TripAdvisor 2014 Annual Report Download - page 145

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23
Equity Awards
The Compensation Committees use equity awards to align executive compensation with our long-term performance. Equity
awards link compensation to financial performance because their value depends on TripAdvisor’s share price. Equity awards are also
an important employee retention tool because they generally vest over a multi-year period, subject to continued service by the award
recipient.
Equity awards are typically granted to our named executive officers upon hire or promotion and annually thereafter.
Management generally recommends annual equity awards in the first quarter of each year when the Compensation Committees meet
to make determinations regarding annual bonuses for the last completed fiscal year and to set compensation levels for the current
fiscal year. The practice of the Compensation Committees is to generally grant equity awards to our named executive officers only in
open trading windows.
Typically, equity awards have been in the form of awards of restricted stock units (“RSUs”) and/or options to purchase shares of
TripAdvisor common stock or some combination of the two. Stock options have an exercise price equal to the market price of
TripAdvisor common stock on the date of grant, and, therefore, provide value to our named executive officers only if our stock price
increases. Stock options generally vest over a period of four years. We believe stock options incentivize our named executive officers
to sustain increases in stockholder value over extended periods of time. RSUs are a promise to issue shares of our common stock in
the future provided the named executive officer remains employed with us through the award’s vesting period. RSUs generally vest
over a period of four years. RSUs provide the opportunity for capital accumulation and long-term incentive value and are intended to
assist in satisfying our retention objectives.
The Compensation Committees review various factors considered by management when they establish TripAdvisor’s equity
award grant pool including, but not limited to, the following:
x TripAdvisor’s business and financial performance, including year-over-year performance,
x dilution rates, taking into account projected headcount growth and employee turnover,
x non-cash compensation as a percentage of earnings before interest, taxes, depreciation and amortization,
x equity compensation utilization by peer companies,
x general economic conditions, and
x competitive compensation market data regarding award values.
For specific awards to our named executive officers, management makes recommendations to the Section 16 Committee based
on a variety of factors including, but not limited to, the following:
x TripAdvisor’s business and financial performance, including year-over-year performance,
x individual performance and future potential of the executive,
x the overall size of the equity award pool,
x award value relative to other TripAdvisor executives,
x the value of previous awards and amount of outstanding unvested equity awards,
x competitive compensation market data, to the degree that the available data is comparable, and
x the recommendations of the President and Chief Executive Officer (other than in connection with his own compensation).