Travelzoo 2013 Annual Report Download - page 16

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14
COMPENSATION DISCUSSION AND ANALYSIS
We hold annual votes on executive compensation, in accordance with shareholder recommendation made at the 2011
annual meeting. In light of last year's shareholder approval of the compensation for executives, there were no significant
changes in executive compensation.
Overview of Compensation Program
The following Compensation Discussion and Analysis, or ("CD&A"), describes our overall compensation philosophy
and the primary components of our compensation program. Furthermore, the CD&A explains the process by which the
Compensation Committee, or "Committee", determined the 2013 compensation for our Chief Executive Officer, Chief
Financial Officer and other most highly compensated officers. We refer to these individuals collectively as the "named
executives" or the "named executive officers."
Compensation Philosophy and Objectives
The fundamental objectives of our executive compensation program are to attract and retain highly qualified executive
officers, motivate these executive officers to materially contribute to our long-term business success, and align the interests of
our executive officers and stockholders by rewarding our executives for individual and corporate performance based on targets
established by the Committee.
We believe that achievement of these compensation program objectives enhances long-term profitability and
stockholder value. The elements utilized to help achieve the Committee's objectives include the following:
• Accountability for Individual Performance. Compensation should in large part depend on the named executive's
individual performance in order to motivate and acknowledge the key contributors to our success.
• Recognition for Business Performance. Compensation should take into consideration our overall financial
performance and overall growth.
• Attracting and Retaining Talented Executives. Compensation should generally reflect the competitive marketplace
and be designed to attract and retain superior employees in key competitive positions.
We implement our compensation philosophy through setting base salaries for our executive officers, through the use of
our executive bonus plan and through reviewing and approving other terms of employment agreements.
Compensation Determination Process
Compensation Committee Members. The Committee is responsible for establishing, overseeing and reviewing
executive compensation policies and for approving, validating and benchmarking the compensation and benefits for named
executive officers. The Committee is also responsible for determining the fees paid to our outside directors. The Committee
includes Mr. Michael Karg (Chair) and Ms. Mary Reilly. Mr. Karg and Ms. Reilly satisfied the independence requirements of
the NASDAQ.
Role of Management. During 2013, the Committee engaged in its annual review of executive compensation with the
goal of ensuring the appropriate combination of fixed and variable compensation linked to individual and corporate
performance. In the course of its review, the Committee considered the advice and input of the Company's CEO and data
prepared by management, including a comparison of the current compensation of the named executive officers with publicly
available information. Management did rely on a service from Equilar Inc., a compensation research firm, to provide peer
executive compensation data from proxies and a compensation survey for comparison purposes. However, management did not
receive advice from Equilar in setting our executive compensation. The data utilized by the Committee included salary and
total compensation information based on the title, job description, and geographic location of similarly situated executives. The
most significant aspects of the CEO's role in the compensation determination process are evaluating employee performance,
establishing business performance targets, goals and objectives and recommending salary and bonus levels. The CEO does not
participate in discussions regarding his compensation.
The Committee compared the compensation received by the Company's named executive officers with the levels of
compensation received by similarly situated executives in the same geographic location in light of the named executives'
responsibilities, performance, experience and tenure, in order to arrive at the total compensation package for each of the named
executive officers. In some cases, the compensation package that the Committee awarded a named executive officer was at or
below the median compensation received by executives compared to third-party data, while in other instances the compensation
was higher due to the executive's responsibilities, performance, experience and tenure.