|
|
 | | | |
- close
- close
- close
- close
This excerpt taken from the EBAY DEF 14A filed Mar 19, 2009. Short-term
Cash Incentive Awards
eBay Incentive Plan (eIP). The eIP is a cash
incentive program designed to align executive compensation with
annual performance and to enable eBay to attract, retain, and
reward individuals who contribute to eBay’s success and
motivate them to enhance the value of eBay. The eIP was approved
by our stockholders in 2005. The Compensation Committee believes
that incentive payouts should be tightly linked to eBay’s
performance, with individual compensation differentiated based
on individual performance. As a result, funding and payouts
under the eIP are dependent and based on eBay’s performance
and individual performance.
The committee determines the semi-annual, annual, or other
performance period under the eIP. For each performance period,
the committee establishes (1) performance measures based on
business criteria and target levels of performance and
(2) a formula for calculating a participant’s award
based on actual performance compared to the pre-established
performance goals. Performance measures may be based on a wide
variety of business metrics. Management recommends to the
committee a proposed approach to setting the performance
measures and targets. In 2008, the eIP consisted of only an
annual award for employees at the level of senior vice president
and above, semi-annual and annual awards for employees at the
level of director through vice president, and semi-annual awards
for other employees.
The following table outlines the performance measures for the
2008 annual award for executive officers and the
committee’s rationale for selecting those performance
measures:
Table of Contents
If the minimum revenue and non-GAAP net income thresholds have
been met, 75% of the award is based on the company’s
performance, and 25% of the award is based on individual
performance. During the second half of 2008, the committee added
a customer retention metric, which we refer to as a “net
promoter score,” for certain employees at the level of vice
president and above (which includes all executive officers).
Twenty percent of the company performance component of the
annual incentive for 2008 was subject to the net promoter score
metric. If the target for the net promoter score metric was not
met, then the individual would lose up to 20% of the amount he
or she would have otherwise received for the company performance
component under the eIP. If the target was met, the individual
would receive what he or she would have otherwise received under
the eIP (and would not receive any additional pay out as a
result of the achievement of the net promoter score metric).
The amount by which the eIP is funded is determined based on the
company’s actual performance measured against the targets
set by the committee. The committee sets the annual target in
the first quarter. Unless both the minimum revenue and non-GAAP
net income thresholds for the year are met, there is no payout
for that year. After the end of the year, the company’s
actual performance is compared to the targets to determine the
funding level, and our CEO presents the committee with his
assessment of the performance of each of the other executive
officers; the committee reviews his assessments and determines
the level of performance for each of those executive officers.
In addition, the committee reviews (with input from the lead
independent director and other members of the Board) and
determines the CEO’s level of performance against targets
set by the Board at the beginning of the year.
The following table sets forth the annual 2008 performance
measures set by the committee:
In 2008, the maximum incentive amount that could be paid was
200% of target. In 2008, total annual target incentive amounts
for the named executive officers (other than the CEO) were 65%
to 100% of base salary, and the target incentive amount for the
CEO was 125% of base salary. Based on eBay’s annual
performance, there was no payout for our executive officers
under the eIP for 2008.
Special Retention Bonus
Plans. Messrs. Donahoe and Swan each have
special retention bonus plans that were entered into in
connection with their hiring in 2005 and 2006, respectively. The
Compensation Committee believed that it was necessary to enter
into these special bonus plans to provide each of
Messrs. Donahoe and Swan with a total compensation package
that would be attractive to them and cause them to join eBay, in
each case with particular reference to the compensation he had
been receiving at his previous position. Under the terms of
Mr. Donahoe’s plan, he received a special retention
bonus of $2,000,000 in cash, of which $500,000 was paid in each
of 2005, 2006, 2007, and 2008. Under the terms of
Mr. Swan’s plan, he is eligible to receive a special
retention bonus of up to $1,000,000 in cash, of which $200,000
was paid in each of 2006, 2007, and 2008. The plan provides that
Mr. Swan will receive two additional bonus payments of
$200,000, payable on each of the third and fourth anniversaries
of the date of his commencement of employment, assuming his
continued employment with eBay. The amounts paid to
Messrs. Donahoe and Swan under these bonus plans were in
addition to their base salaries.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||
