Starwood 2015 Annual Report Download - page 16

Table of Contents
be paid under the Executive Plan (which we refer to as the EP Threshold). The Executive Plan also specified a maximum incentive amount, in dollars, that could be
paid to any executive for 2015. When the threshold was established at the beginning of 2015, the achievement of the threshold was considered substantially
uncertain. For 2015, the EP Threshold was $968,000,000, which was subsequently exceeded by $252,000,000.
Under the 2015 program, each continuing named executive officer participating in the Executive Plan could receive payment of an incentive award only if he or she
remained employed by us on the award payment date in 2016 (in the case of Mr. Aron, the Compensation Committee permitted his continued participation in the
Executive Plan despite his departure from the Company on December 30, 2015). However, subject to attaining the EP Threshold for 2015, pro rata awards could be
paid at the discretion of the Compensation Committee in the event of death, disability, retirement or other prior termination of employment.
Once the EP Threshold was achieved, the maximum annual incentive amount specified in the Executive Plan became available for each continuing named
executive officer participating in the Executive Plan (as well as Mr. Aron) and the Compensation Committee applied its discretion to reduce such amount to
determine the actual incentive amount for each individual.
To determine the actual incentive to be paid for 2015 under the Executive Plan and the Annual Incentive Plan, the Compensation Committee and management
established specific annual Company financial and (in most cases) individual performance goals and a related target incentive amount for each continuing named
executive officer and Mr. Aron (plus a maximum payout level for each participating named executive officer despite the higher maximum annual incentive amount
specified in the Executive Plan). The applicable financial and individual goals are described below. Based on its evaluation of 2015 performance, the Compensation
Committee approved and authorized payout of at least 80% of the target annual incentive awards under the Annual Incentive Plan in December 2015, with the
remainder of the payout subsequently approved and authorized under the Annual Incentive Plan in February 2016.
AdditionalPerformanceCriteria.Since the EP Threshold under the Executive Plan was met for 2015, our performance in comparison to the financial goals and
(in most cases) individual performance for the year as evaluated by the Compensation Committee and management was then used as guidance to determine the
actual incentive payout for each continuing named executive officer (other than Mr. Schnaid) and for Mr. Aron. Performance against the financial goals determined
75% of each such continuing named executive officer’s total target annual incentive payout (100% in the case of Mr. Aron), with the remaining 25% based on
individual performance (0% in the case of Mr. Aron). The total annual incentive payout for both financial and individual (if applicable) portions is capped at 200%
of target (150% in the case of Mr. Aron, due to contractual agreement). The Compensation Committee’s process for determining annual incentive awards under the
Executive Plan for the continuing named executive officers (other than Mr. Schnaid) and Mr. Aron for fiscal 2015 is described below.
FinancialGoals.Our financial goals for our named executive officers under the Executive Plan consisted of adjusted EBITDA and adjusted EPS goals, with
each criteria accounting for half of the financial goal portion of the annual incentive awards. We deemed adjusted EBITDA and adjusted EPS to be the most
appropriate metrics to measure performance and we have consistently used these metrics since 2009. As the Compensation Committee generally sets target
incentive award opportunities above the median and monitors awards around the median among our peer group, our financial and individual goals to achieve such
award levels are considered challenging but achievable, representing requirements for a superior level of performance. Consistent with maintaining these high
standards and subject to achieving the EP Threshold, the Compensation Committee identified mandatory and objective adjustments that would be applied to the
financial goals for 2015 if we experienced exceptional circumstances (as examples, a Company restructuring or unanticipated accounting changes).
Once the EP Threshold was achieved, actual incentives paid to the named executive officers participating in the Executive Plan for financial performance could
have ranged from 0% to 200% (150% in the case of Mr. Aron, due to contractual agreement) of the pre-determined target incentive opportunities for this category
of performance, as
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