Starwood 2011 Annual Report Download - page 38

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Evaluation Process.
In the case of Mr. van Paasschen, the Compensation Committee conducts a formal performance review
process each year during which the Compensation Committee evaluates how Mr. van Paasschen performed
against the strategic/operational/talent management performance goals established for the prior year. The
Compensation Committee also determines the extent to which the Company’s financial performance goals were
achieved and whether the Company achieved the applicable minimum threshold(s) required to pay awards.
With respect to the other Named Executive Officers, Mr. van Paasschen, together with the Chief Human
Resources Officer and with oversight and input from the Compensation Committee, conducts a formal
performance review process each year to evaluate performance against the officer’s strategic/operational
performance goals for the prior year. The Chief Executive Officer conducts this evaluation through the
Performance Management Process (“PMP”), which results in a PMP rating for each executive. This PMP rating
corresponds to a payout range under the Executive Plan determined annually by the Compensation Committee
for that rating. As noted, for 2011 the portion of the Executive Plan payouts based on PMP ratings could range
from 0% to 175% of target once the target has been adjusted to reflect the Company’s performance. Where
necessary to preserve the competitive position of the Company’s compensation scale, the Chief Executive
Officer may recommend a market adjustment to the base amount that is subject to this percentage. At the
conclusion of his review, the Chief Executive Officer submits his recommendations to the Compensation
Committee for final review and approval. In determining the actual award payable to a Named Executive Officer
under the Executive Plan, the Compensation Committee reviews the Chief Executive Officer’s evaluation and
makes a final determination as to how the executive performed against his strategic/operational goals for the
year. The Compensation Committee also determines, based on management’s report, the extent to which the
Company’s financial performance goals were achieved and whether the Company achieved the applicable
minimum threshold(s) required to pay awards. The Chief Executive Officer also meets in executive session with
the Board of Directors to inform the Board of Directors of his performance assessments regarding the Named
Executive Officers and the basis for the compensation recommendations he presented to the Compensation
Committee.
The evaluation of Mr. van Paasschen and the other Named Executive Officers with respect to each
executive’s strategic/operational goals for 2011 is described below.
Mr. van Paasschen’s accomplishments for 2011 show a clear connection between motivated associates,
through strong brands, to better financial results:
• drove record high associate engagement, according to 138,000 responses to an annual survey;
• reached record high guest satisfaction levels across system of nearly 1,100 hotels;
• drove growth in relative brand performance to a record high for the Company, based on revenue per
available room index measures from over 600 hotels where data is tracked;
• opened a record number of nearly 21,000 new rooms in the system, including a record number of
conversions from other brands;
• pushed the Company’s innovation agenda further in guest relationships and loyalty, including e-folio, 24
hour check-in, and next generation Starwood Preferred Guest; and
• delivered an increase in adjusted EBITDA of approximately 17% and earnings per share from continuing
operations excluding special items of approximately 54%, as compared to fiscal year 2010. Generated
significant cash through the sale of three hotels and timeshare and residential closings at the The St. Regis
Bal Harbour Resort.
In light of Mr. van Paasschen’s accomplishments and impact on the Company, the Compensation Committee
awarded him a payout at 98% of target for the strategic/operational portion of the annual bonus, for a total annual
bonus of $2,450,000 for 2011, representing 98% of his overall annual bonus target.
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