The Priceline Group likes to keep its CEOs hungry with below-market base salaries and lucrative potential bonuses should they and the company over-achieve.
New CEO Darren Huston cashed in on the opportunity, receiving nearly $17.9 million in total compensation in 2013 just prior to taking on the top role.
Here’s the breakdown of Huston’s 2013 compensation, which occurred prior to his becoming Priceline Group CEO on January 1, 2014.
In addition to Huston’s 2013 base salary of $478,487 as CEO of the Priceline Group’s Booking.com unit, he received a stock award of around $12 million, a bonus of $5.25 million, and other compensation amounting to a teensy $150,000 or so.
That brought Huston’s total compensation to $17,878,468, to be precise, which he received in euros as he was based in the Netherlands.
Huston’s 2013 bonus was based on his being the CEO of Booking.com and its “excellent” performance, a Priceline financial filing states, as well as the additional duties he took on last year to be responsible for the Group’s inter-brand relations.
You might think of Huston’s role last year in coordinating relations between and technology-sharing among Booking.com, Priceline.com, Kayak, Agoda, and rentalcars.com in 2013 as sort of a CEO internship and a prelude to his taking the top spot in 2014, replacing Jeffery Boyd as CEO of the Priceline Group.
As part of his 2013 compensation, Huston became eligible for a $6 million grant of “performance share units” that vest over three years if the company achieves earnings targets during this period. He also a stock award of $6 million in November 2013 based on his promotion to president and CEO of the Priceline Group on January 1, 2014.
This performance share unit grant could come to nothing if the Priceline Group doesn’t achieve earnings targets, but the number of underlying shares could double if the Group achieves “outstanding performance,” the company states.
Outgoing CEO Boyd, who stays on as Priceline Group chairman, didn’t do too shabbily in 2013 compensation-wise, although Huston’s compensation was nearly $3 million greater.
Boyd’s total compensation was $15,058, 300, including a base salary of $550,000, a stock award of a little more than $8 million, an incentive payment of $6.5 million, and other compensation of nearly $8,000.
To the degree that Priceline’s compensation strategy contributes to performance, it appears to be working.
“The company believes that 2013 was a very good year,” the Priceline Group states, adding:
- Priceline’s stock price increased 87% in 2013.
- Its gross bookings jumped 37.7% year over year.
- Priceline’s adjusted EBITDA climbed 35.9% year over year, and
- Priceline retained its position as the leader in global room nights booked.
Those kind of marks make it worth tossing a few extra bucks to senior management.