RealTime IT News

Name Your Own Severance Pay?

Former Priceline.com Inc. CEO Daniel H. Schulman, who was forced out about a year ago as the name-your-own-price e-commerce company began executing a turn-around plan, was paid $600,000 simply to get out of the way, according to a company filing made Friday with the SEC.

The payment was required by his employment agreement.

At the time it was disclosed that the decision to oust Schulman also resulted in a chargeof approximately $5.8 million in the second quarter primarily as "the result of the acceleration of the forgiveness of loans to ... Schulman and the acceleration of the vesting of restricted stock, each of which were required by the terms of (his) employment agreement."

Schulman came to Priceline in June 1999 from AT&T, where he had been president of the consumer-markets division. Priceline named its chairman, Richard S. Braddock, to replace Schulman on May 8 last year. Priceline had seen its share price plunge to as little as $1.06 after it ran into problems in the fall of 2000.

The company's latest proxy statement filed with the Securities and Exchange Commission says Schulman was entitled to, among other things, twice his base salary of $300,000 paid over the course of the year following his separation from the company.

In total, he collected $683,332 in salary last year-- $600,000 of it for stepping out of the way. The proxy filing also says that in connection with Schulman's separation, the company "accelerated the vesting of 1 million shares underlying stock options granted to Schulman, also as required by the terms of his employment agreement."

Interestingly, for 2001, Chairman and CEO Richard Braddock received no salary or bonus at all. However, he did get options to buy another 750,000 shares of company stock, thus tying his annual compensation directly to the financial performance of the company. The exercise price of the options is $10 per share; Priceline has been in the $5 range lately. The company reports its first-quarter earnings on Wednesday.

Braddock, 60, has been chairman of Priceline since August 1998. He owns 18.2 million shares of Priceline, or about 8 percent of the company, according to the SEC filing, which also says that since February 2001, "due to general economic conditions and the challenges facing the company and the travel industry since Sept. 11," no bonuses were paid to any executive officers or employees of the company.

The proxy statement also discloses that billionaire Saudi investor Prince Alwaleed Bin Talal Abdulaziz Al Saud now has about 11.9 million shares or 5.21 percent of the company. The largest single shareholders are Cheung Kong (Holdings) Ltd. with 72.2 million shares and Edmond Tak Chuen with an equal amount. Hutchison Whampoa has about 36 million shares or nearly 16 percent of the company. Cheung Kong is a 49.97 percent shareholder of Hutchison Whampoa.

The Hong Kong companies invested in Priceline last June for the second time.