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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-K/A

(Amendment No. 1)


|    |  |                                                                                           
|--- |  | ------------------------------------------------------------------------------------------
|[X] |  | Joint Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2002

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from        to

|                                                               |  |                                                               
|-------------------------------------------------------------- |  | --------------------------------------------------------------
|Commission File Number: 1-7959                                 |  | Commission File Number: 1-6828                                
|                                                               |  |                                                               
|STARWOOD HOTELS & RESORTS WORLDWIDE, INC                       |  | STARWOOD HOTELS & RESORTS                                     
|(Exact name of Registrant as specified in its charter)         |  | (Exact name of Registrant as specified in its charter)        
|                                                               |  |                                                               
|Maryland                                                       |  | Maryland                                                      
|(State or other jurisdiction
of incorporation or organization) |  | (State or other jurisdiction
of incorporation or organization)
|                                                               |  |                                                               
|52-1193298                                                     |  | 52-0901263                                                    
|(I.R.S. employer identification no.)                           |  | (I.R.S. employer identification no.)                          
|                                                               |  |                                                               
|1111 Westchester Avenue
White Plains, NY 10604                 |  | 1111 Westchester Avenue
White Plains, NY 10604                
|(Address of principal executive
offices, including zip code)   |  | (Address of principal executive
offices, including zip code)  
|                                                               |  |                                                               
|(914) 640-8100                                                 |  | (914) 640-8100                                                
|(Registrants telephone number,
including area code)           |  | (Registrants telephone number,
including area code)          

Securities Registered Pursuant to Section 12(b) of the Act:

|                                                                                                                                                                                                                                                                                                                                                                                      |  |                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                                                                                                                                                                                                                                                                                                                                                   |  | Name of Each Exchange on Which Registered
|                                                                                                                                                                                                                                                                                                                                                                                      |  |                                          
|Common Stock, par value $0.01 per share
(Corporation Share), of Starwood
Hotels & Resorts Worldwide, Inc. (the
Corporation), the Class B shares of
beneficial interest, par value $0.01
per share (Class B Shares), of
Starwood Hotels & Resorts (the
Trust), and Preferred Stock Purchase
Rights of the Corporation, all of
which are attached
and trade together as a Share |  | New York Stock Exchange                  

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes [X]   No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of each Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X]   No [   ]

As of June 30, 2002, the aggregate market value of the Registrants voting
and non-voting common equity (for purposes of this Joint Annual Report only,
includes all shares other than those held by the Registrants Directors,
Trustees and executive officers) was $6,539,800,304.

As of June 30, 2003, the Corporation had outstanding 201,016,041
Corporation Shares and the Trust had outstanding 201,016,041 Class B Shares and
100 Class A shares of beneficial interest, par value $0.01 per share (Class A
Shares).



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Table of Contents

|              |          |                                                                                               |  |      |    | 
|------------- | -------- | --------------------------------------------------------------------------------------------- |  | ---- | -- | 
|              |          |                                                                                               |  | Page
|              |          |                                                                                               |  |     
|AMENDED ITEMS |          |                                                                                               |  |     
|              | PART III |                                                                                               |  |      |   
|              |          | Item 11.   Executive Compensation                                                             |  |      | 2  | 
|              |          | Item 12.   Security Ownership of Certain Beneficial Owners
and Management and Related Matters |  |      | 12 | 
|              |          | Item 13.   Certain Relationships and Related Transactions                                     |  |      | 16 | 
|OTHER         |          |                                                                                               |  |     
|              | PART IV  |                                                                                               |  |      |   
|              |          | Item 16.   Exhibits, Financial Statement Schedules and Reports on Form 8-K                    |  |      |    | 
|              |          | 16(c)       Exhibits                                                                          |  |      | 18 | 

TABLE OF CONTENTS




|                  |                                                                                             |  |  |  |  |  |  | 
|----------------- | ------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part III         
|                  | Item 11. Executive Compensation                                                            
|                  | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Matters
|                  | Item 13. Certain Relationships and Related Transactions                                    
|SIGNATURES       
|Index to Exhibits
|EX-23.1          
|EX-99.1          
|EX-99.2          
|EX-99.3          
|EX-99.4          



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Explanatory Note:

This Amendment No. 1 to Form 10-K/A (this Amendment) is being filed to
include certain information under Part III that was not properly incorporated
by reference from Starwood Hotels & Resorts Worldwide, Inc.s proxy statement
due to the improper filing of such proxy statement under Starwood Hotels &
Resorts CIK number.

As required under SEC rules, this Amendment sets forth the complete text
of Items 11,12 and 13 as amended. The remainder of the information contained
in the Joint Annual Report on Form 10-K for the fiscal year ended December 31,
2002, originally filed on February 28, 2003, of Starwood Hotels & Resorts
Worldwide, Inc. and Starwood Hotels & Resorts (the Original Filing) is not
amended hereby and shall be as set forth in the Original Filing and neither
Starwood Hotels & Resorts Worldwide, Inc. nor Starwood Hotels & Resorts has
updated the disclosure in this Amendment to speak to any later date.




Part III




Item 11.Executive Compensation

DIRECTORS COMPENSATION

Directors of the Company who are employees of the Company receive no fees
for their services as Directors. Non-employee Directors receive separate
compensation for their service. That compensation includes:

|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Annual Fee:      |  | $50,000 per Director, payable in four equal installments of Company Shares and class B
shares of beneficial interest (Class B Shares) of the Trust that are attached and
traded together (collectively, the Shares) (based on the market value of a Share on
the preceding December 31). A Director may elect to receive up to one half of the
Annual Fee in cash and may defer (at an annual interest rate of LIBOR plus 1 1/2% for
deferred cash amounts) any or all of the Annual Fee. A Director may also elect to
defer to a deferred unit account any or all of the Annual Fee payable in Shares.
Effective January 1, 2002, Directors serving as members of the Audit Committee receive
an annual fee of $10,000 ($20,000 for the chairman of the Audit Committee).
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Attendance Fees: |  | $750 for each Board meeting ($500 in the case of a telephonic meeting). For committees
other than the Audit Committee, $500 for each committee meeting ($1,000 for the
chairman of a committee). For the Audit Committee, $3,000 for each meeting ($4,000 for
the chairman of the Audit Committee). Expenses related to attendance.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Options:         |  | Annual grants of options for 4,500 Shares under the Companys long-term incentive plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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|                                                       |  |                                                                                                           
|------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------
|Starwood Preferred
Guest Program
(1) Points and Rooms: |  | Annual grants of 250,000 Starwood Preferred Guest Points and eighteen free nights in
the Companys hotels.



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|(1) |  | The Starwood Preferred Guest Program is the Companys loyalty program
under which points are redeemable for hotel stays and other goods and
services offered under the program.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

The Summary Compensation Table below shows the compensation for Starwoods
past three fiscal years for the Chief Executive Officer of the Company and the
four other most highly compensated executive officers of the Company who were
serving as executive officers on December 31, 2002.

Summary Compensation Table

|                                                   |  |      |      |            |  |                     |           |                        |  |                |           |                  |  |            |           |            |  |           |           |  |  |  |         |      
|-------------------------------------------------- |  | ---- | ---- | ---------- |  | ------------------- | --------- | ---------------------- |  | -------------- | --------- | ---------------- |  | ---------- | --------- | ---------- |  | --------- | --------- |  |  |  | ------- | -----
|                                                   |  |      |      |            |  |                     |           |                        |  |                |           |                  |  | Restricted |           | Securities |  |           |           | 
|Name and                                           |  |      |      |            |  |                     |           |                        |  |                |           |                  |  | Stock      |           | Underlying |  | All Other
|Principal Position                                 |  | Year |      | Salary ($) |  | Bonus ($)           |           | Award(s)($)(1)         |  | Options(#) (2) |           | Compensation ($)
|                                                   |  |      |      |            |  |                     |           |                        |  |                |           |                 
|                                                   |  |      |      |            |  | Annual Compensation |           | Long-Term Compensation |  |                |           |                 
|                                                   |  |      |      |            |  |                     |           |                        |  |                |           |                 
|Barry S. Sternlicht                                |  |      | 2002 |            |  |                     | 1,000,008 |                        |  |                | 1,182,050 | (3)(4)           |  |            | 2,843,483 | (6)        |  |           | 1,100,000 |  |  |  | 96,636  | (9)  
|Chairman and Chief                                 |  |      | 2001 |            |  |                     | 1,000,008 |                        |  |                | 2,496,750 | (3)(4)           |  |            | 3,185,128 | (7)        |  |           | 600,000   |  |  |  | 124,095 | (9)  
|Executive Officer                                  |  |      | 2000 |            |  |                     | 1,000,008 |                        |  |                | 3,437,500 | (4)              |  |            | 1,080,624 | (8)        |  |           | 1,500,000 |  |  |  | 190,707 | (9)  
|Robert F. Cotter                                   |  |      | 2002 |            |  |                     | 674,375   |                        |  |                | 298,519   | (3)(4)           |  |            | 773,369   | (6)        |  |           | 360,000   |  |  |  | (62,345 | )(10)
|Chief Operating Officer                            |  |      | 2001 |            |  |                     | 637,500   |                        |  |                | 401,500   | (3)(4)           |  |            | 2,012,086 | (7)        |  |           | 355,466   |  |  |  | 408,169 | (10) 
|                                                   |  |      | 2000 |            |  |                     | 587,564   |                        |  |                | 675,000   | (4)              |  |            | 244,237   | (8)        |  |           | 591,400   |  |  |  | 741,297 | (10) 
|Ronald C. Brown                                    |  |      | 2002 |            |  |                     | 482,185   |                        |  |                | 200,000   | (5)              |  |            | 276,640   | (6)        |  |           | 165,000   |  |  |  | 2,541   | (11) 
|Executive Vice
President                           |  |      | 2001 |            |  |                     | 495,890   |                        |  |                | 316,300   | (5)              |  |            | 554,709   | (7)        |  |           | 78,006    |  |  |  | 743     | (11) 
|and Chief
Financial Officer                        |  |      | 2000 |            |  |                     | 437,748   |                        |  |                | 506,925   | (5)              |  |            | 154,606   | (8)        |  |           | 120,000   |  |  |  | 37,029  | (11) 
|Theodore W. Darnall (14)                           |  |      | 2002 |            |  |                     | 555,750   |                        |  |                | 200,000   | (3)              |  |            | 345,800   | (6)        |  |           | 220,000   |  |  |  | 47,337  | (12) 
|President, Real Estate
Group                       |  |      |      |            |  |                     |           |                        |  |                |           |                  |  |            |           |            |  |           |           |  |  |  |         |      
|Steven M. Hankin (14)                              |  |      | 2002 |            |  |                     | 453,600   |                        |  |                | 180,306   | (5)              |  |            | 322,004   | (6)        |  |           | 185,000   |  |  |  | 1,332   | (13) 
|President, Starwood
Technology and Revenue
Systems |  |      |      |            |  |                     |           |                        |  |                |           |                  |  |            |           |            |  |           |           |  |  |  |         |      



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|(1) |  | Value is calculated by multiplying the number of Shares by the closing
market price of a Share on the date of grant. Dividends are paid to the
holders of such restricted stock awards.                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For details regarding options granted in 2002, see Option/ SAR Grants in
Last Fiscal Year below. Grants for 2001 for Messrs. Sternlicht and Cotter
include 100,000 and 50,000, respectively, purchased options pursuant to
the Companys Purchased Option Program described below in footnote (3).

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|(3) |  | Includes amounts deferred and utilized to purchase options. In December
2002 and 2001, for incentive and retention purposes, a select group of
senior executives were provided the opportunity to purchase stock options
using a portion of their 2002 and 2001 bonuses that were paid in March
2003 and 2002, respectively. Under the Purchased Option Program,
executives could make an irrevocable election to forego a portion of their
cash bonus, equal to 10% of the exercise price on a specified date, and
apply such amounts to the purchase of such options. The options vest in
full one year from the date of grant and the executive is at risk for the
purchase price if the executive leaves the Company prior to vesting of the
option or if the Share price declines. Upon exercise, the executive must
pay the remaining 90% of the exercise price. The amounts deferred for Mr.
Sternlicht were $228,150 and $287,000 in 2002 and 2001, respectively. The
amounts deferred for Mr. Cotter were $114,075 and $143,500 in 2002 and
2001, respectively. The amount deferred for Mr. Darnall was $45,630 in
2002.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | Excludes amounts deferred into Deferred Shares (defined below in note
(6)) and grossed up by 33% in accordance with the 1999 Annual Incentive
Plan for Certain Executives (the Executive AIP). The amounts deferred
for Mr. Sternlicht were $317,950, $403,254 and $610,902 for 2002, 2001 and
2000, respectively. The amounts deferred for Mr. Cotter were $61,481,
$84,000 and $225,000 for 2002, 2001 and 2000, respectively. The amounts
deferred into Deferred Shares (including the gross-up amount) are included
in the amounts disclosed under the Restricted Stock Awards column in the
above table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(5) |  | Excludes amounts utilized to purchase restricted Shares and grossed up by
33% in accordance with the Companys Annual Incentive Plan. The amounts
deferred for Mr. Brown were $52,709 and $87,406 for 2001 and 2000,
respectively. The amount deferred for Mr. Hankin was $60,102 for 2002. The
amounts deferred into restricted stock (including the gross-up amount) are
included in the amounts disclosed under the Restricted Stock Awards
column in the above table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(6) |  | On March 3, 2003, in accordance with the Companys Annual Incentive Plan,
25% of Mr. Hankins annual bonus with respect to 2002 performance was paid
in restricted Shares, which number of Shares was grossed up by 33% and
which vest equally over a two-year period. Mr. Hankin received a grant of
3,504 restricted Shares. The value of this grant on the date of grant is
shown on the above table and is based on the closing price of a Share on
the NYSE on such date ($22.82).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | On March 3, 2003 and March 14, 2003, respectively, in accordance with the
Companys Executive AIP, 25% of Messrs. Cotters and Sternlichts,
respectively, annual bonus with respect to 2002 performance was credited
to a deferred Share account on the Companys books, which number was
grossed up by 33% and which vest ratably over a period of three years
(Deferred Shares). With respect to 2002 performance, Mr. Cotter was
credited with 3,584 Deferred Shares and Mr. Sternlicht was credited with
17,995 Deferred Shares. The value of these Deferred Shares on the date of
the grant is shown on the above table and is based on the closing price of
a Share on the NYSE on such date ($22.82 in the case of Mr. Cotter and
$23.50 in the case of Mr. Sternlicht).                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | On February 15, 2002, in accordance with the 1999 Long-Term Incentive Plan
(the 1999 LTIP), the following grants of restricted Shares were made
which vest in full three years from date of grant: Mr. Sternlicht -
70,000; Mr. Cotter  20,000; Mr. Brown  8,000; Mr. Darnall  10,000 and
Mr. Hankin  7,000. The values of these grants on the date of grant are
shown on the above table and are based on the closing price of a Share on
the NYSE on such date ($34.58). The value of these grants at December 31,
2002 were: Mr. Sternlicht  $1,661,800; Mr. Cotter  $474,800; Mr. Brown -
189,920; Mr. Darnall  $237,400; and Mr. Hankin  $166,180, based on the
closing price of a Share on the NYSE on such date ($23.74).                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(7) |  | On March 1, 2002, in accordance with the Companys Annual Incentive Plan,
25% of each named executives (other than Messrs. Sternlicht and Cotter)
annual bonus with respect to 2001 performance was paid in restricted
Shares, which number of Shares was grossed up by 33% and which vest
equally over a two-year period. With respect to 2001 performance, Mr.
Brown received a grant of 1,947 restricted Shares. The value of this grant
on the date of grant is shown on the above table and is based on the
closing price of a Share on the NYSE on such date ($36.00).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | On March 1, 2002, in accordance with the Executive AIP, 25% of Messrs.
Sternlichts and Cotters annual bonus with respect to 2001 performance
was deferred into Deferred Shares. With respect to 2001 performance, Mr.
Sternlicht was credited with 14,898 Deferred Shares and Mr. Cotter was
credited with 3,177 Deferred Shares. The value of these Deferred Shares on
the date of grant is shown on the above table and is based on the closing
price of a Share on the NYSE on such date ($36.00).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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|     |  | On February 7, 2001, in accordance with the 1999 LTIP, the following
grants of restricted Shares were made which vest in full three years from
date of grant: Mr. Sternlicht  70,000; Mr. Cotter  50,151 and Mr. Brown
- 12,807. The values of these grants on the date of grant are shown on the
above table and are based on the closing price of a Share on the NYSE on
such date ($37.84).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | The value of these grants at December 31, 2002 were: Mr. Sternlicht -
$1,661,800; Mr. Cotter  $1,190,585; and Mr. Brown  $304,038, based on
the closing price of a Share on the NYSE on such date ($23.74). On
November 23, 2001, the Board of Directors of the Company elected to
accelerate the vesting of 50% of the restricted Share grants made to
employees of the Company, including the grants made to the executives
named in the above table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    
|(8)  |  | On March 1, 2001, in accordance with the Companys Annual Incentive Plan
and with respect to 2000 performance, Mr. Brown received a grant of 4,386
restricted Shares. The value of this grant at December 31, 2002 was
$104,124 and is based on the closing price of a Share on the NYSE on such
date ($23.74).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|     |  | On March 1, 2001, in accordance with the Executive AIP and with respect to
2000 performance, Messrs. Sternlicht and Cotter received the following
amounts of Deferred Shares: Mr. Sternlicht was credited with 30,656
Deferred Shares and Mr. Cotter was credited with 8,489 Deferred Shares.
The value of these Deferred Shares at December 31, 2002 were: Mr.
Sternlicht  $727,773; and Mr. Cotter  $201,529, based on the closing
price of a Share on the NYSE on such date ($23.74).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|(9)  |  | Amounts include (a) deemed income arising from Mr. Sternlichts personal
use of an airplane leased by the Company amounting to $86,008, $121,937
and $189,851 in 2002, 2001 and 2000, respectively, (b) the taxable portion
of basic life insurance amounting to $3,978, $1,141 and $856 in 2002, 2001
and 2000, respectively, and (c) as provided in Mr. Sternlichts employment
agreement, premiums paid for a $10 million split dollar life insurance
policy amounting to $6,650 and $1,017 in 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(10) |  | Amounts include (a) a cost of living allowance of $18,303 and $38,138 in
2001 and 2000, respectively, (b) foreign compensation of $233,142 and
$907,740 in 2001 and 2000, respectively, paid to Mr. Cotter or on his
behalf locally in Brussels, Belgium, primarily for reimbursement of
foreign taxes, including foreign taxes on the grant of employee stock
options and restricted stock, (c) income credit due to tax equalization of
($101,280), ($8,569) and ($205,511) in 2002, 2001 and 2000, respectively,
(d) a taxable reimbursement of relocation expenses, including a related
tax gross-up payment in the amount of $139,091 in 2001, (e) imputed
interest relating to a five-year non-interest bearing loan from the
Company relating to the purchase of a home, amounting to $32,148 and
$24,578 in 2002 and 2001, respectively, and (f) the taxable portion of
basic life insurance amounting to $6,787, $1,624 and $930 for 2002, 2001
and 2000, respectively.
|    
|(11) |  | Amounts include (a) imputed interest relating to a five-year,
non-interest bearing loan from the Company relating to the purchase of a
home, amounting to $36,499 in 2000 and (b) the taxable portion of basic
life insurance amounting to $2,541, $743 and $530 for 2002, 2001 and 2000
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(12) |  | Amounts include (a) imputed interest relating to a five-year,
non-interest bearing loan from the Company relating to the purchase of a
home, amounting to $43,867 in 2002 and (b) the taxable portion of basic
life insurance amounting to $3,470 in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|(13) |  | Amount is for the taxable portion of basic life insurance amounting to
$1,332 in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(14) |  | Messrs. Darnall and Hankin became executive officers of the Company in
2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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Option Grants

The following table provides additional information regarding options
granted during the last fiscal year to each of the executive officers named in
the Summary Compensation Table.

Option/SAR Grants in 2002

|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  |                         |            |  |  |  |            | 
|------------------- |  | ------------ | ------- | ------------ |  | ----------- | ---- | --------------- |  | ------ | ----- | ------- |  |  | ---------- |  |  | ----------------------- | ---------- |  |  |  | ---------- | 
|                    |  | Number of    |         | % of Total   |  |             |      |                 |  |        |       |         |  |  |            |  |  |                         |            | 
|                    |  | Securities   |         | Options/SARs |  |             |      |                 |  |        |       |         |  |  |            |  |  |                         |            | 
|                    |  | Underlying   |         | Granted to   |  | Exercise of |      |                 |  |        |       |         |  |  |            |  |  |                        
|                    |  | Options/SARs |         | Employees in |  | Base Price  |      |                 |  |        |       |         |  |  |            |  |  |                        
|Name                |  | Granted      |         | 2002         |  | ($/sh.)     |      | Expiration Date |  | 5% ($) |       | 10% ($)
|                    |  |              |         |              |  |             |      |                 |  |        |       |        
|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  | Potential Realizable   
|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  | Value at               
|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  | Assumed Annual Rates of
|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  | Stock                  
|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  | Price Appreciation     
|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  | for Option Term (1)    
|                    |  |              |         |              |  |             |      |                 |  |        |       |         |  |  |            |  |  |                        
|Barry S. Sternlicht |  |              | 500,000 |              |  |             | 3.19 |                 |  |        | 34.58 | (2)     |  |  | 2/15/2012  |  |  |                         | 10,873,588 |  |  |  | 27,555,807 | 
|                    |  |              | 600,000 |              |  |             | 3.83 |                 |  |        | 24.88 | (2)     |  |  | 12/23/2010 |  |  |                         | 7,127,455  |  |  |  | 17,071,494 | 
|Robert F. Cotter    |  |              | 180,000 |              |  |             | 1.15 |                 |  |        | 34.58 | (2)     |  |  | 2/15/2012  |  |  |                         | 3,914,492  |  |  |  | 9,920,091  | 
|                    |  |              | 180,000 |              |  |             | 1.15 |                 |  |        | 24.88 | (2)     |  |  | 12/23/2010 |  |  |                         | 2,138,236  |  |  |  | 5,121,448  | 
|Ronald C. Brown     |  |              | 75,000  |              |  |             | 0.48 |                 |  |        | 34.58 | (2)     |  |  | 2/15/2012  |  |  |                         | 1,631,038  |  |  |  | 4,133,371  | 
|                    |  |              | 90,000  |              |  |             | 0.57 |                 |  |        | 24.88 | (2)     |  |  | 12/23/2010 |  |  |                         | 1,069,118  |  |  |  | 2,560,724  | 
|Theodore W. Darnall |  |              | 110,000 |              |  |             | 0.70 |                 |  |        | 34.58 | (2)     |  |  | 2/15/2012  |  |  |                         | 2,392,189  |  |  |  | 6,062,278  | 
|                    |  |              | 110,000 |              |  |             | 0.70 |                 |  |        | 24.88 | (2)     |  |  | 12/23/2010 |  |  |                         | 1,306,700  |  |  |  | 3,129,774  | 
|Steven M. Hankin    |  |              | 75,000  |              |  |             | 0.48 |                 |  |        | 34.58 | (2)     |  |  | 2/15/2012  |  |  |                         | 1,631,038  |  |  |  | 4,133,371  | 
|                    |  |              | 110,000 |              |  |             | 0.70 |                 |  |        | 24.88 | (2)     |  |  | 12/23/2010 |  |  |                         | 1,306,700  |  |  |  | 3,129,774  | 



---

|(1) |  | The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as prescribed by the SEC and are not intended to
forecast future price appreciation of the Shares. The gains reflect a
future value, based upon the closing price of a Share on the applicable
grant date, and assume annual growth at these prescribed rates. Options
have value to recipients, including the named executive officers, only if
the price of Shares advances beyond the grant date price shown in the
table during the option term.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The exercise price of each of the options is equal to the fair market
value of a Share on the applicable grant date and vests in four equal
annual installments commencing on the first anniversary of the grant date.                                                                                                                                                                                                                                                                                                                             

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##### Table of Contents



Option Exercises and Holdings

The following table shows the number and value of stock options (exercised
and unexercised) during the last fiscal year held by each of the executive
officers named in the Summary Compensation Table.

Aggregated Option/SAR Exercises in 2002
and December 31, 2002 Option/SAR Values

|                    |  |              |   |                 |  |             |   |               |  |                        |           |                        |  |  |           |     |  |  |           |     |  |  |        | 
|------------------- |  | ------------ | - | --------------- |  | ----------- | - | ------------- |  | ---------------------- | --------- | ---------------------- |  |  | --------- | --- |  |  | --------- | --- |  |  | ------ | 
|                    |  | Shares       |   |                 |  |             |   |               |  |                        |           |                        |  |  |           |     |  |  |           |     |  | 
|                    |  | Acquired on  |   | Value           |  |             |   |               |  |                        |           |                        |  |  |           |     |  |  |           |    
|Name                |  | Exercise (#) |   | Realized ($)(1) |  | Exercisable |   | Unexercisable |  | Exercisable            |           | Unexercisable         
|                    |  |              |   |                 |  |             |   |               |  |                        |           |                       
|                    |  |              |   |                 |  |             |   |               |  | Number of Shares       |           | Value of Unexercised  
|                    |  |              |   |                 |  |             |   |               |  | Underlying Unexercised |           | In-the-Money          
|                    |  |              |   |                 |  |             |   |               |  | Options/SARs at        |           | Options/SARs at       
|                    |  |              |   |                 |  |             |   |               |  | Fiscal Year-End (#)    |           | Fiscal Year-End ($)(1)
|                    |  |              |   |                 |  |             |   |               |  |                        |           |                       
|Barry S. Sternlicht |  |              |  |                 |  |             |  |               |  |                        | 7,429,500 | (2)                    |  |  | 1,850,000 | (2) |  |  | 8,313,531 | (3) |  |  |       | 
|Robert F. Cotter    |  |              |  |                 |  |             |  |               |  |                        | 599,060   |                        |  |  | 916,049   |     |  |  |          |     |  |  |       | 
|Ronald C. Brown     |  |              |  |                 |  |             |  |               |  |                        | 412,502   |                        |  |  | 306,004   |     |  |  | 82,560    | (4) |  |  |       | 
|Theodore W. Darnall |  |              |  |                 |  |             |  |               |  |                        | 516,028   |                        |  |  | 413,083   |     |  |  | 122,753   | (5) |  |  |       | 
|Steven M. Hankin    |  |              |  |                 |  |             |  |               |  |                        | 158,490   |                        |  |  | 365,467   |     |  |  | 52,781    |     |  |  | 17,594 | 



---

|(1) |  | Value is calculated by subtracting the exercise price from the fair
market value of the Share underlying the option on the exercise date (in
the case of options exercised) or at December 31, 2002 (in the case of
unexercised in-the-money options) and multiplying the result by the
number of Shares for which the option was exercised or is in-the-money, as
the case may be. Fair market value at December 31, 2002 was calculated
based upon the average of the high and low sales prices of a Share as
reported by the NYSE for that date ($23.72). There is no assurance that if
and when any such in-the-money option is exercised, the option will have
this value.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Excludes 500,000 options granted to Mr. Sternlicht in 1998. Subsequent to
the grant of these options to Mr. Sternlicht in February 1998, he
transferred the right to purchase a total of 500,000 Shares underlying
such options to third parties. In addition, this amount excludes certain
options granted to Mr. Sternlicht in 1995 and 1996. In July 2002, he
transferred the right to purchase a total of 96,250 Shares underlying such
options to third parties.                                                                                                                                                                                                            
|   
|(3) |  | Excludes the value at December 31, 2002 of dividend equivalents payable
upon exercise of certain options relating to performance award provisions
of those options. The value at December 31, 2002 was $10,117,500,
representing the aggregate dividend equivalents of $7.10 per Share accrued
since the date of grant of 1,425,000 options in 1996.                                                                                                                                                                                                                                                                                                                             
|   
|(4) |  | Excludes the value at December 31, 2002 of dividend equivalents payable
upon exercise of certain options relating to performance award provisions
of those options. The value at December 31, 2002 was $607,050,
representing the aggregate dividend equivalents of $7.10 per Share accrued
since the date of grant of 85,500 options in 1996.                                                                                                                                                                                                                                                                                                                                   
|   
|(5) |  | Excludes the value at December 31, 2002 of dividend equivalents payable
upon exercise of certain options relating to performance award provisions
of those options. The value at December 31, 2002 was $1,065,500,
representing the aggregate dividend equivalents of $7.10 per Share accrued
since the date of grant of 150,000 options in 1996.                                                                                                                                                                                                                                                                                                                                

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##### Table of Contents



Employment and Compensation Agreements with Executive Officers

Barry S. Sternlicht and the Company entered into an employment agreement,
dated as of January 1, 2000, pursuant to which Mr. Sternlicht agreed to
continue to serve as the Chairman and Chief Executive Officer of the Company
until at least December 31, 2002. Mr. Sternlicht and the Compensation and
Option Committee are currently in discussions regarding a new employment
contract. Mr. Sternlicht receives a minimum annual base salary of $1,000,000.
Mr. Sternlicht also is entitled to receive an annual bonus of not less than
$1,325,000 if certain performance measurements are attained during the term of
his employment agreement. In addition, Starwood has purchased for Mr.
Sternlicht a $10,000,000 life insurance policy. In March 2000, pursuant to the
terms of his agreement, Starwood granted to Mr. Sternlicht an option to
purchase 1,500,000 Shares, exercisable at $21.8125 per Share. This option vests
in three equal installments, subject generally to
Mr. Sternlichts continued employment by Starwood. The option was fully vested
as of December 31, 2002. Mr. Sternlichts employment is terminable by Starwood
with or without cause. In the event Mr. Sternlichts employment is terminated
by
Starwood other than for cause or by Mr. Sternlicht for good reason,
Starwood will pay to Mr. Sternlicht as a severance benefit an amount equal to
two times the sum of his annual base salary then in effect plus the highest
amount paid to him as a bonus during the preceding three years. In addition,
all then unvested awards made to Mr. Sternlicht will vest in full, subject to
certain exceptions, and the Company will also continue to provide medical
benefits coverage during the one year period after the date of termination.
Under the terms of the agreement, the Company acknowledged that Mr. Sternlicht
is involved in other business endeavors, including Starwood Capital as well as
serving on outside boards and managing personal investments and, as a
consequence, performs multiple executive roles. Subject to Mr. Sternlichts
duties and obligations to the Company and subject to certain non-competition
agreements between the Company and Mr. Sternlicht and between the Company and
Starwood Capital, the Company consented to the continuation of Mr. Sternlichts
additional business endeavors and multiple executive roles. In April 1999, the
Company made an interest-bearing loan to Mr. Sternlicht in the amount of
approximately $1,222,000 in respect of taxes payable by Mr. Sternlicht as a
result of the vesting of the restricted stock award originally granted to Mr.
Sternlicht in August 1996.

As of June 27, 2000, Robert F. Cotter and the Company entered into an
employment agreement, commencing on February 15, 2000, in connection with his
becoming the Companys Chief Operating Officer and his relocation to the White
Plains, New York office from Brussels, Belgium. Mr. Cotters annual salary was
$600,000 for 2000 and, effective January 1, 2001, $650,000, with a bonus to be
determined in accordance with the Companys bonus plan. For 2001, Mr. Cotter
was guaranteed to receive an option to purchase 454,000 Shares with an exercise
price per Share equal to the fair market value of a Share on the date of grant.
In addition, the Company agreed to pay the reasonable, out-of-pocket costs of
Mr. Cotters relocation. The Company has also made a non-interest bearing home
loan to Mr. Cotter in the amount of $600,000, secured by a second mortgage on
Mr. Cotters home, which is due in five years or upon Mr. Cotters termination
of employment. Mr. Cotters employment is terminable by the Company with or
without cause upon thirty days notice. In the event his employment is
terminated by the Company without cause, Mr. Cotter will be entitled to
severance benefits of one years base salary and the Company will reimburse Mr.
Cotter for COBRA expenses for one year following the date of termination.

As of May 24, 1999, Ronald C. Brown and the Company entered into a new
employment agreement in connection with his employment as the Companys
Executive Vice President and Chief Financial Officer and his relocation to the
White Plains, New York office. Mr. Browns initial annual salary was $425,000,
with a bonus to be determined in accordance with the Companys bonus plan. In
addition, the Company agreed to pay the reasonable, out-of-pocket costs of Mr.
Browns relocation. Mr. Browns employment is terminable by the Company with or
without cause. In the event his employment is terminated by the Company without
cause, Mr. Brown will be entitled to severance benefits of one years base
salary and the Company will continue to provide medical benefits coverage
during the one year period after the date of termination. In April 1999, the
Company made an interest-bearing loan to Mr. Brown in the amount of
approximately $218,000 in respect of taxes payable by Mr. Brown as a result of
the vesting of the restricted stock award originally granted to Mr. Brown in
August 1996. The taxes payable were based on a fair value of $53.00 per Share.
The Company also made a non-interest bearing home loan to Mr. Brown in the
amount of $600,000 secured by a second mortgage on Mr. Browns home. This loan
was repaid in full by Mr. Brown in 2001.

As of March 25, 1998, Theodore W. Darnall and the Company entered into an
employment agreement in connection with his employment as the Companys
Executive Vice President of Hotel Operations. Mr. Darnalls initial annual
salary was $350,000, with a bonus to be determined in accordance with the
Companys bonus plan. In lieu of a base salary payment for change in control,
Mr. Darnall received a retention bonus equal to one years base salary
conditioned upon his staying with the Company at least one year after the
closing of the acquisition of ITT Corporation. In addition, Mr. Darnall was
granted 125,000 options under the 1995 Long Term Incentive Plan in connection
with his accepting

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##### Table of Contents



employment with the Company. The Company also agreed to pay the reasonable,
out-of-pocket costs of Mr. Darnalls relocation and made a non-interest bearing
home loan to Mr. Darnall in the amount of $600,000, secured by a second
mortgage on Mr. Darnalls home, which is due in five years or upon his
termination of employment. Mr. Darnalls employment is terminable by the
Company with or without cause. In April 1999, the Company made an
interest-bearing loan to Mr. Darnall in the amount of approximately $416,000 in
respect of taxes payable by Mr. Darnall as a result of the vesting of the
restricted stock award originally granted to Mr. Darnall in August 1996. In the
event his employment is terminated by the Company without cause, Mr. Darnall
will be entitled to severance benefits of one years base salary and the
Company will continue to provide medical benefits coverage during the one year
period after the date of termination.

As of September 2, 1999, Steven M. Hankin and the Company entered into an
employment agreement in connection with his employment as the Companys Senior
Vice President, Strategic Planning. Mr. Hankins initial annual salary was
$325,000, with a bonus to be determined in accordance with the Companys bonus
plan. Mr. Hankin was granted 50,000 options and 5,000 shares of Restricted
Stock under the 1999 LTIP in connection with his accepting employment with the
Company. In addition, the Company agreed to pay the reasonable out-of-pocket
costs of Mr. Hankins relocation. The Company has also made a non-interest
bearing home loan to Mr. Hankin in the amount of $300,000, secured by a second
mortgage on Mr. Hankins home, which is due in five years or upon Mr. Hankins
termination of employment. Mr. Hankins employment is terminable by the Company
with or without cause. In the event his employment is terminated by the Company
without cause, Mr. Hankin will be entitled to severance benefits of one years
base salary and the Company will continue to provide medical benefits coverage
during the one year period after the date of termination.

In December 1999, the Company entered into severance agreements with each
of Messrs. Sternlicht, Brown and Darnall. Messrs. Cotter and Hankin entered
into severance agreements with the Company in August 2000 and October 2000,
respectively. The severance agreements provide for a term of three years, in
each case with provision for 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 defined in the agreement)
occurs, the agreements will continue for at least 24 months following the date
of such Change in Control.

The agreements provide 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) or the executive
terminates his employment for any reason during the one-month period commencing
one year after the Change in Control, the executive would be entitled to
receive (i) three times (or two times in the case of Mr. Hankin) 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; (ii) 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; (iii) 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
to 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; (iv) immediate vesting of stock options and
restricted stock held by the executive under any stock option or incentive plan
maintained by the Company; (v) 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 twenty percent (20%) of the executives base salary; (vi) a lump sum
payment of any of the executives deferred compensation; (vii) 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; and
(viii) forgiveness in full of any home or relocation loans from the Company to
the executive, that are outstanding as of the date of termination plus an
additional amount required to permit the executive to pay any income tax
incurred as a result of such loan forgiveness. In addition, to the extent
Messrs. Sternlicht, Brown, Cotter or Darnall, become subject to the golden
parachute excise tax imposed under Section 4999 of the Internal Revenue Code
of 1986, such executive would become entitled to a gross-up payment in an
amount sufficient to offset the effects of such excise tax. To the extent Mr.
Hankin would become subject to such excise tax, any payment or benefit received
under his severance agreement will be reduced to an amount that would not
subject him to such tax.

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##### Table of Contents



COMPENSATION AND OPTION COMMITTEE REPORT

The information contained in this Compensation and Option 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.

During 2002, the Board made decisions with respect to compensation for
executive officers of the Company based on the recommendations of the
Compensation and Option Committee (the Compensation Committee) comprised of
Directors who are not members of Starwood management. The primary objectives of
the Board with respect to executive compensation are to establish programs
which attract and retain key domestic and international managers and align the
compensation received by executive officers with the overall business
strategies, values, performance and financial conditions of Starwood and with
the achievement of individual performance goals. In addition, equity based
incentive plans are utilized to promote ownership of Shares by key executives
and serve to align financial interests of executives with those of
stockholders.

Starwoods executive compensation package generally includes a base
salary, an annual cash and restricted stock incentive, and a long-term
incentive award. In December 2002, for incentive and retention purposes, a
select group of senior executives, including the executives named in the
Summary Compensation Table, were provided the opportunity to purchase stock
options using a portion of their 2002 bonus that was paid in March 2003. Under
the Purchased Option Program, executives could make an irrevocable election to
forego a portion of their cash bonus, equal to 10% of the exercise price per
option and apply such amounts to the purchase of such options. The options vest
in full one year from the date of grant and the executive is at risk for the
purchase price if the executive leaves the Company prior to vesting of the
option or if the Share price declines. Upon exercise, the executive must pay
the remaining 90% of the exercise price.

In aggregate, these programs are designed to be performance based, with a
significant portion of an executives compensation tied to key financial,
strategic, and individual objectives. It is the Compensation Committees
intention that substantially all compensation for executives be deductible
under Section 162(m) of the Internal Revenue Code of 1986, as amended, for
federal income tax purposes.

In determining competitive compensation levels for the pay elements noted
above, the Compensation Committee reviews survey data from several major
compensation consulting firms that reflects the pay practices for comparable
positions in the hotel and hospitality industries, as well as general industry.
Data from more than half of the companies reflected in the Standard & Poors
Corporation Hotel Index included in the Stockholder Return Performance Graph
below are included in the survey results. The Compensation Committee also
considers other publicly available data of peer companies and, to the extent
appropriate, also considered past pay practices.

The salary ranges for executives are generally based on the
accountabilities of each position, which are reviewed on a regular basis. The
ranges are reviewed annually against similar positions among the companies in
the survey group described above. The midpoint of each salary range is
generally targeted at the median of similar positions in the survey group.

For the Chief Executive Officer and the Chief Operating Officer, annual
incentive awards are paid based on performance against specified earnings
targets set in advance in accordance with the stockholder approved Executive
AIP. Awards for other named executive officers were made in accordance with the
Companys Annual Incentive Plan. The amount of the award an executive is
eligible to receive increases for Company earnings performance that exceeds the
target and decreases when targeted Company earnings performance is not
achieved. In approving the incentive award for each executive officer, the
Compensation Committee considers performance of both earnings per share (EPS)
and earnings before interest expense, tax expense, depreciation and
amortization (EBITDA) as well as certain other key metrics set in advance in
accordance with a stockholder approved plan. Annual incentive targets are set
above the median of similar positions in the survey group. For the Chief
Executive Officer and the Chief Operating Officer, annual incentive awards are
payable partly in cash and partly in Deferred Shares. The amount of Deferred
Shares credited to such executives is grossed up by 33% and vest ratably over a
three-year period. For the other named executive officers, annual incentive
awards are generally payable partly in cash and partly in restricted stock.
During 2002, however, due to the significant financial uncertainty associated
with bonuses to be paid in March of 2003, the Board decided that named
executives (other than Messrs. Sternlicht and Cotter) would be permitted to
elect to receive their bonus partly in cash and partly in stock (up to

10



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##### Table of Contents



25%), or entirely in cash, at their sole discretion. Where shares were elected,
the number of shares of restricted stock were grossed up by 33% and vest
ratably over a two-year period.

Long-term awards, made under the stockholder approved 2002 LTIP, are
generally granted annually in the form of stock options. In 2002, restricted
stock awards were also made. The options are granted at the fair market value
of a Share on the date of grant and increase in value based on the appreciation
of a Share. Most awards become exercisable in 25% increments upon each of the
first four anniversaries of the grant. The restricted stock awards cliff vest
three years from the date of grant, except in circumstances where the Board
determines, that vesting acceleration could occur based on the achievement of
certain performance targets. Long-term incentive targets are set above the
median of similar positions in the survey group. Actual awards are determined
after considering each individuals performance against a set of
pre-established performance objectives.

The executive compensation decisions made by the Compensation Committee
during 2002 reflect Starwoods below target performance against key financial
measures, specifically EPS and EBITDA, caused by the weakened global economy
and the impact of geo-political uncertainty. The Compensation Committee
believes that the Companys executive compensation programs and decisions have
generally met their objectives. Starwood has been able to attract and retain
the type of executive talent necessary to successfully support its growth and
financial objectives.

Chief Executive Officer Compensation For 2002

Barry S. Sternlicht is the Chairman and Chief Executive Officer of
Starwood. Mr. Sternlicht was awarded a total bonus of $1,500,000 in March 2003
relating to his 2002 performance, $228,150 of which he deferred in order to
purchase 100,000 options pursuant to the Companys purchased option program and
$317,950 of which was deferred into Deferred Shares in accordance with the
Executive AIP (which amount was grossed up by 33% to $422,874 in Deferred
Shares in accordance with the terms of the Executive AIP). In addition, he
received stock options to purchase 1,100,000 Shares in 2002 as well as a grant
of 70,000 restricted Shares, under the 2002 LTIP. Mr. Sternlichts base salary,
is targeted to be generally competitive with the salary paid to the chief
executive officers in the survey group.

The following factors contributed to the Compensation Committees
determination of Mr. Sternlichts 2002 bonus: (a) Starwoods financial
performance as measured by EPS and EBITDA, (b) the amount of bonus relative to
bonuses paid to chief executive officers in peer companies and (c) Mr.
Sternlichts leadership and direction during the most challenging economic and
political environments the hospitality industry and Starwood have ever faced.

The ultimate value of the stock options granted to Mr. Sternlicht in 2002
depends on Starwoods future success and whether that value is reflected in the
value of the Shares.



| |  | Eric Hippeau (chairman)
Jean-Marc Chapus
Kneeland Youngblood
| |  | ------------------------------------------------------------

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STOCKHOLDER RETURN PERFORMANCE

Set forth below is a line graph comparing the cumulative total stockholder
return on the Shares against the cumulative total return on the S&P 500 and the
S&P 500 Hotel Index (the S&P 500 Hotel) for the five fiscal years beginning
December 31, 1997 and ending December 31, 2002. The graph assumes that the
value of the investments was 100 on December 31, 1997 and that all dividends
and other distributions were reinvested. The comparisons are provided in
response to SEC disclosure requirements and are not intended to forecast or be
indicative of future performance.

(PERFORMANCE GRAPH)

|              |  |      |        |      |  |      |        |      |  |      |        |      |  |  |        |  |  |  |        |  |  |  |       | 
|------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  |  | ------ |  |  |  | ------ |  |  |  | ----- | 
|              |  | 1997 |        | 1998 |  | 1999 |        | 2000 |  | 2001 |        | 2002
|              |  |      |        |      |  |      |        |      |  |      |        |     
|Starwood      |  |      | 100.00 |      |  |      | 42.16  |      |  |      | 44.78  |      |  |  | 68.48  |  |  |  | 59.55  |  |  |  | 49.03 | 
|S&P 500       |  |      | 100.00 |      |  |      | 128.34 |      |  |      | 155.14 |      |  |  | 141.13 |  |  |  | 124.40 |  |  |  | 97.08 | 
|S&P 500 Hotel |  |      | 100.00 |      |  |      | 81.53  |      |  |      | 81.52  |      |  |  | 65.80  |  |  |  | 61.70  |  |  |  | 55.31 | 




Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Matters

The following tables show the number of Shares beneficially owned by all
persons known to the Company to be the beneficial owners of more than 5% of the
outstanding Shares at December 31, 2002 and each of the Directors, the
executive officers and all Directors and executive officers of the Company as a
group, at January 31, 2003. Beneficial ownership includes Shares a
stockholder has the power to vote or the power to transfer, and also includes
stock options and other derivative securities that were exercisable at that
date, or as of that date will become exercisable within 60 days thereafter. In
the case of holdings of Directors and executive officers, percentages are based
upon the number of Shares outstanding at January 31, 2003, plus, where
applicable, the number of Shares that the indicated person had a right to
acquire within 60 days of such date. The information in the tables is based
upon information provided by each Director and

12



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##### Table of Contents



executive officer and, in the case of the beneficial owners of more than 5% of
the outstanding Shares, the information is based upon Schedules 13G and a
Schedule 13D filed with the SEC.

Certain Beneficial Owners

|                                                                   |  |            |            |          |  |  |      |     
|------------------------------------------------------------------ |  | ---------- | ---------- | -------- |  |  | ---- | ----
|                                                                   |  | Amount and |            |          |  | 
|                                                                   |  | Nature of  |            |          |  | 
|                                                                   |  | Beneficial |            | Percent 
|Name and Address of Beneficial Owner                               |  | Ownership  |            | of Class
|                                                                   |  |            |            |         
|FMR Corp.                                                          |  |            | 11,253,477 |          |  |  | 5.64 | %(1)
|82
Devonshire Street
Boston, Massachusetts 02109                   |  |            |            |          |  |  |      |     
|Janus Capital Management LLC                                       |  |            | 10,302,040 |          |  |  | 5.20 | %(2)
|100
Fillmore Street
Denver, Colorado 80206                         |  |            |            |          |  |  |      |     
|Stichting Pensioenfonds ABP                                        |  |            | 10,015,000 |          |  |  | 5.02 | %(3)
|Oude
Lindestraat 70
Postbus 2889

6401 DL Heerlen

The Netherlands |  |            |            |          |  |  |      |     



---

|(1) |  | Based on information contained in a Schedule 13G, dated February 14, 2003
(the Fidelity Schedule 13G), filed with respect to the Company,
11,004,406 Shares are held by Fidelity Management & Research Company
(Fidelity), a wholly-owned subsidiary of FMR Corp. (FMR); 248,389
Shares are held by Fidelity Management Trust Company (Fidelity 2), a
wholly-owned subsidiary of FMR, as a result of Fidelity acting as
investment adviser to various investment companies and Fidelity 2 serving
as investment manager of certain institutional accounts; and 682 Shares
are held by Geode Capital Management, LLC, a registered investment advisor
(Geode), which is wholly-owned by Fidelity Investors III Limited
Partnership (FILP III). Fidelity Investors Management, LLC (FIML) is
the general partner and investment manager of FILP III. The managers of
Geode, the members of FIML and the limited partners of FILP III are
certain shareholders and employees of FMR Corp. According to the Fidelity
Schedule 13G, FMR and Edward C. Johnson 3d, Chairman of FMR, each have
sole voting power with respect to 248,389 Shares and dispositive power
with respect to 11,253,477 Shares and FILP III has sole power to vote and
sole dispositive power with respect to 682 Shares. Through ownership of
voting common stock and the execution of a certain stockholders voting
agreements, members of the Edward C. Johnson 3d family may be deemed,
under the Investment Company Act of 1940, to form a controlling group with
respect to FMR.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Based on information contained in a Schedule 13G, dated February 14, 2003
(the Janus Schedule 13G), filed with respect to the Company, 10,302,040
Shares are held by Janus Capital Management, LLC (Janus), Bay Isle
Financial LLC (Bay Isle) and Enhanced Investment Technologies LLC
(INTECH). Bay Isle and INTECH are registered investment advisors in
which Janus has indirect ownership interests of 100% and 50.1%,
respectively. Holdings of Janus, Bay Isle and INTECH are aggregated for
purposes of the Janus Schedule 13G. Janus may be deemed to be the
beneficial owner of 10,120,840 Shares and INTECH may be deemed to be the
beneficial owner of 181,200 Shares each as a result of their roles as
investment advisor to various registered investment companies and to
individual and institutional clients (the Managed Portfolios). Neither
Janus nor INTECH have the right to receive dividends from, or the proceeds
from the sale of, the Shares held by the Managed Portfolios and therefore
disclaim any beneficial ownership associated with such rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(3) |  | Based on information contained in a Schedule 13D, dated February 12, 2003
(the Stichting Schedule 13D), filed with respect to the Company,
10,015,000 Shares are held by Stichting Pensioenfonds ABP, an entity
established                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

13



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##### Table of Contents



| |  | under the laws of The Kingdom of the Netherlands, whose principal business
is investing funds held on behalf of public sector employees of The
Kingdom of the Netherlands.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Directors and Executive Officers of the Company

|                                                                               |  |                   |            |                     |  |  |      |    
|------------------------------------------------------------------------------ |  | ----------------- | ---------- | ------------------- |  |  | ---- | ---
|                                                                               |  | Amount and Nature |            |                     |  | 
|                                                                               |  | of Beneficial     |            |                     |  | 
|Name of Beneficial Owner                                                       |  | Ownership         |            | Percent of Class(1)
|                                                                               |  |                   |            |                    
|Charlene Barshefsky                                                            |  |                   | 9,000      | (2)(3)              |  |  |      | (4)
|Ronald C. Brown                                                                |  |                   | 544,324    | (3)                 |  |  |      | (4)
|Jean-Marc Chapus                                                               |  |                   | 62,061     | (3)                 |  |  |      | (4)
|Robert F. Cotter                                                               |  |                   | 928,852    | (2)(3)(5)           |  |  |      | (4)
|Theodore W. Darnall                                                            |  |                   | 725,846    | (3)                 |  |  |      | (4)
|Bruce W. Duncan                                                                |  |                   | 97,499     | (2)(3)(6)           |  |  |      | (4)
|Steven M. Hankin                                                               |  |                   | 267,220    | (3)                 |  |  |      | (4)
|Eric Hippeau                                                                   |  |                   | 23,449     | (2)(3)              |  |  |      | (4)
|George J. Mitchell                                                             |  |                   | 29,910     | (2)(3)              |  |  |      | (4)
|Stephen R. Quazzo                                                              |  |                   | 64,167     | (3)(7)              |  |  |      | (4)
|Thomas O. Ryder                                                                |  |                   | 13,500     | (2)(3)              |  |  |      | (4)
|Barry S. Sternlicht                                                            |  |                   | 9,181,897  | (2)(3)(8)           |  |  | 4.00 | %  
|Daniel W. Yih                                                                  |  |                   | 64,351     | (2)(3)(9)           |  |  |      | (4)
|Kneeland C. Youngblood                                                         |  |                   | 15,161     | (3)                 |  |  |      | (4)
|All Directors, Trustees and current executive officers as a group (16
persons) |  |                   | 12,258,372 | (10)                |  |  | 5.37 | %  



---

|(1) |  | Based on the number of Shares outstanding on January 31, 2003 and
Shares issuable upon exercise of options exercisable within 60 days from
January 31, 2003 or on exchange of Class A exchangeable preferred shares
of the Trust (Class A EPS), Class B exchangeable preferred shares of
the Trust (Class B EPS), limited partnership units (Partnership
Units) of SLC Operating Limited Partnership (Operating Partnership)
or SLT Realty Limited Partnership (Realty Partnership) for Shares.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The following Directors also hold the following amounts of phantom
stock units received as a result of their election to defer Directors
Annual Fees: 1,981 for Ambassador Barshefsky; 8,353 for Mr. Duncan;
6,853 for Mr. Hippeau; 8,551 for Senator Mitchell; 2,722 for Mr. Ryder;
and 9,061 for Mr. Yih. Messrs. Cotter and Sternlicht also hold Deferred
Shares (see Executive Compensation) in the following amounts: 11,666
for Mr. Cotter and 45,554 for Mr. Sternlicht.                     
|   
|(3) |  | Includes Shares subject to presently exercisable options and options
and restricted Shares that will become exercisable or vest within 60
days of January 31, 2003, as follows: 506, 421 for Mr. Brown; 827,146
for Mr. Cotter; 642,003 for Mr. Darnall; 235,704 for Mr. Hankin; 49,500
for messrs. Chapus, Duncan, Quazzo, and Yih: 23,449 for Mr. Hippeau;
29,910 for Senator Mitchell; 8,079,904 for Mr. Sternlicht; 9,000 for
Ambassador Barshefsky and 13,500 for Messrs. Ryder and Youngblood.     
|   
|(4) |  | Less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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##### Table of Contents



|(5)  |  | Includes 10,000 Shares held by The Robert F. Cotter Revocable Trust
of which Mr. Cotter is a Trustee and beneficiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(6)  |  | Includes 47,999 Shares held by The Bruce W. Duncan Revocable Trust of
which Mr. Duncan is a Trustee and beneficiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|(7)  |  | Includes 14,270 Shaers held by a trust of which Mr. Quazzo is settler
and over which he shares investment control, and 397 Shares owned by a
trust of which Mr. Quazzos wife is settler and over which she exercises
some investment control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|(8)  |  | Includes 200,226 Shares that Mr. Sternlicht may be deemed to
beneficially own, directly or indirectly through entities controlled by
him or through family trusts, and may be deemed to have either sole or
shared power to vote and dispose of such Shares. In addition, such
amount includes the following derivative securities that Mr. Sternlicht
holds, directly or through trusts created by him for the benefit of
members of his family: (i) Class A EPS that are exchangeable for an
aggregate of 237,729 Shares and (ii) Partnership Units that are
exchangeable for an aggregate of 864,264 Shares. Mr. Sternlicht has
disclaimed beneficial ownership of all such Shares, Class A EPS and
Partnership Units except to the extent of his actual pecuniary interest
therein.
|    
|(9)  |  | Includes 5,761 Shares held in an IRA account for the benefit of Mr.
Yih. Also includes 4,922 Shares and 1,799 shares of Class A EPS that
are held by the Barry S. Sternlicht Family Spray Trust of which Mr. Yih
serves as a co-trustee. Mr. Yih has disclaimed beneficial ownership of
all such trust Shares and Class A EPS.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|(10) |  | Includes amounts held by two other executive officers of the Company
who are not Named Executive Officers, as defined in the Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

The following table provides information as of December 31, 2002 regarding
Shares that may be issued under equity compensation plans maintained by the
Company.

|                                                                                              |  |                   |            |                   |  |                     |       |                     |  |                     |           |    
|--------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | ----------------- |  | ------------------- | ----- | ------------------- |  | ------------------- | --------- | ---
|Equity Compensation
Plan Information-December 31, 2002(in millions, except per Share amounts) |  | (a)               |            | (b)               |  | (c)                
|                                                                                              |  |                   |            |                   |  |                     |       |                     |  | Number of          
|                                                                                              |  |                   |            |                   |  |                     |       |                     |  | securities         
|                                                                                              |  |                   |            |                   |  |                     |       |                     |  | remaining available
|                                                                                              |  | Number of         |            |                   |  |                     |       | for future issuance
|                                                                                              |  | securities to be  |            |                   |  |                     |       | under equity       
|                                                                                              |  | issued upon       |            | Weighted-average  |  | compensation plans 
|                                                                                              |  | exercise of       |            | exercise price of |  | (excluding         
|                                                                                              |  | outstanding       |            | outstanding       |  | securities         
|                                                                                              |  | options, warrants |            | options, warrants |  | reflected in Column
|Plan Category                                                                                 |  | and rights        |            | and rights        |  | (a))               
|                                                                                              |  |                   |            |                   |  |                    
|Equity compensation plans approved by security holders                                        |  |                   | 45,748,940 |                   |  | $                   | 31.56 |                     |  |                     | 7,766,680 | (1)
|Equity compensation plans not approved by security holders                                    |  |                   |           |                   |  |                     |      |                     |  |                     |          |    
|                                                                                              |  |                   |            |                   |  |                     |       |                     |  |                     |           |    
|Total                                                                                         |  |                   | 45,748,940 |                   |  | $                   | 31.56 |                     |  |                     | 7,766,680 |    
|                                                                                              |  |                   |            |                   |  |                     |       |                     |  |                     |           |    



---

|(1) |  | Does not include deferred share units (that vest over three years and
may be settled in Shares) that may be issued pursuant to obligations
under the Executive AIP. The Executive AIP does not limit the number of
deferred share units that may be issued. In addition, 9,926,736
shares remain available for issuance under the Companys
Employee Stock Purchase Plan, a stock purchase plan meeting the
requirements of Section 423 of the Internal Revenue Code.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15



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##### Table of Contents






Item 13.Certain Relationships and Related Transactions

Policies of the Board of Directors

The policy of the Board of Directors of the Company provides that any
contract or transaction between the Company and any other entity in which one
or more of its Directors or officers are directors or officers, or have a
financial interest, must be approved or ratified by the Governance Committee
(which is comprised of Senator Mitchell, Messrs. Ryder and Youngblood and
Ambassador Barshefsky) or by a majority of the disinterested Directors after
the material facts as to the relationship or interest and as to the contract or
transaction are disclosed or are known to them.

Starwood Capital

General.Barry S. Sternlicht, Chairman, Chief Executive Officer and a
Director of the Company, controls and has been the President and Chief
Executive Officer of Starwood Capital since its formation in 1991. Affiliates
of Starwood Capital held an approximate 50% vote and 35.16% interest in profits
in the Westin entities acquired by a predecessor of the Company, in 1997.

Trademark License.An affiliate of Starwood Capital has granted to
Starwood, subject to Starwood Capitals unrestricted right to use such name, an
exclusive, non-transferable, royalty-free license to use the Starwood name
and trademarks in connection with the acquisition, ownership, leasing,
management, merchandising, operation and disposition of hotels worldwide, and
to use the Starwood name in its corporate name worldwide, in perpetuity.

Starwood Capital Noncompete.In connection with a restructuring of the
Company in 1995, Starwood Capital agreed that, with certain exceptions,
Starwood Capital would not compete directly or indirectly with the Company
within the United States and would present to the Company all opportunities
presented to Starwood Capital to acquire fee interests in hotels in the United
States and debt interests in hotels in the United States where it is
anticipated that the equity will be acquired by the debt holder within one year
from the acquisition of such debt (the Starwood Capital Noncompete). During
the term of the Starwood Capital Noncompete, neither Starwood Capital nor any
of its affiliates is permitted to acquire any such interest, or any ground
lease interest or other equity interest, in hotels in the United States. In
addition, the Companys Corporate Opportunity Policy requires that each
director and executive officer submit to the Corporate Governance Committee any
opportunity that the director or executive officer reasonably believes is
within the Companys lines of business or in which
the Company has an interest. Therefore, as a matter of practice, all
opportunities to purchase hotel-related assets, even those outside of the
United States, that Starwood Capital may pursue are first presented to the
Company. The Starwood Capital Noncompete continues until no officer, director,
general partner or employee of Starwood Capital is on the Board (subject to
exceptions for certain restructurings, mergers or other combination
transactions with unaffiliated parties). Several properties owned or managed by
the Company, including the Westin Innisbrook Resort (the Innisbrook Resort),
the Westin Mission Hills Resort and the Turnberry Hotel, were opportunities
brought to the Company or its predecessors by Starwood Capital or entities
related to Mr. Sternlicht. With the approval in each case of the Governance
Committee of the Board, from time to time the Company has waived the
restrictions of the Starwood Capital Noncompete, in whole or in part, (or
passed on the opportunity in cases of the Corporate Opportunity Policy for
non-U.S.-opportunities) with respect to particular acquisition opportunities in
which the Company had no interest. Since 1995, a total of four such investments
were made  the Radisson Governors Inn Hotel in Research Triangle Park as part
of a mixed use property in Raleigh, North Carolina (deemed below the quality of
hotel the Company targets); the acquisition of Chevy Chase Plaza, a mixed use
property in Maryland that included a Holiday Inn hotel leased on a long term
basis to a third party operator (no management or branding opportunity was
available), the acquisition of a small lower end hotel located in Kobe, Japan
operated by a third party at the date of acquisition and deemed unsuitable for
any Starwood brand and a 16-hotel portfolio of lessor interests under which the
properties were subject to long-term operating leases which were essentially
long-term income investments and not an opportunity to manage or brand the
properties, and which were not of interest to the Company.

Portfolio Investments.An affiliate of Starwood Capital holds an
approximately 25% non-controlling interest in Troon Golf (Troon), a golf
course management company that currently manages over 120 high-end golf
courses. Mr. Sternlichts indirect interest in Troon held through such
affiliate is approximately 12%. Troon is one of the largest third-party
managers of golf courses in the United States. In January 2002, after extensive
review of alternatives and with the unanimous approval of the Governance
Committee, the Company entered into a Master Agreement with Troon covering the
United States and Canada whereby the Company has agreed to have Troon manage
all golf courses in the United States and Canada that are

16



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##### Table of Contents



owned by the Company and to use reasonable efforts to have Troon manage golf
courses at resorts that the Company manages and franchises. The Company
believes that the terms of the Troon agreement are at or better than market
terms. Mr. Sternlicht did not participate in the negotiations or the approval
of the Troon Master Agreement. During 2002, Troon managed 17 golf courses at
resorts owned or managed by the Company. The Company paid Troon a total of
$6,846,000
($813,000 of which represents management fees and payments for other services
and $6,033,000 of which represents reimbursements of third-party expenses), in
2002 for eight golf courses at resorts owned or managed by the Company. During
2001 and 2000, the Company paid a total of $479,000 ($432,000 of which
represents management fees and payments for other services and $47,000 of which
represents reimbursements of third-party expenses), and $545,000 ($458,000 of
which represents management fees and payments for other services and $87,000 of
which represents reimbursements of third-party expenses), respectively for two
golf courses at resorts owned by the Company.

An entity in which Mr. Sternlicht has a 38% interest owned the common area
of the Sheraton Tamarron Resort, which the Company managed until December 2001.
As of the date of this filing, management fees earned and paid were, $197,000
and $219,000 relating to 2001 and 2000, respectively. The Company has
outstanding receivables of approximately $314,000 at December 31, 2002, which
arose as a result of the termination of the Tamarron management agreement.
These
receivables are expected to be paid in connection with any settlement of the
Innisbrook matter discussed below. The Company believes that the terms of the
Tamarron agreement were at or better than market terms.

In addition, a subsidiary of Starwood Capital is a general partner of a
limited partnership which owns approximately 45% in an entity that manages over
40 health clubs, including one health club and spa space in a hotel owned by
the Company. The Company paid approximately $84,000 annually to the management
company for such management services in 2002, 2001 and 2000. The Company
believes that the terms of the management agreement are at or better than
market terms.

Other Management-Related Investments.Mr. Sternlicht has a 38% indirect
interest in an entity (the Innisbrook Entity) that owns the common area
facilities and certain undeveloped land (but not the hotel) at the Innisbrook
Resort. In May 1997, the Innisbrook Entity entered into a management agreement
for the Innisbrook Resort with Westin, which was then a privately held company
partly owned by Starwood Capital and Goldman, Sachs & Co. When the Company
acquired Westin in January 1998, it acquired Westins rights and obligations
under the management and other related agreements. Under these agreements, the
hotel manager was obligated to loan up to $12.5 million to the owner in the
event certain performance levels were not achieved. Management fees earned
under these agreements were $584,000, $716,000 and $885,000 in 2002, 2001 and
2000, respectively. The operations of the Innisbrook Entity have not generated
sufficient cash flow to service the debt and remain current in its payments to
the Company. The Innisbrook Entity, the Company and other lenders are currently
in discussions regarding the terms and timing of payments owed to the Company
and such other lenders. The discussions relate to approximately $7 million in
loans by the Company, which funded resort operations and approximately $5
million of deferred management fees and reimbursable expenses as well as
amounts owed by the Innisbrook Entity to other parties. While there can be no
assurance that the Company will be able to collect these amounts, based on
available information and the establishment of applicable reserves, the Company
does not believe any resolution of this matter will have a material
impact on the financial position, results of operation or cash flows of the
Company. Any settlement of this matter would be subject to the approval of the
Governance Committee.

In July 2002, the Company acquired a 49% interest in the Westin Savannah
Harbor Resort and Spa in connection with the restructuring of the indebtedness
of that property. An unrelated party holds an additional 49% interest in the
property. The remaining 2% is held by Troon. As disclosed above, Mr. Sternlicht
owns an approximate 12% non-controlling interest in Troon through an affiliate
of Starwood Capital. Troon invested in the project on a pari-passu basis and
manages the golf course at the Westin Savannah. The unrelated third party
negotiated the terms of the golf management agreement with Troon and approved
the terms of its equity interest, and therefore, the Company believes the
arrangements are on an arms-length basis.

Aircraft Lease.In February 1998, the Company leased a Gulfstream III
Aircraft (GIII) from Star Flight LLC, an affiliate of Starwood Capital. The
term of the lease was one year and automatically renews for one-year terms
until either party terminates the lease upon 90 days written notice. The rent
for the aircraft, which was set at approximately 90% of fair market value at
the time (based on two estimates from unrelated third parties), is (i) a
monthly payment of 1.25% of the lessors total costs relating to the aircraft
(approximately $123,000 at the beginning of the lease with this amount
increasing as additional costs are incurred by the lessor), plus (ii) $300 for
each hour that the aircraft is in use. Payments to Star Flight LLC were
$2,052,000, $1,682,000 and $840,000 in 2002, 2001 and 2000, respectively.
Starwood Capital has used the GIII

17



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##### Table of Contents



as well as the Gulfstream IV Aircraft (GIV) operated by the Company. For use
of the GIII, Starwood Capital relieves the Company of lease payments for the
days the plane is used and reimburses the Company for costs of operating the
aircraft. Lease relief and reimbursed operating costs were approximately
$296,000, $95,000 and $176,000 for fiscal 2002, 2001 and 2000, respectively.
For use of the GIV, Starwood Capital pays a charter rate that the Company
believes is no less favorable than that which the Company could receive from an
unaffiliated third party.

Other

The Company has on occasion made loans to employees, including executive
officers, principally in connection with home purchases upon relocation. As of
December 31, 2002, approximately $11 million in loans to approximately 36
employees was outstanding of which approximately $7 million were non-interest
bearing home loans. Home loans are generally due five years from the date of
issuance or upon termination of employment and are secured by a second mortgage
on the employees home. Officers receiving home loans in connection with
relocation were Robert F. Cotter, Chief Operating Officer, in June 2001
(original balance of $600,000), Ronald C. Brown, Executive Vice President and
Chief Financial Officer, in June 1999 (original balance of $600,000), David K.
Norton, Executive Vice President of Human Resources, in July 2000 (original
balance of $500,000), Theodore W. Darnall, President, Real Estate Group, in
1996 and 1998 (original
balance of $750,000 ($150,000 bridge loan in 1996 of which $100,000 has been
repaid) and $600,000 home loan in 1998) and Steven M. Hankin, President,
Starwood Technology and Revenue Systems, in 2000 (original balance of
$300,000). The loans to Messrs. Cotter, Norton, Darnall and Hankin are
currently outstanding. The loan made to Mr. Brown was repaid in 2001. As a
result of the acquisition of ITT Corporation in 1998, restricted stock awarded
to Messrs. Sternlicht, Brown and
Darnall in 1996 vested at a price for tax purposes of $53 per Share. This
amount was taxable at ordinary income rates. By late 1998, the value of the
stock had fallen below the amount of income tax owed. In order to avoid a
situation in which the executives could be required to sell all of the Shares
acquired by them to cover income taxes, in April 1999 the Company made
interest-bearing loans at 5.67% to Messrs. Sternlicht, Brown and Darnall of
$1,222,000, $218,000 and $416,000
respectively, to cover the taxes payable. Accrued interest on these loans at
December 31, 2002 is approximately $257,000, $46,000 and $88,000, respectively.
The notes and all associated accumulated interest become due on their tenth
anniversary.

Since July 2002, Richard Cotter has been the Vice President, Operations,
Mid Atlantic Region for the Company. From January 2001 to July 2002 Mr. Cotter
served as Vice President, Operations, New York City and assisted in the
transition of a new General Manager for the St. Regis New York and from July
1998 to January 2001, he served as Vice President, the St. Regis Group, and
Managing Director, St. Regis New York (General Manager of the property). Mr.
Cotters salary and bonus were $272,571 and $181,335, respectively, for 2000,
$283,336 and $71,549, respectively, for 2001 and $292,160 and $53,244
respectively, for 2002. In connection with the Companys Long Term Incentive
Plans, Mr. Cotter was granted 31,000, 10,823 and 28,000 options to purchase
Company shares in 2000, 2001 and 2002, respectively, and was awarded 3,487
shares of restricted stock in 2001. In addition, in connection with his
employment as general manager of the St. Regis and these other positions, Mr.
Cotter was provided with the use of a Company-owned apartment in New York City
adjacent to the St. Regis, which the Company believes has a rental value of
$10,000 per month. Mr. Cotter has had the use of the apartment since September
1998. In light of his new position with the Company, Mr. Cotter will no longer
have use of the apartment starting during the second quarter of 2003 and will
be moving to an apartment located in the Sheraton New York  Hotel & Towers.
Richard Cotter is the brother of Robert Cotter, who has been the Chief
Operating Officer of the Company since February 2000.

In 2002, Starwood retained the law firm Piper Rudnick (as well as Verner
Liipfert, which merged with Piper Rudnick in October 2002), of which Senator
George J. Mitchell, a Director of the Corporation and Trustee of the Trust, is
a partner. We expect that this firm will continue to provide services to the
Company in 2003.

Item 16(c).Exhibits

Exhibits



|23.1 |  | Consent of Ernst & Young LLP of the Joint Annual Report on Form
10-K/A of which this exhibit index is a part. (1)          
|---- |  | ---------------------------------------------------------------------------------------------------------------------------
|    
|99.1 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Executive Officer  Corporation (1)

18



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|99.2 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Financial Officer  Corporation (1)         
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------
|    
|99.3 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Executive Officer  Trust (1)               
|    
|99.4 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Financial and Accounting Officer  Trust (1)
|    
|(1)  |  | Filed herewith                                                                                                                      

19



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.

|      |              |  |  |                                           |  |                                                                     
|----- | ------------ |  |  | ----------------------------------------- |  | --------------------------------------------------------------------
|      |              |  |  | STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
|      |              |  |  |                                           |  |                                                                     
|Date: | July 7, 2003 |  |  | By:                                       |  | /s/ RONALD C. BROWN                                                 
|      |              |  |  |                                           |  |                                                                     
|      |              |  |  |                                           |  | Ronald C. Brown
Executive Vice President and
Chief Financial Officer

20



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.

|      |              |  |  |                           |  |                                                                     
|----- | ------------ |  |  | ------------------------- |  | --------------------------------------------------------------------
|      |              |  |  | STARWOOD HOTELS & RESORTS
|      |              |  |  |                           |  |                                                                     
|Date: | July 7, 2003 |  |  | By:                       |  | /s/ RONALD C. BROWN                                                 
|      |              |  |  |                           |  |                                                                     
|      |              |  |  |                           |  | Ronald C. Brown
Executive Vice President and
Chief Financial Officer

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##### Table of Contents






Index to Exhibits

Exhibits



|23.1 |  | Consent of Ernst & Young LLP of the Joint Annual Report on Form
10-K/A of which this exhibit index is a part. (1)                   
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------
|    
|99.1 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Executive Officer  Corporation (1)         
|    
|99.2 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Financial Officer  Corporation (1)         
|    
|99.3 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Executive Officer  Trust (1)               
|    
|99.4 |  | Certification Pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934  Chief Financial and Accounting Officer  Trust (1)
|    
|(1)  |  | Filed herewith                                                                                                                      

22