eBay 1999 Annual Report Download - page 76

1998 Employee Stock Purchase Plan
In July 1998, the Board adopted, and in August 1998 the Company’s stockholders approved, the
1998 Employee Stock Purchase Plan (the ‘‘Purchase Plan’’) and reserved 900,000 shares of Common Stock for
issuance thereunder. On each January 1, the aggregate number of shares reserved for issuance under the Purchase
Plan will be increased automatically by the number of shares purchased under the Purchase Plan in the preceding
calendar year. The aggregate number of shares reserved for issuance under the Purchase Plan shall not exceed
4,500,000 shares. The Purchase Plan became effective on September 24, 1998, the first business day on which
price quotations for the Company’s Common Stock were available on the Nasdaq National Market. Employees
are generally eligible to participate in the Purchase Plan if they are customarily employed by the Company for
more than 20 hours per week and more than five months in a calendar year and are not (and would not become
as a result of being granted an option under the Purchase Plan) 5% stockholders of the Company. Under the
Purchase Plan, eligible employees may select a rate of payroll deduction between 2% and 10% of their W-2 cash
compensation subject to certain maximum purchase limitations. Each Offering Period has a maximum duration
of two years (the ‘‘Offering Period’’) and consists of four six-month Purchase Periods (each, a ‘‘Purchase
Period’’), with the exception of the first Purchasing Period, which began on September 24, 1998 and ended on
April 30, 1999 and a supplemental purchasing period to accommodate merged employees which began on July
1, 1999 and ended on October 31, 1999. Offering Periods and Purchase Periods thereafter will begin on May 1
and November 1. The price at which the Common Stock is purchased under the Purchase Plan is 85% of the
lesser of the fair market value of the Company’s Common Stock on the first day of the applicable offering period
or on the last day of that purchase period. The Purchase Plan will terminate after a period of ten years unless
terminated earlier as permitted by the Purchase Plan.
1998 Directors Stock Option Plan
In July 1998, the Board adopted, and in August 1998 the Company’s stockholders approved, the 1998
Directors Stock Option Plan (‘‘Directors Plan’’) and reserved a total of 600,000 shares of the Company’s
Common Stock for issuance thereunder. Members of the Board who are not employees of the Company, or any
parent, subsidiary or affiliate of the Company, are eligible to participate in the Directors Plan. The option grants
under the Directors Plan are automatic and nondiscretionary, and the exercise price of the options must be 100%
of the fair market value of the Common Stock on the date of grant. Each eligible director who first becomes a
member of the Board on or after September 24, 1998 will initially be granted an option to purchase 90,000 shares
(an ‘‘Initial Grant’’) on the date such director first becomes a director. Immediately following each Annual
Meeting of the Company, each eligible director will automatically be granted an additional option to purchase
15,000 shares if such director has served continuously as a member of the Board since the date of such director’s
Initial Grant or, if such director was ineligible to receive an Initial Grant, since the Effective Date. In March
1999, the Board amended the Directors Plan to provide that no such grants would be made to eligible directors
at the 1999 Annual Meeting. The term of such options is ten years, provided that they will terminate seven
months following the date the director ceases to be a director or a consultant of the Company (twelve months if
the termination is due to death or disability). All options granted under the Directors Plan will vest as to 25% of
the shares on the first anniversary of the date of grant and as to 2.08% of the shares each month thereafter,
provided the optionee continues as a member of the Board or as a consultant to the Company.
Unearned stock-based compensation
In connection with certain stock option and stock warrant grants during the years ended December 31, 1997,
1998 and 1999, the Company recognized unearned compensation totaling $1.4 million, $5.4 million and
$6.3 million, respectively, which is being amortized over the four-year vesting periods of the options and the one
year vesting period of the warrant as applicable. Amortization expense recognized during the years ended
December 31, 1997, 1998 and 1999 totaled approximately $25,000, $3.1 million and $4.7 million, respectively.
eBAY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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