NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the 2018 Annual Meeting of Stockholders (the "Annual Meeting") of ILG, Inc., a Delaware corporation ("ILG"), will be held at
our offices located at 6262 Sunset Drive, Miami, Florida 33143, on Tuesday, June 12, 2018, at 10:00 a.m., local time, for the following purposes:
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1.
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To
elect thirteen directors, each to serve until the 2019 annual meeting and until his or her successor is duly elected and qualified;
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To
approve, in an advisory non-binding vote, the compensation of our named executive officers;
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To
ratify the selection of Ernst & Young LLP as the independent registered public accounting firm for ILG for the fiscal year ending December 31,
2018; and
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To
transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
This
booklet contains our notice of the Annual Meeting and our proxy statement.
Only
stockholders of record at the close of business on April 24, 2018 will be entitled to notice of and to vote at the meeting or any adjournment or postponement of the meeting.
Your vote is important.
Whether or not you plan to attend the meeting, please vote as soon as possible. You may
vote your shares via a toll-free
telephone number or over the Internet. If you received a proxy card or voting instruction card by mail, you also may submit your proxy card or voting instruction card by completing, signing, dating
and mailing your proxy card or voting instruction card in the envelope provided. Any stockholder attending the meeting may vote in person, even if you have already returned a proxy card or voting
instruction card. If your shares are held in the name of a bank, broker or other holder of record, you may vote in person at the Annual Meeting only if you provide a legal proxy from such bank, broker
or other holder of record.
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By Order of the Board of Directors,
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Victoria J. Kincke
Secretary
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Dated:
May 7, 2018
Table of Contents
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Table of Contents
This summary highlights information contained elsewhere in this proxy statement, which is first being sent or made available to stockholders on or about May 9, 2018. You
should read the entire proxy statement carefully before voting. For more information regarding ILG, Inc.'s 2017 performance, please review our 2017 Annual Report on Form 10-K filed with
the SEC as of March 1, 2018 (the "2017 Annual Report").
2018 ANNUAL MEETING OF STOCKHOLDERS
Date
and Time: June 12, 2018 at 10:00 a.m. EST
Record
Date: April 24, 2018
Place: 6262 Sunset
Drive, Miami, Florida 33143
VOTING MATTERS AND RECOMMENDATIONS
Annual Meeting Agenda
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Board Vote Recommendation
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Election of Directors
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FOR nominees listed herein
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Advisory vote to approve executive compensation
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FOR
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Ratification of auditors
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FOR
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How to Vote
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Vote Online
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Vote by Phone
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Vote by Mail
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Vote in Person
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You can vote your shares online by logging in to
www.proxyvote.com
and following the instructions on your proxy card
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You can vote your shares by phone by following the instructions on your proxy card (
1-800-690-6903
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You can vote your shares by mail by signing, dating and mailing the enclosed proxy card in the enclosed envelope
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To attend the meeting and/or vote in person, go to the "Register for Meeting" link at
www.proxyvote.com
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CORPORATE GOVERNANCE HIGHLIGHTS
We
are committed to strong corporate governance practices, which promote the long-term interests of shareholders, strengthen financial integrity, and foster attractive company performance as
demonstrated by the following:
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13 director nominees, of which 11 are independent
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Annually elected board
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Significant shareholder representation on board
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No shareholder rights plan in place
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Independent lead director
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Four new directors in past two years
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Robust stock ownership guidelines
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Majority vote standard to elect directors
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Performance based executive compensation
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Regular board review and self-evaluation
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Single class of stock
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1
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Table of Contents
Director Nominee Overview
The following is an overview of the individuals who have been nominated for election to ILG's board of directors at the Annual Meeting. The
board believes this group of nominees is diverse in background, skills, and experience and would result in a board that would be well-balanced and effective in overseeing our strategy and management.
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Director
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Principal
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Key Committee Memberships
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Name
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Age
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Since
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Occupation
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Independent
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AC
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CC
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NC
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EC
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SRC
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Craig M. Nash
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64
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2008
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Chairman, President and CEO of ILG
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Avy H. Stein
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63
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2008
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Co-Chairman Cresset Wealth Advisors & Managing Partner Willis Stein & Partners
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Chair
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Chair
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David Flowers
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63
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2008
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Private Investor and Former SVP Liberty Media
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Victoria L. Freed
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61
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2013
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SVP Sales, Trade Support and Service, Royal Caribbean International
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Lizanne Galbreath
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60
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2016
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Managing Partner Galbreath & Company
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Chad Hollingsworth
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40
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2015
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SVP, Corporate Development Liberty Media
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Lewis J. Korman
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2008
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Business Advisor
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Chair
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Thomas J. Kuhn
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55
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2008
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Of Counsel Covington & Burling LLP
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Chair
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Thomas J. McInerney
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2008
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CEO Altaba Inc.
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Thomas P. Murphy, Jr.
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2008
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Chairman and CEO Coastal Construction Group
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Stephen R. Quazzo
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58
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2016
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CEO & Co-Founder Pearlmark Real Estate, LLC
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Sergio D. Rivera
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55
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2016
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President & CEO ILG Vacation Ownership
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Thomas O. Ryder
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73
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2016
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Former Chairman of Reader's Digest Association, Inc.
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AC: Audit Committee
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CC: Compensation Committee
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NC: Nominating Committee
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EC: Executive Committee
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SRC: Strategic Review Committee
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2
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Table of Contents
2017 Stockholder Performance Highlights
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Increased revenues by $430 million to $1.8 billion
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Invested $350 million in the business, primarily to drive vacation ownership sales and related recurring revenues
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Returned $102 million to shareholders through dividends and stock repurchases
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Increased quarterly dividend by 25% to $0.15 per share from $0.12
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Consolidated timeshare contract sales on a pro-forma basis increased 11%. Excluding the estimated impact of the hurricanes, the increase would
have been 15%
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3
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Table of Contents
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Opened two world-class resorts, The Westin Nanea Ocean Villas and Westin Los Cabos Resort Villas and Spa, and expanded several other properties
growing the number of vacation ownership units by nearly 700, or 11%
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Enhanced our product offering through the introduction of two new multi-site programs, Westin Aventuras and Hyatt Residence Club Portfolio
Program
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Interval International added 63 resorts in 20 countries and launched its hotel exchange product
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Maintained operations through a series of destructive hurricanes, while keeping guests and associates safe
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Created the ILG Relief Fund to assist those in need following the storms, which has provided grants to over 460 associates in Puerto Rico, the
U.S. Virgin Islands and Florida
These
successes create an environment for continued strong earnings and cash flow performance, which the Company believes will lead to enhanced stockholder value.
For
reconciliations, see Appendix A.
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4
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Table of Contents
Key Elements of Our Executive Compensation Program
Our
Compensation and Human Resources committee believes that our executive compensation program follows best practices and is designed to attract, reward, motivate, and retain top executives. In order
to provide appropriate incentives, a significant portion of each executive's pay is based on corporate performance and is aligned to long-term stockholders' interests. The charts below show the pay
mix for the chief executive officer and the average of the remaining named executive officers at target.
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CEO Target Compensation
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Other NEO Average Target Compensation
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The
annual incentive payouts are based on a combination of consolidated Adjusted EBITDA, consolidated revenue, business Adjusted EBITDA, and business revenue targets. For all named executive officers,
these factors account for between 70% and 100% of the annual incentive. Long-term incentives are earned based on a combination of achieving operating metrics, Adjusted EBITDA performance and relative
total shareholder return.
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5
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Table of Contents
Performance Highlights
ILG
delivered excellent results for stockholders in 2017 as we continued to propel our business forward and position ourselves as a leader in the vacation ownership space.
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1.
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In this proxy statement, TSR is calculated by adding cumulative dividends to the ending stock price, and dividing this by the beginning stock price.
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Reconcilations to non GAAP measures can be found in Appendix A.
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6
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Table of Contents
ILG, INC.
6262 SUNSET DRIVE
MIAMI, FLORIDA 33143
PROXY STATEMENT FOR THE
2018 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
This proxy statement and the enclosed proxy card are furnished to you in connection with the solicitation of proxies by the Board of Directors
of ILG for use at ILG's 2018 Annual Meeting of Stockholders. The Annual Meeting will be held at our offices located at 6262 Sunset Drive, Miami, Florida 33143 on Tuesday, June 12,
2018, at 10:00 a.m., local time.
The
proxy materials, including this proxy statement, proxy card and our 2017 Annual Report, are being mailed on or about May 9, 2018 to all stockholders of record at the close of
business on April 24, 2018. 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.
It
is important that your shares be represented and voted at the Annual Meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote your shares by proxy in advance
via the internet, the telephone or by signing, dating and returning the enclosed proxy card so that if you are
unable to attend the Annual Meeting, your shares can still be represented and voted. Voting now will not limit your right to change your vote or to attend the Annual Meeting.
If
you are a registered stockholder, you may use the enclosed proxy card to vote by Internet, by telephone or by signing, dating and returning the proxy card in the postage-paid
envelope provided. If you beneficially hold your shares in "street name" through a bank, broker or other nominee, please follow the instructions on the voting instruction form provided to you by such
nominee to vote by Internet, by telephone or by signing, dating and returning the enclosed voting instruction form in the postage-paid envelope provided.
Proxies
will be voted at the Annual Meeting in accordance with the specifications you make on the proxy. If you sign a proxy card or submit a proxy by telephone or over the Internet and
do not specify how your shares are to be voted, your shares will be voted in accordance with the recommendations of our Board of Directors.
Electronic Access.
Stockholders have the ability to access the proxy materials on the following website:
www.proxyvote.com
. If you choose to receive future proxy materials electronically, you will receive an email next year with instructions containing a link to the proxy
materials and a link to the proxy voting site. Your election to receive proxy materials electronically or in printed form by mail will remain in effect until you terminate such election. Choosing to
receive future proxy materials electronically will allow us to provide you with the information you need in a timelier manner, will save us the cost of printing and mailing documents to you and will
conserve natural resources.
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7
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Table of Contents
Help in Voting Your Shares.
ILG stockholders who need assistance in voting their shares or need additional
copies of the proxy materials may call:
Innisfree
M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders
May Call:
Toll-Free at (877) 800-5192 (from the U.S. and Canada)
(412) 232-3651 (from other locations)
Banks and Brokers May Call Collect: (212) 750-5833
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8
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Table of Contents
Questions and Answers
What matters will ILG stockholders vote on at the Annual Meeting, what vote is required for each matter and what are the recommendations of our Board of Directors?
ILG stockholders will vote on the following proposals:
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Proposal 1
To elect thirteen directors, each to serve until the 2019 annual meeting
and until his or her successor is duly elected and qualified.
The
thirteen director nominees receiving the greatest number of "for" votes will be elected. ILG has a majority voting policy as part of its corporate governance guidelines. This majority voting
policy is applicable solely to uncontested elections, for which the number of nominees does not exceed the number of directors to be elected. Under the majority voting policy, any nominee that
receives more "withhold" votes than "for" votes in an uncontested election must submit a written offer to resign as a director. Any such resignation will be reviewed by our nominating committee and,
within 90 days after the election, the independent members of the Board of Directors will determine whether to accept, reject or take other appropriate action with respect to, the resignation,
in furtherance of the best interests of ILG and its stockholders.
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Proposal 2
To approve, in an advisory non-binding vote, the compensation of our
named executive officers.
This
proposal requires the affirmative approval of a majority of votes cast by holders of our common stock present in person, or by proxy, at the Annual Meeting and voting on the matter. Abstentions
and broker non votes will not be considered votes cast on the proposal and will not have a positive or negative effect on the outcome of the proposal.
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Proposal 3
To ratify the selection of Ernst & Young LLP as the
independent registered public accounting firm for ILG for the
fiscal
year ending December 31, 2018.
This
proposal requires the affirmative approval of a majority of votes cast by holders of our common stock present in person, or by proxy, at the Annual Meeting and voting on the matter. Abstentions
will not be considered votes cast on the proposal and will not have a positive or negative effect on the outcome of this proposal. Because Proposal 3 should be considered a "routine" matter (as
described below), we do not anticipate any broker non-votes.
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Other Items
If any other item requiring a stockholder vote should come before the
Annual Meeting, the vote required will be determined in accordance with applicable law, NASDAQ rules and our Amended and Restated Certificate of Incorporation and Bylaws, as applicable.
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Do you expect other candidates to be nominated for election as directors at the Annual Meeting in opposition to the Board's nominees?
No. FrontFour Capital Group LLC (together with its affiliates and related parties, "FrontFour") had previously notified ILG of its
intent to nominate a slate of four nominees for election as directors at the Annual Meeting. However, on May 1, 2018, in a filing with the SEC, FrontFour announced that it had determined to
withdraw its slate of nominees for election to the Board of Directors at the Annual Meeting. Because the deadline, as provided in our Bylaws, for a stockholder to provide notice to ILG of its intent
to nominate candidates for election as directors at the Annual Meeting has already passed, no candidates may be nominated for election as directors at the Annual Meeting in opposition to the Board's
candidates.
How will my shares be voted?
The common stock represented by your proxy will be voted in accordance with specifications provided on your proxy card or voting instruction
form or with specifications you provided by telephone or Internet. If any other matters shall properly come before the Annual Meeting, the persons named in your proxy, or their substitutes, will
determine how to vote thereon in accordance with their judgment, to the extent permitted by Rule 14(a)-4(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). At this
time our Board of Directors does not know of any other matters that will be presented for action at the Annual Meeting that are not addressed in this proxy statement.
What happens if I do not give specific voting instructions?
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Stockholders of Record.
If you are a stockholder of record and you sign and
return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by our Board of Directors on all matters presented in this proxy
statement, i.e., for the election of the thirteen directors as set forth under Proposal 1 (Election of Directors) and nominated herein, in favor of Proposal 2 (approval of non-binding advisory
resolution on executive compensation), and in favor of Proposal 3 (ratification of Ernst & Young LLP as independent registered public accounting firm) and as the proxy holders or their
substitutes may determine in their discretion, to the extent permitted by Rule 14(a)-4(c) under the Exchange Act, with respect to any other matters properly presented for a vote at the Annual
Meeting.
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Beneficial Owners of Shares Held in Street Name.
If you are a beneficial
owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges,
the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you
on how to vote your shares on a "non-routine" matter, the organization that holds your shares will note that it does not have the authority to vote on such matters with respect to your shares. This is
generally referred to as a "broker non-vote." We believe that Proposal 3 will be considered a "routine" matter and Proposals 1 and 2 will be considered "non-routine."
Therefore
it is important that you provide voting instructions to your broker
.
How will I receive the proxy materials?
We are mailing a printed copy of this proxy statement, the accompanying proxy card and the 2017 Annual Report to our stockholders beginning on
or about May 9, 2018.
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Alternatively,
you can view the proxy materials for the Annual Meeting on the Internet:
www.proxyvote.com
. Our proxy materials are also available on our
Investor Relations website at
www.ilg.com
.
Why did I receive these proxy materials?
You have received these proxy materials because you are a stockholder of ILG, and our Board of Directors is soliciting authority, or proxy, to
vote your shares at the Annual Meeting. These proxy materials include our notice of the Annual Meeting, proxy statement and 2017 Annual Report. These materials also include a proxy card or voting
instruction form for the Annual Meeting. These proxy cards are being solicited on behalf of our Board of Directors. The proxy materials include detailed information about the matters that will be
discussed and voted on at the Annual Meeting and provide updated information about ILG that you should consider in order to make an informed decision when voting your shares.
What is a proxy?
It is your legal designation of another person to vote on matters transacted at the Annual Meeting based upon the stock you own. That other
person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. The form of proxy card included with this proxy statement
designates each of Craig M. Nash and William L. Harvey as proxies for the Annual Meeting.
What is a proxy statement?
It is a disclosure document that the SEC's regulations require us to give you so that you can make an informed voting decision when we ask you
to sign the proxy card designating individuals as proxies to vote on your behalf.
Who may vote at the Annual Meeting?
If you owned our stock at the close of business on April 24, 2018, the record date, you may attend and vote at the Annual Meeting. At
the close of business on April 24, 2018, there were 124,207,141 shares of our common stock outstanding and entitled to vote at the Annual Meeting. Holders of our common stock at the close of
business on the record date are entitled to one vote per share on all matters voted on at the Annual Meeting. No stockholders becoming owners of record after the record date will be entitled to vote
at the Annual Meeting or any adjournment or postponement thereof.
What is the quorum requirement for the Annual Meeting?
We will have a quorum and will be able to conduct the business of the Annual Meeting if the holders of a majority of the outstanding shares of
our common stock as of the record date are present at the Annual Meeting, either in person or by proxy. Proxies we receive marked as abstentions or any broker non-votes (shares held in "street name"
by a broker or nominee that does not have discretionary authority to vote on a particular matter and has not received voting instructions from its client) will be included in the calculation of the
number of shares considered to be present at the Annual Meeting.
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What is the difference between a stockholder of record and a stockholder who holds stock in street name?
If your shares are registered in your name, you are a stockholder of record. When you properly vote in accordance with the instructions
provided in the voting instruction form, you are instructing the named proxies to vote your shares in the manner you indicate on your proxy.
If
your shares are held in the name of your broker or other institution, your shares are held in "street name." Your broker or other institution or its respective nominee is the
stockholder of record for your shares. As the holder of record, only your broker, other institution or nominee is authorized to vote or grant a proxy for your shares. Accordingly, if you wish to vote
your shares in person, you must contact your broker or other institution to obtain the authority to do so in the form of a "legal proxy" which you must provide at the Annual Meeting. When you properly
vote in accordance with the instructions provided in the voting instruction form, you are giving your broker, other institution or nominee instructions on how to vote the shares they hold for you on
your behalf.
Applicable
SEC and NASDAQ regulations severely limit the matters your broker may vote on without having been instructed to do so by you, especially as they relate to the election of
directors and compensation matters. We urge you to instruct your broker about how you wish your shares to be voted. For additional information, refer to the answers provided under the question "What
happens if I do not give specific voting instructions?" set forth above.
What do I need to do to vote at the Annual Meeting?
We encourage you to vote promptly by following the instructions indicated on your proxy card or voting instruction form. Telephone and Internet
voting are available through 11:59 p.m. Eastern Time on Monday, June 11, 2018. If your shares are registered in your name, then you are a "registered holder" and you may vote in person
at the Annual Meeting or by proxy. Registered and beneficial holders may vote in one or more of the following ways:
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By Internet.
You may vote your shares over the Internet by logging onto
www.proxyvote.com
using the
control number found on your proxy card or voting instruction card and following the steps outlined on the secure website.
As with the telephone voting system, you will be able to confirm that the system has properly recorded your votes.
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By Telephone.
You may vote your shares by calling
1-800-690-6903
and following
instructions provided by the recorded message. You may vote by telephone 24 hours a day. The telephone voting system
allows you to confirm that the system has properly recorded your votes.
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By Mail.
You may vote by mail by completing, signing and dating your proxy
card if your shares are held of record in your name or, for shares held beneficially in "street name," by following the voting instructions included by your stockbroker, trustee or nominee, and
mailing it in the enclosed envelope.
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In Person.
If your shares are held of record by our transfer agent in your
name as of the record date, you may vote at the Annual Meeting by providing a ballot or proxy at the Annual Meeting. If you are a beneficial holder of shares held in "street name" through a broker,
trustee, bank or other nominee that holds shares on your behalf, you may vote in person at the Annual Meeting by obtaining a legal proxy from the nominee that holds your shares.
Even
if you plan to attend the Annual Meeting, we encourage you to vote your shares in advance via the internet, the telephone or by signing, dating and returning the proxy card so that
if
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you
are unable to attend the Annual Meeting, your shares can still be voted. Voting now will not limit your right to change your vote or to attend the Annual Meeting.
Only
persons with proof of stock ownership as of the record date and/or their designated representatives will be admitted to the Annual Meeting. If you are a registered stockholder,
please
bring a form of photo identification with you to the Annual Meeting. If your shares are not registered in your name, you must bring proof of share ownership (such as a recent bank or brokerage firm
account statement, together with photo identification) to be admitted to the Annual Meeting. If you do not have valid photo identification or proof of your stock ownership, you will not be admitted to
the meeting. For security purposes, packs and bags will be inspected and you may be required to check these items. Please arrive early enough to allow yourself adequate time to clear security.
Can I change my vote or revoke my proxy?
You may revoke your proxy at any time before a vote is taken at the Annual Meeting by giving notice to us in writing or at the Annual Meeting
or by executing and forwarding a later-dated proxy to us or voting a later proxy by telephone or the Internet. You can also change your vote by voting in person at the Annual Meeting, but your
presence at the Annual Meeting will not automatically revoke your proxy. If you are a beneficial stockholder only, you should check with the broker, trustee, bank or other nominee who holds your
shares to determine how to change or revoke your vote.
Only the latest validly executed proxy that you submit will be counted.
Where can I find the voting results of the Annual Meeting?
We will publicly disclose the preliminary voting results of the Annual Meeting on a Current Report on Form 8-K filed with the SEC within
four business days of the Annual Meeting. The final voting results, which are tallied and certified by independent inspectors will be published as soon as possible thereafter.
Who pays for the proxy solicitation and how will ILG solicit votes?
We will bear the expense of soliciting proxies. ILG has retained Innisfree M&A Incorporated, a proxy solicitation firm, to solicit proxies in
connection with the Annual Meeting at a cost of $25,000 plus expenses. In addition to these proxy materials, our directors and employees (who will receive no compensation in addition to their regular
compensation) may solicit proxies in person, by telephone or email. We will reimburse banks, brokers, and other custodians, nominees and fiduciaries for reasonable out-of-pocket expenses for sending
proxy materials to, and obtaining instructions from, persons for whom they hold shares.
What does it mean if I receive more than one package of proxy materials?
This means that you have multiple accounts holding ILG shares. These may include: accounts with our transfer agent, Computershare Investor
Services, and accounts with a broker, bank or other holder of record. In order to vote all of the shares held by you in multiple accounts, you will need to vote the shares held in each account
separately. Please follow the voting instructions provided on the proxy card or voting instruction forms that you receive to ensure that all of your shares are voted.
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How do I contact our Board of Directors?
You can send written communications to one or more members of our Board of Directors, addressed to:
All
such communications will be forwarded to the relevant director(s), except for solicitations or other matters unrelated to ILG.
How do I submit a stockholder proposal or nominate directors for the 2019 annual meeting?
Our 2019 annual meeting is currently expected to be held in May 2019. To be eligible under the SEC stockholder proposal rule (Rule 14a-8
promulgated under the Exchange Act) for inclusion in next year's proxy statement, and form of proxy, a stockholder must submit the proposal in writing so that we receive it no later than
5:00 p.m. Eastern Time on January 9, 2019. Proposals should be addressed to ILG's Secretary at 6262 Sunset Drive, Miami, Florida 33143. Even if a stockholder proposal is not eligible for
inclusion in our proxy statement pursuant to Rule 14a-8, the proposal may still be offered for consideration at an annual meeting according to the procedures set forth in our Bylaws. Our Bylaws
contain certain advance notice requirements with respect to any stockholder proposal and of any nominations by stockholders of persons to stand for election as directors at a stockholders' meeting. To
be adequate, that notice must contain the information specified in our Bylaws and be received by us not earlier than February 23, 2019 nor later than 5:00 p.m., Eastern Time, on
March 25, 2019. If, however, the date of the Annual Meeting is advanced or delayed by more than 30 days from June 12, 2019, timely notice by the stockholder must be delivered not
later than the 90th day prior to the date of such Annual Meeting or, if later, the tenth day following the day on which public announcement of the date of such meeting is first made.
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PROPOSALS REQUIRING YOUR VOTE
The following three proposals will be presented at the 2018 Annual Meeting for your vote. When voting by Internet or telephone, you will be
instructed how to vote for or against or abstain from voting on these proposals. If you received a printed copy of your proxy materials, space is provided on the proxy card to vote for or against or
abstain from voting on each of the proposals.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ALL
NOMINEES LISTED IN PROPOSAL 1, AND
FOR
PROPOSALS 2 AND 3.
PROPOSAL 1ELECTION OF DIRECTORS
At the Annual Meeting, ILG's stockholders will be asked to vote for the election of thirteen directors, each to serve until the
next annual meeting and until his or her successor is duly elected and qualified. All of the nominees named below are incumbent directors. Qurate Retail Group (formerly Liberty Interactive
Corporation) ("Qurate") has the right to nominate two directors serving on ILG's board and Starwood Hotels & Resorts Worldwide, LLC ("Starwood"), previously had the right to nominate
four directors serving on ILG's board, in each case as described in more detail below under "Certain Relationships and Related Transactions."
Common
stock represented by proxies on the proxy card, unless otherwise specified, will be voted for the election of the thirteen nominees named below. If, by reason of death or other
unexpected occurrence, any one or more of the nominees should not be available for election, the proxies will be voted for the election of one or more substitute nominees as the board may nominate.
None
of the nominees is related to another or to any other director or any executive officer of the Company by blood, marriage, or adoption.
It
is expected that all nominees proposed by our Board of Directors will be able to serve on the board if elected. However, if before the election one or more nominees are unable to
serve or for good cause will not serve (a situation that we do not anticipate), the proxy holders named on the proxy card will vote the proxies for the remaining nominees and for substitute nominees
chosen by our Board of Directors. If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such
nominees have consented to being named in the revised proxy statement and to serve if elected, and includes certain biographical and other information about such nominees required by the rules of the
SEC.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE ON THE PROXY CARD OR BY INTERNET OR TELEPHONE AS SET FORTH ON THE PROXY CARD "
FOR
ALL
" THE NOMINEES IDENTIFIED BELOW.
The
thirteen director nominees receiving the greatest number of "for" votes will be elected. ILG has a majority voting policy as part of its corporate governance guidelines. This
majority voting policy is applicable solely to uncontested elections, for which the number of nominees does not exceed the number of directors to be elected. Under the majority voting policy, any
nominee that receives more "withhold" votes than "for" votes in an uncontested election must submit a written offer to resign as a director. Any such resignation will be reviewed by our nominating
committee and, within 90 days after the election, the independent members of the Board of Directors will determine whether to accept, reject or take other appropriate action with respect to,
the resignation, in furtherance of the best interests of ILG and its stockholders.
The
following information is supplied for each person that our Board of Directors nominated and recommended for election and is based upon our records and information furnished to us by
the nominees. It includes the experience, qualifications, attributes or skills that caused the nominating committee and the Board of Directors to conclude that the person should serve as one of our
directors.
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Information Regarding the Director Nominees
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Director Since:
2008
Board Committees:
None
Age:
64
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CRAIG M. NASH
Position, Principal Occupation and Professional Experience:
Chairman, President, and Chief Executive Officer of ILG.
Mr. Nash served as President of Interval International
from August 1989 until September 2014. Prior to assuming this role, Mr. Nash served in a series of increasingly significant roles with Interval International, including as General Counsel. Mr. Nash joined Interval in 1982. Mr. Nash
serves on the Board of Directors of the American Resort Development Association and is also a member of its Executive Committee.
Other Current Public
Directorships:
None
Prior Public Company
Directorships (within the last five years):
None
Director Qualifications:
Mr. Nash's qualifications to serve on the Board include his industry, strategic, operational and legal
experience as our chief executive officer and as a member of the executive committee of the American Resort Development Association as well as his role in promoting the foundation of constructive regulation regarding the shared ownership
industry.
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Director Since:
2008
Board Committees:
None
Age:
63
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DAVID FLOWERS
Position, Principal Occupation and Professional Experience:
Mr. Flowers has served as a director of ILG since August 2008. Prior to December 31, 2014, Mr. Flowers served as Senior Vice President and Managing
Director, Alternative Investments of Liberty Media Corporation, which holds ownership interests in a broad range of electronic retailing, media, communication and entertainment businesses, since October 2000, Treasurer since April 1997 and Vice
President since June 1995. He also served as Senior Vice President and Treasurer of Discovery Holding Company from May 2005 to September 2008. Mr. Flowers was a member of the board of directors of Sirius XM Radio Inc., a subscription
satellite radio company from March 2009 until December 2014. Since October 2015, he has served on the board and as chairman of the audit committee and on the remuneration committee of Digital Global Services Ltd. ("DGS"), a London AIM-listed
provider of outsourced online customer acquisition solutions. DGS became a private company in December 2016. Mr. Flowers was nominated as a director of ILG by Qurate.
Other Current Public Directorships:
None
Prior Public Company Directorships (within the last five years):
Sirius XM Radio Inc.
Director Qualifications:
Mr. Flower's qualifications to serve on
the Board include his financial, investment and public company experience as a senior finance executive of a large public company.
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Director Since:
2012
Board Committees:
Compensation
Age:
61
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VICTORIA L. FREED
Position, Principal Occupation and Professional Experience:
Ms. Freed has served as a director of ILG since October 2012. Ms. Freed has also served as Senior Vice President, Sales, Trade Support and Service for Royal
Caribbean International, a global cruise vacation company, since January 2008. Prior to joining Royal Caribbean, she spent 29 years with Carnival Cruise Lines, where she was Senior Vice President of Sales and Marketing for 15 years. From
1998 to 2000, Ms. Freed also served as the first female chairman of the Cruise Line International Association, the marketing and travel agent training arm of the North American cruise industry. Ms. Freed earned a bachelor's degree in
business with an emphasis in marketing from the University of Colorado. She also holds a Certified Travel Counselor (CTC) designation.
Other Current
Public Directorships:
None
Prior Public Company
Directorships (within the last five years):
None
Director Qualifications:
Ms. Freed's qualifications to serve on the Board include her sales, marketing and consumer insight experience
in the leisure and tourism industry as a senior executive with two major cruise companies.
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Director Since:
2016
Board Committees:
Nominating
Age:
60
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LIZANNE GALBREATH
Position, Principal Occupation and Professional Experience:
Ms. Galbreath has served as a director of ILG since May 2016. Ms. Galbreath has been the Managing Partner of Galbreath & Company, a real estate
investment firm, since 1999. From April 1997 to 1999, Ms. Galbreath was Managing Director of LaSalle Partners/Jones Lang LaSalle, a real estate services and investment management firm, where she also served as a director. From 1984 to 1997,
Ms. Galbreath served in a variety of leadership positions including as a Managing Director, Chairman and Chief Executive Officer of The Galbreath Company, the predecessor entity of Galbreath & Company. Ms. Galbreath is also
currently a director of Paramount Group, Inc. Ms. Galbreath has been a director of Starwood from 2005 to September 2016 and served on its Capital Committee, Compensation and Option Committee and Corporate Governance and Nominating
Committee. Ms. Galbreath was nominated as a director of ILG by Starwood.
Other Current Public Directorships:
None
Prior Public Company Directorships (within the last five years)
:
Starwood Hotels and Resorts Worldwide, LLC
Director Qualifications:
Ms. Galbreath's qualifications to serve on the Board include her senior leadership experience as manager of
Galbreath & Company, real estate investment, development and strategy experience, and management and corporate governance experience, having served as a Director of another publicly-traded company.
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Director Since:
2015
Board Committees:
Nominating and Strategic Review
Age:
41
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CHAD HOLLINGSWORTH
Position, Principal Occupation and Professional Experience:
Mr. Hollingsworth has served as a director of ILG since February 2015. Mr. Hollingsworth has been senior vice president of Qurate, Liberty Media Corporation,
Liberty TripAdvisor Holdings, Inc. and Liberty Broadband Corporation since January 2016. He previously served as vice president of Qurate and Liberty Media Corporation since December 2011, having joined the company in November 2007, as well as
vice president of Liberty TripAdvisor Holdings, Inc. since August 2014 and Liberty Broadband Corporation since October 2014. He also serves as a director of CommerceHub, Inc., a Nasdaq-listed distributed commerce network.
Mr. Hollingsworth focuses on transaction and structuring opportunities, strategic advisory work and venture capital investment evaluation. He received his bachelor's degree from Stanford University in human biology, with honors, and earned the
right to use the CFA® designation. Mr. Hollingsworth was nominated as a director of ILG by Qurate.
Other Current Public
Directorships:
CommerceHub, Inc.
Prior
Public Company Directorships (within the last five years):
None
Director Qualifications:
Mr. Hollingsworth's qualifications to serve on the Board include his merger and acquisition
transaction experience, financial analysis skills and experience with corporate governance and management compensation plans.
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Director Since:
2008
Board Committees:
Audit and Nominating
Age:
73
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LEWIS J. KORMAN
Position, Principal Occupation and Professional Experience:
Mr. Korman has served as a director of ILG since August 2008. Mr. Korman is and has been a business advisor to various companies. From 2006 until December 2017, he was a business
advisor to Sandler Travis Trade Advisory Services, a customs management, consulting and trade compliance company, and he continues to act as a consultant to the company that represents the interests of the former shareholders of this business since
its acquisition by UPS, Inc. From 2002 until September 2017, Mr. Korman was a business advisor to Trident Media Group, a literary agency. From 1999 until its sale in April 2015, Mr. Korman was a director of Learning Express LLC, a
company engaged in test preparation for occupational certification and test assessment for educational institutions through the internet. From 1998 through 2007, Mr. Korman served as Vice Chairman of RAB Holdings, which owned Millbrook
Distribution Services (a distributor of specialty foods and health and beauty products to supermarkets), and The B. Manischewitz Company (a manufacturer of kosher and related ethnic food products). From 1997 to 2009, he was an advisor to X.L. Capital,
Ltd., a reinsurance company. From 1992 to 1997, until acquired by a predecessor of IAC/InterActiveCorp (IAC), Mr. Korman was President and Chief Operating Officer of Savoy Pictures Entertainment, motion picture distributor and owner of
four Fox affiliated television stations. He served as Senior Executive Vice President and Chief Operating Officer of Columbia Pictures Entertainment (motion picture and television production and distribution) from 1988 until 1989, and as Senior
Executive Vice President of its predecessor, TriStar Pictures from 1987. Mr. Korman was a partner in a law firm until 1986.
Other Current Public
Directorships:
None
Prior Public Company
Directorships (within the last five years):
None
Director Qualifications:
Mr. Korman's qualifications to serve on the Board include his business and legal experience as a business
advisor and senior operating executive in areas involving strategy, financial analysis and planning, capital formation, acquisition and sale of companies, and in a variety of business transactions. He also has experience in corporate governance,
serving as a director of other publicly-traded companies.
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Director Since:
2008
Board Committees:
Audit, Nominating and Executive
Age:
55
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THOMAS J. KUHN
Position, Principal Occupation and Professional Experience:
Mr. Kuhn has served as a director of ILG since August 2008. Mr. Kuhn is of counsel at the law firm of Covington & Burling, LLP. Prior to
joining Covington in February 2017, Mr. Kuhn was the managing member of Doorbrook, LLC, an advisory and investment firm beginning January 2014. From 2000 through December 2013, Mr. Kuhn was a Managing Director at Allen &
Company LLC, an investment banking firm. Prior to joining Allen, he was the Senior Vice President and General Counsel of USA Networks, Inc. (a predecessor to IAC).
Other Current Public Directorships:
None
Prior Public Company Directorships (within the last five years):
None
Director Qualifications:
Mr. Kuhn's qualifications to serve on
the Board include his financial, legal and public company experience and his experience reading and understanding financial statements as a managing director at an investment banking firm and as the general counsel of a public company.
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Director Since:
2008
Board Committees:
Audit and Strategic Review
Age:
53
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THOMAS J. MCINERNEY
Position, Principal Occupation and Professional Experience:
Mr. McInerney has served as a director of ILG since May 2008. Since June 2017, Mr. McInerney has served as Chief Executive Officer of Altaba Inc., a
publicly-traded non-diversified closed end management investment company and has been a member of its board since 2012. From April 2012 through May 2017, Mr. McInerney was a private investor. Mr. McInerney previously served as
Executive Vice President and Chief Financial Officer of IAC from January 2005 through March 2012. Mr. McInerney served as Chief Executive Officer of IAC's Retailing sector from January 2003 through December 2005. Prior to this time,
Mr. McInerney served as Executive Vice President and Chief Financial Officer of Ticketmaster (prior to it becoming a wholly-owned subsidiary of IAC in January 2003) and its predecessor company, Ticketmaster Online-Citysearch, Inc., since
May 1999. Prior to joining Ticketmaster, Mr. McInerney worked at Morgan Stanley, most recently as a Principal. Mr. McInerney previously served as a director of Cardlytics, Inc., a purchase-based data intelligence platform, and
HSN Inc., a television and online retailer. He currently serves as a director of Match Group, Inc., a leading provider of dating products.
Other Current Public Directorships:
Altaba Inc., Match Group, Inc.
Prior Public Company Directorships (within the last five years):
HSN Inc., Cardlytics, Inc.
Director Qualifications:
Mr. McInerney's qualifications to serve on the Board include his financial and public company experience as the chief executive officer and chief financial officer of public companies and his familiarity with ILG's business and
operations as an executive of our former parent company. He also has broad experience in corporate governance, serving as a director of other publicly-traded companies.
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Director Since:
2008
Board Committees:
Compensation
Age:
69
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THOMAS P. MURPHY, JR.
Position, Principal Occupation and Professional Experience:
Mr. Murphy has served as a director of ILG since August 2008. Mr. Murphy is Chairman and Chief Executive Officer of Coastal Construction Group, a
construction company, which he founded in 1989. Mr. Murphy has over 40 years of construction and development experience, which encompasses hospitality, resort, office, retail, industrial, institutional and residential projects.
Mr. Murphy is an honorary board member of Baptist Health Systems of South Florida and is a member of the National Construction Industry Round Table, the National Association of Home Builders and the Florida Home Builders Association. He also
serves as a director of The St. Joe Company, a New York Stock Exchange (NYSE) listed real estate developer.
Other Current Public
Directorships:
The St. Joe Company
Prior
Public Company Directorships (within the last five years):
None
Director Qualifications:
Mr. Murphy's qualifications to serve on the Board include his operational and related industry
experience in development of resorts as the chief executive officer of a construction and development company. He also has experience in corporate governance serving as a director of another publicly-traded company.
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Director Since:
2016
Board Committees:
Audit
Age:
58
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STEPHEN R. QUAZZO
Position, Principal Occupation and Professional Experience:
Mr. Quazzo has served as a director of ILG since May 2016. Mr. Quazzo is the Chief Executive Officer and has been the Managing Director and co-founder of
Pearlmark Real Estate, LLC, formerly known as Transwestern Investment Company, L.L.C., a real estate principal investment firm, since March 1996. From April 1991 to March 1996, Mr. Quazzo was President of Equity Institutional Investors,
Inc., a private investment firm and a subsidiary of Equity Group Investments, Inc. Mr. Quazzo is also currently a director of Phillips Edison & Company Inc. and was a director of Starwood from 1995 to September 2016
serving terms as the Chair of the Capital and Governance Committees as well as serving on the Audit Committee. Mr. Quazzo holds undergraduate and MBA degrees from Harvard University, where he serves as a member of the Board of Dean's Advisors
for the business school. He is a member and Trustee of the Urban Land Institute, chairman of the ULI Foundation, a member of the Pension Real Estate Association, and is a licensed real estate broker in Illinois. He is a Trustee of Rush University
Medical Center, an Investment Committee member of the Chicago Symphony Orchestra endowment and pension plans, a Trustee of Deerfield Academy, and a Chicago advisory Board member of City Year, a national service organization since 1994.
Mr. Quazzo was nominated as a director of ILG by Starwood.
Other Current Public Directorships:
Phillips Edison & Company Inc.
Prior Public Company Directorships (within the
last five years):
Starwood Hotels and Resorts Worldwide, LLC
Director Qualifications:
Mr. Quazzo's qualifications to serve on the Board include his real estate, investment,
development and strategy experience as chief executive officer of Pearlmark Real Estate, LLC and his senior leadership experience. He also has broad experience in corporate governance, serving as a director of other publicly-traded
companies.
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Director Since:
2016
Board Committees:
None
Age:
55
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SERGIO D. RIVERA
Position, Principal Occupation and Professional Experience:
Mr. Rivera has served as a director of ILG since May 2016 and President and chief executive officer of the Vacation Ownership segment since November 2016. Prior
to joining ILG, Mr. Rivera was President of The Americas for Starwood. He was previously Co-President, The Americas for Starwood from July 2012 to February 2014, and President and Chief Executive Officer of Starwood Vacation Ownership (now known
as Vistana Signature Experiences), now a wholly owned subsidiary of ILG. Prior to 2008, Mr. Rivera held progressively senior management roles within Starwood, including Controller, Vice President of Sales and Marketing, Senior Vice President of
International Operations, and President of Global Real Estate. Mr. Rivera began his career with Starwood through its predecessor company, Vistana Resorts, in 1989. Mr. Rivera is a member of the board of directors of Welltower, Inc., a
NYSE-listed REIT that invests with leading senior housing operators, post-acute providers and health systems. He also serves as a member of the Urban Land Institute, trustee of The Nature Conservancy Florida Chapter, a member of the University of
Central Florida Rosen College of Hospitality Management Advisory Board, as well as the Florida International University Chaplin School of Hospitality & Tourism Management Dean's Advisory Council. Mr. Rivera was nominated as a director
of ILG by Starwood.
Other Current Public Directorships:
Welltower, Inc.
Prior Public Company Directorships (within the last five years):
None
Director Qualifications:
Mr. Rivera's qualifications to serve on the Board include his senior leadership, operational and industry experience as former Starwood President, The Americas as well as president and
chief executive officer of the Vistana business. He also has experience in corporate governance serving as a director of another publicly-traded company.
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Director Since:
2016
Board Committees:
Compensation
Age:
73
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THOMAS O. RYDER
Position, Principal Occupation and Professional Experience:
Mr. Ryder has served as a director of ILG since May 2016. Mr. Ryder retired as Chairman of the Board of The Reader's Digest Association, Inc., a global
media and direct marketing company, in January 2007, a position he had held since January 2006. Mr. Ryder was Chairman of the Board and Chief Executive Officer of that company from April 1998 through December 2005. In addition, Mr. Ryder
was Chairman of the Board and Chairman of the Audit Committee of Virgin Mobile USA, Inc., a wireless service provider, from October 2007 to November 2009. Mr. Ryder was President, American Express Travel Related Services International, a
division of American Express Company, which provides travel, financial and network services, from October 1995 to April 1998. In the past five years, Mr. Ryder also served as a director of Quad/Graphics, Inc., World Color Press, Inc.,
a company acquired by Quad/Graphics, Inc. in July 2010, and RPX Corporation. Mr. Ryder is also currently a director of Amazon.com, Inc. Mr. Ryder was a director of Starwood from 2001 to September 2016 and served on its Capital
Committee and the Compensation and Option Committee. Mr. Ryder was nominated as a director of ILG by Starwood.
Other Current Public
Directorships:
Amazon.com, Inc.
Prior
Public Company Directorships (within the last five years):
Starwood Hotels and Resorts Worldwide, LLC, The Reader's Digest Association,
Inc., Quad/Graphics, Inc. and RPX Corporation
Director Qualifications:
Mr. Ryder's qualifications to serve on the Board include his branding, development and strategy experience coupled with his global business, media and marketing knowledge. He also has broad
experience in corporate governance serving as chief executive officer and a director of other publicly-traded companies.
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Director Since:
2008
Board Committees:
Compensation, Executive and Strategic Review
Age:
63
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AVY H. STEIN
Position, Principal Occupation and Professional Experience:
Mr. Stein has served as a director of ILG since August 2008 and as Lead Director since December 2008. Mr. Stein is co-founder and co-chairman of Cresset
Wealth Advisors which launched May 2017. He also serves as Chief Executive Officer of Willis Stein & Partners, a Chicago-based private equity firm that invests in companies in the consumer, education, healthcare and specialized business
service industries. Mr. Stein co-founded Willis Stein & Partners with John Willis in 1994. Mr. Stein serves many philanthropic organizations. He is a member of the Board of Trustees, former Treasurer, and chairman of the Investment
Committee of the Ravinia Festival; a member of the Harvard Law School Leadership Council of Chicago; and provides fundraising and strategic counsel for B.U.I.L.D. (Broader Urban Involvement in Leadership Development), an organization that provides
career and educational development for inner city youth. He is also a director for the Western Golf Association. Mr. Stein served on the Board of Directors and compensation and nominating and corporate governance committees of Roundy's,
Inc., a NYSE-listed grocer in the Midwest until December 2015 and currently serves the board of directors of, the following privately-held companies, FDH VelociTel, Education Corporation of America and Hilco Global, a privately-held
international financial services company. Mr. Stein is a certified public accountant, and received his law degree from Harvard University.
Other
Current Public Directorships:
None
Prior Public
Company Directorships (within the last five years):
Roundy's, Inc.
Director Qualifications:
Mr. Stein's financial, accounting and legal experience as a managing partner in a private equity
firm and as a certified public accountant and lawyer, and his familiarity with ILG's business and operations as a principal of the private equity firm that previously owned Interval. He also has experience in corporate governance serving as a
director of another publicly-traded company.
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CORPORATE GOVERNANCE
Board of Directors
Qualifications.
Our board of directors is comprised of individuals with an array of operating, finance,
sales and legal experience in a variety of
industries, as well as serving on public company boards. As such, they each bring an informed perspective on matters we face as a public company, including experience reading and understanding and/or
preparing financial statements, compensation determinations, regulatory compliance, corporate governance, public affairs and legal matters. Our board of directors believes that each of the directors
is qualified to serve as a director and member of the committees on which each serves because of the skills and qualifications acquired based on the experience described above. Here is a summary of
the various experience of our directors:
Many
of our directors also serve or have in the past served on the boards of one or more other publicly traded companies. We believe ILG benefits from the experience and expertise our
directors
gain from serving on those boards. The board of directors also believes that it is important to effective board governance and collaboration to have our chief executive officer serve on the board.
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Director Independence.
ILG's board of directors currently consists of thirteen members. The board of
directors has affirmatively determined that
each of Mr. Flowers, Ms. Freed, Ms. Galbreath, Mr. Hollingsworth, Mr. Korman, Mr. Kuhn, Mr. McInerney, Mr. Murphy, Mr. Quazzo,
Mr. Ryder and Mr. Stein are "independent directors" within the meaning of the NASDAQ's listing standards. In making this determination, the board of directors considers information
regarding transactions, relationships and arrangements involving ILG and its businesses and each director that it deems relevant to independence, including those required by NASDAQ listing standards.
This information is obtained from director responses to a questionnaire circulated by ILG management, ILG records and publicly available information. ILG management monitors those transactions,
relationships and arrangements that are relevant to determinations of independence, and solicits updated information potentially relevant to independence from internal personnel and directors, to
determine whether there have been any developments that could potentially have an adverse impact on ILG's prior independence determinations. In particular, the board considered past relationships
which directors had with ILG and Starwood, as well as, for Ms. Freed, commercial transactions between ILG's businesses and Royal Caribbean International's businesses.
With
respect to the remaining directors, (i) Mr. Nash is an executive of ILG, and (ii) Mr. Rivera is an executive of ILG and before joining ILG was within
the last three years an executive of Starwood and Vistana Signature Experiences ("Vistana"), now a subsidiary of ILG.
Governance Guidelines.
ILG's board of directors has adopted Corporate Governance Guidelines that are
available on our website at www.ilg.com under
"Corporate Governance."
Meetings.
During 2017, the board of directors held eight meetings. All of our incumbent directors
attended at least 75% of the aggregate of the
board meetings and the meetings of committees on which he or she served in 2017. At our 2017 Annual Meeting of Stockholders, two of our directors were in attendance. The independent directors of the
board regularly meet in executive session without management.
Board Leadership Structure.
Mr. Nash serves as both our Chairman of the Board and our President and
Chief Executive Officer. We believe that
by serving in these dual capacities, Mr. Nash is well-situated to execute our business strategy. Because Mr. Nash has primary management responsibility with respect to the day-to-day
business operations of our company, he is in the most effective position to chair regular meetings of the board of directors and to help ensure that key business issues are communicated to the board
of directors. Mr. Stein has been our lead director since December 2008. As lead director, Mr. Stein serves as a liaison between the Chairman of the Board and the other directors and
presides at meetings of the independent directors.
Risk Oversight.
Risk assessment and management is an integral part of our board of director and
committee deliberations throughout the year. Our
board of directors' role primarily is oversight of the risk management processes implemented by our management team. This role is performed through the board committees as well as the board of
directors as a whole. The audit committee annually reviews an assessment prepared by internal audit based on management feedback of the critical risks facing ILG, their relative magnitude and
management's actions to mitigate these risks. The audit committee also monitors risks related to investments and liquidity, financial covenants, related party transactions, and information technology
security. The compensation and human resources committee (the "Compensation Committee") reviews risks relating to our compensation practices as described below under "Compensation Risk Analysis." The
results of these reviews are discussed with the entire board of directors which also reviews overall strategic and operational risks. We believe these risk oversight functions allow our directors to
make well-informed decisions and increase the effectiveness of our leadership structure. The roles of the
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board
of directors and its committees in the risk oversight process have not affected the board leadership structure.
Committees of the Board of Directors.
The board of directors has a standing audit committee,
Compensation Committee, and nominating committee, each
of which operates under a written charter, as well as an executive committee and a strategic review committee that was formed in December 2017. Current copies of the charters are available to
stockholders on our website, www.ilg.com, under "Corporate Governance." Each director serving as a member of a board committee, other than the executive committee, is an independent director within
the meaning of the NASDAQ's listing standards applicable to such members and under the applicable committee's charter.
The
following table sets forth the members of each standing committee of our board of directors during 2017:
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Name
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Audit
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Compensation
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Nominating
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Executive
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Strategic
Review
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Craig M. Nash
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X
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David Flowers
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Victoria L. Freed
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X
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Lizanne Galbreath
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X
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Chad Hollingsworth
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X
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X
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Lewis J. Korman
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C
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X
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Thomas J. Kuhn
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X
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C
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X
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Thomas J. McInerney
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X
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X
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Thomas P. Murphy, Jr.
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X
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Stephen R. Quazzo
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X
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Sergio D. Rivera
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Thomas O. Ryder
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X
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Avy H. Stein
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C
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X
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C
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X = member, C = Chair
Audit Committee.
The members of the audit committee during 2017 were Mr. Korman (chair),
Mr. Kuhn, Mr. McInerney and
Mr. Quazzo. The audit committee assists the board of directors in fulfilling its oversight responsibilities for the integrity of our accounting, auditing, financial reporting and financial
control practices. The audit committee monitors:
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the integrity of ILG's financial statements,
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the effectiveness of ILG's internal control over financial reporting,
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the qualifications and independence of ILG's independent registered public accounting firm,
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the performance of ILG's internal audit function and independent registered public accounting firm, and
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the compliance by ILG with legal and regulatory requirements.
In
addition, the audit committee considers and pre-approves audit and any non-audit services proposed to be performed by the independent registered public accounting firm. The audit
committee also reviews related party transactions, our code of ethics, hedging and derivatives strategies, and the process for receiving, retaining and treating employee complaints regarding
accounting, internal control over financial reporting, auditing matters, and information technology security.
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Our
board of directors has determined that Mr. McInerney meets the requirements for an audit committee financial expert under Item 407 of Regulation S-K promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). During 2017, the audit committee held eleven meetings.
Compensation and Human Resources Committee.
The members of the Compensation Committee during 2017 were
Ms. Freed, Mr. Murphy,
Mr. Ryder and Mr. Stein (chair), each of which is a "non-employee director" as defined under Rule 16b-3 and an "outside director" as defined under Section 162(m) of the
Internal Revenue Code. During 2017, the Compensation Committee held four meetings. The Compensation Committee is authorized to exercise all of the powers of the ILG board of directors with respect to
matters pertaining to compensation and benefits that affect the executive officers of ILG, including, but not limited to:
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salary,
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incentive/bonus plans,
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stock compensation plans, and
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retirement programs.
To
assist in its review of compensation decisions, the Compensation Committee has retained the services of an independent compensation consultant. The consultant works for the
Compensation Committee in connection with its review of executive and non-employee director compensation practices (for the nominating committee), including the competitiveness of executive and
director pay levels, executive incentive design issues, market trends in executive and director compensation and technical considerations. The independent consultant is Meridian Compensation Partners
("Meridian"). Meridian's services to ILG are limited to advising the Compensation Committee on executive compensation related matters and the nominating committee on director compensation as well as
calculating the payout for total shareholder return-based performance share units granted by the Compensation Committee; they do no other work for ILG. The Compensation Committee reviews and evaluates
the independence of its consultant each year and has the final authority to hire and terminate the consultant. In considering Meridian's independence, numerous factors were reviewed relating to
Meridian and the individuals providing services to ILG, including those required by the SEC and the NASDAQ. Based on a review of these factors, the Compensation Committee has determined that Meridian
is independent and that no conflict of interest exists with Meridian.
For
more information on how executive compensation decisions are made, see "Compensation Discussion and Analysis."
Nominating Committee.
The members of the nominating committee during 2017 were Ms. Galbreath,
Mr. Hollingsworth, Mr. Korman,
and Mr. Kuhn (chair). The nominating committee:
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identifies and recommends for nomination qualified individuals for election as directors,
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oversees the composition of the committees of the board of directors,
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oversees periodic self-evaluation of the board of directors and its committees, and
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reviews compensation of directors.
During
2017, the nominating committee held three meetings.
Stockholders
may recommend individuals to the nominating committee for consideration as potential director candidates by submitting their names, together with appropriate biographical
information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of ILG's common
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shares
for at least one year as of the date such recommendation is made, to the following address: ILG, Inc., 6262 Sunset Drive, Miami, Florida 33143, Attn: Victoria J. Kincke, Secretary. Any
such recommendation should be accompanied by a written statement from the candidate of his or her consent to be named as a candidate and, if nominated and elected, to serve as a director. Assuming
that appropriate biographical and background material has been provided on a timely basis, the nominating committee will evaluate stockholder-recommended candidates by following substantially the same
process, and applying substantially the same criteria, as it follows for candidates submitted by others. See "Other Matters-Stockholder Proposals for 2019 annual meeting" below.
The
nominating committee has not established specific minimum qualifications a candidate must have in order to be recommended to the board of directors. However, in determining
qualifications for directors, the nominating committee considers whether the potential candidate qualifies as independent under NASDAQ listing standards, his or her familiarity with reviewing or
preparing financial statements and other skills and experience, as well as whether such candidate will effectively serve stockholders' long-term interests and contribute to ILG's overall corporate
goals. As stated in our Corporate Governance Guidelines, the nominating committee and the board of directors seek to include a diversity of backgrounds, perspectives and skills among board members.
While the committee does not use any particular benchmarks with respect to these qualities, it looks to include a balance of backgrounds, perspectives and skills on the board of directors as a whole.
The nominating committee will consider potential board candidates recommended by stockholders and others, including management and current directors and the nominating committee may retain a board
search consultant to assist in searching for potential board candidates. The committee has not engaged a consultant at this time.
After
reviewing FrontFour's nominees, the nominating committee and our Board of Directors unanimously determined that the candidates nominated by the Board of Directors (as identified
and described in this proxy statement) have the most current and relevant skill sets and experience to support ILG and the actions being taken to improve its performance and drive value, and that they
are best qualified to serve as the ILG's director nominees.
Executive Committee.
The members of the executive committee are Mr. Nash, Mr. Kuhn and
Mr. Stein. The executive committee has
all the power and authority of the ILG board of directors, except those powers specifically reserved to the ILG board of directors by Delaware law or ILG's organizational documents.
Strategic Review Committee.
The members of the strategic review committee are Mr. Hollingsworth,
Mr. McInerney and Mr. Stein.
The strategic review committee has the power and authority to review,
consider, evaluate, negotiate and make recommendations to the board of directors with respect to strategic alternatives and financial alternatives that may be available to ILG.
Other Committees.
In addition to the foregoing committees, the ILG board of directors, by resolution,
may from time to time establish other
committees of the ILG board of directors, consisting of one or more of its directors.
Stockholder Engagement
Engagement and transparency with our shareholders help ILG gain useful feedback on a wide variety of topics, including corporate governance,
compensation practices, shareholder communication, board composition, stockholder proposals, business performance and operations. This information is shared regularly with ILG's management and board
of directors and is considered in the processes that set our governance practices and strategic direction. Shareholder feedback also helps us to better tailor the public information we provide to
address the interests and inquiries of our shareholders and other interested parties.
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ILG
interacts and communicates with shareholders in a number of forums, including quarterly earnings presentations, SEC filings, the 2017 Annual Report and proxy statement, the Annual
Meeting, investor conferences, web communications and in 2017, at our Investor Day. At the end of 2016 and early 2017 we also engaged a consultant to conduct a formal Perception Study in preparation
for the Investor Day. Our shareholder engagement program covers a wide array of topics with a broad group of shareholders, and shareholder feedback is regularly provided to the board and ILG's
management. Discussions are typically focused on our strategy and financial results.
In
2017, outreach efforts included the following:
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Independent Directors, including on certain occasions our lead director, spoke to shareholders representing approximately 24% of our
outstanding common stock. Topics included:
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Strategy and performance
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Board structure and composition
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Corporate governance principles
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Members of senior management and/or our head of investor relations participated in more than 110 investor meetings and telephone calls and
attended five investor conferences. Members of senior management and our head of investor relations visited major cities in the U.S., during which they met with shareholders.
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Members of senior management hosted an Investor Day on ILG's strategy and financial performance.
Any
stockholder who desires to communicate with any of the members of ILG's board of directors may do so electronically by sending an email to
boardofdirectors@ilg.com
. Alternatively, a stockholder may
communicate with the members of the board of directors by writing to ILG, Inc., 6262
Sunset Drive, Miami, Florida 33143, Attn: Victoria J. Kincke, Secretary. Communications may be addressed to the lead director, an individual director, a committee chair, a board committee, the
non-management directors or the full board of directors. All such communications must identify the author as a stockholder and provide evidence of the sender's stock ownership. Communications received
by the Secretary will be reviewed by the Secretary and, if appropriate, distributed to the appropriate directors. Solicitations for the sale of merchandise, publications or services of any kind will
not be forwarded to the directors.
Director Compensation
Non-Employee Director Arrangements.
Each member of the ILG board of directors who is not an employee of
ILG or its affiliates receives an annual
retainer and member and chairs of committees receive additional annual retainers. For 2017, the retainers were as follows:
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Board service$65,000 per year
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Members of audit and Compensation Committees (excluding chairs)$15,000 per year
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Members of nominating (excluding chair) and executive committee$10,000 per year
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Chair of audit committee$35,000 per year
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Chair of Compensation Committee$30,000 per year
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Chair of nominating committee$15,000 per year
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-
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Lead director$20,000 per year
In
addition, each non-employee director receives a grant of restricted stock units, or RSUs, with a dollar value of $125,000 upon re-election on the date of ILG's Annual Meeting of
Stockholders. The terms of these restricted stock units provide for (i) vesting on the first anniversary of the grant date with settlement in shares of common stock, (ii) cancellation
and forfeiture of unvested units in their entirety upon termination of service with the ILG board of directors (other than for death or disability) and (iii) full acceleration of vesting upon a
change of control of ILG. Non-employee directors are also reimbursed for all reasonable expenses incurred in connection with attendance at ILG board and committee meetings.
Director Stock Ownership Guidelines.
In order to further align the interests of our directors with those
of our stockholders, our board of directors
maintains stock ownership guidelines for non-employee directors. These guidelines generally require directors that are not employed by us or our affiliates to maintain ownership of our common stock in
an amount not less than five times the amount of the annual cash retainer for board service, subject to a grace period of five years from either the adoption of the policy or commencement of service.
Deferred stock units and restricted stock units are included in the calculation.
The
guidelines are administered by the nominating committee. As of April 24, 2018, all of our non-employee directors were in compliance with the guidelines.
Deferred Compensation Plan for Non-Employee Directors.
Under ILG's Deferred Compensation Plan for
Non-Employee Directors, non-employee directors are
able to defer all or a portion of their board and board committee fees. Eligible directors who defer all or any portion of these fees can elect to have such fees applied to the purchase of share
units, representing the number of shares of ILG common stock that could have been purchased on the relevant date, or credited to a cash fund. If any dividends are paid on ILG common stock, dividend
equivalents will be credited on the share units. The cash fund will be credited with deemed interest at an annual rate equal to the weighted average prime lending rate of JPMorgan Chase Bank. After a
director ceases to be a member of the ILG board of directors, he or she will receive (i) with respect to share units, such number of shares of ILG common stock as the share units represent and
(ii) with respect to the cash fund, a cash payment in an amount equal to deferred amounts, plus accrued interest. These payments will be made in either one lump sum or up to five installments,
as previously elected by the eligible director at the time of the related deferral election.
The
following table and footnotes provide information regarding the compensation of non-employee members of ILG's board of directors for fiscal year 2017.
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Director Compensation for Fiscal Year 2017
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Total Fees Earned or
Paid in Cash
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Name
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Fees Paid
in Cash
($)
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Cash Fees
Deferred
($)(1)
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Stock
Awards
($)(2)
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All Other
Compensation
($)(3)
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Total
($)
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David Flowers(4)
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65,000
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|
125,008
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3,543
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|
193,551
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|
Victoria L. Freed
(
4
)
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|
80,000
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|
125,008
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|
3,543
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|
208,551
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Lizanne Galbreath(4)
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199,972
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3,543
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|
203,515
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Chad Hollingsworth(4)
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75,000
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|
125,008
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|
3,543
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|
203,551
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Lewis J. Korman(4)
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110,000
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|
125,008
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3,543
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|
238,551
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Thomas J. Kuhn(4)
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105,000
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|
125,008
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29,265
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|
259,273
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Thomas J. McInerney(4)
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80,000
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|
125,008
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|
3,543
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|
208,551
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Thomas P. Murphy, Jr.(4)
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|
80,000
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|
125,008
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|
3,543
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|
208,551
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Stephen R. Quazzo(4)
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204,976
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3,543
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|
208,519
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Thomas O. Ryder(4)
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80,000
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|
125,008
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4,306
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|
209,314
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Avy H. Stein(4)
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125,000
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|
125,008
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15,776
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|
265,784
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-
(1)
-
Represents
the dollar value of fees elected to be deferred pursuant to ILG's Deferred Compensation Plan for Non-Employee Directors, as described above. For 2017,
Mr. Kuhn and Mr. Ryder elected for this entire amount to be deferred as share units.
-
(2)
-
All
amounts for stock awards are the aggregate grant date fair value of the RSUs computed in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718, CompensationStock Compensation ("ASC Topic 718"). Each non-employee director received 4,808 restricted stock units on May 31, 2017. In addition,
Ms. Galbreath and Mr. Quazzo elected to have their quarterly cash retainer paid in shares. For a discussion of the assumptions made in the valuation of such stock awards, see
Note 18 to the Consolidated Financial Statements for 2017 contained in our 2017 Annual Report.
-
(3)
-
Includes
dollar amount of dividends on restricted stock units that are accrued as additional RSUs. For Mr. Kuhn, Mr. Ryder, and Mr. Stein these
amounts also include the dollar amount of dividends on deferred fees that are accrued as additional share units.
-
(4)
-
Each
of these directors held 4,889 restricted stock units as of December 31, 2017.
The
nominating committee has primary responsibility for establishing non-employee director compensation arrangements, which are designed to provide competitive compensation necessary to
attract and retain high quality non-employee directors and to encourage ownership of ILG stock to further align directors' interests with those of ILG's stockholders. When considering non-employee
director compensation arrangements, the nominating committee consulted a competitive benchmarking report prepared by the compensation and human resources committee's independent consultant, Meridian.
Compensation Committee Interlocks and Insider Participation
Mr. Stein, Ms. Freed, Mr. Murphy and Mr. Ryder served on our Compensation Committee during 2017 and
none has been an officer or employee of ILG. None of ILG's executive officers or directors serves or has served on the board of directors or Compensation Committee of any entity that has one or more
executive officers serving as a member of ILG's board of directors or Compensation Committee.
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36
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Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following compensation discussion and analysis discusses our executive compensation programs for 2017. The design and administration of
these programs is overseen by ILG's Compensation Committee. This section focuses on the compensation decisions made for the following individuals who are referred to as the named executive officers:
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Craig M. Nash
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Chairman, President and Chief Executive Officer
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Sergio D. Rivera
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Executive Vice President, ILG
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President and Chief Executive Officer, Vacation Ownership segment
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Jeanette E. Marbert
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Executive Vice President, ILG
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President and Chief Executive Officer, Exchange & Rental segment
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William L. Harvey
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Executive Vice President and Chief Financial Officer
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John A. Galea
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Executive Vice President and Chief Accounting Officer
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Victoria J. Kincke
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Executive Vice President, General Counsel and Secretary
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Overview Highlights of 2017 ILG performance
:
Growing the Business
-
-
Increased revenues by $430 million to $1.8 billion
-
-
Opened two world-class resorts, The Westin Nanea Ocean Villas and Westin Los Cabos Resort Villas and Spa, and expanded several other
properties, growing the number of vacation ownership units by nearly 700, or 11%
-
-
Enhanced our product offering through the introduction of two new multi-site programs, Westin Aventuras and Hyatt Residence Club Portfolio
Program
-
-
Leveraged opportunities to drive revenue and share best practices across businesses
-
-
Interval International added 63 resorts in 20 countries and launched its hotel exchange product
-
-
Positioned ILG for long-term sustainable growth.
Deploying Capital Wisely
-
-
Invested $350 million in the business to drive vacation ownership sales and related recurring revenues
-
-
Returned $102 million to shareholders through dividends and stock repurchases
-
-
Increased the quarterly dividend by 25% to $0.15 per share from $0.12
Managing through Hurricanes
-
-
Maintained operations through a series of destructive hurricanes, while keeping guests and associates safe
-
-
Created the ILG Relief Fund to assist those in need following the storms, which has provided grants to over 460 associates in Puerto Rico, the
U.S. Virgin Islands and Florida
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The
following charts summarize key financial results for 2017 compared to 2016 and 2015 (dollars in millions except per share and percentage data):
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Year Ended December 31
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2017
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Year over
Year
Change
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2016
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Year over
Year
Change
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2015
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Revenue
|
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$1,786
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|
32%
|
|
$1,356
|
|
95%
|
|
$697
|
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|
|
Revenue excluding cost reimbursements
|
|
$1,446
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34%
|
|
$1,082
|
|
99%
|
|
$545
|
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|
|
Net income attributable to common stockholders
|
|
$168
|
|
(37)%
|
|
$265
|
|
263%
|
|
$73
|
|
|
|
|
Adjusted net income(1)
|
|
$139
|
|
7%
|
|
$130
|
|
71%
|
|
$76
|
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Adjusted EBITDA reported(2)
|
|
$346
|
|
15%
|
|
$302
|
|
63%
|
|
$185
|
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Adjusted EBITDA long-term incentive calculation(3)
|
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$345
|
|
19%
|
|
$290
|
|
58%
|
|
$184
|
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|
Diluted earnings per share
|
|
$1.34
|
|
(48)%
|
|
$2.60
|
|
106%
|
|
$1.26
|
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|
Adjusted diluted earnings per share(4)
|
|
$1.10
|
|
(14)%
|
|
$1.28
|
|
(3)%
|
|
$1.32
|
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Price per share at last trading day(5)
|
|
$28.48
|
|
57%
|
|
$18.17
|
|
16%
|
|
$15.61
|
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-
(1)
-
Adjusted
net income is defined as net income attributable to common stockholders excluding, without duplication (a) acquisition related and restructuring
costs, (b) other non-operating foreign currency remeasurements, (c) the impact of the application of purchase accounting, (d) goodwill and asset impairments and//or permitted
reversals, and (e) other special items. Other special items include (i) the gain on bargain purchase price recognized as part of the Vistana acquisition, (ii) costs related to
non-ordinary course litigation matters described in the notes to our financial statements, (iii) impact to our financial statements related to natural disasters, including Hurricane Irma and
other named storms, (iv) costs related to activist defense, (v) the net provisional tax benefit related to Tax Reform and (vi) the impact of the substantial liquidation of our
Venezuela subsidiary. Reconciliation to net income attributable to common stockholders is provided in Appendix A.
-
(2)
-
Adjusted
EBITDA is defined as net income attributable to common stockholders, excluding, if applicable (a) non-operating interest income and interest expense,
(b) income taxes, (c) depreciation expense, (d) amortization expense of intangibles, (e) non-cash compensation expense, (f) goodwill and asset impairments and/or
permitted reversals, (g) acquisition related and restructuring costs, (h) other non-operating income and expense (i) the impact of application of purchase accounting, and
(j) other special items, which includes items (i) through (iv) in footnote 1. Reconciliation to net income attributable to common stockholders is provided in Appendix A.
ILG's presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
-
(3)
-
For
purposes of calculation of the long-term incentive awards that were earned based on Adjusted EBITDA performance from 2015-2018, Adjusted EBITDA is defined as net
income attributable to common stockholders excluding, if applicable: (1) non-cash compensation expense, (2) depreciation expense, (3) amortization expense, (4) goodwill and
asset impairments, (5) income tax provision, (6) interest income and interest expense, (7) acquisition related and restructuring costs, (8) other non-operating income, and
(9) one
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time
charges. Reconciliation to net income attributable to common stockholders is provided in Appendix A.
-
(4)
-
Adjusted
diluted earnings per share is defined as Adjusted net income divided by the weighted average number of shares of common stock and dilutive securities
outstanding during the period. Reconciliation to diluted earnings per share is provided in Appendix A.
-
(5)
-
Based
on the closing price for ILG shares on The NASDAQ Stock Market on the last trading day of the applicable year.
Compensation Program Highlights:
The following table summarizes the specific features of our executive compensation program.
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What We DO
|
|
What We DON'T Do
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|
Pay for performance philosophy and practice, by including performance conditions on 83% of the 2017 target compensation of the chief executive officer and an average of over 64% for the other named executive
officers
|
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Guarantee bonus payments for our named executive officers
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|
Maintain robust stock ownership guidelines (6x multiple for CEO)
|
|
Allow hedging or pledging of ILG stock
|
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|
|
Maintain a long-standing "clawback" policy
|
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Pay tax gross-ups on severance arrangements and perquisites
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Require "double trigger" for change of control protection
|
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Provide ongoing supplemental executive retirement plans
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Impose caps for all performance-based awards of no more than 200% of target
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Provide only limited perquisites, which provide nominal additional assistance to allow executives to focus on their duties
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Conduct a comprehensive annual risk assessment of our compensation program
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Utilize an independent compensation consultant to assist the Compensation Committee in evaluating executive compensation
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Compensation Decisions for 2017:
-
-
Increased Proportion of Performance Based RSUs in Long Term Equity
Awards.
Beginning with the annual 2017 grants, one half (50%) of the annual equity grants to our executive officers is comprised of Performance
Restricted Stock Units ("RSUs") (which vest based on ILG's 3 year cumulative adjusted EBITDA and Total Shareholder Returns), with the remaining one half (50%) comprised of Annual RSUs.
-
-
Ratable Vesting of Annual
RSUs.
Beginning in 2017, Annual RSUs vest ratably over three years to harmonize practices across the organization and to better align with market
practices.
-
-
Double Trigger for RSU
Vesting.
Amended employment agreements with the chief executive officer, then chief operating officer, chief financial officer and chief
executive officer of vacation ownership, to provide that all equity awards granted to our executive officers will be subject to "double trigger" accelerated vesting upon a change of control. This is
consistent with the terms of RSUs granted generally.
-
-
Amendments to Change of Control
Arrangements.
To align with market practices, ILG amended the chief executive officer employment agreement to remove the legacy gross
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up
provision for payments subject to Section 280G of the Internal Revenue Code and eliminated "single triggers" for cash severance from executive officer change of control agreements. As a
result, all change of control arrangements with ILG's executive officers require a double trigger for benefits and do not include a tax "gross up" for taxes imposed on any change of control payments.
-
-
Removed "Gross up" for
Perquisite.
As part of the amendments to employment agreements described above, Mr. Nash and Ms. Marbert agreed to forego the prior
practice of the company grossing up amounts paid for supplemental disability premiums.
-
-
Increased Stock Ownership
Requirements.
In 2017, we increased our stock ownership guidelines to require our executives to own ILG stock with a market value at least equal
to 6 times base salary for our chief executive officer, at least 3 times base salary for ILG executive vice presidents and at least 2 times base salary for ILG corporate and segment level senior vice
presidents.
-
-
Incentive Pay.
The Compensation
Committee increased the amount of annual incentives and long-term incentives granted to named executive officers, based on the increased scope of the business and responsibilities of the named
executive officers following the acquisition of Vistana.
Philosophy and Objectives of Compensation
ILG is focused on growing our business of providing memorable vacation experiences to our customers and delivering shareholder value. To
further these objectives, ILG's executive officer compensation program is designed to attract, reward, motivate, and retain top executives. In order to provide appropriate incentives, a significant
portion of each executive's pay is based on corporate performance. The following charts show the pay mix at target for the chief executive officer and the average pay mix at target for the other named
executive officers.
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CEO Target Compensation
|
|
Other NEO Average Target
|
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Compensation
|
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|
ILG's
compensation program rewards annual performance through an annual cash incentive program and long-term value creation through performance-contingent equity grants. ILG reviewed
all components of our executive pay program and made changes that align with market, introducing more contemporary terms, and bringing greater uniformity to severance and change-of-control provisions.
Based on the most recent benchmarking analyses, the total compensation opportunities at target levels of performance are provided at or near the median of the peer group, with individual
differentiation to reflect, among other things, executive experience, performance, internal equity, and unique customer relationships that may be difficult to replace.
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Compensation Methodology
Roles and Responsibilities.
Our executive officer compensation program is administered by our
Compensation Committee. In 2017, the Compensation
Committee engaged Meridian Compensation Partners, LLC to provide executive compensation advisory services to the Compensation Committee. Meridian also prepared a report for ILG's nominating
committee on director compensation.
Meridian
provides the Compensation Committee with support on market information and perspective on executive pay practices. At the request of the Compensation Committee, Meridian
participated in select discussions during the Compensation Committee's meetings with respect to reviewing and modifying incentive programs.
Our
chief executive officer makes recommendations to the Compensation Committee regarding salary and bonus payments for the other named executive officers. In addition, our chief
executive officer, then chief operating officer and chief financial officer make recommendations on performance goals based on board approved budgets and internal forecasts, and provide information
and recommendations as to whether performance goals were achieved. The Compensation Committee evaluates these recommendations and approves the compensation for the named executive officers. With
respect to the chief executive officer, this review is conducted in executive session without the presence of the chief executive officer.
Benchmarking.
In 2016, under the direction of the Compensation Committee, Meridian conducted a
benchmarking study of compensation levels and design
practices for the top executive positions. Meridian provided the Compensation Committee with an analysis based on a comparator group that reflects the scope, industry and financial characteristics of
ILG and represents a key market for competitive executive talent. While the comparator group does include a number of companies in the Hotels, Restaurants & Leisure industry (as defined by
Standard & Poor's GICS industry classifications), it does not include restaurant companies as these are not businesses similar to ILG and are not a source of competition for executive talent.
Within this comparator group, ILG's revenues place it at the 51
st
percentile.
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2017 Comparator Group
|
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|
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Choice Hotels Intl Inc.
|
|
Marriott Vacations Worldwide, Inc.
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|
Diamond Resorts International
|
|
Norwegian Cruise Line Holdings Ltd.
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|
|
Hospitality Properties Trust
|
|
Pinnacle Entertainment Inc.
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|
Hyatt Hotels Corporation
|
|
Ryman Hospitality Properties, Inc.
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Intercontinental Hotels, Inc.
|
|
Vail Resorts Inc.
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|
|
Isle of Capri Casinos Inc.
|
|
Viad Corp.
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|
La Quinta Holdings Inc.
|
|
Wyndham Worldwide Corp.
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|
The
Compensation Committee reviewed both the levels of total compensation for the chief executive officer, then chief operating officer, chief financial officer, chief accounting
officer and general counsel and as well as the relative contribution of each different element of such individual's compensation against similarly situated individuals within the comparator group.
Prior to the Vistana transaction, these named executive officers were an average of 20% below the market median levels for total targeted compensation. Our chief executive officer's total target
compensation mix aligned with the median of the market, as did the mix for our other named executive officers. The compensation for Mr. Rivera was individually negotiated in contemplation of
joining ILG in late 2016.
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Elements of Compensation
Our pay philosophy is supported by the following elements of our executive compensation:
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Element
|
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Form
|
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|
|
Purpose
|
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Base Salary
|
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|
|
Cash
(Fixed)
|
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|
|
Provides a competitive level of fixed pay reflecting the executive's experience, responsibilities, and performance
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Annual Incentive
|
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|
Cash
(Variable)
|
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|
|
Rewards executives for achieving annual revenue and earnings goals, and for certain executives, individual performance goals
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Long-Term Incentives
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Equity (Variable)
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|
|
Provide equity-based incentives that reward management for achieving longer-term financial and strategic growth goals while also aligning management interests with stockholders' interests
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Base Salary
Management and the Compensation Committee consider a number of factors in recommending and determining base salaries of named executive
officers, including corporate performance and with respect to an individual executive the assumption of additional responsibilities, internal equity, periodic benchmarking, historical compensation for
executives of acquired companies and other factors which demonstrate an executive's value to ILG.
In
March 2017, in connection with the cessation of gross-up benefits for disability insurance, the amounts of base salary for Mr. Nash and Ms. Marbert
were adjusted. Mr. Galea and Ms. Kincke received a 3% increase in base salary effective in July 2017 consistent with increases provided to executives generally on an annual basis. All of
the named executive officers had received increases the prior year in connection with the acquisition of Vistana other than Mr. Rivera, whose base salary was determined as a result of arm's
length negotiations with him to attract him to join ILG in late 2016. Note that Ms. Marbert had been the Chief Operating Officer for ILG until November 2017 when she became the President and
Chief Executive Officer, Exchange & Rental. No changes were made to her compensation at that time. The following shows the original annual base salaries as of the beginning of 2017 and the
adjusted annual base salaries effective in March 2017:
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Name
|
|
|
Original Base
Salary
|
|
|
Adjusted Base
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig M. Nash(1)
|
|
|
$865,000
|
|
|
$875,000
|
|
|
|
|
Sergio D. Rivera
|
|
|
$550,000
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|
Jeanette E. Marbert(1)
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|
|
$475,000
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|
$480,000
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|
William L. Harvey
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|
$420,000
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|
|
|
|
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|
John A. Galea(2)
|
|
|
$300,000
|
|
|
$309,000
|
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|
|
|
Victoria J. Kincke(2)
|
|
|
$300,000
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|
$309,000
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|
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|
|
-
(1)
-
Adjustment
effective March 25, 2017.
-
(2)
-
Adjustment
effective July 1, 2017.
Annual Incentives
ILG's annual incentive program is designed to reward performance on an annual basis. The annual incentive program represents an important
incentive tool to achieve ILG's annual objectives
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42
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Table of Contents
and
to attract, motivate and retain executive talent with significant upside opportunity for executives if performance goals are exceeded.
Our
annual incentive program, implemented under our 2013 Stock and Incentive Compensation Plan, provides for a cash payment based upon ILG financial performance, and, for certain named
executive officers, their specific businesses and individual performance. Mr. Rivera's annual incentive compensations based, in part, on the performance of the Vistana and Hyatt Vacation
Ownership businesses, referred to in this section as Vacation Ownership. ILG generally pays bonuses during the first quarter following finalization of financial results for the prior year and
Compensation Committee approval.
For
2017, the Compensation Committee established target bonuses for each of the named executive officers expressed as a percentage of base salary. These incentives
were determined based on ILG's consolidated Adjusted EBITDA and revenue performance, the Vacation Ownership Adjusted EBITDA and revenue performance and individual performance as described below.
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Name
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|
Target
Annual
Incentive as %
of Salary
|
|
|
% Based
on ILG Target
Adjusted
EBITDA
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|
% Based
on ILG Target
Revenue
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|
% Based
on VO Target
Adjusted
EBITDA
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|
% Based
on VO Target
Revenue
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|
% Based
on Individual
Performance
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Craig M. Nash
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120%
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85%
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15%
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Sergio D. Rivera
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100%
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25%
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60%
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15%
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Jeanette E. Marbert
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100%
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85%
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15%
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William L. Harvey
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80%
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60%
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10%
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30%
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|
John A. Galea
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55%
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|
60%
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10%
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|
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|
30%
|
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|
Victoria J. Kincke
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55%
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|
60%
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|
10%
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|
30%
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Adjusted
EBITDA and revenue excluding cost reimbursements were selected by the Compensation Committee as the performance measures because they reflect the financial focus of ILG and
align the program with ILG's key business goals. These targets are designed to reward both top line growth and expense controls. The target Adjusted EBITDA and revenue levels were based on the 2017
budget approved by the board of directors. Please see Appendix A for a reconciliation of Adjusted EBITDA.
The
following table shows the Adjusted EBITDA goals for 2017 for the annual incentive program. Potential payouts range from a minimum of 0% to a maximum of 200% of target, with results
interpolated for points in between established goals:
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ILG Adjusted EBITDA
(Millions)
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|
Annual Incentive
Payout
as a % of Target
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|
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|
VO Adjusted EBITDA
(Millions)
|
|
Annual Incentive
Payout
as a % of Target
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|
|
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|
|
|
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|
Below $302.6
|
|
0%
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|
Below $164.7
|
|
0%
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|
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|
$302.6
|
|
50%
|
|
|
|
|
|
|
|
$164.7
|
|
50%
|
|
|
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|
$329.3
|
|
75%
|
|
|
|
|
|
|
|
$179.3
|
|
75%
|
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|
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|
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|
|
|
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|
$356.0
|
|
100%
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|
|
|
|
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|
$193.8
|
|
100%
|
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|
|
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|
|
|
|
|
|
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|
$391.6
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125%
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|
$213.2
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125%
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|
$427.2
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|
150%
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|
|
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|
$232.6
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|
150%
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|
$462.8
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|
175%
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|
$251.9
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175%
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|
$498.4
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|
200%
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|
$271.3
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|
200%
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|
Above $498.4
|
|
200%
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|
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|
Above $271.3
|
|
200%
|
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43
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Table of Contents
The
following table shows the revenue excluding cost reimbursements goals for 2017 for the annual incentive program. Payouts range from a minimum of 0% to a maximum of 140% of target,
with results interpolated for points in between established goals:
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|
|
ILG Revenue (Millions)
|
|
Annual Incentive
Payout
as a % of Target
|
|
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|
|
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|
|
VO Revenue (Millions)
|
|
Annual Incentive
Payout
as a % of Target
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|
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|
Below $1,245.8
|
|
0%
|
|
|
|
|
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|
|
Below $850.1
|
|
0%
|
|
|
|
|
$1,245.8
|
|
50%
|
|
|
|
|
|
|
|
$850.1
|
|
50%
|
|
|
|
|
$1,355.8
|
|
75%
|
|
|
|
|
|
|
|
$925.1
|
|
75%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,465.7
|
|
100%
|
|
|
|
|
|
|
|
$1,000.1
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,612.3
|
|
120%
|
|
|
|
|
|
|
|
$1,100.1
|
|
120%
|
|
|
|
|
$1,758.8
|
|
140%
|
|
|
|
|
|
|
|
$1,200.1
|
|
140%
|
|
|
|
|
Above $1,758.8
|
|
140%
|
|
|
|
|
|
|
|
Above $1,200.1
|
|
140%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
2017 Consolidated ILG Adjusted EBITDA was $345.2 million, or 97.0% of the target Adjusted EBITDA and revenue excluding cost reimbursements was $1.449 billion, or
98.9% of target revenue excluding cost reimbursements. Therefore, the annual incentives earned based on Consolidated ILG Adjusted EBITDA and revenue performance were 89.9% and 96.2% of the respective
target
amounts. These results were negatively impacted by the hurricanes that made landfall during the third quarter of 2017 in the amount of approximately $9 million to Adjusted EBITDA and
approximately $21 million to consolidated revenue.
Actual
2017 Vacation Ownership Adjusted EBITDA was $191.9 million, or 99.0% of the target Adjusted EBITDA and revenue excluding cost reimbursements was $988.0 billion, or
98.8% of target revenue excluding cost reimbursements. Therefore, the annual incentives earned based on Vacation Ownership Adjusted EBITDA and revenue performance were 96.7% and 96.0% of the
respective target amounts.
With
respect to the portion of the incentives based on subjective individual performance, the Compensation Committee determined, following a discussion with the chief executive officer
regarding the individual performance of each Mr. Harvey, Mr. Galea and Ms. Kincke, that Mr. Harvey had earned the 111% of the target amount and Mr. Galea and
Ms. Kincke had earned 121% of the target amount. In determining these amounts, the Compensation Committee considered the leadership roles that each of them played in the integration efforts and
the establishment of shared services functions across the enterprise, similar to other leaders of shared service functions.
The
following table shows the component and total cash incentive amounts for each of these named executive officers:
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
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|
|
Annual
Incentive
Based on
ILG Adjusted
EBITDA
($)
|
|
Annual
Incentive
Based on
ILG
Revenue
($)
|
|
Annual
Incentive
Based on
VO
Adjusted
EBITDA
($)
|
|
Annual
Incentive
Based on
VO
Revenue
($)
|
|
Annual
Incentive
Based on
Subjective
Criteria
($)
|
|
Total Cash
Incentives
($)
|
|
|
|
|
Craig M. Nash
|
|
|
802,336
|
|
|
151,554
|
|
NA
|
|
NA
|
|
|
NA
|
|
|
953,890
|
|
|
|
|
Sergio D. Rivera
|
|
|
123,609
|
|
|
NA
|
|
319,164
|
|
79,169
|
|
|
NA
|
|
|
521,942
|
|
|
|
|
Jeanette E. Marbert
|
|
|
366,782
|
|
|
69,282
|
|
NA
|
|
NA
|
|
|
NA
|
|
|
436,064
|
|
|
|
|
William L. Harvey
|
|
|
181,233
|
|
|
32,332
|
|
NA
|
|
NA
|
|
|
111,435
|
|
|
325,000
|
|
|
|
|
John A. Galea
|
|
|
91,669
|
|
|
16,353
|
|
NA
|
|
NA
|
|
|
61,928
|
|
|
169,950
|
|
|
|
|
Victoria J. Kincke
|
|
|
91,669
|
|
|
16,353
|
|
NA
|
|
NA
|
|
|
61,928
|
|
|
169,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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44
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Table of Contents
Long-Term Incentives
In determining ILG's long-term incentive programs, the Compensation Committee believes that by providing a meaningful portion of an executive
officer's compensation in stock, his or her incentives are aligned with our stockholders' interests in a manner that drives better performance over time. In setting individual award levels, important
considerations include effective retention, market competitiveness, performance, motivating strong future performance and issues of internal compensation equity.
Our
long-term incentive program, implemented under our 2013 Stock and Incentive Compensation Plan, generally consists of two components, each of which is subject to performance hurdles.
Annual
RSUs:
The annual RSUs are performance-based restricted stock units that are granted during the first quarter of the fiscal year and are
deemed earned only after a determination by the Compensation Committee that the specified performance conditions have been met during the performance year in which they are granted. Once earned, these
annual RSUs vest in equal portions over several years, subject to continued employment. Beginning in 2017, these awards vest over three years instead of the four year vesting schedule used in prior
years. The Compensation Committee believes that the time based vesting of the performance-based RSUs promotes executive retention and encourages long-term performance because the value of the RSUs
will only be realized upon ultimate vesting.
Long-term
Performance RSUs:
These long-term performance-based RSUs are granted during the first quarter of the fiscal year and vest on the
third anniversary of the grant date, following a determination by the Compensation Committee of the number of shares earned based on the specified, multi-year performance conditions.
For 2017, 50% of the value of the total long-term incentive opportunity for each of the named executive officers was granted through annual
RSUs and 50% was granted through performance RSUs. This split provides greater weight to the performance RSUs than the 75% to 25% split used in prior years and was determined to be in line with market
practice. The allocation reflects the Compensation Committee's goal of aligning our executives' and stockholders' interests,
while recognizing the goal of moving ILG in the right direction to thrive in the evolving business environment within the leisure industry.
For
Mr. Nash, Ms. Marbert, Mr. Harvey, Mr. Galea and Ms. Kincke, the Compensation Committee determined in February 2017 to increase the first quarter
RSU grant in terms of the dollar value between 25% and 75% from the prior year. The Vistana acquisition that closed in May 2016 materially changed the size of the enterprise and the responsibilities
of the named executive officers and additional performance-based grants had been provided to these named executive officers upon closing in May 2016. For Mr. Rivera, the prior year grant was
made in connection with his hiring and was not part of the annual process. All of these 2017 grant amounts were converted to a number of units based on the average of the closing ILG stock price for
the trailing twenty days ending on the date prior to determination of the amount of grant by the Compensation Committee on February 14, 2017.
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45
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Table of Contents
The following table summarizes the 2017 grant levels which were determined based on the particular experience, performance, roles and responsibilities of the
individual executives and the other factors described above.
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|
|
Total Dollar
Value of
Grant
($)
|
|
Annual
Performance
RSUs
(#)
|
|
Long-Term
Performance
RSUs at
Target
(#)
|
|
Total
RSUs
(#)
|
|
|
|
|
Craig M. Nash
|
|
|
2,800,000
|
|
|
74,962
|
|
|
74,963
|
|
|
149,925
|
|
|
|
|
Sergio D. Rivera
|
|
|
1,000,000
|
|
|
26,772
|
|
|
26,773
|
|
|
53,545
|
|
|
|
|
Jeanette E. Marbert
|
|
|
700,000
|
|
|
20,079
|
|
|
20,079
|
|
|
40,158
|
|
|
|
|
William L. Harvey
|
|
|
600,000
|
|
|
16,064
|
|
|
16,063
|
|
|
32,127
|
|
|
|
|
John A. Galea
|
|
|
300,000
|
|
|
8,031
|
|
|
8,032
|
|
|
16,063
|
|
|
|
|
Victoria J. Kincke
|
|
|
300,000
|
|
|
8,031
|
|
|
8,032
|
|
|
16,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
RSUs.
If earned, the annual RSUs will vest one-third each year with full vesting occurring three years after the date of grant. This is
a change from prior years when annual awards vested ratably over four years. This change was made following a review of market practice, noting that companies are changing at a faster pace and it is
difficult to set targets longer than three years. For 2017, the requirement for earning the annual RSUs was achievement of at least two of the following
performance conditions that were set in mid-February of 2017: (1) Interval membership count as of the end of the second, third or fourth fiscal quarter of 2017 exceeding the specified amount,
(2) the number of enterprise-wide exchange transactions during 2017 exceeding a specified amount; (3) the retention rate of Interval members for the 12 month period ended as of
the end of the second, third or fourth fiscal quarter of 2017 exceeding a specified percentage; (4) the number of managed resorts as of the end of the second, third or fourth fiscal quarter
exceeding the specified amount, or (5) Vacation Ownership achieving at least a specified amount of total timeshare contract sales for 2017. During 2018, management provided a schedule of the
relevant metrics in order for the Compensation Committee to certify that the relevant targets have been met for the 2017 grant. These awards were earned and will vest as described above.
Long-Term
Performance RSUs.
The long-term performance RSUs granted in February 2017 as part of the long-term incentives have two components:
60% vest based on a cumulative three-year consolidated ILG Adjusted EBITDA target for 2017-2019 that is set based on expected 2017 results and a set growth rate for 2018 and 2019, and the remaining
40% vest based on relative total shareholder return of our common stock against two peer groups over the period from December 31, 2016 through December 31, 2019. The Compensation
Committee selected these metrics to encourage bottom line growth and reward shareholder returns.
For
the 2017 relative total shareholder return ("TSR") performance, the returns are compared to a broad industry peer group as well as the Russell 2000 index companies as a whole. The
broad industry peer group includes those companies in the Russell 2000 that have the Hotels, Restaurant and Leisure GICS Code 253010, referred to as the industry peer group. These two groups
are equally weighted to determine the relative return.
Long-Term Equity Awards Earned in 2017.
The 2015 long-term performance RSUs were granted by the Compensation
Committee based on a cumulative
three-year Adjusted EBITDA target for 60% of the awards and on the relative three-year total shareholder return for 40% of the awards.
Adjusted
EBITDA awards.
For the Adjusted EBITDA-based awards, if a higher or lower level of cumulative Adjusted EBITDA performance was achieved
for 2015-2017, the number of shares
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46
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Table of Contents
earned
was increased or decreased accordingly. The following table describes the relationship between the target cumulative Adjusted EBITDA for 2015-2017 for the long-term performance RSUs, to be
interpolated for points in between, based on ILG's Adjusted EBITDA performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (Millions)
|
|
Performance
RSUs Earned
as a % of
Target
|
|
|
|
|
Below T-20%
|
|
|
0
|
%
|
|
|
|
T-20%
|
|
|
50
|
%
|
|
|
|
T-10%
|
|
|
75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Target Cumulative Adj. EBITDA(T)
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
T+10%
|
|
|
150
|
%
|
|
|
|
T+20%
|
|
|
200
|
%
|
|
|
|
Above T+20%
|
|
|
200
|
%
|
|
|
|
|
|
|
|
|
|
For
this purpose, as for the annual incentives, Adjusted EBITDA is defined as net income attributable to common stockholders excluding, if applicable: (1) non-cash compensation
expense, (2) depreciation expense, (3) amortization expense, (4) goodwill and asset impairments, (5) income tax provision, (6) interest income and interest expense,
(7) acquisition related and restructuring costs, (8) other non-operating income and expense, and (9) one time charges. See Appendix A for reconciliation.
Shares
earned based on cumulative Adjusted EBITDA for 2015-2017 performance vested on the third anniversary of the grant date, following certification of performance by the Compensation
Committee and subject to continued employment. The combined Adjusted EBITDA for 2015 through 2017 of $818.9 million was greater than the cumulative target of $600.8 million and the
maximum amount of Adjusted EBITDA of $720.9 million for 2015 through 2017. Therefore, the 2015 long-term performance RSUs were earned at 200% of target amounts.
TSR
awards.
For long-term performance RSUs earned based on the relative TSR on ILG stock measured against the Russell 2000 index and the
industry peer group for the period from December 31, 2014 through December 31, 2015, the relative TSR is determined as the annualized rate of return as measured by stock price
appreciation over the measurement period described above, taking dividends into account and using a 20 trading-day average of reported closing prices. The first peer group is the Russell 2000 Index,
of which ILG is a component. The second peer group is the subset of Russell 2000 companies, including ILG, with the Hotels, Restaurant and Leisure GICS Code 253010. In crafting this performance
measure, the Compensation Committee noted the small number of publicly traded peer companies for ILG and determined that the industry peer group provided an externally defined group of companies in
aligned businesses with similar market capitalization for measuring market performance while the full Russell 2000 provided a broad market perspective. The Compensation Committee determined to weight
these two peer groups equally. The
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47
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Table of Contents
relative
TSR against each peer group will be measured as follows with percentiles being interpolated for amounts in between:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative Percentile Rank
|
|
Percent of
Target
Earned
|
|
|
|
|
Greater than 75
th
percentile
|
|
|
200
|
%
|
|
|
|
75
th
Percentile (Maximum)
|
|
|
200
|
%
|
|
|
|
50
th
Percentile (Target)
|
|
|
100
|
%
|
|
|
|
40
th
Percentile (Threshold)
|
|
|
50
|
%
|
|
|
|
Less than 40
th
Percentile
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
For
the December 31, 2014 through December 31, 2017 period, ILG stock ranked at the 62
nd
percentile against the index and the
68
th
percentile against the industry group, which resulted in a 159.4% payout on these RSUs.
Dividends.
During
2017, ILG maintained a regular quarterly dividend of $0.15 per share. Under the award agreements for the RSUs, these awards
accrue dividend equivalents and the Compensation Committee determined such accrual be made in additional RSUs which vest at the times and subject to the conditions of the underlying awards. These
amounts are included under the heading "Other Annual Compensation" in this proxy statement pursuant to applicable rules.
Compensation Related Policies
Stock
Ownership Guidelines.
To further align the interests of our executives with the interests of stockholders, our board of directors, upon
recommendation of the Compensation Committee, adopted stock ownership guidelines for all executive officers. The guidelines require each senior executive to own a multiple of his or her base salary in
the form of ILG common stock and certain unvested equity, generally within five years of assuming his or her position. Prior to attaining the required level, the executive is required to hold 50% of
shares acquired upon settlement of equity awards. The required levels of ownership are designed to reflect the level of responsibility that the executive positions entail. In February 2017, ILG
updated its stock ownership guidelines for our executive officer positions as shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Position Level
|
|
Prior Stock
Ownership
Guidelines
|
|
New Stock
Ownership
Guidelines
|
|
|
|
|
Chief Executive Officer
|
|
5 x base salary
|
|
6 x base salary
|
|
|
|
|
Chief Operating Officer
|
|
3 x base salary
|
|
3 x base salary
|
|
|
|
|
Chief Financial Officer and ILG Executive Vice Presidents
|
|
2 x base salary
|
|
3 x base salary
|
|
|
|
|
Chief Executive Officer and President of Segment
|
|
NA
|
|
3 x base salary
|
|
|
|
|
Presidents of Subsidiary Businesses
|
|
2 x base salary
|
|
2 x base salary
|
|
|
|
|
Senior Vice Presidents at ILG/Operating Segment
|
|
1 x base salary
|
|
2 x base salary
|
|
|
|
|
Interval International Executive Vice Presidents and Senior Vice Presidents
|
|
1 x base salary
|
|
1 x base salary
|
|
|
|
|
|
|
|
|
|
|
|
The
guidelines are administered by the Compensation Committee. As of April 24, 2018, all of our named executive officers were in compliance with the guidelines.
Recoupment
Provisions.
The Compensation Committee adopted a recoupment policy for annual and long-term incentive compensation in the event of
certain financial restatements. This policy provides that the Compensation Committee may require the reimbursement or forfeiture of any
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48
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Table of Contents
annual
incentive payment and any long-term incentive payment or award to an executive for the three years prior to a material restatement of financial results. This policy applies if that executive
engaged in fraud or intentional misconduct that caused the need for a material restatement of results, the payment was based on achieving results that were the subject of the material restatement and
a lower or no payment would have been made based upon the restated results.
In
addition, the granted RSUs have recoupment provisions in the event an executive is terminated for cause or it is determined that during the two-year period prior to termination there
was an event or circumstance that would have been grounds for termination for cause. In such event, ILG has the right to cancel all annual and performance RSUs that have not yet vested. Also, to the
extent any RSUs vested within two years following the event that was or would have been grounds for
termination for cause, ILG may cause such executive to return any shares or pay amounts realized from the settlement of shares issued upon vesting of such RSUs.
Hedging
and Pledging Policies.
Under our Policy on Securities Trading, our directors, executives and other employees are prohibited from
pledging ILG stock or engaging in hedging transactions involving ILG stock or derivatives as well as engaging in short sales involving ILG stock.
Change of Control and Severance
ILG believes that providing executives with severance and change of control protection is important to allowing executives to fully value the
forward-looking elements of their compensation packages, and therefore limit retention risk during uncertain times. During 2017 following a market analysis, the Compensation Committee approved
amendments to existing employment agreements with Mr. Nash, Mr. Rivera, Ms. Marbert and Mr. Harvey and entered into employment agreements to replace existing severance
agreements with Mr. Galea and Ms. Kincke, in each case, to:
-
-
accelerate vesting of RSUs following a change of control only if there is a qualifying termination,
-
-
remove the tax gross-up
provision for Mr. Nash's agreement, and
-
-
revise the amounts payable upon a qualifying termination and a qualifying termination following a change of control.
These
employment arrangements provide for payments in the event of either a termination by ILG other than for death, disability or cause or a termination by the executive for good
reason, referred to as a qualifying termination. In the event of a qualifying termination, amounts payable include a multiple of base salary and target annual incentive, payment of a pro-rata portion
of the annual
incentive for the year of termination, continuation of benefits for severance period, and vesting of certain equity awards based on the severance period (determined as if all such awards vested in
equal annual installments) for a qualifying termination for Mr. Nash, Mr. Rivera,
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49
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Table of Contents
Ms. Marbert,
and Mr. Harvey (all awards if following a change of control), subject to compliance with restrictive covenants. The multiples of salary and target annual incentive are as
follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
Qualifying
Termination
|
|
|
|
Qualifying
Termination
following Change In
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig M. Nash
|
|
|
|
|
2x
|
|
|
|
|
3x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sergio D. Rivera
|
|
|
|
|
2x
|
|
|
|
|
2.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeanette E. Marbert
|
|
|
|
|
2x
|
|
|
|
|
2.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Harvey
|
|
|
|
|
1x
|
|
|
|
|
2x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Galea
|
|
|
|
|
1x
|
|
|
|
|
1.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria J. Kincke
|
|
|
|
|
1x
|
|
|
|
|
1.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
terms and conditions of the RSUs held by our named executive officers provide that the vesting of such RSUs will be accelerated upon a qualifying termination following a change of
control.
Prior
to March 2017, Mr. Nash's employment agreement required either (1) a decrease of payments upon a change of control if such payments would have exceeded 2.99 times
the base amount under Section 280G of the Internal Revenue Code by no more than 110% or (2) a gross-up of payments subject to excise tax if the payments due upon a change of control
would have exceeded 2.99 times the base amount by more than 110%. In addition, the employment agreements, with each of Mr. Nash, Mr. Rivera, Ms. Marbert, and Mr. Harvey
previously provided that vesting of RSUs would accelerate upon a change of control if the vest date (determined as if all such RSUs vested in equal annual installments) would have occurred during the
two years following the change of control.
Other Compensation
During 2017, we provided a limited number of perquisites and other compensation to our named executive officers. These perquisites included
group term life insurance policies for each named executive officer, supplemental disability policies, and an auto allowance for our chief executive officer. The values of these benefits, and the
accrued dividend equivalents described above, are reported under the heading "Other Annual Compensation" in this proxy statement pursuant to applicable rules.
The
executive officers do not participate in any deferred compensation or retirement program other than ILG's 401(k) plan. ILG has established a 401(k) plan for our employees that is
intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the "Code") and has a separate 401(k) plan that covers the Vistana associates. Generally,
all employees, including the named executive officers, are eligible to participate in the applicable 401(k) plan from their start of service, or for the Vistana plan upon completion of 90 days
of service. Eligible employees electing to participate in the 401(k) plan may defer from one percent of their compensation up to the statutorily prescribed limit, on a pre-tax basis, by making a
contribution to the plan. ILG's discretionary matching contributions equal 50% of each participant's contribution of up to 6% of the participant's salary, while the Vistana plan also matches 100% of
the first 1% of the participant's salary. Employer matching contributions vest after two years of service.
Our
chief executive officer has on occasion used the private aircraft in which ILG owns a fractional interest for personal trips. In each case, he reimburses ILG for the costs of such
use.
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|
|
50
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Table of Contents
Tax
Deductibility.
Our Compensation Committee's practice generally has been to structure ILG's compensation program in such a manner so that
the compensation may be deductible by ILG for federal income tax purposes. Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a
company can deduct in any one year for certain executive officers. The exemption from Section 162(m)'s deduction limit for performance-based compensation has been repealed, effective for
taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for
transition relief applicable to certain arrangements in place as of November 2, 2017. Despite the Compensation Committee's prior efforts to structure compensation in a manner intended to be
exempt from Section 162(m) and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the
regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing Section 162(m)'s exemption from the deduction limit, no assurance can be
given that compensation intended to satisfy the requirements for exemption from Section 162(m) in fact will.
Committee
Consideration of Results of Stockholder Advisory Vote.
At our 2017 Annual Meeting of stockholders, our executive compensation program
received the support of nearly 98% of shares represented at the meeting. The Compensation Committee has considered the results of this vote and views this outcome as evidence of stockholder support of
its executive compensation decisions and policies. Our stockholders will again be asked to provide a non-binding advisory vote on our executive compensation at this Annual Meeting of stockholders.
Also at our 2017 Annual Meeting of stockholders, stockholders over 83% of shares represented at the meeting voted for the frequency of such non-binding advisory votes to be on an annual basis. The
Compensation Committee
recommended and our Board of Directors approved a recommendation for the advisory vote on executive compensation to be held annually going forward.
Compensation Committee Report
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 filing under the Securities Act or the Exchange Act, except to the extent ILG specifically incorporates this report by reference therein.
The
compensation committee evaluates and establishes compensation for executive officers and oversees the deferred compensation plan, ILG's management equity compensation plans, and
other management incentive, benefit and perquisite programs. Management has the primary responsibility for the disclosure of executive compensation in ILG's financial statements and reporting process.
With this in mind, the compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis above. The compensation committee is satisfied that the Compensation
Discussion and Analysis fairly and completely represents the philosophy, intent, and actions of the compensation committee with regard to executive compensation and recommended to our Board of
Directors that the Compensation Discussion and Analysis be included in the proxy statement.
Compensation and Human Resources Committee
Avy
H. Stein,
Chairman
Victoria L. Freed
Thomas P. Murphy, Jr.
Thomas O. Ryder
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51
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Table of Contents
Summary Compensation Table
The following table sets forth information concerning the total compensation received for services rendered to ILG and its subsidiaries during
2015, 2016 and 2017 by our chief executive officer, chief financial officer, and our four other most highly compensated executive officers for 2017, all of whom are referred to in this proxy statement
as named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)(1)
|
|
Bonus
($)
|
|
Stock Awards
($)(2)
|
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
|
All Other
Compensation
($)(4)
|
|
Total
($)
|
|
|
|
|
Craig M. Nash
|
|
|
2017
|
|
|
872,692
|
|
|
|
|
|
3,151,723
|
|
|
953,890
|
|
|
359,555
|
|
|
5,337,860
|
|
|
|
|
Chairman, President &
|
|
|
2016
|
|
|
823,866
|
|
|
|
|
|
4,353,054
|
|
|
1,319,711
|
|
|
247,324
|
|
|
6,743,955
|
|
|
|
|
Chief Executive Officer
|
|
|
2015
|
|
|
750,000
|
|
|
|
|
|
2,471,559
|
|
|
637,500
|
|
|
227,857
|
|
|
4,086,916
|
|
|
|
|
Sergio D. Rivera*(5)
|
|
|
2017
|
|
|
550,000
|
|
|
|
|
|
1,125,623
|
|
|
521,942
|
|
|
105,237
|
|
|
2,302,802
|
|
|
|
|
EVP, CEO & President, VO
|
|
|
2016
|
|
|
84,615
|
|
|
|
|
|
1,949,016
|
|
|
|
|
|
15,444
|
|
|
2,049,075
|
|
|
|
|
Jeanette E. Marbert
|
|
|
2017
|
|
|
478,846
|
|
|
|
|
|
844,205
|
|
|
436,064
|
|
|
126,930
|
|
|
1,886,045
|
|
|
|
|
EVP, CEO & President, E&R
|
|
|
2016
|
|
|
460,692
|
|
|
|
|
|
1,597,407
|
|
|
682,642
|
|
|
87,486
|
|
|
2,828,227
|
|
|
|
|
|
|
|
2015
|
|
|
435,000
|
|
|
|
|
|
786,411
|
|
|
369,750
|
|
|
80,364
|
|
|
1,671,526
|
|
|
|
|
William L. Harvey
|
|
|
2017
|
|
|
420,000
|
|
|
111,435
|
|
|
675,370
|
|
|
213,565
|
|
|
101,700
|
|
|
1,522,070
|
|
|
|
|
Chief Financial Officer
|
|
|
2016
|
|
|
403,904
|
|
|
94,905
|
|
|
1,391,948
|
|
|
364,941
|
|
|
64,345
|
|
|
2,320,043
|
|
|
|
|
|
|
|
2015
|
|
|
375,000
|
|
|
29,846
|
|
|
533,648
|
|
|
209,217
|
|
|
58,295
|
|
|
1,206,006
|
|
|
|
|
John A. Galea
|
|
|
2017
|
|
|
304,500
|
|
|
61,928
|
|
|
337,680
|
|
|
108,022
|
|
|
45,704
|
|
|
812,130
|
|
|
|
|
EVP, Chief Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria J. Kincke
|
|
|
2017
|
|
|
304,500
|
|
|
61,928
|
|
|
337,680
|
|
|
108,022
|
|
|
45,704
|
|
|
812,130
|
|
|
|
|
EVP, General Counsel & Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Includes
amounts since November 7, 2016 for Mr. Rivera.
-
(1)
-
For
Mr. Nash, Ms. Marbert and Mr. Harvey, the rate of salary increased beginning May 12, 2016 with additional small increases for
Mr. Nash and Ms. Marbert in March 2017, as described in "Compensation Discussion and Analysis" above.
-
(2)
-
Represents
the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718 in connection with RSUs granted during the applicable year
under our 2013 Stock and Incentive Compensation Plan. These awards consist of annual RSUs and performance RSUs. Performance RSU awards vest in amounts that change based upon performance conditions and
are computed based on the probable outcome of the performance conditions assuming target performance for Adjusted EBITDA-based and Revenue-based awards and based upon a Monte Carlo simulation for
relative TSR based awards as discussed in Note 18 to the Consolidated Financial Statements for 2017 contained in our 2017 Annual Report. The fair value at the maximum level of vesting for these
performance awards is:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
Max
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig M. Nash
|
|
|
|
|
3,421,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sergio D. Rivera
|
|
|
|
|
1,222,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeanette E. Marbert
|
|
|
|
|
916,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Harvey
|
|
|
|
|
733,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Galea
|
|
|
|
|
366,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria J. Kincke
|
|
|
|
|
366,648
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(3)
-
Amounts
earned under the annual incentive program are paid following Compensation Committee certification of the achievement of performance following completion of
the fiscal year. Amounts earned following the successful closing of the Vistana acquisition were paid during 2017.
-
(4)
-
See
the table below for all other compensation included in this column for 2017 with dividends accrued on RSUs at target levels. In addition, as described above in
"Compensation Discussion and AnalysisOther Compensation,"
|
|
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52
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Table of Contents
Mr. Nash
has on occasion used the private aircraft in which ILG owns a fractional interest for personal trips and has reimbursed ILG for the costs of such use.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Supplemental
Disability
Insurance
($)
|
|
Auto
Allowance
($)
|
|
401(k)
Plan
Company
Match
($)
|
|
Group
Term
Life
($)
|
|
Dividends
Accrued
on
RSUs
($)
|
|
Total
All Other
Compensation
($)
|
|
|
|
|
|
Craig M. Nash
|
|
|
7,040
|
|
|
14,400
|
|
|
8,100
|
|
|
3,564
|
|
|
326,451
|
|
|
359,555
|
|
|
|
|
|
Sergio D. Rivera
|
|
|
|
|
|
|
|
|
1,692
|
|
|
2,382
|
|
|
101,163
|
|
|
105,237
|
|
|
|
|
|
Jeanette E. Marbert
|
|
|
4,718
|
|
|
|
|
|
8,100
|
|
|
3,564
|
|
|
110,548
|
|
|
126,930
|
|
|
|
|
|
William L. Harvey
|
|
|
|
|
|
|
|
|
8,100
|
|
|
3,564
|
|
|
90,036
|
|
|
101,700
|
|
|
|
|
|
John A. Galea
|
|
|
|
|
|
|
|
|
8,100
|
|
|
3,204
|
|
|
34,400
|
|
|
45,704
|
|
|
|
|
|
Victoria J. Kincke
|
|
|
|
|
|
|
|
|
8,100
|
|
|
3,204
|
|
|
34,400
|
|
|
45,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(5)
-
Prior
to Mr. Rivera joining ILG as an executive, he received compensation for his role as a director. Such compensation ceased upon his hiring.
Executive Agreements
Craig M. Nash.
Mr. Nash entered into a four-year employment agreement that was effective upon the spin-off
on August 20, 2008 which
was most recently amended in March 2017. Under this agreement as amended and restated, Mr. Nash receives a base salary of $875,000 and is entitled to receive an annual bonus with a target of
120% of base salary, based upon achievement of targets set by the Compensation Committee. He is also eligible to receive grants under ILG's long-term incentive program with a target annual award level
of $2,800,000 or more, based on criteria to be set by the Compensation Committee. The agreement continues until Mr. Nash provides at least 60 days' written notice of his intent to
separate or pursuant to the provisions for death, disability, termination with or without cause, or resignation for good reason. Severance provisions are described below under "Potential Payments upon
Termination or Change of Control."
Sergio D. Rivera.
Mr. Rivera entered into a two-year employment agreement with ILG, effective
November 7, 2016 which was most recently
amended and restated in March 2017. The agreement provides for an initial base salary of $550,000, target annual incentive payments up to 100% of base salary and initial RSUs as described under
Compensation Discussion and Analysis. He is also eligible to receive grants under ILG's long-term incentive program with a target annual award level of $1,000,000, based on criteria to be set by the
Compensation Committee. The agreement continues after the initial two-year term unless terminated by either party on 90 days' notice. Severance provisions are described below under "Potential
Payments upon Termination or Change of Control."
Jeanette E. Marbert.
Ms. Marbert entered into a four-year employment agreement that was effective upon the
spin-off which was most recently
amended in March 2017. Under this agreement as amended and restated, Ms. Marbert receives a base salary of $480,000 and is entitled to receive an annual bonus with a target of 100% of base
salary, based upon achievement of targets set by the Compensation Committee. She is also eligible to receive grants under ILG's long-term incentive program with a target annual award level of
$700,000, based on criteria to be set by the Compensation Committee. The agreement continues until Ms. Marbert provides at least 60 days' written notice of her intent to separate or
pursuant to the provisions for death, disability, termination
with or without cause, or resignation for good reason. Severance provisions are described below under "Potential Payments upon Termination or Change of Control."
William L. Harvey.
Mr. Harvey entered into a four-year employment agreement in 2008 which was most recently
amended in March 2017. Under this
agreement as amended and restated
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53
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Table of Contents
Mr. Harvey
receives a base salary of $420,000 and is entitled to receive an annual bonus with a target of 80% of base salary, based upon achievement of targets set by the Compensation
Committee. He is also eligible to receive grants under ILG's long-term incentive program with a target annual award level of $600,000, based on criteria to be set by the Compensation Committee. The
agreement continues until Mr. Harvey provides at least 60 days' written notice of his intent to separate or pursuant to the provisions for death, disability, termination with or without
cause, or resignation for good reason. Severance provisions are described below under "Potential Payments upon Termination or Change of Control."
John A. Galea.
Mr. Galea entered into an employment agreement in March 2017 which superseded his prior
severance agreement from 2008. The
agreement provides for an initial base salary of $300,000, target annual incentive payments up to 55% of base salary and equity compensation with a target annual award level of $300,000, based on
criteria to be set by the Compensation Committee. The agreement continues until Mr. Galea provides at least 30 days' written notice of his intent to separate or pursuant to the
provisions for death, disability, termination with or without cause, or resignation for good reason. Severance provisions are described below under "Potential Payments upon Termination or Change of
Control."
Victoria J. Kincke.
Ms. Kincke entered into an employment agreement in March 2017 which superseded her
prior severance agreement from 2008.
The agreement provides for an initial base salary of $300,000, target annual incentive payments up to 55% of base salary and equity compensation with a target annual award level of $300,000, based on
criteria to be set by the Compensation Committee. The agreement continues until Ms. Kincke provides at least 30 days' written notice of her intent to separate or pursuant to the
provisions for death, disability, termination with or without cause, or resignation for good reason. Severance provisions are described below under "Potential Payments upon Termination or Change of
Control."
CEO Pay Ratio
Under rules adopted pursuant to the Dodd-Frank Act of 2010, we are required to calculate and disclose the total compensation
paid to ILG's median employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our CEO.
Under
the relevant rules, we are required to identify the median employee by use of a consistently applied compensation measure. We chose total cash earnings, including annual base pay,
overtime, bonus at target, commission, tips and paid time off. We did not perform adjustments to the compensation paid to part-time employees to calculate what they would have been paid on a full-time
basis.
As
of October 31, 2017, the date for the determination of the median employee, ILG had 11,218 employees in 17 countries, however the vast majority of these employees were in
North America. In identifying the median employee, we excluded workers in 15 countries totaling 325 associates (approximately 3% of our workforce) as permitted by the de minimis exemption rules, given
the small portion of the total employee population in these countries.
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54
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Table of Contents
We excluded the following number of workers from the following countries in the identification of the median employee:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Country
|
|
|
|
#
|
|
|
|
|
|
|
|
Country
|
|
|
|
#
|
|
|
|
|
|
|
|
Country
|
|
|
|
#
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Argentina
|
|
|
|
|
22
|
|
|
|
|
|
|
|
Colombia
|
|
|
|
|
20
|
|
|
|
|
|
|
|
Singapore
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bahamas
|
|
|
|
|
43
|
|
|
|
|
|
|
|
Egypt
|
|
|
|
|
12
|
|
|
|
|
|
|
|
South Africa
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil
|
|
|
|
|
3
|
|
|
|
|
|
|
|
Finland
|
|
|
|
|
8
|
|
|
|
|
|
|
|
Spain
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
|
|
34
|
|
|
|
|
|
|
|
Germany
|
|
|
|
|
18
|
|
|
|
|
|
|
|
Thailand
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
|
|
1
|
|
|
|
|
|
|
|
Italy
|
|
|
|
|
15
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After
applying our methodology and excluding the employees listed above, we identified the median employee. Once the median employee was identified, we calculated the median employee's
total annual compensation in accordance with the requirements of the Summary Compensation Table.
Our
median employee compensation as calculated using Summary Compensation Table requirements was $36,628. Our CEO's compensation as reported in the Summary Compensation Table was
$5,337,860. Therefore, our CEO to median employee pay ratio is 146:1.
Note
that the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices
and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided for compliance purposes. Neither the Compensation
Committee nor management of the company used the pay ratio measure in making compensation decisions.
|
|
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|
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55
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Table of Contents
Grants of Plan-Based Awards for Fiscal Year 2017
The following table sets forth information with respect to the grants of plan-based awards to the named executive officers during the year
ended December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
|
|
Grant Date
Fair Value of
Stock Awards
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
($)(3)
|
|
|
|
|
Craig M. Nash
|
|
|
|
|
|
525,000
|
|
|
1,050,000
|
|
|
2,005,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
37,482
|
|
|
74,963
|
|
|
149,926
|
|
|
1,710,954
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,962
|
|
|
|
|
|
1,440,770
|
|
|
|
|
Sergio D. Rivera
|
|
|
|
|
|
275,000
|
|
|
550,000
|
|
|
1,050,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
13,387
|
|
|
26,773
|
|
|
53,546
|
|
|
611,065
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,772
|
|
|
|
|
|
514,558
|
|
|
|
|
Jeanette E. Marbert
|
|
|
|
|
|
240,000
|
|
|
480,000
|
|
|
916,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
10,040
|
|
|
20,079
|
|
|
40,158
|
|
|
458,287
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,079
|
|
|
|
|
|
385,918
|
|
|
|
|
William L. Harvey
|
|
|
|
|
|
117,600
|
|
|
235,200
|
|
|
450,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
8,032
|
|
|
16,063
|
|
|
32,126
|
|
|
366,620
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,064
|
|
|
|
|
|
308,750
|
|
|
|
|
John A. Galea
|
|
|
|
|
|
59,483
|
|
|
118,965
|
|
|
227,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
4,016
|
|
|
8,032
|
|
|
16,064
|
|
|
183,324
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,031
|
|
|
|
|
|
154,356
|
|
|
|
|
Victoria J. Kincke
|
|
|
|
|
|
59,483
|
|
|
118,965
|
|
|
227,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
4,016
|
|
|
8,032
|
|
|
16,064
|
|
|
183,324
|
|
|
|
|
|
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,031
|
|
|
|
|
|
154,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
These
awards are performance based awards under the annual incentive program with amounts paid determined by the achievement of the Adjusted EBITDA and revenue
performance targets, as described in "Compensation Discussion and AnalysisElements of CompensationAnnual Incentives" above.
-
(2)
-
These
awards granted February 14, 2017 include (A) in the first line for each named executive officerperformance RSUs under the long-term
incentive program with the number of shares earned determined by the achievement of the Adjusted EBITDA performance targets or, total shareholder return targets, all subject to cliff vesting on the
third anniversary of the grant date, and (B) in the second lineannual RSUs awarded under the long-term incentive program which vest pro rata over three years, in each case as
described in "Compensation Discussion and AnalysisElements of CompensationLong-Term Incentives" above.
-
(3)
-
The
grant date fair value was calculated in accordance with FASB ASC Topic 718. For the value of the performance RSUs based on Adjusted EBITDA, at the date of grant
we estimated the future payout at the target level, and for the performance shares based on relative TSR, we used a Monte Carlo simulation as discussed in Note 18 to the Consolidated Financial
Statements for 2017 contained in our 2017 Annual Report. The grant date fair value does not reflect the current value of these awards or the value of any future payout.
|
|
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|
|
56
|
|
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|
|
Table of Contents
Outstanding Equity Awards at Fiscal Year-End for Fiscal Year 2017
The following table sets forth information with respect to the value of restricted stock units held by the named executive officers on
December 31, 2017, based on the closing price for ILG shares of $28.48 on The NASDAQ Stock Market on that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(1)(3)
|
|
|
|
|
Name
|
|
|
Number of Shares
or Units of Stock
That Have
Not Vested(1)
(#)
|
|
|
Market Value of
Shares or Units
of Stock That
Have Not
Vested(1)
($)
|
|
|
Equity Incentive
Plan Awards: No. of
Unearned Shares, Units
or Other Rights That
Have Not Vested(2)
(#)
|
|
|
Equity Incentive
Plan Awards: Market
or Payout Value
of Unearned Shares,
Units or Other
Rights That Have
Not Vested(2)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig M. Nash
|
|
|
362,046
|
|
|
10,311,070
|
|
|
210,553
|
|
|
5,996,549
|
|
|
|
|
Sergio D. Rivera
|
|
|
92,073
|
|
|
2,662,239
|
|
|
60,370
|
|
|
1,719,338
|
|
|
|
|
Jeanette E. Marbert
|
|
|
119,349
|
|
|
3,401,623
|
|
|
70,901
|
|
|
2,019,260
|
|
|
|
|
William L. Harvey
|
|
|
94,425
|
|
|
2,689,224
|
|
|
62,260
|
|
|
1,773,165
|
|
|
|
|
John A. Galea
|
|
|
36,936
|
|
|
1,051,937
|
|
|
23,100
|
|
|
657,888
|
|
|
|
|
Victoria J. Kincke
|
|
|
36,936
|
|
|
1,051,937
|
|
|
23,100
|
|
|
657,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Amounts
shown include 2015 performance RSUs earned, but that have not yet vested, based on achieving 2015-2017 performance criteria pursuant to the long-term
incentive plan and annually vesting RSUs earned, but not yet vested, based on achieving operational criteria as described in "Compensation Discussion and AnalysisElements of
CompensationLong-Term Incentives" above.
-
(2)
-
Amounts
shown include RSUs granted that have not yet been earned based on the assumption that the applicable performance criteria are achieved at target levels.
-
(3)
-
The
table below provides the following information regarding RSU awards held by ILG's named executives as of December 31, 2017: (i) the grant date of
each award, (ii) the number of RSUs outstanding (on an aggregate and grant-by-grant basis), (iii) the market value of RSUs outstanding as of December 31, 2017, (iv) the
vesting schedule for each award and (v) the total number of RSUs that vested or are scheduled to vest in each of the fiscal years ending December 31, 2018, 2019, and 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Unvested
RSUs as of
12/31/17
|
|
Market Value
of Unvested
RSUs as of
12/31/17
|
|
Vesting Schedule
(#)
|
|
|
|
|
Grant Date
|
|
(#)
|
|
($)
|
|
2018
|
|
2019
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig M. Nash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/14(a)
|
|
16,835
|
|
479,461
|
|
16,835
|
|
|
|
|
|
|
|
|
2/24/15(a)
|
|
36,992
|
|
1,053,532
|
|
18,492
|
|
18,500
|
|
|
|
|
|
|
2/24/15(b)
|
|
29,590
|
|
842,723
|
|
29,590
|
|
|
|
|
|
|
|
|
2/24/15(c)
|
|
15,721
|
|
447,734
|
|
15,721
|
|
|
|
|
|
|
|
|
2/23/16(a)
|
|
94,236
|
|
2,683,841
|
|
31,409
|
|
31,410
|
|
31,417
|
|
|
|
|
2/23/16(b)
|
|
25,129
|
|
715,674
|
|
|
|
25,129
|
|
|
|
|
|
|
2/23/16(c)
|
|
16,752
|
|
477,097
|
|
|
|
16,752
|
|
|
|
|
|
|
5/12/16(d)
|
|
91,876
|
|
2,616,628
|
|
|
|
91,876
|
|
|
|
|
|
|
5/12/16(b)
|
|
55,126
|
|
1,569,989
|
|
|
|
55,126
|
|
|
|
|
|
|
5/12/16(e)
|
|
36,750
|
|
1,046,640
|
|
|
|
36,750
|
|
|
|
|
|
|
2/14/2017(a)
|
|
76,796
|
|
2,187,150
|
|
25,339
|
|
25,343
|
|
26,114
|
|
|
|
|
2/14/2017(b)
|
|
46,078
|
|
1,312,302
|
|
|
|
|
|
46,078
|
|
|
|
|
2/14/2017(c)
|
|
30,718
|
|
874,849
|
|
|
|
|
|
30,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
572,599
|
|
16,307,620
|
|
137,386
|
|
300,886
|
|
134,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sergio Rivera
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/7/2016(f)
|
|
49,411
|
|
1,407,225
|
|
24,704
|
|
24,707
|
|
|
|
|
|
|
11/7/2016(g)
|
|
48,177
|
|
1,372,081
|
|
15,235
|
|
16,470
|
|
16,472
|
|
|
|
|
2/14/2017(a)
|
|
27,427
|
|
781,121
|
|
9,048
|
|
9,052
|
|
9,327
|
|
|
|
|
2/14/2017(b)
|
|
16,457
|
|
468,696
|
|
|
|
|
|
16,457
|
|
|
|
|
2/14/2017(c)
|
|
10,971
|
|
312,454
|
|
|
|
|
|
10,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
152,443
|
|
4,341,577
|
|
48,987
|
|
50,229
|
|
53,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
|
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Unvested
RSUs as of
12/31/17
|
|
Market Value
of Unvested
RSUs as of
12/31/17
|
|
Vesting Schedule
(#)
|
|
|
|
|
Grant Date
|
|
(#)
|
|
($)
|
|
2018
|
|
2019
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeanette E. Marbert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/14(a)
|
|
5,363
|
|
152,738
|
|
5,363
|
|
|
|
|
|
|
|
|
2/24/15(a)
|
|
11,773
|
|
335,295
|
|
5,882
|
|
5,891
|
|
|
|
|
|
|
2/24/15(b)
|
|
9,415
|
|
268,139
|
|
9,415
|
|
|
|
|
|
|
|
|
2/24/15(c)
|
|
5,002
|
|
142,457
|
|
5,002
|
|
|
|
|
|
|
|
|
2/23/16(a)
|
|
30,565
|
|
870,491
|
|
10,186
|
|
10,187
|
|
10,192
|
|
|
|
|
2/23/16(b)
|
|
8,149
|
|
232,084
|
|
|
|
8,149
|
|
|
|
|
|
|
2/23/16(c)
|
|
5,433
|
|
154,732
|
|
|
|
5,433
|
|
|
|
|
|
|
5/12/16(d)
|
|
36,751
|
|
1,046,668
|
|
|
|
36,751
|
|
|
|
|
|
|
5/12/16(b)
|
|
22,050
|
|
627,984
|
|
|
|
22,050
|
|
|
|
|
|
|
5/12/16(e)
|
|
14,700
|
|
418,656
|
|
|
|
14,700
|
|
|
|
|
|
|
2/14/2017(a)
|
|
20,570
|
|
585,834
|
|
6,786
|
|
6,788
|
|
6,996
|
|
|
|
|
2/14/2017(b)
|
|
12,341
|
|
351,472
|
|
|
|
|
|
12,341
|
|
|
|
|
2/14/2017(c)
|
|
8,228
|
|
234,333
|
|
|
|
|
|
8,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
190,340
|
|
5,420,883
|
|
42,634
|
|
109,949
|
|
37,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Harvey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/14(a)
|
|
3,067
|
|
87,348
|
|
3,067
|
|
|
|
|
|
|
|
|
2/24/15(a)
|
|
7,990
|
|
227,555
|
|
3,990
|
|
4,000
|
|
|
|
|
|
|
2/24/15(b)
|
|
6,388
|
|
181,930
|
|
6,388
|
|
|
|
|
|
|
|
|
2/24/15(c)
|
|
3,395
|
|
96,690
|
|
3,395
|
|
|
|
|
|
|
|
|
2/23/16(a)
|
|
20,377
|
|
580,337
|
|
6,790
|
|
6,791
|
|
6,796
|
|
|
|
|
2/23/16(b)
|
|
5,433
|
|
154,732
|
|
|
|
5,433
|
|
|
|
|
|
|
2/23/16(c)
|
|
3,621
|
|
103,126
|
|
|
|
3,621
|
|
|
|
|
|
|
5/12/16(d)
|
|
36,751
|
|
1,046,669
|
|
|
|
36,751
|
|
|
|
|
|
|
5/12/16(b)
|
|
22,050
|
|
627,984
|
|
|
|
22,050
|
|
|
|
|
|
|
5/12/16(e)
|
|
14,700
|
|
418,656
|
|
|
|
14,700
|
|
|
|
|
|
|
2/14/2017(a)
|
|
16,457
|
|
468,695
|
|
5,429
|
|
5,431
|
|
5,597
|
|
|
|
|
2/14/2017(b)
|
|
9,874
|
|
281,212
|
|
|
|
|
|
9,874
|
|
|
|
|
2/14/2017(c)
|
|
6,582
|
|
187,455
|
|
|
|
|
|
6,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
156,685
|
|
4,462,389
|
|
29,059
|
|
98,777
|
|
28,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Galea
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/14(a)
|
|
1,536
|
|
43,745
|
|
1,536
|
|
|
|
|
|
|
|
|
2/24/15(a)
|
|
3,366
|
|
95,864
|
|
1,680
|
|
1,686
|
|
|
|
|
|
|
2/24/15(b)
|
|
2,690
|
|
76,611
|
|
2,690
|
|
|
|
|
|
|
|
|
2/24/15(c)
|
|
1,430
|
|
40,726
|
|
1,430
|
|
|
|
|
|
|
|
|
2/23/16(a)
|
|
8,662
|
|
246,694
|
|
2,885
|
|
2,885
|
|
2,892
|
|
|
|
|
2/23/16(b)
|
|
2,309
|
|
65,760
|
|
|
|
2,309
|
|
|
|
|
|
|
2/23/16(c)
|
|
1,539
|
|
43,831
|
|
|
|
1,539
|
|
|
|
|
|
|
5/12/16(d)
|
|
11,025
|
|
313,992
|
|
|
|
11,025
|
|
|
|
|
|
|
5/12/16(b)
|
|
6,615
|
|
188,395
|
|
|
|
6,615
|
|
|
|
|
|
|
5/12/16(e)
|
|
4,409
|
|
125,568
|
|
|
|
4,409
|
|
|
|
|
|
|
2/14/2017(a)
|
|
8,227
|
|
234,305
|
|
2,713
|
|
2,715
|
|
2,799
|
|
|
|
|
2/14/2017(b)
|
|
4,937
|
|
140,606
|
|
|
|
|
|
4,937
|
|
|
|
|
2/14/2017(c)
|
|
3,291
|
|
93,728
|
|
|
|
|
|
3,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
60,036
|
|
1,709,825
|
|
12,934
|
|
33,183
|
|
13,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58
|
|
|
|
|
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Unvested
RSUs as of
12/31/17
|
|
Market Value
of Unvested
RSUs as of
12/31/17
|
|
Vesting Schedule
(#)
|
|
|
|
|
Grant Date
|
|
(#)
|
|
($)
|
|
2018
|
|
2019
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria Kincke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/14(a)
|
|
1,536
|
|
43,745
|
|
1,536
|
|
|
|
|
|
|
|
|
2/24/15(a)
|
|
3,366
|
|
95,864
|
|
1,680
|
|
1,686
|
|
|
|
|
|
|
2/24/15(b)
|
|
2,690
|
|
76,611
|
|
2,690
|
|
|
|
|
|
|
|
|
2/24/15(c)
|
|
1,430
|
|
40,726
|
|
1,430
|
|
|
|
|
|
|
|
|
2/23/16(a)
|
|
8,662
|
|
246,694
|
|
2,885
|
|
2,885
|
|
2,892
|
|
|
|
|
2/23/16(b)
|
|
2,309
|
|
65,760
|
|
|
|
2,309
|
|
|
|
|
|
|
2/23/16(c)
|
|
1,539
|
|
43,831
|
|
|
|
1,539
|
|
|
|
|
|
|
5/12/16(d)
|
|
11,025
|
|
313,992
|
|
|
|
11,025
|
|
|
|
|
|
|
5/12/16(b)
|
|
6,615
|
|
188,395
|
|
|
|
6,615
|
|
|
|
|
|
|
5/12/16(e)
|
|
4,409
|
|
125,568
|
|
|
|
4,409
|
|
|
|
|
|
|
2/14/2017(a)
|
|
8,227
|
|
234,305
|
|
2,713
|
|
2,715
|
|
2,799
|
|
|
|
|
2/14/2017(b)
|
|
4,937
|
|
140,606
|
|
|
|
|
|
4,937
|
|
|
|
|
2/14/2017(c)
|
|
3,291
|
|
93,728
|
|
|
|
|
|
3,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
60,036
|
|
1,709,825
|
|
12,934
|
|
33,183
|
|
13,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(a)
-
Represents
Annual RSUs earned which vest in equal annual installments on each of the first three or four anniversaries of the grant date, subject to continued
employment. The performance conditions to which these awards were subject have been satisfied.
-
(b)
-
Represents
performance RSUs which vest on the third anniversary of the grant date subject to continued employment. The number of shares included on the table is
based on the number of shares which would be earned if the cumulative total of Adjusted EBITDA for 2016-2018 or 2017-2019, as applicable, equals the cumulative total target Adjusted EBITDA for those
three years. For the February 2015 grant, the number of shares included is based on the number of shares earned based on Adjusted EBITDA achieved for 2015-2017.
-
(c)
-
Represents
performance RSUs which vest on the third anniversary of the grant date subject to continued employment. The number of shares included on the table is
based on the number of shares which would be earned based on the relative TSR for ILG being at the target percentile for the measurement period of December 31, 2015 through December 31,
2018 or December 31, 2016 through December 31, 2019 as applicable, as measured against the peer groups. For the February 2014 grant, the number of shares included is the number of shares
earned based on the relative TSR for the measurement period from December 31, 2014 through December 31, 2017.
-
(d)
-
Represents
performance RSUs which vest on the third anniversary of the grant date subject to continued employment. The performance conditions to which these awards
were subject have been satisfied.
-
(e)
-
Represents
performance RSUs which vest on the third anniversary of the grant date subject to continued employment. The number of shares included on the table is
based on the number of shares which would be earned if the cumulative total of revenue excluding cost reimbursements for 2016-2018, equals the cumulative total target revenue excluding cost
reimbursements for those three years.
-
(f)
-
Represents
RSUs granted to Mr. Rivera upon hire that vest ratably on the first three anniversaries of the grant date subject to achieving specified operating
goals during 2017.
-
(g)
-
Represents
RSUs that vest in annual installments over the first three anniversaries of the grant date (or if later, when performance is certified) based on
achievement of annual adjusted EBITDA targets for Vacation Ownership.
|
|
|
|
|
|
|
|
|
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Table of Contents
Stock Vested for Fiscal Year 2017
The following table sets forth information with respect to the value to the named executive officers of RSUs and restricted stock that vested
during 2017, based on the closing price for ILG shares on The NASDAQ Stock Market on the applicable vesting date, which does not reflect the current value. In 2017 none of the named executive officers
had any options. Note that a portion of the RSUs that vested for Mr. Rivera were granted for his board service prior to becoming an officer of ILG.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
Name
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized
on Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig M. Nash
|
|
111,632
|
|
2,132,914
|
|
|
|
|
Sergio D. Rivera
|
|
33,606
|
|
988,282
|
|
|
|
|
Jeanette E. Marbert
|
|
35,340
|
|
675,230
|
|
|
|
|
William L. Harvey
|
|
22,343
|
|
426,929
|
|
|
|
|
John A. Galea
|
|
10,162
|
|
194,161
|
|
|
|
|
Victoria J. Kincke
|
|
10,162
|
|
194,161
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits for Fiscal Year 2017 and Nonqualified Deferred Compensation for Fiscal Year 2017
ILG does not offer a pension plan and none of the named executive officers are eligible to participate in a deferred compensation plan offered
by ILG.
Potential Payments upon Termination or Change of Control
Each of the named executive officers is eligible to receive severance benefits in the event of a qualifying termination, with additional
benefits if such qualifying termination occurs after a change of control. A qualifying termination is a termination by ILG other than for death, disability or cause (as defined in the agreement) or a
termination by the executive for good reason (as defined in the agreement).
Under
the terms of the equity awards granted to the named executive officers, all of the awards will accelerate and vest upon the death of the executive, with
performance based awards vesting at target. In the event of the disability of an executive, the terms of the equity awards state that such awards will continue to vest for up to four years, subject to
compliance with confidentiality and non-competition agreements.
Cash.
Upon a qualifying termination, ILG executive officers are entitled to continued payment of salary and
target annual incentive, with respect to
Mr. Nash, Ms. Marbert and Mr. Rivera, for 24 months, with respect to Mr. Harvey, Mr. Galea and Ms. Kincke, for 12 months. The executives will
also receive a pro rata portion of the annual incentive following certification of the amount earned by the Compensation Committee. Additionally, each of the named executive officers will also receive
payment to cover the excess of the applicable premium under COBRA over the active employee/family portion for the same period.
|
|
|
|
|
60
|
|
|
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|
Table of Contents
Equity.
Upon a qualifying termination, Mr. Nash, Ms. Marbert, Mr. Harvey and Mr. Rivera
would receive accelerated
vesting for any equity awards granted after the effective date of the applicable employment agreement that would otherwise have vested within the continuation period, with each such award treated as
if it vested in equal annual installments. In addition, in the event of a qualifying termination, each of the named executive officers would be entitled to one-third of the shares that would otherwise
vest for each completed 12-month period following the grant date with respect to performance-based RSUs that vest at the end of three years that were not granted upon hire. Note that generally in the
case of a qualifying termination for death, the awards vest in full, and for disability, the awards continue to vest for up to three years following the termination date.
Obligations.
The amounts payable upon a Qualifying Termination are all subject to the execution of a general
release and to compliance with
confidentiality, non-compete, non-solicitation of employees and non-solicitation of customer covenants set forth in the relevant employment agreements.
Pursuant
to the terms of ILG's equity compensation plans and the award agreements thereunder, upon a change of control, as defined in the applicable executive
employment agreement, or as defined in the relevant plan, the named executive officers are generally entitled to accelerated vesting of equity awards if, following such change of control, there is a
qualifying termination.
Under
amended agreements executed in March 2017, amounts payable upon a qualifying termination within 24 months following a change of control include a lump-sum payment of a
multiple of base salary and target annual incentive, and a pro-rated continuation of benefits for severance period, and accelerated vesting of equity awards, subject to compliance with restrictive
covenants. The multiples of salary and target annual incentive are three times for Mr. Nash, two and a half times for Ms. Marbert and Mr. Rivera, two times for Mr. Harvey
and one and a half times for Mr. Galea and Ms. Kincke. Each executive will also receive a pro rata portion of his or her annual incentive at the greater of target or actual performance
through the date of the qualifying termination to the extent determinable. Additionally, each of the named executive officers will also receive payments to cover
the excess of the applicable premium under COBRA over the active employee/family portion for the number of years equal to the multiples stated above.
Each
of these agreements also provides that amounts payable may be reduced to ensure that no portion of the payment is subject to excise tax, but only if the reduced payment results in
the executive receiving the greatest amount of benefit. The agreements with Mr. Nash, Mr. Rivera and Ms. Marbert also provide that if the executive requests Retirement pursuant to
the 2013 Plan at least six months after a Change of Control, complies with the post-separation obligations, and there are no circumstances that create a basis for Cause, the Compensation Committee
will approve Retirement treatment, which consists of continued vesting for all unvested equity awards.
The
amounts shown in the table assume that the termination or change of control was effective as of December 31, 2017 and that the price of ILG common stock on which certain
calculations are based was the closing price of $28.48 on The NASDAQ Stock Market on that date. These amounts are estimates of the incremental amounts that would have been paid out to the executive
upon such terminations/change of control, and do not take into account equity grants
|
|
|
|
|
|
|
|
|
61
|
Table of Contents
made,
and contractual obligations entered into, after December 31, 2017. The actual amounts to be paid out can only be determined at the time the event actually occurs.
|
|
|
|
|
|
|
Name and
Benefit
|
|
Death or
Disability(2)
($)
|
|
Termination
without
cause or for
Good Reason
($)
|
|
Termination
w/o cause or
for good reason
after Change in
Control(3)
($)
|
Craig M. Nash
|
|
|
|
|
|
|
Cash Severance (salary and bonus)
|
|
|
|
4,803,890
|
|
6,728,890
|
RSUs (vesting accelerated)(1)
|
|
16,307,620
|
|
13,954,906
|
|
16,307,620
|
Continued health benefits(4)
|
|
|
|
64,900
|
|
97,350
|
|
|
|
|
|
|
|
Total estimated value
|
|
16,307,620
|
|
18,823,696
|
|
23,133,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sergio D. Rivera
|
|
|
|
|
|
|
Cash Severance (salary and bonus)
|
|
|
|
2,721,942
|
|
3,271,942
|
RSUs (vesting accelerated)(1)
|
|
4,341,577
|
|
3,820,820
|
|
4,341,577
|
Continued health benefits(4)
|
|
|
|
31,300
|
|
39,125
|
|
|
|
|
|
|
|
Total estimated value
|
|
4,341,577
|
|
6,574,062
|
|
7,652,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeanette E. Marbert
|
|
|
|
|
|
|
Cash Severance (salary and bonus)
|
|
|
|
2,356,064
|
|
2,836,064
|
RSUs (vesting accelerated)(1)
|
|
5,420,883
|
|
5,030,337
|
|
5,420,883
|
Continued health benefits(4)
|
|
|
|
40,736
|
|
50,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total estimated value
|
|
5,420,883
|
|
7,427,137
|
|
8,307,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Harvey
|
|
|
|
|
|
|
Cash Severance (salary and bonus)
|
|
|
|
1,081,000
|
|
1,837,000
|
RSUs (vesting accelerated)(1)
|
|
4,462,389
|
|
2,553,090
|
|
4,462,389
|
Continued health benefits(4)
|
|
|
|
15,650
|
|
23,475
|
|
|
|
|
|
|
|
Total estimated value
|
|
4,462,389
|
|
3,649,740
|
|
6,322,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Galea
|
|
|
|
|
|
|
Cash Severance (salary and bonus)
|
|
|
|
648,900
|
|
888,375
|
RSUs (vesting accelerated)(1)
|
|
1,709,825
|
|
271,699
|
|
1,709,825
|
Continued health benefits(4)
|
|
|
|
15,650
|
|
23,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total estimated value
|
|
1,709,825
|
|
936,249
|
|
2,621,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria J. Kincke
|
|
|
|
|
|
|
Cash Severance (salary and bonus)
|
|
|
|
648,900
|
|
888,375
|
RSUs (vesting accelerated)(1)
|
|
1,709,825
|
|
271,699
|
|
1,709,825
|
Continued health benefits(4)
|
|
|
|
15,650
|
|
23,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total estimated value
|
|
1,709,825
|
|
936,249
|
|
2,621,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
value of accelerated performance RSUs included in these amounts is based on the target numbers (other than RSUs that have been earned at a different amount) and
includes the full value of earned RSUs. These RSUs provide that the Compensation Committee may determine that a larger number of RSUs would have vested absent a change of control and cause such larger
number of RSUs to vest.
-
(2)
-
Note
that upon death the RSUs awards vest immediately whereas in the case of disability, the awards vest over time.
-
(3)
-
Any
amounts paid that are considered excess parachute payments under Section 280G of the Code will not be deductible by ILG. To the extent the benefit to the
executive is greater by reducing the amounts so that no portion would be subject to an excise tax, the amounts would be so reduced.
-
(4)
-
Based
on 2018 health care costs per executive.
|
|
|
|
|
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|
|
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|
Table of Contents
Compensation Risk Analysis
The Compensation Discussion and Analysis describes generally the compensation policies and practices that apply to executives
throughout the company. Meridian Compensation Partners worked with our human resources team to assess ILG's compensation policies and practices from a risk-taking perspective. The conclusions were
reviewed with representatives from the legal and internal audit departments. A summary of this assessment was provided to the Compensation Committee. This assessment considered the potential risks
with respect to our various compensation policies and practices and the mitigating factors and controls to address these risks. Based on the results of this review, we determined that the risks
arising from ILG's compensation policies and procedures are not reasonably likely to have a material adverse effect on ILG.
Equity Compensation Plan Information
The table below provides information pertaining to all compensation plans under which equity securities of our company are authorized for
issuance as of December 31, 2017:
|
|
|
|
|
|
|
Plan Category
|
|
Number of
Securities to be
issued upon
exercise
of outstanding
options, warrants
and rights
(a)
|
|
Weighted-average
exercise price of
outstanding
options,
warrants and
rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans
(excluding securities
reflected in column (a))
(c)
|
Equity compensation plans approved by security holders(1)
|
|
2,992,110(2)
|
|
NA(3)
|
|
3,289,318
|
Equity compensation plans not approved by security holders
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
Total
|
|
2,992,110
|
|
|
|
3,289,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
These
plans include the 2013 Stock and Incentive Compensation Plan, under which a variety of awards, including incentive or nonqualified stock options, restricted
shares, restricted stock units, performance units, appreciation rights, bonus awards or any combination of the foregoing may be issued and the 2008 Deferred Compensation Plan for Non-Employee
Directors, under which directors can defer retainer fees that are converted to share units and settled in common stock. There are 30,213 shares available under the Deferred Compensation Plan for
Non-Employee Directors.
-
(2)
-
Includes
an aggregate of (a) 2,922,322 shares issuable upon vesting of RSUs at maximum for performance RSUs, and (b) 69,788 shares issuable upon
settlement of share units issued under the Deferred Compensation Plan for Non-Employee Directors.
-
(3)
-
As
of December 31, 2017, there were no options outstanding.
|
|
|
|
|
|
|
|
|
63
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Table of Contents
PROPOSAL 2APPROVE, IN A NON-BINDING ADVISORY VOTE, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
We are asking stockholders to approve, on an advisory basis, as required pursuant to section 14A of the Exchange Act, the compensation
of ILG's named executive officers as reported in this proxy statement.
As
described in detail above under "Compensation Discussion and Analysis," ILG is focused on growing our business of providing memorable vacation experiences to our customers and
delivering shareholder value. To further this goal, we structure our compensation to reward performance and foster long-term growth of our business. Our compensation highlights include the
following:
-
-
Pay for performance philosophy and practice, by including performance conditions on 83% of the 2017 target compensation for our chief executive
officer and an average of 64% for the other named executive officers
-
-
Utilize an independent compensation consultant to assist the Compensation Committee in evaluating executive compensation
-
-
Emphasize equity-based awards, resulting in the alignment of our executives' interests with those of our stockholders
-
-
Provide a cap for all performance-based awards of no more than 200% of target
-
-
Removed legacy gross-up provisions
-
-
All change of control payments now based on a "double trigger"
-
-
Set robust executive stock ownership guidelines (6x multiple for CEO)
-
-
Subject performance-based pay to a recoupment policy
-
-
Prohibit hedging or pledging of ILG stock by executive officers and directors
Therefore,
we are asking stockholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED
, that the stockholders of ILG, Inc. ("ILG") approve, on an advisory basis, the compensation of ILG's named executive
officers disclosed in the Proxy Statement for ILG's 2018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the
Compensation Discussion and Analysis, Summary Compensation Table and the other related tables and narrative discussion within the Executive Compensation section.
This
advisory resolution, commonly referred to as a "say-on-pay" resolution, is non-binding on the board of directors. Although non-binding, the Compensation Committee will review and
consider the voting results when making future decisions regarding our executive compensation.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "
FOR
" THE NON-BINDING
ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
This
proposal requires the affirmative approval of a majority of votes cast by holders of our common stock present in person, or by proxy, at the Annual Meeting and voting on the
matter. Abstentions and broker non-votes will not be considered votes cast on the proposal and will not have a positive or negative effect on the outcome of the proposal. Although the say-on-pay vote
is non-binding, the Board of Directors and its compensation committee, which is comprised entirely of independent directors, will consider the voting results, as well as other communications from
stockholders relating to our compensation practices, and take them into account in future determinations concerning our executive compensation program.
|
|
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|
|
64
|
|
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Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of ILG common stock as of close of business on
April 24, 2018, except as otherwise disclosed in the notes below, by:
-
-
each person who is known by ILG to own beneficially more than 5% of the outstanding common stock based on a review of filings with the SEC;
-
-
ILG's directors;
-
-
ILG's named executive officers; and
-
-
ILG's current executive officers and directors as a group.
Unless
otherwise indicated, beneficial owners listed here may be contacted at ILG's corporate headquarters at 6262 Sunset Drive, Miami, FL 33143. Except as otherwise described in the notes below, the
following beneficial owners have sole voting power and sole investment power with respect to all common shares set forth opposite their respective names:
|
|
|
|
|
|
|
|
|
ILG Common Stock
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Shares
|
|
%
|
|
|
|
|
|
|
|
Qurate Retail Group
(formerly Liberty Interactive Corporation)(1)
|
|
16,643,957
|
|
13.4
|
|
12300 Liberty Boulevard
|
|
|
|
|
|
Englewood, CO 80112
|
|
|
|
|
|
Blackrock, Inc.(2)
|
|
11,243,741
|
|
9.1
|
|
55 East 52
nd
Street
|
|
|
|
|
|
New York, NY 10055
|
|
|
|
|
|
The Vanguard Group(3)
|
|
9,153,245
|
|
7.4
|
|
100 Vanguard Blvd.
|
|
|
|
|
|
Malvern, PA 19355
|
|
|
|
|
|
David Flowers(5)
|
|
25,038
|
|
*
|
|
Victoria L. Freed(5)
|
|
35,245
|
|
*
|
|
Lizanne Galbreath(5)
|
|
24,039
|
|
*
|
|
John A. Galea(4)
|
|
67,674
|
|
*
|
|
William L. Harvey(4)
|
|
233,955
|
|
*
|
|
Chad Hollingsworth(5)
|
|
18,806
|
|
*
|
|
Victoria J. Kincke(4)
|
|
101,017
|
|
*
|
|
Lewis J. Korman(5)
|
|
68,885
|
|
*
|
|
Thomas J. Kuhn(5)
|
|
68,677
|
|
*
|
|
Jeanette E. Marbert(4)
|
|
441,571
|
|
*
|
|
Thomas J. McInerney(5)
|
|
126,885
|
|
*
|
|
Thomas P. Murphy, Jr.(5)
|
|
67,885
|
|
*
|
|
Craig M. Nash(4)(6)
|
|
1,151,858
|
|
*
|
|
Stephen R. Quazzo(5)(6)
|
|
41,037
|
|
*
|
|
Sergio D. Rivera(4)(5)
|
|
56,226
|
|
*
|
|
Thomas O. Ryder (5)
|
|
47,327
|
|
*
|
|
Avy H. Stein(5)
|
|
83,387
|
|
*
|
|
All executive officers and directors as a group
(19 persons)
|
|
2,685,958
|
|
2.0
|
-
*
The
percentage of shares beneficially owned does not exceed 1%.
|
|
|
|
|
|
|
|
|
65
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(1)
-
Based
upon information reported on Amendment No.1 to Schedule 13D which was filed with the SEC on November 2, 2015. Liberty Interactive Corporation
(formerly Liberty Media Corporation) is a publicly traded corporation. According to its Schedule 14A, filed December 29, 2017, Liberty's chairman, John C. Malone, controls 39.2% of the
voting power of Qurate Retail Group (formerly Liberty Interactive Corporation).
-
(2)
-
Based
upon information reported on Amendment No. 10 to Schedule 13G which was filed with the SEC on January 25, 2018, Blackrock, Inc.
and its subsidiaries beneficially own and have sole dispositive rights over 11,243,741 shares and have sole voting rights over 11,008,274 shares.
-
(3)
-
Based
upon information reported on Amendment No. 2 to Schedule 13G which was filed with the SEC on February 9, 2018, The Vanguard
Group, Inc. and its subsidiaries beneficially own and have sole dispositive rights over 9,021,801, have shared dispositive rights over 131,444 shares, have sole voting rights over 124,750
shares and have shared voting rights over 15,537.
-
(4)
-
Excludes
RSUs that vest more than 60 days after March 31, 2018.
-
(5)
-
Includes
8,968 RSUs that vest on May 12, 2017. For Mr. Kuhn, excludes 45,944 share units, for Mr. Ryder 3,160 share units and for
Mr. Stein, 20,683 share units under the Non-Employee Director Deferred Compensation Plan, which would be paid no sooner than six months following termination of services as a director of ILG.
For Mr. Korman, excludes 2,000 share units held by his private foundation.
-
(6)
-
Excludes
221,860 shares held by trusts for the benefit of Mr. Nash's children and 5,988 shares held by trusts for the benefit of Mr. Quazzo's family
members and by his spouse.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers, and owners of more than 10% of a registered class of
ILG's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of common shares and other equity securities of ILG. Executive officers, directors and owners of more than 10% of the common shares are
required by SEC regulations to furnish ILG with copies of all forms they file pursuant to Section 16(a). We file Section 16(a) reports on behalf of our directors and executive officers
to report their initial and subsequent changes in beneficial ownership of our common stock. To our knowledge, based solely on review of the reports that we filed, written representations that no other
reports were required and all Section 16(a) reports provided to us, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial
owners were complied with during the fiscal year ended December 31, 2017, with the exception of one Form 4 for vesting of equity for Mr. Rivera that was filed late due to
administrative error.
AUDIT COMMITTEE REPORT
The following report of the audit committee does not constitute soliciting material and should not be deemed filed or incorporated by reference
into any other filing under the Securities Act or the Exchange Act, except to the extent ILG specifically incorporates this report by reference therein.
In
accordance with its written charter adopted by the board of directors, the audit committee assists the board of directors in fulfilling its responsibility for oversight of the
quality and integrity of the accounting, auditing and financial reporting practices of ILG.
The
audit committee reviewed and discussed the audited consolidated financial statements of ILG for the year ended December 31, 2017 with management and the independent
registered public accountants. Management has the responsibility for the preparation of ILG's consolidated financial statements, and for determining that the financial statements are complete and
accurate and in accordance with U.S. generally accepted accounting principles. ILG's independent registered public accountants are responsible for planning and conducting audits for the examination of
those consolidated financial statements.
The
audit committee obtained the written disclosures and letter required by the applicable requirements of the Public Company Accounting Oversight Board and discussed with the
independent registered public accountants any relationships that may impact their objectivity and independence. The audit committee also reviewed and discussed with the independent registered
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public
accountants all communications required by the Public Company Accounting Oversight Board Auditing Standards No. 16, Communications with Audit Committees, and reviewed and discussed the
results of the independent registered public accountants' audit of the financial statements.
Based
on the above-described review and discussions with management and the independent registered public accountants, the audit committee recommended to the board of directors that
ILG's audited consolidated financial statements be included in its 2017 Annual Report.
Audit Committee
Lewis J. Korman,
Chairman
Thomas J. Kuhn
Thomas J. McInerney
Stephen R. Quazzo
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Transactions with Related Persons
ILG has adopted a written policy for the review of transactions with related persons by the audit committee of the board of
directors. The policy requires review, approval or ratification of transactions exceeding $120,000 in which ILG is a participant and in which an ILG director, executive officer, a holder of more than
five percent (5%) of the Company's common stock or an immediate family member of any of the foregoing persons has a direct or indirect material interest. The audit committee determines whether these
transactions are in, or not inconsistent with, the best interests of ILG and its stockholders, taking into consideration whether they are on terms no less favorable to ILG than those available with
other parties and the related person's interest in the transaction. The relationships and related party transactions described below relating to Qurate Retail Group ("Qurate") (formerly Liberty
Interactive Corporation ("Liberty")) were originally entered into prior to or in connection with ILG's spin-off from IAC in August 2008 and were amended in connection with the acquisition of
Vistana in 2016. The terms "related person" and "transaction" have the meanings set forth in Item 404(a) of Regulation S-K promulgated by the SEC.
Agreements with Qurate
As of April 24, 2018, Qurate beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act)
16,643,957 shares or 13.4% of ILG common stock. The Amended Spinco Agreement between ILG and Qurate provides that Qurate is entitled to appoint two directors to the ILG Board. So long as Qurate
continues to beneficially own at least 10% of ILG's common stock, Qurate has the right to nominate a proportionate number of directors to ILG's board of directors. The amended agreement restricts
Qurate and its affiliates from acquiring in excess of 35% of ILG's outstanding shares of common stock without ILG's consent.
The
amended agreement with Qurate, and the respective rights and obligations thereunder, will terminate if Qurate 's beneficial ownership falls below 10% of ILG's outstanding equity,
unless Qurate's ownership was reduced below 10% not in conjunction with Qurate transferring its shares. In that event, Qurate's rights will terminate three years from the date of the amended
agreement.
Under
the amended registration rights agreement between ILG and Qurate, Qurate has four demand registration rights and the aggregate offering price threshold for any demand registration
statement is at least $50 million. Pursuant to the amended registration rights agreement, ILG must prepare a demand registration statement if requested by Qurate.
Other
An officer of Royal Caribbean Cruises Ltd. ("Royal Caribbean"), Victoria L. Freed, is part of our board of
directors. Through the travel services we offer, we sell Royal Caribbean cruises. During 2017, we recorded revenue of $0.7 million for these sales and Royal Caribbean had
$6.7 million of gross sales from our bookings of their cruises, which in each case is less than 5% of gross revenues for the year.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS' FEES
The following table sets forth fees for professional services rendered by Ernst & Young LLP for fiscal years 2017
and 2016.
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2017
Estimated Fees
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2016
Actual Fees
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Audit Fees(1)(3)
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$
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5,007,253
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$
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4,987,307
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Audit-Related Fees(2)
|
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191,200
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254,791
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Tax Fees(3)(4)
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58,074
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50,435
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All Other Fees
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Total Fees
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$
|
5,256,527
|
|
$
|
5,292,533
|
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-
(1)
-
Includes
fees and expenses related to the fiscal year integrated audit and PCAOB AU Section 722, Interim Financial Information, statutory audits of foreign
subsidiaries, SEC filings, including consents and comment letters, and attestations on Statements of Key Operating Exchange Statistics of Interval International and Vistana, notwithstanding when the
fees and expenses were billed or when the services were rendered. These services reflect additional work in 2016 related to the Vistana acquisition.
-
(2)
-
Includes
fees and expenses related to agreed upon accounting procedures and accounting consultation in connection with a business combination rendered during the
respective year.
-
(3)
-
Amounts
in local currencies are converted at the respective exchange rates at December 31, 2017.
-
(4)
-
Includes
fees and expenses related to tax compliance services and transfer pricing advisory services rendered during the respective year.
Audit Committee Pre-Approval of Independent Accountant Services
The audit committee pre-approves all audit and permissible non-audit services provided by the independent registered public
accountants. These services may include audit services, audit-related services, tax services and other services.
Ernst &
Young LLP has been selected by the audit committee to serve as ILG's independent registered public accountants for the fiscal year ending December 31, 2018.
A representative of Ernst & Young LLP will be present at the Annual Meeting, will have an opportunity to make a statement if he or she desires to do so and will be available to
respond to appropriate questions.
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PROPOSAL 3RATIFICATION OF THE SELECTION OF ILG'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ILG is asking its stockholders to ratify the selection of Ernst & Young LLP as ILG's independent registered public accounting
firm for the year ending December 31, 2018. Although ratification is not required, the board of directors is submitting the selection of Ernst & Young LLP to its stockholders for
ratification as a matter of good corporate governance. If the selection is not ratified, the audit committee will consider whether it is appropriate to select another registered public accounting
firm. Even if the selection is ratified, the audit committee in its discretion may select a different registered public accounting firm at any time during the fiscal year if it determines that such a
change would be in the best interests of ILG and its stockholders.
We
have been advised by Ernst & Young LLP that neither the firm, nor any member of the firm, has any financial interest, direct or indirect, in any capacity in ILG or any
of its subsidiaries.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "
FOR
" THE PROPOSAL TO
RATIFY THE SELECTION OF ERNST & YOUNG LLP AS ILG'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2018.
This
proposal requires the affirmative approval of a majority of votes cast by holders of our common stock present in person, or by proxy, at the Annual Meeting and voting on the
matter. Abstentions will not be considered votes cast on the proposal and will not have a positive or negative effect on the outcome of this proposal. Because Proposal 3 should be considered a
"routine" matter, we do not anticipate any broker non-votes.
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OTHER MATTERS
Management does not know of any other matters which will be presented for action at the Annual Meeting. If any other matters shall properly
come before the Annual Meeting, the persons named in the proxy will vote thereon in accordance with their judgment.
Stockholder Proposals for 2019 Annual Meeting
An eligible stockholder who wishes to have its qualifying stockholder proposal considered for inclusion in our proxy materials
for such meeting must send a qualifying stockholder proposal to our Corporate Secretary at our executive offices at the address below no later than the close of business on January 9, 2019. To
qualify as an eligible stockholder with regard to making a stockholder proposal, a stockholder must, among other things, have continuously held at least $2,000 in market value or 1% of our outstanding
capital stock for at least one year by the date of submission of the stockholder proposal, and must continue to own that amount of stock through the date of the Annual Meeting.
If
you want to make a proposal or nominate a director for consideration at next year's Annual Meeting without having the proposal included in our proxy materials, you must comply with
the current advance notice provisions and other requirements set forth in our Bylaws. Under our Bylaws, a stockholder may bring a matter to vote upon at an annual meeting by giving adequate notice to
our Corporate Secretary. To be adequate, that notice must contain the information specified in our Bylaws and be received by us not earlier than February 23, 2019 nor later than
5:00 p.m., Eastern Time, on March 25, 2019. If, however, the date of the Annual Meeting is advanced or delayed by
more than 30 days from June 12, 2019, timely notice by the stockholder must be delivered not later than the 90th day prior to the date of such Annual Meeting or, if later, the
tenth day following the day on which public announcement of the date of such meeting is first made.
If
we do not receive your proposal or nomination by the appropriate deadline, then it may not be brought before the 2019 annual meeting of stockholders. The fact that we may not insist
upon compliance with these requirements should not be construed as a waiver of our right to do so at any time in the future.
All
proposals or nominations should be addressed to ILG, Inc., 6262 Sunset Drive, Miami, Florida 33143, Attention: Corporate Secretary.
Householding
The SEC permits a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if
they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information
stockholders receive and reduces mailing and printing costs. A number of brokerage firms have instituted householding. Only one copy of this proxy statement and the accompanying annual report will be
sent to certain beneficial stockholders who share a single address, unless any stockholder residing at that address gave contrary instructions.
If
any beneficiary stockholder residing at such an address desires at this time to receive a separate copy of this proxy statement and the attached annual report or if any such
stockholder wishes to receive a separate proxy statement and annual report in the future, or if any stockholders sharing an address desire to request delivery of a single copy of such documents if
they are receiving multiple copies of such documents, the stockholder(s) should provide such instructions to ILG by calling ILG Investor Relations, at 305-666-1861 x7302, or by writing
ILG, Inc., 6262 Sunset Drive, Miami, Florida 33143, Attention: Investor Relations, after which, in the case of a stockholder requesting a separate copy, ILG will deliver promptly a separate
copy of the requested document(s).
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ANNUAL REPORTS
Upon written request to the Corporate Secretary, ILG, Inc., 6262 Sunset Drive, Miami, Florida 33143, ILG will provide without charge to
each person solicited a copy of ILG's 2017 Annual Report, including the financial statements and financial statement schedule filed therewith. Copies are also available on our website,
www.ilg.com
. ILG
will furnish requesting stockholders with any exhibit not contained in its 2017 Annual Report upon payment of copying costs.
By
order of the Board of Directors,
Victoria J.
Kincke
Secretary
Dated
May 7, 2018
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APPENDIX A
ADJUSTED EBITDA REPORTED RECONCILIATION
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Year Ended December 31,
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2017
|
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2016
|
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2015
|
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2014
|
|
2013
|
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|
|
(in millions)
|
|
|
|
|
|
Net income attributable to common stockholders
|
|
$
|
168
|
|
$
|
265
|
|
$
|
73
|
|
$
|
79
|
|
$
|
81
|
|
Net income attributable to noncontrolling interest
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|
1
|
|
Net income
|
|
|
171
|
|
|
267
|
|
|
75
|
|
|
82
|
|
|
82
|
|
Income tax provision
|
|
|
26
|
|
|
57
|
|
|
41
|
|
|
45
|
|
|
45
|
|
Other special items (gain on bargain purchase)
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|
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(2
|
)
|
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(163
|
)
|
|
|
|
|
|
|
|
|
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Equity in earnings from unconsolidated entities
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|
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(4
|
)
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|
(5
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)
|
|
(5
|
)
|
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5
|
|
|
|
|
Other non-operating expense, net
|
|
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3
|
|
|
7
|
|
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(3
|
)
|
|
(2
|
)
|
|
|
|
Interest expense
|
|
|
26
|
|
|
23
|
|
|
21
|
|
|
7
|
|
|
6
|
|
Interest income
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
219
|
|
|
185
|
|
|
128
|
|
|
127
|
|
|
133
|
|
Other non-operating income (expense), net
|
|
|
(3
|
)
|
|
(7
|
)
|
|
3
|
|
|
2
|
|
|
|
|
Other special items (gain on bargain purchase)
|
|
|
2
|
|
|
163
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings from unconsolidated entities
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
|
|
Net income attributable to noncontrolling interest
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
Depreciation expense
|
|
|
60
|
|
|
43
|
|
|
18
|
|
|
16
|
|
|
15
|
|
Amortization expense of intangibles
|
|
|
20
|
|
|
19
|
|
|
14
|
|
|
12
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
299
|
|
|
406
|
|
|
166
|
|
|
159
|
|
|
155
|
|
Other special items
|
|
|
4
|
|
|
(163
|
)
|
|
|
|
|
|
|
|
(3
|
)
|
Asset impairments
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of purchase accounting
|
|
|
(4
|
)
|
|
12
|
|
|
1
|
|
|
2
|
|
|
|
|
Acquisition related and restructuring costs
|
|
|
12
|
|
|
22
|
|
|
8
|
|
|
7
|
|
|
4
|
|
Less: Other non-operating (income) expense, net
|
|
|
3
|
|
|
7
|
|
|
(3
|
)
|
|
(2
|
)
|
|
|
|
Non-cash compensation expense
|
|
|
22
|
|
|
18
|
|
|
13
|
|
|
11
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
346
|
|
$
|
302
|
|
$
|
185
|
|
$
|
173
|
|
$
|
166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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A-1
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Table of Contents
ADJUSTED EBITDA LONG-TERM INCENTIVE CALCULATION RECONCILIATION
|
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|
|
|
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|
|
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|
|
Year Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
(in millions)
|
|
Net income attributable to common stockholders
|
|
$
|
168
|
|
$
|
265
|
|
$
|
73
|
|
Net income attributable to noncontrolling interest
|
|
|
3
|
|
|
2
|
|
|
2
|
|
Net income
|
|
|
171
|
|
|
267
|
|
|
75
|
|
Income tax provision
|
|
|
26
|
|
|
57
|
|
|
41
|
|
Other special items (gain on bargain purchase)
|
|
|
(2
|
)
|
|
(163
|
)
|
|
|
|
Equity in earnings from unconsolidated entities
|
|
|
(4
|
)
|
|
(5
|
)
|
|
(5
|
)
|
Other non-operating expense, net
|
|
|
3
|
|
|
7
|
|
|
(3
|
)
|
Interest expense
|
|
|
26
|
|
|
23
|
|
|
21
|
|
Interest income
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
219
|
|
|
185
|
|
|
128
|
|
Other non-operating income (expense), net
|
|
|
(3
|
)
|
|
(7
|
)
|
|
3
|
|
Other special items (gain on bargain purchase)
|
|
|
2
|
|
|
163
|
|
|
|
|
Equity in earnings from unconsolidated entities
|
|
|
4
|
|
|
5
|
|
|
5
|
|
Net income attributable to noncontrolling interest
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
Depreciation expense
|
|
|
60
|
|
|
43
|
|
|
18
|
|
Amortization expense of intangibles
|
|
|
20
|
|
|
19
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
299
|
|
|
406
|
|
|
166
|
|
Other special items
|
|
|
4
|
|
|
(163
|
)
|
|
|
|
Asset impairments
|
|
|
10
|
|
|
|
|
|
|
|
Acquisition related and restructuring costs
|
|
|
12
|
|
|
22
|
|
|
8
|
|
Less: Other non-operating (income) expense, net
|
|
|
3
|
|
|
7
|
|
|
(3
|
)
|
Non-cash compensation expense
|
|
|
22
|
|
|
18
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
350
|
|
$
|
290
|
|
$
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
(in millions)
|
|
Operating activities before inventory spend
|
|
$
|
310
|
|
$
|
168
|
|
$
|
143
|
|
Inventory spend
|
|
|
(231
|
)
|
|
(175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
79
|
|
|
(7
|
)
|
|
143
|
|
Repayments on securitizations
|
|
|
(178
|
)
|
|
(93
|
)
|
|
|
|
Proceeds from securitizations, net of debt issuance costs
|
|
|
322
|
|
|
370
|
|
|
|
|
Net changes in financing-related restricted cash
|
|
|
14
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net securitization activities
|
|
|
158
|
|
|
252
|
|
|
|
|
Capital expenditures
|
|
|
(119
|
)
|
|
(95
|
)
|
|
(20
|
)
|
Acquisition-related and restructuring payments
|
|
|
10
|
|
|
30
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
$
|
128
|
|
$
|
180
|
|
$
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-2
|
|
|
|
|
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
(in millions)
|
|
Net income attributable to common stockholders
|
|
$
|
168
|
|
$
|
265
|
|
$
|
73
|
|
Acquisition related and restructuring costs
|
|
|
12
|
|
|
22
|
|
|
8
|
|
Other non-operating foreign currency remeasurements
|
|
|
(1
|
)
|
|
7
|
|
|
(4
|
)
|
Impact of purchase accounting
|
|
|
(2
|
)
|
|
15
|
|
|
1
|
|
Other special items
|
|
|
(40
|
)
|
|
(163
|
)
|
|
|
|
Asset impairments
|
|
|
10
|
|
|
|
|
|
|
|
Income tax impact on adjusting items(1)
|
|
|
(8
|
)
|
|
(16
|
)
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
|
|
$
|
139
|
|
$
|
130
|
|
$
|
76
|
|
Earnings per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.36
|
|
$
|
2.62
|
|
$
|
1.28
|
|
Diluted
|
|
$
|
1.34
|
|
$
|
2.60
|
|
$
|
1.26
|
|
Adjusted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.12
|
|
$
|
1.29
|
|
$
|
1.33
|
|
Diluted
|
|
$
|
1.10
|
|
$
|
1.28
|
|
$
|
1.32
|
|
Weighted average number of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
124,032
|
|
|
100,868
|
|
|
57,400
|
|
Diluted
|
|
|
125,833
|
|
|
101,732
|
|
|
57,989
|
|
-
(1)
-
Tax
rate utilized is the applicable effective tax rate respective to the period to the extent amounts are deductible
|
|
|
|
|
|
|
|
|
A-3
|
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 06/11/2018 for shares held directly. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. ILG INC 6262 SUNSET DRIVE MIAMI, FL 33143 VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 06/11/2018 for shares held directly. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For Withhold For All Except To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the AllAll The Board of Directors recommends you vote FOR the following: nominee(s) on the line below. 0 0 0 1. Election of Directors Nominees 01 Craig M. Nash 06 Lewis J. Korman 11 Sergio D. Rivera 02 David Flowers 03 Victoria L. Freed 08 Thomas J. McInerney 13 Avy H. Stein 04 Lizanne Galbreath 09 Thomas P. Murphy, Jr. 05 10 Chad Hollingsworth Stephen R. Quazzo 07 Thomas J. Kuhn 12 Thomas O. Ryder The Board of Directors recommends you vote FOR proposals 2 and 3. 2To approve, in an advisory non-binding vote, the compensation of our named executive officers. For 0 0 Against 0 0 Abstain 0 0 3To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm for ILG for the fiscal year ending December 31, 2018. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 0 For address change/comments, mark here. (see reverse for instructions) Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000382815_1 R1.0.1.17
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement are available at www.proxyvote.com ILG INC Annual Meeting of Stockholders June 12, 2018 10:00 AM This proxy is solicited by the Board of Directors By signing this proxy, you hereby revoke any prior proxies and appoint Craig M. Nash and William L. Harvey, or any of them, each with the power to appoint his/her substitute, and hereby authorize them to represent and to vote, as designated on the reverse side of this card, all of the shares of common stock of ILG INC that you are entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 AM, ET on 6/12/2018, at ILG's offices at 6262 Sunset Drive Miami, FL 33143, and any adjournment or postponement thereof. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors recommendations. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof to the extent authorized by Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side 0000382815_2 R1.0.1.17
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