Yahoo 1997 Annual Report Download - page 26

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in 1997 and $637,000 in 1996. In connection w ith t h is a g re ement, the Company issued to the Visa Group for a
purchase price of $50,000, a w arrant to purchase 525,000 shares of the Company’s Com m on St ock a t an
exercise price of $8.33 per share, w hich w arrant w as e xe rcisable during a tw o ye ar period commencing in
March 1997. In Ap ril 1997, t h e Visa Grou p n e t e xe rcis e d t h e w a rra n t . Du rin g J u ly 1997, p rior t o t h e com -
pletion of significant business activities and public launch of the p rop e rty, t h e Com p a n y a n d VISA
entered into an a g reement u n d e r w h ich t h e Visa Group relea s e d t h e Com p a n y from ce rtain ob lig a t ion s
and claims. In conne ct ion w ith this agreeme n t , t h e Com p a n y is s u e d 699,481 s h a re s of Ya h oo! Com m on
Stock t o t h e Visa Grou p , for w h ich t h e Com p a n y re cord e d a on e -t im e , non-cash, pre-tax charge of
$21,245,000 in the second quart e r e n d e d J u n e 30, 1997.
NOTE 6 Share holde rs ’ Equity
Stock Split. Du rin g J u ly 1997, t h e Com p a n y’s Boa rd of Dire ct ors a p p rove d a t h re e -for-t w o Common Stock
split. Shareholders of record on August 11, 1997 (t h e re cord d a t e ) re ce ive d on e a d d it ion a l s h a re for e very tw o
shares held on that date. All refe re n ce s t o t h e n u m b e r of s h a re s of Com m on St ock, w e ig h t e d a ve ra g e com m on
shares, and per share amounts ha ve b e e n re t roa ct ive ly re s t a t e d in t h e a ccom p a n yin g con s olid a t e d fin a n cia l
statements to reflect the effe ct of t h e t h re e -for-tw o s p lit .
Com m on Stock. On Ap ril 11, 1996, t h e Com p a n y com p le t e d it s in it ia l p u b lic offe rin g of 4,485,000 s h a re s of it s
Com m on St ock. Ne t proceeds to the Company aggregated a p p roxim a t e ly $35,106,000. As of t h e clos in g d a t e of
the offering, all of the Convertible Preferred Stock and Mandatorily Rede e m a b le Con ve rtible Pre fe rre d St ock
outstanding w as con ve rted in t o a n a g g re gate of 19,257,108 shares of Common Stock. The Company has the
right to repurchase, at the original issue price , a d e clin in g p e rce n t a g e of ce rtain of t h e com m on s h a re s is s u e d
to employees under restricted stock agre e m e n t s . Th e Com p a n y’s re p u rch a se right lapses over four years ba s e d
on the length of the employees’ con t in u a l e m p loym e n t w it h t h e Com p a n y. At December 31, 1997, 3,125,000
shares of Common Stock w ere s u b je ct to repurchase by the Company.
Stock Option Plan s . As of December 31, 1997, the Company had four stock-ba s e d com p e n s a t ion p la n s w h ich
are described below. The Company a p p lie s APB Op in ion 25 a n d re la t e d in t e rp re t a t ion s in a ccou n t in g for it s
plans and complies w ith t h e disclosure provisions of SFAS 123,“Accou n t in g for St ock-Ba s e d Com p e n s a t ion .”
The 1995 Stock Plan (the “Stock Plan”) and the 1995 Four11 Stock Option Plan (the “Four11 Plan”) allow
for the issuance of incentive stock options, non-qualified stock options a n d s t ock p u rch a s e rig h t s t o p u rch a s e
a maximum of 19,830,332 shares of the Company’s Common Stock. Under the Stock Plan and the Four11 Plan,
incentive stock options may be granted to employe e s , d ire ct ors , a n d office rs of t h e Com p a n y a n d n on -q u a li-
fied stock options and stock purchase rights may be grante d t o con s u lt a n t s , e m p loye e s , d ire ct ors , a n d office rs
of the Company. Op t ion s g ra n t e d u n d e r t h e St ock Pla n a n d t h e Fou r11 Pla n a re for p e riod s n ot t o e xce e d t e n
years, and must be issued at prices not le s s t h a n 100% a n d 85%, for in ce n t ive a n d n on q u a lifie d s t ock
options, respectively, of t h e fa ir m a rke t va lu e of t h e s t ock on t h e d a t e of g ra n t a s d e t e rm in e d by the Board of
Directors. Options granted to shareholders w ho ow n g re a ter than 10% of the outstanding stock are for periods
not to exceed five years and must be is s u e d a t p rice s n ot le s s t h a n 110% of t h e fa ir m a rke t va lu e of t h e
stock on the date of grant as determine d b y t h e Boa rd of Dire ct ors . Op t ion s g ra n t e d u n d e r t h e St ock Pla n
and the Four11 Plan generally vest 25% after the firs t ye a r of s e rvice a n d ra t a b ly e a ch m on t h ove r t h e
remaining thirt y-s ix m on t h p e riod . Op t ion s is s u e d under the Four11 Plan may be exercised prior to vesting
and are subject to repurchase in the e ve n t of a volu n t a ry t e rm in a t ion , a t t h e orig in a l p u rch a s e p rice . At
December 31, 1997, 30,749 shares w ere subject to repurchase unde r t h e p rovis ion s of t h e Fou r11 Pla n .
The 1996 Directors’ St ock Op t ion Pla n (t h e “Dire ct ors ’ Plan”) provides for the issua n ce of u p t o 300,000
non-statutory stock options to non-employee directors of the Company. Ea ch p e rs on w h o b e com e s a n on -
employee director of the Company after the d a t e of t h e Com p a n y's in it ia l p u b lic offe ring w ill a u t om a t ica lly
be granted a non-statutory option (the “First Option”) to purchase 60,000 share s of Common Stock upon the
date on w hich s u ch p e rs on firs t b e comes a director. Therea ft e r, e a ch d ire ct or of t h e Com p a n y w ill b e g ra n t e d
an annual option (the “Annual Option”) to purchase 7,500 share s of Common Stock. Options unde r t h e
Directors’ Pla n w ill b e g ra n t e d a t t h e fa ir m a rke t va lu e of t h e s t ock on t h e d a t e of grant as determined by
the Board of Directors and w ill vest in equal monthly installments over four yea rs , in t h e ca s e of t h e Firs t
Option, or at the end of four years in the case of t h e An n u a l Op t ion .
Activity under the Company’s s t ock op t ion p la ns is summarized as follow s:
Weig hte d
Av ailable Option s Ave rag e
for Gran t Outs tan din g Price pe r Share
Shares reserved 7,830,332
Options granted (5,260,626) 5,260,626 $ 0.02
Options exercised – (284,100) 0.01
Balance at December 31, 1995 2,569,706 4,976,526 0.02
Additional shares reserved 4,800,000
Options granted (5,707,385) 5,707,385 6.71
Options canceled 461,328 (461,328) 6.64
Options exercised – (744,566) 0.01
Balance at December 31, 1996 2,123,649 9,478,017 3.73
Additional shares reserved 7,500,000
Options granted (4,604,075) 4,604,075 37.45
Options canceled 88,913 (88,913) 9.18
Options exercised – (2,417,456) 2.09
Balance at December 31, 1997 5,108,487 11,575,723 $ 17.38