Starwood 2011 Annual Report Download - page 157

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS
The following table summarizes the Company’s restricted stock and units activity during 2011:
Number of
Restricted
Stock and Units
Weighted Average
Grant Date Value
Per Share
(In Millions)
Outstanding at December 31, 2010 ......................... 8.5 $28.11
Granted ............................................. 1.3 60.77
Lapse of restrictions ................................... (2.7) 42.71
Forfeited or Canceled .................................. (0.2) 27.24
Outstanding at December 31, 2011 ......................... 6.9 $29.54
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 shares through payroll deductions and reserved 11,988,793 shares for issuance under the ESPP. The
ESPP commenced in October 2002.
All full-time 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 at the end of each period. Participants may
withdraw their contributions at any time before shares are purchased.
Approximately 110,000 shares were issued under the ESPP during the year ended December 31, 2011 at
purchase prices ranging from $42.33 to $58.05. Approximately 117,000 shares were issued under the ESPP
during the year ended December 31, 2010 at purchase prices ranging from $36.77 to $54.00.
Note 23. Derivative Financial Instruments
The Company, based on market conditions, enters into forward contracts to manage foreign exchange risk.
The Company enters into forward contracts to hedge forecasted transactions based in certain foreign currencies,
including the Euro, Canadian Dollar and Yen. These forward contracts have been designated and qualify as cash
flow hedges, and their change in fair value is recorded as a component of other comprehensive income and
reclassified into earnings in the same period or periods in which the forecasted transaction occurs. To qualify as a
hedge, the Company needs to formally document, designate and assess the effectiveness of the transactions that
receive hedge accounting. The notional dollar amount of the outstanding Euro forward contracts at December 31,
2011 are $34 million, with average exchange rates of 1.4, with terms of primarily less than one year. The Yen
forward contracts expired during 2011. The Company reviews the effectiveness of its hedging instruments on a
quarterly basis and records any ineffectiveness into earnings. The Company discontinues hedge accounting for
any hedge that is no longer evaluated to be highly effective. From time to time, the Company may choose to
de-designate portions of hedges when changes in estimates of forecasted transactions occur. Each of these hedges
was highly effective in offsetting fluctuations in foreign currencies.
The Company also enters into forward contracts to manage foreign exchange risk on intercompany loans
that are not deemed permanently invested. These forward contracts are not designated as hedges, and their
change in fair value is recorded in the Company’s consolidated statements of income during each reporting
period.
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