Business Context and Reporting Period
Company: Expedia, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 15, 2005
Event: Entry into a Material Definitive Agreement regarding the adoption of the Expedia Executive Deferred Compensation Plan.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on a corporate governance and compensation agreement.
Material Changes
The primary material change is the ratification of the Expedia Executive Deferred Compensation Plan, effective August 9, 2005. Key features include:
- Eligibility: Select group of management and highly compensated employees.
- Deferral Limit: Participants may defer up to 90% of cash bonuses.
- Investment: Deferred amounts are credited to book-entry accounts subject to investment results selected by the participant.
- Payout Timing: Generally no sooner than three years after deferral, upon termination of employment, or attainment of age 65. Key employees must wait six months post-termination.
- Distribution Options: Single lump sum or installments over 10 or 15 years.
- Accelerated Payouts: Available in cases of unforeseen emergency or change in control.
- Credit Status: Plan benefits are unsecured general obligations ranking in parity with other unsecured indebtedness.
Guidance, Outlook, and Risks
Management Commentary: The Company retains the right to amend or terminate the Plan at any time.
Risks and Contingencies:
- Benefits are unsecured obligations of the Company.
- The Company may establish a "rabbi trust" to fund benefits, but assets in such a trust remain subject to the claims of the Company's creditors.
- Investment returns on deferred amounts are not guaranteed and depend on selected investment alternatives.
Investor Verification Checklist
- Review Exhibit 10.1 for the complete text of the Executive Deferred Compensation Plan.
- Verify the specific list of eligible "key employees" and "highly compensated employees" under Section 416 of the IRC.
- Assess the impact of the plan on future cash flow obligations, noting the unsecured nature of the liability.
- Confirm the investment alternatives available to participants and their historical performance.