Related Party Transactions with Officers and Directors |
12 Months Ended |
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Dec. 31, 2023 | |
| Related Party Transactions with Officers and Directors | |
| Related Party Transactions with Officers and Directors |
(10) Related Party Transactions with Officers and Directors Chairman Compensation Arrangement
In December 2019, LMC entered into a new employment arrangement with Gregory B. Maffei, our Chairman. The arrangement provides for a five year employment term which began on January 1, 2020 and ends December 31, 2024, with an annual base salary of $3 million (with no contracted increase), a one-time cash commitment bonus of $5 million (paid in December 2019), an annual target cash performance bonus of $17 million (with payment subject to the achievement of one or more performance metrics as determined by the applicable company’s Compensation Committee), upfront equity awards and annual equity awards (as described below). The Chairman was entitled to receive term equity awards with an aggregate GDFV of $90 million (the “Upfront Awards”) which were granted in two equal tranches. The first tranche consisted of time-vested stock options from each of ߲ݴý, LMC, Liberty Broadband and GCI Liberty and time-vested restricted stock units (“RSUs”) from Liberty TripAdvisor Holdings, Inc. (“Liberty TripAdvisor”) (collectively, the “2019 term awards”) that vested, in each case, on December 31, 2023 (except Liberty TripAdvisor’s award of time-vested RSUs, which vested on December 15, 2023). The second tranche of the Upfront Awards consisted of time-vested stock options from each of LMC, ߲ݴý, Liberty Broadband and GCI Liberty and time-vested RSUs from Liberty TripAdvisor (collectively, the “2020 term awards”) that vest, in each case, on December 31, 2024 (except Liberty TripAdvisor’s award of time-vested RSUs, which vests on December 7, 2024), subject to the Chairman’s continued employment, except under certain circumstances. The Chairman is also entitled to receive annual equity award grants with an annual aggregate GDFV of $17.5 million, consisting of time-vested options, performance-based RSUs or a combination of both, at the election of the Chairman. The annual equity awards are granted directly by ߲ݴý, LMC, Liberty Broadband, Atlanta Braves Holdings, Inc. and Liberty TripAdvisor according to their applicable allocation percentage. The allocation percentage is determined based on a combination of (1) relative market capitalizations, weighted 50%, and (2) a blended average of historical time allocation on an LMC-wide and Chairman basis, weighted 50%, in each case, absent agreement to the contrary by ߲ݴý, LMC, Liberty Broadband, Atlanta Braves Holdings, Inc. and Liberty TripAdvisor in consultation with the Chairman. The allocation percentage is then adjusted annually and following certain events. For the years ended December 31, 2023, 2022 and 2021 the allocation percentage for ߲ݴý was 11%, 13% and 17%, respectively. Vesting of any annual performance-based RSUs is subject to the achievement of one or more performance metrics to be approved by the Compensation Committee of the applicable company with respect to its respective allocable portion of the annual performance-based RSUs. CEO Employment Agreement On July12, 2021, the Compensation Committee of the Board of Directors of ߲ݴý approved the Company’s entry into an employment agreement withDavid Rawlinson II, effective July12, 2021. Effective October1, 2021, Mr.Rawlinson began to serve as President and Chief Executive Officer of ߲ݴý. Mr. Rawlinson concurrently assumed the same positions with QVC. Mr.Rawlinson joined the Board of Directors effective January 1, 2022.
Malone Stock Exchange and Maffei Arrangements On May18, 2021,Gregory B. Maffei, the Chairman of the Boardand a director of the Company,delivered a written offer (the “Offer”) to John C. Malone, a director of߲ݴý, to acquire all ofthe outstanding shares of Series B common stock (“QRTEB”) beneficially owned by Mr.Malone, his wife Leslie Malone and certain trusts for the benefit of Mr. Malone, Mrs. Malone and/or their children (the “Malone Group,” and such shares, the “Subject Shares”) at a per share price of$14.00payable in cash, securities or such other form of consideration as to which Mr.Maffei and Mr.Malone might mutually agree. The transfer by the Malone Group of the Subject Shares was subject to the terms ofthat certain call agreement, dated February9, 1998 (the “Call Agreement”), among ߲ݴý, as successor-in-interest to the assignee of Tele-Communications,Inc., a Delaware corporation, Mr.Malone and Mrs.Malone, which provided߲ݴýwith the right to acquire all, but not less than all, of the Subject Sharesat a per share price equal to the lower of (x)the Offer price or (y)110%of the average closing prices of a share of QRTEA for theconsecutive trading days ending on May17, 2021 (with the price calculated pursuant to clause (y)equal to$13.62per share (the“Call Price”))(the “Call Right”). As previously disclosed, on May18, 2021, Mr.Malone provided written notice to ߲ݴý of his desire to accept the Offer, subject tothe approval by the Board of Directors of the Company of the transactions contemplated thereby for purposes of Section203 of the General Corporation Law of the State of Delaware, pursuant to the terms of the Call Agreement. However, in the event the Company determined to exercise the Call Right, Mr.Malone indicated a preference for the payment of the per share price in the form of shares of QRTEA such that he would continue to hold a substantial investment in the Company. On June2, 2021,߲ݴýdelivered written notice to Mr.Malone to exercise the Call Right and to pay the per share Call Price required by the Call Agreement in shares of QRTEA. On June3, 2021, the Company and the Malone Group entered into a Stock Exchange Agreement (the “Malone Stock Exchange Agreement”) to effect the closing of the Call Right exercise, pursuant to whichthe Malone Group transferred tothe Companyan aggregate of27,655,931shares of QRTEB, and in exchange (the “Malone Exchange”),߲ݴýissued to the Malone Group an aggregate of30,421,522shares of QRTEA. Under the terms of the Call Agreement, the aggregate Call Price converts into an equivalent ratio of1.1shares of QRTEA for each share of QRTEB with the aggregate number of shares of QRTEA issued to each member of the Malone Group rounded down to the nearest whole share. On June3, 2021,the Company, LMC and Mr.Maffei entered into a Waiver Letter and Amendment of Employment Agreement (the “Letter Agreement”), pursuant to which, among other things, Mr.Maffei (x)waived his rights to assert that ߲ݴý’s exercise of the Call Right, the transactions to be consummated pursuant to the Malone Stock Exchange Agreement or the resulting reduction in the Malone Group’s voting power with respect to߲ݴý(collectively, the “Specified Events”) would constitute a “Change in Control” or “Good Reason,” in each case, as defined in the Executive Employment Agreement, dated as of December 13, 2019, by and between LMC and Mr. Maffei (the “Employment Agreement”), with respect to߲ݴý, and agreed not to terminate his employment with߲ݴýfor “Good Reason” in connection with or arising out of the Option Cancellation (as defined below) or any of the Specified Events, and (y)consented to the cancellation (the “Option Cancellation”) of stock option awards to purchase shares of QRTEB that had been granted to Mr.Maffei on each of December24, 2014, and March31, 2015 for1,137,228shares at an exercise price of$16.97per share, and197,783shares at an exercise price of$16.71per share, respectively. In consideration for the foregoing, pursuant to the Letter Agreement, (i)Mr.Maffei received a grant of1,101,321restricted shares of QRTEB that are scheduled to vest, subject to Mr.Maffei’s continued employment withthe Company, intwoequal tranches on December10, 2024 and the fifth anniversary of the grant date, subject to earlier vesting under certain circumstances, and (ii)߲ݴýagreed that the portion of the Annual Equity Awards (as defined in the Employment Agreement) to be granted by߲ݴýto Mr.Maffei pursuant to Section4.11 of the Employment Agreement for calendar years 2022, 2023 and 2024 shall be granted with respect to the QRTEB. Also, on June3, 2021,the Companyand Mr.Maffei also entered into a Stock Exchange Agreement (the “Maffei Stock Exchange Agreement”) pursuant to which, among other things: (i) Mr.Maffei transferred to߲ݴýan aggregate of5,378,308shares of QRTEA, and in exchange߲ݴýissued to Mr.Maffei an equivalent number of shares of QRTEB; (ii)߲ݴýagreed that on the terms and subject to the conditions of the Maffei Stock Exchange Agreement, Mr.Maffei, at his option (during thesix-monthperiod following the vesting of the performance-based restricted stock unit award granted to Mr.Maffei on March10, 2021), may transfer tothe Companythe number of shares of QRTEA actually received by Mr.Maffei upon vesting of such performance-based restricted stock unit award in exchange for an equivalent number of newly-issued shares of QRTEB (the “Subsequent Exchange”); (iii)Mr.Maffei agreed that until December31, 2024 (the “Cap Period”), which is also the end of the current term of his employment as set forth in the Employment Agreement, he will not, and will not authorize or permit any of his affiliates that he controls (“Controlled Affiliates”) to, acquire or agree to acquire (or announce publicly an intent to acquire) by purchase or otherwise, beneficial ownership of voting securities ofthe Company(or direct or indirect rights or options to acquire any such voting securities) if, after giving effect to any such acquisition of securities, the aggregate voting power ofthe Company’s voting securities beneficially owned by Mr.Maffei and his Controlled Affiliates would exceed20.0% of the voting power of all of the outstanding voting securities (assuming, for purposes of this calculation that all voting securities beneficially owned by Mr.Maffei which are not outstanding are included in the calculation) (the “Cap”); and (iv)the foregoing transactions by which Mr.Maffei and certain of his related persons became an “interested stockholder” were approved for purposes of Section203 of the General Corporation Law of the State of Delaware. The Cap is subject to certain terms and exceptions, as described in the Maffei Stock Exchange Agreement. In addition, Mr.Maffei and his Controlled Affiliates may not transfer voting securities of ߲ݴý to any other Controlled Affiliate of Mr.Maffei unless such transferee has agreed to be bound by the terms of the Maffei Stock Exchange Agreement. Pursuant to the terms of the Maffei Stock Exchange Agreement, on March 25, 2022, Mr. Maffei transferred to the Company an aggregate of229,022shares of QRTEA received by Mr. Maffei upon vesting of the performance-based RSU award granted to Mr. Maffei on March 10, 2021 and in exchange, the Company issued to Mr. Maffei an equivalent number of shares of QRTEB. Each share of QRTEB stock is convertible, at the option of the holder, intooneshare of QRTEA. |