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2011

ANNUAL MEETING OF STOCKHOLDERS

PROXY STATEMENT

March 21, 2011

Dear Stockholder:

You are cordially invited to attend Starwood’s Annual Meeting of Stockholders, which is being held on Thursday, May 5, 2011, at 10:00 a.m. (local time), at The St. Regis Atlanta, 88 West Paces Ferry Road, Atlanta, Georgia 30305.

At this year’s Annual Meeting, you will be asked to (i) elect eleven Directors, (ii) ratify the appointment of Ernst & Young LLP as Starwood’s independent registered public accounting firm for 2011, (iii) approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers, as disclosed in the compensation section of the proxy statement (a “Say-on-Pay” vote), and (iv) vote, on a non-binding advisory basis, on how frequently the Company should hold a Say-on-Pay vote. You have the opportunity to request a Say-on-Pay vote every year, every two years, or every three years, or abstain from voting on the matter completely.

As owners of Starwood, your vote is important. Whether or not you are able to attend the Annual Meeting in person, it is important that your shares be represented. Please vote as soon as possible. Instructions on how to vote are contained herein.

We appreciate your continued support and interest in Starwood.

Very truly yours,



Frits van Paasschen Chief Executive Officer and President		Bruce W. Duncan Chairman of the Board

NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS
OF
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
A Maryland Corporation


DATE:		May 5, 2011
TIME:		10:00 a.m. (local time)
PLACE:		The St. Regis Atlanta 88 West Paces Ferry Road Atlanta, Georgia 30305
ITEMS OF BUSINESS:		1. To elect eleven Directors to serve until the next Annual Meeting of Stockholders (“Annual Meeting”) and until their successors are duly elected and qualified.
		2. To consider and vote upon the ratification of the appointment of Ernst & Young LLP as Starwood Hotels & Resorts Worldwide, Inc.’s (the “Company”) independent registered public accounting firm for the fiscal year ending December 31, 2011.
		3. To have a non-binding advisory vote on approval of the compensation of the Company’s “Named Executive Officers,” as described in the Compensation Discussion and Analysis, compensation tables and narrative discussion included in the accompanying proxy statement.
		4. To have a non-binding advisory vote on the frequency (every year, every two years, or every three years) of future advisory votes to approve the compensation of the Company’s Named Executive Officers.
		5. To transact such other business as may properly come before the meeting or any postponement or adjournment thereof.
RECORD DATE:		Holders of record of the Company’s stock at the close of business on March 10, 2011 are entitled to vote at the meeting.
ANNUAL REPORT:		The Company’s 2010 Annual Report on Form 10-K (“Annual Report”), which is not a part of the proxy soliciting material, is enclosed. The Annual Report may also be obtained from the Company’s website at www.starwoodhotels.com/corporate/investor _ relations.html. Stockholders may also obtain, without charge, a copy of the Annual Report by contacting Investor Relations at the Company’s headquarters.
PROXY VOTING:		It is important that your shares be represented and voted at the meeting. You can authorize a proxy to vote your shares by completing and returning the proxy card sent to you. Most stockholders can authorize a proxy over the Internet or by telephone. If Internet or telephone authorization is available to you, instructions are printed on your proxy card. You can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the accompanying proxy statement. Your promptness will assist us in avoiding additional solicitation costs.

Kenneth S. Siegel
Corporate Secretary

March 21, 2011

White Plains, New York

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
1111 WESTCHESTER AVENUE
WHITE PLAINS, NY 10604

PROXY STATEMENT

FOR

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 5, 2011

THE ANNUAL MEETING AND VOTING — QUESTIONS AND ANSWERS

Why did I receive these materials?

Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (the “Company” or “Starwood”), has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the solicitation of proxies by the Board of Directors (the “Board”) for use at the Company’s 2011 Annual Meeting of Stockholders (the “Annual Meeting”), and at any postponement or adjournment of the Annual Meeting. The Company is first making these materials available (and is mailing the Notice of Meeting and Internet Availability of Proxy Materials) on or about March 21, 2011. This Notice contains instructions on how to access the Company’s proxy statement and 2010 Annual Report and authorize a proxy to vote online. By furnishing this Notice, the Company is lowering the costs and reducing the environmental impact of providing its Annual Meeting.

The Company intends to start sending paper or electronic copies of its proxy statement and 2010 Annual Report to its stockholders on or about March 21, 2011.

When and where will the Annual Meeting be held?

The Annual Meeting will be held on May 5, 2011 at 10:00 a.m. (local time) at The St. Regis Atlanta, 88 West Paces Ferry Road, Atlanta, Georgia 30305. If you plan to attend the Annual Meeting and have a disability or require special assistance, please contact the Company’s Investor Relations department at (914) 640-8100.

What proposals will be voted on at the Annual Meeting?

At the Annual Meeting, the stockholders of the Company will consider and vote upon:

1. The election of eleven Directors to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified.

2. The ratification of the appointment of Ernst & Young LLP (“Ernst & Young”) as the Company’s independent registered public accounting firm for 2011.

3. The approval, on a non-binding advisory basis, of the compensation of the Company’s Named Executive Officers, as disclosed in the Compensation Discussion & Analysis, compensation tables and narrative discussion contained in this proxy statement (a “Say-on-Pay” vote).

4. The approval, on a non-binding advisory basis, of the frequency (every year, every two years or every three years) of future Say-on-Pay votes.

5. Such other business as may properly come before the meeting or any adjournment or postponement thereof.

The Board is not aware of any other matter that may properly be presented at the Annual Meeting that is not described above. If any other matter is properly presented at the Annual Meeting, the persons named as proxies on the enclosed proxy card will, in the absence of stockholder instructions to the contrary, vote the shares for which such persons have voting authority in accordance with their discretion on any such matter.

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

Pursuant to the rules adopted by the Securities and Exchange Commission (“SEC”), we are providing access to our proxy materials over the Internet. Accordingly, we sent a Notice of Meeting and Internet Availability of Proxy Materials (the “Notice”) to our stockholders of record and beneficial owners as of the close of business on March 10, 2011. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found on the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

How can I get electronic access to the proxy materials?

The Notice will provide you with instructions regarding how to:


	•	View our proxy materials for the Annual Meeting on the Internet; and

	•	Instruct us to send our future proxy materials to you electronically by email.

Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual stockholders’ meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

Who is entitled to vote at the Annual Meeting?

If you were a stockholder of record of the Company at the close of business on March 10, 2011 (the “Record Date”), you are entitled to notice of, and to vote at, the Annual Meeting. You have one vote for each share of common stock of the Company (“Shares”) you held of record at the close of business on the Record Date on each matter that is properly submitted to a vote at the Annual Meeting, including Shares:


	•	Held directly in your name as the stockholder of record,

	•	Held for you in an account with a broker, bank or other nominee, or

	•	Credited to your account in the Company’s Savings and Retirement Plan (the “Savings Plan”).

On the Record Date there were 195,121,899 Shares outstanding and entitled to vote at the Annual Meeting and there were 14,951 record holders of Shares. The Shares are the only outstanding class of voting securities of the Company.

Who may attend the Annual Meeting?

Only stockholders of record, or their duly authorized proxies, may attend the Annual Meeting. Registration and seating will begin at 9:00 a.m. To gain admittance, you must present valid picture identification, such as a driver’s license or passport. If you hold Shares in “street name” (through a broker or other nominee), you will also need to bring a copy of a brokerage statement (in a name matching your photo identification) reflecting your stock ownership as of the Record Date to be admitted to the Annual Meeting. If you are a representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are a representative of such stockholder.

Please note that cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting.

How many Shares must be present to hold the Annual Meeting?

The presence in person or by proxy of stockholders entitled to cast all of the votes entitled to be cast at the Annual Meeting constitutes a quorum for the transaction of business. Shares of stockholders of record are counted as present at the meeting if you:


	•	are present in person at the Annual Meeting, or

	•	have properly executed and submitted a proxy card, or authorized a proxy over the telephone or the Internet, prior to the Annual Meeting.

Abstentions and broker non-votes are counted as present for purposes of determining whether a quorum is present at the Annual Meeting.

If a quorum is not present when the Annual Meeting is convened, or if for any other reason the presiding officer believes that the Annual Meeting should be adjourned, the Annual Meeting may be adjourned by the presiding officer to a date not more than 120 days after the Record Date. If a motion is made to adjourn the Annual Meeting, the persons named as proxies on the enclosed proxy card will have discretion to vote on such adjournment all Shares for which such persons have voting authority.

What are broker non-votes?

If you have Shares that are held by a broker, you may give the broker voting instructions and the broker must vote as you directed. If you do not give the broker any instructions, the broker may vote at its discretion on all routine matters (i.e., the ratification of an independent registered public accounting firm). For non-routine matters, including: the election of Directors, the Say-on-Pay advisory vote, and on the frequency of future Say-on-Pay advisory votes, however, the broker may NOT vote using its discretion. This is referred to as a broker non-vote.

How many votes are required to approve each proposal?

Directors will be elected by a plurality of the votes cast in the election of directors at the Annual Meeting, either in person or represented by properly authorized proxy. This means that the eleven nominees who receive the largest number of “FOR” votes cast will be elected as Directors. Stockholders cannot cumulate votes in the election of Directors. Broker non-votes will not have any effect on the election of Directors. See “What happens if a Director nominee does not receive a majority of the votes cast?” below for information concerning our director resignation policy.

Ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm requires “FOR” votes from a majority of the votes cast on the matter at the Annual Meeting, either in person or represented by properly completed or authorized proxy. Brokers may vote uninstructed customer Shares on this matter. Abstentions will have no effect on the matter. If a majority of the votes cast at the Annual Meeting vote “AGAINST” ratification of the appointment of Ernst & Young, the Board and the Audit Committee will reconsider its appointment.

Adoption of a resolution approving on a non-binding, advisory basis the compensation of the Company’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion of this proxy statement, requires “FOR” votes from a majority of the votes cast on the matter at the Annual Meeting, either in person or represented by properly authorized proxy. Abstentions and broker non-votes will not have any effect on the matter. If a majority of the votes cast at the Annual Meeting vote “AGAINST” the approval of the compensation of the Company’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion of this proxy statement, the Board and the Compensation Committee will consider the outcome of the vote when making future compensation decisions.

With respect to the frequency of future Say-on-Pay advisory votes, approval of a frequency requires votes for that frequency from a majority of the votes cast on the matter at the Annual Meeting, either in person or represented by properly authorized proxy. Because stockholders have four choices (one year, two years, three years or abstain) on the advisory approval of a frequency of future Say-on-Pay votes, it is possible that no frequency will receive a majority vote. If no frequency receives the affirmative vote of a majority of the votes cast, our Board intends to

regard the frequency receiving the greatest number of votes as the recommendation of our stockholders. Abstentions and broker non-votes will not have any effect on the matter. The Board and the Compensation Committee will consider the outcome of the vote when making its determination regarding how frequently (every one, two or three years) over the next six years the Say-on-Pay advisory vote will be held, after which period another frequency vote will be held.

What happens if a Director nominee does not receive a majority of the votes cast?

Under our Bylaws, a Director nominee, running uncontested, who receives more “Withheld” than “For” votes is required to tender his or her resignation for consideration by the Board. The Corporate Governance and Nominating Committee will recommend to the Board whether to accept or reject the resignation. The Board will act on the tendered resignation and publicly disclose its decision within 90 days following certification of the election results. The Director who tenders his or her resignation will not participate in the Board’s decision with respect to the resignation.

What is the advisory vote regarding executive compensation?

The stockholders of the Company are entitled to cast an advisory vote at the Annual Meeting to approve the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement in accordance with SEC rules, including the Compensation Discussion & Analysis, compensation tables and narrative discussion. While this stockholder vote on executive compensation is an advisory vote that is not binding on the Company or the Board of Directors, the Company values the opinions of its stockholders and will consider the outcome of the vote when making future compensation decisions.

What is the advisory vote regarding the frequency of executive compensation advisory votes?

The stockholders of the Company are entitled to cast an advisory vote at the Annual Meeting to determine how frequently an advisory vote to approve the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement, should be held. The choices are every year, every two years, or every three years. While this stockholder vote regarding frequency is an advisory vote that is not binding on the Company or the Board of Directors, the Company values the opinions of its stockholders and will consider the outcome of the vote when making its determination regarding how frequently the Say-on-Pay advisory vote will be cast.

How do I vote?

If you are a stockholder of record, you may vote in person at the Annual Meeting. We will give you a ballot when you arrive. If you do not wish to vote in person or if you will not be attending the Annual Meeting, you may vote by proxy. You can vote your Shares by authorizing a proxy over the Internet by following the instructions provided in the Notice, or, if you request printed copies of the proxy materials by mail, you can also authorize a proxy to vote your Shares by mail or by telephone or Internet.

Each Share represented by a properly completed written proxy or properly authorized proxy by telephone or over the Internet will be voted at the Annual Meeting in accordance with the stockholder’s instructions specified in the proxy, unless such proxy has been revoked. If no instructions are specified, such Shares will be voted FOR the election of each of the nominees for Director named in this proxy statement, FOR ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for 2011, FOR the approval, on an advisory basis, of the Say-on-Pay vote on compensation of our Named Executive Officers, FOR the approval, on an advisory basis, of a frequency of 1 YEAR for future Say-on-Pay advisory votes on the compensation of our Named Executive Officers, and, in the discretion of the proxy holder, on any other business that may properly come before the meeting.

If you participate in the Savings Plan and have contributions invested in Shares, the proxy card will serve as a voting instruction for the trustee of the Savings Plan. You must return your proxy card to the transfer agent on or prior to 11:59 p.m. (Eastern Time) on April 29, 2011. If your proxy card is not received by the transfer agent by that date or if you sign and return your proxy card without instructions marked in the boxes, the trustee will vote your

Shares in the same proportion as other Shares held in the Savings Plan for which the trustee received timely instructions unless contrary to ERISA (Employee Retirement Income Security Act).

How can I revoke a previously submitted proxy?

If you are a stockholder of record, you may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. You may submit a proxy again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the meeting will be counted), or by signing and returning a new proxy card with a later date, or by attending the meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote at the meeting or specifically request in writing that your prior proxy be revoked.

What does it mean if I receive more than one proxy card?

If you receive more than one proxy card from the Company, it means your Shares are not all registered in the same way (for example, some are held in your name and others are held jointly with a spouse) and are in more than one account. Please sign and return all proxy cards you receive to ensure that all Shares held by you are voted.

How does the Board recommend that I vote?

The Board recommends that you vote FOR each of its Director nominees, FOR ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for 2011, FOR the approval, on an advisory basis, of the Say-on-Pay vote on the compensation of our Named Executive Officers, and FOR the approval, on an advisory basis, of a frequency of 1 YEAR for future Say-on-Pay votes on the compensation of our Named Executive Officers.

CORPORATE GOVERNANCE

Starwood is committed to maintaining the highest standards of business conduct and corporate governance, which we believe are essential to running our business efficiently, serving our stockholders well and maintaining our Company’s integrity in the marketplace.

Board Leadership Structure and Risk Oversight

We believe that the composition of our Board and its committees results in a strong leadership structure for our Company. As of the date of this proxy statement, our Board has eleven directors, comprised of one chairman (who is not the Chief Executive Officer and President of the Company), nine additional non-employee members, and the Chief Executive Officer and President of the Company. Biographies of our Directors can be found in the Election of Directors section beginning on page 8. The Board has the following four standing committees: (1) Audit, (2) Capital, (3) Compensation and Option and (4) Corporate Governance and Nominating. The current committee membership, the number of meetings held during the last fiscal year and the function of each of the standing committees are described in the Board Meetings and Committees section beginning on page 11. Each of the standing committees operates under a written charter adopted by the Board. All of the committee charters are available on the Company’s website at www.starwoodhotels.com/corporate/investor _ relations.html.

As part of its general oversight duties, the Board oversees the Company’s risk management. The Board regularly invites key members of the Company’s management to its meetings in order to inform the Board of any operational and/or financial risks that the Company is facing, and the Board reviews and directs management to address and mitigate such risks. In addition, one of the responsibilities of the Audit Committee is to discuss and review the systems of internal controls over financial reporting, accounting, legal compliance and our ethics policies, as established by the Board and/or management, in order to assess risk and oversee risk management. In setting compensation practices, the Compensation and Option Committee considers the risks to our stockholders, and the Company as a whole, and structures our incentive compensation to discourage the taking of excessive risks.

Corporate Governance Policies

In addition to our charter and Bylaws, we have adopted Corporate Governance Guidelines (the “Guidelines”), which are posted on our website at www.starwoodhotels.com/corporate/investor _ relations.html, to address significant corporate governance matters. The Guidelines provide a framework for the Company’s corporate governance and cover topics including, but not limited to, Board and committee composition, Director Share ownership guidelines, and Board evaluations. The Corporate Governance and Nominating Committee is responsible for overseeing and reviewing the Guidelines and reporting and recommending to the Board any changes to the Guidelines.

The Company has adopted a Finance Code of Ethics applicable to its Chief Executive Officer, Chief Financial Officer, Corporate Controller, Corporate Treasurer, Senior Vice President-Taxes and persons performing similar functions. The Finance Code of Ethics is posted on the Company’s website at www.starwoodhotels.com/corporate/investor _ relations.html. The Company intends to post amendments to, and waivers from, the Finance Code of Ethics that require disclosure under applicable SEC rules on its website. In addition, the Company has a Code of Business Conduct and Ethics (the “Code of Conduct”) applicable to all employees and Directors that addresses legal and ethical issues that may be encountered in carrying out their duties and responsibilities. Subject to applicable law, employees are required to report any conduct they believe to be a violation of the Code of Conduct. The Code of Conduct is posted on the Company’s website at www.starwoodhotels.com/corporate/investor _ relations.html.

The Company has a Disclosure Committee, comprised of certain senior executives, to design, establish and maintain the Company’s internal controls and other procedures with respect to the preparation of periodic reports filed with the SEC, earnings releases and other written information that the Company will disclose to the investment community. The Disclosure Committee evaluates the effectiveness of the Company’s disclosure controls and procedures on a regular basis and maintains written records of its meetings.

The Board has a policy under which Directors who are not employees of the Company or any of its subsidiaries may not stand for re-election after reaching the age of 72. In addition, under this policy, Directors who are employees of the Company must retire from the Board upon their retirement from the Company. Pursuant to the Guidelines, the Board also has a policy that Directors who change their principal occupation (including through retirement) should voluntarily tender their resignation to the Board.

The Company encourages all Directors to attend the Annual Meeting and believes that attendance at the Annual Meeting is as important as attendance at meetings of the Board of Directors and its committees. In fact, the Company typically schedules Board of Directors’ and committee meetings to coincide with the dates of its Annual Meetings. However, from time to time, other commitments prevent all Directors from attending a meeting. All but one of the Directors who were Board members at the time attended the most recent annual meeting of stockholders, which was held on May 13, 2010.

The Company indemnifies its Directors and officers to the fullest extent permitted by law so that they will be free from undue concern about personal liability in connection with their service to the Company. This is required under the Company’s charter, and the Company has also signed agreements with each of those individuals contractually obligating it to provide this indemnification to them.

Director Independence

In accordance with New York Stock Exchange (the “NYSE”) rules, the Board makes an annual determination as to the independence of the Directors and nominees for election as a Director. No Director will be deemed to be independent unless the Board affirmatively determines that the Director has no material relationship with the Company, directly or as an officer, stockholder or partner of an organization that has a relationship with the Company. The Board observes all criteria for independence established by the NYSE listing standards and other governing laws and regulations. In its annual review of Director independence, the Board considers any commercial, banking, consulting, legal, accounting, charitable or other business relationships each Director may have with the Company. In addition, the Board consults with the Company’s counsel to ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent director,” including but not limited to those set forth in pertinent listing standards of the NYSE in effect from time to time. As a result of its annual review, the Board has determined that all of the Directors, with the exception of Mr. van Paasschen, are independent directors. Mr. van Paasschen is not independent because he is serving as the Chief Executive Officer and President of the Company.

In making this determination, the Board took into account that three of the non-employee Directors, Messrs. Aron and Daley and Ms. Galbreath, have no relationship with the Company except as a Director and stockholder of the Company and that the remaining seven non-employee Directors have relationships with companies that do business with the Company that are consistent with the NYSE independence standards. With respect to Mr. Duncan, the Board considered the fact that Mr. Duncan served as the Company’s Chief Executive Officer on an interim basis from April 1, 2007 to September 24, 2007, and received a salary and other benefits for his services. As that service was more than three years ago, the Board determined that Mr. Duncan is an independent director.

Yahoo! Inc., Buddy Media, The Huffington Post, Amazon.com, Inc., Burger King Holdings, Inc., The Gap, Inc., American Express Company and Intel Corporation are the only companies to transact business with the Company over the past three years in which any of the Company’s independent directors served as a director, executive officer or is a partner, principal or greater than 10% stockholder. Mr. Hippeau is a director of Yahoo! Inc. and Buddy Media and the Chief Executive Officer of The Huffington Post; Mr. Ryder is a director of Amazon.com, Inc.; Mr. Youngblood is a director of Burger King Holdings, Inc. and The Gap, Inc.; and Ambassador Barshefsky is a director of American Express Company and Intel Corporation. In the case of each public company other than American Express Company, the combined annual payments from the Company to each such entity and from each such entity to the Company has been less than 0.5% of the Company’s and/or each such other entity’s annual consolidated revenues for each of the past three years. In the case of American Express Company, with which the Company co-brands the American Express Starwood Preferred Guest credit card, the combined annual payments from the Company to American Express Company and from American Express Company to the Company has been

less than 1% of American Express Company’s annual consolidated revenues for each of the past three years and payments from American Express Company were less than 4% of the Company’s annual consolidated revenues for 2010, less than 9.5% for 2009 and less than 4% for 2008. Ambassador Barshefsky serves solely as a director of American Express Company and derives no personal benefit from these payments. These relationships are consistent with the NYSE independence standards. In addition, in the case of Mr. Quazzo, the Board considered that in January 2008 a fund managed by Transwestern Investment Company, LLC, of which Mr. Quazzo is the Chief Executive Officer, purchased the office building in Phoenix where the Company maintains an office. The Company’s lease for the office space was originally negotiated and entered into prior to the acquisition with unaffiliated third parties at arms-length and was not amended in connection with the acquisition of the building by the fund. Mr. Quazzo has informed the Company that he did not derive any direct personal benefit from the office space lease, although his compensation does depend, in part, on Transwestern Investment Company, LLC’s results of operations. In 2010, the building in Phoenix where the Company maintains an office was sold to a third party and Transwestern Investment Company, LLC no longer holds any interest in the building.

Mr. Duncan, who was an independent Director prior to his interim appointment as the Company’s Chief Executive Officer, has served as non-executive Chairman of the Board from May 2005 until March 31, 2007 when he was appointed Chief Executive Officer on an interim basis, and from September 24, 2007 to the present. Prior to March 31, 2007 and following September 24, 2007, Mr. Duncan, as Chairman, ran meetings of the Board. During Mr. Duncan’s appointment as Chief Executive Officer on an interim basis, the Chairman of the Corporate Governance and Nominating Committee presided at the meetings of the Board held in executive session.

Communications with the Board

The Company has adopted a policy which permits stockholders and other interested parties to contact the Board of Directors. If you are a stockholder or interested party and would like to contact the Board of Directors you may send a letter to the Board of Directors, c/o the Corporate Secretary of the Company, 1111 Westchester Avenue, White Plains, New York 10604 or online at www.hotethics.com. You should specify in the communication that you are a stockholder or an interested party. If the correspondence contains complaints about Starwood’s accounting, internal or auditing matters or directed to the non-management directors, the Corporate Secretary will forward that correspondence to a member of the Audit Committee. If the correspondence concerns other matters, the Corporate Secretary will forward the correspondence to the Director to whom it is addressed or otherwise as would be appropriate under the circumstances, attempt to handle the inquiry directly (for example where it is a request for information or a stock-related matter), or not forward the communication if it is primarily commercial in nature or relates to an improper or irrelevant topic. At each regularly scheduled Board meeting, the Corporate Secretary or his designee will present a summary of all such communications received since the last meeting that were not forwarded and shall make those communications available to the Directors upon request. This policy is also posted on the Company’s website at www.starwoodhotels.com/corporate/investor _ relations.html.

Posted Documents

You may also obtain a free copy of any of the aforementioned posted documents by sending a letter to the Company’s Investor Relations Department, 1111 Westchester Avenue, White Plains, New York 10604. Please note that the information on the Company’s website is not incorporated by reference in this proxy statement.

ELECTION OF DIRECTORS

Under the Company’s charter, each of the Company’s Directors is elected to serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualified. Set forth below is information as of March 10, 2011 regarding the nominees of the Board of Directors for election as a Director, which has been confirmed by each of them for inclusion in this proxy statement. Each nominee has agreed to serve on the Board if elected. If a nominee becomes unavailable for election, proxy holders and stockholders may vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of Directors to be elected at the meeting.

Directors Nominated at the Annual Meeting will be Elected to Serve Until the 2012 Annual Meeting of Stockholders and Until his or her Successor is Duly Elected and Qualified

Frits van Paasschen, 50, has been Chief Executive Officer and President of the Company since September 2007. From March 2005 until September 2007, he served as President and CEO of Molson Coors Brewing Company’s largest division, Coors Brewing Company, prior to its merger with Miller Brewing Company and the formation of MillerCoors LLC. Prior to joining Coors, from April 2004 until March 2005, Mr. van Paasschen worked independently through FPaasschen Consulting and Mercator Investments, evaluating, proposing, and negotiating private equity transactions. Prior thereto, Mr. van Paasschen spent seven years at Nike, Inc., most recently as Corporate Vice President/General Manager, Europe, Middle East and Africa from 2000 to 2004. From 1995 to 1997, Mr. van Paasschen served as Vice President, Finance and Planning at Disney Consumer Products and earlier in his career was a management consultant for eight years at McKinsey & Company and the Boston Consulting Group. Mr. van Paasschen has been a Director of the Company since September 2007.

The Corporate Governance and Nominating Committee considered these qualifications, his significant public company managerial experience, his experience with the Company, and a requirement under his employment agreement that he serve on the Company’s Board (subject to customary procedures and conditions to Board membership, including stockholder election) in making the determination that Mr. van Paasschen should be a nominee for director of the Company.

Bruce W. Duncan, 59, has been President, Chief Executive Officer and Director of First Industrial Realty Trust, Inc. since January 2009, prior to which time he was a private investor since January 2006. From April to September 2007, Mr. Duncan served as Chief Executive Officer of the Company on an interim basis. He also has been a senior advisor to Kohlberg Kravis & Roberts & Co. from July 2008 to January 2009. From May 2005 to December 2005, Mr. Duncan was Chief Executive Officer and Trustee of Equity Residential (“EQR”), a publicly traded apartment company, and held various positions at EQR from March 2002 to December 2005, including President, Chief Executive Officer and Trustee from January 2003 to May 2005, and President and Trustee from March 2002 to December 2002. Mr. Duncan has served as a Director of the Company since April 1999, and was a Trustee of Starwood Hotels & Resorts, a real estate investment trust and former subsidiary of the Company (the “Trust”), since August 1995.

The Corporate Governance and Nominating Committee considered these qualifications, his experience as Chief Executive Officer of other publicly traded companies, and his tenure with the Company in making the determination that Mr. Duncan should be a nominee for director of the Company.

Adam M. Aron, 56, has been Chairman and Chief Executive Officer of World Leisure Partners, Inc., a leisure-related consultancy, since 2006. From 1996 through 2006, Mr. Aron served as Chairman and Chief Executive Officer of Vail Resorts, Inc., an owner and operator of ski resorts and hotels. Mr. Aron is a director of Norwegian Cruise Line Limited, Prestige Cruise Holdings, Inc. and Cap Juluca Properties Ltd. In the past 5 years, Mr. Aron also served as a director of e-Miles LLC, FTD Group, Inc., Rewards Network, Inc. and Marathon Acquisition Corp. Mr. Aron has been a Director of the Company since August 2006.

The Corporate Governance and Nominating Committee considered these qualifications, his significant experience in the leisure travel industry, his financial expertise, and his experience with the Company in making the determination that Mr. Aron should be a nominee for director of the Company.

Charlene Barshefsky, 60, has been Senior International Partner at the law firm of WilmerHale, LLP, in Washington, D.C. since September 2001. From March 1997 to January 2001, Ambassador Barshefsky was the United States Trade Representative, the chief trade negotiator and principal trade policymaker for the United States and a member of the President’s Cabinet. Ambassador Barshefsky is a director of The Estee Lauder Companies, Inc. since July 2001, American Express Company since July 2001, and Intel Corporation since January 2004. Ambassador Barshefsky is a member of the Council on Foreign Relations and a Trustee of the Howard Hughes Medical Institute. In the past 5 years Ambassador Barshefsky also served as a director of Idenix Pharmaceuticals, Inc. and of the Council on Foreign Relations. She has been a Director of the Company, and was a Trustee of the Trust, since October 2001.

The Corporate Governance and Nominating Committee considered these qualifications, her significant public policy experience, and her tenure with the Company in making the determination that Ambassador Barshefsky should be a nominee for director of the Company.

Thomas E. Clarke, 59, has been President of New Business Ventures of Nike, Inc., a designer, developer and marketer of footwear, apparel and accessory products, since 2001. Dr. Clarke joined Nike in 1980. He was appointed Divisional Vice President in charge of marketing in 1987, Corporate Vice President in 1990, and served as President and Chief Operating Officer from 1994 to 2000. Dr. Clarke previously held various positions with Nike, primarily in research, design, development and marketing. Dr. Clarke is also a director of Newell Rubbermaid Inc. since 2003, a global marketer of consumer and commercial products. Dr. Clarke has been a Director of the Company since April 2008.

The Corporate Governance and Nominating Committee considered these qualifications, his expertise in brand marketing, and his experience with the Company in making the determination that Dr. Clarke should be a nominee for director of the Company.

Clayton C. Daley, Jr., 59, spent his entire professional career with The Procter & Gamble Company, joining the company in 1974, and has held a number of key accounting and finance positions including Chief Financial Officer and Vice Chair for Procter & Gamble; Comptroller, U.S. Operations for Procter & Gamble USA; Vice President and Comptroller of Procter & Gamble International and Vice President and Treasurer. Mr. Daley retired from Procter & Gamble in October 2009. Mr. Daley is also a director of Nucor Corporation since 2001 and Foster Wheeler, AG since 2009. In addition, Mr. Daley is Senior Advisor to TPG Capital. Mr. Daley has been a Director of the Company since November 2008.

The Corporate Governance and Nominating Committee considered these qualifications, his experience in corporate strategy and planning for a global consumer products company, his financial expertise, and his experience with the Company in making the determination that Mr. Daley should be a nominee for director of the Company.

Lizanne Galbreath, 53, has been Managing Partner of Galbreath & Company, a real estate investment firm, since 1999. From April 1997 to 1999, Ms. Galbreath was Managing Director of LaSalle Partners/Jones Lang LaSalle where she also served as a director. From 1984 to 1997, Ms. Galbreath served as a Managing Director, Chairman and Chief Executive Officer of The Galbreath Company, the predecessor entity of Galbreath & Company. Ms. Galbreath has been a Director of the Company, and was a Trustee of the Trust, since May 2005.

The Corporate Governance and Nominating Committee considered these qualifications, her expertise in real estate, and her tenure with the Company in making the determination that Ms. Galbreath should be a nominee for director of the Company.

Eric Hippeau, 59, is the Chief Executive Officer of The Huffington Post, a news website, since June 2009. From 2000 to 2009, he was a Managing Partner of Softbank Capital, a technology venture capital firm. Mr. Hippeau served as Chairman and Chief Executive Officer of Ziff-Davis Inc., an integrated media and marketing company, from 1993 to March 2000 and held various other positions with Ziff-Davis from 1989 to 1993. Mr. Hippeau has been a director of Yahoo! Inc. since January 1996. Mr. Hippeau has been a Director of the Company, and was a Trustee of the Trust, since April 1999.

The Corporate Governance and Nominating Committee considered these qualifications, his significant experience as a director including at many privately held companies, and his tenure with the Company in making the determination that Mr. Hippeau should be a nominee for director of the Company.

Stephen R. Quazzo, 51, is the Chief Executive Officer and has been the Managing Director and co-founder of Transwestern Investment Company, L.L.C., a real estate principal investment firm, since March 1996. From April 1991 to March 1996, Mr. Quazzo was President of Equity Institutional Investors, Inc., a subsidiary of Equity Group Investments, Inc. Mr. Quazzo has been a Director of the Company since April 1999, and was a Trustee of the Trust, since August 1995.

The Corporate Governance and Nominating Committee considered these qualifications, his expertise in real estate, and his tenure with the Company in making the determination that Mr. Quazzo should be a nominee for director of the Company.

Thomas O. Ryder, 66, retired as Chairman of the Board of The Reader’s Digest Association, Inc. in January 2007, a position he had held since January 1, 2006. Mr. Ryder was Chairman of the Board and Chief Executive Officer of that company from April 1998 through December 31, 2005. In addition, Mr. Ryder was Chairman of the Board and Chairman of the Audit Committee of Virgin Mobile USA, Inc. from October 2007 to November 2009. Mr. Ryder was President, American Express Travel Related Services International, a division of American Express Company, which provides travel, financial and network services, from October 1995 to April 1998. In addition, he has been a director of Amazon.com, Inc. since November 2002, and Quad/Graphics, Inc. since July 2010. Quad/Graphics, Inc. acquired World Color Press, Inc. in July 2010; Mr. Ryder was a director of World Color Press, Inc. from July 2009 to July 2010. Mr. Ryder has been a Director of the Company, and was a Trustee of the Trust, since April 2001.

The Corporate Governance and Nominating Committee considered these qualifications, his financial expertise, and his tenure with the Company in making the determination that Mr. Ryder should be a nominee for director of the Company.

Kneeland C. Youngblood, 55, is a founding partner of Pharos Capital Group, L.L.C., a private equity fund focused on technology companies, business service companies and health care companies, since January 1998. From July 1985 to December 1997, he was in private medical practice. He is the former Chairman of the Board of the American Beacon Funds, a mutual fund company managed by AMR Investments, an investment affiliate of American Airlines. He has also been a director of Burger King Holdings, Inc. since October 2004; The Gap, Inc. since November 2006; and Energy Future Holdings (formerly TXU Corp.) since October 2007. Mr. Youngblood has been a Director of the Company, and was a Trustee of the Trust, since April 2001.

The Corporate Governance and Nominating Committee considered these qualifications, his experience as a director of large public companies, and his tenure with the Company in making the determination that Mr. Youngblood should be a nominee for director of the Company.

The Board unanimously recommends a vote FOR election of these nominees.

Board Meetings and Committees

The Board of Directors held six meetings during 2010. In addition to meetings of the full Board, Directors attended meetings of individual Board committees. Each Director attended at least 75% of the total number of meetings of the full Board and committees on which he or she serves.

The Board has established Audit, Capital, Compensation and Option and Corporate Governance and Nominating Committees, the principal functions of which are described below:

Audit Committee. The Audit Committee, which has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is currently comprised of Messrs. Daley (chairperson), Aron, Clarke and Youngblood, all of whom are “independent” Directors, as determined by the Board in accordance with the NYSE listing requirements and applicable federal securities laws. The Board has determined that Meessrs. Daley, Ryder and Aron are an “audit committee financial expert” under federal securities laws. The Board has adopted a written charter for the Audit Committee which states that the Audit Committee provides oversight regarding accounting, auditing and financial reporting practices of the Company. The Audit Committee selects and engages the Company’s independent registered public accounting firm to audit the Company’s annual consolidated financial statements and discusses with it the scope and results of the audit. The Audit Committee also discusses with the independent registered public accounting firm, and with management, financial accounting and reporting principles, policies and practices and the adequacy of the Company’s accounting, financial, operating and disclosure controls. The Audit Committee met nine times during 2010.

Capital Committee. The Capital Committee is currently comprised of Mr. Quazzo (chairperson), Ms. Galbreath and Messrs. Hippeau and Ryder, all of whom are “independent” Directors, as determined by the Board in accordance with the NYSE listing requirements. The Capital Committee was established in November 2005 to exercise some of the power of the Board relating to, among other things, capital plans and needs, mergers and acquisitions, divestitures and other significant corporate opportunities between meetings of the Board. The Capital Committee met four times during 2010.

Compensation and Option Committee. Under the terms of its charter, the Compensation and Option Committee (the “Compensation Committee”) is required to consist of three or more members of the Board of Directors who meet the independence requirements of the NYSE, are “non-employee directors” pursuant to SEC Rule 16b-3, and are “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended. The Compensation Committee is currently comprised of Messrs. Aron (chairperson), Clarke, Daley, Ryder and Youngblood, all of whom are “independent” Directors, as determined by the Board in accordance with the NYSE listing requirements. The Compensation Committee makes recommendations to the Board with respect to the salaries and other compensation to be paid to the Company’s executive officers and other members of senior management and administers the Company’s employee benefits plans, including the Company’s 2004 Long-Term Incentive Compensation Plan. The Compensation Committee met six times during 2010.

Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee is currently comprised of Ambassador Barshefsky (chairperson), Ms. Galbreath, and Messrs. Duncan and Hippeau, all of whom are “independent” Directors, as determined by the Board in accordance with the NYSE listing requirements. The Corporate Governance and Nominating Committee was established in May 2004, combining the functions of the Corporate Governance Committee and the Nominating Committee. The Corporate Governance and Nominating Committee establishes, or assists in the establishment of, the Company’s governance policies (including policies that govern potential conflicts of interest) and monitors and advises the Company as to compliance with those policies. The Corporate Governance and Nominating Committee reviews, analyzes, advises and makes recommendations to the Board with respect to situations, opportunities, relationships and transactions that are governed by such policies, such as opportunities in which a Director or executive officer or their affiliates has a personal interest. In addition, the Corporate Governance and Nominating Committee is responsible for making recommendations for candidates for the Board of Directors, taking into account suggestions made by officers, Directors, employees and stockholders, recommending Directors for service on Board committees, developing and reviewing background information for candidates, and making recommendations to the Board for changes to the Corporate Governance Guidelines as they pertain to the nomination or qualifications of Directors or the size of the Board, if applicable. The Corporate Governance and Nominating Committee met four times during 2010.

There are no firm prerequisites to qualify as a candidate for the Board, although the Board seeks a diverse group of candidates who possess the background, skills and expertise relevant to the business of the Company, or candidates that possess a particular geographical or international perspective. The Board looks for candidates with qualities that include strength of character, an inquiring and independent mind, practical wisdom and mature judgment. The Board seeks to insure that at least two-thirds of the Directors are independent under the Company’s Governance Guidelines, and that members of the Company’s Audit Committee meet the financial literacy requirements under the rules of the NYSE and at least one of them qualifies as an “audit committee financial expert” under applicable federal securities laws. The Corporate Governance and Nominating Committee does not have a set policy for considering or weighing diversity in identifying nominees but does seek to have a diversity of backgrounds, skills and perspectives among Board members, and considers how the background, skills and perspectives of the nominee would contribute to the total mix of backgrounds, skills and perspectives that would be available to the Board as a whole. Annually the Corporate Governance and Nominating Committee reviews the qualifications and backgrounds of the Directors and the overall composition of the Board, and recommends to the full Board the slate of Directors to be recommended for nomination for election at the annual meeting of stockholders.

The Board does not believe that its members should be prohibited from serving on boards and/or committees of other organizations, and the Board has not adopted any guidelines limiting such activities. However, the Corporate Governance and Nominating Committee and the full Board will take into account the nature of, and time involved in, a Director’s service on other boards in evaluating the suitability of individual Directors and making its recommendations to Company stockholders. Service on boards and/or committees of other organizations should be consistent with the Company’s conflict of interest policies.

The Corporate Governance and Nominating Committee may from time-to-time utilize the services of a search firm to help identify and evaluate candidates for Director who meet the qualifications outlined above.

The Corporate Governance and Nominating Committee will consider candidates for nomination recommended by stockholders and submitted for consideration. Although it has no formal policy regarding stockholder candidates, the Corporate Governance and Nominating Committee believes that stockholder candidates should be reviewed in substantially the same manner as other candidates.

Under the Company’s current Bylaws, stockholder nominations of individuals to be elected as directors at an annual meeting of our stockholders must be made in writing and delivered to the Corporate Secretary, 1111 Westchester Avenue, White Plains, New York 10604, and be received by the Corporate Secretary no later than the close of business on the 75th day nor earlier than the close of business on the 100th day prior to the first anniversary of the preceding year’s annual meeting. In accordance with the Company’s current Bylaws, in addition to other required information specified in the Bylaws, such notice shall set forth as to each proposed nominee (i) the name, age and business address of each nominee proposed in such notice, and a statement as to the qualification of each nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of Shares which are beneficially owned and owned of record by the nominating stockholder, and (iv) any other information concerning the nominee that must be disclosed of nominees in proxy solicitations regulated by Regulation 14A of the Exchange Act, including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected.

The Company provides a comprehensive orientation for all new Directors. It includes a corporate overview, one-on-one meetings with senior management and an orientation meeting. In addition, all Directors are given written materials providing information on the Company’s business.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that the Company’s Directors and executive officers, and persons who own more than ten percent of the outstanding Shares, file with the SEC (and provide a copy to the Company) certain reports relating to their ownership of Shares.

To the Company’s knowledge, based solely on a review of the copies of these reports furnished to the Company for the fiscal year ended December 31, 2010, and written representations from our Directors and executive officers, all Section 16(a) filing requirements applicable to its Directors, executive officers and greater than 10 percent beneficial owners were complied with for the most recent fiscal year, except that Mr. Duncan failed to timely file one Form 4 with respect to one transaction. This transaction report was filed late by the Company on behalf of Mr. Duncan.

RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The Board has appointed and is requesting ratification by stockholders of the appointment of Ernst & Young as the Company’s independent registered public accounting firm. While not required by law, the Board is asking the stockholders to ratify the selection of Ernst & Young as a matter of good corporate practice. Representatives of Ernst & Young are expected to be present at the Annual Meeting, will have an opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions. If the appointment of Ernst & Young is not ratified, the Board and the Audit Committee will reconsider the selection of the independent registered public accounting firm.

The Board unanimously recommends a vote FOR ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for 2011.

ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board of Directors is committed to excellence in governance and is aware of the significant interest in executive compensation matters by investors and the general public.

The Company has designed its executive compensation programs to attract, motivate, reward and retain the senior management talent required to achieve our corporate objectives and increase stockholder value. We believe

that our compensation programs are centered on pay-for-performance principles and are strongly aligned with the long-term interests of our stockholders. See the discussion of the compensation of our executive officers in the section entitled Compensation Discussion and Analysis beginning on page 19.

We are asking our stockholders to indicate their support for our Named Executive Officer compensation disclosed in the Compensation Discussion & Analysis, compensation tables and narrative discussion of this proxy statement. The Say-on-Pay vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and related philosophy, policies and practices.

Accordingly, we are asking our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company stockholders approve, on an advisory basis, the compensation paid to our Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables and narrative discussion, in our proxy statement for the 2011 Annual Meeting of Stockholders.”

This Say-on-Pay vote is advisory, and therefore is not binding on the Company, the Compensation Committee or the Board of Directors. However, the Compensation Committee and the Board value the opinions of our stockholders and will consider the outcome of the Say-on-Pay vote when making future compensation decisions.

The Board unanimously recommends a vote FOR the approval of the executive compensation program for the Company’s Named Executive Officers as disclosed in the Compensation Discussion & Analysis, compensation tables and narrative discussion of this proxy statement.

ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATION

The Company is presenting this proposal, which gives you as a stockholder the opportunity to inform the company as to how often you wish the Company to hold a stockholder vote on a Say-on-Pay proposal. As a stockholder, you have the option to vote for one of the following choices, as indicated on the proxy card: to hold the advisory vote on executive compensation every 1 year, 2 years, 3 years; or to abstain from voting.

The Board values constructive dialog on executive compensation and other important governance topics with our stockholders. The Board believes an advisory vote every year will provide an effective way to obtain information on stockholder sentiment about our executive compensation program. Accordingly, the Board recommends to the stockholders an annual frequency for Say-on-Pay votes.

Stockholders may vote on their preferred frequency for voting on approval of executive compensation by selecting the option of one year, two years, three years or abstain on the proxy card when voting on this proposal. Please note that, when casting a vote on this proposal, stockholders will not be voting to approve or disapprove the Board’s recommendation.

Approval of a frequency of future Say-on-Pay advisory votes requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting. If no frequency receives a majority of the votes cast on the proposal, our Board will consider the option (one, two or three years) receiving the greatest number of votes to be the frequency approved by stockholders. Although the vote is advisory in nature and therefore will not bind the Board, the Board intends to carefully consider the outcome of the vote when making future decisions about the frequency for holding an advisory vote on executive compensation. The Board anticipates that its decision on the frequency (one, two or three years) of future Say-on-Pay advisory votes will apply for the next six years, after which period another vote on the frequency of the Say-on-Pay vote will be held.

BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS

The table below shows the number of Shares beneficially owned by principal stockholders who beneficially own more than five percent of our outstanding Shares as of March 10, 2011. The information in this table is based upon the latest filings of either a Schedule 13D, Schedule 13G or Form 13F as filed by the respective stockholder with the SEC as of the date stated in the below footnotes.

We calculate the stockholder’s percentage of ownership of Shares assuming the stockholder beneficially owned that number of Shares on March 10, 2011, the record date for the Annual Meeting. Unless otherwise indicated, the stockholder had sole voting and dispositive power over the Shares.


	Amount and Nature of		Percent
Name and Address of Beneficial Owner	Beneficial Ownership		of Class

Waddell & Reed Financial, Inc.(1)		19,318,597		9.90%
6300 Lamar Avenue Overland Park, KS 66202
T. Rowe Price Associates, Inc.(2)		13,581,322		6.96%
100 E. Pratt Street Baltimore, MD 21202
BlackRock Inc.(3)		11,429,398		5.86%
40 East 52nd Street New York, NY 10022
FMR LLC(4)		10,285,981		5.27%
82 Devonshire Street Boston, MA 02109


(1)		Based on information contained in a Schedule 13G/A, dated February 8, 2011 (the “Waddell & Reed 13G/A”), filed by Waddell & Reed Financial, Inc. (WDR”), Waddell & Reed Financial Services, Inc. (“WRFSI”), Waddell & Reed, Inc. (“WRI”), Waddell & Reed Investment Management Company (“WRIMCO”), and Ivy Investment Management Company (“IICO”) (collectively “Waddell & Reed”) with the SEC, with respect to the Company reporting beneficial ownership as of December 31, 2010. The Waddell & Reed 13G/A reports that Waddell & Reed has sole voting power and sole dispositive power over 19,318,597 Shares as follows: WDR holds 19,318,597 Shares indirectly; WRFSI holds 7,687,394 Shares indirectly; WRI holds 7,687,394 Shares indirectly; WRIMCO holds 7,687,394 Shares directly; and IICO holds 11,631,203 Shares directly.

(2)		Based on information contained in a Schedule 13G, dated February 14, 2011 (the “Price Associates 13G”), filed by T. Rowe Price Associates, Inc. (“Price Associates”) with the SEC, with respect to the Company, reporting beneficial ownership as of December 31, 2010. The Price Associates 13G reports that Price Associates has sole voting power over 4,134,703 Shares and sole dispositive power over 13,581,322 Shares. These securities are owned by various individual and institutional investors which Price Associates serves as an investment adviser with power to direct investments and/or sole power to vote the securities. For the purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.

(3)		Based on information contained in a Schedule 13G/A, dated January 21, 2011 (the “BlackRock 13G/A”), filed by BlackRock, Inc. (“BlackRock”) with the SEC, with respect to the Company, reporting beneficial ownership as of December 31, 2010. The BlackRock 13G/A reports that BlackRock has sole voting and dispositive power over 11,429,398 Shares.

(4)		Based on information contained in a Schedule 13G/A, dated February 11, 2011 (the “FMR 13G/A”), filed by FMR LLC (“FMR”) with the SEC, with respect to the Company, reporting beneficial ownership as of December 31, 2010. The FMR 13G/A reports that FMR has sole voting power over 772,850 Shares and sole dispositive power over 10,285,981 Shares as follows: Fidelity Management & Research Company (“Fidelity”), a wholly-owned subsidiary of FMR, holds 9,513,131 Shares; Edward C. Johnson 3rd and FMR, through its control of Fidelity, and the funds, each has sole dispositive power over 9,513,131 Shares; Strategic Advisers, Inc., a registered investment adviser and wholly owned subsidiary of FMR, holds 778 Shares; Pyramis Global Advisors Trust Company (“PGATC”), an indirect wholly-owned subsidiary of FMR, holds 401,062 Shares; FIL Limited, a foreign-based entity that provides investment advisory and management services to non-U.S. investment companies, holds 371,010 Shares. According to the FMR 13G/A, FMR and Edward C. Johnson 3rd, Chairman of FMR, each has sole dispositive power and sole voting power over 9,513,131 Shares. According to the FMR 13G/A, Edward C. Johnson 3rd and FMR, through its control of PGATC, each has sole voting power and sole dispositive power over 401,062 Shares. Through ownership of voting common stock and the execution of a certain stockholders’ voting agreement, members of the Edward C. Johnson 3rd family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR.

BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The table below shows the beneficial ownership of our Shares of (i) each Director, (ii) each nominee for Director, (iii) our Chief Executive Officer, our Chief Financial Officer and each of the other three most highly paid executive officers and (iv) all directors and executive officers as a group, as of January 31, 2011. Beneficial ownership includes Shares a Director, nominee for Director or executive officer may acquire pursuant to stock options and other derivative securities that were exercisable at that date or that will become exercisable within 60 days thereafter. Unless otherwise indicated, the stockholder had sole voting and dispositive power over the Shares.


	Amount and Nature of
Name (Listed alphabetically)	Beneficial Ownership			Percent of Class

Adam M. Aron		47,124	(1)		(2)
Matthew E. Avril		143,823	(1)		(2)
Charlene Barshefsky		38,171	(1)(3)		(2)
Thomas E. Clarke		22,705	(1)		(2)
Clayton C. Daley, Jr.		20,173	(1)(3)		(2)
Bruce W. Duncan		194,549	(1)(3)(4)		(2)
Lizanne Galbreath		45,991	(1)(3)		(2)
Eric Hippeau		70,813	(1)(3)		(2)
Vasant M. Prabhu		348,355	(1)		(2)
Stephen R. Quazzo		71,255	(1)(5)		(2)
Thomas O. Ryder		76,560	(1)(3)		(2)
Kenneth S. Siegel		136,079	(1)		(2)
Simon M. Turner		189,076	(1)(6)		(2)
Frits van Paasschen		496,507	(1)		(2)
Kneeland C. Youngblood		38,029	(1)		(2)
All Directors, Nominees for Directors and executive officers as a group (17 persons)		2,056,616	(1)		(2)


(1)		Includes Shares subject to presently exercisable options, and options, restricted stock and restricted stock units that will become exercisable or vest within 60 days of January 31, 2011, as follows: 27,057 for Mr. Aron; 143,823 for Mr. Avril; 24,112 for Ambassador Barshefsky; 43,185 for Mr. Cava; 17,918 for Mr. Clarke; 13,631 for Mr. Daley; 58,448 for Mr. Duncan; 34,680 for Ms. Galbreath; 46,500 for Mr. Hippeau; 74,221 for Mr. McAveety; 331,297 for Mr. Prabhu; 41,104 for Mr. Quazzo; 46,295 for Mr. Ryder; 96,563 for Mr. Siegel; 169,118 for Mr. Turner; 494,476 for Mr. van Paasschen; and 29,200 for Mr. Youngblood.

(2)		Less than 1%.

(3)		Amount includes the following number of “phantom” stock units received as a result of the following Directors’ election to defer Directors’ Annual Fees: 3,400 for Ambassador Barshefsky; 3,542 for Mr. Daley; 7,499 for Mr. Duncan; 11,311 for Ms. Galbreath; 24,313 for Mr. Hippeau; and 19,267 for Mr. Ryder.

(4)		Includes 121,866 Shares held by The Bruce W. Duncan Revocable Trust of which Mr. Duncan is a trustee and beneficiary.

(5)		Includes 29,754 Shares held by a trust of which Mr. Quazzo is settlor and over which he shares investment control, and 397 Shares owned by Mr. Quazzo’s wife in a retirement account.

(6)		Includes 19,958 Shares owned jointly with spouse.

The following table provides information as of December 31, 2010 regarding Shares that may be issued under equity compensation plans maintained by the Company.

Equity Compensation Plan Information-December 31, 2010

Number of Securities

Remaining Available for

to be Issued Upon

Weighted-Average

Future Issuance Under

Exercise of

Exercise Price of

Equity Compensation Plans

Outstanding Options,

(Excluding Securities

Warrants and Rights

Reflected in Column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders

17,182,466

15.06

52,807,415

(1)

Equity compensation plans not approved by security holders

—

Total

17,182,466

15.06

52,807,415


(1)		Does not include deferred restricted stock units (that vest over three years and may be settled in Shares) that have been issued pursuant to the Executive Plan. The Executive Plan as it was approved by stockholders at the 2010 Annual Meeting did not limit the number of deferred restricted stock units that may be issued. In addition, 10,157,990 Shares remain available for issuance under our Employee Stock Purchase Plan, a stock purchase plan meeting the requirements of Section 423 of the Code.

EXECUTIVE AND DIRECTOR COMPENSATION


I.	EXECUTIVE OFFICERS

Our executive officers and their positions as of March 10, 2011 are:


Name
(listed alphabetically, after
Chief Executive Officer)		Position

Frits van Paasschen		Chief Executive Officer and President and a Director
Matthew E. Avril		President, Hotel Group
Jeffrey M. Cava		Executive Vice President and Chief Human Resources Officer
Philip P. McAveety		Executive Vice President and Chief Brand Officer
Vasant M. Prabhu		Vice Chairman and Chief Financial Officer
Kenneth S. Siegel		Chief Administrative Officer, General Counsel and Secretary
Simon M. Turner		President, Global Development

The biography for Mr. van Paasschen, our Chief Executive Officer and President, follows the table listing our Directors under Election of Directors beginning on page 8 above. Biographies for our other executive officers are:

Matthew E. Avril. Mr. Avril, 50, has been President, Hotel Group since September 2008. From May 2005 until August 2008, he was President and Managing Director of Operations for Starwood Vacation Ownership (“SVO”); and immediately prior, from September 2002 to May 2005, served as Senior Vice President for SVO. Mr. Avril was with Vistana, Inc. (SVO’s predecessor entity) for the ten year period from January 1989 to December 1998, serving as its Executive Vice President and Chief Operating Officer and, prior to that, as the company’s Chief Financial Officer. Prior to joining Vistana, Mr. Avril, a certified public accountant, spent five years with KPMG Peat Marwick. Mr. Avril is also a member of the board of directors of API Technologies Corp.

Jeffrey M. Cava. Mr. Cava, 59, has been Executive Vice President and Chief Human Resources Officer since May 2008. Mr. Cava served as Executive Vice President and Chief Human Resources Officer for Wendy’s International, Inc. from June 2003 to May 2008. Prior to joining Wendy’s, Mr. Cava was Vice President and Chief Human Resources Officer for Nike, Inc.; Vice President Human Resources for The Walt Disney Company, Consumer Products Group; and Vice President of Global Staffing, Training and Development for ITT Sheraton Corporation. Mr. Cava is also a member of the board of directors of The Society for Human Resources Management, a non-profit global human resources professional organization.

Philip P. McAveety. Mr. McAveety, 44, has been Executive Vice President and Chief Brand Officer since April 2008. Prior to joining the company, Mr. McAveety was Global Brand Director of Camper, SL, a fashion footwear company, from January 2007 until March 2008. From July 1997 until December 2006, he served as Vice President, Brand Marketing, Europe, Middle East and Africa at Nike, Inc.

Vasant M. Prabhu. Mr. Prabhu, 51, has been Vice Chairman and Chief Financial Officer since February 2010. Prior to that, he was Executive Vice President and Chief Financial Officer since January 2004. Prior to joining the Company, Mr. Prabhu served as Executive Vice President and Chief Financial Officer for Safeway Inc., from September 2000 through December 2003. Mr. Prabhu was previously the President of the Information and Media Group at the McGraw-Hill Companies, Inc., from June 1998 to August 2000, and held several senior positions at divisions of PepsiCo, Inc. from June 1992 to May 1998. From August 1983 to May 1992 he was a partner at Booz Allen Hamilton Inc., an international management consulting firm. Mr. Prabhu is a member of the board of directors of Mattel, Inc.

Kenneth S. Siegel. Mr. Siegel, 55, has been Chief Administrative Officer and General Counsel since May 2006. From November 2000 to May 2006, Mr. Siegel held the position of Executive Vice President and General Counsel. In February 2001, he was also appointed as the Secretary of the Company. Mr. Siegel was formerly the Senior Vice President and General Counsel of Gartner, Inc., a provider of research and analysis on information technology industries, from January 2000 to November 2000. Prior to that time, he served as Senior Vice President,

General Counsel and Corporate Secretary of IMS Health Incorporated, an information services company, and its predecessors from February 1997 to December 1999. Prior to that time, Mr. Siegel was a Partner in the law firm of Baker & Botts, LLP. Mr. Siegel is also a Trustee of Cancer Hope Network, a non-profit entity, a Trustee of Minority Corporate Counsel Association, and a Trustee of the American Hotel & Lodging Educational Foundation.

Simon M. Turner. Mr. Turner, 49, has been President, Global Development since May 2008. From June 1996 to April 2008, he was a principal of Hotel Capital Advisers, Inc., a hotel investment advisory firm. During this period, Mr. Turner served on the board of directors of Four Season Hotels, Inc., serving as a member of the Human Resources Committee and the Audit Committee. He was also a member of the board of directors of Fairmont Raffles Hotels International and was chairman of the Audit Committee. From July 1987 to May 1996, Mr. Turner was a member of the Investment Banking Department of Salomon Brothers, based in both New York and London.


II.	COMPENSATION DISCUSSION AND ANALYSIS

Introduction

The Company’s compensation programs are designed to align compensation with its business objectives and performance, enabling the Company to attract, retain, and reward executive officers and other key employees who contribute to the Company’s long-term success and motivate executive officers and key employees to enhance long-term stockholder value. The Compensation Committee reviews and sets the Company’s overall compensation strategy for all employees on an annual basis. In the course of this review, the Compensation Committee considers the Company’s current compensation programs and whether to modify them or introduce new programs or elements of compensation in order to better meet the Company’s overall compensation objectives. We provide information below with regard to the specific compensation of our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers, as determined for 2010 (our “Named Executive Officers”).

A. Overview of Starwood’s Executive Compensation Program

1. Program Objectives and Other Considerations

Objectives. As a consumer lifestyle company with a branded hotel portfolio at its core, the Company operates in a competitive, dynamic and challenging business environment. In step with this mission and environment, the Company’s compensation program for our principal executive officer, principal financial officer and other executive officers has the following key objectives:


	•	Attract and Retain: We seek to attract and retain talented executives from within and outside the hospitality industry who understand the importance of innovation, brand enhancement and consumer experience. We are working to reinvent the hospitality industry, and one element of this endeavor is to bring in key talent from other industries. Therefore, overall program competitiveness must take these other markets into account.

	•	Motivate: We seek to motivate our executives to sustain high performance and achieve Company financial and strategic/operational goals over the course of business cycles and in various market conditions.

	•	Align Interests: We endeavor to align the interests of stockholders and our executives by tying executive compensation to the Company’s business results and stock performance. Moreover, we strive to keep the executive compensation program transparent, easily understood, in line with market practices and consistent with high standards of good corporate governance.

In its review of the overall compensation strategy and program in 2008, the Compensation Committee made several key changes, most of which became effective for the 2009 performance year and have carried forward for 2010. The Compensation Committee changed its philosophy on tax gross-ups in change in control agreements and eliminated gross-ups for arrangements put in place in 2008 and thereafter. The Compensation Committee also revised the structure of determining annual incentive compensation under the Company’s Executive Plan: with respect to the goal based upon the Company’s financial performance, the Compensation Committee eliminated a floor below which compensation could not fall; and with respect to bonus pool funding, the Compensation Committee made structural changes to fund the pool entirely based upon the Company’s financial performance

goals. Further, when translating dollar-denominated long-term equity incentive awards into a number of stock options to be granted under the Company’s 2004 Long-Term Incentive Compensation Plan (“LTIP”), the Compensation Committee lowered the ratio from three times as many options as the number of Shares whose aggregate value on the grant date equals the dollar-denominated award (i.e., a 3-to-1 ratio) to two and one-half times (i.e., a 2.5-to-1 ratio). These changes were designed to better align compensation with the creation and preservation of stockholder value.

What the Program Intends to Reward. Our executive compensation program is strongly weighted toward variable compensation tied to Company results. Specifically, our compensation program for our Named Executive Officers is designed to ensure the following:


	•	Alignment with Stockholders: A significant portion of Named Executive Officer compensation is delivered in the form of equity, ensuring that long-term compensation is strongly tied to stockholder returns.

	•	Achievement of Company Financial Objectives: A portion of Named Executive Officer compensation is tied directly to the Company’s financial performance.

	•	Achievement of Strategic/Operational Objectives: A portion of Named Executive Officer compensation is tied to achievement of specific individual objectives that are directly aligned with the execution of our business strategy. These objectives may be related to, among others, operational excellence, brand enhancement, innovation, growth, cost containment/efficiency, customer experience and/or teamwork.

	•	Overall Leadership and Stewardship of the Company: Leadership, teambuilding, and development of future talent are key success factors for the Company and a portion of compensation for the Named Executive Officers is dependent on satisfaction of core leadership competencies.

2. Roles and Responsibilities

The Compensation Committee is responsible for, among other things, the establishment and review of compensation policies and programs for our executive officers and ensuring that the executive officers are compensated in a manner consistent with the objectives and principles outlined above. It also monitors the Company’s executive succession plan, and reviews and monitors the Company’s performance as it affects the Company’s employees and the overall compensation policies for the Company’s employees.

The Compensation Committee makes all compensation decisions with respect to our Named Executive Officers. Our Chief Executive Officer, together with the Chief Human Resources Officer, reviews the performance of each other Named Executive Officer and presents to the Compensation Committee his conclusions and recommendations, including salary adjustments and annual incentive compensation amounts (as described in more detail in the Annual Incentive Compensation section below). The Compensation Committee may exercise its discretion in modifying any recommended salary adjustments or awards to these executives.

The role of the Company’s management is to provide reviews and recommendations for the Compensation Committee’s consideration, and to manage operational aspects of the Company’s compensation programs, policies and governance. Direct responsibilities include, but are not limited to, (i) providing an ongoing review of the effectiveness of the compensation programs, including competitiveness, and alignment with the Company’s objectives, (ii) recommending changes, if necessary, to ensure achievement of all program objectives and (iii) recommending pay levels, payout and/or awards for executive officers other than the Chief Executive Officer. Management also prepares tally sheets which describe and quantify all components of total compensation for our Named Executive Officers, including salary, annual incentive compensation, long-term incentive compensation, deferred compensation, outstanding equity awards, benefits, perquisites and potential severance and change in control payments. The Compensation Committee reviews and considers these tally sheets in making compensation decisions for our Named Executive Officers.

The Compensation Committee retained Pearl Meyer & Partners to assist in the review and determination of compensation awards to the Named Executive Officers (including the Chief Executive Officer) for the 2010 performance period, as well as the annual fees or other compensation paid to our Board. Pearl Meyer & Partners worked with management and the Compensation Committee in reviewing the compensation structure of the

Company and of the companies in the peer group. The fees paid to Pearl Meyer & Partners for services performed for the Compensation Committee during 2010 were $136,000. Pearl Meyer & Partners does not provide any other services to the Company and no other fees were paid to Pearl Meyer & Partners by the Company during 2010.

3. Risk Assessment

In setting compensation, our Compensation Committee also considers the risks to our stockholders, and the Company as a whole, arising out of our compensation programs. In January 2011, management held a special meeting to discuss and assess the risk profile of our compensation programs. The Chief Human Resources Officer, our Chief Administrative Officer and General Counsel, our Vice Chairman and Chief Financial Officer, the Company’s external legal counsel for compensation matters, and Pearl Meyer & Partners were among the participants in the special meeting. Their review considered risk-determining characteristics of the overall structure and individual components of our Company-wide compensation program, including our base salaries, incentive plans (both at the executive and property management levels) and equity plans. A report of the findings was provided to the Compensation Committee for its review and consideration. Following this assessment, we believe that the Company has instituted policies that align our executive officers’ interests with those of our stockholders without creating incentives for our executive officers to take risks that are reasonably likely to have a material adverse effect on the Company. For example,


	•	Balance of Compensation: Across the Company, individual elements of our compensation program include base salaries, incentive compensation, and for certain of our employees, equity-based awards. By providing a mix of different elements of compensation which reward both short-term and long-term performance, the Company’s compensation programs as a whole provide a balanced approach to incentivizing and retaining employees, without placing an inappropriate emphasis on any particular form of compensation.

	•	Objective Formula and Pre-established Performance Measures Dictate Annual Incentives: Under the Executive Plan, payment of annual incentives to our Named Executive Officers is subject to the satisfaction of specific company-wide annual performance targets determined under an incentive formula established by our Compensation Committee within the first 90 days of each fiscal year. Similarly, the Company’s employees other than the Named Executive Officers that are eligible to receive an annual incentive receive such incentive subject to the satisfaction of specific company-wide annual performance targets determined under an incentive formula established by our Compensation Committee. These performance targets are directly and specifically tied to one or more of the following company-wide business criteria: EBITDA, consolidated pre-tax earnings, net revenues, net earnings, operating income, earnings before interest and taxes, cash flow measures, return on equity, return on net assets employed or earnings per share for the applicable fiscal year.

	•	Minimum and Maximum Thresholds For Annual Incentives: Each year our Compensation Committee establishes within the first 90 days of any fiscal year a threshold level of EBITDA that the Company must achieve in order for any bonus to be paid to our Named Executive Officers or other Company employees eligible to receive an annual incentive for any given year. The Executive Plan also specifies a maximum incentive amount, in dollars, that may be paid to any executive officer for any 12-month performance period. As a result of this threshold performance requirement and the design of our Executive Plan, incentive compensation is payable under our incentive plans only upon the attainment of performance targets related to business criteria that are in the interests of our stockholders.

	•	Use of Long-Term Incentive Compensation: Equity-based long-term incentive compensation that vests over a period of years is a key component of total compensation of our executive employees. This vesting period encourages our executives to focus on sustaining the Company’s long-term performance. These grants are also made annually, so executives always have unvested awards that could decrease significantly in value if our business is not managed for the long term.

	•	Share Ownership Guidelines: Our Share ownership guidelines require our executive officers, including the Named Executive Officers, to hold that number of Shares having a market value equal to or greater than a multiple of each executive’s base salary. For the Chief Executive Officer, the multiple is five times base


		salary and for the other Named Executive Officers, the multiple is four times base salary. A retention requirement of 35% is applied to restricted Shares upon vesting (net Shares after tax withholding) and Shares obtained from option exercises until the executive meets the target, or if an executive falls out of compliance. See the section entitled *Share Ownership Guidelines* on page 32 for a description of the securities that count towards meeting the target and other considerations.


	•	Internal Processes Further Restrict Risk: The Company has in place additional processes to limit risk to the Company from our compensation programs. Specifically, the Company has financial policies that restrict the amount of capital that any individual may deploy absent obtaining internal approvals, which reduces the risk of inappropriate expenditures by an individual. Further, the processes and controls associated with respect to our compensation programs are audited each year to insure that all expenditures have been approved within the Company’s guidelines and by required approval authorities. In addition, the Company engages an external compensation consulting firm for design and review of our compensation programs, as well as external legal counsel to assist with the periodic review of our compensation plans to ensure compliance with applicable laws and regulations.

B. Elements of Compensation


	1.	*Primary Elements*

The primary elements of the Company’s compensation program for our Named Executive Officers are:


	•	Base Salary

	•	Incentive Compensation


	ο	Annual Incentive Compensation

	ο	Long-Term Incentive Compensation


	•	Benefits and Perquisites

Mr. van Paasschen’s compensation structure was established in 2007 pursuant to his employment agreement. Mr. van Paasschen and the Company agreed to a compensation structure which was heavily weighted towards performance and long-term incentives, including equity awards in the form of restricted stock and stock options and restrictions on selling equity awards for two years (other than to satisfy tax withholding obligations). As a result, in the event of strong financial and individual performance, Mr. van Paasschen would benefit greatly in the form of long-term incentive compensation (stock options and restricted stock), but his compensation would be significantly lower if the Company did not perform well or if his employment with the Company was terminated after a short period of time (due to the vesting requirements of the equity awards under which there is generally no acceleration of equity awards for a termination with or without cause). For the other Named Executive Officers, pay is structured to award performance upon achievement of pre-established financial and strategic performance goals.

Total compensation for this group is evaluated against the peer group identified in this proxy statement. Evaluated on this basis, the Compensation Committee believes the actual cash and equity compensation delivered for the 2010 performance year was appropriate in light of the Company’s overall performance and the performance of the particular executives.

We describe each of the compensation elements below and explain why we pay each element and how we determine the amount of each element.

Base Salary. The Company believes it is essential to provide our Named Executive Officers with competitive base salaries that will enable the Company to continue to attract and retain critical senior executives from within and outside the hospitality industry. In the case of Named Executive Officers other than the Chief Executive Officer, base salary typically accounts for approximately 20% of total compensation at target (i.e., total compensation assuming performance goals are satisfied at targeted levels, but excluding benefits and perquisites). In the case of Mr. van Paasschen, base salary for 2010 was $1,250,000. As a result, base salary accounted for approximately 14% of total compensation at target for Mr. van Paasschen. Base salary serves as a minimum

level of compensation to Named Executive Officers in circumstances when achieving Company financial and strategic/operational objectives becomes challenging and the level of incentive compensation is impacted. Salaries for Named Executive Officers are generally based on the responsibilities of each position and are reviewed annually against similar positions among a group of peer companies developed by the Company and its advisors consisting of similarly-sized hotel and hospitality companies as well as other companies representative of markets in which the Company competes for key executive talent. See the Background Information on the Executive Compensation Program — Use of Peer Data section beginning on page 31 below for a list of the peer companies used in this analysis. The Company generally seeks to position base salaries of our Named Executive Officers at or near the median base salary of the Company’s peer group for similar positions.

Incentive Compensation. Incentive compensation includes annual cash bonus awards under the Company’s Executive Plan and long-term incentive compensation in the form of equity awards under the Company’s LTIP. Incentive compensation typically accounts for approximately 80% of total compensation at target (86% for Mr. van Paasschen in 2010), with annual cash bonus compensation and long-term incentive compensation accounting for 23% and 57%, respectively (29% and 57% for Mr. van Paasschen, respectively, in 2010). The Company believes that this structure allows it to provide each Named Executive Officer with substantial incentive compensation opportunities if performance objectives are met. The Company believes that the allocation between base and incentive compensation is appropriate and beneficial because:


	•	it promotes the Company’s competitive position by allowing it to provide Named Executive Officers with above-median total competitive compensation if targets are met;

	•	it targets and attracts highly motivated and talented executives within and outside the hospitality industry;

	•	it aligns senior management’s interests with those of stockholders;

	•	it promotes achievement of business and individual performance objectives; and

	•	it provides long-term incentives for Named Executive Officers to remain in the Company’s employ.

Annual Incentive Compensation. Annual cash bonuses are a key part of the Company’s executive compensation program. The bonuses directly link the achievement of Company financial and strategic/operational performance objectives to executive pay. Annual bonuses also provide a complementary balance to equity incentives (discussed below). Each Named Executive Officer has an annual opportunity to receive an incentive award under the stockholder-approved Executive Plan. If and when earned, awards are typically paid to Named Executive Officers partly in cash and, unless the Compensation Committee otherwise elects, partly as deferred stock awards (under the Executive Plan). The deferred stock awards generally vest over a three-year period. See additional detail regarding these deferred stock awards in the Long-Term Incentive Compensation section beginning on page 28 below.

Viewed on a combined basis once minimum performance is attained, the annual bonus payments attributable to both Company financial and strategic/operational performance can range from 0% - 275% of target for the Named Executive Officers, other than the Chief Executive Officer.

Minimum Threshold.

For the Named Executive Officers, an annual bonus award for 2010 was paid under the Executive Plan. Under the Executive Plan, each year, the Compensation Committee establishes in advance a threshold level of EBITDA that the Company must achieve in order for any bonus to be paid under the Executive Plan for that year (the “EP Threshold”). The Executive Plan also specifies a maximum bonus amount, in dollars, that may be paid to any executive for any 12-month performance period. When the threshold is established at the beginning of a year, the achievement of the threshold is considered substantially uncertain for purposes of Section 162(m), which is one of the requirements for compensation paid under the Executive Plan to be deductible as performance-based compensation under Section 162(m). For 2010, the EP Threshold was $640,000,000.

Generally, a Named Executive Officer will receive payment of a bonus award under the Executive Plan only if he remains employed by the Company on the award payment date. However, subject to attaining the EP

Threshold in the relevant year, pro rata awards may be paid at the discretion of the Compensation Committee in the event of death, disability, retirement or other termination of employment.

Once the EP Threshold is achieved, the maximum annual bonus amount specified in the Executive Plan becomes available for each Named Executive Officer and the Compensation Committee may apply its discretion to reduce such amount to determine the actual bonus amount for each individual. To determine the actual bonus to be paid for a year under the Executive Plan, the Compensation Committee also establishes specific annual Company financial and strategic/operational performance goals and a related target bonus amount for each executive. These financial and strategic/operational goals are described below.

Additional Performance Criteria.

If the EP Threshold under the Executive Plan is met for a year, the Company’s performance in comparison to the financial and strategic/operational goals for the year set by the Compensation Committee is then used to determine a Named Executive Officer’s actual bonus, as follows:

Financial Goals.

The Company financial goals for Named Executive Officers under the Executive Plan consist of EBITDA and earnings per share targets, with each criteria accounting for half of the financial goal portion of the annual bonus. As the Compensation Committee generally sets target bonus award opportunities above the median among the Company’s peer group, the Company financial and strategic/operational goals to achieve such award levels are considered challenging but achievable, representing a superior level of performance. Consistent with maintaining these high standards and subject to achieving the EP Threshold, the Compensation Committee retains the ability to consider whether an adjustment of the financial goals for any year is necessitated by exceptional circumstances, e.g., an unanticipated and material downturn in the business cycle that triggers, in response, an increased focus by the Compensation Committee on the Company’s performance relative to the industry. This ability is intended to be narrowly and infrequently used and, if applicable, the basis for its use would be detailed in the Company’s proxy statement.

Performance against the financial goals determined 60% of Mr. van Paasschen’s total target annual bonus opportunity and 50% of the total target opportunities for the other Named Executive Officers. Subject to achieving the EP Threshold, actual bonuses paid to Named Executive Officers for financial performance may range from 0% to 200% of the pre-determined target bonus for this category of performance, as determined by the Compensation Committee. For Named Executive Officers, the Company financial performance portion is based 50% on earnings per share and 50% on EBITDA of the Company.

As noted above, once the EP Threshold is achieved, the minimum and maximum annual bonus amount specified in the Executive Plan becomes available for award. The maximum bonus payout for the applicable Company financial performance metric is limited to 200% of target (i.e., the “Maximum”) and the Compensation Committee may apply its discretion to reduce such amount to the actual bonus amount for each Named Executive Officer. The table below sets forth for each metric the performance levels for 2010 which would have resulted in 100% bonus pool payout (i.e., “Target”), the minimum performance level (i.e., the “Minimum”) that would have resulted in a 20% bonus pool payout and the Maximum that would have resulted in a 200% bonus pool payout. In addition, the table sets forth the approximate mid-points of payout between the Minimum to Target and Target to Maximum and indicates the related required performance level:


	Minimum		Mid-point		Target		Mid-point		Maximum
	(20%)		(75%)		(100%)		(150%)		(200%)

Earnings per Share	$	0.68	$	0.80	$	0.85	$	0.96	$	1.06
Company EBITDA	$	640,000,000	$	750,000,000	$	800,000,000	$	900,000,000	$	1,000,000,000

For the 2010 performance period, EBITDA (which exceeded the EP Threshold) for purposes of determining annual bonuses was $884,000,000, which reflects an adjusted EBITDA amount that is normalized to exclude the potential impact of asset sales and/or foreign exchange swings. Actual results for earnings per Share for purposes of determining annual bonuses were $1.26, which reflects earnings before special items. The Compensation Committee, using the metrics described above, approved a maximum payout eligibility of

170% of target for the Company financial portion of the annual bonus for the 2010 fiscal year for the Named Executive Officers. Using negative discretion, the Compensation Committee determined that the Company financial portion of the annual bonus would pay out only at 120% of target, reflecting the Compensation Committee’s judgment that the economic recovery was stronger than anticipated at the time the 2010 targets were established.

Strategic/Operational Goals.

The strategic/operational performance goals for Named Executive Officers under the Executive Plan consists of “Big 5” and leadership competency objectives that link individual contributions to execution of our business strategy and major financial and operating goals. “Big 5” refers to each executive’s specific deliverables within the Company’s critical performance categories — win with talent, execute brilliantly, build great brands, deliver global growth, and drive outstanding results. As part of a structured process that cascades down throughout the Company, these objectives are developed at the beginning of the year, and they integrate and align an executive with the Company’s strategic and operational plan. Achievement of “Big 5” objectives typically accounts for 80% of the strategic/operational performance evaluation, and achievement of leadership competency objectives typically accounts for 20% of such evaluation. The portion of annual bonus awards attributable to strategic/operational management performance represents 40% of Mr. van Paasschen’s total target opportunity and 50% of the total target opportunities for the other Named Executive Officers. Actual bonuses paid to Named Executive Officers for strategic/operational performance may range from 0% to 175% of the pre-determined target amount for this category of performance, as determined by the Compensation Committee.

Evaluation Process.

In the case of Mr. van Paasschen, the Compensation Committee conducts a formal performance review process each year during which the Compensation Committee evaluates how Mr. van Paasschen performed against the strategic/operational/talent management performance goals established for the prior year. The Compensation Committee also determines the extent to which the Company’s financial performance goals were achieved and whether the Company achieved the applicable minimum threshold(s) required to pay awards.

With respect to the other Named Executive Officers, Mr. van Paasschen, together with the Chief Human Resources Officer and with oversight and input from the Compensation Committee, conducts a formal performance review process each year to evaluate performance against the officer’s strategic/operational performance goals for the prior year. The Chief Executive Officer conducts this evaluation through the Performance Management Process (“PMP”), which results in a PMP rating for each executive. This PMP rating corresponds to a payout range under the Executive Plan determined annually by the Compensation Committee for that rating. As noted, for 2010 the portion of the Executive Plan payouts based on PMP ratings could range from 0% to 175% of target once the target has been adjusted to reflect the Company’s performance. Where necessary to preserve the competitive position of the Company’s compensation scale, the Chief Executive Officer may recommend a market adjustment to the base amount that is subjected to this percentage. At the conclusion of his review, the Chief Executive Officer submits his recommendations to the Compensation Committee for final review and approval. In determining the actual award payable to a Named Executive Officer under the Executive Plan, the Compensation Committee reviews the Chief Executive Officer’s evaluation and makes a final determination as to how the executive performed against his strategic/ operational goals for the year. The Compensation Committee also determines, based on management’s report, the extent to which the Company’s financial performance goals were achieved and whether the Company achieved the applicable minimum threshold(s) required to pay awards. The Chief Executive Officer also meets in executive session with the Board of Directors to inform the Board of his performance assessments regarding the Named Executive Officers and the basis for the compensation recommendations he presented to the Compensation Committee.

The evaluation of Mr. van Paasschen and the other Named Executive Officers with respect to each executive’s strategic/operational goals for 2010 is described below.

Mr. van Paasschen’s accomplishments for the 2010 performance year included the following:


	•	Delivered strong financial returns, as measured by key financial measures including EBITDA, EPS, and shareholder return, in excess of both the S&P 500 average and the S&P 500 average for hotel companies for 2010;

	•	Furthered strong growth in the Company’s hotel portfolio by opening 72 new hotels and executing signed deals for 96 new hotels and 59 re-engagements of existing hotels;

	•	Maintained Starwood’s position as a brand leader and innovator by improving market share across most Company brands and increasing membership in the Company’s Preferred Guest Program;

	•	Achieved increased employee satisfaction scores and introduced new initiatives to develop management talent within the Company; and

	•	Announced water and energy reduction targets, with global initiatives rolled out to support these goals.

In light of Mr. van Paasschen’s accomplishments and impact on the Company, the Compensation Committee awarded him a payout at 120% of target for the strategic/operational portion of the annual bonus, for a total annual bonus of $3,000,000 for 2010, representing 120% of his overall annual bonus target.

Mr. Avril’s accomplishments for the 2010 performance year included the following:


	•	Significantly gained market share across most Company brands, including an 1.5% increase over last year in our North America Division led by a 2.1% increase in market share for our Sheraton brand, and a 7.1% increase over last year for our W brand globally;

	•	Significantly increased from the prior year the hotel group EBITDA and owned hotels EBITDA, outpacing our budgeted revenue growth by 7%, and 32% in each case, respectively;

	•	Redesigned the Starwood Preferred Guest enrollment process, resulting in a significant increase in the Company’s Preferred Guest Program;

	•	Opened 72 hotels worldwide and delivered strong guest satisfaction index (GSI) scores across all brands, despite inherent pressures from raising rates and occupancy levels; and

	•	Furthered key relationships with hotel owners, joint venture partners and our Company’s personnel to drive revenue, strong owner relations, and retention of management talent throughout our hotels.

In light of Mr. Avril’s accomplishments in 2010, he received an “accomplished objectives” PMP performance rating and was awarded a payout at 120% of target for the strategic/operational portion of the annual bonus, for a total annual bonus of $902,100 for 2010, representing 120% of his overall annual bonus target.

Mr. Prabhu’s accomplishments for the 2010 performance year included the following:


	•	Continued to strengthen the Company’s liquidity position and reduce leverage by extending the Company’s $1.6 billion credit facility to 2013 and significantly reducing debt;

	•	Exceeded the Company’s cash flow budget by almost $800 million and lowered net debt to $2 billion with approximately $650 million in cash reserves at year-end;

	•	Received a total tax refund of $245 million for the successful settlement of a tax matter with the United States Internal Revenue Service;

	•	Led a strategic sourcing team that delivered savings of $37 million with the successful negotiation of contracts in 2010; and

	•	Managed the Company’s financial operations efficiently, improving the accuracy of our forecasting and continuing a focus on strong internal controls.

In light of Mr. Prabhu’s accomplishments, he received an “accomplished objectives” PMP performance rating and the Compensation Committee awarded him a payout at 120% of target for the strategic/operational portion of the annual bonus, for a total annual bonus of $902,100 for 2010, representing 120% of his overall annual bonus target.

Mr. Siegel’s individual accomplishments for the 2010 performance year included the following:


	•	Provided legal support for over 145 hotel management and franchise transactions, including new deals, changes in ownership and re-engagements worldwide; strategic hotel sales and sale-and-manage-back transactions; and the negotiation of the Company’s new headquarters lease along with eight additional corporate lease transactions;

	•	Successfully resolved a litigation matter against certain former employees and their new employer regarding substantial theft of intellectual property from the Company, along with the management of over 600 matters in active litigation;

	•	Managed, in coordination with our finance and information security teams, the resolution of a hacker-instituted malware incident; and streamlined, in coordination with our development team, the Company’s hotel operating agreements for more expedient negotiations with owners;

	•	In partnership with the hotel industry, led efforts to block “Card Check” legislation and tax windfall legislation favoring Online Travel Agencies (OTAs); and

	•	Made significant progress in long-term Global Citizenship goals, including instituting four “Foundational Environmental Initiatives” in our hotel brand standards and secured LEED Volume Certification for our Element brand hotels.

In light of Mr. Siegel’s accomplishments, he received an “accomplished objectives” PMP performance rating and was awarded a payout at 120% of target for the strategic/operational portion of the annual bonus, for a total annual bonus of $766,188 for 2010, representing 120% of his overall annual bonus target.

Mr. Turner’s accomplishments for the 2010 performance year included the following:


	•	Successfully managed the global development team to achieve agreements for 96 new hotels (approximately 22,200 new rooms) and 59 re-engagements or changes to ownership involving existing hotels (approximately 15,000 rooms), which exceeds 2009 growth levels by approximately 25% and 35% respectively;

	•	Completed strategic sale transactions generating pre-tax proceeds of $148 million;

	•	Continued focus on accelerating growth of the Aloft brand with 17 incremental Aloft hotel deals signed in 2010;

	•	Completed a series of Strategic Asset Reviews to set direction for future development, covering 80% of wholly owned properties; and

	•	Completed a comprehensive review of the Company’s hotel operating agreements in partnership with the legal team, which will allow for more streamlined, efficient negotiations with owners.

In light of Mr. Turner’s accomplishments in 2010, he received an “accomplished objectives” PMP performance rating and was awarded a payout at 120% of target for the strategic/operational portion of the annual bonus, for a total annual bonus of $778,500 for 2010, representing 120% of his overall annual bonus target.

Overall, the Compensation Committee paid the Named Executive Officers individual bonuses under the Executive Plan at 120% of target, which reflected the target payout based upon the Company’s financial performance goals, and the contribution made by each of the Named Executive Officers under his strategic/operational goals.

Annual awards made to our Named Executive Officers under the Executive Plan with respect to 2010 performance are reflected in the Summary Compensation Table on page 34 and described in the accompanying narrative.

Long-Term Incentive Compensation. Like the annual incentives described above, long-term incentives are a key part of the Company’s executive compensation program. Long-term incentives are strongly tied to returns achieved by stockholders, providing a direct link between the interests of stockholders and the Named Executive Officers. Long-term incentive compensation for our Named Executive Officers consists primarily of equity compensation awards granted annually (in February of each year following the announcement of the Company’s earnings for the previous year) under the Company’s LTIP and secondarily of the portion of the Executive Plan awards that are deferred in the form of deferred stock awards. Taken together, approximately 60% of total compensation at target award levels is equity-based long-term incentive compensation.

The Compensation Committee grants awards under the LTIP to Mr. van Paasschen that are a combination of stock options and restricted stock. Mr. van Paasschen’s employment agreement, which reflects an emphasis on performance and long-term incentives, provides that in the event of strong financial and individual performance Mr. van Paasschen benefits greatly in the form of long-term incentive compensation that, for the 2010 fiscal year, would not be less than $5,000,000. The Compensation Committee generally grants awards under the LTIP to all other Named Executive Officers that are a combination of stock options and restricted stock awards. For the other Named Executive Officers, compensation is also geared towards performance and long-term incentives, but to a lesser degree than Mr. van Paasschen. The Compensation Committee believes an emphasis on long-term equity compensation (i.e., stock options and restricted stock) is particularly appropriate for the leader of a management team committed to the creation of stockholder value.

In 2010, for all Named Executive Officers, the Compensation Committee used a grant approach in which the award is articulated as a dollar value. Under this approach, an overall award value, in dollars, was determined for each executive based upon our compensation strategy and competitive market positioning taking into account the Company and individual performance factors for the Named Executive Officers described above in Annual Incentive Compensation.

The Compensation Committee determines the appropriate mix of restricted stock and stock options to be given to our Named Executive Officers. For 2010, the Compensation Committee determined that a split of 75% of restricted stock awards and 25% of stock options was the appropriate balance to maximize cost effectiveness and encourage equity ownership among our management. The number of shares of restricted stock was calculated by dividing 75% of the award value by the fair market value of the Company’s stock on the grant date. The number of stock options was determined by dividing the remaining 25% of the award value by the fair market value of the Company’s stock on the grant date and multiplying the result by two and one-half. The Named Executive Officers are able to elect a greater portion of options (up to 100% options). Based on the factors set forth above, including the Company’s performance and individual performance of each Named Executive Officer in 2010, the Compensation Committee believes that the equity award grants in 2010 were appropriate.

The exercise price for each stock option is equal to fair market value of the Company’s common stock on the option grant date. See the section entitled Equity Grant Practices on page 32 below for a description of the manner in which we determine fair market value for this purpose. Currently, most stock options vest in 25% increments annually starting with the first anniversary of the date of grant. For stock options granted in 2010, awards granted to associates who are retirement eligible, as defined in the LTIP, vest in 16 equal quarterly periods. Unexercised stock options expire eight years from the date of grant, or earlier in the event of termination of employment. Stock options provide compensation only when vested and only if the Company’s stock price appreciates and exceeds the exercise price of the option. Therefore, during business downturns, option awards may not represent any economic value to an executive.

Named Executive Officers have a mandatory deferral of 25% of their awards under the Executive Plan in the form of deferred restricted stock units, unless reduced in the discretion of the Compensation Committee. The deferred amount (as increased as described below) is deemed to represent a number of shares of the Company determined by dividing the amount by the fair market value of a Share on the date of grant, which will be delivered to the Named Executive Officer upon vesting of the Shares. As such, the awards combine performance-based compensation with a further link to stockholder interests. First, amounts must be earned based on annual Company financial and strategic/operational performance under the Executive Plan. Second,

these already earned amounts are put at risk through a vesting schedule. Vesting occurs in installments for employment over a three-year period. Third, these earned amounts become subject to Share price performance. Primarily in consideration of this vesting risk being applied to already earned compensation (but also taking into account the enhanced stockholder alignment that results from being subject to Share performance), the deferred amount is increased by 33% of value. For awards granted in 2009 or later, vesting will accelerate in the event of death, disability or retirement.

Restricted stock and restricted stock unit awards provide some measure of mitigation of business cyclicality while maintaining a direct tie to Share price. The Company seeks to enhance the link to stockholder performance by building a strong retention incentive into the equity program. Consequently, for 2010 grants, 100% of restricted stock unit awards vest on the fiscal year end of the year immediately prior to the third anniversary of the date of grant and 100% of restricted stock awards vest on the third anniversary of the date of grant. For restricted stock granted in 2010, awards granted to associates who are retirement eligible, as defined in the LTIP, vest in twelve equal quarterly periods. This vesting places an executive’s long-term compensation at risk to Share price performance for a significant portion of the business cycle, while encouraging long-term retention of executives.

Pursuant to his employment agreement, Mr. van Paasschen agreed not to sell any Company stock awards or Shares received on exercise of options (except as may be withheld for taxes) without prior consultation with the Board of Directors.

Benefits and Perquisites. Base salary and incentive compensation are supplemented by benefits and perquisites.

Current Benefits. The Company believes the employee benefits it provides are consistent with local practices and competitive markets, including group health benefits, life and disability insurance, dependent care flexible spending accounts, health savings account, and a pre-tax premium payment arrangement. Each of these benefits is provided to a broad group of employees within the Company and our Named Executive Officers participate in the arrangements on the same basis as other employees.

Perquisites. As reflected in the Summary Compensation Table below, the Company provides certain limited perquisites to select Named Executive Officers when necessary to provide an appropriate compensation package, particularly in connection with enabling the executives and their families to smoothly transition from previous positions which may require relocation. For example, Mr. van Paasschen and his immediate family had access to a Company owned or leased airplane on an “as available” basis for personal travel, i.e., assuming such plane was not needed for business purposes, with an obligation to reimburse for personal use based upon the Company’s operating cost. The Company also reimburses Named Executive Officers generally for travel expenses and other out-of-pocket costs incurred with respect to attendance by their spouses at one meeting of the Board each year.

Retirement Benefits. The Company maintains a tax-qualified retirement savings plan pursuant to Code section 401(k) for a broadly-defined group of eligible employees that includes the Company’s Named Executive Officers. Eligible employees may contribute a portion of their eligible compensation to the plan on a before-tax basis, subject to certain limitations prescribed by the Code. Prior to 2008, the Company matched 100% of the first 2% of eligible compensation and 50% of the next 2% of eligible compensation that an eligible employee contributes. Beginning in 2008, the Company matches 100% of the first 1% of eligible compensation and 50% of the next 6% of eligible compensation that an eligible employee contributes. These matching contributions, as adjusted for related investment returns, become fully vested upon the eligible employee’s completion of two years of service with the Company. Our Named Executive Officers, in addition to certain other eligible employees, were permitted to make additional deferrals of base pay and regular annual incentive awards under our nonqualified deferred compensation plan. This plan is discussed in further detail under the heading Nonqualified Deferred Compensation on page 40.

2. Change in Control Arrangements

On March 25, 2005, the Company adopted a policy proscribing certain terms of severance agreements triggered upon a change in control of the Company. Pursuant to the policy, the Company is required to seek stockholder approval of severance agreements with executive officers that provide Benefits (as defined in the policy) in excess of 2.99 times base salary plus such officer’s most recent annual incentive award.

In 2006, the Board reviewed the change in control arrangements then in place with the Named Executive Officers and decided to enter into new change in control agreements with the Named Executive Officers at that time, which included Messrs. Prabhu and Siegel. In connection with the hiring of Mr. Turner in May 2008 as President, Global Development, and the promotion of Mr. Avril in September 2008 to President, Hotel Group, the Company entered into change in control arrangements with them that were similar to the arrangements in place for the other Named Executive Officers (other than the Chief Executive Officer). Pursuant to the Company’s 2008 policy decision to cease paying tax gross-ups in change in control agreements, the arrangements with Messrs. Turner and Avril, however, do not provide for a tax gross-up if the benefits payable thereunder are subject to the excise tax under Section 280G of the Code. Instead, the benefits provided are reduced to the point that it would be more advantageous to the executive to pay the excise tax rather than reduce benefits further. The Company also included change in control arrangements in Mr. van Paasschen’s employment agreement.

These change in control arrangements are described in more detail beginning on page 41 under the heading entitled Potential Payments Upon Termination or Change in Control. The change in control severance agreements are intended to promote stability and continuity of senior management. The Company believes that the provision of severance pay to these Named Executive Officers upon a change in control aligns their interests with those of stockholders. By making severance pay available, the Company is able to mitigate executive concern over employment termination in the event of a change in control that benefits stockholders. In addition, the acceleration of equity compensation vesting in connection with a change in control provides these Named Executive Officers with protection against equity forfeiture due to termination and ample incentive to achieve Company goals, including facilitating a sale of the Company at the highest possible price per share, which would benefit both stockholders and executives. In addition, the Company acknowledges that seeking a new senior position is a long and time-consuming process. Lastly, each severance agreement permits the executive to maintain certain benefits for a period of two years following termination and to receive outplacement services. The aggregate effect of our change in control provisions is intended to focus executives on maximizing value to stockholders. In addition, should a change in control occur, benefits will be paid only after a “double trigger” event as described in Potential Payments Upon Termination or Change in Control. The Company believes benefit levels have been set to be competitive with peer group practices.

In connection with Section 409A of the Code (“Section 409A”), in 2008 the Company amended the employment arrangements with each of the Named Executive Officers (including the Chief Executive Officer). These amendments made several technical changes designed to make the employment arrangements with such officers comply with Section 409A and the final regulations issued thereunder, and generally affect the timing, but not the amount, of the compensation of such officers under specified circumstances.


	3.	*Additional Severance Arrangements*

In 2007, the Company entered into a letter agreement with Mr. Prabhu clarifying that his severance included the acceleration of 50% of unvested stock options in the event that his employment was terminated without cause or by him for good reason. Mr. Prabhu’s employment agreement dated November 13, 2003, provides for the acceleration of 50% of unvested restricted stock in the event that his employment was terminated without cause or by him for good reason. The clarification formally documented Mr. Prabhu’s existing severance arrangements as part of his employment with the Company.

This additional severance arrangement is described in more detail beginning on page 41 under the heading entitled Potential Payments Upon Termination or Change in Control.


C.	Background Information on the Executive Compensation Program


	1.	*Use of Peer Data*

In determining competitive compensation levels, the Compensation Committee reviews data from several major compensation consulting firms that reflects compensation practices for executives in comparable positions in a peer group consisting of companies in the hotel and hospitality industries and companies with similar revenues in other industries relevant to key talent recruitment needs. The executive team and Compensation Committee review the peer group bi-annually to ensure it represents a relevant market perspective. The Compensation Committee utilizes the peer group for a broad set of comparative purposes, including levels of total compensation, pay mix, incentive plan and equity usage and other terms of employment. The Company believes that by conducting the competitive analysis using a broad peer group, which includes companies outside the hospitality industry, it is able to attract and retain talented executives from outside the hospitality industry. The Company’s experience has proven that key executives with diversified experience prove to be major contributors to its continued growth and success.

The peer group approved by the Compensation Committee for 2010 is set out below. We expect that it will be necessary to update the list periodically.


Avon Products		MGM Mirage
Carnival Corp.		Nike, Inc.
Colgate Palmolive Corporation		Simon Property Group Inc.
Estee Lauder Cos. Inc.		Staples Inc.
Federal Express Corp.		Starbucks Corp.
Host Hotels & Resorts		Williams Sonoma Inc.
Kellogg Corporation		Walt Disney Co.
Limited Brands Inc.		Wyndham Worldwide Corporation
Marriott International, Inc.		Yum Brands Inc.
McDonald’s Corp.

In performing its competitive analysis, the Compensation Committee typically reviews:


	•	base pay;

	•	target and actual total cash compensation, consisting of salary, target and actual annual incentive awards in prior years; and

	•	direct total compensation consisting of salary, target and actual annual incentive awards, and the value of option and restricted stock/restricted stock unit awards.

When establishing target compensation levels for 2010, the Compensation Committee reviewed peer group data on payments to named executive officers as reported in proxy statements available as of February 2010 as provided by Pearl Meyer & Partners.

2. Tax Considerations

Section 162(m) generally disallows a federal income tax deduction to public companies for incentive compensation in excess of $1,000,000 paid to the chief executive officer and the four other most highly compensated executive officers. Qualified performance-based compensation is not subject to the deduction limit if certain requirements are met. The Company believes that compensation paid under the Executive Plan for 2010 meets these requirements and is generally fully deductible for federal income tax purposes.

In designing the Company’s compensation programs, the Compensation Committee carefully considers the effect of this provision together with other factors relevant to its business needs. In certain circumstances the Company may approve compensation that does not meet these requirements in order to advance the long-term interests of its stockholders. In February 2010 the Compensation Committee approved an increase in Mr. van Paasschen’s base salary from $1,000,000 to $1,250,000. For the 2011 fiscal year, the Compensation Committee determined that Mr. van Paasschen’s base salary should remain $1,250,000. The Company has

historically taken, and intends to continue taking, reasonably practicable steps to minimize the impact of the loss of deductibility under Section 162(m). Accordingly, the Compensation Committee has determined that each of the Named Executive Officers will participate under the Executive Plan for 2011.

On October 22, 2004, the American Jobs Creation Act of 2004 was signed into law, adding Section 409A to the Code and thereby changing the tax rules applicable to nonqualified deferred compensation arrangements effective January 1, 2005. While final Section 409A regulations were not effective until January 1, 2010, the Company believes it was operating in good faith compliance with Section 409A and the interpretive guidance thereunder. The Company entered into amendments to the employment arrangements with its senior officers, including the Chief Executive Officer and Named Executive Officers, and amended its bonus and compensation plans in December 2008 to meet the requirements of these regulations. A more detailed discussion of the Company’s nonqualified deferred compensation plan is provided on page 40 under the heading Nonqualified Deferred Compensation.

3. Share Ownership Guidelines

The Company has adopted share ownership guidelines for our executive officers, including the Named Executive Officers. Pursuant to the guidelines, the Named Executive Officers, including the Chief Executive Officer, are required to hold that number of Shares having a market value equal to or greater than a multiple of each executive’s base salary. For the Chief Executive Officer, the multiple is five times base salary and for the other Named Executive Officers, the multiple is four times base salary. A retention requirement of 35% is applied to restricted Shares upon vesting (net Shares after tax withholding) and Shares obtained from option exercises until the executive meets the target, or if an executive falls out of compliance. Shares owned, stock equivalents (vested/unvested restricted stock units), and unvested restricted stock (pre-tax) count towards meeting ownership targets. However, stock options do not count towards meeting the target. Officers have five years from the date of hire or, if later, the date they first become subject to the policy, to meet the ownership requirements.

4. Equity Grant Practices

Determination of Option Exercise Prices. The Compensation Committee grants stock options with an exercise price equal to the fair market value of a Share on the grant date. Under the LTIP, the fair market value of our common stock on a particular date is determined as the average of the high and low trading prices of a Share on the NYSE on that date.

Timing of Equity Grants. The Compensation Committee generally makes annual equity compensation grants to Named Executive Officers following its first regularly scheduled meeting that occurs after the release of the Company’s earnings for the prior year (typically the grant date is the last business day in February). The timing of this meeting is determined based on factors unrelated to the pricing of equity grants.

The Compensation Committee approves equity compensation awards to a newly hired executive officer at the time that the Board meets to approve the executive’s employment package. Generally, the date on which the Board approves the employment package becomes the grant date of the newly-hired executive officer’s equity compensation awards. However, if the Company and the new executive officer enter into an employment agreement regarding the employment relationship, the Company requires the executive officer to sign his employment agreement shortly following the date of Board approval of the employment package; the later of the date on which the executive officer signs his employment agreement or the date that the executive officer begins employment becomes the grant date of these equity compensation awards.

The Company’s policy is that the grant date of equity compensation awards is always on or shortly after the date the Compensation Committee approves the grants, which is generally in February. However, the Compensation Committee has the discretion under unusual circumstances to award grants at other times in the year.


IV.	SUMMARY COMPENSATION TABLE

The table below sets forth a summary of the compensation received by the Named Executive Officers for the past three years:


												Non-equity
Name and principal position								Stock		Option		incentive plan		All other
(listed alphabetically following the			Salary		Bonus			awards		awards		compensation		compensation		Total
Chief Executive Officer)	Year		($)(1)		($)			($)(2)		($)(3)		($)(4)		($)(5)		($)

Frits van Paasschen		2010		1,208,333		—			3,956,262		1,210,395		3,000,000		171,626		9,546,616
Chief Executive Officer and		2009		1,000,000		800,000	(6)		150,125		5,151,077		1,700,000		63,832		8,865,034
President		2008		1,000,000		—			44,421		1,742,402		1,820,000		522,538		5,129,361
Matthew E. Avril		2010		747,292		—			1,550,838		484,167		902,100		40,572		3,724,969
President, Hotel		2009		725,000		—			44,269		1,545,324		616,250		82,908		3,013,751
Group (since September 2008)		2008		601,896		—			2,621,756		376,360		536,500		188,103		4,324,615
Vasant M. Prabhu		2010		733,235		—			2,312,035		726,243		902,100		57,935		4,731,548
Vice Chairman and		2009		640,658		207,191	(6)		1,298,096		1,287,769		544,559		112,271		4,090,544
Chief Financial Officer		2008		638,054		—			1,335,578		1,332,945		582,999		93,380		3,982,956
Kenneth S. Siegel		2010		634,582		—			1,468,148		459,953		766,188		115,021		3,443,892
Chief Administrative		2009		615,039		—			46,166		1,957,411		522,784		116,139		3,257,539
Officer, General Counsel and Secretary		2008		612,539		—			1,564,371		522,721		559,686		102,515		3,361,832
Simon M. Turner		2010		644,792		—			693,824		1,888,226		778,500		17,661		4,023,003
President, Global		2009		625,000		—			34,369		2,575,538		531,250		27,910		3,794,067
Development Group (since May 2008)		2008		407,197		500,000			—		2,497,898		416,667		30,013		3,851,775


(1)		Represents salary actually earned during the fiscal year listed.

(2)		Represents the grant date fair value for restricted stock and restricted stock unit awards granted during the year computed in accordance with ASC 718. For additional information, refer to Note 23 of the Company’s financial statements filed with the SEC as part of the Form 10-K for the year ended December 31, 2010. These amounts reflect the grant date fair value for these awards and do not correspond to the actual value that will be recognized by the Named Executive Officers. See the *Grants of Plan-Based Awards Table* on page 36 for information on awards granted in 2010.

(3)		Represents the grant date fair value for stock option awards granted during the year computed in accordance with ASC 718. For additional information, refer to Note 23 of the Company’s financial statements filed with the SEC as part of the Form 10-K for the year ended December 31, 2010. These amounts reflect the grant date fair value for these awards and do not correspond to the actual value that will be recognized by the Named Executive Officers. See the *Grants of Plan-Based Awards Table* on page 36 for information on awards granted in 2010.

(4)		Represents cash awards paid in March 2011, 2010 and 2009 with respect to performance in 2010, 2009 and 2008, respectively, determined under the Executive Plan, as discussed under the *Annual Incentive Compensation* section beginning on page 23. Cash incentive awards include the following amounts that were converted into restricted stock units and such number of restricted stock units was increased by 33% in accordance with the Executive Plan:


Name	2010 Amount Deferred		2009 Amount Deferred			2008 Amount Deferred

van Paasschen		750,000		625,000	(A)		455,000
Avril		225,525		154,063			134,125
Prabhu		225,525		187,938	(B)		145,750
Siegel		191,547		130,696			139,922
Turner		194,625		132,813			104,167


	(A)	This amount is an aggregate of cash incentive awards deferred in respect of the 2009 fiscal year, which includes $200,000 deferred from a special one-time cash bonus enhancement awarded by the Compensation Committee.


	(B)	This amount is an aggregate of cash incentive awards deferred in respect of the 2009 fiscal year, which includes $51,798 deferred from a special one-time cash bonus enhancement awarded by the Compensation Committee.


(5)		Pursuant to SEC rules, perquisites and personal benefits are not reported for any Named Executive Officer for whom such amounts were less than $10,000 in the aggregate for a year but must be identified by type for each Named Executive Officer for whom the aggregate amount was equal to or greater than $10,000 in the aggregate. In that regard, the All Other Compensation column of the Summary Compensation Table includes perquisites and other personal benefits consisting of the following: annual physical examinations, Company contributions to the Company’s tax-qualified 401(k) plan, dividends on restricted stock, life insurance premiums, legal fees paid by the Company, spousal accompaniment while on business travel, and tax and financial planning services. SEC rules further require specification of the cost of any perquisite or personal benefit when this cost exceeds $25,000. This applies to Mr. van Paasschen’s personal travel (discussed below). These amounts are included in the All Other Compensation column.

		There was no net aggregate incremental cost to the Company of Mr. van Paasschen’s personal use of the Company-owned plane and chartered aircraft in 2010; in 2009 there was $3,746, all of which he reimbursed to the Company in January 2010; and in 2008, there was $329,480. With respect to expenses incurred in 2008, Mr. van Paasschen’s employment agreement provides that the Company would provide Mr. van Paasschen with up to a $500,000 credit for personal use of the Company’s aircraft during the first 12 months of his employment with the Company. These amounts (other than the reimbursed expenses for use of the Company-owned plane and chartered aircraft in 2009) are included in the All Other Compensation column.

		The cost of the Company-owned plane includes the cost of fuel, ground services and landing fees, navigation and telecommunications, catering and aircraft supplies, crew expenses, aircraft cleaning and an allocable share of maintenance. Pursuant to SEC rules, the following table specifies the value for each element of All Other Compensation not specified above (other than perquisites and personal benefits) that is valued in excess of $10,000.


	Dividend		Dividend				Dividend
	Equivalents on		Equivalents on				Equivalents on
	Restricted Stock		Restricted Stock		Relocation		Restricted Stock		Relocation
Name	($) (2010)		($) (2009)		($) (2009)		($) (2008)		($) (2008)

van Paasschen		151,699		—		31,438		—		165,328
Avril		30,671		57,254		—		150,728		—
Prabhu		48,135		85,186		—		69,917		—
Siegel		105,221		89,225		—		76,538		—
Turner		—		—		—		—		—


(6)		Represents special one-time cash bonus enhancements awarded by the Compensation Committee in recognition of 2009 accomplishments.


V.	GRANTS OF PLAN-BASED AWARDS

The table below sets forth a summary of the grants of plan-based incentive awards to the Named Executive Officers made during 2010:


												All Other			All Other
	Grant											Stock			Option
	date (or											Awards:			Awards:		Exercise		Grant Date
Name	year with		Compensation									Number of			Number of		or Base		Fair Value
(listed alphabetically	respect to		Committee			Estimated Future Payouts Under						Shares of			Securities		Price of		of Stock
by name following the	non-equity		Approval			Non-Equity Incentive Plan Awards(2)						Stock or			Underlying		Option		and Option
Chief Executive	incentive plan		date			Threshold		Target		Maximum		Units			Options		Awards		Awards
Officer) (a)	award) (b)(1)		(c)(1)			($)(d)		($)(e)		($)(f)		(#)(g)			(#)(h)(3)		($/Sh)(i)(4)		($)(j)(5)

van Paasschen		2/26/2010		2/11/2010												81,731		38.24		1,210,395
		2/26/2010		2/11/2010									98,078	(7)						3,750,012
		3/01/2010		(6	)								21,468	(6)						831,241
		2010					—		2,500,000		3,750,000
Avril		2/26/2010		2/11/2010												32,693		38.24		484,167
		2/26/2010		2/11/2010									39,231	(7)						1,499,997
		3/01/2010		(6	)								5,292	(6)						204,906
		2010					150,350		751,750		2,067,312
Prabhu		2/26/2010		2/11/2010												49,039		38.24		726,243
		2/26/2010		2/11/2010									58,847	(7)						2,250,015
		3/01/2010		(6	)								6,456	(6)						249,976
		2010					150,350		751,750		2,067,312
Siegel		2/26/2010		2/11/2010												31,058		38.24		459,953
		2/26/2010		2/11/2010									37,270	(7)						1,425,018
		3/01/2010		(6	)								4,489	(6)						173,814
		2010					127,698		638,490		1,755,848
Turner		2/26/2010		2/11/2010												127,501		38.24		1,888,226
		2/26/2010		2/11/2010									17,000	(7)						649,995
		3/01/2010		(6	)								4,562	(6)						176,641
		2010					129,750		648,750		1,784,062


(1)		Grant date differs from Compensation Committee approval date in accordance with the procedure outlined in the discussion on page 32 under the heading *Equity Grant Practices*.

(2)		Represents the potential values of the awards granted to the Named Executive Officers under the Executive Plan if the threshold, target and maximum goals are satisfied for all applicable performance measures. See detailed discussion of these awards in section VI. below.

(3)		The options generally vest in equal installments on the first, second, third and fourth anniversary of their grant. As of September 4, 2010, Mr. Siegel’s awards vest quarterly in equal installments over four years due to his retirement eligible status, as defined in the LTIP.

(4)		The exercise price was determined by using the average of the high and low price of Shares on the grant date.

(5)		Represents the fair value of the awards disclosed in columns (g) and (h) on their respective grant dates. For restricted stock and restricted stock units, fair value is calculated in accordance with ASC 718 using the average of the high and low price of Shares on the grant date. For stock options, fair value is calculated in accordance with ASC 718 using a lattice valuation model. For additional information, refer to Note 23 of the Company’s financial statements filed with the SEC as part of the Form 10-K for the year ended December 31, 2010. There can be no assurance that these amounts will correspond to the actual value that will be recognized by the Named Executive Officers.

(6)		On March 1, 2010, in accordance with the Executive Plan, 25% of Messrs. van Paasschen, Avril, Prabhu, Siegel and Turner’s annual bonus with respect to 2009 performance was converted into restricted stock units and the number of units was increased by 33%. The amount included in stock awards in the summary compensation table only includes the 33% increase, as the deferral of the bonus amount is disclosed separately. These restricted stock units vest in equal installments on the first, second and third fiscal year-ends following the date of grant, and vested units are distributed on the earlier of (i) the third fiscal year-end or (ii) a termination of employment. Dividends are paid to the Named Executive Officers in amounts equal to those paid to holders of


		Shares. No separate Compensation Committee approval was required for award of these deferred stock units, which are provided by plan terms.

(7)		This award vests on the third anniversary of the grant date, except with respect to Mr. Siegel whose awards as of September 4, 2010, vest quarterly in equal installments over three years due to his retirement eligible status, as defined in the LTIP.


VI.	NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS SECTION

We describe below the Executive Plan awards granted to our Named Executive Officers for 2010. These awards are reflected in both the Summary Compensation Table on page 34 and the Grants of Plan-Based Awards section on page 36.

Each of the Named Executive Officers received an award in March 2011 relating to his 2010 performance. The table below sets forth for each Named Executive Officer his salary, target award as both a percentage of salary and a dollar amount, actual award, the portion of the award that is deferred into restricted stock units and the related 33% increase in his restricted stock units.


												Increased
												Award
			Award							Award Deferred		Deferred into
			Target							into Restricted		Restricted
			Relative			Award		Actual		Stock/Restricted		Stock/Restricted
	Salary		to Salary			Target		Award		Stock Units		Stock Units
Name	($)		(%)			($)		($)		($)		($)

van Paasschen		1,250,000		200	%		2,500,000		3,000,000		750,000		997,500
Avril		751,750		100	%		751,750		902,100		225,525		299,948
Prabhu		751,750		100	%		751,750		902,100		225,525		299,948
Siegel		638,490		100	%		638,490		766,188		191,547		254,758
Turner		648,750		100	%		648,750		778,500		194,625		258,851

The following factors contributed to the Compensation Committee’s determination of the 2010 Executive Plan awards for the Named Executive Officers:


	•	the Company’s 2010 financial performance as measured by EBIDTA and earnings per share,

	•	the strategic and operational performance goals for each Named Executive Officer that link individual contributions to execution of our business strategy and major financial and operating goals, and

	•	the bonuses paid to executive officers performing comparable functions in peer companies,

as further described in the Annual Incentive Compensation assessment commencing on page 23 above.


VII.	OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table provides information on the current holdings of stock options and stock awards by the Named Executive Officers as of December 31, 2010. This table includes unexercised and unvested stock options, unvested restricted stock and unvested restricted stock units. Each equity grant is shown separately for each Named Executive Officer. The market value of the stock awards is based on the closing price of a Share on December 31, 2010, which was $60.78.


			Option awards								Stock awards
			Number of		Number of									Market value
			Securities		Securities									of Shares
			Underlying		Underlying						Number of			or Units of
			Unexercised		Unexercised		Option				Shares or			Stock That
Name			Options-		Options		Exercise		Option		Units of Stock			Have Not
(listed alphabetically following	Grant		Exercisable		Unexercisable		Price		Expiration		That Have Not			Vested
the Chief Executive Officer)	Date		(#)(1)(2)		(#)(1)(2)		($)(1)		Date		Vested (#)			($)

van Paasschen		9/24/2007		47,922		15,973		58.69		9/24/2015
		2/28/2008		51,436		51,434		48.61		2/28/2016
		2/27/2009		74,484		823,452		11.39		2/27/2017
		2/26/2010		—		81,731		38.24		2/26/2018
		9/24/2007										31,947	(3)		1,941,739
		3/02/2009										18,905	(4)		1,149,046
		2/26/2010										98,078	(3)		5,961,181
		3/01/2010										14,312	(4)		869,883
Avril		2/28/2007		15,543		5,180		65.15		2/28/2015
		2/28/2008		—		11,110		48.61		2/28/2016
		2/27/2009		—		247,035		11.39		2/27/2017
		2/26/2010		—		32,693		38.24		2/26/2018
		2/28/2007										10,361	(3)		629,742
		2/28/2008										22,220	(3)		1,350,532
		9/02/2008										40,344	(3)		2,452,108
		3/02/2009										5,572	(4)		338,666
		2/26/2010										39,231	(3)		2,384,460
		3/01/2010										3,528	(4)		214,432
Prabhu		2/10/2005		40,000		—		48.39		2/10/2013
		2/07/2006		79,913		—		48.80		2/07/2014
		2/28/2007		25,904		8,634		65.15		2/28/2015
		2/28/2008		39,348		39,348		48.61		2/28/2016
		2/27/2009		—		205,863		11.39		2/27/2017
		2/26/2010		—		49,039		38.24		2/26/2018
		2/28/2007										17,269	(3)		1,049,610
		2/28/2008										26,232	(3)		1,594,381
		2/27/2009										109,794	(3)		6,673,279
		3/02/2009										6,056	(4)		368,084
		2/26/2010										58,847	(3)		3,576,721
		3/01/2010										4,304	(4)		261,597


			Option awards								Stock awards
			Number of		Number of									Market value
			Securities		Securities									of Shares
			Underlying		Underlying						Number of			or Units of
			Unexercised		Unexercised		Option				Shares or			Stock That
Name			Options-		Options		Exercise		Option		Units of Stock			Have Not
(listed alphabetically following	Grant		Exercisable		Unexercisable		Price		Expiration		That Have Not			Vested
the Chief Executive Officer)	Date		(#)(1)(2)		(#)(1)(2)		($)(1)		Date		Vested (#)			($)

Siegel		2/28/2007		34,538		—		65.15		2/28/2015
		2/28/2008		21,219		9,642		48.61		2/28/2016
		2/27/2009		—		234,684		11.39		2/27/2017
		2/26/2010		5,825		25,233		38.24		2/26/2018
		2/28/2008										9,642	(3)		586,041
		3/02/2009										5,813	(4)		353,314
		2/26/2010										27,952	(3)		1,698,923
		3/01/2010										2,992	(4)		181,854
Turner		5/07/2008		—		67,612		53.25		5/07/2016
		2/27/2009		—		411,726		11.39		2/27/2017
		2/26/2010		—		127,501		38.24		2/26/2018
		3/02/2009										4,328	(4)		263,056
		2/26/2010										17,000	(3)		1,033,260
		3/01/2010										3,041	(4)		184,832


(1)		In connection with the sale of 33 hotels to Host Hotels & Resorts, Inc. (or “Host”), Company stockholders received 0.6122 Host shares and $0.503 in cash for each of their Class B Shares. Holders of Company employee stock options and restricted stock did not receive this consideration while the market price of Shares was reduced to reflect the payment of this consideration directly to the holders of the Class B Shares. In order to preserve the value of the Company’s options immediately before and after the Host transaction, the Company adjusted its stock options to reduce the strike price and increase the number of stock options using the intrinsic value method based on the Share price immediately before and after the transaction. The option information provided reflects the number of options granted and the option exercise prices after these adjustments were made. As of December 31, 2010, this impacts Mr. Prabhu’s holdings only.

(2)		These options generally vest in equal installments on the first, second, third and fourth anniversary of their grant. As of September 4, 2010, Mr. Siegel’s 2008, 2009 and 2010 awards vest quarterly in equal installments over four years due to his retirement eligible status, as defined in the LTIP.

(3)		For awards granted in 2007, the restricted stock or restricted stock units generally vest 50% on each of the third and fourth anniversaries of their grant date. For awards granted in 2008, the restricted stock or restricted stock units generally vest 75% on the third anniversary and 25% on the fourth anniversary of the date of grant, provided that Mr. Avril’s September 2, 2008 award will vest on the third anniversary of the grant date. For awards granted in 2009 and 2010, the restricted stock or restricted stock units generally vest 100% on the third anniversary of their grant. As of September 4, 2010, Mr. Siegel’s 2008 and 2010 awards vest quarterly in equal installments over four and three years, respectively, due to his retirement eligible status as defined in the LTIP.

(4)		These restricted stock units vest in equal installments on the first, second and third fiscal year-ends following the date of grant, and vested units are distributed on the earlier of (i) the third fiscal year-end or (ii) a termination of employment.


VIII.	OPTION EXERCISES AND STOCK VESTED

The following table discloses, for each Named Executive Officer, (i) option awards representing Shares acquired pursuant to exercise of stock options during 2010; and (ii) stock awards representing (A) Shares of restricted Company stock that vested in 2010 and (B) Shares acquired in 2010 on account of vesting of restricted

stock units. The table also discloses the value realized by the Named Executive Officer for each such event, calculated prior to the deduction of any applicable withholding taxes and brokerage commissions.


	Option Awards				Stock Awards
	Number of Shares				Number of Shares
	Acquired on		Value Realized		Acquired on		Value Realized
	Exercise		on Exercise		Vesting		on Vesting
Name	(#)		($)		(#)		($)

van Paasschen		200,000		9,795,140		61,284		3,237,050
Avril		159,420		2,864,025		12,137		465,123
Prabhu		257,846		4,632,750		22,422		974,072
Siegel		322,302		9,218,465		70,549		3,444,463
Turner		204,854		5,434,039		—		—


IX.	NONQUALIFIED DEFERRED COMPENSATION

The Company’s Deferred Compensation Plan (the “Plan”) permits eligible executives, including our Named Executive Officers, to defer up to 100% of their Executive Plan cash bonus award, as applicable, and up to 75% of their base salary for a calendar year. The Company does not contribute to the Plan. No Named Executive Officer made deferrals under the Plan in 2010.


	Executive		Registrant		Aggregate		Aggregate		Aggregate
	Contributions in		Contributions		Earnings		Withdrawals/		Balance at
	Last FY		in Last FY		in Last FY		Distributions		Last FYE
Name	($)		($)		($)		($)		($)

van Paasschen		—		—		83,644		—		585,376
Avril		—		—		—		—		—
Prabhu		—		—		—		—		—
Siegel		—		—		—		—		—
Turner		—		—		—		—		—

Deferral elections are made in December for base salary paid in pay periods beginning in the following calendar year. Deferral elections are made in June for annual incentive awards that are earned for performance in that calendar year but paid in March of the following year. Deferral elections are irrevocable.

Elections as to the time and form of payment are made at the same time as the corresponding deferral election. A participant may elect to receive payment on February 1 of a calendar year while still employed or either 6 or 12 months following employment termination. Payment will be made immediately in the event a participant terminates employment on account of death, disability or on account of certain changes in control. A participant may elect to receive payment of his account balance in either a lump sum or in annual installments, so long as the account balance exceeds $50,000; otherwise payment will be made in a lump sum.

If a participant elects an in-service distribution, the participant may change the scheduled distribution date or form of payment so long as the change is made at least 12 months in advance of the scheduled distribution date. Any such change must provide that distribution will commence at least five years later than the scheduled distribution date. If a participant elects to receive a distribution upon employment termination, that election and the corresponding form of payment election are irrevocable. Withdrawals for hardship that result from an unforeseeable emergency are available, but no other unscheduled withdrawals are permitted.

The Plan uses the investment funds listed below as potential indices for calculating investment returns on a participant’s Plan account balance. The deferrals the participant directs for investment into these funds are adjusted based on a deemed investment in the applicable funds. The participant does not actually own the investments that he

selects. The Company may, but is not required to, make identical investments pursuant to a variable universal life insurance product. When it does, participants have no direct interest in this life insurance.


	1-Year Annualized
	Rate of Return
Name of Investment Fund	(as of 2/28/11)

NVIT Money Market — Class V		−0.25%
PIMCO VIT Total Return — Admin Shares		6.40%
Fidelity VIP High Income — Service Class		16.19%
NVIT Inv Dest Moderate — Class 2		14.96%
T. Rowe Price Equity Income — Class II		21.60%
Dreyfus Stock Index — Initial Shares		21.97%
Fidelity VIP II Contrafund — Service Class		25.51%
NVIT Mid Cap Index Class I		31.96%
Dreyfus IP Small Cap Stock Index — Service Shares		30.00%
NVIT International Index — Class 2		19.44%
Invesco V.I. International Growth — Series I Shares		20.59%


X.	POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The Company provides certain benefits to our Named Executive Officers in the event of employment termination, both in connection with a change in control and otherwise. These benefits are in addition to benefits available generally to salaried employees, such as distributions under the Company’s tax-qualified retirement savings plan, disability insurance benefits and life insurance benefits. These benefits are described below.


A.	Termination Before Change in Control: Involuntary Other than for Cause, Voluntary for Good Reason, Death or Disability

Pursuant to Mr. van Paasschen’s employment agreement, if Mr. van Paasschen’s employment is terminated by the Company other than for cause or by Mr. van Paasschen for good reason, the Company will pay Mr. van Paasschen as a severance benefit (i) two times the sum of his base salary and target annual bonus and (ii) a pro rated target bonus for the year of termination. None of the other equity awards granted to Mr. van Paasschen would be accelerated. If Mr. van Paasschen’s employment were terminated because of his death or permanent disability, Mr. van Paasschen (or his estate) would be entitled to receive a pro rated target bonus for the year of termination and all of his equity awards would accelerate and vest.

Pursuant to Mr. Avril’s employment agreement, if Mr. Avril’s employment is terminated by the Company without cause, Mr. Avril will receive severance benefits of twelve months of base salary and the Company will continue to provide medical benefits coverage for up to twelve months after the date of termination. In addition, Mr. Avril will also be 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.

Pursuant to his employment agreement, if Mr. Prabhu’s employment is terminated by the Company without cause or by Mr. Prabhu voluntarily with good reason, Mr. Prabhu will receive severance benefits of twelve months of base salary and the Company will continue to provide medical benefits coverage for up to twelve months after the date of termination. In addition, the Company will accelerate the vesting of 50% of Mr. Prabhu’s unvested restricted stock and options. The Company entered into a letter agreement on August 14, 2007 confirming the terms of the agreement as it relates to the acceleration of 50% of Mr. Prabhu’s unvested restricted stock and options if his employment is terminated by the Company without cause or is terminated by him voluntarily with good reason.

Pursuant to Mr. Siegel’s employment agreement, in the event Mr. Siegel’s employment is terminated by the Company without cause, Mr. Siegel will receive severance benefits of twelve months of base salary plus 100% of his target annual incentive and the Company will continue to provide medical benefits coverage for up to twelve months after the date of termination.

Pursuant to Mr. Turner’s employment agreement, if Mr. Turner’s employment is terminated by the Company other than for cause or by Mr. Turner for good reason, Mr. Turner will receive severance benefits of twelve months base salary and the Company will continue to provide medical benefits coverage for up to twelve months after the date of termination.


B.	Termination in the Event of Change in Control

The Company has entered into severance agreements with each of Messrs. Prabhu and Siegel. Each severance agreement provides for a term of three years, with automatic one-year extensions until either the executive or the Company notifies 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 defined in the agreement) or with Good Reason (as defined in the agreement), the executive would receive the following in addition to the items described in A. above:


	•	two times the sum of his base salary plus the average of the annual bonuses earned by the executive in the three fiscal years ending immediately prior to the fiscal year in which the termination occurs or, if higher, the annual bonus earned in the immediately prior year;

	•	continued medical benefits for two years, reduced to the extent benefits of the same type are received by or made available to the executive from another employer;

	•	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;

	•	immediate vesting of stock options and restricted stock held by the executive under any stock option or incentive plan maintained by the Company;

	•	outplacement services suitable to the executive’s position for a period of two years or, if earlier, until the first 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

	•	immediate vesting of all unvested 401(k) contributions in the executive’s 401(k) account or payment by the Company of an amount equal to any such unvested amounts that are forfeited by reason of the executive’s termination of employment.

In addition, to the extent that any executive becomes 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 sufficient to offset the effects of such excise tax.

Under the severance agreements, a “Change in Control” is deemed to occur upon any of the following events:


	•	any person becomes the beneficial owner of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company;

	•	a majority of the Directors cease to serve on the Company’s Board in connection with a successful hostile proxy contest;


	•	a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than:


	ο	a merger or consolidation in which securities of the Company would represent at least 70% of the voting power of the surviving entity; or

	ο	a merger or consolidation effected to implement a recapitalization of the Company in which no person becomes the beneficial owner of 25% or more of the voting power of the Company; or


	•	approval of a plan of liquidation or dissolution by the stockholders or the consummation of a sale of all or substantially all of the Company’s assets, other than a sale to an entity in which the Company’s stockholders would hold at least 70% of the voting power in substantially the same proportions as their ownership of the Company immediately prior to such sale. However, a “Change in Control” does not include a transaction in which Company stockholders continue to hold substantially the same proportionate ownership in the entity which would own all or substantially all of the Company’s assets following such transaction.

Each of Messrs. Avril and Turner entered into similar change in control agreements in connection with their employment with the Company, provided that no tax gross-up is provided if such payments become subject to the excise tax. If such payments are subject to the excise tax, the benefits under the agreement will be reduced until the point where the executive is better off paying the excise tax rather than reducing the benefits.

Mr. van Paasschen’s employment agreement provides that he would be entitled to the following benefits if his employment were terminated without cause or he resigned with good reason following a Change in Control:


	•	two times the sum of his base salary and target annual bonus;

	•	a lump sum payment, in cash, equal to the unpaid incentive compensation then subject to performance conditions, payable at the maximum level of performance;

	•	immediate vesting of stock options and restricted stock held under any stock option or incentive plan maintained by the Company;

	•	a lump sum payment of his nonqualified deferred compensation paid in accordance with Section 409A distribution rules; and

	•	immediate vesting of all unvested 401(k) contributions in his 401(k) account or payment by the Company of an amount equal to any such unvested amounts that are forfeited by reason of his termination of employment.

In addition, to the extent that Mr. van Paasschen becomes subject to the “golden parachute” excise tax imposed under Section 4999 of the Code, he would receive a gross-up payment in an amount sufficient to offset the effects of such excise tax.

In December 2008, the Company amended the employment arrangements and change in control agreements with each of the Named Executive Officers. The amendments were technical in nature and were designed to meet the guidelines of 409A of the Code. The amendments did not change any of the amounts payable to the Named Executive Officers.


C.	Estimated Payments Upon Termination

The tables below reflect the estimated amounts payable to the Named Executive Officers in the event their employment with the Company had terminated on December 31, 2010 under various circumstances, and includes amounts earned through that date. The actual amounts that would become payable in the event of an actual employment termination can only be determined at the time of such termination.

1. Involuntary Termination without Cause or Voluntary Termination for Good Reason

The following table discloses the amounts that would have become payable on account of an involuntary termination without cause or a voluntary termination for good reason outside of the change in control context.


	Severance		Medical		Vesting of		Vesting of
	Pay		Benefits		Restricted Stock		Stock Options		Total
Name	($)		($)		($)(1)		($)(2)		($)

van Paasschen		10,000,000		—		—		—		10,000,000
Avril(3)		751,750		11,448		1,980,273		135,264		2,878,735
Prabhu		751,750		11,220		7,628,802		5,876,625		14,268,397
Siegel(3)		1,276,980		11,075		—		—		1,288,055
Turner		648,750		11,101		—		—		659,851


(1)		Includes values for holdings of restricted stock and restricted stock units. With respect to Mr. Prabhu, includes vested but deferred restricted stock units in accordance with the Executive Plan.

(2)		Excludes vested stock options.

(3)		Messrs. Siegel and Avril’s employment agreements provide for payments in the event of involuntary termination other than for cause but do not provide for payments in the event of voluntary termination for good reason.

2. Termination on Account of Death or Disability

The following table discloses the amounts that would have become payable on account of a termination on account of death or disability.


					Vesting of		Vesting of
	Severance		Medical		Restricted		Stock
	Pay		Benefits		Stock		Options		Total
Name	($)		($)		($)(1)		($)(2)		($)

van Paasschen(3)		2,500,000		—		12,654,882		47,582,156		62,737,038
Avril		751,750		11,448		8,154,609		13,074,622		21,992,429
Prabhu		751,750		11,220		14,390,637		13,685,101		28,838,708
Siegel		1,276,980		11,075		3,617,869		12,668,152		17,574,076
Turner		648,750		11,101		2,099,706		23,721,172		26,480,729


(1)		Includes values for holdings of restricted stock and restricted stock units. Includes vested but deferred restricted stock units in accordance with the Executive Plan.

(2)		Includes vested stock options. Vested stock options could be subject to loss by the Named Executive Officers in the event of a termination for cause and certain other events but could not in the event of termination on account of death or disability.

(3)		Excludes $585,376 of Mr. van Paasschen’s nonqualified deferred compensation that is payable upon death, disability or certain changes in control as discussed in the *Nonqualified Deferred Compensation* section beginning on page 40.

3. Change in Control

The following table discloses the amounts that would have become payable on account of an involuntary termination without cause following a change in control or a voluntary termination with good reason following a change in control.


					Vesting of		Vesting of
	Severance		Medical		Restricted		Stock				401(k)		Tax
	Pay		Benefits		Stock		Options		Outplacement		Payment		Gross-Up		Total
Name	($)		($)		($)(1)		($)(2)		($)		($)		($)		($)

van Paasschen(3)		1,000,000		5,424		12,654,882		47,582,156		—		—		7,220,816		77,463,278
Avril		3,487,750		31,139		8,154,609		13,074,622		150,350		—		n/a		24,898,470
Prabhu		3,758,750		30,519		14,390,637		13,685,101		150,350		—		—		32,015,357
Siegel		3,157,150		30,125		3,617,869		12,668,152		127,698		—		—		19,600,994
Turner		3,008,750		30,195		2,099,706		23,721,172		129,750		—		n/a		28,989,573


(1)		Includes values for holdings of restricted stock and restricted stock units. Includes vested but deferred restricted stock units in accordance with the Executive Plan.

(2)		Includes vested stock options. Vested stock options could be subject to loss by the Named Executive Officers in the event of a termination for cause and certain other events but could not in the event of an involuntary termination without cause following a change in control or a voluntary termination with good reason following a change in control.

(3)		If the amount of severance pay and other benefits payable on change in control is greater than three times certain base period taxable compensation for Mr. van Paasschen, a 20% excise tax is imposed on the excess amount of such severance pay and other benefits. Excludes $585,376 of Mr. van Paasschen’s nonqualified deferred compensation that is payable upon death, disability or certain changes in control as discussed in the *Nonqualified Deferred Compensation* section beginning on page 40. Because of Mr. van Paasschen’s recent hire, his base period taxable compensation does not reflect the total value of restricted stock granted to him in earlier years, thus artificially increasing the excise tax that would apply on a change in control and, correspondingly, the tax gross-up payment due under the estimate.


XI.	DIRECTOR COMPENSATION

The Company uses a combination of cash and stock-based awards to attract and retain qualified candidates to serve on the Board. In setting Director compensation, the Company considers the significant amount of time that members of the Board spend in fulfilling their duties to the Company as well as the skill level required by the Company of its Directors. The current compensation structure is described below.

For 2010, under the Company’s Director share ownership guidelines, each Director was required to own Shares (or deferred compensation stock equivalents) that have a market price equal to four times the annual Director’s fees paid to such Director. If any Director fails to satisfy this requirement, sales of Shares by such Director shall be subject to a 35% retention requirement. Any new Director shall be given a period of three years to satisfy this requirement.

Company employees who serve as members of the Board receive no fees for their services in this capacity. Non-employee members of the Board (“Non-Employee Directors”) receive compensation for their services as described below.


A.	Annual Fees

Each Non-Employee Director receives an annual fee in the amount of $80,000, payable in four equal installments of Shares issued under our LTIP. The number of Shares to be issued is based on the fair market value of a Share using the average of the high and low price of the Company’s stock on December 31 of the year prior to grant.

A Non-Employee Director may elect to receive up to one-half of the annual fee in cash and to defer (at an annual interest rate of LIBOR plus 11/2% for deferred cash amounts) any or all of the annual fee payable in cash.

Deferred cash amounts are payable in accordance with the Non-Employee Director’s advance election. A Non-Employee Director is also permitted to elect to defer to a deferred unit account any or all of the annual fee payable in Shares or cash. Deferred stock or cash amounts are payable in accordance with the Non-Employee Director’s advance election.

Non-Employee Directors serving as members of the Audit Committee receive an additional annual fee in cash of $10,000 ($25,000 for the Chairman of the Audit Committee). The chairperson of each other committee of the Board receive an additional annual fee in cash of $12,500. The Chairman of the Board receive an additional retainer of $150,000, payable quarterly in restricted stock units which vest in three years.


B.	Attendance Fees

Non-Employee Directors do not receive fees for attendance at meetings.


C.	Equity grant

In 2010, each Non-Employee Director received an annual equity grant (made at the same time as the annual grant is made to Company employees) under our LTIP with a value of $125,000. The equity grant was delivered 50% in restricted stock units and 50% in stock options. The number of restricted stock units is determined by dividing the value by the average of the high and low Share price on the date of grant. The number of options is determined by dividing the value by the average of the high and low Share price on the date of grant (also the exercise price) and multiplying by two and one half. The options are fully vested and exercisable upon grant and are scheduled to expire eight years after the grant date. The restricted stock units awarded pursuant to the annual grant generally vest upon the earlier of (i) the third anniversary of the grant date and (ii) the date such person ceases to be a Director of the Company.


D.	Starwood Preferred Guest Program Points and Rooms

In 2010, each Director received an annual grant of 750,000 Starwood Preferred Guest (“SPG”) Points to encourage them to visit and personally evaluate our properties.


E.	Other Compensation

The Company reimburses Non-Employee Directors for travel expenses, other out-of-pocket costs they incur when attending meetings and, for one meeting per year, expenses related to attendance by spouses.

We have summarized the compensation paid by the Company to our Non-Employee Directors in 2010 in the table below.


	Fees earned		Stock		Option		All Other
	or Paid in Cash		Awards (2) (3)		Awards (4)		compensation (5)		Total
Name of Director(1)	($)		($)		($)		($)		($)

Adam M. Aron		22,500		142,571		55,853		11,250		232,174
Charlene Barshefsky		47,898		102,469		55,853		14,582		220,802
Thomas E. Clarke		50,000		102,469		55,853		11,250		219,572
Clayton C. Daley, Jr.		59,478		102,469		55,853		12,335		230,135
Bruce W. Duncan		—		292,623		55,853		21,960		370,436
Lizanne Galbreath		4,602		142,571		55,853		14,908		217,934
Eric Hippeau		—		142,571		55,853		20,672		219,096
Stephen R. Quazzo		12,500		142,571		55,853		11,250		222,174
Thomas O. Ryder		9,203		142,571		55,853		18,302		225,929
Kneeland C. Youngblood		50,000		102,469		55,853		11,250		219,572


(1)		Mr. van Paasschen is not included in this table because he was an employee of the Company and thus received no compensation for his services as a Director. Mr. van Paasschen’s 2010 compensation from the Company is disclosed in the *Summary Compensation Table* on page 34.


(2)		As of December 31, 2010, each Director beneficially owns the following aggregate number of Shares (deferred or otherwise) outstanding: Mr. Aron, 20,067; Ambassador Barshefsky, 14,059; Mr. Clarke, 4,787; Mr. Daley, 6,542; Mr. Duncan, 136,101; Ms. Galbreath, 11,311; Mr. Hippeau, 24,313; Mr. Quazzo, 30,151; Mr. Ryder, 30,265; Mr. Youngblood, 8,829.

(3)		Represents the grant date fair value for restricted stock and unit awards granted during the year computed in accordance with ASC 718. For additional information, refer to Note 23 of the Company’s financial statements filed with the SEC as part of the Form 10-K for the year ended December 31, 2010. These amounts reflect the grant date fair value for these awards and do not correspond to the actual value that will be recognized by the Named Executive Officers. The grant date fair value of each stock award is set forth below:


			Number of Shares of
Director	Grant Date		Stock/Units		Grant Date Fair Value ($)

Adam M. Aron		2/26/2010		1,635		62,514
		3/31/2010		541		20,014
		6/30/2010		541		20,014
		9/30/2010		541		20,014
		12/31/2010		541		20,014
Charlene Barshefsky		2/26/2010		1,635		62,514
		3/31/2010		270		9,989
		6/30/2010		270		9,989
		9/30/2010		270		9,989
		12/31/2010		270		9,989
Thomas E. Clarke		2/26/2010		1,635		62,514
		3/31/2010		270		9,989
		6/30/2010		270		9,989
		9/30/2010		270		9,989
		12/31/2010		270		9,989
Clayton C. Daley, Jr.		2/26/2010		1,635		62,514
		3/31/2010		270		9,989
		6/30/2010		270		9,989
		9/30/2010		270		9,989
		12/31/2010		270		9,989
Bruce W. Duncan		2/26/2010		1,635		62,514
		3/31/2010		1,014		37,513
		3/31/2010		541		20,014
		6/30/2010		1,014		37,513
		6/30/2010		541		20,014
		9/30/2010		1,014		37,513
		9/30/2010		541		20,014
		12/31/2010		1,014		37,513
		12/31/2010		541		20,014
Lizanne Galbreath		2/26/2010		1,635		62,514
		3/31/2010		541		20,014
		6/30/2010		541		20,014
		9/30/2010		541		20,014
		12/31/2010		541		20,014


			Number of Shares of
Director	Grant Date		Stock/Units		Grant Date Fair Value ($)

Eric Hippeau		2/26/2010		1,635		62,514
		3/31/2010		541		20,014
		6/30/2010		541		20,014
		9/30/2010		541		20,014
		12/31/2010		541		20,014
Stephen R. Quazzo		2/26/2010		1,635		62,514
		3/31/2010		541		20,014
		6/30/2010		541		20,014
		9/30/2010		541		20,014
		12/31/2010		541		20,014
Thomas O. Ryder		2/26/2010		1,635		62,514
		3/31/2010		541		20,014
		6/30/2010		541		20,014
		9/30/2010		541		20,014
		12/31/2010		541		20,014
Kneeland C. Youngblood		2/26/2010		1,635		62,514
		3/31/2010		270		9,989
		6/30/2010		270		9,989
		9/30/2010		270		9,989
		12/31/2010		270		9,989


(4)		Represents the grant date fair value for stock option awards granted during the year computed in accordance with ASC 718. For additional information, refer to Note 23 of the Company’s financial statements filed with the SEC as part of the Form 10-K for the year ended December 31, 2010. These amounts reflect the grant date fair value for these awards and do not correspond to the actual value that will be recognized by the Directors. As of December 31, 2010, each Director has the following aggregate number of stock options outstanding: Mr. Aron, 26,028; Ambassador Barshefsky, 22,672; Mr. Clarke, 17,918; Mr. Daley, 13,631; Mr. Duncan, 66,897; Ms. Galbreath, 33,651; Mr. Hippeau, 44,649; Mr. Quazzo, 39,150; Mr. Ryder, 44,649; Mr. Youngblood, 28,171. All Directors received a grant of 4,087 options on February 26, 2010 with a grant date fair value of $55,853.

(5)		We reimburse Non-Employee Directors for travel expenses and other out-of-pocket costs they incur when attending meetings and, for one meeting per year, attendance by spouses. In addition, in 2010 Non-Employee Directors received 750,000 SPG Points valued at $11,250. Non-Employee Directors receive interest on deferred dividends. Pursuant to SEC rules, perquisites and personal benefits are not reported for any Director for whom such amounts were less than $10,000 in the aggregate for 2010 but must be identified by type for each Director for whom such amounts were equal to or greater than $10,000 in the aggregate. SEC rules do not require specification of the value of any type of perquisite or personal benefit provided to the Non-Employee Directors because no such value exceeded $25,000.

AUDIT COMMITTEE REPORT

The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or “filed” or “incorporated by reference” in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act.

The Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”) of Starwood Hotels & Resorts Worldwide, Inc. (the “Company”), which is comprised entirely of “independent” Directors, as determined by the Board in accordance with the New York Stock Exchange (the “NYSE”) listing requirements and applicable federal securities laws, serves as an independent and objective party to assist the Board in fulfilling its oversight responsibilities including, but not limited to, (i) monitoring the quality and integrity of the Company’s financial statements, (ii) monitoring compliance with legal and regulatory requirements, (iii) assessing the qualifications and independence of the independent registered public accounting firm and (iv) establishing and monitoring the Company’s systems of internal controls regarding finance, accounting and legal compliance. The Audit Committee operates under a written charter which meets the requirements of applicable federal securities laws and the NYSE requirements.

In the first quarter of 2011, the Audit Committee reviewed and discussed the audited financial statements for the year ended December 31, 2010 with management, the Company’s internal auditors and the independent registered public accounting firm, Ernst & Young LLP, including the matters required to be discussed with the independent accountant by Statement of Auditing Standards No. 61, as amended. The Audit Committee also discussed with the independent registered public accounting firm matters relating to its independence, including a review of audit and non-audit fees and the written disclosures and letter from Ernst & Young LLP to the Audit Committee required pursuant to Rule 3526 of the Public Company Accounting Oversight Board regarding the independent accountants’ communications with the Audit Committee concerning independence.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Audit Committee of the Board of Directors

Clayton C. Daley, Jr., Chairman
Adam M. Aron
Thomas E. Clarke
Kneeland C. Youngblood

Audit Fees

The aggregate amounts paid by the Company for the fiscal years ended December 31, 2010 and 2009 to the Company’s principal accounting firm, Ernst & Young, are as follows (in millions):


	2010		2009

Audit Fees(1)	$	5.6	$	5.4
Audit-Related Fees(2)	$	0.9	$	0.6
Tax Fees(3)	$	0.6	$	0.4

Total	$	7.1	$	6.4


(1)		Audit fees include the fees paid for the annual audit, the review of quarterly financial statements and assistance with financial reports required as part of regulatory and statutory filings and the audit of the Company’s internal controls over financial reporting with the objective of obtaining reasonable assurance about whether effective internal controls over financial reporting were maintained in all material respects.

(2)		Audit-related fees include fees for audits of employee benefit plans, audit and accounting consultation and other attest services.

(3)		Tax fees include fees for the preparation and review of certain foreign tax returns.

The Company has adopted a policy which requires the Audit Committee of the Board of Directors to approve the hiring of any current or former employee (within the last five years) of the Company’s independent registered public accounting firm into any position (i) as a manager or higher, (ii) in its accounting or tax departments, (iii) where the hire would have direct involvement in providing information for use in its financial reporting systems, or (iv) where the hire would be in a policy setting position. When undertaking its review, the Audit Committee considers applicable laws, regulations and related commentary regarding the definition of “independence” for independent registered public accounting firms.

Pre-Approval of Services

The Audit Committee pre-approves all services, including both audit and non-audit services, provided by the Company’s independent registered public accounting firm. For audit services (including statutory audit engagements as required under local country laws), the independent registered public accounting firm provides the Audit Committee with an engagement letter outlining the scope of the audit services proposed to be performed during the year. The engagement letter must be formally accepted by the Audit Committee before any audit commences. The independent registered public accounting firm also submits an audit services fee proposal, which also must be approved by the Audit Committee before the audit commences. The Audit Committee may delegate authority to one of its members to pre-approve all audit/non-audit services by the independent registered public accounting firm, as long as these approvals are presented to the full Audit Committee at its next regularly scheduled meeting.

Management submits to the Audit Committee all non-audit services that it recommends the independent registered public accounting firm be engaged to provide and an estimate of the fees to be paid for each. Management and the independent registered public accounting firm must each confirm to the Audit Committee that the performance of the non-audit services on the list would not compromise the independence of the registered public accounting firm and would be permissible under all applicable legal requirements. The Audit Committee must approve both the list of non-audit services and the budget for each such service before commencement of the work. Management and the independent registered public accounting firm report to the Audit Committee at each of its regular meetings as to the non-audit services actually provided by the independent registered public accounting firm and the approximate fees incurred by the Company for those services.

All audit and permissible non-audit services provided by Ernst & Young to the Company for the fiscal years ended December 31, 2010 and 2009 were pre-approved by the Audit Committee or our Board of Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

All members of the Compensation Committee during fiscal year 2010 were independent Directors, and no member was an employee or former employee. No Compensation Committee member had any relationship requiring disclosure under “Certain Relationships and Related Transactions,” below. During fiscal year 2010, none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose officer served on our Compensation Committee.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Policies of the Board of Directors of the Company

The Board has adopted a Corporate Opportunity and Related Person Transaction Policy (the “Related Person Transaction Policy”), the purpose of which is to address the reporting, review and approval or ratification of transactions with Directors, director nominees, executive officers, stockholders known to own of record or beneficially more than five percent of our Shares (“5% Holders”) and each of the foregoing’s respective family members and/or corporate affiliates (collectively “Covered Persons”). As a general matter, we seek to avoid Related Person Transactions because they can involve potential or actual conflicts of interest and pose the risk that they may be, or be perceived to be, based on considerations other than the Company’s best interests. For purposes of the policy, a “Related Person Transaction” means any transaction involving the Company in which a Covered Person has a direct or indirect material interest. A transaction involving entities controlled by the Company shall be deemed

a transaction in which the Company participates. However, we recognize that in some circumstances transactions between us and related persons may be incidental to the normal course of business or provide an opportunity that is in the best interests of the Company, or that is not inconsistent with the best interests of the Company, or is more efficient to pursue than an alternative transaction. The Board has charged the Corporate Governance and Nominating Committee (the “Governance Committee”) with establishing and reviewing (on a periodic basis) our Related Person Transaction Policy. A copy of the policy is posted on our website at www.starwoodhotels.com/corporate/investor _ relations.html.

The Related Person Transaction Policy also governs certain corporate opportunities to ensure that Corporate Opportunities are not pursued by Covered Persons unless and until the Company has determined that it is uninterested in pursuing said opportunity. For purposes of the policy, a “Corporate Opportunity” means any opportunity (1) that is within the Company’s existing line of business or is one in which the Company either has an existing interest or a reasonable expectancy of an interest; and (2) the Company is reasonably capable of pursuing.

Under the Related Person Transaction Policy, except as otherwise provided, each Director, executive officer, and 5% Holder is required to submit any such Related Person Transaction or Corporate Opportunity to the Governance Committee for review. In its review, the Governance Committee is to consider all relevant facts and circumstances to determine whether it should (i) reject the proposed transaction; (ii) conclude that the proposed transaction is appropriate and suggest that the Company pursue it on the terms presented or on different terms, and in the case of a Corporate Opportunity suggest that the Company pursue the Corporate Opportunity on its own, with the party who brought the proposed transaction to the Company’s attention or with another third party; or (iii) ask the Board to consider the proposed transaction so that the Board may then take either of the actions described in (i) or (ii) above, and, at the Governance Committee’s option, in connection with (iii), make recommendations to the Board.

Any person bringing a proposed transaction to the Governance Committee is obligated to provide any and all information requested by the Governance Committee and, if a Director, to recuse himself from any vote or other deliberation.

The policy may be changed at any time by the Board.

OTHER MATTERS

The Board is not aware of any matters not referred to in this proxy statement that may properly be presented for action at the Annual Meeting. The deadline for stockholders to submit matters for consideration at the Annual Meeting and have it included in these proxy materials expired on November 16, 2010 and the deadline for stockholders to submit matters for consideration at the Annual Meeting without having the proposal included in these proxy materials expired on February 27, 2011. However, if any other matter properly comes before the Annual Meeting, it is the intention of the persons named in the enclosed proxy to vote the Shares represented thereby in accordance with their discretion.

SOLICITATION COSTS

The Company will pay the cost of soliciting proxies for the Annual Meeting, including the cost of mailing. The solicitation is being made by mail and over the Internet and may also be made by telephone or in person using the services of a number of regular employees of the Company at nominal cost. The Company will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for expenses incurred in sending proxy materials to beneficial owners of Shares. The Company has engaged D.F. King & Co., Inc. to solicit proxies and to assist with the distribution of proxy materials for a fee of $18,500 plus reasonable out-of-pocket expenses.

HOUSEHOLDING

The SEC allows us to deliver a single proxy statement and annual report to an address shared by two or more of our stockholders. This delivery method, referred to as “householding,” can result in significant cost savings for us. In order to take advantage of this opportunity, the Company and banks and brokerage firms that hold your Shares have delivered only one proxy statement and annual report to multiple stockholders who share an address unless one or more of the stockholders has provided contrary instructions. The Company will deliver promptly, upon written or oral request, a separate copy of the proxy statement and annual report to any stockholder at a shared address to which a single copy of the documents was delivered. A stockholder who wishes to receive a separate copy of the proxy statement and annual report, now or in the future, may obtain one, without charge, by addressing a request to Investor Relations, Starwood Hotels & Resorts Worldwide, Inc., 1111 Westchester Avenue, White Plains, NY 10604 or by calling (914) 640-8100. You may also obtain a copy of the proxy statement and annual report from the investor relations page on the Company’s website (www.starwoodhotels.com/corporate/investor _ relations.html). Stockholders of record sharing an address who are receiving multiple copies of proxy materials and annual reports and wish to receive a single copy of such materials in the future should submit their request by contacting us in the same manner. If you are the beneficial owner, but not the record holder, of the Shares and wish to receive only one copy of the proxy statement and annual report in the future, you will need to contact your broker, bank or other nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.

STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

If you want to make a proposal for consideration at next year’s Annual Meeting and have it included in the Company’s proxy materials, the Company must receive your proposal by November 22, 2011, and the proposal must comply with the rules of the SEC.

If you want to make a proposal or nominate a Director for consideration at next year’s Annual Meeting without having the proposal included in the Company’s proxy materials, you must comply with the then current advance notice provisions and other requirements set forth in the Company’s Bylaws, including that the Company must receive your proposal on or after January 26, 2012 and on or prior to February 20, 2012, with certain exceptions if the date of next year’s Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the 2011 Annual Meeting.

If the Company does not receive your proposal or nomination by the appropriate deadline and in accordance with the terms of the Company’s Bylaws, then it may not properly be brought before the 2012 Annual Meeting.

The fact that the Company may not insist upon compliance with these requirements should not be construed as a waiver by the Company of its right to do so at any time in the future.

You should address your proposals or nominations to the Corporate Secretary, Starwood Hotels & Resorts Worldwide, Inc., 1111 Westchester Avenue, White Plains, New York 10604.

By Order of the Board of Directors

STARWOOD HOTELS & RESORTS

WORLDWIDE, INC.

Kenneth S. Siegel

Corporate Secretary

March 21, 2011

General Directions To
The St. Regis Atlanta

From North


	•	Take Interstate 285 East (from Interstate 75) or Interstate 285 West (from Interstate 85) to Exit GA 400 South.
	•	Take Exit 2 — Lenox Road.
	•	Turn left and follow the signs for Peachtree Road South.
	•	Turn right on Peachtree Road.
	•	Continue one mile and turn right on West Paces Ferry Road.
	•	The St. Regis Atlanta is two blocks on the left.

From South


	•	Take Interstate 85 North to Exit GA 400 North.
	•	Take first exit — Lenox Road.
	•	Turn right and follow signs for Peachtree Road South.
	•	Turn right on Peachtree Road.
	•	Continue one mile and turn right on West Paces Ferry Road.
	•	The St. Regis Atlanta is two blocks on the left.

From East


	•	Travel on Interstate 20 West to Interstate 85 North.
	•	Take Interstate 85 North and follow to Exit GA 400 North.
	•	Take first exit — Lenox Road.
	•	Turn right and follow signs for Peachtree Road South.
	•	Turn right on Peachtree Road.
	•	Continue one mile and turn right on West Paces Ferry Road.
	•	The St. Regis Atlanta is two blocks on the left.

From West


	•	Take Interstate 285 East to Exit GA 400 South.
	•	Take Exit 2 — Lenox Road.
	•	Turn left and follow the signs for Peachtree Road South.
	•	Turn right on Peachtree Road.
	•	Continue one mile and turn right on West Paces Ferry Road.
	•	The St. Regis Atlanta is two blocks on the left.

From Hartsfield-Jackson International Airport (ATL)*


	•	Take Interstate 85 North to Exit GA 400 North.
	•	Take first exit — Lenox Road.
	•	Turn right and follow signs for Peachtree Road South.
	•	Turn right on Peachtree Road.
	•	Continue one mile and turn right on West Paces Ferry Road.
	•	The St. Regis Atlanta is two blocks on the left.

From Peachtree-Dekalb Airport (PDK)


	•	Proceed west on Chamblee Tucker Road toward West Hospital Avenue.
	•	Turn left onto Peachtree Industrial Boulevard GA-141.
	•	Continue to follow GA-141.
	•	Turn right onto West Paces Ferry Road.
	•	The St. Regis Atlanta is two blocks on the left.

*The Atlanta Link is the exclusive shuttle service running to and from Hartsfield-Jackson International Airport.

Taxi service is available from the airports, the Atlanta Amtrak Station, and from the Greyhound Bus Station.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
1111 WESTCHESTER AVENUE
WHITE PLAINS, NY 10604

VOTE BY INTERNET - www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date or any cut-off date described in the proxy statement. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date or any cut-off date described in the proxy statement. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.


TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

	M31574-P07908	KEEP THIS PORTION FOR YOUR RECORDS

		DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

For
All

Withhold
All

For All
Except

To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.

Vote on Directors

The Board of Directors recommends you vote FOR
each of the following nominees:

Election of Directors

Nominees:

01) Adam Aron

07) Eric Hippeau

02) Charlene Barshefsky

08) Stephen Quazzo

03) Thomas Clarke

09) Thomas Ryder

04) Clayton Daley, Jr.

10) Frits van Paasschen

05) Bruce Duncan

11) Kneeland Youngblood

06) Lizanne Galbreath

Vote on Proposals

The Board of Directors recommends you vote FOR the following proposal:

For

Against

Abstain

To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2011.

The Board of Directors recommends you vote FOR the following resolution:

RESOLVED, that the Company stockholders approve, on an advisory basis, the compensation paid to our Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables and narrative discussion, in our proxy statement for the 2011 Annual Meeting of Stockholders.

The Board of Directors recommends you vote 1 YEAR on the following proposal:

1 Year

2 Years

3 Years

Abstain

To recommend, by non-binding vote, the frequency of executive compensation votes.

NOTE: Such other business as may properly come before the meeting or any postponement or adjournment thereof.

Please indicate if you plan to attend this meeting.

Yes

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.




Signature [PLEASE SIGN WITHIN BOX]	Date	Signature (Joint Owners)	Date

General Directions To The St. Regis Atlanta

From North

•		Take Interstate 285 East (from Interstate 75) or Interstate 285 West (from Interstate 85) to Exit GA 400 South.

•		Take Exit 2 — Lenox Road.

•		Turn left and follow the signs for Peachtree Road South.

•		Turn right on Peachtree Road.

•		Continue one mile and turn right on West Paces Ferry Road.

•		The St. Regis Atlanta is two blocks on the left.

From South

•		Take Interstate 85 North to Exit GA 400 North.

•		Take first exit — Lenox Road.

•		Turn right and follow signs for Peachtree Road South.

•		Turn right on Peachtree Road.

•		Continue one mile and turn right on West Paces Ferry Road.

•		The St. Regis Atlanta is two blocks on the left.

From East

•		Travel on Interstate 20 West to Interstate 85 North.

•		Take Interstate 85 North to Exit GA 400 North.

•		Take first exit — Lenox Road.

•		Turn right and follow signs for Peachtree Road South.

•		Turn right on Peachtree Road.

•		Continue one mile and turn right on West Paces Ferry Road.

•		The St. Regis Atlanta is two blocks on the left.

From West

•		Take Interstate 285 East to Exit GA 400 South.

•		Take Exit 2 — Lenox Road.

•		Turn left and follow the signs for Peachtree Road South.

•		Turn right on Peachtree Road.

•		Continue one mile and turn right on West Paces Ferry Road.

•		The St. Regis Atlanta is two blocks on the left.

From Hartsfield-Jackson International Airport (ATL)*

•		Take Interstate 85 North to Exit GA 400 North.

•		Take first exit — Lenox Road.

•		Turn right and follow signs for Peachtree Road South.

•		Turn right on Peachtree Road.

•		Continue one mile and turn right on West Paces Ferry Road.

•		The St. Regis Atlanta is two blocks on the left.

From Peachtree-Dekalb Airport (PDK)

•		Proceed west on Chamblee Tucker Road toward West Hospital Avenue.

•		Turn left onto Peachtree Industrial Boulevard GA-141.

•		Continue to follow GA-141.

•		Turn right onto West Paces Ferry Road.

•		The St. Regis Atlanta is two blocks on the left.

* The Atlanta Link is the exclusive shuttle service running to and from Hartsfield-Jackson International Airport.

Taxi service is available from the airports, the Atlanta Amtrak Station, and from the Greyhound Bus Station.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
Combined Document is available at www.proxyvote.com.

M31575-P07908

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Proxy solicited by the Board of Directors for
2011 Annual Meeting of Stockholders
and any postponement or adjournment thereof

I, a stockholder of Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (the “Company”), hereby appoint Frits van Paasschen, Bruce Duncan and Kenneth S. Siegel, or each of them, proxies and attorneys-in-fact, with full power of substitution, to attend and represent me at the Annual Meeting of Stockholders of the Company, to be held at The St. Regis Atlanta, 88 West Paces Ferry Road, Atlanta, GA 30305, on May 5, 2011, at 10:00 a.m. local time, and at any adjournment or postponement thereof, and to cast on my behalf all votes that I am entitled to cast at such meeting as I direct on the reverse side of this card. I hereby acknowledge receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement, the terms of which are incorporated by reference, and revoke any proxy previously given by me with respect to such meeting.

This proxy will be voted as directed, or if no direction is indicated, the proxy holders will vote the shares represented by this proxy “FOR” Proposals 1, 2 and 3 and “1 YEAR” for Proposal 4 and in the discretion of the proxy holders on any other matter that may properly come before the meeting.

Continued and to be signed on reverse side


þ	No fee required.

o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.


	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):


o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.


WHO CAN HELP ANSWER YOUR QUESTIONS?			ii
THE ANNUAL MEETING AND VOTING — QUESTIONS AND ANSWERS			1
CORPORATE GOVERNANCE			6
ELECTION OF DIRECTORS			8
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			13
ADVISORY VOTE ON EXECUTIVE COMPENSATION			13
ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATION			14
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS			14
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS			16
EXECUTIVE AND DIRECTOR COMPENSATION			18
EXECUTIVE OFFICERS			18
COMPENSATION DISCUSSION & ANALYSIS			19
COMPENSATION COMMITTEE REPORT			33
SUMMARY COMPENSATION TABLE			34
GRANTS OF PLAN-BASED AWARDS			36
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS SECTION			37
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END			38
OPTION EXERCISES AND STOCK VESTED			39
NONQUALIFIED DEFERRED COMPENSATION			40
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL			41
DIRECTOR COMPENSATION			45
AUDIT COMMITTEE REPORT			49
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION			50
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			50
OTHER MATTERS			51
SOLICITATION COSTS			51
HOUSEHOLDING			52
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING			53