Priceline.com handed out big pay packages to its executives in 2000 despite a sliding stock and corporate troubles.
The Norwalk, Conn.-based name-your-own-price e-commerce company awarded Chief Executive Daniel Schulman $3.8 million of restricted stock and forgave him of $4.8 million in debt, according to an SEC filing Monday. Meanwhile, Priceline forgave a $2.1 million loan to Chief Operating Officer Jeffrey Boyd and paid a $1.4 million bonus to Chief Marketing Officer Michael McCadden.
"In the fourth quarter 2000, Priceline.com designed and put in place a turnaround plan, a critical component of which was to retain and continue to motivate the company's executive officers and key employees," the company said in its filing. "At the time (the) turnaround plan was initiated, we believed that it was essential that Priceline.com maintain the continuity of its senior management and key employees in order to facilitate the turnaround plan.
"We also believed that maintaining the continuity of senior management would differentiate Priceline.com from other companies in the e-commerce arena that were experiencing a flight of senior management and employee talent."
A Priceline spokesman declined to comment.
"It's a very unique skill to be able to drive a stock price down 97 percent in a year, but it's not a skill that I think would be very much in demand by stockholders," said compensation expert Graef "Bud" Crystal. "I don't understand why they wouldn't fire the whole lot of them."
Priceline's stock plunged 97 percent last year. In December, company founder Jay Walker resigned from the company's board of directors, which came after Chief Financial Officer Heidi Miller's resignation one month earlier.
Priceline has struggled to move beyond the market for low-cost airfare and hotel rooms. In January, the company scrapped plans to sell auto insurance through its Web site. As part of a restructuring in December that included layoffs, Priceline said it would indefinitely postpone the introduction of several new businesses including a business-to-business service and the sale of life insurance through its site.
And in October, the company's WebHouse Club and Perfect Yard Sale affiliates shut down, aborting efforts by Priceline to expand into groceries and gasoline.
Even the company's core travel business has had its problems. The company laid off another 87 employees in November after an earnings report that showed losses greater than analysts' initial expectations. Priceline blamed slowing airline ticket sales for those losses.
Priceline has also been hit by several class-action lawsuits over its declining stock price.
Priceline paid Schulman $329,808 last year. As part of an amended employment agreement made with him in December, the company increased his annual salary from $300,000 per year to $400,000. The company also forgave half of the $9 million in loans given to Schulman. In exchange, Schulman returned the 7 million stock options the company granted him last year.
Priceline awarded Schulman 2.5 million shares of restricted stock as part of his new contract. Half of those shares will vest in May. The other half will vest in December 2002. Additionally, the company committed to giving Schulman 2 million stock options in June, half of which will vest when they are granted. The other half will vest during the following 18 months.
Schulman's contract runs through June 2004.
In November, Priceline amended its agreement with Boyd, setting his salary at $300,000 and awarding him 1.4 million shares of restricted stock. Half of Boyd's stock will vest in May, while the other half will vest in November 2002.
Priceline also promised to grant Boyd 1.6 million stock options in May, half of which will vest when they are granted. Boyd's contract runs through 2002.
McCadden's contract with Priceline will pay him $300,000 a year through 2002. His bonus consisted of a signing bonus of $100,000 and a $1.3 million retention bonus the company paid him at the end of the year.
The company awarded 1 million shares of restricted stock and plans to issue him 1 million stock options in May. His vesting schedule is similar to that of Schulman and Boyd.
Priceline awarded Boyd and McCadden 800,000 and 650,000 stock options respectively in 2000. Schulman, Boyd and McCadden returned their stock options to the company to ensure that it had enough options available to award to employees, Priceline said in the filing.
As part of the filing, the company asked shareholders to approve an increase in the number of stock options available from 25.4 million to 35.4 million. The company also asked that shareholders approve an increase in the number of options that could be granted to nonemployee directors from 10,000 to 20,000.
Priceline paid Chairman Richard Braddock $262,500 last year. Braddock stopped receiving a salary when he stepped down from the CEO position last May.
Priceline forgave $294,000 worth of interest that Braddock owed on a $3.3 million loan he repaid last year. The company also awarded him $1.15 million worth of restricted stock last year.
Braddock cashed in stock options worth $9.8 million in 2000. The exercised options represented a small fraction of his total vested shares.
Meanwhile, Trey Urbahn, president of Priceline's airline department, and Thomas D'Angelo, the company's senior vice president of finance, realized $12.6 million and $12.9 million in gains by exercising their options in 2000.
Priceline paid Urbahn a $250,000 bonus on top of his $240,000 salary last year. D'Angelo earned a $250,000 bonus on top of his salary of $189,583. Additionally, the company paid Urbahn and D'Angelo $487,500 and $243,750 worth of restricted stock.