01—Abstract
Summary
Summary of the 10-K/A filed April 29, 2020. Cited figures are marked; the original filing is the authoritative source.
This 10-K filing for Expedia Group, Inc. provides an overview of its corporate governance, executive compensation, and related party transactions as of April 29, 2020.
A significant development discussed is the company's transition from a "controlled company" status to full compliance with Nasdaq's corporate governance requirements following the Liberty Expedia Transaction in July 2019. The report details the composition and independence of the Board of Directors and its committees, highlighting the commitment to an independent board structure. Key insights for investors include the compensation philosophy aimed at aligning executive interests with shareholder value through a mix of base salary, cash bonuses, and equity awards, with a growing emphasis on performance-based equity.
Significant executive changes in late 2019 and early 2020, including leadership transitions at the CEO and CFO levels, are also detailed, along with their associated compensation adjustments and severance packages. The filing also outlines related-party transactions, particularly those involving Chairman and Senior Executive Barry Diller, and new governance agreements aimed at clarifying control and ownership structures.
Investors should note the company's ongoing efforts to adapt its executive compensation and governance practices to ensure alignment with market standards and shareholder interests. The focus on performance-based incentives and director independence demonstrates a commitment to good corporate governance.
02—Key points
Key Highlights
- Expedia Group transitioned from "controlled company" status to full Nasdaq compliance following the Liberty Expedia Transaction in July 2019, increasing board independence.
- The company has an 11-member Board of Directors, with 7 independent directors as of the filing date.
- Executive compensation is structured to align with performance and shareholder interests, utilizing base salary, cash bonuses, and equity awards, with a shift towards performance-based RSUs.
- Significant executive leadership changes occurred in late 2019 and early 2020, including CEO and CFO transitions, with updated compensation arrangements detailed.
- Related-party transactions, particularly those involving Chairman and Senior Executive Barry Diller, are disclosed, including details on new governance and exchange agreements.
- The company has a Code of Business Conduct and Ethics applicable to its CEO, CFO, and Chief Accounting Officer.
- A Special Litigation Committee was formed to investigate shareholder litigation related to the Liberty Expedia acquisition.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Expedia Group, Inc. kept $0.05.
- Revenue$12.07B100.0%
- Cost of revenue−$2.16B17.9%
- Gross profit$9.90B82.1%
- Operating costs−$9.00B74.6%
- Operating income$903.0M7.5%
- Interest, other & tax−$338.0M2.8%
- Net income$565.0M4.7%
Where FY2019 revenue went
$12.07B- Operating costs: $9.00B, 75% of revenue
- Cost of revenue: $2.16B, 18% of revenue
- Net income: $565.0M, 4.7% of revenue
- Interest, other & tax: $338.0M, 2.8% of revenue
Kept 4.7% as net incomeNet income $565.0M · 4.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2019filed April 29, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $12.07B$11.22B | +7.5% |
| Cost of Revenue | $2.16B$1.97B | +10.1% |
| Gross Profit | $9.90B$9.26B | +7.0% |
| Operating Income | $903.00M$714.00M | +26.5% |
| Interest Expense | $173.00M$190.00M | −8.9% |
| Net Income | $565.00M$406.00M | +39.2% |
| EPS (Basic) | $3.84$2.71 | +41.7% |
| EPS (Diluted) | $3.77$2.65 | +42.3% |
| Shares Outstanding (Basic) | 147.19M149.96M | −1.8% |
| Shares Outstanding (Diluted) | 149.88M152.89M | −2.0% |
05—Questions
Frequently Asked Questions
What is the current status of Expedia Group's board independence and corporate governance?
Following the Liberty Expedia Transaction on July 26, 2019, Expedia Group ceased to be a controlled company and is now required to comply with all Nasdaq corporate governance requirements. As of the filing date, the company has an 11-member Board of Directors, of which 7 are independent. The Compensation and Nominating Committees both consist of two independent members, and the Audit Committee is composed of three independent directors, with two designated as audit committee financial experts.
How is executive compensation structured at Expedia Group, and what are the key changes or philosophies?
Expedia Group's executive compensation program is designed to attract, motivate, retain, and reward executives, with a philosophy of "pay for performance" to align executive interests with those of stockholders. The program includes base salary, cash bonuses, and equity compensation, with a recent transition to Restricted Stock Units (RSUs) as the primary equity vehicle. For 2020, the company adopted broad-based performance-based RSUs (PSUs) for senior executives to further strengthen performance alignment. Notably, key executives like Barry Diller and Peter M. Kern have forgone or had reduced base salaries and cash bonuses in light of recent events and company performance.
What were the significant executive leadership changes and their impact?
In December 2019, Mark Okerstrom resigned as CEO and Alan Pickerill resigned as CFO. Eric Hart was appointed acting CFO and continued as Chief Strategy Officer. In April 2020, Peter M. Kern was officially appointed CEO, and Eric M. Hart was appointed CFO. The report details severance packages for Okerstrom and Pickerill and outlines compensation adjustments, including base salary reductions for senior executives in 2020 due to the COVID-19 pandemic.
Are there any significant related-party transactions or governance agreements to be aware of?
Yes, several related-party transactions and agreements are disclosed. These include ongoing cost-sharing and aircraft arrangements with IAC due to Barry Diller's dual role as Chairman/Senior Executive at both companies. Importantly, a New Governance Agreement with Barry Diller outlines his right to exchange or purchase Class B common stock, detailing potential future voting power and transfer restrictions. This agreement was amended in April 2020 in connection with ongoing litigation.
06—Continue