ServiceMagic 2015 Annual Report Download - page 15
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InMarch2015,theCommitteeawardedMr.Diller1,000,000stockoptionswhichwillvest25%ayearonthefirstfouranniversariesofthegrantdate.
Onehalfoftheoptionshaveanexercisepriceequalto,andtheotherhalfoftheoptionshaveanexercisepriceequalto125%of,theclosingpriceofthe
Company’scommonstockonthetradingdayimmediatelyprecedingthegrantdate.
InmakingthisgranttoMr.Diller,theCommitteeconsideredthatthelasttimeMr.Dillerreceivedanequityawardwasin2011,andpriortothatwasin
2005.TheCommitteealsonotedthattheoptionsgrantedin2005weresettoexpireinJune2015andthatthelasttrancheoftheoptionsgrantedin2011fullyvested
inFebruary2015.Asaresult,theCommitteedetermineditwasinthebestinterestoftheCompanytoprovideMr.Dilleranadditionallong-termincentiveaward.
Infinalizingthestructureoftheaward,theCommitteetookintoaccountavarietyoffactors,including:
·competitivepayandperformancedataamongcomparatorgroupsofcompanies;
·thevestingandexpirationschedulesofMr.Diller’sexistinglong-termincentivearrangements;
·thenatureofMr.Diller’soutstandinglong-termincentivearrangements;
·theincentivetocreateadditionalshareholdervalueinherentinthepremiumoptionpricingcomponentofthenewpackage;
·theCommittee’ssubstantialdesiretoretainMr.Diller’sservicesforthelong-term;and
·theCompany’shistoryofgrantingMr.Dillerequityawardsonceeveryfewyears(andtheCommittee’sintentiontoremainconsistentwiththat
approach).
TheCommitteealsoconsideredthevaluerealizedbyMr.Dillerfromhisexerciseofstockoptionsovertheyearsandtheintrinsicvalueofhiscurrently
outstandingoptions.TheytooknotethatMr.Dillerhadgenerallyexercisedoptionsafterholdingthemforsubstantialperiodsoftimeaftergrant,andasaresult,the
CommitteeconsideredtherealizationofvaluebyMr.Dillertobeprimarilyafunctionofbothpersonalinvestmentdecisionsbyhimandthetimingoftherelevant
optionexpirationdates,andnotcompensationfortheperiodsinwhichitwouldberealized.
OnJune24,2015,Mr.LevinwasappointedastheCompany’sChiefExecutiveOfficer.InhisformerroleasChiefExecutiveOfficerofIACSearch,a
portionofhislong-termincentivesweretiedtothatbusiness.WhentheCompanyaskedMr.LevintobecomeChiefExecutiveOfficer,theCommitteedesiredto
haveacompensationstructureforhimthatprovidedincentivesdirectlyalignedwiththeperformanceoftheCompanyasawhole.InJune2015,theCommittee
awardedMr.Levin400,000stockoptionswhichwillvest25%ayear,onthefirstfouranniversariesofthegrantdate,andhaveanexercisepriceequaltothe
closingpriceoftheCompany’scommonstockonthegrantdate,with50%oftheseoptionsbecomingexercisableonlyiftheclosingpricepershareofthe
Company’scommonstockduringany20consecutivedaysequalsorexceeds150%oftheclosingpriceoftheCompany’scommonstockonthegrantdate.In
connectionwiththisnewaward,Mr.LevinsurrenderedtotheCompanyequityawardspreviouslygrantedtohimthatweretiedsolelytotheIACSearchbusiness.
Infinalizingthestructureoftheaward,theCommitteetookintoaccountavarietyoffactors,includingmanyofthoseconsideredinconnectionwithMr.Diller’s
award,asdiscussedabove.
Webelievetheseawardsprovidemeaningfulretentionandperformanceincentivesforourexecutiveofficers.
2016 Equity Awards. InFebruary2016,theCommitteegranted200,000stockoptionstoMr.Levinand100,000stockoptionstoMr.Winiarski.The
optionsvest25%ayear,onthefirstfouranniversariesofthegrantdate,andhaveanexercisepriceequaltotheclosingpriceoftheCompany’scommonstockon
thegrantdate.AlsoinFebruary2016,Mr.Levinreceived100,000restrictedstockunits,vestinginonelumpsuminstallmentonthethirdanniversaryofthegrant
date,andMr.Kaufmanreceivedarestrictedstockunitawardwithadollarvalueof$350,000inaccordancewiththetermsofhisemploymentagreement,vestingin
thirdsonthefirstthreeanniversariesofthegrantdate.
ChangeofControl
TheCompany’sequityawardsforseniorexecutivesgenerallyincludeaso-called“double-trigger”changeofcontrolprovision,whichprovidesforthe
accelerationofthevestingofoutstandingequityawardsinconnectionwithachangeofcontrolonlywhenanawardrecipientsuffersaninvoluntaryterminationof
employmentwithintwoyearsofsuchchangeofcontrol.TheCommitteebelievesthatprovidingfortheaccelerationofthevestingofequityawardsafteran
involuntaryterminationwillassistintheretentionofourexecutivesthroughachangeofcontroltransaction.Forpurposesofthisdiscussionandthediscussion
belowundertheheading“Severance,”weusetheterm“involuntarytermination”tomeanbothaterminationbytheCompanywithout“cause”andaresignationby
theexecutivefor“goodreason”orsimilarconstruct.
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