Starwood 2011 Annual Report Download - page 30

II. COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Our executive compensation program is designed to attract, motivate and retain executive officers and
other key employees who contribute to the Company’s success in a way that rewards performance and
aligns pay with our stockholders’ long-term interests. The Compensation Committee reviews the
Company’s overall compensation strategy for all employees, including our Named Executive Officers, 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 to better meet the
Company’s overall compensation objectives.
Key highlights of our executive compensation program for fiscal 2011 included:
Pay Decisions
•Base Salaries Remained Generally Unaltered — the base salary of Mr. van Paasschen was the same as
fiscal 2010; the base salaries of the other Named Executive Officers remained relatively unchanged
compared to fiscal 2010, with the exception of Mr. Turner, whose salary went up 15.6% when compared
to fiscal 2010, to more closely align with the median base salary of executives at peer companies.
•Incentive Pay Largely Contingent upon the Company’s Performance — 75% of our Named
Executive Officers’ total target annual bonus opportunity was dependent upon the Company’s
financial results, up 15% for Mr. van Paasschen and 25% for the other Named Executive Officers
compared to fiscal 2010; maximum payout eligibility for the Company financial portion of the
annual bonus was 98% for 2011, compared with 120% in 2010.
•Decrease in Equity Grants — the total equity grants made to our Named Executive Officers
decreased by approximately 2% when compared to fiscal 2010.
•CEO’s Stock Ownership Requirement Increased — Mr. van Paasschen’s stock ownership
requirement was increased to a multiple of six times his base salary, up one multiple when compared
to fiscal 2010, to keep in line with market practices.
Pay Practices
•Minimum Compensation Levels in our Executive Plan Removed to Better Align Executive
Compensation to the Company’s Financial Results — minimum compensation levels tied to the
Company’s financial results were previously removed so that bonus pool funding is based solely on
the Company’s financial performance.
•No More Tax Gross-Ups — except for tax gross-ups required to be paid under existing employment
agreements, the Compensation Committee does not intend to approve any other tax gross-ups.
•All Incentive Awards Subject to Clawback — all incentive awards received by any senior vice
president or more senior officer, including our Named Executive Officers, remain subject to a
clawback policy that mandates repayment in certain instances where there is a restatement of the
Company’s financial statements.
•No Hedging Activities Linked to Company Stock — officers and directors of the Company,
including our Named Executive Officers, were required to refrain from engaging in any hedging or
monetization transaction directly linked to Company stock.
•Stock Ownership Requirements — all of our executive officers, including our Named Executive
Officers, were required to hold a number of shares having a market value equal to or greater than a
multiple of each executive’s base salary.
•Formal Evaluation Process — the Compensation Committee conducted a formal performance review of
Mr. van Paasschen and determined whether and to what extent the Company’s financial performance
goals were achieved; Mr. van Paasschen, together with the Chief Human Resources Officer and with
oversight and input from the Compensation Committee conducted a formal performance review of the
other Named Executive Officers through the Performance Management Process.
•Compensation Consultants Retained — the Compensation Committee retained Meridian
Compensation Partners, LLC to assist it in the review and determination of compensation awards for
the Named Executive Officers.
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