Starwood 2009 Annual Report Download - page 30

Company and no other fees were paid to Pearl Meyer & Partners by the Company during 2009; however the Federal
Policy Group, an affiliate consulting firm of Pearl Meyer & Partners, provided services to the Company’s tax group.
The fees paid to the Federal Policy Group for services performed for the Company’s tax group during 2009 were
$320,004. The Compensation Committee believes that the services provided by the Federal Policy Group do not
impair the ability of Pearl Meyer & Partners to provide objective advice to the Compensation Committee regarding
Named Executive Officer compensation.
3. Risk Assessment.
In setting compensation, our Compensation Committee also considers the risks to our stockholders, and the
Company as a whole, arising out of our compensation programs. In March 2010, management held a special
meeting to discuss and assess the risk profile of our compensation programs. The Chief Human Resources Officer,
our Chief Administrative Officer and General Counsel, our Chief Financial Officer, and the Company’s external
legal counsel for compensation matters were among the participants in the special meeting. Their review considered
risk-determining characteristics of the overall structure and individual components of our Company-wide com-
pensation program, including our base salaries, incentive plans (both at the executive and property levels) and
equity plans. A report of the findings was provided to the Compensation Committee for its review and consid-
eration. Following this assessment, we believe that the Company has instituted policies that align our executive
officers’ interests with those of our stockholders without creating incentives for our executive officers to take risks
that are reasonably likely to have a material adverse effect on the Company. For example,
•Balance of Compensation: Across the Company, individual elements of our compensation program include
base salaries, incentive compensation, and for certain of our employees, equity-based awards. By providing a
mix of different elements of compensation which reward both short-term and long-term performance, the
Company’s compensation programs as a whole provide a balanced approach to incentivizing and retaining
employees, without placing an inappropriate emphasis on any particular form of compensation.
•Objective Formula and Pre-established Performance Measures Dictate Annual Incentives: Under the
Executive Plan, payment of annual incentives to our Named Executive Officers is subject to the satisfaction
of specific annual performance targets determined under an incentive formula established by our Com-
pensation Committee within the first 90 days of each fiscal year. Similarly, the Company’s employees other
than the Named Executive Officers that are eligible to receive an annual incentive receive such incentive
subject to the satisfaction of specific annual performance targets determined under an incentive formula
established by our Compensation Committee. These performance targets are directly and specifically tied to
one or more of the following business criteria: EBITDA, consolidated pre-tax earnings, net revenues, net
earnings, operating income, earnings before interest and taxes, cash flow measures, return on equity, return
on net assets employed or earnings per share for the applicable fiscal year.
•Minimum and Maximum Thresholds For Annual Incentives: Each year our Compensation Committee
establishes within the first 90 days of any fiscal year a threshold level of EBITDA that the Company must
achieve in order for any bonus to be paid to our Named Executive Officers or other Company employees
eligible to receive an annual incentive for any given year. The Executive Plan also specifies a maximum
incentive amount, in dollars, that may be paid to any executive officer for any 12-month performance period.
As a result of this threshold performance requirement and the design of our Executive Plan, incentive
compensation is payable under our incentive plans only upon the attainment of performance targets related
to business criteria that are in the interests of our stockholders.
•Use of Long-Term Incentive Compensation: Equity-based long-term incentive compensation that vests
over a period of years is a key component of total compensation of our executive employees. This vesting
period encourages our executives to focus on sustaining the Company’s long-term performance. These
grants are also made annually, so executives always have unvested awards that could decrease significantly
in value if our business is not managed for the long term.
•Alignment with Competitive Practice: Our Compensation Committee sets total compensation at a target
that is relative to the Company’s peer group. For the 2009 fiscal year, this target was set at approximately the
65th percentile, subject to both the Company’s and an individual’s performance.
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