8-KLeadership ChangesExhibits & Filings

Expedia Group, Inc. 8-K Report, Executive Changes (Apr 1, 2015)

Filed April 1, 2015For Securities:EXPE

Summary

Expedia, Inc. (EXPE) filed an 8-K on April 1, 2015, to report on a new, long-term Employment Agreement with its CEO, Dara Khosrowshahi. The agreement, effective March 31, 2015, extends through September 30, 2020, providing executive stability and aligning incentives. This new agreement supersedes his previous one, which was set to expire in August 2015, indicating a proactive approach by the company to retain its key leadership. The new agreement maintains Mr. Khosrowshahi's base salary of $1,000,000 and his eligibility for an annual discretionary bonus. Significant aspects include detailed severance provisions in case of termination without cause or for good reason, and substantial equity awards designed to incentivize long-term performance and shareholder value creation. These include a large grant of stock options, some with vesting tied to continued employment and others contingent on achieving a significant stock price target, demonstrating a strong commitment to shareholder alignment.

Key Highlights

  • 1Expedia, Inc. entered into a new, long-term Employment Agreement with CEO Dara Khosrowshahi, effective March 31, 2015, extending to September 30, 2020.
  • 2The agreement provides for Mr. Khosrowshahi's continued base salary of $1,000,000 and eligibility for annual discretionary bonuses.
  • 3Robust severance provisions are included for termination without cause or for good reason, offering continued salary, accelerated vesting of equity, and COBRA premium payments.
  • 4Mr. Khosrowshahi was awarded 2.7 million stock options: 1.6 million with cliff vesting on the third and fifth anniversaries, and 1.1 million performance options tied to a $170 stock price goal.
  • 5The stock options have an exercise price of $95.00, a premium to the market price at the time of grant, and a seven-year term.
  • 6Vesting of performance options requires the stock price to reach $170, an 80.6% increase from the grant date closing price.
  • 7The agreement includes restrictive covenants, preventing Mr. Khosrowshahi from competing with Expedia or soliciting employees/partners for 24 months post-termination.

Frequently Asked Questions

This 8-K filing is primarily to announce and provide details about a new, long-term Employment Agreement entered into between Expedia, Inc. and its Chief Executive Officer, Dara Khosrowshahi. It also covers the associated equity grants awarded to him under this new agreement.

The agreement extends his employment through September 30, 2020, maintains his $1,000,000 base salary and bonus eligibility, outlines specific severance benefits in certain termination scenarios, and includes significant equity awards.

He received two types of stock options totaling 2.7 million: 1.6 million 'Cliff Vest Options' that vest 50% on the third and fifth anniversaries of the grant date, subject to continued employment. The remaining 1.1 million 'Performance Options' vest upon continued employment and achievement of a stock price goal of $170, measured over a specified period before September 2020.

In the event of a Change in Control, or if Liberty Interactive Corporation or its affiliates acquire 100% of the Company's voting securities, all of Mr. Khosrowshahi's awarded stock options will vest in full.