TripAdvisor 2012 Annual Report Download - page 149

Qualified Performance-Based Compensation under Code Section 162(m)
To ensure that certain awards granted under the 2011 Plan to a “Covered Employee” (as defined in the
Code) qualify as “performance-based compensation” under Section 162(m) of the Code, the 2011 Plan provides
that the Compensation Committees may require that the vesting of such awards be conditioned on the satisfaction
of performance criteria that may include any or all of the following: (1) specified levels of earnings per share
from continuing operations; (2) net profit after tax; (3) EBITDA; (4) EBITA; (5) gross profit; (6) cash
generation; (7) unit volume; (8) market share; (9) sales; (10) asset quality; (11) earnings per share; (12) operating
income; (13) revenues; (14) return on assets; (15) return on operating assets; (16) return on equity; (17) profits;
(18) total stockholder return (measured in terms of stock price appreciation and/or dividend growth); (19) cost
saving levels; (20) marketing-spending efficiency; (21) core non-interest income; (22) change in working capital;
(23) return on capital; and (24) stock price. Performance goals may be based upon specified levels of Company,
subsidiary, affiliate or division performance under one or more of the criteria set forth above relative to the
performance of other entities, divisions or subsidiaries. The Compensation Committees will select the particular
performance criteria within the time period specified by Section 162(m) of the Code. Subject to adjustments for
stock splits and similar events, the maximum award granted to any one individual in the form of restricted stock
units or restricted stock that is intended to qualify as “performance-based compensation” under Section 162(m)
of the Code will not exceed 2,000,000 shares of common stock for any calendar year and no more than 3,000,000
shares of common stock underlying options may be granted to any one individual during any calendar year
period. If a performance-based award is payable in cash, it cannot exceed $10,000,000 for any calendar year.
Summary of the 2011 Plan
The following description of certain features of the 2011 Plan is intended to be a summary only. The
summary is qualified in its entirety by the full text of the 2011 Plan that is attached hereto as Appendix A.
Plan Administration. The 2011 Plan is administered by the Compensation Committees. The Compensation
Committees have full power to select, from among the individuals eligible for awards, the individuals to whom
awards will be granted, to make any combination of awards to participants, and to determine the specific terms
and conditions of each award, subject to the provisions of the 2011 Plan. The Compensation Committees may
delegate to an officer the authority to grant awards to employees who are not subject to the reporting and other
provisions of Section 16 of the Exchange Act and not subject to Section 162(m) of the Code, subject to certain
limitations and guidelines.
Eligibility. Persons eligible to participate in the 2011 Plan are the directors, officers, employees, and
consultants of TripAdvisor and its subsidiaries or affiliates as selected from time to time by the Compensation
Committees in their discretion. Approximately 1,616 individuals are currently eligible to participate in the 2011
Plan, which includes three officers, 1,613 employees who are not officers, and seven non-employee directors.
Plan Limits. The maximum award of stock options and/or stock appreciation rights granted to any one
individual will not exceed 32,468,104 shares of common stock (subject to adjustment for stock splits and similar
events) for any calendar year period. If any award of restricted stock, restricted stock units or performance shares
granted to an individual is intended to qualify as “performance-based compensation” under Section 162(m) of the
Code, then the maximum award shall not exceed 2,000,000 shares of common stock (subject to adjustment for
stock splits and similar events) to any one such individual in any calendar year. If any cash-based award is
intended to qualify as “performance-based compensation” under Section 162(m) of the Code, then the maximum
award to be paid in cash in any performance cycle may not exceed $10,000,000. In addition, no more than
7,000,000 shares may be issued in the form of incentive stock options.
Stock Options. The 2011 Plan permits the granting of (1) options to purchase common stock intended to
qualify as incentive stock options under Section 422 of the Code and (2) options that do not so qualify. Options
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