This excerpt taken from the EBAY DEF 14A filed Mar 19, 2009.
In certain instances where we have determined that offering RSUs would provide minimal retentive value, would be overly burdensome to implement or administer or would not provide a meaningful benefit to holders of eligible options, we will provide for a cash payment in exchange for surrendered options. Generally, this will be limited to cases where less than an aggregate of 100 new RSUs would be issuable to an employee in the option exchange. The amount of the cash payment will be calculated based on the RSU exchange ratio and in a manner intended to provide those receiving cash payments with approximately 90% of the fair value of their surrendered options, less any taxes and social insurance contributions due on the payments. To ensure that the payment of any such de minimis cash amounts satisfy securities law requirements that they be made promptly following the completion of the option exchange, we have determined that such payments cannot be subject to vesting or other delayed payment schedule. Accordingly, any cash payments that we provide in exchange for surrendered options will not be subject to any vesting schedule and will be made on the date that replacement RSUs are granted. In addition, we currently expect to provide for such de minimis cash payments in less than one-third of the countries in which we have eligible employees holding eligible options. The aggregate number of eligible options that may be
exchanged for cash payments as of February 17, 2009 based upon the illustrative exchange ratios is approximately 3.0 million and we expect the amount of these cash payments to be approximately $1.9 million, assuming all such eligible options are exchanged.