What are Stock Appreciation Rights (SARs) and how do they benefit Marriott executives?

Stock Appreciation Rights (SARs) are a form of equity compensation that allows the holder to receive the value of an increase in the company's stock price over a specific period. For Marriott executives, SARs provide an incentive tied directly to the company's stock performance, potentially rewarding them as the stock price rises without requiring an upfront cash payment from the executive to exercise, unlike traditional stock options.

How do these SARs differ from stock options?

While SARs and stock options are both equity incentives, the key difference lies in how value is realized upon exercise. With stock options, the holder buys shares at a fixed price (the grant price). With stock-settled SARs, the holder receives shares (or the cash equivalent) whose value is equal to the difference between the stock price at exercise and the stock price at the grant date. This means SARs can provide value even if the stock price hasn't significantly risen above the initial grant price, as long as it has appreciated.

What is the typical vesting schedule for these SARs?

The SARs will generally vest ratably over four years, meaning a portion of the awarded SARs will become exercisable each year over that four-year period. However, the Compensation Policy Committee has the discretion to set the specific vesting schedule at the time of grant.

What is the significance of this filing for Marriott's stock?

This filing is primarily an administrative and compensation-related disclosure. It indicates Marriott's use of equity-based compensation to align executive interests with shareholder value. While it doesn't directly impact the company's financial results on the day of filing, it signals a continued strategy of incentivizing key personnel based on stock performance, which can be a positive factor for long-term investor confidence if executed effectively.

MAR 8-K: Material Agreements

Summary

Marriott International, Inc. filed an 8-K report on February 6, 2006, to announce a material definitive agreement regarding the issuance of stock-settled stock appreciation rights (SARs) under its 2002 Comprehensive Stock and Cash Incentive Plan. This move allows the company to grant SARs, which provide a cash payment or stock equivalent based on the increase in the company's stock price from the grant date to the exercise date. The key takeaway for investors is the introduction of a new equity-based incentive tool for management and employees. These SARs will generally have terms similar to stock options, including a ten-year maximum term and a typical four-year ratable vesting schedule. The company's Compensation Policy Committee has the discretion to set specific terms, including vesting schedules, at the time of grant. This filing indicates Marriott's continued focus on aligning executive compensation with shareholder value through equity incentives.

Key Highlights

1Marriott International approved the issuance of stock-settled Stock Appreciation Rights (SARs) under its 2002 Comprehensive Stock and Cash Incentive Plan.
2SARs provide value based on the appreciation of Marriott's stock price from the grant date to the exercise date.
3The SARs are generally similar to stock options in terms, with a maximum term of up to ten years.
4Vesting schedules for SARs will be determined at the time of grant, typically vesting ratably over four years.
5The Compensation Policy Committee of the Board of Directors approved the issuance of these SARs.
6The filing includes the Form of Stock Appreciation Right Agreement as an exhibit.
7This action is part of the company's ongoing strategy to incentivize management and align their interests with shareholder value.

MARRIOTT INTERNATIONAL INC /MD/ 8-K Report, Material Agreement (Feb 6, 2006)

Summary

Key Highlights

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