Yahoo 2007 Annual Report Download - page 129

fact that a substantial portion of Mr. Yang’s net worth is dependent upon the value of the Company’s common stock,
the Compensation Committee and Mr. Yang agreed that it would be appropriate to pay him a base salary of $1 for his
services to the Company during 2007. Mr. Yang did not receive an annual bonus or long-term equity incentive grant
from the Company during 2007.
2007 Compensation Arrangement with Ms. Decker
In November 2007, the Compensation Committee approved a new compensation arrangement for Ms. Decker
in connection with her appointment, and significantly increased responsibilities, as the Company’s President. The
Compensation Committee determined that in light of Ms. Decker’s increased responsibilities in her new position for
the overall operations of the Company, and to encourage her retention during a period of important strategic and
organizational transition for the Company, the changes in Ms. Decker’s compensation, and the differences between
her compensation level and the compensation levels of the other Named Executive Officers, were appropriate.
Ms. Decker’s past contributions to the Company were also considered.
In determining the new compensation arrangement for Ms. Decker, the Compensation Committee considered
data provided by Compensia, compensation consultants retained by management to provide assistance in preparing
recommendations for Ms. Decker’s arrangement, as well as input from Frederic W. Cook & Co., Inc., the
Compensation Committee’s compensation consultant. Compensia identified certain companies as having exec-
utives whose role, level and scope of duties and responsibilities are similar to those performed by Ms. Decker for
Yahoo!; specifically, Adobe Systems Incorporated, Apple Inc., eBay Inc., Hewlett-Packard Company, International
Business Machines Corporation, Microsoft Corporation, Motorola, Inc., Network Appliance, Inc., Oracle Corpo-
ration, and Time Warner Inc. Compensia also provided comparable data for the executives performing these roles at
these companies.
After consideration of the market data provided by Compensia, input from Frederic W. Cook & Co., the other
factors described above, the compensation levels of the Company’s other executives, and Mr. Yang’s recommen-
dations, the Compensation Committee approved an arrangement to provide total direct compensation for
Ms. Decker in the top quartile of competitive market practice. Ms. Decker’s base salary level was intended to
be consistent with competitive market levels for her position. To link her interests with those of the Company’s
stockholders, over 90% of Ms. Decker’s total direct compensation opportunity for 2007 was performance-based and
tied directly to stockholder value creation.
As described in more detail below, the new arrangement increased Ms. Decker’s base salary and annual target
bonus opportunity, provided retention grants of stock options and restricted stock units, and modified the
termination-related provisions of stock options granted to her in May 2006. In setting the levels of the equity-
based awards, the Compensation Committee took into account the size of the May 2006 option grant, as well as
competitive market data for similarly situated executives. The specific components of Ms. Decker’s arrangement
are described in the sections below and in the tables that follow this Compensation Discussion and Analysis.
Independent Consultant and Peer Group
The Compensation Committee’s practice has been to retain independent compensation consultants to help
identify appropriate peer group companies and to obtain and evaluate current executive compensation data for these
companies. For 2007, the Compensation Committee retained the consulting firm of Frederic W. Cook & Co., Inc.
for this purpose. Frederic W. Cook & Co. advised the Compensation Committee with respect to trends in executive
compensation, determination of pay programs, assessment of competitive pay levels and mix (e.g., proportion of
fixed pay to incentive pay, proportion of annual cash pay to long-term incentive pay), and setting compensation
levels. Frederic W. Cook & Co. also provided advice to the Compensation Committee as it considered Ms. Decker’s
compensation arrangements described above. In setting compensation levels, the Compensation Committee also
considers compensation survey data compiled from the Mercer Benchmark Database — Executive Positions and
data included in the Radford Executive Survey. The Compensation Committee reviews the information provided by
Frederic W. Cook & Co. and obtained from these surveys to inform its decisions on executive compensation
arrangements, including the competitive reasonableness of arrangements.
In consultation with Frederic W. Cook & Co., the Compensation Committee selected the following companies
as our peer group companies for 2007: Amazon.com Inc., Adobe Systems Incorporated, Apple Inc., eBay Inc.,
Electronic Arts Inc., EMC Corporation, Expedia, Inc., Google Inc., IAC/InterActiveCorp, Intuit Inc., Juniper
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