Starwood 2007 Annual Report Download - page 50

In addition, to the extent that Mr. Van Paasschen becomes subject to the “golden parachute” excise tax imposed
under Section 4999 of the Code, he would receive a gross-up payment in an amount sufficient to offset the effects of
such excise tax.
C. Named Executive Officer Departures
1. Mr. Heyer
Effective March 31, 2007, Mr. Heyer resigned his positions as Chief Executive Officer of the Company and as
a member of its Board of Directors. In connection with Mr. Heyer’s resignation, the Company entered into an
agreement and general release of claims with Mr. Heyer (the “Release Agreement”) pursuant to which Mr. Heyer’s
employment agreement dated September 20, 2004, and amended as of May 4, 2005 (the “Employment Agree-
ment”), was terminated effective March 31, 2007.
The Release Agreement provides for Mr. Heyer receiving the following: (i) cash incentive compensation for
2006 in the gross amount of $2,000,000 (the “Bonus”), (ii) issuance of 73,959 shares of Company stock to Mr. Heyer
in settlement of his restricted stock units that were vested as of March 31, 2007 (valued at $4,796,241 based on the
$64.85 per share closing price of the Company’s common stock on March 30, 2007, the last trading day prior to
March 31, 2007), (iii) payment of Mr. Heyer’s account balance under the Starwood Hotels & Resorts Worldwide,
Inc. Deferred Compensation Plan in accordance with the terms of such plan and Starwood Hotels & Resorts
Worldwide, Inc. Savings and Retirement Plan, as described in the section entitled Nonqualified Deferred
Compensation on page 34 ($1,712,641 as of March 31, 2007); and (iv) reimbursement for 21 unused vacation
days (valued at $80,769) and for business expenses incurred on or prior to March 31, 2007. The Company also
agreed to take all actions reasonably requested by Mr. Heyer to transfer to Mr. Heyer, at no cost to Mr. Heyer, the
Company’s interest in the life insurance policy maintained on Mr. Heyer’s life (valued at $117,407 effective
March 31, 2007). In addition, all outstanding stock options and restricted stock units that were unvested as of
March 31, 2007 were canceled. Other than the amounts specified above, Mr. Heyer received no severance pay or
benefits on account of his resignation and received no additional benefits other than those set forth in his
employment agreement for a voluntary resignation without good reason.
Pursuant to the Release Agreement, Mr. Heyer agreed to release the Company, its affiliates and their directors,
officers and employees from any claims that he may have against any of them. The Company agreed to release
Mr. Heyer from any claims arising out of Mr. Heyer’s exercise of any restricted stock awards or stock option grants
during his employment with the Company. In addition, Mr. Heyer agreed that until March 31, 2009, he will not
(i) acquire any equity securities of the Company, offer to enter into any change of control of the Company, or
propose or disclose any request for consent to any of the foregoing; (ii) engage in any business that competes with
the Company in any geographic area where the Company then conducts business; or (iii) solicit any of the
Company’s employees or customers.
2. Mr. Gellein
In December 2007, Mr. Gellein’s employment agreement was amended in connection with his retirement,
which was to be no later than March 31, 2008. Pursuant to the amendment, Mr. Gellein’s 2007 equity awards were
amended to provide for their immediate vesting. In addition, the Compensation Committee exercised its discretion
not to defer (or subject to gross up) 25% of Mr. Gellein’s bonus award for the 2007 performance year that was paid
on March 1, 2008 and subject to the satisfaction of the financial targets established for the Annual Incentive Plan for
Certain Executives, agreed to set the individual component of his bonus at no less than target. The Compensation
Committee approved the amendment in recognition of Mr. Gellein’s years of devoted service to the Company and
his willingness to accept the new role as President, Global Development Group in 2006. In addition, the
Compensation Committee took into consideration that Mr. Gellein would be subject to non-competition provisions
following his retirement.
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