Starwood 2012 Annual Report Download - page 43

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.-2013Proxy Statement 37
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Introduction
In this Compensation Discussion and Analysis section of the proxy
statement, we explain and analyze the executive compensation program
that applied to our named executive offi cers for 2012, including the
compensation awarded to or earned by our named executive offi cers
for 2012 and the compensation philosophy established and decisions
made by our Compensation Committee for 2012. This Compensation
Discussion and Analysis should be read in conjunction with the tabular
disclosures beginning with the 2012 Summary Compensation Table
on page 55 of this proxy statement. For 2012, our named executive
offi cers were:
•Frits van Paasschen, Chief Executive Offi cer and President;
•Vasant M. Prabhu, Vice Chairman and Chief Financial Offi cer;
•Sergio D. Rivera, Co-President, The Americas;
• Kenneth S. Siegel, Chief Administrative Offi cer, General Counsel
and Secretary;
•Simon Turner, President, Global Development; and
•Matthew E. Avril, Former President, Hotel Group.
Executive Summary
Our Business
Starwood is one of the world’s largest hotel and leisure companies.
We conduct our hotel and leisure business both directly and
through our subsidiaries, and our brand names include St. Regis®,
The Luxury Collection
®
, W
®
, Westin
®
, Le Méridien
®
, Sheraton
®
,
Four Points®, Aloft® and ElementSM. Through our brands, we are
well represented in most major markets around the world. Our
revenue and earnings are derived primarily from hotel operations,
which include management and other fees earned from hotels
we manage pursuant to management contracts, the receipt of
franchise and other fees and the operation of our owned hotels.
Our hotel business emphasizes the global operation of hotels and
resorts primarily in the luxury and upscale segment of the lodging
industry. At December31, 2012, our hotel portfolio included owned,
leased, managed and franchised hotels totaling 1,134 hotels with
approximately 335,000 rooms in approximately 100 countries,
consisting of 53 hotels that we own or lease or in which we have
a majority equity interest, 13 hotels where we own and operate
vacation ownership resorts, 547 hotels managed by us on behalf
of third-party owners (including entities in which we have a minority
equity interest) and 521 hotels for which we receive franchise fees.
2012 Business Results and Key Performance
Metrics
Results for the year ended December31, 2012 were strong. We
performed well along all four key drivers of value. We held our costs
in check for the fourth year in a row, grew our footprint with quality
hotels and contracts, sustained high RevPAR and occupancies in an
uncertain environment, and realizedsignifi cant valuefromreal estate
sales.Our results for the year ended December31, 2012 benefi ted
from the sales of residential units at the St. Regis Bal Harbour.
During 2012, we closed sales of 188 units and realized revenues
of $684million. From project inception through December31,
2012, we have closed contracts and recognized revenue on 224
units representing approximately 73% of the total residential units.
For 2012, our business highlights included:
• We grew Same Store Worldwide RevPAR by 5 % in constant
dollars and Management and Franchise Fees by over 10 % ;
•We opened 69 hotels with nearly 18,000 rooms, including the
Sheraton Macao, our largest hotel;
• We signed 131 deals for new hotels , growing our pipeline to
400 hotels with 100,000 rooms;
•We sold eight hotels for $540 million;
• We invested over $300million in our owned hotels, including
trophy properties like the Gritti Palace in Venice and the Alfonso
XIII in Seville;
•We generated $684 million in residential sales at the St. Regis
Bal Harbour; and
•We returned over $550 million to stock holders, increasing our
dividend by 150% and repurchasing 6.3million shares.
2012 Pay Decisions
Our executive compensation program is designed to attract,
motivate and retain executive offi cers and other key employees
who contribute to our success in a way that rewards performance
and aligns pay with our stockholders’ long-term interests. The
Compensation Committee reviews our overall compensation
strategy for all employees, including our named executive offi cers,