SEATTLE—Barry Diller, chairman/senior executive of Expedia Group, has revealed the company’s COVID-19 mitigation plan, with actions approved by its board of directors.
“We have one mandate—to conserve cash, survive and use this time to reconstruct a stronger enterprise to serve the future of travel,” said Diller. “We are unable to make any predictions as to when travel will rebound but we emphatically believe that it will, for ‘if there’s life, there’s travel.'”
The plan includes changes to the executive team, compensation changes and employee policies.
- Peter Kern named CEO of Expedia Group: “Peter Kern has been a key member of our board since 2005 and became our vice chairman in 2018,” said Diller. “When we changed management in December, he joined with me in operational supervision of the company. In these last five months, he has shown outstanding leadership in all aspects of the business, first in a wide reorganization and then dealing with the impact of the coronavirus crisis on our business. He now knows all aspects of the business, and we are truly lucky that he is now available to devote his full time to Expedia.”
- Eric Hart named Expedia Group’s CFO: “Eric Hart has been with Expedia for 11 years now and, during that time, he’s held responsibility for group strategy, business development, global M&A, investments and the CarRentals.com business,” said Diller. “He’s a strong executive who’s been truly tested these past five months as acting CFO during both the reorganization and the crisis. He has fully earned permanent status as CFO.”
- Compensation changes for the board of directors, chairman, CEO and senior operating executives: The chairman, CEO and members of the board will forgo cash compensation for the remainder of the year. Senior executives—the Travel Leadership Team—will be taking a reduction in salary of 25% for the balance of the year.
- Employee policies during the crisis: The group will be implementing furloughs and reduced work week programs for select volume-based teams with limited work currently. “Our intention is that impacted employees would retain Expedia healthcare benefits coverage while on furlough or reduced hours, and we will cover the employee premiums in the case of furloughs,” said Diller. “We will support employees by participating in government aid where feasible in different countries. 401(k) matching contributions in the U.S. will be suspended through the end of the year. We will offer a voluntary reduced work week program for parents, caregivers and employees with personal needs to take a temporary shortened three-day work week. These steps on furlough and reduced work week programs as well as voluntary reduced work weeks will be active through Aug. 31, when we will re-evaluate the situation and hope to be in a better position with volumes coming back and plenty of work to keep us all busy.”
Expedia Group Inc. is also raising approximately $3.2 billion of new capital, consisting of a $1.2-billion private placement of perpetual preferred stock and approximately $2 billion in new debt financing. Investment funds managed by affiliates of alternative asset investors Apollo Global Management Inc. and Silver Lake are providing the equity investment. David Sambur, co-lead partner of Apollo’s private equity business, and Greg Mondre, co-CEO and managing partner of Silver Lake, will join the Expedia Group board of directors upon the closing of the fund raising transactions, which is expected on May 5.
“Between the significant steps Expedia Group continues to take to simplify the business, the talented leaders I have gotten to know over the last several months, and this new funding, we are in better position to continue to rise to the current challenge and come out even stronger than before—we understand the financial challenges ahead and we will continue to prudently address those needs,” said Kern. “We are excited to have Apollo and Silver Lake as valued partners in this effort as they share our strong belief in the long-term growth of Expedia and look forward to David and Greg’s invaluable insights as board members.”