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.

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