Starwood 2012 Annual Report Download - page 68

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.-2013Proxy Statement62
EXECUTIVE COMPENSATION
Pursuant to Mr.Avril’s employment agreement, if Mr.Avril’s
employment had been terminated by us for any reason other
than for cause, Mr.Avril would have received severance benefi ts
of twelve months of base salary and we would have continued to
provide medical benefi ts coverage for up to twelve months after the
date of termination. The receipt of such severance benefi ts would
have been subject to and conditioned upon Mr. Avril’s compliance
with his agreement not to engage in competitive activities or solicit
employees for a period of twelve months after the date of termination.
In addition, Mr.Avril would also have been entitled to acceleration
of all of his restricted stock and options that were granted prior to
August19, 2008, but no acceleration for equity awards granted
on or after August19, 2008. If Mr. Avril’s employment had been
terminated because of his death or permanent disability, pursuant
to the terms of the underlying award agreements, all of his equity
awards would have accelerated and vested.
Termination in the Event of Change in Control
We have entered into severance agreements with each of
Messrs.Prabhu, Siegel, Turner and Avril. Each severance agreement
provides for a term of three years, with automatic one-year extensions
until either the executive or we notifi es 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 defi ned in
the agreement) or with Good Reason (as defi ned in the agreement),
the executive would receive, in addition to any accrued salary or
normal post-termination compensation and benefi ts in accordance
with our retirement, insurance and other compensation or benefi t
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 fi scal
years ending immediately prior to the fi scal year in which the
termination occurs or, if higher, the annual bonus earned in the
immediately prior fi scal year;
• continued life, disability and accident benefi ts for two years,
reduced to the extent benefi ts of the same type are received
by or made available to the executive from another employer;
•continued medical benefi ts for two years;
• 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, prorated based upon the number
of days employed during such year;
• immediate vesting of stock options, restricted stock and restricted
stock units held by the executive under any stock option or
incentive plan maintained by us;
• outplacement services suitable to the executive’s position for
a period of two years or, if earlier, until the fi rst 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
• payment by us of an amount equal to any unvested amounts
in the executive’s 401(k) account that are forfeited by reason
of the executive’s termination of employment.
In addition, to the extent that Messrs. Prabhu or Siegel become
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 suffi cient to offset the effects of such excise
tax. No tax gross-up is provided to Messrs. Avril and Turner if such
payments become subject to the excise tax. If such payments
are subject to the excise tax, the benefi ts under their respective
agreement will be reduced until the point where the executive is
better off paying the excise tax rather than reducing the benefi ts.
Under the severance agreements, a “Change in Control” is deemed
to occur upon any of the following events:
• any person becomes the benefi cial owner of our securities (not
including in the securities benefi cially owned by such person any
securities acquired directly from us or our affi liates) representing
25% or more of our combined voting power;
• a majority of the directors cease to serve on our Board in
connection with a successful hostile proxy contest;
– a merger or consolidation of us or any of our direct or indirect
subsidiaries with any other corporation, other than:
– a merger or consolidation in which our securities would represent
at least 70% of the voting power of the surviving entity;or
• a merger or consolidation effected to implement a recapitalization
of the company in which no person becomes the benefi cial
owner of 25% or more of our voting power;or
• approval of a plan of liquidation or dissolution by the stockholders
or the consummation of a sale of all or substantially all of our
assets, other than a sale to an entity in which our stockholders
would hold at least 70% of the voting power in substantially the
same proportions as their ownership of us immediately prior to
such sale. However, a “Change in Control” does not include a
transaction in which our stockholders continue to hold substantially
the same proportionate ownership in the entity which would own
all or substantially all of our assets following such transaction.