TripAdvisor 2012 Annual Report Download - page 177

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review and Approval or Ratification of Related Person Transactions
Prior to the completion of the Spin-Off, we were subject to the policies and procedures of Expedia regarding
the review and approval of related person transactions. In general, we will enter into or ratify a “related person
transaction” only when it has been approved by the Audit Committee of the Board of Directors, in accordance
with its written charter. Related persons include our executive officers, directors, 5% or more beneficial owners
of our common stock, immediate family members of these persons and entities in which one of these persons has
a direct or indirect material interest. Related person transactions are transactions that meet the minimum
threshold for disclosure in the proxy statement under the relevant SEC rules (generally, transactions involving
amounts exceeding $120,000 in which a related person or entity has a direct or indirect material interest). When a
potential related person transaction is identified, management presents it to the Audit Committee to determine
whether to approve or ratify. When determining whether to approve, ratify, disapprove or reject any related
person transaction, the Audit Committee considers all relevant factors, including the extent of the related
person’s interest in the transaction, whether the terms are commercially reasonable and whether the related
person transaction is consistent with the best interests of TripAdvisor and our stockholders.
The legal and accounting departments work with business units throughout TripAdvisor to identify potential
related person transactions prior to execution. In addition, we take the following steps with regard to related
person transactions:
• On an annual basis, each director, director nominee and executive officer of TripAdvisor completes a
Director and Officer Questionnaire that requires disclosure of any transaction, arrangement or relationship
with us during the last fiscal year in which the director or executive officer, or any member of his or her
immediate family, had a direct or indirect material interest.
• Each director, director nominee and executive officer is expected to promptly notify our legal department
of any direct or indirect interest that such person or an immediate family member of such person had, has
or may have in a transaction in which we participate.
• TripAdvisor monitors its accounts payable, accounts receivable and other databases to identify any other
potential related person transactions that may require disclosure.
• Any reported transaction that our legal department determines may qualify as a related person transaction
is referred to the Audit Committee.
If any related person transaction is not approved, the Audit Committee may take such action as it may deem
necessary or desirable in the best interests of TripAdvisor and our stockholders.
Related Person Transactions
Expedia
Related-party revenue from Expedia of $203.8 million, $211.0 million and $171.1 million for the years
ended December 31, 2012, 2011 and 2010, respectively, primarily consists of click-based advertising and other
advertising services provided to Expedia and its subsidiaries and is recorded at contract value, which we believe
is a reasonable reflection of the value of the services provided. Related-party revenue represented 27%, 33% and
35% of our total revenue for the years ended December 31, 2012, 2011 and 2010, respectively.
Prior to the Spin-Off, our operating expenses included a related-party shared services fee, of $9.2 million
and $7.9 million for the years ended December 31, 2011 and 2010, respectively, which was comprised of
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