Starwood 2011 Annual Report Download - page 54

B. Termination in the Event of Change in Control
The Company has entered into severance agreements with each of Messrs. Prabhu and Siegel. Each
severance agreement provides for a term of three years, with automatic one-year extensions until either the
executive or the Company notifies the other that such party does not wish to extend the agreement. If a Change in
Control (as described below) occurs, the agreement will continue for at least 24 months following the date of
such Change in Control.
Each agreement provides that if, following a Change in Control, the executive’s employment is terminated
without Cause (as defined in the agreement) or with Good Reason (as defined in the agreement), the executive
would receive, in addition to any accrued salary or normal post-termination compensation and benefits in
accordance with the Company’s retirement, insurance and other compensation or benefit plans, programs and
arrangements as in effect immediately prior to the date of termination, the following:
• two times the sum of his base salary plus the average of the annual bonuses earned by the executive in the
three fiscal years ending immediately prior to the fiscal year in which the termination occurs or, if higher,
the annual bonus earned in the immediately prior year;
• continued medical benefits for two years, reduced to the extent benefits of the same type are received by
or made available to the executive from another employer;
• a lump sum amount, in cash, equal to the sum of (A) any unpaid incentive compensation which had been
allocated or awarded to the executive for any measuring period preceding termination under any annual or
long-term incentive plan and which, as of the date of termination, is contingent only upon the continued
employment of the executive until a subsequent date, and (B) the aggregate value of all contingent
incentive compensation awards allocated or awarded to the executive for all then uncompleted periods
under any such plan that the executive would have earned on the last day of the performance award
period, assuming the achievement, at the target level, of the individual and corporate performance goals
established with respect to such award;
• immediate vesting of stock options, restricted stock and restricted stock units held by the executive under
any stock option or incentive plan maintained by the Company;
• outplacement services suitable to the executive’s position for a period of two years or, if earlier, until the
first acceptance by the executive of an offer of employment, the cost of which will not exceed 20% of the
executive’s base salary;
• a lump sum payment of the executive’s deferred compensation paid in accordance with Section 409A
distribution rules; and
• immediate vesting of all unvested 401(k) contributions in the executive’s 401(k) account or payment by
the Company of an amount equal to any such unvested amounts that are forfeited by reason of the
executive’s termination of employment.
In addition, to the extent that any executive becomes subject to the “golden parachute” excise tax imposed
under Section 4999 of the Code, the executive would receive a gross-up payment in an amount sufficient to offset
the effects of such excise tax.
Under the severance agreements, a “Change in Control” is deemed to occur upon any of the following
events:
• any person becomes the beneficial owner of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly from the Company or its affiliates)
representing 25% or more of the combined voting power of the Company;
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