Priceline CEO paid in stock options

A company proxy statement filed with the Securities and Exchange Commission shows that the Internet travel site didn't pay its CEO a salary last year.

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Priceline didn't pay its chief executive a salary last year, but some of its other executives fared far better.

Richard Braddock did not receive a bonus or salary last year, according to a Priceline proxy statement filed with the Securities and Exchange Commission on Friday. Instead, the company paid Braddock 750,000 stock options when he resumed as Priceline's CEO after the company fired Daniel Schulman last May.

Other company executives saw their salaries increase, including Jeffrey Boyd, Priceline's president; Chief Financial Officer Robert Mylod; and Chief Information Officer Ronald Rose.

The departing Shulman was paid more than double his 2000 salary and the company forgave a $4.9 million loan.

"The goals of Priceline.com's compensation program are to align compensation with the company's and each executive's business objectives and performance and to enable Priceline.com to attract, retain and reward executive officers and other key employees who contribute to Priceline.com's long-term success and to motivate them to enhance long-term stockholder value," the company said in its proxy statement.

Priceline representatives did not return calls seeking comment.

Priceline drew criticism from compensation experts last year when it handed out big bonuses and forgave million-dollar loans to company executives despite its plummeting revenue and stock price. The company explained the action as a way of retaining crucial employees during a turnaround. But the company fired Schulman less than a month after revealing the salary awards and just five months after the company began its turnaround plan.

While Priceline has stemmed its losses in recent quarters, its travel-focused business was hit hard by the Sept. 11 terrorist attacks and its stock price has not rebounded to earlier highs. Priceline's stock closed regular trading on Friday at $5.19 per share, down from its 52-week high of $10.35.

Although Braddock earned $262,500 in salary in 2000, Priceline stopped paying him a salary in May 2000, when he stepped down as the company's CEO. When Braddock, who remained the company's chairman, became CEO again last May, the company paid him 750,000 in stock options, which were set at $10 per share.

Braddock has more than 6 million vested Priceline shares, which are worth more than $30 million, according to the proxy statement. However, Braddock did not exercise any shares last year.

Priceline "made the award to Mr. Braddock to provide an additional incentive to retain and motivate Mr. Braddock as the company executed on its turnaround plan and strives towards profitability," the company said in its proxy statement. "The option grant made to Mr. Braddock was based upon his performance and leadership with the company and placed his entire compensation at risk, since the value of the option grant depends on the significant appreciation of the company's common stock over the option term."

While Braddock saw his salary drop last year, Boyd, the company's president, saw his salary rise from $260,192 in 2000 to $304,167 in 2001. Priceline also bumped up Boyd's option awards, from 800,000 in 2000 to 1.7 million in 2001. Boyd did see a drop in other compensation though. Priceline paid him $3.4 million worth of restricted stock in 2000 and none in 2001.

Priceline named Boyd its chief operating officer in November 2000. Before that, he served as the company's executive vice president and general counsel.

Mylod, who became Priceline's CFO in November 2000 after serving as the company's senior vice president of finance, saw his base salary jump from $191,667 in 2000 to $300,000 in 2001. But Mylod saw other portions of his compensation decline in 2001. The company paid him 125,000 in stock options in 2001, compared with 550,000 in 2000. And like Boyd, Mylod did not receive a restricted stock grant in 2001, after receiving a grant worth $1.7 million in 2000.

Rose, who has served as Priceline's CIO since March 1999, saw his base salary rise from $247,000 in 2000 to $300,000 last year. But like Boyd and Mylod, Rose's other compensation fell in 2001. He received 125,000 stock options in 2001 versus 1.25 million in 2000. And after receiving a restricted stock grant worth $765,600 in 2000, Rose did not receive such a grant in 2001.

Meanwhile, even though he worked for Priceline less than half the year, Schulman earned $683,332 last year versus $329,808 in 2000. Priceline also accelerated the vesting of 1 million options held by Schulman and forgave him on his loan. Priceline forgave the principal and interest on another $4.8 million loan to Schulman in 2000.

Under the separation agreement in Schulman's contract, he was entitled to twice his $300,000 base salary and the accelerated vesting of his options, Priceline said in its proxy statement.