UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant  o

 

Check the appropriate box:

 

 

GAYLORD ENTERTAINMENT COMPANY

 

(Name of Registrant as Specified in its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 1, 2011

 

Dear Stockholder:

 

You are cordially invited to attend the 2011 Annual Meeting of Stockholders of Gaylord Entertainment Company at the Gaylord Opryland Resort and Convention Center in Nashville, Tennessee, on May 5, 2011 at 10:00 a.m. local time.

 

Details of the business that will be conducted at the Annual Meeting are given in the attached Notice of Annual Meeting, proxy statement and proxy card.

 

It is important that your shares be represented and voted at the Annual Meeting. If you do not plan to attend the Annual Meeting, please complete, sign, date and return the enclosed proxy card promptly in the accompanying reply envelope. If you received your Annual Meeting materials via email, the email contains voting instructions and links to the annual report and proxy statement on the Internet, which are both available at our website, www.gaylordentertainment.com/investorrelations/proxymaterials.htm. If you decide to attend the Annual Meeting and wish to change your proxy vote, you may do so by voting in person at the Annual Meeting.

 

We look forward to seeing you at the Annual Meeting.

 

Sincerely,

 

Colin V. Reed

Chief Executive Officer and

Chairman of the Board

 

GAYLORD ENTERTAINMENT COMPANY
One Gaylord Drive
Nashville, Tennessee 37214
(615) 316-6000

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

 

 

 

By Order of the Board of Directors,

 

CARTER R. TODD

Secretary

 

Nashville, Tennessee

April 1, 2011

 

PROXY STATEMENT

 

 

 

The Board of Directors of Gaylord Entertainment Company (“Gaylord,” the “Company,” “we” or “us”) is soliciting proxies for the 2011 Annual Meeting of Stockholders (the “Annual Meeting”) on May 5, 2011, and any postponements and adjournments of such meeting. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. A copy of our 2010 Annual Report to Stockholders, this Proxy Statement and accompanying proxy card are being mailed to our stockholders beginning on or about April 1, 2011.

 

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE 2011 ANNUAL MEETING OF STOCKHOLDERS

 

The following proxy materials are available for you to review online at our website, www.gaylordentertainment.com/investorrelations/proxymaterials.htm:

 

 

In accordance with Securities and Exchange Commission rules, this website does not use “cookies,” track user moves or gather any personal information.

 

 

Table of Contents

 

 

At the Annual Meeting, our stockholders will vote on the following matters:

 

 

This proxy statement more fully describes each of these proposals. Stockholders will also transact any other business that may properly come before the meeting or any adjournment or postponement of the meeting.

 

You may vote if you were a holder of record of shares of our common stock at the close of business on March 15, 2011 (the record date). On the record date, there were 48,327,497 shares of common stock outstanding. On such date, the shares were held by 2,622 holders of record. You are entitled to one vote for each share of common stock held by you as of the record date.

 

If you hold the shares in your own name, you can vote in person at the meeting or by signing and dating each proxy card you receive and returning it in the enclosed prepaid envelope. If you vote by proxy, the proxies identified on the back of the proxy card will vote your shares in accordance with your instructions. If you submit a signed proxy card but do not mark the boxes showing how you wish to vote, the proxies will vote your shares in accordance with the recommendations of the Board of Directors as described in greater detail below.

 

In addition, Gaylord stockholders can vote using the Internet or by phone. To use the Internet, log onto www.proxyvote.com to transmit your voting instructions up until 11:59 p.m. Eastern time on May 4, 2011 (for shares in Gaylord’s 401(k) Savings Plan, the voting deadline is 11:59 p.m. Eastern time on May 3, 2011). Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. To vote by phone, dial 1-800-690-6903 using a touch-tone telephone up until 11:59 p.m. Eastern time on May 4, 2011 (for shares in Gaylord’s 401(k) Savings Plan, the voting deadline is 11:59 p.m. Eastern time on May 3, 2011). Have your proxy card in hand when you call and then follow the instructions.

 

If you do not own your shares directly, but instead are the beneficial owner of shares held in “street name” by a broker, bank or other nominee, your broker, bank or other nominee, as the record holder of the shares, must vote those shares in accordance with your instructions. If you do not give instructions to your broker, bank or other nominee, your broker, bank or other nominee can vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. On non-discretionary items for which you do not give instructions, your shares will be counted as “broker non-votes.” A discretionary item is a proposal that is considered routine under the rules of the New York Stock Exchange. Shares held in street

name may be voted by your broker, bank or other nominee on discretionary items in the absence of voting instructions given by you.

 

The matters presented in Proposals 1, 3, 4 and 5 are not considered routine under the rules of the New York Stock Exchange. Therefore, brokers, banks or other nominees subject to New York Stock Exchange Rules will not have the ability to vote shares held in street name with respect to those proposals unless the broker, bank or other nominee has received voting instructions from the beneficial owner of the shares held in street name. Broker non-votes will not impact the outcome of Proposals 1, 3, 4 or 5. It is therefore important that you provide instructions to your broker, bank or other nominee if your shares are held in street name by a broker, banker or other nominee so that you are able to vote with respect to Proposals 1, 3, 4 and 5. Proposal 2 is considered routine and therefore may be voted upon by your broker, bank or other nominee if you do not give instructions for the shares held in street name by your broker, bank or other nominee.

 

If any other matter that properly comes before the meeting is not considered routine under the rules of the New York Stock Exchange, broker non-votes will not impact the outcome of the matter.

 

Participants in the Company’s 401(k) Savings Plan are entitled to vote the shares held under the 401(k) Savings Plan in their name. To do this you must sign and timely return the proxy card you received with this Proxy Statement. Your proxy card will be considered your confidential voting instructions, and the 401(k) Savings Plan trustee will direct your vote in the manner you indicate on the proxy card. In order to do this, the proxy results for the shares held in the 401(k) Savings Plan will be tabulated by our transfer agent for all plan participants and reported to the 401(k) Savings Plan trustee on an aggregate basis. The overall vote tallies will not show how individual participants voted. The trustee will vote the shares at the meeting through the custodian holding the shares. If a plan participant’s voting instructions are not received by our transfer agent before the meeting, or if the proxy is revoked by the participant before the meeting, the shares held by that participant will be considered unvoted. All unvoted shares in the plan will be voted at the Annual Meeting by the 401(k) Savings Plan trustee in direct proportion to the voting results of 401(k) Savings Plan shares for which proxies are received.

 

Your proxy card represents all shares registered in your name with the transfer agent on the record date, including those shares owned pursuant to the Company’s 401(k) Savings Plan.

 

The holders of a majority of the shares of our common stock outstanding on the record date, or 24,163,749 shares, in person or by a valid proxy, must be present at the meeting for any business to be conducted, known as a “quorum.” Proxies received but marked as “withhold authority” or “abstain,” as well as shares that are counted as “broker non-votes,” will be counted as shares that are present for purposes of determining the presence of a quorum.

 

If a quorum is not present at the scheduled time of the Annual Meeting, we may adjourn the Annual Meeting, either with or without a vote of the stockholders. If we propose to have the stockholders vote whether to adjourn the meeting, the people named in the enclosed proxy will vote all shares of our common stock for which they have voting authority in favor of the adjournment. We also may adjourn the meeting if for any reason we believe that additional time should be allowed to enable our stockholders to (i) consider fully information which the Board of Directors determines has not been sufficiently or timely available to stockholders or (ii) otherwise to exercise effectively their voting rights. An adjournment will have no effect on the business that may be conducted at the Annual Meeting.

 

The Board recommends that you vote FOR:

 

 

You can revoke your proxy at any time before the meeting by:

 

 

Representatives of Broadridge will count the votes and act as the independent inspectors of the election.

 

If you send in a signed proxy but do not give any voting instructions, your shares will be voted FOR:

 

 

We are not aware of any business to be considered at the Annual Meeting other than the proposals described in this proxy statement. If any other business is properly presented at the meeting, your signed proxy card authorizes Colin V. Reed, Ralph Horn and Carter R. Todd to use their discretion to vote on these other matters.

 

With respect to Proposal 1, you have three choices. You may:

 

 

The eleven (11) nominees receiving the most FOR votes will be elected. A properly executed proxy marked WITHHOLD with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. Proxies may not be voted for more than eleven (11) directors, and stockholders may not cumulate votes in the election of directors.

 

With respect to Proposal 2, you may vote FOR the proposal, AGAINST the proposal or you may elect to ABSTAIN from voting.

 

With respect to Proposal 3, you may vote FOR the proposal, AGAINST the proposal or you may elect to ABSTAIN from voting.

 

With respect to Proposal 4, you may vote FOR the proposal, AGAINST the proposal or you may elect to ABSTAIN from voting.

 

With respect to Proposal 5, you may vote FOR EVERY YEAR, FOR EVERY TWO YEARS, FOR EVERY THREE YEARS or you may elect to ABSTAIN from voting.

 

If you abstain from voting on Proposals 1 or 5, the abstention will not have an effect on the outcome of the vote. If you abstain from voting on Proposals 2, 3 or 4, the abstention will have the same effect as a vote against such proposal.

 

 

In addition to the vote required to approve Proposal 3 above, the listing standards of the New York Stock Exchange require that the amendment and restatement of our 2006 Omnibus Incentive Plan be approved by a majority of votes cast on Proposal 3, provided that the total vote cast on Proposal 3 represents over 50% in interest of all securities entitled to vote on the proposal.

 

Yes. All proxy cards and vote tabulations that identify an individual stockholder are kept confidential. Except to meet legal requirements, your vote will not be disclosed to us unless:

 

 

This policy does not prevent us from ascertaining which stockholders have voted or from taking actions designed to encourage stockholder voting.

 

We will bear the cost of soliciting proxies for the Annual Meeting. We have retained Broadridge to assist in the solicitation and will pay approximately $5,000 for its assistance. Our officers and employees may also solicit proxies by mail, telephone, e-mail or facsimile transmission. They will not be paid additional remuneration for their efforts. Upon request, we will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy material to beneficial owners of shares of our common stock.

 

On March 9, 2009, the Company entered into a settlement agreement (the “TRT Agreement”) with TRT Holdings, Inc., a Delaware corporation (“TRT”), which had previously submitted notice to the Company of its intention to nominate four (4) individuals for election to the Company’s Board of Directors at its 2009 annual meeting of stockholders and to solicit proxies for the election of such nominees.

 

The TRT Agreement provided that, prior to the 2009 annual meeting of stockholders, the Board of Directors would increase the size of the Board from nine (9) to eleven (11) directors. Under the terms of the TRT Agreement, TRT was entitled to name two (2) directors for nomination by the Board and inclusion in the Company’s proxy statement for the 2009 annual meeting of stockholders and 2010 annual meeting of stockholders, and TRT is entitled to name two (2) directors for nomination by the Board and inclusion in the Company’s proxy statement for the Annual Meeting. The TRT nominees for the 2009 annual meeting of stockholders and 2010 annual meeting of stockholders were Robert B. Rowling and David W. Johnson. Messrs. Rowling and Johnson were elected as directors of the Company at its 2009 Annual Meeting and were re-elected as directors of the Company at its 2010 annual meeting.

 

On August 25, 2010, Mr. Rowling resigned from the Company’s Board of Directors. The TRT nominees for the Company’s Board at the Annual Meeting are David W. Johnson and Terrell T. Philen, Jr.

 

The TRT Agreement also requires the Board of Directors to nominate seven incumbent directors and two additional independent directors identified by the Nominating and Corporate Governance Committee after consultation with the Company’s stockholders. The TRT Agreement provides that one TRT Nominee will serve on each of the standing committees of the Board. In addition, the TRT Agreement provides that the Board will not increase the size of the Board to more than eleven (11) directors prior to the Company’s 2012 annual meeting of stockholders.

 

The TRT Agreement provides that prior to its termination date, which is May 15, 2011 (except as otherwise provided in the TRT Agreement), TRT is obligated to vote its shares for the full slate of nominees recommended by the Board of Directors for election at the Annual Meeting, and any other meeting of the Company’s stockholders prior to such termination date: (i) in accordance with the recommendation of the Board of Directors on any stockholder proposal that is put to a vote of stockholders, and (ii) in favor of any proposal made by the Company unless Mr. Rowling (or any other TRT nominee that is an affiliate of TRT)

has voted against such proposal in his or her capacity as a member of the Board of Directors. These voting obligations will not, however, apply with respect to the voting of TRT’s shares in connection with an “extraordinary transaction” (as defined in the TRT Agreement).

 

The TRT Agreement also includes a standstill provision restricting TRT from taking certain actions from the date of the TRT Agreement through the termination date of the agreement. In addition, in connection with the TRT Agreement, the Company amended and restated its previous stockholder rights agreement.

 

The description of the TRT Agreement above is qualified in its entirety by reference to the full text of the agreement, a copy of which the Company filed with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K filed on March 10, 2009.

 

On March 9, 2009, the Company entered into a letter agreement (the “GAMCO Agreement”) with GAMCO Asset Management, Inc. (“GAMCO”), which had previously submitted notice to the Company of its intention to nominate four individuals for election to the Board of Directors at the Annual Meeting.

 

Under the terms of the GAMCO Agreement, GAMCO was entitled to name two (2) directors for nomination by the Board of Directors and inclusion in the Company’s proxy statement for the 2009 annual meeting of stockholders. The GAMCO nominees for the 2009 annual meeting of stockholders were Glenn J. Angiolillo and Robert S. Prather, Jr. Messrs. Angiolillo and Prather were elected as directors of the Company at its 2009 annual meeting and were re-elected as directors of the Company at its 2010 Annual Meeting. Messrs. Angiolillo and Prather have been re-nominated as director nominees by the Company’s board, and they are standing for re-election at the Annual Meeting.

 

The description of the GAMCO Agreement above is qualified in its entirety by reference to the full text of the agreement, a copy of which the Company filed with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K filed on March 10, 2009.

 

You may vote on the election of eleven (11) directors to the Board of Directors.

 

The current Board of Directors consists of ten (10) directors. All of our directors are elected annually. All of the nominees are currently directors, other than Mr. Philen. The Board expects all of the nominees named below to be available for election. In case any nominee is not available, the person or persons voting the proxies may vote your shares for such other person or persons designated by the Board if you have submitted a proxy card.

 

Directors will be elected by a plurality of the shares present (in person or by proxy) and entitled to vote for the election of directors. Each of the nominees shall be elected to serve as a director until the annual meeting of stockholders in 2012 or until his or her respective successor is duly elected and qualified, or until his or her earlier resignation or removal.

 

The Board of Directors, acting through its Nominating and Corporate Governance Committee, is responsible for nominating a slate of director nominees that collectively have the complementary experience, qualifications, skills and attributes to guide the Company and function effectively as a Board. See “Committees of the Board-The Nominating and Corporate Governance Committee” for further discussion.

 

We are a lodging and hospitality company focusing on the large group meetings and convention segment of the hospitality industry. The Nominating and Corporate Governance Committee seeks directors with established strong professional reputations and experience in areas relevant to the strategy and operations of the Company’s businesses. Each of the nominees for election as a director at the Annual Meeting holds or has held senior executive positions in large, complex organizations and has operating experience that meets this

objective, as described below. The Nominating and Corporate Governance Committee also believes that each of the nominees has other key attributes that are important to an effective Board: integrity, candor, analytical skills, the willingness to engage management and each other in a constructive and collaborative fashion, and the ability and commitment to devote significant time and energy to service on the Board and its committees. The Nominating and Corporate Governance Committee takes into account diversity considerations in determining the Company’s slate and planning for director succession and believes that, as a group, the nominees bring a diverse range of perspectives to the Board’s deliberations. See “Committees of the Board-The Nominating and Corporate Governance Committee” for further discussion of the Nominating and Corporate Governance Committee’s consideration of diversity.

 

In addition to the above, the Nominating and Corporate Governance Committee also considered the specific experience described in the biographical details that follow in determining to nominate the individuals set forth below for election as directors.

 

Information concerning the nominees proposed by the Board for election as directors is set forth below.

 

 

Mr. Angiolillo is President of GJA Management Corp., a consulting and advisory firm specializing in wealth management, a position he has held since 1998. Previously, Mr. Angiolillo was a partner and member of the Management Committee in the law firm of Cummings & Lockwood, where he concentrated in the areas of corporate law, mergers and acquisitions and banking and finance. Mr. Angiolillo serves on the board of directors of electronics display company Trans-Lux Corporation. With respect to other directorships held by any company registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or registered as an investment company under the Investment Company Act of 1940 during the past five years, Mr. Angiolillo previously served as a director of insurance company NYMAGIC, Inc.

 

The Nominating and Corporate Governance Committee concluded that Mr. Angiolillo should serve as a director, in part, because of his legal background, his understanding of corporate finance and his knowledge of corporate governance.

 

 

Mr. Bender is the EVP and President, West Business Unit, of retailer Wal-Mart Stores, Inc., with overall responsibility for a group of stores in the western United States, a position he has held since February 2011. Mr. Bender previously served as SVP of the Mountain Division of Wal-Mart from February 2010 to February 2011 and as a VP/Regional General Manager at Wal-Mart from February 2009 to February 2010. From 2003 through 2007, Mr. Bender served as the President/General Manager of the Retail and Alternate Care business of healthcare retailer Cardinal Health. Prior to joining Cardinal Health, Mr. Bender was Vice President of Store Operations for clothing retailer Victoria’s Secret Stores. Mr. Bender also spent 14 years with beverage company PepsiCo in a variety of sales, finance and operating roles.

 

The Nominating and Corporate Governance Committee concluded that Mr. Bender should serve as a director, in part, because of his experience in retail sales, his knowledge of human resources and his understanding of corporate finance and accounting.

 

 

Mr. Gaylord served as the Company’s Chairman of the Board from May 1999 through April 2001. He served as interim President and Chief Executive Officer of the Company from July 2000 until September 2000, and as Vice-Chairman of the Board from May 1996 to May 1999. He was the President of the privately-held Oklahoma Publishing Company from June 1994 until December 2002. Mr. Gaylord has been Chairman of the privately-held sports management firm Gaylord Sports Management since January 2004 and Chairman of Medtrust Online, a privately-held healthcare services firm, since 2007. Mr. Gaylord is also a member of the

Board of Trustees of the Scottsdale Healthcare Foundation, as well as a member of the National Board of the Smithsonian Institution, and is Chairman of the Smithsonian Institution’s Traveling Exhibitions.

 

The Nominating and Corporate Governance Committee concluded that Mr. Gaylord should serve as a director, in part, because of his previous specific experience in operations and management with the Company and the knowledge he has acquired from years of involvement with the Company.

 

 

Mr. Horn served as the Chairman of the Board of financial services company First Tennessee National Corporation (now First Horizon National Corporation) and First Tennessee Bank, National Association, its principal subsidiary, from 1996 until his retirement in December 2003. Mr. Horn served as Chief Executive Officer of First Tennessee National Corporation from 1994 through 2002 and as its President from 1991 through 2001. Mr. Horn is co-lead director of Mid America Apartment Communities, Inc., an owner of apartment communities. With respect to other directorships held by any company registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or registered as an investment company under the Investment Company Act of 1940 during the past five years, Mr. Horn previously served as a director of gaming company Harrah’s Entertainment, Inc.

 

The Nominating and Corporate Governance Committee concluded that Mr. Horn should serve as a director, in part, because of his corporate finance background, his knowledge of the hospitality industry and his knowledge of corporate governance.

 

 

Mr. Johnson is President and CEO of Aimbridge Hospitality, a privately-held hotel management and real estate investment company. Prior to joining Aimbridge as President and CEO in April 2003, Mr. Johnson spent 17 years at hospitality company Wyndham International in various capacities, including Executive Vice President/Chief Marketing Officer and President of Wyndham Hotels.

 

The Nominating and Corporate Governance Committee concluded that Mr. Johnson should serve as a director, in part, because of his knowledge of the hospitality and lodging industry and his sales and marketing background. As noted above, pursuant to the TRT Agreement the Company is obligated to nominate Mr. Johnson to its Board at the Annual Meeting.

 

 

Ms. Levine is Editorial Director of Hearst Magazines, one of the world’s largest magazine publishers. Prior to assuming this role in 2006, Ms. Levine had served as Editor-in-Chief of the Hearst publication Good Housekeeping since 1994. She was instrumental in founding O, The Oprah Magazine in 2000 (and continues to serve as its Editorial Consultant) and in founding Food Network Magazine in 2009. Ms. Levine also served as Editor-in-Chief of Redbook (1990-1994) and Woman’s Day (1982-1990) and as a Senior Editor of Cosmopolitan (1976-1982). With respect to other directorships held by any company registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or registered as an investment company under the Investment Company Act of 1940 during the past five years, Ms. Levine previously served as a director of retailer Finlay Enterprises, Inc.

 

The Nominating and Corporate Governance Committee concluded that Ms. Levine should serve as a director, in part, because of her sales and marketing background and her knowledge of human resources.

 

 

Mr. Philen has been the Chief Financial Officer for Alan Ritchey, Inc., a north Texas-based, privately-owned trucking and transportation logistics company, since June 2010. Prior to that time, Mr. Philen served as the Chief Financial Officer of TRT Holdings, Inc., a privately-owned, diversified holding company with primary interests in hospitality, energy, fitness and real estate, from 1994 to 2009. Prior to joining TRT, Mr. Philen worked for more than 10 years at Corpus Christi National Bank in a number of accounting roles,

including Chief Financial Officer. Mr. Philen also spent four years as a Senior Staff Accountant with KPMG Peat Marwick.

 

The Nominating and Corporate Governance Committee concluded that Mr. Philen should serve as a director, in part, because of his knowledge of the hospitality and lodging industry and his accounting background. As noted above, pursuant to the TRT Agreement the Company is obligated to nominate Mr. Philen to its Board at the Annual Meeting.

 

 

Mr. Prather has been President and Chief Operating Officer of Gray Television, Inc., a television broadcast company, since September 2002. He was an Executive Vice President of Gray Television, Inc. from 1996 until September 2002. Mr. Prather is also a director of Gray Television, Inc. Mr. Prather also has served as Chairman of the Board of Directors at Triple Crown Media, Inc., a publishing and communication company, since December 2005. He served as Chief Executive Officer and director of Bull Run Corporation, a sports and affinity marketing and management company, from 1992 until its merger into Triple Crown Media, Inc. in December 2005. Mr. Prather is also a member of the Board of Directors of GAMCO Investors, Inc., the parent company of GAMCO Asset Management, Inc.

 

The Nominating and Corporate Governance Committee concluded that Mr. Prather should serve as a director, in part, because of his overall business acumen and his experience in the entertainment and media industries.

 

 

Mr. Reed has served as Chief Executive Officer and a director of the Company since April 2001, and Mr. Reed was also elected Chairman of the Board of Directors of the Company in May 2005. From April 2001 until November 2008, Mr. Reed also served as President of the Company. Prior to joining the Company, Mr. Reed had served as a member of the three-executive Office of the President of Harrah’s Entertainment, Inc. since May 1999, and he had served as Harrah’s Chief Financial Officer since April 1997. Mr. Reed also was a director of Harrah’s from 1998 to May 2001. Mr. Reed served in a variety of other management positions with Harrah’s and its predecessor, hotel operator Holiday Corp., since 1977. Mr. Reed is a director of First Horizon National Corporation. With respect to other directorships held by any company registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or registered as an investment company under the Investment Company Act of 1940 during the past five years, Mr. Reed has previously served as a director of retailer Rite-Aid Corporation.

 

The Nominating and Corporate Governance Committee concluded that Mr. Reed should serve as a director, in part, because of his service as Chief Executive Officer of the Company, his financial and accounting background and his knowledge of the hospitality industry.

 

 

Mr. Rose served as Chairman of the Board of the Company from April 2001 through May 2005 and served as Chairman of the Executive Committee of the Board of the Company from May 2005 through May 2009. Mr. Rose currently serves as Chairman of the Board of Directors of First Horizon National Corporation. Since 1998, Mr. Rose has been a private investor and Chairman of Midaro Investments, a privately held investment firm. In 1995, Mr. Rose became Chairman of the Board of both hotel operator Promus Hotel Corporation and Harrah’s Entertainment, Inc. when the two companies split into two publicly-traded companies. He retired from the Boards of Harrah’s in 1996 and Promus in 1997. Mr. Rose also served as Chairman from 1990 to 1995, and Chief Executive Officer from 1990 to 1994, of the Promus Companies, Incorporated. Mr. Rose is also a director of restaurant operator Darden Restaurants, Inc. and food manufacturer General Mills, Inc. With respect to other directorships held by any company registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or registered as an investment company under the Investment Company Act of 1940 during the past five years, Mr. Rose has previously served as a director of Felcor Lodging Trust, a real estate investment trust, and retailer Stein Mart, Inc.

The Nominating and Corporate Governance Committee concluded that Mr. Rose should serve as a director, in part, because of his experience with public companies, his prior tenure as Chairman of the Board of the Company, his knowledge of the hospitality industry, his service as compensation committee chairman for two Fortune 250 companies and his understanding of corporate governance and finance.

 

 

Mr. Roth is Chairman and Chief Executive Officer of the Interpublic Group of Companies, a global marketing services company. He was appointed Interpublic’s Chief Executive Officer in January of 2005. Prior to becoming Chairman of Interpublic in July 2004, Mr. Roth had been a member of Interpublic’s Board of Directors since 2002. Previously, Mr. Roth was Chairman of the Board and Chief Executive Officer of financial services company The MONY Group Inc. and its predecessor entities since 1997. Mr. Roth is also a director of Pitney Bowes, Inc.

 

The Nominating and Corporate Governance Committee concluded that Mr. Roth should serve as a director, in part, because of his legal and accounting background, his previous experience managing public companies and his knowledge of corporate finance.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THESE NOMINEES.

 

Our business is managed under the direction of the Board of Directors. The Board of Directors delegates the conduct of the business to our senior management team. The Board of Directors held four (4) meetings during 2010. All directors attended at least 75% of the Board meetings during their tenure on the Board in 2010.

 

We have adopted Corporate Governance Guidelines governing the conduct of our Board of Directors. The charters of our Audit Committee, Human Resources Committee and Nominating and Corporate Governance Committee, as well as our Corporate Governance Guidelines, are all posted on our web site at www.gaylordentertainment.com (under “Corporate Governance” on the Investor Relations page).

 

We have also adopted a Code of Ethics which is applicable to all employees, officers and directors, including the principal executive officer, the principal financial officer and the principal accounting officer. The Code of Ethics is available on our web site at www.gaylordentertainment.com (under “Corporate Governance” on the Investor Relations page). We intend to post amendments to or waivers from our Code of Ethics (to the extent applicable to our directors, chief executive officer, principal financial officer or principal accounting officer) at this location on our website.

 

We will provide a copy of our Corporate Governance Guidelines, our committee charters or our Code of Ethics (and any amendments or waivers) to any stockholder or other person upon receipt of a written request addressed to Gaylord Entertainment Company, Attn: Corporate Secretary, One Gaylord Drive, Nashville, Tennessee 37214.

 

The Board of Directors believes that Mr. Reed’s service as both Chairman of the Board and Chief Executive Officer is in the best interests of the Company and its stockholders. Mr. Reed possesses a detailed knowledge of the hospitality industry as well as an understanding of both the opportunities and challenges facing the Company and its businesses. The Board thus believes that Mr. Reed is best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most important matters facing the Company. The Board also believes that Mr. Reed’s combined role ensures clear accountability, enhances the Company’s ability to articulate its strategy and message to the Company’s employees, stockholders and customers, and enables decisive overall leadership.

The Board has determined that it is also important to have a Lead Director who will play an active role and oversee many of the functions that an independent chair would otherwise perform. The Board has adopted a description of the duties of the Lead Director, which is posted on the Company’s website at www.gaylordentertainment.com (under “Corporate Governance” on the Investor Relations page). Pursuant to this job description, the Chairman of the Nominating and Corporate Governance Committee serves as the Company’s Lead Director, and that individual is currently Ralph Horn. Some of the primary functions of our Lead Director are:

 

 

Each of the directors other than Mr. Reed and Mr. Rose (the Company’s former Chairman of the Board) is independent, and the Board believes that the independent directors coupled with the Lead Director provide effective oversight of management. Our non-management directors meet regularly in scheduled executive sessions, and the Lead Director presides at these executive sessions. Following an executive session of independent directors, the Lead Director acts as a liaison between the independent directors and the Chairman regarding any specific feedback or issues, provides the Chairman with input regarding agenda items for Board and Committee meetings, and coordinates with the Chairman regarding information to be provided to the independent directors in performing their duties. The Board believes that this approach appropriately and effectively complements the combined Chief Executive Officer/Chairman structure.

 

Although the Company believes that the combination of the Chairman and Chief Executive Officer roles is appropriate in the current circumstances, the Board retains the authority to modify the Company’s current combined Chief Executive Officer/Chairman structure to best address the Company’s circumstances, if and when appropriate.

 

We strongly encourage each member of the Board of Directors to attend the Annual Meeting of Stockholders. All of our directors attended the 2010 Annual Meeting of Stockholders either in person or via teleconference.

 

Pursuant to our Corporate Governance Guidelines, the Board undertook its annual review of director independence in February 2011. Our Board of Directors determines the independence of its members through a broad consideration of all relevant facts and circumstances, including an assessment of the materiality of any relationship between the Company and a director. In making this assessment, the Board looks not only at relationships from the director’s standpoint, but also at relationships of persons or organizations with which the director has an affiliation. In making its determination, the Board of Directors adheres to the requirements of, and applies the standards set forth by, both the New York Stock Exchange (as set forth in Section 303A.02 of the listed company manual) and the Securities and Exchange Commission.

 

During this review, the Board considered transactions and relationships between each director, or any member of his or her immediate family, and the Company and its subsidiaries and affiliates. The Board also

examined transactions and relationships between directors, or their affiliates, and members of the Company’s senior management or their affiliates. The purpose of this review was to determine whether any of these relationships or transactions were inconsistent with a determination that the director is independent. As a result of this review, the Board affirmatively determined that, with the exception of Colin V. Reed and Michael D. Rose, all of the current directors of the Company are independent of the Company and its management.

 

The Board maintains an Audit Committee, Human Resources Committee and Nominating and Corporate Governance Committee to facilitate and assist the Board in the execution of its responsibilities. The table below shows current membership for each of the standing Board committees:

 

 

 

 

In accordance with New York Stock Exchange listing standards, all the committees are comprised solely of non-employee, independent directors.

 

Following the Annual Meeting, the Board of Directors will appoint the members of each of the standing Board committees. Under the terms of the TRT Agreement, one of the TRT nominees (Messrs. Johnson or Philen) will be appointed to each of the standing committees of the Board of Directors.

 

The Audit Committee

 

We have a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Audit Committee is responsible for:

 

 

The Board has determined that all the members of the Audit Committee are financially literate pursuant to the New York Stock Exchange rules. The Board also has determined that Mr. Horn is an “audit committee financial expert” within the meaning stipulated by the Securities and Exchange Commission.

 

In 2010, the Audit Committee met eight (8) times. All of the Audit Committee members attended at least 75% of the meetings of the Audit Committee during their tenure on the Board in 2010.

The Human Resources Committee

 

The Human Resources Committee is responsible for:

 

 

The Committee has also delegated to the Chief Executive Officer the authority to make limited equity grants to new members of the Company’s management team to allow such grants to be made in a timely manner, as the Committee generally only meets on a quarterly basis. Equity grants under this delegation of authority may only be made as initial equity grants to newly hired executives (other than officers subject to Section 16 of the Securities Exchange Act of 1934) and on the same terms and conditions as were applied by the Committee in its most recent prior equity grants. In addition, equity grants under this delegation of authority to any one executive are limited to 12,500 shares granted as stock options (or similar awards such as stock appreciation rights) or 6,250 restricted shares (or similar awards such as restricted stock units or performance shares).

 

For additional information regarding the Committee’s processes and procedures for considering and determining executive and director compensation, see “Compensation Discussion and Analysis” below. The Committee engages a competent executive compensation consultant, who is independent of conflicts with Board members or Company management. The Committee’s compensation consultant or its affiliates did not provide additional services to the Company or its affiliates in excess of $120,000 during fiscal 2010.

 

The compensation consultant assists the Committee in determining if its strategies and plans are advisable based on the Company’s current financial position and strategic goals, as well as developments in corporate governance and compensation design. Each year, at the Committee’s request, the compensation consultant performs several analyses, including internal pay equity, updating of the executive salary structure and modeling of executive compensation levels at different levels of Company performance, to assist the Committee in its review.

 

In 2010, the Human Resources Committee met six (6) times. All of the Human Resources Committee members attended at least 75% of the meetings of the Human Resources Committee during their tenure on the Board in 2010.

 

The Nominating and Corporate Governance Committee

 

The Nominating and Corporate Governance Committee is responsible for:

 

 

In 2010, the Nominating and Corporate Governance Committee met four (4) times. All of the Nominating and Corporate Governance Committee members attended at least 75% of the meetings of the Nominating and Corporate Governance Committee during their tenure on the Board in 2010.

 

A formal Board evaluation covering Board operations and performance, with a written evaluation from each Board member, is conducted annually by the Nominating and Corporate Governance Committee to

enhance Board effectiveness. Recommended changes are considered by the full Board. In addition, each Board committee conducts an annual self-evaluation.

 

The Nominating and Corporate Governance Committee annually reviews with the Board the Company’s “Statement of Expectations of Directors.” This review includes an assessment of independence, diversity, age, skills, experience and industry backgrounds in the context of the needs of the Board and the Company, as well as the ability of current and prospective directors to devote sufficient time to performing their duties in an effective manner. Directors are expected to actively participate in Board discussions and exemplify the highest standards of personal and professional integrity. In particular, the Nominating and Corporate Governance Committee seeks directors with established strong professional reputations and expertise in areas relevant to the strategy and operations of the Company’s businesses. While the Company’s Corporate Governance Guidelines do not prescribe specific diversity criteria for selection of directors, as a matter of practice, the Committee considers diversity in the context of the Board as a whole and takes into account the personal characteristics (such as gender, ethnicity, age) and experience (such as industry, professional, public service) of current and prospective directors when selecting new directors to facilitate Board deliberations that reflect a broad range of viewpoints. The Committee’s Charter gives the Committee responsibility to develop and recommend criteria for the selection of new directors to the Board, including, but not limited to diversity, age, skills, experience, time availability and such other criteria as the Committee shall determine to be relevant at the time.

 

The Nominating and Corporate Governance Committee considers candidates for Board membership recommended by its members and other Board members, as well as by management and stockholders. To date the Committee has not engaged a third party to identify prospective nominees. The Committee will only consider stockholder nominees for Board membership submitted in accordance with the procedures set forth below in “Additional Information-Stockholder Nominations of Candidates for Board Membership.”

 

Once the Nominating and Corporate Governance Committee has identified a prospective nominee, the Committee makes an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is based on whatever information is provided to the Committee with the recommendation of the prospective candidate, as well as the Committee’s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others. The preliminary determination is based primarily on the need for additional Board members to fill vacancies or expand the size of the Board and the likelihood that the prospective nominee can satisfy the evaluation factors described below. If the Committee determines, in consultation with the Chairman of the Board and other Board members as appropriate, that additional consideration is warranted, it may request additional information about the prospective nominee’s background and experience. The Committee then evaluates the prospective nominee against the following standards and qualifications:

 

 

The Nominating and Corporate Governance Committee also considers such other relevant factors as it deems appropriate, including the current composition of the Board and the evaluations of other prospective nominees. In connection with this evaluation, the Committee determines whether to interview the prospective nominee, and if warranted, one or more members of the Committee, and others as appropriate, will interview prospective nominees in person or by telephone. After completing this evaluation and interview, the Committee makes a recommendation to the full Board as to the persons who should be nominated by the Board, and the Board determines the nominees after considering the recommendation and report of the Committee.

New directors participate in an orientation program that includes discussions with senior management, background materials on our strategic plan, organization and financial statements and visits to our facilities. We encourage each director to participate in continuing educational programs that are important to maintaining a director’s level of expertise to perform his or her responsibilities as a Board member.

 

The Human Resources Committee (which functions as our compensation committee) is comprised entirely of independent directors. In addition, except as noted below, there are no relationships among our executive officers, members of the Human Resources Committee or entities whose executives serve on the Board of Directors or the Human Resources Committee that require disclosure under applicable regulations of the Securities and Exchange Commission.

 

The Board as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board Committees that report on their deliberations to the Board. The oversight responsibility of the Board and its Committees is made possible by a management report process that is designed to provide both visibility and transparency to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. In this regard, each Committee meets in executive session with key management personnel and representatives of outside advisors (for example, the vice president of internal audit meets in executive session with the Audit Committee).

 

The areas of focus of the Board and its Committees include competitive, economic, operational, financial (accounting, credit, liquidity, and tax), legal, compliance, political and reputational risks. The Board and its Committees oversee risks associated with their respective principal areas of focus, as outlined below:

 

 

The Company believes that the Board’s role in risk oversight is facilitated by the leadership structure of the Board. In this regard, the Company believes that, by combining the positions of Chairman of the Board and Chief Executive Officer, the Board gains a valuable perspective that combines the operational experience of a member of management with the oversight focus of a member of the Board. The Company also believes that the division of risk management-related roles among the Company’s full Board, Audit Committee, Nominating and Corporate Governance Committee and Human Resource Committee as noted above fosters an atmosphere of significant involvement in the oversight of risk at the Board level and complements the Company’s risk management policies.

The Board in executive sessions (which are presided over by the Company’s Lead Director) also considers and discusses risk-related matters. This provides a forum for risk-related matters to be discussed without management or the Chairman of the Board and Chief Executive Officer present. The Company’s Lead Director acts as a liaison between the Company’s Chairman of the Board and Chief Executive Officer and the Company’s independent directors to the extent that any risk-related matters discussed at these executive sessions require additional feedback or action.

 

In setting compensation, the Human Resources Committee also considers the risks to the Company’s stockholders that may be inherent in our compensation programs. We believe that our compensation programs are appropriately structured and provide for a suitable balance between long-term and short-term compensation and have an appropriate performance-based and “at risk” component, and that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

Summary of Compensation.  As described more fully below, this chart summarizes the annual compensation for the Company’s non-employee directors, as well as Mr. Rose, during 2010:

 

 

 

 

Cash Compensation of Directors.  The Human Resources Committee reviews and recommends the compensation for directors. Directors who are not employees of the Company will be compensated for their service as a director during 2011 as follows:

 

 

The cash compensation set forth above was the same as the cash compensation paid to the Company’s directors during 2010. In addition, each non-employee director receives a fee of $1,500 for each meeting of the Board of Directors attended.

 

Pursuant to the Company’s Director Deferred Compensation Plan, non-employee directors may defer the fees described above into this plan until their retirement or resignation from the Board. Earnings on fees deferred under this plan accrue based on either, at the participant’s election, the performance of the Company’s common stock or the performance of a pre-determined investment allocation. Currently two (2) non-employee directors (Messrs. Gaylord and Horn) participate in this plan.

 

Mr. Reed does not receive cash compensation for his service as a director. All directors are reimbursed for expenses incurred in attending meetings.

 

Equity Compensation of Directors.  In 2011 each non-employee director will receive, as of the date of the first board meeting following the Annual Meeting, an annual grant of restricted stock units having a fixed dollar value of $75,000, based upon the fair market value of our common stock on the grant date. The restricted stock units will vest fully on the first anniversary of the date of grant, pursuant to our 2006 Omnibus

Incentive Plan, unless deferred by the director until the earlier of a specified date or the end of the director’s Board service.

 

In 2010 each non-employee director received, as of the date of the first board meeting following our 2010 annual meeting of stockholders, an annual grant of restricted stock units have a fixed dollar value of $75,000, based upon the fair market value of our common stock on the grant date. The restricted stock units vested on the first anniversary of the date of grant, pursuant to our 2006 Omnibus Incentive Plan, unless deferred by the director until the earlier of a specified date or the end of the director’s Board service.

 

From 2007 until 2009, each newly-elected non-employee director received a grant of 3,000 restricted stock units, vesting fully on the first anniversary of the date of grant, pursuant to our 2006 Omnibus Incentive Plan, described below. In addition, from 2007 until 2009 each non-employee director received, as of the date of the first board meeting following our annual meeting of stockholders, an annual grant of 1,500 restricted stock units, vesting fully on the first anniversary of the date of grant, pursuant to our 2006 Omnibus Incentive Plan.

 

Until restricted stock units vest and shares of common stock are issued in conversion of the restricted stock units, the director does not have any rights as a stockholder of the Company with respect to such shares, other than the right to receive a cash payment equal to any dividends paid on the common stock. The restricted stock units permit a director to defer the issuance of the common stock to be issued upon conversion of the restricted stock units to a specific date in the future or until the director’s date of retirement from the Board of Directors, whichever comes first. Shares of common stock issued upon conversion of restricted stock units must be held until six months after the conclusion of a director’s service on the Board of Directors.

 

Director Stock Ownership Guidelines.  In 2006, the Board of Directors adopted stock ownership guidelines for non-employee directors. The guidelines provide that directors must hold a minimum of 5,000 shares of our common stock, with a five-year time period from the date of adoption of the guidelines in which to comply with such requirement. Unvested shares of restricted stock or shares of common stock issuable upon conversion of outstanding restricted stock units will be credited toward this requirement.

 

Stockholders, employees and other parties interested in communicating directly with members of the Board of Directors (including our non-management directors) may do so by writing to Corporate Secretary, Gaylord Entertainment Company, One Gaylord Drive, Nashville, Tennessee 37214. As set forth in the Corporate Governance Guidelines, the Corporate Secretary reviews all such correspondence and regularly forwards to the Board a summary of all such correspondence and copies of all correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or committees thereof or that he otherwise determines requires their attention. Directors may at any time review a log of all correspondence received by us that is addressed to members of the Board and request copies of any such correspondence. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of our internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters. In addition, stockholders, employees and other interested parties may communicate directly with the lead non-management director (Mr. Ralph Horn), individual non-management directors or the non-management directors as group by email at boardofdirectors@gaylordentertainment.com.

 

The Audit Committee of the Board of Directors has established procedures for employees, stockholders, vendors or others to communicate concerns about our ethical conduct or business practices, including

accounting, internal controls or financial reporting issues, to the Audit Committee, which has responsibility for these matters. Matters may be reported as follows:

 

 

Carter R. Todd
One Gaylord Drive
Nashville, TN 37214
615-316-6186

 

 

Since the beginning of the Company’s last fiscal year, there were no related person transactions that are required to be disclosed pursuant to Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934. Our policies and procedures for the review, approval or ratification of related person transactions (including those required to be disclosed under Item 404(a) of Regulation S-K) are outlined in the charter of the Audit Committee of the Board of Directors and are as follows: Possible related person transactions are first screened by the Company’s legal department for materiality and then sent to the Audit Committee of the Board for review, discussion with the Company’s management and independent registered public accounting firm and approval. In its discretion, the Audit Committee may also consult with the Company’s legal department or external legal counsel. Audit Committee review and approval of related person transactions would be evidenced in the minutes of the applicable Audit Committee meeting.

 

The following table sets forth information regarding the beneficial ownership of our common stock as of March 15, 2011 (unless otherwise noted) for:

 

 

The percentages of shares outstanding provided in the table are based on 48,327,497 shares outstanding as of March 15, 2011. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Unless otherwise indicated, each person or entity named in the table has sole voting and investment power, or shares voting and investment power with his or her spouse, with respect to all shares of stock listed as owned by that person. The number of shares shown does not include the interest of certain persons in shares held by certain family members in their own right. Shares issuable upon the exercise of options that are exercisable within 60 days of March 15, 2011 or the vesting of restricted stock units which are scheduled to vest within 60 days of March 15, 2011 are considered outstanding for the purpose of calculating the percentage of outstanding shares of our common stock held by the individual, but not for the purpose of calculating the percentage of

outstanding shares held by any other individual. Unless otherwise indicated, the address for each person listed in the table is our principal office.

 

 

 

 

 

This Compensation Discussion and Analysis reviews the objectives and elements of our executive compensation program and discusses the 2010 compensation decisions regarding our named executive officers:

 

 

Overview

 

General.  We are a lodging and hospitality company focusing on the large group meetings segment of the hospitality industry. The Human Resources Committee (the “Committee”) of the Board establishes compensation programs which are intended to align our named executive officers’ interests with those of our stockholders by rewarding performance that meets or exceeds the goals the Human Resources Committee establishes with the objective of increasing stockholder value. In line with our pay for performance philosophy, the total compensation received by our named executive officers will vary based on individual and corporate performance measured against performance goals. Our named executive officers’ total compensation is comprised of a mix of base salary, annual incentive compensation and long term equity incentive awards.

 

2010 Company Achievements.  Despite a continuing challenging economic environment and the damage and disruption to our flagship Gaylord Opryland Resort and our other Nashville-area attractions as a result of

the May 2010 Nashville flood, we delivered strong operating and financial results and the following achievements during 2010:

 

 

2010 Compensation Decisions

 

As a result of the factors discussed above and the other factors discussed below, the Committee took the following key compensation actions in 2010:

 

 

Role of the Human Resources Committee

 

The Committee establishes and monitors compliance with our compensation philosophy. The Committee makes sure that the total compensation paid to our named executive officers and our other executives is fair, reasonable and competitive. The Committee also oversees the Board’s and management’s evaluation of the performance of the named executive officers and administration of our cash- and equity-based incentive plans. The Committee acts under a written charter adopted by the Committee and the Board, which is reviewed at least annually by the Committee. You can view the charter on our website, www.gaylordentertainment.com (under “Corporate Governance” on the Investor Relations page).

 

The Committee is comprised solely of “non-employee directors” as defined in Rule 16b-3 of the rules promulgated under the Securities and Exchange Act of 1934, as amended, “outside directors” for purposes of

regulations promulgated pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, and “independent directors” as defined in Section 303A.02 of the New York Stock Exchange corporate governance listing standards. The Nominating and Corporate Governance Committee of our Board determines independence and recommends Committee membership based on such knowledge, experience and skills that it deems appropriate in order to adequately perform the responsibilities of the Committee.

 

The Decision-Making Process and the Role of Executive Officers in Compensation Decisions

 

The Committee makes all compensation decisions for our named executive officers. Our Chief Executive Officer annually reviews the performance of each named executive officer (other than the Chief Executive Officer, whose performance is reviewed by the Committee). Recommendations based on these reviews are discussed with the Committee. The Committee then discusses and approves compensation for each named executive officer, based on such factors as the compensation analysis performed by the Committee’s external compensation consultant, the Chief Executive Officer’s assessment of individual performance and our performance. Since 2007, the Committee has engaged Towers Watson & Co., formerly Watson Wyatt & Company (“Towers Watson”), to assist it in reviewing our compensation strategies and plans.

 

The process is similar for determining compensation for the Chief Executive Officer, except that the Chief Executive Officer does not provide the Committee with a recommendation. The Chief Executive Officer presents a self-assessment of his performance during the year to the Committee, which then meets in executive session to discuss and set his compensation, based on the compensation analysis performed by the Committee’s external compensation consultant and the Committee’s assessment of the Chief Executive Officer’s performance and our performance.

 

Compensation Objectives

 

Our executive compensation program is designed to achieve the following key objectives:

 

 

The Committee believes that a compensation program with these objectives is the most effective type of executive compensation program for the Company.

 

In determining total compensation for 2010, the Committee assessed the performance, responsibilities, expectations and experience of each named executive officer. The Committee also reviewed data provided by Towers Watson derived from several broad-based market-wide studies. This includes data from nationally recognized surveys prepared by Towers Watson and other third-party consultants in order to obtain a general understanding of current compensation practices. These market-wide studies were comprised of companies operating in various markets and industries (excluding financial services companies) with an annual revenue size comparable to our revenue size. When preparing the data derived from these studies delivered to the Committee, Towers Watson used a regression analysis to adjust for differences in the size of the surveyed companies compared to us. The revenue regression used to determine comparative market levels for us from published data sources was $930 million. In addition, for purposes of structuring our compensation program,

the Committee also approved a peer group of companies and reviewed data compiled by Towers Watson regarding the structure of compensation programs at those companies, which were:

 

• Ameristar Casinos, Inc.

 

 

This peer group was selected because of each company’s industry classification, size and existence of publicly available data with respect to such companies. The median size of the peer group was $977 million in revenue. The peer group information was used for purposes of structuring our compensation program only, and the published survey data was used primarily to understand market-competitive levels of pay. Together these two sources of data helped inform the Committee’s decisions on compensation but did not dictate the compensation actually paid to our named executive officers.

 

Target Total Compensation

 

In 2010, the named executive officers’ total compensation package consisted of three primary elements:

 

 

There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Instead, the Committee reviews information provided by its compensation consultant to determine the appropriate level and mix of incentive compensation. Historically, the Committee has granted a majority of total compensation to the named executive officers in the form of incentive compensation.

 

In 2010, the Committee attempted to provide total compensation to each named executive officer that was competitive based on current compensation practices. In setting target total compensation for each named executive officer, the Committee also confirmed that the past individual performance of each named executive officer did not merit a lower level of total compensation.

 

The Committee generally endeavors to provide a total target compensation package to our named executive officers that is between the 50th and 75th percentile of total compensation paid to executives in comparable positions based on the data derived from the market-wide studies noted above (using a regression analysis to adjust for differences between our size and the size of the surveyed companies). In determining target total compensation for this purpose in 2010 in comparison to the market-wide studies noted above, the Committee took into account each named executive officer’s 2010 base salary and 2010 target cash incentive compensation opportunity, as well as the fair value of the time-based restricted stock unit awards and stock options granted to our named executive officers in early 2010 as described below (excluding the restricted stock units granted as retention awards in early 2010 to Messrs. Fioravanti, Maradik and Todd as described

below). In this determination, the Committee did not take into account any amounts included under “All Other Compensation” in the 2010 Summary Compensation Table below as the result of the fact that the market-wide studies referenced above do not include compensation of this nature when determining total compensation. Target total compensation for 2010 also did not take into account (1) the restricted stock units granted to Messrs. Fioravanti, Maradik and Todd in early 2010 as retention awards as the result of the fact that such awards (which do not vest until February 3, 2014) were granted outside of the normal, annual long-term incentive plan process for the purpose of encouraging the retention of these named executive officers, or (ii) the amendments in September 2010 to the performance-based RSUs granted during 2008 as the result of the fact that this action was taken later in 2010 after the total target compensation package had been set.

 

In 2010, the target total compensation of Messrs. Reed and Maradik was within this 50th to 75th percentile. The target total compensation of Mr. Kloeppel was slightly above this 75th percentile as the result of the significance of Mr. Kloeppel’s responsibilities and role within the Company as compared to the peer group. The target total compensation of Mr. Todd was slightly below the 50th percentile as the result of the Company having a somewhat smaller internal legal staff headed by Mr. Todd compared to the average size of in-house legal departments of other companies included in the market-wide surveys. The target total compensation of Mr. Fioravanti was below the 50th percentile as the result of Mr. Fioravanti being relatively new to the chief financial officer position at the Company.

 

The compensation actually received by each of our named executive officers during 2010 in respect of the elements of compensation taken into account in setting target total compensation (that is, all 2010 compensation reflected in the 2010 Summary Compensation Table below other than amounts included under “All Other Compensation” for the reason noted above) exceeded the 75th percentile of total compensation based on the market-wide studies noted above. This resulted from, among other things, that each of our named executive officers other than Mr. Maradik received cash incentive payments equal to at least their stretch amount (with Mr. Maradik receiving a cash incentive payment slightly below his stretch amount) as the result of the Company’s strong operating and financial results and achievements during 2010, and the incremental fair value associated with the amendments to the 2008 performance-based RSUs in September 2010. The Committee believes that this level of compensation was appropriate given both the strong operating performance of the Company’s other Gaylord Hotels and the extraordinary performance of the management team in responding to the flood at the Gaylord Opryland and completing the rebuild and repositioning of that hotel on time and on budget in 2010.

 

Base Salary

 

We seek to provide base salaries for our named executive officers that provide a secure level of guaranteed cash compensation in accordance with their experience, professional status and job responsibilities. We also seek to provide base salaries that are competitive with comparable positions at other companies, using the market surveys described above for guidance.

 

In February 2010, the Committee reviewed the base salary to be paid to the named executive officers for the 2010 fiscal year. In making its decisions, the Committee considered the ongoing challenging economic conditions during the past two years, the difficult operating environment in the hospitality industry during this time and the equity market decline that had adversely affected our stock price during this time. The Committee also considered the percentage increase in salaries generally being provided to the Company’s employees at this time. Finally, the Committee assessed the impact of the recent base salary increases given to Mr. Kloeppel, Mr. Fioravanti and Mr. Maradik in June 2009 in connection with their appointments to new positions with additional responsibilities, along with the fact that the Company’s named executive officers did not otherwise receive any increase in base salary during 2009. Following this review, the Committee decided that Mr. Reed’s and Mr. Kloeppel’s base salaries should not be increased and that the other named executive

officers should receive the percentage increases in base salaries set forth below. Accordingly, base salaries for the named executive officers for 2010 were set at:

 

 

Annual Cash Incentive Compensation

 

2010 Incentive Compensation Plan.  At the beginning of 2010, as is customary, the Committee established the parameters of the annual cash incentive program for the named executive officers. In this regard, as described below, the Committee established earnings per share targets for the payment of annual incentive compensation during 2010. At the time the Committee established these targets, the Committee provided that the Company’s actual earnings per share would be adjusted upon the occurrence of certain extraordinary events.

 

Plan Design.  The Company’s named executive officers and other employees participate in our cash incentive plan in accordance with stockholder-approved criteria specified in our omnibus incentive plans. Our annual cash incentive plan is designed to motivate the named executive officers by directly linking the payment of cash incentive compensation to the attainment of designated financial goals. The annual cash incentive compensation paid to the named executive officers in 2010 was based on the level of achievement of Company earnings per share, or EPS, calculated in accordance with generally accepted accounting principles (subject to adjustment by the Committee as described below). The Committee selected EPS because it is one of the principal tools used by our management and our investors in evaluating our financial performance.

 

In determining whether the named executive officers met their designated EPS goals, the Committee may provide for certain adjustments to this calculation in order to take into account certain extraordinary or unusual transactions or events as set forth in our 2006 Omnibus Incentive Plan which cause this calculation to more accurately reflect our actual performance. As described below, the Committee provided for such adjustments at the time of setting EPS goals in 2010. The Committee also retains the discretion to lower the amount of, or not award, annual cash incentive compensation otherwise payable to a named executive officer if the officer does not attain a minimum-level annual performance rating.

 

2010 Performance Goals.  In February 2010, the Committee established the following performance goals for our annual cash incentive plan for 2010:

 

 

The Committee set the EPS “target” performance goal at our projected EPS level for 2010, as the Committee believed that achieving this goal would represent a significant step in meeting our long-term strategic and financial objectives. In choosing this goal, the Committee considered the general economic climate expected in 2010, the expected conditions in the hospitality industry during 2010 and our expected financial results during 2010. In setting the “threshold,” “target” and “stretch” performance goals for 2010, the Committee attempted to ensure that the relative level of difficulty of achieving these levels was generally consistent with prior years.

In February 2010, the Committee also approved the following potential bonus award opportunities (set as a percentage of base salary) under the cash incentive plan for each named executive officer for 2010:

 

 

The percentage of salary awarded for performance falling between the “threshold” and “target” goals and the “target” and “stretch” goals is based on actual results achieved using interpolation.

 

2010 Cash Incentive Awards.  In analyzing our results for the purpose of determining the extent to which annual cash incentive plan compensation had been earned, the Committee took note of the fact that despite a continuing challenging economic environment and the damage and disruption to our flagship Gaylord Opryland Resort as a result of the May 2010 Nashville flood, we delivered strong operating and financial results and accomplished the following achievements:

 

 

As noted above, under the terms of our 2006 Omnibus Incentive Plan, the Committee provided that adjustments to our EPS calculation would be made in order to take into account certain extraordinary or unusual transactions or events to cause this calculation to more accurately reflect our actual performance. In 2010, the Committee determined that the catastrophic flooding in Nashville in May 2010 (which resulted in the complete closure of the Gaylord Opryland for remediation and rebuilding following the time of the flood until the hotel’s reopening on November 15, 2010, as well as the temporary closure of certain of our Nashville area attractions such as the Grand Ole Opry) was such an extraordinary event. The Committee then conducted an analysis to determine to what extent the permitted incentive compensation should be awarded to accurately reflect the efforts of the named executive officers and the performance of the Company’s business. As a result of this analysis, Committee determined that, because of the significant impact of the flooding on the Company’s EPS, excluding the effect of the Nashville flood on our 2010 earnings per share, as provided by the annual cash incentive plan, was appropriate for purposes of determining the compensation to be paid under the annual cash incentive plan.

 

Prior to making any adjustments related to the Nashville flood, our EPS during 2010 was ($1.886). The Committee determined under the 2006 Omnibus Plan that the expenses and losses associated with the flood

should be eliminated in the calculation of the Company’s EPS for purposes of the 2010 cash incentive plan. Thus, the Committee adjusted the Company’s EPS for purposes of evaluating the incentive awards to eliminate the direct expenses incurred by the Company as a result of the flood and to give credit for the budgeted income of the idled operating units during the periods in which these units were not operating, but otherwise retained the Company’s threshold, target and stretch EPS targets. Based upon that determination, the Committee concluded that adjusted EPS for determining compliance with Section 162(m) was $0.215 per share, which was in excess of our stretch EPS goal of $0.133. That determination would permit cash incentive compensation payable at the “stretch” level. The Committee believes that these adjustments were appropriate given both the strong operating performance of the Company’s other Gaylord Hotels and the extraordinary performance of the management team in responding to the flood at the Gaylord Opryland and completing the rebuild and repositioning of that hotel on time and on budget in 2010.

 

Based on the Company’s achievement of an EPS level, as adjusted, in excess of our stretch EPS goal, as well as the Company’s other strong operating and financial results and achievements as described above, the Committee determined that each of our named executive officers other than Mr. Maradik should receive cash incentive compensation in an amount equal to at least his stretch bonus amount. In this regard, the Committee determined that Messrs. Kloeppel, Fioravanti and Todd should each receive a bonus equal to his stretch performance amount, that Mr. Maradik’s bonus should be slightly lower than his stretch performance amount, and that Mr. Reed should receive his stretch performance amount plus an additional amount of $180,000 due to his efforts in directing the Company’s flood restoration efforts.

 

Accordingly, the annual cash incentive compensation awards made to each named executive officer for 2010 were:

 

 

The Committee also reviewed the annual performance rating of each named executive officer and verified that each named executive officer met the minimum-level performance rating.

 

Long-Term Equity Incentive Compensation

 

Program Design.  The Committee believes that a powerful way to align the long-term interests of the named executive officers with those of our stockholders is to award equity-based compensation, which may take the form of stock options, restricted stock, restricted stock unit awards or other equity-based awards pursuant to the terms of our omnibus incentive plans. A significant percentage of each named executive officer’s targeted total compensation is allocated to incentive compensation, including equity-based incentive compensation.

 

2010 Equity Incentive Compensation Awards.  At its February 3, 2010 meeting, the Committee reviewed the long-term incentive compensation program implemented in 2008. This program included the grant during 2008 of performance-based restricted stock unit awards vesting in 2012 to the extent of the Company’s achievement of certain performance criteria during the 2008 through 2011 fiscal years, and the grant of stock options with an exercise price in excess of the trading price of our common stock at the time of the grant. These awards normally would have been granted in annual increments to the named executive officers over the 2008 through 2011 fiscal years. The Committee determined that the two goals of the 2008 incentive compensation program, rewarding performance and encouraging retention from 2008 through 2011, would not be fully realized as a result of the difficult economic conditions and hospitality industry environment faced by us since 2008 which had significantly impaired the value of the equity awards made by us in 2008.

Based on this review, the Committee determined that long-term equity incentive compensation awards should be made to the named executive officers for 2010 to reinforce the goals of rewarding performance and encouraging retention. In deciding the type of awards to make, the Committee noted the difficulty of establishing long-term performance goals given the current economic and industry conditions. The Committee decided to structure the new incentive awards as a combination of time-based restricted stock unit awards, vesting in two and four years, and stock options, vesting ratably over four years. In addition to the grants referenced above, the Committee decided to grant restricted stock units to Messrs. Fioravanti, Maradik and Todd vesting in four years as retention awards outside of the normal, annual long-term incentive compensation plan process for the purposes of encouraging the retention of these officers (7,900 restricted stock units in the case of Mr. Fioravanti, and 7,000 restricted stock units in the case of Mr. Maradik and Mr. Todd). Accordingly, the following long-term equity incentive compensation awards (including the retention awards to Messrs. Fioravanti, Maradik and Todd) were made to the named executive officers for 2010:

 

 

 

 

2010 Amendments to Executive Employment Agreements and 2008 Equity Incentive Agreements.

 

On September 3, 2010, the Company amended the employment agreements of each named executive officer to eliminate the Company’s obligation to reimburse the named executive officers for certain excise tax payments that may apply under Internal Revenue Code Sections 4999 and 280G in connection with compensation payable after a change in control of the Company. The Committee believed that eliminating these tax gross-up payments reflected emerging compensation best practices and were in the best interests of the Company.

 

On September 3, 2010, the Company also amended the award agreements for performance-based restricted stock units granted in 2008 to the named executive officers. As amended, the restricted stock units vest as follows:

 

 

The number of restricted stock units that ultimately vest will be determined based on the achievement of various company-wide financial performance goals stated in the original terms of the award agreements. Based on current projections, the Company expects that portions of the performance goals will be achieved and, when coupled with the time-based portion of the awards, all of the restricted stock units granted will ultimately vest. The Committee believed it advisable to amend these agreements as described above to encourage the retention of our named executive officers as well as (through the remaining performance-based

component) to incentivize and reward performance, particularly in light of the historic 2010 Nashville flood and the extraordinary performance of the management team in responding to the flood.

 

Other Compensation Elements in 2010

 

Employment Agreements.  In February 2008 we entered into employment agreements with each of the named executive officers which have an initial two-year term, with automatic renewal terms of two years each (unless either party provides the other with prior notice of non-renewal). The terms of the employment agreement for each named executive officer, including a description of required severance and/or change of control payments in designated circumstances, are more fully described under “Potential Payments on Termination or Change of Control” below.

 

Retirement Plans.  We currently maintain a tax-qualified 401(k) retirement savings plan (the “401(k) Savings Plan”). The 401(k) Savings Plan enables our employees to contribute a portion of their annual salary, subject to a limit prescribed by the Internal Revenue Service (the “IRS”), to the 401(k) Savings Plan on a before-tax basis. Our named executive officers, along with certain other highly compensated employees, may contribute the lesser of up to 40% of annual salary on a before-tax basis or an IRS-prescribed limit. We make matching contributions of 100% of each participant’s contributions, up to four percent of the participant’s pay, which are fully vested upon contribution.

 

Participants in the 401(k) Savings Plan may choose to invest their account balances from an array of investment options as selected by plan fiduciaries from time to time, plus a Company stock fund. Participants can daily change their investment selections prospectively by contacting the 401(k) Savings Plan’s trustee.

 

In addition to the 401(k) Savings Plan, the named executive officers, in addition to certain other eligible executive officers, are entitled to participate in an unfunded, unsecured deferred compensation plan (the “Supplemental Deferred Compensation Plan”). Deferrals of compensation under the Supplemental Deferred Compensation Plan by each named executive officer and our matching obligations are discussed in further detail under “Nonqualified Deferred Compensation” below. We believe that this plan provides an important retirement savings vehicle for senior executive officers.

 

We have also agreed to pay Mr. Reed a supplemental executive retirement benefit (“SERP”). This benefit, which is discussed in more detail under “Nonqualified Deferred Compensation” below, was in the Committee’s view essential to attracting Mr. Reed to employment with us and has proved valuable in securing his extended employment as well.

 

Perquisites and Other Personal Benefits.  We provide the named executive officers with a limited number of perquisites and other personal benefits whose primary purpose is to minimize distractions from the executives’ attention to important Company initiatives. The Committee believes the perquisites and other personal benefits provided to the named executive officers are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions.

 

We provide the following perquisites to the named executive officers, all of which are quantified in the Summary Compensation Table below:

 

 

At its February 2, 2011 meeting, the Committee reviewed the compensation to be paid to the named executive officers for the 2011 fiscal year in light of the continuing economic challenges faced by us and the hospitality industry as a whole in recent years and which, the Committee believes, would continue in 2011. In making its decisions, the Committee also considered the substantial volatility in the United States equity markets in recent years. These events have significantly affected our stockholders, as well as our named executive officers who, due to the emphasis in our compensation program on performance-based equity compensation and the accumulation and holding of prior equity grants, have substantial holdings in our stock.

 

Base Salary

 

In assessing the base salary to be paid to the named executive officers for the 2011 fiscal year, the Committee reviewed the factors described above. The Committee also considered the impact of base salaries paid in 2010 to each named executive officer. Based on this review, the Committee determined that the base salaries for Mr. Reed and Mr. Kloeppel should remain unchanged and that Mr. Maradik and Mr. Todd should receive the percentage increases in base salary set forth below. The Committee also determined that Mr. Fioravanti should receive an approximately 14% increase in his base salary due to the fact that his base salary was below the median base salary of chief financial officers at companies within the market-wide studies noted above (after giving effect to a regression analysis to adjust for differences between our size and the size of surveyed companies). Accordingly, base salaries for the named executive officers for 2011 were set at:

 

 

Annual Cash Incentive Compensation

 

At its February 2, 2011 meeting, the Committee also established criteria for 2011 cash incentive plan compensation pursuant to Section 11 of the 2006 Omnibus Incentive Plan. Each named executive officer will have the opportunity to earn cash incentive compensation equal to the percentage of his 2011 salary set forth in the table below based upon achievement of designated EPS performance goals established by the Committee.

 

 

The Committee set the EPS “target” performance goal at our projected EPS level for 2011, as the Committee believes that achieving this goal will represent a significant step in meeting our long-term strategic and financial objectives. In making determinations of the desired “threshold,” “target” and “stretch” performance goals, the Committee also considered the general economic climate and the specific market conditions that we are likely to face in 2011. The Committee attempted to set the “threshold,” “target” and “stretch” performance goals to ensure that the relative level of difficulty of achieving these levels was generally consistent with prior years.

In determining whether the named executive officers meet their designated Company EPS goals in 2011, the Committee will adjust the actual EPS for the year to exclude losses or expense related to certain extraordinary, non-recurring events or occurrences as set forth in our 2006 Omnibus Incentive Plan (and may exclude any items of income or gain) before exercising any negative discretion in determining the final amounts of the cash incentive awards to ensure that such awards accurately reflect our actual performance. The Committee also can lower the amount of, or not award, annual cash incentive compensation otherwise payable to an officer under the cash incentive plan for 2011 if the officer does not attain a minimum-level annual performance rating.

 

Long-Term Equity Incentive Compensation

 

At its February 2, 2011 meeting, the Committee also reviewed the long-term incentive compensation program decisions implemented in 2010. Based on this review, the Committee determined that long-term equity incentive compensation awards should be made to the named executive officers for 2011 to reinforce the goals of rewarding performance and encouraging retention. The Committee decided to structure the new incentive awards as a combination of performance-based restricted stock unit awards, vesting in three years based on the achievement of designated financial goals established by the Committee, and stock options, vesting ratably over four years. Accordingly, the following long-term equity incentive compensation awards were made to the named executive officers for 2011:

 

 

 

 

Equity Compensation

 

Restricted Stock and Restricted Stock Unit Awards.  We grant restricted stock awards or restricted stock unit awards (with time-based or performance-based vesting) pursuant to the 2006 Omnibus Incentive Plan, and prior to adoption of this plan, we made such awards pursuant to our 1997 Omnibus Stock Option and Incentive Plan. In addition, in the event the amendment and restatement of our 2006 Omnibus Incentive Plan is approved by our stockholders at the Meeting, we anticipate that we will make grants of restricted stock awards or restricted stock unit awards (with time-based or performance-based vesting) pursuant to the amended and restated 2006 Amended and Restated Omnibus Incentive Plan. For additional information regarding the amendment and restatement of our 2006 Omnibus Incentive Plan, see “Proposal 3 — Approval of Amendment and Restatement of the Company’s 2006 Omnibus Incentive Plan” below.

 

We have historically made restricted stock and restricted stock unit awards primarily made in connection with an employee’s promotion or assumption of additional job duties, or as otherwise determined by the Committee. Except as noted above, time-based vesting restricted stock and restricted stock unit awards, when made, generally vest over a four year period, with one-fourth vesting annually beginning on the first

anniversary of the date of grant. In addition, we have also granted performance-based vesting restricted stock unit awards, which vest based on the achievement of financial criteria established by the Committee.

 

The Committee has also determined that, beginning in 2011, we will make restricted stock unit awards the primary component of our equity incentive compensation plan to our eligible employees other than the named executive officers. These awards will be made an annual basis and will be focused on the goals of encouraging Company financial performance and encouraging employee retention. Except as otherwise determined by the Committee, the restricted stock unit awards will generally vest 50% on the third anniversary, and 50% after the fourth anniversary, of the date of grant. Other vesting schedules may be determined by the Committee in its discretion. In addition, we may from time to time grant performance-based vesting restricted stock unit awards, which will vest based on the achievement of financial criteria established by the Committee.

 

Restricted stock and restricted stock unit awards are evidenced by a written agreement between us and the employee. Prior to the vesting of a restricted stock award, the holder of such award would have rights as a stockholder with respect to shares (including as to dividends or other distributions), but may not sell or otherwise dispose of such shares. Prior to the vesting of a restricted stock unit award, the holder has no rights as a stockholder with respect to the shares subject to such award, including voting rights and the right to receive dividends or dividend equivalents.

 

Stock Option Awards.  We have granted stock option awards pursuant to the 2006 Omnibus Incentive Plan, and prior to adoption of this plan, we granted awards pursuant to our 1997 Omnibus Stock Option and Incentive Plan. In addition, in the event the amendment and restatement of our 2006 Omnibus Incentive Plan is approved by our stockholders at our Annual Meeting, we anticipate that we may from time to time make stock option awards pursuant to the amended and restated 2006 Omnibus Incentive Plan. For additional information regarding the amendment and restatement of our 2006 Omnibus Incentive Plan, see “Proposal 3 — Approval of Amendment and Restatement of the Company’s 2006 Omnibus Incentive Plan” below.

 

Each option award is evidenced by a written agreement between us and the employee. Stock options awarded generally vest ratably over a four-year period, with one-fourth vesting annually beginning on the first anniversary of the date of grant, and have a 10-year term. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights and the right to receive dividends or dividend equivalents.

 

Stock Ownership Guidelines

 

To directly align the interests of senior executive officers with the interests of the stockholders and to ensure that they maintain a significant portion of their long-term equity incentive awards, the Committee requires that our senior executives, including the named executive officers, maintain a minimum ownership interest in our stock. The value of our stock (as a multiple of the named executive officers’ base salary) required to be owned is as follows:

 

 

The named executive officers are required to achieve these ownership requirements by December 31, 2011 (five years from the adoption of the requirement). Shares that are either owned directly (including restricted shares of common stock or restricted stock units, whether vested or not) or indirectly through savings plans sponsored by us are included in determining whether an individual attains the minimum

ownership guidelines. Shares that are subject to unexercised stock options are not included. At December 31, 2010, each named executive officer was in compliance with the guidelines, as detailed below:

 

 

 

 

Deductibility of Executive Compensation

 

As part of its role, the Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that we may not deduct compensation of more than $1,000,000 that is paid to certain individuals unless earned under an objective performance-based arrangement. We believe that compensation paid under the management incentive plans (except for time-based vesting restricted stock and the currently outstanding time-based vesting restricted stock unit awards) is generally fully deductible for federal income tax purposes. We also believe that the terms of the employment agreements for our senior management, including each named executive officer, comply with recent Internal Revenue Service guidance, including Revenue Ruling 2008-13, with respect to the deductibility of qualified performance-based compensation payable upon retirement or termination of employment. However, in certain situations, the Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation for our executive officers.

 

Accounting for Stock-Based Compensation

 

Beginning on January 1, 2006, we began accounting for stock-based payments, including all stock option, restricted stock and restricted stock unit awards, in accordance with the requirements of FASB ASC Topic 718 (formerly SFAS 123(R)).

 

The following Report of the Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this Report by reference therein.

 

The Human Resources Committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion and Analysis with the Company’s management. Based on its review and these discussions, the Human Resources Committee recommended to the Company’s Board of Directors that the Compensation Discussion and Analysis be included in these proxy materials.

 

HUMAN RESOURCES COMMITTEE:

 

MICHAEL I. ROTH, CHAIRMAN

RALPH HORN

ELLEN LEVINE

ROBERT S. PRATHER, JR.

 

The following Summary Compensation Table shows compensation information for Colin V. Reed, our principal executive officer; Mark Fioravanti, our principal financial officer; and David C. Kloeppel, Richard A. Maradik and Carter R. Todd, who are the three most highly compensated executive officers other than Mr. Reed and Mr. Fioravanti.

 

 

 

 

 

 

The number of restricted stock units that ultimately vest will be determined based on the achievement of various company-wide financial performance goals stated in the original terms of the award agreements. Based on current projections, the Company expects that portions of the performance goals will be achieved and, when coupled with the time-based portion of the awards, all of the restricted stock units granted will ultimately vest.

 

 

 

 

 

The following table provides information on awards pursuant to the Company’s incentive plan to each of the Company’s named executive officers.