Why did Booking Holdings adjust the executive compensation (PSUs)?

The adjustments were made because the COVID-19 pandemic severely impacted Booking Holdings' business and financial performance, particularly its EBITDA metric which is the sole performance measure for the 2018 and 2019 Performance Share Units (PSUs). Without these adjustments, the PSUs were projected to pay out at zero percent of their target values, despite strong performance in the initial years of the performance periods.

How were the PSU payouts adjusted, and what was the rationale?

The 2018 PSUs were adjusted to a payout of 1.33x target shares, and the 2019 PSUs were adjusted to 0.33x target shares. The rationale was to acknowledge the significant strong performance prior to the pandemic and to provide a fair outcome reflecting approximately two-thirds and one-third of the pre-pandemic projected payouts, respectively, while also considering executive retention and stockholder feedback.

Did the executive officers forgo any compensation?

Yes, the filing notes that during 2020, CEO Glenn Fogel voluntarily eliminated his salary from April through the end of the year. Other senior leaders, including the CFO David Goulden and General Counsel Peter Millones, voluntarily and temporarily reduced their salaries for much of 2020. Additionally, the Executive Officers elected not to receive 2019 bonuses.

Will the adjusted PSU payouts be finalized regardless of future performance?

The filing states that the adjusted payout levels (1.33x for 2018 PSUs and 0.33x for 2019 PSUs) are set, provided the Executive Officers satisfy the remaining service requirements until the respective vesting dates (March 2021 and March 2022). The adjustments fix the payout levels based on performance up to the point of the award adjustments and continued service, mitigating retention risk.

BKNG 8-K: Leadership Changes

Summary

This 8-K filing from Booking Holdings Inc. (BKNG), dated January 28, 2021, primarily addresses adjustments to long-term incentive awards for its Executive Officers in response to the significant financial impact of the COVID-19 pandemic. Due to unprecedented declines in travel and consumer spending throughout 2020, the company's financial performance was severely harmed, leading to projected zero payouts for performance share units (PSUs) initially granted in 2018 and 2019. In response to these extraordinary circumstances and after consultation with major stockholders and compensation consultants, the Board of Directors, on the recommendation of the Compensation Committee, adjusted the terms of these PSUs. Specifically, the 2018 PSUs were adjusted to a payout of 1.33x target shares, reflecting strong performance prior to the pandemic, and the 2019 PSUs were adjusted to 0.33x target shares. These adjustments aim to balance the performance-based compensation philosophy with the realities of the pandemic's impact, executive retention risks, and the need to maintain alignment with stockholder interests during a challenging period.

Key Highlights

1Adjustments made to Executive Officers' 2018 and 2019 Performance Share Unit (PSU) awards due to COVID-19 pandemic impact.
2Original 2018 PSUs projected to pay out at 2x target shares and 2019 PSUs at 1x target shares pre-pandemic.
3Due to pandemic's severe impact on travel industry and company's EBITDA performance metric, PSUs were expected to pay out at 0% of target values.
4Board of Directors, on Compensation Committee's recommendation, adjusted 2018 PSUs to 1.33x target shares and 2019 PSUs to 0.33x target shares.
5Adjustments considered pre-pandemic performance, executive retention risk, stockholder feedback, and advice from compensation consultant Mercer.
6Executive Officers (CEO Glenn Fogel, CFO David Goulden, General Counsel Peter Millones) voluntarily reduced salaries during 2020; CEO eliminated his salary from April-December 2020.
7Vesting dates for adjusted PSUs remain unchanged (March 2021 for 2018 PSUs, March 2022 for 2019 PSUs) to incentivize continued service.

Booking Holdings Inc. 8-K Report, Executive Changes (Jan 29, 2021)

Summary

Key Highlights

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