Yahoo 2013 Annual Report Download - page 120

Total payments for the employees’ tax obligations to the relevant taxing authorities were $140 million for the
year ended December 31, 2013 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 2011, 2012, and 2013, $71 million, $36 million, and $64 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 the grant date fair value 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 (valued at $6 million per the offer letter) 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 the grant date fair value of this equity award was granted as restricted stock units
on July 26, 2012 and will vest over five years. The remaining portion of this equity award (valued at $15 million
per the offer letter) 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. The number of
performance options granted in November 2012 was determined based on the grant date fair value as of July 26,
2012. 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 fair value
of $14 million (the “Make-Whole RSUs”). Based on grant date fair values, $4 million of the Make-Whole RSUs
vested in 2012, $7 million vested in 2013, and $3 million is scheduled to vest in 2014.
Performance-Based Executive Incentive Equity Awards. The financial performance stock options awarded by the
Company in November 2012 include multiple performance periods. In January 2013, the Compensation and
Leadership Development Committee of the Board (the “Compensation Committee”) established performance
goals under these stock options for the first performance period (the six months ended June 30, 2013) and the
second performance period (the full year ended December 31, 2013). These options were held by Ms. Mayer,
Mr. de Castro, the Company’s former Chief Operating Officer, and Mr. Goldman, the Company’s Chief
Financial Officer, (the first performance period for Mr. Goldman is the full year ending December 31, 2013). The
number of stock options that ultimately vest for each performance period will range from 0 percent to 100
percent of the target amount for such period stated in each executive’s award agreement based on the Company’s
performance. The financial performance metrics (and their weightings) under the performance options are
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