8-KLeadership ChangesExhibits & Filings

Expedia Group, Inc. 8-K Report, Executive Changes (Aug 3, 2012)

Filed August 3, 2012For Securities:EXPE

Summary

Expedia, Inc. (EXPE) filed an 8-K on August 3, 2012, to report on the new employment agreement for its CEO and President, Dara Khosrowshahi. The agreement, effective August 2, 2012, has a three-year term and retains Mr. Khosrowshahi's base salary of $1,000,000 and eligibility for an annual discretionary bonus. The filing details specific severance provisions in case of termination without cause or by the executive for good reason. These include continued base salary for a period, acceleration of unvested equity, an extended period to exercise vested stock options, and COBRA premium payments. Notably, 400,000 unvested restricted stock units were immediately accelerated, with a requirement for Mr. Khosrowshahi to retain 80% of the net shares for three years, subject to certain conditions. The report also discloses new equity grants approved on July 31, 2012, comprising stock options and restricted stock units.

Key Highlights

  • 1New three-year employment agreement for CEO Dara Khosrowshahi, effective August 2, 2012.
  • 2CEO's base salary remains $1,000,000 with continued eligibility for an annual discretionary bonus.
  • 3Detailed severance package for termination without cause or resignation for good reason, including salary continuation and equity acceleration.
  • 4Immediate vesting of 400,000 unvested restricted stock units (RSUs) for the CEO.
  • 5CEO must retain 80% of net shares from accelerated RSUs for three years, with exceptions for termination.
  • 6CEO received new equity grants on July 31, 2012: 300,000 stock options vesting over four years and 50,000 RSUs vesting in three years upon performance conditions.
  • 7Restrictive covenants include non-competition and non-solicitation clauses for a specified period.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce and provide details regarding the new employment agreement entered into between Expedia, Inc. and its CEO and President, Dara Khosrowshahi, which was effective August 2, 2012.

The agreement has a three-year term. His base salary remains $1,000,000 annually, and he is eligible for discretionary bonuses. Significant provisions include severance benefits upon certain termination events and new equity grants, including the immediate vesting of 400,000 RSUs with a retention requirement.

400,000 unvested RSUs were accelerated to vest immediately. He must retain 80% of the net shares from these accelerated RSUs for three years. Additionally, he received new grants of 300,000 stock options vesting over four years and 50,000 RSUs vesting in three years, subject to continued service and performance conditions.

If terminated by the Company without Cause (or by him for Good Reason), Mr. Khosrowshahi is entitled to continued base salary (offset by other earnings) for the remainder of the agreement term or twelve months, whichever is longer. His unvested equity will accelerate, and he will have an extended period to exercise vested stock options. The Company will also cover COBRA premiums for twelve months.