Starwood 2007 Annual Report Download - page 161

The following table summarizes the Company’s restricted stock activity during 2007:
Number of
Restricted
Stock Units
Weighted Average
Grant Date Value
Per Share
(In millions)
Outstanding at December 31, 2006 .......................... 4.7 $46.21
Granted ............................................ 2.3 $63.33
Distributed .......................................... (0.8) $38.36
Forfeited ........................................... (0.5) $50.96
Outstanding at December 31, 2007 .......................... 5.7 $53.95
2002 Employee Stock Purchase Plan
In April 2002, the Board of Directors adopted (and in May 2002 the shareholders approved) the Company’s
2002 Employee Stock Purchase Plan (the “ESPP”) to provide employees of the Company with an opportunity to
purchase common stock through payroll deductions and reserved 10,000,000 Shares for issuance under the ESPP.
The ESPP commenced in October 2002.
All full-time regular employees who have completed 30 days of continuous service and who are employed by
the Company on U.S. payrolls are eligible to participate in the ESPP. Eligible employees may contribute up to 20%
of their total cash compensation to the ESPP. Amounts withheld are applied at the end of every three month
accumulation period to purchase Shares. The value of the Shares (determined as of the beginning of the offering
period) that may be purchased by any participant in a calendar year is limited to $25,000. Participants may withdraw
their contributions at any time before Shares are purchased.
For the purchase periods prior to June 1, 2005, the purchase price was equal to 85% of the lower of (a) the fair
market value of Shares on the day of the beginning of the offering period or (b) the fair market value of Shares on the
date of purchase. Effective June 1, 2005, the purchase price is equal to 95% of the fair market value of Shares on the
date of purchase. Approximately 119,000 Shares were issued under the ESPP during the year ended December 31,
2007 at purchase prices ranging from $51.00 to $68.47. Approximately 115,000 Shares were issued under the ESPP
during the year ended December 31, 2006 at purchase prices ranging from $50.60 to $60.96.
Note 21. Derivative Financial Instruments
The Company enters into interest rate swap agreements to manage interest expense. The Company’s objective
is to manage the impact of interest rate fluctuations on the results of operations, cash flows and the market value of
the Company’s debt. At December 31, 2007, the Company had no outstanding interest rate swap agreements under
which the Company pays a fixed rate and receives a variable rate of interest.
In March 2004, the Company terminated certain interest rate swap agreements, with a notional amount of
$1 billion under which the Company was paying floating rates and receiving fixed rates of interest (“Fair Value
Swaps”), resulting in a $33 million cash payment to the Company. The proceeds were used for general corporate
purposes and resulted in a reduction of the interest expense on the corresponding underlying debt (Sheraton Holding
Public Debt and Senior Notes) through 2007, the scheduled maturity of the terminated Fair Value Swaps. In order to
adjust its fixed versus floating rate debt position, the Company immediately entered into two new Fair Value Swaps.
The new Fair Value Swaps hedge the change in fair value of certain fixed rate debt related to fluctuations in
interest rates and mature in 2012. The aggregate notional amount of the Fair Value Swaps was $300 million at
December 31, 2007. The Fair Value Swaps modify the Company’s interest rate exposure by effectively converting
debt with a fixed rate to a floating rate. The fair value of the Fair Value Swaps was a liability of approximately
$6 million at December 31, 2007 and is included in other liabilities in the Company’s consolidated balance sheet.
F-41
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)