The Priceline Group
Priceline Group Inc. (Form: DEF 14A, Received: 04/25/2017 16:55:41)

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

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Priceline Group

 

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Dear Stockholders -

We are pleased to state that The Priceline Group had a very successful 2016. In a highly complex and competitive environment we pushed forward on key fronts. We increased our penetration in the world’s largest travel markets, accelerated our pace of innovation, deepened our investment in customer service, and added to our suite of digital and cloud-based solutions to further advance our mission: To help people experience the world .

Our mission is guided by a deep commitment to international expansion. Today, we offer our services to consumers in more than 220 countries and territories worldwide and operate through more than 200 offices, delivering locally-tailored products and services with content that is translated into over 40 languages, all supported by a global team of 18,000+ employees representing more than 130 nationalities.

We became one of the world’s most global companies by doing more than just making our products and services available through the Internet. Our commitment to having highly trained people on-the-ground in both the world’s largest cities and some of the most remote corners of the world helped us grow rapidly in 2016. Our international operations accounted for 88% of the Group’s total gross profit. This growth was led by the Group’s largest business, Booking.com, which made strong progress in three of the world’s most important travel markets: the United States, China and Japan. We also marked our first bookings in Cuba, demonstrating our commitment to be wherever our traveling customers want to go. We also saw continued global expansion by other Group brands, including KAYAK, which now operates 40 websites in 20 languages, OpenTable and Rentalcars.com, which made further pushes into Europe and Asia, and agoda.com, which has expanded its core Asia-based business into Western markets.

Global growth for the Group was enhanced by continued improvements in supply. Collectively, we work with more than 1.2 million properties and more than 40,000 restaurants. As travelers’ appetites for new and unique places to stay continue to grow, we have pushed to ensure our customers have the widest selection of homes, apartments, vacation rentals and hotels. Today, we offer our customers more than 7.8 million bookable rooms in property types that go beyond the traditional hotel, from homes and apartments, to villas, igloos and more. This is an area where we will continue to focus, knowing our customers love breadth of selection.

Any global, customer-facing business that is content with its own pace of innovation is destined for failure. Across the Group we have always had an “innovate or die” mindset but in 2016 we pushed even harder to accelerate our pace of innovation within a data-driven, ROI-positive framework. Through a number of initiatives, we deployed new technologies to reduce the friction points inherent in e-commerce. We launched new product enhancements such as chatbot integrations by Booking.com and KAYAK to make our booking experiences more seamless. We also introduced a new proprietary messaging platform at Booking.com that uses machine-learning algorithms to better understand and predict customer needs.

In addition, Rentalcars.com launched Rideways to provide even more flexibility when it comes to meeting the on-demand needs of consumers worldwide who want to instantly book car services. Over the last year, Rideways has scaled to over 800 locations worldwide.

In 2016, OpenTable improved its language technology platforms to launch its Global Passport product, reaching diners in their local language through technology.


We also launched integrations between our own technologies and third-party platforms to bolster superior experiences as demonstrated by KAYAK’s integration with Amazon’s Alexa and Facebook Messenger, and OpenTable’s tests with Google and Alexa.

At The Priceline Group, we are driven by a basic belief that innovation doesn’t have to be “big” to matter. Our teams know that small, incremental product innovations can, collectively, have a meaningful impact. At any moment in time, we have well over 1,000 live experiments running across our websites and apps in a constant quest to seek out the things that matter most to our customers. We experiment, collect findings, and then use these findings to create the next round of innovation. It is a continuous process that is driven by data, our own curiosities and consumer behavior.

However, we believe our customers are the key to the innovation process. Whether it is launching Booking.com for Travel Agents, finding new ways to merchandise the very best deals in travel at priceline.com, reinventing loyalty at agoda.com, or adding deeper, more relevant content at KAYAK, these bottom-up efforts and many like them have led to high customer satisfaction and growth in the business.

Innovation isn’t just about the “new.” It’s also about making the right decisions to pivot from products and technologies that are no longer desired or needed so capital can be reallocated to emerging growth efforts. For example, in 2016, we shut down priceline.com’s Name Your Own Price ® flight product in favor of newer discount products and apps like priceline.com’s Express Deals ® service that better meet today’s customer desires.

Our focus on customers doesn’t stop with the digital product. We invested significantly in 2016 in our global Customer Service efforts and today we have thousands of worldwide customer service employees using some of the latest technologies to ensure best-in-class service. Whether it’s hiring more multi-lingual experts all over the world, using machine-learning to better understand our customers’ preferences, or developing natural language processing algorithms to enable customers to converse with customer service systems, investments in our global customer service are expected to lower costs, increase customer loyalty and improve interactions between our customers and our partners worldwide.

As one of the largest e-commerce businesses in the world, we are not the final customer destination. We offer experiences sold by our network of partners worldwide, so our innovation can’t stop with the customer. Innovating around the tools and services we bring to our partners sets us apart and was a focus for the Company again in 2016. For example, OpenTable continued to roll out its cloud-based technology to its network of 40,000+ restaurants to offer better, more flexible restaurant management software to its partners. Also, Booking.com’s BookingSuite continued to build out its portfolio of digital services to help hotels and other properties digitize their businesses.

These efforts helped progress our mission and led to very strong financial performance. In 2016, The Priceline Group posted another year of outstanding double-digit growth, solidifying the company’s position as a global leader in e-commerce services. The Group posted $68.1 billion in gross travel bookings in 2016, an increase of 25% over 2015 on a constant currency basis, which contributed full year gross profit of $10.3 billion. We also delivered over 556 million room nights to our accommodation partners, exiting the year growing faster than we entered it. Finally, we repurchased 763,000 shares during 2016 to further drive value for our stockholders while ending the year with a strong balance sheet.

While I am extremely proud of the work done by our teams in 2016, there is so much more to do. The challenge is to figure out how technologies can be used to make the impossible and difficult today into the possible and real tomorrow. My vision for The Priceline Group is to think


about how we move from scaled e-commerce to connected scaled experience. We will test and learn, probably make some mistakes, perhaps fail entirely at times, but this is how we learn and grow as a company and as human beings. Our never-ending quest is to reduce the friction impeding people from experiencing all this world has to offer.

We want a future in which friction goes away and technology re-creates the personalized service that a travel agent used to do when planning a vacation.  Imagine if technology could eliminate the conventional hotel check-in process entirely and you went directly to your room where your phone unlocked the door. Imagine check-out just being a click on an app that showed your bill in its entirety.  What if we arrived at our vacation villa and the minibar was pre-stocked with our favorite foods and beverages, the services at the resort were bookable on our travel app and the staff knew all of our travel preferences?  What if a few hours before dinner our travel app suggested restaurants based on our favorite foods and these restaurants competed for our business by offering us personalized offers?  What if when we went abroad, the restaurant menus were on our app in our own language?  All of this, and so much more, is not only possible but is already beginning to happen.  However, it will not be easy to make this a universal experience.  It will take time and expertise but our brand CEOs and I are committed to trying to make it happen in the coming years.

I have now been at The Priceline Group for seventeen years and am honored to have been promoted to the role of CEO on January 1, 2017. I know that our success has been the result of the extraordinary efforts by our employees worldwide and I want to thank all of them for their commitment and energy. They are everything The Priceline Group stands for and I promise to continue listening to and investing in our people.

I also want to thank our millions of loyal customers, hundreds of thousands of partners, committed stockholders and Board of Directors for our success. Without you, none of this is possible.

 

Sincerely,

Glenn D. Fogel
President and Chief Executive Officer

April 2017


 

 

Dear Stockholder:

You are cordially invited to attend the 2017 Annual Meeting of Stockholders (the “Annual Meeting”) of The Priceline Group Inc. to be held at 10:00 a.m. Eastern Time on Thursday, June 8, 2017 at The NASDAQ Market Site, 4 Times Square, New York, New York 10036.

This booklet includes the Notice of Annual Meeting and proxy statement. The proxy statement provides information about The Priceline Group in addition to describing the business we will conduct at the meeting.

We hope you will be able to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please mark, sign, date and return your proxy card in the enclosed envelope as soon as possible or vote by calling the toll-free telephone number or by using the Internet as described in the instructions included in your proxy card. Your stock will be voted in accordance with the instructions you have given in your proxy card. You may attend the Annual Meeting and vote in person, even if you have previously returned your proxy card or voted by telephone or by Internet, by following the instructions included in the proxy statement. All stockholders who attend the meeting will be required to present valid picture identification, such as a driver’s license or a passport . We hope you are able to join us on June 8.

Sincerely,

Jeffery H. Boyd

Executive Chairman of the Board

April 25, 2017

IMPORTANT

A proxy card is enclosed. We urge you to complete and mail the card promptly in the enclosed envelope, which requires no postage if mailed in the United States. Alternatively, you may vote by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card. Any stockholder attending the Annual Meeting may personally vote on all matters that are considered, in which case the signed and mailed proxy or prior vote by telephone or Internet will be revoked. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain from the record holder a proxy issued in your name.

IT IS IMPORTANT THAT YOU VOTE YOUR STOCK


 

The Priceline Group Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06854

Notice of Annual Meeting of Stockholders

Thursday, June 8, 2017

10:00 a.m. Eastern Time

To the stockholders of The Priceline Group Inc. (the “Company”):

The Company hereby notifies you that its 2017 Annual Meeting of Stockholders (the “Annual Meeting”) will be held on Thursday, June 8, 2017 at 10:00 a.m. Eastern Time at The NASDAQ Market Site, 4 Times Square, New York, New York 10036 for the following purposes:

 

To elect twelve directors to hold office until the next annual meeting of stockholders and until their respective successors are elected and qualified;

To ratify the selection of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2017;

To approve on an advisory basis the 2016 compensation paid by the Company to its named executive officers;

To cast an advisory vote on the frequency of future advisory votes on the compensation paid by the Company to its named executive officers;

To consider and vote upon a non-binding stockholder proposal concerning special meetings of stockholders; and

To transact such other business as may properly come before the meeting or any adjournment or postponement of the meeting.

These business items are more fully described in the proxy statement accompanying this notice.

The Board of Directors fixed the close of business on April 13, 2017 as the record date for identifying those stockholders entitled to notice of, and to vote at, this Annual Meeting and at any adjournment or postponement of this meeting.

April 25, 2017

By Order of the Board of Directors

Peter J. Millones

Executive Vice President, General Counsel and
Corporate Secretary

Norwalk, Connecticut

 

All stockholders are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for that purpose. Alternatively, you may vote by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card. Even if you have given your proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain from the record holder a proxy issued in your name.


 

 

Company Highlights and Proxy Statement Summary

To assist you in reviewing our 2016 performance, we would like to call your attention to the following information, including key elements of our proxy statement and Annual Report on Form 10-K. The following description is only a summary. Before voting and for more complete information about these topics, please review our Annual Report on Form 10-K for the year ended December 31, 2016 and the complete proxy statement.

Company Highlights - Performance

From an operating and financial perspective, 2016 was an outstanding year for The Priceline Group Inc. (the “Company,” “The Priceline Group,” “we,” “our” or “us”). We continue to operate the largest, most profitable global online travel business in the world, with a market capitalization of $87.6 billion (as of March 31, 2017) and a 2016 operating margin of 28% as a percentage of gross profit (inclusive of a non-cash charge to goodwill associated with the acquisition of OpenTable). During 2016, Booking.com, our largest business, added over 260,000 accommodations to its reservation services, including over 175,000 vacation rental properties, and, as of March 31, 2017, had approximately 1,191,000 directly bookable hotels and other places to stay available through its websites and mobile offerings representing more than 25.2 million rooms. Based on room nights booked, which grew 28.7% in 2016 to more than 556 million, we continue to be the largest online accommodation reservation service in the world.

We are particularly proud of our ability to achieve both strong growth and industry-leading profitability over many years. Due to the highly international nature of our business, our financial performance as reported in U.S. Dollars, including our adjusted EBITDA, was negatively impacted by the strong U.S. Dollar when compared to many other currencies during 2016. However, we still achieved year-over-year gross bookings (a common operating and statistical metric used in the travel industry representing the total U.S. Dollar value, generally inclusive of all taxes and fees, of all travel services purchased by consumers through our online travel reservation businesses, net of cancellations) growth of 22.6%, gross profit growth of 20.1% and adjusted EBITDA growth of 19.1%. Constant currency (i.e., using 2015 exchange rates) gross bookings growth of 25% and gross profit growth of 23% in 2016 are even more impressive and demonstrate our fundamental operating strength. From a multi-year perspective, we have achieved significant growth, with a 95% increase in gross bookings, a 106% increase in gross profit, a 63% increase in net income and an 85% increase in adjusted EBITDA over the 2014-2016 three-year period as compared to the 2011-2013 three-year period. See Appendix A to this proxy statement for a reconciliation of adjusted EBITDA to U.S. GAAP net income.

 

THE PRICELINE GROUP INC. - 2017 Proxy Statement     8


Company Highlights - Stockholder Return

Our strong operating and financial performance has resulted in significant returns to stockholders. Our stock price increased from $1,162.40 on December 31, 2013 to $1,466.06 on December 30, 2016. In addition, we returned approximately $1.0 billion to stockholders through the repurchase of shares of our common stock during 2016. Over the 2014-2016 three-year period, we returned approximately $4.9 billion to stockholders through the repurchase of shares of our common stock, representing 49% of the cash generated by operating activities during that three-year period.

Company Highlights - Corporate Governance and Board Composition

We strive to maintain strong corporate governance practices that are both stockholder friendly and designed to protect and grow long-term stockholder value. Management regularly engages with our largest stockholders and encourages all stockholders to contact us about any concerns they have. Our corporate governance practices include:

Lead Independent Director;

Majority voting in director elections;

Stockholder-approved proxy access;

Annual director elections (i.e., no classified board);

No super-majority voting provisions;

Stock ownership guidelines for directors and executive officers;

Stockholders can call special meetings;

No poison pill/rights plan;

Annual “say-on-pay” vote;

No hedging or pledging of stock by directors or executive officers;

Disclosure of director and executive officer 10b5-1 Plans; and

9 of 12 directors are independent.

In addition, our Board of Directors (the “Board”) exhibits a strong mix of desired attributes, including business experience, tenure, age, gender and independence. Five of our current directors have joined our Board since January 2013, including four independent directors, and another director is joining the Board on May 15, 2017. Two members of our Audit Committee have been designated as “audit committee financial experts.”

Company Highlights - Executive Compensation

We believe strongly in pay for performance. As a result, we design our compensation programs so that we must achieve outstanding performance for our executive officers to achieve above-market compensation, including through the combination of below-market salaries and the potential for a high level of variable, “at risk” performance-driven compensation. We believe that we have developed a highly effective compensation program that has resulted in strong performance for many years. The program is substantially performance based, combines short-term and long-term elements and is based on a metric that promotes both stockholder value creation and short-term and long-term executive accountability. We use adjusted EBITDA as the basis for calculating “Compensation EBITDA,” which is the primary measure for evaluating our performance and for determining performance-based compensation for our senior executives, because, among other reasons, we believe that adjusted EBITDA represents the performance of our core business and our ability to create value for stockholders. See Compensation Discussion and Analysis beginning on page 31 for more information about our compensation programs and philosophy, as well as an explanation of how we calculate “Compensation EBITDA.”

THE PRICELINE GROUP INC. - 2017 Proxy Statement     9


We do:

 

We do not:

Tie pay to performance.

 

Provide change in control severance tax gross-ups and do have a policy against future such arrangements.

Use “double triggers” in our severance agreements and equity awards.

 

Permit stock option repricing without stockholder approval.

Have significant stock ownership guidelines.

 

Provide significant executive-only perquisites.

Have a clawback policy.

 

Grant stock options.

Conduct an annual risk assessment of our executive compensation program.

 

Permit hedging or pledging of our stock by our directors or executive officers.

Cap the bonus pool from which senior executives’ individual cash bonuses are paid.

 

Annual Meeting Information Summary

Time and Date:

10:00 a.m., local (Eastern) time, on Thursday, June 8, 2017.

Location:

The NASDAQ Market Site, 4 Times Square, New York, New York 10036. For more information about entry into the meeting, see How to Attend the Annual Meeting on page 74.

Record Date:

April 13, 2017.

Voting Procedures:

All stockholders are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy card as promptly as possible to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for that purpose. Alternatively, you may vote by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card. Even if you have submitted your proxy card, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain from the record holder a proxy issued in your name.

Voting Matters:

The following proposals will be voted upon at the Annual Meeting and are described in more detail in this proxy statement. Our Board recommends that you vote as follows on each such proposal:

Proposals

Board Vote Recommendation

More Information

Election of Directors (Proposal 1)

The Board of Directors recommends that you vote FOR each of the Board of Directors’ nominees.

Page 13

Ratification of Independent Auditor (Proposal 2)

The Board of Directors recommends that you vote FOR ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.

Page 64

Advisory Vote to Approve 2016 Executive Compensation (Proposal 3)

The Board of Directors recommends that you vote FOR the approval on an advisory basis of our 2016 executive compensation.

Page 67

Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation (Proposal 4)

The Board of Directors recommends that you select ONE YEAR as the desired frequency of future advisory votes to approve executive compensation.

Page 68

Stockholder Proposal Concerning Special Meetings of Stockholders (Proposal 5)

The Board of Directors recommends that you vote AGAINST the non-binding stockholder proposal concerning special meetings of stockholders.

Page 69

THE PRICELINE GROUP INC. - 2017 Proxy Statement    10


Table of Contents

 

13

Nominees for Election as Directors

15

EXECUTIVE OFFICERS

19

CORPORATE GOVERNANCE AND BOARD MATTERS

20

The Board of Directors

20

Strategic Framework and The Board’s Role in Company Strategy

20

Corporate Governance

20

Committees of the Board of Directors

24

Leadership Structure

26

Board’s Oversight of Risk

26

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

28

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

30

COMPENSATION DISCUSSION AND ANALYSIS

31

Summary Information

31

Executive Compensation Program Philosophy and Objectives

34

Benchmarking and Target Compensation

35

Measuring Performance – Compensation EBITDA

36

Components of Executive Compensation in 2016

37

Key Governance Matters

44

Compensation Committee Report

46

COMPENSATION OF NAMED EXECUTIVE OFFICERS

47

Summary Compensation Table

47

Grants of Plan-Based Awards Table

49

Outstanding Equity Awards at 2016 Fiscal Year-End Table

50

Option Exercises and Stock Vested Table

51

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

52

POTENTIAL PAYMENTS UPON A CHANGE IN CONTROL AND/OR TERMINATION

56

THE PRICELINE GROUP INC. - 2017 Proxy Statement    11


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EQUITY COMPENSATION PLAN INFORMATION

59

2016 NON-EMPLOYEE DIRECTOR COMPENSATION AND BENEFITS

60

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

63

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

63

Review and Approval or Ratification of Related Person Transactions

63

64

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

65

AUDITOR INDEPENDENCE

66

67

68

69

2018 STOCKHOLDER PROPOSALS

71

OTHER MATTERS

71

ANNUAL MEETING INFORMATION

72

Voting Rights and Outstanding Shares; Approval

72

Revocability of Proxies

73

Solicitation

73

How to Attend the Annual Meeting

74

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

75

Non-GAAP Financial Measures

76

FORM OF PROXY CARD

77

THE PRICELINE GROUP INC. - 2017 Proxy Statement    12


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PROPOSAL 1

ELECTION OF DIRECTORS

The Board currently consists of eleven directors, with no vacancies, and the term of all of the directors expires at the Annual Meeting. In addition, the Board has appointed Mr. Robert J. Mylod, Jr. as a director, effective May 15, 2017. The Board has proposed that the following twelve nominees, each of whom is a current director (other than Mr. Mylod, who is joining the Board on May 15, 2017), be elected to the Board at the Annual Meeting to hold office for a one-year term until the next annual meeting of stockholders and until his or her successor has been duly elected and qualified: Timothy M. Armstrong, Jeffery H. Boyd, Jan L. Docter, Jeffrey E. Epstein, Glenn D. Fogel, James M. Guyette, Robert J. Mylod, Jr., Charles H. Noski, Nancy B. Peretsman, Thomas E. Rothman, Craig W. Rydin and Lynn M. Vojvodich. Unless otherwise instructed, it is the intention of the persons named as proxies on the accompanying proxy card to vote shares represented by properly executed proxies for such nominees. The proxies solicited by this proxy statement may not be voted for more than twelve nominees.

With respect to the election of directors, a majority of votes cast means that the number of shares cast “for” a nominee’s election exceeds the number of “withhold” votes for that nominee. With respect to Proposal 1, votes cast does not include abstentions or broker non-votes, and therefore, abstentions and broker non-votes will not affect the outcome of the vote. Holders of common stock may not cumulate their votes in the election of directors.

Although the Board anticipates that the twelve nominees will be available to serve as directors on our Board, if any of them should be unwilling or unable to serve, it is intended that the proxies will be voted for the election of such substitute nominee or nominees as may be designated by the Board. If elected at the Annual Meeting, each of the nominees would serve a one-year term until the 2018 annual meeting of stockholders and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation or removal. Each person nominated for election has agreed to serve if elected. We have no reason to believe that any nominee will be unable to serve.

      The Board of Directors recommends a vote FOR each of the Board’s nominees.

We believe that our directors should possess high personal and professional ethics and integrity, and be committed to representing the long-term interests of our stockholders. We endeavor to have a Board representing a range of experiences at policy-making levels in business and in areas that are relevant to our global activities. The Board and the Nominating and Corporate Governance Committee believe that, in light of our businesses and structure, the following are key areas of experience, qualifications and skills that should be represented on the Board:

Leadership experience. The Board believes that directors with experience in significant leadership positions over an extended period, especially chief executive officer positions, provide us and the Board with special insights. These individuals generally possess extraordinary leadership qualities and the ability to identify and develop those qualities in others. They demonstrate a practical understanding of organizations, processes, strategy, risk management and the methods to drive change and growth.

Finance experience. The Board believes that an understanding of finance, financial statements and financial reporting processes is important for our directors. We generally measure our operating and strategic performance by reference to financial targets. In addition, accurate financial reporting and effective auditing are critical to our success.

Industry experience. The Board seeks to have directors with experience in Internet or technology businesses or in the travel industry, because it believes that having directors experienced in the industries in which we operate is important for our success and the Board’s ability to oversee management.

Global experience. Our future success depends, in part, on our ability to continue to grow our businesses outside the United States. In 2016, approximately 88% of our consolidated gross profit was generated by our international businesses. As a result, the Board believes it is important that it include directors with a global business perspective and significant international business experience.

Sales and Marketing experience. The Board seeks to have directors with significant sales and marketing experience to provide additional insight and advice to management as our business is highly dependent on effective marketing, including brand and performance advertising.

THE PRICELINE GROUP INC. - 2017 Proxy Statement    13


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The foregoing areas of experience, qualifications and skills that were particularly identified with each nominee by the Nominating and Corporate Governance Committee and the Board when considering the re-nomination of the current directors (and Mr. Mylod) are summarized in the following chart and described more fully in each nominee’s biography set forth below.

Director Qualifications

 

 

 

Leadership

Finance

Industry

 

Global Business

Sales and Marketing

Timothy M. Armstrong

 

 

 

Jeffery H. Boyd

 

 

 

Jan L. Docter

 

 

 

 

Jeffrey E. Epstein

 

 

 

Glenn D. Fogel

 

 

 

James M. Guyette

 

 

Robert J. Mylod, Jr.

 

 

 

Charles H. Noski

 

 

Nancy B. Peretsman

 

 

Thomas E. Rothman

 

 

 

Craig W. Rydin

 

 

 

Lynn M. Vojvodich

 

 

 

 

The evaluation of director nominees, including each nominee’s independence from management, by the Nominating and Corporate Governance Committee and the Board also takes into account director tenure. Although re-nomination of incumbent directors is not automatic, the Nominating and Corporate Governance Committee believes that Board continuity facilitates effective and efficient leadership, risk management and oversight and that the knowledge and understanding of our business gained over years of service are important attributes to consider when determining nominees for election to the Board. The Nominating and Corporate Governance Committee and the Board believe that the current mix of directors reflects an appropriate mix of short-, medium- and long-tenured directors, with the Board’s independent directors having an average tenure of 8.8 years, including the addition of four new independent directors since January 1, 2013.

THE PRICELINE GROUP INC. - 2017 Proxy Statement    14


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Nominees for Election as Directors

Set forth below is biographical information as of March 31, 2017 for each person nominated for election to the Board at the Annual Meeting.

Name

Age

Director Since

Committee Memberships

Timothy M. Armstrong

46

2013

Compensation

Jeffery H. Boyd (Executive Chairman)

60

2001

 

Jan L. Docter

67

2007

Audit

Jeffrey E. Epstein

60

2003

Audit

Compensation

Glenn D. Fogel

55

2017

 

James M. Guyette (Lead Independent Director)

71

2003

Compensation

Nominating and Corporate Governance (Chair)

Robert J. Mylod, Jr.

50

2017

 

Charles H. Noski

64

2015

Audit (Chair)

Nancy B. Peretsman

63

1999

Nominating and Corporate Governance

Thomas E. Rothman

62

2013

Nominating and Corporate Governance

Craig W. Rydin

65

2005

Audit

Compensation (Chair)

Lynn M. Vojvodich

49

2016

Nominating and Corporate Governance

 

Timothy M. Armstrong

 

Mr. Armstrong has served as Chief Executive Officer of AOL Inc. since April 2009. He also served as Chairman of the Board of AOL Inc. from April 2009 until Verizon acquired the company in June 2015. Prior to that, Mr. Armstrong served as President, Americas Operations and Senior Vice President of Google Inc. Mr. Armstrong joined Google in 2000 as Vice President, Advertising Sales, in 2004 was promoted to Vice President, Advertising and Commerce and in 2007 was named President, Americas Operations and Senior Vice President. Before joining Google, Mr. Armstrong served as Vice President of Sales and Strategic Partnerships for Snowball.com and as Director of Integrated Sales and Marketing at Starwave’s and Disney’s ABC/ESPN Internet Ventures. Mr. Armstrong started his career by co-founding and running a newspaper based in Boston, Massachusetts. Mr. Armstrong is a trustee of the Paley Center for Media, the New York Regional Board of Teach For America, the Waterside School and the U.S. Olympic & Paralympic Foundation. He is a Chair Emeritus of the Ad Council and Chairman of the IAB Education Foundation, both of which are non-profit organizations.

Director Qualifications:

Leadership, Industry and Global Business experience - extensive experience, expertise and background in global Internet businesses and the interactive media industry gained from his position as Chief Executive Officer of AOL and his former positions at Google; and his corporate leadership experience gained from his position as Chief Executive Officer of AOL.

Sales and Marketing experience - extensive experience and background in Internet marketing and sales from his position as Chief Executive Officer of AOL and his former positions at Google and ABC/ESPN Internet Ventures.

Jeffery H. Boyd, Executive Chairman

 

Mr. Boyd has served on our Board since October 2001, as the Chairman of our Board since January 2013, and as the Executive Chairman of our Board since January 2017. Mr. Boyd served as our Interim Chief Executive Officer and President from April 2016 to December 2016 and as our President and Chief Executive Officer from November 2002 until December 2013. Mr. Boyd was our President and Co-Chief Executive Officer from August 2002 to November 2002 and Chief Operating Officer from November 2000 to August 2002. He previously served as our Executive Vice President, General Counsel and Secretary from January 2000 to October 2000. Prior to joining us, Mr. Boyd was Executive Vice President, General Counsel and Secretary of Oxford Health Plans, Inc. Mr. Boyd is a member of the Board of Directors of The Home Depot.

Director Qualifications:

Leadership, Industry, Global Business, and Sales and Marketing experience - Mr. Boyd’s long and successful tenure as our President and Chief Executive Officer.

Jan L. Docter

 

Mr. Docter has been a self-employed business consultant since 2006. He is also an investor and actively involved in a number of

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early-stage companies. From 2003 until its acquisition by us in 2005, Mr. Docter was the Chief Financial Officer of Booking.com. From 2005 to 2006, Mr. Docter served as the Chief Financial Officer of Corio NV, an international real estate investment company that was listed on the Amsterdam Stock Exchange until it merged with Klépierre in 2014. From 1987 to 2003, he was Chief Financial Officer, and later Deputy CEO of, Getronics NV, a Dutch-based global information and communications technology services company that was listed on the Amsterdam Stock Exchange until it merged with Royal Dutch Telecom in 2007. From 1985 to 1988, he was Chief Financial Officer of Centrafarm Group NV, a European producer of generic drugs, which was listed on NASDAQ until 1987. Prior to that, Mr. Docter held various management positions at Polygram NV, currently known as Universal Music Group. He has also worked with the Dutch Ministry of Economic Affairs, and served on the Advisory Board of the Amsterdam Stock Exchange until it merged with Euronext in 2000. Mr. Docter is also a non-executive director of some private Dutch companies. Mr. Docter holds a Master's degree in economics from the Erasmus University of Rotterdam.

Director Qualifications:

Finance experience - former chief financial officer of European-based public companies and Booking.com.

Industry and Global Business experience - former chief financial officer of and human resource consultant to Booking.com; former chief financial officer and deputy CEO of a global technology services company.

Jeffrey E. Epstein

 

Mr. Epstein is an Operating Partner at Bessemer Venture Partners, a venture capital firm, which he joined in November 2011. From August 2011 to May 2014 he also served as a Senior Advisor at Oak Hill Capital Partners, a private equity firm. Mr. Epstein was Executive Vice President and Chief Financial Officer of Oracle Corporation from September 2008 to April 2011. Mr. Epstein has served as a member of the Board of Directors of Shutterstock, Inc., a global provider of licensed imagery, since April 2012 and serves as Chairman of its Audit Committee and a member of its Nominating and Corporate Governance Committee. Since January 2013, Mr. Epstein has served as a member of the Board of Directors of Global Eagle Entertainment Inc., a provider of in-flight video, Internet and other content to airlines and their passengers, and serves as chairman of its Audit Committee and as a member of its Corporate Governance and Nominating Committee. Mr. Epstein serves as a member of the Board of Directors of Kaiser Permanente, a leading U.S. not-for-profit health care provider and health plan.

Director Qualifications:

Finance and Global Business experience - former chief financial officer of Oracle, the world’s largest enterprise software company.

Leadership and Industry experience - former senior executive at Internet advertising company; board member of Internet companies; board member of supplier to the airline industry; former chief financial officer of Oracle.

Glenn D. Fogel – Chief Executive Officer and President

 

Mr. Fogel has served as our Chief Executive Officer and President since January 2017. Previously, he served as our Head of Worldwide Strategy and Planning from November 2010 to December 2016 and as our Executive Vice President, Corporate Development, from March 1, 2009 to December 2016. Mr. Fogel joined us in February 2000. Prior to that, he was a trader at a global asset management firm and prior to that was an investment banker specializing in the air transportation industry. Mr. Fogel is a member of the New York State Bar (retired).

Leadership experience - service as our President and Chief Executive Officer; and his previous service as our Head of Worldwide Strategy and Planning, responsible for global corporate strategy, worldwide mergers and acquisitions, business development initiatives and strategic alliances, helping lead us during a long period of sustained global growth.

Industry and Global Business experience – over 16 years at our company.

James M. Guyette

 

Mr. Guyette served as Chairman, President and Chief Executive Officer of Rolls-Royce North America Inc., a world-leading supplier of power systems to the global aerospace, defense, marine and energy markets, from 1997 through May 2015. Prior to joining Rolls-Royce, Mr. Guyette was Executive Vice President - Marketing and Planning for United Airlines, where he also held a number of other senior roles over nearly 30 years. Mr. Guyette served as a member of the Board of Directors of Rolls-Royce plc from 1997 until May 2015, and is Chairman of the Board of Directors of PrivateBancorp, Inc., where he has served on the Board of Directors since 1989. He is a member of the St. Mary’s College - Moraga CA - Board of Regents.

Director Qualifications:

Leadership and Global Business experience - served as chief executive officer of a leading multinational supplier to global aerospace, defense, marine and energy markets; director of two other public companies, including a multinational public company.

Industry and Global Business experience - approximately thirty years at one of the world’s largest airlines; former director of a global distribution system.

Sales and Marketing experience - extensive experience in sales and marketing from his positions at Rolls-Royce and United Airlines.

Robert J. Mylod, Jr.

 

Mr. Mylod is the Managing Partner of Annox Capital Management, a private investment firm that he founded in 2013. From 1999 to 2011, Mr. Mylod held several roles with us, including Vice Chairman, Head of Worldwide Strategy and Planning, and Chief Financial Officer. Prior to joining us, Mr. Mylod was a Principal at Stonington Partners, a private equity investment firm. Between October 2015 and April 2017, Mr. Mylod served as a member of the board of directors of Autobytel, a company that facilitates the buying and selling of cars online. Since 2001, Mr. Mylod has served as a member of the board of directors of EverBank, a U.S.

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savings bank providing online and mobile banking and financial services, and has served on EverBank’s Compensation Committee and as the Chairman of the Nominating and Corporate Governance Committee since EverBank went public in 2012. Mr. Mylod has served as a member of the board of directors of Novocure, a cancer treatment company, and on its Audit Committee since 2012, and on its Nominating and Corporate Governance Committee since 2015. He also serves on the board of directors of several privately held companies. Mr. Mylod received an A.B. in English from the University of Michigan and an M.B.A. from the University of Chicago Graduate School of Business.

Director Qualifications:

Leadership and Finance experience – our former chief financial officer; significant finance and investment experience as the founder and managing partner of Annox Capital Management.

Industry and Global Business experience – board member of several public and private technology companies; various positions with our company over 12 years, helping lead us during a long period of sustained global growth.

Charles H. Noski

 

In 2012, Mr. Noski retired from the role of Vice Chairman of Bank of America Corporation, to which he was named after previously serving as that company’s Executive Vice President and Chief Financial Officer. Prior to this, Mr. Noski served as Chief Financial Officer, Corporate Vice President and as a member of the Board of Directors of Northrop Grumman Corporation. Prior to Northrop Grumman, he was Vice Chairman of the Board of Directors and Chief Financial Officer of AT&T Corporation. Before that, Mr. Noski led Hughes Electronics Corporation in various senior executive roles, including as Vice Chairman and as President and Chief Operating Officer. Mr. Noski began his career at Deloitte & Touche LLP where he was named Partner. Mr. Noski has served as a member of the Board of Directors of Microsoft Corporation since 2003 and is the Chair of Microsoft’s Audit Committee and a member of its Governance and Nominating Committee. Mr. Noski has served as a member of the Board of Directors of Avon Products, Inc. since 2012 and is the Chair of Avon’s Audit Committee and a member of its Nominating and Corporate Governance Committee. Mr. Noski is also Chairman of the Board of Trustees of the Financial Accounting Foundation and a member of the Board of Directors of the National Association of Corporate Directors. In addition, Mr. Noski served as a member of the Board of Directors of Avery Dennison Corp., a global labeling and packaging company, from 2011 to 2014.

Director Qualifications:

Leadership, Finance and Global Business experience - senior leadership roles at large public, global companies, including as Chief Financial Officer of Bank of America; service as a partner at one of the world’s largest public accounting firms.

Industry experience - service as President and Chief Operating Officer of a large, public technology company; service as Chief Financial Officer of public technology companies and as a director of Microsoft.

Nancy B. Peretsman

 

Ms. Peretsman is a Managing Director at Allen & Company LLC, an investment bank, with which she has been associated since 1995. During her tenure at Allen & Company, Ms. Peretsman has provided advice and capital to over one hundred small, high growth businesses and served as advisor to many of the world’s largest media and consumer companies. Prior to joining Allen & Co., Ms. Peretsman was at Salomon Brothers from 1983 to 1995, where she headed the worldwide media investment banking practice and was a Managing Director from 1990 to 1995. Ms. Peretsman is an Emeritus Trustee of Princeton University, serves on the Board of Trustees of The Institute for Advanced Study and is a member of the National Board of Directors of Teach For America.

Director Qualifications:

Finance and Industry experience - current managing director at an investment bank; advisor to leading Internet, media and consumer companies.

Thomas E. Rothman

 

Mr. Rothman has served as Chairman of Sony Pictures Entertainment Motion Picture Group since March 2015. From September 2013 to February 2015, Mr. Rothman was Chairman of TriStar Productions, a motion picture and television venture with Sony Pictures Entertainment. Previously, Mr. Rothman served as Chairman of Fox Entertainment Group Inc., a media company and subsidiary of News Corp. from 2000 to 2005 and as its Chairman and Chief Executive Officer from 2005 to 2012. Mr. Rothman served as President of Twentieth Century Fox Film Group from January 2000 to August 2000, and served as President of Twentieth Century Fox Production from 1995 to 2000. In 1994, Mr. Rothman founded and served as President of Fox Searchlight Pictures. Prior to that, he served as President of Worldwide Production for the Samuel Goldwyn Company from 1989 to 1994. Mr. Rothman also served as an associate and then partner with Frankfurt, Kurnit, Klein & Selz, a law firm, from 1982 to 1987. Mr. Rothman serves as a member of the Board of Directors of the Sundance Institute and the American Film Institute, emeritus. He is also a member of the Boards of California Institute of the Arts (CalArts), Brown University (emeritus), and was appointed by President Obama and confirmed by the U.S. Senate as a member of the National Council of the Arts, the governing body for the National Endowment for the Arts.

Director Qualifications:

Leadership and Global Business experience - extensive executive leadership of global media companies.

Sales and Marketing experience - a long and successful career marketing motion pictures, television programs and other media.

Craig W. Rydin

 

From October 2011 to October 2013, Mr. Rydin served as the Non-Executive Chairman of The Yankee Candle Company, a maker of scented candles. Prior to being named Non-Executive Chairman, Mr. Rydin was the Executive Chairman of The Yankee

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Candle Company. Prior to being named Executive Chairman in October 2009, Mr. Rydin served as Chairman and Chief Executive Officer of Yankee Candle Inc. from April 2001 to October 2009 and served as Chairman of the Board of Directors of The Yankee Candle Company from February 2003 to October 2013. Prior to joining Yankee Candle, Mr. Rydin was the President of the Away From Home food services division of Campbell Soup Company, a position he held from 1998 to 2001. From 1996 to 1998, Mr. Rydin served as President of the Godiva Chocolatiers division of Campbell. Prior to his position with Godiva, Mr. Rydin held a number of senior management positions at Pepperidge Farm, Inc., also a part of Campbell. Mr. Rydin has served as a member of the Board of Directors of Philips-Van Heusen since 2006 and is currently a member of its Compensation Committee and Nominating Committee, has served as a member of the Board of Directors of Fitness Connection since 2013, and served as a member of the Board of Directors of Au Bon Pain from 2009 until 2016.

Director Qualifications:

Sales and Marketing experience - extensive experience in global sales and marketing from senior roles at consumer products and food services companies.

Leadership, Finance and Global Business experience - former chief executive officer and chairman of leading consumer products company; director of another public company; senior leadership experience at global food services companies.

Lynn M. Vojvodich

 

Ms. Vojvodich served as Executive Vice President and Chief Marketing Officer of salesforce.com from 2013 to February 2017. Before joining Salesforce, Ms. Vojvodich was a partner at Andreessen Horowitz, a leading venture capital firm, where she helped companies build their go-to-market strategies. Previously, she was the Chief Marketing Officer at Terracotta Inc., a leader in in-memory and cloud-enabling technology. Ms. Vojvodich has also served in various roles at organizations including Bain & Company and Microsoft. Ms. Vojvodich has served as a member of the Board of Directors of Ford Motor Company since April 2017. Ms. Vojvodich began her career as a mechanical engineer in a hard hat working on the design and construction of Gulfstream jets and offshore oil structures. She holds a B.S. in Product Design and Mechanical Engineering from Stanford University and an MBA from Harvard Business School.

Director Qualifications:

Industry, Global Business, and Sales and Marketing experience - extensive experience, expertise and background in Internet marketing and sales, including from her former position as Chief Marketing Officer of salesforce.com as well as prior senior marketing roles; responsible for global marketing at salesforce.com and prior experience in marketing positions at large, global organizations.

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Executive Officers

Set forth below is biographical information as of March 31, 2017 for our executive officers, other than Glenn D. Fogel, who became our Chief Executive Officer and President in January 2017, and Jeffery H. Boyd, our Executive Chairman, each of whom is nominated for election as a director. Biographical information for Messrs. Fogel and Boyd is set forth above.

Name

Title

Age

Executive Officer Since

Daniel J. Finnegan

Chief Financial Officer and Chief Accounting Officer

54

2005

Gillian Tans

President and Chief Executive Officer, Booking.com

46

2015

Peter J. Millones

Executive Vice President, General Counsel and Corporate Secretary

47

2001

Daniel J. Finnegan

 

Mr. Finnegan has been Chief Financial Officer since January 2009. Mr. Finnegan was Senior Vice President, Controller and Chief Accounting Officer from October 2005 to January 2009. Mr. Finnegan joined us in April 2004 as Vice President and Chief Compliance Officer. Prior to that, Mr. Finnegan served as Chief Financial Officer for CS Technology, Inc., a consulting company, from October 2000 to April 2004.

Gillian Tans

 

Ms. Tans has served as the President of our Booking.com business since January 2015 and as the Chief Executive Officer of Booking.com since April 2016. Ms. Tans is responsible for overseeing all of Booking.com’s functional departments and operations. Prior to her appointment as Chief Executive Officer, Ms. Tans served as Booking.com’s Chief Operating Officer from September 2011 to April 2016 and as Booking.com’s Director Hotels & Content from 2002 to September 2011. Before joining Booking.com in 2002, Ms. Tans spent four years with the international Golden Tulip Worldwide hotel group, where she served as Product Manager, Marketing Manager and Director of Sales. Ms. Tans also worked for the Intercontinental Hotel Group and with a number of independent hotels. Ms. Tans began her career at Hershey Entertainment and Resorts.

Peter J. Millones

 

Mr. Millones has been our General Counsel and Corporate Secretary since January 2001, and Executive Vice President since April 2003. He previously served as Vice President and Associate General Counsel from March 2000 to January 2001. Prior to that, Mr. Millones was with the law firm of Latham & Watkins LLP. As part of his responsibilities, Mr. Millones oversees our executive compensation programs.

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CORPORATE GOVERNANCE AND BOARD MATTERS

The Board of Directors

The Board is elected by and accountable to the stockholders and is responsible for our strategic direction, oversight and control. Regular meetings of the Board are generally held six times per year and special meetings are scheduled when necessary. The Board held sixteen meetings in 2016. The Board met more often in 2016 as compared with prior years, primarily in connection with the departure of Darren Huston, our former President and Chief Executive Officer, the appointment of Jeffery H. Boyd as our Interim Chief Executive Officer and President, and the search for a permanent chief executive officer, which resulted in the appointment of Glenn D. Fogel as our President and Chief Executive Officer effective January 1, 2017. For 2016, all directors attended at least 75% of the meetings of the Board and the Board committees of which they were members held while they were serving on the Board and any such committees. The Board has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, and has adopted written charters for each of these committees.

Strategic Framework and The Board’s Role in Company Strategy

As discussed in our Annual Report, we aim to achieve our mission to help people experience the world through global leadership in online travel and restaurant reservation and related services. We focus on relentless innovation and a commitment to serve both consumers and travel service provider and restaurant partners with unmatched service and best-in-class digital technology. As the online travel and dining categories continue to grow as consumer purchasing shifts from traditional off-line channels to interactive online channels, including mobile channels, our strategy is to continue to participate broadly in this online growth by expanding our service offerings and markets. In particular, we aim to be the world leader in online travel and restaurant reservation and related services by (a) providing consumers with the best experience, (b) partnering with travel service providers and restaurants to our mutual benefit, (c) operating entrepreneurial, independent brands that share best practices, and (d) investing in profitable and sustainable growth.

The Board is a key partner with management in formulating our strategy and oversees management’s implementation of our strategy. The Board and management, including our executive officers and the chief executive officers of our primary brands, meet annually in a day-long session to, among other things, review the state of the markets in which we operate, analyze our competitive position, measure our performance against our strategy and evaluate and adjust our strategy as deemed necessary or appropriate. While management takes the lead in preparing background materials and proposes the going-forward strategic direction for The Priceline Group, the Board plays an active role in evaluating, adjusting and approving our strategy. In particular, our Executive Chairman and Lead Independent Director work closely with management in advance of the meeting to prepare and approve the agenda for the meeting and to consult on the strategy to be proposed by management. Between these annual strategy meetings, management reports to the Board regularly, typically in connection with each regular meeting of the Board, on our implementation of the strategy and our progress toward reaching our strategic goals, and the Board discusses with management whether adjustments should be made in light of any changed circumstances, whether with respect to us, our markets, our competitors or otherwise. In addition, the Board meets regularly in executive session without management where, among other things, it discusses our performance and the continued viability of our strategy.

Corporate Governance

Corporate Governance Principles

 

We and our Board operate under corporate governance principles that are designed to maximize long-term stockholder value, align the interests of the Board and management with those of our stockholders and promote high ethical conduct among our directors and employees. A copy of our Corporate Governance Principles is available on our corporate website (www.pricelinegroup.com) under the tab “For Investors.” Our Corporate Governance Principles include the following:

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A majority of the Board must consist of independent directors.

The Nominating and Corporate Governance Committee will annually concur on a CEO succession plan.

The Board and each committee of the Board can hire its own outside advisors.

The independent directors will have at least two regularly scheduled meetings each year.

The Compensation Committee, meeting without our CEO present, will evaluate our performance and the performance of our CEO and will recommend to the Board the compensation of our CEO.

We maintain stock ownership guidelines for directors and executive officers.

Director Independence. For 2016, the Nominating and Corporate Governance Committee recommended to the Board, and the Board determined, that each of the directors elected at the 2016 annual meeting of stockholders other than Mr. Boyd (our former Interim Chief Executive Officer and President) was “independent” based on The NASDAQ Stock Market’s listing rules and our Corporate Governance Principles. For 2017, the Nominating and Corporate Governance Committee recommended to the Board, and the Board determined, that each of the nominees for election to the Board at the Annual Meeting is independent, other than Messrs. Boyd (the Executive Chairman of our Board), Fogel (our current Chief Executive Officer and President) and Mylod. In connection with the Nominating and Corporate Governance Committee’s recommendation regarding independence and the Board’s subsequent determination thereof, both the Committee and the Board take into account any relationships between us and companies with which directors may be affiliated, as well as the specific requirements of The NASDAQ Stock Market and the U.S. Securities and Exchange Commission (the “SEC”). The independent directors conduct at least two regularly scheduled executive sessions each year.

In connection with the independence determination of Mr. Armstrong, the Board and the Nominating and Corporate Governance Committee considered the ordinary course transactions between us and AOL, of which Mr. Armstrong is the Chief Executive Officer, primarily involving marketing affiliate relationships whereby we provide accommodation booking and restaurant reservation content to consumers through MapQuest (an AOL company) and under which we and AOL share in related commissions. In addition, the Board and the Nominating and Corporate Governance Committee considered the ordinary course transactions between us and Verizon, of which AOL is a subsidiary, primarily involving data center services, web services, voice services for call centers, CDN services, and caching and phone services. The Board and the Nominating and Corporate Governance Committee concluded that these transactions did not impair Mr. Armstrong’s independence because, among other reasons, the amounts in question were small in comparison to our revenues and those of Verizon and AOL and well below the thresholds set forth in The NASDAQ Stock Market’s independence standards and the fact that Mr. Armstrong was not involved in the transactions or in our decision to enter into these relationships with either Verizon or AOL.

In connection with the independence determination of Mr. Epstein, the Board and the Nominating and Corporate Governance Committee considered that we do business with Shutterstock, Inc., a public company, and five private companies on whose Board of Directors Mr. Epstein served in 2016. The Board and the Nominating and Corporate Governance Committee concluded that our ordinary course business relationships with these companies did not impair Mr. Epstein’s independence because, among other reasons, the amounts in question were small relative to both our business and that of the applicable companies and the fact that Mr. Epstein was not involved in the transactions or in our decision to enter into commercial relationships with the applicable companies. The Board and the Nominating and Corporate Governance Committee also considered that OpenTable offers its California-based employees healthcare plan services through Kaiser Permanente, a not-for-profit health care services provider, and that Mr. Epstein is a member of Kaiser Permanente’s Board of Directors. The Board and the Nominating and Corporate Governance Committee considered that this ordinary course relationship with Kaiser Permanente did not impair Mr. Epstein’s independence because, among other reasons, the amounts in question were not material when compared with Kaiser Permanente’s revenues and our revenues, the relationship was in place prior to our acquisition of OpenTable and there was no connection between OpenTable’s offering of Kaiser Permanente’s healthcare services and Mr. Epstein’s service on Kaiser Permanente’s Board of Directors.

In connection with the independence determination of Mr. Noski, the Board and the Nominating and Corporate Governance Committee considered that Mr. Noski serves on the Board of Directors of Microsoft Corporation, a company from which we purchase various software products and services and which we also pay for online search marketing services, in each case in the ordinary course of business. The Board and the Nominating and Corporate Governance Committee concluded that our ordinary course business relationships with Microsoft did not impair Mr. Noski’s independence because, among other reasons, the decision to purchase Microsoft products and services was made in the ordinary course of business and without Mr. Noski’s participation, Mr. Noski is not an executive officer of Microsoft and does not have a material interest in our relationships with Microsoft, and the amounts in question are well below the thresholds set forth in The NASDAQ Stock Market’s independence standards. In addition, these relationships began long before Mr. Noski joined our Board.

In connection with the independence determination of Ms. Peretsman, the Board and the Nominating and Corporate Governance Committee considered that Ms. Peretsman’s husband serves on the Board of Directors of one of our insurance providers. The Board and the Nominating and Corporate Governance Committee concluded that the relationship of Ms. Peretsman’s husband with the insurance provider did not impair her independence because, among other reasons, there was no connection between Ms. Peretsman or her husband and us with respect to purchasing the insurance, the insurance

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premiums were relatively small and we purchased the insurance through a broker (who identified and recommended the insurance provider).

In connection with the independence determination of Ms. Vojvodich, the Board and the Nominating and Corporate Governance Committee considered that during 2016 Ms. Vojvodich served as an executive officer of salesforce.com, a company from which we, primarily our agoda.com and OpenTable businesses, purchase software licenses and other services in the ordinary course of business. The Board and the Nominating and Corporate Governance Committee concluded that our ordinary course of business relationships with salesforce.com in 2016 did not impair Ms. Vojvodich's independence because, among other reasons, Ms. Vojvodich did not have a material interest in these arrangements and the amounts in question are well below the thresholds set forth in The NASDAQ Stock Market's independence standards.

Director Nominees. The Nominating and Corporate Governance Committee identifies, evaluates and recommends director candidates to the Board. In identifying and recommending nominees for election or appointment to the Board, the Nominating and Corporate Governance Committee places primary emphasis on the criteria set forth under "Selection of Directors - Nominations and Appointments" in our Corporate Governance Principles, namely that the nominee has:

the highest personal and professional ethics and integrity;

relevant business, professional or managerial skills and experience (including team-building and communication skills) useful to the oversight of our business;

demonstrated leadership skills through involvement in business, professional, charitable or civic affairs;

current knowledge and contacts in the markets and communities in which we do business and in our industry or other industries relevant to our business;

ability and willingness to commit adequate time to fulfilling Board and committee duties and responsibilities;

ability and willingness to exercise independent judgment, ask probing questions and express tough opinions; and

expertise, skills, knowledge, experience and personality that fit well with those of other directors and potential directors in building a Board that is effective, collegial and responsive to our needs and stockholder interests and that represents a diversity of viewpoints, backgrounds, experiences and other demographics.

The Nominating and Corporate Governance Committee does not set specific, minimum qualifications that nominees must meet in order for the committee to recommend them to the Board, but rather believes that each nominee should be evaluated based on his or her individual merits, taking into account our needs and the overall composition of the Board. The Nominating and Corporate Governance Committee's policy is to consider diversity, which it views broadly in terms of viewpoints, backgrounds, experience, gender, race and ethnic or national origin, as a factor in nominating persons for election or appointment to the Board. The Nominating and Corporate Governance Committee is committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which Board nominees are chosen. Members of the Nominating and Corporate Governance Committee discuss and evaluate possible candidates in detail, and suggest individuals to explore in more depth. Outside consultants may be employed to help in identifying candidates. The Nominating and Corporate Governance Committee expects that other Board members and members of management may also make recommendations to the committee regarding potential Board candidates. Once a candidate is identified whom the Nominating and Corporate Governance Committee wants to seriously consider and move toward nomination, the chairperson of the Nominating and Corporate Governance Committee, or his or her designee, enters into a discussion with that nominee.

The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders. Our Corporate Governance Principles require that the Nominating and Corporate Governance Committee give appropriate consideration to potential candidates recommended by stockholders in the same manner as other potential candidates identified by the Nominating and Corporate Governance Committee. Stockholders who wish to submit potential candidates for consideration by the Nominating and Corporate Governance Committee for election at our 2018 annual meeting of stockholders may do so in accordance with the procedures required under our By-laws and described in this Proxy Statement under the heading 2018 Stockholder Proposals on page 71.

When considering current directors for nomination for re-election to the Board, the Nominating and Corporate Governance Committee takes into account the performance of each director. The Nominating and Corporate Governance Committee also reviews the composition of the Board in light of our current challenges and needs and those of the Board, and determines whether it may be appropriate to add or remove individuals after considering, among other things, the need for specific expertise and issues of independence, judgment, age, skills, background, tenure and experience.

Communications with the Board of Directors. Stockholders may contact any of our directors, a committee of the Board, non-employee or independent directors as a group, or the Board as a whole by writing to them c/o Office of the General Counsel, The Priceline Group Inc., 800 Connecticut Avenue, Norwalk, Connecticut 06854. Stockholders should indicate how many shares of our common stock they own as of the date of their communication. Communications received in this manner will be handled in accordance with procedures developed and approved by the Board, including a majority of our independent directors. The procedures provide that in general, communications to the Board will be initially reviewed and logged by our General Counsel and then periodically, and at least quarterly, forwarded to the Lead Independent Director and/or the chairperson of the Nominating and Corporate Governance Committee.

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Attendance at Annual Meetings. We expect directors to attend our annual meetings of stockholders. Nine of the ten members of the Board who were directors at the time attended our 2016 annual meeting of stockholders. One director was unable to attend due to an unexpected work-related conflict that arose shortly before the meeting.

Compensation-related Corporate Governance . See Key Governance Matters on page 44 for our various compensation related corporate governance policies and practices, including, among other things, policies regarding compensation clawbacks, 10b5-1 plans and hedging and pledging of securities.

Other key corporate governance policies and practices include:

We do:

Code of Ethics. We have adopted a code of ethics that we refer to as our “Code of Conduct” and we require all directors and employees (including officers) to adhere to it in discharging their work-related responsibilities. A copy of our Code of Conduct is available on our corporate website (www.pricelinegroup.com) under the tab “For Investors.”

Annual Meetings. At each annual meeting of stockholders, stockholders have the ability to vote on important matters that are presented at the meeting, including the annual election of all of our directors.

Special Meetings. If important matters arise between annual meetings of stockholders, our certificate of incorporation provides that the Chairman of the Board, the Vice Chairman of the Board, the Chief Executive Officer, the Board or stockholders holding at least 25% of our shares may call a special meeting of stockholders. If properly called, a special meeting of stockholders would provide all stockholders an opportunity to debate and vote on matters outside the annual meeting cycle.

Majority Vote Standard. We have a majority vote standard in uncontested elections of directors, which means that directors are required to tender their resignation unless they receive the support of a majority of shares cast.

Proxy Access and Stockholder Nominees. Stockholders have the opportunity to nominate individuals for election to the Board pursuant to our By-Laws and Delaware law and, in accordance with our By-Laws, to include nominees in our proxy statement. As approved by our stockholders at our 2015 annual meeting, our proxy access By-Law provides that:

any stockholder or group of stockholders holding at least 3% of our outstanding common stock,

holding the shares continuously for at least 3 years,

can include in our proxy statement nominees for up to 25% of our Board for election at an annual stockholders’ meeting.

Annual Advisory Vote on Executive Compensation. The Board has implemented, and our stockholders have approved, an annual stockholder advisory vote on executive compensation, which means that stockholders have the opportunity to provide feedback on our executive compensation practices on an annual basis.

Lead Independent Director. Since January 2013, we have had a Lead Independent Director with a set of defined responsibilities, including, among other things, if requested and when appropriate, ensuring availability for consultation and direct communication with major stockholders. See Corporate Governance and Board Matters - Leadership Structure and - Communications with the Board of Directors for more details.

Stock Ownership Guidelines. The Board has adopted stock ownership guidelines for executive officers and non-employee directors. See Key Governance Matters on page 44 and 2016 Non-Employee Director Compensation and Benefits on page 60.

Continuing Director Education. We encourage our directors to attend seminars and other corporate governance or director workshops to further develop their expertise or otherwise stay abreast of issues relevant to their service on the Board. Our policy is to reimburse directors for the costs of attending such programs. In addition, our Board and Board committees regularly invite outside experts to present to them on a variety of topics, which have included corporate governance trends and best practices and areas of risk management, such as cybersecurity and privacy issues.

We do not:

Rights Plan. We do not have a stockholder rights plan, sometimes referred to as a “poison pill.”

No Supermajority Voting Provisions. Neither our certificate of incorporation nor our By-Laws contain any supermajority voting provisions.

No Classified Board. We do not have a classified board of directors. All directors are elected by the stockholders each year.

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Committees of the Board of Directors

Our Board has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each committee has a written charter, a copy of which is available on our corporate website (www.pricelinegroup.com) under the tab “For Investors.” The table below provides current membership for each Board committee.

Committee Membership and Independence

 

Name

 

Audit

 

Compensation

 

Nominating and

Corporate

Governance

 

Independent

Timothy M. Armstrong

 

 

 

 

 

 

Jeffery H. Boyd

 

 

 

 

 

 

 

 

Jan L. Docter

 

 

 

 

 

 

Jeffrey E. Epstein

 

 

 

 

 

Glenn D. Fogel

 

 

 

 

 

 

 

 

James M. Guyette

 

 

 

 

 

Robert J. Mylod, Jr.

 

 

 

 

 

 

 

 

Charles H. Noski

 

 

 

 

 

 

Nancy B. Peretsman

 

 

 

 

 

 

Thomas E. Rothman

 

 

 

 

 

 

Craig W. Rydin

 

 

 

 

 

Lynn M. Vojvodich

 

 

 

 

 

 

Number of Meetings in 2016

 

8

 

8

 

3

 

 

- Chair

- Member

Audit Committee

 

The Audit Committee’s responsibilities include, among other things:

overseeing and reviewing our financial statements, accounting practices and related internal controls;

overseeing our relationship with our independent registered public accounting firm, including making all decisions relating to appointing, compensating, evaluating and retaining the independent registered public accounting firm;

overseeing our internal audit function;

establishing procedures for the submission, receipt and treatment of complaints or concerns regarding accounting or auditing matters; and

reviewing and approving all related party transactions (defined as transactions required to be disclosed by Item 404 of SEC Regulation S-K).

The Audit Committee is the primary committee of the Board overseeing our compliance program and risk management efforts generally, as well as our major financial risk exposures. For additional details, see Corporate Governance and Board Matters - Board's Oversight of Risk on page 26.

The Board has determined that each member of the Audit Committee is an independent director based on The NASDAQ Stock Market’s listing rules and that each member of the Audit Committee also satisfies the additional independence requirements of the SEC for members of audit committees. In addition, the Board has determined that each of Mr. Epstein and Mr. Noski is an “audit committee financial expert” as defined by SEC rules.

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Compensation Committee

 

The Compensation Committee’s responsibilities include, among other things, setting, or recommending to the Board for determination, the compensation of our chief executive officer, reviewing and approving the compensation of our other executive officers, administering employee benefit plans including incentive compensation plans and equity-based plans, and making recommendations to the Board with respect to the adoption of incentive compensation plans and equity-based plans. The Compensation Committee also oversees risks related to compensation programs. See Corporate Governance and Board Matters - Board’s Oversight of Risk on page 26 for additional details.

The Board has determined that each member of the Compensation Committee is an independent director based on The NASDAQ Stock Market’s listing rules and also meets The NASDAQ Stock Market’s additional requirements for membership on the Compensation Committee. The Compensation Committee has the authority to appoint and dismiss its advisors and compensation consultants and approve their compensation. These advisors report directly to the Compensation Committee. The Compensation Committee has retained Mercer Inc. (“Mercer”) as its outside compensation consultant. While Mercer reports to the Compensation Committee, the Compensation Committee authorized Mercer to communicate and work with management with respect to the compensation planning process.

The Compensation Committee has delegated limited authority to the Chief Executive Officer, the Chief Financial Officer and the Executive Vice President and General Counsel to determine whether and to what extent certain restricted stock, restricted stock units and performance share units held by non-executive officers may be settled, vested, canceled, forfeited, or surrendered pursuant to their terms (for instance, the Chief Executive Officer has the authority to determine whether an employee’s termination was, pursuant to the terms of a relevant agreement, “with cause” or “without cause”).

The Chairperson of our Compensation Committee works with our Chief Executive Officer and our Executive Vice President and General Counsel to establish agendas for each meeting of the committee. The Compensation Committee typically meets with our Chief Executive Officer, Chief Financial Officer, Executive Vice President and General Counsel and outside advisors. The Compensation Committee also regularly meets in executive session without management. The Compensation Committee receives and reviews materials in advance of each meeting. These materials include information that management believes will be helpful to the Compensation Committee as well as materials that the Compensation Committee has specifically requested.

Management plays a significant role in the compensation planning process. See Compensation Discussion and Analysis - The Role of Management on page 42.

With respect to the specific 2016 compensation initiatives detailed in the Compensation Discussion and Analysis section of this proxy statement (i.e., 2016 base salaries, bonus targets (and subsequent payouts) and equity grants), the bulk of the work related to the 2016 compensation process occurred between October 2015 and April 2016. During that time, the Compensation Committee met formally on seven occasions to review and discuss executive compensation matters, approve equity awards and 2016 compensation of executive officers (other than that of the chief executive officer). In May 2016, the Compensation Committee recommended that the Board approve the target compensation of Mr. Boyd, our Interim Chief Executive Officer and President. During the compensation planning process, the General Counsel and other employees interacted often with Mercer outside the context of Compensation Committee meetings to discuss a range of issues, including specific compensation proposals for executives, the structure of equity awards (i.e., the structure of the performance share units described in the Compensation Discussion and Analysis section of this proxy statement) and proposed funding mechanisms and structure of the 2016 bonus plan. In early 2017, the Compensation Committee determined funds to be allocated to the 2016 senior executive bonus pool and amounts to be paid to individual executive officers under the 2016 bonus plan. For further discussion of the compensation planning process relating to 2016 compensation initiatives and the Compensation Committee’s consideration of executive compensation, see Compensation Discussion and Analysis beginning on page 31.

Nominating and Corporate Governance Committee

 

The Nominating and Corporate Governance Committee is instrumental in our efforts to ensure that the Board is comprised of directors with the necessary skills and experience to effectively oversee our business. The Nominating and Corporate Governance Committee actively and regularly evaluates the composition of the Board, including the skills and experience of directors, in light of our changing business needs and challenges and takes the lead in identifying needed changes, whether with respect to adding directors with certain skills, experience or other desirable traits, planning for director retirements, ensuring an appropriate mix of short-, medium- and long-tenured directors or for any other reason. When the need for a new director arises, the Nominating and Corporate Governance Committee has the primary responsibility of seeking, identifying and qualifying director candidates. See Corporate Governance - Corporate Governance Principles - Director Nominees for more information about the Nominating and Corporate Governance Committee’s responsibilities with respect to director nominees.

The Nominating and Corporate Governance Committee also oversees the establishment and implementation of our corporate governance standards, practices and policies. The written charter of the Nominating and Corporate Governance Committee provides that it shall:

from time to time as deemed necessary or desirable in light of our needs and those of the Board, identify individuals believed to be qualified to become members of the Board, consistent

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with criteria approved by the Board and set forth in our Corporate Governance Principles and the Nominating and Corporate Governance Committee’s charter, and to nominate or recommend to the Board for nomination candidates to stand for election as directors at the annual meeting of stockholders;

identify members of the Board qualified to serve on and fill vacancies on any committee of the Board (including the Nominating and Corporate Governance Committee) and to recommend that the Board appoint the identified member or members to the respective committee;

assess whether candidates to join the Board would be “independent” under the listing rules of The NASDAQ Stock Market;

establish procedures to receive prompt notification of changes in a director’s circumstances that may affect his or her qualifications or independence as a director and review such information and make recommendations as deemed appropriate;

at least annually, review our Code of Conduct and review and consider the effectiveness of our Corporate Governance Principles and, if appropriate, recommend to the Board any suggested modifications or changes thereto; and

design a process for the Board to conduct a self-evaluation at least annually.

The Board has determined that each member of the Nominating and Corporate Governance Committee is an independent director based on The NASDAQ Stock Market’s listing rules.

The Nominating and Corporate Governance Committee approved and recommended to our Board the twelve director nominees standing for election at the Annual Meeting.

Leadership Structure

Mr. Boyd, who served as our President and Chief Executive Officer from 2002 until 2013, and as our Interim Chief Executive Officer and President from April 2016 to December 2016, currently serves as Executive Chairman of our Board, a position we view as that of an executive officer. The Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board as the Board believes that it is in our best interests and those of our stockholders to make that determination from time to time based on our needs and those of the Board. The Board has determined that separation of the roles of Chief Executive Officer and Chairman is currently in our best interests and those of our stockholders. Mr. Boyd’s continued leadership as the Executive Chairman of our Board provides an important connection between the non-employee directors on the Board and Mr. Fogel, our President and Chief Executive Officer, due to Mr. Boyd's recent and continuing service as an executive officer, and his resulting familiarity with our operations. In light of Mr. Boyd’s recent service as an executive officer and current service as our Executive Chairman, the Board maintains the position of Lead Independent Director. Mr. Guyette, the Chairman of the Nominating and Corporate Governance Committee, serves as the Lead Independent Director. The responsibilities of the Lead Independent Director can be found on our corporate website (www.pricelinegroup.com) under the tab “For Investors” and include, among other things, the following:

to call, set the agenda for and lead meetings and executive sessions of the independent directors;

consult with the Board Chairperson and, if different, the Chief Executive Officer regarding Board meeting agendas;

from time to time as the Lead Independent Director deems necessary or appropriate, consult with the Board Chairperson and the Chief Executive Officer as to the quality, quantity and timeliness of the flow of information from management that is necessary for the independent directors to perform their duties effectively;

on a case-by-case basis and where appropriate, if requested by major stockholders, ensure availability for consultation and direct communication with such stockholders; and

authorize the retention of outside advisors and consultants who report directly to the Board.

Board’s Oversight of Risk

Our risk management activities include the identification and assessment of the key risks facing us among the universe of business risks (e.g., strategic, operational, financial, privacy and data protection, security and technology, and legal, regulatory and compliance risks). These key risks are identified across the organization from multiple regions and functions, in a process undertaken generally by our internal audit function and overseen primarily by our Audit Committee. The Board and Audit Committee review these risks at least on an annual basis after they have been identified and assessed by management. The Board, or a committee of the Board, regularly reviews the initiatives put in place to mitigate the effects of these risks. These reviews include updates throughout the year from the businesses, regions and functions from which the key risks arise. Depending on the risk, the update may be presented to the full Board or, if appropriate, to a committee of the Board, which will report to the full Board as appropriate. The Board’s and each committee’s role is one of oversight, recognizing that management is responsible for executing our risk management policies. The oversight of risk within the organization is an evolving process requiring us to continually look for opportunities to further embed systematic enterprise risk management into ongoing business processes across the organization. The Board actively encourages management to continue to develop this process.

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In addition to the Board’s role in enterprise risk management, various committees of the Board are also responsible for the oversight of certain risks.

The Audit Committee oversees:

our risk assessment and processes generally;

our internal control over financial reporting;

our risk management related to hedging activities, investments and use of derivative instruments;

our risk assessment and processes related to privacy, data protection, security and technology; and

our general operational, business continuity, legal, regulatory and compliance risks.

The Audit Committee is committed to effective, involved oversight of management’s risk assessment and management efforts. The Audit Committee has established a regular practice of meeting with those members of management with responsibility for privacy, data protection, security and technology risks to discuss these risks, risk management activities and efforts, best practices, lessons learned from incidents at other companies as well as at our company, the effectiveness of our security measures and other related matters, as well as periodically meeting with outside experts in these areas. Members of management responsible for our internal audit and compliance functions also meet with the Audit Committee regularly, including in executive sessions without other members of management present, to report on their areas of responsibility.

The Compensation Committee oversees risks related to compensation programs and regularly reviews and assesses our compensation policies and practices, including those applicable to our named executive officers, to determine whether they incentivize undesired risk-taking. For further discussion, see Compensation Discussion and Analysis Executive Compensation Program Philosophy and Objectives on page 34. The Compensation Committee believes that our compensation programs do not create or encourage excessive or inappropriate risk-taking that is reasonably likely to have a material adverse effect on us or our business.

As discussed above under Nominating and Corporate Governance Committee on page 25, the Nominating and Corporate Governance Committee oversees risks related to the composition of our Board, including ensuring that we have Board members with the appropriate experience, judgment, availability, skills, tenure and ability to effectively oversee our business and fulfill the duties of the Board and each Board committee. In addition, the Nominating and Corporate Governance Committee oversees our corporate governance practices and is involved in the development, improvement and review of our global compliance program, including our Code of Conduct.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to us with respect to beneficial ownership of our common stock as of March 31, 2017 by (1) each person known by us to be the beneficial owner of more than 5% of our common stock; (2) each member of the Board; (3) our Chief Executive Officer, our Chief Financial Officer and each of our other named executive officers in the Summary Compensation Table in this proxy statement, except for Mr. Huston, who ceased to be our director, officer or employee as of April 27, 2016; and (4) all directors and executive officers as a group. The percentage of shares owned is based on 49,180,147 shares outstanding as of March 31, 2017.

 

Shares beneficially owned (a)

Name of beneficial owner

Number

 

Percent

Jeffery H. Boyd (b)

62,266

 

*

Tim Armstrong (c)

50

 

*

Jan L. Docter (d)

6,000

 

*

Jeffrey E. Epstein (e)

5,248

 

*

Glenn D. Fogel

19,866

 

*

James M. Guyette

2,237

 

*

Charles H. Noski (f)

50

 

*

Nancy B. Peretsman (g)

3,350

 

*

Thomas E. Rothman (h)

50

 

*

Craig W. Rydin (i)

446

 

*

Lynn M. Vojvodich

50

 

*

Daniel J. Finnegan

14,801

 

*

Gillian Tans

2,352

 

*

Peter J. Millones

3,603

 

*

T. Rowe Price Associates, Inc. (j)

5,843,017

 

11.9%

The Vanguard Group (k)

3,110,688

 

6.3%

BlackRock, Inc. (l)

2,942,623

 

6.0%

All directors and executive officers as a group (14 persons) (m)

120,369

 

*

*

Represents beneficial ownership of less than one percent.

(a)

Beneficial ownership is determined in accordance with the rules of the SEC and includes sole or shared voting and investment power with respect to securities, except as discussed in the footnotes below. Shares of common stock issuable (i) upon the exercise of stock options that are currently exercisable or exercisable within 60 days after March 31, 2017 and (ii) upon vesting of restricted stock units or performance share units that vest by their terms within 60 days after March 31, 2017, are deemed to be outstanding and to be beneficially owned by the person holding such stock options, restricted stock units and/or performance share units for the purpose of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Certain directors have elected to defer receipt of shares of common stock pursuant to vested restricted stock unit awards for tax planning purposes. However, depending on the terms of the deferral program in place at the time of the deferral, if the director does not have the right to receive the shares until more than 60 days after termination of board service, those shares are not included in the above table even though the director has vested in the shares and bears the economic risk of ownership.

(b)

Does not include 567 vested shares the receipt of which has been deferred by Mr. Boyd for tax planning purposes (such shares will be issued to Mr. Boyd 90 days after termination of his Board service).

(c)

Does not include 755 vested shares the receipt of which has been deferred by Mr. Armstrong for tax planning purposes (such shares will be issued to Mr. Armstrong 90 days after termination of his Board service).

(d)

Includes 6,000 shares held by a family trust of which Mr. Docter is a beneficiary.

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(e)

Does not include 4,043 vested shares the receipt of which has been deferred by Mr. Epstein for tax planning purposes (such shares will be issued to Mr. Epstein 90 days after termination of his Board service).

(f)

Does not include 209 vested shares the receipt of which has been deferred by Mr. Noski for tax planning purposes (such shares will be issued to Mr. Noski 90 days after termination of his Board service).

(g)

Includes 521 shares held by a limited liability company of which Ms. Peretsman is a Manager. Does not include 1,072 vested shares the receipt of which has been deferred by Ms. Peretsman for tax planning purposes (such shares will be issued to Ms. Peretsman 90 days after termination of her Board service); and does not include 21,430 shares held by a foundation for which Ms. Peretsman serves as a trustee, of which Ms. Peretsman disclaims beneficial ownership. Allen & Company LLC disclaims beneficial ownership of the shares described in this note (g).

(h)

Does not include 755 vested shares the receipt of which has been deferred by Mr. Rothman for tax planning purposes (such shares will be issued to Mr. Rothman 90 days after termination of his Board service).

(i)

Does not include 863 vested shares the receipt of which has been deferred by Mr. Rydin for tax planning purposes (such shares will be issued to Mr. Rydin 90 days after termination of his Board service).

(j)

Based solely on information provided in a Schedule 13G/A filed by T. Rowe Price Associates, Inc. (“Price Associates”) with the SEC on February 7, 2017. For purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims beneficial ownership of such securities. Price Associates lists its address as 100 E. Pratt Street, Baltimore, Maryland 21202.

(k)

Based solely on information provided in a Schedule 13G/A filed by The Vanguard Group (“Vanguard”) with the SEC on February 13, 2017. These securities are owned by Vanguard directly or through wholly-owned subsidiaries of Vanguard. Vanguard lists its address as 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

(l)

Based solely on information provided in a Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on January 25, 2017. These securities are owned by various institutional investors affiliated with BlackRock. BlackRock lists its address as 55 East 52nd Street, New York, New York 10055.

(m)

Consists of shares beneficially owned by all of our directors and executive officers, including the named executive officers (except for Mr. Huston, who ceased to be our director, officer or employee as of April 27, 2016), as a group. Does not include 7,697 vested shares of non-employee directors, and 567 vested shares of Mr. Boyd, the receipt of which has been deferred for tax planning purposes (because such shares will be issued 90 days after termination of such director’s Board service).

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than ten percent of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock or any other equity securities of ours. Executive officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2016, each of our executive officers, directors and greater than ten percent beneficial owners complied with the Section 16(a) filing requirements.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) describes our executive officer compensation program, provides information about the goals and the key elements of the program and explains the reasons behind the Compensation Committee’s executive officer compensation decisions. The CD&A focuses on the 2016 compensation program applicable to the following “named executive officers” (titles are as of December 31, 2016).

Name

Title

Jeffery H. Boyd (1)

Interim Chief Executive Officer and President

Darren R. Huston (2)

Former President and Chief Executive Officer; Former Chief Executive Officer, Booking.com

Daniel J. Finnegan

Chief Financial Officer and Chief Accounting Officer

Gillian Tans

President and Chief Executive Officer, Booking.com

Glenn D. Fogel (3)

Executive Vice President, Corporate Development, and Head of Worldwide Strategy and Planning

Peter J. Millones

Executive Vice President, General Counsel and Corporate Secretary

(1)

Mr. Boyd ceased to be our Interim Chief Executive Officer and President as of December 31, 2016.

(2)

Mr. Huston ceased to be our President and Chief Executive Officer and the Chief Executive Officer of Booking.com on April 27, 2016.

(3)

Mr. Fogel became our President and Chief Executive Officer on January 1, 2017.

Summary Information

From an operating and financial perspective, 2016 was an outstanding year for The Priceline Group. We continue to operate the largest, most profitable global online travel business in the world, with a market capitalization of approximately $87.6 billion (as of March 31, 2017) and a 2016 operating margin of 28% as a percentage of gross profit (inclusive of a non-cash charge to goodwill associated with the acquisition of OpenTable). During 2016, Booking.com, our largest business, added over 260,000 accommodations to its reservation services, including over 175,000 vacation rental properties, and, as of March 31, 2017, had approximately 1,191,000 directly bookable hotels and other places to stay available through its websites and mobile offerings representing more than 25.2 million rooms. Based on room nights booked, which grew 28.7% in 2016 to more than 556 million, we continue to be the largest online accommodation reservation service in the world.

We are particularly proud of our ability to achieve both strong growth and industry-leading profitability over many years. Due to the highly international nature of our business, our financial performance as reported in U.S. Dollars, including our adjusted EBITDA, was negatively impacted by the strong U.S. Dollar when compared to many other currencies during 2016. Although our 2016 U.S. GAAP net income decreased by approximately 16% due primarily to a non-cash charge to goodwill associated with the acquisition of OpenTable, we still achieved year-over-year gross bookings (a common operating and statistical metric used in the travel industry representing the total U.S. Dollar value, generally inclusive of all taxes and fees, of all travel services purchased by consumers through our online travel reservation businesses, net of cancellations) growth of 22.6%, gross profit growth of 20.1% and adjusted EBITDA growth of 19.1%. Constant currency (i.e., using 2015 exchange rates) gross bookings growth of 25% and gross profit growth of 23% in 2016 are even more impressive, and demonstrate our fundamental operating strength.

From a multi-year perspective, we have achieved significant growth, with a 95% increase in gross bookings, a 106% increase in gross profit, a 63% increase in net income, and an 85% increase in adjusted EBITDA over the 2014-2016 three-year period as compared to the 2011-2013 three-year period. Over the three-year period from 2014 to 2016, we earned $7.1 billion of net income and $10.9 billion of adjusted EBITDA, and generated $9.9 billion of cash from operating activities (see Appendix A to this proxy statement for a reconciliation of adjusted EBITDA to U.S. GAAP net income). We had gross travel bookings of $173.9 billion over the same three-year period. Measured in terms of stockholder return, our stock price increased from $1,162.40 on December 31, 2013 to $1,466.06 on December 30, 2016, representing a 26.1% increase over that three-year period. Through the repurchase of shares of our common stock, we returned approximately $1.0 billion to stockholders in 2016 and approximately $4.9 billion over the 2014-2016 three-year period, representing 49% of the cash generated by operating activities during that three-year period.

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This outstanding performance is a result of many factors, most importantly actions taken by our corporate leadership team and the leadership teams at our primary brands: Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com and OpenTable. During 2016, we continued our geographic expansion and increased the number and types of accommodations offered through our services, invested in and grew KAYAK’s meta-search business, executed on various growth initiatives, revamped OpenTable’s international expansion strategy, grew our rental car reservation business and benefited from collaboration among our different brands, all while maintaining our industry-leading profitability.

Although 2016 was a successful year for The Priceline Group, it was not without its challenges. In particular, in April 2016 we experienced an unexpected change in our Chief Executive Officer when Mr. Huston’s employment with us terminated, creating an immediate need for a new Chief Executive Officer at The Priceline Group and Booking.com. Fortunately, the active succession planning done by our Board and Compensation Committee allowed us to respond quickly to these circumstances. Mr. Boyd, our former President and Chief Executive Officer who was then serving as the Chairman of our Board of Directors, was appointed as our Interim Chief Executive Officer and President, and Ms. Tans, who was then serving as President and Chief Operating Officer of Booking.com, was appointed President and Chief Executive Officer of Booking.com. Their strong and active leadership and the confidence that provided to our employees, business partners and stockholders, together with the leadership of our other executive officers, were instrumental to our strong 2016 operational and financial results.

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Mr. Boyd’s 2016 compensation, including his performance-based bonus, reflects his highly effective management during this transition, as well as our performance and the other factors discussed below. The 2016 compensation for our other named executive officers also reflects our strong 2016 performance, as well as their individual accomplishments and contributions as discussed below.

Name and Principal Position

2016 Salary

2016 Stock

Awards

2016 Incentive

Payment

All Other 2016

Compensation

Total 2016

Compensation

Jeffery H. Boyd
Interim Chief Executive Officer
and President

 

$373,013

 

$8,092,792

 

$8,000,000

 

$33,291

 

$16,499,096

Darren R. Huston
Former President and Chief Executive Officer;
Former Chief Executive
Officer, Booking.com

 

$288,573

 

$0

 

$0

 

$58,544

 

$347,117

Daniel J. Finnegan
Chief Financial Officer

 

$315,000

 

$4,499,397

 

$1,200,000

 

$8,291

 

$6,022,688

Gillian Tans
President and Chief Operating Officer, Booking.com

 

$498,356

 

$12,198,482

 

$4,405,440

 

$1,001

 

$17,103,279

Glenn D. Fogel
Executive Vice President,
Corporate Development and
Head of Worldwide Strategy
and Planning

 

$315,000

 

$4,499,397

 

$1,500,000

 

$8,416

 

$6,322,813

Peter J. Millones
Executive Vice President,
General Counsel and
Corporate Secretary

 

$330,000

 

$4,499,397

 

$1,700,000

 

$8,291

 

$6,537,688

Key Compensation Policies

 

The Compensation Committee continually reviews our executive officer compensation program and seeks the advice of Mercer, its independent compensation consultant, to ensure that it maintains compensation practices that are in the best interests of our stockholders.

We do:

 

We do not:

Tie pay to performance.

 

Provide change in control severance tax gross-ups and do have a policy against future such arrangements.

Use “double triggers” in our severance agreements and equity awards.

 

Permit stock option repricing without stockholder approval.

Have significant stock ownership guidelines.

 

Provide significant executive-only perquisites.

Have a clawback policy.

 

Grant stock options.

Conduct an annual risk assessment of our executive officer compensation program.

 

Permit hedging or pledging of our stock by our directors and executive officers.

Cap the bonus pool from which senior executives’ individual cash bonuses are paid.

 

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Executive Compensation Program Philosophy and Objectives

The basic philosophy of our executive compensation program is to reward earnings growth because we believe that earnings growth is likely to create long-term stockholder value. We implement this philosophy by designing a senior executive compensation program based on the following principles:

Senior executives should be compensated primarily on performance, which we measure by earnings growth;

Senior executives should be measured and incentivized by metrics that are likely to increase long-term stockholder value;

The program should align the interests of senior executives with those of stockholders;

The attraction and retention of talented senior executives is key to our success;

The program should be consistent over time to enable senior executives to implement a long-term strategy and reward them if they achieve long-term results;

Senior executives should be compensated for their management of the business and not for external factors; and

The program should not incentivize excessive or inappropriate risk taking.

We have had substantially the same compensation program for many years, which we believe has been highly successful in delivering outstanding results for our stockholders. As can be seen in the graph below, over time our stock price has increased consistently with our adjusted EBITDA and at a similar rate. We believe this supports our view that earnings growth has resulted in the creation of significant stockholder value and is therefore the appropriate performance measure for our senior executive compensation program.

 

 

In addition, our stockholders have consistently expressed their approval of our senior executive compensation through our annual stockholder say-on-pay votes. See 2016 Say-on-Pay Advisory Vote on Executive Compensation Results and Consideration on page 43 for more information. Notwithstanding the foregoing, each year our Compensation Committee evaluates whether changes to our senior executive compensation program are appropriate or necessary to achieve desired financial and operational results and to align management interests with those of our stockholders.

The Compensation Committee believes that the compensation program should provide an appropriate balance between short-term and long-term performance, with an emphasis on long-term performance. As a result, our senior executive compensation program is designed to be weighted such that most of an executive’s potential compensation is delivered through our long-term equity incentive awards, which are in the form of performance share units (PSUs). In general, we pay below “market” (as defined below) salaries and provide above “market” target bonus opportunities to our senior executives to achieve “market” direct cash compensation for target performance. We also grant PSUs to provide our executives with a meaningful opportunity to receive significant compensation for superior long-term performance. The Compensation Committee believes that this approach focuses executives on long-term performance while encouraging responsible short-term decision making to achieve sustainable earnings growth over time. Different elements of our compensation program are designed to serve different objectives and drive different behaviors, and thereby work together to achieve the objectives described above, as follows:

Base salary and benefits are designed to provide a level of economic security and stability so that executives can focus on meeting our objectives.

Our annual performance-based cash bonus plan is designed to provide a meaningful bonus opportunity for executives tied to our annual earnings growth and individual objectives in connection with each executive’s annual individual performance goals.

Our long-term equity incentives are designed to provide a significant compensation opportunity tied to long-term earnings growth and increases in our stock price over a period of several years (typically three years).

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Severance arrangements and change-in-control provisions in our equity awards are designed to (a) encourage executives to remain focused on our business in the event of rumored or actual fundamental corporate change or changes in the organization or its employment needs and, if required, to provide assistance during any transition, and (b) manage compensation-related risks and align the interests of executives and stockholders by incentivizing executives to manage the business and evaluate potential change in control transactions from the perspective of a stockholder.

Our compensation program is substantially performance based, and our incentive compensation programs provide the significant majority of the compensation opportunity for our executives. As shown in the chart below, in 2016, consistent with prior years and our executive compensation program, compensation for our non-CEO named executive officers was primarily performance based.

 

 

As a result of Mr. Huston’s departure in April 2016, Mr. Boyd, our former President and Chief Executive Officer who was then serving as the Chairman of our Board of Directors, was appointed as our Interim Chief Executive Officer and President. Mr. Boyd’s primary tasks were to ensure a smooth transition without disruption to our business performance, address the need for leadership at Booking.com resulting from Mr. Huston’s departure, and perform the normal duties of Chief Executive Officer pending the Board’s search for and appointment of a permanent Chief Executive Officer. While Mr. Boyd’s base salary and annual performance-based cash bonus would be determined on the same basis as our prior chief executive officers and our current non-executive officers, due to the temporary nature of Mr. Boyd’s service as Interim Chief Executive Officer, the Compensation Committee determined that it would be more appropriate for Mr. Boyd to receive a restricted stock unit (RSU) award rather than a three-year PSU award.

Given that Mr. Boyd’s assignment was likely to last less than a year, the Board and the Compensation Committee designed a compensation package focused on an RSU award that was tied to the accomplishment of short term milestones that the Board and Compensation Committee believed would be a more effective incentive than a long-term equity grant. The Board and the Compensation Committee did, however, want to ensure that Mr. Boyd’s compensation was aligned with the interests of our stockholders. As a result, Mr. Boyd was eligible for a cash bonus under the 2016 Bonus Plan (as defined below), which was based on our achievement of earnings growth targets, and received an RSU award to ensure that a significant portion of his compensation was tied to our stock price performance. In addition, the vesting provisions of Mr. Boyd’s RSU award (discussed in more detail below) were designed (a) to secure Mr. Boyd’s services for sufficient time to allow the Board to conduct a thorough and successful search for a permanent Chief Executive Officer and for a transition period following the appointment of a permanent Chief Executive Officer, and (b) to ensure that Mr. Boyd was appropriately compensated should the search take longer than originally anticipated.

Mr. Fogel was appointed our permanent President and Chief Executive Officer as of January 1, 2017. Mr. Fogel’s target 2017 compensation reflects the application of our general executive compensation program, and is therefore designed to be substantially performance-based.

Benchmarking and Target Compensation

In making compensation decisions, the Compensation Committee compares each element of total compensation against a peer group of publicly-traded companies. The Compensation Committee reviews annually the appropriateness of the companies comprising the peer group. In determining the appropriate peer group of companies to be used in connection with the 2016 compensation planning process, the Compensation Committee looked closely at, among other things, companies included in the prior year’s peer group, as well as companies identified as peers by those companies. The primary characteristics used to evaluate which companies to include in the peer group were: industry, gross profits and peers identified by our peers. For comparison purposes, the Compensation Committee focused on the gross profit of the peer group, rather than revenues, as the Compensation Committee believes gross profit is a better indicator of company size. In particular, the Compensation Committee sought to include Internet merchandisers, online travel companies and other technology companies with gross profits between one-half and two times our annual gross profits. The Committee also included Amazon.com because, although its gross profits were more than two times our gross profits, there were relatively few comparable companies and it, like us, is a leading Internet commerce company.

After discussions with Mercer, the Compensation Committee's compensation consultant, the Compensation Committee determined that the fifteen companies listed below, which are primarily Internet services, travel services and/or e-commerce companies, would comprise the 2016 peer group (the “Compensation Peer Group”):

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Activision Blizzard, Inc.

Expedia, Inc.

LinkedIn Corporation

Adobe Systems Incorporated

Facebook, Inc.

Netflix, Inc.

Amazon.com, Inc.

IAC/InterActiveCorp

salesforce.com, inc.

eBay Inc.

Intuit Inc.

TripAdvisor, Inc.

Electronic Arts Inc.

Liberty Interactive Corporation

Yahoo! Inc.

These are the same companies as were used in 2015 except that the Compensation Committee removed Orbitz Worldwide, Inc. from the peer group due to its acquisition by Expedia in September 2015.

Based on the four most recent quarters of data that were available at the time that the Compensation Committee initiated its review (for most, but not all companies, the last quarter of 2014 through the first three quarters of 2015), our gross profit ranked at approximately the 80th percentile of the Compensation Peer Group. In comparing our executive compensation against the Compensation Peer Group, the Compensation Committee generally considered this percentile of executive pay for the Compensation Peer Group to be a general proxy for “market” compensation. In arriving at “market” compensation for the Compensation Peer Group, Mercer adjusted the cash compensation information from the Compensation Peer Group to account for projected pay increases over the 2015-2016 timeframe. The Compensation Committee used the data of the Compensation Peer Group primarily to ensure that our executive compensation program as a whole is competitive. The Compensation Peer Group provides the Compensation Committee with guidance and information, but does not dictate the setting of the named executive officers’ compensation and is not a substitute for the Committee’s own business judgment in establishing compensation for the named executive officers.

Generally speaking, our compensation program is designed to achieve “market” compensation for our named executive officers if they achieve target performance. In other words, if we achieve our budgeted performance, our named executive officers would generally be compensated at approximately the 80 th percentile when compared with our Compensation Peer Group. If performance is below target, compensation would generally be below “market,” and if performance is above target, compensation would generally be above “market.” We combine below “market” salaries with above “market” target cash bonus opportunities in an attempt to achieve “market” direct cash compensation at “target” performance. Similarly, we attempt to align target equity incentive compensation opportunities with “target” performance to achieve “market” equity compensation at “target” performance. Both our annual performance-based cash bonus plan and long-term equity incentive plan, which are described more fully below, provide a meaningful opportunity for our executive officers to achieve above “market” compensation in return for superior performance.

Measuring Performance – Compensation EBITDA

Our performance measure for purposes of our senior executive compensation program is a non-GAAP financial measure based on our EBITDA, or earnings before interest, taxes, depreciation and amortization, which we refer to herein as “Compensation EBITDA.” Compensation EBITDA is calculated by taking our adjusted EBITDA as publicly reported in our earnings press releases (“Adjusted EBITDA”) and further adjusting it as described below. We use Compensation EBITDA as the performance measure for our senior executives for both our annual performance-based bonus plan and our PSUs granted as part of our long-term equity incentive plan (except that, as described below, the performance measure for Ms. Tans is Booking.com’s Compensation EBITDA further adjusted primarily to account for inter-company transactions).

 

How is Compensation EBITDA calculated ?

The calculation of Compensation EBITDA is consistent for both plans, except that Compensation EBITDA is calculated on a pre-bonus basis for purposes of our annual performance-based bonus plan and on a post-bonus basis for purposes of our PSU awards. To arrive at Compensation EBITDA, we begin with Adjusted EBITDA and then:

Exclude the effect of any accounting changes during the applicable performance period (because the targets were set without regard to such changes);

Exclude the impact, to the extent reasonably quantifiable, of a business acquisition (so that management cannot “buy” earnings to meet performance targets) or a business disposition (so that management cannot “sell” losses to meet performance targets or be hurt if we decide to sell a profitable business);

Exclude stock-based compensation expense (because we changed our method of publicly reporting Adjusted EBITDA to include stock-based compensation expense but such expense was not included in the Compensation EBITDA targets applicable to the 2016 Bonus Plan or the 2016 PSUs); and

With respect to certain of our brands, apply fixed exchange rates to fixed earnings percentages consistent with those used to set the performance targets (so that Company performance is measured consistently against the performance targets and senior executives are not rewarded or punished based on currency exchange rate fluctuations, which are out of their control, but rather are compensated based on management of the underlying business).

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The Compensation Committee believes the above adjustments to Adjusted EBITDA to arrive at Compensation EBITDA are appropriate elements of our compensation program to achieve the financial performance goals described above. The Compensation Committee has made the use of fixed currencies with respect to certain of our brands a feature of Compensation EBITDA for many years to ensure that management is focused on the operational success of the business without incentivizing excessive or inappropriate risk taking or decision making based on short-term or speculative expectations regarding foreign exchange rates. In addition, the Compensation Committee believes that taking a fixed-currency approach more accurately addresses management performance, while ensuring that the interests of management and stockholders are aligned through any impact currency factors have on our stock price since equity compensation constitutes the largest component of our named executive officers’ compensation. The use of Adjusted EBITDA as the basis for Compensation EBITDA and these adjustments are intended to ensure that payments under our annual performance-based bonus plan and the issuance of shares under our PSUs represent the underlying growth of our core business and are not inflated or deflated due to “non-cash,” “one time” or “non-recurring” items, the translation impact of changes in certain foreign currency exchange rates, or the acquisition or disposition of assets between the time the plan was adopted and the end of the performance period.

The Compensation Committee has chosen to use the single performance metric of Compensation EBITDA for both our annual performance-based cash bonus plan and for our senior executive PSUs because the Committee believes that:

This approach properly balances incentives so that short-term and long-term decision making by management is also appropriately balanced;

An earnings growth based metric properly balances top-line growth with operating margin discipline over both the short term and the long term; and

A single metric based on earnings growth provides focus to management that is consistent with the Company’s basic philosophy that earnings growth will lead to long-term stockholder value.

Components of Executive Compensation in 2016

The Compensation Committee annually reviews each named executive officer’s total direct compensation, which consists of base salary and benefits, performance-based cash bonus opportunity and equity incentives. In addition to these primary compensation elements, the Compensation Committee reviews any other compensation to the extent applicable, and payments that would be required under various severance and change in control scenarios. In making compensation decisions, the Compensation Committee also takes into consideration historical compensation, including the unvested value of outstanding equity awards.

Before giving final approval to the annual compensation initiatives, the Compensation Committee and, with respect to our Chief Executive Officer, the Board, generally reviews a presentation of total compensation, a “tally sheet,” prepared by Mercer. The tally sheet generally summarizes each executive officer’s total “target” compensation for the applicable year and, using a year-end stock price estimates the payments to be made to the officer under certain termination of employment and change in control scenarios. For 2016, with respect to our executive officers other than our Interim Chief Executive Officer, the Compensation Committee made no adjustments as a result of the tally sheet analysis based on its assessment that the program continued to meet the objectives described above. With respect to Mr. Boyd’s compensation as Interim Chief Executive Officer, our Board did not conduct this analysis in light of the intended short-term nature of his role as Interim Chief Executive Officer.

Base Salary

 

Base salary ranges for named executive officers are determined based on, among other things:

Information from the Compensation Peer Group described above;

Individual performance of the executive, including level of responsibility and breadth of knowledge; and

Internal review of the executive’s total compensation, both individually and relative to other senior executives.

The relative importance of these factors varies depending on the individual whose salary is being reviewed. Salary levels are typically considered annually as part of our performance review process as well as upon a promotion or other change in job responsibility. Consistent with our belief that senior executive compensation should be highly performance-based, base salaries for our named executive officers are generally towards the low end of the Compensation Peer Group and therefore below “market.”

For 2016, the Compensation Committee made no changes to the annual base salaries of our named executive officers who were serving as executive officers in 2015, except that Ms. Tans received a salary increase effective March 1, 2016 and, in connection with her appointment as Chief Executive Officer of Booking.com, she received another salary increase. Mr. Boyd’s base salary was similarly set below “market” levels based on the above principles, as well as the expected temporary nature of his service as Interim Chief Executive Officer discussed above under Executive Compensation Program Philosophy and Objectives .

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Annual Performance-Based Cash Bonus

 

Both the funding of our 2016 executive bonus pool and the bonuses received by our executives for 2016 reflected our outstanding 2016 performance. Our executive bonus plan provides for an aggregate “pool” based on our annual Compensation EBITDA performance. Funding of the pool increases as a percentage of Compensation EBITDA as our Compensation EBITDA increases, and senior executive individual cash bonuses are paid from this pool (other than Ms. Tans’ bonus, which is discussed below). As a result, annual bonuses (other than for Ms. Tans, which is discussed below) are funded from our annual earnings so that, as a general matter, it is unlikely there would be significant bonus funding for executive officers unless we meet or exceed our budgeted Compensation EBITDA targets.

Further, generally in order for our senior executives to achieve their target annual bonus amounts, we must achieve our budgeted annual Compensation EBITDA, which is set at a level that requires meaningful year-over-year growth. To the extent we exceed our Compensation EBITDA budgeted amount, the senior executive bonus pool will be greater than the target amount and both aggregate and individual bonuses would likely exceed target bonus amounts. To the extent we do not meet our Compensation EBITDA budgeted amount, the senior executive bonus pool and individual bonuses would likely be less than target bonus amounts. However, in both cases, the Compensation Committee maintains discretion to adjust the aggregate pool and/or individual bonuses upwards or downwards. In many years, and again with respect to 2016, notwithstanding the significant over-achievement of the Compensation EBITDA budget, the aggregate amount of bonuses awarded from the senior executive bonus pool by the Compensation Committee was less than the full amount of the available pool.

The fundamental principle underlying our 2016 performance-based cash bonus plan (the "2016 Bonus Plan") was that the bonus pool for senior executives, including the named executive officers, (other than Ms. Tans as discussed below) would only be meaningfully funded if we had significant year-over-year earnings growth, taking into account the stronger U.S. Dollar, the size of our business, market expectations regarding our growth, and our expectations regarding the growth of our Compensation Peer Group, including our primary global, direct competitor. The Compensation Committee believed at the time of adoption of the 2016 Bonus Plan that in order for the 2016 senior executive bonus pool to be funded at a level equal to that of 2015, we would need to achieve earnings growth that would: (i) be significantly higher than our budgeted growth rate, (ii) represent strong performance compared to our competition, and (iii) reward stockholders. The Compensation Committee felt that requiring us to achieve (a) significant year-over-year earnings growth, taking into account the stronger U.S. Dollar, for the senior executive bonus pool to be meaningfully funded and (b) what it believed would be competitively strong performance before there was a year-over-year increase in the funding of the senior executive bonus pool, constituted significant hurdles and meant that each named executive officer's bonus was at significant risk.

For 2016, Ms. Tans’ target performance-based cash bonus was tied to the financial performance of our Booking.com business, for which she is responsible, rather than to that of The Priceline Group as a whole. Similar to the approach taken with respect to bonuses for our other named executive officers, the bonus pool from which Ms. Tans’ bonus would be paid would only be meaningfully funded if the Booking.com business over-performed against its plan. The performance metric for Ms. Tans’ bonus was Booking.com’s Compensation EBITDA as further adjusted primarily to take into account inter-company transactions. The Compensation Committee determined that having Ms. Tans’ cash bonus tied to the performance of the Booking.com business was appropriate to provide incentives based directly on the business for which she was responsible.

How did the 2016 Bonus Plan work?

The sole determinant of the funding of the 2016 Bonus Plan was our Compensation EBITDA performance, except in the case of Ms. Tans as discussed above, in which case it was the Compensation EBITDA of the Booking.com business as further adjusted primarily to address inter-company transactions. The 2016 Bonus Plan funded throughout 2016 as we met and/or exceeded the pre-established Compensation EBITDA targets.

In order for the aggregate corporate bonus pool (which includes the bonus pool from which senior executive bonuses are paid (other than Ms. Tans' bonus, as discussed above)) to be funded at a level equal to that of the previous year, we needed to achieve 2016 year-over-year Compensation EBITDA growth of approximately 13% after taking into account the effect of the stronger U.S. Dollar on the 2016 Compensation EBITDA targets as compared to those for 2015. If Compensation EBITDA growth was 9%, the growth rate used to establish our 2016 operating plan and therefore target bonuses (again, taking into account the effect of the stronger U.S. Dollar on the 2016 Compensation EBITDA targets as compared to those for 2015), the aggregate corporate bonus pool (which includes the bonus pool from which senior executive bonuses are paid (other than Ms. Tans's bonus)) would be funded at a level that would have represented a year-over-year decrease of approximately 71%.

As the growth targets above illustrate, significant funding of the 2016 Bonus Plan for our named executive officers would only occur upon our achievement of significant year-over-year Compensation EBITDA growth, taking into account the stronger U.S. Dollar in 2016.

2016 Performance and Funding of the 2016 Bonus Plan.

We produced year-over-year Compensation EBITDA (on a fixed currency basis) growth of approximately 18%, which substantially exceeded the 2016 budget used to set target bonus levels described above. As a result, the senior executive bonus pool under the 2016 Bonus Plan was funded in amounts well above target. With respect to Ms. Tans, her bonus was funded from the bonus pool applicable to our Booking.com business. Based on the 2016 performance of our Booking.com business, that pool was also funded in amounts well above target.

Individual Bonus Amounts.

As discussed above, the 2016 base salaries of the named executive officers were significantly under “market” (i.e., compared to the 80th percentile of the Compensation Peer

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Group) as determined by Mercer, which, as a general matter has consistently been the case over prior years. Consequently, bonus targets for the named executive officers (which are set forth in the 2016 Grants of Plan-Based Awards Table on page 49 ) were higher than the competitive market but set at levels to ensure, assuming appropriate performance, that total cash compensation was competitive with compensation provided by companies in the Compensation Peer Group. Consistent with our executive compensation policy, individuals with greater job responsibilities had a greater proportion of their total cash compensation tied to our performance through the 2016 Bonus Plan. The Compensation Committee established bonus targets for 2016 for the named executive officers ranging from 190% to 210% of annual base salary. The Compensation Committee reserved the right in its discretion to decrease or increase individual payouts below or above target amounts, notwithstanding our financial performance. The Compensation Committee exercised such discretion in not awarding our former chief executive officer a bonus for 2015 despite our outstanding financial performance that year. While the 2016 Bonus Plan did not provide for individual maximum or minimum amounts for the named executive officers, it did provide for a maximum aggregate funding of the bonus pool from which senior executive bonuses were paid.

In early 2017, the Compensation Committee reviewed our 2016 financial results and worked with Mr. Boyd, who served as our Interim Chief Executive Officer and President during 2016, to develop appropriate 2016 bonus amounts for our executive officers, other than himself. As our new Chief Executive Officer, Mr. Fogel was also involved in this process with respect to 2016 bonus amounts for our executive officers, other than himself and Mr. Boyd. Final bonus amounts for the named executive officers were based on a subjective assessment of each such named executive officer’s performance and contributions during 2016, as opposed to, in most cases, the accomplishment of specific quantitative goals. The Compensation Committee exercised its discretion and did not attempt to quantify, rank or assign specific weight to any single factor (other than our Compensation EBITDA performance as described above) in making its bonus decisions. The bonuses paid to such executive officers were paid in March 2017 and appear in the Summary Compensation Table for 2016 under the “Non-Equity Incentive Plan Compensation” column.

Mr. Boyd

Based on the Company’s performance in 2016 and Mr. Boyd’s strong leadership, the Compensation Committee and the Board authorized the Company to pay Mr. Boyd an $8 million bonus for 2016. Consistent with the approach taken to determine chief executive officer bonus compensation in prior years, Compensation EBITDA performance as described above was the sole determinant in calculating the funding of the 2016 Bonus Plan from which Mr. Boyd’s bonus was paid and was the primary consideration in determining the amount of Mr. Boyd’s ultimate bonus.

From the Compensation Committee’s perspective, the Company’s operating and financial performance was an impressive accomplishment in any year, but even more impressive given the departure of Mr. Huston in April 2016 and the potential organizational and business instability and disruption that could have resulted if not for Mr. Boyd’s leadership, as well as the competitive and macro-economic environment in which we operate. In evaluating Mr. Boyd’s 2016 performance and arriving at his 2016 bonus, the Compensation Committee and the Board also considered, among other things, the following:

Our strong operating and financial performance in 2016;

Our industry-leading operating margin;

The growth in inter-company gross profit;

Mr. Boyd’s demonstrated commitment to the Company by coming out of retirement to act as Interim Chief Executive Officer following Mr. Huston’s departure;

Mr. Boyd’s effective and active leadership of the Company as Interim Chief Executive Officer, including providing a smooth transition following Mr. Huston’s departure and the confidence that provided to employees, business partners and stockholders;

Mr. Boyd’s strategic leadership and vision, including the continued development of our long-term strategy with the Board;

Mr. Boyd’s strong working relationship with our brands and his mentorship of our brand chief executive officers;

The increased collaboration among our brands;

Mr. Boyd’s efforts to achieve a smooth Chief Executive Officer transition to Mr. Fogel as of January 1, 2017; and

Mr. Boyd’s healthy, open and constructive relationship with employees and the Board.

The Compensation Committee and Board also considered a number of other subjective and qualitative factors in its evaluations, such as Mr. Boyd’s integrity, ethics, commitment, people management skills and investor and Board communication skills.

After reviewing our position in the market relative to other leading global online travel companies, the over-achievement of our 2016 financial targets, as well as the organizational and business challenges facing us in 2016, the Compensation Committee and the Board believed that the bonus amount authorized by the Board and paid to Mr. Boyd was appropriate.

Mr. Huston

Mr. Huston, our former President and Chief Executive Officer, was not eligible for and did not receive a 2016 bonus.

Other Named Executive Officers

The bonuses paid to the other named executive officers reflected our strong performance during 2016, which is described in detail above. The bonus amounts also reflect the factors described below.

Mr. Finnegan’s bonus is in recognition of, among other things, his role as Chief Financial Officer, his role in developing our annual financial plan, his oversight of our treasury activities, including the successful completion of a debt offering, his effective management of our stock repurchase program, and his oversight of our finance department and investor relations function. Mr. Finnegan's bonus also reflects his contributions to a smooth transition for Mr. Boyd upon his appointment as Interim Chief Executive Officer.

Ms. Tans’ bonus reflects her role as President and Chief Executive Officer of our Booking.com brand during 2016, including her successful transition to Booking.com’s Chief Executive Officer following Mr. Huston’s departure, her effective leadership of

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Booking.com and Booking.com’s outstanding 2016 operating and financial performance.

Mr. Fogel’s bonus is in recognition of, among other things, his role in advising the Board and the Chief Executive Officer and Interim Chief Executive Officer on our strategic direction, developing our annual business plan and leading our corporate development initiatives. Mr. Fogel did not serve as our Chief Executive Officer during 2016; as a result, his 2016 bonus was based on his service during 2016 as our Executive Vice President, Corporate Development and Head of Worldwide Strategy and Planning.

Mr. Millones’ bonus is in recognition of, among other things, his oversight of our legal department, corporate governance matters, global human resource matters and litigation and his organization and coordination of and assistance with the Board's activities. In addition, Mr. Millones' bonus also reflects his outstanding support of the Board and his leadership leading up to and in connection with Mr. Huston's departure in April 2016 and the transition of Mr. Boyd to Interim Chief Executive Officer.

In determining bonus amounts for the named executive officers, other than our Interim Chief Executive Officer, in addition to considering the factors described above, the Compensation Committee discusses and considers with the Chief Executive Officer a range of other subjective factors including each named executive officer’s ability to act and think strategically, ability to get results, ability to demonstrate a strong leadership style, integrity, ethics and ability to foster global cooperation.

Equity Incentives

 

Equity incentive grants to the named executive officers are based on job responsibilities and potential for individual contribution, with reference to the “market” levels, as described above, of total “target” direct compensation (total “target” cash compensation plus the “target” value of long-term equity awards) of executives within the Compensation Peer Group. When it makes grants, the Compensation Committee also considers the size and current value of previous grants, in particular the current unvested value of previous grants. As with the determination of base salaries and bonus awards, the Compensation Committee exercises judgment and discretion in view of the above criteria and its general policies.

PSUs.

In connection with the 2016 compensation planning process, the Compensation Committee authorized, and we granted, PSUs to the named executive officers (other than Messrs. Boyd and Huston). All of the 2016 PSUs granted to the named executive officers, other than Ms. Tans, are tied to our Compensation EBITDA performance over the three-year period ending December 31, 2018 and are forfeitable if certain minimum performance thresholds are not achieved. The number of shares that could be issued at the end of the three-year performance period ranges from zero to two times the “target” grant, depending on our performance over the period. Ms. Tans’ 2016 PSUs are tied to the Compensation EBITDA (as further adjusted primarily to take into account inter-company transactions) of our Booking.com business over the three-year performance period ending December 31, 2018. The number of shares that could be issued to her at the end of the three-year performance period ranges from one to two times the “target” grant, depending on Booking.com’s performance over that period. As a result, Ms. Tans’ PSUs are not forfeitable in that, subject to continued employment, at least the “target” number of shares will be issued to her.

The 2016 PSUs granted to each of the named executive officers will vest and be earned, subject to continued employment by us, on the three-year anniversary of the grant date if the Compensation EBITDA hurdles below are accomplished over the three-year performance period (except that Ms. Tans’ grant had a 1x minimum and was based on the performance of our Booking.com business):

If Compensation EBITDA

for the three-year period

ending December 31, 2018 is:

Then, the number of shares

that will be issued is:

Compensation EBITDA target for the three-year

period ending December 31, 2018 expressed as a

multiple of Compensation EBITDA for the

three-year period ending December 31, 2015

(reflects upper limit of each applicable tier of

Compensation adjusted EBITDA):

Less than $11.2 billion

1.1x

Between $11.2 billion and $12.3 billion

0x to 1x the "target" grant

1.2x

Between $12.3 billion and $13.4 billion

1x the "target" grant

1.4x

Between $13.4 billion and $15.0 billion

1x to 2x the "target" grant

1.5x

Above $15.0 billion

2x the "target" grant

Greater than 1.5x

Except in the case of Ms. Tans’ PSUs (which are based on the performance of our Booking.com business and which are not subject to a minimum performance threshold), the 2016 PSUs awarded to our named executive officers will be forfeited and no shares will be issued if, over the three-year performance period, we do not increase our cumulative Compensation EBITDA by at least approximately 13% over our cumulative Compensation EBITDA for the three-year period ending December 31, 2015 (2013 through 2015).

The Compensation Committee estimated at the time of adoption – based on information available in early 2016 and our expectations regarding the growth of our primary global, direct

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competitor and other select travel and technology companies that management, Mercer and the Committee felt were relevant – that the three-year performance thresholds and forfeiture thresholds set forth above represented significant growth hurdles. Accordingly, the Compensation Committee believed that if we were to achieve the cumulative Compensation EBITDA hurdles above, our stockholders would be rewarded. The Compensation Committee believed that the three-year performance period ensures that executives are focused on longer-term performance and serves as a significant retention device.

RSUs.

Although for a number of years the primary equity component of the compensation program for senior executives has been PSUs, from time to time the Compensation Committee has also granted restricted stock units to senior executives. In some cases, RSU awards have been used together with PSUs. For example, RSUs have been used in connection with the hiring of a new senior executive or the promotion of a senior executive to provide retention incentives during the first years of employment to balance the uncertainty associated with PSUs in the case of a new hire.

As discussed above, given that Mr. Boyd’s assignment was likely to last less than a year, the Board and the Compensation Committee designed a compensation package tied to the accomplishment of short term milestones that the Board and Compensation Committee believed would be a more effective incentive, and more aligned with the interests of stockholders, than a long-term equity grant. As a result, Mr. Boyd received an RSU award to ensure that a significant portion of his compensation was tied to our stock price performance. The Board felt that, given the temporary nature of his assignment, the use of an RSU award (rather than a long-term PSU) combined with his participation in our 2016 performance-based cash bonus award program was appropriate. In addition, the vesting provisions of Mr. Boyd’s RSUs were designed (a) to secure Mr. Boyd’s services for sufficient time to allow the Board to conduct a thorough and successful search for a permanent Chief Executive Officer and for a transition period following the appointment of a permanent Chief Executive Officer, and (b) to ensure that Mr. Boyd was appropriately compensated should the search take longer than originally anticipated. The RSU provides for vesting either (A) 50% on the first day of employment of a new Chief Executive Officer and 50% on the earlier of (i) the 2017 annual stockholders meeting (June 2017) or (ii) 6 months following the first day of employment of a new Chief Executive Officer or (B) if the first day of employment of a new Chief Executive Officer does not occur by the date of the 2017 annual stockholders meeting, then the award will fully vest on the date of the annual meeting. The award may vest earlier than either (A) or (B) in the event of, among other things, a “change in control” (as defined in the restricted stock unit agreement) of the Company and/or termination of employment in certain circumstances.

Stock Options.

Since our adoption of FASB ASC Topic 718 (formerly known as FAS 123(R)) on January 1, 2006, we have not issued any stock options and currently do not intend to do so going forward. In connection with certain business acquisitions, including KAYAK in May 2013 and OpenTable in July 2014, we have assumed outstanding stock options granted by the acquired companies prior to the acquisition.

Stockholder Dilution.

Finally, in connection with administering our equity plans, including when considering equity awards to executive officers, the Committee considers the dilutive impact of such awards on stockholders. For 2016, our stock-based compensation expense as a percentage of year-end market capitalization was among the lowest in the Compensation Peer Group and was 36% of the median of the Compensation Peer Group.

Change in Control and Severance Benefits

 

Change in Control.

Our equity grants do not provide for “single trigger” accelerated vesting solely upon the occurrence of a change in control. Rather, acceleration will only occur with respect to those grants upon certain terminations of employment that occur coincident with or following a change in control or upon certain terminations of employment that occur independently from a change in control. As a general matter, upon a termination of employment by us “without cause” or by the employee on account of his death or disability (and in some circumstances, for “good reason”) that occurs coincident with or following a change in control, the vesting of outstanding equity will be accelerated to occur on the date on which the employee is terminated coincident with or following such change in control (on a pro-rata basis based on the portion of the performance period that has expired).

 

No excess parachute payment tax gross-ups

Section 4999 of the U.S. Internal Revenue Code provides that certain individuals may be subject to additional taxes if they receive certain payments of benefits in connection with a change of control (“excess parachute payments”), and Section 280G of the Internal Revenue Code provides that we may forfeit a tax deduction on the amounts subject to this additional tax. We have not provided for tax gross-ups in respect of Section 4999 in any new or materially modified compensatory arrangements with our executive officers for many years and none of our executive officers are entitled to tax gross-ups in respect of Section 4999. Further, while it had been the Compensation Committee’s practice over many years not to provide such tax gross-ups, in October 2014 the Compensation Committee formally adopted a policy not to approve any Section 4999 tax gross-ups or similar tax reimbursement arrangements related to excess parachute payments in any new or materially modified compensatory arrangements with our directors or executive officers.

 

With respect to each of Messrs. Fogel and Millones, our Chief Executive Officer and President, and Executive Vice President and General Counsel, respectively, if any payment made pursuant to his employment agreement would be an excess parachute

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payment, we will reduce the amount of such payment to the extent necessary so that no portion of the payment, so reduced, would constitute an excess parachute payment if such reduction would result in an increase in the aggregate payments and benefits to be provided to him, determined on an after tax basis. See Potential Payments Upon a Change in Control and/or Termination beginning on page 56 for additional details.

Severance Benefits.

Each of the named executive officers, other than Mr. Boyd, is entitled to receive severance benefits upon, among other things, a termination “without cause” or, in some cases, “for good reason.” The arrangements with our executive officers provide severance payments in an amount that the Compensation Committee believes is appropriate, taking into account, among other things, the time it is expected to take a separated employee to find another job and marketplace practices as well as the duration of non-competition agreements between us and our executive officers. The payments and other benefits are provided because the Compensation Committee considers a termination “without cause” or for “good reason,” as applicable, not to be employee-initiated, that under different circumstances would not have occurred and which are beyond the control of the separated individual. The severance and other benefits are intended to ease the consequences to an executive of an unexpected termination of employment. See Employment Contracts, Termination of Employment and Change in Control Arrangements beginning on page 52 for additional details.

Benefits

 

Our health care and other insurance programs are generally the same for all eligible employees, including the named executive officers, depending on their geographic location. For all eligible U.S.-based employees and certain eligible employees based outside the United States, we have a 401(k) plan. The 401(k) plan in which our eligible named executive officers participate allows all eligible employees to contribute up to 75% of their base salary and bonus, up to limits imposed by the U.S. Internal Revenue Code, on a pre-tax basis. We add a cash match to this 401(k) plan for all participants, including those named executive officers who participate in the plan, of 50% of the first 6% of compensation deferred as contributions. The 401(k) match made to each of the participating named executive officers is reflected in the All Other Compensation column on the Summary Compensation Table .

Perquisites

 

We do not maintain any material perquisites or personal benefits for any of the named executive officers, such as company planes, cars, security, financial services or country club memberships.

The Role of Management

 

Our Chief Executive Officer, Chief Financial Officer and Executive Vice President and General Counsel provide significant input to the Compensation Committee when developing the structure of, and setting performance metrics for, our annual performance based bonus plan and annual equity grants. Our Chief Executive Officer provides detailed recommendations to the Compensation Committee of base salary, annual performance-based bonus plan opportunities and awards and long-term equity incentive award values for our executive officers other than himself. For our executive officers other than our Chief Executive Officer, the Compensation Committee receives a performance assessment and compensation recommendation from our Chief Executive Officer in executive session without the presence of other executive officers. The Compensation Committee gives significant weight to our Chief Executive Officer’s judgment when assessing the performance of each of the other executive officers and determining appropriate compensation levels and incentive awards because he is particularly able to assess the other executive officers’ performance and contributions to our business. See Corporate Governance and Board Matters Committees of the Board of Directors on page 24 for more details on the 2016 compensation planning process.

The Board meets annually at the beginning of the year with our Chief Executive Officer to agree upon his performance objectives (which generally are stated in terms of Company objectives) for the year. Generally and as deemed necessary or appropriate, our Chief Executive Officer reviews our annual objectives with the Board and discusses our year-to-date performance against those objectives from time to time during the year. At the beginning of the following year, our Chief Executive Officer presents to the Compensation Committee a summary of his and our performance over the past year. The Compensation Committee then meets in executive session without the presence of management (including our Chief Executive Officer) to review the performance of, and develop compensation recommendations for, the Chief Executive Officer. The Compensation Committee chairperson also discusses with each member of the Board our Chief Executive Officer’s performance. The Board then meets in executive session (without the presence of our Chief Executive Officer) to discuss our Chief Executive Officer’s performance and the Committee’s compensation recommendations. The Board then deliberates, discusses the review to be given to our Chief Executive Officer and determines the actual payout amount of our Chief Executive Officer’s bonus for the prior fiscal year and establishes target total compensation for our Chief Executive Officer for the current year.

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The Role of the Compensation Consultant

 

The Compensation Committee engaged Mercer Inc., an outside global human resources consulting firm, to advise and counsel the Committee on our compensation program for the named executive officers. Mercer has been working with the Compensation Committee for approximately fifteen years in connection with the Committee’s review of senior executive compensation. In addition to providing compensation program advice to us, Mercer has at times provided services to certain of our subsidiaries, including employee benefit plan consulting services, healthcare insurance services and software implementation services. An affiliate of Mercer provides insurance brokerage services to us, and another affiliate of Mercer previously provided commercial consulting services to one of our subsidiaries, but did not do so in 2016. The aggregate fees paid by us to Mercer for advice on the amount or form of executive compensation in 2016 were approximately $265,000. The aggregate fees paid to Mercer by our subsidiaries for other services were approximately $492,000 and the aggregate amount paid to Mercer’s affiliate for insurance brokerage services in 2016 was approximately $245,000 The decision to engage Mercer’s affiliate for these insurance brokerage services was made by the Nominating and Corporate Governance Committee, after evaluating the relationship of Mercer’s affiliate with us and the Compensation Committee’s engagement of Mercer; and Mercer’s affiliate was retained directly by the Nominating and Corporate Governance Committee. After reviewing information provided by Mercer regarding its independence and considering the independence factors required by SEC rules, the Compensation Committee determined that Mercer was independent and did not find that any conflicts of interest existed in connection with the services Mercer performed for the Compensation Committee in 2016 or otherwise with respect to our 2016 compensation program.

At the direction of the Compensation Committee, management generally provides Committee materials to Mercer and discusses materials and recommendations with Mercer in advance of each Committee meeting. Mercer considers the information presented to the Compensation Committee and discusses the information with the Committee. Mercer generally attends Compensation Committee meetings and, at the end of most meetings, meets in executive session with the Committee without management present.

With the support of the Compensation Committee, management (generally our Executive Vice President and General Counsel and our Vice President, Human Resources) regularly asks Mercer to provide calculations and market data to be used by the Committee in its decision-making process. The Compensation Committee periodically requests our Executive Vice President and General Counsel and his staff to seek Mercer’s input, analysis or recommendation with respect to a specific compensation practice, program or arrangement being considered by the Committee. The chairperson of the Compensation Committee and/or management may also independently seek Mercer’s advice on various compensation-related matters to assist the Committee in its decision-making process.

During 2016, among other things, Mercer assisted the Compensation Committee on the following matters:

Advised the Committee on the compensation for Mr. Boyd as Interim Chief Executive Officer;

Advised the Committee on the compensation for Mr. Fogel in connection with his appointment as Chief Executive Officer effective January 1, 2017;

Advised the Committee on the composition of the Compensation Peer Group;

Prepared analyses of executive officer compensation levels as compared to the Compensation Peer Group and made compensation recommendations;

Evaluated the design and provided advice on the appropriateness of our 2016 performance-based bonus plan and long term incentives; and

Prepared tally sheets and IRC Section 280G analyses to determine “excess parachute payments.”

In addition, during 2016 but as part of our 2017 compensation program review, Mercer advised the Compensation Committee on our non-employee director compensation program and recommended various minor changes to the program.

2016 Say-on-Pay Advisory Vote on Executive Compensation Results and Consideration

 

We provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay” proposal). At our annual meeting of stockholders held in June 2016, 97.8% of shares present and entitled to vote (which includes abstentions but not broker non-votes) were voted in favor of approving the executive compensation described in our 2016 proxy statement. The Compensation Committee regards the results of the stockholder vote as an indication that our executive compensation practices effectively align executive compensation with stockholder interests and therefore did not implement any changes as a direct result of the vote. The Compensation Committee will continue to consider the outcome of our say-on-pay votes when structuring and implementing compensation programs for executive officers.

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Key Governance Matters

Stock Ownership Guidelines

 

Under our stock ownership guidelines, each named executive officer is required to own the number of shares of our common stock indicated below. As of March 31, 2017, each named executive officer listed below was in compliance with the guidelines (whether due to the number of shares owned or the value of shares owned).

Name

Number of Shares Required to be Owned under our

Stock Ownership Guidelines – the Lesser of:

Number of Shares

Owned as of

March 31, 2017 (1)

Value of Shares

Owned as of

March 31, 2017 (2)

Glenn D. Fogel,
President and
Chief Executive Officer

15,000 shares or shares valued at $5 million

19,866

$35,360,884

Jeffery H. Boyd,
Executive Chairman

5,000 shares or shares valued at three times base salary

62,266

$110,831,612

Daniel J. Finnegan,
Chief Financial Officer

5,000 shares or shares valued at three times base salary

14,801

$26,345,336

Gillian Tans,
President and Chief
Executive Officer, Booking.com

5,000 shares or shares valued at three times base salary

2,352

$4,186,489

Peter J. Millones,
Executive Vice President,
General Counsel and
Corporate Secretary

5,000 shares or shares valued at three times base salary

3,603

$6,413,232

(1)

See Security Ownership of Certain Beneficial Owners and Management on page 28 for certain details relating to beneficial stock ownership, calculated in accordance with SEC rules.

(2)

Based on the closing share price of $1,779.97 on March 31, 2017.

 

Our stock ownership guidelines also establish requirements for non-employee members of the Board, which are set forth under 2016 Non-Employee Director Compensation and Benefits beginning on page 60. Our stock ownership guidelines are detailed in our Corporate Governance Principles, a copy of which is available on our corporate website (www.pricelinegroup.com) under the tab “For Investors.”

Short-Selling, Hedging and Pledging Prohibitions

 

We do not allow our executive officers or directors to speculate in our stock, which includes, but is not limited to, short selling (profiting if the market price of the securities decreases) and/or buying or selling publicly traded options, including writing covered calls. We also do not permit our executive officers or directors to enter into hedging transactions with respect to their ownership of our securities or to pledge any of our securities.

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Pre-arranged Trading Plans

 

We encourage, but do not require, our executive officers to effect any disposal of shares of our common stock pursuant to a pre-arranged trading plan adopted in compliance with Rule 10b5-1 under the Exchange Act (a “10b5-1 Plan”) and our internal guidelines. We have established guidelines for the adoption and implementation of 10b5-1 Plans, including the following:

A 10b5-1 Plan must be adopted during an open trading window.

The first proposed sale under a 10b5-1 Plan generally cannot occur until the first fiscal quarter following the fiscal quarter in which the plan is adopted. Specifically, the first proposed sale under a 10b5-1 Plan generally may not be before the second trading day following the filing of our next Form 10-Q with the SEC after the 10b5-1 Plan is adopted or, in the case of plans implemented during the fourth quarter of a calendar year, not before the second trading day following the public release of our fourth quarter and year-end financial information.

A 10b5-1 Plan must generally have a minimum of a one-year term. A 10b5-1 Plan may not be terminated earlier than the date provided for in the plan, except as approved by the chairperson of our Compensation Committee or, if such chairperson is unavailable, the chairperson of our Audit Committee.

Sales under a 10b5-1 Plan may occur during a closed trading window.

We reserve the right to modify the terms of our 10b5-1 guidelines at any time.

The following table summarizes the 10b5-1 Plans adopted by each of the named executive officers and directors that were in existence on March 31, 2017. The number of shares that are reflected as eligible for future sale in the table below reflects share amounts as of March 31, 2017 and excludes shares that may have been previously sold. It is provided as a summary only and does not set forth all of the material terms and conditions of such 10b5-1 Plans.

Name and Principal Position

 

Total Shares

Subject to Plan

 

Date of Adoption

 

End Date

Gillian Tans,
President and Chief Executive Officer, Booking.com

 

1,346

 

12/7/2016

 

The earlier of the sale of all of the shares or March 15, 2018.

Nancy Peretsman,
Director

 

1,500 (1)

 

11/29/2016

 

The earlier of the sale of all of the shares or March 3, 2018.

(1)

Represents shares donated to and held by a charitable foundation for which Ms. Peretsman serves as a trustee. Ms. Peretsman disclaims beneficial ownership of the shares.

 

Consistent with our past practices, we intend to continue to update the list on a quarterly basis following the closing of our trading window and post the updated list on our corporate website (www.pricelinegroup.com) under the tab “For Investors.” We will also file a Current Report on Form 8-K promptly after the adoption of any 10b5-1 Plan by our Chief Executive Officer or Chief Financial Officer.

Equity Award Dates

 

The Compensation Committee selected March 4, May 12, August 12 and November 12 as the dates of grant for equity awards (to the extent the Committee authorizes any awards) to executive officers and other employees in 2017. The Compensation Committee reserves the right to adjust dates in advance or select additional grant dates in its sole discretion. All grants are or will be, as applicable, approved in advance by the Compensation Committee or, on an exception basis, the chairperson of the Compensation Committee.

Clawbacks

 

Effective as of February 7, 2013, we adopted a policy with respect to the “clawback” of executive compensation pending adoption by the SEC and The NASDAQ Stock Market of final rules on the matter. In general and subject to the terms and conditions of the policy, the policy provides that under certain circumstances where an executive officer has engaged in misconduct that has resulted in the executive receiving excessive incentive-based compensation, the Board may seek recovery of such excessive incentive-based compensation.

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Deductibility Cap on Executive Compensation

 

Section 162(m) of the Internal Revenue Code of 1986, as amended, provides that compensation in excess of $1,000,000 paid to each “covered employee” (generally, the chief executive officer and the three other highest paid executive officers other than the chief financial officer) will not be deductible for federal income tax purposes unless such compensation is paid pursuant to one of the enumerated exceptions set forth in Section 162(m). The Compensation Committee’s primary objective in designing and administering our compensation policies is to support and encourage the achievement of our long-term strategic goals and to enhance stockholder value, all as described above. When consistent with this compensation philosophy, the Compensation Committee may choose to structure our compensation programs such that compensation paid thereunder will be tax deductible. The Compensation Committee believes that stockholder interests are best served by not restricting the Committee’s discretion and flexibility in crafting compensation programs, even though such programs may result in certain non-deductible compensation expenses. Accordingly, the Compensation Committee has approved, and may in the future approve, compensation arrangements for executive officers that are not fully deductible. However, each year, as part of its compensation planning process, the Compensation Committee reevaluates whether to structure our compensation programs so as to be tax deductible under Section 162(m).

In particular, as discussed above under Components of Executive Compensation in 2016 - Performance-Based Cash Bonus , the Compensation Committee determined to retain discretion under the 2016 Bonus Plan to make adjustments to what was included or excluded from the Compensation EBITDA metric in order to ensure that the results measured in the 2016 Bonus Plan represent the underlying growth of our core business, as well as discretion to increase or decrease the amounts paid under the 2016 Bonus Plan. In addition, the performance criteria of the 2016 Bonus Plan were not approved by our stockholders. As a result, payments under the 2016 Bonus Plan, which were funded as the result of significant year-over-year earnings growth, are not tax deductible under Section 162(m).

Compensation Committee Report

The Compensation Committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion and Analysis with management. Based on that review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for filing with the SEC.

COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS

Craig W. Rydin, Chairman
Tim Armstrong
Jeffrey E. Epstein
James M. Guyette

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COMPENSATION OF NAMED EXECUTIVE OFFICERS

Summary Compensation Table

The following table shows compensation earned during 2016, 2015 and 2014, except for Mr. Boyd and Ms. Tans, as noted below, by the persons who served as our Interim Chief Executive Officer, our former Chief Executive Officer, our Chief Financial Officer and the next three most highly-compensated executive officers serving at the end of 2016. These individuals are referred to as the “named executive officers.” Information for Mr. Boyd is for 2016 only, in accordance with applicable SEC rules, since he was not a named executive officer as of December 31, 2015 or 2014. Information for Ms. Tans is for 2016 and 2015 only, in accordance with applicable SEC rules, since she was not a named executive officer as of December 31, 2014. In April 2016, Mr. Huston ceased to be our President and Chief Executive Officer and the Chief Executive Officer of Booking.com, and Ms. Tans was promoted to President and Chief Executive Officer of Booking.com. Titles shown in the table are titles held as of December 31, 2016.

 

Name and Principal Position

Year

Salary

($)

Bonus

($)

Stock Awards

($)

(3)

Option Awards

($)

Non-Equity Incentive Plan Compensation

($)

 

All Other Compensation

($)

 

Total

($)

 

Jeffery H. Boyd (1)
Interim Chief Executive
Officer and President

2016

373,013

8,092,792

 

8,000,000

(4)

33,291

(7)

16,499,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Darren Huston (2)
Former President and
Chief Executive Officer;
Former Chief Executive
Officer, Booking.com

2016

288,573

0

 

0

 

58,544

(7)

347,117

 

2015

865,000

14,000,162

 

0

 

141,096

(8)

15,006,258

 

2014

750,000

14,000,667

 

7,000,000

(6)

215,427

(9)

21,966,094

 

Daniel J. Finnegan
Chief Financial Officer

2016

315,000

4,499,397

 

1,200,000

(4)

8,291

(7)

6,022,688

 

2015

315,000

4,200,545

 

1,200,000

(5)

8,488

(8)

5,724,033

 

2014

315,000

3,999,999

 

1,200,000

(6)

10,722

(9)

5,525,721

 

Gillian Tans (10)
President and Chief
Executive Officer,
Booking.com

2016

498,356

12,198,482

 

4,405,440

(4)

1,001

(7)

17,103,279

 

2015

360,335

4,799,700

 

1,108,723

(5)

1,000

(8)

6,269,758

 

 

 

 

 

 

 

 

 

 

 

 

 

Glenn D. Fogel
Executive Vice President,
Corporate Development,
and Head of Worldwide
Strategy and Planning

2016

315,000

4,499,397

 

1,500,000

(4)

8,416

(7)

6,322,813

 

2015

315,000

4,200,545

 

1,200,000

(5)

11,952

(8)

5,727,497

 

2014

315,000

3,999,999

 

1,200,000

(6)

9,065

(9)

5,524,064

 

Peter J. Millones
Executive Vice President,
General Counsel and
Corporate Secretary

2016

330,000

4,499,397

 

1,700,000

(4)

8,291

(7)

6,537,688

 

2015

330,000

4,200,545

 

1,200,000

(5)

12,133

(8)

5,742,678

 

2014

330,000

3,999,999

 

1,200,000

(6)

10,928

(9)

5,540,927

 

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(1)

Mr. Boyd was named Interim Chief Executive Officer and President effective April 27, 2016. From January 1, 2016 to April 27, 2016, Mr. Boyd served as the non-employee Chairman of our Board, for which he received non-employee director compensation, the amounts of which are included herein. Mr. Boyd did not receive additional compensation for his service on our Board after April 27, 2016, when he became our employee.

(2)

For 2014, 2015 and 2016, the amounts comprising Mr. Huston’s “All Other Compensation” were generally translated into U.S. Dollars using the exchange rate in effect at the time the respective amounts were paid or reimbursed. Mr. Huston ceased to be our President and Chief Executive Officer and the Chief Executive Officer of Booking.com on April 27, 2016. For a summary of stock awards held by Mr. Huston that vested in 2016, including the pro-rated vesting of certain stock awards in accordance with the separation agreement we entered into with Mr. Huston on April 27, 2016, see “Compensation of Named Executive Officers - Option Exercises and Stock Vested Table” on page 51.

(3)

Represents the aggregate grant date fair value of (a) PSUs granted to Messrs. Finnegan, Fogel and Millones, and Ms. Tans in 2016, (b) RSUs granted to Mr. Boyd and Ms. Tans in 2016, (c) PSUs granted to Messrs. Huston, Finnegan, Fogel and Millones, and Ms. Tans in 2015, (d) RSUs granted to Ms. Tans in 2015, and (e) PSUs granted to Messrs. Huston, Finnegan, Fogel and Millones in 2014, in each case computed in accordance with FASB ASC Topic 718. With respect to Mr. Boyd, includes 71 RSUs granted on March 4, 2016 with a grant date fair value of $92,516, calculated using the grant date share price of $1,303.04, the closing price of our common stock on March 3, 2016, the trading day prior to the March 4, 2016 grant date, as non-employee director compensation for Mr. Boyd's service as a director and Chairman of our Board. For PSUs granted to Messrs. Finnegan, Fogel, and Millones, and Ms. Tans in 2016, the amount reflects 1 times the “target” amount, as of the grant date, for those awards. Under the terms of these awards, as of the grant date the maximum number of shares that could be issued to Messrs. Finnegan, Fogel and Millones, and Ms. Tans under the 2016 PSU awards is 2 times the “target” amount, which would result in a value of $8,998,794, $8,998,774, $8,998,794 and $14,397,888, respectively, based on the stock price used to determine the aggregate grant date fair value of the awards. For PSUs granted to Messrs. Huston, Finnegan, Fogel, and Millones, and Ms. Tans in 2015, the amount reflects 1 times the “target” amount, as of the grant date, for those awards. Under the terms of these awards, as of the grant date the maximum number of shares that could be issued to Messrs. Huston, Finnegan, Fogel and Millones, and Ms. Tans under the 2015 PSU awards is 2 times the “target” amount, which would result in a value of $28,000,324, $8,401,090, $8,401,090, $8,401,090 and $8,999,749, respectively, based on the stock price used to determine the aggregate grant date fair value of the awards. For PSUs granted to Messrs. Huston, Finnegan, Fogel and Millones in 2014, the amount reflects 1 times the “target” amount, as of the grant date, for those awards. Under the terms of these awards, as of the grant date the maximum number of shares that could be issued to Messrs. Huston, Finnegan, Fogel and Millones under the 2014 PSU awards is 2 times the “target” amount, which would result in a value of $28,001,334, $7,999,999, $7,999,999 and $7,999,999, respectively, based on the stock price used to determine the aggregate grant date fair value of the awards. The amounts in this column reflect our estimate of the payout for these awards, as of the date of grant, and do not correspond to the actual value, if any, that will be recognized by the named executive officers. For additional information, please refer to Notes 2 and 3 of our Consolidated Financial Statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K for the year ended December 31, 2016.

(4)

Represents 2016 cash awards paid in 2017 under the 2016 Bonus Plan.

(5)

Represents 2015 cash awards paid in 2016 under the 2015 Bonus Plan.

(6)

Represents 2014 cash awards paid in 2015 under the 2014 Bonus Plan.

(7)

With respect to Messrs. Boyd, Finnegan, Fogel and Millones, the amount represents the U.S. Dollar value of insurance premiums paid by us during 2016 with respect to life insurance and accidental death and dismemberment insurance for the benefit of each such named executive officer and matching contributions made by us to each individual’s 401(k) plan for fiscal year 2016. With respect to Mr. Boyd, the amount also represents $25,000 of non-employee director compensation received by Mr. Boyd for his service as a director and as Chairman of our Board for the period from January 1, 2016 to April 27, 2016, when Mr. Boyd became our employee. Mr. Boyd did not receive additional compensation for his service on our Board after April 27, 2016. With respect to Mr. Fogel, the amount also represents $125 of certain perquisites available to all of our employees during 2016. With respect to Ms. Tans, the amount represents the U.S. Dollar value of perquisites available to all Booking.com employees. With respect to Mr. Huston, the amount represents the U.S. Dollar value of certain perquisites through April 27, 2016, consisting of the following: (i) $13,074 for car service to and from the office; (ii) $26,909 in professional fees associated with tax preparation and planning and a related tax gross-up of $17,642; and (iii) $662 in perquisites available to all Booking.com employees and a related tax gross-up of $257.

(8)

With respect to Messrs. Huston, Finnegan, Fogel and Millones, the amount represents the U.S. Dollar value of insurance premiums paid by us during 2015 with respect to life insurance and accidental death and dismemberment insurance for the benefit of each such named executive officer and matching contributions made by us to each individual’s 401(k) plan for fiscal year 2015. With respect to Messrs. Finnegan, Fogel and Millones, the amount also represents the U.S. Dollar value of certain perquisites available to all of our employees during 2015, consisting of the following: $250 to Mr. Finnegan, $3,714 to Mr. Fogel and a related tax gross-up of $1,464, and $3,895 to Mr. Millones and a related tax gross-up of $1,895. With respect to Mr. Huston, the amount also represents the U.S. Dollar value of certain perquisites during 2015, consisting of the following: (a) $29,348 for car service to and from the office; (b) $3,143 in legal fees incurred and paid in 2015 related to Mr. Huston’s Employment Contract; (c) $57,429 in professional fees associated with tax preparation and planning and a related tax gross-up of $37,652; and (d) $2,405 in perquisites available to all Booking.com employees and a related tax gross-up of $634. With respect to Ms. Tans, the amount represents the U.S. Dollar value of perquisites available to all Booking.com employees.

(9)

With respect to Messrs. Huston, Finnegan, Fogel and Millones, the amount represents the U.S. Dollar value of insurance premiums paid by us during 2014 with respect to life insurance and accidental death and dismemberment insurance for the benefit of such named executive officer and matching contributions made by us to each individual’s 401(k) plan for fiscal year 2014. With respect to Messrs. Finnegan, Fogel and Millones, the amount also represents the U.S. Dollar value of certain perquisites available to all Company employees during 2014, consisting of the following: $1,399 to Mr. Finnegan and a related tax gross-up of $1,199, $649 to Mr. Fogel and a related tax gross-up of $292, and $2,545 to Mr. Millones and a related tax gross-up of $259. With respect to Mr. Huston, the amount also represents the U.S. Dollar value of certain perquisites during 2014, consisting of the following: (a) $20,375 for car service to and from the office; (b) $10,287 in legal fees incurred in 2013 but paid in 2014 related to the negotiation of Mr. Huston’s Amended and Restated Employment Agreement in connection with his promotion to President and Chief Executive Officer of The Priceline Group and a related tax gross-up of $4,792; (c) $27,032 in professional fees associated with tax preparation and planning and a related tax gross-up of $17,723; (d) $10,563 tax equalization payment and a related tax gross-up of $6,925; (e) $26,478 in education expenses related to his assignment to the Netherlands; (f) $48,928 in personal airfare expenses and a related tax gross-up of $28,002; (g) $2,808 in private Dutch health care insurance premiums and a related tax gross-up of $1,606; and (h) $4,268 in perquisites available to all Booking.com employees and a related tax gross-up of $395.

(10)

For 2016, the compensation for Ms. Tans is translated into U.S. Dollars using an average exchange rate of 1.10136 U.S. Dollars to 1 Euro. For 2015, the compensation for Ms. Tans is translated into U.S. Dollars using an average exchange rate of 1.1087 U.S. Dollars to 1 Euro. The amounts comprising Ms. Tans’ “All Other Compensation” were generally translated into U.S. Dollars using the exchange rate in effect at the time the respective amounts were paid or reimbursed.

 

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Grants of Plan-Based Awards Table

The following table provides information about equity and non-equity awards granted to our named executive officers in 2016. The column “ Estimated Possible Payouts under Non-Equity Incentive Plan Awards” shows the “target” cash payouts under the 2016 Bonus Plan at the time the plan was adopted; actual payouts were made in March 2017 based on the attainment by us of certain performance thresholds and can be found in the Summary Compensation Table in the column entitled “ Non-Equity Incentive Plan Compensation ” for the 2016 fiscal year.

Name

Grant Date

Date Grant Approved

Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (1)

Estimated Future Payouts
Under Equity Incentive Plan
Awards (2)

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)

Grant
Date Fair
Value of
Stock and
Option
Awards
($) (3)

Threshold ($)

Target ($)

Maximum ($)

Threshold (#)

Target (#)

Maximum (#)

Jeffery H. Boyd

3/4/2016

2/25/2016

 

 

 

71 (4)

92,516

 

5/19/2016

5/18/2016

 

 

 

6,313

8,000,276

 

1,100,000

N/A

 

 

 

 

 

Darren Huston

Daniel J. Finnegan

3/4/2016

2/25/2016

 

 

 

3,453

6,906

4,499,397

 

661,500

N/A

 

 

 

 

 

Gillian Tans

3/4/2016

2/25/2016

 

 

N/A

3,837

3,837

7,674

4,999,764

 

3/4/2016

2/25/2016

 

 

 

153

153

306 (5)

199,365

 

5/12/2016

5/11/2016

 

 

 

1,578

1,578

3,156

1,999,815

 

5/12/2016

5/11/2016

 

 

 

 

 

 

3,945

4,999,538

 

1,211,492

N/A

 

 

 

 

 

Glenn D. Fogel

3/4/2016

2/25/2016

 

 

 

3,453

6,906

4,499,397

 

598,500

N/A

 

 

 

 

 

Peter J. Millones

3/4/2016

2/25/2016

 

 

 

3,453

6,906

4,499,397

 

627,000

N/A

 

 

 

 

 

(1)

These columns show the target amount, at the time the 2016 Bonus Plan was adopted, of the payout for each named executive officer under the 2016 Bonus Plan. The actual payments for 2016 for each named executive officer are included in the column entitled “Non-Equity Incentive Plan Compensation” of the Summary Compensation Table. The business measurements and performance goals for determining the payouts are described in the Compensation Discussion and Analysis beginning on page 31.

(2)

These columns show the “Threshold,” “Target” and “Maximum” number of shares of our common stock that could be issued in connection with PSUs granted in 2016 under our 1999 Omnibus Plan. The performance period commenced on January 1, 2016 and ends on December 31, 2018. The target payouts for Messrs. Finnegan, Fogel and Millones are performance-driven and therefore completely at risk. The performance criteria for determining the number of shares of our common stock to be issued, if any, in connection with the PSUs are described in the Compensation Discussion and Analysis beginning on page 31.

(3)

Represents the aggregate grant date fair value of PSUs and RSUs granted to the named executive officers, computed in accordance with FASB ASC Topic 718. Generally, the grant date fair value is the full amount that we would expense in our financial statements over the award’s vesting schedule. Grant Date Fair Value for the PSUs granted on March 4, 2016 to Messrs. Finnegan, Fogel and Millones, and Ms. Tans, and the RSU granted to Mr. Boyd, was calculated using the target number of shares multiplied by the share price of $1,303.04, which was the closing price of our common stock on March 3, 2016, the trading day prior to such grant date. Grant Date Fair Value for the PSUs granted on May 12, 2016 to Ms. Tans was calculated using the target number of shares multiplied by the share price of $1,267.31, which was the closing price of our common stock on May 11, 2016, the trading day prior to such grant date. Mr. Boyd’s RSU grant was calculated using the original grant date share price of $1,267.27, which was the closing price of our common stock on May 18, 2016, the trading day prior to such grant date. Ms. Tans’ May 12, 2016 RSU grant was calculated using the original grant date share price of $1,267.31, which was the closing price of our common stock on May 11, 2016, the trading day prior to such grant date. As of December 31, 2016, the estimated probable number of shares that will be issued in connection with the PSUs at the end of the performance period is 1.685 times the “target” grant amount, except in the case of Ms. Tans' PSUs, where the number is 2.0 times the “target” grant amount. The actual number of shares to be issued, if any, has not been determined and will be determined based on the relevant performance criteria over the three-year performance period. For additional information, please refer to Notes 2 and 3 of our Consolidated Financial Statements for the year ended December 31, 2016, included in our Annual Report on Form 10-K for the year ended December 31, 2016.

(4)

Represents a grant of RSUs made to Mr. Boyd as non-employee director compensation for his service as a director and Chairman of our Board. Mr. Boyd did not become our employee until April 27, 2016.

(5)

Represents a grant of PSUs made to Ms. Tans in connection with the integration of the Buuteeq business into Booking.com's BookingSuite initiative, as further described in our 2016 proxy statement.

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Outstanding Equity Awards at 2016 Fiscal Year-End Table

The following table provides information on the holdings of stock awards by our named executive officers at fiscal year-end 2016, including any unvested RSUs and/or unvested PSUs with performance and/or service conditions that have not yet been satisfied as of December 31, 2016. There are no unexercised stock option awards, either vested or unvested, held by our named executive officers. The market value of the stock awards is based on the closing per share market price of our common stock on December 30, 2016, which was $1,466.06.

Name

 

Stock Awards

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

($)

Jeffery H. Boyd

 

6,313

(1)

9,255,237

 

Darren Huston

 

 

 

Daniel J. Finnegan

 

 

19,648

(2)

28,805,147

Gillian Tans

 

4,128

(3)

6,051,896

21,372

(4)

31,332,634

Glenn D. Fogel

 

 

19,648

(2)

28,805,147

Peter J. Millones

 

 

19,648

(2)

28,805,147

(1)

Represents the number of shares of our common stock subject to RSUs granted to Mr. Boyd in May 2016 in connection with his appointment as our Interim Chief Executive Officer and President effective April 27, 2016, consisting of 6,313 shares that vest either (A) 50% on the first day of employment of a new chief executive officer and 50% on the earlier of (i) our 2017 annual stockholders meeting (on June 8, 2017) and (ii) six months following the first day of employment of a new chief executive officer or (B) if the first day of employment of a new chief executive officer does not occur by the date of our 2017 annual stockholders meeting, on the date of such annual meeting. The award may vest earlier than either (A) or (B) in the event of, among other things, a “change in control” (as defined in the restricted stock unit agreement) and/or termination of employment in certain circumstances.

(2)

Represents the maximum number of shares of our common stock that may be issued following the end of the performance period in connection with PSUs. Includes 5,978 shares for which the performance period commenced on January 1, 2014, and ended on December 31, 2016, and which vested and were issued on March 4, 2017. Includes 6,764 shares for which the performance period commenced on January 1, 2015, and ends on December 31, 2017, and 6,906 shares for which the performance period commenced on January 1, 2016 and ends on December 31, 2018. The actual number of shares to be issued for the latter two grants, if any, has not been determined and will be determined based on the relevant performance criteria over the applicable three-year performance period, subject to continued employment by us.

(3)

Represents the number of shares of our common stock that will be issued pursuant to RSUs granted to Ms. Tans in (i) November 2015, consisting of 69 shares that vested in March 2017 and 114 shares that are scheduled to vest in March 2018, and (ii) May 2016, consisting of 3,945 shares that are scheduled to vest in May 2019.

(4)

Represents the maximum number of shares of our common stock that may be issued following the end of the performance period in connection with PSUs. Includes 2,990 shares for which the performance period commenced on January 1, 2014, and ended on December 31, 2016, and which vested and were issued on March 4, 2017. Includes 7,246 shares for which the performance period commenced on January 1, 2015, and ends on December 31, 2017, and 11,136 shares for which the performance period commenced on January 1, 2016 and ends on December 31, 2018. The actual number of shares to be issued for the latter two grants, if any, has not been determined and will be determined based on the relevant performance criteria over the applicable three-year performance period.

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Option Exercises and Stock Vested Table

The following table contains information about the vesting of stock awards held by our named executive officers in 2016. There were no options exercised by our named executive officers in 2016.

Name

 

Stock Awards

Number of Shares

Acquired on

Vesting

(#)

 

Value

Realized on

Vesting

($)

Jeffery H. Boyd

 

23,073

 

29,941,515 (1)

Darren Huston

 

42,885

 

57,088,622 (2)

Daniel J. Finnegan

 

11,500

 

14,923,665 (3)

Gillian Tans

 

4,358

 

5,655,420 (4)

Glenn D. Fogel

 

11,500

 

14,923,665 (3)

Peter J. Millones

 

11,500

 

14,923,665 (3)

(1)

Reflects vesting of (a) 23,002 PSUs in March 2016 with a per share market price of $1,297.71, the closing price of our common stock on March 4, 2016, and (b) 71 RSUs in June 2016 with a per share market price of $1,290.00, the closing price of our common stock on June 2, 2016. The RSUs were granted to Mr. Boyd in March 2016 as non-employee director compensation for his service as a director and as Chairman of our Board. See “Compensation of Named Executive Officers - Summary Compensation Table” for more information.

(2)

Reflects vesting (a) in March 2016 of 17,250 PSUs granted to Mr. Huston in March 2013, with a per share market price of $1,297.71, the closing price of our common stock on March 4, 2016, and (b) in accordance with the separation agreement we entered into with Mr. Huston on April 27, 2016, pro rata vesting based on time served of certain of his outstanding equity awards (as contemplated by his employment agreement for certain terminations, except that the performance multiplier for his 2015 performance share units is reduced from the multiplier provided for by the terms of the equity agreement based on the Company’s historical financial performance to 1, and not including a portion of outstanding equity awards forfeited by Mr. Huston under the separation agreement), consisting of: of 16,189 PSUs granted to Mr. Huston in March 2014, 4,967 PSUs granted to Mr. Huston in March 2015 and 4,479 RSUs granted to Mr. Huston in November 2013, in each case with a per share market price of $1,353.74, the closing price of our common stock on April 27, 2016.

(3)

Reflects vesting of PSUs in March 2016 with a per share market price of $1,297.71, the closing price of our common stock on March 4, 2016.

(4)

Reflects vesting of 4,312 PSUs and 46 RSUs in March 2016, each with a per share market price of $1,297.71, the closing price of our common stock on March 4, 2016.

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We have an employment agreement with each of our currently serving named executive officers. The agreements are of varying duration and generally provide for minimum annual base salaries. In addition, most of the agreements provide that each executive will be eligible to participate at a level commensurate with his or her position in our annual bonus and long-term compensation plans generally made available to our senior executives, and to participate in all benefit plans and arrangements and fringe benefits and perquisite programs generally provided to our other comparable senior executives. A summary is provided below of each named executive officer’s employment agreement followed by a summary of the material terms of any equity instruments held by such executive outstanding at December 31, 2016 that provide for accelerated vesting (or similar provisions) upon a change in control or termination. On April 27, 2016, we entered into a separation agreement with Mr. Huston, a summary of which is set forth below.

Mr. Boyd

 

Effective April 27, 2016, Mr. Boyd became our Interim Chief Executive Officer and President. We entered into an employment agreement with Mr. Boyd on May 19, 2016, which was terminable at will by either party at any time. Mr. Boyd was not entitled to any severance payments whether in connection with a change in control or otherwise pursuant to such employment agreement. On December 15, 2016, Mr. Boyd entered into an agreement (the “Executive Chairman Agreement”) to become our Executive Chairman (and cease being our Interim Chief Executive Officer and President), effective January 1, 2017. Mr. Boyd’s Executive Chairman Agreement provides for a fixed term from January 1, 2017 through immediately prior to our 2018 annual meeting of stockholders, which is terminable at will by either party at any time. Mr. Boyd is not entitled to any severance payments whether in connection with a change in control or otherwise pursuant to the Executive Chairman Agreement. His equity awards, including those received while he was our Interim Chief Executive Officer and President, remain in effect and will continue to vest pursuant to the terms of the applicable award agreements. Mr. Boyd is not otherwise entitled to any additional benefits.

Equity Instruments

RSUs.

The RSUs granted to Mr. Boyd in May 2016 vest either (A) 50% on the first day of employment of a new chief executive officer and 50% on the earlier of (i) our 2017 annual stockholders meeting (on June 8, 2017) and (ii) six months following the first day of employment of a new chief executive officer or (B) if the first day of employment of a new chief executive officer does not occur by the date of our 2017 annual stockholders meeting, on the date of such annual meeting. The award may vest earlier than either (A) or (B) in the event of a termination without “Cause,” a termination for “Good Reason,” or a termination as a result of death or “Disability.” If a termination without “Cause,” for “Good Reason,” or as the result of death or “Disability” occurs prior to a “Change in Control,” Mr. Boyd will receive a pro-rata portion of the RSUs as of the date of termination.

Mr. Huston

 

Pursuant to a separation agreement entered into between Mr. Huston and us, effective April 27, 2016, Mr. Huston resigned as our director, officer and employee. As a result, he is no longer entitled to severance payments whether in connection with a change in control or otherwise pursuant to his employment agreement. The separation agreement confirms that Mr. Huston's resignation was without “Good Reason” (as defined in his employment agreement) and provides that Mr. Huston (i) would not receive any severance payments, (ii) would receive pro-rata vesting, subject to certain reductions, based on time served as of April 27, 2016 of his outstanding equity awards (as described in Option Exercises and Stock Vested Table on page 51), as well as (iii) the cost of reasonable relocation expenses to North America. Mr. Huston is not otherwise entitled to any additional benefits. Mr. Huston will continue to be bound by the non-compete, non-solicitation and proprietary information covenants contained in his employment agreement.

Mr. Fogel

 

During 2016, Mr. Fogel served as our Executive Vice President, Corporate Development, and Head of Worldwide Strategy and Planning. Effective January 1, 2017, Mr. Fogel became our President and Chief Executive Officer and was appointed to the Board. We entered into an employment agreement with Mr. Fogel in December 2008, which was in effect until December 31, 2016 and

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governed any severance and/or change in control arrangements with Mr. Fogel until that date. On December 15, 2016, we and Mr. Fogel entered into an employment agreement effective January 1, 2017 (the “2017 Employment Agreement”) in connection with his appointment as our President and Chief Executive Officer and as a member of the Board.

 

2008 Employment Agreement

Termination without “Cause” or for “Good Reason.”

In the event of a termination of Mr. Fogel’s employment by us without “Cause” (as defined in the agreement with Mr. Fogel) or by Mr. Fogel for “Good Reason” (as defined in the agreement), Mr. Fogel will be entitled to receive, among other things, in addition to his compensation accrued through the date of his termination of employment, the following severance compensation and benefits: (1) one and a half times his base salary and target bonus, if any, paid over a 12-month period following his termination of employment; (2) if a bonus plan is in place, a pro-rata target annual bonus for the year in which termination of employment occurs; and (3) continuation for one year following termination of employment of group health, life and disability insurance benefits as if he were our employee.

Other.

Mr. Fogel entered into a separate non-competition and non-solicitation agreement with us in February 2013 pursuant to which Mr. Fogel is subject to one-year non-competition and non-solicitation obligations following Mr. Fogel’s termination of employment with us.

 

2017 Employment Agreement

Term.

Mr. Fogel’s 2017 Employment Agreement has a three-year fixed term beginning January 1, 2017, which is terminable at will by either party upon ninety days’ written notice. The three-year term is automatically extended for additional one year periods unless either party gives written notice to the other party at least ninety days prior to the expiration of the initial three-year term or the then-current one year additional period that the 2017 Employment Agreement will not be extended.

Termination without “Cause” or for “Good Reason.”

In the event of a termination of Mr. Fogel’s employment without “Cause” (as defined in the agreement) or by Mr. Fogel for “Good Reason” (as defined in the agreement), Mr. Fogel will be entitled to receive, among other things, in addition to his compensation accrued through the date of his termination of employment, the following severance compensation and benefits:

(1)

two times his base salary and target bonus, if any, paid over a 24-month period following his termination of employment;

(2)

if a bonus plan is in place, a pro-rata target annual bonus for the year in which termination of employment occurs;

(3)

continuation for eighteen months following termination of employment of group health, life and disability insurance benefits as if Mr. Fogel were our employee; and

(4)

a pro-rata portion of any PSU or other restricted stock (including RSU) award granted after January 1, 2017 will vest, provided that with respect to any such PSU award, the pro-rata portion shall be determined based on any applicable performance multiplier under the applicable award agreement as of the last fiscal quarter for which our financial results have been publicly reported.

If Mr. Fogel’s employment is terminated without “Cause” or by Mr. Fogel for “Good Reason” on or within twelve months after the consummation of, or, under certain circumstances, within six months prior to, a “Change in Control” (as defined in the agreement), instead of the above severance compensation and benefits, Mr. Fogel will be entitled to the following severance compensation and benefits:

(1)

three times the sum of his base salary and target bonus, if any, for the year in which such termination occurs, payable in a lump sum;

(2)

if a bonus plan is in place, a pro-rata target annual bonus for the year in which termination of employment occurs;

(3)

continuation for up to eighteen months following termination of employment of group health, life and disability insurance benefits as if Mr. Fogel were our employee; and

(4)

a pro-rata portion of any PSU or other restricted stock (including RSU) award granted after January 1, 2017 will vest, provided that with respect to any such PSU award, the pro-rata portion shall be determined based on any applicable performance multiplier under the applicable award agreement as of the last fiscal quarter for which our financial results have been publicly reported.

Termination as the Result of Death or “Disability.”

In the event of a termination of Mr. Fogel’s employment as the result of his death or “Disability,” (as defined in the agreement), Mr. Fogel’s heirs will be entitled to receive, among other things, in addition to his compensation accrued through the date of termination of employment, if a bonus plan is in place, a pro-rata target annual bonus for the year in which termination of employment occurs, continuation for twelve months following his death of group health insurance benefits for his dependents (or for Mr. Fogel, if he is terminated as the result of “Disability”) as if he were our employee, and in the event of termination of Mr. Fogel’s employment as the result of “Disability,” continuation for twelve months following termination of employment of group life and disability insurance benefits as if Mr. Fogel were our employee.

Other.

In addition, subject to certain limitations, if severance remuneration payable under the 2017 Employment Agreement is held to constitute a “parachute payment” under Section 280G of the Internal Revenue Code, we will reduce the amount of such payment to the extent necessary so that no portion of the payment, so reduced, would constitute a “parachute payment” if such reduction would result in an increase in the aggregate payments and benefits to be provided to Mr. Fogel determined on an after tax basis. Concurrently with the 2017 Employment Agreement, Mr. Fogel also entered into a separate non-competition and non-solicitation agreement with us pursuant to which Mr. Fogel is subject to one-year non-competition and

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non-solicitation obligations following Mr. Fogel’s termination of employment with us.

Equity Instruments

PSUs.

The PSUs granted to Mr. Fogel in March 2016, 2015 and 2014 provide for accelerated vesting upon a termination of service without “Cause,” a termination of service for “Good Reason,” or a termination of service as the result of death or “Disability.” The number of shares to be delivered to Mr. Fogel would depend on the termination event (termination without cause/good reason/death/disability) and when it occurred.

Upon a termination of service without “Cause,” for “Good Reason,” or as the result of death or “Disability” that does not occur coincident with or following a “Change in Control,” the PSU performance multiplier would be applied to a pro-rata portion (based on the number of full months that had elapsed since January 1, 2016, 2015 or 2014 as of the date of his termination of service) of Mr. Fogel’s “target” PSU grant and could range from 0 to 2x, depending on our performance through the last fiscal quarter for which our financial results have been publicly reported.

If a “Change in Control” occurs prior to January 1, 2019, January 1, 2018 or January 1, 2017, as applicable, and Mr. Fogel’s service is terminated without “Cause,” for “Good Reason,” or as a result of death or “Disability” coincident with or at any time following the effective date of the “Change in Control,” the PSU performance multiplier would be applied to a pro-rata portion (based on the number of full months that had elapsed since January 1, 2016, January 1, 2015 or January 1, 2014, as applicable, as of the effective date of the “Change in Control”) of Mr. Fogel’s “target” PSU grant and the performance multiplier could range from 0 to 2x, depending on our performance through the last fiscal quarter for which our financial results have been publicly reported; and Mr. Fogel would also receive a pro-rata portion of Mr. Fogel’s “target” PSU grant (based on the number of full months that had elapsed since the effective date of the “Change in Control” as of the date of his termination) without the application of the performance multiplier.

If a “Change in Control” occurs on or after January 1, 2019, January 1, 2018 or January 1, 2017, as applicable, and Mr. Fogel’s service is terminated without “Cause,” for “Good Reason,” or as a result of death or “Disability” coincident with or at any time following the effective date of the “Change in Control,” the PSU performance multiplier would be applied to Mr. Fogel’s “target” PSU grant and could range from 0 to 2x, depending on our performance through the 12th fiscal quarter completed since January 1, 2016, January 1, 2015 or January 1, 2014, as applicable.

Mr. Finnegan

 

Employment Agreement

Termination without “Cause” or for “Good Reason.”

In the event of a termination of Mr. Finnegan’s employment by us without “Cause” (as defined in the agreement with Mr. Finnegan) or by Mr. Finnegan for “Good Reason” (as defined in the agreement), Mr. Finnegan will be entitled to receive, among other things, in addition to his compensation accrued through the date of his termination of employment, the following severance compensation and benefits:

(1)

one times his base salary and target bonus, if any, paid over a 12-month period following his termination of employment;

(2)

if a bonus plan is in place, a pro-rata target annual bonus for the year in which termination of employment occurs; and

(3)

continuation for one year following termination of employment of group health, life and disability insurance benefits as if he were our employee.

Other.

Mr. Finnegan entered into a separate non-competition and non-solicitation agreement with us in February 2013 pursuant to which Mr. Finnegan is subject to one-year non-competition and non-solicitation obligations following Mr. Finnegan’s termination of employment with us.

Equity Instruments

PSUs.

The PSUs granted to Mr. Finnegan in March 2016, 2015 and 2014, respectively, would be treated in the same fashion as the PSUs held by Mr. Fogel described above under “Mr. Fogel - Equity Instruments.”

Ms. Tans

 

Amended and Restated Employment Agreement

Ms. Tans served as President and Chief Operating Officer of our Booking.com brand until April 27, 2016. Effective April 27, 2016, Ms. Tans became Booking.com's Chief Executive Officer. Ms. Tans and Booking.com entered into an employment agreement dated February 19, 2015 in connection with Ms. Tans becoming Booking.com's Chief Operating Officer. The employment agreement does not have a fixed term and is terminable at will by either party upon due observance of the statutory notice period in the Netherlands, which is currently one month in the event of a termination by Ms. Tans and three months in the event of a termination by us. The agreement automatically terminates upon Ms. Tans reaching the pensionable age under an applicable pension

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agreement or under the General Old Age Pensions Act in the Netherlands (which is generally age 65). On May 19, 2016, Booking.com and Ms. Tans amended and restated the employment agreement in connection with her appointment as Booking.com's President and Chief Executive Officer. The amended and restated Employment Agreement is substantially similar to Ms. Tans' prior employment agreement, except that it provides for an increased annual base salary.

Termination without “Cause.”

In the event of a termination of Ms. Tans’ employment by us without “Cause” (as defined in the agreement with Ms. Tans), Ms. Tans will be entitled to receive, among other things, in addition to her compensation accrued through the date of termination of her employment, severance compensation and benefits of one times her base salary (including holiday allowance) and target bonus (not to exceed a maximum of one times her annual base salary including holiday allowance). 

Other.

The employment agreement with Ms. Tans includes certain confidentiality, non-competition, and non-solicitation provisions. It also includes a commuting costs reimbursement not to exceed €200 per month.

Equity Instruments

PSUs.

As of December 31, 2016, with respect to accelerated vesting upon a termination of employment, the PSUs granted to Ms. Tans in March 2016, 2015 and 2014 would be treated in the same fashion as the PSUs held by Mr. Fogel described above under “Mr. Fogel - Equity Instruments.”

RSUs.

The RSUs granted to Ms. Tans in November 2015 provide for accelerated vesting upon a termination without “Cause” or a termination as a result of death or “Disability.” The RSUs granted to Ms. Tans in May 2016 provide that upon a termination without “Cause,” for “Good Reason,” or as the result of death or “Disability,” Ms. Tans will receive a pro-rata portion of the RSUs as of the date of termination.

Mr. Millones

 

Employment Agreement

Termination without “Cause” or for “Good Reason.”

In the event of a termination of Mr. Millones’ employment by us without “Cause” (as defined in the agreement with Mr. Millones) or by Mr. Millones for “Good Reason” (as defined in the agreement), then Mr. Millones will be entitled to receive, among other things, in addition to his compensation accrued through the date of his termination of employment, the following severance compensation and benefits:

(1)

two times his base salary and target bonus, if any, paid over a 12-month period following his termination of employment;

(2)

if a bonus plan is in place, a pro-rata target annual bonus for the year in which termination of employment occurs; and

(3)

continuation for one year following termination of employment of group health, life and disability insurance benefits as if he were our employee (in the event of a “Change in Control,” as defined in the agreement, continuation of benefits is for two years following the termination of employment).

Termination as a Result of Death or “Disability.”

In the event of a termination of Mr. Millones’ employment as a result of death or “Disability” (as defined in such agreement), Mr. Millones will be entitled to receive, among other things, in addition to his compensation accrued through the date of termination of employment, the following severance compensation and benefits:

(1)

if a bonus plan is in place, a pro-rata target annual bonus for the year in which termination of employment occurs;

(2)

in the event of termination as a result of death, continuation for one year following termination of employment of group health insurance benefits for Mr. Millones’ dependents as if he were our employee; and

(3)

in the event of termination as a result of “Disability,” continuation for one year following termination of employment of group health, life and disability insurance benefits, as if he were our employee.

Other.

Mr. Millones’ employment agreement provides that, subject to certain limitations, if severance remuneration payable under the employment agreement is held to constitute an excess parachute payment under Section 280G of the Internal Revenue Code, we will reduce the amount of such payment to the extent necessary so that no portion of the payment, so reduced, would constitute a “parachute payment” if such reduction would result in an increase in the aggregate payments and benefits to be provided to Mr. Millones determined on an after tax basis. Mr. Millones entered into a separate non-competition and non-solicitation agreement with us in February 2013 pursuant to which Mr. Millones is subject to one-year non-competition and non-solicitation obligations following Mr. Millones’ termination of employment with us.

Equity Instruments

PSUs.

The PSUs granted to Mr. Millones in March 2016, 2015 and 2014, respectively, would be treated in the same fashion as the PSUs held by Mr. Fogel described above under “Mr. Fogel - Equity Instruments.”

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The following tables estimate the payments required to be made to each named executive officer (except for Mr. Huston, who ceased to be our employee on April 27, 2016) in connection with a termination of his or her employment upon specified events or a change in control, assuming a $1,466.06 per share price for our common stock (the closing market price on December 30, 2016). The amounts shown also assume that the termination or change in control was effective December 31, 2016, and thus include amounts earned through such time and are estimates of the amounts which would be paid out to the named executive officers. Therefore, amounts shown do not reflect, for instance, any changes to base salaries or bonus targets effective in 2017, 2017 changes in the cost of health benefit plans, equity grants made in 2017 or the unvested pro-rata portion of equity awards for which the performance or vesting period extends beyond December 31, 2016. However, amounts shown do reflect incremental amounts due to the named executive officer upon or as a result of the specified event. The actual amounts paid can only be determined at the time of the termination of the named executive officer’s employment or a change in control. The terms “Cause,” “Good Reason,” and “Disability,” as applicable, have the meanings in the individual employment agreements or equity instruments described above. In the event of voluntary resignation or retirement where the person’s last date of employment was December 31, 2016, the named executive officer would only receive his or her accrued but unpaid salary through the termination date of employment. See Employment Contracts, Termination of Employment and Change in Control Arrangements above for more information.

Mr. Boyd

 

Executive Benefits and

Payments Upon Separation

or Change in Control

 

Termination

without

“Cause”

(non-Change

in Control)

($)

 

Termination for

“Good Reason”

(non-Change in

Control)

($)

 

Termination

without “Cause” or

for “Good Reason”

(Change in

Control)

($)

 

No

Termination

(Change in

Control)

($)

 

Death or

Disability

($)

Severance:

 

 

 

 

 

 

 

 

 

 

Base Salary and
Target Bonus

 

 

 

 

 

Pro Rated Bonus

 

 

 

 

 

Equity and Benefits:

 

 

 

 

 

 

 

 

 

 

Performance Share Units

 

 

 

 

 

Restricted Stock Units

 

5,695,643

 

5,695,643

 

5,695,643

 

 

5,695,643

Stock Options

 

 

 

 

 

Health & Welfare

 

 

 

 

 

Tax Gross-Up

 

 

 

 

 

Relocation

 

 

 

 

 

TOTAL:

 

5,695,643

 

5,695,643

 

5,695,643

 

 

5,695,643

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Mr. Finnegan

 

Executive Benefits and

Payments Upon Separation

or Change in Control

 

Termination

without

“Cause”

(non-Change

in Control)

($)

 

Termination for

“Good Reason”

(non-Change in

Control)

($)

 

Termination

without “Cause” or

for “Good Reason”

(Change in

Control)

($)

 

No

Termination

(Change in

Control)

($)

 

Death or

Disability

($)

Severance:

 

 

 

 

 

 

 

 

 

 

Base Salary and
Target Bonus

 

976,500

 

976,500

 

976,500

 

 

Pro Rated Bonus

 

661,500

 

661,500

 

661,500

 

 

Equity and Benefits:

 

 

 

 

 

 

 

 

 

 

Performance Share Units

 

18,217,262

 

18,217,262

 

18,217,262

 

 

18,217,262

Restricted Stock Units

 

 

 

 

 

Stock Options

 

 

 

 

 

Health & Welfare (1)

 

17,932

 

17,932

 

17,932

 

 

Tax Gross-Up

 

 

 

 

 

TOTAL:

 

19,873,194

 

19,873,194

 

19,873,194

 

 

18,217,262

(1)

Benefit amounts are based on 2016 annual premiums paid by us for (a) medical, dental and vision coverage, (b) term life insurance and (c) long-term disability insurance.

Ms. Tans

 

Executive Benefits and

Payments Upon Separation

or Change in Control

Termination

without

“Cause”

(non-Change

in Control)

($)

Termination for

“Good Reason”

(non-Change in

Control)

($)

Termination without

“Cause” or for “Good

Reason” (Change in

Control)

($)

 

No

Termination

(Change in

Control)

($)

Death or

Disability

($)

Severance: (1)

 

 

 

 

 

 

Base Salary and
Target Bonus

1,308,416

1,308,416

1,308,416

 

Pro Rated Bonus

1,308,416

1,308,416

1,308,416

 

Equity and Benefits:

 

 

 

 

 

 

Performance Share Units

16,908,070

16,908,070

16,908,070

 

16,908,070

Restricted Stock Units

1,200,703

1,200,703

1,200,703

 

1,200,703

Stock Options

 

Health & Welfare

 

Tax Gross-Up

 

TOTAL:

20,725,605

20,725,605

20,725,605

 

18,108,773

(1)

Ms. Tans’ compensation is translated into U.S. Dollars using an average exchange rate of 1.10136 U.S. Dollars to 1 Euro.

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Mr. Fogel

 

Executive Benefits and

Payments Upon Separation

or Change in Control (1)

 

Termination

without “Cause”

(non-Change in

Control)

($)

 

Termination for

“Good Reason”

(non-Change in

Control)

($)

 

Termination

without “Cause”

or for “Good

Reason”

(Change in

Control)

($)

 

No

Termination

(Change in

Control)

($)

 

Death or

Disability

($)

Severance:

 

 

 

 

 

 

 

 

 

 

Base Salary and
Target Bonus

 

1,370,250

 

1,370,250

 

1,370,250

 

 

Pro Rated Bonus

 

598,500

 

598,500

 

598,500

 

 

Equity and Benefits:

 

 

 

 

 

 

 

 

 

 

Performance Share Units

 

18,217,262

 

18,217,262

 

18,217,262

 

 

18,217,262

Restricted Stock Units

 

 

 

 

 

Stock Options

 

 

 

 

 

Health & Welfare (2)

 

17,932

 

17,932

 

35,865

 

 

Tax Gross-Up

 

 

 

 

 

TOTAL:

 

20,203,944

 

20,203,944

 

20,221,877

 

 

18,217,262

(1)

Amounts are based on payments that would have been made pursuant to Mr. Fogel's employment contract effective during 2016, not the 2017 Employment Agreement. See “Employment Contracts, Termination of Employment and Change in Control Arrangements - Mr. Fogel” for more information.

(2)

Benefit amounts are based on 2016 annual premiums paid by us for (a) medical, dental and vision coverage, (b) term life insurance and (c) long-term disability insurance.

Mr. Millones

 

Executive Benefits and

Payments Upon Separation

or Change in Control

Termination

without “Cause”

(non-Change in

Control)

($)

Termination for

“Good Reason”

(non-Change in

Control)

($)

Termination

without “Cause”

or for “Good

Reason” (Change

in Control)

($)

 

No Termination

(Change in

Control)

($)

Death or

Disability

($)

Severance:

 

 

 

 

 

 

Base Salary and
Target Bonus

1,914,000

1,914,000

1,914,000

 

Pro Rated Bonus

627,000

627,000

627,000

 

627,000

Equity and Benefits:

 

 

 

 

 

 

Performance Share Units

18,217,262

18,217,262

18,217,262

 

18,217,262

Restricted Stock Units

 

Stock Options

 

Health & Welfare (1)

17,932

17,932

35,865

 

17,932

Tax Gross-Up

 

TOTAL:

20,776,194

20,776,194

20,794,127

 

18,862,194

(1)

Benefit amounts are based on 2016 annual premiums paid by us for (a) medical, dental and vision coverage, (b) term life insurance and (c) long-term disability insurance.

Note to the Potential Payments Upon a Change in Control and/or Termination Tables Above . Under applicable SEC rules, we are required to estimate the potential payments to each of the named executive officers upon termination or change in control assuming the event occurred on December 31, 2016, the last day of our most recently-completed fiscal year. However, the payments to named executive officers could differ, in some instances materially, if the triggering event were to occur on or after January 1, 2017.

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We have one primary equity compensation plan: the 1999 Omnibus Plan, as amended (the “Plan”). In addition, in connection with our acquisition of KAYAK Software Corporation in May 2013, Buuteeq, Inc. in June 2014, OpenTable, Inc. in July 2014 and Rocket Travel, Inc. (“RocketMiles”) in March 2015, we assumed equity plans of those acquired companies (the “Assumed Company Plans”). We may continue to grant equity awards under certain of the Assumed Company Plans to employees of the applicable acquired company and, subject to certain limitations, other employees of us or our other subsidiaries. The Compensation Committee has broad authority to, among other things, grant equity awards and determine the terms, conditions and restrictions relating to those equity awards under the Plan and the Assumed Company Plans.

The table below presents information as of December 31, 2016 regarding the Plan and the Assumed Company Plans:

Plan Category

 

Number of securities

to be issued upon

exercise of outstanding

options, warrants and

rights (1)

(#)

 

Weighted-average

exercise price of

outstanding

options, warrants

and rights (2)

($)

 

Number of securities

remaining available for

future issuance under

equity compensation

plans (excluding outstanding

securities as reflected in the first

column) (3)

(#)

Equity Compensation plans approved by security holders

 

 

 

 

 

 

1999 Omnibus Plan

 

0

 

0.00

 

2,292,522

Equity Compensation plans not approved by security holders

 

 

 

 

 

 

2005 KAYAK Plan (4)

 

41,286

 

316.94

 

2012 KAYAK Plan (4)

 

1,511

 

348.35

 

2,680

Buuteeq Plan (5)

 

1,789

 

242.44

 

2,427

OpenTable Plan (6)

 

4,819

 

825.79

 

99,040

RocketMiles Plan (7)

 

328

 

230.37

 

3,490

TOTAL:

 

49,733

 

 

 

2,400,159

(1)

Excludes an aggregate of 656,216 unvested RSUs and unvested PSUs outstanding at December 31, 2016, consisting of 531,086 unvested shares under the 1999 Omnibus Plan, 28,265 shares under the 2012 KAYAK Plan, and 96,865 under the OpenTable Plan.

(2)

The weighted-average exercise price does not apply to PSUs or RSUs because there is no exercise price associated with such awards.

(3)

With respect to PSUs, this column assumes that the maximum number of shares underlying the PSUs will be issued at the end of the relevant performance periods, and therefore all such shares have been excluded. As of December 31, 2016, the actual number of shares to be issued, if any, had not been determined and will be determined based on the relevant performance criteria over the applicable performance periods.

(4)

The assumed KAYAK plans include the KAYAK Software Corporation 2012 Equity Incentive Plan and the KAYAK Software Corporation 2005 Equity Incentive Plan (the “2005 KAYAK Plan”). No further grants may be made under the 2005 KAYAK Plan, although the stock options shown in the table were outstanding as of December 31, 2016.

(5)