TripAdvisor 2011 Annual Report Download - page 25

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Table of Contents
us and (ii) limited obligations to cooperate and exchange information in connection with certain tax matters pursuant to the tax sharing
agreement between Expedia and us. Among other things, as an independent entity, we are subject to, and responsible for, regulatory compliance,
including periodic public filings with the SEC and compliance with securities exchange listing requirements, as well as generally applicable tax
and accounting rules. Without assistance from Expedia, we may not be able to implement the changes necessary to operate as an independent
public entity successfully.
Conflicts of interest, or the appearance of conflicts of interest, may develop between the management and directors of Expedia, on the one
hand, and our management and directors, on the other hand.
Some members of the management and some directors of Expedia and TripAdvisor own both Expedia capital stock and our capital stock.
This ownership overlap could create, or appear to create, potential conflicts of interest when Expedia’s and our directors and executive officers
face decisions that could have different implications for Expedia and us. For example, potential conflicts of interest could arise in connection
with the resolution of any dispute between Expedia and us regarding terms of the agreements governing the Spin-Off and our relationship with
Expedia following the Spin-Off, including the separation agreement, the employee matters agreement, the tax sharing agreement, the transition
services agreement between us and Expedia or any commercial agreements between us and Expedia. Potential conflicts of interest could also
arise if we enter into commercial arrangements with Expedia in the future.
In addition, Mr. Diller serves as the Chairman of our Board of Directors and as our Senior Executive, while retaining his role as Chairman
and Senior Executive of Expedia; Mr. Khosrowshahi serves as a director of TripAdvisor while retaining his role as President, Chief Executive
Officer and director of Expedia; and Mr. Kaufman serves a director of TripAdvisor while retaining his role as Vice Chairman and director of
Expedia. The fact that Messrs. Diller, Khosrowshahi and Kaufman hold positions with both Expedia and us could create, or appear to create,
potential conflicts of interest for Messrs. Diller, Khosrowshahi and Kaufman when they face decisions that may affect both us and Expedia.
Messrs. Diller, Khosrowshahi and Kaufman may also face conflicts of interest with regard to the allocation of their time between us and
Expedia. Involvement with entities other than us or Expedia could also create potential conflicts; for example, Messrs. Diller and Kaufman hold
significant positions at IAC.
In connection with its 2005 spin-off from IAC, Expedia adopted “corporate opportunity” provisions in its amended and restated certificate
of incorporation that generally provide that no officer or director of Expedia who is also an officer or director of IAC 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 instead of
Expedia, or does not communicate information to Expedia regarding a corporate opportunity that the officer or director has directed to IAC.
Such provisions remain in effect following the Spin-Off. We have a similar provision in our certificate of incorporation with respect to our
officers or directors who are also officers or directors of Expedia (or IAC). In addition, Expedia’s amended and restated certificate of
incorporation has been reciprocally and similarly amended such that Expedia renounces any interest or expectancy in certain corporate
opportunities, which generally have the effect that no officer or director of Expedia who is also an officer or director of 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 us instead of Expedia, or does not communicate information to Expedia regarding a corporate opportunity that the officer or director has
directed to us. The corporate opportunity provisions may have the effect of exacerbating the risk of conflicts of interest between Expedia and us
because the provisions effectively shield an overlapping director/executive officer from liability for breach of fiduciary duty in the event that
such director or officer chooses to direct a corporate opportunity to us instead of to Expedia or vice versa.
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