Proxy Statement 2007
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
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by
the Registrant x
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by
a Party other than the Registrant ¨
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appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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ý
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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INNSUITES
HOSPITALITY
TRUST
(Name
of
Registrant as Specified In Its Charter)
N/A
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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fee
required.
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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of
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number of securities to which transaction applies: N/A
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unit
price or other underlying value of transaction computed pursuant to Exchange
Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined): N/A
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maximum aggregate value of transaction: N/A
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previously with preliminary materials. N/A
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box
if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and
identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
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(4)
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[TRUST
LOGO]
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
Notice
is
hereby given that the 2007 Annual Meeting of Shareholders of InnSuites
Hospitality Trust will be held in the Kachina Room at the InnSuites Hotels
Phoenix Best Western, 1615 E. Northern Avenue, Phoenix,
Arizona 85020 (phone: 602-997-6285) on Thursday, July 12, 2007, at
11:00 a.m., local time, for the purpose of considering and acting
upon:
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1.
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The
election of two Trustees to hold office until the 2010 Annual Meeting
of Shareholders and until their successor shall be elected and qualified
(listed as Proposal 1 on the Proxy
Card).
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2.
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The
transaction of any other business that properly may come before the
meeting and any adjournments
thereof.
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Shareholders
of the Trust of record at the close of business on May 29, 2007 are entitled
to
vote at the 2007 Annual Meeting of Shareholders and any adjournments
thereof.
By
order
of the Board of Trustees
MARC
E.
BERG
Secretary
Phoenix,
Arizona
May
31,
2007
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Shareholders
are requested to complete, date, sign and return the enclosed Proxy
Card
in the envelope provided, which requires no postage if mailed in
the
United States.
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[TRUST
LOGO]
InnSuites
Hotels Centre
1615 E. Northern
Avenue
Suite 102
Phoenix,
Arizona 85020
PROXY
STATEMENT
Proxy
Solicitation
The
accompanying proxy is solicited by the Trustees of InnSuites Hospitality Trust
for use at the 2007 Annual Meeting of Shareholders to be held on Thursday,
July
12, 2007, and any adjournments thereof. In addition to the solicitation of
proxies by mail, our Trustees, officers and regular employees may also solicit
the return of proxies by mail, telephone or personal contact, for which they
will not receive additional compensation. We have retained Georgeson Inc.,
219
Murray Hill Parkway, East Rutherford, NJ 07073, to assist in the solicitation
of
proxies for an estimated fee of $13,000. We will pay all costs of soliciting
proxies. We will reimburse brokers or other persons holding our Shares of
Beneficial Interest (“Shares”) in their names or in the names of their nominees
for their reasonable expenses in forwarding proxy material to the beneficial
owners of such Shares.
General
Information
Shareholders
of record at the close of business on May 29, 2007 (the record date) will be
entitled to vote at the 2007 Annual Meeting of Shareholders and at any
adjournments thereof. At that date, there were 9,187,304 Shares
issued and outstanding. Each outstanding Share is entitled to one vote on all
matters that properly come before the 2007 Annual Meeting. A majority of the
issued and outstanding Shares, or 4,593,653 Shares, must be represented at
the
2007 Annual Meeting in person or by proxy in order to constitute a quorum for
the transaction of business.
Shares
represented by properly executed proxy cards will be voted in accordance with
the specifications made thereon. If no specification is made, proxies will
be
voted FOR
the
election of the Trustee nominees named herein. The election of the Trustees
requires the affirmative vote of a majority of the issued and outstanding Shares
entitled to vote present in person or by proxy at the Annual Meeting.
Abstentions and broker non-votes, unless a broker’s authority to vote on a
particular matter is limited, are tabulated in determining the votes present
at
a meeting. Consequently, an abstention or a broker non-vote (assuming a broker
has unlimited authority to vote on the matter) has the same effect as a vote
against a Trustee, as each abstention or broker non-vote would be one less
vote
for the Trustee nominee.
This
Proxy Statement and the accompanying form of proxy are first being mailed to
our
shareholders on or about June 6, 2007. We are also mailing with this Proxy
Statement our Annual Report to Shareholders for the fiscal year ended January
31, 2007.
No
appraisal rights are available under Ohio law or under our Declaration of Trust
to any shareholder who dissents from the Proposal described below.
A
proxy
may be revoked at any time before a vote is taken or the authority granted
is
otherwise exercised. Revocation may be accomplished by the execution of a later
proxy with regard to the same Shares or by giving notice in writing to our
Secretary or in an open meeting.
ELECTION
OF TRUSTEES
(Proposal
1 on the Proxy Card)
At
the
Annual Meeting, two Trustees are to be elected to a term of three years expiring
at the 2010 Annual Meeting of Shareholders and until their respective successors
are duly elected and qualified. Accordingly, James F. Wirth and Peter A. Thoma
will stand for re-election as Trustees to terms expiring at the 2010 Annual
Meeting.
Unless
a
shareholder requests that voting of a proxy be withheld for any one or more
of
the nominees for Trustee in accordance with the instructions set forth on the
proxy, it presently is intended that Shares represented by proxies solicited
hereby will be voted FOR
the
election of Mr. Wirth and Mr. Thoma as Trustees to terms expiring at the 2010
Annual Meeting of Shareholders. The nominees have consented to being named
in
this Proxy Statement and to serve if elected. Should any nominee subsequently
decline or be unable to accept such nomination or to serve as a Trustee, an
event that the current Trustees do not now expect, the persons voting the Shares
represented by proxies solicited hereby may vote such Shares for a slate of
two
persons that includes a substitute nominee.
Our
Board
of Trustees currently has five members and is divided into three classes, as
follows:
·
two
Trustees in the class whose terms expire at the 2007 Annual Meeting of
Shareholders;
·
two
Trustees in the class whose terms expire at the 2008 Annual Meeting of
Shareholders; and
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·
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one
Trustee in the class whose terms expire at the 2009 Annual Meeting
of
Shareholders.
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Each
of
the Trustees serves for three years and until his successor is duly elected
and
qualified. The Board of Trustees has determined that a majority of the Trustees,
Messrs. Thoma, Robson and Pelegrin, are “independent” as defined by the American
Stock Exchange (“Amex”) listing standards. We request that all of our Trustees
attend our Annual Meeting of Shareholders. All incumbent Trustees were present
at the 2006 Annual Meeting of Shareholders.
Our
Board of Trustees recommends a vote FOR James F. Wirth and Peter A.
Thoma as
Trustees.
Nominees,
Trustees and Executive Officers
The
biographies of Mr. Wirth and Mr. Thoma, and each of the Trustees whose term
in
office will continue after the 2007 Annual Meeting of Shareholders, are set
forth below. The information concerning our Trustees and executive officers
set
forth in the following table is based in part on information received from
the
respective Trustees and executive officers and in part on our records. The
following table sets forth the name, age, term of office and principal business
experience for each Trustee, nominee for Trustee and executive officer of the
Trust, as applicable:
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Name
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Principal
Occupations During Past
Five
Years, Age as of May
29, 2007
and
Directorships Held
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Trustee
Since
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Nominees
For Terms Expiring in 2010
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James
F. Wirth(1)
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Chairman,
President and Chief Executive Officer of the Trust since January
30, 1998.
President and owner (together with his affiliates) of Suite Hotels,
LLC,
Rare Earth Financial, L.L.C. and affiliated entities, owners and
operators
of hotels, since 1980. President of Rare Earth Development Company,
a real
estate investment company owned by Mr. Wirth and his affiliates,
since
1973. Age: 61.
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January
30, 1998
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Peter
A. Thoma(2)(3)(4)
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Owner
and operator of A&T Verleih, Hamburg, Germany, a hospitality service
and rental company, since 1997. Age: 40.
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April
13, 1999
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Trustees
Whose Terms Expire in 2008
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Larry
Pelegrin(2)(3)(4)
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Retired
marketing executive with an extensive background in travel industry
automation systems and call center sales. Director of Sales and Marketing
of ARINC, a provider of transportation communications services, from
1994
to 2001. Previous employment included senior marketing positions
with Best
Western International and Ramada Inns. Age: 69.
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August
25, 2005
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Steven
S. Robson(1)(2)(3)(4)
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President
of Robson Communities, Inc. and Scott Homes, residential real estate
developers, since 1979. Age: 51.
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June
16, 1998
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Trustee
Whose Term Expires in 2009
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Marc
E. Berg(1)
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Executive
Vice President, Secretary and Treasurer of the Trust since
February 10, 1999. Vice President - Acquisitions of the Trust from
December 16, 1998 to February 10, 1999. Consultant to InnSuites
Hotels since 1989. Self-employed as a Registered Investment Advisor
since
1985. Age: 54.
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January
30, 1998
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______________________________________________________________________________
1
Member of the Executive Committee.
2
Member of the Audit Committee.
3
Member of the Compensation Committee.
4
Member
of the Governance and Nominating Committee.
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Other
Executive Officers
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Anthony
B. Waters
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Chief
Financial Officer of the Trust since February 25, 2000. Controller
of the
Trust from June 17, 1999 to February 25, 2000. Accountant and auditor
with Michael Maastricht, CPA from June 16, 1998 to June 15, 1999,
performing audits for InnSuites Hotels, Inc. Self-employed, concentrating
in computerized accounting and information systems, from 1990 to
June
1998. Age: 60.
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The
Trustees held two meetings during fiscal year 2007. The nominees for Trustee,
Mr. Wirth and Mr. Thoma, were both members of the Board of Trustees during
fiscal year 2007.
Trustee
Nominations and Qualifications
The
Governance and Nominating Committee expects to identify nominees to serve as
our
Trustees primarily by accepting and considering the suggestions and nominee
recommendations made by members of the Board of Trustees and our management
and
shareholders. Nominees for Trustee are evaluated based on their character,
judgment, independence, financial or business acumen, diversity of experience,
ability to represent and act on behalf of all of our shareholders, and the
needs
of the Board of Trustees. In general, before evaluating any nominee, the
Governance and Nominating Committee first determines the need for additional
Trustees to fill vacancies or expand the size of the Board of Trustees and
the
likelihood that a nominee can satisfy the evaluation criteria. The Governance
and Nominating Committee would expect to re-nominate incumbent Trustees who
have
served well on the Board of Trustees and express an interest in continuing
to
serve.
The
Governance and Nominating Committee will consider shareholder recommendations
for Trustee nominees. A shareholder who wishes to suggest a Trustee nominee
for
consideration by the Governance and Nominating Committee should send a resume
of
the nominee’s business experience and background to Peter Thoma, Chairman of the
Governance and Nominating Committee, InnSuites Hospitality Trust,
1615 E. Northern Avenue, Suite 102, Phoenix, Arizona 85020. The
mailing envelope and letter must contain a clear notation indicating that the
enclosed letter is a “Shareholder-Board of Trustees Nominee.”
Shareholder
Communications with the Board of Trustees
Shareholders
interested in communicating directly with the Board of Trustees or any
individual member thereof may do so by writing to the Secretary, InnSuites
Hospitality Trust, 1615 E. Northern Avenue, Suite 102, Phoenix,
Arizona 85020. The mailing envelope and letter must contain a clear notation
indicating that the enclosed letter is a “Shareholder-Board of Trustees
Communication.” The Secretary will review all such correspondence and regularly
forward to the Board of Trustees a log and summary of all such correspondence
and copies of all correspondence that, in the opinion of the Secretary, deals
with the functions of the Board of Trustees or Committees thereof or that he
otherwise determines requires their attention. Trustees may at any time review
a
log of all correspondence received by us that is addressed to members of the
Board of Trustees and request copies of any such correspondence. Concerns
relating to accounting, internal controls or auditing matters are immediately
brought to the attention of our accounting department and handled in accordance
with procedures established by the Audit Committee for such
matters.
BOARD
COMMITTEES
All
incumbent Trustees attended at least 75% of
the
aggregate number of meetings held by the Board of Trustees and all committees
on
which the Trustee served.
Audit
Committee
The
Audit
Committee is directly responsible for the appointment, compensation, retention
and oversight of the work of our independent auditors, including reviewing
the
scope and results of audit and non-audit services. The Audit Committee also
reviews internal accounting controls and assesses the independence of our
auditors. In addition, the Audit Committee has established procedures for the
receipt, retention and treatment of any complaints received by us regarding
accounting, internal controls or auditing matters and the confidential,
anonymous submission by our employees of any concerns regarding accounting
or
auditing matters. The Audit Committee has the authority to engage independent
counsel and other advisors as it deems necessary to carry out its duties. The
Audit Committee met two times during fiscal year 2007.
All
members of the Audit Committee are “independent,” as such term is defined by
Securities and Exchange Commission (“SEC”) rules and Amex listing standards. The
Board of Trustees has determined that Mr. Pelegrin, a member of our Audit
Committee, qualifies as a “financial expert” under applicable SEC rules. We have
posted our Amended and Restated Audit Committee Charter on our Internet website
at www.innsuitestrust.com.
Audit
Committee Report
The
Audit
Committee of the Board of Trustees has reviewed and discussed the audited
financial statements of the Trust for the fiscal year ended January 31,
2007 with the management of the Trust. In addition, the Audit Committee has
discussed with Moss Adams LLP (“Moss Adams”), the independent registered public
accounting firm of the Trust, the matters required by Codification of Statements
on Auditing Standards No. 61. The Audit Committee has also received the
written disclosures and the letter from Moss
Adams
required
by Independence Standards Board Standard No. 1 and has discussed with Moss
Adams
its independence from the Trust, including the compatibility of non-audit
services with Moss Adams’ independence. The Audit Committee has also
pre-approved the fees to be charged to the Trust by its independent auditors
for
audit and non-audit services.
Based
on
the foregoing, the Audit Committee recommended that such audited financial
statements be included in the Trust’s Annual Report for the fiscal year ended
January 31, 2007. The Trust’s Annual Report on Form 10-K was filed
with the SEC on May 2, 2007.
By
the Audit Committee of the Board of Trustees:
Larry
Pelegrin, Chairman
Steven
S. Robson
Peter
A. Thoma
Compensation
Committee
The
Compensation Committee has the responsibility of determining the compensation
of
the Chief Executive Officer and all of our other officers, advising the Board
of
Trustees on the adoption and administration of employee benefit and compensation
plans and administering our 1997 Stock Incentive and Option Plan. A
description of the Compensation Committee’s processes and procedures for the
consideration and determination of executive officer compensation is included
in
this proxy statement under “Compensation of Executive Officers and Trustees
-
Compensation Discussion and Analysis.” The Compensation Committee met two times
during fiscal year 2007.
All
members of the Compensation Committee are “independent,” as such term is defined
by SEC rules and Amex listing standards. We have posted our Compensation
Committee Charter on our Internet website at
www.innsuitestrust.com.
Governance
and Nominating Committee
The
Governance and Nominating Committee has the responsibility of screening and
nominating candidates for election as Trustees and recommending committee
members for appointment by the Board of Trustees. See “Election of Trustees -
Trustee Nominations and Qualifications” above for more information on how
shareholders can nominate Trustee candidates, as well as information regarding
how Trustee candidates are identified and evaluated. The Governance and
Nominating Committee also advises the Board of Trustees with respect to
governance issues and trusteeship practices, including determining whether
Trustee candidates and current Trustees meet the criteria for independence
required by Amex and the SEC. The Governance and Nominating Committee met one
time during fiscal year 2007.
All
members of the Governance and Nominating Committee are “independent,” as such
term is defined by SEC rules and Amex listing standards. We have posted our
Governance and Nominating Committee Charter on our Internet website at
www.innsuitestrust.com.
Executive
Committee
The
Executive Committee has the responsibility of exercising all of the powers
of
the Board of Trustees in the management of the business and affairs of the
Trust, other than filling vacancies on the Board of Trustees or on any committee
of the Board of Trustees, during intervals between meetings of the Board of
Trustees. The Executive Committee did not meet during fiscal year
2007.
COMPENSATION
OF TRUSTEES AND EXECUTIVE OFFICERS
Compensation
Discussion and Analysis
The
following discussion and analysis relates to the compensation paid to our named
executive officers listed in the Summary Compensation Table set forth below
during fiscal year 2007.
Overview
of the Compensation Committee
The
Compensation Committee of the Board of Trustees is comprised of three
independent Trustees. The Committee sets the principles and strategies that
serve to guide the design of the compensation programs for our named executive
officers. The Committee annually evaluates the performance of our Chief
Executive Officer, our Chief Financial Officer and our Executive Vice President
(our “named executive officers”). Taking into consideration the factors set
forth below, the Committee then approves their compensation levels, including
equity-based and cash bonuses. The Committee does not use an independent
compensation consultant to assist it with its responsibilities. The Committee
does consider input from the Chief Executive Officer when determining
compensation for the other executive officers.
Compensation
Philosophy and Objectives
Under
the
supervision of the Compensation Committee, we have developed and implemented
compensation policies, plans and programs that seek to enhance our ability
to
recruit and retain qualified management and other personnel.
In
developing and implementing compensation policies and procedures, the
Compensation Committee seeks to provide rewards for the long-term value of
an
individual’s contribution to the Trust. The Compensation Committee seeks to
develop policies and procedures that offer both recurring and non-recurring,
and
both financial and non-financial, incentives.
Our
executive compensation program is designed to (i) attract, as needed,
executives with the skills necessary for us to achieve our business plan
priorities, (ii) reward our executives fairly over time, (iii) retain
those executives who continue to perform at or above expected levels of
performance, and (iv) align the compensation of our executives with our
performance.
Compensation
for our named executive officers has two main monetary components, salary and
bonus, as well as a benefits component. Each named executive officer receives
a
base salary. In addition, each named executive officer is eligible to receive
a
bonus. The bonus typically consists of a grant of restricted Shares or, in
some
cases, cash. Our 1997 Stock Incentive and Option Plan (the “Plan”) also permits
the granting of stock options. However, beginning in the second quarter of
fiscal year 2006, the Compensation Committee decided to utilize other types
of
awards available under the Plan. As a result, we accepted the voluntary
surrender of all outstanding stock options from our executive officers, Trustees
and employees. The options were surrendered in order to reduce accounting and
overall costs and simplify our reporting and compliance obligations to the
SEC
and Amex. We made no payments to the holders of the options for their surrender
and we have no obligation, explicit or implied, for the surrender of the
options, including but not limited to the reissuance of options at some time
in
the future. Therefore, none of our named executive officers or Trustees owns
any
stock options. In establishing future executive officer compensation packages,
the Compensation Committee may utilize other types of awards available under
the
Plan, and/or adopt additional long-term incentive and/or annual incentive plans
to meet the needs of changing employment markets and economic, accounting and
tax conditions.
The
Plan
provides for accelerated benefits to participants in the event of a change
in
control. Generally, a change in control will be deemed to have occurred if
(i) certain corporate reorganizations take place where the existing
shareholders do not retain more than two-thirds of the combined voting power
of
our outstanding securities, (ii) any person or group becomes the beneficial
owner of 15% or more of the combined voting power of our outstanding securities,
(iii) there is a change in the majority of our Board of Trustees during any
period of two consecutive years, or (iv) we announce that a change in
control has occurred or will occur in the future pursuant to a then-existing
contract or transaction. We chose these change in control triggers based on
an
evaluation of market practices at the time we implemented the Plan. In the
event
of a change in control, each outstanding restricted Share award becomes fully
vested as of the day before the event occurs.
Our
compensation program does not rely to any significant extent on broad-based
benefits or perquisites. The benefits offered to our named executive officers
are those that are offered to all of our full-time employees. We do not offer
our named executive officers any perquisites.
Our
management and the Compensation Committee work in a cooperative fashion.
Management advises the Compensation Committee on compensation developments,
compensation packages and our overall compensation program. The Compensation
Committee then reviews, modifies if necessary and approves the compensation
packages for our named executive officers.
Elements
of Compensation
In
setting the compensation for each named executive officer, the Compensation
Committee considers (i) the responsibility and authority of each position
relative to other positions within the Trust, (ii) the individual
performance of each named executive officer, (iii) the experience and
skills of the named executive officer, and (iv) the importance of the named
executive officer to the Trust.
Base
Salary
We
pay
base salaries to our named executive officers in order to provide a level of
assured compensation reflecting an estimate of the value in the employment
market of the named executive officer’s skills and the demands of his position.
In
establishing base salaries for our named executive officers, the Compensation
Committee considers our overall performance and the performance of each
individual named executive officer, as well as market forces and other general
factors believed to be relevant, including time between salary increases,
promotion, expansion of responsibilities, advancement potential, and the
execution of special or difficult projects. Additionally, the Compensation
Committee will take into account the relative salaries of the executive officers
and determine what it believes are appropriate compensation level distinctions
between and among the executive officers, including between the Chief Executive
Officer and the Chief Financial Officer and among the other executive officers.
While the Compensation Committee considers our financial performance, there
is
no specific relationship between achieving or failing to achieve budgeted
estimates or our Share or financial performance and the annual salaries
determined by the Compensation Committee for any of the executive officers.
No
specific weight is attributed to any of the factors considered by the
Compensation Committee; the Compensation Committee considers all factors and
makes a subjective determination based upon the experience of its members and
the recommendations of our management.
Mr.
Wirth, our Chairman, President and Chief Executive Officer, has an Employment
Agreement with us expiring in December 2007. Pursuant to the terms of this
Employment Agreement, upon the termination of the Advisory Agreement with
Mid-America ReaFund Advisors, Inc. (“MARA”), a company owned by
Mr. Wirth and his spouse, which termination occurred effective
January 1, 1999, Mr. Wirth is to receive, each year through 2007, up
to the amount MARA would have received for advisory and management services
under the Advisory Agreement, but in no event will his compensation exceed
$160,000 per year. Based upon a review of our performance and upon the
recommendation of the Compensation Committee, during fiscal year 2007,
Mr. Wirth was paid an annual salary equal to $141,000, which is less than
he is entitled to receive under the terms of his Employment Agreement.
Mr. Wirth’s annual salary for fiscal year 2008 has been set at $147,000.
The Compensation Committee does not rely on any particular set of financial
or
non-financial factors, measures or criteria when determining the compensation
offered to Mr. Wirth. The Compensation Committee does consider Mr. Wirth’s
substantial Share ownership when setting his base salary.
Mr.
Waters’ base salary increased from $126,000 in fiscal year 2006 to $141,000 in
fiscal year 2007. Mr. Berg’s base salary increased from $86,000 in fiscal year
2006 to $90,000 in fiscal year 2007.
Bonuses
Our
named
executive officers are eligible to receive bonuses in the form of equity
compensation under the Plan at the discretion of the Compensation Committee.
The
Plan was established to provide an incentive for employees, including our named
executive officers, to maximize our long-term performance and align our named
executive officers’ interests with those of our shareholders, and permits our
Board of Trustees or the Compensation Committee to grant restricted Shares
to
employees, including our named executive officers, on such terms as our Board
of
Trustees or the Compensation Committee may determine. The bonuses are used
as a
means of additional compensation, rather than a long-term incentive. For this
reason, the vesting periods for these awards is relatively short, usually one
year or less.
The
Compensation Committee determines the size of an executive’s bonus by
considering a number of factors such as: (i) prior grants,
(ii) retention objectives for the specific executive, and
(iii) guidelines established by the Compensation Committee for equity usage
company-wide. Grants are then made on the basis of a subjective analysis of
an
executive’s individual performance, our financial performance, and the extent to
which the executive’s existing equity awards have current value. The named
executive officers do not have specific bonus targets.
Mr.
Berg
receives an annual cash bonus in addition to any bonus he receives under the
Plan. As a regional manager of four of our hotels, Mr. Berg receives a cash
bonus equal to 10% of the aggregate cash bonuses received by the general
managers of the hotels in his region. In turn, the general managers receive
a
bonus based on the achievement of budgeted gross operating profit (total
revenues less operating expenses) (“GOP”) at their hotel on a quarterly and
annual basis. A general manager will receive the maximum bonus under the plan
upon achieving 104% of budgeted quarterly GOP and 108% of budgeted annual GOP
and will not receive any bonus if 96% of budgeted quarterly and annual GOP
is
not achieved. Since Mr. Berg’s bonus opportunity is tied to the performance of
the general managers of the hotels in his region, his bonus is tied to the
achievement of the same performance criteria.
Beginning
in fiscal year 2008, each of our named executive officers will receive an annual
cash bonus equal to 10% of the aggregate cash bonuses received by the general
managers of all of our hotels, regardless of region. For Mr. Berg, this bonus
will be in addition to the cash bonus he receives as a regional
manager.
Benefits
and Other Compensation
We
maintain broad-based benefits that are provided to all employees, including
health and dental insurance, life insurance and a 401(k) plan. We also have
a mandatory matching contribution for our 401(k) plan. We do not have a pension
plan. Our executive officers are eligible to participate in all of our employee
benefit plans, in each case on the same basis as other employees.
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis that appears in this proxy statement.
Based
on such review and discussions, the Compensation Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis be included
in
this proxy statement.
By
the Compensation Committee of the Board of Trustees:
Steven S.
Robson, Chairman
Larry
Pelegrin
Peter
A. Thoma
Fiscal
2007 Trustee Compensation
|
Name
|
Fees
Earned or Paid
in
Cash ($)
|
Stock
Awards($)
|
Total
($)
|
|
Larry
Pelegrin
|
$
0
|
$
16,080
|
$
16,080
|
|
Steven
S. Robson
|
0
|
16,080
|
16,080
|
|
Peter
A. Thoma
|
0
|
16,080
|
16,080
|
We
issued
12,000 restricted Shares to each Trustee, other than Messrs. Wirth and
Berg, as compensation for services rendered during fiscal year 2007. The
restricted Shares were issued on March 1, 2006 and vested in 10% increments
over
the ten month period following the date of grant. We do not pay our Trustees
per
meeting fees or additional compensation for serving on a committee or as a
committee chairperson.
Summary
Compensation Table
The
table
below shows individual compensation information for our named executive officers
whose total compensation for the fiscal year ended January 31, 2007
exceeded $100,000:
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
($)
|
Stock
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
All
Other Compensation
($)(1)
|
Total
($)
|
| |
|
|
|
|
|
|
|
James
F. Wirth,
President
and Chief Executive Officer
|
2007
|
$141,000
|
$
5,360
|
$
0
|
$
500
|
$146,860
|
|
Anthony
B. Waters,
Chief
Financial Officer
|
2007
|
141,000
|
15,544
|
0
|
500
|
157,044
|
|
Marc
E. Berg,
Executive
Vice President
|
2007
|
90,000
|
5,360
|
8,814
|
500
|
104,674
|
______________________________
(1) Matching
contributions made under our 401(k) plan to the named executive officers during
fiscal year 2007.
Mr.
Wirth’s base salary is determined according to his employment agreement, as more
fully described in “Compensation Discussion and Analysis - Elements of
Compensation - Base Salary.” During the first quarter of fiscal year 2007, we
issued 41,700 Shares, with a total value of $55,878 (reflecting the closing
price on the date of grant), as bonuses to our executive officers and other
employees. The amount presented for Stock Awards represents the dollar amount
recognized for financial statement reporting purposes, which is also the grant
date fair value of each award of restricted Shares, computed in accordance
with
Statement of Financial Accounting Standards No. 123 (Revised 2004),
“Share-Based Payment” (“FAS No. 123R”). During the second quarter of
fiscal year 2006, we accepted the voluntary surrender of all outstanding stock
options. As a result, none of our executive officers owned any stock options
at
January 31, 2007. In addition to his stock award, Mr. Berg received a cash
bonus
of $8,814, as more fully described in “Compensation Discussion and Analysis -
Elements of Compensation - Bonuses.”
Fiscal
2007 Grants of Plan-Based Awards
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
|
|
|
Threshold
($)
|
Maximum
($)
|
All
Other Stock Awards: Number of Shares of Stock
or Units (#)
|
Grant
Date Fair Value of Stock and Option Awards
($)(4)
|
| |
|
|
|
|
|
|
James
F. Wirth
|
03/01/06
|
|
|
4,000(2)
|
$5,360
|
| |
|
|
|
|
|
|
Anthony
B. Waters
|
03/01/06
|
|
|
7,000(2)
|
9,380
|
|
03/01/06
|
|
|
4,600(3)
|
6,164
|
| |
|
|
|
|
|
|
Marc
E. Berg
|
03/01/06
|
|
|
4,000(2)
|
5,360
|
| |
(1)
|
$
1,200
|
$
8,000
|
|
|
______________________________
(1) There
is
no grant date for this award. This row relates to an annual cash award made
to
our regional managers. The calculation of estimated future payouts is more
fully
described in “Compensation Discussion and Analysis - Elements of Compensation -
Bonuses.”
(2) These
restricted Shares vested in 10% increments over the ten month period following
the date of grant.
(3) These
restricted Shares were
not
subject to any performance or time-based vesting requirements.
(4) This
represents the grant date fair value of each award of restricted Shares,
computed in accordance with FAS No. 123R.
The
following table provides information relating to aggregate Share awards vested,
including in each case the value realized upon vesting, during fiscal year
2007
for the named executive officers.
Fiscal
2007 Option Exercises and Stock Vested
| |
Stock
Awards
|
|
Name
|
Number
of Shares Acquired
on Vesting (#)
|
Value
Realized on Vesting ($)
|
| |
|
|
|
James
F. Wirth
|
4,000
|
$5,560
|
| |
|
|
|
Anthony
B. Waters
|
7,000
|
9,730
|
| |
|
|
|
Marc
E. Berg
|
4,000
|
5,560
|
Potential
Payments Upon Change in Control
Upon
a
change in control, our 1997 Stock Incentive and Option Plan provides for the
acceleration of vesting of restricted Shares. The change in control triggers
are
described in the “Compensation Discussion and Analysis - Compensation
Philosophy and Objectives.” This plan does not discriminate as to scope or terms
in favor of our named executive officers. All terms are generally applicable
to
all participants in this plan. If a change in control had occurred on January
31, 2007, none of our named executive officers would have received any payment
upon a change in control because none had any unvested restricted Shares as
of
that date.
Our
employment agreement with Mr. Wirth, as more fully described in “Compensation
Discussion and Analysis -
Elements
of Compensation - Base Salary” does not provide any benefits or payments to Mr.
Wirth upon termination or a change in control.
CERTAIN
TRANSACTIONS
Related
Party Loans and Advances to the Trust
Notes
and
advances payable to related parties consist of funds provided by Mr. Wirth,
certain of his affiliates and other related parties to permit us to repurchase
additional general partnership units in RRF Limited Partnership (the
“Partnership”) and to fund working capital and capital improvement needs. The
aggregate amounts outstanding to related parties were $1,085,717 and $514,706
as
of January 31, 2007 and 2006, respectively.
The
notes
and advances payable to related parties are as follows as of January 31 of
the respective years:
| |
|
2007
|
|
2006
|
|
|
Line
of credit payable to Rare Earth Financial, L.L.C., an affiliate of
Mr.
Wirth, unsecured and bearing interest at 7% per annum. Due in one
installment of accrued interest and unpaid principal on March 1,
2008.
|
|
$
|
1,000,000
|
|
$
|
—
|
|
| |
|
|
|
|
|
|
Note
payable to The Anderson Charitable Remainder Unitrust, an affiliate
of
Mason Anderson, former Trustee of the Trust, bearing interest at
7% per
annum, and secured by Shares of Beneficial Interest in the Trust.
Due in
monthly principal and interest payments of $1,365 through November
2009.
|
|
41,985
|
|
54,929
|
|
| |
|
|
|
|
|
|
Note
payable to Wayne Anderson, son of Mason Anderson, former Trustee
of the
Trust, bearing interest at 7% per annum, and secured by Shares of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $574 through June 2009.
|
|
15,280
|
|
20,886
|
|
| |
|
|
|
|
|
|
Note
payable to Karen Anderson, daughter of Mason Anderson, former Trustee
of
the Trust, bearing interest at 7% per annum, and secured by Shares
of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $574 through June 2009.
|
|
15,280
|
|
20,886
|
|
| |
|
|
|
|
|
|
Note
payable to the Kathy Anderson, daughter of Mason Anderson, former
Trustee
of the Trust, bearing interest at 7% per annum, and secured by Shares
of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $495 through June 2009.
|
|
13,172
|
|
18,005
|
|
| |
|
|
|
|
|
|
Note
payable to Rare Earth Financial, L.L.C., an affiliate of Mr. Wirth,
unsecured and bearing interest at 7% per annum. Satisfied in full
during
fiscal 2007 with proceeds from the line of credit with Rare Earth
Financial.
|
|
—
|
|
400,000
|
|
| |
|
|
|
|
|
|
Totals
|
|
$
|
1,085,717
|
|
$
|
514,706
|
|
During
the third quarter of fiscal year 2006, the Partnership issued a promissory
note
in the amount of $400,000 to Rare Earth Financial, L.L.C., an affiliate of
Mr.
Wirth. The full unpaid principal and accrued interest was due in one installment
on April 15, 2006. This note was paid off during fiscal year 2007 using a new
line of credit with Rare Earth Financial, L.L.C.
During
the first quarter of fiscal year 2007, the Partnership established a $700,000
subordinated line of credit with Rare Earth Financial, L.L.C., an affiliate
of
Mr. Wirth. The line of credit is secured by 49% of the Partnership’s
interest in its Tucson St. Mary’s hotel property, and is subordinated to our
commercial bank line of credit. Outstanding borrowings under the line of credit
will bear interest at 7.0% per year. We borrowed $400,000 under the line of
credit during the first quarter of fiscal year 2007 in order to refinance an
outstanding promissory note payable to Rare Earth Financial. During the fourth
quarter of fiscal year 2007, the line of credit limit was increased to $1.0
million. As of January 31, 2007, $1.0 million was outstanding on the line
of credit. We repaid the line of credit during the first quarter of fiscal
year
2008.
We
paid
interest on related party notes to Mr. Wirth and his affiliates in the
amount of $45,644, for the twelve months ended January 31, 2007. We
incurred interest expense on related party notes to Mr. Wirth and his
affiliates in the amount of $42,782 for the twelve months ended January 31,
2007.
Sales
and Project Coordination Agreement
On
March 1, 2006, we entered into a Sales and Project Coordination Agreement
(the “Project Agreement”) with Rare Earth Development Company, an affiliate of
Mr. Wirth. The Project Agreement required Rare Earth Development Company to
coordinate the conversion of hotel properties, to be designated by us, into
condo-hotel units, including coordination of the construction, marketing and
sales of such condo-hotel units. Rare Earth Development Company was to receive
a
brokerage fee of 6% of the sales price of each condo-hotel unit (subject to
the
potential splitting of such brokerage fee with unaffiliated brokers) payable
contingent upon the sale and closing of a condo-hotel unit. Although we continue
to explore the condo-hotel concept as an opportunity for the Trust, this project
has been terminated at our properties in Phoenix and Tempe and has been slowed
in Yuma and Tucson City Center. We have not made any payments to Rare Earth
Development Company pursuant to the Project Agreement and do not expect to
do so
in the future.
Management
and Licensing Agreements
Under
its
management agreements, InnSuites Hotels provides personnel for four hotels
owned
by affiliates of Mr. Wirth, the expenses of which are reimbursed at cost,
and
manages the hotels’ daily operations. During fiscal year 2007, InnSuites Hotels
received 2% of room revenue and the monthly accounting fee was set at $2,000
per
month for these four hotels. Effective February 1, 2007, the management fees
for
these four hotels is set at 2.5% of room revenue. These agreements have no
expiration date and may be cancelled by either party with 90-days written
notice, or 30-days written notice in the event the property changes
ownership.
InnSuites
Hotels received 1.25% of room revenue from the four hotels owned by affiliates
of Mr. Wirth in exchange for use of the “InnSuites” trademark during fiscal
year 2007. Effective February 1, 2007, the fees are fixed at 1.25% for the
two hotels owned by affiliates of Mr. Wirth which carry a third party franchise
and 2.0% for the two hotels which do not carry a third-party franchise. These
agreements have no expiration date and may be cancelled by either party with
12-months written notice, or 90-days written notice in the event the property
changes ownership.
Review,
Approval or Ratification of Transactions with Related
Parties
We
have
established procedures for reviewing transactions between us and our Trustees
and executive officers, their immediate family members and entities with which
they have a position or relationship. These procedures help us evaluate whether
any related person transaction could impair the independence of a Trustee or
presents a conflict of interest on the part of a Trustee or executive officer.
First, the related party transaction is presented to our executive management,
including our Chief Financial Officer. Our Chief Financial Officer will discuss
the transaction with our outside counsel or our independent registered public
accountants, if appropriate. Lastly, the members of the Board of Trustees who
do
not have an interest in the transaction will review the transaction and, if
they
approve, will pass a resolution authorizing the transaction.
CERTAIN
INFORMATION CONCERNING THE TRUST
Ownership
of Shares
The
following table shows the persons who were known to us to be the beneficial
owner of more than 5% of the Shares as of May 29, 2007, together with the number
of Shares owned beneficially by each Trustee, nominee and executive officer,
and
the Trustees, nominees and executive officers as a group.
|
Five
Percent Beneficial Owners and
Beneficial
Ownership of Trustees, Nominees and Executive
Officers
|
|
|
Shares
Beneficially
Owned
|
Percentage
of
Outstanding
Shares
|
|
Trustees,
Nominees and Executive Officers
|
|
|
|
James
F. Wirth (1)
|
5,573,624
|
60.7%
|
|
Marc
E. Berg
|
60,225
|
*
|
|
Steven
S. Robson
|
224,723
|
2.5%
|
|
Peter
A. Thoma
|
69,900
|
*
|
|
Larry
Pelegrin (2)
|
31,870
|
*
|
|
Anthony
B. Waters
|
23,000
|
*
|
|
Trustees,
Nominees and Executive Officers as a group (six persons)
|
5,983,342
|
65.1%
|
______________________________
|
(1)
|
All
Shares are owned jointly by Mr. Wirth and his spouse, except for
150,000 Shares each that are held individually by Mr. Wirth and Mrs.
Wirth. Mr. Wirth and his spouse also own all 3,407,938 issued and
outstanding Class B limited partnership units in the Partnership, the
conversion of which is restricted and permitted only at the discretion
of
our Board of Trustees. Mr. Wirth’s business address is 1615 E.
Northern Avenue, Suite 102, Phoenix, Arizona
85020.
|
|
(2)
|
Mr.
Pelegrin has shared voting power and shared investment power with
respect
to 3,870 Shares.
|
*
Less
than one percent (1.0%).
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Securities Exchange Act of 1934 requires our Trustees, executive officers
and holders of more than 10% of our Shares to file with the SEC initial reports
of ownership and reports of subsequent changes in ownership. Such persons are
required by the regulations of the SEC to furnish us with copies of all
Section 16(a) reports they file with the SEC. The SEC has established
specific due dates for these reports and we are required to disclose in this
proxy statement any late filings or failures to file.
Based
solely on our review of the copies of such forms (and amendments thereto)
furnished to us and written representations from certain reporting persons
that
no additional reports were required, we believe that all our Trustees, executive
officers and holders of more than 10% of the Shares complied with all
Section 16(a) filing requirements during the fiscal year ended January 31,
2007.
Selection
of Independent Auditors
Our
consolidated financial statements as of and for the fiscal year ended
January 31, 2007 were audited by Moss Adams. The Audit Committee has
appointed Moss Adams to serve as our independent registered public accountants
for the fiscal year ended January 31, 2008.
Representatives
of Moss Adams are
expected to be present at the 2007 Annual Meeting, will have the opportunity
to
make a statement if they desire to do so and are expected to be available to
respond
to appropriate
questions.
Change
in Independent Auditors
Effective
January 1, 2007, Epstein, Weber & Conover, P.L.C. (“Epstein Weber”) combined
its practice with Moss Adams and therefore resigned as our independent
registered public accounting firm. According to information provided to us,
all
of the partners of Epstein Weber have become partners of Moss Adams.
The
report of Epstein Weber on our financial statements for the fiscal year ended
January 31, 2006 did not contain an adverse opinion or a disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with the audits of our financial statements for
the fiscal year ended January 31, 2006, and in the subsequent interim periods
through January 1, 2007, there were no disagreements with Epstein Weber on
any
matter of accounting principles or practices, financial statement disclosure
or
auditing scope and procedure which, if not resolved to the satisfaction of
Epstein Weber, would have caused Epstein Weber to make reference to the matter
in its report. In connection with the audit of our financial statements for
the
fiscal year ended January 31, 2006, and in the subsequent interim periods
through January 1, 2007, there were no “reportable events” as that term is
defined in Item 304 of Regulation S-K promulgated under the Securities Exchange
Act of 1934 (“Item 304”).
Effective
January 1, 2007, we engaged Moss Adams to act as our principal independent
accountant. The Audit Committee of the Board of Trustees approved the decision
to engage Moss Adams.
During
the fiscal year ended January 31, 2006, and during all subsequent interim
periods through January 1, 2007, we did not consult Moss Adams regarding the
application of accounting principles to a specified transaction, either
completed or proposed, the type of audit opinion that might be rendered on
our
financial statements or any matter that was the subject of a disagreement with
our former accountants or a reportable event as those terms are defined in
Item
304.
Audit
Fees & Services
Audit
Fees
The
aggregate fees for professional services rendered by Moss Adams or Epstein
Weber, as the case may be, for the audit of our annual financial statements
for
the fiscal years ended January 31, 2007 and January 31, 2006 were $63,500
and $67,250, respectively. The aggregate fees for professional services rendered
by Epstein Weber for reviewing the interim financial statements included in
our
quarterly reports on Form 10-Q filed during the fiscal years ended
January 31, 2007 and 2006 were $25,900
and $29,240, respectively.
Audit-Related
Fees
The
aggregate fees for audit-related services rendered by Epstein Weber, such as
comfort letters, consents and assistance with and review of documents filed
with
the SEC, for the fiscal years ended January 31, 2007 or January 31, 2006 were
$4,550 and $1,455, respectively.
Tax
Fees
The
aggregate fees for Moss Adams tax compliance, tax advice and tax planning for
the fiscal year ended January 31, 2007 was $54,270. The aggregate fees for
Epstein Weber tax compliance, tax advice
and tax planning for the fiscal year ended January 31, 2006 was $83,012.
The Audit Committee pre-approved all tax fees billed for the fiscal years ended
January 31, 2007 and 2006.
All
Other Fees
The
aggregate fees for other services rendered, which
consisted of analysis of financial statement and tax implications of an asset
sale, during the fiscal years ended January 31, 2007 and January 31,
2006 were $5,740 and $2,360, respectively.
Our
Audit
Committee has considered whether the provision of these services, other than
the
audit of our annual financial statements and the review of our interim financial
statements, is compatible with Moss Adams and Epstein Weber maintaining their
respective independence from us.
The
Audit
Committee pre-approves all fees for services performed by Moss Adams, including
audit and non-audit services. Unless a type of service Moss Adams provided
received general pre-approval, it will require specific pre-approval by the
Audit Committee. Any proposed services exceeding pre-approved cost levels will
require specific pre-approval by the Audit Committee. The term of any
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee specifically provides for a different period.
Since
May 6, 2003, the effective date of the SEC’s rules requiring Audit
Committee pre-approval of audit and non-audit services performed by our
independent auditors, all of the services provided by our independent auditors
were approved in accordance with the policies and procedures described
above.
OTHER
MATTERS
The
Trustees know of no matters to be presented for action at the 2007 Annual
Meeting other than those described in this Proxy Statement. Should other matters
come before the meeting, the Shares represented by proxies solicited hereby
will
be voted with respect thereto in accordance with the best judgment of the proxy
holders.
OTHER
INFORMATION
Shareholder
Proposals
If
a
shareholder intends to present a proposal at the 2008 Annual Meeting, it must
be
received by us for consideration for inclusion in our Proxy Statement and form
of proxy relating to that meeting on or before February 1, 2008. A shareholder
who wishes to present a proposal at the 2008 Annual Meeting, but not have that
proposal included in our Proxy Statement and form of proxy relating to that
meeting, must notify us of the proposal before April 22, 2008. If notice of
the
proposal is not received by us by that date, then the proposal will be deemed
untimely and we will have the right to exercise discretionary voting authority
and vote proxies returned to us with respect to that proposal.
By
order
of the Board of Trustees
MARC
E.
BERG
Secretary
May
31,
2007
InnSuites
Hospitality Trust
c/o
National City Bank
Shareholder
Services Operations
LOC
5352
P.
O. Box
94509
Cleveland,
OH 44101-4509
Proxy
card must be signed and dated below.
Ø
Please
fold and detach card at perforation before mailing. Ø
InnSuites
Hospitality Trust
THIS
PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The
undersigned hereby appoints MARC E. BERG and ANTHONY B. WATERS as proxies,
each
with the full power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side, all the Shares of Beneficial Interest of InnSuites Hospitality
Trust held of record by the undersigned on May 29, 2007 at the Annual Meeting
of
Shareholders to be held on July 12, 2007 or at any
adjournments thereof. Please
sign and return this proxy whether or not you plan to attend the meeting.
You
may nevertheless vote
in
person if you attend.
Signature
Signature
(if held jointly)
Please
sign exactly as name appears to the left. When shares are held
in
joint name, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name
by
authorized person
Dated: _________________________________________________________________2007.
PLEASE
DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
YOUR
VOTE IS IMPORTANT
PLEASE
SIGN AND DATE THIS PROXY CARD AND RETURN I
T
PROMPTLY
IN THE ENCLOSED POSTAGE
-PAID
ENVELOPE
SO YOUR SHARES MAY BE REPRESENTED AT THE 2007 ANNUAL
MEETING
OF
SHAREHOLDERS
.
Proxy
card must be signed and dated below.
Ø
Please
fold and detach card at perforation before mailing. Ø
INNSUITES
HOSPITALITY TRUST PROXY
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE
UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES
LISTED
BELOW.
1.
Election of Trustees:
o
FOR
the
nominees listed below. o
WITHHOLD
AUTHORITY
to
vote for the nominees listed
below.
James
F.
Wirth Peter
A.
Thoma
Instruction:
To withhold authority to vote for any individual nominee, write that nominee’s
name in the space provided below.
2.
In their discretion, the proxies are authorized to vote upon such other
business
as may properly come before the meeting.
(CONTINUED,
AND TO BE SIGNED, ON THE OTHER SIDE)