8-KLeadership ChangesExhibits & Filings

Booking Holdings Inc. 8-K Report, Executive Changes (Apr 24, 2015)

Filed April 24, 2015For Securities:BKNG

Summary

This 8-K filing from The Priceline Group Inc. (now Booking Holdings Inc.) on April 23, 2015, primarily concerns an amendment to the employment agreement of Peter J. Millones, Executive Vice President, General Counsel, and Secretary. The amendment focuses on executive compensation and severance provisions, specifically addressing excise tax gross-ups and parachute payment limitations in the event of a change in control. For investors, the key takeaway is the company's proactive approach to modifying executive compensation structures to align with tax regulations and potentially reduce future liabilities. The elimination of the excise tax "gross-up" and the introduction of provisions to reduce severance benefits under certain "parachute payment" scenarios indicate a move towards more standard and potentially less costly executive compensation arrangements, particularly in the context of potential mergers or acquisitions.

Key Highlights

  • 1Amendment to the employment agreement of Peter J. Millones, EVP, General Counsel & Secretary, entered into on April 21, 2015.
  • 2The Second Amended and Restated Employment Agreement (New Employment Agreement) revises the terms of his prior agreement.
  • 3Key amendment: elimination of provisions for an excise tax "gross-up" on severance payments related to a change in control.
  • 4Introduction of provisions to reduce severance benefits if they are considered "parachute payments" to the extent it would increase net benefits after tax.
  • 5These changes are intended to comply with U.S. Internal Revenue Code Section 4999 regarding parachute payments.
  • 6The New Employment Agreement remains substantially similar to the Prior Agreement in all other aspects.
  • 7The filing includes the New Employment Agreement as an exhibit (Exhibit 99.1).

Frequently Asked Questions

The main purpose of this 8-K filing is to report an amendment to the employment agreement of Peter J. Millones, the company's Executive Vice President, General Counsel, and Secretary. The amendment focuses on changes to severance pay provisions related to excise taxes and parachute payments in the event of a change in control.

The company amended the agreement to eliminate an "excise tax gross-up" provision. This means that in the event of a change in control, Mr. Millones will no longer receive an additional payment from the company to cover any excise taxes he might owe on severance payments. This change likely aims to reduce the company's potential financial liability.

"Parachute payments" are generally defined under U.S. tax law as compensation payments that are contingent on a change in control of a company. The amended agreement includes provisions that would reduce Mr. Millones' severance benefits if they are deemed "parachute payments," but only if such a reduction would ultimately result in him receiving greater benefits on an after-tax basis. This is to manage the tax implications for both the executive and the company.

According to the filing, aside from the specific changes related to excise tax gross-ups and parachute payment reductions, the New Employment Agreement is substantially the same as the Prior Agreement. No other material changes to his employment terms were detailed in this report.