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This excerpt taken from the EBAY DEF 14A filed Mar 19, 2009. Summary
of our Amended Equity Incentive Plans
The following is a summary of the material terms of the amended
equity incentive plans. A more comprehensive discussion of the
material terms of the 2008 Plan and the U.S. federal income
tax consequences of awards granted under the 2008 Plan is
included in Proposal 3 of this proxy statement and is
incorporated into this proposal by this reference. We administer
the other amended equity incentive plans consistent with our
administration of the 2008 Plan, and the U.S. federal
income tax consequences associated with awards under our other
amended equity incentive plans are the same as similar awards
granted under the 2008 Plan.
Generally, the amended equity incentive plans provide for equity
awards to be made to our employees, directors and executive
officers. Currently, the types of awards that our Compensation
Committee grants consist of incentive stock options, or ISOs,
non-statutory stock options, or NSOs, restricted stock units, or
RSUs, nonvested shares of our common stock, which we also refer
to as restricted stock, and performance-based RSUs. As of
December 31, 2008, 79.4 million shares were available
for future grant under our amended equity incentive plans.
Stock options granted under the amended equity incentive 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 seven to ten years from the date of grant.
The cost of stock options is determined using the Black-Scholes
option pricing model on the date of grant.
RSUs and restricted stock are granted to eligible employees
under our amended equity incentive plans. In general, RSUs and
restricted stock vest over one to five years, are subject to the
employees’ continuing service to us and do not have an
expiration date. The cost of RSUs and nonvested shares is
determining using the fair value of our common stock on the date
of grant.
Certain executives are eligible for performance-based RSUs under
our amended equity incentive plans. The number of RSUs
ultimately received depends on our business performance against
specified performance targets set
Table of Contents
by the Compensation Committee. If the performance criteria are
satisfied, the performance-based RSUs will vest on specified
dates or over any period determined by the Compensation
Committee.
The table below sets forth the types of awards that we may grant
under each of the amended equity incentive plans.
The option exchange is contingent upon stockholder approval of
Proposal 3 of this proxy statement at the Annual Meeting,
which would amend the 2008 Plan to increase the number of shares
of our common stock issuable under the plan by 50 million,
to a total of 85 million. As of March 3, 2009, an
aggregate of 35 million shares are authorized pursuant to
the 2008 Plan, and 7.2 million shares are available for
grant under the 2008 Plan. As of March 3, 2009, there were
a total of 105.3 million shares underlying options
outstanding under our amended equity incentive plans. Based on
the assumptions described under “Details of the Stock
Option Exchange Program — Exchange Ratios” above,
of the outstanding options under our amended equity incentive
plans, as of March 3, 2009, options to purchase
62.53 million shares of common stock would be eligible for
exchange under the proposed option exchange. Assuming all of the
62.53 million eligible options are surrendered and
cancelled pursuant to the option exchange, 3.57 million
shares would be needed in order to issue the new RSUs in
accordance with the estimated exchange ratios. Since there would
not be enough shares available for grant under the 2008 Plan in
order to continue to make grants consistent with our equity
compensation grant practices and effect the option exchange, the
option exchange is contingent upon stockholder approval of
Proposal 3 in this proxy statement, which proposal would
increase the number of shares issuable under the 2008 Plan by an
additional 50 million, to a total of 85 million shares.
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