Yahoo 2010 Annual Report Download - page 93

The 1995 Stock Plan permits the granting of restricted stock and restricted stock units (collectively referred to as
“restricted stock awards”). The restricted stock award vesting criteria are generally the passing of time, meeting
certain performance-based objectives, or a combination of both, and continued employment through the vesting
period (which varies but does not exceed four years). 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.
The 1995 Stock Plan provides for the issuance of a maximum of 754 million shares of which 123 million shares
were still available for issuance as of December 31, 2010.
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, 2010. 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’ Plan’s 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 seven to 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.
Restricted stock units granted under the Directors’ Plan generally vest in equal quarterly installments over a
one-year period following the date of grant and, once vested, are generally 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 “Employee Stock
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 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 Employee Stock Purchase Plan provides for the issuance of a maximum of 75 million shares of common
stock of which 31 million shares were available as of December 31, 2010. For the years ended December 31,
2008, 2009, and 2010, stock-based compensation expense related to the activity under the plan was $52 million,
$55 million, and $26 million, respectively. As of December 31, 2010, there was $60 million of unamortized
stock-based compensation cost related to the Employee Stock Purchase Plan which will be recognized over a
weighted average period of 1.2 years.
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