TripAdvisor 2012 Annual Report Download - page 148

PROPOSAL 3:
APPROVAL OF THE 2011 STOCK AND ANNUAL INCENTIVE PLAN, AS AMENDED
Proposal
The Board of Directors believes that stock options and other stock-based incentive awards can play an
important role in the success of TripAdvisor by encouraging and enabling the employees, officers, non-employee
directors and consultants of TripAdvisor and its subsidiaries upon whose judgment, initiative and efforts we
largely depend for the successful conduct of our business to acquire a proprietary interest in TripAdvisor. The
Board of Directors anticipates that providing such persons with a direct stake in the Company will assure a closer
identification of the interests of such individuals with those of TripAdvisor and our stockholders, thereby
stimulating their efforts on our behalf and strengthening their desire to remain with TripAdvisor.
On April 24, 2013, the Board of Directors approved an amendment to the 2011 Stock and Annual Incentive
Plan (as amended, the “2011 Plan”), subject to stockholder approval, to increase the aggregate number of shares
authorized for issuance under the 2011 Plan by 15,000,000 shares to 32,468,104 shares of common stock, which
includes 7,468,104 Expedia equity-based compensation awards that were converted into TripAdvisor equity-
based awards on the effective date of the Spin-Off. This amendment also extended the per person annual cap on
stock options and stock appreciation rights. This amendment was designed to enhance the flexibility of the
Compensation Committees in granting stock options and other awards to our officers, employees, non-employee
directors and consultants and to ensure that we can continue to grant stock options and other awards to such
persons at levels determined to be appropriate by the Compensation Committees. In this Proxy Statement, we
refer to the Compensation Committee and Section 16 Committee collectively as the “Compensation
Committees.” A copy of the 2011 Plan (as amended by the proposed amendment) is attached as Appendix A to
this Proxy Statement and is incorporated herein by reference.
Proposal 3 seeks stockholder approval of the 2011 Plan. Stockholder approval of Proposal 3 will also allow
certain awards granted under the 2011 Plan to qualify as performance-based compensation exempt from the cap
imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), on TripAdvisor’s
tax deduction with respect to compensation paid to certain executive officers.
Summary of Material Features of the 2011 Plan
The material features of the 2011 Plan are:
• The maximum number of shares of common stock to be issued under the 2011 Plan is increased from
17,468,104 shares to 32,468,104 shares;
• The award of stock options (both incentive and non-qualified options), stock appreciation rights, restricted
stock, restricted stock units, unrestricted stock, performance units, dividend equivalents, convertible
debentures and cash bonus awards is permitted;
• The exercise price of stock options and stock appreciation rights will not be decreased in any manner
without stockholder approval; and
• Any material amendment to the 2011 Plan is subject to approval by our stockholders.
Based solely on the closing price of our common stock as reported by the NASDAQ on May 1, 2013, the
maximum aggregate market value of the additional 15,000,000 shares of common stock that could potentially be
issued under the 2011 Plan is $781,650,000. The shares of common stock underlying any awards that are
forfeited, canceled, held back upon exercise or settlement of an award to satisfy the exercise price or tax
withholding, reacquired by TripAdvisor prior to vesting, satisfied without any issuance of stock, expire or are
otherwise terminated (other than by exercise) under the 2011 Plan are added back to the shares of common stock
available for issuance under the 2011 Plan.
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