def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
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Preliminary Proxy Statement |
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Soliciting Material under Rule 14a-12 |
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eBay Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing. |
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Date Filed: |
eBay
Inc.
2145 Hamilton Avenue
San Jose, California 95125
To the Stockholders of eBay Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of eBAY INC., a Delaware corporation, will
be held on Tuesday, June 13, 2006, at
8:00 a.m. Pacific time at the Wynn Resort Las Vegas,
Mouton 1 Room, 3131 Las Vegas Boulevard South, Las Vegas, Nevada
89109 for the following purposes:
1. To elect four directors to hold office until our 2009
Annual Meeting of Stockholders.
2. To approve an amendment to our 2001 Equity Incentive
Plan to increase by 30,000,000 the number of shares of common
stock that may be issued under our 2001 Equity Incentive Plan.
3. To ratify the selection of PricewaterhouseCoopers LLP as
our independent auditors for our fiscal year ending
December 31, 2006.
4. To transact such other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
These business items are described more fully in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on
April 17, 2006 as the record date for identifying those
stockholders entitled to notice of and to vote at this Annual
Meeting and at any adjournment or postponement of this meeting.
By Order of
the Board of Directors
Michael R. Jacobson
Secretary
San Jose, California
April 26, 2006
The proxy statement and the accompanying form of proxy are
being mailed on or about April 26, 2006 in connection with
the solicitation of proxies on behalf of the Board of Directors
of eBay. All stockholders are cordially invited to attend the
Annual Meeting in person. Whether or not you expect to attend
the Annual Meeting, you are urged to vote your shares as soon as
possible so that your shares can be voted at the Annual Meeting
in accordance with your instructions on the proxy or voting
instruction card. Telephone and Internet voting are available.
For specific instructions on voting, please refer to the
instructions on the proxy or voting instruction card.
eBay
Inc.
2145 Hamilton Avenue
San Jose, California 95125
PROXY
STATEMENT
QUESTIONS
AND ANSWERS ABOUT THE PROXY MATERIALS AND
OUR 2006 ANNUAL MEETING
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Why am I receiving these materials? |
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eBays Board of Directors, or the Board, is providing these
proxy materials to you in connection with the Boards
solicitation of proxies for use at eBays 2006 Annual
Meeting of Stockholders, which will take place on June 13,
2006. Stockholders are invited to attend the Annual Meeting and
are requested to vote on the proposals described in this proxy
statement. |
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What information is contained in these materials? |
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The information included in this proxy statement relates to the
proposals to be voted on at the Annual Meeting, the voting
process, the compensation of directors and our most highly paid
executive officers, and certain other required information.
eBays 2005 Annual Report, which includes eBays
audited consolidated financial statements, is also included with
this Proxy Statement. |
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What proposals will be voted on at the Annual Meeting? |
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There are three proposals scheduled to be voted on at the Annual
Meeting: |
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the election of four directors for a three-year term;
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the approval of an amendment to our 2001 Equity Incentive Plan
to increase the authorized number of shares of common stock we
may issue under the plan by 30,000,000 shares; and
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the ratification of the appointment of PricewaterhouseCoopers
LLP as our independent auditors for our fiscal year ending
December 31, 2006.
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What are eBays Board of Directors voting
recommendations? |
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eBays Board recommends that you vote your shares
FOR each of the nominees to the Board,
FOR the approval of the amendment to the 2001 Equity
Incentive Plan, and FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent
auditors. |
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What class of shares is entitled to be voted? How many shares
can vote? |
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Each share of eBays common stock outstanding as of the
close of business on April 17, 2006, the record date, is
entitled to one vote at the Annual Meeting. At the close of
business on April 17, 2006, 1,409,869,244 shares of
common stock were outstanding and entitled to vote. |
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What shares owned by me can be voted? |
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All shares owned by you as of the close of business on the
record date of April 17, 2006 may be voted by you. You may
cast one vote per share of common stock that you held on the
record date. These shares include shares that are (1) held
of record directly in your name, including shares purchased
through eBays equity incentive plans, and (2) held
for you as the beneficial owner through a stockbroker, bank, or
other nominee. |
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What is the difference between holding shares as a
stockholder of record and as a beneficial owner? |
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Most stockholders of eBay hold their shares through a
stockbroker, bank, or other nominee rather than directly in
their own name. As summarized below, there are some distinctions
between shares held of record and shares owned beneficially. |
If your shares are registered directly in your name with
eBays transfer agent, Mellon Investor Services, you are
considered the stockholder of record with respect to those
shares, and these proxy materials are being sent directly to you
by eBay. As the stockholder of record, you have the right to
grant your voting proxy directly to eBay or to vote in person at
the Annual Meeting. eBay has enclosed a proxy card for you to
use. You may
also vote on the Internet or by telephone as described below
under How can I vote my shares without attending the
Annual Meeting?
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Shares owned beneficially
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If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner
of shares held in street name, and these proxy materials are
being forwarded to you by your broker or nominee who is
considered, with respect to those shares, the stockholder of
record. As the beneficial owner or nominee, you have the right
to direct your broker on how to vote, and you are also invited
to attend the Annual Meeting. However, since you are not the
stockholder of record, you may not vote these shares in person
at the Annual Meeting. Your broker or nominee has enclosed a
voting instruction card for you to use in directing the broker
or nominee regarding how to vote your shares. You may also vote
on the Internet or by telephone as described below under
How can I vote my shares without attending the Annual
Meeting?
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Can I attend the Annual Meeting? |
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You are invited to attend the Annual Meeting if you are a
stockholder of record or a beneficial owner as of April 17,
2006. If you are a stockholder of record you must bring proof of
identification. If you hold your shares through a stock broker
or other nominee, you will need to provide proof of ownership by
bringing either a copy of the voting instruction card provided
by your broker or a copy of a brokerage statement showing your
share ownership as of April 17, 2006. If you do not attend
the Annual Meeting, you can listen to a webcast of the
proceedings at eBays investor relations site at
http://investor.ebay.com. |
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How can I vote my shares in person at the Annual Meeting? |
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Shares held directly in your name as the stockholder of record
may be voted in person at the Annual Meeting. If you choose to
vote in person, please bring the enclosed proxy card and proof
of identification. Even if you plan to attend the Annual
Meeting, eBay recommends that you vote your shares in advance as
described below so that your vote will be counted if you later
decide not to attend the Annual Meeting. Shares held in street
name through a brokerage account or by a bank or other nominee
may be voted in person by you if you obtain a signed proxy from
the record holder giving you the right to vote the shares. |
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How can I vote my shares without attending the Annual
Meeting? |
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Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct your vote without
attending the Annual Meeting by Internet, by telephone, or by
completing and mailing your proxy card or voting instruction
card in the enclosed pre-paid envelope. Please refer to the
enclosed materials for details. |
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Can I change my vote? |
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You may change your proxy instructions at any time before your
proxy is voted at the Annual Meeting. Proxies may be revoked by
any of the following actions: (1) filing a written notice
of revocation with our Corporate Secretary at our principal
executive office (2145 Hamilton Avenue, San Jose,
California 95125); (2) filing a properly executed proxy
showing a later date with our Corporate Secretary at our
principal executive office; or (3) attending the Annual
Meeting and voting in person (attendance at the meeting will
not, by itself, revoke a proxy). |
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How are votes counted? |
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In the election of directors, you may vote FOR all
of the nominees or your vote may be WITHHELD with
respect to one or more of the nominees. For the approval of the
of the amendment to the 2001 Equity Incentive Plan and the
ratification of the selection of PricewaterhouseCoopers LLP, you
may vote FOR, AGAINST or
ABSTAIN. If you ABSTAIN, it has the same
effect as a vote AGAINST. If you sign and return
your proxy card or broker voting instruction card without giving
specific voting instructions, your shares will be voted as
recommended by our Board, except that in the case of a broker
voting instruction card, your broker may only vote on those
matters over which the broker has discretionary voting power. |
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Who will count the votes? |
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A representative of ADP Investor Communication Services will
tabulate the votes and act as the inspector of election. |
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What is the quorum requirement for the Annual Meeting? |
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The quorum requirement for holding the Annual Meeting and
transacting business is a majority of the outstanding shares
entitled to be voted. The shares may be present in person or
represented by proxy at the Annual Meeting. Both abstentions and
broker non-votes are counted as present for the purpose of
determining the presence of a quorum. Broker non-votes, however,
are not counted as shares present and entitled to be voted with
respect to the matter on which the broker has expressly not
voted. |
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What is the voting requirement to approve each of the
proposals? |
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In the election for directors, the four persons receiving the
highest number of FOR votes will be elected. The
proposal to amend the 2001 Equity Incentive Plan and the
proposal to ratify the selection of the auditors each require
the affirmative FOR vote of a majority of those
shares present and entitled to vote to be approved. If you are a
beneficial owner and do not provide the stockholder of record
with voting instructions, your shares may constitute broker
non-votes, as described above in What is the quorum
requirement for the Annual Meeting? in this section. |
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What are broker non-votes and what effect do they have on the
proposals? |
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Generally, broker non-votes occur when shares held by a broker
in street name for a beneficial owner are not voted
with respect to a particular proposal because (1) the
broker has not received voting instructions from the beneficial
owner and (2) the broker lacks discretionary voting power
to vote those shares. A broker is entitled to vote shares held
for a beneficial owner on routine matters, such as the election
of our directors and the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors, without
instructions from the beneficial owner of those shares. On the
other hand, a broker may not be entitled to vote shares held for
a beneficial owner on certain non-routine items, such as the
approval of the amendment of the 2001 Equity Incentive Plan,
absent instructions from the beneficial owner of such shares.
Broker non-votes count for purposes of determining whether a
quorum exists but do not count as entitled to vote with respect
to individual proposals. |
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What does it mean if I receive more than one proxy or voting
instruction card? |
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It means your shares are registered differently or are in more
than one account. Please provide voting instructions for all
proxy and voting instruction cards you receive. |
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Where can I find the voting results of the Annual Meeting? |
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eBay will announce preliminary voting results at the Annual
Meeting and will publish final results in eBays quarterly
report on
Form 10-Q
for the second quarter of 2006. |
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Who will bear the cost of soliciting votes for the Annual
Meeting? |
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eBay will pay the entire cost of preparing, assembling,
printing, mailing and distributing these proxy materials. eBay
will provide copies of these proxy materials to banks, brokerage
houses, fiduciaries and custodians holding in their names shares
of our common stock beneficially owned by others so that they
may forward these proxy materials to the beneficial owners. eBay
has retained the services of D.F. King & Co., Inc., a
professional proxy solicitation firm, to aid in the solicitation
of proxies. D.F. King may solicit proxies by personal interview,
mail, telephone and electronic communications. eBay estimates
that it will pay D.F. King its customary fee, estimated to be
approximately $8,500, plus reasonable
out-of-pocket
expenses incurred in the process of soliciting proxies. In
addition, eBay may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners.
Solicitations may also be made by personal interview, telephone,
and electronic communication by directors, officers, and other
employees of eBay, but we will not additionally compensate our
directors, officers or other employees for these services. |
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May I propose actions for consideration at next years
Annual Meeting or nominate individuals to serve as directors? |
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You may submit proposals for consideration at future annual
stockholder meetings. In order for a stockholder proposal to be
considered for inclusion in the proxy materials for our 2007
Annual |
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Meeting of Stockholders, your proposal must be received by our
Corporate Secretary no later than December 27, 2006. A
stockholder proposal or a nomination for director that is
received after this date will not be included in our proxy
statement and proxy but will otherwise be considered at the 2007
annual meeting so long as it is submitted to our Corporate
Secretary no earlier than March 13, 2007, and no later than
April 12, 2007. We advise you to review our Bylaws, which
contain this and other requirements with respect to advance
notice of stockholder proposals and director nominations. Our
Bylaws were filed with the Securities and Exchange Commission,
or SEC, as an exhibit to our quarterly report on Form
10-Q on
November 13, 1998, which can be viewed by visiting our
investor relations website at
http://investor.ebay.com/edgar.cfm and may also be
obtained by writing to our Corporate Secretary at our principal
executive office (2145 Hamilton Avenue, San Jose,
California 95125). |
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How can I get electronic access to the Proxy Statement and
Annual Report? |
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This proxy statement and our 2005 Annual Report may be viewed
online on our investor relations website at
http://investor.ebay.com/annual.cfm. You can also elect
to receive an email that will provide an electronic link to
future annual reports and proxy statements rather than receiving
paper copies of these documents. Choosing to receive your proxy
materials electronically will save us the cost of printing and
mailing documents to you. You can choose to receive future proxy
materials electronically by visiting
http://investor.ebay.com/adp.cfm. If you choose to
receive future proxy materials electronically, you will receive
an email next year with instructions containing a link to those
materials and a link to the proxy voting site. Your choice to
receive proxy materials electronically will remain in effect
until you contact eBay Investor Relations and tell us otherwise.
You may visit our investor relations website at
http://investor.ebay.com or contact eBay Investor
Relations by mail at 2145 Hamilton Avenue, San Jose,
California 95125 or by telephone at 866-696-3229. |
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How do I obtain a separate set of proxy materials if I share
an address with other stockholders? |
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To reduce expenses, in some cases, we are delivering one set of
proxy materials to certain stockholders who share an address,
unless otherwise requested. A separate proxy card is included in
the proxy materials for each of these stockholders. If you
reside at such an address and wish to receive a separate copy of
the proxy materials, including our annual report, you may
contact eBay Investor Relations at the website, address, or
phone number in the previous paragraph. You may also contact
eBay Investor Relations if you would like to receive separate
proxy materials in the future or if you are receiving multiple
copies of our proxy materials and would like to receive only one
copy in the future. |
4
2006
ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT
TABLE OF
CONTENTS
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PROPOSALS TO BE VOTED
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A-1
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5
CORPORATE
GOVERNANCE
Our business is managed by our employees under the direction and
oversight of the Board of Directors. Except for
Ms. Whitman, none of our Board members is an employee of
eBay. We keep Board members informed of our business through
discussions with management, materials we provide to them,
visits to our offices, and their participation in Board and
Board committee meetings.
The Board of Directors has adopted corporate governance
guidelines that, along with the charters of the Board committees
and our Code of Business Conduct and Ethics, which we refer to
as the Code of Conduct, provide the framework for the governance
of the company. A complete copy of our governance guidelines,
the charters of our Board committees, and our Code of Conduct
may be found on our investor relations website at
http://investor.ebay.com/governance. (Information
contained on eBays website is not part of this proxy
statement.) The Board regularly reviews corporate governance
developments and modifies these policies as warranted. Any
changes in these governance documents will be reflected on the
same location on our website.
OUR
CORPORATE GOVERNANCE PRACTICES
We believe open, effective, and accountable corporate governance
practices are key to our relationship with our stockholders. To
help our stockholders understand our commitment to this
relationship and our governance practices, several of our key
governance initiatives are summarized below.
Governance Guidelines. The Board has adopted a
set of governance guidelines to set a framework within which the
Board will conduct its business. The governance guidelines can
be found on our website at
http://investor.ebay.com/governance
and are summarized below.
Committee Responsibilities. Board committees
help the Board run effectively and efficiently, but do not
replace the oversight of the Board as a whole. There are
currently three principal committees: the Audit Committee, the
Compensation Committee, and the Corporate Governance and
Nominating Committee. Each committee meets regularly and has a
written charter that has been approved by the Board. In
addition, at each regularly scheduled Board meeting, a member of
each committee reports on any significant matters addressed by
the committee. Each committee performs an annual self-assessment
to evaluate its effectiveness in fulfilling its obligations.
Independence. Nasdaq rules require listed
companies to have a board of directors with at least a majority
of independent directors. Our Board has determined that nine of
our eleven directors are independent under the listing standards
of the Nasdaq Stock Market. The Board limits membership on the
Audit Committee, the Compensation Committee, and the Corporate
Governance and Nominating Committee to independent non-employee
directors. In addition, the Board has a designated lead
independent director who chairs and can call formal closed
sessions of outside directors, leads Board meetings in the
absence of the Chairman, and leads the annual Board
self-assessment. Mr. Tierney is currently the lead
independent director, and was recently reappointed to the
position for a second two-year term. He will serve as lead
independent director until the Board meeting following our
2008 Annual Meeting of Stockholders.
Stockholder Communication. Stockholders may
communicate with the Board of Directors or individual directors
care of the Corporate Secretary, eBay Inc., 2145 Hamilton
Avenue, San Jose, California 95125. The Corporate
Governance and Nominating Committee has delegated responsibility
for initial review of stockholder communications to our
Corporate Secretary. In accordance with the committees
instructions, our Corporate Secretary will summarize all
correspondence and make it available to each member of the
Board. In addition, the Corporate Secretary will forward copies
of all stockholder correspondence to each member of the
Corporate Governance and Nominating Committee, except for
communications that are (a) advertisements or promotional
communications, (b) solely related to complaints by users
with respect to ordinary course of business customer service and
satisfaction issues, or (c) clearly unrelated to our
business, industry, management, or Board or committee matters.
Attendance at Annual Meetings. Absent exigent
circumstances, all directors are expected to attend the
companys annual meeting of stockholders. Nine of the ten
directors who were then on the Board attended our 2005 Annual
Meeting of Stockholders.
6
Formal Closed Sessions. At the conclusion of
each regularly scheduled Board meeting, the outside directors
have the opportunity to meet without our management or the other
directors. The lead independent director leads the discussions.
Board Compensation. Board compensation is
determined by the Compensation Committee. Prior to 2003, Board
compensation was 100% equity based. After a review, in December
2002, Board compensation was substantially revised by the Board,
with equity compensation reduced and cash compensation added.
Board compensation has subsequently been reviewed annually by
the Compensation Committee, which has not changed cash
compensation and has effectively reduced equity compensation by
holding the number of options granted annually to the same
absolute number notwithstanding two subsequent stock splits.
Current Board compensation is described under the heading
Executive Compensation Compensation of
Directors below.
Stock Ownership Guidelines. In September 2004,
our Board adopted stock ownership guidelines to better align the
interests of our directors and executives with the interests of
stockholders and further promote our commitment to sound
corporate governance. Under the guidelines, our executive
officers are required to achieve ownership of eBay common stock
valued at three times their annual base salary (five times in
the case of our Chief Executive Officer). Until an executive
achieves the required level of ownership, he or she is required
to retain 25% of the net shares received as the result of the
exercise of eBay stock options. Directors are required to
achieve ownership of eBay common stock valued at three times the
amount of the annual retainer paid to directors within three
years of joining the Board, or in the case of directors serving
at the time the guidelines were adopted, within three years of
the date of adoption of the guidelines. A more detailed summary
of our stock ownership guidelines can be found on our website at
http://investor.ebay.com/governance. The ownership levels
of our executives and directors as of April 1, 2006 are set
forth in the section entitled Security Ownership of
Certain Beneficial Owners and Management below.
Outside Advisors. The Board and each of its
committees may retain outside advisors and consultants of their
choosing at the companys expense. The Board need not
obtain managements consent to retain outside advisors.
Conflicts of Interest. eBay expects its
directors, executives, and employees to conduct themselves with
the highest degree of integrity, ethics, and honesty.
eBays credibility and reputation depend upon the good
judgment, ethical standards and personal integrity of each
director, executive, and employee. In order to better protect
eBay and its stockholders, eBay regularly reviews its Code of
Conduct to ensure that it provides clear guidance to its
employees and directors. The Code of Conduct was most recently
updated in October 2005.
Transparency. eBay believes it is important
that stockholders understand the governance practices of eBay.
In order to help ensure transparency of our practices, we have
posted information regarding our corporate governance procedures
on our website at http://investor.ebay.com/governance.
Board Effectiveness and Director Performance
Reviews. It is important to eBay that the Board
and its committees are performing effectively and in the best
interest of the company and its stockholders. The Board performs
an annual self-assessment, led by the lead independent director,
to evaluate its effectiveness in fulfilling its obligations. As
part of this annual self-assessment, directors are asked to
provide feedback on the performance of other directors. The lead
independent director then follows up on this feedback and takes
such further action with directors receiving comments and other
directors as he deems appropriate.
Succession Planning. The Board recognizes the
importance of effective executive leadership to eBays
success, and meets to discuss executive succession planning at
least annually. As part of this process, the Board reviews the
capabilities of the companys senior leadership as set out
in written succession planning documents and identifies and
discusses potential successors for members of the companys
executive staff, including the Chief Executive Officer.
Auditor Independence. eBay has taken a number
of steps to ensure continued independence of our outside
auditors. Our independent auditors report directly to the Audit
Committee, and we limit the use of our auditors for non-audit
services. The fees for services provided by our auditors in 2005
and 2004 and our policy on pre-approval of non-audit services
are described under Proposal 3 below.
7
Corporate Hotline. eBay has established a
corporate hotline to allow any employee to confidentially and
anonymously lodge a complaint about any accounting, internal
control, auditing, or other matter of concern.
BOARD
COMMITTEES AND MEETINGS
During 2005, our Board of Directors held ten meetings, and each
Board member except for Mr. Ford attended at least 75% of
the aggregate of all of our Board meetings and committee
meetings for committees on which such director served.
Mr. Fords aggregate meeting attendance was below 75%
because he was unable to modify his schedule to attend a series
of special meetings of our Board of Directors related to our
acquisition of Skype Technologies that were scheduled with
relatively little notice and that occurred shortly after he
joined the Board in July 2005. The Board of Directors has three
principal committees: an Audit Committee, a Compensation
Committee, and a Corporate Governance and Nominating Committee.
Audit
Committee
Our Board has a separately-designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the
Exchange Act. Our Audit Committee consists of
Messrs. Anderson and Schlosberg and Ms. Lepore.
Mr. Anderson is the chairman of the committee. The Audit
Committee held 12 meetings during fiscal year 2005. The primary
responsibilities of the Audit Committee are to meet with our
independent auditors to review the results of the annual audit
and to discuss the financial statements, including the
independent auditors judgment about the quality of
accounting principles, the reasonableness of significant
judgments, the clarity of the disclosures in the financial
statements, eBays internal control over financial
reporting, and managements report with respect to internal
control over financial reporting. Additionally, the Audit
Committee meets with our independent auditors to review the
interim financial statements prior to the filing of our
Quarterly Reports on
Form 10-Q,
recommends to the Board the independent auditors to be retained
by us, oversees the independence of the independent auditors,
evaluates the independent auditors performance, receives
and considers the independent auditors comments as to
controls, adequacy of staff and management performance and
procedures in connection with audit and financial controls,
including our system to monitor and manage business risks and
legal and ethical compliance programs. The Audit Committee
approves the compensation of our Vice President of Internal
Audit, who meets with the committee regularly without other
members of management present. The Audit Committee also prepares
the Audit Committee Report for inclusion in our proxy statement,
approves audit and non-audit services provided to us by our
independent auditors, considers conflicts of interest involving
executive officers or Board members, and meets with our General
Counsel to discuss legal matters that may have a material impact
on our financial statements or our compliance policies. Our
Board has determined that Mr. Anderson is an audit
committee financial expert as defined by the SEC, and that
each member of the Audit Committee is independent under the
listing standards of the Nasdaq Stock Market. You can view our
Audit Committee Charter on the corporate governance section of
our investor relations website at
http://investor.ebay.com/governance.
Compensation
Committee
Our Compensation Committee in 2005 consisted of
Messrs. Kagle, Barnholt, Bourguignon, Ford, and Tierney.
Mr. Kagle was the chairman of the committee.
Mr. Barnholt joined the committee in June 2005, and
Mr. Ford joined the committee in July 2005. Commencing
April 1, 2006, Mr. Barnholt became the chair of the
committee and Mr. Ford moved to the Corporate Governance
and Nominating Committee. The committee met six times during
2005. The Compensation Committee reviews and approves all
compensation programs applicable to directors and executive
officers, the overall strategy for employee compensation, and
the compensation of our CEO and our other executive officers. In
addition, the Compensation Committee also prepares the
Compensation Committee Report for inclusion in our proxy
statement. All members of our Compensation Committee are
independent under the listing standards of the Nasdaq Stock
Market. You can view our Compensation Committee Charter on the
corporate governance section of our investor relations website
at http://investor.ebay.com/governance.
8
Corporate
Governance and Nominating Committee
Our Corporate Governance and Nominating Committee consisted of
Messrs. Cook, Schlosberg, and Tierney and Ms. Lepore
in 2005. Mr. Ford became a member of the committee
effective April 1, 2006. Mr. Cook is the chairman of
the committee. The committee met three times during 2005. The
Corporate Governance and Nominating Committee makes
recommendations to the Board as to the appropriate size of the
Board or any Board committee, reviews the qualifications of
candidates for the Board of Directors, and makes recommendations
to the Board of Directors on potential Board members (whether
created by vacancies or as part of the annual election cycle).
The committee considers nominee recommendations from a variety
of sources, including nominees recommended by stockholders. The
committee has in the past retained an executive search firm to
help facilitate the screening and interview process of director
nominees. The committee has not established specific minimum
age, education, experience, or skill requirements for potential
members, but, in general, expects that qualified candidates will
have high-level managerial experience in a complex organization
and will be able to represent the interests of the stockholders
as a whole rather than special interest groups or
constituencies. The committee considers each candidates
integrity, judgment, skill, diversity of background, and time
available to devote to Board activities. The committee will also
consider the interplay of a candidates skill and
experience with that of other Board members, and the extent to
which a candidate may be a desirable addition to any committee
of the Board.
In addition to recommending director candidates, the Corporate
Governance and Nominating Committee establishes procedures for
the oversight and evaluation of the Board and management,
reviews correspondence received from stockholders, and reviews
on an annual basis a set of corporate governance guidelines for
the Board. Stockholders wishing to submit recommendations or
director nominations for our 2007 Annual Meeting of Stockholders
should submit their proposals to the Corporate Governance and
Nominating Committee care of our Corporate Secretary in
accordance with the time limitations, procedures, and
requirements described under the heading May I propose
actions for consideration at next years Annual Meeting or
nominate individuals to serve as directors? in the section
entitled Questions and Answers about the Proxy Materials
and Our 2006 Annual Meeting above. All members of our
Corporate Governance and Nominating Committee are independent
under the listing standards of the Nasdaq Stock Market. You can
view our Corporate Governance and Nominating Committee Charter
on the corporate governance section of our investor relations
website at
http://investor.ebay.com/governance.
9
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us
with respect to beneficial ownership of our common stock as of
April 1, 2006, by (i) each stockholder known to us to
be the beneficial owner of more than 5% of our common stock,
(ii) each director and nominee for director,
(iii) each of the executive officers named in the Summary
Compensation Table set forth under Executive
Compensation Summary of Compensation
below, and (iv) all executive officers and directors as a
group.
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially
Owned(1)
|
|
Name of Beneficial
Owner
|
|
Number
|
|
|
Percent
|
|
|
Pierre M. Omidyar(2)
|
|
|
202,323,408
|
|
|
|
14.4
|
%
|
Jeffrey S. Skoll(3)
|
|
|
83,024,912
|
|
|
|
5.9
|
|
FMR Corp(4)
|
|
|
70,819,310
|
|
|
|
5.0
|
|
Margaret C. Whitman(5)
|
|
|
33,027,600
|
|
|
|
2.3
|
|
Maynard G. Webb, Jr.(6)
|
|
|
1,380,416
|
|
|
|
*
|
|
John J. Donahoe(7)
|
|
|
292,459
|
|
|
|
*
|
|
Jeffrey D. Jordan(8)
|
|
|
1,028,359
|
|
|
|
*
|
|
Rajiv Dutta(9)
|
|
|
1,918,492
|
|
|
|
*
|
|
Fred D. Anderson(10)
|
|
|
20,375
|
|
|
|
*
|
|
Edward W. Barnholt(10)
|
|
|
0
|
|
|
|
*
|
|
Philippe Bourguignon(10)
|
|
|
182,125
|
|
|
|
*
|
|
Scott D. Cook(11)
|
|
|
1,807,723
|
|
|
|
*
|
|
William C. Ford(12)
|
|
|
125,225
|
|
|
|
*
|
|
Robert C. Kagle(13)
|
|
|
3,777,711
|
|
|
|
*
|
|
Dawn G. Lepore(14)
|
|
|
401,625
|
|
|
|
*
|
|
Richard T. Schlosberg, III(15)
|
|
|
19,375
|
|
|
|
*
|
|
Thomas J. Tierney(16)
|
|
|
52,125
|
|
|
|
*
|
|
All directors and executive
officers as a group (20 persons)(17)
|
|
|
251,866,316
|
|
|
|
17.6
|
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
This table is based upon information supplied by officers,
directors, and principal stockholders and Schedules 13D and 13G
filed with the Securities and Exchange Commission. Beneficial
ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting
or investment power with respect to securities. Unless otherwise
indicated below, the persons and entities named in the table
have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws
where applicable. Shares of our common stock subject to options
that are currently exercisable or exercisable within
60 days of April 1, 2006 are deemed to be outstanding
for the purpose of computing the percentage ownership of the
person holding those options, but are not treated as outstanding
for the purpose of computing the percentage ownership of any
other person. The percentage of beneficial ownership is based on
1,408,671,441 shares of common stock outstanding as of
April 1, 2006. |
|
(2) |
|
Mr. Omidyar is our Founder and Chairman of the Board.
Includes 285,000 shares held by his spouse as to which he
disclaims beneficial ownership. The address for Mr. Omidyar
is c/o eBay Inc., 2145 Hamilton Avenue, San Jose,
California 95125. |
|
(3) |
|
Mr. Skoll is a former officer and director of the company.
The address for Mr. Skoll is c/o Seiler &
Company, LLP, 1100 Marshall Street, Redwood City, CA 94063,
Attn: James G.B. DeMartini, III. |
|
(4) |
|
The address for FMR Corp. is 82 Devonshire Street, Boston, MA
02109. |
|
(5) |
|
Ms. Whitman is our President and Chief Executive Officer.
Includes 8,108,380 shares held by the Griffith R. Harsh,
IV & Margaret C. Whitman TTEES of Sweetwater
Trust U/A/D 10/15/99, 1,098,777 shares held by the
Griffith R. Harsh, IV, TTEE, GRH 2005 GRAT,
1,098,777 shares held by the Margaret C. Whitman, TTEE, |
10
|
|
|
|
|
MCW 2005 GRAT, 3,000,000 shares held by the
Griffith R. Harsh, IV, TTEE, GRH 2006 Two Year GRAT,
3,000,000 shares held by the Margaret C. Whitman,
TTEE, MCW 2006 Two Year GRAT, 3,000,000 shares held by the
Griffith R. Harsh, IV, TTEE, GRH March 2006 Two Year GRAT and
3,000,000 shares held by the Margaret C. Whitman, TTEE, MCW
March 2006 Two Year GRAT. In addition, includes
(a) 4,792 shares held by Griffith Rutherford
Harsh IV Custodian Griffith Rutherford Harsh V UTMA
California as to which Ms. Whitmans spouse is
custodian for the trust and as to which Ms. Whitman
disclaims beneficial ownership and (b) 4,792 shares
held by Griffith Rutherford Harsh IV Custodian William
Whitman Harsh UTMA California as to which
Ms. Whitmans spouse is custodian for the trust and as
to which Ms. Whitman disclaims beneficial ownership.
Includes 6,752,082 shares Ms. Whitman has the right to
acquire pursuant to outstanding options exercisable within
60 days of April 1, 2006. The address for
Ms. Whitman is c/o eBay Inc., 2145 Hamilton Avenue,
San Jose, California 95125. |
|
(6) |
|
Mr. Webb is our Chief Operating Officer. Includes
1,280,416 shares Mr. Webb has the right to acquire
pursuant to outstanding options exercisable within 60 days
of April 1, 2006. The address for Mr. Webb is
c/o eBay Inc., 2145 Hamilton Avenue, San Jose,
California 95125. |
|
(7) |
|
Mr. Donahoe is our President, eBay Business Unit. Includes
291,666 shares Mr. Donahoe has the right to acquire
pursuant to outstanding options exercisable within 60 days
of April 1, 2006. The address for Mr. Donahoe is
c/o eBay Inc., 2145 Hamilton Avenue, San Jose,
California 95125. |
|
(8) |
|
Mr. Jordan is our President, PayPal. Includes
988,159 shares Mr. Jordan has the right to acquire
pursuant to outstanding options exercisable within 60 days
of April 1, 2006. The address for Mr. Jordan is
c/o eBay Inc., 2145 Hamilton Avenue, San Jose,
California 95125. |
|
(9) |
|
Mr. Dutta is our President, Skype. Includes
1,875,874 shares Mr. Dutta has the right to acquire
pursuant to outstanding options exercisable within 60 days
of April 1, 2006. The address for Mr. Dutta is
c/o eBay Inc., 2145 Hamilton Avenue, San Jose,
California 95125. |
|
(10) |
|
Includes in the case of Mr. Anderson, 14,375 shares
Mr. Anderson has the right to acquire pursuant to
outstanding options exercisable within 60 days of
April 1, 2006 and in the case of Mr. Bourguignon,
176,125 shares Mr. Bourguignon has the right to
acquire pursuant to outstanding options exercisable within
60 days of April 1, 2006. The address for Messrs.
Anderson, Barnholt, and Bourguignon is c/o eBay Inc.,
2145 Hamilton Avenue, San Jose, California 95125. |
|
(11) |
|
Includes 1,644,717 shares Mr. Cook has the right to
acquire pursuant to outstanding options exercisable within
60 days of April 1, 2006. The address for
Mr. Cook is c/o Intuit, Inc., 2535 Garcia Avenue,
Mountain View, California 94043. |
|
(12) |
|
The address for Mr. Ford is c/o Ford Motor Company,
One American Road, Dearborn, Michigan 48126. |
|
(13) |
|
Includes 415,625 shares Mr. Kagle has the right to
acquire pursuant to outstanding options exercisable within
60 days of April 1, 2006. The address for
Mr. Kagle is c/o Benchmark Capital, 2480 Sand Hill
Road, Suite 200, Menlo Park, California 94025. |
|
(14) |
|
Includes 361,625 shares Ms. Lepore has the right to
acquire pursuant to outstanding options exercisable within
60 days of April 1, 2006. The address for
Ms. Lepore is c/o drugstore.com, inc., 411
108th Avenue NE, Suite 1400, Bellevue, Washington
98004. |
|
(15) |
|
Includes 14,375 shares Mr. Schlosberg has the right to
acquire pursuant to outstanding options exercisable within
60 days of April 1, 2006. The address for
Mr. Schlosberg is 9901 IT-10 West, Suite 800,
San Antonio, Texas 78230. |
|
(16) |
|
Includes 48,125 shares Mr. Tierney has the right to
acquire pursuant to outstanding options exercisable within
60 days of April 1, 2006. The address for
Mr. Tierney is c/o The Bridgespan Group, 535 Boylston
Street, 10th Floor, Boston, Massachusetts 02116 |
|
(17) |
|
Includes 18,755,797 shares subject to options exercisable
within 60 days of April 1, 2006. |
11
PROPOSAL 1
ELECTION
OF DIRECTORS
Our Certificate of Incorporation and Bylaws, as amended to date,
provide for the Board to be divided into three classes, with
each class having a three-year term. The first and second
classes currently consist of four directors and the third class
currently consists of three directors. The term of office for
the first class expires at our 2008 Annual Meeting, the term of
office for the second class expires at our upcoming Annual
Meeting, and the term of office for the third class expires at
our 2007 Annual Meeting. A director elected to fill a vacancy
(including a vacancy created by an increase in the size of the
Board) will serve for the remainder of the term of the class of
directors in which the vacancy occurred and until his or her
successor is elected and qualified, or until his or her earlier
death, resignation, or removal.
Our Board is presently composed of eleven members, nine of whom
are currently independent directors within the meaning of the
listing standards of the Nasdaq Stock Market. There are four
nominees in the class whose term of office expires at the Annual
Meeting, all of whom are currently members of the Board of
Directors. Three of the four nominees for election at the Annual
Meeting were previously elected by the stockholders. If elected
at the Annual Meeting, each of the nominees would serve until
our 2009 Annual Meeting and until his successor is elected and
qualified, or until his earlier death, resignation, or removal.
Directors are elected by a plurality (excess of votes cast over
opposing nominees) of the votes present in person or represented
by proxy and entitled to vote at the meeting. Shares represented
by signed proxies will be voted, if authority to do so is not
withheld, for the election of the four nominees named below. If
any of the nominees is unexpectedly unavailable for election,
these shares will be voted for the election of a substitute
nominee proposed by our Corporate Governance and Nominating
Committee. Each person nominated for election has agreed to
serve if elected. Management has no reason to believe that any
of the nominees will be unable to serve.
Set forth below is biographical information for the nominees as
well as for each director whose term of office will continue
after the Annual Meeting.
NOMINEES
FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT OUR 2009 ANNUAL
MEETING
William
C. Ford, Jr.
William C. Ford, Jr., age 48, has served as a director
of eBay since July 2005. Mr. Ford has served as Chief
Executive Officer of Ford Motor Company, a company that engages
in the manufacture and distribution of automobiles, since
October 2001 and has served as Chairman of the Board of Ford
since September 1998. Mr. Ford also serves as Chairman of
Fords Environmental and Public Policy Committee and as a
member of Fords Finance Committee. Mr. Ford has held
a number of management positions at Ford since 1979.
Mr. Ford serves as Vice Chairman of The Detroit Lions, Inc.
and Chairman of the Board of Trustees of The Henry Ford. He is
also a Vice Chairman of Detroit Renaissance. Mr. Ford holds
a B.A. degree from Princeton University and a master of science
degree in management from the Massachusetts Institute of
Technology (MIT).
Dawn
G. Lepore
Dawn G. Lepore, age 51, has served as a director of eBay
since December 1999. Ms. Lepore has served as Chief
Executive Officer and Chairman of the Board of drugstore.com,
inc., a leading online provider of health, beauty, vision, and
pharmacy solutions, since October 2004. From August 2003 to
October 2004, Ms. Lepore served as Vice Chairman of
Technology, Active Trader, Operations, Business Strategy, and
Administration for the Charles Schwab Corporation and Charles
Schwab & Co, Inc., a financial holding company. Prior
to this appointment, she held various positions with the Charles
Schwab Corporation including: Vice Chairman of Technology,
Operations, Business Strategy, and Administration from May 2003
to August 2003; Vice Chairman of Technology, Operations, and
Administration from March 2002 to May 2003; Vice Chairman of
Technology and Administration from November 2001 to March 2002;
and Vice Chairman and Chief Information Officer from July 1999
to November 2001. Ms. Lepore holds a B.A. degree from Smith
College.
12
Pierre
M. Omidyar
Pierre M. Omidyar, age 38, founded eBay as a sole
proprietorship in September 1995. He has been a director and
Chairman of the Board since eBays incorporation in May
1996 and also served as its Chief Executive Officer, Chief
Financial Officer, and President from inception to February
1998, November 1997 and August 1996, respectively. Prior to
founding eBay, Mr. Omidyar was a developer services
engineer at General Magic, a mobile communications platform
company, from December 1994 to July 1996. Mr. Omidyar
co-founded Ink Development Corp. (later renamed eShop) in May
1991 and served as a software engineer there from May 1991 to
September 1994. Prior to co-founding Ink, Mr. Omidyar was a
developer for Claris, a subsidiary for Apple Computer, and for
other Macintosh-oriented software development companies.
Mr. Omidyar is currently Chairman and CEO of Omidyar
Network, a mission-based investment group committed to fostering
individual self-empowerment on a global scale. He also serves on
the Board of Trustees of Tufts University and the Santa Fe
Institute, and as a director of Meetup Inc. Mr. Omidyar
holds a B.S. degree in Computer Science from Tufts University.
Richard
T. Schlosberg, III
Richard T. Schlosberg, III, age 62, has served as a
director of eBay since March 2004. From May 1999 to January
2004, Mr. Schlosberg served as President and Chief
Executive Officer of the David & Lucile Packard
Foundation, a private family foundation. Prior to joining the
foundation, Mr. Schlosberg was Executive Vice President of
The Times Mirror Company and publisher and Chief Executive
Officer of the Los Angeles Times. Prior to that, he served in
the same role at the Denver Post. Mr. Schlosberg serves on
the board of directors of Edison International, BEA Systems,
Inc, and is also a national board member of the Smithsonian
Institution, a member of the USO World Board of Governors, and a
trustee of Pomona College. Mr. Schlosberg is a graduate of
the United States Air Force Academy and holds an M.B.A. degree
from the Harvard Business School.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS
CONTINUING IN OFFICE UNTIL OUR 2007 ANNUAL MEETING
Philippe
Bourguignon
Philippe Bourguignon, age 58, has served as a director of
eBay since December 1999. Mr. Bourguignon has been Vice
Chairman of Revolution Resorts, a division of Revolution LLC, a
company focused on health, living, and resort investments and
operations, since January 2006. From April 2004 to January 2006,
Mr. Bourguignon served as Chairman of Aegis Media France, a
media communications and market research company. From September
2003 to March 2004, Mr. Bourguignon was Co-Chief Executive
Officer of The World Economic Forum (The DAVOS Forum). From
August 2003 to October 2003, Mr. Bourguignon served as
Managing Director of The World Economic Forum. From April 1997
to January 2003, Mr. Bourguignon served as Chairman of the
Board of Club Méditerranée S.A., a resort operator.
Prior to his appointment at Club Méditerranée S.A.,
Mr. Bourguignon was Chief Executive Officer of Euro Disney S.A.,
the parent company of Disneyland Paris, since 1993, and
Executive Vice President of The Walt Disney Company (Europe)
S.A., since October 1996. Mr. Bourguignon was named
President of Euro Disney in 1992, a post he held through April
1993. He joined The Walt Disney Company in 1988 as head of Real
Estate development. Mr. Bourguignon holds a Masters Degree in
Economics at the University of Aix-en-Provence and holds a
post-graduate diploma from the Institut dAdministration
des Enterprises (IAE) in Paris.
Thomas
J. Tierney
Thomas J. Tierney, age 52, has served as a director of eBay
since March 2003. Mr. Tierney is the founder of The
Bridgespan Group, a non-profit consulting firm serving the
non-profit sector, and has been its Chairman of the Board since
late 1999. Prior to founding Bridgespan, Mr. Tierney served
as Chief Executive Officer of Bain & Company, a
consulting firm, from June 1992 to January 2000.
Mr. Tierney holds a B.A. degree in Economics from the
University of California at Davis and an M.B.A. degree with
distinction from the Harvard Business School. Mr. Tierney
is the co-author of a book about organization and strategy
called Aligning the Stars.
13
Margaret
C. Whitman
Margaret C. Whitman, age 49, serves eBay as President and
Chief Executive Officer. She has served in that capacity since
February 1998 and as a director since March 1998. From January
1997 to February 1998, she was General Manager of the Preschool
Division of Hasbro Inc., a toy company. From February 1995 to
December 1996, Ms. Whitman was employed by FTD, Inc., a
floral products company, most recently as President, Chief
Executive Officer and a director. From October 1992 to February
1995, Ms. Whitman was employed by The Stride Rite
Corporation, a footwear company, in various capacities,
including President, Stride Rite Childrens Group and
Executive Vice President, Product Development,
Marketing & Merchandising, Keds Division. From May 1989
to October 1992, Ms. Whitman was employed by The Walt Disney
Company, an entertainment company, most recently as Senior Vice
President, Marketing, Disney Consumer Products. Before joining
Disney, Ms. Whitman was at Bain & Co., a
consulting firm, most recently as a Vice President.
Ms. Whitman also serves on the board of directors of The
Procter & Gamble Company and DreamWorks Animation SKG,
Inc. Ms. Whitman holds an A.B. degree in Economics from
Princeton University and an M.B.A. degree from the Harvard
Business School.
DIRECTORS
CONTINUING IN OFFICE UNTIL OUR 2008 ANNUAL MEETING
Fred
D. Anderson
Fred D. Anderson, age 61, has served as a director of eBay
since July 2003. Mr. Anderson has been a Managing Director
of Elevation Partners, a private equity firm focused on the
media and entertainment industry, since July 2004. From March
1996 to June 2004, Mr. Anderson served as Executive Vice
President and Chief Financial Officer of Apple Computer, Inc., a
manufacturer of personal computers and related software. Prior
to joining Apple, Mr. Anderson was Corporate Vice President and
Chief Financial Officer of Automatic Data Processing, Inc., an
electronic transaction processing firm, from August 1992 to
March 1996. Mr. Anderson also serves on the board of
directors of Apple Computer, Inc. and Homestore, Inc.
Mr. Anderson holds a B.A. degree from Whittier College and
an M.B.A. from the University of California, Los Angeles.
Edward
W. Barnholt
Edward W. Barnholt, age 62, has served as a director of
eBay since April 2005. Mr. Barnholt served as President and
Chief Executive Officer of Agilent Technologies, Inc., a
measurement company, from May 1999 until March 2005, and served
as Chairman of the Board of Agilent from November 2002 until
March 2005. Before being named Agilents Chief Executive
Officer, Mr. Barnholt served as Executive Vice President
and General Manager of Hewlett-Packard Companys
Measurement Organization from 1998 to 1999. From 1990 to 1998,
he served as General Manager of Hewlett-Packard Companys
Test and Measurement Organization. He was elected a Senior Vice
President of Hewlett-Packard Company in 1993 and an Executive
Vice President in 1996. Mr. Barnholt also serves on the
board of directors of KLA-Tencor Corporation and Adobe Systems
Incorporated and is a member of the Board of Trustees of the
Packard Foundation. Mr. Barnholt holds a bachelors
degree and a masters degree in electrical engineering from
Stanford University.
Scott
D. Cook
Scott D. Cook, age 53, has served as a director of eBay
since June 1998. Mr. Cook is the founder of Intuit Inc., a
financial software developer. Mr. Cook has been a director of
Intuit since March 1984 and is currently Chairman of the
Executive Committee of the Board of Intuit. From March 1993 to
July 1998, Mr. Cook served as Chairman of the Board of
Intuit. From March 1984 to April 1994, Mr. Cook served as
President and Chief Executive Officer of Intuit. Mr. Cook
also serves on the board of directors of The Procter &
Gamble Company. Mr. Cook holds a B.A. degree in Economics
and Mathematics from the University of Southern California and
an M.B.A. degree from the Harvard Business School.
Robert
C. Kagle
Robert C. Kagle, age 50, has served as a director of eBay
since June 1997. Mr. Kagle has been a Member of Benchmark
Capital, the General Partner of Benchmark Capital Partners, L.P.
and Benchmark Founders Fund, L.P., since its founding in
May 1995. Mr. Kagle also has been a General Partner of
Technology Venture Investors since
14
January 1984. Mr. Kagle also serves on the board of
directors of ZipRealty, Inc. Mr. Kagle holds a B.S. degree
in Electrical and Mechanical Engineering from the General Motors
Institute (renamed Kettering University in January
1998) and an M.B.A. degree from the Stanford Graduate
School of Business.
PROPOSAL 2
APPROVAL
OF AMENDMENT TO 2001 EQUITY INCENTIVE PLAN
We are asking you to approve an amendment to our 2001 Equity
Incentive Plan, which we refer to as the 2001 Plan. The purpose
of the amendment is to increase the number of shares of common
stock we may issue under the 2001 Plan by 30,000,000 shares
from 192,000,000 to 222,000,000 shares.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
A summary of the 2001 Plan is set forth below. The discussion
below is qualified in its entirety by reference to the 2001
Plan, a copy of which, as amended, is attached as
Appendix A to this proxy statement.
GENERAL
The 2001 Plan provides for the grant of incentive stock options
and nonstatutory stock options. Incentive stock options granted
under the 2001 Plan are intended to qualify as incentive
stock options within the meaning of Section 422 of
the Code. Nonstatutory stock options granted under the 2001 Plan
are not intended to qualify as incentive stock options under the
Code. We have not granted any incentive stock options since our
initial public offering.
PURPOSE
The purpose of the 2001 Plan is to provide a means by which
eligible employees, directors, and consultants of eBay and its
affiliates may be given an opportunity to purchase our common
stock. We believe that the 2001 Plan assists us in retaining the
services of such persons, in securing and retaining the services
of persons capable of filling such positions, and in providing
incentives for such persons to exert maximum efforts for our
success.
ADMINISTRATION
The Board administers the 2001 Plan. Subject to the provisions
of the 2001 Plan, it may construe and interpret the 2001 Plan
and the options granted under it, and to establish, amend, and
revoke rules and regulations for its administration. The Board
determines the persons to whom and the dates on which options
will be granted. Subject to the provisions of the 2001 Plan, it
also may determine the number of shares of our common stock to
be subject to each option, the exercise and vesting schedule,
the exercise price, the type of consideration, and other terms
of the option. Pursuant to its authority to delegate
administration of the 2001 Plan to a committee of one or more
members of the Board of Directors, the Board of Directors has
delegated such administration to its Compensation Committee.
Therefore, when referring to the Board in reference
to the 2001 Plan, we are referring to the Compensation Committee
as well as to the Board of Directors itself.
The 2001 Plan provides that, in the Boards discretion,
directors serving on the Compensation Committee may be
outside directors within the meaning of
Section 162(m). This limitation would exclude from such
committee directors who are: (i) current employees of ours
or of an affiliate of ours; (ii) former employees of ours
or an affiliate of ours receiving compensation for past services
(other than benefits under a tax-qualified pension plan);
(iii) current and former officers of ours or an affiliate
of ours; (iv) directors currently receiving direct or
indirect remuneration from us or an affiliate of ours in any
capacity (other than as a director); and (v) any other
person who is not otherwise considered an outside
director for purposes of Section 162(m). The
definition of an outside director under
Section 162(m) is generally narrower than the definition of
a non-employee director under
Rule 16b-3
of the Securities Exchange Act of 1934, as amended. All of the
directors on our Compensation Committee are and have been
outside directors since our initial public offering.
15
ELIGIBILITY
We intended the 2001 Plan to benefit all of our employees and
consultants and the employees, directors, and consultants of our
affiliates. As such, all are eligible to participate in the 2001
Plan. However, nonemployee directors are eligible only for
grants where the essential terms have been set forth in the 2001
Plan and been approved by our stockholders, and the 2001 Plan
currently does not provide for such nondiscretionary grants. In
addition, the Board may grant incentive stock options under the
2001 Plan only to our employees and employees of our affiliates.
As of December 31, 2005, we and our consolidated
subsidiaries employed approximately 11,600 persons
(excluding approximately 1,000 temporary employees), all of
whom are eligible to receive grants under the 2001 Plan,
although option grants to our employees outside of the
U.S. are generally made under our 1999 Equity Incentive
Plan.
The Board may not grant an incentive stock option under the 2001
Plan to any person who, at the time of the grant, owns (or is
deemed to own) stock possessing more than 10% of the total
combined voting power of us or any of our affiliates, unless the
exercise price is at least 110% of the fair market value of the
common stock subject to the option on the date of grant and the
term of the option does not exceed five years from the date of
grant. In addition, the aggregate fair market value, determined
at the time of grant, of the shares of our common stock with
respect to which incentive stock options are exercisable for the
first time by the optionholder during any calendar year (under
the 2001 Plan and any other plan of ours or our affiliates) may
not exceed $100,000.
No employee may be granted options under the 2001 Plan covering
more than 4,000,000 shares of our common stock during any
calendar year.
STOCK
SUBJECT TO THE 2001 PLAN
Assuming adoption of this Proposal 2, we have reserved an
aggregate of 222,000,000 shares of our common stock for
issuance under the 2001 Plan. As of April 14, 2006, there
were 100,949,981 shares to be issued upon the exercise of
outstanding options under the 2001 Plan and only
34,832,849 shares were available for future grant under the
2001 Plan from the 192,000,000 shares previously approved
by our stockholders. If options granted under the 2001 Plan
expire or otherwise terminate without being exercised, the
shares of our common stock not acquired pursuant to such options
again become available for issuance under the 2001 Plan. As of
April 14, 2006, the closing price of our common stock as
reported on the Nasdaq Stock Market was $38.59 per share.
TERMS OF
OPTIONS
Exercise Price; Payment. The exercise price of
incentive stock options may not be less than 100% of the fair
market value of the common stock subject to the option on the
date of the grant and, in some cases (see
Eligibility above), may not be less than 110% of
such fair market value. Prior to March 2004, the Board had the
ability to grant nonstatutory stock options at an exercise price
of up to a 15% discount to fair market value if the discount was
expressly granted in lieu of a reasonable amount of salary or a
cash bonus. In 2004, the Board amended the 2001 Plan to provide
that no options may be granted at an exercise price less than
100% of the fair market value of the common stock on the date of
grant (except in the context of a merger where such options
replace outstanding options of a company we have acquired).
Optionholders may pay the exercise price either in cash or, if
allowed by the Board, by delivery of other shares of our common
stock or in any other form of legal consideration acceptable to
the Board.
Option Exercise. Options granted under the
2001 Plan may become exercisable in cumulative increments, or
vest, as determined by the Board, and the Board may accelerate
the time during which an option may vest or be exercised. In
addition, options may permit exercise prior to vesting, but in
such event the optionholder will be required to enter into an
early exercise stock purchase agreement that allows us to
repurchase unvested shares, generally at the optionholders
exercise price, should the optionholders service terminate
before vesting. To the extent provided by the terms of an
option, an optionholder may satisfy any tax withholding
obligation relating to the exercise of the option by a cash
payment upon exercise, by authorizing us to withhold a portion
of the common stock otherwise issuable to the optionholder, by
delivering already-owned shares of our common stock (or
providing assurances of ownership and receiving shares on a net
basis), or by a combination of these means.
16
Term. The term of options will be
10 years or less, and until 2006, we generally granted
options with a ten-year term. Beginning in January 2006, we
began granting options with a seven-year term. Options generally
will terminate three months after termination of the
optionholders service. If such termination is due to the
optionholders disability, as determined under the 2001
Plan, the option generally may be exercised (to the extent the
option was exercisable at the time of the termination of
service) at any time within 12 months of such termination.
If the optionholder dies during the option term, or within three
months after termination of service other than for cause or
because of disability, the option generally may be exercised (to
the extent the option was exercisable at the time of the
optionholders death) within 18 months of the
optionholders death. An optionholder may designate a
beneficiary who may exercise the option following the
optionholders death.
RESTRICTIONS
ON TRANSFER
In general, the optionholder may not transfer an incentive stock
option other than by will or by the laws of descent and
distribution. However, the Board may grant nonstatutory stock
options that are transferable to the extent provided in the
stock option agreement. If the option agreement does not provide
for transferability, then the nonstatutory stock option is not
transferable other than by will or by the laws of descent and
distribution.
ADJUSTMENT
PROVISIONS
Transactions not involving our receipt of consideration, such as
a merger, consolidation, reorganization, stock dividend, or
stock split, may change the class and number of shares of our
common stock subject to the 2001 Plan and to outstanding
options. In that event, the Board will appropriately adjust the
2001 Plan as to the class and the maximum number of shares of
our common stock subject to the 2001 Plan as well as the maximum
number of shares that may be issued to an employee during any
calendar year, and will adjust outstanding options as to the
class, number of shares and price per share of our common stock.
EFFECT OF
CERTAIN CORPORATE EVENTS
In the event of our dissolution or liquidation, outstanding
options will terminate immediately prior to the date of such
event. However, outstanding options do not automatically
terminate in the event of a change in control. A change in
control means a sale, lease or other disposition of all or
substantially all of our assets, a merger or consolidation in
which we are not the surviving corporation, or a reverse merger
in which we are the surviving corporation but the shares of our
stock outstanding immediately preceding the merger are converted
by virtue of the merger into other property. In the event of a
change in control, any surviving corporation or acquiring
corporation must either assume or continue outstanding options
or substitute similar options. If it refuses to do so, then with
respect to options held by optionholders whose service has not
terminated, the vesting of such options (and, if applicable, the
time during which such options may be exercised) will be
accelerated in full. The unexercised portion of all outstanding
options will terminate upon the change in control. The
acceleration of an option in the event of a change in control
may be viewed as an anti-takeover provision, which may have the
effect of discouraging a proposal to acquire or otherwise obtain
control of us.
DURATION,
AMENDMENT, REPRICING, AND TERMINATION
The Board may amend, suspend, or terminate the 2001 Plan at any
time or from time to time. Stockholders initially approved the
2001 Plan at our 2001 Annual Meeting of Stockholders.
Stockholder approval of any amendment to the 2001 Plan must be
sought if necessary under applicable laws or regulations.
Stockholder approval also must be sought for any material
amendment to the 2001 Plan. However, the Board may submit any
amendment to the 2001 Plan for stockholder approval at its
discretion.
In 2002, the Board amended the 2001 Plan to provide that prior
stockholder approval is required before the Board may cancel an
option and replace it with a new option or cash, reduce the
exercise price of any option it has already granted under the
2001 Plan, or take any other action with respect to an
outstanding option that is treated as a repricing under
generally accepted accounting principles. The 2001 Plan
terminates on March 21, 2011, unless sooner terminated.
17
FEDERAL
INCOME TAX INFORMATION
The following is a summary of the general federal income tax
consequences of options granted under the 2001 Plan to persons
subject to United States taxation. U.S. tax consequences to
any particular individual may be different.
Incentive Stock Options. Incentive stock
options under the 2001 Plan are intended to be eligible for the
favorable federal income tax treatment accorded incentive
stock options under the Code. To date, no incentive stock
options have been granted under the 2001 Plan.
There generally are no federal income tax consequences to us or
to the optionholder by reason of the grant or exercise of an
incentive stock option. However, the exercise of an incentive
stock option may increase the optionholders alternative
minimum tax liability, if any.
If an optionholder holds stock acquired through exercise of an
incentive stock option for at least two years from the date on
which the option is granted and at least one year from the date
on which the shares are transferred to the optionholder upon
exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss if the
optionholder held the stock for more than one year.
Generally, if the optionholder disposes of the stock before the
expiration of either of these holding periods (a
disqualifying disposition), then at the time of
disposition the optionholder will realize taxable ordinary
income equal to the lesser of (i) the excess of the
stocks fair market value on the date of exercise over the
exercise price, or (ii) the optionholders actual
gain, if any, on the purchase and sale. The optionholders
additional gain or any loss upon the disqualifying disposition
will be a capital gain or loss, which will be long-term or
short-term depending on whether the stock was held for more than
one year.
To the extent the optionholder recognizes ordinary income by
reason of a disqualifying disposition, we will generally be
entitled (subject to the requirement of reasonableness, the
provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation) to a corresponding
business expense deduction in the tax year in which the
disqualifying disposition occurs.
Nonstatutory Stock Options. There are no tax
consequences to us or to the optionholder by reason of the grant
of a nonstatutory stock option. Upon acquisition of the stock,
the optionholder normally will recognize taxable ordinary income
equal to the excess, if any, of the stocks fair market
value on the acquisition date over the purchase price. However,
to the extent the stock is subject to certain types of vesting
restrictions, the taxable event will be delayed until the
vesting restrictions lapse unless the optionholder elects to be
taxed on receipt of the stock. With respect to employees, we are
generally required to withhold from regular wages or
supplemental wage payments an amount based on the ordinary
income recognized. Subject to the requirement of reasonableness,
the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, we generally will be
entitled to a business expense deduction equal to the taxable
ordinary income realized by the optionholder.
Upon disposition of our stock, the optionholder will recognize a
capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any
amount recognized as ordinary income upon acquisition (or
vesting) of the stock. Such gain or loss will be long-term or
short-term depending on whether the optionholder held our stock
for more than one year. Slightly different rules may apply to
optionholders who acquire stock subject to certain repurchase
options or who are subject to Section 16(b) of the Exchange
Act.
Capital Gains. Long-term capital gains
currently are generally subject to lower tax rates than ordinary
income or short-term capital gains. The maximum long-term
capital gains rate for federal income tax purposes is currently
generally 15% while the maximum ordinary income rate and
short-term capital gains rate is effectively 35%. Slightly
different rules may apply to participants who acquire stock
subject to our repurchase right.
Potential Limitation on Company
Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for
compensation paid to certain covered employees in a
taxable year to the extent that compensation to such covered
employee exceeds $1,000,000. It is possible that compensation
attributable to options, when combined with all other types of
compensation received by a covered employee from us, may cause
this limitation to be exceeded in any particular year.
18
Certain kinds of compensation, including qualified
performance-based compensation, are disregarded for
purposes of the deduction limitation. In accordance with
Treasury regulations issued under Section 162(m),
compensation attributable to stock options will generally
qualify as performance-based compensation if (i) the option
is granted by a compensation committee composed solely of two or
more outside directors, (ii) the plan contains
a per-employee limitation on the number of shares for which such
options may be granted during a specified period, (iii) the
plan is approved by the stockholders, and (iv) under the
terms of the option, the amount of compensation an employee
could receive is based solely on an increase in the value of the
stock after the date of the grant (which requires that the
exercise price of the option is not less than the fair market
value of the stock on the date of grant). All options granted to
date under the 2001 Plan qualify as performance-based
compensation.
PARTICIPATION
IN THE 2001 PLAN
The grant of stock options under the 2001 Plan to executive
officers, including the executive officers named in the Summary
Compensation Table set forth under Executive
Compensation Summary of Compensation, is
subject to the discretion of the Board. During 2005, all current
executive officers as a group, including the Named Executive
Officers, and all other employees as a group were granted
options under the 2001 Plan to purchase 4,226,000 shares at
a weighted average exercise price of $39.67 and
20,253,254 shares at a weighted average exercise price of
$41.80, respectively. During this period, options to purchase an
aggregate of 10,119,756 shares under the 2001 Plan were
cancelled. Since the 2001 Plans inception, none of our
current directors, with the exception of Ms. Whitman, has
been granted options to purchase shares under the 2001 Plan. As
of December 31, 2005, the weighted average exercise price
of outstanding options under the 2001 Plan was $25.15. As of the
date hereof, there has been no determination as to future awards
under the 2001 Plan. Accordingly, future benefits or amounts
received are not determinable.
PROPOSAL 3
RATIFICATION
OF SELECTION OF INDEPENDENT AUDITORS
We have selected PricewaterhouseCoopers LLP, or PwC, as our
independent auditors for the fiscal year ending
December 31, 2006. We are submitting our selection of
independent auditors for ratification by the stockholders at the
Annual Meeting. PwC has audited our historical consolidated
financial statements for all annual periods since our
incorporation in 1996. We expect that representatives of PwC
will be present at the Annual Meeting, will have an opportunity
to make a statement if they wish, and will be available to
respond to appropriate questions.
Our Bylaws do not require that the stockholders ratify the
selection of PwC as our independent auditors. However, we are
submitting the selection of PwC to the stockholders for
ratification as a matter of good corporate practice. If the
stockholders do not ratify the selection, the Board of Directors
and the Audit Committee will reconsider whether or not to retain
PwC. Even if the selection is ratified, the Board of Directors
and the Audit Committee, in their discretion, may change the
appointment at any time during the year if we determine that
such a change would be in the best interests of eBay and our
stockholders.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
19
AUDIT AND
OTHER PROFESSIONAL FEES
During the fiscal years ended December 31, 2004 and
December 31, 2005, fees for services provided by PwC were
as follows (in thousands):
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Year Ended
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December 31,
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2004
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2005
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Audit Fees
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$
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3,757
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$
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3,174
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Audit-Related Fees
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1,617
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2,202
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Tax Fees
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All Other Fees
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Total
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$
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5,374
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$
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5,376
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Audit Fees consisted of fees incurred for services
rendered for the audit of eBays annual financial
statements, review of financial statements included in
eBays quarterly reports on
Form 10-Q,
other services normally provided in connection with statutory
and regulatory filings, and for attestation services related to
Sarbanes-Oxley compliance. Audit-Related Fees
consisted of fees billed for due diligence procedures in
connection with acquisitions and divestitures and consultation
regarding financial accounting and reporting matters. We did not
incur any Tax Fees or All Other Fees in
the fiscal years ended December 31, 2004 and 2005.
The Audit Committee of our Board of Directors has determined
that the rendering of non-audit services by PwC was compatible
with maintaining their independence.
AUDIT
COMMITTEE PRE-APPROVAL POLICY
The Audit Committee of our Board of Directors has adopted a
policy requiring the pre-approval of any non-audit engagement of
PwC. In the event that we wish to engage PwC to perform
accounting, technical, diligence, or other permitted services
not related to the services performed by PwC as our independent
registered public accounting firm, our internal finance
personnel will prepare a summary of the proposed engagement,
detailing the nature of the engagement, the reasons why PwC is
the preferred provider of such services, and the estimated
duration and cost of the engagement. The report will be provided
to our Audit Committee or a designated committee member, who
will evaluate whether the proposed engagement will interfere
with the independence of PwC in the performance of its auditing
services. Beginning with the first quarter of 2003, we have
disclosed all approved non-audit engagements during a quarter in
the appropriate quarterly report on
Form 10-Q
or annual report on
Form 10-K.
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS1
We constitute the Audit Committee of the Board of Directors of
eBay Inc. The Audit Committees responsibility is to
provide assistance and guidance to the Board of Directors in
fulfilling its oversight responsibilities to eBays
stockholders with respect to (1) eBays corporate
accounting and reporting practices, (2) eBays
compliance with legal and regulatory requirements, (3) the
independent auditors qualifications and independence,
(4) the performance of eBays internal audit function
and independent auditors, (5) the quality and integrity of
eBays financial statements and reports, (6) reviewing
and approving all audit engagement fees and terms, as well as
all non-audit engagements with the independent auditors, and
(7) producing this report. The Audit Committee members are
not professional accountants or auditors and these functions are
not intended to replace or duplicate the activities of
management or the independent auditors. Management has primary
responsibility for preparing the financial statements and
designing and assessing the effectiveness of internal control
over financial reporting. Management and the internal auditing
department are responsible for maintaining appropriate
accounting and financial reporting principles and policies and
internal controls and procedures that provide for compliance
with
1 The
material in this report is not soliciting material,
is not deemed filed with the SEC and is not to be
incorporated by reference in any of our filings under the
Securities Act of 1933, as amended, referred to as the 1933 Act,
or the Exchange Act of 1934, as amended, referred to as the
1934 Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing.
20
accounting standards and applicable laws and regulations.
PricewaterhouseCoopers LLP, or PwC, eBays independent
auditors, are responsible for planning and carrying out an audit
of eBays financial statements in accordance with the
standards of the Public Company Accounting Oversight Board
(United States) and of managements assessment of
eBays internal control over financial reporting,
expressing an opinion on the conformity of eBays audited
financial statements with generally accepted accounting
principles as well as the effectiveness of eBays internal
control over financial reporting and managements
assessment thereof, reviewing eBays quarterly financial
statements prior to the filing of each quarterly report on
Form 10-Q,
and other procedures.
During the last year, and earlier in 2006, in connection with
the preparation of eBays annual report on
Form 10-K
for the year ended December 31, 2005, and in fulfillment of
our oversight responsibilities, we did the following, among
other things:
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discussed with PwC the overall scope of and plans for their
audit;
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reviewed, upon completion of the audit, the financial statements
to be included in the
Form 10-K
and managements report on internal control over financial
reporting and discussed the financial statements and eBays
internal control over financial reporting with management;
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conferred with PwC and with senior management of eBay regarding
the scope, adequacy and effectiveness of internal accounting and
financial reporting controls (including eBays internal
control over financial reporting) in effect;
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instructed PwC that the independent auditors are ultimately
accountable to the Board of Directors and the Audit Committee,
as representatives of the stockholders;
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discussed with PwC the results of their audit, including
PwCs assessment of the quality and appropriateness, not
just acceptability, of the accounting principles applied by
eBay, the reasonableness of significant judgments, the nature of
significant risks and exposures, the adequacy of the disclosures
in the financial statements as well as other matters required to
be communicated under generally accepted auditing standards,
including the matters required by the Statement on Auditing
Standards No. 61 (Communications with Audit
Committees); and
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obtained from PwC in connection with the audit a timely report
relating to eBays annual audited financial statements
describing all critical accounting policies and practices to be
used, all alternative treatments of financial information within
generally accepted accounting principles that were discussed
with management, ramifications of the use of such alternative
disclosures and treatments, the treatment preferred by PwC, and
any material written communications between PwC and management.
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The Audit Committee held 12 meetings in 2005. Throughout the
year we conferred with PwC, eBays internal audit team, and
senior management in separate executive sessions to discuss any
matters that the Audit Committee, PwC, the internal audit team,
or senior management believed should be discussed privately with
the Audit Committee. We have direct and private access to both
the internal and external auditors of eBay.
We have discussed with PwC their independence from management
and eBay and have received and reviewed the written disclosure
and the letter regarding the auditors independence as
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committee). We have also
concluded that PwCs provision to eBay and its affiliates
of the non-audit services described under Audit and Other
Professional Fees above is compatible with PwCs
obligation to remain independent.
We have also established procedures for the receipt, retention,
and treatment of complaints received by eBay regarding
accounting, internal accounting controls, or auditing matters
and for the confidential anonymous submission by eBay employees
of concerns regarding questionable accounting or auditing
matters.
After reviewing the qualifications of the current members of the
committee, and any relationships they may have with eBay that
might affect their independence from eBay, the Board of
Directors determined that each member of the Audit Committee
meets the independence requirements of the Nasdaq Stock Market
and of Section 10A of the Exchange Act, that each member is
able to read and understand fundamental financial
21
statements and that Mr. Anderson qualifies as an
audit committee financial expert under the
applicable rules promulgated pursuant to the Exchange Act. The
Audit Committee operates under a written charter adopted by the
Board of Directors, which was last modified in March 2004. The
Audit Committee Charter, as so amended, is shown on the
corporate governance section of eBays investor relations
website at
http://investor.ebay.com/governance/charter audit.cfm.
Any future changes in the charter or key practices will also be
reflected on the website.
Based on our reviews and discussions described above, we
recommended to the Board of Directors, and the Board approved,
the inclusion of the audited financial statements in eBays
Annual Report on
Form 10-K
for the year ended December 31, 2005, which eBay filed with
the SEC on February 24, 2006. We have also recommended, and
the Board has approved, the selection of PwC as our independent
auditors for 2006.
AUDIT COMMITTEE
Fred D. Anderson, Chair
Dawn G. Lepore
Richard T. Schlosberg, III
OUR
EXECUTIVE OFFICERS
Executive officers are elected annually by the Board and serve
at the discretion of the Board. Set forth below is information
regarding our executive officers as of April 1, 2006.
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Name
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Age
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Position
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Margaret C. Whitman
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49
|
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President and Chief Executive
Officer
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Elizabeth L. Axelrod
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43
|
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Senior Vice President, Human
Resources
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Matthew J. Bannick
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41
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President, eBay International
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William C. Cobb
|
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49
|
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President, eBay North America
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John J. Donahoe
|
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45
|
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President, eBay Business Unit
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Rajiv Dutta
|
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44
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President, Skype
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Michael R. Jacobson
|
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51
|
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Senior Vice President Legal
Affairs, General Counsel and Secretary
|
Jeffrey D. Jordan
|
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47
|
|
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President, PayPal
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Robert H. Swan
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45
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Senior Vice President, Finance and
Chief Financial Officer
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Maynard G. Webb, Jr.
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50
|
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Chief Operating Officer
|
Margaret C. Whitmans biography is set forth under
the heading Proposal 1 Election of
Directors Directors Continuing in Office Until
Our 2007 Annual Meeting.
Elizabeth L. Axelrod serves eBay as Senior Vice
President, Human Resources. She has served in that capacity
since March 2005. From May 2002 to March 2005, Ms. Axelrod
served as the Chief Talent Officer for WPP Group PLC, a global
communications services group where she was also an executive
director. Ms. Axelrod was a partner at McKinsey &
Company, a consulting firm where she worked from October 1989 to
April 2002. Ms. Axelrod holds a B.S.E. degree in Finance
from the Wharton School of the University of Pennsylvania and a
Masters degree in Public and Private Management (MPPM)
from the Yale School of Management. Ms. Axelrod is a
co-author of The War for Talent published by Harvard
Business School Press in 2001.
Matthew J. Bannick serves eBay as President, eBay
International. He has served in that capacity since December
2004. On March 6, 2006, eBay announced that
Mr. Bannick will be transitioning out of his current role
later in 2006 in order to spearhead eBays initiatives in
corporate philanthropy and the developing world. From October
2002 to November 2004, Mr. Bannick served as Senior Vice
President and General Manager, Global Online Payments and Chief
Executive Officer of PayPal. From November 2000 to October 2002,
Mr. Bannick served as eBays Senior Vice President and
General Manager, eBay International. From February 1999 to
November 2000, Mr. Bannick served in a variety of other
executive positions at eBay. From April 1995 to January
22
1999, Mr. Bannick was an executive for Navigation
Technologies (NavTech), a leading provider of digital map
databases for the vehicle navigation and internet mapping
industries. Mr. Bannick was President of NavTech North
America for three years and also served as Senior Vice President
of Marketing and Vice President of Operations. From June 1992 to
August 1992, Mr. Bannick served as a consultant for
McKinsey & Company, a consulting firm, in Europe and
from June 1993 to April 1995 in the U.S. Mr. Bannick
also served as a U.S. diplomat in Germany during the period
of German unification. Mr. Bannick holds a B.A. in
Economics and International Studies from University of
Washington and an M.B.A degree from the Harvard Business School.
William C. Cobb serves eBay as President, eBay North
America. He has served in that capacity since December 2004.
From September 2002 to November 2004, Mr. Cobb served as
Senior Vice President and General Manager, eBay International.
From November 2000 to September 2002, Mr. Cobb served as
eBays Senior Vice President, Global Marketing. From
February 2000 to June 2000, Mr. Cobb served as the General
Manager of Consumer Sales for Netpliance, Inc., an
Internet-based content company. From July 1997 to February 2000,
Mr. Cobb served as the Senior Vice President of
International Marketing for Tricon Global Restaurants, Inc. (now
known as Yum! Brands, Inc.), a restaurant operator and
franchiser. From August 1995 to July 1997, Mr. Cobb served
as the Senior Vice President and Chief Marketing Officer for
Pizza Hut, Inc., a division of Tricon Global Restaurants, Inc.
From May 1994 to August 1995, Mr. Cobb served as Vice President
of Colas for the Pepsi-Cola Company, a division of PepsiCo.,
Inc. Mr. Cobb holds a B.S. degree in Economics from the
University of Pennsylvania and an M.B.A. degree from
Northwestern University.
John J. Donahoe serves eBay as President, eBay Business
Unit. He has served in that capacity since March 2005. From
January 2000 to February 2005, Mr. Donahoe served as
Worldwide Managing Director for Bain & Company, a
global business consulting firm. Mr. Donahoe serves on the
Board of Trustees for Dartmouth College and Sacred Heart and
sits on the Advisory Board of Stanford Graduate School of
Business. Mr. Donahoe holds a B.A. in Economics from
Dartmouth College and an M.B.A. degree from the Stanford
Graduate School of Business.
Rajiv Dutta serves eBay as President, Skype. He has
served in that capacity on a full-time basis since March 2006.
From January 2001 to March 2006, Mr. Dutta served as
eBays Senior Vice President and Chief Financial Officer.
From August 1999 to January 2001, Mr. Dutta served as
eBays Vice President of Finance and Investor Relations.
From July 1998 to August 1999, Mr. Dutta served as eBays
Finance director. From February 1998 to July 1998, Mr. Dutta
served as the World Wide Sales Controller of KLA-Tencor, a
manufacturer of semiconductor equipment. Prior to KLA-Tencor,
Mr. Dutta spent ten years, from January 1988 to February
1998, at Bio-Rad Laboratories, Inc., a manufacturer and
distributor of life science and diagnostic products with
operations in over 24 countries. Mr. Dutta held a variety
of positions with Bio-Rad, including the group controller of the
Life Science Group. Mr. Dutta holds a B.A. degree in
Economics from St. Stephens College, Delhi University in
India and an M.B.A. degree from Drucker School of Management.
Michael R. Jacobson serves eBay as Senior Vice President,
Legal Affairs, General Counsel and Secretary. He has served in
that capacity or as Vice President, Legal Affairs, General
Counsel since August 1998. From 1986 to August 1998,
Mr. Jacobson was a partner with the law firm of Cooley
Godward LLP, specializing in securities law, mergers and
acquisitions, and other transactions. Mr. Jacobson holds an
A.B. degree in Economics from Harvard College and a J.D. degree
from Stanford Law School.
Jeffrey D. Jordan serves eBay as President, PayPal. He
has served in that capacity since December 2004. From April 2000
to November 2004, Mr. Jordan served as eBays Senior
Vice President, eBay North America. From September 1999 to April
2000, Mr. Jordan served as eBays Vice President,
Regionals and Services. From September 1998 to September 1999,
Mr. Jordan served as Chief Financial Officer for Hollywood
Entertainment Corporation, a video rental company, and President
of their subsidiary, Reel.com. From September 1990 to September
1998, Mr. Jordan served in various capacities including
most recently Senior Vice President and Chief Financial Officer
of The Disney Store Worldwide, a subsidiary of The Walt Disney
Company. Mr. Jordan holds a B.A. degree in Political
Science and Psychology from Amherst College and an M.B.A. degree
from the Stanford Graduate School of Business.
Robert H. Swan serves eBay as Senior Vice President,
Finance and Chief Financial Officer. He has served in that
capacity since March 2006. From February 2003 to March 2006,
Mr. Swan served as Executive Vice President and Chief
Financial Officer of Electronic Data Systems Corporation. From
July 2001 to December 2002, Mr. Swan
23
was Executive Vice President and Chief Financial Officer of TRW
Inc. Mr. Swan served in executive positions at Webvan
Group, Inc. from 1999 to 2001, including Chief Executive Officer
from April 2001 to July 2001, Chief Operating Officer from
September 2000 to July 2001 and Chief Financial Officer from
October 1999 to July 2001. (Webvan filed a voluntary petition
for Chapter 11 bankruptcy in July 2001.) Mr. Swan
holds a B.S. from the State University of New York at
Buffalo and an M.B.A. from State University of New York at
Binghamton.
Maynard G. Webb, Jr. serves eBay as Chief Operating
Officer. He has served in that capacity since June 2002. From
August 1999 to June 2002, Mr. Webb served as President,
eBay Technologies. From July 1998 to August 1999, Mr. Webb
was Senior Vice President and Chief Information Officer at
Gateway, Inc., a computer manufacturer. From February 1995 to
July 1998, Mr. Webb was Vice President and Chief
Information Officer at Bay Networks, Inc., a manufacturer of
computer networking products. From June 1991 to January 1995,
Mr. Webb was Director, IT at Quantum Corporation.
Mr. Webb also serves on the board of directors of Gartner,
Inc., a high technology research and consulting firm and
Hyperion Solutions, a software company. Mr. Webb holds a
B.A.A. degree from Florida Atlantic University.
EXECUTIVE
COMPENSATION
SUMMARY
OF COMPENSATION
The following table shows certain compensation earned during the
fiscal years ended December 31, 2003, 2004, and 2005, by
our Chief Executive Officer and four most highly-compensated
other executive officers (based on their total annual salary and
bonus compensation), also referred to as the Named Executive
Officers, at December 31, 2005.
Summary
Compensation Table
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Long-Term and
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Other Compensation
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Annual Compensation
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Number of Securities
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|
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Name and
|
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Fiscal
|
|
|
|
|
|
|
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Other Annual
|
|
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Underlying Options
|
|
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All Other
|
|
2005 Principal
Positions
|
|
Year
|
|
|
Salary(1)
|
|
|
Bonus(2)
|
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Compensation(3)
|
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Options (#)(4)
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Compensation(5)
|
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Margaret C. Whitman
|
|
|
2005
|
|
|
$
|
995,016
|
|
|
$
|
1,697,651
|
(6)
|
|
$
|
404,917
|
|
|
|
550,000
|
|
|
$
|
3,483
|
|
President and
|
|
|
2004
|
|
|
|
994,052
|
|
|
|
1,553,480
|
(6)
|
|
|
358,735
|
|
|
|
1,200,000
|
|
|
|
3,639
|
|
Chief Executive Officer
|
|
|
2003
|
|
|
|
843,823
|
|
|
|
1,159,132
|
(6)
|
|
|
377,496
|
|
|
|
2,200,000
|
|
|
|
3,639
|
|
Maynard G. Webb, Jr.
|
|
|
2005
|
|
|
|
625,008
|
|
|
|
799,580
|
(7)
|
|
|
268,309
|
|
|
|
300,000
|
|
|
|
1,246
|
|
Chief Operating Officer
|
|
|
2004
|
|
|
|
620,203
|
|
|
|
1,880,279
|
(7)
|
|
|
35,755
|
|
|
|
650,000
|
|
|
|
1,297
|
|
|
|
|
2003
|
|
|
|
582,007
|
|
|
|
1,266,601
|
(7)
|
|
|
|
|
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1,100,000
|
|
|
|
1,297
|
|
John J. Donahoe
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2005
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568,269
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(8)
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1,217,546
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(9)
|
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|
1,080
|
|
|
|
1,000,000
|
|
|
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2,621
|
|
President, eBay Business Unit
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Jeffrey D. Jordan
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2005
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510,747
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722,245
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(10)
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25,074
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|
|
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185,000
|
|
|
|
2,527
|
|
President, PayPal
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2004
|
|
|
|
494,284
|
|
|
|
934,973
|
(10)
|
|
|
2,065
|
|
|
|
440,000
|
|
|
|
2,516
|
|
|
|
|
2003
|
|
|
|
439,345
|
|
|
|
858,793
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(10)
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|
|
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600,000
|
|
|
|
1,016
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|
Rajiv Dutta
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2005
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416,302
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|
|
|
588,089
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(12)
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104,423
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|
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385,000
|
|
|
|
2,497
|
|
Senior Vice President and
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2004
|
|
|
|
392,337
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|
|
|
368,699
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(12)
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1,440
|
|
|
|
330,000
|
|
|
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2,279
|
|
Chief Financial Officer(11)
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2003
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341,794
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275,606
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(12)
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500,000
|
|
|
|
2,279
|
|
|
|
|
(1) |
|
Effective March 1, 2005, all eligible employees of eBay,
including certain of the Named Executive Officers, received an
annual salary increase representing: (i) in the case of
Mr. Jordan, a salary of $515,016 per annum; and
(ii) in the case of Mr. Dutta, a salary of
$414,000 per annum. Mr. Dutta received an additional
salary increase to $500,000 per annum effective
November 21, 2005. Total salary amounts reported are lower
than |
24
|
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|
|
these 2005 annual salary increases because lower salaries were
in effect for a portion of 2005. Neither Ms. Whitman nor
Mr. Webb received an annual salary increase.
Mr. Donahoe received a salary of $750,000 per annum
effective March 17, 2005 (his date of hire). |
|
(2) |
|
All 2005 bonuses represent amounts paid in 2005 and 2006 for
services rendered in 2005, all 2004 bonuses represent amounts
paid in 2004 and 2005 for services rendered in 2004, and all
2003 bonuses represent amounts paid in 2003 and 2004 for
services rendered in 2003. |
|
(3) |
|
Represents the perquisites outlined in the table below.
Perquisites are valued at the incremental cost of providing such
perquisites. |
The incremental cost to eBay of personal usage of its corporate
aircraft is calculated based on a methodology that includes the
weighted average cost of fuel, maintenance expenses, parts and
supplies, landing fees, ground services, catering, and crew
expenses associated with such use. Because the corporate
aircraft is used primarily for business travel, the methodology
excludes fixed costs that do not change based on usage. Fixed
costs include pilot salaries, the purchase or lease costs of the
aircraft, and the cost of maintenance not related to such
personal travel. Executives, their families, and invited guests
occasionally fly on corporate aircraft as additional passengers
on business flights. In those cases, the aggregate incremental
cost to eBay is a de minimis amount, and as a result, no
amount is reflected in the table. Prior to 2004, eBay calculated
the cost of the personal use of its corporate aircraft using the
Standard Industrial Fare Level (SIFL) tables prescribed under
applicable IRS regulations. Because eBay has determined that the
incremental cost methodology produces generally higher amounts
than use of the SIFL calculation method, the incremental cost
methodology has also been used to calculate the value of
personal use of corporate aircraft by Ms. Whitman for 2003.
Our annual report and proxy statement covering the period ended
December 31, 2003 reflected the value of
Ms. Whitmans personal use of corporate aircraft in
2003 using the SIFL calculation method and valued such use at
$115,857.
Information Technology Equipment and Services
consist of information technology support services provided for
computer equipment located at the residences of our executive
officers. In the case of Mr. Webb, Information
Technology Equipment and Services also consist of certain
computer hardware installed at Mr. Webbs residence to
permit quicker and more effective remote monitoring of the
Companys website and the related cost of installation.
Tax reimbursements consist of additional bonuses
granted by the Compensation Committee to cover any income taxes
relating to personal use of the corporate aircraft, including
taxes on imputed income resulting from executives, their
families, and guests traveling as additional passengers on
business flights which resulted in de minimis aggregate
incremental costs to eBay.
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Information
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Technology
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Fiscal
|
|
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Personal
|
|
|
Equipment and
|
|
|
Tax
|
|
|
|
|
Name
|
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Year
|
|
|
Aircraft Usage
|
|
|
Services
|
|
|
Reimbursements
|
|
|
Total
|
|
|
Margaret C. Whitman
|
|
|
2005
|
|
|
$
|
290,062
|
|
|
$
|
480
|
|
|
$
|
114,375
|
|
|
$
|
404,917
|
|
|
|
|
2004
|
|
|
|
229,145
|
|
|
|
1,200
|
|
|
|
128,390
|
|
|
|
358,735
|
|
|
|
|
2003
|
|
|
|
307,496
|
|
|
|
|
|
|
|
70,000
|
|
|
|
377,496
|
|
Maynard G. Webb, Jr
|
|
|
2005
|
|
|
|
202,501
|
|
|
|
13,523
|
|
|
|
52,285
|
|
|
|
268,309
|
|
|
|
|
2004
|
|
|
|
28,070
|
|
|
|
420
|
|
|
|
7,265
|
|
|
|
35,755
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Donahoe
|
|
|
2005
|
|
|
|
|
|
|
|
1,080
|
|
|
|
|
|
|
|
1,080
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey D. Jordan
|
|
|
2005
|
|
|
|
18,539
|
|
|
|
2,640
|
|
|
|
3,895
|
|
|
|
25,074
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
2,065
|
|
|
|
2,065
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rajiv Dutta
|
|
|
2005
|
|
|
|
90,698
|
|
|
|
120
|
|
|
|
13,605
|
|
|
|
104,423
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
1,440
|
|
|
|
|
|
|
|
1,440
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
(4) |
|
Amounts have been adjusted to reflect all prior stock splits,
including eBays
two-for-one
stock split that occurred on February 16, 2005. |
|
(5) |
|
Represents the following payments by eBay: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums Paid for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accidental Death and
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
Premiums Paid for
|
|
|
Dismemberment
|
|
|
Matching 401(k)
|
|
|
|
|
Name
|
|
Year
|
|
|
Group Life Insurance
|
|
|
Coverage
|
|
|
Contributions
|
|
|
Total
|
|
|
Margaret C. Whitman
|
|
|
2005
|
|
|
$
|
1,553
|
|
|
$
|
430
|
|
|
$
|
1,500
|
|
|
$
|
3,483
|
|
|
|
|
2004
|
|
|
|
1,664
|
|
|
|
475
|
|
|
|
1,500
|
|
|
|
3,639
|
|
|
|
|
2003
|
|
|
|
1,664
|
|
|
|
475
|
|
|
|
1,500
|
|
|
|
3,639
|
|
Maynard G. Webb, Jr
|
|
|
2005
|
|
|
|
976
|
|
|
|
270
|
|
|
|
|
|
|
|
1,246
|
|
|
|
|
2004
|
|
|
|
1,009
|
|
|
|
288
|
|
|
|
|
|
|
|
1,297
|
|
|
|
|
2003
|
|
|
|
1,009
|
|
|
|
288
|
|
|
|
|
|
|
|
1,297
|
|
John J. Donahoe
|
|
|
2005
|
|
|
|
878
|
|
|
|
243
|
|
|
|
1,500
|
|
|
|
2,621
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey D. Jordan
|
|
|
2005
|
|
|
|
804
|
|
|
|
223
|
|
|
|
1,500
|
|
|
|
2,527
|
|
|
|
|
2004
|
|
|
|
790
|
|
|
|
226
|
|
|
|
1,500
|
|
|
|
2,516
|
|
|
|
|
2003
|
|
|
|
790
|
|
|
|
226
|
|
|
|
|
|
|
|
1,016
|
|
Rajiv Dutta
|
|
|
2005
|
|
|
|
781
|
|
|
|
216
|
|
|
|
1,500
|
|
|
|
2,497
|
|
|
|
|
2004
|
|
|
|
606
|
|
|
|
173
|
|
|
|
1,500
|
|
|
|
2,279
|
|
|
|
|
2003
|
|
|
|
606
|
|
|
|
173
|
|
|
|
1,500
|
|
|
|
2,279
|
|
|
|
|
(6) |
|
Represents amounts paid to Ms. Whitman under the eBay
Incentive Plan, which for years prior to 2005 was referred to as
eBays Management Incentive Plan. |
|
(7) |
|
Represents: (i) for 2005, $799,580 paid under the eBay
Incentive Plan; (ii) for 2004, $726,279 paid under
eBays Management Incentive Plan and $1,154,000 paid under
Mr. Webbs special retention plan; and (iii) for
2003, $620,501 paid under eBays Management Incentive Plan
and $646,100 paid under Mr. Webbs special retention
plan. We entered into Mr. Webbs special retention
plan in January 2001, under which Mr. Webb received bonus
payments in August of 2001, 2002, 2003, and 2004. |
|
(8) |
|
Mr. Donahoe was hired by eBay on March 17, 2005.
Accordingly, the amounts shown in the table above for fiscal
year 2005 are for a period of less than a year.
Mr. Donahoes salary in 2005 was $750,000 per
annum. |
|
(9) |
|
Represents $717,546 paid under the eBay Incentive Plan and
$500,000 paid under Mr. Donahoes special retention
plan. We entered into a special retention bonus plan with
Mr. Donahoe in November 2004 in connection with his hiring.
Under the terms of this bonus plan, Mr. Donahoe received a
$500,000 bonus in April 2005. In addition, the terms of the
bonus plan provide for three additional bonus payments of
$500,000, payable on each of the first, second, and third
anniversaries of the date of his commencement of employment,
assuming his continued employment with us. |
|
(10) |
|
Represents: (i) for 2005, $525,482 paid under the eBay
Incentive Plan and $196,763 under Mr. Jordans special
retention plan; (ii) for 2004, $462,948 for 2004 paid under
eBays Management Incentive Plan and $472,025 under
Mr. Jordans special retention plans; and
(iii) for 2003, $361,505 paid under eBays Management
Incentive Plan and $497,288 under Mr. Jordans special
retention plans. In May 2000, we entered into a special
retention bonus plan with Mr. Jordan under which
Mr. Jordan received bonus payments in May of 2001, 2002,
2003, and 2004. In April 2001, we entered into a second special
retention bonus plan with Mr. Jordan under which
Mr. Jordan received bonus payments in April of 2002, 2003,
2004, and 2005. |
|
(11) |
|
Mr. Dutta served eBay as Senior Vice President and Chief
Financial Officer until March 16, 2006 and has completed
his transition to his new role as President, Skype. |
|
(12) |
|
Represents amounts paid to Mr. Dutta under the eBay
Incentive Plan, which for years prior to 2005 was referred to as
eBays Management Incentive Plan. |
The following executive officers received grants of options in
2005 under eBays 2001s Equity Incentive Plan, which
we also refer to as the 2001 Plan.
26
OPTION
GRANTS DURING 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percentage of
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Total Options
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Granted to
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Employees
|
|
|
Price per
|
|
|
Expiration
|
|
|
Grant Date
|
|
Name
|
|
Granted(1)
|
|
|
During 2005(2)
|
|
|
Share(3)
|
|
|
Date
|
|
|
Present Value(4)
|
|
|
Margaret C. Whitman
|
|
|
550,000
|
|
|
|
1.6
|
%
|
|
$
|
42.58
|
|
|
|
3/1/15
|
|
|
$
|
6,894,546
|
|
Maynard G. Webb, Jr.
|
|
|
300,000
|
|
|
|
0.9
|
|
|
|
42.58
|
|
|
|
3/1/15
|
|
|
|
3,760,661
|
|
John J. Donahoe
|
|
|
1,000,000
|
|
|
|
2.9
|
|
|
|
35.50
|
|
|
|
3/25/15
|
|
|
|
10,619,950
|
|
Jeffrey D. Jordan
|
|
|
185,000
|
|
|
|
0.5
|
|
|
|
42.58
|
|
|
|
3/1/15
|
|
|
|
2,319,074
|
|
Rajiv Dutta
|
|
|
185,000
|
|
|
|
0.5
|
|
|
|
42.58
|
|
|
|
3/1/15
|
|
|
|
2,319,074
|
|
|
|
|
200,000
|
|
|
|
0.6
|
|
|
|
46.71
|
|
|
|
11/25/15
|
|
|
|
2,650,250
|
|
|
|
|
(1) |
|
Options granted in 2005 were granted under our 2001 Equity
Incentive Plan. All options granted in 2005 to the Named
Executive Officers were granted by our Board of Directors, are
nonqualified stock options, and are subject to a four-year
vesting schedule, and, except for Mr. Donahoes option
and Mr. Duttas November 25, 2005 option grant,
such options vest 12.5% six months after the grant date and
1/48 per month thereafter. Mr. Donahoes new hire
option grant vests 25% on the first anniversary of the grant
date and 1/48 per month thereafter. Mr. Duttas
November 25, 2005 option grant vests 50% on
November 22, 2007 and 1/48 per month thereafter.
Amounts have been adjusted to reflect the
two-for-one
stock split that occurred on February 16, 2005. |
|
(2) |
|
Based on options to purchase 34,488,548 shares of our
common stock granted to employees in 2005. |
|
(3) |
|
Options were granted at an exercise price equal to the fair
market value of our common stock, as determined by our Board of
Directors, on the date of grant. The exercise prices per share
listed in the table above are rounded up to the nearest cent.
The exercise per share has been adjusted to reflect the
two-for-one
stock split that occurred on February 16, 2005. |
|
(4) |
|
Represents the estimated fair value of stock options as of the
applicable grant date. The Black-Scholes method is used to
estimate the fair value in accordance with the requirements of
Financial Accounting Standards Boards Statement of
Financial Accounting Standards 123(R) (FAS 123R). The
estimated fair value of all stock-based compensation is
amortized over the vesting period and is reflected in the
footnotes to eBays consolidated financial statements
through fiscal year 2005 and, beginning in fiscal year 2006,
will be included as an expense in the eBays consolidated
income statement in accordance with FAS 123R. |
The following table sets forth the number of shares acquired and
the value realized upon exercise of stock options during 2005
and the number of shares of our common stock subject to
exercisable and unexercisable stock options held as of
December 31, 2005 by each of the Named Executive Officers.
The value at fiscal year end is measured as the difference
between the exercise price and the fair market value at close of
market on December 31, 2005, which was $43.22.
Aggregate
Option Exercises in 2005 and Values at December 31,
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Underlying
|
|
|
Value of Unexercised
|
|
|
|
Acquired on
|
|
|
Value
|
|
|
Unexercised Options
|
|
|
In-The-Money Options
|
|
Name
|
|
Exercise(1)
|
|
|
Realized(2)
|
|
|
Exercisable (#)
|
|
|
Unexercisable (#)
|
|
|
Exercisable ($)
|
|
|
Unexercisable ($)
|
|
|
Margaret C. Whitman
|
|
|
|
|
|
$
|
|
|
|
|
6,165,625
|
|
|
|
1,984,375
|
|
|
$
|
165,124,612
|
|
|
$
|
26,255,288
|
|
Maynard G. Webb, Jr.
|
|
|
600,000
|
|
|
|
14,996,096
|
|
|
|
1,231,875
|
|
|
|
978,125
|
|
|
|
24,381,887
|
|
|
|
12,212,312
|
|
John J. Donahoe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
7,720,000
|
|
Jeffrey D. Jordan
|
|
|
640,000
|
|
|
|
15,833,862
|
|
|
|
1,058,055
|
|
|
|
607,813
|
|
|
|
22,714,974
|
|
|
|
7,340,450
|
|
Rajiv Dutta
|
|
|
285,000
|
|
|
|
7,993,726
|
|
|
|
1,672,644
|
|
|
|
946,356
|
|
|
|
45,285,061
|
|
|
|
13,763,116
|
|
|
|
|
(1) |
|
Amounts have been adjusted to reflect the
two-for-one
stock split that occurred on February 16, 2005. |
27
|
|
|
(2) |
|
Value realized is based on the fair market value of our common
stock on date of exercise minus the exercise price and does not
necessarily reflect proceeds actually received by the Named
Executive Officer. |
PENSION
PLAN AND OTHER RETIREMENT ARRANGEMENTS
We do not have any pension plan or deferred compensation plan
for our U.S. employees, including our executive officers.
We have a savings plan, which qualifies under
Section 401(k) of the Internal Revenue Code. We contribute
one dollar for each dollar a participant contributes, with a
maximum contribution of $1,500 per employee (including our
executive officers). Our
non-U.S. employees
are covered by various other savings plans, and in some cases,
pension plans.
EQUITY
COMPENSATION PLAN INFORMATION
The table below gives information about our shares of common
stock that may be issued upon the exercise of options, warrants,
and rights under all of our existing equity compensation plans
as of December 31, 2005, including our 1996 Stock Option
Plan, 1997 Stock Option Plan, 1998 Equity Incentive Plan,
1998 Directors Stock Option Plan, 1999 Global Equity
Incentive Plan, 2001 Equity Incentive Plan, and 2003 Deferred
Stock Unit Plan, as well as shares of our common stock that may
be issued under individual compensation arrangements that were
not approved by our stockholders, also referred to as our
Non-Plan Grants. We refer to these plans and grants collectively
as our Equity Compensation Plans. No warrants are outstanding
under any of the foregoing plans.
As of April 14, 2006, there were 1,409,839,646 shares
of eBays common stock outstanding. As of April 14,
2006, there were (i) 143,566,575 shares to be issued
upon the exercise of outstanding options under our Equity
Compensation Plans at a weighted average exercise price of
$30.20, and with a weighted average remaining life of
7.28 years, and (ii) 269,224 shares of restricted
stock and deferred stock units granted and outstanding under our
Equity Compensation Plans. As of April 14, 2006, there were
78,036,402 shares available for future grants under our
Equity Compensation Plans.
The following table gives information about our Equity
Compensation Plans as of December 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
(a)
|
|
|
(b)
|
|
|
Number of Securities
Remaining
|
|
|
|
Number of Securities to be
|
|
|
Weighted Average
|
|
|
Available for Future Issuance
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Under Equity Compensation
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in
Column(a))
|
|
|
Equity compensation plans approved
by securityholders
|
|
|
123,622,549(1
|
)
|
|
$
|
29.97
|
(2)
|
|
|
103,280,368(3
|
)
|
Equity compensation plans not
approved by securityholders
|
|
|
1,382,728(4
|
)
|
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
125,005,277
|
|
|
$
|
28.65
|
|
|
|
103,280,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes 27,391 shares of our common stock issuable
pursuant to deferred stock units, or DSUs, under our 2003
Deferred Stock Unit Plan. DSUs represent an unfunded, unsecured
right to receive shares of eBay common stock (or the equivalent
value thereof in cash or property), and the value of DSUs varies
directly with the price of eBays common stock. |
|
(2) |
|
Because DSUs do not have an exercise price, the
27,391 shares of our common stock issuable pursuant to DSUs
under our 2003 Deferred Stock Unit Plan are not included in the
calculation of weighted average exercise price. |
|
(3) |
|
Includes 5,788,596 shares of our common stock remaining
reserved for future issuance under our 1998 Employee Stock
Purchase Plan, as amended, or the ESPP, as of December 31,
2005. Our ESPP contains an evergreen provision that
automatically increases, on each January 1, the number of
securities reserved for issuance under the ESPP by the number of
shares purchased under the ESPP in the preceding calendar year,
provided that the aggregate number of shares reserved for
issuance under the ESPP may not exceed 36,000,000 shares.
As of December 31, 2005, an aggregate amount of
8,160,996 shares had been purchased under the ESPP since
its inception. An aggregate amount of 1,411,404 shares was
purchased under the ESPP in |
28
|
|
|
|
|
2005, and the number of securities available for issuance under
the ESPP was increased by that number on January 1, 2006,
bringing the total number of shares reserved for future issuance
on January 1, 2006 to 7,200,000. None of our other plans
has an evergreen provision. |
|
(4) |
|
Does not include: (i) 12,262 shares of our common
stock, with a weighted average exercise price of $2.38 per
share, to be issued upon exercise of outstanding options assumed
by us under the Half.com, Inc. 1999 Equity Compensation Plan;
(ii) 60,572 shares of our common stock, with a
weighted average exercise price of $0.77 per share, to be
issued upon exercise of outstanding options assumed by us under
the X.com Corporation 1999 Stock Plan;
(iii) 637,142 shares of our common stock, with a
weighted average exercise price of $9.19 per share, to be
issued upon exercise of outstanding options assumed by us under
the PayPal, Inc. 2001 Equity Incentive Plan;
(iv) 445,623 shares of our common stock, with a
weighted average exercise price of $8.42 per share, to be
issued upon exercise of outstanding options assumed by us under
the Shopping.com Ltd. 2003 Omnibus Stock Option and Restricted
Stock Incentive Plan; (v) 1,153,067 shares of our
common stock, with a weighted average exercise price of
$36.19 per share, to be issued upon exercise of outstanding
options assumed by us under the Shopping.com Ltd. 2004 Equity
Incentive Plan; or (vi) 1,822,090 shares of our common
stock, with a weighted average exercise price of $4.02 per
share, to be issued upon exercise of outstanding options assumed
by us under the Skype Technologies S.A. Stock Option Plan Rules.
All of the options and related plans referenced above were
assumed by us in connection with acquisitions. We cannot make
subsequent grants or awards of our equity securities under any
of these plans. Prior to each acquisition, the stockholders of
the acquired company approved the acquired companys plan.
Our stockholders, however, did not approve any of the plans in
connection with the acquisitions. |
The only outstanding Non-Plan Grant as of December 31, 2005
relates to an individual compensation arrangement that was made
prior to the initial public offering of our common stock in
1998. At the time of this Non-Plan Grant, members of our Board
and their affiliates beneficially owned in excess of 90% of our
then outstanding equity and voting interests. This Non-Plan
Grant has been previously disclosed in our initial public
offering prospectus filed with the SEC on September 25,
1998 under the headings
Management Director Compensation
and Compensation Arrangements.
Except as set forth below, the terms and conditions of this
Non-Plan Grant are identical to the terms of our 1997 Stock
Option Plan, a copy of which was filed as an exhibit to our
S-1
Registration Statement
(No. 33-59097)
filed in connection with our initial public offering.
The outstanding Non-Plan Grant involved the Boards grant
of an option to purchase 3,600,000 shares of our common
stock at an exercise price of $0.39 to Mr. Cook upon his
joining our Board in June 1998 as an independent director. These
options granted to Mr. Cook were non-qualified options and
were immediately exercisable, with a term of 10 years.
These options vested as to 25% of the underlying shares in June
1999 and as to 2.08% of the shares each month thereafter until
they fully vested in June 2002. Mr. Cook exercised options
to purchase 480,000 shares in 2002, exercised options to
purchase 1,430,000 shares in 2003, and exercised options to
purchase 307,272 shares during 2005. As of
December 31, 2005, options to purchase
1,382,728 shares remain outstanding under the Non-Plan
Grant.
Employment
Agreements,
Change-in-Control
Arrangements, Severance Arrangements, and Retention Bonus Plans
with Executive Officers
We do not have individual long-term employment agreements or
change-in-control
arrangements with any of our executive officers. We do not have
any severance payment arrangements with any of our executive
officers, except that: (i) under her January 16, 1998
employment letter agreement, if Ms. Whitman is terminated other
than for cause, she is entitled to receive salary compensation
for six months, and if she remains unemployed at the end of such
six-month period, she is eligible to receive additional salary
compensation for the lesser of six months or commencement of
other employment; and (ii) under his July 17, 1999
offer letter, if Mr. Webb is terminated other than for
cause, he is entitled to receive salary compensation for six
months, and if he remains unemployed at the end of such
six-month period, he is eligible to receive additional salary
compensation for the lesser of six months or commencement of
other employment. See footnotes 9 and 10 of the Summary
Compensation Table above for descriptions of the special
retention bonus plans that we entered into with Mr. Jordan
and Mr. Donahoe.
29
Similar to the provisions of broad-based equity compensation
plans of many other public companies, our broad-based equity
compensation plans provide that in the event of a change in
control, any surviving corporation or acquiring corporation must
either assume or continue outstanding awards or substitute
similar awards. If the surviving corporation or acquiring
corporation refuses to do so, then with respect to awards held
by participants whose service has not terminated, the vesting of
such awards (and, if applicable, the time during which such
awards may be exercised) will be accelerated in full.
Compensation
of Directors
Board compensation is determined by the Compensation Committee.
Prior to 2003, Board compensation was 100% equity based. After a
review in December 2002, Board compensation was substantially
revised by the Board, with equity compensation reduced and cash
compensation added. Board compensation has subsequently been
reviewed annually by the Compensation Committee, which has not
changed cash compensation and has effectively reduced equity
compensation by holding the number of options granted annually
to the same absolute number notwithstanding two subsequent stock
splits of eBay common stock.
New directors who are not employees of eBay, or any parent,
subsidiary, or affiliate of eBay, receive deferred stock units,
or DSUs, with an initial value of $150,000 under our 2003
Deferred Stock Unit Plan. DSUs represent an unfunded, unsecured
right to receive shares of eBay common stock (or the equivalent
value thereof in cash or property), and the value of DSUs varies
directly with the price of eBays common stock. Each DSU
award granted to a non-employee director upon election to the
Board will vest as to 25% of the DSUs on the first anniversary
of the date of grant and as to 1/48 of the DSUs each month
thereafter, provided the director continues as a director or
consultant of eBay. DSUs are payable in stock or cash (at
eBays election) following the termination of a
non-employee directors tenure in such capacity.
Non-employee directors are also eligible to participate in the
1998 Directors Stock Option Plan, also referred to as the
Directors Plan. Option grants under the Directors Plan are
automatic and non-discretionary, and the exercise price of the
options must be 100% of the fair market value of the common
stock on the date of grant. Each eligible director is granted an
option to purchase 15,000 shares of eBay common stock at
the time of each annual meeting if he or she has served
continuously as a member of the Board since the date elected.
The Compensation Committee elected to maintain the annual option
grant under the Directors Plan at 15,000 shares
notwithstanding the
two-for-one
split of eBay common stock in February 2005. All options granted
under the Directors Plan vest as to 25% of the shares on the
first anniversary of the date of grant and as to 1/48 of the
shares each month thereafter, provided the optionee continues as
a director or consultant of eBay. In the event of a change of
control of eBay, the Directors Plan provides that options
granted under that plan will become fully vested and the
individual award agreements for directors under the 2003
Deferred Stock Unit Plan provide that DSUs granted under that
plan will become fully vested.
Except for Mr. Omidyar, eBays founder and the
Chairman of its Board of Directors, non-employee directors are
paid a retainer of $50,000 per year, the chairman of the
Audit Committee receives an additional $10,000 per year,
and the Lead Independent Director and all other committee chairs
receive an additional $5,000 per year. Directors may elect
to receive, in lieu of these fees and at the time these fees
would otherwise be payable (i.e., on a quarterly basis in
arrears for services provided), DSUs with an initial value equal
to the amount of these fees. Except for Mr. Omidyar, each
non-employee director also receives meeting fees of $2,000 for
each Board meeting and $1,000 for each committee meeting.
30
During the year ended December 31, 2005, non-employee
directors received the following compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Option
|
|
|
Deferred
|
|
Name
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Stock Units
|
|
|
Fred D. Anderson
|
|
$
|
89,000
|
|
|
|
15,000
|
|
|
|
|
|
Edward W. Barnholt
|
|
|
18,000
|
|
|
|
15,000
|
|
|
|
5,346
|
|
Philippe Bourguignon
|
|
|
35,500
|
|
|
|
15,000
|
|
|
|
596
|
|
Scott D. Cook
|
|
|
32,750
|
|
|
|
15,000
|
|
|
|
656
|
|
William C. Ford, Jr.
|
|
|
4,000
|
|
|
|
|
|
|
|
3,895
|
|
Robert C. Kagle
|
|
|
32,750
|
|
|
|
15,000
|
|
|
|
656
|
|
Dawn G. Lepore
|
|
|
85,000
|
|
|
|
15,000
|
|
|
|
|
|
Pierre M. Omidyar
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard T. Schlosberg, III
|
|
|
85,000
|
|
|
|
15,000
|
|
|
|
|
|
Thomas J. Tierney
|
|
|
41,750
|
|
|
|
15,000
|
|
|
|
656
|
|
Stock
Ownership Guidelines for Directors
In September 2004, our Board adopted stock ownership guidelines
to better align the interests of our directors and executives
with the interests of stockholders and further promote our
commitment to sound corporate governance. Under the guidelines,
directors are required to achieve ownership of eBay common stock
valued at three times the amount of the annual retainer paid to
directors within three years of joining the Board, or in the
case of directors serving at the time the guidelines were
adopted, within three years of the date of adoption of the
guidelines. A more detailed summary of our stock ownership
guidelines can be found on our website at
http://investor.ebay.com/governance. The ownership levels
of our directors as of April 1, 2006 are set forth in the
section entitled Security Ownership of Certain Beneficial
Owners and Management above.
31
We constitute the Compensation Committee of the Board of
Directors of eBay Inc. We are all independent, non-employee
directors, and none of us has ever been an officer or employee
of eBay. We are responsible to eBays Board of Directors
and stockholders for the design, administration, and oversight
of the compensation and benefits programs for eBays
executive officers, including the CEO.
The goals of eBays compensation program are to align
compensation with business objectives and performance and to
enable eBay to attract, retain, and reward executive officers
and other key employees who contribute to eBays long-term
success and to motivate them to enhance long-term stockholder
value. To meet these goals, we employ a mix of total direct
compensation elements currently composed of base salary, cash
bonus, and stock options.
To set total direct compensation guidelines, the Committee
reviews a competitive market of companies with which eBay
competes for executive talent, business, and capital. The
competitive market includes two peer groups of approximately
15 companies each, which reflect consumer products and
high-tech competitors. These peer companies provide a
comprehensive perspective on pay programs and top five executive
compensation for direct competitors for talent. The competitive
market also includes various survey sources that represent
additional market benchmarks that are relevant to eBay. These
surveys provide broader perspectives for all executive
positions. In evaluating the individual components of overall
compensation, the Committee reviewed not only the individual
elements of compensation, but also holistically at total
compensation.
eBays pay positioning strategy is to target total annual
cash (i.e., base salary and target cash bonuses) of the
executive group as a whole at median levels relative to the
competitive market. eBay also evaluates benefits and perquisites
in addition to salary and bonus in order to measure the
companys positioning of total annual compensation relative
to the competitive market.
eBays pay positioning strategy for long-term incentive
compensation is variable based on performance. The Committee
considers total stockholder return, revenue growth, and net
income growth in absolute terms and relative to eBays peer
groups of technology and consumer products companies in
positioning long-term incentive awards. For example, if
eBays performance is average, the midpoints of long-term
incentive award guidelines are targeted to be positioned at the
50th percentile of the competitive market. If eBays
performance is high, midpoints of long-term incentive award
guidelines could be positioned as high as the
75th percentile of the competitive market. If eBays
performance is low, midpoints of long-term incentive guidelines
could be positioned as low as the 25th percentile of the
competitive market. Once the midpoints of the long-term
incentive guidelines are set, ranges around the midpoints are
established to allow for differentiation of awards by
individual. Individual awards may therefore be higher or lower
than the pay positioning guidelines. In addition, the Committee
may make special compensation-related decisions for performance,
recognition, retention,
and/or
recruitment purposes that cause individual compensation to
differ from the regular stated compensation strategy and
guidelines.
The Committee retains Mercer Human Resource Consulting LLC, or
Mercer, an independent consulting firm, as an advisor and
resource to help develop and execute the companys total
compensation strategy. To provide the company with information
for making external compensation comparisons, Mercer provides
competitive data for each senior executive position by analyzing
proprietary surveys and publicly disclosed documents of selected
high-tech and consumer-product companies, taking into
consideration eBays current and anticipated size, scope of
operations, and business focus. Some, but not all, of these
companies are included in the indices shown in our performance
graph under the heading Performance Measurement
Comparison.
Base Salary. Base salary is the fixed portion
of executive pay and compensates individuals for expected
day-to-day
performance. The Committee meets at least annually to review and
approve each executive officers salary for the ensuing
year. When reviewing base salaries, we consider the following
factors: competitive pay
1 The
material in this report is not soliciting material,
is not deemed filed with the SEC, and is not to be
incorporated by reference in any of our filings under the
1933 Act or 1934 Act, whether made before or after the
date hereof and irrespective of any general incorporation
language contained in such filing.
32
practices (which is the primary determinant of the range within
which individual salaries are set); individual performance
against goals; levels of responsibility; breadth of knowledge;
and prior experience. For 2005, based in part on external
comparisons and recommendations by the CEO (for non-CEO
executive officer compensation), we increased the salary levels
of some of our executive officers beginning March 1, 2005.
We set the base salaries of our named executive officers (other
than our CEO) in a range from $414,000 to $625,008, effective
March 1, 2005. As reported last year in the companys
proxy statement for eBays 2005 Annual Meeting, Meg
Whitmans salary was maintained at $995,016 for the period
from March 1, 2005 to March 1, 2006.
Bonus. In 2005, payments made through
eBays bonus plan were variable and designed to reward
participants quarterly based on Company financial and individual
performance. The eBay Incentive Plan, or eIP, for our employees
(including our executive officers) provides for
(i) quarterly bonuses based upon pro-forma net income
targets set by our Committee for each quarter and on achievement
of quarterly individual goals, so long as minimum revenue and
net income thresholds have been met and (ii) an annual
bonus based on attainment of annual pro forma net income
targets, so long as a minimum revenue threshold has been met.
The Committee believes these financial goals are the strongest
drivers of long-term value for the company.
In 2005, quarterly bonus amounts could range from 0% to 160% of
an executives target opportunity, based on financial and
individual performance in that quarter. The maximum that could
be paid on the annual component was 200% of target. 50% of the
total 2005 bonus target for executive officers was based on
quarterly performance (12.5% per quarter) and 50% was based
on annual performance. 2005 total annual target bonus amounts
for the named executive officers (other than the CEO) were 60%
to 75% of base salary. The target bonus amount for our CEO
remained 100% of base salary.
eBay exceeded financial targets for every quarter of 2005, which
contributed, along with individual performance, to quarterly
bonus payments for eBay executives ranging from 110% to 160% of
quarterly target opportunity. Based on eBays 2005 annual
performance, the annual component for all executives, including
the CEO, was paid out at 200% of the annual target opportunity.
In 2005, a payment was made to Mr. Donahoe in accordance
with the terms of his special retention plan. The payment is
shown in the Summary Compensation Table and explained in
footnote 9 to the Summary Compensation Table.
Stock Options. eBays stock option plans
are designed to align participants with the long-term interests
of eBays stockholders and to provide a total compensation
opportunity commensurate with Company performance. eBays
stock options are performance granted, since the grant
guidelines are positioned relative to the market commensurate
with relative performance to the market. Initial grants of stock
options are generally made to eligible employees upon
commencement of employment. Following the initial hire,
additional grants are made to participants pursuant to a
periodic focal grant program or following a significant change
in job responsibilities, scope, or title. Stock options under
the option plans generally vest over a four-year period and
expire ten years from the date of grant. Options granted in 2006
will expire seven years from the date of grant. The exercise
price of our option grants is set at 100% of the fair market
value of our common stock on the date of grant.
Initial stock option grants and follow-on (periodic)
option grants for plan participants are generally determined
within ranges established for each job level. These ranges are
established based on the companys desired pay positioning
relative to the competitive market. Initial option grants for
specific individuals also take into account specific recruitment
needs. Follow-on option grants to specific individuals are based
upon a number of factors, including performance of the
individual, job level, future potential, competitive external
levels, and past option grants. eBay generally makes follow-on
grants for its employees (including officers) once a year in the
first quarter. The Board of Directors has delegated the
authority to make option grants to employees (within approved
ranges and other than those who are senior vice presidents or
above) to a Stock Option Grant Committee consisting of
Ms. Whitman.
As described above, the targeted positioning for midpoints of
eBays long-term incentive award guidelines would be the
50th percentile of the competitive market for average
performance, up to 75th percentile for high performance,
and as low as 25th percentile for low performance. Given
eBays superior performance evaluation in 2004, midpoints
of long-term incentive award guidelines for 2005 were positioned
at approximately the 75th percentile of competitive levels.
This positioning was subject to an aggregate stock dilution
objective set forth by the Committee. Given eBays superior
33
performance evaluation in 2005, the Committee approved
75th percentile positioning of midpoints of long-term
incentive award guidelines for 2006, subject to the dilution
objective described below.
The Committee engaged Mercer for a full review of long-term
incentive strategy and considered adding performance-based stock
to the long-term incentive program for 2006. However, after
careful consideration, the Committee did not feel it was
appropriate to introduce the vehicle for 2006. The Committee
felt that stock options remain an extremely important element of
total compensation given eBays stage of growth, business
complexity, and its need to compete for talent with other
high-growth companies. The Committee believes that stock options
provide a strong link between executive compensation and
eBays performance and align the interests of executives
with those of stockholders. The committee will continue to
consider performance-based stock, as well as other long-term
incentive alternatives, for 2007 to ensure that eBays
programs continue to provide the best and most appropriate link
between long-term incentive compensation for executives and
long-term stockholder value.
In 2005, the Committee engaged Mercer to conduct a thorough
review of market practices related to the average annual gross
dilution from employee stock option grants and market trends
anticipated for 2006 through 2007. This study indicated a
leveling trend in annual gross dilution in the competitive
market, in contrast to reductions in previous years. As a
result, the Committee adopted a maximum gross dilution rate of
2.7% for employee stock option grants during 2006, including
grants to existing employees and grants associated with
anticipated growth in eBays employee base. The 2.7%
maximum dilution level for 2006 compares with a 2.5% maximum
dilution figure for 2005 and is down from approximately 4% in
2004. Actual gross dilution levels in both 2004 and 2005 were
lower than these maximum levels, and net dilution (after taking
into account option cancellations) was below 3% in 2004 and
below 2% in 2005. The Company believes that the current 2.7%
gross dilution rate target is consistent with current and
evolving market conditions.
Stock Ownership Guidelines. In September 2004,
the Board adopted stock ownership guidelines to better align the
interests of eBays executives with the interests of
stockholders and further promote the Companys commitment
to sound corporate governance. Under the guidelines, executive
officers are required to achieve ownership of eBay common stock
valued at three times their annual base salary (five times in
the case of the Chief Executive Officer). Until an executive
achieves the required level of ownership, he or she is required
to retain 25% of the net shares received as the result of the
exercise of eBay stock options. A more detailed summary of the
stock ownership guidelines can be found on the Companys
website at http://investor.ebay.com/governance. The
ownership levels of our executive officers as of April 1,
2006 are set forth in the section entitled Security
Ownership of Certain Beneficial Owners and Management
above.
Perquisites. eBay provides benefits to certain
executive officers in the form of personal usage of its
corporate aircraft, information technology equipment and
services, and tax reimbursements. For the named executive
officers, the amounts of these benefits are described in
footnote 3 of the Summary Compensation Table above.
CEO Compensation. The following table sets
forth Ms. Whitmans compensation for 2005:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual
|
|
|
Number of
|
|
|
All Other
|
|
|
|
|
|
Other Long-Term
|
|
|
Deferred
|
|
Salary
|
|
Bonus
|
|
|
Compensation
|
|
|
Options
|
|
|
Compensation
|
|
|
Restricted Stock
|
|
|
Incentives
|
|
|
Compensation
|
|
|
$995,016
|
|
$
|
1,697,651
|
|
|
$
|
404,917
|
|
|
|
550,000
|
|
|
$
|
3,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Similar to other eBay employees, Ms. Whitmans
quarterly bonus awards were determined based on eBays
financial performance and her individual performance.
Ms. Whitmans annual bonus award was determined based
on eBays annual financial performance. To determine
individual performance, the Committee considered several
factors. These were the attainment of eBays strategic
objectives and growth initiatives, including acquisitions, and
her leadership of the companys management throughout the
year. As noted above, eBay exceeded its financial targets each
quarter of 2005. Accordingly, taking financial and individual
performance into account, Ms. Whitman received an aggregate
annual bonus of 170% of her base salary, as compared to a target
opportunity of 100%. In addition, at the end of the year,
consistent with the companys past practice,
Ms. Whitman received an additional bonus of $114,375 to
cover any income taxes relating to personal use of the
companys aircraft during the year.
As previously reported, during the first quarter of 2005, the
Committee considered Ms. Whitmans compensation for
2005. The Committee maintained Ms. Whitmans salary at
$995,016 for 2005. Ms. Whitmans bonus
34
target was maintained at 100%. In March 2005, Ms. Whitman
was also granted an option to purchase 550,000 shares,
vesting over four years.
During the first quarter of 2006, the Committee considered
Ms. Whitmans compensation for 2006. To assist it in
its determination, it again received advice from Mercer. In
light of the Companys continued strong financial results,
Ms. Whitmans success in growing and restructuring the
companys organization and management team in tandem with
the companys growth, including significant international
expansion, and Ms. Whitmans own preference for
long-term compensation over increases in other forms of
compensation, the Committee again maintained
Ms. Whitmans salary at $995,016, kept her bonus
target at 100%, and granted her an option to purchase
500,000 shares, vesting over four years. The options expire
seven years from the date of grant. Under
Ms. Whitmans January 16, 1998 employment letter
agreement, if Ms. Whitman is terminated other than for
cause, she is entitled to receive salary compensation for six
months, and if she remains unemployed at the end of such
six-month period, she is eligible to receive additional salary
compensation for the lesser of six months or commencement of
other employment. Ms. Whitman does not have a
change-in-control
arrangement or any other agreement entitling her to base salary,
cash bonus, perquisites, or new equity grants following
termination of employment. eBay also does not have any pension
plan or deferred compensation plan that is available to
Ms. Whitman or any other U.S. employee.
Section 162(m). eBay is limited by
Section 162(m) of the Internal Revenue Code of 1986 to a
deduction for federal income tax purposes of up to $1,000,000 of
compensation paid to certain Named Executive Officers in a
taxable year. Compensation above $1,000,000 may be deducted if
it meets certain technical requirements to be classified as
performance-based compensation. Given the
companys consistent profitability, the Committee believes
that it is in the best interests of eBay and its stockholders to
pay bonuses to its Named Executive Officers that are deductible
by eBay for federal income tax purposes. The eIP was approved by
stockholders in 2005 and satisfies the requirements of
Section 162(m) for performance-based
compensation. In 2004, the Board adopted and stockholders
approved amendments to the companys 1999 Global Equity
Incentive Plan to allow awards under that plan to qualify as
performance-based compensation. The Board continues
to reserve the flexibility and authority to make decisions that
are in the best interest of the company and its stockholders,
even if those decisions do not result in full deductibility
under Section 162(m).
Summary. Through the plans described above, a
significant portion of our compensation program for our
executive officers (including our CEO) is contingent upon
individual and eBay performance, and realization of value by our
CEO and the other executive officers is closely linked to
increases in long-term stockholder value. We remain committed to
this philosophy of
pay-for-performance.
We will continue to review executive compensation programs
periodically and will consider new and revised programs, as
appropriate, to ensure the interests of stockholders are served.
COMPENSATION COMMITTEE
Edward W. Barnholt*
Philippe Bourguignon
William C. Ford, Jr.**
Robert C. Kagle (Chairman)
Thomas J. Tierney
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* |
|
A member since June 23, 2005. |
|
** |
|
A member from July 27, 2005 to April 1, 2006. |
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of our Board are
Edward W. Barnholt, Philippe Bourguignon, Robert C. Kagle, and
Thomas J. Tierney. No member of our Boards Compensation
Committee is or was formerly an officer or an employee of eBay.
No interlocking relationship exists between our Board and its
Compensation Committee and the board of directors or
compensation committee of any other company, nor has such
interlocking relationship existed in the past.
35
PERFORMANCE
MEASUREMENT
COMPARISON1
The graph below shows the cumulative total stockholder return of
an investment of $100 (and the reinvestment of any dividends
thereafter) on December 31, 2000 in (i) our common
stock, (ii) the Nasdaq National Market Index,
(iii) the S&P 500 Index and (iv) the GSTI Internet
Index. We were added to the S&P 500 Index on July 19,
2002. The GSTI Internet Index is a modified-capitalization
weighted index of 14 stocks representing the Internet industry,
including Internet content and access providers, Internet
software and services companies and
e-commerce
companies. Our stock price performance shown in the graph below
is not indicative of future stock price performance.
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(1) |
|
The material in this section is not soliciting
material, is not deemed filed with the SEC and
is not to be incorporated by reference in any of our filings
under the 1933 Act or the 1934 Act whether made before
or after the date hereof and irrespective of any general
incorporation language in any such filing. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We have entered into indemnification agreements with each of our
directors and executive 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 eBay.
From time to time, we have entered into and may continue to
enter into commercial arrangements with companies with which our
directors or executive officers may have relationships,
including as a director or executive officer, but with respect
to which our directors or executive officers do not have a
material interest and, thus, are not required to be disclosed.
These commercial arrangements are entered into in the ordinary
course of business and on an arms-length basis.
In March 2006, we made a $2,000,000 equity investment in Meetup,
Inc., a local community website that brings groups together
offline. Mr. Omidyar, our founder and the Chairman of our
Board of Directors, is a director of Meetup, Inc., and entities
controlled by Mr. Omidyar beneficially hold greater than a
10% equity interest in Meetup, Inc. Consistent with our
corporate governance practices, the Audit Committee of our Board
of Directors pre-approved this transaction. We believe this
transaction was made on terms no less favorable to us than we
could have obtained from unaffiliated third parties. While we do
not believe that Mr. Omidyar had a direct or indirect
material interest in this transaction, and thus it is not
required to be disclosed, we are disclosing its existence as a
matter of good corporate governance and because it is not an
ordinary course commercial arrangement.
In February 2006, we entered into a special retention bonus plan
with Mr. Swan in connection with his hiring. Under the terms of
this bonus plan, Mr. Swan received a $200,000 bonus in March
2006. In addition, the terms of the
36
bonus plan provide for four additional bonus payments of
$200,000, payable on each of the first, second, third, and
fourth anniversaries of the date of his commencement of
employment, assuming his continued employment with us.
Mr. Omidyar and Mr. Skoll, a beneficial owner of more
than 5% of our common stock, from time to time make their
personal aircraft available to our officers for business
purposes at no cost to us. The imputed cost of the aircraft use
was not material to our consolidated financial statements.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers, and holders of more than 10% of our common
stock to file reports regarding their ownership and changes in
ownership of our securities with the SEC, and to furnish us with
copies of all Section 16(a) reports that they file.
We believe that during the fiscal year ended December 31,
2005, our directors, executive officers, and greater than 10%
stockholders complied with all applicable Section 16(a)
filing requirements.
In making this statement, we have relied upon a review of the
copies of Section 16(a) reports furnished to us and the
written representations of our directors, executive officers,
and greater than 10% stockholders.
OTHER
MATTERS
The Board of Directors knows of no other matter that will be
presented for consideration at the Annual Meeting. If any other
matters are properly brought before the meeting, the persons
named in the accompanying proxy intend to vote on those matters
in accordance with their best judgment.
By Order of the Board of Directors
Michael R. Jacobson
Secretary
April 26, 2006
Copies of this proxy statement and of our annual report for
the fiscal year ended December 31, 2005 are available by
visiting our investor relations website at
http://investor.ebay.com/annual.cfm or free of charge by
writing to Investor Relations, eBay Inc., 2145 Hamilton Avenue,
San Jose, California 95125.
37
APPENDIX A
eBay
Inc.
2001 Equity Incentive
Plan, As Amended
Initial
Stockholder Approval on May 25, 2001
Amendment Adopted by the Board of Directors on March 14,
2002
Stockholder Approval of Amendment on June 5, 2002
Amendment Ratified by the Compensation Committee as of
March 18, 2003
Stockholder Approval of Amendment on June 26, 2003
Amendment Adopted by the Compensation Committee on
March 18, 2004
Stockholder Approval of Amendment on June 24, 2004
Amendment Adopted By The Compensation committee on
March 21, 2006
Termination
Date: March 21, 2011
1. Purposes.
(a) Eligible Option Recipients. The
persons eligible to receive Options are the Employees, Directors
and Consultants of the Company and its Affiliates.
(b) Available Options. The purpose of the
Plan is to provide a means by which eligible recipients of
Options may be given an opportunity to benefit from increases in
value of the Common Stock through the granting of
(i) Incentive Stock Options and (ii) Nonstatutory
Stock Options.
(c) General Purpose. The Company, by
means of the Plan, seeks to retain the services of the group of
persons eligible to receive Options, to secure and retain the
services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
2. Definitions.
(a) Affiliate means any parent
corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code, and any
other entity which is controlled, directly or indirectly, by the
Company.
(b) Board means the Board of
Directors of the Company.
(c) Code means the United States
Internal Revenue Code of 1986, as amended.
(d) Committee means a committee
of one or more members of the Board appointed by the Board in
accordance with subsection 3(c).
(e) Common Stock means the common
stock of the Company.
(f) Company means eBay Inc.,
a Delaware corporation.
(g) Consultant means any natural
person, including an advisor, (i) engaged by the Company or
an Affiliate to render consulting or advisory services and who
is compensated for such services, or (ii) who is a member
of the Board of Directors or comparable governing body of an
Affiliate and who is compensated for such services. However, the
term Consultant shall not include Directors who are
not compensated by the Company for their services as Directors.
In addition, the payment of a directors fee by the Company
for services as a Director shall not cause a Director to be
considered a Consultant for purposes of the Plan.
(h) Continuous Service means that
the Optionholders service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. The Optionholders
Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Optionholder
renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the
Optionholder renders such service, provided that there is no
interruption or termination of the Optionholders service
with the Company or an Affiliate. For example, a change in
status from an Employee of the Company to a Consultant of an
Affiliate or a Director will not constitute an interruption of
Continuous Service. The Board or the
A-1
chief executive officer of the Company, in that partys
sole discretion, may determine whether Continuous Service shall
be considered interrupted in the case of any leave of absence
approved by that party, including sick leave, military leave or
any other personal leave.
(i) Covered Employee means the
chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation
is required to be reported to stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the
Code.
(j) Director means a member of
the Board of Directors of the Company.
(k) Disability means the
inability of a natural person to continue to perform services
for the Company or any Affiliate of the type previously
performed prior to the occurrence of such Disability, whether as
a result of physical and/or mental illness or injury, as
determined by a physician acceptable to the Company, for a
period that is expected to be of a duration of no less than six
(6) months.
(l) Employee means any person
employed for tax purposes by the Company or an Affiliate. Mere
service as a Director or payment of a directors fee by the
Company or an Affiliate shall not be sufficient to constitute
employment by the Company or an Affiliate.
(m) Exchange Act means the United
States Securities Exchange Act of 1934, as amended.
(n) Fair Market Value means, as
of any date, the value of the Common Stock determined as
follows:
(i) If the Common Stock is listed on any established
stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, the Fair Market Value of a share of
Common Stock shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest
volume of trading in the Common Stock) on the last market
trading day prior to the day of determination, as reported in
The Wall Street Journal or such other source as the Board
deems reliable.
(ii) In the absence of such markets for the Common
Stock, the Fair Market Value shall be determined in good faith
by the Board.
(o) Incentive Stock Option means
an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) Non-Employee Director means a
Director who either (i) is not a current Employee or
Officer of the Company or its parent or a subsidiary, does not
receive compensation (directly or indirectly) from the Company
or its parent or a subsidiary for services rendered as a
consultant or in any capacity other than as a Director (except
for an amount as to which disclosure would not be required under
Item 404(a) of
Regulation S-K
promulgated pursuant to the Securities Act
(Regulation S-K)),
does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of
Regulation S-K
and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of
Regulation S-K;
or (ii) is otherwise considered a non-employee
director for purposes of
Rule 16b-3.
(q) Nonstatutory Stock Option
means an Option not intended to qualify as an Incentive
Stock Option.
(r) Officer means a person who is
an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated
thereunder.
(s) Option means an Incentive
Stock Option or a Nonstatutory Stock Option granted pursuant to
Section 6 of the Plan.
(t) Option Agreement means a
written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(u) Optionholder means a person
to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.
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(v) Outside Director means a
Director who either (i) is not a current employee of the
Company or an affiliated corporation (within the
meaning of Treasury Regulations promulgated under
Section 162(m) of the Code), is not a former employee of
the Company or an affiliated corporation receiving
compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an
affiliated corporation at any time and is not
currently receiving direct or indirect remuneration from the
Company or an affiliated corporation for services in
any capacity other than as a Director or (ii) is otherwise
considered an outside director for purposes of
Section 162(m) of the Code.
(w) Plan means this
eBay Inc. 2001 Equity Incentive Plan, as amended.
(x) Rule 16b-3
means
Rule 16b-3
promulgated under the Exchange Act or any successor to
Rule 16b-3,
as in effect from time to time.
(y) Securities Act means the
United States Securities Act of 1933, as amended.
(z) Ten Percent Stockholder means
a person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of the Company or of any of its Affiliates.
3. Administration.
(a) Administration by Board. The Board
shall administer the Plan unless and until the Board delegates
administration to a Committee, as provided in subsection 3(c).
(b) Powers of Board. The Board shall have
the power, subject to, and within the limitations of, the
express provisions of the Plan:
(i) To determine from time to time which of the
persons eligible under the Plan shall be granted Options; when
and how each Option shall be granted; what type or combination
of types of Option shall be granted; the provisions of each
Option granted (which need not be identical), including the time
or times when a person shall be permitted to receive Common
Stock pursuant to an Option; and the number of shares of Common
Stock with respect to which an Option shall be granted to each
such person.
(ii) To construe and interpret the Plan and Options
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or inconsistency
in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend the Plan or an Option as provided in
Section 11.
(iv) To terminate or suspend the Plan as provided in
Section 12.
(v) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient in
its sole discretion to promote the best interests of the Company
and its stockholders that are not in conflict with the
provisions of the Plan.
(c) Delegation to Committee.
(i) General. The Board may delegate
administration of the Plan to a Committee or Committees of one
(1) or more members of the Board, and the term
Committee shall apply to any person or persons to
whom such authority has been delegated. If administration is
delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to
delegate to a subcommittee of one (1) or more members of
the Board any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by
the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.
(ii) Committee Composition when Common Stock is Publicly
Traded. At such time as the Common Stock is
publicly traded, in the discretion of the Board, a Committee may
consist solely of two (2) or more
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Outside Directors, in accordance with Section 162(m) of the
Code, and/or solely of two or more Non-Employee Directors, in
accordance with
Rule 16b-3.
Within the scope of such authority, the Board or the Committee
may (1) delegate to a committee of one or more members of
the Board who are not Outside Directors the authority to grant
Options to eligible persons who are either (a) not then
Covered Employees and are not expected to be Covered Employees
at the time of recognition of income resulting from such Option
or (b) not persons with respect to whom the Company wishes
to comply with Section 162(m) of the Code and/or
(2) delegate to a committee of one or more members of the
Board who are not Non-Employee Directors the authority to grant
Options to eligible persons who are not then subject to
Section 16 of the Exchange Act.
(d) Effect of Boards Decision. All
determinations, interpretations and constructions made by the
Board in good faith shall not be subject to review by anyone and
shall be final, binding and conclusive on all Optionholders and
any other person having an interest in such determination,
interpretation or construction.
4. Shares Subject
to the Plan.
(a) Share Reserve. Subject to the
provisions of Section 10 relating to adjustments upon
changes in Common Stock, the Common Stock that may be issued
pursuant to Options shall not exceed in the aggregate Two
Hundred Twenty Two Million
(222,000,000)1 shares
of Common Stock.
(b) Reversion of Shares to the Share
Reserve. If any Option shall for any reason
expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not
acquired under such Option shall revert to and again become
available for issuance under the Plan. If an Optionholder
exercises an Option by attesting to the ownership of shares of
Common Stock in accordance with the provisions of
Section 6(c) below, only the net number of additional
shares issued to the Optionholder shall be deducted from the
share reserve.
(c) Source of Shares. The shares of
Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. Eligibility.
(a) Eligibility for Specific Options.
Incentive Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted to Employees,
Directors and Consultants.
(b) Non-Employee
Directors. Notwithstanding the provisions of
subsection 5(a) hereof, a Director who is not an Employee only
may be granted nondiscretionary Options that the Stockholders
have approved as to the following option provisions: Number of
shares, date of automatic grant, term, exercise price,
consideration, vesting schedule, exercise schedule, and the
post-termination exercise periods.
(c) Ten Percent
Stockholders. Notwithstanding the provisions of
subsection 5(a) hereof, a Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the
Fair Market Value of the Common Stock at the date of grant and
the Option is not exercisable after the expiration of five
(5) years from the date of grant.
(d) Section 162(m)
Limitation. Notwithstanding the provisions of
subsection 5(a) hereof and subject to the provisions of
Section 10 relating to adjustments upon changes in the
shares of Common Stock, no Employee shall be eligible to be
granted Options covering more than Four Million
(4,000,000)1 shares
of Common Stock during any calendar year.
(e) Consultants. Notwithstanding the
provisions of subsection 5(a) hereof, a Consultant shall not be
eligible for the grant of an Option if, at the time of grant, a
Form S-8
Registration Statement under the Securities Act
(Form S-8)
is not available to register either the offer or the sale of the
Companys securities to such Consultant because of the
nature of the services that the Consultant is providing to the
Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of
Form S-8.
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Denotes that such share number reflects the stock split of
eBays common stock occurring in 8/03 and 2/05. |
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6. Option
Provisions.
Each Option shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. All Options
shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if
certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise
of each type of Option. The provisions of separate Options need
not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:
(a) Term. Subject to the provisions of
subsection 5(c) regarding Ten Percent Stockholders, no Option
shall be exercisable after the expiration of ten (10) years
from the date it was granted.
(b) Exercise Price.
(i) Subject to the provisions of subsection 5(c)
regarding Ten Percent Stockholders and subsection 6(b)(ii)
below, the exercise price of each Option shall be not less than
one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is
granted.
(ii) An Option may be granted with an exercise price
lower than that set forth in subsection 6(b)(i) above if such
Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of
Section 424(a) of the Code.
(c) Consideration.
(i) The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (i) in cash at
the time the Option is exercised or (ii) at the discretion
of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option)
(1) by delivery to the Company, or attestation to the
Company of ownership, of other Common Stock or (2) in any
other form of legal consideration that may be acceptable to the
Board.
(ii) Unless otherwise specifically provided, the
purchase price of Common Stock acquired pursuant to an Option
that is paid by delivery to the Company, or attestation to the
Company of ownership, of other Common Stock shall be paid only
by shares of the Common Stock of the Company that have been held
for more than six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for
financial accounting purposes).
(d) Transferability of an Incentive Stock
Option. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a
third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(e) Transferability of a Nonstatutory Stock
Option. A Nonstatutory Stock Option shall be
transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a
third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(f) Vesting Generally. The total number
of shares of Common Stock subject to an Option may, but need
not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options may vary. The provisions of
this subsection 6(f) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to
which an Option may be exercised.
(g) Termination of Continuous Service. In
the event an Optionholders Continuous Service terminates
(other than upon the Optionholders death or Disability),
the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of
the date of termination) but only within such period of time
ending on the earlier of (i) the date three (3) months
following the termination of the Optionholders
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Continuous Service (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the
Option shall terminate.
(h) Extension of Termination Date. An
Optionholders Option Agreement may also provide that if
the exercise of the Option following the termination of the
Optionholders Continuous Service (other than upon the
Optionholders death or Disability) would be prohibited at
any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities
Act, then the Option shall terminate on the earlier of
(i) the expiration of the term of the Option or
(ii) the expiration of a period of three (3) months
after the termination of the Optionholders Continuous
Service during which the exercise of the Option would not be in
violation of such registration requirements.
(i) Disability of Optionholder. In the
event that an Optionholders Continuous Service terminates
as a result of the Optionholders Disability, the
Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the
date of termination), but only within such period of time ending
on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration
of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or
her Option within the time specified herein, the Option shall
terminate.
(j) Death of Optionholder. In the event
(i) an Optionholders Continuous Service terminates as
a result of the Optionholders death or (ii) the
Optionholder dies within the period (if any) specified in the
Option Agreement after the termination of the
Optionholders Continuous Service for a reason other than
death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date
of death) by the Optionholders estate, by a person who
acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the option
upon the Optionholders death, but only within the period
ending on the earlier of (1) the date eighteen
(18) months following the date of death (or such longer or
shorter period specified in the Option Agreement) or
(2) the expiration of the term of such Option as set forth
in the Option Agreement. If, after death, the Option is not
exercised within the time specified herein, the Option shall
terminate.
7. Covenants
of the Company.
(a) Availability of Shares. During the
terms of the Options, the Company shall keep available at all
times the number of shares of Common Stock required to satisfy
such Options.
(b) Securities Law Compliance. The
Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may
be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register
under the Securities Act the Plan, any Option or any Common
Stock issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel
for the Company deems necessary for the lawful issuance and sale
of Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Common Stock
upon exercise of such Options unless and until such authority is
obtained.
8. Use
of Proceeds from Stock.
Proceeds from the sale of Common Stock pursuant to Options shall
constitute general funds of the Company.
9. Miscellaneous.
(a) Stockholder Rights. No Optionholder
shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares of Common Stock
subject to such Option unless and until such Optionholder has
satisfied all requirements for exercise of the Option pursuant
to its terms.
(b) No Employment or other Service
Rights. Nothing in the Plan or any instrument
executed or Option granted pursuant thereto shall confer upon
any Optionholder any right to continue to serve the Company or
an Affiliate in the capacity in effect at the time the Option
was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee
with or without notice and with or without cause, for any reason
or no reason, (ii) the
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service of a Consultant pursuant to the terms of such
Consultants agreement with the Company or an Affiliate or
(iii) the service of a Director pursuant to the Bylaws of
the Company or an Affiliate, and any applicable provisions of
the corporate law of the jurisdiction in which the Company or
the Affiliate is incorporated, as the case may be.
(c) Incentive Stock Option $100,000
Limitation. To the extent that the aggregate Fair
Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable
for the first time by any Optionholder during any calendar year
(under all plans of the Company and its Affiliates) exceeds one
hundred thousand dollars ($100,000), the Options or portions
thereof which exceed such limit (according to the order in which
they were granted) shall be treated as Nonstatutory Stock
Options.
(d) Investment Assurances. The Company
may require an Optionholder, as a condition of exercising an
Option or acquiring Common Stock under any Option, (i) to
give written assurances satisfactory to the Company as to the
Optionholders knowledge and experience in financial and
business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she
is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option;
(ii) to give written assurances satisfactory to the Company
stating that the Optionholder is acquiring Common Stock subject
to the Option for the Optionholders own account and not
with any present intention of selling or otherwise distributing
the Common Stock; and/or (iii) to give such other written
assurances as the Company shall determine are necessary,
desirable or appropriate to comply with applicable securities
regulation and other governing law. The Company may, upon advice
of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer
of the Common Stock.
(e) Withholding Obligations. To the
extent provided by the terms of an Option Agreement, the
Optionholder may satisfy any tax withholding obligation arising
under the laws or regulations of any country, state or local
jurisdiction relating to the exercise or acquisition of Common
Stock under an Option by any of the following means (in addition
to the Companys right to withhold from any compensation
paid to the Optionholder by the Company) or by a combination of
such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares of Common
Stock from the shares of Common Stock otherwise issuable to the
Optionholder as a result of the exercise or acquisition of
Common Stock under the Option; provided, however, that no shares
of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law (or such lesser
amount as may be required to avoid variable award accounting);
or (iii) delivering to the Company owned and unencumbered
shares of Common Stock.
10. Adjustments
upon Changes in Stock.
(a) Capitalization Adjustments. If any
change is made in the Common Stock subject to the Plan, or
subject to any Option, without the receipt of consideration by
the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities
subject to the Plan pursuant to subsection 4(a) and the maximum
number of securities subject to award to any person pursuant to
subsection 5(d), and the outstanding Options will be
appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding
Options. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall
not be treated as a transaction without receipt of
consideration by the Company.)
(b) Dissolution or Liquidation. In the
event of a dissolution or liquidation of the Company, then all
outstanding Options shall terminate immediately prior to such
event.
(c) Corporate Transaction. In the event
of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a
merger or consolidation in which the Company is not the
surviving corporation, or (iii) a reverse merger in which
the Company is the surviving corporation but the shares of
Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether
in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation shall assume or continue
any Options outstanding under the Plan or shall substitute
similar stock awards (including an award to
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acquire the same consideration paid to the stockholders in the
transaction described in this subsection 10(c)) for those
outstanding under the Plan. In the event any surviving
corporation or acquiring corporation refuses to assume or
continue such Options or to substitute similar stock awards for
those outstanding under the Plan, then with respect to Options
held by Optionholders whose Continuous Service has not
terminated, the vesting of such Options (and, if applicable, the
time during which such Options may be exercised) shall be
accelerated in full, and the Options shall terminate if not
exercised (if applicable) at or prior to such event. With
respect to any other Options outstanding under the Plan, such
Options shall terminate if not exercised (if applicable) at or
prior to such event.
11. Amendment
of the Plan and Options.
(a) Amendment of Plan. The Board at any
time, and from time to time, may amend the Plan. However, except
as provided in Section 10 relating to adjustments upon
changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent
stockholder approval is necessary under applicable laws or
regulations or to the extent that such amendment constitutes a
material amendment of the Plan.
(b) Stockholder Approval. The Board may,
in its sole discretion, submit any other amendment to the Plan
for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from
the limit on corporate deductibility of compensation paid to
certain executive officers. Notwithstanding any other provision
of the Plan to the contrary, the Board shall not, without prior
stockholder approval, (A) reduce the exercise price of any
outstanding Option under the Plan, (B) cancel any
outstanding Option under the Plan and grant in substitution
therefor, on either an immediate or delayed basis, a new Option
under the Plan covering the same or a different number of shares
of Common Stock or cash, or (C) take any other action with
respect to any outstanding Option under the Plan that is treated
as a repricing of such Option pursuant to generally accepted
accounting principles.
(c) Contemplated Amendments. It is
expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide
eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted
under it into compliance therewith.
(d) No Impairment of Rights. Rights under
any Option granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (i) the
Company requests the consent of the Optionholder and
(ii) the Optionholder consents in writing.
(e) Amendment of Options. The Board at
any time, and from time to time, may amend the terms of any one
or more Options; provided, however, that the rights under any
Option shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Optionholder
and (ii) the Optionholder consents in writing.
12. Termination
or Suspension of the Plan.
(a) Plan Term. The Board may suspend or
terminate the Plan at any time. Unless sooner terminated, the
Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is
earlier. No Options may be granted under the Plan while the Plan
is suspended or after it is terminated.
(b) No Impairment of Rights. Suspension
or termination of the Plan shall not impair rights and
obligations under any Option granted while the Plan is in effect
except with the written consent of the Optionholder.
13. Effective
Date of Plan.
The Plan shall become effective as determined by the Board, but
no Option shall be exercised unless and until the Plan has been
approved by the stockholders of the Company, which approval
shall be within twelve (12) months before or after the date
the Plan is adopted by the Board.
14. Choice
of Law.
The law of the State of Delaware shall govern all questions
concerning the construction, validity and interpretation of this
Plan, without regard to such states conflict of laws rules.
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eBay Inc.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 13, 2006
The undersigned hereby appoints
MARGARET C. WHITMAN, ROBERT H. SWAN AND MICHAEL R. JACOBSON, and each of them,
as attorneys and proxies of the undersigned, with full power of substitution, to vote all shares of stock of eBay Inc.
that the undersigned may be entitled to vote at the Annual Meeting of Stockholders of eBay Inc. to be held on June 13, 2006, at 8:00 a.m. Pacific time
at the Wynn Resort Las Vegas, Mouton 1 Room, 3131 Las Vegas Boulevard South, Las Vegas, Nevada 89109 for the purposes listed on
the reverse side and at any and all continuations and adjournments of that meeting, with all powers that the undersigned would possess if
personally present, upon and in respect of the instructions indicated on the reverse side, with discretionary authority as to any and all other matters that may properly come before the meeting.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE THAT IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
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eBay Inc.
2145 HAMILTON AVE. SAN JOSE, CA 95125
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VOTE BY
INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions provided.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by eBay Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern time the day before the meeting date. Have your proxy card in hand when you call and follow the simple instructions the Vote Voice provides to you.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return to eBay Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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eBay Inc. |
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Vote on Directors |
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The
Board of Directors recommends a vote FOR the listed nominees. |
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For |
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Withhold |
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For All |
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To withhold authority to vote, mark For All Except
and write the
nominees number on the line below.
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1.
Election of four directors to hold office until our 2009 annual
Meeting of Stockholders.
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All |
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All |
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Except |
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Nominees: 01) William C.
Ford, Jr.,
02) Dawn G. Lepore,
03) Pierre M. Omidyar and 04) Richard T. Schlosberg, III
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¨
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¨
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¨
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Vote on Proposals |
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For |
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Against |
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Abstain |
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The Board of Directors recommends a vote FOR Proposals 2 and 3. |
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2.
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To approve an amendment to our 2001 Equity Incentive Plan to increase by 30,000,000 the number of shares of common
stock that may be issued under our 2001 Equity Incentive Plan.
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¨
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¨
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3.
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To ratify the selection of
PricewaterhouseCoopers LLP as our independent auditors for our fiscal year ending December 31, 2006.
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¨ |
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Yes |
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No |
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HOUSEHOLDING ELECTION Please indicate if you
consent to receive certain future investor communications in a single package per household. |
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¨ |
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date |
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