Starwood 2012 Annual Report Download - page 192
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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS
The weighted average assumptions used to determine net periodic benefit cost for the years ended
December 31 were as follows:
Domestic
Pension Benefits
Foreign Pension
Benefits
Postretirement
Benefits
2012 2011 2010 2012 2011 2010 2012 2011 2010
Discount rate ..................... 4.25% 5.00% 5.51% 4.68% 5.34% 5.93% 4.00% 4.75% 5.50%
Rate of compensation increase ........ n/a n/a n/a 3.26% 3.64% 3.50% n/a n/a n/a
Expected return on plan assets ........ n/a n/a n/a 6.31% 6.52% 6.56% 0.00% 7.10% 7.10%
Our investment objectives are to minimize the volatility of the value of the assets and to ensure the assets
are sufficient to pay plan benefits. The target asset allocation is 63% debt securities and 36% equity securities
and 1% other.
A number of factors were considered in the determination of the expected return on plan assets. These
factors included current and expected allocation of plan assets, the investment strategy, historical rates of return
and our expectations, as well as investment expert expectations, for investment performance over approximately
a ten year period.
The following table presents our fair value hierarchy of the plan assets measured at fair value on a recurring
basis as of December 31, 2012 (in millions):
Level 1 Level 2 Level 3 Total
Assets:
Mutual Funds ....................................... $61 $ — $— $ 61
Collective Trusts .................................... — 6 — 6
Equity Index Funds .................................. — 75 — 75
Money Markets ..................................... 1 — — 1
Bond Index Funds ................................... — 74 — 74
Total .............................................. $62 $155 $— $217
The following table presents our fair value hierarchy of the plan assets measured at fair value on a recurring
basis as of December 31, 2011 (in millions):
Level 1 Level 2 Level 3 Total
Assets:
Mutual Funds ....................................... $55 $ — $— $ 55
Collective Trusts .................................... — 5 — 5
Equity Index Funds .................................. — 67 — 67
Bond Index Funds ................................... — 63 — 63
Total .............................................. $55 $135 $— $190
All assets are valued using quoted market prices in active markets.
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