EX-10.2 3 d735934dex102.htm EX-10.2 EX-10.2

Exhibit 10.2

 

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2019 RLHC Executive Officers Bonus Plan

Purpose

RLHC is committed to compensating employees through comprehensive and competitive pay packages that include base salary, bonus programs, incentive plans, competitive benefits plans, and reward and recognition programs. These programs are designed to motivate employees to exceed performance expectations in support of the company’s business objectives.

The Executive Officers Bonus Plan (“Plan”) provides the opportunity for annual bonus payments to the contributors who drive the successful attainment of company goals. The success of the company relies on many factors. Adjusted EBITDA is the main driver behind this plan, however; our success also depends on department and individual goals.

Plan Year January 1, 2019 to December 31, 2019

Eligible Employees; Target Bonus and Maximum Bonus

 

Eligible Employees

   Minimum
Bonus
  Threshold Bonus   Target Bonus   Maximum
Bonus

Executive Vice President

   0% of Base
Salary
  25% of Base
Salary
  50% of Base
Salary
  80% of Base

Salary

EVP, Chief Operating Officer

   0% of Base
Salary
  30% of Base
Salary
  60% of Base
Salary
  96% of Base
Salary

EVP, Chief Financial Officer

   0% of Base
Salary
  35% of Base
Salary
  70% of Base
Salary
  112% of Base
Salary

EVP, President of Global Development

   0% of Base
Salary
  40% of Base
Salary
  80% of Base
Salary
  128% of Base
Salary

Chief Executive Officer

   0% of Base
Salary
  50% of Base
Salary
  100% of Base
Salary
  160% of Base
Salary

An employee must hold one of the above positions at the beginning of the Plan Year to be eligible to participate in this Plan, unless otherwise approved by the Compensation Committee. Transfers to an ineligible position that occurs after the Plan Year will not affect any bonus earned during the Plan Year. Position transfers that occur during the Plan year may result in a pro-rated bonus amount for each position based upon the target bonus amount, the achievement of bonus criteria for each position and the discretion of the Compensation Committee.

Plan Components

Whether a participant will receive a bonus under the Plan depends on the extent to which the following goals are achieved:

 

  (1)

A company goal based on target Adjusted EBITDA for 2019 (“Target Adjusted EBITDA”); and

  (2

One or more department or individual goals based on applicable division or department performance such as gross operating profit; revenues from group business; RevPAR growth; increase in RevPAR index; improvement in customer service competitive quality index; associate engagement; and addition of franchised and managed hotels to RLHC’s system of hotels and other goals that advance department or company strategic goals and/or personal development. The department and individual goals are established by the CEO and Compensation Committee.


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Bonus Calculation

For purposes of determining the bonuses, if any, due under this Plan for achievement of the Target Adjusted EBITDA (“EBITDA Goal Achievement”), the calculation will be the fraction (expressed as a percentage) determined by dividing (i) RLHC’s 2019 Adjusted EBITDA, as disclosed in the 2019 Form 10-K by (ii) 2019 Target Adjusted EBITDA approved by the Board on February 7, 2019. Neither the 2019 Adjusted EBITDA as disclosed, nor the Target Adjusted EBITDA shall be further adjusted for hotel sales, dispositions or acquisitions. There will be no bonus payout to the participants under this calculation unless this percentage exceeds 90%.

The EBITDA Goal Achievement percentage will determine the tentative payouts, if any, to which the participants are entitled, as set forth in or determined from the following applicable table:

 

     EBITDA
Goal
Achievement
    Target
Multiplier(1)
    Tentative
EVP Payout:
% of base
salary
    Tentative
EVP, COO
Payout:
% of base
salary
    Tentative
EVP, CFO
Payout:
% of base
salary
    Tentative
EVP, PGD
Payout:
% of base
salary
    Tentative
CEO
Payout:
% of base
salary
 

Maximum

     120     160     64     76.8     89.6     102.4     128
     115     145     58     69.6     81.2     92.8     116
     110     130     52     62.4     72.8     83.2     104
     105     115     46     55.2     64.4     73.6     92

Target

     100     100     40     48     56     64     80
     97.5     87.5     35     42     49     56     70
     95     75     30     36     42     48     60
     92.5     62.55     25     30     35     40     50

Threshold

     90     50     20     24     28     32     40

(1) The Target Multiplier and tentative payout percentages will be linearly interpolated for EBITDA Goal Achievement percentages that are between any two percentages shown in the table.

The goal payout has two elements, EBITDA performance and hotel sales and departmental/individual goals. The ratio of payouts is as follows:

 

  1.

EBITDA—represents 80% of the bonus payout, as is reflected in the chart above.

 

  2.

Department/Individual goals—represents 20% of the bonus payout. To the extent the department/individual goals are met, as determined collaboratively between the CEO and the Compensation Committee, then up to 20% of the target bonus is paid to eligible participants, up to a maximum of 32% of the target bonus if department/individual goals are exceeded.

The minimum threshold to receive any bonus payout under this Plan is the 90% EBITDA target. Failure to meet this threshold will result no bonus payment under this Plan.

Bonus payouts in excess of 100% are possible (up to 160%), if the EBITDA goal is exceeded and/or Department/Individual Goals are exceeded, as determined by the Compensation Committee.

A participant who receives a bonus under the Plan will be required to repay the bonus to RLHC to the extent required by (i) any “clawback” or recoupment policy adopted by RLHC to comply with the requirements of any applicable laws, rules or regulations, or (ii) any applicable law, rule or regulation that imposes mandatory recoupment.

Administration

The VP, HR, and CFO will administer the Plan.

Calculation, Approval and Payment

As soon as the necessary information is available following the end of the Plan Year, the VP HR and the SVP, Chief Accounting Officer will complete the bonus calculations for each participant and submit them to the CFO for review and


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approval including a review and recommendation by the CEO of the achievement of department and individual goals. Once approved by the CFO, she will submit the bonus calculations to the Compensation Committee for final approval. Upon Compensation Committee approval, the CFO will provide the payment information to the SVP, Chief Accounting Officer and VP, HR for recordkeeping, who will in turn submit it to the payroll office for payments. Payments will be made to participants as soon as administratively possible following the end of the bonus period. Typically, payments are approved following the February Board meeting and paid as soon as practical thereafter. Calculations are based on the base salary of the participant on the last day of the Plan Year.

Effect of Change in Employment Status/Termination

Leaves of Absences: To the extent a participant qualifies for an approved leave of absence, that participant’s bonus will not be forfeited, but rather will be prorated. If the leave involves accrued paid leave, the bonus will be unaffected. If the leave involves unpaid leave, the bonus will be prorated based upon the actual number of days worked plus any paid leave as a proportion of the full Plan Year.

Terminations: Bonuses for this Plan are not earned or vested until they are approved by the Compensation Committee and paid. Any bonuses earned will be determined and paid on or before March 31, 2020. To encourage continued employment with RLHC, participants must be employed as of the date of payout in order to earn a bonus. Therefore, any participant whose employment terminates prior to the date of payout will not earn, vest in, or receive a bonus.

General Provisions

There is an overriding discretionary analysis of each participant’s eligibility to receive a bonus. Even though an individual might earn a bonus based on the terms of this Plan, a bonus can be adjusted up or down or not paid entirely in the sole discretion of the Compensation Committee Directors. For example a bonus may be adjusted down for overall substandard work performance of the participant, including, but not limited to the below. For example, if a participant fails to follow company policy and procedures, exposes the company to legal liability, exhibits inappropriate behavior, withholds information, or does not adequately follow through on critical incidents, he or she may be disqualified from receiving a bonus. Other disqualifiers may include unacceptable performance against established performance objectives, unacceptable scores on internal audit processes (e.g., HR, Accounting, Risk Management, Internal Audit, Quality Assurance), or poor associate or customer satisfaction scores.

Notwithstanding anything to the contrary in this Plan, individual bonus payments may be deferred, partially paid or withheld in their entirety, at the sole discretion of the Compensation Committee, in consideration of the overall best interests of the company. RLHC reserves the right to cancel, change, modify or interpret any and all provisions of the Plan at any time without notice. Participation in the Plan does not create any entitlement to continued employment and does not alter the at-will status of participants. This Plan will be governed and construed in accordance with the laws of the state of Washington.

This Plan supersedes all previous plans in existence and any past written or verbal communication to any participant regarding the terms of any incentive plan.