Karen C. Gallagher
About Karen C. Gallagher
Senior Vice President and Chief Operating Officer at Apple Hospitality REIT, Inc. (APLE), appointed April 1, 2020; age 48; Certified Public Accountant with an M.S. in Accounting and B.S. in Commerce from the University of Virginia, and a second major in Economics . Gallagher joined Apple REIT Companies in 2003 and led asset management from 2012–2020; her leadership has focused on analytical benchmarking of property-level performance and fostering brand and manager relationships to maximize profitability . Company operating context under her tenure includes 2024 Comparable Hotels Adjusted Hotel EBITDA margin of 36.0% and RevPAR of $119.36 (+1.4% YoY); APLE’s three-year TSR ranked at the 86th percentile vs peers for 2024 incentive metrics .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Apple Hospitality REIT (Apple REIT Companies) | Senior VP, Asset Management | 2012–2020 | Built analytical benchmarking methodology; deepened brand/manager relationships to maximize profitability . |
| Apple Hospitality REIT (Apple REIT Companies) | Various management roles | 2005–2012 | Progressively senior roles in asset management and corporate operations . |
| Apple REIT Companies | Joined organization | 2003–2005 | Early contributions across asset and corporate functions . |
| Ernst & Young LLP | Senior Assurance Associate (real estate focus) | 2000–2003 | Specialized in real estate clients; controls and reporting rigor . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Home2 Suites by Hilton Ownership Advisory Council | Member | Current | Brand-level owner advisory input . |
| Lodging industry Global Finance Committee (HFTP/AHLA) | Member | Current | Industry finance standards and benchmarking participation . |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Annual Base Salary ($) | $480,000 | $494,400 |
APLE does not maintain individual employment contracts for executive officers .
Performance Compensation
2024 incentive framework applied to NEOs (including Gallagher): 50% shareholder return metrics, 50% operational goals/metrics; ~75% of target incentive paid in shares (two-thirds vested at grant; one-third vesting in December of the issuance year) .
| Metric | Weight | Target | Actual | Payout (% of target) |
|---|---|---|---|---|
| Comparable Hotels RevPAR change | 7.5% | 3.0% | 1.4% | 0.0% |
| Comparable Hotels Adjusted Hotel EBITDA margin % | 7.5% | 35.1% | 36.0% | 15.0% |
| Adjusted EBITDAre ($000s) | 7.5% | $463,000 | $467,216 | 10.4% |
| Modified FFO per share | 7.5% | $1.61 | $1.61 | 7.5% |
| Manage capital expenditures ($000s) | 7.5% | $80,000 | $78,262 | 10.1% |
| Balance sheet maturities & capital allocation (discretionary) | 6.25% | Target | Above Target | 9.38% |
| Proprietary market forecasting build-out (discretionary) | 6.25% | Target | Target | 6.25% |
| TSR (absolute, 1-year) | 4.2% | 7.0% | -1.3% | 0.0% |
| TSR (absolute, 2-year) | 4.2% | 13.0% | 10.8% | 3.4% |
| TSR (absolute, 3-year) | 4.2% | 18.0% | 13.4% | 2.8% |
| TSR relative (1-year) | 12.5% | 55th percentile | 44th percentile | 10.2% |
| TSR relative (2-year) | 12.5% | 55th percentile | 39th percentile | 9.2% |
| TSR relative (3-year) | 12.5% | 55th percentile | 86th percentile | 25.0% |
2024 awards (Gallagher):
- Target cash $432,600; target equity $1,297,800; target total $1,730,400 .
- Actual cash $507,064; actual equity $1,383,881; actual total $1,890,945, granted March 2025; one-third vests December 12, 2025 and two-thirds vested at issuance .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 361,722 shares; less than 1% of class (238,858,327 shares outstanding) . |
| Vested vs. unvested (2024 activity) | 50,158 restricted shares vested in 2024, value $805,036 (at $16.05 close on Dec 13, 2024) . |
| Unearned performance shares (FY2024 awards) | 169,094 shares at maximum payout, based on $15.35 close on Dec 31, 2024 (payout value $2,595,600) . |
| Options | No options granted to officers; no option grants in program . |
| Ownership guidelines | Executives must hold ≥3x annual base salary; all execs either met levels or are within transition periods . |
| Hedging/pledging policy | Hedging, short sales, margin accounts prohibited; pledging capped at ≤50% of individually held securities . |
Employment Terms
| Provision | Terms |
|---|---|
| Employment contracts | None for executive officers . |
| Severance (Executive Severance Pay Plan) | Double-trigger: if terminated without Cause or for Good Reason within one year after a Change in Control → lump sum equal to unpaid salary/PTO, prorated annual bonus, plus 3.0x (Annual Bonus + Annual Base Salary), plus 12 months COBRA, life insurance premiums, welfare benefits, and up to $15,000 outplacement; full acceleration of equity awards . |
| Illustrative CIC values (as of 12/31/2024) | Gallagher: cash severance $12,461,347; acceleration of equity $1,480,395; acceleration of cash awards $507,064 (if no termination but awards not assumed) . |
| Change-in-control treatment (equity plans) | Under 2014 Plan (terminated May 2024, but outstanding awards preserved): if awards not assumed/continued, restricted stock and units vest; performance awards earned based on performance-to-date or at target if less than half of period elapsed . |
| Clawback policy | Mandatory recovery of erroneously awarded incentive compensation for three years preceding a restatement (per Dodd-Frank and listing standards) . |
| Tax gross-ups | None provided to NEOs . |
| Perquisites | Limited; includes parking and standard employee benefits; 401(k) match up to $13,800 in 2024 . |
Company Performance Context
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($USD) | $1,139,436,000 | $1,226,159,000 | $1,298,525,000* |
| EBITDA ($USD) | $412,961,000 | $436,750,000 | $467,081,000 |
Values retrieved from S&P Global. The FY 2024 Revenues value has no citation and is marked with an asterisk.
Additional document-based KPIs:
- 2024 Actual revenue $1,431,468,000; Adjusted Hotel EBITDA $509,544,000; Comparable Hotels Adjusted Hotel EBITDA margin 36.0% .
- Pay versus performance (2024): Company TSR value of initial $100 investment $115.39; Peer group $91.43; Net income $214,064,469; MFFO/share $1.61 .
Compensation Structure Notes
- Pay mix: Approximately 78% of 2024 target executive compensation is incentive-based; 75% of target incentive is paid in stock; 50% is linked to shareholder return metrics and 50% to operating goals .
- Peer benchmarking: Compensation reviewed with Ferguson Partners Consulting; peer set includes DRH, HST, PK, PEB, RLJ, RHP, INN, SHO, XHR; median market cap ~$1.9B at Dec 31, 2024 .
- Say-on-pay: ~97% approval in 2024 for 2023 executive compensation .
Investment Implications
- Strong alignment: High equity share in incentives and formal ownership requirements (≥3x salary for non-CEO execs) align Gallagher’s interests with shareholders and support retention through deferred vesting schedules .
- CIC economics and retention: Double-trigger severance at 3.0x salary+bonus and equity acceleration create significant retention value while limiting single-trigger windfalls; illustrative CIC severance for Gallagher of $12.46M underscores negotiating leverage in potential strategic events .
- Governance safeguards: Robust clawback, anti-hedging, and pledging limits (≤50%) reduce misalignment risk; absence of tax gross-ups and options aligns with shareholder-friendly practices .
- Performance linkage: 2024 payouts reflect mixed operational results (RevPAR below threshold, margin above target) and strong 3-year relative TSR (86th percentile), indicating pay-for-performance calibration with both operating and market outcomes .