Yahoo 2007 Annual Report Download - page 97

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forfeitures for the year ended December 31, 2006 and 2007 such that expense was recorded only for those stock-
based awards that are expected to vest. Previously under APB 25 to the extent awards were forfeited prior to
vesting, the corresponding previously recognized expense was reversed in the period of forfeiture. Upon the
adoption of SFAS 123R, the Company recorded a cumulative adjustment to account for the expected forfeitures of
stock-based awards granted prior to January 1, 2006 for which the Company previously recorded an expense. This
adjustment was not material and was recorded as a reduction to stock-based compensation expense in 2006.
In addition, upon the adoption of SFAS 123R, the Company included as part of cash flows from financing activities
the gross benefit of tax deductions related to stock-based awards in excess of the grant date fair value of the related
stock-based awards for the options exercised during the year ended December 31, 2006 and certain options
exercised in prior periods. This amount is shown as a reduction to cash flows from operating activities and an
increase to cash flows from financing activities. Net cash flows remain unchanged from what would have been
reported prior to the adoption of SFAS 123R.
Stock Plans. The Company’s Amended and Restated 1995 Stock Plan and stock-based award plans assumed
through acquisitions are collectively referred to as the “Plans.” The Amended and Restated 1995 Stock Plan
provides for the issuance of stock-based awards to employees, including executive officers, and consultants. The
Amended and Restated 1995 Stock Plan permits the granting of incentive stock options, non-statutory stock options,
restricted stock, restricted stock units, stock appreciation rights, indexed options, and dividend equivalents.
Options granted under the Amended and Restated 1995 Stock Plan before May 19, 2005 generally expire 10 years
after the grant date, and options granted after May 19, 2005 generally expire seven years after the grant date.
Options generally become exercisable over a four-year period based on continued employment and vest either
monthly, quarterly, semi-annually, or annually.
The Amended and Restated 1995 Stock Plan permits the granting of restricted stock and restricted stock units
(collectively referred to as “restricted stock awards”). The vesting of restricted stock awards is generally subject to
meeting certain performance-based objectives, the passage of time, or a combination of both, and continued
employment through the vesting period. Restricted stock award grants are generally measured at fair value on the
date of grant based on the number of shares granted and the quoted price of the Company’s common stock. Such
value is recognized as an expense over the corresponding service period. Each share of the Company’s common
stock issued in settlement of restricted stock awards is counted as 1.75 until June 11, 2007 and 2.00 shares beginning
on June 12, 2007 against the Amended and Restated 1995 Stock Plan’s share limit.
The Amended and Restated 1995 Stock Plan provides for the issuance of a maximum of 704 million shares of which
69 million were still available for issuance as of December 31, 2007.
The Amended and Restated 1996 Directors’ Stock Plan (the “Directors’ Plan”) provides for the grant of
nonqualified stock options and restricted stock units to non-employee directors of the Company. The Directors’
Plan provides for the issuance of up to 9 million shares of the Company’s common stock, of which approximately
5 million were still available for issuance as of December 31, 2007. Each share of the Company’s common stock
issued in settlement of restricted stock units granted under the Directors’ Plan is counted as 1.75 shares against the
Directors’ Plans’ share limit.
Options granted under the Directors’ Plan before May 25, 2006 generally become exercisable, based on continued
service as a director, for initial grants to new directors, in equal monthly installments over four years, and for annual
grants, with 25 percent of such options vesting on the one year anniversary of the date of grant and the remaining
options vesting in equal monthly installments over the remaining 36-month period thereafter. Such options
generally expire 10 years after the grant date. Options granted on or after May 25, 2006 become exercisable, based
on continued service as a director, in equal quarterly installments over one year. Such options generally expire
seven years after the grant date.
95
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)