ServiceMagic 2015 Annual Report Download - page 14

TableofContents
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·Revenue and Adjusted EBITDA Results. Revenueincreasedmodestlyovertheprioryear,reflectinggrowthinTheMatchGroup,HomeAdvisorand
Videosegments.AdjustedEBITDAdeclined11%fortheyear,reflectingincreasedsellingandmarketingexpenses,aswellaslowerrevenuein
certainsegments.
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Whilethefactorsnotedaboveweretheprimaryonesconsideredinsettingbonusawardamounts,theCommitteealsoconsideredeachexecutive’sroleand
responsibilities,therelativecontributionsmadebyeachexecutiveofficerduringtheyearandtherelativesizeofthebonusespaidtotheotherexecutiveofficers.
Notwithstandingmanysignificantachievementsduringtheyear,Mr.Dillerdidnotreceiveabonusfor2015duetotheCompany’sdisappointingfinancial
performance.Withrespecttobonusesforotherexecutives,theCommitteeconsideredthefollowing:(i)withrespecttoMr.Levin,hisnewroleasChiefExecutive
OfficeroftheCompany,includinghisfocusonmanagingtheday-to-daybusinessoperationsoftheCompany,aswellashisparticipationinthemajorinitiatives
undertakenduring2015andhisroleindevelopingstrategicinitiativesfortheCompany,(ii)withrespecttoMr.Kaufman,hisparticipationinstrategicoversightof
theCompany,and(iii)withrespecttoMr.Winiarski,hisroleinmanagingthesuccessfulcompletionoftheMatchGroupinitialpublicofferingandrelateddebt
transactions,aswellasthePlentyOfFishacquisition.
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Asnotedabove,insettingindividualbonusamounts,theCommitteedidnotquantifytheweightassignedtoanyspecificfactor,norapplyaformulaic
calculation.Insettingbonusamounts,theCommitteegenerallyconsideredtheCompany’soverallperformance,theamountofbonusforeachnamedexecutive
relativetootherCompanyexecutivesandtherecommendationsoftheChairmanandSeniorExecutiveandtheChiefExecutiveOfficer.Inaddition,theCommittee
consideredachievementsin2015ascomparedtoachievementsandbonuslevelsinprioryears.
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Executiveofficerbonusestendtobehighlyvariablefromyear-to-yeardependingontheperformanceoftheCompanyand,incertaincircumstances,
individualperformance.Accordingly,webelieveourexecutiveofficerbonusprogramprovidesstrongincentivestoreachtheCompany’sannualgoals.
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Long-Term Incentives
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General. Duetoourentrepreneurialphilosophy,webelievethatprovidingameaningfulequitystakeinourbusinessisessentialtocreatecompensation
opportunitiesthatcancompete,onarisk-adjustedbasis,withentrepreneurialemploymentalternatives.Inaddition,webelievethatownershipshapesbehavior,and
thatbyprovidingcompensationintheformofequityawards,wealignexecutiveincentiveswithstockholderinterestsinamannerthatwebelievedrivessuperior
performanceovertime.
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Whilethereiscurrentlynoformalstockownershiporholdingrequirementforexecutiveofficers,ourexecutiveofficersgenerallyhavehistoricallyhelda
significantportionoftheirstockawards(netoftaxwithholdings)wellbeyondtherelevantvestingdates.
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Inestablishingequityawardsforanexecutiveforanygivenperiod,theamountofoutstandingunvestedand/orunexercisedequityawards,aswellas
previouslyearnedorexercisedawards,isreviewedandevaluatedonanindividual-by-individualbasis.Insettingparticularawardlevels,thepredominant
considerationsareprovidingtheexecutivewitheffectiveretentionincentives,appropriaterewardforpastperformance,incentivesforstrongfutureperformance
andcompetitiveconditions.Theannualcorporateperformancefactorsrelevanttosettingbonusamounts,whiletakenintoaccount,aregenerallylessrelevantin
determiningthetypeandlevelofequityawards,astheawardstendtobemoreforwardlooking,andarealonger-termretentionandrewardinstrumentrelativeto
ourannualbonuses.
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TheCompany’susualpracticeistoscheduletheCommitteemeetingsatwhichawardsaretobemadeinadvance,withoutregardtothetimingofthe
releaseofearningsorothermaterialinformation.
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2015 Equity Awards. InFebruary2015,theCommitteegranted100,000stockoptionstoeachofMessrs.KipandWiniarski.Theoptionsvest25%a
year,onthefirstfouranniversariesofthegrantdate,andhaveanexercisepriceequaltotheclosingpriceoftheCompany’scommonstockonthegrantdate.Also
inFebruary2015,Mr.Kaufmanreceivedarestrictedstockunitawardwithadollarvalueof$350,000inaccordancewiththetermsofhisemploymentagreement.
Therestrictedstockunitswillvestinthreeequalinstallmentsoneachofthefirstthreeanniversariesofthegrantdate.
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InFebruaryandJune2015,toassisttheCommitteeasitconsiderednewequityawardsforMr.DillerandMr.Levin,respectively,theCompanyengaged
CAPtoevaluatevariouslong-termincentivealternativesforeachofthoseexecutivesand,inthecaseofMr.Diller,makerecommendationstotheCommittee.
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