eBay 2009 Annual Report Download - page 123

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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.
Employee Savings Plans
We have a savings plan, which qualifies under Section 401(k) of the Internal Revenue Code. Participating
employees may contribute up to 25% of their annual salary, but not more than statutory limits. In 2007, we
contributed one dollar for each dollar a participant contributed, with a maximum contribution of $2,000 per
employee, respectively. In 2008 and 2009, we contributed one dollar for each dollar a participant contributed,
with a maximum contribution of 4% of each employee’s salary, subject a maximum employer contribution of
$9,200 and $9,800, respectively per employee. Our non-U.S. employees are covered by various other savings
plans. Our expenses for these plans were $20.4 million in 2007, $34.2 million in 2008 and $42.8 million in 2009.
Deferred Stock Unit Plan
Since December 31, 2002, we have granted deferred stock units to non-employee directors (other than Pierre
Omidyar) elected to our Board of Directors with each new director receiving 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.
Beginning with our 2008 annual meeting of stockholders, we have granted deferred stock units to each
non-employee director (other than Mr. Omidyar) equal to the result of dividing $110,000 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 based on the fair market value of common stock at the date of grant.
Deferred stock units are payable following the termination of a director’s tenure as a director. As of
December 31, 2009, there were approximately 180,450 deferred stock units outstanding under our equity plans.
Stock Option Valuation Assumptions
We calculated the fair value of each option award on the date of grant using the Black-Scholes option
pricing model. The following weighted-average assumptions were used for each respective period:
Year Ended December 31,
2007 2008 2009
Risk-free interest rates .......................... 4.5% 2.3% 1.7%
Expected life ................................. 3.5years 3.8 years 3.8 years
Dividend yield ................................ 0% 0% 0%
Expected volatility ............................. 37% 34% 47%
Our computation of expected volatility is based on a combination of historical and market-based implied
volatility from traded options on our stock. Our computation of expected life was determined based on historical
experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting
schedules and expectations of future employee behavior. The interest rate for periods within the contractual life
of the award is based on the U.S. Treasury yield curve in effect at the time of grant.
115