Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Ashford Hospitality Prime — Proxy Contest (March 2016)
32 slides from Braemar Hotels & Resorts's proxy contest presentation, Mar 29, 2016
Slide 1: Questions & Answers
Questions & Answers
Slide 2: Important Information
2 In keeping with the SEC's "Safe Harbor" guidelines, certain statements made during this presentation could be considered forward-looking and subject to certain risks and uncertainties that could cause results to differ materially from those projected. When we use the words "will likely result," "m
Slide 3: What is management's long-term track record of shareholder capital stewardship?
Questions & Answers 3 Question: What is management’s long-term track record of shareholder capital stewardship? Ashford Response: Ashford Trust (AHT) went public in 2003 as a blind pool IPO. Since its IPO, AHT has generated a total shareholder return of approximately 124%* compared to the peer avera
Slide 4: What is your experience in running a hotel REIT or hotel investment platform?
Questions & Answers 4 Question: What is your experience in running a hotel REIT or hotel investment platform? Ashford Response: Many members of AHP’s senior management have operated Ashford Trust since its IPO in 2003 and prior to that made hotel investments with private capital partners primarily t
Slide 5: Why did you spin-off Ashford Prime?
Questions & Answers 5 Question: Why did you spin-off Ashford Prime? Ashford Response: Ashford Prime was spun off from Ashford Trust in late 2013 as a way to unlock the value of these high quality assets. We believed these assets were not getting valued appropriately inside of Ashford Trust given Ash
Slide 6: Why did the board decide to pursue a review of strategic alternatives?
Questions & Answers 6 Question: Why did the board decide to pursue a review of strategic alternatives? Ashford Response: When we initially spun-off Ashford Prime, it traded at about a 2-3x EBITDA multiple premium to AHT, but the stock price has underperformed since those initial days after the spin-
Slide 7: Why haven't you set a meeting date for the annual shareholders meeting?
Questions & Answers 7 Question: Why haven't you set a meeting date for the 2016 annual shareholders meeting? Ashford Response: Since AHP has been public it has never announced a meeting date by March 17, which is when Sessa irrationally accused us of not having set our annual meeting date by. The me
Slide 8: Why did you convert your marketable securities into a hedge fund investment?
Questions & Answers 8 Question: Why did you convert your marketable securities into a hedge fund investment? Ashford Response: It was an attractive, low volatility strategy that was a way for us to get returns on our excess cash.
Slide 9: How would you describe your corporate governance?
Questions & Answers 9 Question: How would you describe your corporate governance? Ashford Response: We believe our corporate governance is excellent. Examples include: ■ We have a non-staggered board■ We have opted out of the Maryland Anti-takeover Act■ We have no poison pill■ We have a lead directo
Slide 10: What was the rationale behind buying AINC stock?
Questions & Answers 10 Question: What was the rationale behind buying AINC stock? Ashford Response: We acquired a stake in AINC in August of 2015. We viewed this opportunity as a chance to get a significant stake in our advisor at an attractive price given the very low trading volume and the fact th
Slide 11: Why do you think your stock price has dropped since the spin-off?
Questions & Answers 11 Question: Why do you think your stock price has dropped since the spin-off? Ashford Response: The entire industry has traded down since the time of AHP's spin-off. We have taken multiple steps to increase our value including buying back stock, doubling the common dividend, low
Slide 12: Has the strategic review process stalled?
Questions & Answers 12 Question: Has the strategic review process stalled? Ashford Response: The strategic review process is not stalled at all as the “activist” Sessa would like you to believe. In fact, it's just the opposite. The board has been very actively engaged in reviewing strategic alternat
Slide 13: If Sessa's slate wins will AHP have to pay a termination fee?
Questions & Answers 13 Question: If Sessa's slate wins will AHP have to pay a termination fee? Ashford Response: The Company believes that Sessa has not satisfied AHP’s bylaw information and procedural requirements in nominating their slate; further we have uncovered several factors that give us gra
Slide 14: Why are you suing a large shareholder?
Questions & Answers 14 Question: Why are you suing a large shareholder? Ashford Response: Sessa Capital, unilaterally and surprisingly filed suit against Ashford Prime, each of the Prime directors, and Ashford Inc. We wish they wouldn't have gone down the litigation path, but once they did, we felt
Slide 15: Do you believe there are conflicts of interest at Ashford Prime?
Questions & Answers 15 Question: Do you believe there are conflicts of interest at Ashford Prime? Ashford Response: We believe our 7-member board comprised of 5 independent directors along with an independent lead director mitigates and appropriately evaluates any potential conflicts of interest. Al
Slide 16: How did you come up with the termination fee?
Questions & Answers 16 Question: How did you come up with the termination fee? Ashford Response: The termination fee has been in place since the spin-off from AHT. Investors in AHT at the time were on both sides of the transaction meaning they received shares in the Advisor as well as the Advisee so
Slide 17: Can the termination fee be re-negotiated with Ashford Inc.?
Questions & Answers 17 Question: Can the termination fee be re-negotiated with Ashford Inc.? Ashford Response: The advisory agreement is a contractual obligation between two publicly-traded companies. The AINC board has shown a willingness to re-negotiate the Advisory Agreement when considered on th
Slide 18: Isn't Chairman Bennett incentivized to benefit AINC at the expense of AHP?
Questions & Answers 18 Question: Since Chairman Bennett owns so much more of AINC than AHP isn’t he financially incentivized to benefit AINC at the expense of AHP? Ashford Response: No. As of 12/31/15 Chairman Bennett had approximately 80% more stock in AHP than AINC - 1.8 million shares/units of AH
Slide 19: Why does the advisor have the right to appoint the CEO of AHP?
Questions & Answers 19 Question: Why does the advisor have the right to appoint the CEO of AHP? Ashford Response: This was a term that was added during the amendment to the advisory agreement that addressed key money. The advisor wanted to make sure that at least the CEO of the REIT could be appoint
Slide 20: How is Matt Rinaldi independent?
Questions & Answers 20 Question: How is Matt Rinaldi independent if Monty Bennett has contributed to his political campaigns? Ashford Response: Monty Bennett has contributed to Matt Rinaldi’s political campaigns, but in amounts well below the threshold set in our corporate governance guidelines that
Slide 21: How is Stefani Carter independent?
Questions & Answers 21 Question: How is Stefani Carter independent if Monty Bennett has contributed to her political campaigns? Ashford Response: Monty Bennett has contributed to Stefani Carter’s political campaigns, but in amounts well below the threshold set in our corporate governance guidelines
Slide 22: How is Andrew Strong independent?
Questions & Answers 22 Question: How is Andrew Strong independent if he and Monty Bennett went to high school together? Ashford Response: Monty Bennett and Andrew Strong did go to the same high school, but we don’t believe that impacts Andrew Strong’s independence. His selection as an independent di
Slide 23: How can Monty Bennett be the executive of so many entities?
Questions & Answers 23 Question: How can Monty Bennett be the executive of so many entities and run them all effectively? Ashford Response: Monty has successfully led multiple companies for several years. He delegates a lot of his responsibilities to individual members of the respective management t
Slide 24: Should executives be compensated by each Ashford entity?
Questions & Answers 24 Question: Do you believe executives should be compensated by each Ashford entity? Ashford Response: Our executive team’s salaries and bonuses are paid by Ashford Inc. The executives can earn equity compensation from the REITs at the discretion of the compensation committees of
Slide 25: Do you believe your independent directors are independent?
Questions & Answers 25 Question: Do you believe your independent directors are independent? Ashford Response: Yes. Our board has determined that our independent directors meet the NYSE listing standards for independence and our corporate governance guidelines. Further, our independent directors were
Slide 26: Is the termination fee a golden parachute for Ashford management?
Questions & Answers 26 Question: Is the termination fee a golden parachute for Ashford management? Ashford Response: No. The termination fee is paid to Ashford Inc. Ashford Inc. is a publicly traded company. Anyone can buy the stock if they want to and can participate in the termination fee.
Slide 27: Will a change in Board composition impact hotel operations?
Questions & Answers 27 Question: Is it true that a change in the Board composition will not impact hotel operations? Ashford Response: No. A change in 4 or more directors could trigger a change of control that could result in a termination of the advisory agreement. If that were to happen, sharehold
Slide 28: Is it appropriate to have overlapping management?
Questions & Answers 28 Question: Do you think it’s appropriate to have overlapping management? Ashford Response: The Ashford management team has been together a long time and together have created a lot of value for shareholders. We believe having the management team running each of the Ashford plat
Slide 29: Why did you issue equity for the Bardessono acquisition?
Questions & Answers 29 Question: Why did you issue equity for the Bardessono acquisition? Ashford Response: The acquisition of the Bardessono was funded primarily with convertible preferred equity at a conversion price of $18.90 per share. This price is almost 90% above the current market price of A
Slide 30: Did the board breach its fiduciary duty in amending the advisory agreement?
Questions & Answers 30 Question: Did the Ashford Prime board breach its fiduciary duty to shareholders in agreeing to the amendment to the advisory agreement in June 2015? Ashford Response: No. The amendment to the advisory agreement has gives and gets for Ashford Prime. The biggest gets included th
Slide 31: How can selling hotel assets trigger the termination fee?
Questions & Answers 31 Question: How can selling hotel assets trigger the termination fee? Ashford Response: The sale of a significant amount of assets over a defined period of time would trigger the termination fee. This was added to protect the advisor from a scenario where the Ashford Prime board
Slide 32: Questions & Answers
Questions & Answers
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