10-K/APeriod: FY2015

Expedia Group, Inc. Annual Report (Amendment), Year Ended Dec 31, 2015

Filed April 29, 2016For Securities:EXPE

Summary

Expedia Group, Inc. (EXPE) filed this 10-K/A on April 29, 2016, primarily updating Part III and Part IV of its annual report for the fiscal year ended December 31, 2015. A key takeaway is Expedia's status as a 'controlled company' under NASDAQ listing rules, due to Liberty Interactive and Barry Diller collectively holding approximately 55% of the voting power. This controlled status exempts Expedia from certain NASDAQ requirements, including having a majority of independent directors and an independent compensation committee. Significant focus is placed on executive compensation, detailing base salaries, bonuses, and equity awards for named executive officers. Notably, CEO Dara Khosrowshahi received substantial stock option awards in 2015 as part of a new employment agreement. The filing also outlines director compensation, highlighting that while Liberty Interactive nominees historically did not receive compensation, this changed effective January 1, 2016, for some nominees. Related party transactions are also detailed, primarily involving arrangements with IAC and Liberty Interactive, including cost-sharing for Mr. Diller's resources and aircraft usage.

Financial Highlights

52 data points
Beta

Revenue

$6.67B

80.4% Gross Margin

Net Income

$764.47M

11.5% Net Margin

EPS (Diluted)

$5.70

Total Assets

$15.49B

Cash & Equivalents

$1.68B

Free Cash Flow

$581.00M

Financial Statements
Beta
Revenue$6.67B
Cost of Revenue$1.31B
Gross Profit$5.36B
Operating Income$413.57M
Interest Expense$126.19M
Net Income$764.47M
EPS (Basic)$5.87
EPS (Diluted)$5.70
Shares Outstanding (Basic)130.16M
Shares Outstanding (Diluted)134.02M

Key Highlights

  • 1Expedia operates as a 'controlled company' due to Liberty Interactive and Barry Diller's combined voting power (approx. 55%), leading to exemptions from certain NASDAQ governance rules.
  • 2The filing details executive compensation, with CEO Dara Khosrowshahi receiving significant equity awards in 2015 under a new long-term employment agreement, including performance-based stock options.
  • 3Board composition is influenced by Liberty Interactive's right to nominate directors proportional to its stake.
  • 4Director compensation structure shifted, with Liberty Interactive nominees becoming eligible for compensation starting January 1, 2016.
  • 5Significant related-party transactions and agreements are disclosed, primarily with IAC and Liberty Interactive, concerning cost-sharing, aircraft usage, and corporate governance.
  • 6The company utilizes a compensation committee and a Section 16 committee overseeing executive pay, with a focus on aligning executive interests with shareholder value through equity compensation.
  • 7Expedia's stock ownership policy requires executives to hold a certain number of shares, with compliance noted for most named executive officers.

Frequently Asked Questions

As a 'controlled company,' Expedia is exempt from certain NASDAQ listing requirements regarding board independence and committee composition. This means a majority of the board may not be independent directors, and the compensation committee may not be composed solely of independent directors. Investors should be aware that governance oversight may differ from non-controlled companies.

The primary elements of executive compensation included base salary, cash bonuses, and equity compensation (stock options and restricted stock units). For 2015, CEO Dara Khosrowshahi received substantial stock option awards as part of a new employment agreement, and significant bonuses were awarded to executives involved in key acquisitions like Orbitz and HomeAway.

Yes, Expedia has ongoing commercial and cost-sharing arrangements with IAC, stemming from their historical relationship under common control. Additionally, there are arrangements with Liberty Interactive and its related entities, including cost-sharing for resources used by Barry Diller and equity issuance related to Liberty Interactive's preemptive rights. These transactions are overseen by the Audit Committee.

Non-employee directors received annual retainers, stock unit grants, and committee-specific retainers in 2015. Notably, directors nominated by Liberty Interactive historically did not receive compensation for their board service. However, effective January 1, 2016, some Liberty Interactive nominees, along with Mr. Kaufman, became eligible to receive director compensation.