PCLN » Topics » Amendments to the priceline.com Incorporated 1999 Omnibus Plan

This excerpt taken from the PCLN DEF 14A filed Apr 29, 2008.

Amendments to the priceline.com Incorporated 1999 Omnibus Plan

 

In February 1999, the Company adopted the priceline.com Incorporated 1999 Omnibus Plan (the “1999 Omnibus Plan” or the “Plan”).  Since the Plan’s adoption, awards have been made under the Plan to certain officers, other employees, consultants and directors of the Company or its subsidiaries from time to time.   The maximum number of shares of common stock currently reserved for the grant or settlement of awards under the 1999 Omnibus Plan is 7,895,833.  Assuming the maximum number of possible shares underlying outstanding performance share units are issued, as of March 31, 2008, there were no shares of common stock available for future grants under the 1999 Omnibus Plan.

 

The purpose of the 1999 Omnibus Plan is to increase stockholder value by aligning the selected participants’ interests with those of the Company, its affiliates and its stockholders through increased stock ownership, by assisting the Company in attracting, retaining and motivating the best available talent for the successful conduct of its business and, in some cases, by providing a performance incentive by conditioning the vesting of awards on the achievement of specified business goals.  The 1999 Omnibus Plan is structured to allow the Compensation Committee broad discretion in selecting criteria for the vesting of awards granted under the 1999 Omnibus Plan.

 

The 1999 Omnibus Plan is essential to the Company’s success in recruiting and retaining critical talent.  The Board of Directors believes that providing directors, officers and employees with equity incentives such as restricted stock units and performance share units will contribute substantially to the Company’s continued success by further aligning the interests of management with those of the Company’s stockholders. Additionally, the Company’s overall compensation philosophy places significant emphasis on equity compensation to reward, incentivize and retain management and key employees.  Providing employees with the opportunity to share in the success of priceline.com through equity participation has been a key component in the Company’s success, which could not have been achieved without the dedication and productivity of the Company’s employees.  As priceline.com continues to grow and return stockholder value, the Company will continue to be dependent upon recruiting and retaining employees that can perform at the highest levels.  It is critical that priceline.com continue to motivate its key employees as it seeks to attain future growth.

 

In addition, the constructive use of equity grants has increased the Company’s strategic flexibility and been a fundamental component of the Company’s recent growth.  For example, priceline.com’s ability to grant equity incentives to certain key employees of recently acquired businesses, including Booking.com Limited in 2004, Booking.com B.V. in 2005, the Agoda companies in 2007 and others, was critical to the Company’s ability to acquire such businesses.  In addition, priceline.com’s ability to grant performance-based equity incentives such as performance share units has been critical to retaining and motivating members of the senior management team of Booking.com B.V. and the Agoda companies.

 

In view of the critical importance of the 1999 Omnibus Plan, the Board of Directors proposes that the 1999 Omnibus Plan be amended to increase the maximum number of shares of common stock reserved for the grant or settlement of awards under the Plan from 7,895,833 to 9,195,833, subject to adjustment pursuant to the terms of the Plan.  In 2000, 2001 and 2005, the Plan was amended and restated to increase the number of shares available under the Plan, and we believe that the proposed increase in the number of shares available for grant at this time under the 1999 Omnibus Plan would not only support the Company’s continued growth, but also provide the Company with continued flexibility should the opportunity to consummate future strategic transactions present itself.  Accordingly, the Board of Directors recommends a vote FOR Proposal 2.

 

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The proposed amendments to the 1999 Omnibus Plan would make a variety of other changes to update and improve the Plan.  The principal changes are as follows:

 

·                  Confirm the Compensation Committee’s authority to delegate certain duties or powers with respect to the Plan to officers or agents of the Company;

·                  Specify that certain shares of common stock will not be added to the aggregate plan limit;

·                  Require stockholder approval of certain amendments to the Plan;

·                  Remove the Company’s ability to grant reload options under the Plan;

·                  Expressly prohibit the repricing of any “underwater” options; and

·                  Extend the term of the Plan for another ten years.

 

The amended and restated version of the Plan makes a number of other changes, including the removal of the provision that automatically granted options to Non-Employee Directors.  In addition, the amended and restated version of the Plan provides that any restricted stock or other stock-based award granted under the Plan that vests based only on the passage of time will vest at least three years from the date of grant, although vesting may occur earlier in certain specified circumstances, and that the Company may grant restricted stock or other stock-based awards that vest upon a different vesting schedule so long as such grant amounts do not exceed 10% of the maximum number of additional shares of common stock in the aggregate available under the Plan.  The proposed amendments also include a new set of provisions that require the Plan and any grants made under it to comply with Section 409A of the Internal Revenue Code and a new provision that explicitly provides for the Company to make any changes necessary for awards granted to non-U.S. participants.

 

A description of the 1999 Omnibus Plan, as it is proposed to be amended, follows.  This description is only a summary and is qualified in its entirety by the provisions of the 1999 Omnibus Plan, which is attached hereto as Appendix A. Terms not defined herein have the meanings given to such terms in the 1999 Omnibus Plan.  A majority of the outstanding shares of common stock present, in person or by proxy, at the Annual Meeting voting in favor of the proposed amendments to the 1999 Omnibus Plan is required for its approval.

 

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