Ashford Hospitality Trust Inc . (NYSE:AHT) disclosed a new compensatory arrangement for its President and CEO, Stephen Zsigray, according to a recent 8-K filing with the Securities and Exchange Commission. The arrangement, effective July 1, 2024, was agreed upon by the company's external advisor, Ashford (NYSE:AINC) Inc., on October 18, 2024.
Under this agreement, Zsigray will receive a one-time sign-on bonus composed of a $704,110 deferred cash award and a grant of 509,000 shares of restricted common stock. The cash award will be paid out in three parts: 25% in the fourth quarter of 2024, 50% upon the full repayment of the company's corporate strategic financing with Oaktree Capital Management, L.P., and the final 25% upon the successful completion of a review of potential value creation strategies for the company, as determined by the Compensation Committee of the Board of Directors. The stock grant will vest in equal installments over three years, starting on July 1, 2025, and continuing in 2026 and 2027.
The vesting of the equity grant and the payment of the deferred cash award are contingent upon Zsigray's continued employment through each respective milestone. The company's Board of Directors has agreed to this compensatory arrangement, which is not directly part of Zsigray's base compensation and employee health and welfare benefits, as those are provided by the Advisor.
The details of this compensation plan are outlined in the full text of the Compensatory Arrangement, which is included as an exhibit in the SEC filing. This move comes as part of Ashford Hospitality Trust's strategic planning and executive retention efforts.
Ashford Hospitality Trust is a real estate investment trust (REIT) that focuses on investing in the hospitality industry. With its principal executive offices in Dallas, Texas, the company operates under the jurisdiction of Maryland. This news is based on a press release statement and provides a glimpse into the company's executive compensation strategies.
In other recent news, Ashford Hospitality Trust has unveiled several strategic maneuvers. To ensure compliance with the NYSE's minimum continued listing requirement, the company has approved a 1-for-10 reverse stock split, reducing the number of outstanding common stock from about 54.6 million shares to 5.5 million shares. The reverse split will also affect Ashford Hospitality Limited Partnership units, decreasing the number from roughly 2.1 million to approximately 0.2 million.
In terms of financial performance, Ashford Trust reported a slight dip in revenue per available room (RevPAR) for the third quarter of 2024, alongside a net income of $44.3 million and adjusted funds from operations per diluted share of $0.27 in the second quarter. The company has also raised approximately $167 million through Non-Traded Preferred Equity offerings.
Ashford Trust has exchanged roughly 135,002 shares of its Preferred Stock for about 2.46 million shares of Common Stock, a strategic move for capital restructuring. In addition, the company has amended its hotel management agreement with Remington Lodging & Hospitality, introducing a cap on the monthly Group Services fee charged per hotel room.
Among other recent developments, Ashford Trust sold seven assets for over $310 million, and raised nearly $147 million through non-traded preferred stock offerings.
InvestingPro Insights
As Ashford Hospitality Trust Inc. (NYSE:AHT) unveils its new compensatory arrangement for CEO Stephen Zsigray, investors might benefit from additional context provided by InvestingPro data and tips.
According to InvestingPro, AHT's market capitalization stands at a modest $28.59 million, reflecting the company's current valuation. This relatively small market cap aligns with the company's efforts to incentivize leadership, as evidenced by the new compensation package.
Two relevant InvestingPro Tips shed light on AHT's current situation:
1. "Net income is expected to grow this year," which could potentially justify the company's investment in executive retention.
2. "Stock has taken a big hit over the last week," with a 1-week price total return of -7.98%, suggesting recent market challenges that the new leadership may need to address.
These insights provide context to the company's decision to offer a substantial compensation package to its CEO, possibly aimed at ensuring stability and growth in a challenging market environment.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for AHT, providing a deeper understanding of the company's financial health and market position.
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