Diller defends his compensation package

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By 12:42 a.m. on Jan. 1, 2005, Barry Diller-earning about $894 per minute-had made more money than the average American worker would make all year.

Such is life at the top for the chairman of meandering conglomerate IAC/InterActiveCorp and online travel outfit Expedia.

Mr. Diller last year made $295 million at IAC, putting him at the top of Ad Age's report on 2005 executive compensation. He made another $175 million at Expedia, which IAC spun off last August. The total-$470 million-works out to an hourly rate of $53,639. IAC, where Mr. Diller is chairman-CEO, has assembled a hodgepodge of mostly interactive businesses ranging from Ask.com and LendingTree to Ticketmaster and Shoebuy.com. Expedia, where he is chairman and senior executive, runs travel-booking sites Expedia.com, Hotels.com and Hotwire.

Most of his winnings-$464 million-came from exercising options granted years ago. He collected $3.8 million in bonuses and about $900,000 in salaries from the two companies.

The bucks don't stop there. At the end of 2005, Mr. Diller held exercisable options worth a combined $313 million in IAC and Expedia.

But there's more. Mr. Diller last year received new stock options in IAC and Expedia that the companies valued at up to $217 million. The options, IAC explained in the proxy statement, are intended as long-term incentives "to motivate Mr. Diller for the future."

In a statement, Mr. Diller defended his payday: "I'm proud of the work at IAC and Expedia and the wealth created for shareholders over the last 11 years-me certainly among them," he said. "More than 95% of the total income I've received over 11 years from IAC and Expedia, for any purpose and from any source, has come from a stock option granted me in 1995 when I joined the company. These options were expiring in 2005, and other than amounts necessary to pay the taxes, I hold all the shares received from the exercise."

Mr. Diller noted he took a company with a loss of $70 million the year before he arrived and, "without a dollar of further shareholder capital," turned it into two companies with a combined market cap greater than $16 billion today. He acknowledged his payout was "a lot of money under any analysis."
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