DiamondRock Hospitality Company (DRH) Earnings Call Transcript & Summary

Good morning. I'm Bill Tennis, Executive Vice President, General Counsel and Corporate Secretary of DiamondRock Hospitality Company. Welcome to our Virtual 2021 Annual Meeting of Stockholders. Mr. McCarten, the Chairman of the Board has appointed me to be Chairman of this meeting; and Ben Nelson to the Inspector and Secretary of the meeting. Mark Brugger, our President and CEO, will be available after the formal meeting to respond to any questions. In addition, we invite you to listen to our quarterly investor call this Friday, May 7, 2021 at 9 a.m. Eastern Daylight Time. At this time, our annual meeting is called to order. I note that all the directors of our Board are present by telephonic means, and all the officers of the company are also present by telephonic means. In addition, our independent public accountant, KPMG, is represented here by Bill Harlow and Richard Wheeler, also present by telephonic means. In accordance with the bylaws, notice of this meeting was mailed on March 26, 2021, to shareholders of record as of the close of business on March 8, 2021. Also, holders of at least the majority of the shares entitled to vote at this meeting are present, either in person, by telephonic means or by proxy, and therefore, I declare that a quorum is present. There are 3 items before us. Motions for the 3 items have already been made by me and seconded by Mr. Donnelly. Before I start, does anyone participating by telephonic or electronic means, wish to vote on any of the 3 items during this meeting? If so, please so indicate by submitting your vote in the field provided in the web portal. Otherwise, we will assume that all stockholders who have signed and returned a proxy card, even though present, intend to vote their shares by proxy. The first item of business is the election of 8 directors to serve until the 2022 Annual Meeting of Stockholders and until their successors are duly elected and qualified. The second item of business is a vote on a resolution pursuant to which the stockholders of the company approve, on a nonbinding advisory basis, the compensation of the named executive officers, as disclosed in the proxy statement. The third item of business is ratification of the selection of KPMG to act as the company's independent auditor for the fiscal year ending December 31, 2021. Are there any questions about these motions? If not, and since the present shareholders have indicated that they do not wish to vote in person, the polls are now closed. I now ask the inspector to count the votes and report on the results.

Mr. Chairman, on Item 1, to elect directors for a term of 1 year, each of the nominees received the affirmative vote of a majority of the votes cast by proxy or in person. On item 2, a majority of all votes cast were in favor of approving the compensation of the named executive officers as disclosed in the proxy. On Item 3, a majority of all votes cast were in favor of ratifying the selection of KPMG LLP to act as the company's independent auditor for the fiscal year ending December 31, 2021.

Thank you, Ben. All 3 motions have passed. There being no further business to come before this meeting, the formal meeting is now adjourned.

As I mentioned earlier, Mark Brugger is available to informally respond to your questions. And I understand that there is one question. Operator, can you please read the question?

Yes. Mr. Chairman, the [indiscernible] Pension Funds holds a total of 223,600 shares of the company's stock. As long-term investors, we certainly believe that the company's executive compensation plan should be designed primarily to drive the successful execution of the Board's long-term strategic business plan. Today's public company executive compensation plans are largely formulaic peer related plans with simplistic annual say on pay voting, reinforcing plan homogeneity. Would you or the Chair of the Compensation Committee speak to whether DiamondRock Hospitality might be better served by an executive compensation plan tailored specifically to the company's particular circumstances and its unique long-term strategic business plan?

Good morning. This is Mark Brugger, President and CEO of DiamondRock. Perhaps I can make a few comments. First, we appreciate your question and certainly agree that the compensation plan should be aligned with long-term value creation for shareholders. We do -- the Board and the committee do try to adopt the best practices in the industry. Our compensation for executives and total compensation is primarily performance-based awarded through our annual and long-term incentive compensation programs. We don't provide any guarantees of minimum cash incentives for the executives and the majority of the target pay opportunity for the CEO is 60% performance-based and 50% based on long-term equity grants for the other executives. In other words, more than half of the compensation is awarded based on stock, and we have stock ownership requirements to align the performance and the compensation with the shareholders and the executives. 1/2 of that long-term equity incentive is tied to the achievement of multiyear relative total shareholder returns and market share performance goals for each of the hotels owned by the properties. So in other words, the long-term incentive plan is tied to the achievement of strategically successful value creation, both at the hotel level on a relative market share basis as well as how the company performs versus its competitive set of other public lodging REITS. I'll also mention that our Compensation Committee regularly reviews the company's incentive compensation plan to ensure they are designed to create and maintain stockholder value and do not encourage excess risk. Thank you very much for your question.

Thank you. There are no further questions in the queue. And so this meeting is now fully adjourned. Thank you all for participating.