Starwood 2012 Annual Report Download - page 34

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.-2013Proxy Statement28
APPROVAL OF THE COMPANY’S 2013 LONG-TERM INCENTIVE COMPENSATION PLAN
Stock Options
An option provides the participant with the right to buy a specifi ed
number of shares at a specifi ed price (“exercise price”) after
certain conditions have been met. The Committee may grant
both NQSOs and ISOs under the 2013 Plan. The tax treatment of
NQSOs is different from the tax treatment of ISOs, as explained in
the section entitled Certain Federal Income Tax Consequences
beginning on page 30 of this proxy statement. The Committee
will determine and specify in the award agreement whether the
option is an NQSO or ISO, the number of shares subject to the
option, the exercise price of the option and the period of time
during which the option may be exercised (including the impact
of a termination of employment). Generally (except as otherwise
described in the 2013 Plan), no option can be exercisable more
than ten years after the date of grant and the exercise price of a
stock option must be at least equal to the fair market value of a
share on the date of grant of the option. However, with respect to
an ISO granted to a participant who is a stockholder holding more
than 10% of the Company’s total voting stock, the ISO cannot be
exercisable more than fi ve years after the date of grant and the
exercise price must be at least equal to 110% of the fair market
value of a share on the date of grant.
A participant may pay the exercise price under an option in cash; in
a cash equivalent approved by the Committee; if approved by the
Committee, by tendering previously acquired shares (or delivering
a certifi cation or attestation of ownership of such shares) having
an aggregate fair market value at the time of exercise equal to
the total option price (provided that the tendered shares must
have been held by the participant for any period required by the
Committee); or by a combination of these payment methods. The
Committee may also allow cashless exercises as permitted under
the Federal Reserve Board’s Regulation T, subject to applicable
securities law restrictions, or by any other means which the
Committee determines to be consistent with the 2013 Plan’s
purpose and applicable law. No certifi cate representing a share
(to the extent shares are so evidenced) will be delivered until the
full option price has been paid.
Stock Appreciation Rights (“SARs”)
A SAR entitles the participant to receive cash, shares, a combination
thereof, or such other consideration as the Committee may
determine, in an amount equal to the excess of the fair market
value of a share on the exercise date over the exercise price for the
SAR, after certain conditions have been met. The Committee will
determine and specify in the SAR award agreement the number of
shares subject to the SAR, the SAR price (which generally (except
as otherwise described in the 2013 Plan) must be at least equal
to the fair market value of a share on the date of grant of the SAR)
and the period of time during which the SAR may be exercised
(including the impact of a termination of employment). Generally,
(except as otherwise described in the 2013 Plan), no SAR can
be exercisable more than ten years after the date of grant. SARs
may be granted in tandem with a stock option or independently.
If a SAR is granted in tandem with a stock option, the participant
may exercise the stock option or the SAR, but not both.
Other Awards
The Committee may grant other forms of equity-based or equity-
related awards that the Committee determines to be consistent with
the purpose of the 2013 Plan and the interests of the Company.
These other awards may provide for cash payments based in whole
or in part on the value or future value of shares, for the acquisition
or future acquisition of shares, or any combination thereof. Where
the value of such an award is based on the difference in the value
of a share at different points in time, the grant or exercise price
must generally (except as otherwise described in the 2013 Plan)
not be less than 100% of the fair market value of a share on the
date of grant.