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EXHIBIT 10.1
June 27, 2000
Robert F. Cotter
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
777 Westchester Avenue
White Plains, New York 10604
Dear Bob:
I am delighted to confirm the compensation arrangements associated with your
responsibilities as Chief Operating Officer, Starwood Hotels & Resorts
Worldwide, Inc. ("the Company").
The specifics of these arrangements are outlined below:
POSITION AND EFFECTIVE DATE:
Subject to the terms of this letter, your appointment as Chief Operating Officer
is effective February 15, 2000.
You will report directly to the Company's Chief Executive Officer and you shall
perform such duties and services as are assigned to you by the Company from time
to time. You acknowledge that your employment will be subject to all policies
and practices of the Company as may currently exist or as may be curtailed,
modified or implemented from time to time. Further, you shall devote your full
time and attention to the affairs of the Company and to your duties as Chief
Operating Officer.
BASE SALARY:
For 2000 and in effect from the date of your appointment, February 15, 2000,
your base salary will be $600,000 annually, paid in semi-monthly intervals of
$25,000, and subject to applicable withholdings for FICA, local, state and
federal taxes, and Medicare. Your annual base salary will be adjusted to
$650,000 effective January 1, 2001.
ANNUAL INCENTIVE (BONUS):
You will continue to participate in the Starwood Annual Incentive Plan (AIP).
For performance year 2000, your target incentive opportunity is 100% of base
salary. Your actual incentive payout will be based upon achieving specified
performance criteria to be established and approved with the Chief Executive
Officer, and may be awarded solely at the Company's discretion. For performance
year 2001, your target incentive opportunity will be moved to 112% of base
salary. Any annual bonus shall not be deemed earned by you until the Company has
determined your entitlement to such bonus and only if you are employed by the
Company at the time such bonuses are payable in accordance with the AIP and the
Company's practices.
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BENEFITS:
You will continue to participate in the Starwood Benefits Plan as an expatriate
until such time as you and your family permanently move to the U.S. at which
point you and your family will be covered on a regular U.S. payroll basis.
LONG TERM INCENTIVE:
You will continue to participate in the Starwood 1999 Long Term Incentive
Compensation Plan ("LTIP"). This plan provides for the award of stock options at
the Company's discretion to high performing executives. For 2000, you have been
awarded a stock option grant of 316,400 Starwood options under the terms of the
1999 LTIP, effective as of the April 1, 2000 meeting of the Starwood Board of
Directors. For 2001, you will be awarded 454,000 Starwood options. This grant
date will be the date the Company's 2001 stock option grants are approved by the
Compensation & Option Committee of the Board.
CONTINUATION OF EXPATRIATE STATUS:
Since your family will not be relocating to the U.S. until the summer of 2001,
you will continue to receive your expatriate benefits and legal commitments
under Starwood's expatriate policy. In particular the following benefits will
apply until July 2001:
a. AREA COST ALLOWANCE
You will continue to receive an Area Cost Allowance to compensate you
for certain costs associated with your family's living in Brussels. The
amount of the Area Cost Allowance is based on cost of living surveys
conducted by independent consultants and will be US$ 36,605 per annum
for the balance of 2000. This amount will be paid in 12 equal
installments in local currency and may fluctuate depending on foreign
exchange and cost of living trends. Also, please note that this stated
amount is based on current policy and might be amended based on
Starwood's expatriate policy, which is currently being reviewed. The
exchange rate used in converting your compensation and your Area Cost
Allowance from US$ to BF may be subject to modification at Company
discretion should present policies be revised.
b. INCOME TAXES
Your Company sourced income will continue to be tax protected in the
U.S. A Company provided tax consultant will prepare your tax returns.
It is the Company's responsibility to reimburse you for Belgian, and
excess U.S., taxes incurred. It is, of course, understood that you will
continue to be responsible for all reporting and filing of personal
income tax returns as required by the local tax authorities.
c. TRANSPORTATION
You will continue to be eligible for one fully maintained Company car
for business and personal use, as per European car policy application
in Belgium.
d. HOME LEAVE
On an annual basis your family will continue to be entitled to one
round trip full fare business class airfare between Brussels and
Boston. If you elect to utilize the home leave benefit to a point other
than Boston, you may do so provided the airfare costs do not exceed
those of your normal entitlement. In addition the cost of two round
trip economy
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airfares (between U.S. college locations and Brussels) per year for
your dependents attending college in the U.S. will be reimbursed. The
Human Resources Department must approve all home leave travel in
advance.
e. EDUCATIONAL ASSISTANCE
While your dependents are permanently residents in Brussels, the
Company will continue to pay all reasonable costs associated with their
attendance at a local international school.
f. RELOCATION
Starwood will pay the reasonable, out-of-pocket costs of relocating
your family and household furnishings from Brussels to the New York
metropolitan area in accordance with the provisions of Starwood's
Relocation Program - Plan I. Greg Waldron is available to review the
details of this program with you at your convenience.
In the event that you accept the offer and relocation expenses are paid
to you or on your behalf, you agree that if you voluntarily terminate
your employment within one year after your relocation, you will repay
all relocation expenses, reduced by 1/12 for each full calendar month
actually worked. In addition, eligibility for reimbursement of any and
all relocation expenses will cease on the last day of employment and
any relocation expenses incurred after that date will not be reimbursed
by Starwood and will be your responsibility.
g. HOME LOAN
Upon your move to the New York metropolitan area, Starwood will assist
you in the purchase of a new principal residence by making a second
mortgage home loan available to you in an amount of $600,000. The loan
proceeds must be used by you to purchase your new principal residence.
The loan will be non-transferable and non-interest bearing prior to
maturity and will mature on the earlier of (a) five years from the date
of the first advance of the loan to you, (b) voluntary or involuntary
termination of your employment with Starwood, or (c) your sale of the
residence. The loan shall be evidenced by a note in the amount of the
loan and shall be secured by a second mortgage lien on your new
residence. The second mortgage is to be executed by all persons having
an ownership interest in the new residence. This loan will be funded at
the closing of the purchase of your new residence through an escrow
account established for this purpose acceptable to Starwood. No advance
of the loan will be made unless documents evidencing and securing the
loan acceptable to Starwood are signed and delivered by the appropriate
parties.
EXCLUSIVE DISPUTE RESOLUTION PROCEDURE:
Any and all disputes relating to this offer letter, your employment with
Starwood or the termination of that employment will be resolved solely and
exclusively through binding arbitration pursuant to the employment rules of the
American Arbitration Association. Accordingly, you acknowledge and agree that
this offer of employment as Chief Operating Officer and the benefits provided
herein are contingent upon your execution of the Arbitration Agreement provided
to you herewith.
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EMPLOYMENT TERMS & SEVERANCE:
The term of this Agreement (should you accept this offer) is two years
commencing on February 15, 2000. You understand and agree that your employment
with the Company is "at will." As such, you agree that either you or Starwood
may end the employment relationship at any time, with or without cause upon 30
days' notice. By signing below you understand and acknowledge that except for
this letter, there is not any written contract between you and the Company
concerning this offer employment as Chief Operating Officer. This Agreement
supercedes any previous agreements between you and the Company relating to your
employment.
In the event that Starwood terminates your employment for any reason other than
"cause," Starwood will pay to you the greater of (i) 12 months of your then
current base salary or (ii) your current base salary through the remainder of
the term of this Agreement (the "Severance Period"), in a lump sum less all
applicable withholdings, and will reimburse you for your COBRA expenses minus
your last level of contribution for the Severance Period commencing on the
termination date (the "Termination Payments"). You will not be entitled to any
Termination Payments if you resign your employment with the Company. As a
condition for, and prior to, your entitlement to and receipt of any Termination
Payments, you must enter into a written waiver and release of any and all claims
against Starwood arising out of or relating to your employment with Starwood, in
such form that Starwood may reasonably require.
For purposes of this paragraph, "cause" shall mean (i) any material breach by
you of any of the duties, responsibilities or obligations of your employment, or
any of the policies or practices of Starwood; (ii) any willful failure or
refusal by you to properly perform (as determined by Starwood in its reasonable
discretion and judgment) the duties, responsibilities or obligations of your
employment, or to properly perform or follow (as determined by Starwood in its
reasonable discretion and judgment) any lawful order or direction by Starwood;
(iii) any acts or omissions by you that constitute (as determined by Starwood in
its reasonable discretion and judgment) fraud, dishonesty, breach of your duty
of loyalty, gross negligence, civil or criminal illegality, or any other
misconduct in your employment or which could tend to bring Starwood into
disrepute, could create material civil or criminal liability for Starwood or
could adversely and materially affect Starwood's business or interests.
OTHER CONDITIONS AND OBLIGATIONS:
As a further condition of this offer of employment as Chief Operating Officer
and your right to receive any of the benefits detailed herein, you agree to
execute and be bound by the Confidentiality, Non-solicitation Agreement provided
to you herewith.
INTEGRATED AGREEMENT:
This offer letter represents the sole and complete understanding between you and
the Company relating to your employment and there are no other written or oral
agreements, understandings or representations relating to this offer of
employment. The terms of your employment, including the at-will nature of the
employment, may be amended only through a written instrument signed by you and
the General Counsel or Chief Executive Officer of Starwood Hotels & Resorts
Worldwide, Inc. This Agreement is not intended to supercede or diminish in any
way your rights under the Severance Agreement entered into with you for the
purpose of providing certain protections in the event of a change in control of
the Company.
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By signing and returning this letter, you confirm that this letter accurately
sets forth the understanding between you and Starwood and that you accept and
agree to the terms as outlined.
Best regards,
/s/ David K. Norton
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David K. Norton
Executive Vice President
Human Resources
cc: Barry S. Sternlicht
Personnel File
ACCEPTED AND AGREED TO:
/s/ Robert F. Cotter
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Robert F. Cotter
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