Priceline 2010 Annual Report Download - page 33

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Stock Options. Since the adoption by priceline.com of FASB ASC Topic 718 (formerly known as
FAS 123(R)) on January 1, 2006, the Company has not issued any stock options and currently does not intend to
do so.
Change of control and severance benefits
Change of Control. Most of the Company’s equity grants through 2009 provide for accelerated vesting
upon a change of control. As a general matter, upon a change of control, the vesting of outstanding equity will
be accelerated to the earlier to occur of six months after the change of control (as long as the employee is
employed by the Company on that date) or the date on which the employee is terminated “without cause”
following a change of control. The Company's equity grants made in 2010, including the performance share
units granted to the named executive officers, however, do not explicitly provide for accelerated vesting solely
upon the occurrence of a change of control. Rather, acceleration will only occur with respect to those grants
upon certain terminations of employment that occur coincident with or following a change of control or upon
certain terminations of employment that occur independently from a change of control. As a general matter, with
respect to the most recent equity grants, upon a termination of employment by the Company “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 of 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 of control (pro rata based
on the performance period that has expired). In certain circumstances, Mr. Boyd’s employment arrangement
provides for different accelerated vesting provisions. See the description of Mr. Boyd’s employment agreement
beginning on page 42 for more information on the acceleration of certain of his awards.
With respect to the earlier equity grants, the accelerated vesting upon a change of control is intended to
preserve employee morale and productivity and encourage retention in the face of the disruptive impact of an
actual or rumored change of control of the Company. In addition, for executives, the prospect of accelerated
vesting is intended to align executive and stockholder interests by enabling executives to consider corporate
transactions that are in the best interests of the stockholders and other constituents of the Company without
undue concern over whether the transactions may jeopardize the executives’ own employment. The delay in
vesting until six months after the consummation of a change of control is intended to aid any acquirer by keeping
employees engaged and employed during an initial transition period, which supports a compelling business need
during uncertain times.
Priceline.com will provide gross-ups for certain of the named executive officers who are based in the
United States from any taxes due as a result of the imposition of Section 280G of the Internal Revenue Code
(“excise parachute payments”) because the effects of Section 280G generally are unpredictable and can have
widely divergent and unexpected effects based on an executive’s personal compensation history. The Committee
believes that the gross up payments are appropriate for the Company’s most senior executives.
See the section entitled “Potential Payments Upon a Change of Control and/or Termination” beginning
on page 50.
Severance benefits. Each of the named executive officers is entitled to receive severance benefits upon,
among other things, a termination “without cause” or “for good reason.” The arrangements with the Company’s
executive officers provide severance payments in an amount that the 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. The payments and other benefits are provided because the Committee considers a
termination “without cause” or for “good reason,” as those terms are used in the employment arrangements, to be
Company 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 the section entitled “Employment Contracts,
Termination of Employment and Change-of-Control Arrangements” beginning on page 42.
Benefits
Priceline.com’s health care and other insurance programs are generally the same for all eligible
employees, including executive officers, depending on their geographic location. For all eligible U.S. based
employees, priceline.com has a 401(k) plan. The 401(k) plan allows all eligible employees to contribute up to
75% of their base salary and bonus, up to limits imposed by the Internal Revenue Code on a pre-tax basis.