TripAdvisor 2011 Annual Report Download - page 59

Table of Contents
For more information on our relationship with Expedia, including quantitative disclosures impacting our financials, see “Note 9— Related
Party Transactions
” in the notes to our consolidated and combined financial statements.
Relationship Between Liberty and us After the Spin-Off
Governance Agreement
On December 20, 2011, in connection with the Spin-Off, we entered into a governance agreement, or the Governance Agreement, with
Liberty Interactive Corporation, or Liberty, and Barry Diller, the Chairman of our Board of Directors and our Senior Executive. The summary of
the material terms of the Governance Agreement set forth below is qualified in its entirety by the full text of the Governance Agreement, which
is incorporated by reference on this Annual Report on Form 10-K as Exhibit 10.1. On December 20, 2011, in connection with the Spin-Off,
Liberty and Mr. Diller also entered into a Stockholders Agreement, or the Stockholders Agreement.
Representation of Liberty on our Board of Directors
Under the terms of the Governance Agreement:
Pursuant to the terms of the Governance Agreement, we will cause each director that Liberty nominates to be included in the slate of
nominees recommended by our Board of Directors to our stockholders for election as directors at each annual meeting of our stockholders and
will use all reasonable efforts to cause the election of each such director including soliciting proxies in favor of the election of such persons.
Liberty has the right to designate a replacement director to our Board of Directors in order to fill any vacancy of a director previously designated
by Liberty. Liberty would have the right to transfer this ability to nominate candidates to our Board of Directors subject to the same ownership
requirements as Liberty’s current nomination rights, to its transferee in a Block Sale (as discussed below), provided that the transferee’s
nominees are independent directors and are approved by our Nominating Committee (or equivalent committee of our Board of Directors). In
addition, the spun-off or split-off company in a Distribution Transaction (as discussed below) will succeed to Liberty’s rights under the
Governance Agreement, including Liberty’s right to nominate directors.
Contingent Matters
The Governance Agreement lists certain actions that require the prior consent of Liberty and Mr. Diller before TripAdvisor can take any
such action, which are referred to herein as Contingent Matters.
For so long as:
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• Liberty has the right to nominate up to such number of our directors as is equal to 20% of the total number of TripAdvisor directors
(rounded up to the next whole number if the total number of directors is not an even multiple of 5) so long as Liberty beneficially
owns at least 16,825,982 of our equity securities (or long as Liberty’s ownership percentage is at least equal to 15% of our total
equity securities);
• Liberty has the right to nominate one our directors so long as Liberty beneficially owns at least 11,217,321 of our equity securities
(or so long as Liberty owns at least 5% of the total of our equity securities); and
•
We will use our reasonable best efforts to cause one of Liberty
’
s designees to be a member of a committee of our Board of Directors
and, to the extent the person designated by Liberty would qualify as a member of the compensation committee of our Board of
Directors under applicable tax and securities laws and regulations, we will seek to have that person appointed to the compensation
committee of our Board of Directors.
• In the case of Liberty, Liberty owns at least 14,956,428 of our equity securities and at least 5% of our total equity securities, or the
Liberty Condition; and