Starwood 2008 Annual Report Download - page 28

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•Achievement of Company Financial Objectives: A portion of Named Executive Officer compensation is
tied directly to the Company’s financial performance.
•Achievement of Strategic/Operational Objectives. A portion of Named Executive Officer compensation is
tied to achievement of specific individual objectives that are directly aligned with execution of our business
strategy. These objectives may be related to, among others, operational excellence, brand enhancement,
innovation, growth, cost containment/efficiency, customer experience and/or teamwork.
•Overall Leadership and Stewardship of the Company: Leadership, teambuilding, and development of
future talent are key success factors for the Company and a portion of compensation for the Named
Executive Officers is dependent on satisfaction of enumerated leadership competencies.
2. Roles and Responsibilities
Our Compensation and Option Committee (“Compensation Committee”) is responsible for, among other
things, the establishment and review of compensation policies and programs for our executive officers and ensuring
that these executive officers are compensated in a manner consistent with the objectives and principles outlined
above. It also monitors the Company’s executive succession plan, and reviews and monitors the Company’s
performance as it affects the Company’s employees and the overall compensation policies for the Company’s
employees.
The Compensation Committee makes all compensation decisions for our Named Executive Officers. Our
Chief Executive Officer, together with the Chief Human Resources Officer, reviews the performance of each other
Named Executive Officer and presents to the Compensation Committee his conclusions and recommendations,
including salary adjustments and annual incentive compensation amounts (as described in more detail in subsection
B under the heading Incentive Compensation below). The Compensation Committee may exercise its discretion in
modifying any recommended salary adjustments or awards to these executives.
The role of the Company’s management is to provide reviews and recommendations for the Compensation
Committee’s consideration, and to manage operational aspects of the Company’s compensation programs, policies
and governance. Direct responsibilities include, but are not limited to, (i) providing an ongoing review of the
effectiveness of the compensation programs, including competitiveness, and alignment with the Company’s
objectives, (ii) recommending changes, if necessary, to ensure achievement of all program objectives and
(iii) recommending pay levels, payout and/or awards for executive officers other than the Chief Executive Officer.
Management also prepares tally sheets which describe and quantify all components of total compensation for our
Named Executive Officers, including salary, annual incentive compensation, long-term incentive compensation,
deferred compensation, outstanding equity awards, benefits, perquisites and potential severance and change-in-con-
trol payments. The Compensation Committee reviews and considers these tally sheets in making compensation
decisions for our Named Executive Officers.
Management of the Company retained Towers Perrin in 2008 to perform a comprehensive review of the
compensation paid to all associates other than executive officers. Towers Perrin provided advice concerning the
total compensation, including base salary, bonus opportunity and equity awards at these levels. As a result of this
review, management fundamentally redesigned the compensation structure for such associates starting in 2009
leading to significant cost savings and reduced overhead. Towers Perrin worked directly with management on this
project and it was implemented by management with the approval of the Compensation Committee.
The Compensation Committee retained Pearl Meyer & Partners to assist in the review and determination of
compensation awards to the Named Executive Officers (including the CEO) for the 2008 performance period. Pearl
Meyer & Partners worked with management and the Compensation Committee in reviewing the compensation
structure of the Company and of the companies in the peer group. Pearl Meyer & Partners does not provide any other
services to the Company. The Compensation Committee approved Pearl Meyer & Partners’ equity program
recommendations and compensation awards for the 2008 performance period.
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