Starwood 2012 Annual Report Download - page 30

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.-2013Proxy Statement24
APPROVAL OF THE COMPANY’S 2013 LONG-TERM INCENTIVE COMPENSATION PLAN
Section162(m)
The Board believes that it is in the best interests of the Company
and our stockholders to maintain an equity incentive plan under
which awards may be eligible to qualify for deductibility for federal
income tax purposes. Accordingly, the 2013 Plan is designed
to permit the grant of awards that are intended to qualify as
“performance-based compensation” to be exempt from the
$1,000,000 deduction limit of Section162(m). In general, under
Section162(m), in order for the Company to be able to deduct
compensation in excess of $1,000,000 paid in any one year to
certain executive offi cers (the Chief Executive Offi cer and three
other executive offi cers identifi ed as specifi ed in Section162(m)
based on their compensation ranking), the compensation must
qualify as “performance-based.” One of the requirements for
“performance-based” compensation is that the material terms of
the performance goals under which the compensation may be paid
must be disclosed to and approved by our stockholders at least
once every fi ve years. For purposes of Section162(m), the material
terms include (1) the employees eligible to receive compensation,
(2) a description of the business criteria on which the performance
goals are based, and (3) the maximum amount of compensation
that can be paid to an employee under the performance goals. With
respect to the various types of awards available under the 2013
Plan, each of these aspects is discussed below. In addition, as
noted above, stockholder approval of the 2013 Plan will constitute
approval of each of these aspects of the 2013 Plan for purposes
of the approval requirements of Section162(m).
Plan Summary
The following summary of the material terms of the 2013 Plan is
qualifi ed in its entirety by reference to the full text of the 2013 Plan,
which is attached as Annex A to this Proxy Statement.
The 2013 Plan is not a qualifi ed deferred compensation plan
under Section401(a) of the Code, and is not intended to be an
employee benefi t plan within the meaning of ERISA .
Administration of the 2013 Plan
The 2013 Plan will be administered by the Compensation Committee
or such other committee consisting of two or more members as
may be appointed by the Board to administer the 2013 Plan (in
each case, the “Committee”). So long as shares are traded on the
NYSE, all of the members of the Committee must be independent
directors within the meaning of the NYSE’s Corporate Governance
Standards. If any member of the Committee does not qualify as
(1) a “non-employee director” within the meaning of Rule 16b-3 of
the Exchange Act, and (2) an “outside director” within the meaning
of Section162(m), the Board will appoint a subcommittee of the
Committee, consisting of at least two members of the Board, to
grant awards to individuals who are subject to the limitations of
Section162(m) (“Covered Employees”) and to offi cers and members
of the Board who are subject to Section16 of the Exchange
Act (“Insiders”), and each member of such subcommittee must
satisfy the requirements of (1) and (2) above. References to the
Committee in this summary include and, as appropriate, apply to
any such subcommittee.
Subject to the express provisions of the 2013 Plan, the Committee
is authorized and empowered to do all things that it determines to
be necessary or appropriate in connection with the administration
of the 2013 Plan. The Committee may delegate its authority to
one or more of its members (but not less than two members with
respect to Covered Employees and Insiders). To the extent permitted
by law and applicable stock exchange rules, the Committee may
also delegate its authority to one or more persons who are not
members of the Board, except that no such delegation will be
permitted with respect to Covered Employees and Insiders.
Eligible Participants
Employees of the Company or certain affi liates, non-employee
members of the Board, and any other natural person who provides
bona fi de services to the Company or certain affi liates not in
connection with the offer or sale of securities in a capital raising
transaction (subject to certain limitations) will be eligible for selection
by the Committee for the grant of awards under the 2013 Plan.
As of March1, 2013, approximately 1,600 employees of the
Company and its affi liates and 10 non-employee members of the
Board would be eligible for awards under the 2013 Plan.