Priceline 2010 Annual Report Download - page 19

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Executive Officer, Chief Financial Officer, Vice Chairman and Head of Worldwide Strategy and Planning
(before his retirement in March 2011), 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. The most significant aspects of management’s role are:
¾ Evaluating employee performance (other than the Chief Executive Officer’s);
¾ Helping to establish business performance targets and objectives (other than the Chief
Executive Officer’s);
¾ Recommending salary levels, bonus targets/amounts and equity awards (other than the Chief
Executive Officer’s); and
¾ Helping to design the structure, terms and conditions of bonus plans and equity instruments.
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 reported directly to the Compensation Committee, the Compensation Committee authorized
Mercer to communicate and work with management during the compensation planning process.
With respect to the specific 2010 compensation initiatives detailed in the Compensation Discussion
and Analysis of this proxy statement (i.e., 2010 base salaries, bonus targets (and subsequent payouts) and equity
grants), the bulk of the work related to the 2010 compensation initiatives occurred between October 2009 and
early March 2010. During that time, the Compensation Committee met formally on six occasions to review and
discuss executive compensation matters. In addition, members of the Compensation Committee communicated
informally (through telephone calls and electronic mail) on several occasions to review and discuss executive
compensation matters.
In October 2009, the Compensation Committee met to discuss and plan the steps to be taken during
the compensation planning process over the following months. The Compensation Committee settled on, among
other things, Mercer’s and senior management’s role in the planning process and agreed that management would
act as the primary liaisons with Mercer to provide necessary information for Mercer’s review and discuss and
review compensation proposals before formal presentation to the Compensation Committee. The Compensation
Committee met in December 2009 to evaluate and discuss, among other things, the general structure or
underlying philosophy of, among other things, the 2010 bonus plan and equity grants, and again in February
2010 to discuss more detailed aspects of the plans, from individual bonus targets and equity grants, to specific
funding and vesting provisions. The Compensation Committee met again in February 2010 and gave final
approval to the compensation of the Company’s executive officers for 2010, reviewed senior executive
compensation with the Board of Directors and formally reviewed, and recommended that the Board of Directors
approve, the compensation of the Chief Executive Officer. The Committee also met in March 2010 to review the
Company’s performance over the three-year period relating to the 2007 grants of performance share units to
determine whether targets relating to those grants were met.
During the compensation process, the General Counsel 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 grant instruments (i.e., the structure of the performance share
units described in the Compensation Discussion and Analysis of this proxy statement) and proposed funding
mechanisms and structure of a bonus plan.
In connection with the specific recommendations on the design of the 2010 bonus plan and 2010
equity grants (e.g., number of shares/units to be granted and specific performance thresholds), the Chief
Executive Officer developed recommendations based on guidance given by the Compensation Committee.
Those specific recommendations were reviewed with Mercer, and revised accordingly, if appropriate, before
presentation and detailed review by the Compensation Committee. The final elements of the 2010 bonus plan
and equity grants were the result of an iterative process and aspects of each were refined and changed during the
process as a result of the Compensation Committee’s direction.