What is the primary reason for the changes in executive compensation disclosed in this filing?

The primary reason is the permanent termination of premium payments on life insurance policies held in a trust for the Marriott family. This decision was made due to ongoing regulatory uncertainty surrounding the Sarbanes-Oxley Act and its potential impact on such arrangements. To maintain cost neutrality, a deferred compensation grant was issued to CEO J.W. Marriott, Jr.

How much deferred compensation was granted to J.W. Marriott, Jr. and why?

J.W. Marriott, Jr. received a deferred compensation grant of $1,416,353. This grant was determined to be appropriate by the Compensation Policy Committee to offset the net present value of the carrying costs of the life insurance premium payments that the company decided not to make, ensuring the overall transaction remains cost-neutral for both the company and Mr. Marriott.

Why did Marriott International, Inc. suspend premium payments on these life insurance policies?

The company initially suspended premium payments in July 2002 because of uncertainty about whether the arrangement could be considered a prohibited loan under Section 402 of the Sarbanes-Oxley Act, which was enacted in 2002. After nearly three years without regulatory guidance, the company decided to make this suspension permanent.

What was the original purpose of the life insurance policies and premium payments?

The original arrangement, established in March 1996, involved the company's predecessor making 10 annual premium payments on life insurance policies owned by a trust for the Marriott family. This was in exchange for Mr. Marriott waiving his right to certain post-retirement distributions. The company was to receive a return of the premium payments plus interest from the policy proceeds. The costs were intended to be comparable to the after-tax cost of the waived distributions.

MAR 8-K: Material Agreements

Summary

Marriott International, Inc. (MAR) filed an 8-K on May 10, 2005, detailing changes to executive compensation arrangements. The Compensation Policy Committee approved a deferred compensation grant of $1,416,353 for CEO J.W. Marriott, Jr. This grant is intended to offset the cost implications of permanently suspending premium payments on life insurance policies held in a trust for the Marriott family. The company had previously suspended these premium payments in 2002 due to regulatory uncertainties surrounding the Sarbanes-Oxley Act and its potential classification of such arrangements as prohibited loans. After nearly three years without specific guidance, the decision was made to permanently terminate these premium payments. The deferred compensation grant aims to ensure the arrangement remains cost-neutral for both the company and Mr. Marriott.

Key Highlights

1Marriott International, Inc. is permanently terminating premium payments on certain life insurance policies held by a trust for the Marriott family.
2A deferred compensation grant of $1,416,353 has been awarded to CEO J.W. Marriott, Jr.
3The deferred compensation grant is intended to make the termination of insurance premium payments cost-neutral for both the company and Mr. Marriott.
4The decision to permanently suspend premium payments follows an earlier suspension in 2002 due to regulatory concerns regarding the Sarbanes-Oxley Act.
5The original arrangement involved Old Marriott making 10 annual premium payments on life insurance policies, with the company entitled to a return of these payments plus interest.
6The carrying costs of the original premium payments were designed to approximate the after-tax cost of waived executive distributions.

MARRIOTT INTERNATIONAL INC /MD/ 8-K Report, Material Agreement (May 10, 2005)

Summary

Key Highlights

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