Proxy Statement (definitive) (def 14a)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

( RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant x

Filed by a Party other than the Registrant o

Check the appropriate box:

¨	Preliminary Proxy Statement

¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x	Definitive Proxy Statement

¨	Definitive Additional Materials

¨	Soliciting Material Pursuant to §240.14a-12

MORGANS HOTEL GROUP CO.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):


x	No fee required.

¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)	Title of each class of securities to which transaction applies:

	(2)	Aggregate number of securities to which transaction applies:

	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

	(4)	Proposed maximum aggregate value of transaction:

	(5)	Total fee paid:

¨	Fee paid previously with preliminary materials.

¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No.:

	(3)	Filing Party:

	(4)	Date Filed:

MORGANS HOTEL GROUP CO.

475 Tenth Avenue

New York, NY 10018

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 12, 2016

10:00 a.m. Eastern Daylight Time

Dear Stockholder:

You are cordially invited to attend the 2016 annual meeting of stockholders of Morgans Hotel Group Co. (the “Company”) to be held on Thursday, May 12, 2016, at 10:00 a.m., Eastern Daylight Time, at Hudson hotel, 358 West 58th Street, New York, NY 10019, for the following purposes:

to elect nine directors to serve one-year terms expiring at the 2017 annual meeting of stockholders;

to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016;

to hold an advisory vote on executive compensation; and

to transact such other business as may properly come before the annual meeting.

Only stockholders of record at the close of business on Friday, April 1, 2016, the record date for the annual meeting, will be entitled to notice of and to vote at the meeting.

YOUR VOTE IS IMPORTANT, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON, IF YOU DESIRE, AS DISCUSSED IN THIS PROXY STATEMENT.

If you need any assistance with voting through your proxy card or voting by telephone or the Internet, please contact our proxy solicitor:

Okapi Partners LLC

437 Madison Avenue 28th Floor

New York, NY 10022

Banks and Brokerage Firms, Please Call: (212) 297-0720

Stockholders Call Toll Free: (877) 796-5274

Email: info@okapipartners.com



By Order of the Board of Directors



Name:	Meredith L. Deutsch
Title:	Secretary

New York, NY

April 15, 2016

TABLE OF CONTENTS

	Page
QUESTIONS AND ANSWERS	1
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE	5
PROPOSAL 1: ELECTION OF DIRECTORS FOR A ONE-YEAR TERM EXPIRING AT THE 2017 ANNUAL MEETING OF STOCKHOLDERS	5
Director Nominee Biographies	6
Corporate Governance Information	8
Risk Oversight	12
Board Committees	12
AUDIT RELATED MATTERS	15
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	15
Disclosure of BDO USA, LLP Fees for the Years Ended December 31, 2015 and 2014 .	15
Pre-Approval Policies and Procedures	15
Report of the Audit Committee	16
EXECUTIVE OFFICER BIOGRAPHIES	17
COMPENSATION DISCUSSION AND ANALYSIS	18
Executive Summary	18
Overview of Compensation Program	18
Elements of Executive Compensation	23
Severance and Change in Control Arrangements	27
Tax Provisions Affecting Compensation Decisions	27
Compensation Committee Report	27
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS	28
Executive Compensation	28
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table	29
Potential Payments upon Termination or Change in Control	32
Director Compensation	37
Equity Compensation Plan Information	39
Compensation Committee Interlocks and Insider Participation	39
Compensation Policies and Practices as they Relate to Risk Management	39
PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION	40
VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	40
Section 16(a) Beneficial Ownership Reporting Compliance	43
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	44
Policy and Procedures Regarding Transactions with Related Persons	44
Consulting Agreement with Jonathan A. Langer	44
OTHER MATTERS	45
Availability of Proxy Statement and Annual Report on Form 10-K	45
Other Matters to Come Before the 2016 Annual Meeting	45
Stockholder Proposals and Nominations for the 2017 Annual Meeting	45

MORGANS HOTEL GROUP CO.

475 Tenth Avenue

New York, NY 10018

PROXY STATEMENT

QUESTIONS AND ANSWERS

Why am I receiving this proxy statement?

You are receiving this proxy statement and the accompanying proxy card because you own shares of common stock of Morgans Hotel Group Co. This proxy statement contains information related to the solicitation of proxies for use at our 2016 annual meeting of stockholders, to be held at 10:00 a.m., Eastern Daylight Time, on Thursday, May 12, 2016 at Hudson hotel, 358 West 58th Street, New York, NY 10019, for the purposes stated in the accompanying Notice of Annual Meeting of Stockholders. Unless otherwise stated, as used in this proxy statement, the terms “we,” “our,” “us” and the “Company” refer to Morgans Hotel Group Co.

This proxy statement, the enclosed proxy card and our annual report to stockholders for 2015 are first being mailed to stockholders beginning on or about April 15, 2016.

Who is entitled to vote at the annual meeting?

Only holders of record of our common stock at the close of business on April 1, 2016, the record date for the annual meeting, are entitled to receive notice of the annual meeting and to vote at the annual meeting.

When you vote by signing and returning the proxy card or vote by telephone or the Internet, you appoint Richard T. Szymanski and Meredith L. Deutsch, two officers of the Company, as your representatives to vote your common stock at the annual meeting or any properly authorized adjournment thereof. Mr. Szymanski and Ms. Deutsch, or either of them, will vote your common stock as you instruct on your proxy card or by telephone or the Internet. Accordingly, if you sign and return the proxy card or vote by telephone or the Internet, your common stock will be voted whether or not you attend the annual meeting. Even if you plan to attend the annual meeting, we encourage you to vote by signing and returning your proxy card or voting by telephone or the Internet in advance of the annual meeting.

Is there a list of stockholders entitled to vote at the annual meeting?

The names of stockholders of record entitled to vote at the annual meeting will be available for inspection by stockholders of record at the annual meeting and for ten days prior to the annual meeting, between the hours of 9:00 a.m. and 4:30 p.m., by contacting our Secretary at our principal executive offices at 475 Tenth Avenue, New York, NY 10018, Attn: Secretary.

Can I attend the annual meeting? What do I need for admission?

If you are a holder of our common stock at the close of business on April 1, 2016, the record date for the annual meeting, or a duly appointed proxy, you are authorized to attend the annual meeting. You will need to present proof of share ownership and valid picture identification, such as a driver’s license or passport, before being admitted. If your common stock is held beneficially in the name of a bank, broker or other holder of record (i.e., street name), you must present proof of your ownership by presenting a bank or brokerage account statement reflecting your ownership as of the record date for the annual meeting.

Cameras, recording equipment and other electronic devices will not be permitted at the annual meeting. For directions to the annual meeting, contact our Investor Relations department at (212) 277-4100.

What proposals will be voted on at the annual meeting?

Stockholders will vote on the following proposals at the annual meeting:

to elect nine directors to serve one-year terms expiring at the 2017 annual meeting of stockholders;

to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016;

to hold an advisory vote on executive compensation; and

to transact such other business as may properly come before the annual meeting.

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How does the Board recommend I vote on these proposals?

The entire Board of Directors recommends a vote:

“ FOR ALL ” of the Board’s nine director nominees named in Proposal 1 of this proxy statement;

“ FOR ” the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the 2016 fiscal year; and

“ FOR ” the advisory vote on executive compensation.

Will any other matters be voted on?

As of the date of this proxy statement, we do not know of any matters that will be presented for consideration at the annual meeting other than those matters discussed in this proxy statement. If any other matters properly come before the meeting and call for a stockholder vote, valid proxies will be voted by the holders of the proxies in their own discretion.

What are the voting rights of stockholders?

Each share of common stock outstanding on the record date entitles its holder to cast one vote on each matter to be voted on.

How do I vote?

Stockholders of Record. If you are a stockholder of record (that is, if you hold shares of the Company in your own name), you may vote your shares by any of the following methods:

Vote by Mail . You may vote by completing, signing and dating the enclosed proxy card where indicated and by mailing or otherwise returning the proxy card in the envelope provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as a guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity. Please mail the proxy card in the envelope provided to you so it is received in advance of the annual meeting on Wednesday, May 11, 2016.

Vote by the Internet or Telephone. You may vote by the Internet by logging on to the website listed on the proxy card, entering your control number located on the proxy card and voting by following the on-screen prompts. You may also vote by telephone (toll free) by calling the toll-free touchtone voting number listed on the proxy card, entering your control number located on the proxy card and following the touchtone prompts. If you vote by the Internet or by telephone, you do not need to return your proxy or voting instruction card. Internet and telephone voting facilities will close at 11:59 p.m. (Eastern Daylight Time) on May 11, 2016 for the voting of shares held by stockholders of record.

Beneficial Owners. If you are a beneficial owner, but your shares are held in the name of a bank, broker or other holder of record (that is, in “street name”), you may vote by completing, signing and dating the voting instruction card where indicated and by mailing or otherwise returning the voting instruction card in the envelope provided to you. Please mail the voting instruction card in the envelope provided to you with your voting instruction card so it is received in advance of the annual meeting on Wednesday, May 11, 2016. If your shares are held in street name, and if the bank or broker offers Internet and telephone voting, you will receive instructions from them that you must follow in order for your shares to be voted.

Your vote is important and our Board of Directors strongly encourages you to vote your shares by following the instructions provided on the enclosed proxy card or voting instruction card. Please vote promptly. Even if you plan to attend the annual meeting, our Board of Directors recommends that you vote in advance of the annual meeting via one of the methods described above.

What does it mean if I receive more than one proxy card or voting instruction card?

If your shares are registered in more than one name or are held in more than one account, you will receive a proxy card or voting instruction card for each account. To ensure that all of your shares are voted, please follow the instructions you receive for each account to complete, sign, date and return each proxy card or voting instruction card you receive or to submit your proxy or voting instructions by telephone or by the Internet.

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How will my shares be voted if I do not provide specific voting instructions in the proxy card or voting instruction card that I submit?

If you sign and submit a proxy card or voting instruction card without giving specific voting instructions on one or more matters listed in the notice for the meeting, your shares will be voted as recommended by a majority of our Board on such matters, and as the proxy holders may determine in their discretion how to vote with respect to any other matters properly presented for a vote at the meeting.

Will my shares of common stock be voted if I do not provide my proxy and I do not attend the annual meeting?

If you do not provide a proxy or vote your shares of common stock held in your name at the annual meeting, your shares will not be voted. If you hold your shares in street name, your broker may be able to vote your shares for routine matters even if you do not provide the broker with voting instructions. The ratification of BDO USA, LLP as our independent registered public accounting firm for fiscal year 2016 is considered a routine matter. Your broker may not vote your shares for non-routine matters if you do not provide the broker with voting instructions. If you want your shares voted, we urge you to complete and return the enclosed proxy card. For more information on broker non-votes, see “— What effect do withhold votes, abstentions and broker non-votes have on the proposals?” below.

May I change my vote after I return my proxy card?

Yes. You may change or revoke a previously granted proxy at any time before it is exercised by (i) submitting a later-dated proxy by mail, telephone or the Internet, (ii) attending the annual meeting and voting in person or (iii) delivering instructions to our Secretary at our principal executive offices located at 475 Tenth Avenue, New York, NY 10018, Attn: Secretary. Please note that attendance at the meeting, in itself, will not constitute revocation of a previously granted proxy.

If your shares of common stock are held in street name, then you may submit new voting instructions by contacting your broker or nominee. You may also vote in person at the annual meeting if you obtain a legal proxy from your broker.

What will constitute a quorum at the annual meeting?

The presence at the annual meeting, in person or by proxy, of the holders of a majority of the shares of the Company’s common stock outstanding on April 1, 2016, the record date for the annual meeting, will constitute a quorum, permitting the stockholders to conduct business at the annual meeting. We will include abstentions and broker non-votes in the calculation of the number of shares considered to be present at the meeting, including for purposes of determining the presence of a quorum at the meeting. For more information on abstention and broker non-votes, see “— What effect do withhold votes, abstentions and broker non-votes have on the proposals?” below.

As of April 1, 2016, there were 34,764,261 shares of common stock outstanding.

How many votes are needed to approve each of the proposals?

Directors are elected by a plurality of the votes cast on the election of directors. Therefore, the nine nominees for election to the Board who receive the highest number of affirmative votes will be elected as directors. Ratification of our independent registered public accounting firm and the advisory vote on executive compensation will each require the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote thereon.

How are proxy card votes counted?

If the accompanying proxy card is properly signed and returned to us, and not revoked, the persons designated as proxy holders will vote the shares of common stock represented by that proxy as directed by you. If you return your signed proxy card but fail to indicate your voting preferences, the persons designated as proxy holders will vote the shares of common stock represented by that proxy as recommended by the Board of Directors. The entire Board of Directors recommends you vote (i) “ FOR ALL ” of the Board’s nine director nominees named in Proposal 1 of this proxy statement, (ii) “ FOR ” the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the 2016 fiscal year, and (iii) “ FOR ” the advisory vote on executive compensation.

In the election of directors, you may vote (i) “ FOR ALL” of the Board’s nine director nominees, (ii) “ WITHHOLD ALL ” with respect to the Board’s nine director nominees or (iii) “ FOR ALL EXCEPT ” one or more, but not all, of the Board’s nine director nominees. The nine directors receiving the highest number of votes will be elected.

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On the ratification of our independent registered public accounting firm, you may vote “ FOR ,” “ AGAINST ” or “ ABSTAIN ” . The proposal will be approved if a majority of the shares present in person or by pro xy entitled to vote on the proposal vote “ FOR ” the proposal.

On the advisory vote on executive compensation, you may vote “ FOR ,” “ AGAINST ” or “ ABSTAIN ” . The proposal will be approved if a majority of the shares present in person or by proxy entitled to vote on the proposal vote “ FOR ” the proposal.

What effect do withhold votes, abstentions and broker non-votes have on the proposals?

Withhold Votes. In the election of directors, stockholders can withhold authority to vote their shares with respect to all of the Board’s nine director nominees as a group by voting “ WITHHOLD ALL ” or with respect to one or more, but not all, of the Board’s nine director nominees by voting “ FOR ALL EXCEPT ” and indicating for which individual nominee(s) the stockholder is withholding voting authority. Only the nine nominees standing for election receiving the most “ FOR ” votes will be elected as directors. Withhold votes will be counted as present and entitled to vote for purposes of determining the presence of a quorum at the annual meeting but will not have an impact in determining the outcome of the election because only the candidates who receive the highest number of “ FOR ” votes will be elected.

Abstentions. Pursuant to Delaware law and our by-laws, for all purposes requiring a majority vote, abstentions are counted for purposes of determining both (i) the presence or absence of a quorum for the transaction of business and (ii) the total number of votes cast with respect to a proposal. We intend to treat abstentions in this manner. With respect to all matters other than the election of directors, abstentions will have the same effect as a vote against the proposal.

Broker Non-Votes. Broker non-votes are shares present by proxy at the annual meeting and held by banks, brokers or nominees as to which (i) instructions to vote have not been received from the beneficial owners and (ii) the broker or nominee does not have discretionary voting power on a particular matter. If you are a beneficial owner of shares held in “street name” and you do not provide voting instructions to your broker, your shares may be voted on any matter your broker has discretionary authority to vote. Under the rules that govern brokers who are voting with respect to shares held in “street name,” brokers generally have discretionary authority to vote on “routine” matters, but not on “non-routine” matters. The ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the 2016 fiscal year (Proposal 2) is considered a routine matter. Non-routine matters include the election of directors (Proposal 1) and the advisory vote on executive compensation (Proposal 3). We encourage you to provide instructions to your broker or other nominee regarding voting your shares. On any matter for which your broker or other nominee does not vote on your behalf, the shares will be treated as “broker non-votes.”

Broker non-votes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business at the annual meeting, but broker non-votes will not be counted as votes cast and will have no effect on the voting of the proposals referenced above.

Who will count the votes?

The Inspector of Election appointed for the annual meeting, who we expect will be a representative of Broadridge Financial Solutions, Inc., will separately tabulate the affirmative and negative votes, withheld votes, abstentions and broker non-votes.

Where can I find the voting results of the annual meeting?

We will report voting results by filing a Current Report on Form 8-K within four business days following the date of the annual meeting. If final voting results are not known when such report is filed, they will be announced in an amendment to such report within four business days after the final results become known.

Who is soliciting my proxy, how is it being solicited and who is bearing the cost of such solicitation?

This solicitation of proxies is made by and on behalf of our Board of Directors. We will pay all costs of soliciting proxies, including the costs of preparing and mailing this proxy statement. In addition to the solicitation by us of proxies by mail, our officers, directors and other employees, without additional compensation, may solicit proxies personally or by telephone or by other appropriate means of communication. We request and anticipate that banks, brokers, fiduciaries, custodians and nominees will forward copies of our proxy soliciting materials to their principals and request their voting instructions, and we will reimburse those persons for their out-of-pocket expenses in doing so. In addition, we retained Okapi Partners LLC (“Okapi”) in December 2015 to provide solicitation and advisory services for which Okapi received a retainer of $25,000, plus its reasonable out-of-pocket expenses. We have agreed to indemnify Okapi against certain liabilities, including liabilities arising under the federal securities laws.

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In connection with the sol icitation of proxies for the annual meeting, we have not authorized anyone to give you any information or make any representation not contained in this proxy statement. If anyone gives you any other information or makes any other representation to you, you should not rely on it as having been authorized by us.

What is “householding” and how does it affect me?

If you and other residents at your mailing address who have the same last name own our common stock in street name, your broker or bank may have sent you a notice that your household will receive only one annual report and proxy statement. This practice of sending only one copy of proxy materials is known as “householding.” If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If the foregoing procedures apply to you, your broker has sent one copy of each of our annual report, notice of annual meeting and proxy statement to your address. However, even if your broker has sent only one copy of these proxy materials, you should receive a proxy card for each stockholder in your household. You may revoke your consent to householding at any time by contacting your broker or bank, if you hold your shares in a “street name,” or by writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or calling (866) 540-7095 if you are a stockholder of record. The revocation of your consent to householding will be effective 30 days following its receipt. In any event, if you did not receive an individual copy of our annual report or proxy statement, we will promptly send a separate copy of the annual report or the proxy statement to you upon oral or written request. Such request can be made by contacting us at 475 Tenth Avenue, New York, NY 10018, attention: Investor Relations (telephone number: (212) 227-4100). Any stockholders sharing the same address and currently receiving multiple copies of the annual report and the proxy statement who wish to receive only one copy of these materials per household in the future may also contact your broker or bank or our Investor Relations Department to participate in the householding program.

You should assume that the information in this proxy statement is accurate only as of the date of this proxy statement or, where information relates to another date set forth in this proxy statement, then as of that date.

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

PROPOSAL 1: ELECTION OF DIRECTORS FOR A ONE-YEAR TERM EXPIRING AT THE 2017 ANNUAL MEETING OF STOCKHOLDERS

Our Board of Directors is currently comprised of nine directors, each with terms expiring at the annual meeting. Messrs. Andrew Broad, Kenneth E. Cruse, John J. Dougherty, Jason T. Kalisman, Howard M. Lorber, Bradford B. Nugent, Michael E. Olshan, and Adam Stein, and Ms. Michelle S. Russo currently serve as directors of the Company.

Mr. Nugent has been nominated in accordance with the Stock Purchase Agreement dated October 15, 2009 (the “Yucaipa SPA”), among the Company, Yucaipa American Alliance Fund II, L.P, and Yucaipa American Alliance (Parallel) Fund II, L.P. (together with its affiliates, “Yucaipa”). Under the terms of the Yucaipa SPA, for so long as the Yucaipa investors collectively own or have the right to purchase through exercise of the warrants (assuming a cash exercise of such warrants) 875,000 shares of our common stock (the “Yucaipa SPA Condition”), we have agreed to use our reasonable best efforts to cause our Board of Directors to nominate and recommend to our stockholders the election of a person nominated by the Yucaipa investors as a director (the “Yucaipa Nominee”) and to use our reasonable best efforts to ensure that the Yucaipa investors’ nominee is elected to our Board of Directors at each such meeting. If that nominee is not elected as a director at a meeting of stockholders, the Yucaipa investors have certain Board of Director observer rights. Further, if we do not, within 30 days from the date of such meeting, create an additional seat on the Board of Directors and make available such seat to the nominee, the dividend rate on the Series A preferred securities held by Yucaipa increases by 4% during any time that a Yucaipa investors’ nominee is not a member of our Board of Directors. The Corporate Governance and Nominating Committee believes that Mr. Nugent brings valuable business expertise to the Board, including his extensive transactional and advisory experience, which will allow the Company to continue to execute its strategy in 2016 and beyond.

Each of the Board’s nine director nominees has consented to his or her name being submitted by the Company as a nominee for election as a director of the Company in this proxy statement and other solicitation materials to be filed with the SEC and distributed to the Company’s stockholders and in other materials in connection with the solicitation of proxies by the Company and its directors, officers, employees and other representatives from stockholders to be voted at the annual meeting. Each such nominee has further consented to serve as a director of the Company if elected.

Based on its review of the relationships, if any, that any of our directors has with the Company, and as discussed in greater detail below, a majority of our Board has affirmatively determined that Andrew Broad, Kenneth E. Cruse, John J. Dougherty, Howard M. Lorber, Bradford B. Nugent, Michael E. Olshan, Michelle S. Russo and Adam Stein are “independent” directors within the meaning of the rules of the Nasdaq Stock Market, Inc. (“Nasdaq”).

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The Board knows of no reason why any of its nine director nominees would be unable to serve as a director. However, if at any time before the Annual Meeting, the Yucaipa SPA Condition is not met and Yucaipa’s right to nominate a Yucaipa Nomine e ceases, or the Yucaipa Nominee is unavailable for election or service, the Board may, as permitted by our by-laws, decrease the size of the Board from nine to eight. If any other director nominee is unavailable for election or service, the Board may desi gnate a substitute director nominee and the persons designated as proxy holders on the proxy card will vote for the substitute director nominee recommended by the Board, or the Board may decrease the size of our Board.

Our Recommendation

THE ENTIRE BOARD RECOMMENDS YOU VOTE “ FOR ALL ” OF THE BOARD’S NINE DIRECTOR NOMINEES SET FORTH BELOW.

Vote Required

The affirmative vote of a plurality of the votes cast on the election of directors is necessary for the election of a director. Accordingly, the nine nominees for election to the Board who receive the highest number of affirmative votes will be elected as directors. Cumulative voting in the election of directors is not permitted. For purposes of the election of directors, shares for which voting authority is withheld and broker non-votes will have no effect on the result of the vote.

Director Nominee Biographies

Set forth below are descriptions of the backgrounds and principal occupations of each of our nine director nominees. The age and other information of each person are as of April 15, 2016.

Name	Age	Current Position with Morgans Hotel Group Co.
Howard M. Lorber	67	Chairman and Director
Andrew Broad	42	Director
Kenneth E. Cruse	47	Director
John J. Dougherty	65	Director
Jason T. Kalisman	37	Director
Bradford B. Nugent	36	Director
Michael E. Olshan	33	Director
Michelle S. Russo	50	Director
Adam Stein	41	Director

Howard M. Lorber has been one of our directors since March 2015 and has been the Chairman of our Board since May 2015. Mr. Lorber has served on our Corporate Governance and Nominating Committee since May 2015 and also sits on the Operating Committee of the Board of Directors. Howard M. Lorber is President and Chief Executive Officer and member of the Board of Vector Group Ltd. (NYSE: VGR) and Chairman of Douglas Elliman Realty, LLC, a majority-owned subsidiary of Vector Group, which operates the largest residential brokerage company in the New York City metropolitan area and the fourth-largest in the United States. Mr. Lorber has been with Vector Group and its diversified interests since 1994. Vector Group is one of our stockholders. Mr. Lorber is also Executive Chairman of the Board of Directors of Nathan’s Famous, Inc., a chain of fast food restaurants, a director of United Capital Corp., a real estate investment and diversified manufacturing company, and Vice Chairman of the Board of Ladenburg Thalmann Financial Services. Mr. Lorber served as a director of Borders Group Inc. from May 2010 through January 2012. Mr. Lorber holds a Bachelor of Arts degree, a Master of Science degree in Taxation and an Honorary Doctorate from Long Island University, where he is also a trustee.

Mr. Lorber brings to the Board his valuable expertise in the real estate and investment industries, including more than 25 years of experience serving on the board of a restaurant and real estate company.

Andrew Broad has been one of our Directors since May 2014. Mr. Broad is currently Vice President and Partner at Hotel Assets Group, LLC which is a specialized brokerage firm offering hotel-specific real estate and investment banking within the United States, a position he has held since September 2011. Prior to his role at Hotel Assets Group, Mr. Broad was Senior Vice President of Business Development at Alliance Hospitality Management, a third-party hotel management company, from February 2009 until September 2011. In October 2008, Mr. Broad filed a petition for personal bankruptcy under Chapter 7 of the federal bankruptcy laws, which was subsequently discharged in March 2009. Mr. Broad has been the principal hotel broker for over 150 hotel transactions throughout the United States. In 2007, he was named one of Real Estate New Jersey’s Broker All-Stars. Mr. Broad holds a Bachelor of Science degree from the Cornell University School of Hotel Administration.

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Mr. Broad brings over 15 years of experience in the hospitality industry, including hotel brokera ge, third party hotel management, and brand development.

Kenneth E. Cruse has been one of our directors since March 2015 and has served on our Audit Committee since May 2015. Mr. Cruse also sits on the Operating Committee of the Board of Directors. Mr. Cruse is currently the Chief Executive Officer of Alpha Wave Investors, LLC, a private equity firm that he founded in January 2015. Mr. Cruse has also served as the Chief Executive Officer of Sunstone Hotel Investors Inc. (NYSE: SHO) from August 2011 to January 2015 and as its President from December 17, 2010 to February 15, 2013. Mr. Cruse has over 20 years of experience in hotel investment, operations and finance. Mr. Cruse joined Sunstone in April 2005 as Senior Vice President of Asset Management and Corporate Transactions. In September 2006, he was named Senior Vice President of Corporate Finance and in January 2007, Mr. Cruse was named Chief Financial Officer. For the eight years prior to joining Sunstone, Mr. Cruse worked in a variety of roles for Host Marriott Corporation, the predecessor of Host Hotels and Resorts, Inc., most recently as Vice President of Corporate Finance. He is actively involved in various industry and professional organizations. He served as the Director of Sunstone Hotel Investors Inc. from August 2011 to January 2015. He was previously a member of The Real Estate Roundtable and previously served on the Chief Executive Officer Council for the American Hotel & Lodging Association. He is also a member of the Southern California Chapter of Young President Organization and the Dean’s Advisory Council for Colorado State University Warner College of Natural Resources. Mr. Cruse earned a Master of Business Administration degree with distinction from Georgetown University and a Bachelor of Science degree in Tourism Management and Commercial Recreation from the Colorado State University.

Mr. Cruse brings to the Board over 20 years of valuable experience in hotel investment, operations and finance.

John J. Dougherty is the Chairman of the Audit Committee and a member of the Compensation Committee and the Corporate Governance and Nominating Committee and has been one of our Directors since June 2013. From 1986 until December 31, 2013, Mr. Dougherty was the Vice President of Olshan Hotel Management, Inc., a hotel management company, where he handled development, operations and the management of 7 Hilton and Marriott hotels, totaling 1,395 rooms and 1,000 employees. Mr. Dougherty was also director of Olshan Hotel Management, Inc., a privately owned company which is a subsidiary of Olshan Properties, a full-service real estate operating and investing company which holds 11 million square feet of retail properties, 5 million square feet of office space, 20,000 multi-family residential units, and 1,395 hotel rooms in its portfolio, and over 1,000 employees. Mr. Dougherty retired from his positions at Olshan Hotel Management, Inc. as of December 31, 2013. Mr. Dougherty holds a Bachelor of Science degree from the Cornell University School of Hotel Administration.

Mr. Dougherty brings to the Board over 25 years of valuable experience in the real estate and hotel management industries. In particular, Mr. Dougherty provides the Board with valuable counsel, advice, and expertise with respect to the development and management of hotels.

Jason T. Kalisman , CFA, has served as a director of the Company since April 2011. Mr. Kalisman was the Chairman of our Board of Directors from June 2013 to May 2015 and served as our Interim Chief Executive Officer from August 2013 to May 2015. Mr. Kalisman was a member of the Corporate Governance and Nominating Committee from July 2011 through March 2013 and from June 2013 through August 2013. Mr. Kalisman is the founder and Chief Executive Officer of The Talisman Group, LLC, an investment firm. Mr. Kalisman is also a founding member of OTK Associates, LLC (“OTK”). Prior to founding The Talisman Group, LLC in 2012, Mr. Kalisman was at GEM Realty Capital, Inc., serving as a Vice President from 2010 to 2012 and a Financial Analyst in 2009. From 2008 to 2010, Mr. Kalisman attended Stanford Graduate School of Business. Mr. Kalisman worked at The Goldman Sachs Group, Inc. from 2001 to 2007 in both the Real Estate and Structured Products Groups. Mr. Kalisman graduated from Harvard College with a Bachelor of Arts degree in Economics and Stanford Graduate School of Business with a Master of Business Administration, where he was also a recipient of their Certificate in Global Management. Mr. Kalisman has also earned the right to use the Chartered Financial Analyst designation.

Mr. Kalisman brings to the Board his valuable expertise in the real estate and investment industries, as well as in corporate finance and governance matters. Mr. Kalisman’s past service on the Board of the Company and former role as Interim Chief Executive Officer brings valuable insight into the business of the Company.

Bradford B. Nugent has been one of our directors since April 2015. Mr. Nugent is a Partner at The Yucaipa Companies and is active in sourcing and executing investment opportunities, structuring financing for investments and monitoring portfolio company performance and strategic initiatives focusing primarily on the real-estate and hospitality space. Prior to joining The Yucaipa Companies in 2005, Mr. Nugent served as an Associate of Flag Capital Management, a multi-strategy hedge fund with several billion in commitments. Previously, Mr. Nugent was in the Leveraged Finance and Sponsor Coverage group at CIBC World Markets, consummating several leveraged transactions in various industries. Mr. Nugent received a Bachelor of Arts from Columbia College in New York City. Mr. Nugent is an active board member of Yucaipa’s hospitality investments, including Soho House, luxury brands Stephen Webster and Garrard, as well as Simon Worldwide, Inc.

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Mr. Nugent brings to the Board valuable business expertise, including his extensive transactional and advisory experience.

Michael E. Olshan rejoined our Board of Directors in November 2015. Mr. Olshan previously served on our Board of Directors from June 2013 to May 2014, and served as Chairman of our Corporate Governance and Nominating Committee during that time. Mr. Olshan rejoined the Corporate Governance and Nominating Committee in November 2015 and he also sits on the Operating Committee of the Board of Directors. Mr. Olshan is the founder, Chairman and Managing Partner of O-CAP Management, L.P., a private investment fund founded in July 2009 that focuses primarily on hard asset sectors including real estate, infrastructure and natural resources. Mr. Olshan also serves as a member and director of Olshan Properties, a privately owned real estate firm that specializes in the development, acquisition and management of commercial real estate, and is Co-Manager of OTK. From March 2007 to January 2009, Mr. Olshan served as a Managing Director at JANA Partners LLC, an investment advisory firm, where he was part of an investment team overseeing a multi-billion dollar investment portfolio. Mr. Olshan focused on sourcing and analyzing event-driven opportunities primarily in the REIT, real estate, lodging, gaming, and financial sectors throughout North America and Europe. Mr. Olshan graduated cum laude from Harvard University.

Mr. Olshan brings to the Board his valuable expertise in the real estate and investment industries, including his experience serving on the board of a real estate company.

Michelle S. Russo has been one of our Directors since May 2014 and is the Chairman of the Compensation Committee. Ms. Russo is the founder and Chief Executive Officer of Hotel Asset Value Enhancement, Inc. (“hotelAVE”), a hotel asset management company advising on over $5.5 billion of hotel real estate annually. Ms. Russo also is a Vice President of Stepstone Hospitality, Inc., a position she has held since 2008. Prior to founding hotelAVE, Ms. Russo managed a half-billion dollar portfolio for John Hancock Mutual Life Insurance Company. In addition, Ms. Russo was responsible for changing the 2660 Woodley Road property’s management, the subject of a well-known legal action initiated by Ms. Russo, and overseeing a multi-million dollar repositioning renovation of the 1,500-room convention hotel. Prior to founding hotelAVE, Ms. Russo’s professional experience includes Vice President and Senior Leisure Analyst at Deutsche Bank Securities, Inc., Investment Officer and Hotel Real Estate Asset Manager at John Hancock Mutual Life Insurance Company, Senior Vice President at Pinnacle Advisory Group and Vice President at Hospitality Valuation Services. Ms. Russo graduated from the School of Hotel Administration at Cornell University with a Bachelor of Science degree.

Ms. Russo brings to the Board her valuable experience, including her prior capital markets and analyst experience, as well as more than 25 years of practical, hands-on experience with hotels, restaurants, resorts, convention centers, real estate, and finance.

Adam Stein joined our Board of Directors in November 2015 and is a member of our Compensation Committee and Audit Committee. Mr. Stein is a Portfolio Manager at Pine River Capital Management, a global alternative asset management firm and one of our shareholders. Mr. Stein has been with Pine River since 2008. Prior to joining Pine River Capital Management, Mr. Stein was a Managing Director at RCG Urban American from 2005 to 2008 and an Associate in investment banking at Merrill Lynch from 2004 to 2005. Mr. Stein is currently a Director at Intelepeer Holdings, Inc. Mr. Stein received an MBA in 2004 and a BS in Economics in 1994 from the Wharton School of the University of Pennsylvania.

Mr. Stein brings to the Board his valuable business expertise and general financial experience in the investment industry, including his extensive asset management experience.

Corporate Governance Information

We are committed to maintaining the highest standards of business conduct and corporate governance, which we believe are essential to running our business efficiently, serving our stockholders well and maintaining our integrity in the marketplace. Accordingly, our Board has adopted and maintains the following corporate governance guidelines, codes and charters:

Corporate Governance Guidelines;

Code of Business Conduct;

Code of Ethics;

Charter of the Audit Committee;

Charter of the Compensation Committee; and

Charter of the Corporate Governance and Nominating Committee.

From time to time, we may revise the above-mentioned corporate governance guidelines, codes and charters in response to changing regulatory requirements, evolving best practices and the concerns of our stockholders and other constituents. Please visit our website

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at www.morganshotelgroup.com to view or obtain a copy of the current version of any of these documents. We will provide any of the above-mentioned documents, free of charge, to any stockhol der who sends a written request to:

Morgans Hotel Group Co.

Attn: Investor Relations

475 Tenth Avenue

New York, NY 10018

Director Independence

Our Corporate Governance Guidelines require us to have a majority of our Board consisting of directors who (i) are neither officers nor employees of the Company or its subsidiaries (and have not been officers or employees within the previous three years), (ii) do not have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and (iii) who are otherwise independent under the Nasdaq rules. Under the Nasdaq rules, the following persons would not be considered independent:

a director who is, or at any time during the past three years was, employed by the Company or by any parent or subsidiary of the Company;

a director who accepted or who has a family member who accepted any compensation from the Company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence, other than (i) compensation for board or board committee service; (ii) compensation paid to a family member who is an employee (other than an executive officer) of the Company; or (iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation;

a director who is a family member of an individual who is, or at any time during the past three years was, employed by the Company as an executive officer;

a director who is, or has a family member who is, a partner in, or a controlling stockholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than (i) payments arising solely from investments in the Company’s securities or (ii) payments under non-discretionary charitable contribution matching programs;

a director of the Company who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the Company serve on the compensation committee of such other entity; or

a director who is, or has a family member who is, a current partner of the Company’s outside auditor, or was a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during any of the past three years.

To adequately assess and ensure that (i) at least a majority of our directors qualify as independent and (ii) each of the Board committees is comprised of solely independent directors, the Board undertakes an annual review of the independence of all directors. In determining independence, our Board considers all facts and circumstances. In assessing the materiality of a director’s relationship with the Company, the Board considers the issues from the director’s standpoint and from the perspective of the persons or organization with which the director has an affiliation. The Board reviews commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships.

Our Board has evaluated the status of each director, and a majority of our Board has affirmatively determined, after considering the relevant facts and circumstances, that each of Messrs. Broad, Cruse, Dougherty, Lorber, Nugent, Olshan, and Stein and Ms. Russo is “independent” as defined in the Nasdaq rules. In reaching these decisions, our Board has undertaken a review of the independence of each of the current directors of the Company and, in connection with such review, the Board has reviewed the relationships, if any, that each director has with the Company, as known to the Board or management of the Company, and which have been disclosed by each of the directors.

After discussing these relationships and the independence standards set forth above, the Board determined that none of these relationships would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Board Leadership Structure

We do not have a policy with regard to whether the offices of Chairman of the Board and Chief Executive Officer may or may not be held by the same individual. Our governing documents permit the Chairman and Chief Executive Officer to be the same or different

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individuals, which provides the Board of Directors the flexibility to determine whether these ro les should be combined or separated based on the Company’s circumstances and needs at any given time. The role of Chairman of the Board is currently held by Howard Lorber and we do not currently have a Chief Executive Officer. Since the resignation of our Interim Chief Executive Officer in May 2016, Richard T. Szymanski has served as our principal executive officer for SEC reporting purposes.

The Board believes that its current leadership structure is appropriate. We expect that the Board will re-evaluate our Board leadership structure upon the hiring of a Chief Executive Officer, including whether the Chief Executive Officer should also serve as a director and whether the positions of Chairman of the Board and Chief Executive Officer should be held by the same individual.

Executive Sessions of Independent Directors

Pursuant to our Corporate Governance Guidelines and the Nasdaq rules, in order to promote open discussion among independent directors, our independent directors meet from time to time in scheduled executive sessions without management participation. See “— Director Independence” above for a list of our independent directors.

Communications with the Board

Stockholders and other interested parties may communicate with the Board by sending written correspondence to the Independent Directors, c/o Secretary of Morgans Hotel Group Co., 475 Tenth Avenue, New York, NY 10018. The Secretary will forward all such correspondence to the independent director then presiding over the executive sessions of the independent directors. The applicable independent director will decide what action should be taken with respect to the communication, including whether such communication should be reported to the full Board.

Board Meetings and Director Attendance

Pursuant to our Corporate Governance Guidelines, (i) we are required to have at least four regularly scheduled Board meetings in each calendar year; and (ii) directors are expected to attend, in person or by telephone or video conference, all Board meetings and meetings of committees on which they serve. Our Board held 30 Board meetings in 2015. Each of our directors attended at least 75% of the aggregate number of Board meetings, with the exception of Mr. Kalisman and Ms. Russo who attended 73% and 63%, respectively, of the aggregate number of Board meetings. Each of our directors attended at least 75% of the aggregate number of applicable committee meetings on which they served during 2015. We held our annual meeting of stockholders in May 2015, at which one of our current directors attended. The Company does not have a policy regarding director attendance at our annual meeting of stockholders.

Criteria for Board Membership

According to our Corporate Governance Guidelines, the Corporate Governance and Nominating Committee determines new nominees for the position of independent director who satisfy Nasdaq requirements and the following criteria:

personal qualities and characteristics, accomplishments and reputation in the business community;

current knowledge and contacts in the communities in which the Company does business and in the Company’s industry or other industries relevant to the Company’s business;

ability and willingness to commit adequate time to Board and committee matters;

the fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company; and

diversity of viewpoints, background, experience and other demographics.

Neither the Corporate Governance and Nominating Committee nor the Board has adopted a formal policy with respect to diversity of its directors. However, in connection with its overall director candidate review, the Corporate Governance and Nominating Committee’s consideration of diversity may include, but is not limited to, diversity of business experience, industry experience, professional expertise, personal skills, viewpoints, geographic background, ethnicity, gender and age. The Corporate Governance and Nominating Committee also considers diversity of life experiences in considering director candidates. Directors must be willing and able to devote sufficient time to carrying out their duties effectively. The Corporate Governance and Nominating Committee takes into account the other demands on the time of a candidate, including, for example, occupation and memberships on other boards, and also considers any conflicts of interest (including any appearance of a conflict of interest) or related party issues that may be raised as a result of such candidate’s membership on the Board.

The Corporate Governance and Nominating Committee will seek to identify director candidates based on input provided by a number of sources, including (i) Corporate Governance and Nominating Committee members, (ii) other members of the Board and (iii) our

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stockholders. The Corporate Governance and Nominating Committee also has the authority to consult with or retain advisors or search firms to assist in identifying qualified director candida tes.

As part of the identification process, the Corporate Governance and Nominating Committee considers the number of expected director vacancies and the number and the desired overall composition of the Board. During the identification process, the Corporate Governance and Nominating Committee endeavors to balance the following goals: (i) the size of the Board should facilitate substantive discussions of the whole Board in which each director can participate meaningfully; (ii) the composition of the Board should encompass a broad range of skills, expertise, industry knowledge, diversity of opinion and contacts relevant to the Company’s business; and (iii) a majority of the Board shall consist of directors who are neither officers nor employees of the Company or its subsidiaries (and have not been officers or employees within the previous three years), do not have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and who are otherwise “independent” under Nasdaq rules. If the new director is expected to serve on a committee of the Board, the Corporate Governance and Nominating Committee considers the specific needs of such committee and any Nasdaq or other regulatory requirements or standards governing service on such committee.

Once a director candidate has been identified, the Corporate Governance and Nominating Committee will then evaluate this candidate in light of his or her qualifications and credentials, and any additional factors that it deems necessary or appropriate. Each candidate goes through a screening process that includes interviews, background checks, review and verification of credentials, review of public records and other appropriate measures. Existing directors who are being considered for re-nomination will be re-evaluated as part of the Corporate Governance and Nominating Committee’s process of recommending director candidates. The Corporate Governance and Nominating Committee will consider all persons recommended by stockholders in the same manner as all other director candidates, provided that such recommendations are submitted in accordance with the procedures set forth in our by-laws and summarized below under “Board of Directors and Corporate Governance — Corporate Governance Information — Stockholder Recommendations of Director Nominees.”

After completing the identification and evaluation process described above, the Corporate Governance and Nominating Committee will recommend to the Board the nomination of a number of candidates equal to the number of director vacancies that will exist at the annual meeting of stockholders. The Board will then select the Board’s director nominees for stockholders to consider and vote upon at the stockholders’ meeting.

Stockholder Recommendations of Director Nominees

For nominations for election to the Board to be properly brought before an annual meeting by a stockholder, the stockholder must comply with the advance notice provisions and other requirements of Article I, Section 1.11 of our by-laws. These notice provisions require that nominations for directors must be received no more than 90 days and no less than 60 days before the date of the annual meeting; provided, however, that if the date of the meeting is first publicly announced or disclosed (in a public filing or otherwise) less than 70 days prior to the date of the meeting, such advance notice must be given not more than ten days after the date of the meeting is first announced or disclosed. The stockholder’s notice must set forth:

as to each person whom the stockholder proposes to nominate for election or reelection as a director (i) the name, age, business experience and background of such person, as set forth in our by-laws, (ii) the class and number of shares of Morgans Hotel Group Co. that are beneficially owned or owned of record by such person, (iii) such person’s written consent to being named in the proxy statement as a nominee and to serving as director if elected, and (iv) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, as set forth in our by-laws; and

as to the stockholder giving the notice and each beneficial owner, if any, on whose behalf the nomination is made, (i) the name and address of such stockholder, as they appear on our share ledger and current name and address, if different, of such beneficial owner, and (ii) the class and number of shares of Morgans Hotel Group Co. that are owned beneficially and of record by such stockholder and owned beneficially by such beneficial owner.

Code of Ethics and Code of Business Conduct

We have adopted a Code of Ethics, which is applicable to all of our directors, officers, including our principal executive officer, principal financial officer and principal accounting officer, and employees. This code is intended to:

promote honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interest;

promote full, fair, accurate, timely and understandable disclosure;

promote compliance with applicable laws and governmental rules and regulations;

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ensure the protection of the Company’s legitimate business interests, including corporate opportunities, assets and confidential inform ation; and

deter wrongdoing.

We have also adopted a Code of Business Conduct, which is applicable to all of our directors, officers and employees. This code covers areas of professional conduct, including honest and candid conduct, conflicts of interest, disclosure, compliance with all applicable laws, rules and regulations, corporate opportunities, confidentiality, fair dealing and the protection and proper use of Company assets.

We have posted both our Code of Ethics and Code of Business Conduct to our website and intend to promptly post any waiver or amendment of our Code of Ethics that applies to our principal executive officer, principal financial officer or principal accounting officer to our website.

In addition to the Code of Ethics and Code of Business Conduct, the Audit Committee has in place a whistleblower reporting procedure that enables it to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters. The procedures in place permit our employees to confidentially and anonymously submit their concerns regarding questionable accounting or auditing matters directly to the Audit Committee. Upon receiving a concern or complaint pursuant to these procedures, the Audit Committee chair will:

either call a meeting of the Audit Committee or add the complaint to the agenda for discussion at the next regularly scheduled Audit Committee meeting, depending upon the apparent urgency of the matter;

review the complaint to determine whether the complaint raises a material concern;

investigate or have a designee investigate each concern or complaint; and

review the results of the investigation and communicate the findings and recommendations to the full Board.

Risk Oversight

One of the important roles of our Board is to oversee various risks that we may face from time to time. While the full Board has primary responsibility for risk oversight, it utilizes its committees, as appropriate, to monitor and address the risks that may be within the scope of a particular committee’s expertise or charter. For example, the Audit Committee oversees our financial statements, compliance with legal and regulatory requirements and the performance of our internal audit function. The Board believes that the composition of its committees, and the distribution of the particular expertise of each committee’s members, makes this an appropriate structure to more effectively monitor these risks.

An important feature of the Board’s risk oversight function is to receive updates from its committees and management, as appropriate. For example, each year our Chief Financial Officer and Senior Vice President of Finance-Audit & Compliance, together with our internal audit department, develop an audit plan designed to address key corporate governance controls and financial reporting and internal control risks. This plan is subsequently reviewed by the Audit Committee, and the Senior Vice President of Finance-Audit & Compliance then reports the audit results to the Audit Committee on a quarterly basis, or more frequently as needed. In addition, our General Counsel meets quarterly with the Audit Committee and provides updates to the Audit Committee regarding material litigation and legal compliance matters. The Audit Committee (as well as the other committees of the Board, including the Operating Committee) periodically updates the full Board as to matters discussed in its committee meetings and seeks input from the full Board as necessary and appropriate. In addition to getting direct information from the committees, the Board receives updates directly from members of management. In particular, our Chief Financial Officer and General Counsel, due to their management positions, are able to frequently communicate with other members of our management and update the Board regularly on the important aspects of the Company’s day-to-day operations and risks.

Board Committees

The Board has a standing Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee. All members of the committees described below are “independent” under Nasdaq rules as discussed under “Board of Directors and Corporate Governance — Corporate Governance Information — Director Independence.”

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The table below provides membership information for each of the Board committees as of April 15, 2016:

Name

Audit

Committee

Compensation

Committee

Corporate

Governance and

Nominating

Committee

Operating

Committee

Kenneth E. Cruse

†

John J. Dougherty

*†

Howard M. Lorber

Michael E. Olshan

Michelle S. Russo

Adam Stein

Chairman

†	Audit Committee Financial Expert

Audit Committee

The Audit Committee currently consists of Messrs. Dougherty (Chairman), Cruse, and Stein. Messrs. John Brecker and Martin L. Edelman, both former directors, also served on the Audit Committee during 2015. Pursuant to its charter, the Audit Committee is responsible for, among other things, (i) overseeing management’s maintenance of the reliability and integrity of our financial reporting and disclosure practices, (ii) overseeing management’s establishment and maintenance of processes to assure that an adequate system of internal control is functioning, (iii) overseeing management’s establishment and maintenance of processes to assure our compliance with all applicable laws, regulations and corporate policy, (iv) reviewing our annual and quarterly financial statements prior to their filing or prior to the release of earnings, (v) reviewing the performance of the independent public accounting firm, (vi) appointing, retaining or terminating the independent public accounting firm, (vii) pre-approving all audit, audit-related and other services, if any, to be provided by the independent public accounting firm and (viii) reviewing and approving all related party transactions of the Company. The Board has designated Mr. Dougherty and Mr. Cruse as Audit Committee financial experts as that term is defined by the SEC and has determined that each is “independent” as that term is defined by Nasdaq. See “Director Biographies” above for information regarding their financial expertise and business background. The Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel for this purpose where appropriate. The Audit Committee met seven times in 2015.

Compensation Committee

The Compensation Committee currently consists of Ms. Russo (Chairman) and Messrs. Dougherty and Stein. Mr. Brecker, a former director, also served on the Compensation Committee during 2015. Pursuant to its charter, the Compensation Committee is responsible for, among other things:

reviewing and approving the corporate goals and objectives relevant to the compensation paid to our Chief Executive Officer, evaluating the Chief Executive Officer’s performance in light of these goals and objectives and, either as a committee or with the other independent directors of the Board, determining the Chief Executive Officer’s compensation;

determining the compensation paid to the other executive officers of the Company;

overseeing and administering our incentive compensation plans and programs;

reviewing and approving any severance or termination payments or benefits, as well as any perquisites or other personal benefits provided to the executive officers of the Company;

overseeing and assisting the Company in preparing the compensation discussion and analysis, or the Compensation Discussion and Analysis, for inclusion in the Company’s proxy statement and Annual Report on Form 10-K;

providing a description of the processes and procedures for the consideration and determination of executive and director compensation for inclusion in the Company’s proxy statement;

reviewing and discussing the Compensation Discussion and Analysis with management and making a recommendation to the Board regarding whether to include the Compensation Discussion and Analysis in the Company’s proxy statement and Annual Report on Form 10-K; and

preparing a Compensation Committee report to be included in the Company’s proxy statement and Annual Report on Form 10-K.

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Pursuant to its charter, the Compensation Committe e may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee consisting of one or more members.

The Board of Directors has established a special two-member committee of the Board (the “Non-Executive Equity Award Committee”), and delegated to that committee limited authority to grant equity awards to non-executive officers and non-director employees pursuant to the Amended and Restated 2007 Plan. Grants by the Non-Executive Equity Award Committee may not exceed 540,000 shares of common stock in the aggregate (subject to downward adjustment for specific awards) or such other limit as the Compensation Committee may establish from time to time. The special two-member Non-Executive Equity Award Committee’s authority does not in any way limit the Compensation Committee’s authority to administer the Amended and Restated 2007 Plan. The Non-Executive Equity Award Committee consists of Mr. Kalisman and Ms. Russo.

Under its charter, the Compensation Committee has authority to retain compensation consultants, outside counsel and other advisors that the Compensation Committee deems appropriate, in its sole discretion, to assist it in discharging its duties. In 2015, the Compensation Committee engaged FPL Associates (“FPL”) to act as its compensation consultant. The Compensation Committee has sole authority to terminate any engagement with a compensation consultant. The Compensation Committee met 16 times in 2015.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee currently consists of Messrs. Lorber (Chairman), Dougherty, and Olshan. Mr. Edelman, a former director, also served on the Corporate Governance and Nominating Committee during 2015. Pursuant to its charter, the Corporate Governance and Nominating Committee is responsible for, among other things, (i) seeking, considering and recommending to the Board qualified candidates for election as directors and to fill any vacancies on the Board, (ii) recommending a slate of nominees for election as directors at the annual meeting, (iii) preparing and submitting to the Board qualifications for the position of director and policies concerning the term of office of directors and the composition of the Board, (iv) considering all candidates for election as directors recommended by the Company’s stockholders in accordance with the procedures set forth in the Company’s annual proxy statement and (v) considering and recommending to the Board other actions relating to our corporate governance. The Corporate Governance and Nominating Committee also annually determines the appropriate size of the Board, recommends to the Board nominees for each committee of the Board, and facilitates the assessment of the Board’s performance as a whole and of the individual directors. The Corporate Governance and Nominating Committee met five times in 2015.

Special Transaction Committee

The Special Transaction Committee was dissolved on June 26, 2015 and consisted of Messrs. Dougherty, Edelman, and Kalisman, Mr. Langer and Mr. Broad also served on the Special Transaction Committee in 2015. Mr. Olshan sat on the Special Transaction Committee until May 2014. The Board formed the Special Transaction Committee in January 2014 to evaluate a full range of strategic alternatives for the Company.

Operating Committee

Following the resignation of Mr. Kalisman as Interim Chief Executive Officer, in May 2015 the Board of Directors established an Operating Committee to oversee day-to-day management pending the appointment of a new Chief Executive Officer. The Operating Committee currently consists of Messrs. Lorber, Cruse and Olshan. Mr. Edelman, a former director, also served on the Operating Committee in 2015.

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AUDIT RELAT ED MATTERS

PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our consolidated financial statements for the year ended December 31, 2015 have been audited by BDO USA, LLP, who served as our independent registered public accounting firm for the last fiscal year. The Audit Committee has appointed BDO USA, LLP to serve as our independent registered public accounting firm for the year ending December 31, 2016. We have been advised by BDO USA, LLP that representatives of BDO USA, LLP will be present at our annual meeting. These representatives will have the opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

The Sarbanes-Oxley Act of 2002 requires the Audit Committee to be directly responsible for the appointment, compensation and oversight of the audit work of the independent registered public accounting firm. Nevertheless, our Board of Directors is submitting the appointment of BDO USA, LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment of BDO USA, LLP, the Audit Committee may reconsider the appointment and may retain BDO USA, LLP or another accounting firm without resubmitting the matter to stockholders. Even if the stockholders ratify the appointment, the Audit Committee may select another firm if it determines such selection to be in our and our stockholders’ best interest.

Our Recommendation

THE ENTIRE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “ FOR ” THE PROPOSAL TO RATIFY THE APPOINTMENT OF BDO USA, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2016.

Vote Required

The ratification of the appointment of BDO USA, LLP requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote thereon. This is considered a routine matter on which banks, brokers, or other nominees may vote if no instructions are provided by the stockholder, however, for purposes of the vote on this proposal, broker non-votes will not count and will have no effect on the result of the vote. Abstentions will have the effect of votes against a proposal.

Disclosure of BDO USA, LLP Fees for the Years Ended December 31, 2015 and 2014.

The following summarizes the fees billed by BDO USA, LLP for services rendered during, or in connection with, our 2015 and 2014 fiscal years, as applicable:

	2015		2014
Audit Fees(1)	$	656,654	$	734,083
Audit Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—
Total	$	656,654	$	734,083

(1)

Audit Fees include fees for the audit of our consolidated financial statements, review of quarterly financial statements, audit of certain subsidiaries and the issuance of standalone financial statements, and other services related to SEC matters, such as compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

All services provided by BDO USA, LLP to us since we became a public company have been pre-approved by the Audit Committee, either pursuant to the Audit Committee’s Audit and Non-Audit Services Pre-Approval Policy or through a separate pre-approval by the Audit Committee, which concluded that the provision of such services by BDO USA, LLP was compatible with the maintenance of that firm’s independence from us.

Pre-Approval Policies and Procedures

The Audit Committee’s policy is to review and pre-approve, either pursuant to the Audit Committee’s Audit and Non-Audit Services Pre-Approval Policy or through a separate pre-approval by the Audit Committee, any engagement of our independent registered public accounting firm to provide any audit or permissible non-audit service to the Company. Pursuant to the Audit and Non-Audit Services Pre-Approval Policy, which the Audit Committee will review and reassess periodically, a list of specific services within certain categories of services, including audit, audit-related, tax and other services, are specifically pre-approved for the upcoming or current

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fiscal year, subject to an aggregate maximum annual fee payable by us for each category of pre-approved services. Any service that is not included in the approved list of services must be separately pre-approved by the Audit Committee. Additionally, all audit and permissible non- audit services in excess of the pre-approved fee level, whether or not included on the pre-approved list of services, must be separately pre-approved by the Audit Committee. The Audit Committee has delegated authority to its chairman to specifically pre-ap prove engagements for the performance of audit and permissible non-audit services, for which the estimated cost for each specified type of service shall not exceed $100,000. The chairman must report all pre-approval decisions to the Audit Committee at its next scheduled meeting and provide a description of the terms of the engagement, including:

the type of services covered by the engagement;

the dates the engagement is scheduled to commence and terminate;

the estimated fees payable by us pursuant to the engagement;

other material terms of the engagement; and

such other information as the Audit Committee may request.

Report of the Audit Committee

The Audit Committee is currently comprised of Messrs. Dougherty (Chairman), Cruse and Stein. The members of the Audit Committee are appointed by and serve at the discretion of the Board.

One of the Audit Committee’s principal purposes is to assist the Board in overseeing the integrity of our financial statements. Our management team has the primary responsibility for our financial statements and the reporting process, including the system of internal control over financial reporting and disclosure controls and procedures. BDO USA, LLP, our independent registered public accounting firm, audits the annual financial statements prepared by management and expresses an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, or GAAP. In carrying out its responsibilities, the Audit Committee has reviewed and has discussed our audited consolidated financial statements for the fiscal year 2015 with our management and representatives of BDO USA, LLP. Management represented to the Audit Committee that our financial statements for the past fiscal year were prepared in accordance with GAAP.

The Audit Committee also is responsible for assisting the Board in overseeing the qualification, independence and performance of our independent registered public accounting firm. The Audit Committee discussed with BDO USA, LLP the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standards No. 16 (Communication with Audit Committee). The Audit Committee has received both the written disclosures and the letter from BDO USA, LLP required by the Public Company Accounting Oversight Board Rule 3526 and has discussed with BDO USA, LLP the independence of BDO USA, LLP from us. The Audit Committee also has considered whether the provision of any non-audit services, and any fees charged for such non-audit services, by BDO USA, LLP are compatible with maintaining the independence of BDO USA, LLP from us.

Based on the reviews and discussions described above, the Audit Committee recommended to the Board that our audited consolidated financial statements for fiscal year 2015 be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Respectfully submitted,

The Audit Committee of the Board of Directors

John J. Dougherty (Chairman)

Kenneth E. Cruse

Adam Stein

The Audit Committee report above does not constitute “soliciting material” and will not be deemed “filed” or incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate our SEC filings by reference, in whole or in part, notwithstanding anything to the contrary set forth in those filings.

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EXECUTIVE OFFIC ER BIOGRAPHIES

The following are our current executive officers:

Name	Age	Position
Richard T. Szymanski	58	Chief Financial Officer and principal executive officer for SEC reporting purposes
Meredith L. Deutsch	43	Executive Vice President, General Counsel and Secretary
Chadi Farhat	40	Interim Chief Operating Officer, Senior Vice President and Chief Revenue Officer

Set forth below are biographical summaries of our executive officers as of April 15, 2016. Executive officers are elected by and serve at the discretion of our Board.

Richard T. Szymanski has been our Chief Financial Officer since he joined the Company in 2005, and since the resignation of our Interim Chief Executive Officer in May 2016, he has served as our principal executive officer for SEC reporting purposes. From 2003 until 2005, Mr. Szymanski was Senior Vice President and Chief Financial Officer of Prime Hospitality LLC, an entity controlled by The Blackstone Group L.P., and its predecessor Prime Hospitality Corp. From 1986 to 2003, Mr. Szymanski held a number of senior positions at Prime Hospitality Corp. and its predecessor, including Vice President of Finance and Vice President and Corporate Controller. Mr. Szymanski previously worked for Ernst & Young from 1979 to 1986 in several positions including audit manager. Mr. Szymanski received a Bachelor of Science degree in accounting from Rutgers University.

Meredith L. Deutsch has been our Executive Vice President and General Counsel since May 2014 and Secretary since March 2015. From January 2014 until April 2014, Ms. Deutsch provided legal consulting services to us. Prior to that, Ms. Deutsch served as Acting General Counsel of KIT digital, Inc., a video services and software company from 2012 until 2013. Prior to joining KIT digital, Ms. Deutsch was Of Counsel in the Capital Markets practice in the New York office of the international law firm of Jones Day for 12 years, where she advised Fortune 500, mid-market and private companies on a wide variety of securities law and other corporate law matters. Ms. Deutsch received her law degree, cum laude, from Cornell Law School and her Bachelor of Arts in History from the University of Pennsylvania.

Chadi Farhat has served as Senior Vice President and Chief Revenue Officer of the Company since March 2015 and was appointed Interim Chief Operating Officer in February 2016. Prior to that, Mr. Farhat was the Company’s Vice President of Revenue Management and Distribution and Head of Sales and Revenue from March 2014 until March 2015 and Vice President of Revenue Management from November 2011 until March 2014. Prior to joining the Company, Mr. Farhat was the Director of eCommerce Revenue Management at Marriott International from November 2010 until November 2011. In that position, he was responsible for developing and implementing pricing and revenue management strategies focused on optimizing revenue through Marriott’s electronic distribution channels. Mr. Farhat worked in other positions at Marriott International beginning in April 2003. Mr. Farhat earned a Master of Business Administration from Johns Hopkins University in January 2002 and a Bachelor of Arts in Hospitality and Tourism Management from Notre Dame University in Beirut, Lebanon in 1999.

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COMPENSATION DISCU SSION AND ANALYSIS

This Compensation Discussion and Analysis is designed to provide stockholders with an understanding of our compensation philosophy, core principles and decision making process. It discusses the actions taken by the Compensation Committee of our Board of Directors during 2015 with respect to the following “named executive officers.” We note that two of the named executive officers set forth below have resigned and are no longer employees of the Company, but appear in this analysis as a result of SEC rules. In general, when we refer to “named executive officers” in this Compensation Discussion and Analysis section we are referring to our named executive officers who were employed in 2015. We note that this discussion does not include Mr. Chadi Farhat as Mr. Farhat was not an executive officer or a “named executive officer” prior to February 29, 2016.

Richard T. Szymanski	Chief Financial Officer and principal executive officer for SEC reporting purposes
Meredith L. Deutsch	Executive Vice President, General Counsel & Secretary
Jason T. Kalisman	Former Interim Chief Executive Officer
Joshua Fluhr	Former Executive Vice President, Chief Operating Officer

Direction of Compensation Program

The Compensation Committee believes that the compensation program for our executive officers, including our named executive officers, should attract highly qualified individuals and retain and motivate them to achieve challenging strategic and financial corporate goals. As such, the Compensation Committee believes that the compensation of our named executive officers should be tied to the performance of the Company and aligned with the interests of our stockholders.

Since mid-2013, when the Board of Directors turned over, the Compensation Committee has been focused on creating more effective compensation practices to properly retain and motivate our executives. As a result of the occurrence of certain events at the Company over the last three years, including changes in senior management and board leadership, proxy contests, the now settled Mondrian SoHo litigation, and the strategic review process undertaken by our Board of Directors, 2015 continued to be a unique and challenging year for the Company. Despite such events, the Compensation Committee spent a considerable amount of time to establish defined objectives and attempt to create an optimal compensation program that would align the interests of our named executive officers and stockholders.

In mid-2014, the Compensation Committee engaged an independent compensation consultant, FPL, with experience and focus on REITS and hospitality clients. The Compensation Committee, together with FPL, examined peer companies of similar size (as opposed to hotel and gaming companies of any size, many of which were in excess of 15x that of the Company, and which had been used by the prior Compensation Committee). The hiring of FPL and the setting of the new peer group was the first step in carrying out the Compensation Committee’s renewed focus on properly aligning compensation practices to the market and to stockholders’ interests. The Compensation Committee continued working with FPL in 2015.

Overview of Compensation Program

Objectives

Our current executive compensation philosophy is defined by the following program characteristics:

Provide competitive compensation to attract and retain qualified, high-performing executives . The Compensation Committee believes that the Company must offer competitive total compensation, which includes base salary, annual cash incentives and long-term equity incentives, to recruit key executive talent as we continue to evolve and to provide meaningful rewards to our key executive officers so that they are incentivized to remain with the Company.

Provide compensation that is tied to our performance. The Compensation Committee believes that there should be a link between compensation that is actually paid and the achievement of key financial, operating and strategic goals. We will continue to develop a pay-for-performance culture intended to drive the creation of stockholder value, not only for our named executive officers but for our employees more broadly.

Align the interests of executives and stockholders through equity-based compensation. We historically made annual equity grants to our executives, including to our named executive officers, in order to create symmetry between their interests and those of our stockholders and to serve as a retention tool over the award’s vesting period. Although no equity awards have been granted since May 2014, we believe that equity awards are an important tool to align the interests of our executive officers and other key employees with our stockholders. Our named executive officers who continue to be employed by the Company hold equity awards that continue to align their interests with our stockholders. Going forward, we will review the design of our equity compensation program and may change the types and/or amounts of equity from what historically had been granted.

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Say-On-Pay

At the 2015 Annual Meeting 74.5% of our stockholders approved the compensation of our named executive officers. The Compensation Committee continues to evaluate our executive compensation programs.

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Compensation Practices

Although our review of our executive compensation program is ongoing, there are certain sound compensation governance practices that have historically been maintained by the Company that we intend to continue. These practices include the following:

WHAT WE DO:

WHAT WE DON’T DO:

Annual Advisory Vote to Approve Executive Compensation. We provide our stockholders with an annual opportunity to vote on an advisory resolution to approve the compensation paid to our named executive officers as disclosed in the proxy statement.

Independent Compensation Committee. Our executive compensation program is reviewed annually by the Compensation Committee, which consists solely of independent directors and which makes all final determinations regarding executive compensation.

Significant Portion of Executive Compensation Tied to Performance. A significant portion of our named executive officers’ compensation is comprised of elements of performance-based, incentive compensation that are tied to defined corporate and individual performance goals.

Stockholder Approval Needed for Repricing. The repricing of stock options or recycling of shares requires stockholder approval.

No Excessive Perquisites. We provide our executives with only limited perquisites in the form of health insurance, life insurance, and Company matching contributions to the 401(k) Plan which are the same benefits generally available to all of our employees. Employee rate rooms at our hotels offered to our executives are generally offered on the same basis as offered to all of our employees.

No Tax Gross-Ups. We are not required to pay excise tax gross-ups in connection with the change in control arrangements provided to our executives and do not provide excise tax gross-ups on post-retirement or termination compensation arrangements.

No Automatic Salary Increases or Guaranteed Bonuses. We do not guarantee annual salary increases or bonuses and none of the employment agreements with any named executives officers contain such provisions.

No “Single Trigger” Automatic Payments or Benefits Upon a Change in Control. The change in control arrangements provided to our executives require a termination without cause or a resignation for good reason following a change in control in order to trigger payments to or benefits for our executives.

No Hedging Our Stock. We prohibit our directors and employees, including our named executive officers, from hedging their interest in the Company’s stock.

No Short Sales. We prohibit executive officers and directors from purchasing or selling options to sell or buy Company common stock (“puts” and “calls”) or engaging in short sales with respect to Company common stock.

Setting of Executive Compensation

The Compensation Committee’s philosophy in setting executive compensation is to provide incentives to the named executive officers to achieve outstanding performance results, to outperform direct competitors, and, ultimately, to optimize stockholder value. The Compensation Committee also considers the unique and challenging events at the Company and the need to motivate, attract and retain executive officers during these challenging times. To support this philosophy, the Compensation Committee sets target compensation in a range so that actual pay outcomes will vary (above or below target) based on the performance achieved.

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Roles and Responsibilities in Determining Executive Compensation

The Compensation Committee establishes executive officer compensation packages and determines cash payout and performance equity vesting levels for performance-based compensation after the conclusion of the relevant performance period. The Compensation Committee also administers our equity compensation plans and oversees our long-term incentive programs generally and any special compensation initiatives.

The Compensation Committee receives input from its compensation consultant on recent developments and trends in executive compensation and related governance matters to assist it in making compensation decisions. In 2015, FPL provided executive compensation trend updates to the Compensation Committee to assist the Compensation Committee in structuring and evaluating proposed officer compensation packages, as well as potential year-end payouts.

With the Compensation Committee’s permission or at the Compensation Committee’s request, selected members of senior management from finance, legal or human resources functions may work cooperatively with the FPL and the Compensation Committee in preparing proposals for officer compensation packages or other executive compensation arrangements for consideration by the Compensation Committee. The compensation consultant at all times remains independent of management, does not provide any other services to the Company and forms its own views with respect to the recommendations it makes.

Typically, the Chief Executive Officer provides input to the Compensation Committee on each proposed executive officer compensation package. In light of the resignation of Mr. Kalisman as Interim Chief Executive Officer in May 2015, Mr. Szymanski provided input to the Compensation Committee based, among other things, on views of each officer’s (other than himself) performance, achievements, skills, and responsibilities, competitive factors, and internal pay equity considerations. Notwithstanding such input, the Compensation Committee exercises independent judgment on executive compensation and is solely responsible for final decisions on such matters.

Peer Group

In 2014, the Compensation Committee consulted with FPL on the Company’s peer group and requested that FPL review the appropriateness of the Company’s prior compensation peer group and make suggestions regarding modifications to this peer group in order to facilitate future executive compensation decisions. Based on FPL’s initial review, it was determined that a number of changes were required, primarily to better reflect the relative degree of size, and therefore complexity of operations, of the Company and that of its peers. FPL considered the following criteria for selecting peer group companies:

companies focused primarily in the leisure and entertainment industry (real estate operating companies/lodging companies irrespective of product type, hotel real estate investment trusts with upscale assets, resorts/casinos with a luxury brand);

companies similar in size to the Company (defined by total capitalization, total revenues, total assets, number of employees); and

geographic location (companies that may compete with the Company for talent and/or portfolio concentration across multiple markets and countries).

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Although the Compensation Committee strives to maintain as much consistency as possible when reviewing the peer group selection to ensure meaningful comparisons to market data over time, the prior peer group was largely revised to include companies that more closely met the above criteria. The prior peer group included companies across industry focuses and ranging in size (measured by total capitalization and total revenues) between 0.2x and 27.5x the s ize of the Company, with the majority of such companies in excess of 15x the Company’s size. The current peer group has companies closer in line with the size of the Company with all of such companies ranked between 0.2x and 5.3x the size of the Company, m easured primarily by total capitalization. A listing of the companies that comprises our peer group is set forth below.

Peer Group

Belmond Ltd.

Chatham Lodging Trust

Chesapeake Lodging Trust

Choice Hotels International, Inc.

Interval Leisure Group, Inc.

Isle of Capri Casinos, Inc.

Marcus Corporation

Monarch Casino & Resort, Inc.

Pebblebrook Hotel Trust

Red Lion Hotels Corporation

Ryman Hospitality Properties, Inc.

Town Sports International Holdings, Inc.

Vail Resorts

Further, the Company is one of several companies that maintain international operations, which adds a degree of complexity to the executive’s roles and operates (or is headquartered) in New York City, which is a highly competitive market place for executive talent.

The Compensation Committee determined that the peer group ensured an accurate assessment of rates of pay in the marketplace in which the Company competes for executive talent. The Compensation Committee did not re-evaluate or change the peer group for 2015. We anticipate that the members of the peer group will be revisited each year to ensure that they continue to be appropriate and to determine whether companies should be added or removed.

While the market data of the peer group is used by the Compensation Committee as an initial reference point and framework, it is not relied on exclusively by the Compensation Committee. The Compensation Committee looks at a variety of factors, including the tenure, experience roles/responsibilities, and unique value that each of our named executive officers brings to the Company.

Overview of the Establishment of Officer Compensation for the Year Ended December 31, 2015

In establishing overall compensation levels for each named executive officer, the factors considered by the Compensation Committee consisted of:

the officer’s compensation for the previous year (if applicable);

a subjective assessment of the officer’s performance in the previous year (if applicable);

the Company’s performance in the previous year; including the impact of unusual events at the corporate level as highlighted above.

our growth, based on both financial and non-financial metrics, from the previous year;

our outlook and operating plan for the upcoming year;

executive officer recruiting and retention considerations; and

compensation trends and competitive factors in the market for talent in which we compete.

The financial performance goals established by the Compensation Committee for the cash incentive plans are based on our internal operating plan, which uses non-GAAP (generally accepted accounting principles) measures that the Board of Directors and senior management consider critical/important in managing the business. For extraordinary non-budgeted events, such as M&A activity or unanticipated litigation, the Compensation Committee or the Board of Directors may normalize performance results to ensure comparability with performance goals, unless otherwise provided under the terms of the applicable award. For 2015, the Compensation Committee determined that in light of the Board’s strategic review process, the “Room Growth” component of the

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performance goals should be eliminated and allocated the portion of the criteria attributable to “Room Growth” equitably across the remaining 2015 annual cash incenti ve criteria.

Elements of Executive Compensation

Base salary

Base salaries are paid to provide a steady source of income to our named executive officers, to promote retention and to compensate executives for performing the daily duties of their jobs. Effective April 1, 2015, the Compensation Committee increased the base salary paid to Ms. Deutsch by 11%, and effective April 1, 2016, the Compensation Committee increased the base salary paid to Ms. Deutsch by 6.3%, in each case based on Ms. Deutsch’s performance and added responsibilities. In 2015, during his tenure as Interim Chief Executive Officer, Mr. Kalisman’s total annual compensation was $1. Mr. Szymanski’s base salary has not been increased since 2013.

Annual Cash Incentives

Annual cash incentives are designed to motivate and reward the achievement of annual financial results relative to Company and individual goals. We believe that annual cash incentives, when properly structured, further our objective of creating a pay for performance culture. Mr. Kalisman was not entitled to receive an annual cash incentive and only received $1 of compensation.

Pursuant to the employment agreement with Mr. Szymanski, he is eligible to receive a discretionary annual cash incentive commensurate with those paid to other similarly situated employees of the Company, with the amount of such annual cash incentive to be determined by the Compensation Committee in its sole discretion. In 2015, the target incentive for Mr. Szymanski was set by the Compensation Committee at 100% of base salary, with a payout range of 50% to 150% of base salary, which is consistent with the target incentive percentage for Mr. Szymanski in 2014.

Pursuant to the employment agreement entered into with Ms. Deutsch in May 2014, she was eligible to receive a discretionary annual cash incentive, subject to the achievement of performance objectives with a target incentive, as a percentage of base salary, of 20%. In early 2015, the Compensation Committee determined that Ms. Deutsch’s target incentive would be increased for 2015 to 50% of base salary. In 2015, the payout range for Ms. Deutsch’s annual cash incentive was 25% to 75% of base salary. Under Ms. Deutsch’s Amended and Restated Employment Agreement entered into in January 2016, Ms. Deutsch’s target incentive percentage was contractually set at 50% of base salary to bring her target incentive percentage in line with her role and responsibilities, as well as with the target incentive percentage applicable to other named executive officers.

Pursuant to the employment agreement entered into with Mr. Fluhr in May 2014, in 2015 he was eligible to receive a discretionary annual cash incentive, subject to the achievement of performance goals established by the Compensation Committee, with a target incentive, as a percentage of base salary, of 50%. Under the terms of his employment agreement, Mr. Fluhr’s annual cash incentive could have been up to 150% of his base salary for performance exceeding the target levels, and any annual cash incentive over 50% of his base salary was payable in the form of a restricted stock unit award that would have vested in three equal installments over three years. Although Mr. Fluhr’s resignation was effective prior to the payment of his 2015 bonus, the Compensation Committee determined that Mr. Fluhr would receive his 2015 discretionary bonus, which was equal to 30% of his base salary.

2015 Annual Cash Incentive Plan

In March 2015, after reviewing historical Company incentive plan structures together with the compensation practices of the peer group companies, the Compensation Committee established the 2015 performance goals and annual cash incentive payout potential for our named executive officers under our 2015 annual cash incentive plan, pursuant to our Amended and Restated 2007 Omnibus Stock Incentive Plan, subject to negative discretion retained by the Compensation Committee.

The performance goals for the 2015 annual cash incentive plan were based on:

(a) the financial performance of the Company as measured by:

(i) Adjusted EBITDA as disclosed in the Company’s 2015 year-end earnings release and 2015 Form 10-K, on a pro forma basis, excluding the impact of the compensation of a permanent Chief Executive Officer, any asset sales, any closures or disruptions due to unplanned renovations, or the loss of management agreements due to sales, foreclosures or other ownership changes other than Mondrian SoHo and Shore Club where the terminations of our management agreements were assumed to be April 1 and July 1, respectively; and

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(ii) RevPAR performance of the Company’s Morgans Hotel Group branded hotels versus their competitive sets as measured by their weighted average RevPAR index in 2015, excluding Mondrian SoHo and Shore Club due to uncertainty around the management a greements and Mondrian London due to ramp up.

(b) the Company’s hotel room growth, as measured by the number of new rooms or expected new rooms covered by management or franchise/license agreements signed in 2015; and

(i) guest satisfaction, as measured by the Company average of each of the Morgans Hotel Group branded hotel’s (excluding Mondrian Soho and Shore Club) “Overall Satisfaction” scores on the Sterling survey in 2015 (percent of guests rating that question as a “4” or “5”) and the average of each of the Morgans Hotel Group branded hotels (excluding Mondrian SoHo and Shore Club) as reported by ReviewPro);

(ii) employee engagement, as measured by the Company’s “Engagement Score” under the Aon-Hewitt Employee Engagement Survey of the Company’s employees in 2015, excluding employees at non-Morgans Hotel Group branded hotels (percent of employees whose mean rating was 4.5 or higher on the six relevant engagement survey questions); and

(iii) individual performance, as determined by the Compensation Committee in consultation with the Chief Executive Officer (other than with respect to the Chief Executive Officer’s own performance, if applicable). Because we currently do not have a Chief Executive Officer, for 2015, our Chief Financial Officer performed this consultation except with respect to his own performance.

The Compensation Committee uses the above metrics for the following reasons:

Adjusted EBITDA directly affects stockholder value, and RevPAR is an indication of the strength of the Company’s operational health and competitive performance in the marketplace;

Room growth reflects the Company’s continued pursuit of growth through execution of new management and franchise/license contracts;

Employee engagement and guest satisfaction are also concrete measures of our business performance, as we believe employee engagement leads to improved guest satisfaction, which in turn leads to improved business performance and contributes to stockholder value.

In light of the Company’s strategic alternatives review during 2015, the Compensation Committee determined that the Company’s hotel room growth metric was not a fair assessment of the Company’s performance in 2015 and re-allocated the 10% attributable to that criteria equitably across the remaining 2015 annual cash incentive categories.

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The following table sets forth the weight assigned to each performance goal and the amounts needed to achieve each performance level (i.e. threshold, target and outperformanc e) as determined by the Compensation Committee:

All $ in millions
	2015 Annual Cash Incentive Plan (1)
	Weighting			Threshold			Target			Out-Performance			ACTUAL
Financial Performance
Adjusted EBITDA(2)		50	%	$	47.5		$	50.0		$	55.0		$	47.7
Comp Set RevPAR Index(3)		16.7	%		92.0	%		94.0	%		96.0	%		93.0	%
Growth
Room Unit Growth(4)		0	%		—			—			—			—
Guest and Employee
Guest Satisfaction – Sterling(5)		2.8	%		85	%		86	%		88	%		86	%
Guest Satisfaction – ReviewPro(6)		2.8	%		83	%		84	%		86	%		87	%
Employee Engagement(7)		5.6	%		68	%		70	%		74	%		69	%
Individual Performance(8)		22.2	%	Discretionary

(1)

The calculations for the payment of any actual payments are to be based on a sliding scale between the threshold and target, and target and outperformance levels. For example, if actual Adjusted EBITDA is $48.5 million and Threshold is 50% of Target, then the payout would be at 70% of Target. In addition, as set forth above, in light of the Company’s strategic alternatives review during 2015, at the 2015 Incentive Meeting, the Compensation Committee determined that the Company’s hotel room growth metric was not a fair assessment of the Company’s performance in 2015 and re-allocated the 10% attributable to that criteria equitably across the remaining 2015 Annual Cash Incentive Performance Criteria.

(2)

Calculated on a pro forma basis, excluding the impact of a the compensation of a permanent Chief Executive Officer, any asset sales, any closures or disruptions due to unplanned renovations, or the loss of management agreements due to sales, foreclosures or other ownership changes other than Mondrian SoHo and Shore Club where the terminations of our management agreements were assumed to be April 1 and July 1, respectively.

(3)	RevPAR performance of the Company’s Morgans Hotel Group branded hotels versus their competitive sets as measured by their weighted average RevPAR index in 2015 excluding Mondrian SoHo and Shore Club due to uncertainty around the management agreements and Mondrian London due to ramp up.

(4)

Based on new rooms, or expected new rooms, covered by management or franchise/license agreements signed during the year. However, in light of the Company’s strategic alternatives review during 2015, the Compensation Committee determined that the Company’s hotel room growth metric was not a fair assessment of the Company’s performance in 2015 and re-allocated the initial percentage attributable to that criteria equitably across the remaining 2015 annual cash incentive categories.

(5)	Excluding Mondrian SoHo and Shore Club, the average of each hotel’s “Overall Satisfaction” scores on the Sterling survey in 2015 (percent of guests rating that question as a “4” or “5”).

(6)	The average of the hotels as reported by ReviewPro excluding Mondrian SoHo and Shore Club.

(7)

As measured by the Company’s “Engagement Score” under the Aon-Hewitt Employee Engagement Survey of the Company’s employees in 2015, excluding employees at non-Morgans Hotel Group branded hotels (percent of employees whose mean rating was 4.5 or higher on the six relevant engagement survey questions).

(8)	Based on individual performance of each executive within their functional areas of responsibility as determined by the Compensation Committee in consultation with the Chief Financial Officer (except with respect to his own performance).

The individual performance component of the 2015 annual cash incentive was deemed to be important in evaluating the quality of the Company’s financial results in light of demonstrated individual contribution specific to each individual’s responsibilities and the Company’s future outlook. Though no pre-established individual goals were set at the start of the year, the individual assessment takes into account each individual’s responsibilities and discussions with our Chief Financial Officer and the Compensation Committee about key areas of focus that would be used to assess individual performance (except with respect to the Chief Financial Officer’s own performance).

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The possible threshold, t arget and outperformance annual cash incentive payouts available to the named executive officers for 2015 under the 2015 annual cash incentive plan, as well as the approved actual award levels were as set forth below:

Name	Threshold ($)		Target ($)		Out-Performance ($)		Actual ($)
Mr. Szymanski	$	253,194	$	506,389	$	759,583	$	415,239
Ms. Deutsch	$	100,000	$	200,000	$	300,000	$	164,000
Mr. Kalisman	$	—	$	—	$	—	$	—
Mr. Fluhr	$	100,000	$	200,000	$	600,000	$	120,000

In early 2016, the Compensation Committee reviewed the Company’s results and concluded on the following: Adjusted EBITDA achievement was $47.7 million, which is between the threshold level of $47.5 million and the target level of $50.0 million. RevPAR Index achievement was 93%, which is between the threshold level of 92% and the target level of 94%. Guest satisfaction scores as measured by Sterling were 86%, which matched the target level. Guest satisfaction scores as measured by ReviewPro were 87%, which were above the out-performance level. Employee engagement results were 69%, which is between the threshold level of 68% and the target level of 70%. Based on these metrics, the Compensation Committee determined each of the named executive officers would receive a minimum annual discretionary bonus equal to 48.7% of their target, plus any amount attributable to individual performance, discussed above.

The portion of the bonus tied to individual performance was evaluated by the Compensation Committee, taking into account the Chief Financial Officer’s evaluation of the individual performance of the named executive officers, but the Compensation Committee made the final determinations. The Compensation Committee also considered the Company’s accomplishments, including the sale of The Light Group and the strategic alternatives review, as well as the settlement of the litigation relating to Mondrian SoHo and the operating results of the Company in a difficult environment. After considering these factors, the Compensation Committee determined that Mr. Szymanski and Ms. Deutsch would receive 82% of their annual incentive target bonus, and Mr. Fluhr would receive 60% of his annual incentive target bonus. The named executive officers received 50% of their 2015 annual bonus on March 31, 2016 and will be paid the remaining 50% during the second quarter of 2016.

2015 Retention Bonuses

In light of the Board of Directors’ strategic review process during 2015, the Compensation Committee also determined that it would be appropriate to pay retention bonuses to the named executive officers to motivate and retain them throughout 2015. The Compensation Committee does not view these awards as part of annual compensation, but rather as a retention tool during an ongoing transition period. Accordingly, Mr. Szymanski, Mr. Fluhr, and Ms. Deutsch each received retention incentive awards totaling $108,352, $80,800, and $54,000, respectively. A portion of these awards was paid on March 15, 2015, together with the 2014 annual cash incentive payment. The remainder of these awards was paid to each executive in installments throughout the 2015 fiscal year.

Long-Term Equity Compensation

Long-term equity compensation granted by the Compensation Committee has historically taken the form of stock options, time-based RSUs and long-term performance-based awards, including membership units in Morgans Group LLC ( “Membership Unit”) structured as profits interests (collectively, “LTIP Units”), which were believed would motivate and reward the achievement of stock price appreciation, and were intended to support retention objectives. These long-term equity awards also were intended to align the interests of the named executive officers with those of the stockholders. Such equity awards were granted under our Amended and Restated 2007 Plan.

The Compensation Committee has not yet determined its go-forward policy with respect to the use of equity compensation to our named executive officers, but intends to continue working with FPL and reviewing the practices of the peer group to establish such a policy to create incentives and to motivate and retain the key management team and align their interests with those of our stockholders, while ensuring the continued success of the ongoing operations of the Company, particularly during this period of transition for the Company.

Equity Awards

There were no equity awards granted to our named executive officers in 2015.

Perquisites and Other Compensation

We currently do not provide perquisites or other benefits to our named executive officers with an aggregate value in excess of $10,000. We recognize, however, that from time to time in the future, perquisites and other benefits may directly or indirectly serve

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our business pu rpose, for example, by helping to make our named executive officers more available to us and to maximize their time and attention.

Severance and Change in Control Arrangements

Our severance benefits are designed to provide a bridge to future employment in the event an executive’s job is eliminated or employment is terminated. Severance and termination benefits are based on competitive practice and level of responsibility. The employment agreement we entered into with each of Messrs. Szymanski and Fluhr and Ms. Deutsch provides for certain payments and benefits upon certain terminations of employment. For a description of these arrangements, please see “Potential Payments upon Termination or Change in Control.”

Tax Provisions Affecting Compensation Decisions

Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of compensation paid by a public company to its chief executive officer and certain other highly compensated executive officers to $1 million in the year the compensation becomes taxable to the executive. There is an exception to the limit on deductibility for performance-based compensation that meets certain requirements. While we consider the impact of this and other tax rules when developing and implementing our executive compensation programs, to date they have not been the primary driver of the structure of our executive compensation program. We believe that it is important to consider the benefits of adopting an executive compensation program that preserves flexibility and promotes specific corporate goals that are reflective of the Company’s business strategy and incentivize its employees, even if such program would not maximize the deductibility of compensation under Section 162(m). The Compensation Committee may have made, and may in the future continue to make, compensation payments that did or do not comply with the exemptions, in whole or in part, under Section 162(m) or that may otherwise be limited as to tax deductibility.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with our management. Based on such review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and our Board of Directors has approved that recommendation.

Respectfully submitted,

The Compensation Committee of the Board of Directors

Michelle S. Russo (Chairman)

John J. Dougherty

Adam Stein

The Compensation Committee report above does not constitute “soliciting material” and will not be deemed “filed” or incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate our SEC filings by reference, in whole or in part, notwithstanding anything to the contrary set forth in those filings.

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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Executive Compensation

The following tables contain certain compensation information for our Chief Financial Officer, General Counsel, and Chief Operating Officer, each of whom was serving as an executive officer on December 31, 2015. On February 29, 2016, the Company’s Chief Operating Officer resigned from the Company. Additionally, the following tables contain certain compensation information for our former Interim Chief Executive Officer, Jason T. Kalisman, who resigned effective May 18, 2015. We refer to these current and former executive officers as our “named executive officers.”

Summary Compensation Table

(for 2015, 2014 and 2013)

Name and Principal Position	Year		Salary ($)(1)		Bonus ($)			Stock Awards ($)(2)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)			Total ($)
Richard T. Szymanski,		2015		506,389		108,352	(4)		—		—		415,239		—			1,029,980
Chief Financial Officer and		2014		506,389		—			50,000		—		91,642		—			648,031
principal executive officer		2013		503,907		—			248,230		—		—		—			752,137
for SEC reporting purposes

Meredith L. Deutsch,		2015		390,000		54,000	(4)		—		—		164,000		—			608,000
General Counsel and Secretary		2014		240,000		72,000	(5)		53,995		—		36,000		120,000	(5)		521,995

Joshua Fluhr,		2015		400,000		80,800	(4)		—		—		120,000		—			600,800
Former Chief Operating Officer(6)		2014		394,034		—			600,000		—		59,200		—			1,053,234

Jason T. Kalisman,		2015		1		—			—		—		—		100,000	(7)		100,001
Former Interim Chief Executive Officer		2014		1		—			—		—		—		61,250	(7)		61,251
		2013		1		—			—		—		—		59,302	(7)		59,303

(1)	Salary amounts reflect the prorated amount for the portion of the year executive was employed by the Company during 2014, as applicable.

(2)

Amounts shown represent the grant date fair value computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures, of RSUs granted to Messrs. Szymanski and Fluhr and Ms. Deutsch in 2014 and RSUs granted to Mr. Szymanski in 2013. For a discussion of the assumptions made in the valuations reflected in this column, see footnote 10 to the audited financial statements contained in our Form 10-K for each of the years ended December 31, 2015, 2014 and 2013.

(3)	Represents amounts earned under our annual cash incentive plan in the year listed in the table. These amounts were paid in the subsequent year.

(4)	Represents amounts paid during 2015 as a retention bonus awarded by the Compensation Committee in light of the Company’s ongoing strategic review process in 2015.

(5)

Amounts during 2014 represent consulting fees of $120,000 reimbursed by the Company for services performed by Ms. Deutsch as a consultant prior to the commencement of her employment with the Company in May 2014 and a $72,000 signing bonus paid to Ms. Deutsch upon the acceptance of her position as Executive Vice President and General Counsel in May 2014.

(6)

Mr. Fluhr became Chief Operating Officer effective March 10, 2014. Prior to that time, Mr. Fluhr held various positions with the Company but was not a named executive officer. In connection with his promotion, Mr. Fluhr’s base salary was increased by 6%, effective April 1, 2014, to $400,000. Mr. Fluhr resigned from the Company effective February 29, 2016.

(7)

Amount during 2015 represents Mr. Kalisman’s annual Board of Director stock grant, which vests fully on May 13, 2016. Amounts earned in 2014 and 2013 represent payments for his attendance at Special Transaction Committee meetings in excess of 10 times per year and fees paid prior to the June 2013 proxy contest, respectively.

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2015 Grants of Plan-Based Awards

			Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)						All Other Stock Awards: Number of Shares of Stock		Grant Date Fair Value of Stock and Option
Name	Grant Date		Threshold ($)		Target ($)		Maximum ($)		or Units (#)(2)		Awards ($)(3)
Richard T. Szymanski		—		253,194		506,389		759,583		—		—

Meredith L. Deutsch		—		100,000		200,000		300,000		—		—

Joshua Fluhr		—		100,000		200,000		600,000		—		—

Jason T. Kalisman	5/19/2015			—		—		—		15,082		100,000

(1)	Represents the threshold, target and maximum amounts pursuant to our 2015 annual cash incentive plan set by the Compensation Committee in 2015.

(2)	Represents grants of RSUs. RSUs granted to Mr. Kalisman represent his annual Board of Directors grant.

(3)

The grant date fair value of the RSUs was computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the assumptions made in the valuations reflected in this column, see footnote 10 to the audited financial statements contained in our Form 10-K for the year ended December 31, 2015.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Agreements

We entered into employment agreements with Messrs. Szymanski and Fluhr and Ms. Deutsch. The Amended and Restated Employment Agreement with Mr. Fluhr was terminated in connection with Mr. Fluhr’s resignation effective February 29, 2016. The following discussion summarizes the material terms of the employment agreements with each of Messrs. Szymanski and Fluhr and Ms. Deutsch. As Mr. Kalisman, our former interim chief executive officer had agreed to $1 of annual compensation, we had not entered into an employment agreement with him.

Richard T. Szymanski Employment Agreement

The Company entered into an employment agreement with Mr. Szymanski on October 1, 2007, which was subsequently amended on December 31, 2008, in connection with his service as Chief Financial Officer of the Company. Mr. Szymanski’s employment agreement provides for the following terms:

no specified initial contract term; the agreement may be terminated by either party in accordance with the applicable termination provision;

an annual base salary of at least $450,000, subject to annual review for increase;

eligibility for annual cash incentives commensurate with the incentive paid to the Company’s other similarly situated employees, provided that the exact amount of his incentive will be determined in the Company’s sole discretion; and

medical and other group welfare plan coverage and fringe benefits provided to our employees generally.

In addition, Mr. Szymanski’s employment agreement provides for certain payments to be made upon certain terminations of employment, subject to his execution of a release of claims in favor of the Company, and includes certain restrictive covenants related to confidentiality and non-solicitation. See “Potential Payments Upon Termination or Change in Control” below for these terms and amounts.

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Meredith L. Deutsch Employment Agreement

On May 5, 2014, the Company entered into an employment agreement with Meredith L. Deutsch, effective as of March 10, 2014, which was subsequently amended and restated on January 14, 2016, in connection with her appointment as Executive Vice President and General Counsel and Corporate Secretary. The amended and restated employment agreement provides for the following terms:

no specified contract term; the agreement may be terminated by either party in accordance with the applicable termination provision;

a base salary of $400,000 per annum, subject to annual review for increase;

eligibility to receive a discretionary annual cash incentive, subject to the achievement of performance goals established at the beginning of each year, with a target payout of 50% of base salary and with an outperformance to be set annually by the Compensation Committee in an amount not less than 75% of base salary;

eligibility to participate in the Company’s equity-based incentive plan on terms and conditions determined by the Company in its sole discretion and confirmation of remaining vesting of the initial grant in May 2014 of RSUs with a value at the time of grant of $54,000, vesting in three equal installments on each of December 31, 2014, December 31, 2015 and May 5, 2017;

medical and other group welfare plan coverage and fringe benefits provided to our senior executive generally; and

clawback of any incentive-based or other compensation paid pursuant to the employment agreement or otherwise to the extent required under applicable law, regulation or stock exchange listing requirement or any Company policy adopted pursuant to such law, regulation or stock exchange listing requirement.

In addition, Ms. Deutsch’s employment agreement provides for certain payments to be made upon certain terminations of employment, subject to her execution of a release of claims in favor of the Company and her continued compliance with certain restrictive covenants related to confidentiality, assignment of inventions, and, for a period of 12 months following the termination of employment, non-interference with business relationships of the Company and non-solicitation of employees, consultants, suppliers, customers and the like. See “Potential Payments Upon Termination or Change in Control” below for these terms and amounts.

Joshua Fluhr Employment Agreement

On May 5, 2014, the Company entered into an employment agreement with Josh Fluhr, effective as of March 10, 2014, which was subsequently amended and restated on January 14, 2016, in connection with his appointment as Chief Operating Officer. Mr. Fluhr resigned effective February 29, 2016, at which time his employment agreement terminated. The amended and restated employment agreement provided for the following terms:

no specified initial contract term; the agreement may be terminated by either party in accordance with the applicable termination provision;

a base salary of $400,000 per annum, subject to annual review for increase;

eligibility for a discretionary annual cash incentive, subject to the achievement of performance goals, with a target payout of 50% of base salary and a maximum payout of 150% of base salary for performance exceeding specific targets established by the Compensation Committee and with any excess over 50% of base salary payable in RSUs that vest in three equal installments on each of the first three anniversaries of the date of grant;

eligibility to participate in the Company’s equity-based incentive plan on terms and conditions determined by the Company in its sole discretion and confirmation of remaining vesting of the initial grant in May 2014 of RSUs with a value at the time of grant of $600,000, vesting in three equal installments on each of the first three anniversaries of the grant date, generally subject to continued employment;

medical and other group welfare plan coverage and fringe benefits provided to our senior executive generally; and

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In addition, Mr . Fluhr’s employment agreement provided for certain payments to be made upon certain terminations of employment, subject to his execution of a release of claims in favor of the Company and his continued compliance with restrictive covenants related to conf identiality, non-competition for a period of six months following the termination of his employment and non-solicitation of employees, consultants, suppliers, customers and the like for a period of 12 months following the termination of his employment. See “Potential Payments Upon Termination or Change in Control” below for these terms and amounts.

Outstanding Equity Awards at Fiscal Year-End

(as of fiscal year end December 31, 2015)

	Option Awards								Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)			Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)(8)
Richard T. Szymanski		55,894	(1)		—		15.42	(1)	4/3/2018			33,704	(4)		264,239
		33,000	(2)		—		17.67	(2)	11/27/2017			—			—
		25,000	(3)		—		20.00	(3)	2/14/2016			—			—

Meredith L. Deutsch		—			—		—			—		2,269	(5)		7,647

Josh Fluhr		—			—		—			—		50,441	(6)		169,986
		—			—		—			—		4,033	(4)		13,591

Jason T. Kalisman		—			—		—			—		15,082	(7)		50,826

(1)	This option award was granted on April 3, 2008 to Mr. Szymanski and vested ratably in three annual installments beginning on the first anniversary of the grant date.

(2)	This option award was granted on November 27, 2007 to Mr. Szymanski, and vested ratably in three annual installments beginning on the first anniversary of the grant date.

(3)	This option award was granted on February 14, 2006 to Mr. Szymanski, one-third of which vested on February 14, 2007, and the remainder of which vested in 24 equal installments at the end of each month following the first anniversary of the grant date. These options expired on February 14, 2016.

(4)	This stock award, in the form of RSUs, was granted to Messrs. Szymanski and Fluhr on February 28, 2013, to vest ratably in three annual installments beginning on the first anniversary of the grant date. Mr. Fluhr’s unvested shares vested prior to his resignation.

(5)	This stock award, in the form of RSUs, was granted to Ms. Deutsch on May 5, 2014 to vest in equal installments on December 31, 2014, December 31, 2015 and May 5, 2017.

(6)	This stock award, in the form of RSUs, was granted to Mr. Fluhr on May 5, 2014 to vest ratably in three annual installments beginning on the first anniversary of the grant date. The 50,441 unvested RSUs were forfeited as a result of Mr. Fluhr’s resignation effective February 29, 2016.

(7)	This stock award, in the form of RSUs, was granted to Mr. Kalisman on May 19, 2015 to vest on May 13, 2016. This award represents Mr. Kalisman’s annual Board of Directors retainer.

(8)	This amount has been calculated based on the closing stock price of our common stock on December 31, 2015 ($3.37 per share).

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Stock Vested During 2015

	Stock Awards
Name	Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
Richard T. Szymanski(1)		16,852		130,772
Meredith L. Deutsch(2)		2,270		7,650
Josh Fluhr(3)		31,754		215,514
Jason T. Kalisman		—		—

(1)	Reflects the vesting on February 28, 2015 of 1/3, or 16,852, of the total RSUs granted on February 28, 2013 to Mr. Szymanski. Amounts reflect the market value of the shares that vested on February 28, 2015 (the vesting date), based on the closing price of our common stock on such date.

(2)	Reflects the vesting on December 31, 2015 of 1/3, or 2,270, of the total RSUs granted on May 5, 2014 to Ms. Deutsch. Amounts reflect the market value of the shares that vested on December 31, 2015 (the vesting date), based on the closing price of our common stock on such date.

(3)

Reflects the following RSUs granted to Mr. Fluhr that vested during 2015: 2,500 RSUs that vested on February 22, 2015, with a market value of approximately $19,525, based on the closing price of our common stock on the vesting date, 4,033 RSUs that vested on February 28, 2015, with a market value of approximately $31,296, based on the closing price of our common stock on the vesting date, and 25,221 RSUs that vested on May 5, 2015, with a market value of approximately $164,693, based on the closing price of our common stock on the vesting date.

Potential Payments upon Termination or Change in Control

The following discussion also summarizes the potential payments, benefits and acceleration rights that would have been provided to Mr. Szymanski and Ms. Deutsch assuming the occurrence of a termination of employment or change in control on December 31, 2015. Mr. Kalisman is not a party to an employment agreement with the Company and, therefore, would not have been entitled to any severance payments or benefits upon the termination of his employment or a change in control on December 31, 2015. Mr. Fluhr resigned from the Company effective February 29, 2016 at which time his employment agreement terminated.

The amounts set forth below do not include agreements, plans or arrangements providing for payments upon termination that do not discriminate in scope, terms or operation in favor of the Company’s executive officers and that are generally available to all employees of the Company (e.g., payouts under our life insurance policy or disability plan payments) or compensation amounts accrued and not yet paid for past service unless special terms apply to such accrued compensation. In addition, for purposes of quantifying the value of continued health insurance coverage benefits presented in the disclosure below, we have estimated a value of such insurance benefits based on the monthly cost of such coverage as of December 31, 2015, for Mr. Szymanski and Ms. Deutsch. Finally, since a termination of employment was assumed to have taken place on December 31, 2015, the tables assume that bonuses with respect to 2015 were earned and paid as of this date.

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Mr. Szymanski

The following table summarizes the additional potential payments, benefits and acceleration rights that would have been provided to Mr. Szymanski assuming the occurrence of a termination of Mr. Szymanski’s employment or a change in control on December 31, 2015.

Termination	Key Terms		Payment as of December 31, 2015
For Cause or Voluntary Resignation		—		—

Without Cause or for Good Reason	• prorated annual incentive (if any) for year of termination		$	—
	• 24 months base salary continuation		$	1,012,778
	• amount equal to the greater of (i) the annual cash incentive actually received for the prior two years or (ii) twice his target annual cash incentive		$	1,012,778

	• 24 months of continued health insurance benefits		$	30,315

Death or Disability	• full acceleration of unvested RSUs		$	56,791	(2)

Change in Control (1)	• full acceleration of unvested equity awards held on the closing date of the change in control		$	56,791	(2)

(1)

Reflects benefits provided upon a termination of Mr. Szymanski’s employment by the Company or by Mr. Szymanski for good reason during the one-year period following a “Change in Control” (as defined below). Upon such a termination, Mr. Szymanski would also be entitled to the payments and benefits noted in the table above for a termination Without Cause or for Good Reason. Under the Amended and Restated 2007 Plan, upon a change in control, RSUs, option awards and LTIP Units will become fully vested if such awards are not assumed or substituted and, if assumed or substituted, such awards will fully vest upon a termination of the executive’s employment by the Company without cause or by the executive for good reason within 12 months following a change in control.

(2)	Reflects $56,791, which is the value of the full vesting of 16,852 unvested RSUs as of December 31, 2015, based on the closing price of our common stock on December 31, 2015 ($3.37).

Under Mr. Szymanski’s employment agreement, “Good Reason” means the occurrence of one or more of the following without Mr. Szymanski’s written consent: (i) any material failure by the Company to comply with the provisions related to compensation to be provided under the agreement, other than insubstantial and inadvertent failures not in bad faith which are remedied by the Company promptly after receipt of notice thereof given by Mr. Szymanski; (ii) the assignment to Mr. Szymanski, or the removal of any duties or responsibilities that result in a material diminution of Mr. Szymanski’s authority; (iii) a material diminution of the budget over which Mr. Szymanski has responsibility, other than for a bona fide business reason; (iv) any material failure by the Company to require a successor to assume and agree to perform the agreement; (v) the imposition of any requirement that Mr. Szymanski relocate his office to a location other than Manhattan; or (vi) a material breach by the Company of any written agreement between the Company and Mr. Szymanski. For such an act or omission by the Company to constitute Good Reason, (i) Mr. Szymanski must notify the Company in writing within 60 days after he has knowledge that an event constituting Good Reason has occurred; (ii) such act or omission must be capable of being cured and continue after Mr. Szymanski has given the Company notice thereof beyond 30 days following Company’s receipt of the required notice; and (iii) Mr. Szymanski must actually terminate employment within 30 days of the end of the 30-day cure period.

Under Mr. Szymanski’s employment agreement “Cause” means Mr. Szymanski’s (i) repeated failure to perform his duties commensurate with his position as determined in the sole discretion of the Company; (ii) refusal to follow the lawful policies and directives of his supervisors; (iii) material breach of the provisions of the employment agreement; (iv) engagement in any act of dishonesty, gross negligence or willful misconduct that may have an adverse effect on the Company, its business operations, financial condition, assets, prospects or reputation; (v) breach of any fiduciary duty owed to the Company or (vi) knowing violation of any law, rule or regulation that affects his performance of or ability to perform any of his duties or responsibilities with the Company; provided, however, that no termination pursuant to clause (i), (ii) or (iii) will be effective unless the conduct providing Cause to terminate continues after Mr. Szymanski has been given notice thereof and 30 days in which to cure the same.

Under Mr. Szymanski’s employment agreement, “Change in Control” will be deemed to have occurred if (i) any person or group of persons (as defined in Section 13(d) and 14(d) of the Exchange Act) together with its affiliates, excluding employee benefit plans of

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the Company, is or becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act) of securities of the Company representing 40% or more of the combined voting power of the Company’s then outstanding securities; or (ii) individuals who at the beginning of any two-year period constitute the Board of Directors, plus new directors of the Company whose election or nomination for election by the Company’s stockholders is approved by a vote of at least two-thirds of the directors of the Company still in office who were directors of the Company at the beginning of such two-year period, cease for any reason during su ch two-year period to constitute at least two-thirds of the members of the Board; or (iii) a merger or consolidation of the Company with any other corporation or entity is consummated regardless of which entity is the survivor, other than a merger of conso lidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) at least 60% of the combin ed voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the Company is completely liquidated or all or substantially all of the Company’s assets are sold.

Pursuant to the terms of the equity awards granted to Mr. Szymanski, upon a termination due to his death or disability, unvested RSUs then held by Mr. Szymanski would become fully vested and vested options would remain exercisable for a period of 12 months following the date of death or date of termination due to disability. In the case of any other termination of employment, other than a termination by the Company for cause, in general, vested options then held by Mr. Szymanski would be exercisable for a period of 90 days. Upon a termination of employment for cause, options then held by Mr. Szymanski would immediately expire. Upon a change in control (as defined in the Amended and Restated 2007 Plan), awards of RSUs, options and LTIP Units under the Amended and Restated 2007 Plan will become fully vested if such awards are not assumed or substituted and, if assumed or substituted, such awards will fully vest upon a termination of the executive’s employment by the Company without cause or by the executive for good reason within 12 months following a change in control.

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Ms. Deutsch

The following table summarizes the additional potential payments, benefits and acceleration rights that would have been provided to Ms. Deutsch assuming the occurrence of a termination of her employment or a change in control on December 31, 2015.

Termination	Key Terms		Payment as of December 31, 2015
For Cause or Voluntary Resignation		—		—

Without Cause or for Good Reason (2)	• 6 months base salary continuation		$	200,000
	• lump sum payment equal to 6 months of employer premiums for continued health benefits under COBRA		$	2,515
	• full acceleration of unvested RSUs granted pursuant to the executive’s employment agreement		$	7,647

	• annual cash incentive for prior year to the extent unpaid		$	—

Non-Renewal by Company (3)	• annual cash incentive for prior year to the extent unpaid			164,000

Non-Renewal by Executive (3)	• annual cash incentive for prior year to the extent unpaid		$	164,000

Death (4)		—		—

Disability	• 6 months base salary continuation		$	200,000

Change in Control (5)	• 6 months base salary continuation		$	200,000
	• lump sum payment equal to 6 months of employer premiums for continued health benefits under COBRA		$	2,515
	• full acceleration of unvested RSUs granted pursuant to the executive’s employment agreement		$	7,647	(1)
	• annual cash incentive for prior year to the extent unpaid		$	164,000

(1)	Reflects $7,647, which is the value of the full vesting of 2,269 unvested RSUs as of December 31, 2015, based on the closing price of our common stock on December 31, 2015 ($3.37).

(2)

Pursuant to Ms. Deutsch’s amended and restated employment agreement which became effective January 14, 2016, Ms. Deutsch would receive 12 months of base salary continuation, a lump sum payment equal to 12 months of employer premiums for continued health benefits under COBRA, and a prorated annual cash incentive bonus for the year in the event of termination without cause or for good reason.

(3)	Both of these termination concepts were eliminated under Ms. Deutsch’s amended and restated employment agreement which became effective January 14, 2016, as there is no longer a fixed term in the agreement.

(4)	Pursuant to Ms. Deutsch’s amended and restated employment agreement which became effective January 14, 2016, Ms. Deutsch would receive 6 months base salary continuation in the event of death.

(5)

Reflects benefits provided upon a termination of Ms. Deutsch’s employment by the Company during the one-year period following a “Change in Control” (as defined below). Also, pursuant to Ms. Deutsch’s amended and restated employment agreement which became effective January 14, 2016, Ms. Deutsch would receive 12 months base salary continuation and a prorated annual cash incentive bonus for the year in the event of a change of control. If Ms. Deutsch’s employment is terminated after the end of a fiscal year but before bonuses are paid for the prior year, Ms. Deutsch is entitled to the full amount of the bonus for the year prior to termination.

Under Ms. Deutsch’s employment agreement, “Good Reason” means the occurrence of one or more of the following without Ms. Deutsch’s consent: (i) a material diminution of Ms. Deutsch’s base salary or target incentive, other than a reduction in base salary that affects all similarly situated Company executives in substantially the same proportions; (ii) a material diminution in Ms. Deutsch’s authority, duties, or responsibilities (other than temporarily while Ms. Deutsch is physically or mentally incapacitated or as required by applicable law); (iii) a relocation of Ms. Deutsch’s principal place of employment by more than 50 miles from Ms. Deutsch’s principal place of employment as of the signing of the employment agreement; or (iv) any material breach by the

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Company of the employment agreement. However, the occurrence of any of the foregoing events will not constitute Good Reason unless Ms. Deutsch notifies the Company in writing within 90 days of the in itial occurrence of the condition constituting Good Reason and the Company fails to cure such condition within 30 days after receipt of the required notice. In addition, Good Reason will cease to exist with respect to a condition one year following the ini tial occurrence of such condition.

Under Ms. Deutsch’s employment agreement “Cause” means Ms. Deutsch’s (i) material breach of the provisions of the employment agreement; (ii) willful failure to perform her duties under the employment agreement (other than as a result of disability); (iii) misconduct that is materially injurious to the Company or any of its affiliates or any act of misappropriation, fraud (including with respect to the Company’s or any of its affiliate’s accounting and financial statements), embezzlement or conversion of Company the property; (iv) conviction (or plea of no contest) for any felony or the indictment for any felony; (v) gross negligence, gross neglect of duties or gross insubordination; (vi) violation of any antifraud provision of federal or state securities laws; (vii) alcohol or prescription or other drug abuse substantially affecting work performance; (viii) violation of the Company’s policies regarding harassment or discrimination; or (ix) material violation of the Company’s policies; provided, however, that no termination pursuant to clause (i) or (ii) constitutes a termination for Cause unless the conduct providing Cause to terminate continues after Ms. Deutsch has been given notice thereof and 30 days in which to cure the same.

Under Ms. Deutsch’s employment agreement, “Change in Control” means the occurrence of a “change in control event,” within the meaning of Section 409A of the Code, with respect to the Company.

In addition, in the event any payment due to Ms. Deutsch pursuant to her employment agreement or otherwise is made in connection with a change in control of the Company and constitutes an “excess parachute payment” within the meaning of Section 280G of the Code, Ms. Deutsch will be entitled to receive an amount of such payment reduced so that no portion of the payment would constitute an excess parachute payment, or the amount otherwise payable to the executive under the employment agreement or otherwise reduced by all applicable taxes, including the excise tax, whichever amount results in the greater amount payable to her.

Mr. Fluhr

Effective February 29, 2016, Mr. Fluhr resigned from the Company and 50,441 unvested RSUs were forfeited. Although Mr. Fluhr’s resignation was effective prior to the payment of his 2015 bonus, the Compensation Committee determined that Mr. Fluhr would receive his 2015 discretionary bonus, which was equal to 30% of his base salary. Mr. Fluhr received no other compensation in connection with his resignation. Mr. Fluhr remains bound by the non-competition, non-solicitation, confidentiality and standstill provision in his employment agreement.

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Director Co mpensation

The Company’s Corporate Governance Guidelines provide that a substantial portion of director compensation shall be provided in the form of restricted stock units or other equity-based compensation. The following table summarizes the various fees applicable to directors:

Annual fee (provided entirely in restricted stock units)
• Non-employee directors	$	100,000
Fee for Chairman of Committees (provided in cash)
• Audit Committee	$	15,000
• Compensation Committee	$	12,500
• Corporate Governance and Nominating Committee	$	10,000
• Special Transaction Committee	$	—
Fee for Committee Membership (provided in cash)
• Audit Committee	$	7,500
• Compensation Committee	$	6,250
• Corporate Governance and Nominating Committee	$	5,000
• Special Transaction Committee	$	5,000
Fee for each meeting attended in person or by telephone (provided in cash) ¹
• Board of Directors	$	—
• Audit Committee	$	—
• Compensation Committee	$	—
• Corporate Governance and Nominating Committee	$	—
• Special Transaction Committee	$	—

(1)

Meeting fees of $1,250, per meeting, will be paid to each non-employee director (except in the case of the Special Transactions Committee, which fees will be paid to all committee members) to the extent that the Board meets in excess of 10 times per year. Such fees will only be payable for meetings held thereafter (i.e., beginning with meeting number 11, per annum). In addition, to the extent a given committee meets in excess of 10 times per year, all members of such committee will be paid a per meeting fee of $1,250 held after the aforementioned threshold (i.e., beginning with meeting number 11, per annum).

Directors who are our officers or employees generally receive no compensation for their services as directors, except that the former Interim Chief Executive Officer received meeting fees for his attendance at meetings of the Special Transaction Committee. In addition, we reimburse all directors for reasonable and customary out-of-pocket expenses incurred in connection with their services on the Board.

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The following table sets forth the compensation of our non-employee directors for the fiscal year ended December 31, 2015. Compensation received by Mr. Kalisman, our former Interim Chief Executive Officer, as a director is disclosed in the Summary Compensation Table and is not reflected in the table below.

2015 Director Compensation

	Fees Earned or Paid in Cash ($)(1)		Stock Awards ($)(2)		All Other Compensation ($)			Total ($)
John Brecker		30,000		50,822		—			80,822
Andrew Broad		36,250		100,000		—			136,250
Kenneth E. Cruse		10,000		100,000		—			110,000
John J. Dougherty		101,250		100,000		—			201,250
Martin L. Edelman		10,000		24,444		—			34,444
Howard M. Lorber		13,750		100,000		—			113,750
Jonathan A. Langer		48,750		—	1,454,027		(3)		1,502,777
Bradford Nugent (4)		—		—		—			—
Michael E. Olshan		—		100,000		—			100,000
Michelle S. Russo		25,000		100,000		—			125,000
Adam Stein (4)		—		—		—			—

(1)

Represents amounts paid to directors in 2015. Fees earned in the fourth quarter of 2015 were paid in 2016 and are not included in the table above. Amounts paid to Messrs. Brecker, Edelman, and Langer were earned prior to their respective dates of resignation from the Board of Directors throughout 2015.

(2)

Represents the grant date fair value of RSUs, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of these assumptions made in the valuations affected in this column, see footnote 10 to the audited financial statements included in our 10-K for the year ended December 31, 2015. The 2015 annual fee to non-employee directors was paid in the form of RSUs that fully vest on May 13, 2016. As of December 31, 2015, each of Messrs. Broad, Cruse, Dougherty, and Ms. Russo held stock awards consisting of 15,082 RSUs and Mr. Olshan held stock awards consisting of 16,387 RSUs. Messrs. Nugent and Stein held no stock awards, and none of our directors held stock options.

Messrs. Brecker, Edelman, and Langer, each of whom ceased providing services as members of the Board in 2015, held no stock awards or stock options as of December 31, 2015. Stock award amounts for Mr. Brecker and Mr. Edelman represent the prorated RSU awards which vested as of their respective resignation dates, as adjusted at the discretion of our Board of Directors.

(3)

Represents amounts Mr. Langer received in connection with the 2015 Consulting Agreement. On May 7, 2015, we entered into a Consulting Agreement (the “2015 Consulting Agreement”) with Jonathan Langer, then a member of our Board of Directors, pursuant to which Mr. Langer was to provide consulting services to the Company, at the direction of the Board of Directors, in connection with the Company’s previously announced strategic alternatives process, as well as on-going financial and operating consulting services to the Company. Effective immediately upon the entering of the 2015 Consulting Agreement, Mr. Langer resigned from the Board of Directors. Under the terms of the 2015 Consulting Agreement, in consideration of the services Mr. Langer provided to the Company over the course of the prior year beyond his duties as a director, in May 2015, the Company paid Mr. Langer a one-time fee of $500,000, of which $250,000 was paid in cash and $250,000 was paid in common stock of the Company under the Amended and Restated 2007 Omnibus Stock Incentive Plan, which fully vested on the date of grant. Additionally, we paid Mr. Langer consulting fees totaling $925,000, of which $462,500 was paid in cash and $462,500 was paid in common stock of the Company under the Amended and Restated 2007 Omnibus Stock Incentive Plan, which fully vested on the date of grant. Effective September 15, 2015, Mr. Langer’s 2015 Consulting Agreement was terminated. All stock issued to Mr. Langer pursuant to the 2015 Consulting Agreement was based on the grant date fair market value computed in accordance with FASB ASC Topic 718, as discussed in footnote 10 to the audited financial statements contained in our Form 10-K for the year ended December 31, 2015.

(4)	Mr. Nugent and Mr. Stein waived their annual director grants in accordance with their employers’ internal policies.

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Eq uity Compensation Plan Information

The following table summarizes information, as of December 31, 2015, relating to our equity compensation plan pursuant to which grants of securities may be made from time to time.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights			Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights			Number of Securities Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column)
Equity compensation plans approved by security holders(1)		1,380,267	(2)	$	3.06	(3)		3,810,460	(4)
Equity compensation plans not approved by security holders		—			—			—
Total		1,380,267	(2)	$	3.06	(3)		3,810,460	(4)

(1)

On February 9, 2006, the Board of Directors of the Company adopted the 2006 Omnibus Incentive Plan. Subsequently, and on several occasions, our Board of Directors adopted, and stockholders approved, amendments to the Omnibus Incentive Plan, to namely increase the number of shares reserved for issuance under the plan. As of December 31, 2015, the Omnibus Incentive Plan had 14,610,000 shares reserved for issuance.

(2)

Includes 218,529 RSUs, which all are subject to vesting conditions, 248,315 options, and 913,423 LTIP Units. Conditioned on minimum allocation to the capital accounts of the LTIP Units for federal income tax purposes, each LTIP Unit may be converted, at the election of the holder, into one Membership Unit. Each of the Membership Units underlying these LTIP Units are redeemable at the election of the Membership Unit holder for (i) cash equal to the then fair market value of one share of our common stock, or (ii) at the option of the Company in its capacity as managing member of our operating company, one share of our common stock.

(3)	Weighted-average exercise price of outstanding options including the value of outstanding RSUs and LTIP Units. The weighted-average exercise price of outstanding options excluding the value of outstanding RSUs and LTIP Units is $17.15.

(4)

Represents the number of shares available for issuance under the Amended and Restated 2007 Plan assuming that all awards are made as options or stock appreciation rights. Upon a grant of awards other than awards of options or stock appreciation rights, the number of shares available for issuance under the Amended and Restated 2007 Plan is reduced by 1.7 times the number of shares of stock subject to such awards and any shares underlying options or stock appreciation rights not purchased or forfeited shall be added back to the limit set forth above by 1.7 times the number of shares of stock subject to such awards. The number of shares of stock available for issuance under the Amended and Restated 2007 Plan will not be increased by (i) any shares of stock tendered or withheld or surrendered in connection with the purchase of shares of stock upon exercise of an option, or (ii) any shares of stock deducted or delivered from an award payment in connection with the Company’s tax withholding obligations.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee currently consists of Ms. Russo (Chairman) and Messrs. Dougherty and Stein. Mr. Brecker was also a member of the Compensation Committee during 2015. None of the Compensation Committee members is or was an officer or employee, or former officer or employee, of ours in 2015. No interlocking relationship exists or existed during 2015 between members of the Compensation Committee or the Board of Directors, and the board of directors or compensation or similar committees of any other company.

Compensation Policies and Practices as they Relate to Risk Management

The Compensation Committee oversaw the performance of a risk assessment of our employee compensation programs to ascertain any potential material risks that may be created by the program. The Compensation Committee considered the findings of the internal assessment and concluded that the Company’s employee compensation programs do not pose any material risks. With respect to executive compensation programs, the Compensation Committee determined that they are well-balanced between short-term and long-term incentives, take into account both qualitative and quantitative performance factors, reflect an appropriate mix of compensative instruments, are well-aligned with stockholder interests and do not encourage executives to take unnecessary or excessive risks.

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PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Compensation Committee is committed to continuing to design a compensation program for our executive officers, including our named executive officers, that will allow us to achieve our objectives of attracting and retaining highly-qualified executives, motivating them to perform at their highest individual levels, rewarding executives for achieving challenging Company financial and strategic goals and aligning the interests of our executives with those of our stockholders, in all cases, without creating incentives for our executives to take undue risk. The Compensation Committee expects that our executive compensation programs will continue to evolve and that, in 2016, it will continue to implement a more objective and formulaic compensation program to align pay with performance. On the basis of the changes that have been and continue to be implemented by our Compensation Committee, we ask that you support the actions of our Compensation Committee by voting to approve the compensation of our named executive officers. We urge stockholders to read the “Compensation Discussion and Analysis,” to review the Summary Compensation Table, related compensation tables and narrative disclosures, which provide detailed information on the compensation of our named executive officers.

Our Recommendation

THE ENTIRE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” THE FOLLOWING RESOLUTION:

“RESOLVED, that the stockholders hereby approve the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the related narrative executive compensation disclosure contained in this proxy statement.”

While the vote on this resolution is advisory in nature and therefore will not bind us to take any particular action, the Compensation Committee and the Board of Directors intend to carefully consider the stockholder vote resulting from the proposal in making future decisions regarding the compensation of our named executive officers.

Vote Required

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote with respect to the matter is required to endorse (on a non-binding advisory basis) the compensation of the Company’s named executive officers. For purposes of the vote on this proposal, broker non-votes will not be counted. Abstentions will have the effect of votes against the proposal.

VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of April 1, 2016, certain information regarding the beneficial ownership information of our common stock by:

each person known to us to be the beneficial owner of more than 5% of our common stock;

each named executive officer;

each of our directors or director nominees; and

all of our executive officers and directors as a group.

Beneficial ownership is determined according to the rules of the SEC, and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security, and includes for each executive officer and director options that are currently exercisable or exercisable within 60 days of April 1, 2016 and RSUs and LTIP Units that have vested or will vest within such 60 days. Each director, officer or 5% or more stockholder, as the case may be, furnished us with information or filed the appropriate ownership documents with the SEC, with respect to beneficial ownership. Except as otherwise indicated, we believe that the beneficial owners of common stock listed below, based on the information each of them has given to us, have sole investment and voting power with respect to their shares, except where community property laws may apply. We have based our calculations of the percentage of beneficial ownership on 34,764,261 shares of common stock outstanding as of April 1, 2016.

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Unless otherwise noted below, the address of the persons and entities listed on the table is c/o Morgans Hotel Group Co., 475 Tenth Avenue , New York, NY 10018.

Beneficial Owner	Shares of Common Stock Beneficially Owned		% of Shares of Common Stock Beneficially Owned
5% Stockholders:
Yucaipa American Alliance Fund II, L.P.(1)
Yucaipa American Alliance (Parallel) Fund II, L.P.
Yucaipa American Alliance Fund II, LLC
Yucaipa American Funds, LLC
Yucaipa American Management, LLC
Ronald W. Burkle		12,522,367		36.0	%
OTK Associates, LLC(2)
Robert S. Taubman
Michael E. Olshan		4,500,000		12.9	%
Brian Taylor(3) Pine River Capital Management L.P.		3,139,668		9.0	%
David T. Hamamoto(4)		2,583,438		7.4	%
Accommodations Acquisition Corporation(5) Vector Group Ltd.		2,459,788		7.1	%
GGCP, Inc.(6)
GGCP Holdings LLC
GAMCO Investors, Inc.
Gabelli Funds, LLC
GAMCO Asset Management Inc.
Teton Advisors, Inc.
Gabelli Securities, Inc.
G.research, Inc.
MJG Associates, Inc.
Gabelli Foundation, Inc.
MJG-IV Limited Partnership
Mario Gabelli		1,722,966		5.0	%
Directors, Director Nominees and Named Executive Officers:
Howard M. Lorber(7)		17,295	*
Andrew Broad(8)		28,069	*
Kenneth E. Cruse(9)		17,295	*
John J. Dougherty(8)		28,069	*
Jason T. Kalisman(10)		15,082	*
Bradford B. Nugent		—		—
Michael E. Olshan(11)		16,387	*
Michelle S. Russo(8)		28,069	*
Adam Stein		—		—
Richard T. Szymanski(12)		418,960		1.2	%
Meredith L. Deutsch (13)		2,678	*
Joshua Fluhr(14)		41,567	*
Executive Officers and Directors as a group (12 persons)		613,471		1.8	%

*	Less than 1%

(1)

Based upon the information provided in the Schedule 13D/A filed on February 2, 2015 by Ronald W. Burkle, Yucaipa American Management, LLC, Yucaipa American Funds, LLC, Yucaipa American Alliance Fund II, LLC, Yucaipa American Alliance Fund II, L.P. and Yucaipa American Alliance (Parallel) Fund II, L.P. Mr. Burkle is the managing member of Yucaipa American Management, LLC, which is the managing member of Yucaipa American Funds, LLC, which is the managing member of Yucaipa American Alliance Fund II, LLC, which, in turn, is the general partner of each of Yucaipa American Alliance Fund II, L.P. and Yucaipa American Alliance (Parallel) Fund II, L.P. The beneficial ownership of common stock of the

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Company is through the ownership of 22,367 shares of vested restricted stock units by Mr. Burkle, and warrants to purcha se an aggregate of up to 12,500,000 shares of the Company’s common stock. Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of the Company’s common stock received upon exercise, and the number of shares received w ill be determined by the fair market value of the Company’s common stock at the time of such exercise. The percentage of shares of the Company’s common stock beneficially owned does not reflect any reduction for the effect of the mandatory cashless exercis e as the amount of such reduction is not determinable until the time of exercise. Mr. Burkle, Yucaipa American Management, LLC, Yucaipa American Funds, LLC and Yucaipa American Alliance Fund II, LLC have shared voting and dispositive power over 12,500,000 shares of the Company’s common stock beneficially owned, Yucaipa American Alliance Fund II, L.P. has sole voting and dispositive power over 7,535,580 shares of the Company’s common stock beneficially owned and Yucaipa American Alliance (Parallel) Fund II, L.P. has sole voting and dispositive power over 4,964,420 shares of the Company’s common stock beneficially owned. Mr. Burkle is the direct beneficial owner of 22,367 shares of common stock in the Company. The business address of each member of the group i s c/o The Yucaipa Companies LLC, 9130 W. Sunset Boulevard, Los Angeles, California 90069. Mr. Nugent, one of our Directors, is a Partner employed by The Yucaipa Companies.

(2)

Based upon the information provided in the Schedule 13D/A filed on March 18, 2013 by OTK, Robert S. Taubman and Michael E. Olshan. OTK beneficially owns 4,500,000 shares of the Company’s common stock and has sole voting and dispositive power with respect to 4,500,000 shares of such common stock. OTK is managed by Robert S. Taubman and Michael E. Olshan, with actions taken and made by, or with the written consent of, both of them. As a result, the managers of OTK may be deemed to share voting and dispositive power over the Company’s common stock beneficially owned by OTK. Each of the managers and OTK expressly disclaims status as a “group” for purposes of this Schedule 13D. The business address of OTK is 200 E. Long Lake Road, Suite 300, Bloomfield Hills, Michigan 48304.

(3)

Based upon the information provided in the Schedule 13D filed on November 4, 2015 by Brian Taylor and Pine River Capital Management L.P. (“Pine River”). Mr. Taylor and Pine River beneficially own 3,139,668 shares of the Company’s common stock and each have shared voting and dispositive power with respect to 3,139,668 shares of such common stock. Mr. Taylor is the founder and Chief Executive Officer of Pine River, responsible for the management and oversight of Pine River’s funds, so he may be deemed to have shared voting and dispositive power with respect to the 3,139,668 shares of common stock. Each of Mr. Taylor and Pine River disclaims beneficial ownership of the securities reported, except to the extent of their indirect pecuniary interests therein. The business address of Pine River is 601 Carlson Parkway, Suite 330, Minnetonka, Minnesota 55305. Mr. Stein, one of our Directors, is a Portfolio Manager employed by Pine River.

(4)

Based upon the information provided in the Schedule 13D/A filed on October 9, 2013 by David Hamamoto, Mr. Hamamoto beneficially owns 2,583,438 shares of the Company’s common stock. Mr. Hamamoto has sole voting power with respect to 2,065,384 shares of the Company’s common stock, sole dispositive power with respect to 2,549,941 shares of the Company’s common stock and shared dispositive power with respect to 33,497 shares of the Company’s common stock. The 2,549,941 shares of common stock for which Mr. Hamamoto has sole dispositive power include 2,065,384 shares of common stock, over which Mr. Hamamoto has sole dispositive power and sole voting power, and 484,557 shares of common stock, over which Mr. Hamamoto only has sole dispositive power but no voting power, which represent Mr. Hamamoto’s beneficial ownership of 484,557 vested LTIP Units convertible into common stock. The 33,497 non-voting units over which Mr. Hamamoto is deemed to have shared dispositive power, represent Mr. Hamamoto’s portion (through DTH Holdings LLC) of the 11,842 non-voting units held by MHG OP Holdings LLC, an indirect subsidiary of NorthStar Partnership, L.P. (“NorthStar LP”), and 63,604 non-voting units held by Residual Hotel Interest LLC, an indirect subsidiary of NorthStar LP. Mr. Hamamoto disclaims beneficial ownership of the shares of common stock that may be issued in redemption of the nonvoting units. Of the 2,065,384 shares of common stock over which Mr. Hamamoto has sole voting power and sole dispositive power, 1,737,177 shares of common stock are beneficially owned by Mr. Hamamoto through DTH Holdings LLC, David T. Hamamoto GRAT I — 2012, David T. Hamamoto GRAT II — 2013, Hilo II and Kona II. DTH Holdings LLC directly beneficially owns 336,342 shares of common stock, David T. Hamamoto GRAT I — 2012 directly beneficially owns 357,324 shares of common stock (the “2012 GRAT Shares”), David T. Hamamoto GRAT II – 2013 directly beneficially owns 500,000 shares of common stock (the 2013 GRAT Shares”), Hilo II owns 85,907 shares of common stock (the “Hilo II Shares”), and Kona II owns 457,604 shares of common stock (the “Kona II Shares”). Mr. Hamamoto is deemed to beneficially own the foregoing shares of common stock as the sole manager or trustee of each such entity. The 2012 GRAT Shares were transferred from DTH Holdings LLC and Mr. Hamamoto individually. The Hilo II Shares were indirectly transferred from Hilo I and the Kona II Shares were indirectly transferred from Kona I. In addition, of the 2,065,384 shares of common stock over which Mr. Hamamoto has sole voting power and sole dispositive power, 328,207 shares of common stock are directly beneficially owned by Mr. Hamamoto and were purchased in open market transactions or received as equity grants from the Company. Mr. Hamamoto’s business address is c/o NorthStar Realty Finance Corp., 399 Park Avenue, 18th Floor, New York, NY, 10022.

(5)

Based upon the information provided in the Schedule 13D/A filed on May 19, 2015 by Accommodations Acquisition Corporation, a wholly-owned subsidiary of Vector Group Ltd. (“Vector”). Vector is a public company, with its common stock traded on the New York Stock Exchange, which is a holding company for a number of businesses. Accommodations Acquisition Corporation and Vector are deemed to be a group beneficially owning 2,459,788 shares of the Company’s common stock and has shared voting and dispositive power with respect to 2,459,788 shares of such common stock. In addition to the number of shares of the Company’s common stock held by Vector, J. Bryant Kirkland III, Vice President, Treasurer and Chief

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Financial Officer of Vector, and Marc N. Bell, Vice President, Secretary and General Counsel of Vector , each own 20,000 and 350 shares, respectively, of the Company’s common stock, which amounts are not included in the table above. The business address of Accommodations Acquisition Corporation and Vector is 14400 Biscayne Boulevard, Miami, FL 33131. Mr. Lorber, the Chairman of our Board of Directors, is the President and Chief Executive Officer of Vector.

(6)

Based upon the information provided in the Schedule 13D filed on September 18, 2014 by GGCP, Inc. (“GGCP”), GGCP Holdings LLC (“GGCP Holdings”), GAMCO Investors, Inc. (“GBL”), Gabelli Funds, LLC (“Gabelli Funds”), GAMCO Asset Management Inc. (“GAMCO”), Teton Advisors, Inc. (“Teton Advisors”), Gabelli Securities, Inc. (“GSI”), G.research, Inc. (“G.research”), MJG Associates, Inc. (“MJG Associates”), Gabelli Foundation, Inc. (“Foundation”), MJG-IV Limited Partnership (“MJG-IV”) (together, the “Reporting Entities”), and Mario Gabelli.

The 1,722,966 shares of the Company’s common stock for which Mr. Gabelli has sole dispositive power include: 330,200 shares of common stock beneficially owned by GAMCO, a wholly-owned subsidiary of GBL, an entity in which GGCP Holdings is the controlling stockholder; 181,809 shares beneficially owned by Gabelli Funds, a wholly owned subsidiary of GBL; 629,376 shares beneficially owned by GSI, a majority owned subsidiary of GBL; and 581,581 shares beneficially owned by Teton Advisors. Mr. Gabelli is deemed to have sole dispositive and voting power over the 1,722,966 shares of the Company’s common stock beneficially owned by the Reporting Entities. GGCP is the manager and a member of GGCP Holdings. Mr. Gabelli is the controlling stockholder, Chief Executive Officer and a director of GGCP and Chairman and Chief Executive Officer of GBL. Mr. Gabelli is also a member of GGCP Holdings and the controlling stockholder of Teton. The Reporting Entities and Mr. Gabelli do not admit that they constitute a group.

GAMCO and G.research are New York corporations and GBL, GSI, and Teton Advisors are Delaware corporations, each having its principal business office at One Corporate Center, Rye, New York 10580. GGCP is a Wyoming corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830. GGCP Holdings is a Delaware limited liability corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830. Gabelli Funds is a New York limited liability company having its principal business office at One Corporate Center, Rye, New York 10580. MJG Associates is a Connecticut corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830. The Foundation is a Nevada corporation having its principal offices at 165 West Liberty Street, Reno, Nevada 89501.

(7)	Consists of 15,082 restricted stock units that will vest on May 13, 2016 and 2,213 restricted stock units that vested on May 14, 2015. Mr. Lorber owns a direct interest in Vector and may be deemed to share beneficial ownership of the shares held by Vector.

(8)	Consists of 15,082 restricted stock units that will vest on May 13, 2016 and 12,987 restricted stock units that vested on May 14, 2015.

(9)	Consists of 15,082 restricted stock units that will vest on May 13, 2016 and 2,213 restricted stock units that vested on May 14, 2015.

(10)	Consists of 15,082 restricted stock units that will vest on May 13, 2016. Does not include 4,500,000 shares of the Company’s common stock held by OTK Associates, LLC. Mr. Kalisman owns an indirect interest in OTK and may be deemed to share beneficial ownership of the shares held by OTK.

(11)	Consists of 16,387 restricted stock units that will vest on May 13, 2016. Mr. Olshan owns an indirect interest in OTK and may be deemed to share beneficial ownership of the shares held by OTK.

(12)	Consists of 157,573 shares of common stock, 88,894 options to purchase shares of common stock, and 172,493 LTIP Units convertible into shares of common stock.

(13)	Consists of 2,678 shares of common stock.

(14)	Consists of 41,567 shares of common stock. Mr. Fluhr served as Chief Operating Officer of the Company until his resignation effective February 29, 2016.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that our executive officers, directors, and persons who own more than 10% of a registered class of our equity securities, file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and Nasdaq. These reporting persons are required by the SEC to furnish us with copies of all Forms 3, 4 and 5 that they file.

Based solely on our review of the copies of such forms received by us, and/or on written representations from certain reporting persons that they were not required to file a Form 5 for the fiscal year, we believe that our executive officers, directors and persons who own more than 10% of our common stock complied with all Section 16(a) filing requirements applicable to them with respect to transactions during 2015.

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CERTAIN RELATIONSHIPS AN D RELATED TRANSACTIONS

Policy and Procedures Regarding Transactions with Related Persons

The Company has adopted a written related person transaction policy and procedures to further the goal of ensuring that any related person transaction is properly reviewed, approved or ratified, if appropriate, and fully disclosed in accordance with applicable rules and regulations. The policies and procedures are intended to work in conjunction with the Code of Ethics and Code of Business Conduct, which is described above in “Board of Directors and Corporate Governance — Corporate Governance Information — Code of Ethics and Code of Business Conduct.”

The policies and procedures apply to transactions or arrangements between the Company and any related person, including but not limited to directors, director nominees, executive officers, greater than 5% stockholders and the immediate family members of each of these groups. They do not, however, apply with respect to general conflicts between the interests of the Company and our employees, officers and directors, including issues relating to engaging in a competing business and performing outside or additional work, which are reported and handled in accordance with the Company’s Code of Ethics and Code of Business Conduct and other procedures and guidelines implemented by the Company from time to time.

For purposes of the policies and procedures, a related person transaction is a transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness), or any series of similar transactions, arrangements or relationships, in which (i) the aggregate amount involved will or may be expected to exceed $120,000, (ii) the Company is a participant, and (iii) any related person has or will have a direct or indirect material interest.

Under the policies and procedures, the directors and executive officers of the Company are responsible for identifying and reporting any proposed transaction with a related person. If any director or officer becomes aware of any transaction or arrangement that has taken place, may be taking place or may be about to take place involving the Company and any related person, such person shall immediately bring the matter to the attention of the Company’s chief legal officer. Any proposed related person transaction shall be presented by the chief legal officer to the Audit Committee for its review. The Audit Committee will then meet, in person or by telephone, to review and discuss the proposed transaction.

If the transaction involves a director, that director will not participate in the action regarding whether to approve or ratify the transaction. In the event that all of the directors are deemed to have an interest in the transaction, the Company may enter into the transaction if it is approved in accordance with the provisions of the DGCL.

The policies and procedures provide that all related person transactions are to be disclosed in the Company’s proxy statement and other appropriate filings to the extent required by the rules and regulations of the SEC and Nasdaq.

Consulting Agreement with Jonathan A. Langer

On May 7, 2015, the Company entered into the 2015 Consulting Agreement with Jonathan Langer, then a member of the Company’s Board of Directors, pursuant to which Mr. Langer was to provide consulting services to the Company, at the direction of the Board of Directors, in connection with the Company’s previously announced strategic alternatives process, as well as on-going financial and operating consulting services to the Company. Effective immediately upon the entering of the 2015 Consulting Agreement, Mr. Langer resigned from the Board of Directors. The members of the Audit Committee, together with a majority of the Board of Directors (excluding Mr. Langer), voted to approve the 2015 Consulting Agreement pursuant to the Company’s Related Persons Transaction Policy and Procedures.

Under the terms of the 2015 Consulting Agreement, in consideration of the services Mr. Langer provided to the Company over the course of the prior year beyond his duties as a director, in May 2015, the Company paid Mr. Langer a one-time fee of $500,000, of which $250,000 was paid in cash and $250,000 was paid in common stock of the Company under the Stock Plan, which fully vested on the date of grant. Additionally, the Company paid Mr. Langer consulting fees totaling $925,000, of which $462,500 was paid in cash and $462,500 was paid in common stock of the Company under the Stock Plan, which fully vested on the date of grant. Effective September 15, 2015, Mr. Langer’s 2015 Consulting Agreement was terminated.

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OTHER M ATTERS

Availability of Proxy Statement and Annual Report on Form 10-K

In addition to this proxy statement, we have provided without charge, to each person from whom a proxy is solicited, a copy of our annual report to stockholders for the fiscal year ended December 31, 2015, including our consolidated financial statements.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on Thursday, May 12, 2016:

Stockholders may access the proxy statement and the 2015 Annual Report, as well as transmit their voting instructions, by having their proxy card and related instructions in hand and accessing:

www.proxyvote.com

Additionally, upon written request, we will provide you without charge, a copy of our 2015 Annual Report that we filed with the SEC. You should make your request in writing to:

Morgans Hotel Group Co.

Attention: Investor Relations

475 Tenth Avenue

New York, NY 10018

Other Matters to Come Before the 2016 Annual Meeting

No other matters are to be presented for action at the annual meeting other than as set forth in this proxy statement. If other matters properly come before the meeting, however, the persons named in the accompanying proxy will vote all proxies solicited by this proxy statement in their own discretion.

Stockholder Proposals and Nominations for the 2017 Annual Meeting

Any stockholder proposal pursuant to Rule 14a-8 of the rules promulgated under the Exchange Act to be considered for inclusion in our proxy materials for the next annual meeting of stockholders must be received at our principal executive offices no later than December 16, 2016.

Any stockholder who wishes to propose a nominee to the Board or propose any other business to be considered by the stockholders (other than a stockholder proposal included in our proxy materials pursuant to Rule 14a-8 of the rules promulgated under the Exchange Act) must comply with the advance notice provisions and other requirements of Article I, Section 1.11 of our by-laws, which are on file with the SEC and may be obtained from the Secretary of the Company upon request. These notice provisions require that nominations of persons for election to the Board and the proposal of business to be considered by the stockholders for the 2017 annual meeting must be received no earlier than 60 nor more than 90 days prior to the date of the meeting. However, if the date of the meeting is first publicly announced or disclosed (in a public filing or otherwise) less than 70 days prior to the date of the meeting, such advance notice must be given not more than ten days after the date of the meeting is first announced or disclosed.

* * * *



By Order of the Board of Directors


Name:		Meredith L. Deutsch
Title:		Secretary

New York, NY

April 15, 2016

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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. 0000287922_1 R1.0.1.25 For Withhold For All All All Except The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees 01 Andrew Broad 02 Kenneth E. Cruse 03 John J. Dougherty 04 Jason T. Kalisman 05 Howard M. Lorber 06 Bradford B. Nugent 07 Michael E. Olshan 08 Michelle S. Russo 09 Adam Stein MORGANS HOTEL GROUP CO. ATTN: GRACE CHEN 475 TENTH AVENUE NEW YORK, NY 10018 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. 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. The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain 2 Ratification of appointment of independent registered public accounting firm. 3 Advisory vote to approve executive compensation. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 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.

0000287922_2 R1.0.1.25 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report is/ are available at www.proxyvote.com MORGANS HOTEL GROUP CO. Annual Meeting of Stockholders May 12, 2016 10:00 AM EDT This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Richard T. Szymanski, and Meredith L. Deutsch, or any of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of MORGANS HOTEL GROUP CO. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 AM EDT on May 12, 2016, at Hudson, 356 West 58th Street, New York, NY 10019, or any properly authorized adjournment thereof. 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. Continued and to be signed on reverse side

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