eBay 2006 Annual Report Download - page 103

The stock repurchase program may be limited or terminated at any time without prior notice. Stock repurchases
under this program may be made through a variety of open market and privately negotiated transactions, including
structured stock repurchase transactions or other derivative transactions, at times and in such amounts as management
deems appropriate and will be funded from the company’s working capital or other financing alternatives. The timing
and actual number of shares repurchased will depend on a variety of factors including corporate and regulatory
requirements, price and other market conditions. The program is intended to comply with the volume, timing and other
limitations set forth in Rule 10b-18 under the Securities Exchange Act of 1934.
Note 12 — Stock-Based Plans:
Employee Stock Purchase Plan
We have an employee stock purchase plan for all eligible employees. Under the plan, shares of our common
stock may be purchased over an offering period with a maximum duration of two years at 85% of the lower of the
fair market value on the first day of the applicable offering period or on the last day of the six-month purchase
period. Employees may purchase shares having a value not exceeding 10% of their gross compensation during an
offering period. During the years ended December 31, 2004, 2005, and 2006, employees purchased approximately
1.2 million, 1.4 million, and 1.6 million shares at average prices of $20.66, $25.55 and $27.32 per share,
respectively. At December 31, 2006, approximately 5.6 million shares of common stock were reserved for future
issuance. Our employee stock purchase plan contains an “evergreen” provision that automatically increases, on
each January 1, the number of shares reserved for issuance under the employee stock purchase plan by the number
of shares purchased under this plan in the preceding calendar year.
Deferred Stock Unit Plan
We have a deferred stock unit plan under which deferred stock units have been granted to new non-employee
directors elected to our Board of Directors after December 31, 2002. Under this plan, each new director receives a
one-time grant of deferred stock units equal to the result of dividing $150,000 by the fair market value of our
common stock on the date of grant. Each deferred stock unit constitutes an unfunded and unsecured promise by us to
deliver one share of our common stock (or the equivalent value thereof in cash or property at our election). Each
deferred stock unit award granted to a new non-employee director upon election to the Board vests 25% one year
from the date of grant, and at a rate of 2.08% per month thereafter. If the services of the director are terminated at
any time, all rights to the unvested deferred stock units shall also terminate. In addition, directors may elect to
receive, in lieu of annual retainer and committee chair fees and at the time these fees would otherwise be payable
(i.e., on a quarterly basis in arrears for services provided), fully vested deferred stock units with an initial value
equal to the amount of these fees. Deferred stock units are payable following the termination of a director’s tenure as
a director. All eBay officers, directors and employees are eligible to receive awards under the plan, although, to date,
awards have been made only to new non-employee directors. As of December 31, 2006, 36,056 units have been
awarded under this plan.
Other Equity Incentive Plans
We have equity incentive plans for directors, officers and employees. Stock options granted under these plans
generally vest 25% one year from the date of grant (or 12.5% six months from the date of grant for grants to existing
employees) and the remainder vest at a rate of 2.08% per month thereafter, and generally expire 7 to 10 years from
the date of grant. Stock options issued prior to June 1998, were exercisable immediately, subject to repurchase rights
held by us, which lapsed over the vesting period. At December 31, 2006, 614.8 million shares were authorized under
our equity incentive plans. Shares of restricted stock and restricted stock units issued under these plans that have not
vested are subject to repurchase by us or forfeiture at such times as determined by the Board of Directors, typically
three to five years. At December 31, 2006, 98.5 million shares were available for future grant.
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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)