eBay 2009 Annual Report Download - page 121

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 14 — Related Party Transactions:
We have entered into indemnification agreements with each of our directors, executive officers and certain
other officers. These agreements require us to indemnify such individuals, to the fullest extent permitted by
Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with us.
All contracts with related parties are at rates and terms that we believe are comparable with those that could
be entered into with independent third parties. There were no material related party transactions in 2007 and
2008. On November 19, 2009 we completed the sale of Skype to an investor group. We received approximately
$1.9 billion in cash, a subordinated note issued by a subsidiary of the Buyer in the principal amount of $125.0
million and an equity stake of approximately 30 percent in the outstanding capital stock of the Buyer. Based on
the terms of the agreement, Skype meets the definition of a related party. For details related to our related party
transaction with Skype, please see “Note 4 — Sale of Skype.” Other than our transaction with Skype as of
December 31, 2009, there were no significant amounts payable to or amounts receivable from related parties.
Note 15 — Preferred Stock:
We are authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or
more series; to establish the number of shares included within each series; to fix the rights, preferences and
privileges of the shares of each wholly unissued series and any related qualifications, limitations or restrictions;
and to increase or decrease the number of shares of any series (but not below the number of shares of a series
then outstanding) without any further vote or action by the stockholders. At December 31, 2008 and 2009, there
were 10.0 million shares of $0.001 par value preferred stock authorized for issuance, and no shares issued or
outstanding.
Note 16 — Common Stock:
Our Certificate of Incorporation, as amended, authorizes us to issue 3.6 billion shares of common stock. A
portion of the shares issued and outstanding were issued to our employees and are subject to repurchase or
forfeiture over a four-year period from the earlier of the issuance date or employee hire date, as applicable.
Treasury Stock
In January 2008, our Board of Directors authorized a stock repurchase program for $2.0 billion of our
common stock, excluding broker commissions. During the year ended December 31, 2009, we did not repurchase
any shares of our common stock. As of December 31, 2009, we have the ability to repurchase up to
$656.5 million under our stock repurchase program. Repurchased shares are recorded as treasury stock and are
accounted for under the cost method. No repurchased shares have been retired or reissued.
Our stock repurchase programs may be limited or terminated at any time without prior notice. Stock
repurchases under these programs 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 our 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, other market conditions and management’s determination as to the
appropriate use of our cash. The programs are intended to comply with the volume, timing and other limitations
set forth in Rule 10b-18 under the Securities Exchange Act of 1934.
In addition to the above, we have withheld shares from employees to satisfy tax obligations in conjunction
with share-based compensation plans.
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