Yahoo 2007 Annual Report Download - page 128

• combining Yahoo!’s search and display advertising sales teams in the U.S. to better serve all our advertisers’
marketing objectives from brand awareness to direct response;
• strengthening of the Company’s position in advertising, social media, communications and mobile through a
range of product launches, strategic partnerships and acquisitions; and
• continuing to create compelling new consumer offerings to drive audience growth and deepen engagement.
Those individuals listed in the Summary Compensation Table in this report are referred to as the “Named
Executive Officers.” The Company’s executive compensation arrangements are administered by the Compensation
Committee. The Compensation Committee confers with the board of directors in determining the compensation for
Mr. Yang, our Chief Executive Officer. In determining compensation for the other Named Executive Officers, and
as discussed in more detail below, the Compensation Committee considers, among other things, Mr. Yang’s
recommendations. The Compensation Committee is, however, solely responsible for making the final decisions on
compensation for the Named Executive Officers. (As noted below, Messrs. Semel, Rosensweig and Nazem each
terminated employment with the Company during 2007; references in the following discussion to the “Named
Executive Officers’ generally do not include these former executive officers unless otherwise expressly noted.)
Executive Compensation Program Objectives and Overview
Overview
In order to increase the size of our business and create continued stockholder value, the Company must be able
to respond rapidly to new technological developments and changing trends in the multiple worldwide businesses in
which we compete. The broad scope and complexity of our business require unique experience and talents in our
executives, making it critical to retain on a long-term basis those executives who have developed and grown our
business to date, as well as to attract new talent. We also operate in a highly competitive executive labor market and
face competitors of similar size and scale to the Company as well as new competitors and start-ups seeking to hire
our executives to facilitate and speed their entry into, or expansion of, competing businesses.
Executive Compensation Programs
The Company’s current executive compensation program has three key components, which are designed to be
consistent with the Company’s compensation philosophy and to reward executives based on individual and
company performance: (1) base salary; (2) annual incentive bonuses; and (3) long-term stock awards, including
stock options and restricted stock units. In structuring executive compensation arrangements, the Compensation
Committee considers how each component promotes retention and/or rewards performance by the executive. Other
than our 401(k) plan, the Company does not provide any pensions or other retirement benefits for our executive
officers, nor does it generally provide material perquisites. Furthermore, our executive officers generally do not
have contractual rights to severance benefits upon a termination of their employment, except as described below
under “Change in Control Severance Plan” and “Potential Payments Upon Termination or Change in Control.”
In order to attract and retain our key executives, the Company seeks to provide targeted “total direct
compensation” to our executives above the 50th percentile of competitive market practice. As used in this
discussion, the term “total direct compensation” means the executive’s base salary, annual incentive bonus, and
long-term equity incentive awards based on the grant-date fair value of such awards as determined in accordance
with generally accepted accounting principles and SEC rules. While the Compensation Committee does not target
compensation levels to specific bench-marks against the peer companies identified below, base salary levels are
generally intended to be consistent with competitive market base salary levels. Performance-based compensation,
such as bonus and long-term equity incentive opportunities, is generally targeted to make up a larger portion of each
executive’s total direct compensation opportunities. The Compensation Committee believes that the design of our
annual bonuses and long-term equity incentives provides an effective and appropriate mix of incentives to ensure
our executive performance is focused on long-term stockholder value creation. For this reason, performance-based
compensation constitutes the most substantial portion of each Named Executive Officer’s total direct compensation
opportunity.
2007 Compensation Arrangement with Mr. Yang
Mr. Yang is a founder and one of the Company’s largest stockholders based on beneficial ownership of the
Company’s common stock during 2007. Given the value of Mr. Yang’s existing equity stake in the Company and the
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