Starwood 2008 Annual Report Download - page 158

In April 2006, as part of the Host Transaction, the Company depaired its Corporation Shares and Class B
Shares. As a result, the number of the Company’s options and their strike prices have been adjusted as discussed in
Note 3.
The aggregate intrinsic value of outstanding options as of December 31, 2008 was $0 million. The aggregate
intrinsic value of exercisable options as of December 31, 2008 was $0 million. The weighted-average contractual
life was 4.07 years for outstanding options and 3.58 years for exercisable option as of December 31, 2008.
The Company recognizes compensation expense equal to the fair market value of the stock on the date of
issuance for restricted stock and restricted stock unit grants over the service period. The service period is typically
four years except in the case of restricted shares or units issued in lieu of a portion of an annual cash bonus where the
vesting period is typically in equal installments over a two year period.
At December 31, 2008, there was approximately $139 million (net of estimated forfeitures) in unamortized
compensation cost related to restricted stock and restricted stock units. The weighted average remaining term was
1.88 years for restricted stock grants outstanding at December 31, 2008. The fair value of restricted stock distributed
during 2008 was $85 million.
The following table summarizes the Company’s restricted stock and units activity during 2008:
Number of
Restricted
Stock and Units
Weighted Average
Grant Date Value
Per Share
(In millions)
Outstanding at December 31, 2007 ........................ 5.7 $53.95
Granted .......................................... 2.7 $46.49
Distributed........................................ (2.0) $49.34
Forfeited or Canceled ................................ (1.0) $53.24
Outstanding at December 31, 2008 ........................ 5.4 $52.05
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. The purchase price to
employees is equal to 95% of the fair market value of Shares on the date of purchase. Participants may withdraw
their contributions at any time before Shares are purchased.
Approximately 200,000 Shares were issued under the ESPP during the year ended December 31, 2008 at
purchase prices ranging from $16.02 to $45.98. 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.
Note 22. Derivative Financial Instruments
The Company, based on market conditions, enters into forward contracts to manage foreign exchange risk.
Beginning in January 2008, the Company entered into forward contracts to hedge forecasted transactions based in
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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)