Starwood 2009 Annual Report Download - page 28

predecessors from February 1997 to December 1999. Prior to that time, Mr. Siegel was a Partner in the law firm of
Baker & Botts, LLP. Mr. Siegel is also a Trustee and Chairman of Cancer Hope Network, a non-profit entity, a
Trustee of Minority Corporate Counsel Association, and a Trustee of the American Hotel & Lodging Educational
Foundation.
Simon M. Turner. Mr. Turner, 48, has been President, Global Development since May 2008. From June
1996 to April 2008, he was a principal of Hotel Capital Advisers, Inc., a hotel investment advisory firm. During this
period, Mr. Turner served on the board of directors of Four Season Hotels, Inc., serving as a member of the Human
Resources Committee and the Audit Committee. He was also a member of the board of directors of Fairmont
Raffles Hotels International and was chairman of the Audit Committee. From July 1987 to May 1996, Mr. Turner
was a member of the Investment Banking Department of Salomon Brothers, based in both New York and London.
II. COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The Company’s compensation programs are designed to align compensation with its business objectives and
performance, enabling the Company to attract, retain, and reward executive officers and other key employees who
contribute to the Company’s long-term success and motivate executive officers to enhance long-term stockholder
value. The Compensation Committee reviews and sets the Company’s overall compensation strategy for all
employees on an annual basis. In the course of this review, the Compensation Committee considers the Company’s
current compensation programs and whether to modify them or introduce new programs or elements of compen-
sation in order to better meet the Company’s overall compensation objectives.
A. Overview of Starwood’s Executive Compensation Program
1. Program Objectives and Other Considerations
Objectives. As a consumer lifestyle company with a branded hotel portfolio at its core, the Company
operates in a competitive, dynamic and challenging business environment. In step with this mission and environ-
ment, the Company’s executive compensation program for our principal executive officer, principal financial
officer and other executive officers has the following key objectives:
•Attract and Retain: We seek to attract and retain talented executives from within and outside the
hospitality industry who understand the importance of innovation, brand enhancement and consumer
experience. We are working to reinvent the hospitality industry, and one element of this endeavor is to bring
in key talent from other industries. Therefore, overall program competitiveness must take these other
markets into account.
•Motivate: We seek to motivate our executives to sustain high performance and achieve Company financial
and strategic/operational goals over the course of business cycles and various market conditions.
•Align Interests: We endeavor to align the interests of stockholders and our executives by tying executive
compensation to the Company’s business results and stock performance. Moreover, we strive to keep the
executive compensation program transparent, easily understood, in line with market practices and consistent
with high standards of good corporate governance.
In its review of the overall compensation strategy and program in 2008, the Compensation Committee made
several key changes, most of which became effective for the 2009 performance year. The Compensation Committee
changed its philosophy on tax gross-ups in change in control agreements and eliminated gross-ups for arrangements
put in place in 2008 and thereafter with senior executives. The Compensation Committee also revised the structure
of determining annual incentive compensation under the Company’s Executive Plan: with respect to the goal based
upon the Company’s financial performance, the Compensation Committee eliminated a floor below which
compensation could not fall; and with respect to bonus pool funding, the Compensation Committee made structural
changes to fund the pool entirely based upon the Company’s financial performance goals. Further, when translating
dollar-denominated long-term equity incentive awards into a number of stock options to be granted under the
Company’s 2004 Long-Term Incentive Compensation Plan (“LTIP”), the Compensation Committee lowered the
ratio from three times as many options as the number of Shares whose aggregate value on the grant date equals the
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