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                                                                    EXHIBIT 10.7
 
                           HILTON HOTELS CORPORATION
                   1996 CHIEF EXECUTIVE STOCK INCENTIVE PLAN
 
SECTION 1.  PURPOSE; DEFINITIONS
 
    The  purpose of the Plan is to  give the Corporation a competitive 
advantage by attracting, retaining and motivating a Chief Executive Officer 
("CEO") and to link the CEO's interests more directly to the profitability of 
the Corporation's businesses and increases in shareholder value.
 
    For purposes of the Plan, the following terms are defined as set forth 
below:
 
       a.  "AFFILIATE" means a corporation or other entity controlled by the
    Corporation and  designated by  the Committee from time to time as such.
 
       b.  "BOARD" means the Board of Directors of the Corporation.
 
       c.  "CHANGE OF CONTROL" and "CHANGE OF CONTROL PRICE" have the meanings
    set forth in Sections 6(b) and (c), respectively.
 
       d.  "CODE" means the Internal Revenue Code of 1986, as amended from time
    to time, and any successor thereto.
 
       e.  "COMMISSION" means the Securities and Exchange Commission or any
    successor agency.
 
       f.  "COMMITTEE" means the Committee referred to in Section 2.
 
       g.  "COMMON STOCK" means common stock, par value $2.50 per share, of the
     Corporation.
 
       h.  "CORPORATION" means Hilton Hotels Corporation, a Delaware
     corporation.
 
       i.  "DISABILITY" means permanent and total disability as determined under
     procedures established by the Committee for purposes of the Plan.
 
       j.  "DISINTERESTED PERSON" means a member of the Board who qualifies as a
    disinterested person as defined in Rule 16b-3(c)(2), as promulgated
    by the Commission under the Exchange Act, or any successor definition
    adopted by the Commission.
 
       k.  "EMPLOYMENT AGREEMENT" means the Employment Agreement by and between
    Hilton Hotels Corporation and Stephen F. Bollenbach dated as of the
    1st day of February 1996.
 
       l.  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as  amended
    from time to time, and any successor thereto.
 
       m.  "FAIR  MARKET VALUE" means, except as provided in Section 5(g), as of
    any given date, the mean between the highest and lowest reported
    sales prices of the Common Stock on the New York Stock Exchange Composite
    Tape or, if not listed on such exchange, on any other national securities
    exchange on which the Common Stock is listed or on NASDAQ. If there is no
    regular public trading market for such Common Stock, the Fair Market Value
    of the Common Stock shall be determined by the Committee in good faith.
 
       n.  "PLAN" means the Hilton Hotels Corporation 1996 Chief Executive Stock
    Incentive  Plan, as set forth herein and as hereinafter amended from
    time to time.
 
       o.  "RULE 16B-3" means Rule 16b-3, as promulgated by the Commission under
    Section 16(b) of the Exchange Act, as amended from time to time.

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       p.  "STOCK OPTION" means an option granted under Section 5.
 
       q.  "TERMINATION OF EMPLOYMENT" means the termination of the CEO's
    employment with the Corporation and any subsidiary or Affiliate.
    Temporary absences from employment because of illness, vacation or leave  of
    absence shall not be considered Terminations of Employment.
 
    In  addition, certain other terms used herein have definitions given to 
them in the first place in which they are used.
 
SECTION 2.  ADMINISTRATION
 
    The Plan shall be administered by  the Stock Option Committee or such  
other committee of the Board as the Board may from time to time designate 
(the "Committee"), which shall be composed of not less than two 
Disinterested Persons, each of whom shall be an "outside director" 
for purposes of Section 162(m)(4) of the Code, and  shall be appointed by 
and  serve at the pleasure  of the Board.
 
    The  Committee shall have plenary authority to grant Stock Options 
pursuant to the terms of the Plan to the CEO.
 
    Among other things, the Committee shall have the authority, subject to the
terms of the Plan, to:
 
        (a) Recommend to the Board of Directors whether and to what extent Stock
    Options are to be granted hereunder;
 
        (b) Determine the number of shares of Common Stock to be covered by each
    Stock Option granted hereunder;
 
        (c)  Determine the terms and conditions of any Stock Option granted
    hereunder (including, but not limited to, the option price (subject to
    Section  5(a)), any vesting condition, restriction or limitation (which may
    be related to the  performance of the optionee or the Corporation) and any
    vesting acceleration or forfeiture waiver regarding any Stock Option and the
    shares of Common Stock relating thereto, based on such factors as the
    Committee shall determine;
 
        (d) Modify, amend or adjust the terms and conditions of any Stock
    Option, at any time or from time to time; and
 
        (e)  Determine to what extent and  under what circumstances Common Stock
    and other amounts payable with respect to a Stock Option shall be deferred.
 
    The Committee shall have the authority to adopt, alter and  repeal  
such administrative rules, guidelines and practices governing the Plan as 
it shall from time to time deem advisable, to interpret the terms and 
provisions of the Plan and any Stock Option issued under the Plan (and  
any agreement relating thereto) and to otherwise supervise the administration 
of the Plan.
 
    The Committee may act only by a majority of its members then in  
office, except that the members thereof may (i) delegate to an  
officer of the Corporation the authority to make decisions pursuant to 
paragraphs (c) and (f) of Section 5 (provided that no such delegation  
may be made that would cause Stock Options or other transactions under the 
Plan to cease to be exempt from Section 16(b) of the Exchange Act) and 
(ii) authorize any one or more of their number or any officer of the  
Corporation to execute and deliver documents on behalf of the Committee.
 
    Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Stock Option shall be
made in the sole discretion of the Committee or
 
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such delegate at the time of the grant of the Stock Option or, unless in
contravention of any express term of the Plan, at any time thereafter. All
decisions made by the Committee or any appropriately delegated officer  pursuant
to the provisions of the Plan shall be final and binding on all persons,
including the Corporation and the CEO.
 
SECTION 3.  COMMON STOCK SUBJECT TO PLAN
 
    The total number of shares of Common Stock reserved and available for  
grant under the Plan shall be 1,500,000. The CEO may not be granted 
Stock Options covering in excess of 1,500,000 shares of Common Stock in 
any calendar year. Shares subject to a Stock Option under the Plan may be 
authorized and unissued shares or may be treasury shares.
 
    If any Stock Option terminates without being  exercised, shares subject  
to such  Stock Option shall again be  available for distribution in 
connection with Stock Options under the Plan.
 
    In the event of any change in corporate capitalization, such as a  stock 
split or a corporate transaction, any merger, consolidation, separation, 
including a spin-off, or other distribution of stock or property of the 
Corporation, any reorganization (whether or not such reorganization comes 
within the efinition of such term in Section 368 of the Code) or any partial 
or complete liquidation of the Corporation, the Committee or  Board 
may make such substitution or adjustments in the aggregate number and kind 
of shares reserved for issuance under the Plan, in the number, kind and 
option price of shares subject to outstanding Stock Options, in the  
number and kind of shares subject to other outstanding  Stock Options  
granted under the Plan and/or such other equitable substitution or 
adjustments as it  may determine to be appropriate in its sole discretion; 
PROVIDED, HOWEVER, that the number of shares subject to any Stock Option 
shall always be a whole number.
 
SECTION 4.  ELIGIBILITY
 
    Only the CEO is eligible to be granted Stock Options under the Plan.
 
SECTION 5.  STOCK OPTIONS
 
    Any Stock  Option granted  under  the Plan  shall be  in  such form  as  
the Committee may from time to time approve.
 
    The  Committee  shall have the authority to grant  the CEO Stock 
Options, PROVIDED, HOWEVER, that grants hereunder are subject to the 
aggregate annual limit on grants set forth in Section 3. Stock Options 
shall be evidenced by option agreements, the form, terms and provisions of 
which may differ. The grant of a Stock Option shall occur on the  date (the 
"Grant Date") a majority of  the independent  directors of the  Corporation 
ratify by  resolution the Committee's recommendation with  respect to  the 
numbers  of shares  of Common  Stock to  be subject to such Stock Option and 
the terms and provisions of the Stock Option.
 
    Unless the Committee shall determine otherwise, Stock Options granted 
under the Plan shall be subject to the following terms and conditions  
and shall contain such additional terms and conditions as the  
Committee shall deem desirable:
 
       (a) OPTION PRICE.  The option price per share of Common Stock purchasable
    under a Stock  Option shall be  determined by the  Committee and  set
    forth in the Employment Agreement.
 
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       (b) OPTION  TERM.  The  term of each  Stock Option shall  be fixed by the
    Committee.
 
       (c) EXERCISABILITY.  Except as  otherwise provided herein, Stock  Options
    shall  be exercisable at such time or times and subject to such terms
    and conditions as  shall be determined  by the Committee.  If the  Committee
    provides  that any  Stock Option  is exercisable  only in  installments, the
    Committee may at  any time  waive such installment  exercise provisions,  in
    whole  or in part, based on such  factors as the Committee may determine. In
    addition, the Committee may at any time accelerate the exercisability of any
    Stock Option.
 
       (d) METHOD OF EXERCISE.  Subject to  the provisions of  this Section  5,
    Stock  Options may be exercised, in whole or  in part, at any time
    during the option term by giving written notice of exercise to  the
    Corporation specifying the number of shares  of Common Stock subject to the
    Stock Option to be purchased.
 
        Such notice shall  be accompanied by payment in full of the purchase
    price by certified or bank check or such other instrument as the Committee
    may accept. If approved by the Committee, payment, in full or in part, may
    also be made in the form of unrestricted Common Stock already owned by the
    optionee of the same class as the  Common Stock subject to the Stock Option
    (based on the Fair Market Value of the Common Stock on the date the Stock
    Option is exercised).
 
        Payment for any shares subject to a Stock Option may also be made  by
    delivering a properly executed exercise notice to the Corporation, together
    with a copy of irrevocable instructions to a broker to deliver promptly to
    the Corporation the amount of sale or loan proceeds to pay the purchase
    price, and, if  requested, by the amount of any federal, state, local or
    foreign  withholding taxes. To facilitate the foregoing, the Corporation may
    enter into agreements for coordinated procedures with one or more brokerage
    firms.
 
        No  shares of Common  Stock shall be issued  until full payment therefor
    has been made. The optionee shall have all of the rights of a shareholder 
    of the Corporation holding the class or series of Common Stock that is
    subject to such Stock Option (including, if applicable, the right to 
    vote the shares and  the right to receive dividends), when the optionee  
    has given written notice of exercise and has paid in full for such shares.
 
       (e) NONTRANSFERABILITY OF STOCK OPTIONS. No Stock Option shall be
    transferable by the optionee other than (i) by will or by the laws of
    descent and distribution; or (ii) pursuant to a qualified domestic relations
    order (as defined in the Code or Title I of the Employee Retirement Income
    Security Act of 1974, as amended. All Stock  Options shall be exercisable,
    subject to the terms of this Plan, during the optionee's lifetime, only by
    the optionee or by the guardian or legal representative of the optionee or
    its alternative payee pursuant to  such qualified domestic relations order,
    it being understood that the terms "holder" and "optionee" include the
    guardian and legal representative of the optionee and any person to whom an
    option is transferred by will or the laws of descent and distribution or
    pursuant to a qualified domestic relations.
 
       (f) TERMINATION. Unless otherwise determined by the Committee and
    subject to the terms of  the Employment Agreement, if the  optionee's
    employment terminates for any reason prior to the fifth anniversary of the
    Grant Date, any Stock Option held by the optionee, to the extent such option
    has become exercisable on or before the date of such termination  (including
    without limitation, any portion that  becomes exercisable because of such
    termination) shall remain exercisable until the earlier to occur of (x) the
    first  anniversary of such date of  termination or (y) the fifth anniversary
    of the Grant Date.
 
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       (g) CASHING OUT OF STOCK OPTION. On  receipt of written notice of
    exercise, the Committee  may elect to cash out all or part of the
    portion of the shares of Common Stock for which a Stock Option is being
    exercised by paying the optionee an amount, in cash or Common Stock, equal
    to the excess of the Fair Market  Value of the Common Stock over the option
    price  times the number of shares of Common Stock for which the Option is
    being exercised on the effective date of such cash-out.
 
        Cash-outs pursuant to this Section 5(g) shall comply with the "window
    period" provisions of Rule 16b-3, to the extent applicable, and the
    Committee may determine Fair Market Value based on the highest and lowest
    reported sales prices of the Common Stock on the New York Stock Exchange or
    other national securities exchange on which the shares are listed or on
    NASDAQ, as applicable, on any day during such "window period".
 
       (h) CHANGE OF CONTROL CASH-OUT. The Committee may, but need not,
    determine at the time of grant that, during the 60-day period from
    and after a Change of Control (the "Exercise Period"), the optionee shall
    have the right, whether or not the Stock Option is fully exercisable and in
    lieu  of the payment of the exercise price for the shares of Common Stock
    being purchased  under the Stock Option and by giving notice to the
    Corporation, to elect (within the Exercise Period) to surrender all or part
    of the Stock Option to the Corporation and to receive cash, within 30 days
    of such notice, in an amount equal to the amount by which the Change of
    Control Price per share of Common Stock on the date of such election shall
    exceed the exercise price per share of Common Stock under the Stock Option
    (the "Spread") multiplied by the number of shares of Common Stock granted
    under the Stock Option as to which the right granted under this Section 5(h)
    shall have been exercised; PROVIDED, HOWEVER, that if the Change of Control
    is within six months of the date of grant of a particular Stock Option, no
    such election shall be made by the optionee with respect to such Stock
    Option prior to six months from the date of grant. However, if the end of
    such 60-day period from and after a Change of Control is within six months
    of the date of grant of a Stock Option, such Stock Option shall be canceled
    in exchange for a cash payment to the optionee, effected on the day which is
    six months and one day after the date of grant of such Option, equal to the
    Spread multiplied by the number of shares of Common Stock granted under the
    Stock Option. Notwithstanding the foregoing, if any right granted pursuant
    to this Section 5(h) would make a Change of Control transaction ineligible
    for pooling of interests accounting under APB No. 16 that but for this
    Section 5(h) would otherwise be eligible for such accounting treatment, the
    Committee  shall have the ability to substitute the cash payable pursuant to
    this Section 5(h) with Stock with a Fair Market Value equal to the cash that
    would otherwise be payable hereunder.
 
SECTION 6.  CHANGE OF CONTROL PROVISIONS
 
    (a) IMPACT OF EVENT.  Notwithstanding any other provision of the Plan to  
the contrary, unless the Committee shall determine otherwise, in the 
event of a Change of Control, any Stock Options outstanding as of the date 
such Change of Control is determined to have occurred, and  which are not 
then exercisable and vested, shall become fully exercisable and vested to  
the full  extent of  the original grant.
 
    (b) DEFINITION  OF CHANGE OF CONTROL. For purposes of the Plan, a "Change 
of Control" shall mean the happening of any of the following events:
 
        (i) An acquisition by any individual, entity or group (within the
    meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
    of beneficial ownership (within the meaning of Rule 13d-3 promulgated 
    under the Exchange Act) of 20% or more of either (1) the then outstanding
    shares of
 
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    common stock of the Corporation (the "Outstanding Corporation Common Stock")
    or (2) the combined voting power of the then outstanding voting securities
    of the Corporation entitled to vote generally in the election of directors
    (the "Outstanding Corporation Voting Securities")(a "Control Purchase");
    excluding, however, the following:(1) Any acquisition directly from the
    Corporation, other than an acquisition by virtue of the exercise of a
    conversion privilege unless the security being so converted was itself
    acquired directly from the Corporation, (2) Any acquisition by the
    Corporation, (3) Any acquisition by any employee benefit plan (or related
    trust) sponsored or maintained by the Corporation or any corporation
    controlled  by the Corporation, (4) Any acquisition by any corporation
    pursuant to a transaction which complies with clauses (1), (2) and (3) of
    subsection (iii) of this Section 6(b), or (5) Any acquisition by Barron
    Hilton, the Charitable Remainder Unitrust created by Barron Hilton to
    receive shares from the Estate of Conrad N. Hilton, or the Conrad N. Hilton
    Fund (together, the "Hilton Interests"); or
 
        (ii) A change in the composition of the Board such that the  individuals
    who, as of the effective date of the Plan, constitute the Board (such Board
    shall be herein after referred to as the "Incumbent Board") cease for any
    reason to constitute at least a majority of the Board; PROVIDED, HOWEVER,
    for purposes of this Section 6(b), that any individual who becomes a member
    of the Board subsequent to the effective  date of the Plan, whose election,
    or nomination for election by the Corporation's shareholders, was approved
    by a vote of at least a majority of those individuals who are members of the
    Board and who were also members of the Incumbent Board (or deemed to be such
    pursuant to this proviso) shall be considered as though such individual were
    a member of the Incumbent Board; but, PROVIDED FURTHER, that any such
    individual whose initial assumption of office occurs as a result of either
    an  actual or threatened  election contest (as such terms are  used in Rule
    14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual
    or threatened  solicitation of  proxies or  consents by  or on  behalf of  a
    Person  other than the Board  shall not be so considered  as a member of the
    Incumbent Board (a "Board Change"); or
 
       (iii)  The approval by the shareholders of the Corporation of a
    reorganization, merger or consolidation or sale or other disposition of all
    or substantially all of the assets of the Corporation ("Corporate 
    Transaction"); excluding however, such a Corporate Transaction pursuant to
    which (1) all or substantially all of the individuals and entities who are
    the beneficial owners, respectively, of the Outstanding Corporation Common
    Stock and Outstanding Corporation Voting Securities immediately prior to
    such Corporate Transaction will beneficially own, directly or indirectly,
    more than 50% of, respectively, the outstanding shares of common stock, and
    the combined voting power of the then outstanding voting securities entitled
    to  vote generally in the election of directors,  as the case may be, of the
    corporation resulting from such Corporate Transaction (including, without
    limitation, a corporation which as a result of such transaction owns the
    Corporation or all or substantially all of the Corporation's assets either
    directly or through one or more subsidiaries) in substantially the same
    proportions as their ownership, immediately prior to such Corporate
    Transaction, of the Outstanding Corporation Common Stock and Outstanding
    Corporation Voting Securities, as the case may be, (2) no Person (other than
    the Hilton Interests, the Corporation, any employee benefit plan (or related
    trust) of the Corporation or such corporation resulting from such  Corporate
    Transaction)  will beneficially own, directly or indirectly, 20% or more of,
    respectively, the outstanding shares of common stock of the corporation
    resulting from such Corporate Transaction or the combined voting power of
    the outstanding voting securities of such corporation entitled  to  vote
    generally in the election of directors except to the extent that such
 
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    ownership existed prior to the Corporate Transaction, and (3) individuals
    who  were members of the Incumbent Board will constitute at least a majority
    of the members of the board of directors of the corporation resulting  from
    such Corporate Transaction; or
 
        (iv)  The approval by the stockholders  of the Corporation of a complete
    liquidation or dissolution of the Corporation.
 
    (c) CHANGE OF CONTROL PRICE.  For purposes of  the Plan, "Change of  
Control Price"  means the higher of (i) the highest reported sales 
price, regular way, of a  share of Common Stock in any  transaction reported 
on the New York Stock Exchange Composite Tape or other national exchange  
on which such shares are listed or on NASDAQ during the 60-day period prior 
to and including the date of a Change of Control or (ii) if the Change of  
Control is the result of a tender or exchange offer or a Corporate 
Transaction, the highest price per share of  Common Stock paid in such tender 
or exchange offer or Corporate Transaction; PROVIDED, HOWEVER, that in the  
case of a Stock Option  which (A) is held by  an optionee  who is  an officer 
or director of the Corporation and  is subject to Section 16(b) of the Exchange
Act and (B) was granted within  240 days of  the Change  of Control, then the 
Change of Control Price for such Stock Option shall be the Fair Market Value of
the Common Stock on  the date such Stock Option is exercised  or deemed 
exercised. To the extent that the consideration paid in any such transaction 
described above consists all or in part of securities or  other noncash
consideration, the value of such securities or other noncash consideration shall
be determined in the sole discretion of the Board.
 
SECTION 7.  TERM, AMENDMENT AND TERMINATION
 
    The Plan will  terminate five years  after the effective  date of the  Plan.
Under the Plan, Stock Options outstanding as of such date shall not be affected
or impaired by the termination of the Plan.
 
    The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (i) impair the rights of
the optionee under a Stock Option theretofore granted without the optionee's
consent, except such an amendment made to cause the Plan to qualify for the
exemption provided by Rule 16b-3, or (ii) disqualify the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without the
approval of the Corporation's shareholders to the extent such approval is
required by law or agreement.
 
    The Committee may amend the terms  of any Stock Option theretofore  
granted, prospectively or retroactively, but no such amendment shall impair 
the rights of the  holder without the holder's consent except  such an 
amendment made to cause the Plan or Stock Option to qualify for the exemption 
provided by Rule 16b-3.
 
    Subject to the above provisions, the Board shall have authority to amend 
the Plan to take into account changes in law and tax and accounting rules as 
well as other developments,  and to grant Stock Options which qualify for  
beneficial treatment under such rules without stockholder approval.
 
SECTION 8.  UNFUNDED STATUS OF PLAN
 
    It is presently intended that the Plan constitute an "unfunded" plan for 
incentive and deferred compensation. The Committee may authorize the creation 
of trusts or other arrangements to meet the obligations created under the 
Plan to deliver Common Stock or make payments; PROVIDED, HOWEVER, that unless 
the Committee otherwise determines, the existence of such trusts or other 
arrangements is consistent with the "unfunded" status of the Plan.
 
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SECTION 9.  GENERAL PROVISIONS
 
    (a)  Notwithstanding  any other  provision of  the  Plan or  agreements 
made pursuant thereto, the Corporation shall not be required to issue or 
deliver  any certificate  or certificates for shares of Common  Stock under 
the Plan prior to fulfillment of all of the following conditions:
 
        (1) Listing or approval for listing upon notice of issuance, of such
    shares on the New York Stock Exchange, Inc., or such other securities
    exchange as may at the time be the principal market for the Common Stock;
 
        (2) Any registration or other qualification of such shares of the
    Corporation under any state or federal law or regulation, or the maintaining
    in effect of any such registration or other qualification which the
    Committee shall, in its absolute discretion upon the advice of counsel, deem
    necessary or advisable; and
 
        (3) Obtaining any other consent, approval, or permit from any state or
    federal governmental agency which the Committee shall, in its absolute
    discretion after receiving the advice of counsel, determine to be  necessary
    or advisable.
 
    (b)  Nothing contained in the Plan shall prevent the Corporation or any
subsidiary or Affiliate from adopting other or additional compensation 
arrangements for its employees.
 
    (c)  Adoption of the Plan shall not confer upon the CEO any right to
continued employment, nor shall it interfere in any way with the right of the
Corporation or any subsidiary or Affiliate to terminate the employment of the
CEO at any time.
 
    (d) No later than the date as of which an amount first becomes includible 
in the gross income of the CEO for federal income tax purposes with respect 
to any Stock Option under the Plan, the CEO shall pay to the Corporation, or 
make arrangements satisfactory to the Committee regarding the payment of, 
any federal, state, local or foreign taxes of any kind required by law to 
be withheld with respect to such amount. Unless otherwise determined by 
the Corporation, withholding obligations may be settled with Common Stock, 
including Common Stock that is part of the Stock Option that gives rise to 
the withholding requirement. The obligations of the Corporation under the 
Plan shall be conditional on such payment or arrangements, and the 
Corporation and its Affiliates shall, to the extent permitted by law, have 
the right to deduct any such taxes from any payment otherwise due to the 
optionee. The Committee  may establish such procedures as it deems 
appropriate, including making irrevocable elections, for the settlement of 
withholding obligations with Common Stock.
 
    (e) The Committee shall establish such procedures as it deems  
appropriate for the CEO to designate a beneficiary to whom any amounts 
payable in the event of the CEO's death are to  be paid or by whom any  
rights of the CEO, after  the CEO's death, may be exercised.
 
    (f)  The Plan and all Stock Options made and actions taken thereunder 
shall be governed  by and  construed in accordance with the laws of the  
State of Delaware, without reference to principles of conflict of laws.
 
SECTION 10.  EFFECTIVE DATE OF PLAN
 
    The  Plan shall  be effective as  of February  1, 1996, provided  that it 
is approved and adopted by at least a majority of the shares of Common Stock 
of the Corporation voting at its annual meeting scheduled to be held on May 
9, 1996.
 
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