Starwood 2015 Annual Report Download - page 28

Table of Contents
letters have been superseded by changes in our compensation arrangements with these two officers, as described in our compensation disclosure above.
In terms of material provisions, these letters again established certain initial and basic terms of the officers’ compensation arrangement with us, including minimum
base salaries, participation in our annual incentive program and long-term equity program at minimum participation levels, special one-time equity or cash
arrangements and entitlement to perquisites and personal benefits, plus our customary health and welfare benefits. Severance and related arrangements provided for
these officers under the terms of separate severance agreements entered into between them and us are described in more detail in the section entitled Potential
Payments Upon Termination or Change in Control below in this report. These officers have also executed our customary non-competition, non-solicitation and
confidentiality agreement, which generally provides for customary unlimited confidentiality and one year of post-employment non-competition and non-solicitation
protections for us.
Potential Impact on Compensation for Executive Misconduct
If the Board determines that an executive officer has engaged in misconduct, the Board may take a range of actions to remedy the misconduct. In 2011, the
Compensation Committee adopted an incentive recoupment policy that allows us to recover any annual incentive payment or long-term incentive award to any
individual executive at the senior vice president level or above, including our named executive officers, if the Board determines that:
• we are required to prepare an accounting financial restatement due to material non-compliance with any financial reporting requirement under applicable
securities laws and the compensation payment previously made was based on erroneous data; or
• the executive engaged in intentional misconduct that caused or substantially caused the need for a financial restatement and a lower payment would have been
made to the executive based upon the restated financial results.
In such circumstances we will, to the extent practicable, seek to recover from the individual executive the amount by which the individual executive’s payments for
the relevant period exceeded the lower payment that would have been made based on the restated financial results. In addition, our LTIP provides that the
Compensation Committee may cancel, suspend, withhold or otherwise restrict or limit any long-term incentive award to any participant under the LTIP, including
executive officers, if the Compensation Committee determines that such participant engaged in misconduct.
Background Information on the 2015 Executive Compensation Program
Use of Peer Data
In determining competitive compensation levels for 2015 compensation decisions, the Compensation Committee reviewed data prepared by Meridian that reflected
compensation practices for executives in hotel and property management companies. Due to the limited number of direct competitors with a similar scale and
global brand portfolio, a robust peer community required looking beyond direct competitors to companies in related industries with a strong brand focus, and/or
with similar talent needs (for example, hospitality/entertainment industries, brand-dependent companies, and companies of similar size, scale and complexity). The
companies selected from related industries were also reflective of the entities with whom we have historically competed to attract executive talent. In addition, to
assess the appropriateness of including a potential peer company in our peer group, the following four screening criteria were primarily used:
• revenue size with stronger consideration given to companies within a range of one-third to three times our revenue (the median 2014 revenue for the peer group
was $10.502 billion, and our 2014 revenue was $5.983 billion);
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