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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CURRENT REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of the</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Securities Exchange Act of 1934 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Date of Report (Date of earliest event reported):
February 14, 2012 (February 8, 2012)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>PEBBLEBROOK HOTEL TRUST </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">(Exact name of Registrant
as specified in its charter)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center">Maryland</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center">001-34571</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center">27-1055421</TD></TR>
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        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(State or Other Jurisdiction</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center">of Incorporation or Organization)</P></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
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    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">(I.R.S. Employer Identification No.)</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>2 Bethesda Metro Center, Suite 1530<BR>
Bethesda, MD 20814</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">(Address of principal executive
offices) (Zip code)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(240) 507-1300</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Registrant&rsquo;s telephone number, including
area code)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Not Applicable</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Former name or former address, if changed from
last report)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</P>

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    <TD>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>
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    <TD>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">On February 8, 2012, the Board of Trustees (the &ldquo;Board&rdquo;)
of Pebblebrook Hotel Trust (the &ldquo;Company&rdquo;) approved, as recommended by the Compensation Committee of the Board (the
&ldquo;Compensation Committee&rdquo;), compensatory arrangements in which the executive officers of the Company will participate.
The arrangements include compensation for 2011 and 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><U>Cash Bonus Compensation for 2011</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The Board approved, as recommended by the Compensation Committee,
the payment of cash bonuses to each of the Company&rsquo;s three executive officers for performance in 2011 based on the management
objectives established for 2011. The management objectives for 2011 included the Company&rsquo;s achievement of specified financial
performance for the Company&rsquo;s hotel portfolio as compared to the Company&rsquo;s underwriting at the time of the acquisitions;
achievement of particular business goals, such as certain capital re-investment programs and successful asset management initiatives,
including expense savings or increased profitability; success in the pursuit of new hotel investments; and the successful completion
of the Company&rsquo;s internal control program. These objectives were structured to focus the executives, in part, on enhancing
the return from, and value of, the Company&rsquo;s portfolio of hotels.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">To reward their outstanding execution of the Company&rsquo;s
investment strategy and capital markets activities in a challenging economic environment, and to reward exceptional outperformance
relative to the management objectives for 2011, the Board awarded to each of these executives a cash bonus equal to 200% of his
target cash bonus for 2011 as follows:</P>

<UL TYPE="DISC" STYLE="margin-top: 0in; font-family: Times New Roman, Times, Serif">

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">Jon E. Bortz, the Company&rsquo;s Chairman, President and Chief Executive Officer,
received $630,000.</LI>

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">Raymond D. Martz, the Company&rsquo;s Executive Vice President, Chief Financial Officer,
Treasurer and Secretary, received $420,000, and</LI>

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">Thomas C. Fisher, the Company&rsquo;s Executive Vice President and Chief Investment
Officer, the actual cash bonus was $420,000.</LI>

</UL STYLE="font-family: Times New Roman, Times, Serif">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><U>2012 Compensation Plan</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The key elements of the 2012 compensation program are base
salary, annual cash incentive awards, time-based restricted share incentive awards and performance-based equity incentive awards,
pursuant to the Company&rsquo;s 2009 Equity Incentive Plan. The following disclosure describes the material terms of the elements
of the program and the amounts for the Company&rsquo;s three executive officers. The structure and amounts are based, in large
part, on the recommendations of a third-party compensation consultant, retained by the Compensation Committee, who reviewed and
analyzed the compensation levels and programs of peer companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><I>Base Salary and Annual Cash Incentive Awards</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The Board approved, as recommended by the Compensation Committee,
the following cash compensation arrangements for 2012 for each of the executive officers:</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 34%; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 33%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Base Salary</TD>
    <TD STYLE="width: 33%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Target Cash Bonus</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Jon E. Bortz</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$500,000</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$500,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Raymond D. Martz</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$350,000</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$280,000</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Thomas C. Fisher</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$350,000</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$280,000</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">For each executive, the target cash bonus is contingent on
the Company meeting the target levels of certain management objectives and goals established by the Board (&ldquo;Annual Objectives&rdquo;),
which are set at the beginning of the year and are designed to align the incentives of the Company&rsquo;s employees and management
with the interests of the Company&rsquo;s shareholders. The actual amount of cash bonus that will be paid in 2013 for performance
in 2012 will depend on the Company&rsquo;s performance against the Annual Objectives and could be as little as zero and as much
as 200% of the target cash bonus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The Annual Objectives for 2012 have three primary components:</P>

<UL TYPE="DISC" STYLE="margin-top: 0in; font-family: Times New Roman, Times, Serif">

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">35% is determined by the percentage growth of the Company&rsquo;s comparable hotel-level
earnings before interest, taxes, depreciation and amortization (&ldquo;EBITDA&rdquo;) from December 31, 2011 to December 31, 2012
compared to the average percentage growth in the same measure for of a group of seven peer companies in the full service hotel
sector, including Ashford Hospitality Trust, Chesapeake Lodging Trust, DiamondRock Hospitality Company, Host Hotels &amp; Resorts,
Inc., LaSalle Hotel Properties, Strategic Hotels &amp; Resorts, Inc. and Sunstone Hotel Investors, Inc. (the &ldquo;Peer Group&rdquo;),
(the &ldquo;EBITDA Growth Objective&rdquo;);</LI>

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">35% is determined by the amount of Company hotel-level EBITDA for the year ending
December 31, 2012 compared to the aggregate amount of 2012 hotel-level EBITDA projected by the Company&rsquo;s underwriting process
at the time of a hotel&rsquo;s acquisition (the &ldquo;Underwritten EBITDA Objective&rdquo;); and</LI>

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">30% is determined by the degree to which particular business objectives, including
certain capital re-investment programs, asset management initiatives, acquisition goals, medium-term debt refinancings and internal
controls and compliance, are met (the &ldquo;Operating Objective&rdquo;).</LI>

</UL STYLE="font-family: Times New Roman, Times, Serif">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The level of performance against each of the 2012 Annual Objectives
is measured relative to a target and is subject to a maximum and minimum, each of which varies by objective, as shown in the following
table:</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 13%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Annual Objective</TD>
    <TD STYLE="width: 21%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Minimum % of Target Bonus</TD>
    <TD STYLE="width: 17%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Decrease Increment</TD>
    <TD STYLE="width: 14%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Target Performance/ % of Target Bonus</TD>
    <TD STYLE="width: 14%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Increase Increment</TD>
    <TD STYLE="width: 11%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Maximum % of Target Bonus</TD></TR>
<TR>
    <TD ROWSPAN="2" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">EBITDA Growth<BR> (35% weight)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Performance<BR> (relative to Target Performance)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 basis points (&ldquo;bps&rdquo;) below target</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Peer-Group Average EBITDA growth</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 bps above target</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Payout Level<BR> (percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">700 bps less</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">35%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">700 bps more</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">87.5%</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD ROWSPAN="2" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Underwritten EBITDA<BR> (35% weight)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Performance<BR> (relative to Target Performance)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 bps below target</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Aggregate underwritten EBITDA</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 bps above target</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Payout Level<BR> (percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">700 bps less</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">35%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">700 bps more</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">87.5%</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD ROWSPAN="2" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Operating<BR> (30% weight)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Performance <BR> (Five-point scale &ndash; assessed by Board)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">1</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">2</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">3</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">4</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">5</TD></TR>
<TR>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Payout Level<BR> (percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">15%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">30%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">45%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">60%</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Total (as percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">100%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">200%</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">Regardless of the Company&rsquo;s actual performance against
the Annual Objectives, no executive officer will be entitled to receive more than a maximum of 200% of their target cash bonus
for an annual incentive award.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><I>Time-Based Restricted Share Incentive Awards </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">Each executive officer is eligible to receive time-based restricted
share incentive awards in the form of restricted common shares of the Company. For 2012, the Board awarded restricted common shares,
which will vest ratably on January 1, 2013, January 1, 2014 and January 1, 2015, provided that the recipient remains employed by
the Company through the applicable vesting date, to Messrs. Bortz, Martz and Fisher as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 34%; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 33%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Number of Restricted Common shares</TD>
    <TD STYLE="width: 33%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Grant Date Fair Value</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Jon E. Bortz</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">21,460</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$496,799</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Raymond D. Martz</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">8,495</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$196,659</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Thomas C. Fisher</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">8,495</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">$196,659</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The grant date fair value of these awards was calculated in
accordance with FASB ASC 718 and based on the closing price per share of the Company&rsquo;s common shares on February 8, 2012.
Prior to vesting, all restricted common shares will be entitled to receive dividends paid on the Company&rsquo;s common shares
and will be entitled to vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><I>Performance-Based Equity Incentive Awards</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">Each executive officer is eligible to receive time-based equity
incentive awards in the form of restricted common shares of the Company. The common shares that are issuable pursuant to the performance-based
awards will be issued and vest only if and to the degree that long-term performance criteria established by the Board (&ldquo;Long-Term
Objectives&rdquo;) are met and the recipient remains employed by the Company on the vesting date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The Long-Term Objectives have three primary components:</P>

<UL TYPE="DISC" STYLE="margin-top: 0in; font-family: Times New Roman, Times, Serif">

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">30% is determined by the Company&rsquo;s total shareholder return (common share price
appreciation/depreciation plus paid dividends) (&ldquo;TSR&rdquo;) measured from December 31, 2011 through December 31, 2014 compared
to the Peer Group&rsquo;s average TSR (the &ldquo;Group TSR Objective&rdquo;);</LI>

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">30% is determined by the Company&rsquo;s total shareholder return (common share price
appreciation/depreciation plus paid dividends) from December 31, 2011 through December 31, 2014 (the &ldquo;Absolute TSR Objective&rdquo;);
and</LI>

<LI STYLE="margin: 0 0 6pt; font-size: 10pt">40% is determined by reduction of the gap between the Company&rsquo;s comparable hotel-level
EBITDA margin and that of LaSalle Hotel Properties from December 31, 2011 through December 31, 2014, measured annually (the &ldquo;Direct
Competitor Objective&rdquo;).</LI>

</UL STYLE="font-family: Times New Roman, Times, Serif">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The level of performance against each of the 2012 Long-Term
Objectives is measured relative to a target and is subject to a maximum and minimum, each of which varies by objective, as shown
in the following table:</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Long-Term Objective</TD>
    <TD STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Minimum % of Target Bonus</TD>
    <TD STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Decrease Increment</TD>
    <TD STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Target Performance/ % of Target Bonus</TD>
    <TD STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Increase Increment</TD>
    <TD COLSPAN="2" STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Maximum % of Target Bonus</TD></TR>
<TR>
    <TD ROWSPAN="2" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Group TSR<BR> (30% weight)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Performance<BR> (relative to Target Performance)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&ge; 600 bps below</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 bps below target</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Peer-Group Average TSR</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 bps above target</TD>
    <TD COLSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Payout Level<BR> (percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">500 bps less</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">30%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">500 bps more</TD>
    <TD COLSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&mdash;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center; width: 13%">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center; width: 20%">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center; width: 10%">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center; width: 16%">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center; width: 14%">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center; width: 15%">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center; width: 11%">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; width: 1%">&nbsp;</TD></TR>
<TR>
    <TD ROWSPAN="2" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Absolute TSR<BR> (30% weight)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Performance<BR> (relative to Target Performance)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&le; 5%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 bps below target</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">9% TSR</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 100 bps above target</TD>
    <TD COLSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Payout Level<BR> (percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">750 bps less</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">30%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">750 bps more</TD>
    <TD COLSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">60%</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid">&nbsp;</TD></TR>
<TR>
    <TD ROWSPAN="2" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Direct Competitor<BR> (40% weight)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Performance <BR> (relative to Target Performance)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&ge; 40 bps increase in gap</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 10 bps increase in EBITDA margin gap</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">No change in EBITDA margin gap</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">For every 10 bps decrease in EBITDA margin gap</TD>
    <TD COLSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Payout Level<BR> (percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">1,000 bps less</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">40%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">1,000 bps more</TD>
    <TD COLSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&mdash;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD COLSPAN="2" STYLE="border: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">Total (as percent of Target Bonus)</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">100%</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">200%</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">Regardless of the Company&rsquo;s actual performance against
one or more of the Long-Term Objectives, no executive officer will be entitled to receive more than 200% of their target for performance-based
equity incentive award.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">The minimum, target and maximum number of common shares subject
to the performance-based equity incentive awards for the Company&rsquo;s three executive officers are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD ROWSPAN="2" STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Number of Common Shares Issuable</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Minimum</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Target</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Maximum</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 30%; border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Jon E. Bortz</TD>
    <TD STYLE="width: 22%; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0</TD>
    <TD STYLE="width: 23%; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">32,190</TD>
    <TD STYLE="width: 25%; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">64,380</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Raymond D. Martz</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">12,742</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">25,484</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt">Thomas C. Fisher</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">0</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">12,742</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; text-align: center">25,484</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">Based solely on the closing price per share of the Company&rsquo;s
common shares on February 8, 2012, the value of the target number of shares issuable pursuant to the performance-based equity incentive
awards to Messrs. Bortz, Martz and Fisher would be $745,199, $294,977 and $294,977, respectively. The Company will estimate the
aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718,
excluding the effect of estimated forfeitures, and will calculate the value at the grant date based on the probable outcome of
the performance conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">For each executive, the actual amount of common shares that
will be issued after December 31, 2014 pursuant to the performance-based awards will depend on the Company&rsquo;s performance
against the Long-Term Objectives and requires that the recipient remain employed by the Company through the vesting date. The common
shares issuable pursuant to these performance-based awards will, prior to vesting, not be entitled either to receive dividends
paid on the Company&rsquo;s common shares or to be voted, but dividends will accrue on the shares and will be paid if and when
the shares vest and are issued.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 6pt"><B>SIGNATURE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24pt">Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 47%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 53%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">PEBBLEBROOK HOTEL TRUST</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Date: February 14, 2012</P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">By:<U>/s/ Raymond D. Martz&#9;</U></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 33.6pt; text-indent: -0.25in">Raymond D. Martz</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 15.6pt">Executive Vice President, Chief Financial Officer,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 15.6pt">Treasurer
        and Secretary</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 48.6pt; text-indent: -30pt">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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{"company-data": {"conformed-name": "Pebblebrook Hotel Trust", "cik": "0001474098", "assigned-sic": "6798", "irs-number": "271055421", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-34571", "film-number": "12612260"}, "business-address": {"street1": "2 BETHESDA METRO CENTER", "street2": "SUITE 1530", "city": "BETHESDA", "state": "MD", "zip": "20814", "phone": "240-507-1300"}, "mail-address": {"street1": "2 BETHESDA METRO CENTER", "street2": "SUITE 1530", "city": "BETHESDA", "state": "MD", "zip": "20814"}}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 14, 2012 (February 8, 2012)
PEBBLEBROOK HOTEL TRUST
(Exact name of Registrant
as specified in its charter)
Maryland
001-34571
27-1055421
(State or Other Jurisdiction
of Incorporation or Organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
2 Bethesda Metro Center, Suite 1530
Bethesda, MD 20814
(Address of principal executive
offices) (Zip code)
(240) 507-1300
(Registrant's telephone number, including
area code)
Not Applicable
(Former name or former address, if changed from
last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 8, 2012, the Board of Trustees (the "Board")
of Pebblebrook Hotel Trust (the "Company") approved, as recommended by the Compensation Committee of the Board (the
"Compensation Committee"), compensatory arrangements in which the executive officers of the Company will participate.
The arrangements include compensation for 2011 and 2012.
Cash Bonus Compensation for 2011
The Board approved, as recommended by the Compensation Committee,
the payment of cash bonuses to each of the Company's three executive officers for performance in 2011 based on the management
objectives established for 2011. The management objectives for 2011 included the Company's achievement of specified financial
performance for the Company's hotel portfolio as compared to the Company's underwriting at the time of the acquisitions;
achievement of particular business goals, such as certain capital re-investment programs and successful asset management initiatives,
including expense savings or increased profitability; success in the pursuit of new hotel investments; and the successful completion
of the Company's internal control program. These objectives were structured to focus the executives, in part, on enhancing
the return from, and value of, the Company's portfolio of hotels.
To reward their outstanding execution of the Company's
investment strategy and capital markets activities in a challenging economic environment, and to reward exceptional outperformance
relative to the management objectives for 2011, the Board awarded to each of these executives a cash bonus equal to 200% of his
target cash bonus for 2011 as follows:
Jon E. Bortz, the Company's Chairman, President and Chief Executive Officer,
received $630,000.
Raymond D. Martz, the Company's Executive Vice President, Chief Financial Officer,
Treasurer and Secretary, received $420,000, and
Thomas C. Fisher, the Company's Executive Vice President and Chief Investment
Officer, the actual cash bonus was $420,000.
2012 Compensation Plan
The key elements of the 2012 compensation program are base
salary, annual cash incentive awards, time-based restricted share incentive awards and performance-based equity incentive awards,
pursuant to the Company's 2009 Equity Incentive Plan. The following disclosure describes the material terms of the elements
of the program and the amounts for the Company's three executive officers. The structure and amounts are based, in large
part, on the recommendations of a third-party compensation consultant, retained by the Compensation Committee, who reviewed and
analyzed the compensation levels and programs of peer companies.
Base Salary and Annual Cash Incentive Awards
The Board approved, as recommended by the Compensation Committee,
the following cash compensation arrangements for 2012 for each of the executive officers:
Base Salary
Target Cash Bonus
Jon E. Bortz
$500,000
$500,000
Raymond D. Martz
$350,000
$280,000
Thomas C. Fisher
$350,000
$280,000
For each executive, the target cash bonus is contingent on
the Company meeting the target levels of certain management objectives and goals established by the Board ("Annual Objectives"),
which are set at the beginning of the year and are designed to align the incentives of the Company's employees and management
with the interests of the Company's shareholders. The actual amount of cash bonus that will be paid in 2013 for performance
in 2012 will depend on the Company's performance against the Annual Objectives and could be as little as zero and as much
as 200% of the target cash bonus.
The Annual Objectives for 2012 have three primary components:
35% is determined by the percentage growth of the Company's comparable hotel-level
earnings before interest, taxes, depreciation and amortization ("EBITDA") from December 31, 2011 to December 31, 2012
compared to the average percentage growth in the same measure for of a group of seven peer companies in the full service hotel
sector, including Ashford Hospitality Trust, Chesapeake Lodging Trust, DiamondRock Hospitality Company, Host Hotels & Resorts,
Inc., LaSalle Hotel Properties, Strategic Hotels & Resorts, Inc. and Sunstone Hotel Investors, Inc. (the "Peer Group"),
(the "EBITDA Growth Objective");
35% is determined by the amount of Company hotel-level EBITDA for the year ending
December 31, 2012 compared to the aggregate amount of 2012 hotel-level EBITDA projected by the Company's underwriting process
at the time of a hotel's acquisition (the "Underwritten EBITDA Objective"); and
30% is determined by the degree to which particular business objectives, including
certain capital re-investment programs, asset management initiatives, acquisition goals, medium-term debt refinancings and internal
controls and compliance, are met (the "Operating Objective").
The level of performance against each of the 2012 Annual Objectives
is measured relative to a target and is subject to a maximum and minimum, each of which varies by objective, as shown in the following
table:
Annual Objective
Minimum % of Target Bonus
Decrease Increment
Target Performance/ % of Target Bonus
Increase Increment
Maximum % of Target Bonus
EBITDA Growth
(35% weight)
Performance
(relative to Target Performance)
For every 100 basis points ("bps") below target
Peer-Group Average EBITDA growth
For every 100 bps above target
Payout Level
(percent of Target Bonus)
0%
700 bps less
35%
700 bps more
87.5%
Underwritten EBITDA
(35% weight)
Performance
(relative to Target Performance)
For every 100 bps below target
Aggregate underwritten EBITDA
For every 100 bps above target
Payout Level
(percent of Target Bonus)
0%
700 bps less
35%
700 bps more
87.5%
Operating
(30% weight)
Performance
(Five-point scale – assessed by Board)
1
2
3
4
5
Payout Level
(percent of Target Bonus)
0%
15%
30%
45%
60%
Total (as percent of Target Bonus)
0%
100%
200%
Regardless of the Company's actual performance against
the Annual Objectives, no executive officer will be entitled to receive more than a maximum of 200% of their target cash bonus
for an annual incentive award.
Time-Based Restricted Share Incentive Awards
Each executive officer is eligible to receive time-based restricted
share incentive awards in the form of restricted common shares of the Company. For 2012, the Board awarded restricted common shares,
which will vest ratably on January 1, 2013, January 1, 2014 and January 1, 2015, provided that the recipient remains employed by
the Company through the applicable vesting date, to Messrs. Bortz, Martz and Fisher as follows:
Number of Restricted Common shares
Grant Date Fair Value
Jon E. Bortz
21,460
$496,799
Raymond D. Martz
8,495
$196,659
Thomas C. Fisher
8,495
$196,659
The grant date fair value of these awards was calculated in
accordance with FASB ASC 718 and based on the closing price per share of the Company's common shares on February 8, 2012.
Prior to vesting, all restricted common shares will be entitled to receive dividends paid on the Company's common shares
and will be entitled to vote.
Performance-Based Equity Incentive Awards
Each executive officer is eligible to receive time-based equity
incentive awards in the form of restricted common shares of the Company. The common shares that are issuable pursuant to the performance-based
awards will be issued and vest only if and to the degree that long-term performance criteria established by the Board ("Long-Term
Objectives") are met and the recipient remains employed by the Company on the vesting date.
The Long-Term Objectives have three primary components:
30% is determined by the Company's total shareholder return (common share price
appreciation/depreciation plus paid dividends) ("TSR") measured from December 31, 2011 through December 31, 2014 compared
to the Peer Group's average TSR (the "Group TSR Objective");
30% is determined by the Company's total shareholder return (common share price
appreciation/depreciation plus paid dividends) from December 31, 2011 through December 31, 2014 (the "Absolute TSR Objective");
and
40% is determined by reduction of the gap between the Company's comparable hotel-level
EBITDA margin and that of LaSalle Hotel Properties from December 31, 2011 through December 31, 2014, measured annually (the "Direct
Competitor Objective").
The level of performance against each of the 2012 Long-Term
Objectives is measured relative to a target and is subject to a maximum and minimum, each of which varies by objective, as shown
in the following table:
Long-Term Objective
Minimum % of Target Bonus
Decrease Increment
Target Performance/ % of Target Bonus
Increase Increment
Maximum % of Target Bonus
Group TSR
(30% weight)
Performance
(relative to Target Performance)
≥ 600 bps below
For every 100 bps below target
Peer-Group Average TSR
For every 100 bps above target
Payout Level
(percent of Target Bonus)
0%
500 bps less
30%
500 bps more
—
Absolute TSR
(30% weight)
Performance
(relative to Target Performance)
≤ 5%
For every 100 bps below target
9% TSR
For every 100 bps above target
Payout Level
(percent of Target Bonus)
0%
750 bps less
30%
750 bps more
60%
Direct Competitor
(40% weight)
Performance
(relative to Target Performance)
≥ 40 bps increase in gap
For every 10 bps increase in EBITDA margin gap
No change in EBITDA margin gap
For every 10 bps decrease in EBITDA margin gap
Payout Level
(percent of Target Bonus)
0%
1,000 bps less
40%
1,000 bps more
—
Total (as percent of Target Bonus)
0%
100%
200%
Regardless of the Company's actual performance against
one or more of the Long-Term Objectives, no executive officer will be entitled to receive more than 200% of their target for performance-based
equity incentive award.
The minimum, target and maximum number of common shares subject
to the performance-based equity incentive awards for the Company's three executive officers are as follows:
Number of Common Shares Issuable
Minimum
Target
Maximum
Jon E. Bortz
0
32,190
64,380
Raymond D. Martz
0
12,742
25,484
Thomas C. Fisher
0
12,742
25,484
Based solely on the closing price per share of the Company's
common shares on February 8, 2012, the value of the target number of shares issuable pursuant to the performance-based equity incentive
awards to Messrs. Bortz, Martz and Fisher would be $745,199, $294,977 and $294,977, respectively. The Company will estimate the
aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718,
excluding the effect of estimated forfeitures, and will calculate the value at the grant date based on the probable outcome of
the performance conditions.
For each executive, the actual amount of common shares that
will be issued after December 31, 2014 pursuant to the performance-based awards will depend on the Company's performance
against the Long-Term Objectives and requires that the recipient remain employed by the Company through the vesting date. The common
shares issuable pursuant to these performance-based awards will, prior to vesting, not be entitled either to receive dividends
paid on the Company's common shares or to be voted, but dividends will accrue on the shares and will be paid if and when
the shares vest and are issued.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PEBBLEBROOK HOTEL TRUST
Date: February 14, 2012
By:
/s/ Raymond D. Martz
Raymond D. Martz
Executive Vice President, Chief Financial Officer,
Treasurer
        and Secretary