**Exhibit 10.38***Executive Officer Compensation*On January 25, 2007, the Compensation Committee of the Board of Directors (the “Board”) of WinstonHotels, Inc. (the “Company”) approved, and on January 25, 2007, the Board ratified, 2006performance bonuses, new annual salaries for 2007, bonus ranges for 2007 and awards of restrictedcommon stock to each of the Company’s executive officers. These grants and awards are summarized inthe following table (amounts not in thousands for purpose of this Exhibit 10.38):                   2006 2007      Cash Annual 2007 2007 Restricted  Bonus Salary Bonus Range Shares Award (#) (1)Robert W. Winston, III                Chief Executive Officer $600,000  $446,500  $0–446,500   75,055                  Joseph V. Green                President and Chief Financial Officer $367,500  $386,000  $0–386,000   53,807                  Kenneth R. Crockett                ExecutiveVice President and Chief Development Officer $325,500  $341,750  $0–341,750   47,657                  Brent V. West                VicePresident and Chief Accounting Officer $100,000  $210,000  $0–210,000   16,471                  James P. Frey                Vice President $85,000  $170,100  $0–170,100   11,753  (1) Assuming continued employment by the executives, theserestricted stock awards vest 20% immediately and 20% oneach of January 1, 2008, 2009, 2010 and 2011. If wecomplete the Merger, the unvested shares will vest in fullon the effective date of the Merger.Bonus amounts will be determined by the Compensation Committee of the Board at the beginning of the2008 fiscal year. The Compensation Committee set goals upon which 2007 bonuses for Robert W.Winston, III, Joseph V. Green and Kenneth R. Crockett will be based. Any 2007 bonuses paid to theseexecutive officers will be based primarily on the attainment of certain individual and Companygoals. Approximately 75% of the 2007 bonus awards will be based upon the attainment of certainCompany goals, which generally will be based on the following performance criteria: the ranking ofthe Company’s total return to shareholders, as compared to a peer group of hotel REITs, theCompany’s actual funds from operations (FFO) for the year ending December 31, 2007 as a percentageof the Company’s FFO guidance targets for the year ending December 31, 2007, and certainacquisition, disposition, lending and general corporate goals. Approximately 25% of the potentialbonus awards will be based upon attainment of individual goals, as determined by the CompensationCommittee.*Director Compensation*The Board also set compensation for the Company’s outside directors. Directors who are notemployees of the Company receive a fee of $1,500 for each Board meeting and $500 for each committeemeeting attended in person. For telephonic meetings of the Board or its committees that are morethan 30 minutes in length, directors will typically receive a fee of approximately $500 for theirparticipation. The Company also reimburses all directors for their out-of-pocket expenses inconnection with their service on the Board. Each director received a grant of 8,500 shares ofrestricted stock in August 2004. These restricted stock awards vested 20% immediately, 20% on theday of the Company’s annual meeting of shareholders in each of 2005 and 2006 and will vest 20% onthe date of the Company’s annual meeting in each of 2007 and 2008 assuming the director remains adirector of the Company on those dates. If we complete the Merger, the unvested shares will vestin full on the effective date of the Merger.
102