TripAdvisor 2013 Annual Report Download - page 154

PROPOSAL 3:
STOCKHOLDER PROPOSAL REGARDING MAJORITY VOTING IN DIRECTOR ELECTIONS
Proposal
The United Brotherhood of Carpenters Pension Fund (the “Fund”) has submitted the following proposal,
including proposed resolution and supporting statement:
Resolved: That the stockholders of TripAdvisor, Inc. (“Company”) hereby request that the Board of
Directors initiate the appropriate process to amend TripAdvisor’s corporate governance documents (certificate of
incorporation or bylaws) to provide that director nominees shall be elected by the affirmative vote of the majority
of votes cast at an annual meeting of stockholders, with a plurality vote standard retained for contested director
elections, that is, when the number of director nominees exceeds the number of board seats.
Supporting Statement: TripAdvisor’s Board of Directors should establish a majority vote standard in
director elections in order to provide stockholders a meaningful role in these important elections. The proposed
majority vote standard requires that a director nominee receive a majority of the votes cast in an election in order
to be formally elected. The standard is particularly well-suited for the vast majority of director elections in which
only board nominated candidates are on the ballot. Under the current plurality standard, a board nominee can be
elected with as little as a single affirmative vote, even if a substantial majority of the votes cast are “withheld”
from the nominee. We believe that a majority vote standard in board elections established a challenging vote
standard for board nominees, enhances board accountability, and improves the performance of boards and
individual directors.
In recent years, approximately 87% of the companies in the S&P 500 Index have adopted a majority vote
standard in company bylaws, articles of incorporation, or charter. These companies have also adopted a director
resignation policy that established a board-centric post-election process to determine the status of any director
nominee that is not elected. This dramatic move to a majority vote standard is in direct response to strong
stockholder demand for a meaningful role in director elections.
The TripAdvisor Board of Directors has not acted to establish a majority vote standard, retaining its
plurality vote standard. The Board should take this critical first step in establishing a meaningful majority vote
standard. With a majority vote standard in place, the Board can then act to adopt a director resignation policy to
address the status of unelected directors. A majority vote standard combined with a post-election director
resignation policy would establish a meaningful right for stockholders to elect directors at TripAdvisor, while
reserving for the Board an important post-election role in determining the continued status of an unelected
director. We urge the Board to join the mainstream major U.S. companies and establish a majority vote standard
in director elections.
Statement of the Board of Directors in Opposition of the Stockholder Proposal
The Board of Directors believes that TripAdvisor’s current director election policies are in the best interest
of our stockholders and do not need to be changed. In fact, despite our controlled status, our current director
election policies give our minority stockholders a more meaningful role in the director election process than they
would otherwise be entitled.
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 14.0% of the outstanding shares of Common Stock
and 100% of the outstanding shares of Class B Common Stock. Because each share of Class B common stock is
generally entitled to ten votes per share and each share of common stock is entitled to one vote per share, Liberty
may be deemed to beneficially own equity securities representing approximately 56.7% of our voting power. As
a result, absent special provisions in our charter documents, Liberty would have control over the vote relating
to the election of all director nominees.
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