Yahoo 2008 Annual Report Download - page 101

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Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
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.
Restricted stock units granted under the Directors’ Plan vest in equal quarterly installments over a one year
period following the date of grant and, once vested, are payable in an equal number of shares of the Company’s
common stock on the earlier of the third anniversary of the grant date or the date the director ceases to be a
member of the Board.
Non-employee directors are also permitted to elect an award of restricted stock units or a stock option under the
Directors’ Plan in lieu of a cash payment of fees for serving as chairperson of a committee of the Board. Such
stock options or restricted stock unit awards granted in lieu of cash for chairperson fees are fully vested on the
grant date.
Employee Stock Purchase Plan. The Company’s 1996 Employee Stock Purchase Plan (the “Purchase Plan”)
allows employees to purchase shares of the Company’s common stock through payroll deductions of up to
15 percent of their annual compensation subject to certain Internal Revenue Code limitations. The price of
common stock purchased under the Purchase Plan is equal to 85 percent of the lower of the fair market value of
the common stock on the commencement date of each 24-month offering period or the specified purchase date.
The Purchase Plan provides for the issuance of a maximum of 45 million shares of common stock of which
18 million shares were available as of December 31, 2008. For the years ended December 31, 2006, 2007, and
2008, the stock-based compensation expense related to the activity under the Purchase Plan was $55 million,
$48 million, and $52 million, respectively. As of December 31, 2008, there was $97 million of unamortized
stock-based compensation cost related to the Purchase Plan which will be recognized over a weighted average
period of 1.1 years.
Executive Retention Compensation Agreement. During 2006, the Compensation Committee of the Board (the
“Compensation Committee”) approved a three year performance and retention compensation arrangement with
Terry Semel, the Company’s then Chief Executive Officer (“CEO”). For each of the years 2006 to 2008, as the
CEO, Mr. Semel was eligible to receive a discretionary annual bonus payable in the form of a fully vested
non-qualified stock option for up to 1 million shares with an exercise price equal to the closing trading price of
the Company’s common stock on the date of the grant. On June 18, 2007, the executive retention arrangement
was terminated due to Mr. Semel’s resignation as the CEO of the Company. During 2007, $16 million of stock-
based compensation expense recorded in 2007 under this arrangement was reversed due to the forfeitures of
equity awards. No similar arrangement existed for the Company’s former CEO, Jerry Yang. See Note 17—
“Subsequent Events” for additional information about the Compensatory Arrangements of the Company’s
current CEO, Ms. Carol Bartz.
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