Starwood 2011 Annual Report Download - page 34

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.
•Share Ownership Guidelines: Our share ownership guidelines require our executive officers, including
the Named Executive Officers, to hold that number of shares having a market value equal to or greater
than a multiple of each executive’s base salary. For the Chief Executive Officer, the multiple was
increased from five times base salary to six times base salary in 2011 to be more in line with market
practices, and for the other Named Executive Officers, the multiple is four times base salary. A retention
requirement of 35% is applied to restricted shares upon vesting (net shares after tax withholding) and
shares obtained from option exercises until the executive meets the target, or if an executive falls out of
compliance. See the section entitled Share Ownership Guidelines beginning on page 35 of this proxy
statement for a description of the securities that count towards meeting the target and other
considerations.
•Restrictions on Related Party Transactions: We have a corporate opportunity and related person
transaction approval process regarding the review, approval and ratification by our Governance
Committee of all transactions with related parties, executive officers, and their respective family members
and/or corporate affiliates. See the section entitled Certain Relationships and Related Transactions
beginning on page 52 of this proxy statement for a complete description of this policy.
•Incentive Recoupment Policy: We have an incentive recoupment policy that allows the Company to
recover any annual incentive payment or long-term incentive payment to any individual executive at the
senior vice president level and above, including our Named Executive Officers, under certain
circumstances. See the section entitled Potential Impact on Compensation for Executive Misconduct
beginning on page 33 of this proxy statement.
•Anti-Hedging Policy: We have an anti-hedging policy that restricts all officers and directors from
engaging in short sales, entering into any derivative transactions, such as swaps, straddles, puts, or calls,
or engaging in any hedging or monetization transactions, such as collars or forward sale contracts, that are
directly linked to Company shares.
•Internal Processes Further Restrict Risk: The Company has in place additional processes to limit risk to
the Company from our compensation programs. Specifically, the Company has financial policies that
restrict the amount of capital that any individual may deploy absent obtaining internal approvals, which
reduces the risk of inappropriate expenditures by an individual. Further, the processes and controls
associated with respect to our compensation programs are audited each year to insure that expenditures
have been approved within the Company’s guidelines and by required approval authorities. In addition,
the Company engages an external compensation consulting firm for design and review of our
compensation programs, as well as external legal counsel to assist it with the periodic review of our
compensation plans to ensure compliance with applicable laws and regulations.
B. Elements of Compensation
1. Primary Elements
The primary elements of the Company’s compensation program for our Named Executive Officers are:
• Base Salary
• Incentive Compensation
• Annual Incentive Compensation
• Long-Term Incentive Compensation
• Benefits and Perquisites
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