How do these Stock Appreciation Rights (SARs) work?

SARs are similar to stock options. Upon exercise, a director receives shares of Marriott stock equivalent to the increase in the stock's value from the date the SAR was granted to the date it is exercised. The number of shares is fixed at the grant date but can be adjusted for corporate events.

When can the non-employee directors exercise these SARs?

Generally, non-employee directors have a one-year waiting period after the grant date before they can exercise their SARs. The SARs have a term of up to ten years, but may expire earlier in the event of the director's death.

What is the significance of this compensation change for investors?

This move aligns the interests of non-employee directors more closely with those of shareholders by giving them an equity-based award tied to stock appreciation. It is a common practice to incentivize long-term value creation for the company.

MAR 8-K: Material Agreements

Q: What is the main purpose of this 8-K filing?

The primary purpose of this 8-K filing is to report the entry into a material definitive agreement concerning the issuance of stock-settled stock appreciation rights (SARs) to Marriott's non-employee directors. This allows directors to elect to receive a portion of their compensation in SARs.

Summary

This 8-K filing by Marriott International, Inc. (MAR) on May 3, 2006, primarily details the entry into a material definitive agreement related to the issuance of stock-settled stock appreciation rights (SARs) to its non-employee directors. This initiative, approved by the Compensation Policy Committee of the Board of Directors in February 2006, allows these directors to elect to receive a portion of their annual retainer in the form of SARs instead of cash. The first grants of these SARs were made on May 1, 2006, to directors who made such elections. The SARs operate similarly to stock options but are settled in shares of Marriott stock equal to the appreciation in value from the grant date to the exercise date. These rights generally have a ten-year term, are subject to a one-year waiting period for exercise by directors, and can expire sooner upon death. The filing also includes the form of the Stock Appreciation Right Agreement for Non-Employee Directors as an exhibit, providing transparency on the terms and conditions governing these awards.

Key Highlights

1Marriott International has initiated a new compensation practice for its non-employee directors by granting stock-settled stock appreciation rights (SARs).
2Directors can elect to receive a portion of their annual retainer in the form of SARs, aligning their interests with shareholders.
3The SARs were first granted on May 1, 2006, under the Company's 2002 Comprehensive Stock and Cash Incentive Plan.
4Upon exercise, SARs will be settled with Marriott stock valued at the appreciation from the grant date to the exercise date.
5These SARs have a term of up to ten years, with a general one-year waiting period before they can be exercised by directors.
6The filing includes the 'Form of Stock Appreciation Right Agreement (For Non-Employee Directors)' as Exhibit 10, detailing the terms of these awards.

MARRIOTT INTERNATIONAL INC /MD/ 8-K Report, Material Agreement (May 3, 2006)

Summary

Key Highlights

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