Yahoo 2004 Annual Report Download - page 84

four separate tranches through March 31, 2005. One of the four tranches matured and settled in December 2004,
resulting in the Company receiving a cash settlement of approximately $26 million. On each of the remaining maturity
dates, if the market price of Yahoo! common stock is at or above the pre-determined price agreed in connection with
such transaction, which ranges from $25.41 to $26.74 for the remaining three tranches, the Company will have its
investment returned with a premium. If the market price of the Company’s common stock is below the pre-determined
price, the Company will repurchase shares of its common stock, up to an aggregate of 3.1 million shares. These
transactions are recorded in stockholders’ equity on the consolidated balance sheets as of December 31, 2004. The shares
underlying these transactions were considered outstanding at December 31, 2004 and have been included in the compu-
tation of both basic and diluted net income per share for the year ended December 31, 2004.
Note 12 EMPLOYEE BENEFITS
Benefit Plan. The Company maintains a Yahoo! Inc. 401(k) Plan (the ‘‘401(k) Plan’’) for its full-time employees. The
401(k) Plan allows employees of the Company to contribute up to the Internal Revenue Code prescribed maximum
amount. Each participant in the 401(k) Plan may elect to contribute from one percent to fifty percent of his or her
annual compensation to the 401(k) Plan. The Company matches employee contributions at a rate of 25 percent.
Employee contributions are fully vested, whereas vesting in matching Company contributions occurs at a rate of 33 per-
cent per year of employment. During 2002, 2003, and 2004, the Company’s contributions amounted to approximately
$3 million, $5 million, and $8 million, respectively.
Stock Option Plans. The Company’s 1995 Stock Plan and stock option plans assumed through acquisitions are collectively
referred to as the ‘‘Plans.’’
The Plans allow for the issuance of incentive stock options, non-statutory stock options, and stock purchase rights.
Options are generally granted for a term of ten years and generally vest over a four-year period. The 1995 Stock Plan
was amended in April 2002 to increase the number of shares available for issuance under the plan by an aggregate of
70 million shares to 574 million shares. The 1995 Stock Plan was further amended in May 2003 to enable the
Company to grant additional types of equity-based awards under the 1995 Stock Plan, including but not limited to,
stock appreciation rights, indexed options, restricted stock, restricted stock units and dividend equivalents. The amend-
ment also extended the termination date of the 1995 Stock Plan from May 2005 to May 2013. Shares available for
future option grants at December 31, 2004 totaled approximately 39 million.
The 1996 Directors’ Stock Option Plan (the ‘‘Directors’ Plan’’) provides for the issuance of up to approximately 9 million
non-statutory stock options to non-employee directors of the Company. Options under the Directors’ Plan vest in equal
monthly installments over four years for initial grants to new directors, and over four years for annual grants, with
25 percent of such options vesting on the one-year anniversary of the date of grant, with the remaining options vesting
in equal monthly installments over the 36-month period thereafter. The Directors’ Plan was amended in April 2002 to
increase the annual grant for outside Directors from 20,000 shares to 50,000 shares and to increase the number of shares
available for issuance under the plan by an aggregate of 4 million shares to approximately 9 million shares. Shares
available for future option grants at December 31, 2004 under the Directors’ Plan totaled approximately 6 million shares.
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