Yahoo 2012 Annual Report Download - page 112

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 end of the one-year vesting period or the date the director
ceases to be a member of the Board (subject to any deferral election that may be made by the director).
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 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 compensation subject to
certain Internal Revenue Code limitations. Prior to November 2012, the price of common stock purchased under
the plan was 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. Beginning in November
2012, the Employee Stock Purchase Plan was modified to consist of three-month offering periods. The price of
the common stock purchased under the plan after November 2012 will be equal to 90 percent of the lower of the
fair market value of the common stock on the commencement date of each three-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 19 million shares were available as of December 31, 2012. For the years ended December 31,
2010, 2011, and 2012, stock-based compensation expense related to the activity under the plan was $26 million,
$46 million, and $31 million, respectively. As of December 31, 2012, there was $19 million of unamortized
stock-based compensation cost related to the Employee Stock Purchase Plan which will be recognized over a
weighted average period of 1.1 years.
The Company’s 1995 Stock Plan, the Directors’ Plan, and other stock-based award plans assumed through
acquisitions are collectively referred to as the “Plans.” Stock option activity under the Company’s Plans is
summarized as follows (in thousands, except years and per share amounts):
Shares
Weighted Average
Exercise Price per
Share
Weighted Average
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic Value
Outstanding at December 31, 2011 ............. 62,439 $21.94 3.07 $80,211
Options granted ............................ 19,235 $17.05
Options exercised(1) ......................... (11,212) $12.76
Options cancelled/forfeited ................... (11,040) $14.85
Options expired ............................ (21,330) $26.94
Outstanding at December 31, 2012 ............. 38,092 $21.42 4.19 $78,387
Vested and expected to vest at December 31,
2012(2) ................................. 35,317 $21.34 3.93 $73,082
Exercisable at December 31, 2012 ............. 21,079 $24.16 2.02 $34,315
(1) The Company issued new shares to satisfy stock option exercises.
(2) The expected to vest options are the result of applying the pre-vesting forfeiture rate assumptions to total
outstanding options.
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