Yahoo 2012 Annual Report Download - page 114

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As of December 31, 2012, there was $281 million of unamortized stock-based compensation cost related to
unvested restricted stock awards, which is expected to be recognized over a weighted average period of 2.5 years.
The total fair value of restricted stock awards vested during the years ended December 31, 2010, 2011, and 2012
was $195 million, $136 million, and $171 million, respectively.
During the year ended December 31, 2012, 10.7 million shares subject to previously granted restricted stock
awards vested. A majority of these vested restricted stock awards were net share settled. The Company withheld
3.9 million shares based upon the Company’s closing stock price on the vesting date to settle the employees’
minimum statutory obligation for the applicable income and other employment taxes. The Company then
remitted cash to the appropriate taxing authorities.
Total payments for the employees’ tax obligations to the relevant taxing authorities were $61 million for the year
ended December 31, 2012 and are reflected as a financing activity within the consolidated statements of cash
flows. The payments were used for tax withholdings related to the net share settlements of restricted stock units.
The payments had the effect of share repurchases by the Company as they reduced the number of shares that
would have otherwise been issued on the vesting date and were recorded as a reduction of additional paid-in
capital.
In 2010, 2011, and 2012, $131 million, $71 million, and $36 million, respectively, of excess tax benefits from
stock-based awards for options exercised and restricted stock awards that vested in current and prior periods were
included as a source of cash flows from financing activities. These excess tax benefits represent the reduction in
income taxes otherwise payable during the period, attributable to the actual gross tax benefits in excess of the
expected tax benefits for options exercised and restricted stock awards that vested in current and prior periods.
The Company has accumulated excess tax deductions relating to stock options exercised and restricted stock
awards that vested prior to January 1, 2006 available to reduce income taxes otherwise payable. To the extent
such deductions reduce income taxes payable in the current year, they are reported as financing activities in the
consolidated statements of cash flows.
CEO 2012 Annual Equity Awards. Marissa A. Mayer, the Company’s Chief Executive Officer, received an
equity award for 2012 that will vest over three years. A total of $6 million of this equity award was granted as
restricted stock units on July 26, 2012 and will vest over three years. The remaining portion of this equity award
was granted in November 2012 as a performance-based stock option that will vest over the two and a half years
after July 26, 2012, subject to satisfaction of performance criteria. See below for additional discussion of the
performance-based stock options.
After 2012, Ms. Mayer will be eligible to receive annual equity grants when such grants are made to senior
executives. Subject to the discretion of the Compensation and Leadership Development Committee of the Board
of Directors (the “Compensation Committee”), the Company contemplates that the target value of such awards
will not be less than the target value of her 2012 annual grant.
CEO One-Time Retention Award. Ms. Mayer received a one-time retention equity award that will vest over five
years. A total of $15 million of this equity award was granted as restricted stock units on July 26, 2012 and will vest
over five years. The remaining $15 million portion of this equity award was granted in November 2012 as a
performance-based stock option that will vest over the four and a half years after July 26, 2012, subject to
satisfaction of performance criteria. See below for additional discussion of the performance-based stock options.
CEO Make-Whole Restricted Stock Units. To partially compensate Ms. Mayer for forfeiture of compensation
from her previous employer, on July 26, 2012 she was granted restricted stock units with a grant-date value of
$14 million (the “Make-Whole RSUs”). The Make-Whole RSUs are scheduled to vest on the following schedule,
based on grant date values: $7 million in 2013 and $3 million in 2014. $4 million of the Make-Whole RSUs
vested in 2012.
Former CEO Inducement and Make-Up Equity. On January 27, 2012, Mr. Scott Thompson, former Chief
Executive Officer, was granted an award of restricted stock units under the 1995 Stock Plan with an aggregate
100