TripAdvisor 2014 Annual Report Download - page 167

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which the director or executive officer, or any member of his or her immediate family, had a direct or indirect material
interest.
x 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.
x TripAdvisor monitors its accounts payable, accounts receivable and other databases to identify any other potential related
person transactions that may require disclosure.
x 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
Relationship between Expedia and TripAdvisor
Upon consummation of the Spin-Off, Expedia was considered a related party under GAAP based on a number of factors,
including, among others, common ownership of our shares and those of Expedia. However, we no longer consider Expedia a related
party. For purposes of governing certain of the ongoing relationships between us and Expedia at and after the Spin-Off, and to
provide for an orderly transition, we and Expedia entered into various agreements at the time of the Spin-Off, under which
TripAdvisor has satisfied its obligations. However, TripAdvisor continues to be subject to certain post-spin obligations under the Tax
Sharing Agreement between TripAdvisor and Expedia.
Under the Tax Sharing Agreement, we are generally required to indemnify Expedia for any taxes resulting from the Spin-Off
(and any related interest, penalties, legal and professional fees, and all costs and damages associated with related stockholder litigation
or controversies) to the extent such amounts resulted from (i) any act or failure to act by us described in the covenants in the tax
sharing agreement, (ii) any acquisition of our equity securities or assets or those of a member of our group, or (iii) any failure of the
representations with respect to us or any member of our group to be true or any breach by us or any member of our group of any
covenant, in each case, which is contained in the separation documents or in the documents relating to the IRS private letter ruling
and/or the opinion of counsel.
Relationship between Liberty, LTRIP and TripAdvisor
On August 27, 2014, the entire beneficial ownership of our common stock and Class B common stock held by Liberty was
transferred to LTRIP. Simultaneously, Liberty, LTRIP’s former parent company, distributed, by means of a dividend, to the holders
of its Liberty Ventures common stock, Liberty’s entire equity interest in LTRIP. As a result of the Liberty Spin-Off, effective August
27, 2014 LTRIP became a separate, publicly traded company and 100% of Liberty’s interest in TripAdvisor was held by LTRIP.
As a result of these transactions, as of the record date, LTRIP 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 LTRIP’s shares of Class B common stock into
common stock, LTRIP would beneficially own 21.6% of the outstanding common stock (calculated in accordance with Rule 13d-3).
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, LTRIP may be deemed to beneficially own equity securities representing approximately 56.5% of our voting
power. As a result, LTRIP is 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).