Starwood 2012 Annual Report Download - page 28

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.-2013Proxy Statement22
APPROVAL OF THE COMPANY’S 2013 LONG-TERM INCENTIVE COMPENSATION PLAN
r eturn relative to that of a custom peer group of 20 hospitality,
leisure and real estate peers that are of similar scale and operate
in the same space as the Company.
The initial performance shares refl ecting this design were granted in
February2013 under the 2004 Plan to our CEO and Executive Vice
Presidents . It is anticipated that performance shares refl ecting this
design will be granted under the 2013 Plan beginning in 2014. The
Compensation Committee believes this performance share design
will enhance the already strong “pay for performance” philosophy
of the Company and serve to ensure that key executives continue
to be closely aligned with long-term stockholder objectives and
expectations.
To allow for awards under the 2013 Plan to qualify as tax-deductible
performance-based compensation under Section162(m) of the
Code (“Section162(m)”), as explained below, we are also asking
stockholders to approve the material terms of the performance
goals under the 2013 Plan as well as certain other key terms of the
2013 Plan. Approval of the 2013 Plan will constitute approval of
the performance goals and other key terms specifi ed in the 2013
Plan for purposes of the approval requirements of Section162(m).
On February28, 2013, we made our annual long-term incentive
grants for 2013 under the 2004 Plan. In addition, shares were added
back to the pool of shares available for issuance under the 2004 Plan
pursuant to the share replenishment provisions of the 2004 Plan.
Because these developments affect the amounts reported in the Equity
Compensation Plan Information table in the section entitled Benefi cial
Ownership of Directors and Executive Offi cers beginning on page
35 of this proxy statement, the following table provides supplemental
information regarding awards outstanding and shares available for
issuance under the 2004 Plan as of March1, 2013:
Number of Stock Options
Outstanding under 2004 Plan
(a)
Weighted Average
Exercise Price
of Outstanding
Options
(b)
Number of Full
Value Awards
Outstanding
under 2004 Plan
(c)
Number of Securities Remaining
Available for Future Issuance Under
2004 Plan (excluding securities
refl ected in columns (a) and (c))
(d)
Weighted Average Contractual
Life (Years) of Options
Outstanding under 2004 Plan
3,129 , 171 $38.73 3,584,713 55,807,363 3.95
We will grant no additional awards under the 2004 Plan after the
date on which our stockholders approve the 2013 Plan.
If the 2013 Plan is approved by our stockholders, our full dilution
level on May30, 2013 for the 2013 Plan will be 194,687,768
shares (assuming no additional equity-based award activity
between March1, 2013 and May30, 2013). The level of full dilution
assumes 11,000,000 shares will actually be issued and become
outstanding pursuant to awards granted under the 2013 Plan (and
assuming that outstanding performance-vested awards achieve
maximum performance). Our management team, our Board and
our Compensation Committee are cognizant of dilution levels and
strive to maintain dilution at an appropriate level.
Purpose of 2013 Plan
The objectives of the 2013 Plan are to (1) attract and retain
employees, non-employee directors, consultants, advisors and
other persons who perform services for the Company by providing
compensation opportunities that are competitive with other
companies; (2) provide incentives to those individuals who contribute
signifi cantly to the long-term performance and growth of the
Company and its affi liates; and (3) align the long-term fi nancial
interests of employees and other individuals who are eligible to
participate in the 2013 Plan with those of stockholders.
Why We Believe You Should Vote to Approve the 2013 Plan
The 2013 Plan authorizes the Compensation Committee to provide
equity-based compensation in the form of stock options, stock
appreciation rights (“SARs”), unrestricted stock, restricted stock,
restricted stock units (“RSUs”), performance shares, performance
units and other stock-based awards for the purpose of providing
our offi cers and other employees, and those of our subsidiaries,
and non-employees who perform employee functions, incentives
and rewards for performance. We have designed the 2013 Plan
specifi cally to refl ect our commitment to effective management of
equity-based and incentive compensation. The details of the key
design elements of the 2013 Plan are set forth in the section entitled
Plan Summary beginning on page 24 of this proxy statement.
As further described in the section entitled Compensation
Discussion and Analysis beginning on page 37 of this proxy
statement, we believe our future success depends in part on
our ability to attract, motivate and retain high quality employees.
Our ability to provide equity-based awards under our equity
compensation plans is critical to achieving this success. Our
existing 2004 Plan is scheduled by its terms to expire, and no
longer be available to us for future grants, after May 7, 2014.
We opted to design a new 2013 Plan rather than further extend
the term of the 2004 Plan so that we can reduce the number of
available shares down to a level that better aligns with stockholder
interests. In addition, we have designed the 2013 Plan to ensure