TripAdvisor 2012 Annual Report Download - page 179

including, among others, the Separation Agreement; the Tax Sharing Agreement, the Employee Matters
Agreement, the Transition Services Agreement, and commercial agreements. The various commercial
agreements, including click-based advertising agreements, content sharing agreements and display-based and
other advertising agreements, had terms of up to one year. The full texts of the Separation Agreement, the Tax
Sharing Agreement, the Employee Matters Agreement, the Transition Services Agreement and the Master
Advertising Agreement (CPC) are incorporated by reference to our Annual Report on Form 10-K filed with the
SEC on February 15, 2013 as Exhibits 2.1, 10.2, 10.3, 10.4 and 10.6 (10.6 filed in redacted form pursuant to
confidential treatment request), respectively. We continue to work together with Expedia pursuant to various
commercial agreements between subsidiaries of TripAdvisor, on the one hand, and subsidiaries of Expedia, on
the other hand. These commercial arrangements were and will continue to be negotiated on an arm’s length basis.
Liberty and Barry Diller
On December 20, 2011, in connection with the Spin-Off, we entered into a governance agreement (the
“Governance Agreement”) with Liberty and Barry Diller, our former Chairman of the Board of Directors and our
Senior Executive. The summary of the material terms of the Governance Agreement are qualified in their entirety
by the full text of the Governance Agreement, which is incorporated by reference to our Annual Report on Form
10-K filed with the SEC on February 15, 2013 as Exhibit 10.1. In addition, Liberty and Mr. Diller entered into a
stockholders agreement, dated December 20, 2011 (the “Stockholders Agreement”), pursuant to which, among
other things, Liberty granted to Mr. Diller an irrevocable proxy (the “Proxy”) with respect to all of TripAdvisor’s
securities beneficially owned by Liberty on all matters submitted to a stockholder vote or by which the
stockholders may act by written consent (other than with respect to contingent matters with respect to which
Liberty had not consented).
By virtue of the Proxy, as well as through shares owned by Mr. Diller directly, Mr. Diller was effectively
able to control the outcome of all matters submitted to a vote or for the consent of TripAdvisor’s stockholders
(other than with respect to the election by the holders of TripAdvisor common stock of 25% of the members of
TripAdvisor’s Board of Directors and matters as to which Delaware law requires a separate class vote).
Additionally, Mr. Diller was the Chairman and Senior Executive of Expedia, and through similar arrangements
between Mr. Diller and Liberty, Mr. Diller was effectively able to control the outcome of all matters submitted to
a vote or for the consent of Expedia’s stockholders (other than with respect to the election by the holders of
Expedia common stock of 25% of the members of Expedia’s Board of Directors and matters as to which
Delaware law requires a separate class vote). As a result, from the completion of the Spin-Off until December 11,
2012, TripAdvisor and Expedia were related parties since they were under common control.
On December 11, 2012, Liberty purchased an aggregate of 4,799,848 shares of common stock of
TripAdvisor from Mr. Diller and certain of his affiliates (the “Stock Purchase”). Effective upon completion of the
Stock Purchase, Mr. Diller resigned as Chairman and the Senior Executive of TripAdvisor, but continued to serve
as a non-employee director. As a result of the completion of the Stock Purchase: (i) the Stockholders Agreement
has, in accordance with its terms, terminated, (ii) the Proxy has terminated and Mr. Diller no longer has the right
to vote the shares of TripAdvisor common stock and Class B common stock beneficially owned by Liberty, and
(iii) the Governance Agreement has, in accordance with its terms, terminated with respect to Mr. Diller and
remains in effect with respect to Liberty and TripAdvisor.
As of the record date, Mr. Diller beneficially owned 2,072,023 shares of our common stock (assuming the
exercise of options to purchase 2,019,694 shares of common stock that are or become exercisable by Mr. Diller or
vest within 60 days of May 1, 2013), which shares constitute 1.4% of the outstanding shares of common stock.
Effective April 23, 2013, Mr. Diller tendered his resignation from our Board of Directors and is now employed by
the Company as a special advisor to our Chief Executive Officer. As of the record date, Liberty beneficially owned
18,159,752 shares of our common stock and 12,799,999 shares of our Class B common stock, which shares
constitute 13.9% of the outstanding shares of common stock and 100% of the outstanding shares of Class B
common stock. Assuming the conversion of all of the Liberty’s shares of Class B common stock into common
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