Document:

exv10w3

Exhibit 10.3

SEVERANCE AGREEMENT

          THIS AGREEMENT, dated December 30, 2008 the “Effective Date”), is made by and between Starwood
Hotels and Resorts Worldwide, Inc., a Maryland corporation (the “Company”), and Matthew E. Avril
(the “Executive”).

          WHEREAS, the Executive is employed by the Company as President — Hotel Operations; and

          WHEREAS, the Company considers it essential to the best interests of its stockholders to
foster the continued employment of key management personnel; and

          WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or distraction of senior
management personnel to the detriment of the Company and its stockholders; and

          WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company’s senior management,
including the Executive, to their assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change in Control; and

          WHEREAS, the Company and the Executive entered into an employment agreement (the “Original
Agreement”) dated August ___, 2008; and

          WHEREAS, the Company and the Executive hereby amend and restate the Original Agreement in its
entirety (the “Agreement”) in order to evidence documentary compliance with section 409A of
Code and the guidance thereunder (collectively “Section 409A”);

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Executive hereby agree as follows:

     1. Defined Terms. The definitions of capitalized terms used in this Agreement are
provided in Section 16 hereof.

     2. Term of Agreement. The Term of this Agreement shall commence on the Effective Date
and shall continue in effect through the third anniversary of the Effective Date; provided,
however, that on each anniversary of the Effective Date during the Term of this Agreement,
the Term shall automatically be extended for one additional year unless, not later than 90 days
prior to any such anniversary, the Company or the Executive shall have given notice not to extend
the Term; and further provided, however, that if a Change in Control or a
Potential Change in Control shall have occurred during the Term, the Term shall expire no earlier
than twenty-four (24)

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months beyond the month in which such Change in Control or a Potential Change in Control occurred.

     3. Company’s Covenants Summarized. In order to induce the Executive to remain in the
employ of the Company and in consideration of the Executive’s covenants set forth in Section 4
hereof, the Company agrees, under the conditions described herein, to pay the Executive the
Severance Payments and the other payments and benefits described herein. Except as provided in
Section 10 hereof, no Severance Payments shall be payable under this Agreement unless during the
Term there shall have been (or, under the terms of the second sentence of Section 6 hereof, there
shall be deemed to have been) a termination of the Executive’s employment with the Company
following a Change in Control. This Agreement shall not be construed as creating an express or
implied contract of employment and, except as otherwise agreed in writing between the Executive and
the Company, the Executive shall not have any right to be retained in the employ of the Company.

     4. The Executive’s Covenants. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event a Potential Change in Control occurs during the Term,
the Executive will remain in the employ of the Company until the earliest of (i) a date which is
six (6) months from the date of such Potential Change of Control, (ii) the date of a Change in
Control, (iii) the date of termination by the Executive of the Executive’s employment for Good
Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of
the Executive’s employment for any reason.

     5. Compensation Other Than Severance Payments.

          a. Payment of Salary During Disability. Following a Change in Control and during the
Term, during any period that the Executive is unable to perform the Executive’s full-time duties
with the Company as a result of:

          (1) a period of 409A Disability, the Executive shall continue to receive his base
salary in accordance with the Company’s standard payroll practices at the rate in effect at
the commencement of any such period, together with any compensation payable to the
Executive under the Company’s short-term and long-term disability plans for salaried
employees during such period and any benefit coverages customarily provided to disabled
salaried employees, until the Executive’s employment is terminated on account of the
Executive’s General Disability; or

          (2) a period of General Disability, the Executive shall receive any compensation
payable to the Executive under the Company’s short-term and long-term disability plans for
salaried employees during such period, as well as any benefit coverages customarily
provided to disabled salaried employees, until the Executive’s employment is terminated on
account of the Executive’s General Disability.

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Thereafter the Executive’s benefits shall be determined under the Company’s retirement, insurance
and other compensation programs then in effect in accordance with the terms of such programs.

          b. Accrued Salary. If the Executive’s employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the Executive such
Executive’s full salary through the Date of Termination at the rate in effect immediately prior to
the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence
of an event or circumstance constituting Good Reason, together with all compensation and benefits
payable to the Executive through the Date of Termination under the terms of the Company’s
compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date
of Termination or, if more favorable to the Executive, as in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason.

          c. Post-Termination Benefits. If the Executive’s employment shall be terminated for
any reason following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive’s normal post-termination compensation and benefits as such payments become
due. Such post-termination compensation and benefits shall be determined under, and paid in
accordance with, the Company’s retirement, insurance and other compensation or benefit plans,
programs and arrangements as in effect immediately prior to the Date of Termination or, if more
favorable to the Executive, as in effect immediately prior to the occurrence of the first event or
circumstance constituting Good Reason.

          d. Time of Payment. Upon termination of the Executive’s employment following a Change
in Control and during the Term, the Executive shall receive the payments or benefits to which he
may be entitled under Section 5(b) and 5(c) and which constitute deferred compensation subject to
Section 409A either (A) at the time when due hereunder, or (B) if a payment date sufficient to
satisfy Section 409A is not otherwise stated for such payment or benefit, on the date of
Executive’s termination of employment, except as provided in Section 14 below.

     6. Severance Payments.

          a. If the Executive’s employment is terminated following a Change in Control and during the
Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the
Executive without Good Reason, then, the Company shall pay the Executive the amounts, and provide
the Executive the benefits, described in this Section 6 (“Severance Payments”) and Section 7, in
addition to any payments and benefits to which the Executive is entitled under Section 5 hereof.
For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive with Good Reason, if
(i) the Executive’s employment is terminated by the Company without Cause prior to a Change in
Control (whether or not a Change in Control ever occurs) and such termination was at the request or
direction of a Person who has entered into an
agreement with the Company the consummation of which

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would constitute a Change in Control (an
“Acquiring Person”), (ii) the Executive terminates his employment for Good Reason prior to a Change
in Control (whether or not a Change in Control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of an Acquiring Person, or (iii) the
Executive’s employment is terminated by the Company without Cause or by the Executive for Good
Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise
in connection with or in anticipation of a Change in Control (whether or not a Change in Control
ever occurs). For purposes of any determination regarding the applicability of the immediately
preceding sentence, any position taken by the Executive shall be presumed to be correct unless the
Company establishes to the Board by clear and convincing evidence that such position is not
correct.

          (1) Lump Sum Payment. In lieu of any further salary payments to the Executive
for periods subsequent to the Date of Termination and in lieu of any severance benefit
otherwise payable to the Executive under the terms of his offer letter from the Company,
the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two
times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date
of Termination or, if higher, in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, and (ii) the average of the annual bonuses
earned by the Executive in the three fiscal years ending immediately prior to the fiscal
year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal
year in which occurs the first event or circumstance constituting Good Reason. For
purposes of the preceding sentence, in determining any bonus amount for any fiscal year,
bonuses paid with respect to any year in which employment of the Executive commenced shall
be annualized based on the number of days employed by the Company during such year. In the
event the date of the Executive’s termination of employment occurs on or within two years
following an event that constitutes a change in the ownership or effective control of the
Company or in the ownership of a substantial portion of the assets of the Company within
the meaning of section 409A(a)(2)(a)(vi) of the Code, such amount will be paid in a lump
sum within 30 days following the date of the Executive’s termination of employment, except
as set forth in Section 14 below; otherwise, such amount will be paid 53 days following the
date of the Executive’s termination of employment, except as provided by Section 14 below.

          (2) Continuation of Welfare Benefits. Subject to Paragraph 15 in the case of
any benefits that are not exempt from Section 409A, for the twenty-four (24) month period
immediately following the Date of Termination, the Company shall arrange to provide the
Executive and his dependents life, disability, and accident insurance benefits and other
benefits and perquisites (including employee stay rates) substantially similar to those
provided to the Executive and his dependents immediately prior to the Date of Termination
or, if more favorable to the Executive, those provided to the Executive and his dependents
immediately prior to the first occurrence of an event or circumstance

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constituting Good Reason, at no greater cost to the Executive than the cost to the
Executive immediately prior to such date or occurrence. Benefits otherwise receivable by
the Executive pursuant to this Section 6(a)(2) shall be reduced to the extent benefits of
the same type are received by the Executive from another employer during the twenty-four
(24) month period following the Executive’s termination of employment; provided,
however, that the Company shall reimburse the Executive for the excess, if any, of
the cost of such benefits to the Executive over such cost immediately prior to the Date of
Termination or, if more favorable to the Executive, the first occurrence of an event or
circumstance constituting Good Reason.

          (3) Health Benefits. For the twenty-four (24) month period immediately
following the Date of Termination, the Company shall arrange to provide the Executive with
group health coverage substantially similar to that which the Executive was receiving
immediately prior to the Notice of Termination. The premium charge to the Executive for
each month of such coverage will equal the Company’s monthly COBRA charge for such coverage
in which the Executive, his spouse and covered dependents (as applicable) is enrolled from
time to time (less the amount of any administrative charge typically assessed by the
Company as part of its COBRA charge) and the Executive will be required to pay such monthly
premium charge in accordance with the Company’s standard COBRA premium payment
requirements. The Company will pay Executive a lump sum in cash equal to an initial
multiple that is increased by a percentage. For this purpose, the initial multiple is 24
times the difference that results from calculating (i) the Company’s monthly COBRA charge
on the Date of Termination for family coverage with respect to the highest value health
coverage provided to salaried employees, minus (ii) the amount the Company charges active
salaried employees for such coverage on Executive’s Date of Termination. In addition, for
this purpose, the percentage is the sum of (I) 1% for each month in the 24-month period
that will fall in the calendar year following Executive’s Date of Termination, plus (II) 2%
for each month in the 24-month period that will fall in the second calendar year following
Executive’s Date of Termination. The Company will make such payment within 30 days
following the date of the Executive’s termination of employment, except as provided by
Section 14 below.

          (4) Incentive Compensation. Notwithstanding any provision of any annual or
long-term incentive plan to the contrary, the Company shall pay to the Executive in cash
the following amounts:

          (A) A lump sum equal to any unpaid incentive compensation which has been
allocated or awarded to the Executive for a completed fiscal year or other
measuring period preceding the Date of Termination under any such plan and which,
as of the Date of Termination, is contingent only upon the continued employment of
the Executive to a subsequent date, paid during the fiscal year of termination when
bonuses for such completed fiscal year are paid to senior executives
(but not later than 2-1/2 months after such completed fiscal

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year, except as
provided by Section 14 below; and

          (B) the value of each contingent incentive compensation award allocated or
awarded to the Executive for a then uncompleted period 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, paid in the year
following the end of such performance period when awards for such performance
period are paid to senior executives (but not later than 2-1/2 months after the end
of such performance period, except as provided by Section 14 below. Awards for
uncompleted periods shall be prorated based upon the number of days the Executive
is employed by the Company during such year.

          (5) Accelerated Vesting of Stock Options. All stock options and restricted
stock held by the Executive under any stock option or incentive plan maintained by the
Company (including the Company’s 2004 Long-Term Incentive Plans) shall immediately vest and
become exercisable as of the Date of Termination, to be exercised in accordance with the
terms of the applicable plan

          (6) Outplacement Services. The Company shall provide the Executive with
outplacement services suitable to the Executive’s position for a period of two (2) years
following the date of the Executive’s termination of employment or, if earlier, until the
first acceptance by the Executive of an offer of employment. The cost of such outplacement
services shall not exceed twenty percent (20%) of the Executive’s base salary in effect on
the Date of Termination.

          (7)  401(k) Contributions. The Company shall pay the Executive an amount
equal to the unvested portion (if any) of the Executive’s account balance under the
Company’s 401(k) Plan that is forfeited by reason of the Executive’s termination of
employment. Such payment shall be made within 30 days following the date of the Executive’s
termination of employment, except as provided by Section 14 below.

     7. 280G Cap.

          a. Notwithstanding any other provisions of this Agreement, in the event that any payment or
benefit received or to be received by the Executive in connection with a Change in Control or the
termination of the Executive’s employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose actions result in a Change
in Control or any Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance Payments, being hereinafter called “Total Payments”) would not be
deductible (in whole or part), by the Company, an affiliate or Person making such
payment or providing such benefit as a result of section 280G of the Code, then, the Total
Payments shall be reduced (with the cash Severance Payments being

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reduced first (if necessary, to
zero) in the order in which they appear in Section 6 above, and all other Severance Payments shall
thereafter be reduced (if necessary, to zero) in the order in which they appear in Section 6 above
provided that extended health benefits will be reduced last to the minimum extent necessary such
that, after deducting the amount of any Excise Tax imposed on such Total Payments (as so reduced)
from such Total Payments (as so reduced), the amount of the Total Payments (after such reduction)
will be greater if such reduction is made than it would be without such reduction. All
determinations, including the order and timing of any such reduction shall be determined by the
accounting firm which was, immediately prior to the Change in Control, the Company’s independent
auditor (the “Auditor”).

          b. For purposes of this limitation, (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have waived at such time and in such manner as not to
constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of
tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Auditor,
does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code,
including by reason of section 280G(b)(4)(A) of the Code and (iii) the value of any noncash benefit
or any deferred payment or benefit included in the Total Payments shall be determined by the
Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

     8. Termination Procedures and Compensation During Dispute.

          a. Notice of Termination. After a Change in Control and during the Term, any
purported termination of the Executive’s employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to the other party hereto in
accordance with Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall
mean a notice which shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provisions indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board which was called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the
Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail.

          b. Date of Termination. “Date of Termination,” with respect to any purported
termination of the Executive’s employment after a Change in Control and during the Term, shall mean
(1) if the Executive’s employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive’s duties during such thirty
(30) day period), and (ii) if the Executive’s employment is terminated

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for any other reason, the
date specified in the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the
case of a termination by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days, respectively, from the date such Notice of Termination is given).

          c. Dispute Concerning Termination. If the Executive reasonably believe in good faith
the Company is not providing the Executive with a benefit or payment to which the Executive is
entitled under the terms of this Agreement, the Executive may notify the Company, within forty-five
(45) days after the Date of Termination or, if any such payment or benefit is due after such 45-day
period, within 45 days following such payment date, that a dispute exists concerning the
termination and/or the amount of such payment or benefit. In this event, the Company shall act
within fifteen (15) days to restore fully the disputed benefits and payments (so that all benefits
and payments are provided as of such date as would have been provided had there been no delay in
providing such benefits and payments) and to continue to provide such benefits and payments as
contemplated by this Agreement thereafter (provided, however, that in all events any payment or
benefit shall not be paid or provided to the Executive before the payment date set forth in this
Agreement or any applicable document), but subject to termination and recapture from the Executive
of these disputed benefits and payments in accordance with the terms of a mutual written agreement
of the parties or by a final judgment, order or decree of an arbitrator or a court of competent
jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected).

     9. No Mitigation. The Company agrees that, if the Executive’s employment with the
Company terminated during the Term, the Executive is not required to seek other employment or to
attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to
Section 6 hereof or Section 8(d) hereof. Further, the amount of any payment or benefit provided
for in this Agreement (other than Section 6(a)(2) hereof) shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

     10. Successors; Binding Agreement.

          a. In addition to any obligations imposed by law upon any successor to the Company, the
Company will require any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to terminate his employment
with the Company and receive compensation from the Company in the same amount and on the same
terms as the Executive would be entitled to hereunder if the Executive were to terminate the
Executive’s employment for Good Reason after a Change in

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Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes effective shall be deemed
the Date of Termination.

          b. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if
the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive’s estate.

     11. Indemnification. The Company shall indemnify and hold Executive harmless for acts
and omissions in his capacity as an officer, director or employee of the Company to the maximum
extent permitted under applicable law. The Company shall maintain a Director’s and Officer’s
Liability Insurance Policy, which shall provide liability coverage for Executive’s benefit, and the
Executive shall remain covered under such policy for a period of at least six (6) years following
the earlier of termination of employment or the occurrence of a Change in Control.

     12. Notices. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed, if to the Executive, to the address inserted below the Executive’s signature on the
final page hereof and, if to the Company, to the address set forth below, or to such other address
as either party may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:

To the Company:

Starwood Hotels and Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, NY 10604

Attention: Chief Administrative Officer and General Counsel

     13. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or of any lack of compliance
with, any condition or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement supersedes any other agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof which have been made by
either party; provided, however, that this Agreement shall supersede any agreement setting
forth the terms and conditions of the Executive’s employment with the Company only in the event
that the Executive’s employment with the Company is terminated on or following a Change in Control,
by the Company other than for Cause or by the

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Executive for Good Reason. The validity,
interpretation, construction and performance of this Agreement shall be governed by the laws of the
State of New York. All references to sections of the Exchange Act or the Code shall be deemed also
to refer to any successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The obligations of the Company and the
Executive under this Agreement which by their nature may require either partial or total
performance after the expiration of the Term (including, without limitation, those under Sections
6, 7, 8, and 9 hereof) shall survive such expiration.

     14. Code Section 409A. This Agreement will be construed and administered to preserve
the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas.
Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg.
§1.409A-1(b)(9)(iii). With respect to any amounts that are subject to Section 409A, it is
intended, and this Agreement will be so construed, that such amounts and the Company’s and the
Executive’s exercise of authority or discretion hereunder shall comply with the provisions of
Section 409A so as not to subject the Executive to the payment of interest and additional tax that
may be imposed under Section 409A. For purposes of any payment in this Agreement that is subject
to Section 409A and triggered by the Executive’s “termination of employment”, (i) “termination of
employment” shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i)
of the Code, and (ii) in the event the Executive is a “specified employee” on the date of the
Executive’s termination of employment (with such status determined by the Company in accordance
with rules established by the Company in writing in advance of the “specified employee
identification date” that relates to the date of the Executive’s termination of employment or, if
later, by December 31, 2008, or in the absence of such rules established by the Company, under the
default rules for identifying specified employees under Section 409A), any payment that is subject
to Section 409A, such payment shall not be paid earlier than six months after such termination of
employment (if the Executive dies after the date of the Executive’s termination of employment but
before any payment has been made, such remaining payments that were or could have been delayed will
be paid to the Executive’s estate without regard to such six-month delay). The Executive
acknowledges and agrees that the Company has made no representation to the Executive as to the tax
treatment of the compensation and benefits provided pursuant to this Agreement and that the
Executive is solely responsible for all taxes due with respect to such compensation and benefits.

     15. Expense Reimbursements. To the extent that any expense reimbursement provided for
by this Agreement does not qualify for exclusion from Federal income taxation, except as specified
otherwise in this Agreement, the Company will make the reimbursement only if the Executive incurs
the corresponding expense during the term of this Agreement and submits the request for
reimbursement no later than two months prior to the last day of the calendar year following
the calendar year in which the expense was incurred so that the Company can (and it thereby will)
make the reimbursement on or before the last day of the calendar year following the calendar year
in which the expense was incurred. In the case of any such expense reimbursement and

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any in-kind benefit provided for by this Agreement that does not qualify for exclusion from Federal
income taxation, the amount of expenses eligible for such reimbursement (and the amount of in-kind
benefits provided) during a calendar year will not affect the amount of expenses eligible for such
reimbursement (or benefits provided) in another calendar year; and the right to such reimbursement
or in-kind benefit is not subject to liquidation or exchange for another benefit from the Company.

     16. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.

     17. Settlement of Disputes: Arbitration.

          a. All claims by the Executive for benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a
claim and shall further allow the Executive to appeal to the Board a decision of the Board within
sixty (60) days after notification by the Board that the Executive’s claim has been denied.

          b. Any further dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in New York, in accordance with the rules of the American
Arbitration Association then in effect; provided, however, that the evidentiary
standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the
contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to
be paid until the Date of Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement.

     18. Definitions. For purposes of this Agreement, the following terms shall have the
meanings indicated below:

          a. “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.

          b. “Auditor” shall have the meaning set forth in Section 7 hereof.

          c. “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

          d. “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

          e. “Board” shall mean the Board of Directors of the Company.

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          f. “Cause” for termination by the Company of the Executive’s employment shall mean (i) the
willful and continued failure by the Executive to substantially perform the Executive’s duties with
the Company after a written demand for substantial performance is delivered to the Executive by the
Board, which demand specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive’s duties, and Executive has not cured any
such failure that is capable of being cured in all material respects within ten (10) days of
receiving such written demand, or (ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise.
For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the
Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the
best interest of the Company and (y) in the event of a dispute concerning the application of this
provision, no claim by the Company that Cause exists shall be given effect unless the Company
establishes to the Board by clear and convincing evidence that Cause exists.

          g. A “Change in Control” shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:

          (1) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its affiliates) representing
25% or more of the combined voting power of the Company’s then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection with a transaction
described in clause (i) of paragraph (3) below; or

          (2) the following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the date hereof, constitute the Board
and any new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or recommended;
or

          (3) there is consummated a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity
or any parent
thereof), in combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any

12

 

subsidiary of the Company, at least 70% of the combined voting power of the securities of
the Company or such surviving entity or any parent thereof outstanding immediately after
such merger or consolidation and in proportion to their relative voting power immediately
prior to such merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company’s then outstanding
securities; or

          (4) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets, other than a sale or
disposition by the Company of all or substantially all of the Company’s assets to an
entity, at least 70% of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, a
“Change in Control” shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately following which the record
holders of the common stock of the Company immediately prior to such transaction or series
of transactions continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.

          h. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

          i. “Company” shall mean Starwood Hotels and Resorts Worldwide, Inc., and, except in
determining under Section 17(g) hereof whether or not any Change in Control of the Company has
occurred, shall include any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

          j. “Date of Termination” shall have the meaning set forth in Section 8 hereof.

          k. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.

          l. “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

          m. “Executive” shall mean the individual named in the first paragraph of this Agreement.

13

 

          n. The Executive will be deemed to have a “409A Disability” if (A) the Executive is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, (B) the Executive is, by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three (3) months under an accident and health plan covering
Company employees; or (C) the Executive is determined to be totally disabled by the Social Security
Administration.

          o. “General Disability” shall be deemed the reason for the termination by the Company of the
Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have been absent from the full-time performance of the Executive’s
duties with the Company for a period of six (6) consecutive months, the Company shall have given
the Executive a Notice of Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned to the full-time performance
of the Executive’s duties.

          p. “Good Reason” for termination by the Executive of the Executive’s employment shall mean the
occurrence (without the Executive’s express written consent) after any Change in Control, or prior
to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second
sentence of Section 6(a) hereof (treating all references in paragraphs (1) through (7) below to a
“Change in Control” as references to a “Potential Change in Control”), of any one of the following
acts by the Company, or failures by the Company to act, unless, in the case of any act or failure
to act described in paragraph (1), (5), (6) or (7) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

          (1) the assignment to the Executive of any duties inconsistent with the Executive’s
status as a senior executive officer of the Company or a substantial adverse alteration in
the nature or status of the Executive’s responsibilities from those in effect immediately
prior to the Change in Control;

          (2) a reduction by the Company in the Executive’s annual base salary as in effect on
the date hereof or as the same may be increased from time to time;

          (3) the relocation of the Executive’s principal place of employment to a location more
than 35 miles from the Executive’s principal place of employment immediately prior to the
Change in Control or the Company’s requiring the Executive to be based anywhere other than
such principal place of employment (or permitted relocation thereof) except for required
travel on the Company’s business to an extent substantially consistent with the Executive’s
present business travel obligations;

14

 

          (4) the failure by the Company to pay to the Executive any portion of the Executive’s
current compensation, or to pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the Company, within seven (7) days
of the date such compensation is due;

          (5) the failure by the Company to continue in effect any compensation plan in which
the Executive participates immediately prior to the Change in Control which is material to
the Executive’s total compensation, including but not limited to the Company’s stock
option, bonus and other plans or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure by the Company to continue
the Executive’s participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount or timing of payment of
benefits provided and the level of the Executive’s participation relative to other
participants, as existed immediately prior to the Change in Control;

          (6) the failure by the Company to continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive under any of the Company’s pension,
savings, life insurance, medical, health and accident, or disability plans in which the
Executive was participating immediately prior to the Change in Control, the taking of any
other action by the Company which would directly or indirectly materially reduce any of
such benefits or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of the Change in Control, or the failure by the Company to provide
the Executive with the number of paid vacation days to which the Executive is entitled on
the basis of years of service with the Company in accordance with the Company’s normal
vacation policy or any employment agreement in effect at the time of the Change in Control;
or

          (7) any purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 8(a) hereof; for
purposes of this Agreement, no such purported termination shall be effective.

     The Executive’s right to terminate the Executive’s employment for Good Reason shall not be
affected by the Executive’s incapacity due to physical or mental illness. The Executive’s
continued employment shall not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.

     For purposes of any determination regarding the existence of Good Reason, any claim by the
Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to
the Board by clear and convincing evidence that Good Reason does not exist.

15

 

          q. “Notice of Termination” shall have the meaning set forth in Section 8 hereof.

          r. “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.

          s. “Potential Change in Control” shall be deemed to have occurred if the event set forth in
any one of the following paragraphs shall have occurred:

	 	(1)	 	the Company enters into
an agreement, the consummation of which would result in the
occurrence of a Change in Control;
	 
	 	(2)	 	the Company or any
Person publicly announces an intention to take or to
consider taking actions which, if consummated, would
constitute a Change in Control;
	 
	 	(3)	 	any Person becomes the
Beneficial Owner, directly or indirectly, of securities of
the Company representing 15% 14 or more of either the then
outstanding shares of common stock of the Company or the
combined voting power of the Company’s then outstanding
securities (not including in the securities beneficially
owned by such Person any securities acquired directly from
the Company or its affiliates); or
	 
	 	(4)	 	the Board adopts a
resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.

          t. “Retirement” shall be deemed the reason for the termination by the Executive of the
Executive’s employment if such employment is terminated in accordance with the Company’s retirement
policy, including early retirement, generally applicable to its salaried employees.

          u. “Severance Payments” shall have the meaning set forth in Section 6 hereof.

          v. “Tax Counsel” shall have the meaning set forth in Section 7 hereof.

16

 

          w. “Term” shall mean the period of time described in Section 2 hereof (including any
extension, continuation or termination described therein).

          x. “Total Payments” shall mean those payments so described in Section 7 hereof.

          y.

          IN WITNESS WHEREOF, the parties have caused this Supplement to be duly executed as of the date
first written above.

	 	 	 	 	 
	 	STARWOOD HOTELS AND RESORTS

WORLDWIDE, INC.

 	 
	 	By 	
 	 
	 	 	NAME: Jeffrey Cava 	 
	 	 	TITLE: EVP — Human Resources
Dated:  December 30, 2008 	 
	 

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	
 	 
	 	Matthew E. Avril
 	 
	 	Dated:  December 30, 2008 	 
	 

17exv10w4

Exhibit 10.4

February 1, 2008

Phil McAveety

Calle Cotoner 49, 2a

07013 Palma de Mallorca

Spain

Dear Phil,

We are delighted to confirm to you our offer of employment with Starwood Hotels & Resorts
Worldwide, Inc. as Executive Vice President & Chief Marketing Officer. We recognize that a
successful organization is the reflection of a talented workforce and we look forward to your
contributions.

Please review the attached documents specifically stating the terms of our offer of employment to
you. If those terms are acceptable, kindly signify your acceptance by signing and returning all of
the attached documents to me. If you have any questions concerning the terms of this offer, please
contact me.

Again, we look forward to you joining our team.

Ken Siegel

Chief Administrative Officer & General Counsel

Starwood Hotels & Resorts Worldwide, Inc.

 

 

February 1, 2008

Phil McAveety

Calle Cotoner 49, 2a

07013 Palma de Mallorca

Spain

Dear Phil,

We are pleased to offer your employment with Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”
or the “Company”) under the terms and conditions stated below:

Start Date:

Subject to the terms of this letter and the issuance of an employment authorized VISA, your
employment with Starwood will begin on or about March 31, 2008 (the “Effective Date”). On or
within thirty (30) days after the Effective Date, you shall relocate yourself to housing in the New
York/Connecticut area. The Company will sponsor and pay all costs associated with obtaining an
employment authorized VISA on your behalf. The Company will apply for the most appropriate VISA
based upon VISA availability, current U.S. Immigration law requirements and your academic and
professional background. Subject to satisfactory job performance and the Company’s policy
regarding Permanent Residence Sponsorship, the Company will support a Petition for U.S. Permanent
Residence on your behalf at a future, to be determined date. You agree to provide services to the
Company from Europe, upon the reasonable request of the Company, during the period of time that the
Company’s VISA application on your behalf is pending.

Responsibilities:

Initially, your position will be Executive Vice President & Chief Marketing Offer at the Corporate
office and you shall perform such duties and services as are assigned to you by the Company as
requested. In your role, you shall be responsible for the Company’s global marketing programs and
positioning. You shall devote your full time and attention to the affairs of the Company and to
your job duties, and use your best efforts and abilities to promote Starwood’s interests. You will
initially be reporting to Frits Van Paasschen, Chief Executive Officer, though the Company may make
changes in your title and job responsibilities at any time.

In performing your duties, you will be expected to comply at all times with all Starwood policies,
procedures and directives as they currently exist or as they may be adopted or changed from time to
time.

 

 

Base Salary:

Your base salary will be $500,000 annually, paid in semi-monthly intervals of $20,833.33, and
subject to applicable withholdings for FICA, state and federal taxes. The Starwood salary program
provides performance-based salary reviews for future salary progression.

Annual Incentive (Bonus):

You will be eligible to participate in the Starwood Annual Incentive Plan (AIP) or, at the election
of the board’s compensation committee, the Annual Incentive Plan for Certain Executives (AIPCE).
In either case, your target incentive is 75% of base salary. Your actual incentive award will be
based upon a variety of factors including company and division performance, and your achieving
specified performance criteria to be established and approved with your manager, provided that the
component of your bonus payment related to the financial performance of the Company for the 2008
performance period shall be calculated at no less than target. In the event that changes are made
to any of the incentive plans, the changes will apply to you as they do other similarly situated
employees of the Company

Please note that the AIP and AIPCE provides that a portion of your annual bonus will be deferred
and payable in Starwood stock or stock units. The current deferral portion of the bonus is 25% and
is payable in Starwood stock having a value on the date of deferral equal to 133% of the amount
deferred.

Payment of your 2008 bonus will be delivered according to the regular annual incentive plan payout
schedule and your bonus will assume you were employed with Starwood for the full year. An annual
bonus shall not be deemed earned by you until the Company has determined your entitlement to such
bonus and only if you are employed by the Company at the time such bonus is payable in accordance
with the AIP, AIPCE and Company practices. The Company does not pay pro-rata bonuses upon
departure.

Long Term Incentive:

You will be eligible to participate in Starwood’s Long Term Incentive Compensation Plan (“LTIP”)
beginning in 2009. This plan provides for the award of options/restricted shares at the Company’s
discretion to high performing executives. The actual number of shares granted, if any, will be
based upon your performance and the metrics used for other senior executives of the Company.

Sign-on Stock Equity:

In connection with your employment with the Company you will receive an equity grant under the LTIP
having an aggregate value of $1,800,000, determined as follows:

Sign on Options:

Effective the first day of the month following the Effective Date, you will be granted stock
options having an aggregate value (computed pursuant to the current methods used by the Company) of
$450,000 pursuant to the terms of the LTIP. The options will have an exercise price equal to the
average of the high and low sales prices of Starwood common stock as reported in the New York Stock
Exchange Composite Transactions on the date of grant. The stock options will vest in four equal
annual installments beginning with the first anniversary of the grant date and otherwise and will
otherwise be governed by the provisions of the LTIP.

Further details will be provided in the award notification to be delivered to you following your
employment.

 

 

Sign-on Restricted Stock:

Effective the first day of the month following the Effective Date, you will be granted that number
of shares of restricted stock having a value equal to $1,350,000, based on the Fair Market Value
(as defined in the LTIP) on the date of the grant. The restricted shares will vest 100% on the
third anniversary of the grant date and will otherwise be governed by the provisions of the LTIP
and the award agreement governing the restricted shares. Further details will be provided in the
award notification and agreement to be delivered to you following your employment.

Sign-on Bonus:

You will be paid a one-time sign-on bonus of $494,000 (gross), to be disbursed to you within the
first month of your employment. Your right to retain the sign-on bonus is conditional upon
remaining employed by Starwood for at least one year. In the event that you voluntarily resign
from Starwood or are terminated for cause within this one year period, you would be obligated to
repay the entire amount (net of taxes) of the sign-on bonus.

Other Benefits:

(a) You will also be entitled to salary reimbursement at your base salary pending the issuance of
your United States employment authorized VISA. The reimbursement shall cover the period of time
from the last day of employment by your current employer until your employment authorized VISA is
granted and shall be disbursed to you within the first month of your employment. Your right to
retain the salary reimbursement is conditional upon remaining employed by Starwood for at least one
year. In the event that you voluntarily resign from Starwood or are terminated for cause within
this one year period, you would be obligated to repay the entire amount (net of taxes) of the
salary reimbursement.

(b) The Company shall reimburse you for the costs associated with preparing your 2008 tax returns.

Benefits:

Starwood offers “StarShare”, a comprehensive array of employee benefit programs, that are aimed at
a variety of personal concerns. New employees are eligible for the StarShare health and welfare
benefit programs and the 401(k) plan on the first day of the month following 90 days of continuous
employment. You and your eligible dependents will be covered by these benefits as per your coverage
elections. In order to provide health care coverage during this period, you will be covered under
Starwood’s Foreign Service Plan from the Effective Date until you are eligible for benefits under
Starwood’s standard plans.

Information on these plans and other benefit programs such as the HOT Rates (the employee discount
room rates program), short-term disability, long-term disability, employee life insurance, and
vacation programs will be provided to you after you begin your employment with us. As we
discussed, you will be eligible for 20 days of vacation on an annual basis.

In the event that changes are made to any of the benefit plans, the changes will apply to you as
they do other similarly situated employees of the Company.

Relocation:

Starwood will pay the reasonable, out-of-pocket costs of relocating your family and household
furnishings from Palma, Spain to the New York metropolitan area in accordance with the provisions
of Starwood’s Relocation Program, provided that you shall only be eligible for reimbursement of
rental agency fees and other agency commissions related to your first rental property in the New
York/Connecticut area and you shall not eligible for reimbursement for costs

 

 

associated with the purchase of a residence in the United Stated. Details of Starwood’s Relocation
Program are enclosed. To initiate the moving process, please contact your Human Resources office.
In an effort to fully utilize our relocation benefit and avoid additional tax liability, we ask
that you do not begin your relocation process before being contacted by your assigned relocation
company.

In the event that you accept this offer of employment and relocation expenses are paid to you or on
your behalf, you agree that if you voluntarily terminate your employment within one year after your
first day of employment, you will repay all such relocation, reduced by 1/12 for each full calendar
month actually worked. In addition, eligibility for reimbursement of any and all relocation
expenses will cease on the last day of employment and any relocation expenses incurred after that
date will not be reimbursed by Starwood and will be your responsibility.

Resolution of Disputes:

From time to time, disagreements and misunderstandings may arise concerning your job
responsibilities, performance, compensation, benefits or other matters affecting your employment
with Starwood, or one of its affiliated companies. We hope that we will be able to resolve such
matters through normal discussions with your immediate managers or Human Resources representatives.

In the event those efforts fail, you and Starwood agree, except as may be prohibited by law or as
otherwise excluded by the terms of the attached Mutual Agreement to Arbitrate (Attachment A), to
submit any and all disputes relating to or arising out of this offer letter, your employment with
Starwood or the termination of that employment to final and binding arbitration pursuant to the
employment rules then in effect of the American Arbitration Association, which shall be the sole
and exclusive remedy for such disputes. Accordingly, you acknowledge and agree that this offer of
employment and the benefits provided herein are contingent upon your execution of the Mutual
Agreement to Arbitrate provided to you herewith and incorporated herein by reference. In the
event that the Mutual Agreement to Arbitrate is determined by a court with appropriate jurisdiction
to be unenforceable, you and Starwood Hotels & Resorts Worldwide, Inc. waive any right to a trial
by jury on the claims that otherwise would have been subject to the Mutual Agreement to Arbitrate.

Employment Term:

While Starwood looks forward to a long and mutually beneficial relationship with you, you should
understand that there is no fixed duration for your employment. In accepting this offer, you
acknowledge and agree that your employment with the Company is at will, and may be terminated by
Starwood at any time, including prior to the issuance of an employment authorized VISA, with or
without notice and for any or no reason. By signing below, you acknowledge that except for this
letter, there is not and shall not be any written contract between you and the Company concerning
this offer of employment or your prospective employment, and that nothing in this letter guarantees
employment for any definite or specific term or duration or any particular level of benefits or
compensation.

Severance:

In the event that Starwood terminates your employment for any reason other than cause, Starwood
will pay to you twelve months of your then current base salary, in a lump sum less all applicable
withholdings (the “Severance Payment”), and it will (i) periodically reimburse you for your COBRA
expenses minus your last level of normal contribution for up to twelve months commencing on the
termination date and (ii) also pay the reasonable costs of personal and goods re-location back to
Europe should you relocate to Europe within one year of the termination of

 

 

your employment. In the event that your employment is terminated by Starwood for any reason other
than cause prior to the issuance of an employment authorized VISA, Starwood will also pay to you
the (i) salary reimbursement up to the date of termination and (ii) sign-on bonus of $494,000
(gross). The Severance Payment will be in lieu of any compensation, damage or remedy to which you
might otherwise be entitled and will be subject to and conditioned upon (a) your continuing
compliance with the Non-Compete, Non-Solicitation, Confidentiality and Intellectual Property
Agreement referred to below and (b) your signing a written waiver and release of any and all claims
against Starwood arising out of or relating to your employment with Starwood, in form and substance
satisfactory to Starwood. You will not be eligible for any Severance Payment or COBRA
reimbursement if you resign from your employment with the Company.

For purposes of this paragraph, “cause,” shall mean (i) any material breach by you of any of the
duties, responsibilities or obligations of your employment, or any of the policies or practices of
Starwood; (ii) your failure or refusal to properly perform, or the habitual neglect of (both as
determined by Starwood in its reasonable discretion and judgment), the duties, responsibilities or
obligations of your employment, or to properly perform or follow (as determined by Starwood in its
reasonable discretion and judgment) any lawful order or direction by Starwood; (iii) any acts or
omissions by you that constitute (as determined by Starwood in its reasonable discretion and
judgment) fraud, dishonesty, disloyalty, breach of trust, gross negligence, civil or criminal
illegality, or any other misconduct or behavior that could (as determined by Starwood in its
reasonable discretion and judgment), subject to civil or criminal liability or otherwise adversely
affect the business, interests or reputation of Starwood or any of its affiliates.

Other Conditions and Obligations:

You acknowledge that you are not subject to any currently effective employment contract, or any
other contractual or other binding obligations pursuant to which your employment or employment
activities with or on behalf of the Company may be subject to any restrictions. Restrictions
include, without limitation, any agreements or other obligations or documents relating to
non-competition, confidentiality, trade secrets, proprietary information or works for hire. By
signing this letter, you represent to Starwood that there are no agreements or arrangements,
whether written or oral, in effect that would prevent or conflict with your full performance of
your employments duties and responsibilities to us.

This offer is contingent on satisfactory results of the Company’s pre-employment investigation,
testing and verification and is subject to you having the legal right to work in the United States.
Please be prepared to show appropriate identification and proof of eligibility to work on the
first day that you report to work. Please contact the undersigned if you have any questions
regarding these requirements.

As a further condition of this offer and your right to receive any of the benefits detailed herein,
you agree to execute and be bound by a confidentiality, non-compete and non-solicitation agreement
provided to you by the Company (Attachment B).

No Other Assurances:

You acknowledge that in deciding to sign this offer, you have not relied on any promises,
commitments, statements or representations, whether spoken or in writing, made to you by any
representative of the Company, except for what is expressly stated herein. This offer replaces and
cancels all previous agreements, commitments, and understandings whether spoken or written, if any,
that the Company or any representative of the Company may have made in connection with your
anticipated employment.

 

 

You also acknowledge that this offer is intended as written, and that no marginal notations or
other revisions to either this offer, the Mutual Agreement to Arbitrate, or the Non-compete,
Non-solicitation, Confidentiality and Intellectual Property Agreement are binding on the Company
unless expressly consented to in writing by the Senior Vice President, Human Resources or
Starwood’s General Counsel. This offer shall be construed, governed by and enforced in accordance
with the laws of the State of New York, without regard to its conflicts of laws principles.

You should not resign from your current employment until you have received notification from the
Company of the completion of all pre-employment investigation, testing and verification.

By signing and returning this letter, you confirm that this letter accurately sets forth the
current understanding between you and Starwood and that you accept and agree to the terms as stated
above.

Very truly yours,

Kenneth S. Siegel

Chief Administrative Officer & General Counsel

	 	 	 	 	 
	ACCEPTED AND AGREED TO:

	 	 	 	 
	 
	 	 	 	 
	
 

Phil McAveety

	 	 	 	January      , 2008

Date

 

 

Attachment A

MUTUAL AGREEMENT TO ARBITRATE

     In order to gain the benefits of a speedy, impartial, and cost-effective dispute resolution
procedure, and for good and valid consideration as covenanted below and in addition to any other
consideration, and intending to be legally bound, Starwood Hotels & Resorts Worldwide, Inc.
(“Starwood”) and I hereby agree that, except as otherwise provided herein, all disputes and claims
for which a court otherwise would be authorized by law to grant relief, in any manner, that I may
have, now or in the future, during or after my employment with Starwood, of any and every kind or
nature whatsoever with or against Starwood, any of Starwood’s affiliated or subsidiary companies,
partners, joint venturers, owners of properties Starwood manages, and/or any of his, her, its or
their directors, officers, employees or agents , or any disputes and claims that Starwood may have
against me (collectively, “Claims”), shall be submitted to the American Arbitration Association
(“AAA”) to be resolved and determined through final and binding arbitration before a single
arbitrator and to be conducted in accordance with the National Rules for the Resolution of
Employment Disputes of the AAA. Starwood and I agree that the arbitrator will have the authority
to grant motions dispositive of all or part of any Claim. Starwood shall be responsible for
payment of all arbitrator compensation, AAA filing fees and AAA administrative fees, other than the
initial AAA filing fee for which I will be responsible to pay up to a maximum of $125, or as
otherwise required by law.

     Any reference in this Agreement to Starwood also refers to all of Starwood’s affiliated
entities, benefit plans, the benefit plans’ sponsors, fiduciaries and administrators, and all
successors and assigns of any of them.

     Starwood and I each have the right to representation by counsel with respect to arbitration of
any dispute pursuant to this Agreement. Except as prohibited by law, at the request of either
Starwood or me, the arbitration proceedings shall be conducted in confidence, and, in such a case,
all documents, testimony, and records shall be received, heard, and maintained by the arbitrator in
confidence, available for inspection only by me and Starwood, our respective attorneys, and
experts, who shall agree, in advance and in writing, to receive all such information confidentially
and to maintain the secrecy of such information until it shall become generally known. Both
parties shall be allowed adequate discovery as part of the arbitration process, including
reasonable access to essential documents and witnesses as determined by agreement or the
arbitrator.

     The arbitrator shall conduct a full hearing as to all issues and disputes not resolved by
dispositive motion. At such hearing, the parties shall be entitled to present evidence and
examine and cross-examine witnesses. The arbitrator shall issue a written decision revealing the
essential findings and conclusions upon which any award is based. In addition, the arbitrator
shall have authority to award equitable relief, damages, costs, and fees to the extent permitted by
law, including, but not limited to, any remedy or relief that a governing court might order.

     Starwood and I hereby agree that the Claims subject to arbitration shall include but not be
limited to any and all Claims that arise out of or are related to the offer of employment, transfer
or promotion extended by Starwood to me, any withdrawal or rescission of that offer, any aspect of
my employment with Starwood or the terms and conditions of that employment, any claim for bonus,
vacation pay or other compensation, any termination of that employment and any Claim of

 

 

discrimination, retaliation, or harassment based upon age, race, religion, sex, creed,
ethnicity, pregnancy, veteran status, citizenship status, national origin, disability, handicap,
medical condition, sexual orientation or any other unlawful basis, or any other unlawful conduct,
under any applicable federal, state, local or other statutes, orders, laws, ordinances, regulations
or the like, or case law, that relate to employment or employment practices, including without
limitation, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as
amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment
Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family
Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as
amended, the Worker Adjustment Retraining and Notification Act, as amended, the Fair Labor
Standards Act, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the
Equal Pay Act, as amended, the Rehabilitation Act, as amended, the Immigration Reform and Control
Act, and the state and local analogues to the foregoing.

     Starwood and I further agree that the Claims subject to arbitration shall exclude any Claims
required by any applicable federal, state, local or other statute or benefit or pension plan to be
submitted to an administrative forum (for example, a workers’ compensation claim, a claim for
unemployment insurance benefits, or an administrative charge of discrimination or retaliation filed
with the Equal Employment Opportunity Commission or the state or local analogue to that agency but
not litigation arising from such charges), any claims involving any loans or advances paid to me
that are subject to any mortgage, promissory note or other similar agreement that I have signed,
and any Claims involving solely a monetary dispute within the jurisdiction of a small claims court.
Starwood and I further agree that the Claims subject to arbitration also shall exclude any Claims
to the extent they involve the alleged taking, use or disclosure of trade secrets and similar
confidential or proprietary information, Claims involving a failure to pay a retention bonus or
relocation expense, Claims involving a failure to repay any unearned portion of a retention bonus
or relocation expense, Claims based upon any employee pension or benefit plan the terms of which
contain an enforceable arbitration procedure, in which case the procedure of such plan shall apply,
and Claims that cannot be compelled to mandatory arbitration under applicable federal law.

     Starwood and I agree that any arbitration award rendered as the result of any arbitration
under this Agreement shall be final and binding and may be entered and enforced as a court judgment
in accordance with applicable law. Starwood and I further agree that this Agreement, any
arbitration under this Agreement and any arbitration award rendered in such arbitration shall be
governed by the Federal Arbitration Act.

     By entering into this Agreement, Starwood and I each specifically acknowledge and understand
that the right to the determination and/or trial of any Claims in court before a judge or a jury is
a valuable right, and that by signing this Agreement Starwood and I hereby knowingly and
voluntarily waive any and all rights we may have to assert any Claims in any court of competent
jurisdiction and to a determination and/or trial before a judge or a jury.

     I further understand and acknowledge that this Agreement is not intended to be and shall not
be deemed to constitute a contract of employment for any specific duration, and that my employment
shall be and remain at will, which means that Starwood and I shall be free to terminate that
employment at any time for any or no reason with or without notice and with or without cause.

 

 

     Each party’s promise to resolve Claims by arbitration in accordance with the provisions of
this Agreement is consideration for the other party’s like promise. Additionally, I enter into
this Agreement in consideration of Starwood’s employment, transfer or promotion of me.

     This Agreement shall survive my employer-employee relationship with Starwood and shall apply
to any covered Claim whether arising or asserted during my employment or after the termination of
my employment with the Company. This Agreement can be modified or revoked only by a writing signed
by both Starwood’s Chief Administrative Officer & General Counsel and that expressly refers to this
Agreement and specifically states an intent to modify or revoke it. This is the complete agreement
of the parties on the subject of arbitration of disputes, except for any arbitration provision
contained in a pension or benefit plan or an agreement covering change in control benefits and
protections.

EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES CAREFULLY READING THIS AGREEMENT, UNDERSTANDING ITS
TERMS, AND ENTERING INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY AND NOT IN RELIANCE ON ANY
PROMISES OR REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.

EACH PARTY FURTHER ACKNOWLEDGES HAVING THE OPPORTUNITY TO DISCUSS THE AGREEMENT WITH PERSONAL LEGAL
COUNSEL AND HAS USED THAT OPPORTUNITY TO THE EXTENT DESIRED.

	 	 	 	 	 
	 	 	 
	Dated:                 
           	 
 	 
	 	Phil McAveety 	 
	 	 	 
	 	

Starwood Hotels & Resorts Worldwide, Inc.

 	 
	Dated:                 
           	By:  	 
 	 
	 	 	Kenneth S. Siegel 	 
	 	 	Chief Administrative Officer & General Counsel 	 
	 

 

 

Attachment B

NON-COMPETE, NON-SOLICITATION, CONFIDENTIALITY AND 

INTELLECTUAL PROPERTY AGREEMENT

          This Non-compete, Non-solicitation, Confidentiality and Intellectual Property Agreement
(“Agreement”) is entered into as of this       day of,                     , (the “Effective Date”), by and
between Starwood Hotels & Resorts Worldwide, Inc. (the “Company”) and Phil McAveety (the
“Employee”).

          WHEREAS, the Company devotes significant time, resources and effort to the training and
advancement of its management, and its management team constitutes a significant asset and
important competitive advantage; and

          WHEREAS, the Employee has and will have access to important and sensitive confidential
information; and

          WHEREAS, the Company has determined that it is in the best interests of the Company and its
shareholders to enter into an agreement with Employee whereby Employee will be prohibited from
competing with the Company and/or soliciting employees of the Company in accordance with the terms
and conditions of this Agreement; and

          WHEREAS, Employee may create inventions, trade secrets, know-how and documents or other works
of authorship and may appear or perform in various promotional materials within the scope of
Employee’s employment.

          WHEREAS, in consideration of the Company’s offer of employment, Employee agrees to enter into
this Agreement.

          THEREFORE, the Company and Employee agree as follows:

          1. Employee agrees that during the period of Employee’s employment with the Company and for a
period of 24 months following the date of any termination of employment from the Company (the
“Non-Compete Period”), Employee shall not, without the express written consent of the Board
of Directors of the Company, directly or indirectly, whether for his own account or for the account
of any other person or entity, engage, participate or make any financial investment in, become
employed by or render advisory services to or otherwise assist or be interested in any Competitive
Business in any geographic area in which, as of the date of termination of Employee’s employment,
the Company or any of its subsidiaries is engaged or planning to be engaged. As used herein,
“Competitive Business” shall mean any business engaged in the hotel, hospitality or timeshare
businesses, as well as any corporation, partnership or other entity that derives 33% or more of its
total earnings before interest, taxes, depreciation and amortization (determined, as of the
Effective Date, in accordance with generally accepted accounting principals consistently applied)
from the hotel, hospitality or timeshare businesses. Notwithstanding the foregoing, Employee may
invest in a Competitive Business if its stock is listed for trading on a national stock exchange or
traded in the over-the-counter market and Executive’s holdings have an original cost less than
$5,000,000 and represent less than five percent of its outstanding stock.

 

 

          2. Non-solicitation. During the Non-Compete Period, Employee shall not, without the
prior written consent of the Company, except in the course of carrying out Employee’s duties
hereunder, directly or indirectly solicit or attempt to solicit for employment with or on behalf of
any corporation, partnership, joint venture or other business entity, any person who is, or at any
time during the six-month period preceding the solicitation of such person was, a management-level
employee of the Company (including, without limitation, for this purpose any director level
employee of the Company and any General Manager of any hotel owned (in whole or in part) or managed
by the Company).

          3. Confidentiality. Employee acknowledges that during the course of his/her
employment with the Company, Employee will receive, and will have access to, “Confidential
Information,” as such term is defined below, of the Company and that such information is a special,
valuable and unique asset belonging to the Company. Accordingly, Employee is willing to enter into
the covenants contained in this Agreement in order to provide the Company with what Employee
considers to be reasonable protection for the Company’s interests. All notes, memoranda, papers,
documents, correspondence or writings (which shall include information recorded or stored in
writing, on magnetic tape or disc, or otherwise recorded or stored for reproduction, whether by
mechanical or electronic means and whether or not such reproduction will result in a permanent
record being made) (“Documents”) which from time to time may be in Employee’s possession (whether
prepared by Employee or not) relating, directly or indirectly, to the business of the Company shall
be and remain the property of the Company and shall be delivered by Employee to the Company
immediately upon request, and in any event promptly upon termination of Employee’s employment, and
Employee shall not make or keep any copies or extracts of the Documents. At any time during or
after Employee’s employment with the Company ends, without the prior written consent of the
Company, except (i) in the course of carrying out Employee’s duties hereunder or (ii) to the extent
required by a court or governmental agency, or by applicable law or under compulsion of legal
process, Employee shall not disclose to any third person any information concerning the business of
the Company, including, without limitation, any trade secrets, customer lists and details of
contracts with or requirements of customers, the identity of any owner of a managed hotel,
information relating to any current, past or prospective management agreement or joint venture,
information pertaining to business methods, sales plans, design plans and strategies, management
organization, computer systems and software, operating policies or manuals, personnel records or
information, information relating to current, past or contemplated employee benefits or
compensation data or strategies, business, financial, development or marketing plans, or manpower
strategies or plans, financial records or other financial, commercial, business or technical
information relating to the Company (collectively, “Confidential Information”), unless such
Confidential Information has been previously disclosed to the public by the Company or is in the
public domain (other than by reason of Employee’s breach of this Section 3). Employee will, prior
to making any such disclosure pursuant to subsection (ii), promptly notify the Company of his/her
receipt of such process or requirement, consult with the Company on the advisability of taking
steps to resist or narrow such request, cooperate with the Company in any attempt that the Company
may make to obtain a court order or other reliable assurance that confidential treatment will be
accorded to all or designated portions of such information, and not disclose such Confidential
Information unless the Company shall have had reasonable opportunity to obtain a court order
prohibiting or limiting such disclosure.

               3.1 Employee agrees that, both during and after Employee’s employment with the Company, if
Employee is uncertain of whether or not information is confidential, Employee will treat that
information as Confidential Information until Employee has

 

 

received written verification from an authorized officer of the Company that the information is not
Confidential Information.

          4. Intellectual Property and Publicity Rights. Employee acknowledges and agrees that
all right, title and interest in and to patents, patent applications, inventions, improvements,
discoveries, developments, processes, business methods, technical information, know-how, trade
secrets, computer programs, writings, designs, copyrights, maskworks, trademarks, service marks,
trade names, trade dress and the like (collectively, “Intellectual Property”), including the right
to invoke the benefit of the right of priority provided by any treaty to which the United States is
a party, which Employee creates, conceives, develops or obtains, either solely or jointly with
others, during Employee’s employment with the Company (a) with the use of the Company’s time,
materials, facilities or other resources; or (b) resulting from or suggested by Employee’s work for
the Company; or (c) in any way relating to any subject matter relating to the existing or
contemplated business, products and services of the Company or the Company’s affiliates,
subsidiaries and licensees shall be owned by the Company. Upon request, Employee shall execute all
such assignments and other documents and take all such other action as the Company may reasonably
request in order to vest in the Company, or its nominee, all of Employee’s right, title, and
interest in and to such Intellectual Property. Employee further acknowledges and agrees that the
Company shall have the perpetual, worldwide right to use Employee’s name, performance, biography,
voice, image, signature and likeness in promotional or any other materials developed by or for the
Company during Employee’s employment with the Company. Employee hereby irrevocably and
unconditionally waives any and all rights that he/she has or may have in and to the Intellectual
Property, including, without limitation, any “moral rights” that he/she has or may have as “author”
of the Intellectual Property, and hereby expressly agrees not to make any claim or demand against
the Company or any party authorized by the Company to exploit the Intellectual Property.

          5. Equitable Relief.

               5.1 Employee acknowledges that the restrictions and obligations specified in Sections 1, 2, 3
and 4 hereof are reasonable in view of the nature of the business in which the Company is engaged
and Employee’s knowledge of, and responsibilities with respect to, the Company’s business, and that
any breach of Sections 1, 2, 3 or 4 hereof may cause the Company irreparable harm for which there
is no adequate remedy at law, and as a result of this, the Company will be entitled to the issuance
by a court of competent jurisdiction of an injunction, restraining order or other equitable relief
in favor of the Company, without the necessity of posting a bond, restraining Employee from
committing or continuing to commit any such violation. Any right to obtain an injunction,
restraining order or other equitable relief hereunder will not be deemed to be a waiver of any
right to assert any other remedy the Company may have at law or in equity, including, without
limitation, the right to cancel payments to which Employee is otherwise entitled under Employee’s
employment agreement.

               5.2 Any proceeding or action seeking equitable relief for violation of Sections 1, 2, 3 and 4
hereof may be commenced in the federal courts in the Southern District of the State of New York, or
in the absence of federal jurisdiction in state court in the State of New York. Employee hereby
irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to
take any and all future action necessary to submit to the jurisdiction of such courts. Employee
irrevocably waives any objection that Employee now has or hereafter may have to the laying of venue
of any suit, action or proceeding brought in any such court and further irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. Final judgment against Employee in any such

 

 

suit will be conclusive and may be enforced in other jurisdictions by suit on the judgment, a
certified or true copy of which will be conclusive evidence of the fact and the amount of any
liability therein described, or by appropriate proceedings under an applicable treaty or otherwise.

          6. Severability. In the event that any provision of this Agreement conflicts with the
law under which this Agreement is to be construed, and/or if any such provision is held invalid by
a court with jurisdiction over the parties to this Agreement and the subject matter of this
agreement, (a) such provision will be deemed to be restated to reflect as nearly as possible the
original intentions of the parties to the fullest extent permitted under applicable law, and (b)
the remaining terms and provisions of this Agreement will remain in full force and effect.

          7. Governing Law. This Agreement shall be construed, governed and enforced according
to the laws of the State of New York, without regard to the principles of conflicts of laws.

          8. Amendments and Waivers. No failure to act by the Company will waive any right
contained in this Agreement. No provision of this Agreement may be amended or waived, except by a
written agreement signed by both Employee and an authorized executive officer of the Company. Any
waiver by the Company of strict performance of any provision of this Agreement shall not be a
waiver of or prejudice the Company’s right to require strict performance of that same provision or
any other provision of the Agreement in the future.

     Employee acknowledges that he/she has had a reasonable opportunity to review and consider the
terms described above and to consult with an attorney if he/she so chooses prior to signing this
Agreement. Fully understanding the above terms, Employee is entering into this letter agreement
knowingly and voluntarily.

          IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above
written.

	 	 	 	 	 
	 	 	 
	Dated:                 
           	 
 	 
	 	Phil McAveety 	 
	 	 	 
	 	Starwood Hotels & Resorts Worldwide, Inc.

 	 
	Dated:                 
           	By:  	 
 	 
	 	 	Kenneth S. Siegel 	 
	 	 	Chief Administrative Officer & General Counsel

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