def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
eBay Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
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eBay
Inc.
2145 Hamilton Avenue
San Jose, California 95125
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On April 29,
2009
To the Stockholders of eBay Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of eBay Inc., a Delaware corporation, will
be held on Wednesday, April 29, 2009, at
8:00 a.m. Pacific time at Town Square, 2161 North
First Street, San Jose, California 95131 for the following
purposes:
1. To vote on the election of Marc L. Andreessen, William
C. Ford, Jr., Dawn G. Lepore, Pierre M. Omidyar and Richard
T. Schlosberg, III as directors, to hold office until our
2012 Annual Meeting of Stockholders.
2. To approve amendments to certain of our existing equity
incentive plans to allow for a one-time stock option exchange
program for employees other than our named executive officers
and directors.
3. To approve the amendment and restatement of our 2008
Equity Incentive Award Plan to increase the aggregate number of
shares authorized for issuance under the plan by 50 million
shares and to add market share and volume metrics as performance
criteria under the plan.
4. To ratify the selection of PricewaterhouseCoopers LLP as
our independent auditors for our fiscal year ending
December 31, 2009.
5. To transact such other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
These business items are described more fully in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on
March 4, 2009 as the record date for identifying those
stockholders entitled to notice of and to vote at this Annual
Meeting and at any adjournment or postponement of this meeting.
By Order of the Board of Directors
Michael R. Jacobson
Secretary
San Jose, California
March 19, 2009
All stockholders are cordially invited to attend the Annual
Meeting in person. Whether or not you expect to attend the
Annual Meeting, you are urged to submit your proxy or voting
instructions as soon as possible so that your shares can be
voted at the Annual Meeting in accordance with your
instructions. Telephone and Internet voting are available. For
specific instructions on voting, please refer to the
instructions on the proxy card or voting instruction form.
eBay
Inc.
2145 Hamilton Avenue
San Jose, California 95125
PROXY
STATEMENT
QUESTIONS
AND ANSWERS ABOUT THE PROXY MATERIALS AND
OUR 2009 ANNUAL MEETING
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Why am I receiving these materials? |
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eBays Board of Directors, or the Board, is providing these
proxy materials to you in connection with the Boards
solicitation of proxies for use at eBays 2009 Annual
Meeting of Stockholders, or the Annual Meeting, which will take
place on April 29, 2009. Stockholders are invited to attend
the Annual Meeting and are requested to vote on the proposals
described in this proxy statement. The proxy statement and the
accompanying proxy card are being mailed on or about
March 25, 2009 in connection with the solicitation of
proxies on behalf of the Board. |
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What information is contained in these materials? |
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The information included in this proxy statement relates to the
proposals to be voted on at the Annual Meeting, the voting
process, the compensation of our most highly paid executive
officers and our directors, and certain other required
information. eBays 2008 Annual Report, which includes
eBays audited consolidated financial statements, is also
enclosed with this proxy statement. |
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What proposals will be voted on at the Annual Meeting? |
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There are four proposals scheduled to be voted on at the Annual
Meeting: |
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the election as directors of the five nominees
named in this proxy statement to serve for a three-year term
(Proposal 1);
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the approval of amendments to certain of our
existing equity incentive plans to allow for a one-time stock
option exchange program for employees other than our named
executive officers and directors (Proposal 2);
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the approval of the amendment and restatement
of our 2008 Equity Incentive Award Plan to increase the
aggregate number of shares authorized for issuance under the
plan by 50 million shares and to add market share and
volume metrics as performance criteria under the plan
(Proposal 3); and
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the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent auditors for our
fiscal year ending December 31, 2009 (Proposal 4).
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What are eBays Boards voting recommendations? |
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eBays Board recommends that you vote your shares as
follows: |
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FOR each of the five nominees to the Board
named in this proxy statement (Proposal 1); |
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FOR the approval of amendments to certain of
our existing equity incentive plans to allow for a one-time
stock option exchange program for employees other than our named
executive officers and directors (Proposal 2); |
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FOR the approval of the amendment and
restatement of our 2008 Equity Incentive Award Plan to increase
the aggregate number of shares authorized for issuance under the
plan by 50 million shares and to add market share and
volume metrics as performance criteria under the plan
(Proposal 3); and |
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FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent auditors for our
fiscal year ending December 31, 2009 (Proposal 4). |
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How many shares are entitled to vote? |
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Each share of eBays common stock outstanding as of the
close of business on March 4, 2009, the record date, is
entitled to one vote at the Annual Meeting. At the close of
business on March 4, 2009, 1,286,261,230 shares of
common stock were outstanding and entitled to vote. You may vote
all of the shares owned by you as of the |
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close of business on the record date of March 4, 2009, and
you are entitled to cast one vote per share of common stock held
by you on the record date. These shares include shares that are
(1) held of record directly in your name, including shares
purchased through eBays equity incentive plans, and
(2) held for you as the beneficial owner through a
stockbroker, bank, or other nominee. |
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What is the difference between holding shares as a
stockholder of record and as a beneficial owner? |
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Most stockholders of eBay hold their shares beneficially through
a broker, bank, or other nominee rather than directly in their
own name. There are some distinctions between shares held of
record and shares owned beneficially, specifically: |
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Shares held of record
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If your shares are registered directly in your name with
eBays transfer agent, BNY Mellon Shareowner Services, you
are considered the stockholder of record with respect to those
shares, and these proxy materials are being sent directly to you
by eBay. As the stockholder of record, you have the right to
grant your voting proxy directly to eBay or to vote in person at
the Annual Meeting. eBay has enclosed a proxy card for you to
use. You may also submit voting instructions via the Internet or
by telephone as described below under How can I vote my
shares without attending the Annual Meeting? |
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Shares owned beneficially
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If your shares are held in a stock brokerage account or by a
broker, bank, or other nominee, you are considered the
beneficial owner of shares held in street name, and these proxy
materials are being forwarded to you by your broker, bank, or
nominee, who is considered the stockholder of record with
respect to those shares. As the beneficial owner, you have the
right to direct your broker or other nominee on how to vote the
shares in your account, and you are also invited to attend the
Annual Meeting. However, since you are not the stockholder of
record, you may not vote these shares in person at the Annual
Meeting unless you request and receive a valid proxy from your
broker, bank, or nominee. Your broker, bank, or nominee has
enclosed a voting instruction form for you to use in directing
the broker, bank, or nominee regarding how to vote your shares.
Many brokers or banks also offer voting by Internet or
telephone. Please refer to your voting instruction form for
instructions on the voting methods offered by your broker or
bank. |
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Can I attend the Annual Meeting? |
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You are invited to attend the Annual Meeting if you are a
stockholder of record or a beneficial owner as of March 4,
2009. If you are a stockholder of record, you must bring proof
of identification. If you hold your shares through a stockbroker
or other nominee, you will need to provide proof of ownership by
bringing either a copy of the voting instruction form provided
by your broker or a copy of a brokerage statement showing your
share ownership as of March 4, 2009. If you do not attend
the Annual Meeting, you can listen to a webcast of the
proceedings at eBays investor relations site at
http://investor.ebay.com. |
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How can I vote my shares in person at the Annual Meeting? |
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Shares held directly in your name as the stockholder of record
may be voted in person at the Annual Meeting. If you choose to
vote in person, please bring proof of identification. Even if
you plan to attend the Annual Meeting, eBay recommends that you
submit a proxy with respect to the voting of your shares in
advance as described below so that your vote will be counted if
you later decide not to attend the Annual Meeting. Shares held
in street name through a brokerage account or by a broker, bank,
or other nominee may be voted in person by you if you obtain a
valid proxy from your broker, bank or nominee giving you the
right to vote the shares. |
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How can I vote my shares without attending the Annual
Meeting? |
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Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may vote by proxy or submit a
voting instruction form without attending the Annual Meeting via
the Internet, by telephone, or by completing and mailing your
proxy card or voting instruction form in the enclosed pre-paid
envelope. Please refer to the enclosed materials for details. |
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Can I change my vote or revoke my proxy? |
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If you are the stockholder of record, you may change your proxy
instructions or revoke your proxy at any time before your proxy
is voted at the Annual Meeting. Proxies may be revoked by any of
the following actions: |
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filing a timely written notice of revocation
with our Corporate Secretary at our principal executive office
(2145 Hamilton Avenue, San Jose, California 95125);
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submitting a new proxy at a later date on the
Internet, by telephone, or by mail to our Corporate Secretary at
our principal executive office; or
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attending the Annual Meeting and voting in
person (attendance at the Annual Meeting will not, by itself,
revoke a proxy).
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If your shares are held in a brokerage account by a broker,
bank, or other nominee, you should follow the instructions
provided by your broker, bank, or nominee. |
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How are votes counted? |
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In the election of directors, you may vote FOR,
AGAINST, or ABSTAIN with respect to each
of the nominees. If you elect to abstain from the election of
directors, the abstention will not have any effect on the
election of directors. In tabulating the voting results for the
election of directors, only FOR and
AGAINST votes are counted. |
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You may vote FOR, AGAINST, or
ABSTAIN with respect to the proposals to approve
(1) amendments to certain of our existing equity incentive
plans to allow for a one-time stock option exchange program for
employees other than our named executive officers and directors,
and (2) the amendment and restatement of our 2008 Equity
Incentive Award Plan to increase the aggregate number of shares
authorized for issuance under the plan by 50 million shares
and to add market share and volume metrics as new performance
criteria under the plan. If you elect to abstain from voting on
either of these proposals, the abstention will not have any
effect on the approval of the respective proposal. In tabulating
the voting results for the approval of (1) the proposed
amendments to certain of our existing equity incentive plans to
allow for a one-time stock option exchange program for employees
other than our named executive officers and directors and
(2) the proposed amendment and restatement of our 2008
Equity Incentive Award Plan to increase the aggregate number of
shares authorized for issuance under the plan by 50 million
shares and to add market share and volume metrics as new
performance criteria under the plan, only FOR and
AGAINST votes with respect to each proposal will be
counted. |
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You may vote FOR, AGAINST, or
ABSTAIN with respect to the proposal to ratify the
selection of PricewaterhouseCoopers LLP as our independent
auditors. If you elect to abstain, the abstention will have the
same effect as a vote AGAINST. |
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If you sign and return your proxy card or voting instruction
form without giving specific voting instructions, your shares
will be voted as recommended by our Board. If you are a
beneficial holder and do not return a voting instruction form,
your broker may only vote on the election of directors and the
ratification of the selection of PricewaterhouseCoopers LLP. |
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Who will count the votes? |
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A representative of Broadridge Financial Solutions, Inc. will
tabulate the votes and act as the inspector of election. |
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What is the quorum requirement for the Annual Meeting? |
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The quorum requirement for holding the Annual Meeting and
transacting business is a majority of the outstanding shares
entitled to be voted at the Annual Meeting. The shares may be
present in person or represented by proxy at the Annual Meeting.
Both abstentions and broker non-votes are counted as present for
the purpose of determining the presence of a quorum. |
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What is the voting requirement to approve each of the
proposals? |
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In an uncontested election of directors, such as this election,
each director must be elected by the affirmative vote of a
majority of the votes cast with respect to such director by the
shares of common stock present in person or represented by proxy
and entitled to vote. A majority of votes cast means
that the number of votes FOR a director nominee must
exceed the number of votes AGAINST that director
nominee. |
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The proposals to approve (1) amendments to certain of our
existing equity incentive plans to allow for a one-time stock
option exchange program for employees other than named executive
officers and directors and (2) the amendment and
restatement of our 2008 Equity Incentive Award Plan to increase
the aggregate number of shares authorized for issuance under the
plan by 50 million and to add market share and volume
metrics as new performance criteria under the plan, each require
the affirmative vote of a majority of the votes cast with
respect to the proposal by the shares present in person or
represented by proxy and entitled to vote. A majority of
votes cast means that the number of votes FOR
the approval of the proposal must exceed the number of votes
AGAINST the approval of the proposal. If you are a
beneficial owner and do not provide the stockholder of record
with voting instructions, your shares may constitute broker
non-votes (see What are broker non-votes and what effect
do they have on the proposals? below). |
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The proposal to ratify the selection of PricewaterhouseCoopers
LLP as our independent auditors requires the affirmative vote of
a majority of the shares of common stock present in person or
represented by proxy and entitled to vote on the proposal. |
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What happens if a nominee who is duly nominated does not
receive the required majority vote? |
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Each current director who is standing for re-election at the
Annual Meeting has tendered an irrevocable resignation from the
Board that will become effective if the Corporate Governance and
Nominating Committee or another committee of the Board
determines to accept it after the director fails to receive the
required majority vote. This determination will be made within
90 days of the Annual Meeting and will be publicly reported
promptly after it is made. |
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What are broker non-votes and what effect do they have on the
proposals? |
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Generally, broker non-votes occur when shares held by a broker
in street name for a beneficial owner are not voted
with respect to a particular proposal because the broker
(1) has not received voting instructions from the
beneficial owner and (2) lacks discretionary voting power
to vote those shares. A broker is entitled to vote shares held
for a beneficial owner on routine matters, such as the election
of our directors and the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors, without
instructions from the beneficial owner of those shares. On the
other hand, absent instructions from the beneficial owner of
such shares, a broker is not entitled to vote shares held for a
beneficial owner on certain non-routine items, such as the
approval of (1) amendments to certain of our existing
equity incentive plans to allow for a one-time stock option
exchange program for employees other than named executive
officers and directors and (2) the amendment and
restatement of our 2008 Equity Incentive Award Plan to increase
the aggregate number of shares authorized for issuance under the
plan by 50 million and to add market share and volume
metrics as performance criteria under the plan. Broker non-votes
count for purposes of determining whether a quorum exists but do
not count as entitled to vote with respect to individual
proposals. Thus, if you do not give your broker specific
instructions, your shares may not be voted on these matters and
will not be counted in determining the number of shares
necessary for approval, although they will count for purposes of
determining whether a quorum exists. |
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What does it mean if I receive more than one proxy card or
voting instruction form? |
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It means your shares are registered differently or are in more
than one account. Please provide voting instructions for each
proxy card and voting instruction form you receive to ensure
that all of your shares are voted. |
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Where can I find the voting results of the Annual Meeting? |
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eBay will announce preliminary voting results at the Annual
Meeting and will publish final results in eBays quarterly
report on
Form 10-Q
for the second quarter of 2009. |
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Who will bear the cost of soliciting votes for the Annual
Meeting? |
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eBay will pay the entire cost of preparing, assembling,
printing, mailing, and distributing these proxy materials. eBay
will provide copies of these proxy materials to banks, brokerage
houses, fiduciaries, and custodians holding in their names
shares of our common stock beneficially owned by others so that
they may forward these proxy materials to the beneficial owners.
eBay has retained the services of D.F. King & Co.,
Inc., a professional proxy solicitation firm, to aid in the
solicitation of proxies. D.F. King may solicit proxies by
personal interview, mail, telephone, facsimile, email, or
otherwise. eBay expects that it will pay D.F. King its customary
fee, estimated to be approximately $12,500, plus reasonable
out-of-pocket expenses incurred in the process of soliciting
proxies. In addition, eBay may reimburse brokerage firms and
other persons representing beneficial owners of shares for their
expenses in forwarding solicitation materials to such beneficial
owners. Solicitations may also be made by personal interview,
mail, telephone, facsimile, email, or otherwise by directors,
officers, and other employees of eBay, but eBay will not
additionally compensate its directors, officers, or other
employees for these services. |
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May I propose actions for consideration at next years
Annual Meeting or nominate individuals to serve as directors? |
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You may submit proposals for consideration at future annual
stockholder meetings. In order for a stockholder proposal to be
considered for inclusion in the proxy materials for our 2010
Annual Meeting of Stockholders, your proposal must be received
by our Corporate Secretary no later than November 25, 2009.
A stockholder proposal or a nomination for director that is
received after this date will not be included in our proxy
statement and proxy, but will otherwise be considered at the
2010 Annual Meeting of Stockholders so long as it is submitted
to our Corporate Secretary no earlier than December 30,
2009 and no later than January 29, 2010. We advise you to
review our Bylaws, which contain these and other requirements
with respect to advance notice of stockholder proposals and
director nominations, including certain information that must be
included concerning the stockholder and each nominee and
proposal. Our Bylaws were filed with the Securities and Exchange
Commission, or SEC, on
Form 8-K
on October 3, 2008, and can be viewed by visiting our
investor relations website at
http://investor.ebay.com/sec.cfm.
You may also obtain a copy by writing to our Corporate Secretary
at our principal executive office (2145 Hamilton Avenue,
San Jose, California 95125). |
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How can I get electronic access to the Proxy Statement and
Annual Report? |
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This proxy statement and our 2008 Annual Report may be viewed
online on our investor relations website at
http://investor.ebay.com/annuals.cfm.
You can also elect to receive an email that will provide an
electronic link to future annual reports and proxy statements
rather than receiving paper copies of these documents. Choosing
to receive your proxy materials electronically will save us the
cost of printing and mailing documents to you. You can choose to
receive future proxy materials electronically by visiting our
investor relations website at
http://investor.ebay.com/annuals.cfm.
If you choose to receive future proxy materials electronically,
you will receive an email next year with instructions containing
a link to those materials and a link to the proxy voting site.
Your choice to receive proxy materials electronically will
remain in effect until you contact eBay Investor Relations and
tell us otherwise. You may visit our investor relations website
at
http://investor.ebay.com
or contact eBay Investor Relations by mail at 2145 Hamilton
Avenue, San Jose, California 95125 or by telephone at
866-696-3229. |
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How do I obtain a separate set of proxy materials if I share
an address with other stockholders? |
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To reduce expenses, in some cases, we are delivering one set of
proxy materials to certain stockholders who share an address,
unless otherwise requested. A separate proxy card is included in
the proxy materials for each of these stockholders. If you
reside at such an address and wish to receive a separate copy of
the proxy materials, including our annual report, you may
contact eBay Investor Relations at the website, address, or
phone number in the previous paragraph. You may also contact
eBay Investor Relations if you would like to receive separate
proxy materials in the future or if you are receiving multiple
copies of our proxy materials and would like to receive only one
copy in the future. |
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How can I obtain an additional proxy card or voting
instruction form? |
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If you lose, misplace, or otherwise need to obtain a proxy card
or voting instruction form, and: |
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you are a stockholder of record, contact eBay
Investor Relations by mail at 2145 Hamilton Avenue,
San Jose, California 95125 or by telephone at
866-696-3229;
or
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you are the beneficial owner of shares held
indirectly through a bank, broker, or similar institution,
contact your account representative at that organization.
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6
2009
ANNUAL MEETING OF STOCKHOLDERS
PROXY
STATEMENT
TABLE OF
CONTENTS
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7
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COMPENSATION TABLES
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72
|
|
|
|
|
73
|
|
|
|
|
75
|
|
|
|
|
A-1
|
|
7
CORPORATE
GOVERNANCE
Our business is managed by our employees under the direction and
oversight of the Board of Directors. Except for
Mr. Donahoe, none of our Board members is an employee of
eBay. We keep Board members informed of our business through
discussions with management, materials we provide to them,
visits to our offices, and their participation in Board and
Board committee meetings.
The Board has adopted corporate governance guidelines that,
along with the charters of the principal Board committees and
our Code of Business Conduct and Ethics, which we refer to as
our Code of Conduct, provide the framework for the governance of
the company. A complete copy of our governance guidelines, the
charters of our principal Board committees, and our Code of
Conduct may be found on our investor relations website at
http://investor.ebay.com/governance.
Information contained on our website is not part of this proxy
statement. The Board regularly reviews corporate governance
developments and modifies these policies as warranted. Any
changes in these governance documents will be reflected in the
same location on our website.
OUR
CORPORATE GOVERNANCE PRACTICES
We believe that open, effective, and accountable corporate
governance practices are key to our relationship with our
stockholders. To help our stockholders understand our commitment
to this relationship and our governance practices, the Board has
adopted a set of governance guidelines to set a framework within
which the Board will conduct its business. The governance
guidelines can be found on our website at
http://investor.ebay.com/governance
and are summarized below along with certain other of our
governance practices.
Committee Responsibilities. Board committees
help the Board run effectively and efficiently, but do not
replace the oversight of the Board as a whole. There are
currently three principal Board committees: the Audit Committee,
the Compensation Committee, and the Corporate Governance and
Nominating Committee. Each committee meets regularly and has a
written charter that has been approved by the Board. In
addition, at each regularly scheduled Board meeting, a member of
each committee reports on any significant matters addressed by
the committee since the last Board meeting. Each committee
performs an annual self-assessment to evaluate its effectiveness
in fulfilling its obligations.
Independence. The rules of The Nasdaq Stock
Market require listed companies to have a board of directors
with at least a majority of independent directors. These rules
have both objective tests and a subjective test for determining
who is an independent director. The objective tests
state, for example, that a director is not considered
independent if he or she is an employee of the company, or is a
partner in, or a controlling shareholder or executive officer
of, an entity to which the company made, or from which the
company received, payments in the current or any of the past
three fiscal years that exceed 5% of the recipients
consolidated gross revenue for that year. The subjective test
requires our Board to affirmatively determine that the director
does not have a relationship that would interfere with the
directors exercise of independent judgment in carrying out
his or her responsibilities. On an annual basis, each member of
our Board is required to complete an independence questionnaire
designed to provide information to assist the Board in
determining whether the director is independent under the
listing standards of the Nasdaq Global Select Market and our
corporate governance guidelines. Our Board has adopted
guidelines setting forth certain categories of transactions,
relationships, and arrangements that it has deemed immaterial
for purposes of making its determination regarding a
directors independence, and does not consider any such
transactions, relationships, and arrangements in making its
subjective determination.
Our Board has determined that each of the following directors is
independent under the listing standards of the Nasdaq Global
Select Market: Mr. Anderson, Mr. Andreessen,
Mr. Barnholt, Mr. Bourguignon, Mr. Cook,
Mr. Ford, Ms. Lepore, Mr. Moffett,
Mr. Schlosberg, and Mr. Tierney. Also, our Board
determined that Mr. Kagle, who served as a director until
his term expired upon the conclusion of our 2008 Annual Meeting
of Stockholders held on June 19, 2008, was independent
under the listing standards of the Nasdaq Global Select Market.
In making this assessment, the Board considered the
transactions, relationships, and arrangements described under
the heading Certain Transactions with Directors and
Officers below. In addition, certain of our directors
serve as members of the board of directors for the same company
or have investments in venture funds where another director
serves as a general partner. The Board was aware of these
relationships when it made its determination.
8
The Board limits membership on the Audit Committee, the
Compensation Committee, and the Corporate Governance and
Nominating Committee to independent directors. Our governance
guidelines require any director who has previously been
determined to be independent to inform the Chairman of the Board
and our Corporate Secretary of any change in circumstance that
may cause his or her status as an independent director to change.
Lead Independent Director. Our Board has a
designated lead independent director who chairs and may call
formal closed sessions of the independent directors, leads Board
meetings in the absence of the Chairman, and leads the annual
Board self-assessment. In addition, the lead independent
director, together with the chair of the Corporate Governance
and Nominating Committee, conducts interviews to confirm the
continued qualification and willingness to serve of each
director whose term is expiring at an annual meeting prior to
the time at which directors are nominated for re-election.
Mr. Barnholt is currently the lead independent director,
having been appointed to a two-year term in June 2008. He will
serve as lead independent director until the Board meeting
following our 2010 Annual Meeting of Stockholders.
Stockholder Communication. Stockholders may
communicate with the Board or individual directors care of the
Corporate Secretary, eBay Inc., 2145 Hamilton Avenue,
San Jose, California 95125. The Corporate Governance and
Nominating Committee has delegated responsibility for initial
review of stockholder communications to our Corporate Secretary.
In accordance with the committees instructions, our
Corporate Secretary will summarize all correspondence and make
it available to each member of the Board. In addition, the
Corporate Secretary will forward copies of all stockholder
correspondence to each member of the Corporate Governance and
Nominating Committee, except for communications that are
(1) advertisements or promotional communications,
(2) solely related to complaints by users with respect to
ordinary course of business customer service and satisfaction
issues, or (3) clearly unrelated to our business, industry,
management, or Board or committee matters.
Attendance at Annual Meetings. Absent exigent
circumstances, all directors are expected to attend eBays
annual meeting of stockholders. All of our directors serving on
our Board at the time of our last annual meeting of
stockholders, which was held in June 2008, attended such meeting
except for Mr. Kagle, whose term as a director expired upon
the conclusion of that meeting.
Formal Closed Sessions. At the conclusion of
each regularly scheduled Board meeting, the outside directors
have the opportunity to meet without our management or the other
directors. The lead independent director leads the discussions.
Board Compensation. Board compensation is
determined by the Compensation Committee. Since 2003, Board
compensation has consisted of a mixture of equity compensation
and cash compensation. Board compensation is reviewed annually
by the Compensation Committee. A more detailed description of
current Board compensation can be found under the heading
Compensation of Directors below.
Stock Ownership Guidelines. In September 2004,
our Board adopted stock ownership guidelines to better align the
interests of our directors and executive officers with the
interests of our stockholders and further promote our commitment
to sound corporate governance. Under these guidelines, our
executive officers are required to achieve ownership of eBay
common stock valued at three times their annual base salary
(five times in the case of our Chief Executive Officer, or CEO).
The guidelines provide that the required ownership level for
each executive officer is re-calculated whenever an executive
officer changes pay grade, and as of January 1 of every third
year. Until an executive officer achieves the required level of
ownership, he or she is required to retain 25% of the after-tax
net shares received as the result of the exercise of eBay stock
options or the vesting of restricted stock or restricted stock
units. Directors are required to achieve ownership of eBay
common stock valued at three times the amount of the annual
retainer paid to directors within three years of joining the
Board, or in the case of directors serving at the time the
guidelines were adopted, within three years of the date of
adoption of the guidelines. A more detailed summary of our stock
ownership guidelines can be found on our website at
http://investor.ebay.com/governance.
The ownership levels of our executive officers and directors as
of March 3, 2009 are set forth in the section entitled
Security Ownership of Certain Beneficial Owners and
Management below.
Outside Advisors. The Board and each of its
principal committees may retain outside advisors and consultants
of their choosing at the companys expense. The Board need
not obtain managements consent to
9
retain outside advisors. In addition, the principal committees
need not obtain either the Boards or managements
consent to retain outside advisors.
Conflicts of Interest. eBay expects its
directors, executives, and employees to conduct themselves with
the highest degree of integrity, ethics, and honesty.
eBays credibility and reputation depend upon the good
judgment, ethical standards, and personal integrity of each
director, executive, and employee. In order to better protect
eBay and its stockholders, eBay regularly reviews its Code of
Conduct and related policies to ensure that it provides clear
guidance to its directors, executives, and employees.
Transparency. eBay believes it is important
that stockholders understand the governance practices of eBay.
In order to help ensure the transparency of our practices, we
have posted information regarding our corporate governance
procedures on our website at
http://investor.ebay.com/governance.
Board Effectiveness and Director Performance
Reviews. It is important to eBay that the Board
and its committees are performing effectively and in the best
interest of the company and its stockholders. The Board performs
an annual self-assessment, led by the lead independent director,
to evaluate its effectiveness in fulfilling its obligations. As
part of this annual self-assessment, directors are able to
provide feedback on the performance of other directors. The lead
independent director then follows up on this feedback and takes
such further action with directors receiving comments and other
directors as he or she deems appropriate.
Succession Planning. The Board recognizes the
importance of effective executive leadership to eBays
success. eBay conducts an annual review process that includes
succession plans for eBays senior leadership positions.
These succession plans are reviewed and approved by our CEO, and
details on these succession plans, including potential
successors for members of eBays executive staff (including
the CEO), are presented to the Board. In addition, the Board
reviews and updates eBays CEO succession plan, which
includes formal criteria for the CEO position used to evaluate
potential successors and addresses the possibility of an
emergency situation. In conducting this review, the Board
considers, among other factors, organizational and operational
needs, competitive challenges and leadership/management
potential and development.
Auditor Independence. eBay has taken a number
of steps to ensure continued independence of its outside
auditors. eBays independent auditors report directly to
the Audit Committee, and eBay limits the use of its auditors for
non-audit services. The fees for services provided by
eBays auditors in 2008 and 2007 and eBays policy on
pre-approval of non-audit services are described under
Proposal 4 Ratification of Selection of
Independent Auditors below.
Corporate Hotline. eBay has established a
corporate hotline (operated by a third party) to allow any
employee to confidentially and anonymously lodge a complaint
about any accounting, internal control, auditing, or (where
legally permissible) other matters of concern.
BOARD
COMMITTEES AND MEETINGS
During 2008, our Board held five meetings, and each Board member
attended at least 75% of the aggregate of all of our Board
meetings and committee meetings for committees on which such
director served. The Board has three principal committees: an
Audit Committee, a Compensation Committee, and a Corporate
Governance and Nominating Committee.
Audit
Committee
Our Board has a separately-designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended, which we refer to
as the Exchange Act. Our Audit Committee consists of
Mr. Anderson, Ms. Lepore, Mr. Moffett and
Mr. Schlosberg, each of whom is independent in accordance
with the rules and regulations of the Nasdaq Global Select
Market and the SEC. Mr. Anderson is the chairman of the
committee. The Audit Committee held 12 meetings during 2008. The
primary responsibilities of the Audit Committee are to meet with
our independent auditors to review the results of the annual
audit and to discuss our financial statements, including the
independent auditors judgment about the quality of
accounting principles, the reasonableness of significant
judgments, the clarity of the disclosures in our financial
10
statements, eBays internal control over financial
reporting, and managements report with respect to internal
control over financial reporting. Additionally, the Audit
Committee meets with our independent auditors to review the
interim financial statements prior to the filing of our
Quarterly Reports on
Form 10-Q,
recommends to the Board the independent auditors to be retained
by us, oversees the independence of the independent auditors,
evaluates the independent auditors performance, reviews
and approves the fees of the independent auditors, and receives
and considers the independent auditors comments as to
controls, adequacy of staff and management performance and
procedures in connection with audit and financial controls,
including our system to monitor and manage business risks and
legal and ethical compliance programs. The Audit Committee
approves the compensation of our Vice President of Internal
Audit, who meets with the committee regularly without other
members of management present.
The Audit Committee also prepares the Audit Committee Report for
inclusion in our proxy statement, approves audit and non-audit
services provided to us by our independent auditors, considers
conflicts of interest and reviews all transactions with related
persons involving executive officers or Board members that are
reasonably expected to exceed specified thresholds, and meets
with our General Counsel to discuss legal matters that may have
a material impact on our financial statements or our compliance
policies and with other members of management to discuss other
areas of risk to the company. Our Board has determined that
Mr. Anderson is an audit committee financial
expert as defined by the SEC. You can view our Audit
Committee Charter on the corporate governance section of our
investor relations website at
http://investor.ebay.com/governance.
Compensation
Committee
Our Compensation Committee consists of Messrs. Barnholt,
Bourguignon, Ford and Tierney. Mr. Ford joined the
committee on March 27, 2008. Mr. Kagle was a member of
the committee until his term as a director expired upon the
conclusion of our 2008 Annual Meeting of Stockholders held on
June 19, 2008. Mr. Barnholt is the chairman of the
committee. The committee met nine times during 2008. The
Compensation Committee reviews and approves all compensation
programs applicable to directors and executive officers, the
overall strategy for employee compensation, and the compensation
of our CEO and our other executive officers. The committee also
reviews the Compensation Discussion and Analysis contained in
our proxy statement and prepares the Compensation Committee
Report for inclusion in our proxy statement. All members of our
Compensation Committee are independent under the listing
standards of the Nasdaq Global Select Market. The Compensation
Committee Charter permits the committee to, in its discretion,
delegate all or a portion of its duties and responsibilities to
a subcommittee of the committee. You can view our Compensation
Committee Charter on the corporate governance section of our
investor relations website at
http://investor.ebay.com/governance.
A more detailed description of the role of the committee,
including the role of executive officers and consultants in
compensation decisions, can be found under Compensation
Discussion and Analysis Role of the Compensation
Committee and Role of Executive Officers
and Consultants in Compensation Decisions below.
Compensation Committee Interlocks and Insider
Participation. All members of the Compensation
Committee during 2008 were independent directors, and no member
was an employee or former employee of eBay. No Compensation
Committee member had any relationship requiring disclosure under
Item 404 of
Regulation S-K
promulgated by the SEC. During 2008, none of our executive
officers served on the compensation committee (or its
equivalent) or board of directors of another entity whose
executive officer served on our Compensation Committee or Board.
Corporate
Governance and Nominating Committee
Our Corporate Governance and Nominating Committee consists of
Mr. Cook, Ms. Lepore, Mr. Schlosberg, and
Mr. Tierney. Mr. Ford served on the committee until
March 27, 2008. Mr. Cook is the chairman of the
committee. The committee met four times during 2008. The
Corporate Governance and Nominating Committee makes
recommendations to the Board as to the appropriate size of the
Board or any Board committee, reviews the qualifications of
candidates for the Board of Directors, and makes recommendations
to the Board of Directors on potential Board members (whether as
a result of vacancies, including any vacancy created by an
increase in the size
11
of the Board, or as part of the annual election cycle). The
committee considers nominee recommendations from a variety of
sources, including nominees recommended by stockholders. The
committee has from time to time retained an executive search
firm to help facilitate the screening and interview process of
director nominees. The committee has not established specific
minimum age, education, experience, or skill requirements for
potential members, but, in general, expects that qualified
candidates will have high-level managerial experience in a
complex organization and will be able to represent the interests
of the stockholders as a whole rather than special interest
groups or constituencies. The committee considers each
candidates integrity, judgment, skill, diversity of
background, and time available to devote to Board activities,
among other factors. The committee will also consider the
interplay of a candidates skill and experience with that
of other Board members, and the extent to which a candidate may
be a desirable addition to any committee of the Board.
In addition to recommending director candidates, the Corporate
Governance and Nominating Committee establishes procedures for
the oversight and evaluation of the Board and management,
reviews correspondence received from stockholders, and reviews
on an annual basis a set of corporate governance guidelines for
the Board. Stockholders wishing to submit recommendations or
director nominations for our 2010 Annual Meeting of Stockholders
should submit their proposals to the Corporate Governance and
Nominating Committee in care of our Corporate Secretary in
accordance with the time limitations, procedures, and
requirements described under the heading May I propose
actions for consideration at next years Annual Meeting or
nominate individuals to serve as directors? in the section
entitled Questions and Answers about the Proxy Materials
and Our 2009 Annual Meeting above. All members of our
Corporate Governance and Nominating Committee are independent
under the listing standards of the Nasdaq Global Select Market.
You can view our Corporate Governance and Nominating Committee
Charter on the corporate governance section of our investor
relations website at
http://investor.ebay.com/governance.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us
with respect to beneficial ownership of our common stock as of
March 3, 2009, by (i) each stockholder known to us to
be the beneficial owner of more than 5% of our common stock,
(ii) each director and nominee for director,
(iii) each of the executive officers named in the Summary
Compensation Table below, and (iv) all executive officers
and directors as a group.
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially
|
|
|
|
Owned(1)
|
|
Name of Beneficial Owner
|
|
Number
|
|
|
Percent
|
|
|
Pierre M. Omidyar(2)
|
|
|
167,250,408
|
|
|
|
13.0
|
%
|
Morgan Stanley(3)
|
|
|
65,770,981
|
|
|
|
5.1
|
|
John J. Donahoe(4)
|
|
|
1,767,102
|
|
|
|
*
|
|
Margaret C. Whitman(5)
|
|
|
21,731,035
|
|
|
|
1.7
|
|
Robert H. Swan(6)
|
|
|
607,029
|
|
|
|
*
|
|
Elizabeth L. Axelrod(7)
|
|
|
943,729
|
|
|
|
*
|
|
Lorrie M. Norrington(8)
|
|
|
738,401
|
|
|
|
*
|
|
Scott Thompson(9)
|
|
|
1,012,088
|
|
|
|
*
|
|
Rajiv Dutta(10)
|
|
|
49,233
|
|
|
|
*
|
|
Fred D. Anderson(11)
|
|
|
67,875
|
|
|
|
*
|
|
Marc L. Andreessen(11)
|
|
|
0
|
|
|
|
*
|
|
Edward W. Barnholt(11)
|
|
|
36,375
|
|
|
|
*
|
|
Philippe Bourguignon(11)
|
|
|
127,875
|
|
|
|
*
|
|
Scott D. Cook(12)
|
|
|
644,881
|
|
|
|
*
|
|
William C. Ford, Jr.(13)
|
|
|
143,275
|
|
|
|
*
|
|
Dawn G. Lepore(14)
|
|
|
419,875
|
|
|
|
*
|
|
David M. Moffett(15)
|
|
|
5,000
|
|
|
|
*
|
|
Richard T. Schlosberg, III(16)
|
|
|
67,875
|
|
|
|
*
|
|
Thomas J. Tierney(17)
|
|
|
115,875
|
|
|
|
*
|
|
All directors and executive officers as a group
(19 persons)(18)
|
|
|
177,384,784
|
|
|
|
13.7
|
|
12
|
|
|
(1) |
|
This table is based upon information supplied by officers,
directors, and principal stockholders and Schedules 13D and 13G
filed with the SEC. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. Unless
otherwise indicated in the footnotes to this table, the persons
and entities named in the table have sole voting and sole
investment power with respect to all shares beneficially owned,
subject to community property laws where applicable. Shares of
our common stock subject to options that are currently
exercisable or exercisable within 60 days of March 3,
2009 are deemed to be outstanding for the purpose of computing
the percentage ownership of the person holding those options,
but are not treated as outstanding for the purpose of computing
the percentage ownership of any other person. The percentage of
beneficial ownership is based on 1,286,264,017 shares of
common stock outstanding as of March 3, 2009. |
|
(2) |
|
Mr. Omidyar is our founder and Chairman of the Board.
Includes 100,000 shares held by his spouse as to which he
disclaims beneficial ownership, and 37,730,230 shares
Mr. Omidyar has pledged as security. The address for
Mr. Omidyar is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(3) |
|
The address for Morgan Stanley is 1585 Broadway, New York, New
York 10036. This information is based solely upon a
Schedule 13G filed by Morgan Stanley on February 17,
2009. |
|
(4) |
|
Mr. Donahoe is our President and CEO. Includes
1,680,048 shares Mr. Donahoe has the right to acquire
pursuant to outstanding options exercisable within 60 days
of March 3, 2009. The address for Mr. Donahoe is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(5) |
|
Ms. Whitman is our former President and CEO, and
subsequently served as a special advisor to the President and
CEO and a member of the Board until December 31, 2008.
Includes 4,000,000 shares pledged as security,
15,210,492 shares held by the Griffith R. Harsh,
IV & Margaret C. Whitman TTEES of Sweetwater
Trust U/A/D 10/15/99, 9,584 shares held by the
Whitford Limited Partnership and 2,490,000 shares held by
the Sheridan Investments Limited Partnership. The Managing
General Partner for both is Griffith R. Harsh, IV, not
individually but as trustee of the Griffith R. Harsh,
IV & Margaret C. Whitman TTEES of Sweetwater
Trust U/A/D 10/15/99. The address for Ms. Whitman is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(6) |
|
Mr. Swan is our Senior Vice President, Finance and Chief
Financial Officer. Includes 533,167 shares Mr. Swan
has the right to acquire pursuant to outstanding options
exercisable within 60 days of March 3, 2009. The
address for Mr. Swan is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(7) |
|
Ms. Axelrod is our Senior Vice President, Human Resources.
Includes 902,215 shares Ms. Axelrod has the right to
acquire pursuant to outstanding options exercisable within
60 days of March 3, 2009. The address for
Ms. Axelrod is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(8) |
|
Ms. Norrington is our President, eBay Marketplaces.
Includes 686,926 shares Ms. Norrington has the right
to acquire pursuant to outstanding options exercisable within
60 days of March 3, 2009. The address for
Ms. Norrington is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(9) |
|
Mr. Thompson is our President, PayPal. Includes
955,510 shares Mr. Thompson has the right to acquire
pursuant to outstanding options exercisable within 60 days
of March 3, 2009. The address for Mr. Thompson is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(10) |
|
Mr. Dutta is our former President, eBay Marketplaces. The
address for Mr. Dutta is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(11) |
|
Includes, in the case of Mr. Anderson, 61,875 shares
Mr. Anderson has the right to acquire pursuant to
outstanding options exercisable within 60 days of
March 3, 2009, in the case of Mr. Barnholt,
31,875 shares Mr. Barnholt has the right to acquire
pursuant to outstanding options exercisable within 60 days
of March 3, 2009, and, in the case of Mr. Bourguignon,
121,875 shares Mr. Bourguignon has the right to
acquire pursuant to outstanding options exercisable within
60 days of March 3, 2009. The address for each of
Messrs. Anderson, Andreessen, Barnholt, and Bourguignon is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
13
|
|
|
(12) |
|
Includes 481,875 shares Mr. Cook has the right to
acquire pursuant to outstanding options exercisable within
60 days of March 3, 2009. The address for
Mr. Cook is
c/o Intuit
Inc., 2535 Garcia Avenue, Mountain View, California 94043. |
|
(13) |
|
Includes (a) 25 shares held by Mr. Fords
spouse as a custodian for the trust for his children and as to
which Mr. Ford disclaims beneficial ownership and
(b) 750 shares held in a trust for two of
Mr. Fords children as to which Mr. Ford is
trustee and as to which Mr. Ford disclaims beneficial
ownership. Includes 17,500 shares Mr. Ford has the
right to acquire pursuant to outstanding options exercisable
within 60 days of March 3, 2009. The address for
Mr. Ford is
c/o Ford
Motor Company, One American Road, Dearborn, Michigan 48126. |
|
(14) |
|
Includes 399,875 shares Ms. Lepore has the right to
acquire pursuant to outstanding options exercisable within
60 days of March 3, 2009. The address for
Ms. Lepore is
c/o drugstore.com,
inc., 411 108th Avenue NE, Suite 1400, Bellevue,
Washington 98004. |
|
(15) |
|
The address for Mr. Moffett is
c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
|
(16) |
|
Includes 61,875 shares Mr. Schlosberg has the right to
acquire pursuant to outstanding options exercisable within
60 days of March 3, 2009. The address for
Mr. Schlosberg is Bank of San Antonio,
800 E. Sonterra Blvd., Suite 140,
San Antonio, Texas 78257. |
|
(17) |
|
Includes 111,875 shares Mr. Tierney has the right to
acquire pursuant to outstanding options exercisable within
60 days of March 3, 2009. The address for
Mr. Tierney is
c/o The
Bridgespan Group, 535 Boylston Street, 10th Floor, Boston,
Massachusetts 02116. |
|
(18) |
|
Includes 8,989,675 shares subject to options exercisable
within 60 days of March 3, 2009. Excludes shares
beneficially owned by Ms. Whitman and Mr. Dutta because
they were not executive officers as of March 3, 2009. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
executive officers, and holders of more than 10% of our common
stock to file reports regarding their ownership and changes in
ownership of our securities with the SEC, and to furnish us with
copies of all Section 16(a) reports that they file.
We believe that during the fiscal year ended December 31,
2008, our directors, executive officers, and greater than 10%
stockholders complied with all applicable Section 16(a)
filing requirements, except that (i) one Form 4
involving an option exercise and sale of shares held by
Mr. Cook was filed late, and (ii) one Form 4
involving the vesting of restricted stock units held by
Mr. Thompson was filed late.
In making this statement, we have relied upon a review of the
copies of Section 16(a) reports furnished to us and the
written representations of our directors, executive officers,
and greater than 10% stockholders.
CERTAIN
TRANSACTIONS WITH DIRECTORS AND OFFICERS
The Audit Committee is charged with reviewing reports relating
to (1) compliance program activities, and (2) the
adjudication of potential conflict of interest situations under
our Code of Business Conduct. The Audit Committee also reviews
and approves all transactions with related persons that are
required to be disclosed in this section of our proxy statement.
The charter of our Audit Committee and our Code of Conduct may
be found on our investor relations website at
http://investor.ebay.com/governance.
Our Board has adopted a written policy for the review of related
person transactions. For purposes of the policy, a related
person transaction includes transactions in which (i) the
amount involved is more than $120,000 in any consecutive
twelve-month period, (ii) eBay is a participant, and
(iii) any related person has a direct or indirect material
interest. The policy defines a related person to
include directors, nominees for director, executive officers,
holders of more than 5% of eBays outstanding common stock
and their respective immediate family members. Pursuant to the
policy, all related person transactions must be approved by the
Audit Committee or, in the event of an inadvertent failure to
bring the transaction to the Audit Committee for pre-approval,
ratified by the Audit Committee. In the event that a member of
the Audit Committee has an interest in a related person
transaction, the
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transaction must be approved or ratified by the disinterested
members of the Audit Committee. In deciding whether to approve
or ratify a related person transaction, the Audit Committee will
consider the following factors:
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whether the terms of the transaction are (1) fair to eBay
and (2) at least as favorable to eBay as would apply if the
transaction did not involve a related person;
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whether there are demonstrable business reasons for eBay to
enter into the transaction;
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whether the transaction would impair the independence of an
outside director under eBays director independence
standards; and
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whether the transaction would present an improper conflict of
interest for any director or executive officer, taking into
account the size of the transaction, the overall financial
position of the related person, the direct or indirect nature of
the related persons interest in the transaction and the
ongoing nature of any proposed relationship, and any other
factors the committee deems relevant.
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From time to time, we have entered into and may continue to
enter into commercial arrangements with companies with which our
directors or executive officers may have relationships
(including as a director or executive officer of such other
companies), but with respect to which our directors or executive
officers do not have a material interest and, thus, are not
required to be disclosed. These commercial arrangements are
entered into in the ordinary course of business and on an
arms-length basis.
In July 2008, PayPal entered into an ordinary course commercial
transaction with Intuit Inc. involving the integration and
promotion of PayPal as a preferred payment option in
Intuits online Quickbooks Merchant Services. In connection
with the transaction, PayPal agreed to pay Intuit a revenue
share for PayPal Merchant Services accounts acquired through
Intuit on terms consistent with the terms PayPal had offered
other merchants in similar situations. Mr. Cook, a member
of our Board, is a director and the Chairman of the Executive
Committee of Intuit. The Audit Committee pre-approved this
transaction. We believe this transaction was made on terms no
less favorable to us than we could have obtained from
unaffiliated third parties and did not present an improper
conflict of interest. While we do not believe that Mr. Cook
had a direct or indirect material interest in this transaction,
and thus it is not required to be disclosed, we are disclosing
its existence as a matter of good corporate governance.
Ms. Whitman, our former President and CEO and a former
member of our Board, entered into an aircraft time sharing
agreement with eBay Inc., effective April 1, 2008, pursuant
to which she agreed to reimburse us for her personal use of the
corporate aircraft following her resignation as President and
Chief Executive Officer on March 31, 2008. Under the terms
of the agreement, Ms. Whitman agreed to reimburse us at the
maximum amount allowable under applicable law. Ms. Whitman
fulfilled her obligations under the agreement and reimbursed us
$145,747, which exceeded the incremental cost incurred by us.
The Audit Committee pre-approved the agreement. Given that
Ms. Whitman reimbursed us in an amount that exceeded the
incremental cost related to the operation of the corporate
aircraft for her personal use after March 31, 2008, we do
not consider such use to constitute a perquisite or to have
provided any other personal benefit to Ms. Whitman.
Mr. Omidyar from time to time makes his personal aircraft
available to our officers for business purposes at no cost to
us. No use of Mr. Omidyars personal aircraft was made
by our officers during 2008.
We have entered into indemnification agreements with each of our
directors and executive officers. These agreements require us to
indemnify such individuals, to the fullest extent permitted by
Delaware law, for certain liabilities to which they may become
subject as a result of their affiliation with eBay.
15
PROPOSALS REQUIRING
YOUR VOTE
PROPOSAL 1
ELECTION
OF DIRECTORS
Our Certificate of Incorporation and Bylaws, each as amended to
date, provide for the Board to be divided into three classes,
with each class having a three-year term. The first class
currently consists of four directors, the second class currently
consists of five directors and the third class currently
consists of three directors. The term of office for the first
class expires at our 2011 Annual Meeting, the term of office for
the second class expires at our upcoming Annual Meeting, and the
term of office for the third class expires at our 2010 Annual
Meeting. A director elected to fill a vacancy (including a
vacancy created by an increase in the size of the Board) will
serve for the remainder of the term of the class of directors in
which the vacancy occurred and until his or her successor is
elected and qualified, or until his or her earlier death,
resignation, or removal.
Our Board is presently composed of 12 members, 10 of whom are
currently independent directors within the meaning of the
listing standards of the Nasdaq Global Select Market. The five
nominees standing for election at the Annual Meeting are from
the class whose term of office expires at the upcoming Annual
Meeting. These five nominees are all currently members of the
Board of Directors, and, except for Mr. Andreessen, have
been previously elected by the stockholders. If elected at the
Annual Meeting, each of the nominees would serve until our 2012
Annual Meeting and until his or her successor is elected and
qualified, or until his or her earlier death, resignation, or
removal.
Majority Vote Standard for Election of Directors; Director
Resignation Policy. Our Bylaws require that each
director be elected by the affirmative vote of a majority of the
votes cast with respect to such director in uncontested
elections such as this one (the number of shares voted
FOR a director nominee must exceed the number of
votes cast AGAINST that nominee). In a contested
election, the standard for election of directors would be the
affirmative vote of a plurality of the votes cast by the shares
represented in person or by proxy at any such meeting and
entitled to vote on the election of directors. A contested
election is one in which the Board has determined that the
number of nominees exceeds the number of directors to be elected
at the meeting and has not rescinded this determination by the
date that is at least 20 days prior to the date of the
meeting as initially announced.
If a nominee who is serving as a director is not elected at the
annual meeting, under Delaware law the director would continue
to serve on the Board as a holdover director until
his or her successor is elected and qualified, or until his or
her earlier resignation or removal pursuant to our Bylaws. In
accordance with our governance guidelines, our Board expects
each incumbent director who is nominated for re-election to
resign, in accordance with the procedure set froth in our
Bylaws, from the Board if he or she fails to receive the
required number of votes for re-election in accordance with our
Bylaws. Our governance guidelines provide that, in considering
whether to nominate any incumbent director for re-election, the
Board will take into account whether the director has tendered
an irrevocable resignation that will be effective upon the
Boards acceptance of such resignation in the event the
director fails to receive the required vote to be re-elected. In
the case of a proposed nominee who is not an incumbent director,
the Board will take into account whether the individual has
agreed to tender such a resignation prior to being nominated for
re-election. If a nominee who is an incumbent director does not
receive the required vote for re-election, the Corporate
Governance and Nominating Committee or another committee of the
Board will decide whether to accept or reject such
directors resignation (if the director has tendered such a
resignation), or whether to take other action, within
90 days after the date of the certification of the election
results (subject to an additional
90-day
period in certain circumstances). In reaching its decision, the
committee will review factors it deems relevant, which may
include any stated reasons for against votes,
whether the underlying cause or causes of the
against votes are curable, criteria considered by
the committee in evaluating potential candidates for the Board,
the length of service of the director, the size and holding
period of such directors stock ownership in the company,
and the directors contributions to the company. The
committees decision will be publicly disclosed in a filing
with the SEC. If a nominee who was not already serving as a
director fails to receive the required votes to be elected at
the annual meeting, he or she will not become a member of the
Board. Each director nominee is currently serving on the Board
and has submitted an irrevocable resignation of the type
described above.
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Set forth below is biographical information for each of the
nominees as well as for each director whose term of office will
continue after the upcoming Annual Meeting.
NOMINEES
FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT OUR 2012 ANNUAL
MEETING
Marc
L. Andreessen
Marc L. Andreessen, age 37, has served as a director of
eBay since September 2008. Mr. Andreessen is a co-founder
and chairman of Ning Inc., an online platform for people to
create their own social networks founded in late 2004. From
September 1999 to July 2007, Mr. Andreessen co-founded and
served as the Chairman of the board of directors of Opsware,
Inc. (formerly known as Loudcloud Inc.). From March 1999 to
September 1999, Mr. Andreessen served as Chief Technology
Officer of America Online, Inc. From April 1994 to March 1999,
Mr. Andreessen was a co-founder of Netscape Communications
Corporation, a software company, serving in various positions,
including Chief Technology Officer and Executive Vice President
of Products. Mr. Andreessen also serves on the board of
directors of Facebook Inc., Stanford Hospital and Room to Read.
Mr. Andreessen holds a B.S. degree in Computer Science from
the University of Illinois at Urbana-Champaign.
William
C. Ford, Jr.
William C. Ford, Jr., age 51, has served as a director
of eBay since July 2005. Mr. Ford has served as Executive
Chairman of the Board of Directors of Ford Motor Company, a
company that manufactures and distributes automobiles, since
September 2006 and has served as Chairman of the Board of Ford
since January 1999. Mr. Ford also serves as Chairman of
Fords Finance Committee and as a member of Fords
Environmental and Public Policy Committee. From October 2001 to
September 2006, Mr. Ford was Fords Chief Executive
Officer. Mr. Ford has held a number of management positions
at Ford since 1979. Mr. Ford serves as Vice Chairman of The
Detroit Lions, Inc. and Chairman of the Board of Trustees of The
Henry Ford. He is also a Vice Chairman of Detroit Renaissance.
Mr. Ford holds a B.A. degree from Princeton University and
a M.S. degree in management from the Massachusetts Institute of
Technology.
Dawn
G. Lepore
Dawn G. Lepore, age 54, has served as a director of eBay
since December 1999. Ms. Lepore has served as Chief
Executive Officer and Chairman of the Board of drugstore.com,
inc., a leading online provider of health, beauty, vision, and
pharmacy solutions, since October 2004. From August 2003 to
October 2004, Ms. Lepore served as Vice Chairman of
Technology, Active Trader, Operations, Business Strategy, and
Administration for the Charles Schwab Corporation and Charles
Schwab & Co, Inc., a financial holding company. Prior
to this appointment, she held various positions with the Charles
Schwab Corporation including: Vice Chairman of Technology,
Operations, Business Strategy, and Administration from May 2003
to August 2003; Vice Chairman of Technology, Operations, and
Administration from March 2002 to May 2003; Vice Chairman of
Technology and Administration from November 2001 to March 2002;
and Vice Chairman and Chief Information Officer from July 1999
to November 2001. Ms. Lepore also serves on the board of
directors of The New York Times Company. Ms. Lepore holds a
B.A. degree from Smith College.
Pierre
M. Omidyar
Pierre M. Omidyar, age 41, founded eBay as a sole
proprietorship in September 1995. He has been a director and
Chairman of the Board since eBays incorporation in May
1996 and also served as its Chief Executive Officer, Chief
Financial Officer, and President from inception to February
1998, November 1997 and August 1996, respectively. Prior to
founding eBay, Mr. Omidyar was a developer services
engineer at General Magic, a mobile communications platform
company, from December 1994 to July 1996. Mr. Omidyar
co-founded Ink Development Corp. (later renamed eShop) in May
1991 and served as a software engineer there from May 1991 to
September 1994. Prior to co-founding Ink, Mr. Omidyar was a
developer for Claris, a subsidiary of Apple Inc., and for other
Macintosh-oriented software development companies.
Mr. Omidyar is currently co-founder and chairman of Omidyar
Network, a philanthropic investment firm committed to creating
opportunity for individuals to improve
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their lives. He serves on the Board of Trustees of Tufts
University, Omidyar-Tufts Microfinance Fund, the Santa Fe
Institute and the Punahou School, and as a director of Meetup,
Inc. Mr. Omidyar holds a B.S. degree in Computer Science
from Tufts University.
Richard
T. Schlosberg, III
Richard T. Schlosberg, III, age 64, has served as a
director of eBay since March 2004. From May 1999 to January
2004, Mr. Schlosberg served as President and Chief
Executive Officer of the David and Lucile Packard Foundation, a
private family foundation. Prior to joining the foundation,
Mr. Schlosberg was Executive Vice President of The Times
Mirror Company and publisher and Chief Executive Officer of the
Los Angeles Times. Prior to that, he served in the same role at
the Denver Post. Mr. Schlosberg serves on the board of
directors of Edison International, and is also a member of the
USO World Board of Governors, a trustee of Pomona College and a
founding Director of the U.S. Air Force Academy Endowment.
Mr. Schlosberg is also Chairman of the Board of the Kaiser
Family Foundation. Mr. Schlosberg is a graduate of the
United States Air Force Academy and holds an M.B.A. degree from
the Harvard Business School.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS
CONTINUING IN OFFICE UNTIL OUR 2010 ANNUAL MEETING
Philippe
Bourguignon
Philippe Bourguignon, age 61, has served as a director of
eBay since December 1999. Mr. Bourguignon has been Vice
Chairman of Revolution Resorts, a division of Revolution LLC, a
company focused on health, living, and resort investments and
operations, since January 2006. From April 2004 to January 2006,
Mr. Bourguignon served as Chairman of Aegis Media France, a
media communications and market research company. From September
2003 to March 2004, Mr. Bourguignon was Co-Chief Executive
Officer of The World Economic Forum (The DAVOS Forum). From
August 2003 to October 2003, Mr. Bourguignon served as
Managing Director of The World Economic Forum. From April 1997
to January 2003, Mr. Bourguignon served as Chairman of the
Board of Club Méditerranée S.A., a resort operator.
Prior to his appointment at Club Méditerranée S.A.,
Mr. Bourguignon was Chief Executive Officer of Euro Disney
S.A., the parent company of Disneyland Paris, since 1993, and
Executive Vice President of The Walt Disney Company (Europe)
S.A. since October 1996. Mr. Bourguignon was named
President of Euro Disney in 1992, a post he held through April
1993. He joined The Walt Disney Company in 1988 as head of Real
Estate Development. Mr. Bourguignon holds a Masters Degree
in Economics at the University of Aix-en-Provence and holds a
post-graduate diploma from the Institut dAdministration
des Enterprises (IAE) in Paris.
Thomas
J. Tierney
Thomas J. Tierney, age 55, has served as a director of eBay
since March 2003. Mr. Tierney is the founder of The
Bridgespan Group, a non-profit consulting firm serving the
non-profit sector, and has been its Chairman of the Board since
late 1999. Prior to founding Bridgespan, Mr. Tierney served
as Chief Executive Officer of Bain & Company, a
consulting firm, from June 1992 to January 2000.
Mr. Tierney holds a B.A. degree in Economics from the
University of California at Davis and an M.B.A. degree with
distinction from the Harvard Business School. Mr. Tierney
is the co-author of a book about organization and strategy
called Aligning the Stars.
David
M. Moffett
David Moffett, age 57, has served as a director of eBay
since July 2007. Mr. Moffett served as Chief Executive
Officer of Federal Home Loan Mortgage Corp. (Freddie Mac) from
September 2008 to March 2009, and as a director of Freddie Mac
from December 2008 to March 2009. Mr. Moffett has more than
30 years of strategic finance and operational experience in
banking and payment processing. He joined Star Banc Corporation
in 1993 as CFO and played integral roles as Star Banc
Corporation acquired Firstar Corporation in 1998, which then
acquired U.S. Bancorp in February 2001, retaining the
U.S. Bancorp name. Prior to 1993, Mr. Moffett held
executive level
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positions at some of the nations leading financial
services companies, including Bank of America and Security
Pacific Corp. Mr. Moffett holds a B.S. degree in Economics
from the University of Oklahoma and a Masters degree from
Southern Methodist University.
DIRECTORS
CONTINUING IN OFFICE UNTIL OUR 2011 ANNUAL MEETING
Fred
D. Anderson
Fred D. Anderson, age 64, has served as a director of eBay
since July 2003. Mr. Anderson has been a Managing Director
of Elevation Partners, a private equity firm focused on the
media and entertainment industry, since July 2004. From March
1996 to June 2004, Mr. Anderson served as Executive Vice
President and Chief Financial Officer of Apple Inc., a
manufacturer of personal computers and related software. Prior
to joining Apple Inc., Mr. Anderson was Corporate Vice
President and Chief Financial Officer of Automatic Data
Processing, Inc., an electronic transaction processing firm,
from August 1992 to March 1996. On April 24, 2007, the SEC
filed a complaint against Mr. Anderson and another former
officer of Apple Inc. The complaint alleged that
Mr. Anderson failed to take steps to ensure that the
accounting for an option granted in 2001 to certain executives
of Apple Inc., including himself, was proper. Simultaneously
with the filing of the complaint, Mr. Anderson settled with
the SEC, neither admitting nor denying the allegations in the
complaint. In connection with the settlement, Mr. Anderson
agreed to a permanent injunction from future violations of
Sections 17(a)(2) and 17(a)(3) of the Securities Act of
1933 and Section 16(a) of the Exchange Act and
Rules 13b2-2
and 16a-3
thereunder, and from aiding and abetting future violations of
Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the
Exchange Act and
Rules 12b-20,
13a-1,
13a-13, and
14a-9
thereunder. He also agreed to disgorge approximately
$3.5 million in profits and interest from the option he
received and to pay a civil penalty of $150,000. Under the terms
of the settlement, Mr. Anderson may continue to act as an
officer or director of public companies. Mr. Anderson also
serves on the board of directors of Move, Inc. and Palm, Inc.
Mr. Anderson holds a B.A. degree from Whittier College and
an M.B.A. degree from the University of California, Los Angeles.
Edward
W. Barnholt
Edward W. Barnholt, age 65, has served as a director of
eBay since April 2005. Mr. Barnholt served as President and
Chief Executive Officer of Agilent Technologies, Inc., a
measurement company, from May 1999 until March 2005, and served
as Chairman of the Board of Agilent from November 2002 until
March 2005. Before being named Agilents Chief Executive
Officer, Mr. Barnholt served as Executive Vice President
and General Manager of Hewlett-Packard Companys
Measurement Organization from 1998 to 1999. From 1990 to 1998,
he served as General Manager of Hewlett-Packard Companys
Test and Measurement Organization. He was elected a Senior Vice
President of Hewlett-Packard Company in 1993 and an Executive
Vice President in 1996. Mr. Barnholt also serves as the
Non-Executive Chairman of the Board of KLA-Tencor Corporation, a
member of the Board of Directors of Adobe Systems Incorporated,
and a member of the Board of Trustees of the David and Lucile
Packard Foundation. Mr. Barnholt holds a B.S. and an M.S.
degree in electrical engineering from Stanford University.
Scott
D. Cook
Scott D. Cook, age 56, has served as a director of eBay
since June 1998. Mr. Cook is the founder of Intuit Inc., a
maker of business and financial management technology solutions,
including Quickbooks, Quicken and TurboTax. Mr. Cook has
been a director of Intuit since March 1984 and is currently
Chairman of the Executive Committee of the Board of Intuit. From
March 1993 to July 1998, Mr. Cook served as Chairman of the
Board of Intuit. From March 1984 to April 1994, Mr. Cook
served as President and Chief Executive Officer of Intuit.
Mr. Cook also serves on the board of directors of The
Procter & Gamble Company, The Asia Foundation and The
Intuit Scholarship Foundation. Mr. Cook holds a B.A. degree
in Economics and Mathematics from the University of Southern
California and an M.B.A. degree from the Harvard Business School.
John
J. Donahoe
John J. Donahoe, age 48, serves eBay as its President and
CEO. He has served in that capacity since March 2008, as a
director of eBay since January 2008. From January 2008 to March
2008, Mr. Donahoe served as CEO-
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designate. From March 2005 to January 2008, Mr. Donahoe
served as President, eBay Marketplaces. From January 2000 to
February 2005, Mr. Donahoe served as Worldwide Managing
Director for Bain & Company, a global business
consulting firm. Mr. Donahoe serves on the Board of
Trustees for Dartmouth College and on the board of directors of
Intel Corporation. Mr. Donahoe holds a B.A. in Economics
from Dartmouth College and an M.B.A. degree from the Stanford
Graduate School of Business.
PROPOSAL 2
APPROVAL
OF AMENDMENTS TO CERTAIN OF OUR EXISTING EQUITY INCENTIVE PLANS
TO ALLOW FOR A ONE-TIME STOCK OPTION EXCHANGE PROGRAM FOR
EMPLOYEES OTHER THAN OUR NAMED EXECUTIVE OFFICERS AND
DIRECTORS
We are asking you to approve amendments to certain of our
existing equity incentive plans to allow for a one-time stock
option exchange program. Our Board of Directors, upon
recommendation by our Compensation Committee, authorized the
stock option exchange program on March 4, 2009, subject to
stockholder approval of the equity incentive plan
amendments. If implemented, this one-time stock option exchange
program, or option exchange, would permit some of our employees,
including employees of our majority-owned subsidiaries, to
surrender certain outstanding stock options that are
significantly underwater (i.e., those options with
an exercise price that is significantly greater than our current
trading price) for cancellation in exchange for a lesser number
of restricted stock units, or RSUs, to be granted under the eBay
Inc. 2008 Equity Incentive Award Plan, or the 2008 Plan. Each
RSU issued in the option exchange program will represent an
unfunded right to receive one share of our common stock on one
or more specified future dates when the RSU vests.
We believe this option exchange program, as designed, is in the
best interests of our stockholders and our employees. If
approved by stockholders, we believe the option exchange would
enable us to:
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Motivate and engage our eligible employees to continue to build
stockholder value;
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Reduce the total number of our outstanding stock options, or
overhang, since a substantially smaller number of RSUs will be
granted for the surrendered stock options; and
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Recapture retentive and incentive value from the compensation
expense that we record in our financial statements with respect
to certain eligible options.
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In designing our option exchange, we have taken into account our
stockholders interests by focusing on the following
exchange principles:
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Named executive officers and members of our Board will be
excluded from participating in the option exchange. All other
employees holding eligible grants of stock options will
generally be eligible to participate.
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To ensure that only those stock options that are significantly
underwater may be exchanged, only stock options with a per share
exercise price greater than or equal to the highest per share
trading price of our common stock for the 52-week period
immediately preceding the start of the option exchange will be
eligible to be exchanged for RSUs.
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Stock options granted within the
12-month
period immediately prior to the start of the option exchange and
options that will expire within the
12-month
period immediately following the completion of the option
exchange will not be eligible for exchange.
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The exchange ratios will be determined so that the new RSUs will
have a fair value equal to approximately 90% of the fair value
of the surrendered options.
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None of the new RSUs will be vested on the date of grant. The
new RSUs will be scheduled to vest at least 12 months later
than the options for which they are exchanged would have
otherwise vested.
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The stock options surrendered in the exchange will be cancelled
and shares subject to the cancelled options will not be
available for future issuance under our equity incentive plans.
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In certain instances, instead of RSUs, a lesser number of new
stock options or a small cash payment will be issued in exchange
for surrendered options, in each case, calculated so as to
reflect the same approximate discount to fair value.
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Stockholder approval of the amendments to our equity incentive
plans to permit the option exchange is required under the Nasdaq
listing rules and the terms of certain of our equity incentive
plans.
Our ability to effect the option exchange is also contingent
upon stockholder approval of Proposal 3 of this proxy
statement at the Annual Meeting, which would amend the 2008 Plan
to increase the number of shares of our common stock issuable
under the plan by 50 million and would amend certain of our
other equity incentive plans to decrease the number of shares
issuable under those plans. If our stockholders approve
Proposal 3 of this proxy statement and this proposal, and
our Board, Compensation Committee or CEO determines to implement
the option exchange, the option exchange would commence within
12 months of the date of the Annual Meeting.
Stockholder approval of this proposal requires the affirmative
vote of a majority of the votes cast with respect to this
proposal by the shares present in person or represented by proxy
and entitled to vote thereon at the Annual Meeting. A
majority of votes cast means that the number of
votes FOR the approval of the option exchange must
exceed the number of votes AGAINST the approval of
the option exchange.
OVERVIEW
Like many companies, we have experienced a significant decline
in our stock price over the last year in light of the current
global financial and economic crisis. Our Marketplaces and
Payments segments have been directly impacted by the global
economic environment as buyers reduce their spending. Additional
pressure on our stock price has been caused by the anticipated
decrease in our net revenue and earnings per diluted share as a
result of (i) the strengthening U.S. dollar,
(ii) lower global interest rates, (iii) the uncertain
global consumer spending environment, and (iv) the
long-term slowing of our Marketplaces business. While we have
made significant changes to simplify and streamline our
organization, improve our cost structure, and strengthen our
competitiveness, and we continue to make changes to enhance and
diversify our portfolio of ecommerce businesses, our stock price
has nevertheless declined. As a result, a considerable number of
our employees hold stock options with exercise prices
significantly above the recent trading prices of our common
stock. In addition, the market for key employees remains
extremely competitive, notwithstanding the current economic
turmoil.
Because of the continued challenging economic environment and
the uncertain impact of our efforts to change our business, we
believe these underwater stock options are no longer effective
as incentives to motivate and retain our employees. We believe
that employees perceive that these options have little or no
value. In addition, although these stock options are not likely
to be exercised as long as our stock price is lower than the
applicable exercise price, they will remain on our books with
the potential to dilute stockholders interests for up to
the full remaining term of these options, while delivering
little or no retentive or incentive value and no opportunity to
recapture value from the associated compensation expense, unless
they are surrendered or cancelled.
The objective of our equity incentive plans has been, and
continues to be, to link the personal interests of equity
incentive plan participants to those of our stockholders. We
believe that, if approved by our stockholders, the option
exchange would be an important component in our efforts to:
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Motivate eligible employees to continue to build stockholder
value and achieve future stock price growth by exchanging
underwater stock options for RSUs with new extended vesting
periods, and which have a value that moves directly in line with
our stock price. As of February 17, 2009, assuming the per
share trading price of our common stock was $12.00 per
share, approximately 96% of stock options held by our employees
were underwater. We believe that those stock options that are
significantly underwater no longer serve to motivate or help
retain our employees. We believe that the option exchange would
aid both motivation and retention of those employees
participating in the option exchange, while better aligning the
interests of our employees with the interests of our
stockholders.
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Reduce our total number of outstanding stock options, or
overhang, since a substantially smaller number of RSUs will be
granted for the surrendered stock options. Based on the
assumptions described under Details of the Stock Option
Program Exchange Ratios below, the number of
underwater stock options that
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would be eligible for the option exchange is approximately
62.53 million. Because we will be exchanging a
substantially smaller number of RSUs for those options
surrendered, our overhang and the potential dilution of
stockholders interests provided by these awards will
decrease. We believe that after the option exchange, the
overhang provided by our equity awards, including the newly
granted RSUs, would represent an appropriate balance between the
objectives of our equity incentive plans and our
stockholders interest in minimizing overhang and potential
dilution.
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Recapture value from the compensation expense that we record
with respect to certain eligible options. Regardless of whether
this proposal is approved by our stockholders, we will be
obligated to recognize approximately $142.5 million of
remaining compensation expense over the next three years
with respect to the significantly underwater options that we
expect to be eligible for the option exchange, even if these
stock options are never exercised. Because we will be replacing
surrendered stock options with RSUs that have a slightly lower
fair value than the surrendered stock options, we believe that
we can provide an incentive to retain and motivate our
participating employees without materially increasing the
compensation expense we already must recognize (other than
increases in compensation expense that may result from decreases
in our stock price after the option exchange commences, but
before the exchange actually occurs). Based on the assumptions
below, if our stock price does not fluctuate between the date
the option exchange commences (and the exchange ratios are set)
and the date the exchange actually occurs, then, as a result of
the option exchange, we would expect to recognize an incremental
non-cash accounting charge of approximately $1 million to
$2 million over the vesting periods of the new RSUs.
However, even if our stock price fluctuates between the date the
option exchange commences and the date the exchange actually
occurs, we would not expect to recognize any material non-cash
accounting charges as a result of the option exchange.
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The majority of the stock options eligible for the option
exchange were granted under our guidelines as part of our
periodic broad-based focal grants. The table below reflects
information as of February 17, 2009 regarding the
outstanding options that were granted as part of our periodic
broad-based focal grants that would be eligible for the option
exchange if the highest per share trading price of our common
stock for the 52-week period immediately preceding the start of
the option exchange was at or below $27.01 (for purposes of this
Proposal 2 only, all references to this illustrative
threshold exercise price assume an illustrative commencement
date of August 1, 2009).
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Weighted
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Number of Shares
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Average
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Underlying Eligible
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Remaining Life
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Options as of
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Per Share
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of Options
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February 17,
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Exercise
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as of February 17,
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Focal Grant
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2009
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Price
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2009
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March 2004
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7,187,685
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$
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34.62
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5.09
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March 2005
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6,474,964
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42.58
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6.05
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March 2006
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9,357,813
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39.90
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4.25
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September 2006
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5,789,197
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28.15
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4.69
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March 2007
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7,515,741
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31.93
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5.14
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Total Number of Shares Underlying Options Eligible for Exchange
(from focal grants)
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36,325,400
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$
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35.81
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(1)
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4.98
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(1) |
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Represents the weighted average per share exercise price of all
eligible options under our periodic broad-based focal grants. |
22
In addition to our periodic broad-based focal grants,
historically we have granted options under our guidelines at
varying times and having a broad range of exercise prices
generally to newly hired employees and employees who have been
promoted outside our focal granting processes. Please see
Compensation Discussion and Analysis Equity
Compensation Grant Practices. We have also assumed options
previously granted by other companies in connection with our
acquisition of those companies; however, these options
constitute a minimal portion of the options eligible for
exchange under the option exchange. The table below reflects
information as of February 17, 2009 regarding the options
that were not granted as part of our periodic broad-based focal
grants that would be eligible for the option exchange if the
highest per share trading price of our common stock for the
52-week period immediately preceding the start of the option
exchange was at or below $27.01.
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Number of
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Weighted
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Shares
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Average
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Underlying
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Weighted
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Remaining Life
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Exercise Price of Eligible
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Options as of
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Average
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of Options
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Options Which
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February 17,
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Exercise
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as of February 17,
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Are Not Focal Grants
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2009
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Price
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2009
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$27.01 to $28.14
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2,768,865
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$
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27.55
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4.77
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$28.16 to $30.99
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3,086,026
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29.92
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5.13
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$31.00 to $34.60
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5,845,886
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33.27
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5.40
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$34.63 to $36.99
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1,681,554
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35.57
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5.33
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$37.00 to $40.99
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4,988,179
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39.09
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5.54
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$41.00 to $44.99
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3,530,832
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43.15
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5.92
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$45.00 to $51.99
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3,179,090
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46.35
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5.79
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$52.00 and above
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1,128,390
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55.47
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5.87
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Total Number of Shares Underlying Options Eligible for Exchange
(other than focal grants)
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26,208,822
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$
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37.40
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5.46
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In sum, as of February 17, 2009, assuming that the highest
per share trading price of our common stock for the 52-week
period immediately preceding the start of the option exchange
was at or below $27.01, the total number of shares underlying
options that would be eligible for the option exchange was
approximately 62.53 million, with a weighted average
exercise price of $36.48 and a weighted average remaining life
of 5.2 years.
If our stockholders do not approve the amendments to certain
of our equity incentive plans to provide for the option exchange
or if our stockholders do not approve Proposal 3 of this
proxy statement to increase the number of shares available for
issuance under the 2008 Plan, eligible options will remain
outstanding in accordance with their existing terms.
Summary
of Material Terms
The option exchange authorized by the amendments to certain of
our existing equity incentive plans, if approved by our
stockholders, would provide for the following:
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The option exchange will be open to all eligible employees
(except where we determine that it is infeasible or impractical
to offer the option exchange under local regulations as
described below) who are employed by us or one of our
majority-owned subsidiaries as of the start of the option
exchange and remain employed by us or one of our majority-owned
subsidiaries through the completion date of the option exchange.
Eligible employees will be permitted to elect which of their
eligible options they wish to exchange for new RSUs on a
grant-by-grant
basis.
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Our named executive officers and members of our Board will not
be eligible to participate in the option exchange.
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Only stock options that have a per share exercise price greater
than or equal to the highest per share trading price of our
common stock for the 52-week period immediately preceding the
start of the option exchange will be eligible for exchange.
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Stock options granted within the
12-month
period immediately prior to the commencement date of the option
exchange will not be eligible for exchange.
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Stock options which have a remaining term of less than
12 months immediately following the completion of the
option exchange (based on their terms as of their original grant
date) will not be eligible for exchange.
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The exchange ratios used to determine the number of new RSUs to
be granted in exchange for the eligible options surrendered will
be determined in a manner intended to result in the grant of new
RSUs that have a fair value equal to approximately 90% of the
fair value of the eligible options for which they are exchanged.
The exchange ratios will be established shortly before the start
of the option exchange and will depend on the then-current fair
value of the eligible option (calculated using the Black-Scholes
option pricing model with a computation of expected volatility
based on a combination of historical and market-based implied
volatility from traded options on our common stock), the fair
market value of our common stock and the original exercise price
of the eligible option. The option exchange will not be a
one-for-one exchange. Instead, participating employees will
receive a substantially smaller number of RSUs than the number
of shares that are covered by the surrendered eligible options.
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None of the new RSUs granted in exchange for eligible options
will be vested on the date of grant. The new RSUs will vest,
subject to the participants continued employment, in equal
installments on each anniversary of the date of grant of the new
RSUs with the number of installments determined using the date
the surrendered option would have otherwise become fully vested
in relation to the date the new RSUs are granted (unless local
regulations or restrictions require that the vesting occur later
than the first anniversary of the date of grant). Additional
details regarding the vesting of the new RSUs is provided under
the heading Details of the Stock Option Exchange
Program Vesting of New RSUs below.
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In certain instances, as described below, instead of granting
RSUs, a small cash payment will be made or a lesser number of
new options will be granted in exchange for surrendered eligible
options. In these limited cases, the cash provided or the new
options granted will have a fair value intended to equal
approximately 90% of the fair value of the surrendered options.
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If our stockholders approve Proposal 3 of this proxy
statement and this proposal, and our Board, Compensation
Committee or CEO determines to implement the option exchange,
the option exchange would commence within 12 months of the
date of the Annual Meeting. If the option exchange does not
commence within 12 months of the date of the Annual
Meeting, we would consider any future option exchange or similar
program to require new stockholder approval before it can be
implemented.
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While the terms of the option exchange are expected to be
materially similar to the terms described in this proposal, each
of our Board, Compensation Committee and CEO will have the
discretion to change the terms of the option exchange to take
into account a change in circumstances or local regulations and
to determine not to implement the option exchange even if
stockholder approval of the amendment of the equity incentive
plans is obtained.
Reasons
for the Option Exchange
We believe that to be successful, our employees need to think
like owners. Consistent with this philosophy, our equity program
continues to be broad-based. This broad-based equity program
provides us with a competitive advantage, particularly in our
efforts to hire and retain top talent in technology-related
fields.
Due to the significant decline of our stock price during the
last year, many of our employees now hold stock options with
exercise prices significantly higher than the current market
price of our common stock. For example, the closing price of our
common stock on the Nasdaq Global Select Market on March 3,
2009 was $10.42, whereas the weighted average exercise price of
all outstanding options held by our employees on that date was
$28.77. As of February 17, 2009, assuming the per share
trading price of our common stock was $12.00, approximately 96%
of outstanding stock options held by our employees were
underwater. Although we continue to believe that equity awards
are an important component of our employees total
incentive benefits and provide us with a competitive advantage,
we also believe that many of our employees view their existing
options as having little or no value due to the significant
difference between the exercise prices and the current market
price of our common stock. In addition,
24
the market for key employees remains extremely competitive,
notwithstanding the current economic turmoil. As a result, for
many employees, we believe that those stock options that are
significantly underwater are no longer effective at providing
the incentives that our Board and Compensation Committee believe
are necessary to motivate and retain our employees.
Alternatives
Considered
When considering how best to continue to provide incentives to
and reward our employees who hold options that are significantly
underwater, we considered the following alternatives:
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Increase cash compensation. To replace equity
incentives, we considered whether we could substantially
increase base and target bonus cash compensation. However,
significant increases in cash compensation would substantially
increase our cash compensation expenses and reduce our cash flow
from operations, which could adversely affect our business and
operating results. In addition, these increases would not reduce
our overhang and would not necessarily best align the interests
of our employees with those of our stockholders. Further, in
some
non-U.S. jurisdictions,
cash compensation is treated as a different type of benefit than
equity awards and often has less favorable tax treatment than
equity awards, so the long-term incentive and retention value
would be diminished.
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Grant additional equity awards. We also
considered special grants of additional stock options at current
market prices or RSUs. However, these additional grants would
substantially increase our overhang and dilute the interests of
our stockholders.
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Exchange options for cash. We also considered
implementing a program to exchange significantly underwater
options for cash payments. However, an exchange program where
options are generally exchanged for cash would substantially
increase our compensation expenses and reduce our cash flow from
operations, which could adversely affect our business and
operating results. In addition, we do not believe that such a
program would have significant long-term retention value.
However, in certain instances where we have determined that
offering RSUs would provide minimal retentive value, would be
overly burdensome to administer or would not provide a
meaningful benefit to holders of eligible options, we will
provide for a cash payment in exchange for their surrendered
options. Based on the assumptions described under Details
of the Stock Option Exchange Program Cash
Payments below, the amount of cash that we expect would be
paid under the proposed option exchange is approximately
$1.9 million.
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Exchange options for options with lower exercise
prices. We also considered implementing a program
to exchange significantly underwater options for options having
an exercise price equal to the market price of our common stock
on the date of the exchange. We believe, however, that
implementing an option-for-RSU exchange program would have two
relative advantages versus an option-for-option exchange program
with an equivalent accounting impact. First, an option-for-RSU
exchange program would require the grant of substantially fewer
RSUs than options in an option-for-option exchange program
(i.e., fewer shares will be subject to the replacement RSU
awards granted than replacement option awards). Second, our
overhang and stockholder dilution would decrease more
significantly in an option-for-RSU exchange program compared
with an option-for-option exchange program. In addition,
granting RSUs is consistent with our current grant practices and
provides value to our employees even if current economic
conditions continue and our stock price fails to increase
further. However, in Canada, an option-for-RSU exchange is
subject to taxation on the date the options are exchanged for
new RSUs. In light of the potential adverse consequences of such
taxation to eligible employees in Canada, we will grant a lesser
number of options in exchange for options surrendered by our
eligible employees resident in Canada to avoid the tax
inefficiency associated with an option-for-RSU exchange in
Canada. If we determine that similar adverse tax consequences
may arise in other foreign jurisdictions, we may grant a lesser
number of options in exchange for surrendered options in those
jurisdictions as well. We do not expect this to impact a
material additional number of eligible optionees.
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The
Option Exchange
After weighing each of these alternatives, subject to the
exceptions described in this proposal, we have decided to
provide an option-for-RSU exchange. We have determined that a
program under which our employees generally
25
could exchange significantly underwater stock options for a
substantially smaller number of RSUs was the most attractive
alternative for a number of reasons, including the following:
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The option exchange offers a reasonable, balanced and
meaningful incentive for our eligible
employees. Under the option exchange,
participating employees would surrender eligible options (which
are significantly underwater) for a substantially smaller number
of RSUs that will vest at least 12 months later than the
eligible options for which they are exchanged. New RSUs that are
granted in exchange for eligible options that were fully vested
when surrendered will vest on the first anniversary of the date
of grant (unless local regulations or restrictions require that
the vesting occur later than the first anniversary of the date
of grant). We believe that the lower number of new RSUs to be
granted, the requirement that any eligible option has a per
share exercise price greater than or equal to the highest per
share trading price of our common stock for the 52-week period
immediately preceding the start of the option exchange, and a
new 12 month or longer vesting requirement, represents a
reasonable and balanced option exchange with the potential for a
significant positive impact on employee retention, motivation
and performance. Additionally, the value of the RSUs directly
correlates with movements in the market price of our common
stock over time, thereby aligning employee and stockholder
interests.
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The exchange ratio will be calculated to return value to our
stockholders. We will calculate the exchange
ratios in a manner intended to result in the new RSUs having a
fair value, for accounting purposes, that will be approximately
equal to 90% of the fair value of the eligible options that are
exchanged, which we believe will have no significant adverse
impact on our reported earnings.
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The option exchange will reduce our equity award
overhang. Not only do the underwater options have
little or no retention value, they cannot be removed from our
equity award overhang until they are exercised, expire, or the
employee who holds them leaves our employment. The option
exchange will reduce our overhang while eliminating the
ineffective options that are currently outstanding. Because a
lesser number of shares will be subject to awards granted in
exchange for eligible options, the number of shares of stock
subject to all outstanding equity awards will be reduced,
thereby reducing our overhang. Based on the assumptions
described under Details of the Stock Option Exchange
Program Exchange Ratios below, if all eligible
options are exchanged, options to purchase approximately
62.53 million shares would be surrendered and cancelled,
while approximately 3.57 million new RSUs would be granted
in exchange for eligible options, resulting in a net reduction
in the equity award overhang by approximately 58.96 million
shares. As of March 3, 2009, the total number of shares of
our common stock outstanding was approximately
1.286 billion. All eligible options that are not exchanged
will remain outstanding and in effect in accordance with their
existing terms.
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Our named executive officers and members of our Board will
not be eligible to participate in the option
exchange. Although our named executive officers
and members of our Board also hold options that are
significantly underwater, these individuals are not eligible to
participate in the option exchange because we believe that their
compensation should remain at greater risk based on our stock
price.
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DETAILS
OF THE STOCK OPTION EXCHANGE PROGRAM
Implementing
the Option Exchange
We have not commenced the option exchange and will not do so
unless our stockholders approve this proposal to amend certain
of our equity incentive plans to permit the option exchange and
Proposal 3 to increase the number of shares of common stock
reserved for issuance under the 2008 Plan. Our Board authorized
the option exchange on March 4, 2009, subject to such
stockholder approval. If this proposal is approved, and our
Board, Compensation Committee or CEO determines to implement the
option exchange, the option exchange would commence within
12 months of the date of the Annual Meeting.
If stockholders approve this proposal to amend certain of our
equity incentive plans and Proposal 3 and the Board,
Compensation Committee or CEO determines to commence the option
exchange, eligible employees will be offered the opportunity to
participate in the option exchange pursuant to a written offer
that will be distributed to all eligible employees. Eligible
employees will be given at least 20 business days in which to
accept the offer of the new
26
RSUs in exchange for the surrender of their eligible options.
The surrendered options will be cancelled on the first business
day following this election period. The new RSUs will be granted
under the 2008 Plan on the date of cancellation of the
surrendered options. In those limited cases where new options
will be granted or cash payments made in exchange for
surrendered options, such grants or payments also will be made
on the date of the cancellation of the surrendered options. The
shares of our common stock subject to surrendered options will
not be available for future issuance under our equity incentive
plans once the surrendered options are cancelled.
Prior to commencement of the option exchange, we will file the
offer to exchange with the SEC as part of a tender offer
statement on Schedule TO. Eligible employees, as well as
stockholders and members of the public, will be able to review
the offer to exchange and other related documents filed by us
with the SEC free of charge on the SECs website at
www.sec.gov.
Eligibility
If implemented, the option exchange will be open to all of our
active employees, worldwide, including any employees of our
majority-owned subsidiaries, who hold options with a per share
exercise price greater than or equal to the highest per share
trading price of our common stock for the 52-week period
immediately preceding the start of the option exchange, except
where we determine that it is infeasible or impractical to offer
the option exchange under local regulations. Our named executive
officers and members of the Board will not be eligible to
participate in the option exchange. Based on the assumptions
described below, as of February 17, 2009, we estimate that
approximately 93% of our employees holding options would be
eligible to participate in the option exchange. The program also
will not be available to any former employees. An active
employee who tenders his or her options for exchange must also
remain an eligible employee through the date the new RSU grant
is made following the completion of the option exchange in order
to receive the new RSUs. Active employment does not include any
period of garden leave or notice periods that may be
provided for under local law. If an option holder is no longer
an active employee with us or one of our majority-owned
subsidiaries for any reason, including layoff, termination,
voluntary resignation, death or disability, on the date that the
option exchange is commenced, that option holder cannot
participate in the option exchange. If an option holder is no
longer an active employee with us or one of our majority-owned
subsidiaries for any reason on the date that the new RSU grant
is made following the completion of the offer, even if he or she
had elected to participate and had tendered his or her options
for exchange, such employees tender will automatically be
deemed withdrawn and he or she will not participate in the
option exchange. He or she will retain his or her outstanding
options in accordance with their original terms and conditions,
and he or she may exercise them during a limited period of time
following termination of employment in accordance with their
terms and to the extent that they are vested. A vote by an
employee in favor of this proposal at the Annual Meeting does
not constitute an election to participate in the option exchange.
Based on the assumptions described under Details of the
Stock Option Exchange Program Exchange Ratios
below, of the outstanding options held by eligible employees as
of February 17, 2009, the maximum number of shares of
common stock underlying options which could be surrendered for
exchange is 62.53 million, and the maximum number of shares
of common stock which would be subject to RSUs granted under the
proposed option exchange, using the estimated exchange ratios
below, would be 3.57 million (consisting of
(i) 2.01 million RSUs granted in exchange for eligible
options granted as part of our periodic broad-based focal grants
and (ii) 1.56 million RSUs granted in exchange for
eligible options not granted as part of our periodic broad-based
focal grants). The amount of cash that we expect would be paid
under the proposed option exchange, using the estimated exchange
ratios below, is approximately $1.9 million.
Exchange
Ratios
The exchange ratios set forth below for the option exchange
(that is, how many options an employee must surrender in order
to receive one RSU) will be determined using the Black-Scholes
option pricing model with a computation of expected volatility
based on a combination of historical and market-based implied
volatility from traded options on our common stock. Volatility
is calculated on the same basis as we use for calculating stock
expense under FAS 123(R). We chose to use this model to
enable us to implement the option exchange in a manner that will
result in the granting of new RSUs that have approximately 90%
of the fair value of the stock options that are surrendered, and
to avoid the stockholder dilution that occurs when all options
are exchanged on a one option for
27
one RSU basis. New RSU grants calculated according to the
exchange ratios will be rounded down to the nearest whole share
on a
grant-by-grant
basis. Fractional RSUs will not be issued.
The exchange ratios set forth below are for illustrative
purposes only. They were established based on (i) an
illustrative stock price of $12.00, (ii) the assumption
that the highest per share trading price of our common stock for
the 52-week period immediately preceding the start of the option
exchange was at or below $27.01, (iii) the assumption that
the expected volatility used for the valuations was between
40.79% and 42.97% (depending upon the expected remaining life of
the individual option grant), and (iv) on the principle
that the new RSUs granted will have approximately 90% of the
fair value of the stock options that are surrendered in the
option exchange. Since the majority of eligible options were
granted as part of our periodic broad-based focal grants and the
terms of the options granted in connection with a particular
focal grant are substantially similar, we have calculated
exchange ratios separately for those options granted as part of
our periodic broad-based focal grants and those granted apart
from our focal grants. The actual exchange ratios will be
determined at the time the option exchange commences based on
our then-current stock price and volatility.
The illustrative exchange ratios for new RSUs granted in
exchange for surrendered options which were originally part of a
periodic broad-based focal grant are set forth in the table
below.
|
|
|
|
|
|
|
|
|
Per Share
|
|
|
Exchange Ratio
|
|
|
Exercise
|
|
|
(Surrendered Options
|
Focal Grant
|
|
Price
|
|
|
to New RSU)
|
|
March 2004
|
|
$
|
34.62
|
|
|
16.5 to 1
|
March 2005
|
|
|
42.58
|
|
|
18.5 to 1
|
March 2006
|
|
|
39.90
|
|
|
35 to 1
|
September 2006
|
|
|
28.15
|
|
|
13 to 1
|
March 2007
|
|
|
31.93
|
|
|
14 to 1
|
The illustrative exchange ratios for new RSUs granted in
exchange for surrendered options which were granted apart from a
periodic broad-based focal grant are set forth in the table
below.
|
|
|
|
|
Exchange Ratio
|
Exercise Price of Eligible Employee
|
|
(Surrendered Options
|
Option Grants Other than Focal Grants
|
|
to New RSU)
|
|
$27.01 to $28.14
|
|
12 to 1
|
$28.16 to $30.99
|
|
13 to 1
|
$31.00 to $34.60
|
|
15 to 1
|
$34.63 to $36.99
|
|
16.5 to 1
|
$37.00 to $40.99
|
|
18.5 to 1
|
$41.00 to $44.99
|
|
21 to 1
|
$45.00 to $51.99
|
|
26 to 1
|
$52.00 and above
|
|
35 to 1
|
Election
to Participate
Participation in the option exchange will be voluntary. Under
the option exchange, eligible employees may make an election to
surrender eligible stock options that have an exercise price
greater than or equal to the highest per share trading price of
our common stock for the 52-week period immediately preceding
the start of the option exchange in exchange for new RSUs in
accordance with the actual exchange ratios, which will be
determined at the time the option exchange commences.
Vesting
of New RSUs
New RSUs granted in the option exchange will not be vested on
their date of grant regardless of whether the surrendered option
was fully vested. Instead, the new RSUs will vest in equal
installments on each anniversary of the date of grant of the new
RSUs with the number of installments determined using the date
the new RSUs granted in the option exchange are issued and the
date the surrendered option would have otherwise become fully
vested.
28
For illustrative purposes, the table below provides the vesting
schedule with respect to the new RSUs (unless local regulations
or restrictions require that the vesting occur later than the
first anniversary of the date of grant), assuming that the new
RSUs are issued on September 1, 2009:
|
|
|
|
|
|
|
Number of Vesting
|
|
Final Vesting Date of Surrendered Option Grant
|
|
Installments
|
|
|
Prior to September 1, 2009
|
|
|
1
|
|
On or after September 1, 2009 and before September 1,
2010
|
|
|
2
|
|
On or after September 1, 2010 and before September 1,
2011
|
|
|
3
|
|
On or after September 1, 2012
|
|
|
4
|
|
For example, if an eligible option was granted on March 1,
2007 and would vest with respect to 25% of the shares subject to
the eligible option on the first anniversary of the date of
grant and then with respect to 2.08% of the shares over the
subsequent 36 months, the eligible option would become
fully vested on March 1, 2011. Using the table above, new
RSUs granted in exchange for the surrender of this eligible
option would vest in three equal installments on the first three
anniversaries of the date the new RSUs are granted.
New RSUs will only vest if the award holder remains an employee
with us or one of our majority-owned subsidiaries. Any portion
of the new RSUs that are not vested at termination of employment
will be forfeited. As described above, the new RSUs will be
completely unvested on the date of grant, regardless of whether
the surrendered options were partially or completely vested.
Term and
Conditions of New RSUs
The terms and conditions of the new RSUs will be governed by the
terms and conditions of the 2008 Plan and the RSU agreement
entered into thereunder.
New Stock
Options
In Canada, and potentially in other foreign jurisdictions, an
option-for-RSU exchange is subject to taxation on the date the
options are cancelled in exchange for the new RSUs grants. In
light of the potential adverse consequences of such taxation to
eligible employees in foreign jurisdictions such as Canada, we
will grant a lesser number of new options in exchange for
surrendered options held by employees in Canada and other
foreign jurisdictions where we determine that the tax
consequences of an option-for-RSU exchange are prohibitively
adverse to employees. We expect this to be the case in an
immaterial number of foreign jurisdictions. Any new options
granted as part of the option exchange will be granted on the
date of cancellation of the old options, will have a per share
exercise price equal to the fair market value of our common
stock on the date of grant and will have a fair value intended
to be approximately equal to 90% of the fair value of the
surrendered options (as calculated using the same assumptions as
are used for the RSU exchange ratios). Any new options granted
as part of the option exchange will vest in same manner
described above for new RSUs granted in exchange for surrendered
options.
Cash
Payments
In certain instances where we have determined that offering RSUs
would provide minimal retentive value, would be overly
burdensome to implement or administer or would not provide a
meaningful benefit to holders of eligible options, we will
provide for a cash payment in exchange for surrendered options.
Generally, this will be limited to cases where less than an
aggregate of 100 new RSUs would be issuable to an employee in
the option exchange. The amount of the cash payment will be
calculated based on the RSU exchange ratio and in a manner
intended to provide those receiving cash payments with
approximately 90% of the fair value of their surrendered
options, less any taxes and social insurance contributions due
on the payments. To ensure that the payment of any such de
minimis cash amounts satisfy securities law requirements that
they be made promptly following the completion of the option
exchange, we have determined that such payments cannot be
subject to vesting or other delayed payment schedule.
Accordingly, any cash payments that we provide in exchange for
surrendered options will not be subject to any vesting schedule
and will be made on the date that replacement RSUs are granted.
In addition, we currently expect to provide for such de minimis
cash payments in less than one-third of the countries in which
we have eligible employees holding eligible options. The
aggregate number of eligible options that may be
29
exchanged for cash payments as of February 17, 2009 based
upon the illustrative exchange ratios is approximately
3.0 million and we expect the amount of these cash payments
to be approximately $1.9 million, assuming all such
eligible options are exchanged.
U.S.
Federal Income Tax Consequences and Other Tax
Consequences
The option exchange should be treated as a non-taxable exchange
for U.S. federal income tax purposes, and we and our
participating employees should recognize no income for
U.S. federal income tax purposes upon the issuance of the
new RSUs. Recipients of cash payments will recognize ordinary
income for U.S. federal income tax purposes on the date the
cash payments are made to them, and the payments will be subject
to applicable tax withholdings. The tax consequences of the
option exchange in foreign jurisdictions will depend on
applicable foreign tax rules and regulations but will be fully
disclosed to participants subject to the tax laws of foreign
jurisdictions as part of the offer to exchange options.
Accounting
Impact
The intent of the option exchange is that it will not result in
us incurring significant additional compensation expenses. Based
on this objective, the average fair value of the awards granted
to employees in exchange for surrendered stock options, measured
as of the date such awards are granted (and the amount of any
cash payments made for eligible options) will be equal to
approximately 90% of the fair value of the surrendered options
(other than compensation expense that might result from
fluctuations in stock price after the exchange ratios have been
set but before the exchange actually occurs). The unamortized
compensation expense from the surrendered options and
incremental compensation expense, if any, associated with the
new awards under the option exchange will be recognized over the
service period of the new awards. If any portion of the new
awards granted is forfeited due to termination of employment,
the compensation cost for the forfeited portion of the award
generally will not be recognized. Based on the assumptions
described under Details of the Stock Option
Program Exchange Ratios above, and assuming
that our stock price does not materially fluctuate between the
establishment of the exchange ratios and the date the exchange
actually occurs, then, as a result of the option exchange, we
would expect to recognize an incremental non-cash accounting
charge of approximately $1 million to $2 million over
the vesting period of the new awards. However, even if our stock
price fluctuates between the date the option exchange commences
and the date the exchange actually occurs, we would not expect
to recognize any material non-cash accounting charges as a
result of the option exchange.
Potential
Modification to Terms to Comply with Governmental
Requirements
The terms of the option exchange will be described in a tender
offer document that will be filed with the SEC. Although we do
not anticipate that the SEC would require us to modify the terms
materially, it is possible that we will need to alter the terms
of the option exchange to comply with potential SEC comments. In
addition, it is currently our intention to make the program
available to our eligible employees, including eligible
employees of our majority-owned subsidiaries who are located
outside of the United States, where permitted by local law and
where we determine it is feasible and practical to do so. It is
possible that we will make modifications to the terms offered to
employees in countries outside the United States to comply with
local requirements, or for tax or accounting reasons.
Specifically, as described above, because of the adverse tax
consequences to participants who are resident in Canada of an
option-for-RSU exchange, we intend to issue a lesser number of
options, calculated based on the same methodology as for the
option-for-RSU exchange described above, to employees resident
in Canada and potentially to employees in jurisdictions with
similar adverse tax consequences.
Benefits
of the Option Exchange to Eligible Employees
Because the decision whether to participate in the option
exchange is completely voluntary, we are not able to predict who
will participate, how many options any particular group of
employees will elect to exchange, or the number of new RSUs that
we may grant. As noted above, however, our named executive
officers and members of our Board are not eligible to
participate in the option exchange. The option exchange also
will not be available to any former employees of us or our
majority-owned subsidiaries.
30
Effect on
Stockholders
The option exchange was designed to provide renewed incentives
and motivate the eligible employees to continue to create
stockholder value and reduce the number of shares currently
subject to outstanding options, thereby avoiding the dilution in
ownership that normally results from supplemental grants of new
stock options or other awards. We are unable to predict the
precise impact of the option exchange on our stockholders
because we cannot predict which or how many employees will elect
to participate in the option exchange, and which or how many
eligible options such employees will elect to exchange. Please
see the Details of Stock Option Exchange
Program Eligibility section above for the
approximate reduction in the number of shares underlying options
outstanding assuming that 100% of eligible options are exchanged
and new awards are issued in accordance with the exchange ratios
set forth above.
Text of
Amendments to Existing Equity Plans
In order to permit us to implement the option exchange in
compliance with our existing equity incentive plans and
applicable Nasdaq listing rules, our Compensation Committee
recommended and our Board approved amendments to certain of our
equity incentive plans, subject to approval of the amendments by
our stockholders. We are seeking stockholder approval to amend
the following existing equity incentive plans, which we refer to
hereinafter as the amended equity incentive plans: the 2008
Plan, eBay Inc. 2001 Equity Incentive Plan, eBay Inc. 1999
Global Equity Incentive Plan, eBay Inc. 1998 Equity Incentive
Plan and Shopping.com Ltd. 2004 Equity Incentive Plan, to
provide for the option exchange notwithstanding any provision to
the contrary in the respective plan. The amendments will read
substantially as follows:
Notwithstanding any other provision of the Plan to the contrary,
upon approval of this amendment by the Companys
stockholders in accordance with the terms of this Plan, our
Board of Directors or Compensation Committee may provide for,
and the Company may implement, a one-time-only option exchange
offer, pursuant to which certain outstanding Options could, at
the election of the person holding such Option, be tendered to
the Company for cancellation in exchange for the issuance of a
lesser amount of restricted stock units, stock options or cash
payments, provided that such one-time-only option
exchange offer is commenced within 12 months of the date of
such stockholder approval.
Summary
of our Amended Equity Incentive Plans
The following is a summary of the material terms of the amended
equity incentive plans. A more comprehensive discussion of the
material terms of the 2008 Plan and the U.S. federal income
tax consequences of awards granted under the 2008 Plan is
included in Proposal 3 of this proxy statement and is
incorporated into this proposal by this reference. We administer
the other amended equity incentive plans consistent with our
administration of the 2008 Plan, and the U.S. federal
income tax consequences associated with awards under our other
amended equity incentive plans are the same as similar awards
granted under the 2008 Plan.
Generally, the amended equity incentive plans provide for equity
awards to be made to our employees, directors and executive
officers. Currently, the types of awards that our Compensation
Committee grants consist of incentive stock options, or ISOs,
non-statutory stock options, or NSOs, restricted stock units, or
RSUs, nonvested shares of our common stock, which we also refer
to as restricted stock, and performance-based RSUs. As of
December 31, 2008, 79.4 million shares were available
for future grant under our amended equity incentive plans.
Stock options granted under the amended equity incentive plans
generally vest 25% one year from the date of grant (or 12.5% six
months from the date of grant for grants to existing employees),
and the remainder vest at a rate of 2.08% per month thereafter,
and generally expire seven to ten years from the date of grant.
The cost of stock options is determined using the Black-Scholes
option pricing model on the date of grant.
RSUs and restricted stock are granted to eligible employees
under our amended equity incentive plans. In general, RSUs and
restricted stock vest over one to five years, are subject to the
employees continuing service to us and do not have an
expiration date. The cost of RSUs and nonvested shares is
determining using the fair value of our common stock on the date
of grant.
Certain executives are eligible for performance-based RSUs under
our amended equity incentive plans. The number of RSUs
ultimately received depends on our business performance against
specified performance targets set
31
by the Compensation Committee. If the performance criteria are
satisfied, the performance-based RSUs will vest on specified
dates or over any period determined by the Compensation
Committee.
The table below sets forth the types of awards that we may grant
under each of the amended equity incentive plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
|
Available for
|
|
|
|
|
|
|
|
Awards as of
|
|
|
|
|
Maximum
|
Name of Equity Plan
|
|
March 3, 2009
|
|
|
Types of Awards(1)
|
|
Term(2)
|
|
2008 Plan
|
|
|
7,192,587
|
|
|
ISOs, NSOs, Restricted Stock, RSUs, Stock Appreciation Rights,
Performance Shares, Performance Stock Units, Dividend
Equivalents, Stock Payments, Deferred Stock Units, Other
Stock-Based Awards and Performance-Based Awards
|
|
|
10 years
|
|
eBay Inc. 2001 Plan
|
|
|
42,398,975
|
|
|
ISOs, NSOs
|
|
|
10 years
|
|
eBay Inc. 1999 Plan
|
|
|
6,114,654
|
|
|
NSOs, Stock Bonuses, and Restricted Stock
|
|
|
No limit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eBay Inc. 1998 Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
0
|
|
|
ISOs, NSOs, Stock Bonuses, and Stock Bonus Awards, Restricted
Stock Purchase Awards, Restricted Stock Units and Performance
Restricted Stock Units
|
|
|
10 years
|
|
Shopping.com 2004 Plan
|
|
|
0
|
|
|
ISOs, NSOs, Restricted Stock, Stock Appreciation Rights and
Stock Units
|
|
|
10 years
|
|
|
|
|
(1) |
|
For a description of each type of award, please see our
description of awards that may be granted under the 2008 Plan
under the heading Awards in Proposal 3 of this
proxy statement. |
|
(2) |
|
Where no limit is listed, the maximum is controlled by the
applicable award agreement. |
The option exchange is contingent upon stockholder approval of
Proposal 3 of this proxy statement at the Annual Meeting,
which would amend the 2008 Plan to increase the number of shares
of our common stock issuable under the plan by 50 million,
to a total of 85 million. As of March 3, 2009, an
aggregate of 35 million shares are authorized pursuant to
the 2008 Plan, and 7.2 million shares are available for
grant under the 2008 Plan. As of March 3, 2009, there were
a total of 105.3 million shares underlying options
outstanding under our amended equity incentive plans. Based on
the assumptions described under Details of the Stock
Option Exchange Program Exchange Ratios above,
of the outstanding options under our amended equity incentive
plans, as of March 3, 2009, options to purchase
62.53 million shares of common stock would be eligible for
exchange under the proposed option exchange. Assuming all of the
62.53 million eligible options are surrendered and
cancelled pursuant to the option exchange, 3.57 million
shares would be needed in order to issue the new RSUs in
accordance with the estimated exchange ratios. Since there would
not be enough shares available for grant under the 2008 Plan in
order to continue to make grants consistent with our equity
compensation grant practices and effect the option exchange, the
option exchange is contingent upon stockholder approval of
Proposal 3 in this proxy statement, which proposal would
increase the number of shares issuable under the 2008 Plan by an
additional 50 million, to a total of 85 million shares.
VOTE
REQUIRED
Approval of the amendment of the amended equity incentive plans
requires the affirmative vote of a majority of the votes cast
with respect to this proposal by the shares present in person or
represented by proxy and entitled to vote thereon at the Annual
Meeting. A majority of votes cast means that the
number of votes FOR the approval of the amendment
must exceed the number of votes AGAINST the approval
of the amendment.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
32
PROPOSAL 3
APPROVAL
OF AMENDMENT AND RESTATEMENT OF OUR
2008
EQUITY INCENTIVE AWARD PLAN
We are asking you to approve an amendment and restatement of the
eBay Inc. 2008 Equity Incentive Award Plan, or the 2008 Plan, to
increase the number of shares of common stock we may issue under
the 2008 Plan by 50 million to 85 million and to add
market share and volume metrics as performance criteria for
performance-based awards granted under the 2008 Plan. Our Board
adopted, subject to stockholder approval, the amendment and
restatement of the 2008 Plan to provide us the continued ability
to grant a variety of equity awards as a valuable tool to help
attract and retain members of our Board and employees and
consultants of our company and its subsidiaries. In addition, an
increase to the number of shares of common stock reserved under
the 2008 Plan will ensure that we will be able to grant
restricted stock units, or RSUs, under the 2008 Plan in exchange
for cancelled options in the event that the option exchange
described in Proposal 2 of this proxy statement is
approved. The amendment and restatement of the 2008 Plan will
only become effective if it is approved by the affirmative vote
of a majority of the votes cast with respect to this proposal by
the shares present in person or represented by proxy and
entitled to vote thereon at the Annual Meeting.
A majority of votes cast means that the number of
votes FOR the approval of the amendment and
restatement of the 2008 Plan must exceed the number of votes
AGAINST the approval of the amendment and
restatement of the 2008 Plan.
INTRODUCTION
The purpose of the 2008 Plan is to promote the success and
enhance the value of our company by linking the personal
interests of employees, the members of our Board, and
consultants to those of our stockholders and by providing these
individuals with an incentive to work to generate superior
returns to our stockholders. The 2008 Plan is also intended to
provide us with flexibility in creating competitive plans to
motivate, attract, and retain the services of employees, members
of our Board and consultants upon whose judgment, interest, and
special effort our success is largely dependent.
We believe that to be successful, our employees need to think
like owners. Consistent with this philosophy, our equity program
continues to be broad-based. This broad-based equity program
provides us with a competitive advantage, particularly in our
efforts to hire and retain top talent in technology-related
fields. Furthermore, we encourage stock ownership by our senior
executives and members of our Board through the use of equity
awards and stock ownership guidelines applicable to our
executive officers and directors.
As a result of various historical factors, we currently maintain
multiple plans, each typically used to grant awards to different
groups of employees. Over the next several years, we intend to
reduce the number of plans we administer to two plans, one for
stock options and the other for full-value equity grants,
including RSUs, deferred stock units, and performance-based
RSUs. A simple, smoothly functioning equity award program is an
important component of our general compensation program and
helps streamline our daily operations.
As explained in greater detail in the Compensation Discussion
and Analysis section of this proxy statement, over time our
equity grants have shifted from being made in the form of stock
options to being made in the form of combinations of RSUs,
performance-based RSUs
and/or stock
options for our most senior classes of employees and purely as
RSUs for other employees. As a result of this shift, we have
granted substantially all of the RSUs that can be granted under
our equity incentive plans. In order to continue to make grants
in accordance with the compensation philosophy adopted by the
Compensation Committee, our Compensation Committee and the Board
have approved and are asking you to approve the amendment and
restatement of the 2008 Plan. This will ensure that we have
sufficient shares authorized and available for grants of equity
awards and the flexibility to create the most appropriate equity
grant program possible, including the option exchange
contemplated by Proposal 2 of this proxy statement.
The 2008 Plan, as amended and restated subject to stockholder
approval, authorizes 85 million shares of our common stock
for issuance pursuant to the 2008 Plan. In connection with the
adoption of the amendment and restatement of the 2008 Plan, the
Board has authorized, contingent upon stockholder approval of
the amendment
33
and restatement of the 2008 Plan, the amendment of the eBay
Inc. 2001 Equity Incentive Plan, or the 2001 Plan, to reduce the
number of shares reserved for issuance and, therefore, available
for grant under those plans by 16 million shares of common
stock to help offset the dilutive impact created by the adoption
to the amendment and restatement of the 2008 Plan, which will
reduce the number of shares available for grant pursuant to the
2001 Plan to approximately 26.4 million shares. In
addition, contingent upon stockholder approval of the amendment
and restatement of the 2008 Plan, we will not make any new
grants under the eBay Inc. 1999 Global Equity Incentive Plan, or
the 1999 Plan, following our receipt of such stockholder
approval. As of March 3, 2009, we had 6.1 million
shares available for grant pursuant to the 1999 Plan.
As of March 3, 2009, we had a total of 56.55 million
shares available for grant under our equity incentive plans,
consisting of (i) 7.2 million shares available for
grant under the 2008 Plan, (ii) 42.4 million shares
available for grant under the 2001 Plan,
(iii) 6.1 million shares available for grant under the
1999 Plan, and (iv) 0.8 million shares available for
grant under the eBay Inc. 2003 Deferred Stock Unit Plan, or 2003
Plan. Assuming stockholder approval of the amendment and
restatement of the 2008 Plan (together with the contingent
reduction of shares available for grant under the 2001 Plan
described above and our ceasing to make any new grants under the
1999 Plan following stockholder approval of the amendment and
restatement of the 2008 Plan) and based on the awards
outstanding under our equity incentive plans as of March 3,
2009, we would have a total of 84.4 million shares
available for grant under all plans, consisting of (i) an
aggregate total of 26.4 million shares available for grant
under the 2001 Plan (ii) 0.8 million shares
available for grant under the 2003 Plan, and
(iii) 57.2 million shares available for grant under
the 2008 Plan. The number of shares available for grant under
the 2008 Plan, 2003 Plan and 2001 Plan may increase in
connection with the cancellation or forfeiture of awards
outstanding under such plans. We do not allow for liberal share
counting under the 2001 Plan, and any shares of common stock
tendered in payment of an awards exercise price, shares
withheld to pay taxes, and shares repurchased by us using option
proceeds may not be added back into the authorized pool of
shares eligible for grant pursuant to the 2001 Plan.
The following tables provide information about our outstanding
stock options as of March 3, 2009. Approximately 71.7% of
outstanding stock options were exercisable on that date and
65.2% of exercisable options had exercise prices above the
closing price on that date. In addition to stock options, we had
42.5 million unvested RSUs outstanding as of March 3,
2009.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding Under Plans
|
|
|
Options Exercisable Under Plans
|
|
|
|
Approved by eBay Inc. Stockholders
|
|
|
Approved by eBay Inc. Stockholders
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Contractual
|
|
|
Weighted
|
|
|
Number Exercisable
|
|
|
|
|
Range of
|
|
as of 3/3/09
|
|
|
Life
|
|
|
Average
|
|
|
as of 3/3/09
|
|
|
Weighted Average
|
|
Exercise Prices
|
|
(in thousands)
|
|
|
(in Years)
|
|
|
Exercise Price
|
|
|
(in thousands)
|
|
|
Exercise Price
|
|
|
Under $10.00
|
|
|
170
|
|
|
|
1.87
|
|
|
$
|
8.81
|
|
|
|
170
|
|
|
$
|
8.81
|
|
$10.01 - $20.00
|
|
|
20,877
|
|
|
|
4.12
|
|
|
|
14.19
|
|
|
|
13,667
|
|
|
|
15.85
|
|
$20.01 - $30.00
|
|
|
22,520
|
|
|
|
4.70
|
|
|
|
26.85
|
|
|
|
15,183
|
|
|
|
26.98
|
|
$30.01 - $40.00
|
|
|
44,700
|
|
|
|
4.41
|
|
|
|
35.51
|
|
|
|
33,868
|
|
|
|
35.79
|
|
$40.01 - $50.00
|
|
|
16,676
|
|
|
|
5.19
|
|
|
|
43.30
|
|
|
|
16,089
|
|
|
|
43.27
|
|
$50.01 and above
|
|
|
1,205
|
|
|
|
5.47
|
|
|
|
55.53
|
|
|
|
1,204
|
|
|
|
55.53
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding Under Plans
|
|
|
|
|
|
|
Assumed in Acquisitions (and not
|
|
|
Options Exercisable Under Plans
|
|
|
|
approved by eBay Inc. stockholders)
|
|
|
Assumed in Acquisitions (and not approved by eBay Inc.
stockholders)
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Contractual
|
|
|
Weighted
|
|
|
Number Exercisable
|
|
|
|
|
Range of
|
|
as of 3/3/09
|
|
|
Life
|
|
|
Average
|
|
|
as of 3/3/09
|
|
|
Weighted Average
|
|
Exercise Prices
|
|
(in thousands)
|
|
|
(in Years)
|
|
|
Exercise Price
|
|
|
(in thousands)
|
|
|
Exercise Price
|
|
|
Under $10.00
|
|
|
6,944
|
|
|
|
7.76
|
|
|
$
|
2.66
|
|
|
|
2,106
|
|
|
$
|
1.81
|
|
$10.01 - $20.00
|
|
|
2,987
|
|
|
|
6.21
|
|
|
|
12.93
|
|
|
|
719
|
|
|
|
13.37
|
|
$20.01 - $30.00
|
|
|
7
|
|
|
|
6.15
|
|
|
|
24.89
|
|
|
|
7
|
|
|
|
24.89
|
|
$30.01 - $40.00
|
|
|
564
|
|
|
|
6.14
|
|
|
|
35.75
|
|
|
|
563
|
|
|
|
35.74
|
|
$40.01 - $50.00
|
|
|
6
|
|
|
|
5.92
|
|
|
|
41.50
|
|
|
|
6
|
|
|
|
41.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Options Outstanding
|
|
|
Aggregate Options Exercisable
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Contractual
|
|
|
Weighted
|
|
|
Number Exercisable
|
|
|
|
|
Range of
|
|
as of 3/3/09
|
|
|
Life
|
|
|
Average
|
|
|
as of 3/3/09
|
|
|
Weighted Average
|
|
Exercise Prices
|
|
(in thousands)
|
|
|
(in Years)
|
|
|
Exercise Price
|
|
|
(in thousands)
|
|
|
Exercise Price
|
|
|
Under $10.00
|
|
|
7,113
|
|
|
|
7.62
|
|
|
$
|
2.81
|
|
|
|
2,275
|
|
|
$
|
2.33
|
|
$10.01 - $20.00
|
|
|
23,864
|
|
|
|
4.38
|
|
|
|
14.03
|
|
|
|
14,386
|
|
|
|
15.73
|
|
$20.01 - $30.00
|
|
|
22,527
|
|
|
|
4.70
|
|
|
|
26.85
|
|
|
|
15,190
|
|
|
|
26.98
|
|
$30.01 - $40.00
|
|
|
45,263
|
|
|
|
4.43
|
|
|
|
35.51
|
|
|
|
34,431
|
|
|
|
35.79
|
|
$40.01 - $50.00
|
|
|
16,683
|
|
|
|
5.19
|
|
|
|
43.30
|
|
|
|
16,095
|
|
|
|
43.27
|
|
$50.01 and above
|
|
|
1,205
|
|
|
|
4.79
|
|
|
|
55.53
|
|
|
|
1,204
|
|
|
|
55.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
116,655
|
|
|
|
4.79
|
|
|
$
|
28.77
|
|
|
|
83,581
|
|
|
$
|
31.55
|
|
The Companys equity overhang on March 3, 2009,
considering all equity incentive awards granted plus shares
available for grant under all active plans, was 16.8%.
In addition, assuming stockholder approval of both
Proposal 2 and the amendment and restatement of the
2008 Plan, and based on the assumptions described under
Details of the Stock Option Exchange Program
Exchange Ratios in Proposal 2, if all eligible
options as of February 17, 2009 are exchanged, options to
purchase 62.53 million shares would be surrendered and
cancelled, while 3.57 million new RSUs would be granted in
exchange for eligible options. The stock options surrendered in
the exchange will be cancelled and shares subject to the
cancelled options will not be available for future issuance
under our equity incentive plans. Based on the foregoing
assumptions and on the awards outstanding under our equity
incentive plans as of March 3, 2009, immediately following
the completion of the proposed stock option exchange described
in Proposal 2, (i) approximately 54.1 million
options with a weighted average exercise price of $20.08 and a
weighted average remaining life of 4.32 years would be
outstanding under our equity incentive plans,
(ii) approximately 46.1 million unvested RSUs would be
outstanding under our equity incentive plans, and
(iii) approximately 53.6 million shares would remain
available for grant under our 2008 Plan.
The Company and the Compensation Committee review our equity
program annually to ensure that we are balancing our goal to
include the use of equity in our compensation programs in order
to attract and motivate our employees with our interest and our
stockholders interest in limiting dilution from equity
plans. We have adjusted our grant guidelines over the past two
years to significantly increase the use of RSUs in lieu of stock
options for our broad-based equity program, and, as described in
detail in Proposal 2 of this proxy statement, we propose to
exchange new grants of RSUs with surrendered eligible stock
options with per share exercise prices greater than or equal to
the highest per share trading price of our common stock for the
52-week period immediately preceding the start of the option
exchange. We have also monitored market trends carefully and
have made reductions in our grant
35
guidelines at most levels to reflect the reduced use of equity
by our competitors. The following table provides information on
our annual share usage.
Run
Rate (shares in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-Year
|
|
|
|
FY2006
|
|
|
FY2007
|
|
|
FY2008
|
|
|
Average
|
|
|
Stock options granted (includes assumed options)
|
|
|
38.83
|
|
|
|
20.74
|
|
|
|
23.28
|
|
|
|
27.62
|
|
Time-based restricted stock and RSUs granted
|
|
|
1.02
|
|
|
|
9.24
|
|
|
|
23.55
|
|
|
|
11.27
|
|
Performance-based RSUs earned
|
|
|
0
|
|
|
|
0.10
|
|
|
|
0.09
|
|
|
|
0.06
|
|
Total number of shares cancelled
|
|
|
15.11
|
|
|
|
15.36
|
|
|
|
21.37
|
|
|
|
17.28
|
|
Weighted average common shares outstanding
|
|
|
1,403
|
|
|
|
1,359
|
|
|
|
1,304
|
|
|
|
1,355
|
|
Net run rate(1)
|
|
|
1.76
|
%
|
|
|
1.08
|
%
|
|
|
1.96
|
%
|
|
|
1.60
|
%
|
Equity awards made to Named Executive Officers
|
|
|
3.89
|
%
|
|
|
5.68
|
%
|
|
|
9.53
|
%(2)
|
|
|
6.37
|
%
|
|
|
|
(1) |
|
Net run rate is calculated as (x) all shares
(i) granted as stock options or RSUs or (ii) earned as
performance-based RSUs, minus (y) the number of shares
cancelled, divided by (z) the weighted average shares
outstanding. |
|
|
|
(2) |
|
For 2008, we had seven Named Executive Officers, as compared
with five Named Executive Officers for each of 2006 and 2007. |
The 2008 Plan, as amended and restated subject to stockholder
approval, also provides for market share and volume metrics as
new performance criteria for the purposes of granting awards
that qualify as performance-based compensation within the
meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended. We believe that the addition of market share
and volume metrics (e.g., measures such as the total number of
items bought in a period for the core marketplace business and
total minutes of use for Skype) to the performance criteria
approved for performance-based awards under the 2008 Plan will
provide us more flexibility to make awards under the 2008 Plan
using performance goals that continue to align the interests of
our named executive officers with those of our stockholders by
allowing us to correlate the earning of compensation under the
2008 Plan with key metrics by which we believe our businesses
are measured over time.
A summary of the principal provisions of the 2008 Plan is set
forth below. The summary is qualified by reference to the full
text of the amendment and restatement of the 2008 Plan, which is
attached as Appendix A to this proxy statement.
GENERAL
|
|
|
|
|
The 2008 Plan has a ten-year term from the date our stockholders
initially approved the 2008 Plan in June 2008.
|
|
|
|
The 2008 Plan provides for the grant of stock options, both
incentive stock options and nonqualified stock options,
restricted stock, RSUs, stock appreciation rights, performance
shares, performance stock units, dividend equivalents, stock
payments, deferred stock units, other stock-based awards, and
performance-based awards to eligible individuals.
|
|
|
|
Subject to stockholder approval of the amendment and restatement
of the 2008 Plan, 85 million shares of common stock in the
aggregate are authorized for issuance pursuant to awards under
the 2008 Plan.
|
|
|
|
Subject to stockholder approval of the amendment and restatement
of the 2008 Plan, the authorized shares of common stock under
the 2008 Plan represent approximately 6.6% of the total
outstanding shares of common stock as of March 4, 2009, the
record date.
|
|
|
|
Subject to stockholder approval of the amendment and restatement
of the 2008 Plan, market share and volume metrics will be
included in the performance criteria that may be used in setting
performance goals for performance-based awards.
|
|
|
|
As of March 4, 2009, the closing price of our common stock
on the Nasdaq Global Select Market was $10.81 per share.
|
36
ADMINISTRATION
The 2008 Plan is administered by the Compensation Committee of
our Board. The Compensation Committee may delegate to a
committee of one or more members of our Board or one or more of
our officers the authority to grant or amend awards to
participants other than our senior executives who are subject to
Section 16 of the Exchange Act or employees who are
covered employees within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder, or the Code. Pursuant
to this provision, our Compensation Committee is currently in
the practice of delegating to our Chief Executive Officer the
authority to determine and make most of the individual grants to
our employees below the level of Senior Vice President within
guidelines approved by the Compensation Committee. Unless
otherwise determined by the Board, the Compensation Committee
shall consist solely of two or more members of the Board, each
of whom is an outside director within the meaning of
Section 162(m) of the Code, a non-employee director, and an
independent director under the rules of The Nasdaq
Stock Market (or other principal securities market on which
shares of our common stock are traded).
The Compensation Committee has the exclusive authority to
administer the 2008 Plan, including the power to determine
eligibility, the types and sizes of awards, the price and timing
of awards and the acceleration or waiver of any vesting
restriction, as well as the authority to delegate such
administrative responsibilities.
ELIGIBILITY
Persons eligible to participate in the 2008 Plan include all
non-employee members of our Board, consisting of eleven
directors following the Annual Meeting, approximately
16,200 employees of the company and its subsidiaries and
affiliates, as determined by the Compensation Committee, and
consultants.
LIMITATION
ON AWARDS AND SHARES AVAILABLE
Subject to stockholder approval of the amendment and restatement
of the 2008 Plan, an aggregate of 85 million shares of
common stock are available for grant pursuant to the 2008 Plan.
The shares of common stock covered by the 2008 Plan may be
treasury shares, authorized but unissued shares, or shares
purchased in the open market.
To the extent that an award terminates, expires, or lapses for
any reason, or an award is settled in cash without delivery of
shares to the participant, then any shares subject to the award
may be used again for new grants under the 2008 Plan.
Additionally, any shares tendered or withheld to satisfy the
grant or exercise price or tax withholding obligation pursuant
to any award may be used again for new grants under the 2008
Plan. To the extent permitted by applicable law or any exchange
rule, shares issued in assumption of, or in substitution for,
any outstanding awards of any entity acquired in any form of
combination by us or any of our subsidiaries or affiliates will
not be counted against shares available for issuance under the
2008 Plan. The payment of dividend equivalents in conjunction
with outstanding awards will not be counted against the shares
available for issuance under the 2008 Plan.
The maximum number of shares of common stock that may be subject
to one or more awards granted to any one participant pursuant to
the 2008 Plan during any calendar year is 1 million and the
maximum amount that may be paid in cash during any calendar year
with respect to any performance-based award is $3,000,000.
AWARDS
The 2008 Plan provides for the grant of incentive stock options,
nonqualified stock options, restricted stock, RSUs, stock
appreciation rights, performance shares, performance stock
units, dividend equivalents, stock payments, deferred stock
units, other stock-based awards, and performance-based awards.
No determination has been made as to the types or amounts of
awards that will be granted in the future to specific
individuals pursuant to the 2008 Plan. See the description under
the New Plan Benefits heading below or the Summary Compensation
Table and Grants of Plan-Based Awards Table below for
information on prior awards to our named executive officers
identified in those tables.
Stock Options. Stock options, including
incentive stock options, as defined under Section 422 of
the Code, and nonqualified stock options may be granted pursuant
to the 2008 Plan. The option exercise price of all stock options
granted pursuant to the 2008 Plan will not be less than 100% of
the fair market value of the common stock
37
on the date of grant. Stock options may be exercised as
determined by the Compensation Committee, but in no event may a
stock option have a term extending beyond the tenth anniversary
of the date of grant.
While we do not currently grant any incentive stock options and
have no current intent to do so, to preserve maximum
flexibility, the 2008 Plan allows us to grant incentive stock
options. Incentive stock options granted to any person who owns,
as of the date of grant, stock possessing more than ten percent
of the total combined voting power of all classes of eBay stock,
however, shall have an exercise price that is not less than 110%
of the fair market value of the common stock on the date of
grant and may not have a term extending beyond the fifth
anniversary of the date of grant. The aggregate fair market
value of the shares with respect to which options intended to be
incentive stock options are exercisable for the first time by an
employee in any calendar year may not exceed $100,000, or such
other amount as the Code provides.
The Compensation Committee determines the methods by which
payments by any award holder with respect to any awards may be
paid, the form of payment, including, without limitation:
(1) cash, (2) shares of common stock held for such
period of time as may be required by the Compensation Committee
in order to avoid adverse accounting consequences and having a
fair market value on the date of delivery equal to the aggregate
payments required, or (3) other property acceptable to the
Compensation Committee (including through the delivery of a
notice that the award holder has placed a market sell order with
a broker with respect to shares of common stock then issuable
upon exercise or vesting of an award, and that the broker has
been directed to pay a sufficient portion of the net proceeds of
the sale to us in satisfaction of the aggregate payments
required; provided that payment of such proceeds is then
made to us upon settlement of such sale). However, no
participant who is a member of the Board or an executive
officer of the company within the meaning of
Section 13(k) of the Exchange Act will be permitted to pay
the exercise price of an option in any method which would
violate the prohibitions on loans made or arranged by us as set
forth in Section 13(k) of the Exchange Act.
Restricted Stock Units. RSUs may be granted
pursuant to the 2008 Plan. An RSU award provides for the
issuance of common stock at a future date upon the satisfaction
of specific conditions set forth in the applicable award
agreement. The vesting and maturity dates will be established at
the time of grant, and may provide for the deferral of receipt
of the common stock beyond the vesting date. On the maturity
date, we will transfer to the participant one unrestricted,
fully transferable share of common stock for each RSU scheduled
to be paid out on such date and not previously forfeited. The
Compensation Committee will specify the purchase price, if any,
to be paid by the participant to us for such shares of common
stock. RSUs may constitute, or provide for a deferral of
compensation, subject to Section 409A of the Code and there
may be certain tax consequences if the requirements of
Section 409A of the Code are not met. The tax consequences
for RSUs outside of the U.S. may differ from the
U.S. federal income tax consequences described in the
preceding sentence.
Restricted Stock. Restricted stock may be
granted pursuant to the 2008 Plan. A restricted stock award is
the grant of shares of common stock at a price determined by the
Compensation Committee (including zero), that is nontransferable
and may be subject to substantial risk of forfeiture until
specific conditions are met. Conditions may be based on
continuing employment or achieving performance goals. During the
period of restriction, participants holding shares of restricted
stock may have full voting and dividend rights with respect to
such shares. The restrictions will lapse in accordance with a
schedule or other conditions determined by the Compensation
Committee.
Additional Awards. The other types of equity
awards that may be granted under the 2008 Plan include
performance shares, performance stock units, dividend
equivalents, deferred stock units, stock appreciation rights and
other stock-based awards.
Performance bonus awards may also be granted pursuant to the
2008 Plan. Performance bonus awards are cash bonuses payable
upon the attainment of pre-established performance goals based
on established performance criteria and are intended to be
performance-based awards within the meaning of
Section 162(m) of the Code. The goals are established and
evaluated by the Compensation Committee and may relate to
performance over any periods as determined by the Compensation
Committee. The following is a brief discussion of the
requirements for awards, including performance bonus awards, to
be treated as performance-based awards within the meaning of
Section 162(m) of the Code.
38
The Compensation Committee may grant awards to employees who are
or may be covered employees, as defined in
Section 162(m) of the Code, that are intended to be
performance-based awards within the meaning of
Section 162(m) of the Code in order to preserve the
deductibility of these awards for federal income tax. Under the
2008 Plan, these performance-based awards may be either equity
awards or performance bonus awards. Participants are only
entitled to receive payment for a performance-based award for
any given performance period to the extent that pre-established
performance goals set by the Board for the period are satisfied.
These pre-established performance goals must be based on one or
more of the following performance criteria:
|
|
|
|
|
trading volume
|
|
|
|
users
|
|
|
|
gross merchandise volume
|
|
|
|
total payment volume, revenue
|
|
|
|
operating income
|
|
|
|
EBITDA
and/or net
earnings (either before or after interest, taxes, depreciation
and amortization)
|
|
|
|
net income (either before or after taxes)
|
|
|
|
earnings per share
|
|
|
|
earnings (as determined other than pursuant to United States
generally accepted accounting principles, or GAAP)
|
|
|
|
multiples of price-to-earnings
|
|
|
|
multiples of price-to-earnings to earnings growth
|
|
|
|
return on net assets
|
|
|
|
return on gross assets
|
|
|
|
return on equity
|
|
|
|
return on invested capital
|
|
|
|
cash flow (including, but not limited to, operating cash flow
and free cash flow)
|
|
|
|
net or operating margins
|
|
|
|
economic profit
|
|
|
|
common stock price appreciation
|
|
|
|
total stockholder return
|
|
|
|
employee productivity
|
|
|
|
customer satisfaction metrics
|
|
|
|
market share metrics
|
|
|
|
volume metrics
|
any of which may be measured with respect to us, or any
subsidiary, affiliate or other business unit of ours, either in
absolute terms, terms of growth or as compared to any
incremental increase, as compared to results of a peer group.
The Compensation Committee defines in an objective fashion the
manner of calculating the performance criteria it selects to use
for such awards. With regard to a particular performance period,
the Compensation Committee will have the discretion to select
the length of the performance period, the type of
performance-based awards to be granted, and the goals that will
be used to measure the performance for the period. In
determining the actual size of an individual performance-based
award for a performance period, the Compensation Committee may
reduce or eliminate (but not increase) the initial award.
Generally, a participant will have to be employed by or
providing
39
services to the company on the date the performance-based award
is paid to be eligible for a performance-based award for any
period.
ADJUSTMENT
PROVISIONS
Certain transactions with our stockholders not involving our
receipt of consideration, such as a stock split, spin-off, stock
dividend or certain recapitalizations may affect the share price
of our common stock (which transactions are referred to
collectively as equity restructurings). In the event
that an equity restructuring occurs, our Board will equitably
adjust the class of shares issuable and the maximum number of
shares of our stock subject to the 2008 Plan, and will equitably
adjust outstanding awards as to the class, number of shares and
price per share of our stock. Other types of transactions may
also affect our common stock, such as a dividend or other
distribution, reorganization, merger, or other changes in
corporate structure. In the event that there is such a
transaction, which is not an equity restructuring, and our Board
determines that an adjustment to the plan and any outstanding
awards would be appropriate to prevent any dilution or
enlargement of benefits under the 2008 Plan, our Board will
equitably adjust the 2008 Plan as to the class of shares
issuable and the maximum number of shares of our stock subject
to the 2008 Plan, as well as the maximum number of shares that
may be issued to an employee during any calendar year, and will
adjust any outstanding awards as to the class, number of shares,
and price per share of our stock in such manner as it may deem
equitable.
EFFECT OF
CERTAIN CORPORATE TRANSACTIONS
Outstanding awards do not automatically terminate in the event
of a change in control. A change in control
generally means a sale or other disposition of all or
substantially all of our assets, a merger or consolidation in
which we are not the surviving corporation, or a reverse merger
in which we are the surviving corporation but the shares of our
stock outstanding immediately preceding the merger are converted
by virtue of the merger into other property. In the event of a
change in control, any surviving corporation or acquiring
corporation must either assume or continue outstanding awards or
substitute similar awards. If it does not do so, then with
respect to awards held by participants whose service has not
terminated, the vesting of such awards (and, if applicable, the
time during which such awards may be exercised) will be
accelerated in full and all forfeiture restrictions on such
awards shall lapse. The unexercised portion of all outstanding
awards may terminate upon the change in control. The
acceleration of an award in the event of a change in control may
be viewed as an anti-takeover provision, which may have the
effect of discouraging a proposal to acquire or otherwise obtain
control of us.
AMENDMENT
AND TERMINATION
The Compensation Committee, subject to approval of our Board,
may terminate, amend, or modify the 2008 Plan at any time;
however, stockholder approval will be obtained for any amendment
to the extent necessary and desirable to comply with any
applicable law, regulation or stock exchange rule, to increase
the number of shares available under the 2008 Plan, to permit
the Compensation Committee or our Board to grant options with a
price below fair market value on the date of grant, or to extend
the exercise period for an option beyond ten years from the date
of grant. In addition, absent stockholder approval, no option
may be amended to reduce the per share exercise price of the
shares subject to such option below the per share exercise price
as of the date the option was granted and, except to the extent
permitted by the 2008 Plan in connection with certain changes in
capital structure, no option may be granted in exchange for, or
in connection with, the cancellation or surrender of an option
having a higher per share exercise price.
In no event may an award be granted pursuant to the 2008 Plan on
or after the tenth anniversary of the date the stockholders
initially approved the 2008 Plan.
FEDERAL
INCOME TAX CONSEQUENCES
With respect to nonqualified stock options, we are generally
entitled to deduct and the optionee recognizes taxable income in
an amount equal to the difference between the option exercise
price and the fair market value of the shares at the time of
exercise. A participant receiving incentive stock options will
not recognize taxable income upon grant. Additionally, if
applicable holding period requirements are met, the participant
will not recognize
40
taxable income at the time of exercise. However, the excess of
the fair market value of the common stock received over the
option price is an item of tax preference income potentially
subject to the alternative minimum tax. If stock acquired upon
exercise of an incentive stock option is held for a minimum of
two years from the date of grant and one year from the date of
exercise, the gain or loss (in an amount equal to the difference
between the fair market value on the date of sale and the
exercise price) upon disposition of the stock will be treated as
a long-term capital gain or loss, and we will not be entitled to
any deduction. If the holding period requirements are not met,
the incentive stock option will be treated as one that does not
meet the requirements of the Code for incentive stock options
and the tax consequences described for nonqualified stock
options will apply.
The current federal income tax consequences of other awards
authorized under the 2008 Plan generally follow certain basic
patterns: stock appreciation rights are taxed and deductible in
substantially the same manner as nonqualified stock options;
nontransferable restricted stock subject to a substantial risk
of forfeiture results in income recognition equal to the excess
of the fair market value over the price paid, if any, only at
the time the restrictions lapse (unless the recipient elects to
accelerate recognition as of the date of grant); RSUs,
stock-based performance awards, dividend equivalents and other
types of awards are generally subject to tax at the time of
payment. Compensation otherwise effectively deferred is taxed
when paid. In each of the foregoing cases, we will generally
have a corresponding deduction at the time the participant
recognizes income, subject to Section 162(m) of the Code
with respect to covered employees.
Section 162(m) of the Code denies a deduction to any
publicly held corporation for compensation paid to certain
covered employees in a taxable year to the extent
that compensation to such covered employee exceeds
$1 million. It is possible that compensation attributable
to awards under the 2008 Plan, when combined with all other
types of compensation received by a covered employee from us,
may cause this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified
performance-based compensation, are disregarded for
purposes of the deduction limitation. In accordance with
Treasury Regulations issued under Section 162(m),
compensation attributable to stock awards will generally qualify
as performance-based compensation if (1) the award is
granted by a compensation committee composed solely of two or
more outside directors, (2) the plan contains a
per-employee limitation on the number of awards which may be
granted during a specified period, (3) the plan is approved
by the stockholders, and (4) under the terms of the award,
the amount of compensation an employee could receive is based
solely on an increase in the value of the stock after the date
of the grant (which requires that the exercise price of the
option is not less than the fair market value of the stock on
the date of grant), and for awards other than options,
established performance criteria that must be met before the
award actually will vest or be paid.
The 2008 Plan is designed to meet the requirements of
Section 162(m); however, full value awards granted under
the 2008 Plan will only be treated as qualified
performance-based compensation under Section 162(m) if the
full value awards and the procedures associated with them comply
with all other requirements of Section 162(m). There can be
no assurance that compensation attributable to options and full
value awards granted under the 2008 Plan will be treated as
qualified performance-based compensation under
Section 162(m) and thus be deductible to us.
The tax consequences for equity awards outside of the
U.S. may differ from the U.S. federal income tax
consequences described above.
NEW PLAN
BENEFITS
Awards are subject to the discretion of the Compensation
Committee. Therefore, it is not possible to determine the
benefits that will be received in the future by participants in
the 2008 Plan. Under the 2008 Plan, as of March 3, 2009,
our Named Executive Officers have received the following equity
grants: John J. Donahoe, our President and Chief Executive
Officer, has received 383,681 RSUs; Robert H. Swan, our Senior
Vice President, Finance and Chief Financial Officer, has
received 255,915 RSUs; Elizabeth L. Axelrod, our Senior Vice
President, Human Resources, has received 245,400 RSUs; Lorrie M.
Norrington, our President, eBay Marketplaces, has received
77,512 RSUs; and Scott Thompson, our President, PayPal, has
received 100,867 RSUs. In addition, under the 2008 Plan, as of
March 3, 2009, Margaret C. Whitman, our former President
and Chief Executive Officer, has received 22,330
41
RSUs; and Rajiv Dutta, our former President, eBay Marketplaces,
has received 5,362 RSUs. As of March 3, 2009, our executive
officers as a group have received 1,091,067 RSUs under the 2008
Plan; our non-employee directors as a group have received
options to purchase 91,080 shares and 9,700 RSUs under the
2008 Plan; and our non-executive officer employees as a group
have received 26.7 million RSUs under the 2008 Plan.
VOTE
REQUIRED
Adoption of the amendment and restatement of the 2008 Plan
requires approval by the affirmative vote of a majority of the
votes cast with respect to the proposal by the shares present in
person or represented by proxy, and entitled to vote on the
proposal at the Annual Meeting. A majority of votes
cast means that the number of votes FOR the
approval of the amendment and restatement of the 2008 Plan must
exceed the number of votes AGAINST the approval of
the amendment and restatement of the 2008 Plan.
PROPOSAL 4
RATIFICATION
OF SELECTION OF INDEPENDENT AUDITORS
We have selected PricewaterhouseCoopers LLP, or PwC, as our
independent auditors for the fiscal year ending
December 31, 2009. We are submitting our selection of
independent auditors for ratification by the stockholders at the
Annual Meeting. PwC has audited our historical consolidated
financial statements for all annual periods since our
incorporation in 1996. We expect that representatives of PwC
will be present at the Annual Meeting, will have an opportunity
to make a statement if they wish, and will be available to
respond to appropriate questions.
Our Bylaws do not require that the stockholders ratify the
selection of PwC as our independent auditors. However, we are
submitting the selection of PwC to the stockholders for
ratification as a matter of good corporate practice. If the
stockholders do not ratify the selection, the Board and the
Audit Committee will reconsider whether or not to retain PwC.
Even if the selection is ratified, the Board and the Audit
Committee, in their discretion, may change the appointment at
any time during the year if they determine that such a change
would be in the best interests of eBay and our stockholders.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
AUDIT AND
OTHER PROFESSIONAL FEES
During the fiscal years ended December 31, 2008 and
December 31, 2007, fees for services provided by
PricewaterhouseCoopers LLP, or PwC, were as follows (in
thousands):
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Year Ended
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December 31,
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2008
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2007
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Audit Fees
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$
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6,708
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$
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5,813
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Audit-Related Fees
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1,015
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805
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Tax Fees
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All Other Fees
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Total
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$
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7,723
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$
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6,618
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Audit Fees consist of fees incurred for services
rendered for the audit of eBays annual financial
statements, review of financial statements included in
eBays quarterly reports on
Form 10-Q,
other services normally provided in connection with statutory
and regulatory filings, and for attestation services related to
Sarbanes-Oxley compliance. Audit-Related Fees
consist of fees billed for due diligence procedures in
connection with acquisitions and divestitures and consultation
regarding financial accounting and reporting matters. We did not
incur any Tax Fees or All Other Fees in
the fiscal years ended December 31, 2008 or 2007.
42
The Audit Committee has determined that the non-audit services
rendered by PwC were compatible with maintaining their
independence. All such non-audit services were pre-approved
pursuant to the pre-approval policy set forth below.
AUDIT
COMMITTEE PRE-APPROVAL POLICY
The Audit Committee has adopted a policy requiring the
pre-approval of any non-audit engagement of PwC. In the event
that we wish to engage PwC to perform accounting, technical,
diligence, or other permitted services not related to the
services performed by PwC as our independent registered public
accounting firm, our internal finance personnel will prepare a
summary of the proposed engagement, detailing the nature of the
engagement, the reasons why PwC is the preferred provider of
such services, and the estimated duration and cost of the
engagement. The report will be provided to our Audit Committee
or a designated committee member, who will evaluate whether the
proposed engagement will interfere with the independence of PwC
in the performance of its auditing services. We disclose all
approved non-audit engagements during a quarter in the
appropriate quarterly report on
Form 10-Q
or annual report on
Form 10-K.
AUDIT
COMMITTEE
REPORT1
We constitute the Audit Committee of the Board of Directors of
eBay Inc. The Audit Committees responsibility is to
provide assistance and guidance to the Board of Directors in
fulfilling its oversight responsibilities to eBays
stockholders with respect to (1) eBays corporate
accounting and reporting practices, (2) eBays
compliance with legal and regulatory requirements, (3) the
independent auditors qualifications and independence,
(4) the performance of eBays internal audit function
and independent auditors, (5) the quality and integrity of
eBays financial statements and reports, (6) reviewing
and approving all audit engagement fees and terms, as well as
all non-audit engagements with the independent auditors, and
(7) producing this report. The Audit Committee members are
not professional accountants or auditors and these functions are
not intended to replace or duplicate the activities of
management or the independent auditors. Management has primary
responsibility for preparing the financial statements and
designing and assessing the effectiveness of internal control
over financial reporting. Management and the internal auditing
department are responsible for maintaining appropriate
accounting and financial reporting principles and policies and
internal controls and procedures that provide for compliance
with accounting standards and applicable laws and regulations.
PwC, eBays independent auditors, are responsible for
planning and carrying out an audit of eBays financial
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and
eBays internal control over financial reporting,
expressing an opinion on the conformity of eBays audited
financial statements with generally accepted accounting
principles as well as the effectiveness of eBays internal
control over financial reporting, reviewing eBays
quarterly financial statements prior to the filing of each
quarterly report on
Form 10-Q,
and other procedures.
During 2008, and earlier in 2009, in connection with the
preparation of eBays annual report on
Form 10-K
for the year ended December 31, 2008, and in fulfillment of
our oversight responsibilities, we did the following, among
other things:
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discussed with PwC the overall scope of and plans for their
audit;
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reviewed, upon completion of the audit, the financial statements
to be included in the
Form 10-K
and managements report on internal control over financial
reporting and discussed the financial statements and eBays
internal control over financial reporting with management;
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conferred with PwC and with senior management of eBay regarding
the scope, adequacy and effectiveness of internal accounting and
financial reporting controls (including eBays internal
control over financial reporting) in effect;
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1 The
material in this Audit Committee report is not soliciting
material, is not deemed filed with the SEC and
is not to be incorporated by reference in any of our filings
under the Securities Act of 1933, as amended, or the Exchange
Act, whether made before, on or after the date hereof and
irrespective of any general incorporation language in any such
filing.
43
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instructed PwC that the independent auditors are ultimately
accountable to the Board and the Audit Committee, as
representatives of the stockholders;
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discussed with PwC the results of their audit, including
PwCs assessment of the quality and appropriateness, not
just acceptability, of the accounting principles applied by
eBay, the reasonableness of significant judgments, the nature of
significant risks and exposures, the adequacy of the disclosures
in the financial statements as well as other matters required to
be communicated under generally accepted auditing standards,
including the matters required by the Statement on Auditing
Standards No. 61 (Communications with Audit
Committees); and
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obtained from PwC in connection with the audit a timely report
relating to eBays annual audited financial statements
describing all critical accounting policies and practices to be
used, all alternative treatments of financial information within
generally accepted accounting principles that were discussed
with management, ramifications of the use of such alternative
disclosures and treatments, the treatment preferred by PwC, and
any material written communications between PwC and management.
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The Audit Committee held 12 meetings in 2008. Throughout the
year we conferred with PwC, eBays internal audit team, and
senior management in separate executive sessions to discuss any
matters that the Audit Committee, PwC, the internal audit team,
or senior management believed should be discussed privately with
the Audit Committee. We have direct and private access to both
the internal and external auditors of eBay.
The Audit Committee has discussed with PwC the matters required
to be discussed by by Statement on Auditing Standards
No. 61, as amended (AICPA, Professional Standards, Vol. 1
AU Section 380) as adopted by the Public Company
Accounting Oversight Board in Rule 3200T. The Audit
Committee has also received the written disclosures and the
letter from PwC required by the applicable Public Company
Accounting Oversight Board requirements for independent
accountant communications with audit committees concerning
auditor independence, and has discussed the independence of PwC
with that firm. We have also concluded that PwCs provision
to eBay and its affiliates of the non-audit services reflected
under Audit-Related Fees above is compatible with
PwCs obligation to remain independent.
We have also established procedures for the receipt, retention,
and treatment of complaints received by eBay regarding
accounting, internal accounting controls, or auditing matters
and for the confidential anonymous submission by eBay employees
of concerns regarding questionable accounting or auditing
matters.
After reviewing the qualifications of the current members of the
committee, and any relationships they may have with eBay that
might affect their independence from eBay, the Board determined
that each member of the Audit Committee meets the independence
requirements of The Nasdaq Stock Market and of Section 10A
of the Exchange Act, that each member is able to read and
understand fundamental financial statements and that
Mr. Anderson qualifies as an audit committee
financial expert under the applicable rules promulgated
pursuant to the Exchange Act. The Audit Committee operates under
a written charter adopted by the Board of Directors. The Audit
Committee Charter, as so amended, is shown on the corporate
governance section of eBays investor relations website at
http://investor.ebay.com/governance.
Any future changes in the charter or key practices will also
be reflected on the website.
Based on our reviews and discussions described above, we
recommended to the Board of Directors, and the Board approved,
the inclusion of the audited financial statements in eBays
Annual Report on
Form 10-K
for the year ended December 31, 2008, which eBay filed with
the SEC on February 20, 2009. We have also recommended, and
the Board has approved, the selection of PwC as our independent
auditors for 2009.
AUDIT COMMITTEE
Fred D. Anderson, Chair
Dawn G. Lepore
David M. Moffett
Richard T. Schlosberg, III
44
OUR
EXECUTIVE OFFICERS
Executive officers are elected annually by the Board and serve
at the discretion of the Board. Set forth below is information
regarding our executive officers as of March 3, 2009.
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Name
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Age
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Position
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John J. Donahoe
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48
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President and Chief Executive Officer
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Elizabeth L. Axelrod
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46
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Senior Vice President, Human Resources
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Mark T. Carges
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47
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Senior Vice President, Technology
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Michael R. Jacobson
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54
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Senior Vice President, Legal Affairs, General Counsel and
Secretary
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Alan L. Marks
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46
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Senior Vice President, Corporate Communications
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Lorrie M. Norrington
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49
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President, eBay Marketplaces
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Robert H. Swan
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48
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Senior Vice President, Finance and Chief Financial Officer
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Scott Thompson
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51
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President, PayPal
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John J. Donahoes biography is set forth under the
heading Proposal 1 Election of
Directors Directors Continuing in Office Until Our
2011 Annual Meeting, above.
Elizabeth L. Axelrod serves eBay as Senior Vice
President, Human Resources. She has served in that capacity
since March 2005. From May 2002 to March 2005, Ms. Axelrod
served as the Chief Talent Officer for WPP Group PLC, a global
communications services group where she was also an executive
director. Ms. Axelrod was a partner at McKinsey &
Company, a consulting firm where she worked from October 1989 to
April 2002. Ms. Axelrod holds a B.S.E. degree with a
concentration in Finance from the Wharton School of the
University of Pennsylvania and a Masters degree in Public
and Private Management (MPPM) from the Yale School of
Management. Ms. Axelrod is a co-author of The War for
Talent published by Harvard Business School Press in 2001.
Mark T. Carges serves eBay as Senior Vice President,
Technology. He has served in that capacity since September 2008.
From November 2005 to May 2008, Mr. Carges served as
Executive Vice President and General Manager of the Business
Interaction Division of BEA Systems, Inc. From August 2004 to
November 2005, Mr. Carges served as Chief Technology
Officer of BEA Systems, Inc. From January 2003 to August 2004,
Mr. Carges served as Executive Vice President, Strategic
Global Accounts of BEA Systems, Inc. From February 1996 to
December 2002, Mr. Carges served as Vice President, General
Manager of various product groups of BEA Systems, Inc.
Mr. Carges holds a B.A. degree in Computer Science from
University of California, Berkeley and a M.S. degree in Computer
Science from New York University.
Michael R. Jacobson serves eBay as Senior Vice President,
Legal Affairs, General Counsel and Secretary. He has served in
that capacity or as Vice President, Legal Affairs, General
Counsel since August 1998. From 1986 to August 1998,
Mr. Jacobson was a partner with the law firm of Cooley
Godward Kronish LLP, specializing in securities law, mergers and
acquisitions, and other transactions. Mr. Jacobson holds an
A.B. degree in Economics from Harvard College and a J.D. degree
from Stanford Law School.
Alan L. Marks serves eBay as Senior Vice President,
Corporate Communications. He has served in that capacity since
April 2008. From February 2005 to April 2008, Mr. Marks
served as Director, Corporate Media Relations of Nike, Inc. From
January 1999 to February 2005, Mr. Marks served as Vice
President, Corporate Communications of Gap Inc. Prior to Gap,
Mr. Marks was with Avon Products, Inc. for twelve years in
a variety of global communication positions. Mr. Marks
holds a B.A. degree in Journalism from the University of North
Carolina at Chapel Hill and a M.A. degree in Liberal Studies
from New York University.
Lorrie M. Norrington serves eBay as President, eBay
Marketplaces. She has served in that capacity since July 2008.
From January 2008 to July 2008, Ms. Norrington served as
head of eBay Marketplaces Operations. From June 2006 to January
2008, Ms. Norrington served as President, eBay
International. From June 2005 to June 2006, Ms. Norrington
served as President and CEO of Shopping.com, Inc. From August
2001 to March 2005, Ms. Norrington served as executive vice
president in the office of the CEO of Intuit Inc., a business
and financial management software company. Prior to joining
Intuit, from 1982 to July 2001, she served in a variety of
positions
45
at General Electric Corporation, a diversified technology, media
and financial services company. Ms. Norrington holds a B.S.
degree in Business Administration from University of Maryland
and an M.B.A. degree from the Harvard Business School.
Robert H. Swan serves eBay as Senior Vice President,
Finance and Chief Financial Officer. He has served in that
capacity since March 2006. From February 2003 to March 2006,
Mr. Swan served as Executive Vice President and Chief
Financial Officer of Electronic Data Systems Corporation. From
July 2001 to December 2002, Mr. Swan was Executive Vice
President and Chief Financial Officer of TRW Inc. Mr. Swan
served in executive positions at Webvan Group, Inc. from 1999 to
2001, including Chief Executive Officer from April 2001 to July
2001, Chief Operating Officer from September 2000 to July 2001,
and Chief Financial Officer from October 1999 to July 2001.
Mr. Swan also serves on the board of directors of Applied
Materials Inc. Mr. Swan holds a B.S. from the State
University of New York at Buffalo and an M.B.A. from State
University of New York at Binghamton.
Scott Thompson serves eBay as President, PayPal. He has
served in that capacity since January 2008. From February 2005
to January 2008, Mr. Thompson served as PayPals
Senior Vice President, Chief Technology Officer. From September
2001 to February 2005, Mr. Thompson served as Executive
Vice President of Technology Solutions at Inovant, LLC, a
subsidiary of Visa USA. From 1998 to September 2001,
Mr. Thompson was Chief Technology Officer and Executive
Vice President of Technology & Support Services for
Visa USA. Mr. Thompson also serves on the board of
directors of F5 Networks, Inc. Mr. Thompson holds a B.S.
degree in Accounting from Stonehill College.
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction;
Objectives of Compensation Programs
Our compensation programs are designed to align compensation
with our business objectives and performance, enabling us to
attract, retain, and reward executive officers and other key
employees who contribute to our long-term success and motivate
executive officers to enhance long-term stockholder value. We
also strive to design programs to position eBay competitively
among the companies against which we recruit and compete for
talent. We recognize that compensation programs must be
understandable to be effective and that program administration
and decision making must be fair and equitable. We also consider
the financial obligations created by our compensation programs
and design them to be cost effective. To meet these objectives,
the principal components of executive compensation in 2008
consisted of base salary, short-term cash incentive awards, and
equity incentive awards. For 2008, the equity incentive awards
for most employees were time-based restricted stock units and
stock options and for our executive officers were stock options,
performance-based restricted stock units, and time-based
restricted stock.
The Compensation Committee reviews and sets our overall
compensation strategy for all employees on an annual basis. In
the course of this review, the committee considers our current
compensation programs and whether to modify them or introduce
new programs or elements of compensation in order to better meet
our overall compensation objectives. Our compensation policies
are the same for all of our executive officers.
As we announced in January 2008, we underwent a significant
management change at the beginning of the year and additional
changes in the middle of the year. Ms. Whitman resigned as
our CEO and President effective March 31, 2008 and was
replaced by Mr. Donahoe. References throughout this
discussion to our CEO refer to Mr. Donahoe. When
Ms. Whitmans resignation was announced,
Mr. Donahoe assumed the role of CEO-designate,
Mr. Dutta became President of eBay Marketplaces and
Mr. Thompson became the President of PayPal. In July 2008,
Mr. Dutta resigned and Ms. Norrington became President
of eBay Marketplaces.
The Compensation Committees decisions regarding executive
compensation in 2008 took into account these management changes
and reflect the need to provide additional retention for key
members of our senior management team. As described below, in
2008 the committee also reviewed some of our long-standing
compensation practices and decided to make changes that will
become effective in 2009.
46
Role of
the Compensation Committee
The Compensation Committee reviews and approves all compensation
programs (including equity compensation) applicable to our
executive officers and directors, our overall strategy for
employee compensation, and the specific compensation of our CEO,
other executive officers, our other employees at the level of
senior vice president and above, and any vice president whose
compensation exceeds approved guidelines for cash or equity
compensation. The committees review of executive officer
compensation includes, but is not limited to, a review of the
continued holding power of past equity incentive awards. The
committee has the sole authority to select, retain, and
terminate special counsel and other experts (including
compensation consultants), as the committee deems appropriate.
As discussed in more detail below, in 2008, the committee
retained a compensation consultant that reported directly to the
committee.
Role of
Executive Officers and Consultants in Compensation
Decisions
While the Compensation Committee determines eBays overall
compensation philosophy and sets the compensation of our CEO and
other executive officers, it looks to the executive officers
identified below and the compensation consultant retained by the
committee to make recommendations to the committee with respect
to both overall guidelines and specific compensation decisions.
Our CEO also provides the Board and the Compensation Committee
with his perspective on the performance of eBays executive
officers as part of the determination of the individual portion
payable under the eBay Incentive Plan (as described below), the
annual personnel review and as part of succession planning
discussions with the Board as well as a self-assessment of his
performance. The committee establishes compensation levels for
our CEO in consultation with the compensation consultant it
retains, and our CEO is not present during any of these
discussions. Our CEO recommends to the committee specific
compensation amounts for executive officers other than himself,
and the committee considers those recommendations and
information provided by its compensation consultant concerning
peer group comparisons and industry trends and makes the
ultimate compensation decisions. Our CEO, CFO, Senior Vice
President of Human Resources, and Senior Vice President, Legal
Affairs & General Counsel regularly attend the
Compensation Committees meetings to provide perspectives
on the competitive landscape and the needs of the business,
information regarding eBays performance, and technical
advice. Members of the committee also participate in the
Boards annual review of the CEOs performance and its
setting of annual performance goals, in each case led by our
lead independent director. See Our Corporate Governance
Practices above for further details.
As discussed above, in 2008 the committee retained Towers Perrin
as its compensation consultant to provide advice, its opinion,
and resources to help develop and execute our overall
compensation strategy. Towers Perrin reports directly to the
committee, and the committee has the sole power to terminate or
replace Towers Perrin at any time. As part of its engagement,
the Compensation Committee has directed Towers Perrin to work
with our Senior Vice President of Human Resources and other
members of management to obtain information necessary for it to
form its recommendations and evaluate managements
recommendations. Towers Perrin also meets with the committee
during the committees regular meetings and in executive
session, where no members of management are present, and with
the committee chair and other members of the committee outside
of the regular meetings.
As part of its engagement in 2008, Towers Perrin evaluated
eBays peer groups for performance and compensation
benchmarking, made recommendations regarding how the peer groups
should be changed and how peer groups should be used in setting
compensation guidelines, advised the committee on new
compensation arrangements for certain of our executive officers
in connection with the management changes, assessed compensation
for the board of directors, evaluated compensation levels at the
peer group companies, and developed the related equity and cash
compensation guidelines, which included an analysis of
eBays performance and that of specified peer groups (see
the section entitled Competitive Considerations
below for a further discussion regarding these peer groups). To
facilitate making external compensation comparisons, Towers
Perrin provided the Compensation Committee with competitive
market data by analyzing proprietary surveys prepared by Towers
Perrin, proprietary third-party surveys provided to them by
management, and publicly-disclosed documents of companies in
specified peer groups. Towers Perrins fees for consulting
advice to the committee for the year ended December 31,
2008 were approximately $389,000. The committee periodically
reviews its relationship with its compensation consultant. In
2008, Towers Perrin did not provide any services to the company
other than the compensation consulting services provided to the
Compensation Committee. While we may use Towers Perrin for
47
one-time, discrete projects (separate from the consulting advice
provided to the committee) in the future, the committee believes
that Towers Perrin is able to provide it with independent advice.
Competitive
Considerations
To set total compensation guidelines, the Compensation Committee
reviews market data of companies with which eBay competes for
executive talent, business, and capital. The market data
consists of publicly-disclosed data from peer group companies
and proprietary third-party survey data, which is only available
in an aggregated and unidentifiable format. The committee
believes that it is necessary to consider this market data in
making compensation decisions in order to attract and retain
talent. The committee also recognizes that at the executive
level, we compete for talent against larger global companies.
As discussed in more detail below in the section entitled
Elements of Compensation/Executive Compensation
Practices Equity Incentive Awards,
historically we also used peer group companies as a benchmark
against which to assess eBays performance and set equity
guidelines. In 2008, the committee reviewed data from two peer
groups, which consisted of the following high-technology
companies and consumer products companies:
|
|
|
High-Technology Peer Group:
|
|
Consumer Products Peer Group:
|
Adobe Systems Incorporated
|
|
Charles Schwab & Co., Inc.
|
Amazon.com, Inc.
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|
Coach, Inc.
|
Apple Inc.
|
|
The Coca-Cola Company
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Cisco Systems, Inc.
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The Gap, Inc.
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Dell Inc.
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General Mills, Inc.
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Electronic Arts Inc.
|
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Harley-Davidson, Inc.
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EMC Corporation
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The Hershey Company
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Google Inc.
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Kellogg Company
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Intel Corporation
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Nike, Inc.
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IAC/InterActiveCorp
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PepsiCo, Inc.
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Intuit Inc.
|
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Polo Ralph Lauren Corporation
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Microsoft Corporation
|
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Starbucks Corporation
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Qualcomm Incorporated
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Tiffany & Co.
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Symantec Corporation
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Time Warner Inc.
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Visa Inc.
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Wm. Wrigley Jr. Company
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Yahoo! Inc.
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|
In deciding whether a company should be included in one of the
peer groups, the committee considers the following screening
criteria:
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|
|
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revenue
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market value
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historical growth rate
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primary line of business
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whether the company has a recognizable and well-regarded brand
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|
whether we compete with the company for talent
|
To ensure that these peer groups continue to reflect the markets
in which we compete for executive talent, the committee reviews
the peer groups annually in the fall for the upcoming year.
Before adding or deleting a company from a peer group, the
committee considers how the change would impact the comparative
market data. For 2008, one company was deleted from, and one
company was added to, the high-tech peer group and no changes
were made to the consumer products peer group.
48
Over the course of 2008, the committee (1) reassessed the
reasons why we had two separate peer groups, (2) considered
whether it would be more appropriate to have a single peer
group, and (3) considered how the peer groups should be
used in setting compensation guidelines. The committee noted
that we no longer looked to companies in the consumer products
industry as a source for executive talent and that as our
Payments business continued to grow, we were increasingly
competing with financial services companies for talent. In
considering whether to switch to a single peer group, the
committee considered many factors, including confirming that the
change would not have materially impacted what we would have
paid our executive officers over the past several years.
Following this assessment, the committee decided to move to a
single peer group for 2009. As discussed in more detail below,
the committee also decided that it would no longer set equity
guidelines based on eBays historical performance relative
to its peer group companies. For 2009, the peer group consists
of the following companies:
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Adobe Systems Incorporated
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Amazon.com, Inc.
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American Express Company
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Apple Inc.
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Capital One Financial Corp.
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Charles Schwab & Co., Inc.
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Cisco Systems, Inc.
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Dell Inc.
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Electronic Arts Inc.
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Google Inc.
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Intel Corporation
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IAC/InterActiveCorp
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Intuit Inc.
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MasterCard Incorporated
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Microsoft Corporation
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Symantec Corporation
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Visa Inc.
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Yahoo! Inc.
|
49
Elements
of Compensation/Executive Compensation Practices
For 2008, the principal components of executive compensation
consisted of base salary, short-term cash incentive awards, and
equity incentive awards. The equity incentive awards consisted
of stock options, performance-based restricted stock units, and
time-based restricted stock units. Our executive officers were
also provided certain perquisites and are eligible to
participate in our deferred compensation plan, both as described
below, and are eligible to participate in our health and
benefits plans, retirement savings plans, and our employee stock
purchase plan, which are generally available to all of our
employees. The following table outlines our objectives for each
of the principal components of executive compensation and our
target positioning strategy for those components for both 2008
and 2009:
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Objective
|
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2008 Target Positioning Strategy
|
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2009 Target Positioning Strategy
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Base salary
|
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Reward individuals current contributions to the company
Compensate individuals for their expected day-to-day performance
|
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Target annual base salary ranges of the executive
group as a whole at median levels relative to our peer groups in
the high-technology and consumer products sectors and general
industry third-party survey data
|
|
Target annual base salary ranges of the executive
group as a whole at the median level relative to our single peer
group and general industry third-party survey data
|
|
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|
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Short-term cash incentive awards
|
|
|
|
|
Align executive compensation with annual performance
Enable eBay to attract, retain, and reward individuals who contribute to eBays success
Motivate individuals to enhance the value of eBay
|
|
Target short-term cash incentive ranges of the
executive group as a whole at median levels relative to our peer
groups in the high-technology and consumer products sectors
|
|
Target short-term cash incentive ranges of the
executive group as a whole at the median level relative to our
single peer group and general industry third-party survey data
|
Equity incentive awards
|
|
|
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|
Align individuals incentives with the long-term interests of our stockholders
Reward individuals for potential long-term contributions
Provide a total compensation opportunity commensurate with our performance
|
|
Stock options and time-based restricted stock units: varies based on our performance relative to that of our peer group companies (target awards set at the 25-75th percentile relative to the equity grant practices of high-technology companies that are included in proprietary third-party surveys that provide data on equity grant practices, based on our performance compared to peer group companies)
Performance-based restricted stock units: target awards at the 50th percentile of equity awards relative to high-technology companies included in proprietary third-party surveys
|
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Set equity award guidelines to be competitive with
companies in our single peer group and technology industry
third-party survey data
|
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|
In addition to the customary equity incentive awards described
above, the Compensation Committee was advised by its
compensation consultant that, in light of the uncertainty
created by the management changes announced at the beginning of
2008, similarly-situated companies often granted retention
equity incentive awards to senior executives in addition to
their standard annual grants. The committee decided that it
would be appropriate to provide retention equity incentive
awards to key members of our senior management team.
50
Although the Compensation Committee has not established a fixed
policy for the allocation between cash and equity compensation
or short-term and long-term compensation, as described below,
the committee has policies for each component of compensation,
and as part of its evaluation of the compensation of our
executive officers, the committee reviews not only the
individual elements of compensation, but also total
compensation. In general, compensation of executive officers is
weighted towards equity incentives, as the committee wants the
senior leadership team to have a long-term perspective on the
companys affairs. This is illustrated by the following
chart, which shows how each element of compensation disclosed in
the Summary Compensation Table below was weighted for our
executive officers named therein (which are referred to as our
named executive officers) as a group for 2008:
In making decisions regarding elements of compensation for each
of our executive officers, the committee takes into account the
size and complexity of each executive officers job and
business unit or function in addition to individual performance.
In evaluating these matters in 2008, the committee considered
(1) the continued growth of our Payments business compared
to our core Marketplaces business, (2) the increasing
complexity of our Payments business, (3) changes in
responsibilities among our executive officers resulting from the
reorganization of our Marketplaces business, and (4) the
increased role and responsibilities for our CFO. For executive
officers other than the CEO, assessments of individual
performance are typically based on performance against financial
performance measures for the executives business unit or
function, organizational development (including development of
the senior leadership team of each organization), leadership,
and, as applicable, major product introductions, integration of
acquisitions
and/or
strategic partnerships, and achievement of strategic and
infrastructure objectives, including control of costs. For our
CEO, assessments of individual performance are based on the
committees subjective assessment of the companys
overall financial performance, development of the companys
leadership team, achievement of strategic objectives, and
leadership of the executive team and of the company as a whole.
Our executive officers fall into four different job levels, and
for 2008, our named executive officers fell into three different
job levels. Our CEO is in a higher job level than the rest of
the executive team, and the compensation guidelines for his job
level are significantly higher than the next highest job level.
Because the CEO has overall responsibility for our entire
company, his job responsibilities are significantly greater than
those of the other executive officers, who are responsible for
individual business units or corporate functions. As set forth
in the Summary Compensation Table below, Mr. Donahoes
2008 total compensation as CEO (even after taking into account
equity grants made in connection with his promotion) is lower
than Ms. Whitmans 2007 total compensation as CEO.
Except as described in this Compensation Discussion and
Analysis, in 2008 the committee did not make any additional
compensation-related decisions for any of our named executive
officers.
Base
Salary
Base salary is the fixed portion of executive pay and is set to
reward individuals current contributions to the company
and compensate them for their expected day-to-day performance.
In 2008, our pay positioning strategy was to target annual base
salary and short-term cash incentives of the executive group as
a whole at median levels relative to our peer groups in the
high-technology and consumer products sectors and general
industry third-party survey data. The Compensation Committee
then sets a salary range for each executive job level, with the
midpoint of the salary range based on the median level of our
peer groups, although more weight is given to the
high-technology sector than to the consumer product sector. For
2008, eBays average actual annual base salary and
short-term cash incentive pay position for our named executive
officers was within approximately 5% of the median level of our
peer group companies and the general industry survey data used.
Variances were due to a number of
51
factors, including the performance of individual members of the
executive group, recent promotions, and changes to the cash
compensation necessary to retain certain executive officers, as
described below.
Starting in 2009, our pay positioning strategy is to target
annual base salary ranges of the executive group as a whole at
the median level relative to our single peer group and general
industry third-party survey data. However, in light of the
financial uncertainties caused by the global macroeconomic
recession and credit crunch, the committee decided to freeze
2009 salaries for executive officers, including our CEO, at 2008
levels (except in a small number of individual cases where
adjustments were deemed warranted).
The committee meets at least once a year to review and approve
each executive officers salary for the upcoming year. When
reviewing base salaries, the committee considers the pay
practices of peer group companies, compensation of executives in
similar positions at comparable companies who participate in
proprietary third-party surveys, individual performance, levels
of responsibility, breadth of knowledge, and prior experience.
Of these factors, competitive pay practices are the primary
determinant of the range within which individual salaries are
set. When the committee set the base salaries for our named
executive officers at the beginning of 2008, it took into
account the management changes and promotions, and set the base
salaries within the applicable ranges. Later in the year, the
committee re-evaluated Mr. Swans compensation
arrangements and decided to increase his salary above the range
for his job level to reflect his increased role and
responsibilities. See footnote 1 to the Summary Compensation
Table below for details regarding the 2008 salaries for each of
our named executive officers.
Short-term
Cash Incentive Awards
eBay Incentive Plan (eIP). The eIP is a cash
incentive program designed to align executive compensation with
annual performance and to enable eBay to attract, retain, and
reward individuals who contribute to eBays success and
motivate them to enhance the value of eBay. The eIP was approved
by our stockholders in 2005. The Compensation Committee believes
that incentive payouts should be tightly linked to eBays
performance, with individual compensation differentiated based
on individual performance. As a result, funding and payouts
under the eIP are dependent and based on eBays performance
and individual performance.
The committee determines the semi-annual, annual, or other
performance period under the eIP. For each performance period,
the committee establishes (1) performance measures based on
business criteria and target levels of performance and
(2) a formula for calculating a participants award
based on actual performance compared to the pre-established
performance goals. Performance measures may be based on a wide
variety of business metrics. Management recommends to the
committee a proposed approach to setting the performance
measures and targets. In 2008, the eIP consisted of only an
annual award for employees at the level of senior vice president
and above, semi-annual and annual awards for employees at the
level of director through vice president, and semi-annual awards
for other employees.
The following table outlines the performance measures for the
2008 annual award for executive officers and the
committees rationale for selecting those performance
measures:
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Performance Measures(1)
|
|
Rationale
|
|
Minimum revenue threshold(2)
Non-GAAP net income targets(3)
Individual performance
|
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The committee believes these financial
measures are the best measures of short- and intermediate-term
results for the company given that they are publicly announced,
widely followed, and can be influenced by management in the
short to intermediate term.
|
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|
(1) |
|
Both minimum revenue and non-GAAP net income thresholds must be
met in order for there to be any incentive payout. |
|
(2) |
|
Calculated on a fixed foreign exchange basis (referred to as
FX-neutral). |
|
(3) |
|
Non-GAAP net income excludes certain items, primarily
stock-based compensation expense and related payroll taxes,
amortization of acquired intangible assets, certain one-time
gains and losses, and income taxes related to these items. |
52
If the minimum revenue and non-GAAP net income thresholds have
been met, 75% of the award is based on the companys
performance, and 25% of the award is based on individual
performance. During the second half of 2008, the committee added
a customer retention metric, which we refer to as a net
promoter score, for certain employees at the level of vice
president and above (which includes all executive officers).
Twenty percent of the company performance component of the
annual incentive for 2008 was subject to the net promoter score
metric. If the target for the net promoter score metric was not
met, then the individual would lose up to 20% of the amount he
or she would have otherwise received for the company performance
component under the eIP. If the target was met, the individual
would receive what he or she would have otherwise received under
the eIP (and would not receive any additional pay out as a
result of the achievement of the net promoter score metric).
The amount by which the eIP is funded is determined based on the
companys actual performance measured against the targets
set by the committee. The committee sets the annual target in
the first quarter. Unless both the minimum revenue and non-GAAP
net income thresholds for the year are met, there is no payout
for that year. After the end of the year, the companys
actual performance is compared to the targets to determine the
funding level, and our CEO presents the committee with his
assessment of the performance of each of the other executive
officers; the committee reviews his assessments and determines
the level of performance for each of those executive officers.
In addition, the committee reviews (with input from the lead
independent director and other members of the Board) and
determines the CEOs level of performance against targets
set by the Board at the beginning of the year.
The following table sets forth the annual 2008 performance
measures set by the committee:
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Minimum
|
|
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Target
|
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Maximum
|
|
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FX-neutral revenue threshold
|
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$
|
8.50B
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
|
|
$
|
2.222B
|
|
|
$
|
2.327B
|
|
|
$
|
2.676B
|
|
In 2008, the maximum incentive amount that could be paid was
200% of target. In 2008, total annual target incentive amounts
for the named executive officers (other than the CEO) were 65%
to 100% of base salary, and the target incentive amount for the
CEO was 125% of base salary. Based on eBays annual
performance, there was no payout for our executive officers
under the eIP for 2008.
Special Retention Bonus
Plans. Messrs. Donahoe and Swan each have
special retention bonus plans that were entered into in
connection with their hiring in 2005 and 2006, respectively. The
Compensation Committee believed that it was necessary to enter
into these special bonus plans to provide each of
Messrs. Donahoe and Swan with a total compensation package
that would be attractive to them and cause them to join eBay, in
each case with particular reference to the compensation he had
been receiving at his previous position. Under the terms of
Mr. Donahoes plan, he received a special retention
bonus of $2,000,000 in cash, of which $500,000 was paid in each
of 2005, 2006, 2007, and 2008. Under the terms of
Mr. Swans plan, he is eligible to receive a special
retention bonus of up to $1,000,000 in cash, of which $200,000
was paid in each of 2006, 2007, and 2008. The plan provides that
Mr. Swan will receive two additional bonus payments of
$200,000, payable on each of the third and fourth anniversaries
of the date of his commencement of employment, assuming his
continued employment with eBay. The amounts paid to
Messrs. Donahoe and Swan under these bonus plans were in
addition to their base salaries.
Equity
Incentive Awards
Consistent with our past practice, for 2008 we granted our
executive officers focal equity incentive awards in the form of
stock options and performance-based restricted stock units to
align their incentives with the long-term interests of our
stockholders, reward them for potential long-term contributions,
and provide a total compensation opportunity commensurate with
our performance. In addition, as described below, in light of
the uncertainty created by the management changes announced at
the beginning of 2008, we granted our executive officers
retention equity incentive awards consisting of time-based
restricted stock units.
Our historical pay positioning strategy for equity compensation
(other than for performance-based restricted stock units, which
is discussed below) varied based on our performance. In setting
annual equity award guidelines for stock options and time-based
restricted stock units, the committee considered eBays
total stockholder return, revenue growth, and net income growth
over trailing four-quarter and three-year periods relative to
its peer groups of high-technology companies and consumer
products companies. The committee also considered data regarding
53
equity guidelines for comparable high-technology companies that
were included in proprietary third-party surveys. From these
surveys, the committee could determine how eBays equity
award guidelines would likely compare against companies in the
high-technology peer group. If eBays performance compared
to its peer group companies was average, the midpoints of the
equity award guidelines for the subsequent year were targeted to
be positioned at the 50th percentile of the guidelines for
comparable high-technology companies included in the surveys. If
eBays performance compared to its peer group companies was
high, midpoints of the equity award guidelines could be
positioned as high as the 75th percentile. If eBays
performance compared to its peer group companies was low,
midpoints of the equity award guidelines could be positioned as
low as the 25th percentile. Once the midpoints of the
equity award guidelines were set, ranges around the midpoints
were established to allow for differentiation of awards by
individual. Individual awards could therefore be higher or lower
than the pay positioning guidelines. Given eBays
performance in 2007 (based on trailing four-quarter and
three-year periods), the committee decided to position the
midpoints of the equity award guidelines for 2008 at
approximately the 65th percentile of the guidelines for
comparable high-technology companies included in the surveys.
Our pay positioning strategy for performance-based restricted
stock units was to target awards at the 50th percentile
relative to comparable high-technology companies included in the
surveys. Because the amount of restricted stock awarded under
the performance-based restricted stock plan is granted based on
company performance (as described in more detail below), the
committee decided that it was not necessary to adjust these
guidelines based on historical company performance.
Beginning in 2009, the committee decided to stop setting equity
award guidelines based eBays performance compared to its
peer group companies and instead set equity award guidelines
based on equity compensation practices at companies in our peer
group (which, as discussed above, has been changed to a single
peer group for 2009), data regarding equity guidelines for
comparable high technology companies that are included in
proprietary third-party surveys, and an assessment of dilution
issues. The committee made this decision in order to
(1) prevent unacceptable levels of dilution if eBays
performance was high compared to its peers, (2) deliver
competitive grant levels, (3) simplify the process and
minimize year-over-year variability, (4) focus on the
external competitive market, and (5) make eBays
practices more in line with market practices.
The equity incentive guideline positioning is subject to a
maximum gross dilution rate, including grants to existing
employees and grants associated with anticipated growth in
eBays employee base. Historically, the committee
considered trends in the high-technology industry and dilution
rates of companies in the high-technology peer group in setting
the maximum dilution rate. Beginning in 2009, the committee will
consider dilution rates of companies in our single peer group.
In addition to following the guidelines described above, the
company cannot grant awards in excess of the maximum dilution
target without the committees approval. The committee may
also make special compensation-related decisions for
performance, recognition, long-term retention value,
and/or
recruitment purposes that cause individual compensation to
differ from the regular stated compensation strategy and
guidelines.
New Hire Equity Incentive Grants and Focal
Grants. New hire equity incentive grants for
specific individuals also take into account specific recruitment
needs. Following the new hire grant, additional grants are made
to participants pursuant to a periodic focal grant program or
following a significant change in job responsibilities, scope,
or title. See the section entitled Equity Compensation
Grant Practices below for a description of our equity
grant practices. Focal grants are based upon a number of
factors, including performance of the individual, job level,
future potential contributions to eBay, competitive external
levels of equity incentives, and the retention value associated
with each individuals unvested equity. Vested equity held
by the employee is generally not a factor in the Compensation
Committees consideration of equity grants.
The value of equity incentive awards granted pursuant to our
focal program are determined within ranges established for each
job level that are reviewed and approved by the committee on at
least an annual basis. These job level ranges are established
based on our desired pay positioning relative to the competitive
market, with our CEO and Senior Vice President of Human
Resources and the committees compensation consultant
involved in the process of recommending the job level ranges to
the committee for approval. For both new hire and focal grants,
the committee approves the final value of equity incentive
awards for those employees who are at the level of senior vice
president and above.
54
Allocation between Stock Options and Performance-Based
Restricted Stock Units. The process and
methodology for determining the value of awards for executives
are generally the same as those used for our other employees.
Once the value of the focal equity incentive awards has been set
for each executive officer, a formula is used to allocate a
portion of the value of the focal award to stock options and a
portion of the focal award to performance-based restricted stock
units. For employees below the level of senior vice president,
the formula allocates the award between stock options and
time-vested restricted stock units. For 2008, the committee set
a 24-month
performance period for performance-based restricted stock
awards, which provides an incentive over a longer time period
than the annual eIP program. For 2008, the committee determined
that for executive officers, stock options would constitute 70%,
and the
24-month
performance based restricted stock unit awards would constitute
the remaining 30%, of the value of the focal equity awards
(determined with reference to Black-Scholes valuation of options
and target grant size for the performance-based restricted stock
units).
Promotional Equity Incentive Grants. We
generally use a formulaic approach to set the amount of
promotional equity incentive grants. The value of the
promotional grant is the difference between the value of the
employees most recent equity incentive grant and the value
of an award at the midpoint of the guidelines for a new hire
equity incentive grant at the higher job level. For our
executive officers, the committee considers what the value of
the promotional grant would be based on the formula described
above, and then determines the final value of (and the equity
vehicles to be used for) the promotional grant based on a number
of factors, including (1) the reason for the promotion,
(2) the executive officers prior history of equity
incentive awards, and (3) the advice of the
committees compensation consultant.
2008 Retention Grants of Restricted Stock
Units. In addition to the focal equity incentive
awards described above, the Compensation Committee was advised
by its compensation consultant that many companies granted
retention equity awards to senior executives in addition to
their standard equity grants during times of uncertainty caused
by significant changes to senior management. In January 2008,
the committee approved an executive go forward plan
to grant one-time awards of time-based restricted stock units to
key members of our senior management team critical to
eBays future. In light of the promotion of
Mr. Donahoe to the position of CEO, the related changes to
the heads of our Marketplaces and PayPal business units, and the
related business turnaround that Mr. Donahoe
was charged with effecting, the committee decided that it was
necessary to provide additional equity grants for retention and
incentive purposes to key members of our senior management team.
Ms. Axelrod, Mr. Swan, Ms. Norrington, and
Mr. Thompson were all granted awards under this plan. The
committee made its decisions regarding these one-time awards and
the annual focal equity awards at the same time.
At the same time the Compensation Committee made changes to
other aspects of Mr. Swans compensation arrangements,
the committee decided to award him an additional equity grant
consisting of stock options and time-based restricted stock
units outside the focal program. The committee believed that it
was necessary to grant Mr. Swan these awards to provide an
appropriate retention incentive in light of the increased role
and responsibilities assumed by him.
Performance-Based Restricted Stock
Units. Executive officers are eligible to receive
awards of performance-based restricted stock units if the
company meets specified performance criteria set by the
committee. If the performance criteria are satisfied, the
performance-based restricted stock units are granted and vest
with respect to one-half of the award in March following the end
of the performance period and vest with respect to the remainder
of the award in March of the following year. If any of the
performance criteria are not satisfied, no awards are granted
for the relevant performance period.
55
The following table outlines the performance periods and
performance measures set in 2007 (that relate to 2008
compensation) and 2008 and the committees rationale for
selecting those performance measures:
|
|
|
|
|
Performance Period
|
|
Performance Measures(1)
|
|
Rationale
|
|
Fiscal
2007-2008
(24 months)
|
|
FX-neutral revenue targets
Non-GAAP operating margin targets(2)
Return on invested capital
|
|
The committee believes these measures are key
drivers of the companys long-term success, relatively
simple to understand, and aligned with stockholder value drivers.
|
Fiscal
2008-2009
(24 months)
|
|
FX-neutral revenue targets
Non-GAAP operating margin targets(2)
Return on invested capital
|
|
The committee believes these measures are key
drivers of the companys long-term success, relatively
simple to understand, and aligned with stockholder value drivers.
|
|
|
|
(1) |
|
Both minimum revenue and non-GAAP operating margin thresholds
must be met in order for there to be any incentive payout. |
|
(2) |
|
Non-GAAP operating margin excludes certain items, primarily
stock-based compensation expense and related payroll taxes,
amortization of acquired intangible assets, certain one-time
gains and losses, and income taxes related to these items. |
Once the minimum threshold for non-GAAP operating margin and
revenue growth is reached, each of these performance measures is
calculated independently, with minimum performance equal to 25%,
target 50%, and maximum 100%. The two measures, weighted
equally, are then added together and this total (modified by the
return on invested capital measure, as described below) becomes
a multiplier against the target award to determine the actual
number of shares awarded. The return on invested capital measure
can modify the final awards from 80% to 120% of what they would
otherwise be.
The following table sets forth the performance measures for the
2007-2008
and
2008-2009
performance periods as set by the committee. The
2007-2008
performance measures were set in the first quarter of 2007 and
the
2008-2009
performance measures were set in 2008. While the committee
typically sets the performances measures during the timeframe
required to take advantage of tax deductions afforded by
Section 162(m) of the Internal Revenue Code of 1986, at the
request of our CEO and in light of changes to the executive
management team in 2008 and to ensure that the business
turnaround strategy that Mr. Donahoe would be
effecting would be properly reflected in the financial targets,
the committee made an exception in 2008 and delayed the approval
of the financial targets for the
2008-2009
24-month
performance period until the middle of 2008. In doing so, the
committee decided that providing our CEO with more time to make
his recommendation regarding the performance measures was more
desirable than preserving the ability to take advantage of the
Section 162(m) tax deductions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum
|
|
|
Target
|
|
|
Maximum
|
|
|
2007-2008
(24-month)
Performance Period:
|
|
|
|
|
|
|
|
|
|
|
|
|
FX-neutral revenue
|
|
$
|
15.45
|
B
|
|
$
|
16.12
|
B
|
|
$
|
17.60
|
B
|
Non-GAAP operating margin
|
|
|
32.5
|
%
|
|
|
33.6
|
%
|
|
|
35.2
|
%
|
Return on invested capital
|
|
|
19.0
|
%
|
|
|
23.7
|
%
|
|
|
28.4
|
%
|
2008-2009
(24-month)
Performance Period:
|
|
|
|
|
|
|
|
|
|
|
|
|
FX-neutral revenue
|
|
$
|
18.24
|
B
|
|
$
|
19.16
|
B
|
|
$
|
20.14
|
B
|
Non-GAAP operating margin
|
|
|
28.9
|
%
|
|
|
31.0
|
%
|
|
|
34.0
|
%
|
Return on invested capital
|
|
|
23.1
|
%
|
|
|
28.9
|
%
|
|
|
34.7
|
%
|
In 2008, performance-based restricted stock unit awards could
range from 0% to 240% of an executive officers target
award, based on eBays financial performance for the year.
56
The committee specifically considered whether the charge in the
fourth quarter of 2008 related to eBays 2008 organization
simplification should be applied to the determination of whether
the company had met the non-GAAP operating margin targets for
the year under both the
2007-2008
and
2008-2009
performance periods. Based upon (1) advice from the
committees compensation consultant that companies
generally do not take one-time costs or benefits into account
when determining achievement of goals for bonus plans and
(2) the companys past history of not including
significant one-time accounting gains or losses on the
write-down or sale of equity investments, the committee
determined that it would not apply the charge to the
determination of whether the non-GAAP operating margin targets
had been met for the
2007-2008
and
2008-2009
performance periods.
Deferred
Compensation Plan
Under the terms of our deferred compensation plan, eligible
members of senior management may defer receipt of their
compensation, including up to 50% of their salaries, up to 100%
of their bonuses, and, to the extent permitted by the committee,
up to 100% of their restricted stock units and performance-based
restricted stock units. To date, the committee has not allowed
participants to defer their time-based restricted stock units or
performance-based restricted stock units. The company may, but
has no obligation to, make discretionary contributions on behalf
of a participant in the plan, in such form and amount as the
company deems appropriate (in its sole discretion). To date, the
company has not made any contributions to the plan on behalf of
any named executive officer. For 2008, Messrs. Donahoe and
Swan elected to participate in the plan and defer a portion of
their 2008 bonuses under the eIP. However, because there was no
payout for any of our executive officers under the eIP for 2008,
neither Mr. Donahoe nor Mr. Swan made any
contributions to the plan.
Perquisites
We provide certain executive officers with perquisites and other
personal benefits that the Compensation Committee believes are
reasonable and consistent with our overall compensation programs
and philosophy. These benefits are provided in order to enable
us to attract and retain these executives. The committee
periodically reviews the levels of these benefits provided to
our executive officers. Of these benefits, the most significant
is allowing certain executive officers to use the corporate
airplane for personal use. As set forth in the Summary
Compensation Table below, in 2008 the value of all perquisites
provided to all seven of our named executive officers other than
the use of the corporate airplane for personal use totaled less
than $70,000 in the aggregate. In the first quarter of 2008, the
committee set limits for the use the corporate airplane for
personal use in 2008 as follows: Mr. Donahoe, 50 hours
(plus usage in connection with travel to board meetings for one
entity where Mr. Donahoe serves as an outside board
member); Mr. Dutta, 40 hours; and Mr. Swan,
20 hours. After Ms. Whitman stepped down as CEO, she
was no longer entitled to use the corporate airplane for
personal use unless she reimbursed us for at least the costs we
incurred in connection with such use. See the discussion under
the section entitled Certain Transactions with Directors
and Officers above for further details regarding our
agreement with Ms. Whitman regarding these costs. We do not
grant bonuses to cover, reimburse, or otherwise gross
up any income tax owed for personal travel on the
corporate airplane.
Equity
Compensation Grant Practices
We do not have any program, plan, or practice to select equity
compensation (including stock option) grant dates in
coordination with the release of material non-public
information, nor do we time the release of information for the
purpose of affecting value. We do not backdate options or grant
options retroactively. For all stock options granted after
January 1, 2006, employees have seven years from the date
of the grant to exercise vested options, assuming they remain an
employee of or service provider to an eBay company and subject
to any requirements of local law.
New Hire Grants. New hire grants of equity
compensation are made to eligible employees in connection with
the commencement of employment. The company has maintained a
rules-based approach to new hire option grants since inception.
From January 2004 to July 2006, grants were made on the Friday
of the first week of employment for employees whose first day of
employment was the first business day of the week and the
following Friday if the employee started on a different day.
Beginning in June 2005, grants of options to purchase
100,000 shares or more (which we refer to as sizeable new
hire grants) were split into two tranches, with the first
tranche granted on the
57
Friday following the employees first full week of
employment and the second tranche granted on the date
26 weeks from the date of the first grant. In July 2006, we
changed our grant practices to provide that new hire options are
granted on the second Friday of the month following the month in
which employment commences. In all cases, the options are priced
at the closing price of the companys stock on the date of
grant. These grants generally become fully vested after four
years, with 1/4th of the grant vesting on the first
anniversary of the date of commencement of employment and
1/48th of the grant vesting monthly thereafter. Sizeable
new hire grants are made in two equal tranches, with the first
grant made and priced as described above and the second grant
made and priced at the closing market price on the date
26 weeks from the date of the first grant. Both tranches
vest with respect to 1/4th of the shares on the first
anniversary of the date of commencement of employment and
1/48th of the shares vesting monthly thereafter.
Grants of new hire time-based restricted stock units are granted
on the second Friday of the month following the month in which
employment commences. These grants generally become vested after
four years, with 1/4th of the grant vesting on each
anniversary of the grant date, assuming that the recipient
remains an employee of or service provider to an eBay company
and subject to any requirements of local law.
Focal and Promotional Grants. Focal stock
option grants are awarded on March 1 of each year (or, if
March 1 is not a trading day, the next trading day with
vesting effective as of March 1) and are priced at the
closing market price on the date of the grant. Focal grants of
time-based restricted stock units are granted at the same time
as focal stock option grants. We selected the March 1 date
to allow eBay to close its financial statements for the prior
year, announce earnings for the prior year, and finalize the
performance ratings of employees prior to the determination of
the awards. In addition, we cluster our promotions semiannually
to coincide with our focal grant date and September 1 (or,
if September 1 is not a trading day, the next trading day
with vesting effective as of September 1) and most
promotional grants are therefore made on those two dates. Focal
and promotional stock option grants generally become fully
vested after four years, with 1/8th of the grant vesting
six months after the date of the grant and 1/48th of the
grant vesting monthly thereafter. Focal stock option grants
awarded to executives are priced and granted to executives on
the same date and at the same price that they are priced and
granted to the rest of our employees and have the same four-year
vesting schedule.
Focal and promotional grants of time-based restricted stock
units generally become fully vested after four years, with
1/4th of the grant vesting on March 1 or September 1,
as applicable, assuming they remain an employee of or service
provider to an eBay company and subject to any requirements of
local law.
As discussed above, in January 2008 the Compensation Committee
approved grants of retention equity awards (consisting of
time-based restricted stock units) to certain of our key
employees, including certain of our executive officers. These
awards will become fully vested after three years, with 1/3 of
the grant vesting annually on each of March 1, 2009,
March 1, 2010, and March 1, 2011. The committee
decided to have these awards granted on the same date as the
focal grants in March 2008. Two of our executive officers did
not receive grants in March 2008 in order to ensure that the
company would have an adequate number of shares available under
its equity incentive plans to make all of the companys
ordinary course equity grants prior to the approval of our 2008
Equity Incentive Award Plan at the 2008 annual meeting of
stockholders. After the 2008 Equity Incentive Award Plan was
approved by stockholders in June 2008, the committee decided to
grant each of these executive officers retention awards as part
of the plan approved in January 2008. These executives received
their grants on the same date the regularly scheduled September
grants were made, and the vesting of these grants was the same
as those granted in March 2008.
Employment
Agreements,
Change-in-Control
Arrangements, and Severance Arrangements with Executive
Officers
In connection with becoming President and CEO and President of
eBay Marketplaces, respectively, the compensation arrangements
for Messrs. Donahoe and Dutta were modified to include
severance arrangements. In addition, in July 2008 (at the same
time the other changes to Mr. Swans compensation
described above were made), Mr. Swans compensation
arrangements were modified to include severance arrangements.
Under these arrangements, each is entitled to receive a cash
payment equal to two years target cash compensation (which
is defined as annual base salary plus target annual incentive
bonus) if he is terminated within two years of his promotion (or
in the
58
case of Mr. Swan, within two years of July 16, 2008),
one and one-half years target cash compensation if he is
terminated more than two but within three years of his promotion
(or in the case of Mr. Swan, more than two but within three
years of July 16, 2008), and one years target cash
compensation he is terminated more than three years after his
promotion (or in the case of Mr. Swan, more than three
years after July 16, 2008). Mr. Duttas severance
provision was not triggered when he resigned.
Ms. Whitman became a special advisor to Mr. Donahoe
following her resignation as CEO and continued in this role
through December 31, 2008. After she ceased to be an
employee, Ms. Whitman continues to have the use of office
space and IT and secretarial services through 2011. We estimate
that providing these benefits to Ms. Whitman will result in
an incremental cost to eBay of less than $250,000 per year.
Stock
Ownership Guidelines
In September 2004, the Board adopted stock ownership guidelines
to better align the interests of eBays executives with the
interests of stockholders and further promote eBays
commitment to sound corporate governance. Under the guidelines,
executive officers are required to achieve ownership of eBay
common stock valued at three times their annual base salary
(five times in the case of the CEO). The guidelines provide that
the required ownership level for each executive officer is
recalculated whenever an executive officer changes pay grade and
as of January 1 of every third year. Until an executive achieves
the required level of ownership, he or she is required to retain
25% of the after-tax net shares received as the result of the
exercise of eBay stock options or the vesting of restricted
stock or restricted stock units. A more detailed summary of the
stock ownership guidelines can be found on our website at
http://investor.ebay.com/governance.
The ownership levels of our executive officers as of
March 3, 2009 are set forth in the section entitled
Security Ownership of Certain Beneficial Owners and
Management above. We also have an insider trading policy
that, among other things, prohibits employees from trading any
instrument that relates to the future price of our stock.
Impact of
Accounting and Tax Requirements on Compensation
We are limited by Section 162(m) of the Internal Revenue
Code of 1986 to a deduction for federal income tax purposes of
up to $1,000,000 of compensation paid to our CEO and any of our
three most highly compensated executive officers, other than our
Chief Financial Officer, in a taxable year. Compensation
above $1,000,000 may be deducted if, by meeting certain
technical requirements, it can be classified as
performance-based compensation. The eIP was approved
by stockholders in 2005 and provides for the payment of
performance-based compensation under
Section 162(m). The 1999 Global Equity Incentive Plan was
amended to permit certain grants of awards thereunder to qualify
as performance-based compensation in 2004 and 2007
and such amendments were approved by our stockholders. Although
the Compensation Committee uses the requirements of
Section 162(m) as a guideline, deductibility is not the
sole factor it considers in assessing the appropriate levels and
types of executive compensation and it will elect to forego
deductibility when the committee believes it to be in the best
interests of the company and its stockholders.
In addition to considering the tax consequences, the committee
considers the accounting consequences of, including the impact
of the Financial Accounting Standard Boards Statement of
Financial Accounting Standards 123(R), its decisions in
determining the forms of different awards and generally attempts
to keep the value of awards equivalent regardless of type.
Conclusion
In evaluating the individual components of overall compensation
for each of our executive officers, the Compensation Committee
reviews not only the individual elements of compensation, but
also total compensation. Through the compensation programs
described above, a significant portion of the compensation
awarded to our executive officers is contingent upon individual
and eBay performance. The committee remains committed to this
philosophy of pay-for-performance and will continue to review
executive compensation programs to ensure that the interests of
our stockholders are served.
59
COMPENSATION
COMMITTEE
REPORT2
The Compensation Committee reviews and approves eBays
compensation programs on behalf of the Board. In fulfilling its
oversight responsibilities, the committee reviewed and discussed
with management the Compensation Discussion and Analysis set
forth in this proxy statement. Based upon the review and
discussions referred to above, the Compensation Committee
recommended to the Board that the Compensation Discussion and
Analysis be included in this proxy statement.
COMPENSATION COMMITTEE
Edward W. Barnholt (Chairman)
Philippe Bourguignon
William C. Ford, Jr.*
Thomas J. Tierney
|
|
|
* |
|
A member since March 27, 2008. |
2 The
material in this Compensation Committee report is not
soliciting material, is not deemed filed
with the SEC and is not to be incorporated by reference in any
of our filings under the Securities Act of 1933, as amended, or
the Exchange Act, whether made before, on or after the date
hereof and irrespective of any general incorporation language in
any such filing.
60
SUMMARY
COMPENSATION TABLE
The following table summarizes the total compensation earned by
each of our named executive officers for the fiscal years ended
December 31, 2008, 2007 and 2006. We do not have individual
long-term employment arrangements with any of our named
executive officers. In setting the individual components of
compensation for each of our named executive officers, the
Compensation Committee reviews not only the individual elements
of compensation, but also total compensation, including the
value of equity compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)
|
|
|
($)(6)
|
|
|
($)
|
|
|
John J. Donahoe
|
|
|
2008
|
|
|
$
|
879,808
|
|
|
$
|
500,000
|
(2)(7)
|
|
$
|
5,167,156
|
|
|
$
|
6,364,098
|
(8)
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
279,108
|
|
|
$
|
13,190,170
|
|
President and Chief
|
|
|
2007
|
|
|
|
823,885
|
|
|
|
681,865
|
(7)
|
|
|
1,053,565
|
|
|
|
4,618,444
|
|
|
|
991,842
|
|
|
|
0
|
|
|
|
82,675
|
|
|
|
8,252,276
|
|
Executive Officer(9)
|
|
|
2006
|
|
|
|
790,385
|
|
|
|
655,563
|
(7)
|
|
|
0
|
|
|
|
3,763,549
|
|
|
|
615,973
|
|
|
|
0
|
|
|
|
5,991
|
|
|
|
5,831,461
|
|
Margaret C. Whitman
|
|
|
2008
|
|
|
|
713,947
|
|
|
|
0
|
|
|
|
561,119
|
|
|
|
5,974,042
|
|
|
|
0
|
|
|
|
0
|
|
|
|
215,051
|
|
|
|
7,464,159
|
|
Former President and
|
|
|
2007
|
|
|
|
995,016
|
|
|
|
243,013
|
(10)
|
|
|
920,335
|
|
|
|
9,514,249
|
|
|
|
1,409,861
|
|
|
|
0
|
|
|
|
792,436
|
|
|
|
13,874,910
|
|
Chief Executive Officer(11)
|
|
|
2006
|
|
|
|
995,016
|
|
|
|
221,008
|
(10)
|
|
|
0
|
|
|
|
12,605,385
|
|
|
|
911,684
|
|
|
|
0
|
|
|
|
1,007,943
|
|
|
|
15,741,036
|
|
Robert H. Swan
|
|
|
2008
|
|
|
|
697,442
|
|
|
|
200,000
|
(2)(12)
|
|
|
3,422,265
|
|
|
|
2,385,237
|
|
|
|
0
|
|
|
|
0
|
|
|
|
93,749
|
|
|
|
6,798,693
|
|
Senior Vice President, Finance
|
|
|
2007
|
|
|
|
619,904
|
|
|
|
334,988
|
(12)
|
|
|
689,764
|
|
|
|
1,771,453
|
|
|
|
746,243
|
|
|
|
0
|
|
|
|
3,758
|
|
|
|
4,166,111
|
|
and Chief Financial Officer
|
|
|
2006
|
|
|
|
456,162
|
|
|
|
294,899
|
(12)
|
|
|
387,064
|
|
|
|
1,008,342
|
|
|
|
354,862
|
|
|
|
0
|
|
|
|
981,390
|
|
|
|
3,482,719
|
|
Elizabeth L. Axelrod
|
|
|
2008
|
|
|
|
480,135
|
|
|
|
0
|
|
|
|
1,152,472
|
|
|
|
2,700,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,158
|
|
|
|
4,342,825
|
|
Senior Vice President, Human Resources(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lorrie M. Norrington
|
|
|
2008
|
|
|
|
618,173
|
|
|
|
0
|
|
|
|
2,729,285
|
|
|
|
804,465
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,207
|
|
|
|
4,162,130
|
|
President, eBay Marketplaces(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Thompson
|
|
|
2008
|
|
|
|
556,885
|
|
|
|
0
|
|
|
|
2,868,279
|
|
|
|
1,718,635
|
|
|
|
0
|
|
|
|
0
|
|
|
|
9,520
|
|
|
|
5,153,319
|
|
President, PayPal(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rajiv Dutta
|
|
|
2008
|
|
|
|
600,231
|
|
|
|
0
|
|
|
|
974,175
|
(14)
|
|
|
3,702,503
|
(14)
|
|
|
0
|
|
|
|
0
|
|
|
|
274,866
|
|
|
|
5,558,745
|
|
Former President,
|
|
|
2007
|
|
|
|
569,808
|
|
|
|
131,789
|
(10)
|
|
|
217,718
|
|
|
|
3,643,372
|
|
|
|
685,549
|
|
|
|
0
|
|
|
|
93,775
|
|
|
|
5,342,011
|
|
eBay Marketplaces(15)
|
|
|
2006
|
|
|
|
524,231
|
|
|
|
86,295
|
(10)
|
|
|
0
|
|
|
|
4,904,262
|
|
|
|
336,412
|
|
|
|
0
|
|
|
|
251,911
|
|
|
|
6,103,111
|
|
|
|
|
(1) |
|
For 2008: we went through significant management changes in
2008. In connection with Mr. Donahoe becoming CEO effective
March 31, 2008, his salary was increased to $900,000 per
annum and Ms. Whitmans salary was decreased to
$600,000 per annum. In connection with Ms. Norrington
becoming President, eBay Marketplaces and Mr. Swan taking
on additional responsibilities effective July 16, 2008,
Ms. Norringtons salary was increased to $675,000 per
annum and Mr. Swans salary was increased to $750,000
per annum. Ms. Axelrods salary was increased to
$485,000 per annum as part of our regular annual salary review
process effective March 1, 2008. In connection with
Mr. Dutta becoming President, eBay Marketplaces effective
January 23, 2008, his salary was increased to $720,000 per
annum. In connection with Mr. Thompson becoming President,
PayPal effective January 23, 2008, his salary was increased
to $560,000 per annum. |
|
|
|
For 2007: effective March 1, 2007, all eligible employees
of eBay, including certain of the named executive officers,
received an annual salary increase representing: (i) in the
case of Mr. Swan, a salary of $625,000 per annum;
(ii) in the case of Mr. Donahoe, a salary of $830,000
per annum; and (iii) in the case of Mr. Dutta, a
salary of $580,000 per annum. Total salary amounts reported are
lower than these 2007 annual salary increases because lower
salaries were in effect for a portion of 2007. Ms. Whitman
did not receive an annual salary increase. |
|
|
|
For 2006: effective March 1, 2006, all eligible employees
of eBay, including certain of the named executive officers,
received an annual salary increase representing: (i) in the
case of Mr. Donahoe, a salary of $800,000 per annum; and
(ii) in the case of Mr. Dutta, a salary of $530,000
per annum. Total salary amounts reported are lower than these
2006 annual salary increases because lower salaries were in
effect for a portion of 2006. Ms. Whitman did not receive
an annual salary increase. Mr. Swan received a salary of
$600,000 per annum effective March 16, 2006 (the
commencement date of his employment). |
|
(2) |
|
For 2008, no bonus was paid to any named executive officer under
the eIP. The $500,000 paid to Mr. Donahoe in 2008
represents the fourth (and final) installment of the amount
payable to Mr. Donahoe under the special retention bonus
awarded to him at the time he commenced his employment with us
in 2005. The $200,000 paid |
61
|
|
|
|
|
to Mr. Swan in 2008 represents the third installment of the
amount payable to Mr. Swan under the special retention
bonus awarded to him at the time he commenced his employment
with us in 2006. See the discussion under the section entitled
Compensation Discussion and Analysis Elements
of Compensation/Executive Compensation Practices
Short-term Cash Incentive Awards Special Retention
Bonus Plans above for further details regarding the
special retention bonuses. |
|
(3) |
|
Reflects the dollar amount of the compensation expense for the
fiscal years ended December 31, 2008, 2007 and 2006,
calculated in accordance with the Financial Accounting Standards
Boards Statement of Financial Accounting Standards 123(R)
(FAS 123R) (assuming no forfeitures). The compensation
expense is recognized through the vesting period. We calculated
the estimated fair value of stock awards (other than
performance-based restricted stock units) using the fair value
of our common stock on the date of the grant. |
|
|
|
For 2008, we calculated the estimated fair value of
performance-based restricted stock units using: (i) the
amount of each award granted to our named executive officers for
the 2007 performance period and fair value of our common stock
on the date the target amounts were communicated to each of our
named executive officers; and (ii) the target amount of
each award allocated to our named executive officers for the
2007-2008
performance period and the
2008-2009
performance period and fair value of our common stock on the
date the target amounts were communicated to each of our named
executive officers. The estimated fair value of target amounts
also takes into account the probability of achieving the
performance measures for the applicable period. |
|
|
|
For 2007, we calculated the estimated fair value of
performance-based restricted stock units using the target amount
of each award allocated to our named executive officers for the
2007 performance period and the
2007-2008
performance period and fair value of our common stock on the
date the target amounts were communicated to each of our named
executive officers. The estimated fair value of target amounts
also takes into account the probability of achieving the
performance measures for the applicable period. |
|
|
|
See the discussion under the section entitled Compensation
Discussion and Analysis Elements of
Compensation/Executive Compensation Practices Equity
Incentive Awards above for further details on
performance-based restricted stock units. |
|
(4) |
|
Reflects the dollar amount of the compensation expense for the
fiscal years ended December 31, 2008, 2007 and 2006,
calculated in accordance with FAS 123R (assuming no
forfeitures), and thus includes: (i) for 2008, amounts from
awards granted in 2004 through 2008 that vested in 2008;
(ii) for 2007, amounts from awards granted in 2003 through
2007 that vested in 2007; and (iii) for 2006, amounts from
awards granted in 2003 through 2006 that vested in 2006. In the
case of Ms. Whitman, the 2006 amount also reflects certain
options granted in January 2001 that did not begin to vest until
options granted to her prior to our initial public offering in
1998 were fully vested and thereafter vested over a four-year
period. |
|
|
|
We calculated the estimated fair value of each option award on
the date of grant using a modified Black-Scholes option pricing
model. The weighted-averages of the assumptions used during 2008
were: risk-free interest rate of 2.4%; expected life of
4.4 years; no dividend yield; and expected volatility of
34%. The weighted-averages of the assumptions used during 2007
were: risk-free interest rate of 4.5%; expected life of
3.5 years; no dividend yield; and expected volatility of
37%. The weighted-averages of the assumptions used during 2006
were: risk-free interest rate of 4.7%; expected life of five
years; no dividend yield; and expected volatility of 37.5%. Our
computation of expected volatility was based on a combination of
historical and market-based implied volatility from traded
options on our stock. Our computation of expected life was
determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based
awards, vesting schedules and expectations of future employee
behavior. The interest rate for periods within the contractual
life of the award is based on the U.S. Treasury yield curve in
effect at the time of grant. |
|
(5) |
|
For 2007: represents the following amounts paid pursuant to the
eBay Incentive Plan (eIP) in 2007 and 2008 for services rendered
in 2007: (i) the portion of the quarterly awards based on
the companys performance; and (ii) the annual award.
For 2006: represents the following amounts paid pursuant to the
eIP in 2006 and 2007 for services rendered in 2006: (i) the
portion of the quarterly awards based on the companys
performance; and (ii) the annual award. No amounts were
paid to our named executive officers under the eIP for 2008. See
the discussion under the section entitled Compensation
Discussion and Analysis Elements of Compensation/ |
62
|
|
|
|
|
Executive Compensation Practices Short-term Cash
Incentive Awards eBay Incentive Plan (eIP)
above for further details. |
|
(6) |
|
Includes the amounts outlined in the table below. Also includes:
(i) the cost of certain information technology support
services provided for computer equipment located at the
residences of our executive officers; (ii) matching
contributions by eBay to a 401(k) savings plan (subject to a
maximum of $9,200 per employee for 2008, $2,000 per employee for
2007, and $1,500 per employee for 2006, in each case including
named executive officers); (iii) premiums paid for group
life insurance and accidental death and dismemberment coverage
for the benefit of the named executive officer; and
(iv) for Mr. Dutta, $142,500 in consulting fees paid
to him in 2008 after he ceased to be an employee. Perquisites
are valued at the incremental cost of providing such perquisites. |
|
|
|
Personal Airplane Usage consists of the incremental
cost to eBay of personal usage of its corporate airplane (which
includes use of the corporate airplane by executives who serve
on the board of another entity to attend such board meetings)
and is calculated based on a methodology that includes the
weighted average cost of fuel, maintenance expenses, parts and
supplies, landing fees, ground services, catering, and crew
expenses associated with such use, including those associated
with deadhead flights related to such use. Because
the corporate airplane is used primarily for business travel,
the methodology excludes fixed costs that do not change based on
usage. Fixed costs include pilot salaries, the purchase or lease
costs of the airplane, and the cost of maintenance not related
to such personal travel. Executives, their families, and invited
guests occasionally fly on the corporate airplane as additional
passengers on business flights. In those cases, the aggregate
incremental cost to eBay is a de minimis amount, and as a
result, no amount is reflected in the table. Executives,
directors, and their families also occasionally fly on the
corporate airplane as additional passengers on personal flights
that are attributed to another executive or as passengers on
personal flights that are arranged by an executive who was not
on the flight, in which case the entire incremental cost is
allocated to the executive who arranged for the personal flight. |
|
|
|
Relocation & Expatriate Assistance
consists of: (i) in the case of Mr. Swan, costs and
expenses related to moving from Texas to the San Francisco
Bay Area and the sale of his home in 2006; and (ii) in the
case of Mr. Dutta, costs and expenses related to moving
from the San Francisco Bay Area to the United Kingdom,
temporary housing, and a cost of living allowance in 2006. |
|
|
|
|
|
Tax
Reimbursements/Gross-ups
consist of additional bonuses granted by the Compensation
Committee in 2006 to cover income taxes (based on statutory
withholding rates) relating to personal use of the corporate
airplane in 2006, including taxes on imputed income in
accordance with Internal Revenue Service regulations. Beginning
in 2007, we no longer grant bonuses to cover, reimburse, or
otherwise gross-up any income tax owed for personal
travel on the corporate airplane. In the case of Mr. Swan,
Tax
Reimbursements/Gross-ups
also consist of a
gross-up to
cover income taxes relating to relocation assistance provided to
him in 2006. |
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
|
|
Personal
|
|
|
|
|
|
|
|
|
|
|
|
|
Airplane
|
|
|
Airplane
|
|
|
|
|
|
|
|
|
|
|
|
|
Usage (other
|
|
|
Usage
|
|
|
|
|
|
|
|
|
|
|
|
|
than Outside
|
|
|
(Outside
|
|
|
Relocation &
|
|
|
Tax
|
|
|
|
|
|
|
Board
|
|
|
Board
|
|
|
Expatriate
|
|
|
Reimbursements/
|
|
Name
|
|
Year
|
|
|
Meetings)
|
|
|
Meetings)
|
|
|
Assistance
|
|
|
Gross-ups
|
|
|
John J. Donahoe
|
|
|
2008
|
|
|
$
|
203,591
|
|
|
$
|
69,856
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
76,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,555
|
|
Margaret C. Whitman
|
|
|
2008
|
|
|
|
204,051
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
596,823
|
|
|
|
191,113
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
669,317
|
|
|
|
104,149
|
|
|
|
|
|
|
|
230,992
|
|
Robert H. Swan
|
|
|
2008
|
|
|
|
83,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
22,398
|
|
|
|
|
|
|
$
|
643,991
|
|
|
|
312,672
|
|
Elizabeth L. Axelrod
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lorrie M. Norrington
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Thompson
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rajiv Dutta
|
|
|
2008
|
|
|
|
122,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
90,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
53,381
|
|
|
|
|
|
|
|
179,654
|
|
|
|
16,491
|
|
|
|
|
(a) |
|
Includes a personal flight where Ms. Whitman was not a
passenger, but Ms. Lepore, one of our directors, and a
member of her family were passengers. The entire incremental
cost associated with the flight was attributed to
Ms. Whitman because the flight was arranged by her. |
|
|
|
(7) |
|
See footnote 2 above for an explanation of the amount paid to
Mr. Donahoe in 2008. For 2007 and 2006, represents:
(i) amounts paid pursuant to the portion of the quarterly
awards based on individual performance under the eIP; and
(ii) $500,000 paid under Mr. Donahoes special
retention plan. See the discussion under the sections entitled
Compensation Discussion and Analysis Elements
of Compensation/Executive Compensation Practices
Short-term Cash Incentive Awards eBay Incentive Plan
(eIP) and Compensation Discussion and
Analysis Elements of Compensation/Executive
Compensation Practices Short-term Cash Incentive
Awards Special Retention Bonus Plans above for
further details. |
|
(8) |
|
Notwithstanding the fact that, as disclosed in footnote 3 above,
expense was recognized in connection with these options for
financial statement reporting purposes for the fiscal year ended
December 31, 2008, these options have exercise prices
ranging from $24.93 to $39.90. The closing price of our common
stock on December 31, 2008 was $13.96. |
|
(9) |
|
Mr. Donahoe served eBay as President, eBay Marketplaces
from the beginning of the periods covered by this table until
January 23, 2008, served as CEO-designate from
January 23, 2008 until March 31, 2008, and became
President and CEO of eBay on March 31, 2008. |
|
(10) |
|
For 2007 and 2006, represents amounts paid pursuant to the
portion of the quarterly awards based on individual performance
under the eIP. No amounts were paid to any of our named
executive officers under the eIP for 2008. See the discussion
under the section entitled Compensation Discussion and
Analysis Elements of Compensation/Executive
Compensation Practices Short-term Cash Incentive
Awards eBay Incentive Plan (eIP) above for
further details. |
|
(11) |
|
Ms. Whitman served eBay as President and Chief Executive
Officer from the beginning of the periods covered by this table
until March 31, 2008, and became a special advisor to
Mr. Donahoe on March 31, 2008. |
|
|
|
(12) |
|
See footnote 2 above for an explanation of the amount paid to
Mr. Swan in 2008. For 2007 and 2006, represents:
(i) amounts paid pursuant to the portion of the quarterly
awards based on individual performance under the eIP; and
(ii) $200,000 paid under Mr. Swans special
retention plan. For 2006, Mr. Swan was eligible to
participate in the quarterly component of the eIP for the
second, third, and fourth quarters only. See the discussion
under the sections entitled Compensation Discussion and
Analysis Elements of Compensation/Executive
Compensation Practices Short-term Cash Incentive
Awards eBay Incentive Plan (eIP) |
64
|
|
|
|
|
and Compensation Discussion and Analysis
Elements of Compensation/Executive Compensation
Practices Short-term Cash Incentive
Awards Special Retention Bonus Plans above for
further details. |
|
(13) |
|
Because Ms. Axelrod, Ms. Norrington and
Mr. Thompson were not named executive officers for 2006 or
2007, in accordance with SEC rules, only information for 2008 is
being disclosed. Mr. Thompson served eBay as Chief
Technology Officer, PayPal from the beginning of 2008 until
January 23, 2008, and became President, PayPal on
January 23, 2008. Ms. Norrington served eBay as
President, eBay Marketplaces Operations from the beginning of
2008 until July 16, 2008, and became President, eBay
Marketplaces on July 16, 2008. |
|
(14) |
|
As a result of Mr. Duttas resignation, as of
December 31, 2008, he forfeited 145,067 restricted stock
units and options to purchase 1,137,167 shares of our common
stock. |
|
(15) |
|
Mr. Dutta served eBay as President, eBay Marketplaces from
January 23, 2008, until July 16, 2008, provided
transition assistance to the Marketplaces leadership team as a
full-time employee of eBay from July 16, 2008 until
October 22, 2008, and provided consulting services to eBay
for the remainder of 2008. Mr. Dutta previously served eBay
as President, PayPal throughout 2007, was Senior Vice President
and Chief Financial Officer until March 16, 2006 and
President, Skype until July 6, 2006. |
65
GRANTS OF
PLAN-BASED AWARDS
The following table sets forth for the fiscal year ended
December 31, 2008, certain information regarding grants of
plan-based awards to each of our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
Estimated Future
|
|
|
Number of
|
|
|
Number of
|
|
|
or Base
|
|
|
Grant
|
|
|
|
|
|
|
Payouts Under Non-Equity
|
|
|
Payouts Under Equity
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
Date
|
|
|
|
|
|
|
Incentive Plan Awards(1)
|
|
|
Incentive Plan Awards(2)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Fair
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Value
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)(3)
|
|
|
John J. Donahoe
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
844,665
|
|
|
$
|
25.85
|
|
|
$
|
6,481,452
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
388,781
|
|
|
|
|
|
|
|
25.85
|
|
|
|
10,049,989
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,711
|
(4)
|
|
|
|
|
|
|
25.85
|
|
|
|
173,479
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
25.85
|
|
|
|
1,551,000
|
|
|
|
|
9/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,891
|
|
|
|
24.93
|
|
|
|
2,548,057
|
|
eIP
|
|
|
N/A
|
|
|
$
|
412,410
|
|
|
$
|
824,820
|
|
|
$
|
1,649,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
(2008-2009
performance period)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,421
|
|
|
|
92,843
|
|
|
|
222,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margaret C. Whitman
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,954
|
(4)
|
|
|
|
|
|
|
25.85
|
|
|
|
619,211
|
|
eIP
|
|
|
N/A
|
|
|
|
267,730
|
|
|
|
535,460
|
|
|
|
1,070,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert H. Swan
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171,250
|
|
|
|
25.85
|
|
|
|
1,314,070
|
|
|
|
|
8/8/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
26.36
|
|
|
|
2,282,125
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
25.85
|
|
|
|
5,170,000
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,273
|
(4)
|
|
|
|
|
|
|
25.85
|
|
|
|
136,307
|
|
|
|
|
8/8/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
|
|
|
|
|
|
|
26.36
|
|
|
|
3,426,800
|
|
eIP
|
|
|
N/A
|
|
|
|
261,541
|
|
|
|
523,082
|
|
|
|
1,046,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
(2008-2009
performance period)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,750
|
|
|
|
17,500
|
|
|
|
42,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth L. Axelrod
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,250
|
|
|
|
25.85
|
|
|
|
700,198
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,720
|
(4)
|
|
|
|
|
|
|
25.85
|
|
|
|
122,012
|
|
|
|
|
9/2/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,000
|
|
|
|
|
|
|
|
24.07
|
|
|
|
3,369,800
|
|
eIP
|
|
|
N/A
|
|
|
|
117,033
|
|
|
|
234,066
|
|
|
|
468,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
(2008-2009
performance period)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,625
|
|
|
|
11,250
|
|
|
|
27,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lorrie M. Norrington
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
|
|
|
25.85
|
|
|
|
891,761
|
|
|
|
|
8/8/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
26.36
|
|
|
|
638,995
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
|
|
|
|
|
|
25.85
|
|
|
|
4,523,750
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,622
|
(4)
|
|
|
|
|
|
|
25.85
|
|
|
|
41,928
|
|
eIP
|
|
|
N/A
|
|
|
|
231,815
|
|
|
|
463,630
|
|
|
|
927,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
(2008-2009
performance period)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
25,000
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Thompson
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139,000
|
|
|
|
25.85
|
|
|
|
1,066,603
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
25.85
|
|
|
|
646,250
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,148
|
(4)
|
|
|
|
|
|
|
25.85
|
|
|
|
107,225
|
|
eIP
|
|
|
N/A
|
|
|
|
208,832
|
|
|
|
417,663
|
|
|
|
835,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
(2008-2009
performance period)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,125
|
|
|
|
18,250
|
|
|
|
43,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rajiv Dutta
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
880,125
|
|
|
|
25.85
|
|
|
|
6,753,551
|
|
|
|
|
9/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
261,506
|
|
|
|
24.93
|
|
|
|
2,275,442
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,423
|
|
|
|
|
|
|
|
25.85
|
|
|
|
4,999,984
|
|
|
|
|
3/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,752
|
(4)
|
|
|
|
|
|
|
25.85
|
|
|
|
148,689
|
|
eIP
|
|
|
N/A
|
|
|
|
225,087
|
|
|
|
450,173
|
|
|
|
900,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
(2008-2009
performance period)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,137
|
|
|
|
74,274
|
|
|
|
178,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown reflect estimated payouts for the fiscal year
ended December 31, 2008 under the eIP for the portion of
the award payable based on the companys performance. The
amounts shown in the column entitled |
66
|
|
|
|
|
Threshold reflect the minimum payment levels if both
the minimum revenue and net income thresholds have been met,
which are 50% of the amounts shown under the column entitled
Target, and the amounts shown in the column entitled
Maximum are 240% of the amounts shown under the
column entitled Target. No amounts were paid to any
of our named executive officers under the eIP for 2008. |
|
(2) |
|
The amounts shown reflect estimated payouts of performance-based
restricted stock units (PBRSUs) for the
2008-2009
performance period. For each performance period: (i) the
amounts shown in the column entitled Threshold
reflect the awards if both the minimum revenue and operating
margin thresholds have been met (and reflect the lowest return
on invested capital modifier), which are 50% of the amounts
shown under the column entitled Target; and
(ii) the amounts shown in the column entitled
Maximum reflect the awards if the maximum revenue
and operating margin amounts are met (and reflect the maximum
return on invested capital modifier) and are 240% of the amounts
shown under the column entitled Target. |
|
(3) |
|
Represents the estimated fair value of the awards as of the
applicable grant date in accordance with FAS 123R (assuming
no forfeitures), whereas the amounts shown under the columns
entitled Stock Awards and Option Awards
in the Summary Compensation Table above reflect only the dollar
amount recognized for financial statement reporting purposes for
the fiscal year ended December 31, 2008. We calculated the
estimated fair value of each stock award using the fair value of
our common stock on the date of the grant. We calculated the
estimated fair value of each option award on the date of grant
using a modified Black-Scholes option pricing model. The
weighted-averages of the assumptions used during 2008 were:
risk-free interest rate of 2.4%; expected life of
4.4 years; no dividend yield; and expected volatility of
34%. Our computation of expected volatility was based on a
combination of historical and market-based implied volatility
from traded options on our stock. Our computation of expected
life was determined based on historical experience of similar
awards, giving consideration to the contractual terms of the
stock-based awards, vesting schedules, and expectations of
future employee behavior. The interest rate for periods within
the contractual life of the award is based on the U.S. Treasury
yield curve in effect at the time of grant. |
|
(4) |
|
The amounts shown reflect the actual payout of PBRSUs for the
2007 performance period. |
67
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth certain information regarding
outstanding equity awards for each of our named executive
officers as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Awards:
|
|
|
|
Number
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Market or
|
|
|
|
of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares,
|
|
|
Payout Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Market Value
|
|
|
Units or
|
|
|
Unearned
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Shares or Units
|
|
|
Other
|
|
|
Shares, Units or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
of Stock
|
|
|
of Stock
|
|
|
Rights
|
|
|
Other Rights
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)(1)
|
|
|
John J. Donahoe
|
|
|
171,875
|
|
|
|
78,125
|
(2)
|
|
|
0
|
|
|
$
|
39.90
|
|
|
|
3/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
100,000
|
(3)
|
|
|
0
|
|
|
|
39.90
|
|
|
|
3/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,925
|
|
|
|
146,475
|
(4)
|
|
|
0
|
|
|
|
31.93
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
937,500
|
|
|
|
62,500
|
(5)
|
|
|
0
|
|
|
|
35.50
|
|
|
|
3/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109,832
|
|
|
|
475,942
|
(6)
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,542
|
|
|
|
210,349
|
(7)
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,542
|
|
|
|
210,349
|
(8)
|
|
|
0
|
|
|
|
24.93
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(9)
|
|
$
|
2,094,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,355
|
(10)
|
|
|
46,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
388,781
|
(11)
|
|
|
5,427,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(12)
|
|
|
837,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,550
|
(13)
|
|
$
|
63,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,421
|
(14)
|
|
|
648,037
|
|
Margaret C. Whitman
|
|
|
1,200,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
34.62
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
515,625
|
|
|
|
34,375
|
(15)
|
|
|
0
|
|
|
|
42.58
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
343,750
|
|
|
|
156,250
|
(2)
|
|
|
0
|
|
|
|
39.90
|
|
|
|
3/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,000
|
|
|
|
315,000
|
(4)
|
|
|
0
|
|
|
|
31.93
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,977
|
(10)
|
|
|
167,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,240
|
(13)
|
|
|
226,710
|
|
Robert H. Swan
|
|
|
128,906
|
|
|
|
58,594
|
(16)
|
|
|
0
|
|
|
|
39.00
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,906
|
|
|
|
58,594
|
(17)
|
|
|
0
|
|
|
|
28.36
|
|
|
|
9/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,512
|
|
|
|
115,088
|
(4)
|
|
|
0
|
|
|
|
31.93
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,110
|
|
|
|
139,140
|
(6)
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
250,000
|
(18)
|
|
|
0
|
|
|
|
26.36
|
|
|
|
8/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(19)
|
|
|
349,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,636
|
(10)
|
|
|
36,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(20)
|
|
|
2,792,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
(21)
|
|
|
1,814,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,575
|
(13)
|
|
|
49,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,750
|
(14)
|
|
|
122,150
|
|
Elizabeth L. Axelrod
|
|
|
17,110
|
|
|
|
74,140
|
(6)
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,100
|
|
|
|
83,700
|
(4)
|
|
|
0
|
|
|
|
31.93
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,500
|
|
|
|
37,500
|
(2)
|
|
|
0
|
|
|
|
39.90
|
|
|
|
3/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
656,250
|
|
|
|
43,750
|
(22)
|
|
|
0
|
|
|
|
35.16
|
|
|
|
4/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(9)
|
|
|
698,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,360
|
(10)
|
|
|
32,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,000
|
(20)
|
|
|
1,954,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
(13)
|
|
|
55,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,625
|
(14)
|
|
|
78,525
|
|
Lorrie M. Norrington
|
|
|
15,870
|
|
|
|
0
|
|
|
|
0
|
|
|
|
11.35
|
|
|
|
6/14/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,942
|
|
|
|
0
|
|
|
|
0
|
|
|
|
33.65
|
|
|
|
3/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
70,000
|
(23)
|
|
|
0
|
|
|
|
26.36
|
|
|
|
8/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,375
|
|
|
|
105,625
|
(6)
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,412
|
|
|
|
31,388
|
(4)
|
|
|
0
|
|
|
|
31.93
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
28.15
|
|
|
|
9/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,001
|
|
|
|
24,999
|
(24)
|
|
|
0
|
|
|
|
28.15
|
|
|
|
9/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
25,000
|
(25)
|
|
|
0
|
|
|
|
38.62
|
|
|
|
9/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
311,459
|
|
|
|
0
|
|
|
|
0
|
|
|
|
33.65
|
|
|
|
3/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(26)
|
|
|
977,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
811
|
(10)
|
|
|
11,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
(20)
|
|
|
2,443,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,375
|
(13)
|
|
|
19,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(14)
|
|
|
174,500
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Awards:
|
|
|
|
Number
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Market or
|
|
|
|
of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares,
|
|
|
Payout Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Market Value
|
|
|
Units or
|
|
|
Unearned
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Shares or Units
|
|
|
Other
|
|
|
Shares, Units or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
of Stock
|
|
|
of Stock
|
|
|
Rights
|
|
|
Other Rights
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)(1)
|
|
|
Scott Thompson
|
|
|
103,125
|
|
|
|
46,875
|
(2)
|
|
|
0
|
|
|
|
39.90
|
|
|
|
3/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
527,083
|
|
|
|
22,917
|
(27)
|
|
|
0
|
|
|
|
41.04
|
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,251
|
|
|
|
33,749
|
(24)
|
|
|
0
|
|
|
|
28.15
|
|
|
|
9/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
28.15
|
|
|
|
9/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,031
|
|
|
|
78,469
|
(4)
|
|
|
0
|
|
|
|
31.93
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,156
|
|
|
|
87,344
|
(6)
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,219
|
|
|
|
24,281
|
(28)
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(9)
|
|
|
349,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(29)
|
|
|
2,094,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,074
|
(10)
|
|
|
28,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(20)
|
|
|
349,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,515
|
(13)
|
|
|
49,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,125
|
(14)
|
|
|
127,385
|
|
Rajiv Dutta
|
|
|
113,020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
39.90
|
|
|
|
3/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,350
|
|
|
|
0
|
|
|
|
0
|
|
|
|
31.93
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136,925
|
|
|
|
0
|
|
|
|
0
|
|
|
|
25.85
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,833
|
|
|
|
0
|
|
|
|
0
|
|
|
|
46.71
|
|
|
|
11/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,729
|
|
|
|
0
|
|
|
|
0
|
|
|
|
42.58
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
330,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
34.61
|
|
|
|
3/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,585
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24.93
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14.51
|
|
|
|
2/12/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14.93
|
|
|
|
8/30/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
19.39
|
|
|
|
3/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
(13)
|
|
|
54,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,137
|
(14)
|
|
|
518,433
|
|
|
|
|
(1) |
|
Market value calculated based on the closing price of $13.96 of
our common stock on December 31, 2008. |
|
(2) |
|
Focal grant. Becomes fully vested after four years; 1/8th of the
grant vested on September 1, 2006, and
1/48th of
the grant vests monthly thereafter. |
|
(3) |
|
Focal grant. Becomes fully vested after five years, with 30% of
the grant vesting on March 1, 2009, 30% of the grant
vesting on March 1, 2010, and the remaining 40% of the
grant vesting on March 1, 2011. |
|
(4) |
|
Focal grant. Becomes fully vested after four years;
1/8th of the
grant vested on September 1, 2007, and 1/48th of the grant
vests monthly thereafter. |
|
(5) |
|
New hire grant. Becomes fully vested after four years;
1/4th of the
grant vested on March 17, 2006 (the first anniversary of
the commencement of Mr. Donahoes employment), and
1/48th of
the grant vests monthly thereafter. |
|
(6) |
|
Focal grant. Becomes fully vested after four years;
1/8th of the
grant vested on September 1, 2008, and
1/48th of
the grant vests monthly thereafter. |
|
(7) |
|
First tranche of promotional grant. Becomes fully vested on
March 31, 2012;
1/8th of the
grant vested on September 30, 2008, and 1/48th of the grant
vests monthly thereafter. |
|
(8) |
|
Second tranche of promotional grant. Becomes fully vested on
March 31, 2012;
1/8th of the
grant vested on September 30, 2008, and
1/48th of
the grant vests monthly thereafter. |
|
(9) |
|
Focal grant. Becomes fully vested after five years, with 30% of
the grant vesting on March 1, 2010, 30% of the grant
vesting on March 1, 2011, and the remaining 40% of the
grant vesting on March 1, 2012. |
|
(10) |
|
PBRSU grant. Becomes fully vested on March 2, 2009. |
|
(11) |
|
Promotional grant. Becomes fully vested after four years, with
25% of the grant vesting on each of March 1, 2009,
March 1, 2010, March 1, 2011, and March 1, 2012. |
69
|
|
|
(12) |
|
Promotional grant. Becomes fully vested after two years, with
50% vesting on March 1, 2009, and the remaining 50% vesting
on March 1, 2010. |
|
(13) |
|
Allocation of PBRSUs. Represents the estimated future award of
performance based restricted stock units under the
2007-2008
performance period, assuming eBay meets the minimum threshold
for non-GAAP operating margin and revenue growth. See
Compensation Discussion and Analysis Elements
of Compensation/Executive Compensation Practices
Equity Incentive Awards Performance Based Restricted
Stock Units above for a more detailed discussion of these
target awards and related performance measures. |
|
(14) |
|
Allocation of PBRSUs. Represents the estimated future award of
performance based restricted stock units under the
2008-2009
performance period, assuming eBay meets the minimum threshold
for non-GAAP operating margin and revenue growth. See
Compensation Discussion and Analysis Elements
of Compensation/Executive Compensation Practices
Equity Incentive Awards Performance Based Restricted
Stock Units above for a more detailed discussion of these
target awards and related performance measures. |
|
(15) |
|
Focal grant. Becomes fully vested after four years; 1/8th of the
grant vested on September 1, 2005, and 1/48th of the grant
vests monthly thereafter. |
|
(16) |
|
First tranche of a sizeable new hire grant. Becomes fully vested
after four years; 1/4th of the grant vested on March 16,
2007 (the first anniversary of the commencement of
Mr. Swans employment), and 1/48th of the grant vests
monthly thereafter. See Compensation Discussion and
Analysis Equity Compensation Grant Practices
above for a more detailed discussion of our equity grant
practices with respect to sizeable new hire grants. |
|
(17) |
|
Second tranche of a sizeable new hire grant. Becomes fully
vested after three and a half years; 1/4th of the grant vested
on March 16, 2007 (the first anniversary of the
commencement of Mr. Swans employment), and 1/48th of
the grant vests monthly thereafter. See Compensation
Discussion and Analysis Equity Compensation Grant
Practices above for a more detailed discussion of our
equity grant practices with respect to sizeable new hire grants. |
|
(18) |
|
Promotional grant. Becomes fully vested after four years; 1/8th
of the grant vested on February 8, 2009, and
1/48th of
the grant vests monthly thereafter. |
|
(19) |
|
New hire grant. Becomes fully vested after four years; 25% of
the grant vested on each of March 16, 2007 and
March 16, 2008 (the anniversary of the commencement of
Mr. Swans employment) and 25% of the grant vesting on
each of March 1, 2009 and March 1, 2010. |
|
(20) |
|
Special retention grant. Becomes fully vested after three years,
with 1/3 of the grant vesting on each of March 1, 2009,
March 1, 2010, and March 1, 2011. |
|
(21) |
|
Special retention grant. Becomes fully vested after three years,
with 1/3 of the grant vesting on each of August 8, 2009,
August 8, 2010, and August 8, 2011. |
|
(22) |
|
New hire grant. Becomes fully vested after four years; 1/4th of
the grant vested on March 31, 2006 (the first anniversary
of the commencement of Ms. Axelrods employment), and
1/48th of the grant vests monthly thereafter. |
|
(23) |
|
Promotional grant. Becomes fully vested on July 16, 2012;
1/8th of the grant vested on January 16, 2009, and 1/48th
of the grant vests monthly thereafter. |
|
(24) |
|
Special retention grant. Becomes fully vested after three years;
1/6th of the grant vested on March 1, 2007, and 1/36th of
the grant vests monthly thereafter. |
|
(25) |
|
Promotional grant. Becomes fully vested on August 31, 2009;
1/8th of the grant vested on February 28, 2006, and 1/48th
of the grant vests monthly thereafter. |
|
(26) |
|
Special retention grant. Becomes fully vested on August 1,
2010; 15% of the grant vested on each of August 1, 2007 and
August 1, 2008, 20% of the grant vesting on August 1,
2009, 50% of the grant vesting on August 1, 2010. |
|
(27) |
|
New hire grant. Becomes fully vested after four years; 1/4th of
the grant vested on February 7, 2006 (the first anniversary
of the commencement of Mr. Thompsons employment), and
1/48th of the grant vests monthly thereafter. |
70
|
|
|
(28) |
|
Promotional grant. Becomes fully vested on January 23,
2012; 1/8th of the grant vested on July 23, 2008, and
1/48th of the grant vests monthly thereafter. |
|
(29) |
|
Promotional grant. Becomes fully vested after four years; 25% of
the grant vested on July 13, 2008 and 25% of the grant
vesting on each of July 13, 2009, July 13, 2010, and
July 13, 2011. |
OPTION
EXERCISES AND STOCK VESTED
The following table sets forth the number of shares acquired and
the value realized upon exercise of stock options and the
vesting of stock awards during 2008 by each of our named
executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired
|
|
|
Realized
|
|
|
Acquired
|
|
|
Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)(2)
|
|
|
John J. Donahoe
|
|
|
|
|
|
|
|
|
|
|
3,356
|
|
|
|
86,753
|
|
Margaret C. Whitman
|
|
|
640,000
|
(3)
|
|
$
|
6,136,128
|
|
|
|
11,977
|
|
|
|
309,605
|
|
Robert H. Swan
|
|
|
|
|
|
|
|
|
|
|
15,137
|
|
|
|
396,291
|
|
Elizabeth L. Axelrod
|
|
|
|
|
|
|
|
|
|
|
2,360
|
|
|
|
61,006
|
|
Lorrie M. Norrington
|
|
|
|
|
|
|
|
|
|
|
15,811
|
|
|
|
389,664
|
|
Scott Thompson
|
|
|
|
|
|
|
|
|
|
|
77,074
|
|
|
|
2,068,613
|
|
Rajiv Dutta
|
|
|
339,000
|
|
|
|
1,350,478
|
|
|
|
5,752
|
|
|
|
114,494
|
|
|
|
|
(1) |
|
Value realized on exercise is based on the fair market value of
our common stock on the date of exercise minus the exercise
price and does not necessarily reflect proceeds actually
received by the named executive officer. |
|
(2) |
|
Value realized on vesting is based on the fair market value of
our common stock on the vesting date and does not necessarily
reflect proceeds actually received by the named executive
officer. |
|
(3) |
|
Shares sold in 2008 pursuant to: (1) a 10b5-1 plan adopted
in February 2007 that terminated in February 2008; and
(2) a 10b5-1 plan adopted in February 2008 that terminated
in January 2009. |
COMPENSATION
OF DIRECTORS
Board compensation is determined by the Compensation Committee.
Prior to 2003, Board compensation was 100% equity based. After a
review in December 2002, Board compensation was substantially
revised by the Board, with equity compensation reduced and cash
compensation added. Board compensation has subsequently been
reviewed annually by the Compensation Committee, which has not
changed cash compensation for retainers or board meeting fees.
As of July 2007, the Compensation Committee increased fees
payable for committee meetings and to our lead director and
committee chairs and changed the annual equity component of
Board compensation.
New directors who are not employees of eBay, or any parent,
subsidiary, or affiliate of eBay, receive deferred stock units,
or DSUs, with an initial value of $150,000. DSUs represent an
unfunded, unsecured right to receive shares of eBay common stock
(or the equivalent value thereof in cash or property) on a
future date, and the value of DSUs varies directly with the
price of eBays common stock. Each DSU award granted to a
non-employee director upon election to the Board vests as to 25%
of the DSUs on the first anniversary of the date of grant and as
to 1/48th of the DSUs each month thereafter, provided the
director continues as a director or consultant of eBay. DSUs are
payable in stock or cash (at eBays election) following the
termination of a non-employee directors tenure in such
capacity.
Beginning in 2003, each non-employee director was granted an
option to purchase 15,000 shares of eBay common stock at
the time of each annual meeting of stockholders if he or she has
served continuously as a member of the Board since the date
elected or appointed to the Board. The exercise price of the
options was 100% of the fair market value of the common stock on
the date of grant. Beginning with the 2008 Annual Meeting of
Stockholders, the number of options granted was changed to equal
the net present value of $110,000 (rounded to the nearest whole
71
share), calculated using the Black-Scholes valuation methodology
on the date of the grant, and each director also receives
$110,000 (rounded to the nearest whole share) of DSUs. All
options granted to non-employee directors vest as to 25% of the
shares on the first anniversary of the date of grant and as to
1/48th of the shares each month thereafter, provided the
optionee continues as a director or consultant of eBay through
such date. In the event of a change of control of eBay, options
and DSUs granted to our non-employee directors will accelerate
and become fully vested.
Except for Mr. Omidyar, eBays founder and Chairman of
the Board, non-employee directors are paid a retainer of $50,000
per year, the chairman of the Audit Committee receives an
additional $15,000 per year, the Lead Independent Director
receives an additional $25,000 per year, and all other committee
chairs receive an additional $10,000 per year. Directors may
elect to receive, in lieu of these fees and at the time these
fees would otherwise be payable (i.e., on a quarterly basis in
arrears for services provided), fully-vested DSUs with an
initial value equal to the amount of these fees. DSUs are
payable in stock or cash (at eBays election) following the
termination of a non-employee directors tenure in such
capacity. Except for Mr. Omidyar, each non-employee
director also receives meeting fees of $2,000 for each Board
meeting, $1,500 for each committee meeting attended, and $2,000
for each off-site meeting attended.
DIRECTOR
SUMMARY COMPENSATION TABLE
The following table summarizes the total compensation paid by
the company to non-employee directors for the fiscal year ended
December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)
|
|
|
Fred D. Anderson
|
|
$
|
93,000
|
|
|
$
|
15,000
|
|
|
$
|
184,361
|
|
|
|
|
|
|
$
|
292,361
|
|
Marc L. Andreessen
|
|
|
2,000
|
|
|
|
9,643
|
|
|
|
|
|
|
|
|
|
|
|
11,643
|
|
Edward W. Barnholt
|
|
|
23,500
|
|
|
|
52,570
|
|
|
|
138,173
|
|
|
|
|
|
|
|
214,243
|
|
Philippe Bourguignon
|
|
|
72,000
|
|
|
|
15,000
|
|
|
|
184,361
|
|
|
|
|
|
|
|
271,361
|
|
Scott D. Cook
|
|
|
16,000
|
|
|
|
15,000
|
|
|
|
184,361
|
|
|
|
|
|
|
|
215,361
|
|
William C. Ford, Jr.
|
|
|
20,000
|
|
|
|
52,569
|
|
|
|
104,495
|
|
|
|
|
|
|
|
177,064
|
|
Robert C. Kagle(4)
|
|
|
39,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000
|
|
Dawn G. Lepore(5)
|
|
|
82,500
|
|
|
|
15,000
|
|
|
|
184,361
|
|
|
|
|
|
|
|
281,861
|
|
David M. Moffett
|
|
|
26,500
|
|
|
|
52,243
|
|
|
|
14,974
|
|
|
|
|
|
|
|
93,717
|
|
Pierre M. Omidyar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16,823
|
(6)
|
|
|
16,823
|
|
Richard T. Schlosberg, III
|
|
|
84,000
|
|
|
|
23,007
|
|
|
|
138,064
|
|
|
|
|
|
|
|
245,071
|
|
Thomas J. Tierney
|
|
|
28,000
|
|
|
|
15,000
|
|
|
|
184,361
|
|
|
|
|
|
|
|
227,361
|
|
|
|
|
(1) |
|
Includes fees with respect to which directors elected to receive
DSUs in lieu of such fees. The following directors received DSUs
in the amounts set forth below in lieu of the fees set forth
below: |
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Foregone
|
|
|
DSUs Received
|
|
|
Marc L. Andreessen
|
|
$
|
12,772
|
|
|
|
1,056
|
|
Edward W. Barnholt
|
|
|
73,324
|
|
|
|
4,272
|
|
Scott D. Cook
|
|
|
60,000
|
|
|
|
3,310
|
|
William C. Ford, Jr.
|
|
|
50,000
|
|
|
|
2,758
|
|
David M. Moffett
|
|
|
50,000
|
|
|
|
2,758
|
|
Thomas J. Tierney
|
|
|
61,676
|
|
|
|
3,175
|
|
|
|
|
(2) |
|
Beginning in 2003, we have granted new directors who are not
employees of eBay, or any parent, subsidiary, or affiliate of
eBay, DSUs with an initial value of $150,000. Each non-employee
director (other than Mr. Omidyar) was also granted DSUs
with a value of $110,000 on June 19, 2008. Amounts shown
reflect the dollar amount of compensation expense for DSU awards
for the fiscal year ended December 31, 2008, in accordance
with FAS 123R (assuming no forfeitures), and thus includes
amounts from DSU awards granted in 2003 through 2008 that vested
in 2008. As of December 31, 2008, the following
non-employee directors held the following |
72
|
|
|
|
|
aggregate number of DSUs, which includes DSUs granted in lieu of
fees: Mr. Anderson, 9,215; Mr. Andreessen, 6,719;
Mr. Barnholt, 15,499; Mr. Bourguignon, 4,658;
Mr. Cook, 10,432; Mr. Ford, 12,897; Mr. Kagle,
2,689; Ms. Lepore, 3,771; Mr. Moffett, 9,869;
Mr. Schlosberg, 8,097; and Mr. Tierney, 16,558. DSUs
are not included in the Security Ownership of Certain Beneficial
Owners and Management Table above. As of December 31, 2008,
Mr. Omidyar did not hold any DSUs. |
|
(3) |
|
Reflects the dollar amount of the compensation expense for the
fiscal year ended December 31, 2008, calculated in
accordance with FAS 123R (assuming no forfeitures), and thus
includes amounts from options granted in 2003 through 2008 that
vested in 2008. Each non-employee director (other than
Mr. Omidyar) was granted an option to purchase
10,120 shares on June 19, 2008. The estimated fair
value of each of these options as of the grant date determined
in accordance with FAS 123R is $10.85. We calculated the
estimated |