Starwood 2011 Annual Report Download - page 42

Pursuant to his employment agreement, Mr. van Paasschen has agreed not to sell any shares earned under
any stock awards or shares received upon the exercise of an option (except as may be withheld for taxes) without
prior consultation with the Board of Directors. See additional detail regarding incentive awards in the section
entitled 2011 Grants of Plan-Based Awards beginning on page 38 of this proxy statement.
Benefits and Perquisites. Base salary and incentive compensation are supplemented by benefits and
perquisites, as described below.
Perquisites. As reflected in the 2011 Summary Compensation Table below, the Company provides certain
limited perquisites to select Named Executive Officers when necessary to provide an appropriate compensation
package, particularly in connection with enabling the executives and their families to smoothly transition from
previous positions which may require relocation. For example, Mr. van Paasschen may use the Company airplane
whenever reasonable for both personal and business travel and the Company’s other Named Executive Officers
may use the airplane whenever air travel is required for business. Depending on availability, family members of
executive officers are permitted to accompany our executives on the Company airplane. The cost of that travel is
imputed as income to the executive and included in the All Other Compensation column in the 2011 Summary
Compensation Table, and the executive is fully responsible for any associated tax liability. The Company also
reimburses Named Executive Officers generally for travel expenses and other out-of-pocket costs incurred with
respect to attendance by their spouses at one meeting of the Board each year.
Retirement Benefits. The Company maintains a tax-qualified retirement savings plan pursuant to Code
section 401(k) (the “Savings Plan”) for a broadly-defined group of eligible employees that includes the Named
Executive Officers. Eligible employees may contribute a portion of their eligible compensation to the Savings
Plan on a before-tax basis, subject to certain limitations prescribed by the Code. Beginning in 2008, the Company
matches 100% of the first 1% of eligible compensation and 50% of the next 6% of eligible compensation that an
eligible employee contributes. These matching contributions, as adjusted for related investment returns, become
fully vested upon the eligible employee’s completion of two years of service with the Company. Our Named
Executive Officers, in addition to certain other eligible employees, are permitted to make additional deferrals of
base pay and regular annual incentive awards under our nonqualified deferred compensation plan. This plan is
discussed in further detail under the 2011 Nonqualified Deferred Compensation section beginning on page 42 of
this proxy statement.
2. Change in Control Arrangements
On March 25, 2005, the Company adopted a policy proscribing certain terms of severance agreements
triggered upon a change in control of the Company. Pursuant to the policy, the Company is required to seek
stockholder approval of severance agreements with executive officers that provide Benefits (as defined in the
policy) in excess of 2.99 times base salary plus such officer’s most recent annual incentive award.
In 2006, the Board reviewed the change in control arrangements then in place with the Named Executive
Officers and decided to enter into new change in control agreements with the Named Executive Officers at that
time, which included Messrs. Prabhu and Siegel. In connection with the hiring of Mr. Turner in May 2008 as
President, Global Development, and the promotion of Mr. Avril in September 2008 to President, Hotel Group,
the Company entered into change in control arrangements with these executives that were similar to the
arrangements in place for the other Named Executive Officers (other than the Chief Executive Officer). Pursuant
to the Company’s 2008 policy decision to cease paying tax gross-ups in change in control agreements, the
arrangements with Messrs. Turner and Avril do not provide for a tax gross-up if the benefits payable thereunder
are subject to the excise tax under Section 280G of the Code. Instead, the benefits provided are reduced to the
point that it would be more advantageous to the executive to pay the excise tax rather than reduce benefits
further. The Company also included change in control arrangements in Mr. van Paasschen’s employment
agreement.
32