Item 11. Executive Compensation.
Executive Compensation
This section sets forth information relating to,
and an analysis and discussion of, compensation paid by our company to the following persons (who we collectively refer to as our named
executive officers):
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Gregory B. Maffei, our Chairman of the Board, President and Chief Executive Officer;
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Brian J. Wendling, our Senior Vice President and Chief Financial Officer;
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Albert E. Rosenthaler, our Chief Corporate Development Officer; and
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Renee L. Wilm, our Chief Legal Officer and Chief Administrative Officer.
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Compensation Discussion and Analysis
Compensation Overview
In connection with the August 2014 spin-off
of our company (formerly a wholly-owned subsidiary of Qurate Retail) from Qurate Retail (the Spin-Off), we entered into the services
agreement (the services agreement) with Liberty Media in August 2014, pursuant to which Liberty Media provides to our company
certain administrative and management services, and we pay Liberty Media a monthly management fee, the amount of which is subject to quarterly
review by our audit committee (and at least an annual review by our compensation committee). As a result, Liberty Media employees, including
our named executive officers other than Mr. Maffei, who is paid certain compensation elements directly by our company pursuant to
the amended services agreement as described below, are typically not separately compensated by our company other than with respect to
equity awards with respect to our common stock. See “—Equity Incentive Compensation” below for information concerning
equity awards that were granted to our named executive officers in 2020.
In December 2019, the services agreement was
amended (the amended services agreement) in connection with Liberty Media entering into a new employment arrangement with Mr. Maffei
(the 2019 Maffei Employment Agreement). Under the amended services agreement, our company establishes, and pays or grants directly
to Mr. Maffei, our allocable portion of his annual performance-based cash bonus, his annual equity-based awards and his upfront awards
(as defined below), and we reimburse Liberty Media for our allocable portion of the other components of Mr. Maffei’s compensation,
as described in more detail below in “—Executive Compensation Arrangements—Gregory B. Maffei— 2019 Maffei Employment
Agreement.” Under the 2019 Maffei Employment Agreement, Mr. Maffei’s compensation was allocated across Liberty Media,
and each of our company, Qurate Retail, GCI Liberty (until its services agreement was terminated in December 2020), and Liberty Broadband
(each a Service Company, or, collectively, the Service Companies) based on two factors, each weighted 50%: (i) the
relative market capitalization of each series of stock of each company and (ii) the average of (a) the percentage allocation
of time for all Liberty Media employees across all companies and (b) Mr. Maffei’s percentage allocation of time across
all companies, unless a different allocation method is agreed. Our allocable portion of Mr. Maffei’s compensation was 5% in
2020. The salary, certain perquisite information and other compensation elements of Mr. Maffei that were not paid or granted directly
by our company included in the “Summary Compensation Table” below include the portion of his compensation allocable to our
company and for which we reimbursed Liberty Media and do not include the portion of his compensation allocable to Liberty Media or any
of the other Service Companies. For the year ended December 31, 2020, we accrued management fees payable to Liberty Media under the
amended services agreement of $3.5 million, not including the portion of Mr. Maffei’s compensation allocable to our company
and for which we reimbursed Liberty Media.
Role of Chief Executive Officer in Compensation Decisions;
Setting Executive Compensation
As a result of the management fee paid to Liberty
Media, the compensation committee typically does not expect to provide any cash compensation to the executive officers other than Mr. Maffei
pursuant to the amended services agreement, rather it may determine to compensate the executive officers with equity incentive compensation.
Mr. Maffei may make recommendations with respect to any equity compensation to be awarded to our executive officers. It is expected
that Mr. Maffei, in making any related recommendations to our compensation committee, will evaluate the performance and contributions
of each of our executive officers, given his or her respective area of responsibility, and, in doing so, will consider various qualitative
factors such as:
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the executive officer’s experience and overall effectiveness;
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the executive officer’s performance during the preceding year;
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the responsibilities of the executive officer, including any changes to those responsibilities over the year; and
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the executive officer’s demonstrated leadership and management ability.
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When determining the extent to which the 2020 Chief
RSUs (as defined below) were earned by our named executive officers, our compensation committee considered the recommendations obtained
from Mr. Maffei as to the performance of Messrs. Wendling and Rosenthaler and Ms. Wilm. To make these recommendations,
Mr. Maffei evaluated the performance and contributions of each such named executive officer.
In December 2019,
our compensation committee approved the amended services agreement, which established the terms and conditions of our allocable portion
of Mr. Maffei’s compensation for the term of the 2019 Maffei Employment Agreement. See “—Services Agreement”
above.
At the 2018 annual stockholder meeting, stockholders
representing a majority of the aggregate voting power of Liberty TripAdvisor present and entitled to vote on its say-on-pay proposal voted
in favor of, on an advisory basis, Liberty TripAdvisor’s executive compensation, as disclosed in our proxy statement for the 2018
annual meeting of stockholders. No material changes were implemented to our executive compensation program as a result of this vote. In
addition, at the 2015 annual meeting of stockholders, stockholders elected to hold a say-on-pay vote every three years. At our 2021 annual
stockholder meeting, we will submit for stockholder consideration (i) separate resolution for an advisory vote as to whether a stockholder
vote to approve the compensation paid to our named executive officers should occur every one, two or three years, and (ii) a proposal
to approve, on an advisory basis, our executive compensation.
Role of Independent Compensation Consultant
Prior to entering into the amended services agreement
with Liberty Media in connection with the 2019 Maffei Employment Agreement, our compensation committee engaged Frederic W. Cook &
Co., Inc. (FW Cook), an independent and experienced compensation consultant, to assist in determining the reasonableness of
compensation to be allocated to our company under the amended services agreement.
In order to assess the reasonableness of compensation,
FW Cook evaluated the market value of Mr. Maffei’s role at our company and the proposed allocation to our company under the
service arrangement. Given the unique nature of Mr. Maffei’s role at our company, FW Cook evaluated the market value of the
executive job at our company through three different lenses: as Chief Executive Officer, Chairman of the Board, and managing partner of
a private equity firm.
In assessing the reasonableness of pay as Chief
Executive Officer or Chairman of the Board, FW Cook and the compensation committee reviewed pay data for companies comparable to ours,
including companies in the online travel, real estate, insurance, media and marketplace industries, and companies with which we may compete
for executive talent and stockholder investment and also included companies in those industries that are similar to our company in size,
geographic location or complexity of operations (the comparable companies). In assessing the reasonableness of pay as a managing
partner of a private equity firm, FW Cook and the compensation committee reviewed survey data regarding the compensation of private equity
professionals.
Elements of 2020 Executive Compensation
For 2020, the principal components of compensation
for Mr. Maffei were:
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a one-time award of time-based restricted stock units granted to Mr. Maffei in connection with his offer to restructure his 2020
compensation and reduce his base salary in response to potential liquidity concerns at Liberty Media and the Service Companies resulting
from the onset of the pandemic;
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a performance-based bonus;
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time-vested stock options and performance-based restricted stock units; and
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perquisites and other limited personal benefits.
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Base Salary
Mr. Maffei’s base salary is governed
by the terms of the 2019 Maffei Employment Agreement. For 2020, Mr. Maffei’s base salary was $3,000,000, as prescribed by the
2019 Maffei Employment Agreement. Pursuant to the 2019 Maffei Employment Agreement and the amended services agreement, Liberty Media pays
Mr. Maffei’s base salary directly, and we reimburse Liberty Media for our allocable portion. In 2020, the portion of Mr. Maffei’s
aggregate annual base salary allocated to our company was 5% or $150,000. Due to potential liquidity concerns at Liberty Media and the
Service Companies resulting from the onset of the pandemic, Mr. Maffei offered to waive and restructure a portion of his 2020 calendar
year base salary. For the period from April 4, 2020 through December 31, 2020, Mr. Maffei waived the right to receive his
base salary (except for amounts sufficient to cover health insurance, flexible spending contributions and certain taxes) and received
grants of restricted stock units (RSUs) on April 14, 2020 from Liberty Media and each of the Service Companies with an aggregate
grant date fair value equal to one-half of the base salary waived by Mr. Maffei. Such RSUs were allocated among Liberty Media and
each Service Company in accordance with the 2019 Maffei Employment Agreement and vested on December 10, 2020. The other half of Mr. Maffei’s
base salary for the referenced period was forfeited pursuant to his waiver.
2020 Performance-based Bonus
Overview. For 2020, our compensation committee
adopted an annual, performance-based bonus program for Mr. Maffei, with a bonus amount payable to Mr. Maffei based on his individual
performance.
Pursuant to the 2019 Maffei Employment Agreement,
Mr. Maffei was assigned a target bonus opportunity under the performance-based bonus program equal to $17 million in the aggregate
for Liberty Media, our company and each of the other Service Companies. That bonus amount was split among, and payable directly by Liberty
Media and each of the Service Companies, with payment subject to the achievement of one or more performance metrics as determined by the
applicable company’s compensation committee. In 2020, the portion of Mr. Maffei’s aggregate target bonus amount allocated
to our company was 5% or $850,000. The portions of Mr. Maffei’s aggregate target bonus amount allocated to each of Liberty
Media, Qurate Retail, GCI Liberty and Liberty Broadband pursuant to the amended services agreements were 44% (or $7,480,000), 19% (or
$3,230,000), 14% (or $2,380,000) and 18% (or $3,060,000), respectively.
Mr. Maffei was assigned by our compensation
committee a maximum bonus opportunity under the performance-based bonus program equal to $1,700,000 (the LTAH Maximum Performance Bonus).
The bonus maximum was established by the compensation committee in March 2020 and was determined to be up to 200% of Mr. Maffei’s
target annual bonus allocated to our company under the 2019 Maffei Employment Agreement. Each of Liberty Media, Qurate Retail, GCI Liberty
and Liberty Broadband also established maximum performance-based bonuses for Mr. Maffei of $14,960,000, $6,460,000, $4,760,000 and
$6,120,000, respectively.
The LTAH Maximum Performance Bonus was subject
to reduction based on a determination of Mr. Maffei’s achievement of qualitative criteria established with respect to the services
to be performed by Mr. Maffei on behalf of our company. Under the corollary programs of Liberty Media and Qurate Retail, Mr. Maffei
was entitled to receive from Liberty Media and Qurate Retail a maximum individual performance bonus equal to 60% of his Liberty Media
and Qurate Retail maximum performance bonuses, subject to reduction based on a determination of his achievement of qualitative criteria
established with respect to the services to be performed by him on behalf of Liberty Media and Qurate Retail, respectively, and an amount
equal to 40% of his Liberty Media and Qurate Retail maximum performance bonuses, subject to reduction based on a determination of the
corporate performance of Liberty Media and Qurate Retail, respectively. Under the corollary programs of each of Liberty Broadband and
GCI Liberty, Mr. Maffei was entitled to receive from the applicable Service Company a maximum individual bonus equal to 100% of his
maximum performance bonus established by the applicable Service Company, subject to reduction based on a determination of Mr. Maffei’s
achievement of qualitative criteria established with respect to the services to be performed by him on behalf of that Service Company.
Our compensation committee believes this construct was appropriate in light of the amended service agreement and the fact that Mr. Maffei
splits his professional time and duties.
In December 2020, our compensation committee
and the compensation committees of Liberty Media and each other Service Company reviewed contemporaneously Mr. Maffei’s personal
performance and, with respect to Liberty Media and Qurate Retail, corporate performance under each company’s program. Notwithstanding
this joint effort, our compensation committee retained sole and exclusive discretion with respect to the approval of award terms and amounts
payable under our bonus program.
Our compensation committee reviewed Mr. Maffei’s
performance to determine the reduction that would apply to his LTAH Maximum Performance Bonus. Our compensation committee took into account
a variety of factors, without assigning a numerical weight to any single performance measure. The determination was based on reports to
our board, the observations of committee members throughout the year and Mr. Maffei’s self-evaluation. In evaluating the performance
of Mr. Maffei for determining the reduction that would apply to his LTAH Maximum Performance Bonus, the following performance objectives
related to our company which has been assigned to him for 2020 were considered:
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Assist Tripadvisor with evaluation of strategic alternatives and investments;
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Support Tripadvisor with regard to the coronavirus impact, including activities around capital structure;
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Develop succession planning at our company and at Tripadvisor; provide development opportunities to our
company’s management team; and
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Develop Environmental, Social and Governance (ESG) program for our company and for Tripadvisor.
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Following a review of Mr. Maffei’s performance
and a review of the time allocated to matters for our company, our compensation committee determined to pay Mr. Maffei the following
portion of his LTAH Maximum Performance Bonus:
LTAH
Maximum
Performance
Bonus
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Percentage Payable
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Aggregate
Dollar Amount Paid
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$
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1,700,000
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81.25
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%
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$
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1,381,250
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Aggregate Results. To preserve cash due
to the financial impact of the coronavirus pandemic, the company paid Mr. Maffei’s performance-based bonus amount in stock
options to purchase shares of LTRPB, which were granted on December 15, 2020 (the Maffei 2020 Bonus Options). The number of
options granted, and the exercise price thereof, were based on the fair market value on the date of grant in accordance with the 2019
incentive plan (as defined below) and the corresponding fair market value policy. These options were immediately vested on the date of
grant. Our compensation committee then noted that, when combined with the total 2020 performance-based bonus amounts paid by Liberty Media
and the other Service Companies, Mr. Maffei received $27,917,713. For more information regarding this bonus, please see the “Grants
of Plan-Based Awards” table below.
Equity Incentive Compensation
The Liberty TripAdvisor Holdings, Inc. 2019
Omnibus Incentive Plan (the 2019 incentive plan), provides for the grant of a variety of incentive awards, including stock options,
restricted shares, RSUs, stock appreciation rights (SARs) and performance awards. Our compensation committee has a preference for
grants of stock options and awards of restricted stock or RSUs (as compared with other types of available awards under the 2019 incentive
plan) based on the belief that they better promote retention of key employees through the continuing, long-term nature of an equity investment.
It is the policy of our compensation committee that stock options be awarded with an exercise price equal to fair market value on the
date of grant, typically measured by reference to the closing price on the grant date.
As discussed above, our executive officers perform
management services for our company pursuant to the amended services agreement, and from the Spin-Off in 2014 until 2019, we did not separately
compensate our executive officers for those services, other than to grant a stock option award to Mr. Maffei in 2014. In addition,
Liberty TripAdvisor did not incur any of the costs of the equity awards granted by Liberty Media to its executive officers who provided
services to our company during that period. Following a review of this practice, our compensation committee determined to grant the equity
awards described below to Messrs. Maffei, Wendling and Rosenthaler and Ms. Wilm after considering the Liberty Media compensation
committee’s request that our company grant a proportionate share of the aggregate equity grant value to each named executive officer
each year for their service to our company and each of Liberty Media and the other Service Companies. The proportionate share for each
company was determined based 50% on the relative market capitalization and 50% on relative time spent by Liberty Media’s employees
working for such issuer. As a result, in March 2019, we began granting equity awards directly to our named executive officers and
we granted such awards in 2020 as well. With respect to awards made to Mr. Maffei in 2020, the 2019 Maffei Employment Agreement provides
that Mr. Maffei’s aggregate annual equity award value will be granted across Liberty Media and the Service Companies by Liberty
Media’s compensation committee, our compensation committee and the compensation committees of each other Service Company based on
two factors, each weighted 50%: (i) the relative market capitalization of each series of stock of each company and (ii) the
average of (a) the percentage allocation of time for all Liberty Media employees across all companies and (b) Mr. Maffei’s
percentage allocation of time across all companies, unless a different allocation method is agreed.
Consistent with our compensation philosophy, our
compensation committee believes in aligning the interests of the named executive officers with those of our stockholders. This will ensure
that our executives have a continuing stake in our long-term success. In furtherance of this philosophy, in 2020, our compensation committee
granted the equity awards described below to Messrs. Maffei, Wendling and Rosenthaler and Ms. Wilm.
Maffei Annual Equity Awards. The 2019 Maffei
Employment Agreement provides Mr. Maffei with the opportunity to earn equity awards during the employment term. See “—Executive
Compensation Arrangements—Gregory B. Maffei” for additional information about the annual awards provided under the 2019 Maffei
Employment Agreement.
When structuring the 2019 Maffei Employment Agreement,
to further align Mr. Maffei’s interests with those of the other stockholders, the compensation committee structured his annual
equity award grants as either option awards or performance-based restricted stock units with meaningful payout metrics determined annually.
This structure was designed to provide for alignment of interests with the company’s stockholders and flexibility to the compensation
committee to incent achievement of strategic objectives that may change or evolve over the term of the agreement.
The 2019 Maffei Employment Agreement provided that
Mr. Maffei was entitled to receive from our company, Liberty Media and the other Service Companies in 2020 a combined target value
equity award of $17.5 million comprised of time-vested stock options, performance-based restricted stock units or a combination of award
types, at Mr. Maffei’s election.
In 2020, our compensation committee granted performance-based
RSUs to Mr. Maffei in satisfaction of our obligations under the 2019 Maffei Employment Agreement for 5% of Mr. Maffei’s
aggregate annual equity award for 2020, or $875,000. Our compensation committee believed that Mr. Maffei’s RSU grants should
be subject to performance metrics that incentivize and reward Mr. Maffei for successful completion of our company’s strategic
initiatives.
As a result, our compensation committee granted
to Mr. Maffei 242,382 performance-based RSUs with respect to LTRPB shares (the 2020 Maffei RSUs). The 2020 Maffei RSUs were
granted on March 12, 2020 and vest only upon attainment of the performance objectives described below.
Our compensation committee reviewed the financial
performance of our company along with the personal performance of Mr. Maffei. Based on the compensation committee’s assessment
of his individual performance against the goals established in connection with the performance cash bonus program and general observation
of his leadership and executive performance, our compensation committee approved vesting of all of the 2020 Maffei RSUs previously granted
to Mr. Maffei.
For more information regarding the equity awards,
see the “Grants of Plan-Based Awards” table below.
Other 2020 Awards.
Multiyear Equity Awards. Our compensation
committee decided to make larger stock option grants (equaling approximately three to four years’ value of the named executive officer’s
annual grants) that vest between two and four years after grant, rather than making annual grants over the same period. These multiyear
grants provide for back-end weighted vesting and generally expire seven to ten years after grant to encourage executives to remain with
the company over the long-term and to better align their interests with those of the stockholders.
In line with this philosophy, in connection with
entering into, and pursuant to the terms of, the 2019 Maffei Employment Agreement, Mr. Maffei was entitled to an upfront award, to
be granted in two tranches in December 2019 and December 2020 (the Maffei Term Equity). Five percent of the 2019 tranche
of the Maffei Term Equity, or $2.25 million, was allocated to our company and 6% of the 2020 tranche of the Maffei Term Equity, or $2.7
million, was allocated to our company following a reallocation in December 2020. In December 2019, Mr. Maffei received
a grant of RSUs with respect to 320,057 LTRPB shares, which vest on December 15, 2023, subject to Mr. Maffei’s continued
employment (the 2019 Maffei Term RSUs). On December 7, 2020, Mr. Maffei received a grant of RSUs with respect to 1,000,000
LTRPB shares, which vest on December 7, 2024, subject to Mr. Maffei’s continued employment (the 2020 Maffei Term RSUs).
In December 2020, our compensation committee
granted to each of Messrs. Wendling and Rosenthaler and Ms. Wilm the following multiyear stock option awards that equal the
value of Messrs. Wendling’s and Rosenthaler’s annual grants that are expected to be granted to each for the period from
January 1, 2021 through December 31, 2023, and in the case of Ms. Wilm, a top-up in value over grants already made for
the period from January 1, 2021 through December 31, 2023 to reflect the increased responsibilities associated with her new
role as Chief Administrative Officer: Mr. Wendling – 49,491 options to purchase LTRPA shares (the Wendling 2020 Multiyear
Options); Mr. Rosenthaler – 89,404 options to purchase LTRPA shares (the Rosenthaler 2020 Multiyear Options); and
Ms. Wilm – 24,075 options to purchase LTRPA shares (the Wilm 2020 Multiyear Options, and together with the Wendling
2020 Multiyear Options and the Rosenthaler 2020 Multiyear Options, the 2020 NEO Multiyear Options). The 2020 NEO Multiyear Options
vest in equal installments on each of December 7, 2022 and 2023 and expire on the seventh anniversary of the grant date. See the
“Grants of Plan-Based Awards” and the “Outstanding Equity Awards at Fiscal Year-End” tables below for more information
about the 2020 NEO Multiyear Options.
Annual Performance Awards.
Performance-based RSU Awards. Our compensation
committee granted annual performance-based RSUs to Messrs. Wendling and Rosenthaler and Ms. Wilm in March 2020. Our compensation
committee granted to each of Messrs. Wendling and Rosenthaler and Ms. Wilm 7,535, 15,512 and 12,465 LTRPA performance-based
RSUs, respectively (collectively, the 2020 Chief RSUs). The 2020 Chief RSUs would vest subject to the satisfaction of performance
objectives described below.
Our compensation committee adopted an annual, performance-based
program for payment of the 2020 Chief RSUs and reviewed each named executive officer’s 2020 performance against that performance
program to determine which portion of the award would be paid. Our compensation committee reviewed the 2020 personal performance of Messrs. Wendling
and Rosenthaler and Ms. Wilm and considered the recommendations from Mr. Maffei. Mr. Maffei recommended that our committee
vest 100% of the 2020 Chief RSUs based on his assessment of their individual performance and his general observation of their leadership
and executive performance. Accordingly, our compensation committee approved vesting in full of the 2020 Chief RSUs previously granted
to Messrs. Wendling and Rosenthaler and Ms. Wilm.
2020 Maffei Restructuring Restricted Stock Unit
Grant. As described above, in April 2020, Mr. Maffei received a grant of 30,110 LTRPB restricted stock units (the 2020
Maffei Restructuring RSUs) as a result of Mr. Maffei’s offer to waive and restructure his remaining unpaid 2020 calendar
year base salary due to potential liquidity concerns at Liberty Media and the Service Companies resulting from the onset of the pandemic.
The 2020 Maffei Restructuring RSUs vested on December 10, 2020.
Perquisites and Other Personal Benefits.
The perquisites and other personal benefits available
to our executives (that are not otherwise available to all of our salaried employees) consist of:
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limited personal use of Liberty Media’s corporate aircraft (pursuant to aircraft time sharing agreements between our company
and Liberty Media);
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in the case of Mr. Maffei, payment of legal expenses pertaining to his employment arrangement;
and
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occasional, personal use of Liberty Media’s apartment in New York City (pursuant to a sharing arrangement between our company
and Liberty Media), which is primarily used for business purposes, and occasional, personal use of a company car and driver.
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Taxable income may be incurred by our executives
in connection with their receipt of perquisites and personal benefits. We have not provided gross-up payments to our executives in connection
with any such taxable income incurred during the past three years.
Aircraft Usage. On occasion, and with the
approval of the Chairman of Liberty Media, executives may have family members and other guests accompany them on Liberty Media’s
corporate aircraft when traveling on business.
Pursuant to a February 5, 2013 letter agreement
between Liberty Media and Mr. Maffei, Mr. Maffei is entitled to 120 hours per year of personal flight time through the
first to occur of (i) the termination of his employment with Liberty Media, subject to any continued right to use the corporate aircraft
as described below or pursuant to the terms of his employment arrangement in effect at the time of the termination or (ii) the cessation
of ownership or lease of corporate aircraft. During 2020, pursuant to November 11, 2015 and December 13, 2019 letter agreements
between Liberty Media and Mr. Maffei, Mr. Maffei was entitled to 50 additional hours per year of personal flight time if he
reimbursed Liberty Media for such usage through the first to occur of (i) the termination of his employment with Liberty Media or
(ii) the cessation of ownership or lease of corporate aircraft. If Mr. Maffei’s employment is terminated due to disability,
for good reason or without cause, Mr. Maffei would be entitled to continued use of the corporate aircraft for 12 months after termination
of his employment. Mr. Maffei incurs taxable income, calculated in accordance with the Standard Industry Fare Level (SIFL)
rates, for all personal use of the corporate aircraft under the February 5, 2013 letter agreement. Mr. Maffei incurs taxable
income at the SIFL rates minus amounts paid under time sharing agreements with Liberty Media for travel. Flights where there are no passengers
on company-owned aircraft are not charged against the 120 hours of personal flight time per year allotted to Mr. Maffei if the flight
department determines that the use of a NetJets, Inc. supplied aircraft for a proposed personal flight would be disadvantageous to
our company due to (i) use of budgeted hours under the then current Liberty Media fractional ownership contract with NetJets, Inc.
or (ii) higher flight cost as compared to the cost of using company-owned aircraft.
For disclosure purposes, Liberty Media determines
the aggregate incremental cost to Liberty Media of the executives’ personal flights by using a method that takes into account all
operating costs related to such flights, including:
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landing and parking expenses;
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aircraft fuel and oil expenses per hour of flight;
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aircraft maintenance and upkeep;
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any customs, foreign permit and similar fees; and
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passenger ground transportation.
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Because Liberty Media’s aircraft is used
primarily for business travel, this methodology excludes fixed costs that do not change based on usage, such as salaries of pilots and
crew, and purchase or lease costs of aircraft.
Pursuant to the amended services agreement, we
pay Liberty Media for any costs, calculated in accordance with Part 91 of the Federal Aviation Regulations, associated with Mr. Maffei
using Liberty Media’s corporate aircraft for our company’s business matters along with the approved personal use of Liberty
Media’s corporate aircraft that are allocable to our company under the amended services agreement. Pursuant to aircraft time sharing
agreements between Liberty Media and Mr. Maffei, Mr. Maffei was responsible for reimbursing Liberty Media for costs associated
with his 50 additional hours per year of personal flight time and such costs include the expenses listed above, insurance obtained for
the specific flight and an additional charge equal to 100% of the aircraft fuel and oil expenses for the specific flight.
For purposes of determining an executive’s
taxable income, personal use of Liberty Media’s aircraft is valued using a method based on SIFL rates, as published by the Treasury
Department. The amount determined using the SIFL rates is typically lower than the amount determined using the incremental cost method.
Under the American Jobs Creation Act of 2004, the amount that may be deducted for a purely personal flight is limited to the amount included
in the taxable income of the executives who took the flight. Also, the deductibility of any non-business use will be limited by Section 162(m) of
the Internal Revenue Code of 1986, as amended (the Code), to the extent that the named executive officer’s compensation that
is subject to that limitation exceeds $1 million. See “—Deductibility of Executive Compensation” below.
Liberty Media has a fractional ownership contract
with NetJets, Inc. for business travel purposes. Given the coronavirus pandemic and the significant reduction in business travel,
the minimum use of the NetJets contract would not be met and, therefore, the company’s named executive officers and directors were
afforded the opportunity to use a portion of the NetJets contract for personal use, provided that each such named executive officer or
director was responsible for reimbursing Liberty Media for costs associated therewith. Such use resulted in no incremental cost to the
company and the executives did not incur any taxable income in connection therewith.
Changes for 2021
Our company, Liberty Media and each of the other
Service Companies approved an annual cash bonus program that will apply to our named executive officers beginning in 2021. The compensation
committees of each of these companies approved for each named executive officer target and maximum bonus opportunities, sixty percent
of which will be based on the officer’s individual performance goals and forty percent on corporate performance goals that relate
to our company, Liberty Media and each of the other Service Companies (including subsidiary financial metrics and corporate level achievements).
Our company will pay directly to our other named executive officers (in addition to Mr. Maffei) the portion of the annual cash performance
bonus that will be allocated to our company according to the same allocation schedule that applies to Mr. Maffei, pursuant to the
amended services agreement. Mr. Maffei’s compensation is allocated across Liberty Media, and each of our company and the other
Service Companies based on two factors, each weighted 50%: (i) the relative market capitalization of each series of stock of each
company and (ii) the average of (a) the percentage allocation of time for all Liberty Media employees across all companies and
(b) Mr. Maffei’s percentage allocation of time across all companies, unless a different allocation method is agreed.
Deductibility of Executive Compensation
In developing the 2020 compensation packages for
the named executive officers, the deductibility of executive compensation under Section 162(m) of the Code is considered. That
provision prohibits the deduction of compensation of more than $1 million paid to certain executives, subject to certain exceptions.
Following the enactment of the Tax Cuts and Jobs Act of 2017, beginning with the 2018 calendar year, the executives potentially affected
by the limitations of Section 162(m) of the Code have been expanded and there is no longer any exception for qualified performance-based
compensation. Although some performance-based awards will not result in a compensation deduction after 2017, we believe the transition
rules in effect for binding contracts in effect on November 2, 2017 should continue to allow certain of these awards to maintain
their exemption from the $1 million annual deduction limitation for so long as such awards are not materially modified. However, portions
of the compensation we pay to the named executive officers may not be deductible due to the application of Section 162(m) of
the Code. Our compensation committee believes that the lost deduction on compensation payable in excess of the $1 million limitation for
the named executive officers is not material relative to the benefit of being able to attract and retain talented management.
Recoupment Provisions
In those instances where we grant equity-based
incentive compensation, we expect to include in the related agreement with the executive a right, in favor of our company, to require
the executive to repay or return to the company any cash, stock or other incentive compensation (including proceeds from the disposition
of shares received upon exercise of options or stock appreciation rights). That right will arise if (1) a material restatement of
any of our financial statements is required and (2) in the reasonable judgment of our compensation committee, (A) such restatement
is due to material noncompliance with any financial reporting requirement under applicable securities laws and (B) such noncompliance
is a result of misconduct on the part of the executive. In determining the amount of such repayment or return, our compensation committee
may take into account, among other factors it deems relevant, the extent to which the market value of the applicable series of our common
stock was affected by the errors giving rise to the restatement. The cash, stock or other compensation that we may require the executive
to repay or return must have been received by the executive during the 12-month period beginning on the date of the first public issuance
or the filing with the SEC, whichever occurs earlier, of the financial statement requiring restatement. The compensation required to be
repaid or returned will include (1) cash or company stock received by the executive (A) upon the exercise during that 12-month
period of any stock appreciation right held by the executive or (B) upon the payment during that 12-month period of any incentive
compensation, the value of which is determined by reference to the value of company stock, and (2) any proceeds received by the executive
from the disposition during that 12-month period of company stock received by the executive upon the exercise, vesting or payment during
that 12-month period of any award of equity-based incentive compensation. Beginning in December 2020, we also began including in
new forms of equity-based award agreements a right, in favor of our company, to require the executive to repay or return to the company,
upon a reasonable determination by our compensation committee that the executive breached the confidentiality obligations included in
the agreement, all or any portion of the outstanding award, any shares received under awards during the 12-month period prior to any such
breach or any time after such breach and any proceeds from the disposition of shares received under awards during the 12-month period
prior to any such breach or any time after such breach.
Summary Compensation Table
Name
and
Principal Position
(as of 12/31/20)
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)(2)
|
|
|
Stock
Awards
($)(3)
|
|
|
Option
Awards
($)(4)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change
in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Gregory B. Maffei
|
|
|
2020
|
|
|
|
150,000
|
(1)
|
|
|
-
|
|
|
|
5,310,861
|
|
|
|
-
|
|
|
|
1,377,317
|
(5)
|
|
|
-
|
|
|
|
47,717
|
(6)
|
|
|
6,885,895
|
|
Chairman of the Board,
|
|
|
2019
|
|
|
|
-
|
|
|
|
250,000
|
|
|
|
2,813,547
|
|
|
|
170,196
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,233,743
|
|
President and Chief
|
|
|
2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian J. Wendling
|
|
|
2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,230
|
|
|
|
136,488
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
145,718
|
|
Senior Vice President and
|
|
|
2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,433
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,433
|
|
Chief Financial Officer
|
|
|
2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert E. Rosenthaler
|
|
|
2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,002
|
|
|
|
246,561
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
265,563
|
|
Chief Corporate
|
|
|
2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,619
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,619
|
|
Development Officer
|
|
|
2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renee L. Wilm(7)
|
|
|
2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,270
|
|
|
|
66,395
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
81,665
|
|
Chief Legal Officer
|
|
|
2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,368
|
|
|
|
148,230
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
157,598
|
|
|
|
|
2018
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
(1)
|
Represents only that portion of Mr. Maffei’s base salary allocated to our company under the amended services agreement
in connection with the 2019 Maffei Employment Agreement as described in “—Executive Compensation Arrangements—Gregory
B. Maffei—2019 Maffei Employment Agreement.” For a description of the allocation of Mr. Maffei’s compensation among
Liberty Media, our company and the other Service Companies pursuant to the 2019 Maffei Employment Agreement and the amended services agreement,
see “—Executive Compensation Arrangements—Gregory B. Maffei—2019 Maffei Employment Agreement.” Pursuant
to the 2019 Maffei Employment Agreement, beginning January 1, 2020 the amount of Mr. Maffei’s base salary allocable to
our company was $150,000. Due to the financial impact of the coronavirus pandemic, for the period from April 4, 2020 through December 31,
2020, Mr. Maffei offered to waive the right to his base salary except for amounts sufficient to cover health insurance, flexible
spending contributions and certain taxes In consideration for Mr. Maffei’s offer to waive and restructure his base salary,
we granted to Mr. Maffei the 2020 Maffei Restructuring RSUs, which had a grant date fair value of $143,324. Mr. Maffei received
an aggregate of $41,000 in cash salary during 2020. The portion of the grant date fair value of the 2020 Maffei Restructuring RSUs that
replaced Mr. Maffei’s foregone base salary of $109,000 is reflected in the “Salary” column of this Summary Compensation
Table. The portion of the grant date fair value of the 2020 Maffei Restructuring RSUs that exceeded the amount of Mr. Maffei’s
foregone base salary was $34,324 and is reported in the “Stock Awards” column of this Summary Compensation Table in accordance
with applicable SEC rules. The grant date fair value of all of the 2020 Maffei Restructuring RSUs is reflected in the “Grants of
Plan-Based Awards” table below.
|
|
(2)
|
Represents only that portion of Mr. Maffei’s cash commitment bonus allocated to our
company under the amended services agreement in connection with the 2019 Maffei Employment Agreement as described in “—Executive
Compensation Arrangements—Gregory B. Maffei—2019 Maffei Employment Agreement.”
|
|
(3)
|
Reflects, as applicable, the grant date fair value of the 2020 Maffei Term RSUs and the 2019 Maffei Term RSUs, the 2020 Maffei RSUs,
the portion of the 2020 Maffei Restructuring RSUs that exceeded the amount of base salary waived by Mr. Maffei ($34,324), the 2020
Chief RSUs and the RSUs awarded to Messrs. Maffei, Wendling and Rosenthaler and Ms. Wilm in 2019. The grant date fair value
of these awards has been computed in accordance with FASB ASC Topic 718, but (pursuant to SEC regulations) without reduction for estimated
forfeitures. For a description of the assumptions applied in these calculations, see Note 12 to our consolidated financial statements
for the year ended December 31, 2020 (which are included in our 2020 Form 10-K).
|
|
(4)
|
The grant date fair values of the 2020 NEO Multiyear Options and the stock options awarded to Mr. Maffei and Ms. Wilm in
2019 have been computed in accordance with FASB ASC Topic 718, but (pursuant to SEC regulations) without reduction for estimated forfeitures.
For a description of the assumptions applied in these calculations, see Note 12 to our consolidated financial statements for the year
ended December 31, 2020 (which are included in our 2020 Form 10-K).
|
|
(5)
|
Represents Mr. Maffei’s annual performance-based bonus. To preserve cash due to the
financial impact of the coronavirus pandemic, the company paid Mr. Maffei’s performance-based bonus amount in 572,665 stock
options to purchase shares of LTRPB, as described in “—Compensation Discussion and Analysis—Elements of 2020 Executive
Compensation—2020 Performance-based Bonus.” Reflects the grant date fair value of those stock options computed in accordance
with FASB ASC Topic 718, but (pursuant to SEC regulations) without reduction for estimated forfeitures. For a description of the assumptions
applied in these calculations, see Note 12 to our consolidated financial statements for the year ended December 31, 2020 (which are
included in our 2020 Form 10-K).
|
|
(6)
|
Includes the following amounts, which were allocated to our company under the amended services agreement:
|
|
|
Amounts ($)
|
|
Payment in 2020 for legal expenses pertaining to Mr. Maffei’s employment agreement entered into in December 2019
|
|
|
32,641
|
|
Compensation related to personal use of corporate aircraft(a)
|
|
|
13,395
|
|
Life insurance premiums
|
|
|
101
|
|
Matching contributions made to the Liberty Media 401(k) Savings Plan(b)
|
|
|
1,425
|
|
(a) Calculated
based on aggregate incremental cost of such usage allocated to our company.
|
(b)
|
The Liberty Media 401(k) Savings Plan provides employees with an opportunity to save for retirement. The Liberty Media 401(k) Savings
Plan participants may contribute up to 75% of their eligible compensation on a pre-tax basis to the plan and an additional 10% of their
eligible compensation on an after-tax basis (subject to specified maximums and IRS limits), and Liberty Media contributes a matching contribution
that vests based upon the participants’ years of service and is based on the participants’ own contributions up to the maximum
matching contribution set forth in the plan. Our company reimburses Liberty Media under the amended services agreement for our allocable
portion of the matching contribution for Mr. Maffei. Mr. Maffei’s matching contributions are fully vested. Participant
contributions to the Liberty Media 401(k) Savings Plan are fully vested upon contribution.
|
Liberty Media owns an apartment in New York City which is
primarily used for business purposes. Mr. Maffei occasionally used this apartment for personal reasons during the year indicated
above and our company reimburses Liberty Media for our allocable portion.
|
(7)
|
Ms. Wilm assumed the role of Chief Legal Officer of our company, effective September 23, 2019, and the role of Chief Administrative
Officer in January 2021.
|
Executive Compensation Arrangements
Gregory B. Maffei
2019 Maffei Employment Agreement
Liberty Media entered into the 2019 Maffei Employment
Agreement with Mr. Maffei, effective December 13, 2019. The arrangement provides for a five year employment term beginning January 1,
2020 and ending December 31, 2024, with an annual base salary of $3 million (with no contracted increase) and a one-time cash commitment
bonus of $5 million, an annual target cash performance bonus equal to $17 million (with payment subject to the achievement of one or more
performance metrics as determined by the applicable company’s compensation committee with respect to its allocable portion), upfront
awards (with an aggregate grant date fair value of $90 million to be granted in two equal tranches) and annual equity awards with an aggregate
target grant date fair value of $17.5 million.
Liberty Media paid Mr. Maffei his $5 million
cash commitment bonus in 2019, and we reimbursed Liberty Media for our allocable portion (which was 5%) in 2019.
Maffei Term Equity Awards. Also, on December 13,
2019, in connection with the execution of the 2019 Maffei Employment Agreement, Mr. Maffei became entitled to receive term equity
awards with an aggregate grant date fair value of $90 million (the upfront awards) to be granted in two equal tranches. The first
tranche of Mr. Maffei’s upfront awards consisted of time-vested stock options from each of Liberty Media, Qurate Retail, Liberty
Broadband and GCI Liberty and time-vested restricted stock units from our company (collectively, the 2019 term awards) that vest,
in the case of the stock options, on December 31, 2023 and, in the case of the restricted stock units on December 15, 2023,
subject to Mr. Maffei’s continued employment, except as described below. Our portion of the first tranche of the upfront awards
had an aggregate grant date fair value of $2,250,000 and consisted of 320,057 LTRPB RSUs.
The second tranche of the upfront awards was granted
in December 2020, and consisted of time-vested stock options from each of Liberty Media, Qurate Retail, Liberty Broadband and GCI
Liberty and time-vested restricted stock units from our company (collectively, the 2020 term awards). The stock options will vest
on December 31, 2024 and the restricted stock units will vest on December 7, 2024, subject to Mr. Maffei’s continued
employment, except as described below. Our portion of the 2020 term awards, granted in December 2020, had an aggregate grant date
fair value of $2,700,000 and consisted of 1,000,000 LTRPB RSUs.
Annual Awards. Pursuant to the 2019 Maffei
Employment Agreement, the aggregate grant date fair value of Mr. Maffei’s annual equity awards is $17.5 million for each year
during the term of the 2019 Maffei Employment Agreement and is comprised of awards of time-vested stock options (the Annual Options),
performance-based restricted stock units (Annual Performance RSUs) or a combination of award types, at Mr. Maffei’s
election, allocable across Liberty Media and each of the Service Companies (collectively, the Annual Awards). Vesting of any Annual
Performance RSUs will be subject to the achievement of one or more performance metrics to be approved by our compensation committee and
the compensation committee of Liberty Media or the applicable other Service Company with respect to its allocable portion of the Annual
Performance RSUs. For a description of Mr. Maffei’s Annual Awards, see “—Compensation Discussion and Analysis—Elements
of Executive Compensation—Equity Incentive Compensation—Maffei Annual Equity Awards.”
Termination Payments and Benefits. Mr. Maffei
will be entitled to the following payments and benefits from Liberty Media (with Liberty Media being reimbursed by our company for its
allocated portion of the severance benefits pursuant to the amended services agreement) if his employment is terminated at Liberty Media
under the circumstances described below, subject to the execution of releases by Liberty Media and Mr. Maffei in a form to be mutually
agreed. The following discussion also summarizes the termination payments and benefits that Mr. Maffei would be entitled to if his
services are terminated at our company under the scenarios described below.
Termination by Liberty Media without Cause or
by Mr. Maffei for Good Reason. If Mr. Maffei’s employment is terminated by Liberty Media without cause (as defined
in the 2019 Maffei Employment Agreement) or if Mr. Maffei terminates his employment for good reason (as defined in the 2019 Maffei
Employment Agreement), he is entitled to the following: (i) his accrued base salary, any accrued but unpaid bonus for the prior completed
year, any unpaid expense reimbursements and any amounts due under applicable law; (ii) a severance payment of two times his base
salary during the year of his termination to be paid in equal installments over 24 months; (iii) fully vested shares with an aggregate
grant date fair value of $35 million consisting of shares of the applicable series of common stock from Liberty Media, Qurate Retail,
Liberty Broadband and us; (iv) full vesting of his upfront awards and full vesting of the annual equity awards for the year in which
the termination occurs (including the grant and full vesting of such annual equity awards if the termination occurs before they have been
granted); (v) lump sum cash payment of two times the average annual cash performance bonus paid for the two calendar years ending
prior to the termination, but in no event less than two times his target annual cash performance bonus of $17 million, with (subject to
certain exceptions) up to 25% of such amount payable in shares of the applicable series of common stock from Liberty Media, Qurate Retail,
Liberty Broadband and us; (vi) a lump sum cash payment equal to the greater of (x) $17 million and (y) the annual cash
performance bonus otherwise payable for the year of termination, in each case, prorated based on the number of days that have elapsed
within the year of termination (including the date of termination), with (subject to certain exceptions) up to 25% of such amount payable
in shares of the applicable series of common stock from Liberty Media, Qurate Retail, Liberty Broadband and us; and (vii) continued
use for 12 months after such termination of certain services and perquisites provided by Liberty Media, including continued use of Liberty
Media’s aircraft (collectively, the severance benefits).
Termination at our Company by our Company without
Cause or by Mr. Maffei for Good Reason. If Mr. Maffei’s services at our company are terminated by us without cause
(as defined in the 2019 Maffei Employment Agreement) or by Mr. Maffei for good reason (as defined in the 2019 Maffei Employment Agreement),
he will be entitled to full vesting of the upfront awards and the Annual Awards, in each case, granted by us for the year of his termination,
and if Mr. Maffei remains employed by Liberty Media at or following the date of termination of his services to our company, he will
also be entitled to payment of our allocated portion of the annual cash performance bonus for the year, prorated for the portion of the
calendar year in which Mr. Maffei served as an officer of our company. Other than as described above, no severance benefits will
be due to Mr. Maffei if he remains employed by Liberty Media at or following the date of termination of his services to our company.
Termination by Reason of Death or Disability.
In the event of Mr. Maffei’s death or disability, he will be entitled to the same payments and benefits as if his services
had been terminated without cause or for good reason as described above in “—Executive Compensation Arrangements—Gregory
B. Maffei—2019 Employment Agreement—Termination by Liberty Media without Cause or for Mr. Maffei for Good Reason.”
For Cause Termination at our Company. In
the event Mr. Maffei’s services to our company are terminated by us for cause, he will forfeit any unvested portion of the
upfront awards granted by us, and if the termination for cause occurs before the close of business on December 31 of the relevant
grant year, Mr. Maffei will forfeit our allocated portion of the annual cash performance bonus and all of the annual equity awards
granted by our company for that grant year. If Mr. Maffei’s services are terminated by our company for cause after the close
of business on December 31 of the relevant grant year, but prior to the date on which our compensation committee certifies achievement
of the performance metric for any outstanding performance-based restricted stock units for the grant year, the award will remain outstanding
until such date and will vest to the extent determined by our compensation committee.
Voluntary Termination at our Company without
Good Reason. If Mr. Maffei voluntarily terminates the services he provides to us without good reason, he will be entitled to
pro rata vesting of the upfront awards granted by our company (based on the number of days that have elapsed from the grant date and a
four-year vesting period). He will also be entitled to pro rata vesting of his annual equity awards for the year of termination granted
by us (based on the elapsed number of days in the calendar year of termination) and a pro rata payment of our allocated portion of his
annual cash performance bonus of $17 million (based upon the elapsed number of days in the calendar year of termination). Any performance-based
restricted stock units for the year of termination that are unvested on the date of termination will remain outstanding until the performance
criteria is determined and will vest pro rata (based upon the elapsed number of days in the calendar year of termination) to the extent
determined by our compensation committee (at a level not less than 100% of the target award). Other than as described above, no severance
benefits will be due to Mr. Maffei if he remains employed by Liberty Media at or following the date of termination of his services
to us. If Mr. Maffei also voluntarily terminates his employment with Liberty Media, rather than being entitled to payment of our
allocated portion of his annual cash bonus, Mr. Maffei would be entitled to receive a payment from Liberty Media equal to $17 million,
prorated based upon the elapsed number of days in the calendar year of termination. Our company would reimburse Liberty Media for our
allocable portion of this payment.
Equity Incentive Plans
The 2019 incentive plan is designed, and prior
to its expiration, the Liberty TripAdvisor Holdings, Inc. 2014 Omnibus Incentive Plan (amended and restated March 11, 2015),
as amended (the 2014 incentive plan), was designed, to provide additional remuneration to eligible officers and employees of our
company, our nonemployee directors and independent contractors and employees of Liberty Media or Qurate Retail providing services to us
and to encourage their investment in our capital stock, thereby increasing their proprietary interest in our business. Non-qualified stock
options, SARs, restricted shares, RSUs, cash awards, performance awards or any combination of the foregoing may be granted under the 2019
incentive plan (collectively, as used in this description of the 2019 incentive plan, awards). The maximum number of shares of
our common stock with respect to which awards may be granted is 5,000,000 shares, subject to anti-dilution and other adjustment provisions
of the 2019 incentive plan. No nonemployee director may be granted during any calendar year awards having a value (as determined on the
grant date of such award) in excess of $3 million. Shares of our common stock issuable pursuant to awards will be made available from
either authorized but unissued shares or shares that have been issued but reacquired by our company, including shares purchased on the
open market. The 2019 incentive plan is administered by the compensation committee with regard to all awards granted under the 2019 incentive
plan (other than awards granted to the nonemployee directors which may be administered by our full board of directors or the compensation
committee), and the compensation committee has full power and authority to determine the terms and conditions of such awards. The 2019
incentive plan is the only incentive plan under which awards will be made.
In connection with the Spin-Off, new equity incentive
awards with respect to our common stock (the new Liberty TripAdvisor awards) were issued in connection with adjustments made to
outstanding equity incentive awards with respect to shares of Qurate Retail’s former Liberty Ventures common stock which had been
granted to various directors, officers and employees and consultants of Qurate Retail and certain of its subsidiaries pursuant to the
various stock incentive plans administered by the Qurate Retail board of directors or the compensation committee thereof. These new Liberty
TripAdvisor awards were issued pursuant to the Liberty TripAdvisor Holdings, Inc. Transitional Stock Adjustment Plan (the transitional
plan), which governs the terms and conditions of the new Liberty TripAdvisor awards but cannot be used to make any additional grants
following the Spin-Off.
Pay Ratio Information
We are providing the following information about
the relationship of the median annual total compensation of our employees and the total compensation of Mr. Maffei, our chief executive
officer on December 31, 2020, pursuant to the SEC’s pay ratio disclosure rules set forth in Item 402(u) of Regulation
S-K. We believe our pay ratio is a reasonable estimate calculated in a manner consistent with the SEC’s pay ratio disclosure rules.
However, because these rules provide flexibility in determining the methodology, assumptions and estimates used to determine pay
ratios and the fact that workforce composition issues differ significantly between companies, our pay ratio may not be comparable to the
pay ratios reported by other companies.
To identify our median employee, we first determined
our employee population as of December 31, 2020, which consisted of employees located in the U.S., Europe and throughout the rest
of the world, representing all full-time, part-time and temporary employees, including hourly employees, employed by our company and our
consolidated subsidiary, Tripadvisor, on that date. Using information from our payroll records, we then measured each employee’s
annual total compensation for calendar year 2020, consisting of annualized base salary, short-term bonus at target and annual long-term
equity incentive award at target. Tripadvisor annualized the compensation of approximately 409 full-time and part-time employees who were
hired in 2020 but who did not work for the entire fiscal year. The earnings of Tripadvisor’s employees outside the U.S. were converted
to U.S. dollars using the currency exchange rates used for Tripadvisor’s organizational planning purposes, which consider historic
and forecasted rates as well as other factors. We did not make any cost-of-living or full-time equivalent adjustments.
Once we identified our median employee, we then
determined that employee’s total compensation, including any perquisites and other benefits, in the same manner that we determined
the total compensation of our named executive officers for purposes of the Summary Compensation Table above. The ratio of our chief executive
officer’s total annual compensation to that of the median employee was as follows:
Chief Executive Officer Total Annual Compensation
|
|
$
|
6,885,895
|
|
Median Employee Total Annual Compensation
|
|
$
|
79,909
|
|
Ratio of Chief Executive Officer to Median Employee Total Annual Compensation
|
|
|
86:1
|
|
Pursuant to the terms of the 2019 Maffei Employment
Agreement, Mr. Maffei received the 2020 Maffei Term RSUs. Our portion of the 2020 Maffei Term RSUs, granted in December 2020,
had an aggregate grant date fair value of $4,530,000. Given that this grant was made outside of our normal, annual compensation practices,
we have also included a ratio that eliminates from the total compensation the grant date fair value of our portion of the 2020 Maffei
Term RSUs:
Chief Executive Officer Total Annual Compensation (without Maffei 2020 Term RSUs)
|
|
$
|
2,355,895
|
|
Median Employee Total Annual Compensation
|
|
$
|
79,909
|
|
Ratio of Chief Executive Officer to Median Employee Total Annual Compensation
|
|
|
29:1
|
|
Grants of Plan-Based Awards
The following table contains information regarding
plan-based incentive awards granted during the year ended December 31, 2020 to the named executive officers.
|
|
|
|
|
Estimated
Future Payouts
under Non-Equity
Incentive Plan Awards
|
|
|
Estimated
Future Payouts
under Equity
Incentive Plan Awards
|
|
|
All
Other Stock
Awards: Number
of Shares of
Stock or
Units (#)
|
|
|
All
Other
Option Awards:
Number of
Securities
Underlying
Options (#)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
|
Grant
Date
Fair Value
of Stock
and Option
Awards ($)
|
|
Name
|
|
Grant
Date
|
|
|
Threshold
($)(1)
|
|
|
Target
($)(1)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)(2)
|
|
|
Target
(#)(2)
|
|
|
Maximum
(#)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory B. Maffei
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/12/2020
|
(4)
|
|
|
-
|
|
|
|
850,000
|
|
|
|
1,700,000
|
(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
LTRPB
|
|
|
03/12/2020
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
242,382
|
|
|
|
363,573
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
746,537
|
|
LTRPB
|
|
|
04/14/2020
|
(7)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,110
|
(8)
|
|
|
-
|
|
|
|
-
|
|
|
|
143,324
|
|
LTRPB
|
|
|
12/07/2020
|
(9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
(10)
|
|
|
-
|
|
|
|
-
|
|
|
|
4,530,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian J. Wendling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
03/12/2020
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,535
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,230
|
|
LTRPA
|
|
|
12/07/2020
|
(9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,491
|
(11)
|
|
|
4.31
|
|
|
|
136,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert E. Rosenthaler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
03/12/2020
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,512
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,002
|
|
LTRPA
|
|
|
12/07/2020
|
(9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
89,404
|
(11)
|
|
|
4.31
|
|
|
|
246,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renee L. Wilm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
03/12/2020
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,465
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,270
|
|
LTRPA
|
|
|
12/07/2020
|
(9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,075
|
(11)
|
|
|
4.31
|
|
|
|
66,395
|
|
|
(1)
|
Mr. Maffei’s 2020 performance-based bonus program does not provide for a threshold bonus amount. The program does provide
for a target bonus amount that would be payable upon satisfaction of the performance criteria under the 2020 performance-based bonus program.
For a discussion of the 2020 performance-based bonus, see “—Compensation Discussion and Analysis—Elements of 2020 Executive
Compensation—2020 Performance-based Bonus” and footnote number 5 of this table, below.
|
|
(2)
|
The terms of each of the 2020 Maffei RSUs and the 2020 Chief RSUs do not provide for a threshold amount that would be payable upon
satisfaction of the performance criteria established by the compensation committee. With respect to the 2020 Maffei RSUs, the amount in
the Target column represents the target amount that would have been payable to Mr. Maffei assuming achievement of the target performance
goals. With respect to the 2020 Chief RSUs, the amounts in the Target column represent the target amount that would have been payable
to the award holder assuming our compensation committee determined not to reduce such payout after considering the performance of each
named executive officer. For the actual 2020 Maffei RSUs and 2020 Chief RSUs that vested, see “—Compensation Discussion and
Analysis—Compensation Overview—Equity Incentive Compensation.”
|
|
(3)
|
With respect to the 2020 Maffei RSUs, the amount in the Maximum column represents the maximum amount that would have been payable
assuming maximum achievement of the performance goals.
|
|
(4)
|
Reflects the date on which our compensation committee established the terms of Mr. Maffei’s 2020 performance-based bonus
program, as described under “—Compensation Discussion and Analysis—Elements of 2020 Executive Compensation—2020
Performance-based Bonus.”
|
|
(5)
|
In light of the financial impact of the coronavirus pandemic, the company determined to settle Mr. Maffei’s bonus in stock
options to purchase 572,665 LTRPB shares at an exercise price of $3.76, instead of cash, as described in “—Compensation Discussion
and Analysis—Elements of 2020 Executive Compensation—2020 Performance-based Bonus.” The grant date fair value of those
stock options was $1,377,317 as computed in accordance with FASB ASC Topic 718, but (pursuant to SEC regulations) without reduction for
estimated forfeitures. For a description of the assumptions applied in these calculations, see Note 12 to our consolidated financial statements
for the year ended December 31, 2020 (which are included in our 2020 Form 10-K). The committee acted on December 10, 2020
and the options were granted on December 15, 2020. The target and maximum bonus opportunities for Mr. Maffei are reflected in
the “Estimated Future Payouts under Non-Equity Incentive Plan Awards” column of this Grants of Plan-Based Awards table and
the options are not reflected in the “All Other Option Awards” column in accordance with SEC interpretive guidance.
|
|
(6)
|
Reflects the date on which our compensation committee established the terms of the 2020 Maffei RSUs and the 2020 Chief RSUs as described
under “—Compensation Discussion and Analysis—Elements of 2020 Executive Compensation—Equity Incentive Compensation—Maffei
Annual Equity Awards” and “—Compensation Discussion and Analysis—Elements of 2020 Executive Compensation—Equity
Incentive Compensation—Other 2020 Awards—Annual Performance Awards.”
|
|
(7)
|
Reflects the date on which our compensation committee established the terms of the 2020 Maffei Restructuring RSUs as described under
“—Compensation Discussion and Analysis—Elements of 2020 Executive Compensation—2020 Maffei Restructuring RSUs.”
|
|
(8)
|
The 2020 Maffei Restructuring RSUs awards, which vested in full on December 10, 2020.
|
|
(9)
|
Reflects the date on which our compensation committee established the terms of the 2020 Maffei Term RSUs and the 2020 NEO Multiyear
Options as described under “—Compensation Discussion and Analysis—Elements of 2020 Executive Compensation—Equity
Incentive Compensation—Other 2020 Awards—Multiyear Equity Awards.”
|
|
(10)
|
Vests in full on December 7, 2024.
|
|
(11)
|
Vests 50% on December 7, 2022 and 50% on December 7, 2023.
|
Outstanding Equity Awards at Fiscal Year-End
The following table contains information regarding
unexercised options and unvested RSUs which were outstanding as of December 31, 2020 and held by the named executive officers.
|
|
|
Option
awards
|
|
|
|
Stock
Awards
|
|
Name
|
|
|
Number
of
securities
underlying
unexercised
options
(#)
Exercisable
|
|
|
|
Number
of
securities
underlying
unexercised
options (#)
Unexercisable
|
|
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
|
Option
exercise
price
($)
|
|
|
|
Option
expiration
date
|
|
|
|
Number
of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
|
|
|
|
Equity
Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units
or Other
Rights That Have
Not Vested
($)
|
|
Gregory B. Maffei
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPB
|
|
|
1,797,107
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27.83
|
|
|
|
12/21/2024
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
LTRPB
|
|
|
26,557
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14.28
|
|
|
|
03/06/2026
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
LTRPB
|
|
|
572,665
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3.76
|
|
|
|
12/15/2027
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
RSU Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPB
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
320,057
|
(1)
|
|
|
9,419,278
|
|
|
|
-
|
|
|
|
-
|
|
LTRPB
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
242,382
|
(2)
|
|
|
7,133,302
|
|
LTRPB
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
(3)
|
|
|
29,430,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian J. Wendling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
-
|
|
|
|
49,491
|
(4)
|
|
|
-
|
|
|
|
4.31
|
|
|
|
12/07/2027
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
RSU Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,535
|
(2)
|
|
|
32,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert E. Rosenthaler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
-
|
|
|
|
89,404
|
(4)
|
|
|
-
|
|
|
|
4.31
|
|
|
|
12/07/2027
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
RSU Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,512
|
(2)
|
|
|
67,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renee L. Wilm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
-
|
|
|
|
44,414
|
(5)
|
|
|
-
|
|
|
|
7.07
|
|
|
|
11/11/2026
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
LTRPA
|
|
|
-
|
|
|
|
24,075
|
(4)
|
|
|
-
|
|
|
|
4.31
|
|
|
|
12/07/2027
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
RSU Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,465
|
(2)
|
|
|
54,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Vests on December 15, 2023.
|
|
(2)
|
Represents the target number of 2020 Maffei RSUs that Mr. Maffei could earn and the maximum number of 2020 Chief RSUs that Messrs. Wendling
and Rosenthaler and Ms. Wilm could earn based on performance in 2020.
|
|
(3)
|
Vests on December 7, 2024.
|
|
(4)
|
Vests 50% on December 7, 2022 and 50% on December 7, 2023.
|
|
(5)
|
Vests 50% on September 23, 2022 and 50% on September 23, 2023.
|
Option Exercises and Stock Vested
The following table sets forth information concerning
the vesting of RSUs held by our named executive officers during 2020. None of our named executive officers exercised any options during
2020.
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
shares
|
|
|
Value
|
|
|
shares
|
|
|
Value
|
|
|
|
acquired on
|
|
|
realized on
|
|
|
acquired on
|
|
|
realized on
|
|
Name
|
|
exercise (#)
|
|
|
exercise ($)
|
|
|
vesting(#)(1)
|
|
|
vesting ($)
|
|
Gregory B. Maffei
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPB
|
|
|
—
|
|
|
|
—
|
|
|
|
65,363
|
(2)
|
|
|
240,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian J. Wendling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
—
|
|
|
|
—
|
|
|
|
1,442
|
|
|
|
2,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert E. Rosenthaler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
—
|
|
|
|
—
|
|
|
|
3,290
|
|
|
|
5,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renee L. Wilm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
—
|
|
|
|
—
|
|
|
|
1,325
|
|
|
|
2,014
|
|
|
(1)
|
Includes shares withheld in payment of withholding taxes at election of holder.
|
|
(2)
|
Includes the 2020 Maffei Restructuring RSUs.
|
Potential Payments Upon Termination or Change-in-Control
The following table sets forth the potential payments
to our named executive officers if their employment with our company had terminated or a change in control had occurred, in each case,
as of December 31, 2020, which was the last business day of our last completed fiscal year. For purposes of the following table,
we have assumed that Mr. Maffei’s employment had terminated at each of Liberty TripAdvisor, Liberty Media and the other Service
Companies. In the event of such a termination or change in control, the actual amounts may be different due to various factors. In addition,
we may enter into new arrangements or modify these arrangements from time to time.
The amounts provided in the table are based on
the closing market prices on December 31, 2020 for our Series A common stock and Series B common stock, which were $4.34
and $29.43, respectively. The value of the options shown in the table is based on the spread between the exercise price of the award and
the applicable closing price. Any of the named executive officers’ option awards that had exercise prices that were more than the
closing market price of our Series A common stock and Series B common stock on December 31, 2020 have been excluded from
the table below. The value of the RSUs shown in the table is based on the applicable closing market price and the number of unvested RSUs.
Each of our named executive officers has received
awards and payments under our incentive plans. Additionally, Mr. Maffei is entitled to certain payments and acceleration rights upon
termination under his employment agreement. See “—Executive Compensation Arrangements” above and “—Termination
Without Cause or for Good Reason” below.
The circumstances giving rise to these potential
payments and a brief summary of the provisions governing their payout are described below and in the footnotes to the table (other than
those described under “—Executive Compensation Arrangements,” which are incorporated by reference herein):
Voluntary Termination
The stock options awarded to Mr. Maffei in
2014 (the 2014 Options) and in 2019 were issued under the 2014 incentive plan. The 2019 Maffei Term RSUs and 2020 Maffei Term RSUs,
the Maffei 2020 Bonus Options, the 2020 Maffei RSUs, the stock options awarded to Ms. Wilm in 2019, the 2020 NEO Multiyear Options
and the 2020 Chief RSUs were issued under the 2019 incentive plan. Under these plans and the related award agreements, in the event of
a voluntary termination of his or her employment with our company for any reason, each named executive officer would typically only have
a right to the equity grants that vested prior to his or her termination date. However, if Mr. Maffei had voluntarily terminated
his employment at December 31, 2020, (i) his 2020 Maffei RSUs would have remained outstanding until any performance criteria
had been determined to have been met or not and a prorated amount of RSUs (based on the number of days Mr. Maffei was employed during
the calendar year) would have vested to the extent determined by the compensation committee and (ii) his 2019 Maffei Term RSUs and
2020 Maffei Term RSUs would have been subject to pro rata vesting (based on the number of days elapsed during the four-year vesting period).
Mr. Maffei would have been entitled to certain other benefits upon a voluntary termination of his employment with our company as
of December 31, 2020. The type and amount of severance pay and benefits Mr. Maffei would receive would depend on whether he
remained employed by Liberty Media at or following the date of termination of his services to our company or whether his employment with
Liberty Media was also voluntarily terminated. These additional severance payments and benefits are described above in “—Executive
Compensation Arrangements—Gregory B. Maffei—2019 Maffei Employment Arrangement” above. Messrs. Wendling and Rosenthaler
and Ms. Wilm are not entitled to any severance payments or other benefits upon a voluntary termination of his or her respective employment
for any reason. The foregoing discussion assumes that the named executive officers voluntarily terminated his or her respective employment
without good reason. See “¾Termination Without Cause or for Good Reason” below
for a discussion of potential payments and benefits upon a named executive officer’s voluntary termination of his or her employment
for good reason.
Termination for Cause
All outstanding equity grants constituting options,
whether unvested or vested but not yet exercised, and unvested RSUs under the existing incentive plans would typically be forfeited by
any named executive officer (other than Mr. Maffei in the case of equity grants constituting vested options or similar rights) who
is terminated for “cause.” However, if Mr. Maffei’s employment had been terminated for cause after the close of
business on December 31, 2020, his 2020 Maffei RSUs would have remained outstanding until any performance criteria had been determined
to have been met or not and would have vested to the extent determined by the compensation committee. Unless there is a different definition
in the applicable award agreement, each of the 2014 incentive plan and the 2019 incentive plan define “cause” as insubordination,
dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform duties and responsibilities for any
reason other than illness or incapacity; provided that, if such termination is within 12 months after a change in control (as described
below), “cause” means a felony conviction for fraud, misappropriation or embezzlement. With respect to Mr. Maffei’s
equity grants, including the 2014 Options, “cause,” as defined in the applicable award agreement, means (i) Mr. Maffei’s
willful failure to follow the lawful instructions of the board of directors of our company; (ii) the commission by Mr. Maffei
of any fraud, misappropriation or misconduct that causes demonstrable material injury to our company or its subsidiaries; (iii) Mr. Maffei’s
conviction of, or plea of guilty or nolo contendere to, a felony; or (iv) Mr. Maffei’s failure to comply in any material
respect with any written agreement between him and our company or any of our subsidiaries if such failure causes demonstrable material
injury to our company or any of our subsidiaries, except that Mr. Maffei is entitled to certain procedural and cure rights relating
to a termination for cause, except in the case of a termination for cause based on a felony conviction. Mr. Maffei has certain continuing
rights under his award agreements, including for his 2014 Options, to exercise vested options following a termination for “cause.”
Termination Without Cause or for Good Reason
As of December 31, 2020, Mr. Maffei’s
unvested equity awards consisted of the 2019 Maffei Term RSUs, the 2020 Maffei Term RSUs and the 2020 Maffei RSUs. The 2019 Maffei Term
RSUs, 2020 Maffei Term RSUs and 2020 Maffei RSUs would have vested in full upon a termination of his employment by our company without
cause (as defined in the 2019 Maffei Employment Agreement) or by him for good reason (as defined in the 2019 Maffei Employment Agreement)
as of December 31, 2020. Mr. Maffei would also be entitled to severance pay and benefits from our company upon a termination
without cause or by him for good reason. The type and amount of severance pay and benefits Mr. Maffei would receive would depend
on whether he remained employed by Liberty Media at or following the date of termination of his services to our company or whether his
employment with Liberty Media was also terminated without cause or for good reason. These additional severance payments and benefits are
described above in “—Executive Compensation Arrangements—Gregory B. Maffei—2019 Maffei Employment Agreement—Termination
Payments and Benefits.”
As of December 31, 2020, Messrs. Wendling’s
and Rosenthaler’s and Ms. Wilm’s only unvested equity awards were the 2020 Chief RSUs, the 2020 NEO Mulityear Options
and the stock options granted to Ms. Wilm in 2019. The 2020 Chief RSUs would have remained outstanding until any performance criteria
had been determined to have been met or not and would have vested to the extent determined by the compensation committee. The stock options
granted to Ms. Wilm in 2019 and the 2020 NEO Multiyear Options provide for vesting upon termination of employment without cause of
a pro rata portion of each vesting tranche of the applicable award (based on the number of days that have elapsed from the grant date
through the termination date, plus an additional 365 days, over the applicable tranche’s vesting period). Neither Messrs. Wendling
or Rosenthaler nor Ms. Wilm is entitled to any severance pay or other benefits from our company upon a termination without cause
or for good reason.
Death
In the event of death of any of the named executive
officers as of December 31, 2020, the incentive plans and applicable award agreements would have provided for vesting in full of
any outstanding options and unvested RSUs. Mr. Maffei is also entitled to certain payments and other benefits if he dies while providing
services to our company. These additional severance payments and benefits are described above in “—Executive Compensation
Arrangements—Gregory B. Maffei—2019 Maffei Employment Agreement—Termination Payments and Benefits.” None of the
other named executive officers would have been entitled to any severance pay or other benefits from our company if he or she had died
while employed by our company, assuming a termination date as of December 31, 2020.
Disability
If the employment of any of the named executive
officers had been terminated as of December 31, 2020 due to disability, which is defined in the incentive plans or applicable award
agreements, such plans or agreements provide for vesting in full of any outstanding options and unvested RSUs. Mr. Maffei is also
entitled to certain payments and other benefits upon a termination of his employment due to disability. These additional severance payments
and benefits are described above in “—Executive Compensation Arrangements—Gregory B. Maffei—2019 Maffei Employment
Agreement—Termination Payments and Benefits.” None of the other named executive officers would have been entitled to any severance
pay or other benefits from our company upon a termination due to disability, assuming a termination date as of December 31, 2020.
Change in Control
In case of a change in control, the incentive plans
provide for vesting in full of any outstanding options and unvested RSUs (other than, in the case of a change of control as of December 31,
2020, the 2020 Maffei Term RSUs and 2019 Maffei Term RSUs) held by the named executive officers. A change in control is generally defined
as:
|
·
|
The acquisition by a non-exempt person (as defined in the incentive plans) of beneficial ownership of at least 20% of the combined
voting power of the then outstanding shares of our company ordinarily having the right to vote in the election of directors, other than
pursuant to a transaction approved by our board of directors.
|
|
·
|
The individuals constituting our board of directors over any two consecutive years cease to constitute at least a majority of the
board, subject to certain exceptions that permit the board to approve new members by approval of at least two-thirds of the remaining
directors.
|
|
·
|
Any merger, consolidation or binding share exchange that causes the persons who were common stockholders of our company immediately
prior thereto to lose their proportionate interest in the common stock or voting power of the successor or to have less than a majority
of the combined voting power of the then outstanding shares ordinarily having the right to vote in the election of directors, the sale
of substantially all of the assets of the company or the dissolution of the company.
|
In the case of a change in control described in
the last bullet point, our compensation committee may determine not to accelerate the existing equity awards of the named executive officers
if equivalent awards will be substituted for the existing awards. For purposes of the tabular presentation below, we have assumed that
our named executive officers’ existing unvested equity awards (other than the 2019 Maffei Term RSUs and the 2020 Maffei Term RSUs)
would vest in full in the case of a change in control described in the last bullet. A change in control (as defined in the 2019 Maffei
Employment Agreement) of our company would provide Mr. Maffei with a short time period during which to exercise his rights to terminate
his employment for good reason, which would result in vesting of his 2019 Maffei Term RSUs and 2020 Maffei Term RSUs. For purposes of
the tabular presentation below, we have assumed that Mr. Maffei does not exercise his right to terminate his employment for good
reason in connection with a change in control of our company.
Benefits Payable Upon Termination or Change-in-Control
Name
|
|
Voluntary
Termination
Without Good Reason ($)
|
|
|
Termination for
Cause ($)
|
|
|
Termination Without
Cause or for Good Reason ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
After a Change
in Control ($)
|
|
Gregory B. Maffei
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
850,000
|
(1)
|
|
|
—
|
|
|
|
3,750,000
|
(2)
|
|
|
3,750,000
|
(2)
|
|
|
3,750,000
|
(2)
|
|
|
—
|
|
Options
|
|
|
17,978,020
|
(3)
|
|
|
17,978,020
|
(4)
|
|
|
17,978,020
|
(5)
|
|
|
17,978,020
|
(5)
|
|
|
17,978,020
|
(5)
|
|
|
17,978,020
|
(6)
|
RSUs
|
|
|
10,081,570
|
(3)
|
|
|
7,133,302
|
(4)
|
|
|
45,982,580
|
(5)
|
|
|
45,982,580
|
(5)
|
|
|
45,982,580
|
(5)
|
|
|
7,133,302
|
(6)
|
Perquisites (7)
|
|
|
—
|
|
|
|
—
|
|
|
|
29,752
|
|
|
|
—
|
|
|
|
29,752
|
|
|
|
—
|
|
Total
|
|
|
28,909,591
|
|
|
|
25,111,323
|
|
|
|
67,740,352
|
|
|
|
67,710,600
|
|
|
|
67,740,352
|
|
|
|
25,111,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian J. Wendling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
—
|
(8)
|
|
|
—
|
(8)
|
|
|
659
|
(9)
|
|
|
1,485
|
(10)
|
|
|
1,485
|
(10)
|
|
|
1,485
|
(11)
|
RSUs
|
|
|
—
|
(8)
|
|
|
—
|
(8)
|
|
|
32,702
|
(9)
|
|
|
32,702
|
(10)
|
|
|
32,702
|
(10)
|
|
|
32,702
|
(11)
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
33,361
|
|
|
|
34,187
|
|
|
|
34,187
|
|
|
|
34,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert E. Rosenthaler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
(8)
|
|
|
|
(8)
|
|
|
1,191
|
(9)
|
|
|
2,682
|
(10)
|
|
|
2,682
|
(10)
|
|
|
2,682
|
(11)
|
RSUs
|
|
|
—
|
(8)
|
|
|
—
|
(8)
|
|
|
67,322
|
(9)
|
|
|
67,322
|
(10)
|
|
|
67,322
|
(10)
|
|
|
67,322
|
(11)
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
68,513
|
|
|
|
70,004
|
|
|
|
70,004
|
|
|
|
70,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renee L. Wilm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
—
|
(8)
|
|
|
—
|
(8)
|
|
|
321
|
(9)
|
|
|
722
|
(10)
|
|
|
722
|
(10)
|
|
|
722
|
(11)
|
RSUs
|
|
|
—
|
(8)
|
|
|
—
|
(8)
|
|
|
54,098
|
(9)
|
|
|
54,098
|
(10)
|
|
|
54,098
|
(10)
|
|
|
54,098
|
(11)
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
54,419
|
|
|
|
54,820
|
|
|
|
54,820
|
|
|
|
54,820
|
|
|
(1)
|
If Mr. Maffei had voluntarily terminated his employment without good reason at Liberty TripAdvisor, Liberty Media and each of
the other Service Companies (as defined in the 2019 Maffei Employment Agreement) as of December 31, 2020, he would have been entitled
to receive in a lump sum $17 million, prorated based on the number of days that have elapsed within the year of termination, with up to
25% of such amount payable in shares of common stock of Liberty Media or the applicable Service Company. See “—Executive Compensation
Arrangement—Gregory B. Maffei” above. The amount in the table includes our allocable portion of this payment (5%) for which
we would reimburse Liberty Media.
|
|
(2)
|
If Mr. Maffei’s employment at Liberty TripAdvisor, Liberty Media and each of the other Service Companies had been terminated
by Liberty TripAdvisor, Liberty Media and each of the other Service Companies without cause (as defined in the 2019 Maffei Employment
Agreement), by him for good reason (as defined in the 2019 Maffei Employment Agreement) (whether before or within a specific period following
a change in control), in each case, subject to execution of a mutual release, or due to Mr. Maffei’s death or disability as
of December 31, 2020, he would have been entitled to receive (i) a payment of two times his 2020 base salary payable in 24 equal
monthly installments, (ii) fully vested shares of common stock with an aggregate grant date fair value of $35 million, (iii) a
lump sum payment of an amount equal to two times his average annual bonus paid for the two calendar years prior to separation, but in
no event an amount that is less than two times his aggregate target bonus of $17 million and (iv) a lump sum cash payment equal to
the greater of $17 million and the annual cash performance bonus otherwise payable for the year of termination, in each case, prorated
based on the number of days that have elapsed within the year of termination, with up to 25% of such amount payable in shares of common
stock of Liberty Media or the applicable Service Company. See “—Executive Compensation Arrangement—Gregory B. Maffei”
above. The amount in the table includes our allocable portion of this payment (5%) for which we would reimburse Liberty Media. The amount
in the table does not include the lump sum cash payment described in (iv) because Mr. Maffei had already been paid his 2020
cash bonus prior to December 31, 2020.
|
|
(3)
|
Based on (i) the number of vested options held by Mr. Maffei at December 31, 2020 and (ii) the number of unvested
options and RSUs that would vest pursuant to the following: If Mr. Maffei’s employment had been terminated without good reason
as of December 31, 2020, he would have been entitled to pro rata vesting of the 2019 Maffei Term RSUs and 2020 Maffei Term RSUs (based
on the number of days that had elapsed from the date of grant over the four-year vesting period) and the 2020 Maffei RSUs would have remained
outstanding until any performance criteria had been determined to have been met or not and would have vested on a pro rata basis (based
on the elapsed number of days in the calendar year of termination) to the extent determined by the compensation committee. As described
above in “—Compensation Discussion and Analysis—Equity Incentive Compensation,” our compensation committee vested
all of the 2020 Maffei RSUs, which is reflected in the table above.
|
|
(4)
|
Based on (i) the number of vested options held by Mr. Maffei at December 31, 2020 and (ii) the number of unvested
RSUs that would vest pursuant to the following: If Mr. Maffei’s employment had been terminated for cause as of December 31,
2020, he would have forfeited his 2019 Maffei Term RSUs and 2020 Maffei Term RSUs. His 2020 Maffei RSUs would remain outstanding until
any performance criteria had been determined to have been met or not and would have vested to the extent determined by the compensation
committee. As described above in “—Compensation Discussion and Analysis—Equity Incentive Compensation,” our compensation
committee vested all of the 2020 Maffei RSUs, which is reflected in the table above.
|
|
(5)
|
Based on (i) the number of vested options held by Mr. Maffei at December 31, 2020 and (ii) the number of unvested
RSUs that would vest pursuant to the following: If Mr. Maffei’s employment had been terminated without cause (as defined in
the 2019 Maffei Employment Agreement), for good reason (as defined in the 2019 Maffei Employment Agreement) (whether before or within
a specific period following a change in control) or due to Mr. Maffei’s death or disability as of December 31, 2020, his
2019 Maffei Term RSUs, 2020 Maffei Term RSUs and 2020 Maffei RSUs would have vested in full.
|
|
(6)
|
Based on (i) the number of vested options held by Mr. Maffei at December 31, 2020 and (ii) the number of unvested
RSUs that would vest pursuant to the following: Upon a change in control, we have assumed for purposes of the tabular presentation above
that Mr. Maffei’s 2020 Maffei RSUs would have vested in full. See the “Outstanding Equity Awards at Fiscal Year-End”
table above.
|
|
(7)
|
If Mr. Maffei’s employment had been terminated at our company’s election for any reason (other than cause) or by
Mr. Maffei for good reason (as defined in his employment agreement) or by reason of disability, as of December 31, 2020, he
would have been entitled to receive personal use of the corporate aircraft for 120 hours per year over a 12-month period. Perquisite amount
of $595,044 represents the maximum potential cost of using the corporate aircraft for 120 hours based on an hourly average of the incremental
cost of use of the corporate aircraft. The amount in the table includes our allocable portion of this payment (5%) for which we would
reimburse Liberty Media.
|
|
(8)
|
Each of Messrs. Wendling and Rosenthaler and Ms. Wilm would have forfeited his or her 2020 NEO Multiyear Options and 2020
Chief RSUs if his or her employment had been terminated without good reason or for cause as of December 31, 2020. Ms. Wilm would
have forfeited the stock options awarded to her in 2019 if her employment had been terminated by her without good reason or by the company
for cause as of December 31, 2020.
|
|
(9)
|
Based on the number of unvested options and unvested RSUs held by the named executive officer as of December 31, 2020 that would
vest pursuant to the following: If Messrs. Wendling’s or Rosenthaler’s or Ms. Wilm’s employment had been terminated
without cause or for good reason as of December 31, 2020, their 2020 Chief RSUs would have remained outstanding until any performance
criteria had been determined to have been met or not and would have vested to the extent determined by the compensation committee. As
described above in “—Compensation Discussion and Analysis—Equity Incentive Compensation,” our compensation committee
vested all of the 2020 Chief RSUs, which is reflected in the table above. Additionally, the portion of Messrs. Wendling’s and
Rosenthaler’s and Ms. Wilm’s 2020 NEO Multiyear Options and Ms. Wilm’s stock options granted in 2019 that
would have vested pursuant to the forward-vesting provisions in such named executive officer’s award agreements.
|
|
(10)
|
Based on the number of unvested options and unvested RSUs held by the named executive officer as of December 31, 2020 that would
vest pursuant to the following: If Messrs. Wendling’s or Rosenthaler’s or Ms. Wilm’s employment had been terminated
due to death or disability as of December 31, 2020 all of the 2020 NEO Multiyear Options, 2020 Chief RSUs and Ms. Wilm’s
stock options granted in 2019 would have vested in full.
|
|
(11)
|
Based on the number of unvested options and unvested RSUs held by the named executive officer as of December 31, 2020 that would
vest pursuant to the following: Upon a change of control, we have assumed for purposes of the tabular presentation above that the 2020
NEO Multiyear Options, 2020 Chief RSUs and Ms. Wilm’s stock options granted in 2019 would have vested in full. See the “Outstanding
Equity Awards at Fiscal Year-End” table above.
|
Director Compensation
Nonemployee Directors
Director Fees. Each of our directors who
is not an employee of, or service provider to, our company is paid an annual fee of $162,000 (which we refer to as the director fee)
for 2021 ($159,000 for 2020), of which fee each director was permitted to elect to receive 50%, 75% or 100% of such director fee in RSUs
or options to purchase LTRPA, which will vest one year from the grant date, with the remainder payable in cash. The awards issued to our
directors with respect to their service on our board in 2020 were issued in December 2019, except with respect to Mr. O’Hara,
whose prorated awards were issued in March 2020. See “—Director RSU Grants” and “—Director Option Grants”
below for information on the equity awards granted in 2020 to the nonemployee directors with respect to service on our board in 2021.
Fees for service on our audit committee, compensation committee, executive committee and nominating and corporate governance committee
are the same for 2020 and 2021. With respect to our audit committee, compensation committee and nominating and corporate governance committee,
each member thereof receives an additional annual fee of $15,000, $10,000 and $10,000, respectively, for his participation on each such
committee, except that the chairman of each such committee instead receives an additional annual fee of $25,000, $15,000 and $15,000,
respectively, for his participation on that committee. With respect to our executive committee, each member thereof who is not an employee
of, or service provider to, our company receives an additional annual fee of $5,000 for his participation on that committee. The cash
portion of the director fees and the fees for participation on committees are payable quarterly in arrears.
Equity Incentive Plans. As discussed above,
awards granted to our nonemployee directors under the 2019 incentive plan are currently administered by our full board of directors. Our
board of directors has full power and authority to grant eligible persons the awards described below and to determine the terms and conditions
under which any awards are made. The 2019 incentive plan is designed to provide additional remuneration to our nonemployee directors for
services rendered, and to encourage their investment in our capital stock, thereby increasing their proprietary interest in our business.
Our board of directors may grant non-qualified stock options, SARs, restricted shares, RSUs, cash awards, performance awards or any combination
of the foregoing under the 2019 incentive plan.
As described above, in connection with the Spin-Off,
our company’s board of directors adopted the transitional plan, which governs the terms and conditions of awards issued in the Spin-Off
in connection with adjustments made to awards previously granted by Qurate Retail with respect to its former Liberty Ventures common stock.
Director RSU Grants. Pursuant to our director
compensation policy described above and the 2019 incentive plan, we granted the following RSU awards during 2020:
Name
|
|
03/26/2020 Award of LTRPA RSUs (#)
|
|
|
12/07/2020 Award of LTRPA RSUs (#)
|
|
Michael J. Malone
|
|
|
-
|
|
|
|
63,035
|
|
Chris Mueller
|
|
|
-
|
|
|
|
63,035
|
|
M. Gregory O’Hara
|
|
|
38,116
|
(1)
|
|
|
31,518
|
|
|
(1)
|
These RSUs were granted to Mr. O’Hara upon his appointment to our board of directors and vested in full on December 10,
2020.
|
The RSUs granted in December 2020 will vest
on the first anniversary of the grant date, or on such earlier date that the grantee ceases to be a director because of death or disability
and, unless our board of directors determines otherwise, will be forfeited if the grantee resigns or is removed from the board before
the vesting date.
Director Option Grants. Pursuant to our
director compensation policy described above and the 2019 incentive plan, on December 7, 2020, Mr. Romrell was granted options
to purchase 49,263 LTRPA shares and Mr. Wargo was granted options to purchase 98,526 LTRPA shares, all of which had an exercise price
equal to $4.31, which was the closing price of such stock on the grant date. The options will become exercisable on the first anniversary
of the grant date, or on such earlier date that the grantee ceases to be a director because of death or disability, and, unless our board
determines otherwise, will be terminated without becoming exercisable if the grantee resigns or is removed from the board before the vesting
date. Once vested, the options will remain exercisable until the seventh anniversary of the grant date, or, if earlier, until the first
business day following the first anniversary of the date the grantee ceases to be a director.
Aircraft Usage. Liberty
Media has a fractional ownership contract with NetJets, Inc. for business travel purposes. Given the coronavirus pandemic and the significant
reduction in business travel, the minimum use of the NetJets contract would not be met and, therefore, the company’s named executive
officers and directors were afforded the opportunity to use a portion of the NetJets contract for personal use, provided that each such
named executive officer or director was responsible for reimbursing Liberty Media for costs associated therewith. Such use resulted in
no incremental cost to the company and the directors did not incur any taxable income in connection therewith.
Stock Ownership Guidelines
In March 2016, our board of directors adopted stock ownership guidelines that require each nonemployee director to own shares of
our company’s stock equal to at least 1.5 times the value of the nonemployee director fee. Nonemployee directors will have five
years from the later of (i) the effective date of the guidelines and (ii) the nonemployee director’s initial appointment to our
board to comply with these guidelines.
Director Compensation Table
Name(1)
|
|
Fees
Earned
or Paid in
Cash ($)
|
|
|
Stock
Awards
($)(2)(3)
|
|
|
Option
Awards
($)(2)(4)
|
|
|
All other
compensation
($)
|
|
|
Total ($)
|
|
Michael J. Malone
|
|
|
35,000
|
|
|
|
271,681
|
|
|
|
–
|
|
|
|
–
|
|
|
|
306,681
|
|
Chris Mueller
|
|
|
69,750
|
|
|
|
271,681
|
|
|
|
–
|
|
|
|
–
|
|
|
|
341,431
|
|
M. Gregory O’Hara(5)
|
|
|
60,987
|
|
|
|
224,272
|
|
|
|
–
|
|
|
|
–
|
|
|
|
285,259
|
|
Larry E. Romrell
|
|
|
104,500
|
|
|
|
–
|
|
|
|
135,859
|
|
|
|
–
|
|
|
|
240,359
|
|
J. David Wargo
|
|
|
40,000
|
|
|
|
–
|
|
|
|
271,718
|
|
|
|
–
|
|
|
|
311,718
|
|
|
(1)
|
Gregory B. Maffei and Albert E. Rosenthaler, each of whom is a director of our company and a named executive officer, received no
compensation for serving as a director of our company during 2020.
|
|
(2)
|
As of December 31, 2020, our directors (other than Mr. Maffei and Mr. Rosenthaler, whose equity awards are listed in
“Executive Compensation—Outstanding Equity Awards at Fiscal Year-End” above) held the following equity awards:
|
|
|
Michael J.
Malone
|
|
|
Chris
Mueller
|
|
|
M.
Gregory
O’Hara
|
|
|
Larry E.
Romrell
|
|
|
J. David
Wargo
|
|
Options (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
129,745
|
|
|
|
35,446
|
|
|
|
–
|
|
|
|
125,831
|
|
|
|
208,583
|
|
RSUs (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTRPA
|
|
|
63,035
|
|
|
|
63,035
|
|
|
|
31,518
|
|
|
|
–
|
|
|
|
–
|
|
|
(3)
|
Reflects the grant date fair value of RSUs awarded to Messrs. Malone, Mueller and O’Hara, which has been computed based
on the closing price of LTRPA shares on the grant date in accordance with FASB ASC Topic 718, but (pursuant to SEC regulations) without
reduction for estimated forfeitures.
|
|
(4)
|
The aggregate grant date fair value of the stock option awards has been computed in accordance with FASB ASC Topic 718, but (pursuant
to SEC regulations) without reduction for estimated forfeitures. For a description of the assumptions applied in these calculations, see
Note 12 to our consolidated financial statements for the year ended December 31, 2020 (which are included in our 2020 Form 10-K).
|
|
(5)
|
Mr. O’Hara was appointed to our board of directors effective March 26, 2020.
|
Compensation Committee Interlocks and Insider Participation
No member of our compensation committee during
2020 is or has been an officer or employee of our company or has engaged in any related party transaction in which our company was a participant.
Compensation Committee Report
The compensation committee has reviewed and discussed
with our management the “Compensation Discussion and Analysis” included under “Executive Compensation” above.
Based on such review and discussions, the compensation committee recommended to our board that the “Compensation Discussion and
Analysis” be included in this Form 10-K/A.
Submitted by the Members
of the Compensation Committee
Larry E. Romrell
Michael J. Malone
J. David Wargo
Item 13. Certain Relationships and Related Transactions, and Director
Independence.
Under our Code of Business Conduct and Ethics and
Corporate Governance Guidelines, if a director or executive officer has an actual or potential conflict of interest (which includes being
a party to a proposed “related party transaction” (as defined by Item 404 of Regulation S-K)), the director or executive officer
should promptly inform the person designated by our board to address such actual or potential conflicts. No related party transaction
may be effected by our company without the approval of the audit committee of our board or another independent body of our board designated
to address such actual or potential conflicts.
Investment Agreement
On March 26, 2020, pursuant to the Investment
Agreement, dated as of March 15, 2020 (the Investment Agreement), among our company, Certares Holdings, Certares Blockable
and Certares Optional (collectively, Assignor) and solely for the purposes of certain provisions specified therein, Gregory B.
Maffei, as assigned pursuant to the Assignment and Assumption Agreement, dated as of March 26, 2020, by and among the Assignor and
Certares LTRIP (the Purchaser, and together with Assignor, Certares), we issued and sold to the Purchaser 325,000 shares
of LTRPP, for a purchase price of $1,000 per share. Effective as of March 29,
2021, the Repurchase Agreement, among other things, amended certain terms of the Investment Agreement. For more information regarding
such amended terms of the Investment Agreement, see “—Stock Repurchase Agreement.”
The Investment
Agreement contains certain covenants of our company and Certares, including, among other things, a covenant that, subject to certain exceptions,
Certares will not transfer, or agree to transfer, any of its shares of LTRPP.
Board
Matters. Pursuant to the Investment Agreement, for so long as at least 25% of the original aggregate liquidation value of the
LTRPP shares remains outstanding (the Threshold Amount),
the holders of a majority of the LTRPP shares may appoint one director (the Series A Preferred Threshold Director)
to our board of directors. Upon the closing of the transactions pursuant to the Investment Agreement, Mr. M. Gregory O’Hara,
Founder and Senior Managing Director of Certares Management LLC, was appointed as the Series A Preferred Threshold Director and Vice
Chairman of our board of directors. Pursuant to the Repurchase Agreement, effective as of March 29, 2021, Mr. O’Hara resigned
as the Series A Preferred Threshold Director and the Purchaser permanently waived its right to appoint the Series A
Preferred Threshold Director. As a condition to the transfer of any LTRPP shares, the transferee must agree to such waiver. For more information
regarding board matters with respect to the Repurchase Agreement, see “—Stock Repurchase Agreement—Matters Relating
to the Board.”
Consent
Rights. For so long as the Threshold Amount remains outstanding, we will not pay any dividends on or repurchase shares
of our common stock without the prior written consent of the holders of a majority of the LTRPP
shares (subject to certain exceptions). In addition, for so long as the Purchaser beneficially
owns a number of shares of LTRPP with an aggregate liquidation value at least equal to the Threshold Amount, we are required to obtain
the prior written consent of the holders of at least a majority of the LTRPP shares prior to incurring certain indebtedness, issuing any
stock which ranks on a parity basis with or senior to the LTRPP shares, issuing LTRPB shares, subject to certain exceptions,
entering into certain affiliate transactions and transferring shares of Tripadvisor Class B and TRIP.
Sales
Process. If our board of directors approves the initiation of a sale process to effect a change in control of itself or the entry
into negotiations with a third party for a change in control, and, at such time, the Purchaser beneficially owns a number of shares of
LTRPP with an aggregate liquidation value equal to at least the Threshold Amount, the Investment
Agreement requires us to provide notice of such intent to the Purchaser, designate a nationally recognized investment bank to act as financial
advisor, and provide the Purchaser the opportunity to participate as a potential buyer. In addition, if the Purchaser owns a number of
shares of LTRPP with an aggregate liquidation value equal to at least the Threshold Amount,
subject to certain exceptions, the Purchaser is entitled to certain rights to match offers consisting of at least 90% of cash consideration
to acquire our company or LTRPB shares owned by Mr. Maffei, as the case may be.
Consultation. For
so long as the Purchaser owns shares of LTRPP having a liquidation value equal to at least
the Threshold Amount, the Purchaser is entitled to certain consultation rights with our company
with respect to any matter on which we vote our shares of Tripadvisor equity and with Mr. Maffei with respect to any matter on which
he votes his LTRPB shares.
Tripadvisor
Board. The Investment Agreement also required our company, upon closing, to nominate an individual designated by the Purchaser
to the board of directors of Tripadvisor for so long as (i) the Purchaser beneficially
owns a number of shares with an aggregate liquidation value equal to at least the Threshold Amount and (ii) we have a right to nominate
at least two directors to Tripadvisor’s board of directors under the Governance Agreement among Tripadvisor, Qurate Retail and Barry
Diller, dated as of December 20, 2011, as amended by the Assignment and Assumption of Governance Agreement among Tripadvisor, our
company and Qurate Retail, dated August 12, 2014. On March 27, 2020, Mr. O’Hara was appointed to the board of directors
of Tripadvisor.
The
description of the Investment Agreement is qualified in its entirety by reference to the full text of the Investment Agreement,
which is incorporated by reference herein and filed as Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC March 16, 2020.
Stock Repurchase Agreement
On March 29, 2021, pursuant to the First Closing
(as defined in the Repurchase Agreement) under the Repurchase Agreement, we, among other things, repurchased from the Purchaser 126,921
LTRPP shares at a per share price of $2,174.29, which represented 39% of the LTRPP shares held by the Purchaser, for an aggregate value
of approximately $344 million. The aggregate consideration consisted of a combination of a portion of the net proceeds of our private
offering of $300 million aggregate principal amount of exchangeable senior debentures due 2051 (Debentures), which closed on March 25,
2021, and 1,713,859 shares of TRIP. On April 6, 2021, pursuant to the Second Closing (as defined in the Repurchase Agreement) under
the Repurchase Agreement, we repurchased from the Purchaser an additional 10,665 LTRPP shares at a per share price of $2,174.29, which
represented an additional 3% of the LTRPP shares held by the Purchaser prior to the completion of the transactions contemplated by the
Repurchase Agreement. The consideration for the Second Closing consisted of the net proceeds from the sale of additional Debentures following
the exercise in full by the initial purchasers of their option to purchase additional Debentures. Following the completion of the Second
Closing, we have outstanding 187,414 LTRPP shares with a redemption value, as of March 22, 2021, of approximately $509 million based
on the last reported sale price of TRIP on the Nasdaq Global Select Market on March 22, 2021.
The Repurchase Agreement contains customary representations,
warranties and covenants of the parties. In addition, the Repurchase Agreement provides as follows:
Permanent Waiver of Put Right. The Purchaser
permanently waived its put right with respect to our LTRPP
shares contained in the Certificate of Designations (the Put Right).
Liberty TripAdvisor Call Right. We have
the option, from time to time commencing on March 27, 2024, to call and repurchase (the Optional Repurchase Right) any and
all of the outstanding LTRPP shares at the Optional Repurchase Price (as such term is defined in the Repurchase Agreement).
Restriction on Transfer
of LTRPP Shares. Subject to exceptions contained in the Investment Agreement and the Repurchase Agreement, the LTRPP shares generally
are non-transferable; provided that we have agreed not to unreasonably withhold our consent to certain transfers of up to 49% of the remaining
LTRPP shares outstanding following the completion of the repurchase pursuant to the Repurchase Agreement (so long as there are no more
than six holders of the LTRPP shares at any one time). Any transferee of LTRPP shares must agree to the permanent waiver of the Put Right,
the permanent waiver of the right to appoint the Series A Preferred Threshold Director (as described below) and to the Optional Repurchase
Right.
Lock-up on TRIP.
Pursuant to the Repurchase Agreement, and subject to the limited exceptions described therein, the Purchaser will be restricted from transferring
TRIP shares for a period of six months commencing on March 22, 2021.
Matters Relating to the Board. Pursuant
to the Repurchase Agreement, (i) Mr. O’Hara delivered a resignation to our board of directors as the Series A Preferred
Threshold Director, (ii) the Purchaser permanently waived its right to appoint the Series A Preferred Threshold Director, (iii) the
authorized size of our board of directors increased by two members (the LTRP New Board Seats) and (iv) Mr. O’Hara
was appointed to one of the LTRP New Board Seats as a Class III member with a term expiring at our 2021 annual meeting of stockholders
(the LTRP 2021 Annual Meeting) and Vice Chairman of our board of directors. Pursuant to the Repurchase Agreement, the Purchaser
has nominated Mr. O’Hara to be included in the slate of nominees recommended by our board of directors to our stockholders
for election as directors at the 2021 Annual Meeting and to be included in any future slate of such nominees for Class III directors
for so long as Purchaser beneficially owns LTRPP shares equal to at least the Threshold Amount. In the event Mr. O’Hara is
not elected as a director of our board of directors, we will appoint Mr. O’Hara as a non-voting observer of our board of directors,
subject to certain customary conditions, for so long as the Purchaser beneficially owns LTRPP shares equal to at least the Threshold Amount.
In the event the Purchaser ceases to beneficially own LTRPP shares equal to at least the Threshold Amount, the Purchaser will cause Mr. O’Hara
to immediately resign from our board of directors or, if applicable, his non-voting board observer position, which will automatically
terminate at such time.
The description of the Repurchase Agreement is
qualified in its entirety by reference to the full text of the Repurchase Agreement, which is incorporated by reference herein
and filed as
Exhibit 7(f) to our Amendment No. 4 to Schedule 13D filed with the SEC on March 24, 2021.
Registration Rights Agreement
Our company
and the Purchaser entered into a Registration Rights Agreement at the closing of the sale of the LTRPP
shares under the Investment Agreement (the Registration Rights Agreement). Under the Registration Rights Agreement, the
Purchaser is entitled to demand and piggyback registration rights with respect to the shares of LTRPP
and any shares of common stock of our company paid to satisfy our obligations under the Investment Agreement and the Certificate
of Designations. The Purchaser will be entitled to four demand registration rights, subject to certain limitations, including that each
demand must cover at least $15,000,000 in value of shares to be registered and that we will not be required to effect more than one underwritten
shelf takedown during any 180 day period. We will pay the costs associated with such registrations (other than underwriting discounts,
fees and commissions).
The
description of the Registration Rights Agreement is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is incorporated by reference herein and filed as Exhibit 4.2 to our Current Report on Form 8-K filed with the SEC March 16, 2020.
Letter Agreement with Mr. Maffei
On December 21, 2014, Mr. Maffei received
a one-time grant of the 2014 Options consisting of 1,797,107 options to purchase shares of LTRPB at an exercise price of $27.83 per share.
Because of the significant voting power that Mr. Maffei would possess upon exercise of the 2014 Options, our board of directors determined
that it would be appropriate to also grant Mr. Maffei approval for purposes of exempting him from the restrictions that may be imposed
on him as an “interested stockholder” under Section 203 of the General Corporation Law of the State of Delaware (Section 203).
Separately, Mr. Maffei advised our board that, although no agreement, arrangement or understanding had been reached, he was in discussions
with Mr. Malone regarding a potential exchange of shares of LTRPB owned by the Malones (as defined below) for shares of LTRPA owned
by Mr. Maffei. As a result, the compensation committee of our board and the members of our board independent of Mr. Maffei and
the Malones determined that it was appropriate to request that Mr. Maffei enter into a standstill agreement with our company, and
on December 21, 2014, we and Mr. Maffei entered into a letter agreement (the Standstill Letter). The Standstill Letter
was entered into in connection with the grant of the 2014 Options to Mr. Maffei and in anticipation of such potential exchange. On
December 22, 2014, Mr. Maffei acquired 2,770,173 shares of LTRPB in exchange for 3,047,190 shares of LTRPA pursuant to an exchange
transaction pursuant to which he exchanged (the Exchange) an aggregate of 3,047,190 shares of LTRPA in a private transaction with
John C. Malone, our Chairman at the time, Mr. Malone’s wife and two trusts (the Trusts) managed by an independent trustee,
the beneficiaries of which are Mr. Malone’s adult children (Mr. Malone, his wife and the Trusts, the Malones),
for an aggregate of 2,770,173 shares of LTRPB held by Mr. Malone, his wife and the Trusts. Prior to the grant of the 2014 Options
and any agreement, arrangement or understanding between Mr. Maffei and Mr. Malone regarding the Exchange, the compensation committee
of our board and the members of our board independent of Mr. Maffei and the Malones approved (x) each of Mr. Maffei and
certain of his related persons as an “interested stockholder” and (y) the acquisition by such persons of shares of our
common stock, in each case, for purposes of Section 203.
Although certain portions of the Standstill Letter
terminated in accordance with their terms on December 21, 2019, Mr. Maffei agreed, subject to certain exceptions, to certain
customary standstill provisions, which remain in effect. Such provisions prohibit Mr. Maffei and his Controlled Affiliates (as defined
in the Standstill Letter), unless expressly authorized by a majority of the members of our board who are independent, disinterested and
unaffiliated with Mr. Maffei and his Controlled Affiliates, from: (i) effecting or seeking, offering or proposing (whether publicly
or otherwise) to effect, or announcing any intention to effect or cause or participating in or assisting, facilitating or encouraging
any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (A) any acquisition
of any equity securities (or beneficial ownership thereof) or rights or options to acquire any equity securities (or beneficial ownership
thereof), of our company, (B) any tender or exchange offer, consolidation, business combination, acquisition, merger, joint venture
or other business combination involving our company, (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to our company or (D) any solicitation of proxies or consents relating to the election of directors with
respect to our company; (ii) forming, joining or in any way participating in a “group” (as defined under Rule 13d-3
of the Exchange Act); (iii) depositing any Voting Securities (as defined in the Standstill Letter) in a voting trust or similar arrangement;
(iv) granting any proxies with respect to any Voting Securities to any person (other than in his capacity as a designated representative
of our company); (v) otherwise acting (alone or in concert with others), to call or seek to call a meeting of our stockholders, initiating
any stockholder proposal or calling a special meeting of our board of directors; (vi) entering into any third-party discussions regarding
the foregoing; (vii) publicly requesting a waiver or amendment of the foregoing, or making any public announcement regarding such
restrictions; (viii) taking any action which would reasonably be expected to require our company to make a public announcement regarding
the possibility of a business combination or merger; or (ix) advising, assisting or knowingly encouraging or directing any person
to do so in connection with the foregoing. However, Mr. Maffei will not be deemed to have breached or violated these limitations
to the extent such actions were taken in connection with his provision of services to our company as a member of our board of directors
or as Chief Executive Officer of our company.
The standstill limitations cease to apply (i) if
our company fails (subject to certain exceptions) to comply with our obligation to include Mr. Maffei (or his designee) on the Management
Slate for election as a director (other than at Mr. Maffei’s request or because of Mr. Maffei’s refusal to accept
such nomination), (ii) if Mr. Maffei ceases to serve as Chief Executive Officer of our company other than as a result of his
resignation without Good Reason (as defined in the grant agreement related to the 2014 Options (the Option Agreement)), his Disability
(as defined in the Option Agreement) or his termination for Cause (as defined in the Option Agreement), or (iii) if Mr. Maffei
(or his designee) ceases to be a director of our company, other than (A) due to his refusal to serve as a director of our company
or to propose a designee in his place, (B) due to his (or his designee’s) resignation, (C) due to Mr. Maffei’s
election not to submit a replacement candidate for appointment or (D) during a period following Mr. Maffei’s resignation
so long as our company is working in good faith to appoint a replacement designee of Mr. Maffei. The standstill limitations also
cease to apply upon the occurrence of certain events set forth in the Standstill Letter, including our company entering into discussions
regarding a transaction that would, if consummated, be reasonably likely to result in a Change of Control (unless Mr. Maffei has
been released from such restrictions to the extent reasonably necessary for him to fully participate in any discussions (in his capacity
as a stockholder) and to offer or propose alternative transactions involving himself and his Controlled Affiliates and third parties)
or a third party commences a tender or exchange offer for at least 50.1% of our common stock which would result in a Change of Control
of our company and which offer is not opposed by our company.
The foregoing is a summary of the Standstill Letter
and is qualified by reference to the full text of the Standstill Letter, which is incorporated by reference herein and filed as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on December 29, 2014.
Director Independence
It is our policy that a majority of the members
of our board of directors be independent of our management. For a director to be deemed independent, our board of directors must affirmatively
determine that the director has no direct or indirect material relationship with us. To assist our board of directors in determining which
of our directors qualify as independent for purposes of Nasdaq rules as well as applicable rules and regulations adopted by
the SEC, the nominating and corporate governance committee of our board of directors follows Nasdaq’s corporate governance rules on
the criteria for director independence.
Our board of directors has determined that each
of Michael J. Malone, Chris Mueller, M. Gregory O’Hara, Larry E. Romrell and J. David Wargo qualifies as an independent director
of our company.