Expedia 2013 Annual Report Download - page 123

matters as to which Delaware law requires a separate class vote). On December 11, 2012, Liberty purchased an
aggregate of 4,799,848 shares of common stock of TripAdvisor from Mr. Diller and certain of his affiliates (the
“TripAdvisor Stock Sale”). Effective upon completion of the TripAdvisor Stock Sale, Mr. Diller’s right to
control the vote of the shares of TripAdvisor’s common stock and Class B common stock beneficially owned by
Liberty terminated and Liberty then controlled a majority voting stake in TripAdvisor.
In addition to serving as our Chairman and Senior Executive, Mr. Diller also serves as Chairman of the
Board of Directors and Senior Executive at IAC and previously served as Chairman of the TripAdvisor Board of
Directors and Senior Executive. Mr. Kaufman, a member of our Board of Directors and Vice Chairman, currently
serves as a member of the Board of Directors and Vice Chairman at IAC and previously served as a member of
the TripAdvisor Board of Directors along with Mr. Khosrowshahi, our Chief Executive Officer and a member of
our Board of Directors. Our certificate of incorporation provides that no officer or director of Expedia who is
also an officer or director of IAC or TripAdvisor will be liable to Expedia or its stockholders for breach of any
fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to IAC or
TripAdvisor instead of Expedia, or does not communicate information regarding a corporate opportunity to
Expedia because the officer or director has directed the corporate opportunity to IAC or TripAdvisor, which
could have the effect of increasing the risk of conflicts of interest between the companies. Mr. Diller resigned as
Chairman and the Senior Executive of TripAdvisor, effective December 11, 2012 (the date of his sale of
TripAdvisor shares to Liberty) and subsequently resigned his position as a non-employee director of
TripAdvisor, effective April 23, 2013. Messrs. Kaufman and Khosrowshahi resigned from the TripAdvisor Board
of Directors, in each case effective February 7, 2013.
IAC/InterActiveCorp. In connection with and following the IAC spin-off in August 2005, we entered into
various commercial agreements with IAC, a related party due to common ownership. On August 20, 2008, IAC
completed its plan to separate into five publicly traded companies. With this separation, our related party
transactions with the newly constituted IAC have been immaterial and we expect this trend to continue on a go-
forward basis.
In addition, in conjunction with the IAC spin-off, we entered into a joint ownership and cost sharing
agreement with IAC, under which IAC transferred to us 50% ownership in an airplane, which is available for use
by both companies. In February 2013, Expedia and IAC completed the purchase of an additional aircraft in which
each company has a 50% ownership interest. We paid $25 million (50% of the total purchase price and
refurbishment costs) for our interest. In August 2013, the airplane was placed in service and is being depreciated
over 10 years. We share equally in fixed and nonrecurring costs for both planes; direct operating costs are pro-
rated based on actual usage. As of December 31, 2013 and 2012, the net basis in our ownership interest in both
planes was $38 million and $15 million recorded in long-term investments and other assets. In 2013, 2012 and
2011, operating and maintenance costs paid directly to the jointly-owned subsidiary for the airplanes were
nominal.
Liberty Interactive Corporation. Based on information filed with the Securities and Exchange Commission,
Liberty USA Holdings, LLC, a wholly owned subsidiary of Liberty, holds 10.3 million shares of Expedia, Inc.
common stock and 12.8 million shares of Expedia, Inc. Class B common stock, which shares are subject to the
irrevocable proxy described above. In addition, pursuant to an Amended and Restated Governance Agreement
among Expedia, Liberty Interactive and Mr. Diller dated December 20, 2011 (the “Governance Agreement”),
Liberty Interactive has the right to nominate up to a number of directors equal to 20% of the total number of the
directors on the Board (rounded up to the next whole number if the number of directors on the Board is not an
even multiple of five) for election to the Board and has certain other rights regarding committee participation, so
long as certain stock ownership requirements applicable to Liberty are satisfied.
During 2013, we issued 467,672 shares of common stock from treasury stock to Liberty at a price per share
of $54.04 and an aggregate value of approximately $25 million pursuant to and in accordance with the
preemptive rights as detailed by the Governance Agreement with Liberty.
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