Summary
This Form 8-K filing from Expedia, Inc. (EXPE) on March 13, 2006, primarily reports on material changes to the compensation of its Chief Executive Officer, Dara Khosrowshahi. The key takeaway for investors is the significant upward adjustment in Mr. Khosrowshahi's compensation package, reflecting his importance to the company's leadership and future performance. The new arrangements include a substantial increase in his annual salary and the issuance of a significant number of Restricted Stock Units (RSUs) tied to specific company performance metrics.
Key Highlights
- 1Expedia, Inc. announced updated compensation arrangements for CEO Dara Khosrowshahi, approved by the Board's Compensation/Benefits and Section 16 Committees on March 7, 2006.
- 2Mr. Khosrowshahi's annual salary was increased to $1,000,000, effective February 13, 2006, a notable rise from his previous $550,000 annual rate in 2005.
- 3The CEO is eligible for a discretionary cash bonus in 2006, contingent upon the company achieving specific stock price targets or EBITA (Earnings Before Interest, Taxes, and Amortization) targets.
- 4800,000 Restricted Stock Units (RSUs) were approved for issuance to Mr. Khosrowshahi.
- 5Vesting of 75% of the RSUs is tied to the achievement of either the company's stock price performance goals or approved OIBA (Operating Income Before Amortization) targets.
- 6Specific provisions for RSU vesting are outlined in cases of dismissal without cause, voluntary termination, or a change of control event, suggesting an alignment of executive interests with shareholder value.
- 7Mr. Khosrowshahi will be subject to a two-year non-compete agreement following the termination of his employment for any reason.
Frequently Asked Questions
The primary purpose of this 8-K filing is to disclose material changes to the compensation of Expedia, Inc.'s Chief Executive Officer, Dara Khosrowshahi, which were approved by the Board of Directors' committees.
Dara Khosrowshahi's annual salary has been increased to $1,000,000, effective February 13, 2006. This is a significant increase from his previous annual rate of $550,000 in 2005.
75% of the 800,000 RSUs will vest upon the company achieving either specific stock price performance goals or approved OIBA targets. The remaining portion vests on the first anniversary of the initial vesting, provided Mr. Khosrowshahi is still employed or was not terminated for cause. Specific conditions also apply for vesting in case of dismissal without cause or change of control.
Yes, upon ceasing employment for any reason, Mr. Khosrowshahi will be bound by a two-year non-compete agreement, preventing him from competing with Expedia, Inc.