Finance Case - Career Opportunities

Career opportunities In many ways, Project Chariot would offer attractive possibilities to Marriott's management. In the downsizing of the previous few years many executive positions had been lost. MC had also seen the departure of "fast-track" executives who decided that their chances of rapid ascent in the organization and wealth accumulation were not as good as elsewhere. With two separate companies there would now be twice as many top-level positions, and with MII poised for rapid growth, ambitious managers would be more likely to stay. Managers with stock holdings and options would also benefit personally from the expected increase in the value of the company's stock after the Project Chariot restructuring. Because HMC would be valued more on the basis of the chance of appreciation in its property holdings than on expected income, the company would be under less pressure from investors to sell off hotels at distress prices. To the extent that HMC operated at a loss, the combined after-tax earnings of the two separate companies would be smaller than that of MC as a single entity, for HMC's losses would no longer offset MII's positive earnings. On the other hand, unburdened by debt, MII would have the ability to raise additional capital to finance growth, perhaps to participate in the consolidation of the hotel industry by purchasing the

8According to the MC March 1992 proxy statement, the Marriott family was deemed to control 25.75% (approximately 25.6 million shares) of common stock of MC. The holdings of all other directors, nominees, and executive officers amounted to approximately 300,000 shares. An additional 800,000 shares were set aside for executive officers under a restricted stock plan and deferred stock agreements, as well as approximately 2.8 million stock options (of which 1.1 million were currently exercisable) under a stock option plan.