Starwood 2007 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2007 Starwood annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 174

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174

4. Equity Grant Practices
Determination of Option Exercise Prices. The Compensation Committee grants stock options with an
exercise price equal to the fair market value of a share of our common stock on the grant date. Under the LTIP, the
fair market value of our common stock on a particular date is determined as the average of the high and low trading
prices of a share of the stock on the New York Stock Exchange on that date.
Timing of Equity Grants. The Compensation Committee generally makes annual equity compensation
grants to Named Executive Officers at its first regularly scheduled meeting that occurs after the release of the
Company’s earnings for the prior year (typically in February). The timing of this meeting is determined based on
factors unrelated to the pricing of equity grants.
The Compensation Committee approves equity compensation awards to a newly hired Executive Officer at the
time that the Board meets to approve the executive’s employment package. Generally, the date on which the Board
approves the employment package becomes the grant date of the newly-hired Executive Officer’s equity com-
pensation awards. However, if the Company and the new Executive Officer will enter into an employment
agreement regarding the employment relationship, the Company requires the Executive Officer to sign his
employment agreement shortly following the date of Board approval of the employment package; the later of
the date on which the executive signs his employment agreement or the date that the executive begins employment
becomes the grant date of these equity compensation awards.
The Company’s policy is that the grant date of equity compensation awards is always on or shortly after the
date the Compensation Committee approves the grants.
Although, as discussed above, annual grants are generally made in February, under unusual circumstances
grants may be made at other times during the year. For example, the economic downturn at the beginning of the
current decade as well as the September 11 terrorist attacks and aftermath had a significant negative impact on the
Company (and the hospitality industry generally) and its stock price. This severely weakened the retention aspect of
the Company’s equity awards outstanding at the time, particularly in the case of outstanding option awards,
virtually all of which had exercise prices above the then-current trading price of the Company’s common stock. To
respond to this concern, the Company made the 2003 option grants in December 2002 with the intention of keeping
executives focused on business results (including the Company’s stock price), restoring financial motivation to
succeed and retaining the Company’s top performers.
II. COMPENSATION COMMITTEE REPORT
The Compensation and Option Committee of the Board of the Company has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on
such review and discussions, recommended to the Board that the Compensation Discussion and Analysis be
included in this Proxy Statement.
COMPENSATION AND OPTION COMMITTEE
Jean-Marc Chapus, Chairman
Eric Hippeau
Adam M. Aron
26