def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under Rule 14a-12 |
eBay Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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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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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
eBay Inc.
2145 Hamilton Avenue
San Jose, California 95125
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 2005
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 Thursday, June 23,
2005, at 8:00 a.m. Pacific time at the Silicon Valley
Conference Center, El Camino Room, 2161 N. First
Street, San Jose, California 95131 for the following
purposes:
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To elect four directors to hold office until our 2008 Annual
Meeting of Stockholders. |
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To approve our eBay Incentive Plan in order to qualify it under
Section 162(m) of the Internal Revenue Code. |
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To approve an amendment to our Certificate of Incorporation to
increase the authorized number of shares of common stock from
1,790,000,000 shares to 3,580,000,000 shares. |
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4. |
To ratify the selection of PricewaterhouseCoopers LLP as our
independent auditors for our fiscal year ending
December 31, 2005. |
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To consider a stockholder proposal regarding granting of
performance-vesting shares to senior executives. |
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To consider a stockholder proposal regarding the voting standard
for director elections. |
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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 25, 2005 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.
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By Order of the Board of Directors |
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Michael R. Jacobson |
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Secretary |
San Jose, California
May 16, 2005
The proxy statement
and the accompanying form of proxy are being mailed on or about
May 16, 2005 in connection with the solicitation of proxies
on behalf of the Board of Directors of eBay. All stockholders
are cordially invited to attend the 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. 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
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND
OUR 2005 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 2005 Annual
Meeting of Stockholders, which will take place on June 23,
2005. 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 2004 Annual Report, which includes eBays
audited consolidated financial statements, is also enclosed. |
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What proposals will be voted on at the Annual Meeting? |
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There are six 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 the eBay Incentive Plan in order to qualify it
under Section 162(m) of the Internal Revenue Code; |
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the approval of an amendment to our Certificate of Incorporation
to increase the authorized number of shares of common stock from
1,790,000,000 shares to 3,580,000,000; |
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a stockholder proposal regarding granting of performance-vesting
shares to senior executives; and |
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a stockholder proposal regarding the voting standard for
director elections. |
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In addition, stockholders are being asked to ratify the
appointment of PricewaterhouseCoopers LLP as our independent
auditors for our fiscal year ending December 31, 2005. |
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Q: |
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 our Certificate
of Incorporation, FOR the approval of our eBay
Incentive Plan and the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent auditors, and
AGAINST the two stockholder proposals. |
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Q: |
What class of shares is entitled to be voted? How many shares
can vote? |
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A: |
Each share of eBays common stock outstanding as of the
close of business on April 25, 2005, the record date, is
entitled to one vote at the Annual Meeting. At the close of
business on April 25, 2005, 1,349,781,463 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 25, 2005 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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Q: |
What is the difference between holding shares as a
stockholder of record and as a beneficial owner? |
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A: |
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. |
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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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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 25,
2005. 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 25, 2005. 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
eBay Incentive Plan, the approval of the amendment to the
Certificate of Incorporation, the ratification of the selection
of PricewaterhouseCoopers LLP, and the stockholder proposals,
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 of Directors, 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 approve the eBay Incentive Plan, the proposal to
ratify the selection of the auditors, and the stockholder
proposals each require the affirmative FOR vote of a
majority of those shares present and entitled to vote to be
approved. The proposal to amend the Certificate of Incorporation
requires the affirmative FOR vote of a majority of
the shares of common stock outstanding as of April 25,
2005. 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 eBay Incentive Plan and the two stockholder
proposals, 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. Because approval of
Proposal 3 (amendment of the Certificate of Incorporation)
requires the affirmative vote of a majority of all outstanding
shares, broker non-votes have the same effect as a vote
AGAINST that proposal. For the proposals requiring
the affirmative vote of those shares present and entitled to
vote, broker non-votes will not affect the outcome of the vote. |
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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 publish final results in eBays quarterly
report on Form 10-Q for the second quarter of 2005. |
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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 Georgeson Shareholder
Communications Inc., a professional proxy solicitation firm, to
aid in the solicitation of proxies. Georgeson may solicit
proxies by personal interview, mail, telephone and electronic
communications. eBay estimates that it will pay Georgeson 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 2006
annual meeting of stock- |
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holders your proposal must be received by our Corporate
Secretary no later than January 9, 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 2006 annual meeting so
long as it is submitted to our Corporate Secretary no earlier
than March 25, 2006, and no later than April 24, 2006.
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 2004 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 to 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. |
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2005 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
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Beneficial Ownership Table
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PROPOSALS TO BE VOTED ON
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A-1 |
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B-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 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 eight of
our ten 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 will serve in that capacity until the
Board meeting following our 2006 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. All nine of the
directors who were then on the Board attended our 2004 annual
meeting of stockholders.
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.
6
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, 2005 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.
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. 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.
Succession Planning. The Board recognizes the importance
of effective executive leadership to eBays success, and
meets to discuss executive succession planning at least annually.
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 audit firm for non-audit services. The
fees for services provided by our auditors in 2004 and 2003 and
our policy on pre-approval of non-audit services are described
under Proposal 4 below.
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 2004, our Board of Directors held four meetings, and each
Board member attended at least 75% of the aggregate of all of
our Board meetings and committee meetings for committees on
which such director served. 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.
Mr. Kagle served as a member of the committee until
September 2004, when Mr. Schlosberg was elected to the
committee. The Audit Committee held 11 meetings during fiscal
year 2004. 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 also prepares the Audit
Committee Report for inclusion in our proxy statement, approves
7
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 consists of Messrs. Kagle,
Bourguignon, and Tierney. Mr. Kagle is the chairman of the
committee. The committee met five times during 2004. 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.
Corporate Governance and Nominating Committee
Our Corporate Governance and Nominating Committee consists of
Messrs. Cook, Schlosberg, and Tierney and Ms. Lepore.
Mr. Cook is the chairman of the committee.
Mr. Schlosberg was elected to the committee when he became
a director in March 2004. The committee met four times during
2004. The Corporate Governance and Nominating Committee makes
recommendations to the Board as to the appropriate size of the
Board or any Board committee and 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 retained Spencer Stuart, 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 2006 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 2005 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.
8
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, 2005, 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)
|
|
|
215,336,568 |
|
|
|
16.0 |
% |
Jeffrey S. Skoll(3)
|
|
|
90,578,494 |
|
|
|
6.7 |
|
Margaret C. Whitman(4)
|
|
|
31,230,684 |
|
|
|
2.3 |
|
Maynard G. Webb, Jr.(5)
|
|
|
1,532,916 |
|
|
|
* |
|
Jeffrey D. Jordan(6)
|
|
|
1,473,151 |
|
|
|
* |
|
Matthew J. Bannick(7)
|
|
|
486,149 |
|
|
|
* |
|
William C. Cobb(8)
|
|
|
802,583 |
|
|
|
* |
|
Fred D. Anderson(9)
|
|
|
6,000 |
|
|
|
* |
|
Philippe Bourguignon(10)
|
|
|
516,250 |
|
|
|
* |
|
Scott D. Cook(11)
|
|
|
2,209,256 |
|
|
|
* |
|
Robert C. Kagle(12)
|
|
|
3,728,336 |
|
|
|
* |
|
Dawn G. Lepore(13)
|
|
|
351,250 |
|
|
|
* |
|
Richard T. Schlosberg, III(14)
|
|
|
3,200 |
|
|
|
* |
|
Thomas J. Tierney(15)
|
|
|
22,750 |
|
|
|
* |
|
All directors and executive officers as a group (21
persons)(16)(17)
|
|
|
263,368,256 |
|
|
|
19.3 |
|
|
|
|
|
(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, 2005 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
1,348,840,742 shares of our common stock outstanding as of
April 1, 2005. Amounts have been adjusted to reflect the
two-for-one stock split effective on February 16, 2005. |
|
|
(2) |
Mr. Omidyar is our Founder and Chairman of the Board.
Includes 490,000 shares held by his spouse as to which he
disclaims beneficial ownership. The address for Mr. Omidyar
is 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) |
Ms. Whitman is our President and Chief Executive Officer.
Includes 7,646,842 shares held by the Griffith R. Harsh,
IV & Margaret C. Whitman TTEES of Sweetwater
Trust U/ A/ D 10/15/99, 1,330,046 shares held by the
Griffith R. Harsh, IV, TTEE, GRH 2003 GRAT, and
1,330,046 shares held by the Margaret C. Whitman TTEE, MCW
2003 GRAT, 4,000,000 shares held by the Griffith R. Harsh,
IV, TTEE, GRH 2004 GRAT and 4,000,000 shares held by the
Margaret C. Whitman TTEE, MCW 2004 GRAT and
2,000,000 shares held by the Griffith R. Harsh, IV, TTEE
GRH 2005 GRAT and 2,000,000 shares held by the Margaret C.
Whitman TTEE, MCW 2005 GRAT. In addition, it 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 4,954,166 shares Ms. Whitman has the right to
acquire pursuant to outstanding options exercisable within
60 days. The address for Ms. Whitman is c/o eBay
Inc., 2145 Hamilton Avenue, San Jose, California 95125. |
9
|
|
|
|
(5) |
Mr. Webb is our Chief Operating Officer. Includes
1,432,916 shares Mr. Webb has the right to acquire
pursuant to outstanding options exercisable within 60 days.
The address for Mr. Webb is c/o eBay Inc., 2145
Hamilton Avenue, San Jose, California 95125. |
|
|
(6) |
Mr. Jordan is our President, PayPal. Includes
1,432,951 shares Mr. Jordan has the right to acquire
pursuant to outstanding options exercisable within 60 days.
The address for Mr. Jordan is c/o eBay Inc., 2145
Hamilton Avenue, San Jose, California 95125. |
|
|
(7) |
Mr. Bannick is our President, eBay International. Includes
465,001 shares Mr. Bannick has the right to acquire
pursuant to outstanding options exercisable within 60 days.
The address for Mr. Bannick is c/o eBay Inc., 2145
Hamilton Avenue, San Jose, California 95125. |
|
|
(8) |
Mr. Cobb is our President, eBay North America. Includes
768,583 shares Mr. Cobb has the right to acquire
pursuant to outstanding options exercisable within 60 days.
The address for Mr. Cobb is c/o eBay Inc., 2145
Hamilton Avenue, San Jose, California 95125. |
|
|
(9) |
The address for Mr. Anderson is c/o eBay Inc., 2145
Hamilton Avenue, San Jose, California 95125. |
|
|
(10) |
Includes 514,250 shares Mr. Bourguignon has the right
to acquire pursuant to outstanding options exercisable within
60 days. The address for Mr. Bourguignon is
c/o eBay Inc., 2145 Hamilton Avenue, San Jose,
California 95125. |
|
(11) |
Includes 2,046,250 shares Mr. Cook has the right to
acquire pursuant to outstanding options exercisable within
60 days. The address for Mr. Cook is c/o Intuit,
Inc., 2535 Garcia Avenue, Mountain View, California 94043. |
|
(12) |
Includes 356,250 shares Mr. Kagle has the right to
acquire pursuant to outstanding options exercisable within
60 days. The address for Mr. Kagle is
c/o Benchmark Capital, 2480 Sand Hill Road, Suite 200,
Menlo Park, California 94025. |
|
(13) |
Includes 311,250 shares Ms. Lepore has the right to
acquire pursuant to outstanding options exercisable within
60 days. The address for Ms. Lepore is
c/o drugstore.com, inc., 13920 S.E. Eastgate Way #300,
Bellevue, WA 98005. |
|
(14) |
The address for Mr. Schlosberg is 9901 IT-10 West,
Suite 800, San Antonio, TX 78230. |
|
(15) |
Includes 18,750 shares Mr. Tierney has the right to
acquire pursuant to outstanding options exercisable within
60 days. The address for Mr. Tierney is c/o The
Bridgespan Group, 535 Boylston Street, 10th Floor, Boston, MA
02116 |
|
(16) |
Includes 17,211,430 shares subject to options exercisable
within 60 days. |
|
|
(17) |
Edward W. Barnholt became a director of the company on
April 26, 2005, and is not included in this table. |
|
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 class currently
consists of four directors and the second and third classes each
currently consist of three directors. The term of office for the
first class expires at our upcoming Annual Meeting, the term of
office for the second class expires at our 2006 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 ten members, eight 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. Two 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 2008 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.
10
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 2008 Annual
Meeting
Fred D. Anderson
Fred D. Anderson, age 60, 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 E.piphany, 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 61, has served as a director of eBay
since April 2005. Mr. Barnholt served as President and
Chief Executive Officer of Agilent Technologies, Inc. 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. Mr. Barnholt holds a
bachelors degree and a masters degree in electrical
engineering from Stanford University.
Scott D. Cook
Scott D. Cook, age 52, 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 49, 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 January 1984. Mr. Kagle
also serves on the board of directors of E-LOAN, Inc. and
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.
The Board Of Directors
Recommends
A Vote In Favor Of Each
Named Nominee.
Directors Continuing in
Office Until Our 2006 Annual Meeting
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
11
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. She also serves on the board of
directors of Catalyst, a research and advisory organization
working to expand opportunities for women in business, and as a
trustee of Smith College. Ms. Lepore holds a B.A. degree
from Smith College.
Pierre M. Omidyar
Pierre M. Omidyar, age 37, 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 communication 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 of Apple Computer, and for other
Macintosh-oriented software development companies.
Mr. Omidyar is currently Chairman and CEO of Omidyar
Network. He also serves on the Board of Trustees of Tufts
University and The Santa Fe Institute, and as a director of
several private companies. Mr. Omidyar holds a B.S. degree
in Computer Science from Tufts University.
Richard T. Schlosberg, III
Richard T. Schlosberg, III, age 61, 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, and is also a
national board member of the Smithsonian Institution and the
National Air and Space museum, 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.
Directors Continuing in
Office Until Our 2007 Annual Meeting
Philippe Bourguignon
Philippe Bourguignon, age 57, has served as a director of
eBay since December 1999. Mr. Bourguignon has been the
Chairman of Aegis Media France, a media communications and
market research company, since April 2004. 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 Mediterranee S.A., a resort operator. Prior to his
appointment at Club Mediterranee 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 51, 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.
Margaret C. Whitman
Margaret C. Whitman, age 48, 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,
12
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, Gap Inc. 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.
Proposal 2
Approval of eBay
Incentive Plan
The Board of Directors, upon the recommendation of the
Compensation Committee, approved and adopted the eBay Incentive
Plan, which we refer to as the eIP, on March 17, 2005, to
be effective as of January 1, 2005, subject to the approval
of the eIP by eBays stockholders. The eIP is being
submitted to stockholders for approval so that payments to
certain executive officers under the eIP will be deductible by
eBay for federal income tax purposes as described below.
The eIP is an element of eBays overall compensation
strategy to align employee compensation with eBays
business objectives, strategy, and performance. The eIP is
designed to reward eBays employees for delivering
measurable results. The purpose of the eIP is to align
compensation with quarterly and annual performance and to enable
eBay to attract, retain, and reward highly qualified individuals
who contribute to eBays success and motivate them to
enhance the value of the Company.
As described below under Federal Income Tax
Information, Section 162(m) of the Code denies a tax
deduction to public companies for compensation paid to certain
covered employees in a taxable year to the extent
the compensation paid to a covered employee exceeds $1,000,000,
unless the plan contains certain features that qualify the
compensation as performance-based compensation.
The eIP is intended to satisfy the requirements for
performance-based compensation as required by
Section 162(m) of the Code. One of the requirements of
performance-based compensation is that compensation
be paid pursuant to a plan that has been approved by the
companys stockholders. This is the first year eBay is
asking stockholders to approve the eIP. However, eBay intends to
administer the plan that is being submitted for stockholder
approval for 2005 in a manner almost identical to the Management
Incentive Plan that eBay has used in the past to motivate
employees to drive demonstrated superior results for the company.
In addition to asking for stockholder approval of the eIP, eBay
has structured the eIP to satisfy additional requirements of
Section 162(m) of the Code for performance-based
compensation. The Board believes approval of the eIP is in
the best interest of eBay and its stockholders. The eIP
motivates and rewards eBays employees for achievement of
strategic, operational and financial goals that drive
stockholder value, and will now be structured to be advantageous
for federal income tax purposes.
If the eIP is not approved by stockholders, it is currently
contemplated that eBay would continue to make awards under its
current Management Incentive Plan and that such bonuses to
covered employees would not be deductible under
Section 162(m) of the Code to the extent that (in
combination with other non-exempt compensation,
e.g., salary) they exceed the $1,000,000 limit. If the eIP
is not approved by stockholders, it is currently contemplated
that eBay would resubmit the eIP for stockholder approval in
2006.
The Board Of Directors
Recommends
A Vote In Favor Of
Proposal 2.
A summary of the eIP is set forth below. The discussion below is
qualified in its entirety by reference to the eIP, a copy of
which is attached as Appendix A to this proxy
statement.
General and
Administration
The eIP provides for a quarterly and annual bonus to eligible
eBay employees. The Compensation Committee will be responsible
for administering the eIP. The members of the Compensation
Committee (or the sub-committee selected to administer the eIP)
must qualify as outside directors under
Section 162(m) of the Code in order for Incentive Awards to
covered employees to qualify as deductible
performance-based compensation under the Code. The
Compensation Committee will have complete and absolute authority
to make decisions regarding the administration of the eIP,
including interpreting the terms and provisions, and
establishing,
13
adjusting or paying Incentive Awards, even if those actions
result in the non-deductibility of those awards. Under the eIP,
no participant may receive an award of more than $3,000,000 (or
the equivalent amount of equity, based on fair market value on
the date of grant) in any fiscal year.
Eligibility
All active regular full-time and part-time employees who are
notified by the Company are eligible to participate in the eIP.
Employees who participate in other bonus programs, such as any
sales incentive plan, are not eligible to participate in the eIP
unless they are specifically made eligible in writing by an
executive officer of the Company. In addition, the Company may,
in its sole discretion, provide for a payout under the eIP for
any employee who has changed positions and, as a result, may
have been eligible to participate in the eIP and another bonus
program during a quarter. The eIP contains special provisions
for designating additional eligible employees (e.g., new hires)
for participation in the eIP.
The actual number of participants cannot be determined in
advance. However, as of April 1, 2005, we and our
consolidated subsidiaries employed approximately 8,600 persons
(excluding approximately 650 temporary employees), any number of
whom could be selected by the Compensation Committee as eligible
to participate in the eIP.
Performance
Under the eIP, the Compensation Committee will determine the
quarterly, fiscal year, or other performance period for
measuring actual performance. The Compensation Committee will
establish for each performance period:
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the performance measures based on business criteria and target
levels of performance; and |
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a formula for calculating a participants award based on
actual performance compared to the pre-established performance
goals. |
Performance measures may be based on a selection of measurable
business criteria, including trading volume, users, gross
merchandise volume, total payment volume, revenue, operating
income, EBITDA, net income, earnings per share, return on assets
or equity, cash flow, net or operating margin, economic profit,
stock price appreciation, total stockholder return, employee
productivity, and customer satisfaction metrics. These measures
may be described in terms of growth, an absolute number, or
relative to an external group, and may be calculated on a GAAP
or pro forma basis.
The Compensation Committee may set performance periods and
performance goals that differ from participant to participant.
This may include designating performance goals on either
company-wide or business unit performance, as appropriate for a
participants specific responsibilities.
Establishment of Target
Bonuses
The Compensation Committee will designate those eligible
employees who are to be participants in the eIP for that year
and will specify the terms and conditions for the determination
and payment of an Incentive Award to each of those participants.
The Compensation Committee may condition the payment of an
Incentive Award upon the satisfaction of such objective or
subjective standards as it deems appropriate. Under ordinary
circumstances, these performance measures will be established
within 90 days of the commencement of an annual performance
period, or within the period that is the first 25% of each
quarter or other performance period.
Committee Certification
and Determination of Incentive Awards
As soon as practicable after the end of each performance period,
the Compensation Committee will certify in writing whether the
stated performance goals have been met and will determine the
amount of the Incentive Award to be paid to each eIP
participant. The Compensation Committee may decrease (but cannot
increase) an Incentive Award paid to a covered employee. In
determining that amount, the Compensation Committee will
consider the established target bonuses, the degree to which the
established standards were satisfied and any other objective or
subjective factors it deems appropriate and may reduce the
amount of, or eliminate altogether, any Incentive Award that
would otherwise be payable. Individuals who enter the eIP during
the year may have their awards prorated.
14
Payment of Incentive
Awards
Following the Compensation Committees determination of
Incentive Awards to be paid, those Incentive Awards will
generally be paid in cash (subject to any election made by an
eligible employee to defer all or a portion of the Incentive
Award, if permitted to do so) or equity pursuant to an eBay
equity-based award plan under which securities have been
registered on Form S-8.
Duration and
Amendment
If the eIP is approved by stockholders, it will be effective for
fiscal 2005 and will continue in effect until the fifth
anniversary of the date of such approval. The Compensation
Committee may amend or terminate the eIP at any time and for any
reason. In order to maintain the plans qualification under
Section 162(m) of the Code, material amendments of the eIP
will require stockholder approval.
Proposal 3
Proposed Amendment to
our Certificate of Incorporation
Our Board of Directors has adopted, subject to stockholder
approval, an amendment and restatement of our Certificate of
Incorporation attached as Appendix B to increase the
authorized number of shares of common stock from
1,790,000,000 shares to 3,580,000,000 shares.
The additional shares of common stock would have rights
identical to the currently outstanding common stock. Adoption of
the proposed amendment and any issuance of the common stock
would not affect the rights of the holders of currently
outstanding common stock, except for effects incidental to
increasing the outstanding number of shares of the common stock,
such as dilution of the earnings per share and voting rights of
current holders of common stock. In addition to the
1,348,840,742 shares of common stock outstanding at
April 1, 2005, we have reserved 250,929,280 shares for
issuance upon the exercise of options and rights granted or to
be granted under our equity compensation plans.
Our Certificate of Incorporation also authorizes
10,000,000 shares of preferred stock. There are no
outstanding shares of preferred stock, and this amendment would
not change the number of authorized shares of preferred stock.
If this amendment to increase the authorized number of shares of
common stock is approved by the stockholders, it will become
effective when we file the Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of
Delaware.
In May 2000, August 2003, and February 2005, we
effected two-for-one stock splits in the form of a stock
dividend. These stock splits used a substantial portion of the
currently authorized 1,790,000,000 shares of common stock.
Without increasing the number of authorized but unissued shares
of common stock, we will be unable to effect any stock splits in
the form of a stock dividend in the future. We believe that it
is advisable and in the best interests of the stockholders to
have available additional authorized but unissued shares of
common stock in an amount adequate to provide for our future
needs. We currently have no specific plans to issue the
additional shares of common stock that would be authorized by
this proposal. However, these shares will provide additional
flexibility to use our capital stock for business and financial
purposes in the future. The additional shares may be used for
various purposes, including stock dividends similar to those
discussed above and the following:
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raising capital; |
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providing equity incentives to employees, officers, or directors; |
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establishing strategic relationships with other
companies; and |
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expanding our business or product lines through the acquisition
of other businesses or products. |
Although an increase in the authorized shares of common stock
could, under certain circumstances, have an anti-takeover effect
(for example, by diluting the stock of a person seeking to
effect a change in the composition of the Board of Directors or
contemplating a tender offer or other transaction for a
combination of the company with another company), this proposal
is not in response to any effort of which we are aware to
accumulate eBays stock or obtain control of the company,
nor is it part of a plan by management to recommend a series of
similar amendments to the Board of Directors and stockholders.
15
The affirmative vote of the holders of a majority of the shares
of common stock will be required to approve this amendment to
our Certificate of Incorporation. As a result, abstentions and
broker non-votes will have the same effect as negative votes.
The Board Of Directors
Recommends
A Vote In Favor Of
Proposal 3.
Proposal 4
Ratification of
Selection of Independent Auditors
We have selected PricewaterhouseCoopers LLP, or PwC, as our
independent auditors for the fiscal year ending
December 31, 2005. 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 4.
Audit and Other
Professional Fees
During the fiscal years ended December 31, 2003 and
December 31, 2004, 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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2003 | |
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2004 | |
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Audit Fees
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$ |
1,548 |
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$ |
3,757 |
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Audit-Related Fees
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720 |
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1,617 |
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Tax Fees
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65 |
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Total
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$ |
2,333 |
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$ |
5,374 |
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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, in the case of 2004, 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. Tax Fees consisted of fees billed for tax
payment planning and tax preparation services. Approximately 3%
of Tax Fees for 2003 were approved by eBays Audit
Committee after the provision of services pursuant to the
de minimis services safe harbor exception for
non-audit engagements.
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
16
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.
17
Report of the Audit
Committee of the Board of
Directors(1)
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 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, reviews of 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 2005, in connection with
the preparation of eBays annual report on Form 10-K
for the year ended December 31, 2004, 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. |
The Audit Committee held 11 meetings in 2004. 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.
(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.
18
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 statements and
that Fred D. 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. In December
2002, the Board of Directors revised the Audit Committee Charter
to reflect new rules and standards set forth in SEC regulations,
as well as changes to Nasdaq listing standards. The Board of
Directors made additional modifications to the revised Audit
Committee Charter in May 2003 and 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, 2004. We have also recommended, and the Board
has approved, the selection of PwC as our independent auditors
for 2005.
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AUDIT COMMITTEE |
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Fred D. Anderson |
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Robert C. Kagle* |
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Dawn G. Lepore |
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Richard T. Schlosberg, III** |
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* |
A member until September 9, 2004. |
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** |
A member since September 9, 2004. |
19
Proposal 5
Stockholder Proposal
Regarding Performance-Vesting Shares
We have received a stockholder proposal from the AFL-CIO Reserve
Fund, 815 Sixteenth Street NW, Washington, DC 20006. The Fund
has requested that we include the following proposal and
supporting statement in this proxy statement, and if properly
presented by the Fund, this proposal will be voted on at our
Annual Meeting. The Fund beneficially owns approximately
400 shares of our common stock. Our Board of Directors
recommends that you vote against adoption of this proposal, and
we ask stockholders to read managements response, which
follows the proposal.
The Board Of Directors
Recommends
A Vote Against
Proposal 5.
Shareholder
Proposal
Resolved, that the shareholders of eBay Inc. (the
Company) urge the Board of Directors to adopt a
policy that a significant portion of future equity compensation
grants to senior executives shall be shares of stock that
require the achievement of performance goals as a prerequisite
to vesting (performance-vesting shares).
This policy shall apply to existing employment agreements and
equity compensation plans only if the use of performance-vesting
shares can be legally implemented by the Company, and will
otherwise apply to the design of all future plans and agreements.
Supporting
Statement
We believe that our Companys compensation policies should
encourage the ownership of stock by senior executives in order
to align their interests with those of shareholders. To achieve
this goal, we favor granting senior executives actual shares of
stock for meeting specified performance goals. In our opinion,
performance-vesting shares are a better form of equity
compensation than fixed-price stock options or time-vesting
restricted stock.
Fixed-price stock option grants provide senior executives with
incentives that may not be in the best interests of long-term
shareholders. In our view, stock option grants promise
executives all the benefit of share price increases with none of
the risk of share price declines. Stock options can reward
short-term decision-making because many executives options
can be exercised just one year after the grant date.
Furthermore, we believe that stock options can create a strong
incentive to manipulate a companys stock price through
questionable or even fraudulent accounting.
Leading investors and regulators have questioned the use of
stock options to compensate executives. Berkshire Hathaway CEO
Warren Buffet has characterized fixed-price stock options as
really a royalty on the passage of time. Federal
Reserve Chairman Alan Greenspan blamed poorly-structured options
for the infectious greed of the 1990s, because
they failed to properly align the long-term interests of
shareholders and managers.
Similarly, we oppose granting executives time-vesting restricted
stock that does not include any performance requirements. In our
view, time-vesting restricted stock rewards tenure, not
performance. Instead, we believe vesting requirements should be
tailored to measure each individual executives performance
through disclosed benchmarks, in addition to the Companys
share price. To align their incentives with those of long-term
shareholders, we also believe that senior executives should be
required to hold a significant portion of these
performance-vesting shares for as long as they remain executives
of the Company.
Executive compensation consultant Pearl Meyer has said if
a company is going to issue restricted stock grants as a way of
making sure executives are owners rather than optionees, the
grant should be earned on a performance basis it
shouldnt be just a giveaway. Former SEC Chairman
Richard Breeden has stated that there is not a strong
reason for granting restricted stock rather than simply paying
cash unless there are performance hurdles to vesting.
Management Statement in
Opposition to Stockholder Proposal
Our Board and Compensation Committee support the concept of
performance-based compensation arrangements as an important
component of executive compensation. However, after careful
consideration, we believe that adopting a policy requiring a
significant portion of future equity compensation grants to
senior executives to be performance-based restricted stock would
unduly restrict the
20
Compensation Committees choice of compensation
alternatives. Therefore, we do not believe the proposal is in
the best interests of eBay or its stockholders.
Our Compensation Committee evaluates eBays compensation
program annually to ensure that it is aligned with the
companys business objectives and to enable eBay to
attract, retain, and reward executive officers and other key
employees and motivate them to enhance long-term value for
stockholders. The Compensation Committee retains an independent
consulting firm as an advisor and resource to help develop and
execute the companys total compensation strategy. In 2003
and again in 2004, the Committee concluded that given the
companys stage of growth, business complexity, and its
need to compete for talent with other high-growth companies,
stock options remained an extremely important element of total
compensation.
We believe that our Compensation Committees approach to
date has provided appropriate links between executive
compensation and eBays performance and has aligned the
interests of executives with those of stockholders. Incentive
stock options are to some extent inherently performance-based,
since their eventual value to the recipient is directly linked
to the companys stock price, which, over the long-term is
largely driven by corporate performance. To further align the
interests of our executives with our stockholders and ensure our
executives are focused on achieving long-term stockholder value,
our Board adopted stock ownership guidelines, effective
September 2004, which generally require ownership of stock
valued at three times base salary for executive officers and
five times base salary for our CEO.
In choosing the type of equity compensation program to use for
our executives, the Compensation Committee must consider a
variety of factors. Performance-vesting restricted stock has
recently received significant attention among compensation
experts, and in 2005 the Compensation Committee will consider
performance-vesting shares among the various alternatives for
long-term equity incentive compensation. However, we believe
that it is in the best interest of stockholders to give the
Compensation Committee the flexibility and discretion to use and
introduce new compensation and equity incentive tools as
appropriate, based on the circumstances and information
available at the time. This proposal would unduly limit the
Compensation Committees flexibility by requiring that a
substantial portion of equity compensation be in one particular
form. Accordingly, we do not believe that adoption of this
proposal is in the best interests of our stockholders.
Proposal 6
Stockholder Proposal
Regarding Standard for Director Elections
We have received a stockholder proposal from the United
Brotherhood of Carpenters Pension Fund, 101 Constitution Avenue
NW, Washington, DC 20001. The Fund has requested that we include
the following proposal and supporting statement in this proxy
statement, and if properly presented by the Fund, this proposal
will be voted on at our Annual Meeting. The Fund beneficially
owns approximately 10,700 shares of our common stock. Our
Board of Directors recommends that you vote against adoption of
this proposal, and we ask stockholders to read managements
response, which follows the proposal.
The Board Of Directors
Recommends
A Vote Against
Proposal 6.
Director Election
Majority Vote Standard Proposal
Resolved: That the shareholders of eBay Inc.
(Company) hereby request that the Board of Directors
initiate the appropriate process to amend the Companys
governance documents (certificate of incorporation or bylaws) to
provide that director nominees shall be elected by the
affirmative vote of the majority of votes cast at an annual
meeting of shareholders.
Supporting Statement: Our Company is incorporated in
Delaware. Among other issues, Delaware corporate law addresses
the issue of the level of voting support necessary for a
specific action, such as the election of corporate directors.
Delaware law provides that a companys certificate of
incorporation or bylaws may specify the number of votes that
shall be necessary for the transaction of any business,
including the election of directors. (DGCL, Title 8,
Chapter 1, Subchapter VII, Section 216). Further, the
law provides that if the level of voting support necessary for a
specific action is not specified in the certificate of
incorporation or bylaws of the corporation, directors
shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and
entitled to vote on the election of directors.
21
Our Company presently uses the plurality vote standard for the
election of directors. We feel that it is appropriate and timely
for the Board to initiate a change in the Companys
director election vote standard. Specifically, this shareholder
proposal urges that the Board of Directors initiate a change to
the director election vote standard to provide that in director
elections a majority vote standard will be used in lieu of the
Companys current plurality vote standard. Specifically,
the new standard should provide that nominees for the board of
directors must receive a majority of the vote cast in order to
be elected or re-elected to the Board.
Under the Companys current plurality vote standard, a
director nominee in a director election can be elected or
re-elected with as little as a single affirmative vote, even
while a substantial majority of the votes cast are
withheld from that director nominee. So even if
99.99% of the shares withhold authority to vote for
a candidate or all the candidates, a 0.01% for vote
results in the candidates election or re-election to the
board. The proposed majority vote standard would require that a
director receive a majority of the vote cast in order to be
elected to the Board.
It is our contention that the proposed majority vote standard
for corporate board elections is a fair standard that will
strengthen the Companys governance and the Board. Our
proposal is not intended to limit the judgment of the Board in
crafting the requested governance change. For instance, the
Board should address the status of incumbent directors who fail
to receive a majority vote when standing for re-election under a
majority vote standard or whether a plurality director election
standard is appropriate in contested elections.
We urge your support of this important director election reform.
Management Statement in
Opposition to Stockholder Proposal
In March 2005, after the United Brotherhood of Carpenters
Pension Fund had submitted its proposal for inclusion in this
proxy statement, the Fund and representatives of several other
building trades unions formed a working group with
representatives of ten public companies to study the feasibility
of using the majority vote standard for director elections. The
working group members have stated their intent to prepare a
report on the majority-vote standard prior to the 2006 proxy
season. The American Bar Association has also recently announced
the formation of a task force to study whether to recommend a
change from the plurality vote standard to the majority vote
standard in the ABAs Revised Model Business Corporation
Act, which state lawmakers look to as a reference in drafting
state corporate laws.
While we share the proponents goals of fair elections and
strong corporate governance, we do not believe that adopting a
new standard for the election of our directors before the
proponents working group and the ABA task force have
issued their findings is in the best interest of eBay or its
stockholders. The proposed change does not require urgent
action. The stockholders of almost all of the largest
corporations in America currently elect their directors by
plurality vote, and the rules governing plurality voting are
well understood. Had the proposed standard been in effect in
past years, it would not have changed the outcome of any of our
director elections since eBay has been a public
company, each director nominee has received the affirmative vote
of more than 95% of the shares voted through the plurality
process.
eBay remains open to the possibility of amending its director
election procedures to provide for a majority voting standard if
a consensus emerges on the best corporate governance practice in
this area. We look forward to reviewing the reports of the
proponents working group and the ABA task force on this
issue, but we do not believe that eBay and its stockholders are
best served by adopting a change prematurely.
22
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, 2005.
|
|
|
|
|
|
|
Name |
|
Age | |
|
Position |
|
|
| |
|
|
Margaret C. Whitman
|
|
|
48 |
|
|
President and Chief Executive Officer |
Elizabeth L. Axelrod
|
|
|
43 |
|
|
Senior Vice President, Human Resources |
Matthew J. Bannick
|
|
|
40 |
|
|
President, eBay International |
William C. Cobb
|
|
|
48 |
|
|
President, eBay North America |
John Donahoe
|
|
|
44 |
|
|
President, eBay Business Unit |
Rajiv Dutta
|
|
|
43 |
|
|
Senior Vice President and Chief Financial Officer |
Henry Gomez
|
|
|
41 |
|
|
Senior Vice President, Corporate Communications &
Government Relations |
Michael R. Jacobson
|
|
|
50 |
|
|
Senior Vice President Legal Affairs, General Counsel and
Secretary |
Jeffrey D. Jordan
|
|
|
46 |
|
|
President, PayPal |
Eskander E. Kazim
|
|
|
39 |
|
|
Senior Vice President, New Ventures |
Lynn M. Reedy
|
|
|
49 |
|
|
Senior Vice President, Product, Development and Architecture |
Scott Thompson
|
|
|
47 |
|
|
Senior Vice President, Chief Technology Officer, PayPal |
Maynard G. Webb, Jr.
|
|
|
49 |
|
|
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. 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 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.
23
Rajiv Dutta serves eBay as Senior Vice President and
Chief Financial Officer. He has served in that capacity since
January 2001. 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 also serves on the board of
directors of Jamadat Mobile Inc., a global publisher of wireless
entertainment applications. 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.
Henry Gomez serves eBay as Senior Vice President,
Corporate Communications and Government Relations. He has served
in that capacity since March 2005. From November 2004 to March
2005, Mr. Gomez served as eBays Vice President,
Corporate Communications and Government Relations. From March
2000 to November 2004, Mr. Gomez served as eBays Vice
President, Corporate Communications. From 1993 to March 2000,
Mr. Gomez served in various capacities for Home
Box Office (HBO), a premium television network, including
most recently as Vice President, Corporate Affairs.
Mr. Gomez also serves as chairman of the eBay Foundation, a
non-profit organization. Mr. Gomez holds a B.A. degree in
Political Science from Boston College.
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.
Eskander E. Kazim serves eBay as Senior Vice President,
New Ventures. He has served in that capacity since December
2004. From October 2002 to December 2004, Mr. Kazim served
as PayPals Vice President of Marketing and Business
Operations. From March 2002 to October 2002, Mr. Kazim
served as eBays Vice President, eBay Payments. From
November 2000 to March 2002, Mr. Kazim served as
eBays Vice President of eBays Platform Solutions
Group. From August 1998 to November 2000, Mr. Kazim served
as eBays Director of Engineering. Mr. Kazim holds a
B.S. degree in Mechanical Engineering from Rice University.
Lynn M. Reedy serves eBay as Senior Vice President,
Product, Development and Architecture. She has served in that
capacity since June 2003. From February 2003 to May 2003,
Ms. Reedy served as eBays Vice President, Product,
Development and Architecture. From March 2002 to January 2003,
Ms. Reedy served as eBays Vice President, Product.
From November 1999 to February 2002, Ms. Reedy served as
eBays Vice President, Product Development. From March 1993
to October 1999, Ms. Reedy was Senior Vice President and
Chief Information Officer at Miller Freeman, Inc. Ms. Reedy
holds a B.S. degree from the University of Illinois and an
M.B.A. from Santa Clara University.
Scott Thompson serves eBay as Senior Vice President,
Chief Technology Officer, PayPal. He has served in that capacity
since February 2005. From September 2001 to February 2005,
Mr. Thompson served as Executive Vice President of
Technology Solutions at Inovant, LLC, a subsidiary of Visa USA.
From 1998 to September 2001, Mr. Thompson was Chief
Information Officer and Executive Vice President of
Technology & Support Services for Visa USA.
Mr. Thompson holds a B.S. degree in Accounting from
Stonehill College.
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 Peribit
Networks, a networking company. Mr. Webb holds a B.A.A.
degree from Florida Atlantic University.
24
Executive
Compensation
Summary of
Compensation
The following table shows certain compensation earned during the
fiscal years ended December 31, 2002, 2003 and 2004, 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, 2004.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term and | |
|
|
|
|
|
|
|
|
|
|
Other Compensation | |
|
|
|
|
|
|
| |
|
|
|
|
Annual Compensation | |
|
Number of | |
|
|
|
|
|
|
| |
|
Securities | |
|
|
Name and |
|
Fiscal | |
|
|
|
Other Annual | |
|
Underlying | |
|
All Other | |
2004 Principal Positions |
|
Year | |
|
Salary(1) | |
|
Bonus(2) | |
|
Compensation(3) | |
|
Options(4) | |
|
Compensation(5) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Margaret C. Whitman
|
|
|
2004 |
|
|
$ |
994,052 |
|
|
$ |
1,553,480 |
(6) |
|
$ |
357,535 |
|
|
|
1,200,000 |
|
|
$ |
3,164 |
|
|
President and |
|
|
2003 |
|
|
|
843,823 |
|
|
|
1,159,132 |
(6) |
|
|
377,496 |
|
|
|
2,200,000 |
|
|
|
3,164 |
|
|
Chief Executive Officer |
|
|
2002 |
|
|
|
250,008 |
|
|
|
329,698 |
(6) |
|
|
336,654 |
|
|
|
1,200,000 |
|
|
|
1,980 |
|
Maynard G. Webb, Jr.
|
|
|
2004 |
|
|
|
620,203 |
|
|
|
1,880,279 |
(7) |
|
|
35,335 |
|
|
|
650,000 |
|
|
|
1,009 |
|
|
Chief Operating Officer |
|
|
2003 |
|
|
|
582,007 |
|
|
|
1,266,601 |
(7) |
|
|
|
|
|
|
1,100,000 |
|
|
|
1,009 |
|
|
|
|
|
2002 |
|
|
|
531,250 |
|
|
|
837,154 |
(7) |
|
|
|
|
|
|
600,000 |
|
|
|
1,104 |
|
Jeffrey D. Jordan
|
|
|
2004 |
|
|
|
494,284 |
|
|
|
937,038 |
(8) |
|
|
|
|
|
|
440,000 |
|
|
|
2,290 |
|
|
President, PayPal |
|
|
2003 |
|
|
|
439,345 |
|
|
|
858,793 |
(8) |
|
|
|
|
|
|
600,000 |
|
|
|
790 |
|
|
|
|
|
2002 |
|
|
|
345,102 |
|
|
|
739,762 |
(8) |
|
|
|
|
|
|
540,000 |
|
|
|
672 |
|
Matthew J. Bannick
|
|
|
2004 |
|
|
|
474,258 |
|
|
|
944,950 |
(9) |
|
|
|
|
|
|
440,000 |
|
|
|
2,257 |
|
|
President, |
|
|
2003 |
|
|
|
423,084 |
|
|
|
596,264 |
(9) |
|
|
|
|
|
|
600,000 |
|
|
|
2,257 |
|
|
eBay International |
|
|
2002 |
|
|
|
334,086 |
|
|
|
472,540 |
(9) |
|
|
15,987 |
|
|
|
560,000 |
|
|
|
2,173 |
|
William C. Cobb
|
|
|
2004 |
|
|
|
419,674 |
|
|
|
1,026,146 |
(10) |
|
|
10,796 |
|
|
|
300,000 |
|
|
|
2,173 |
|
|
President, |
|
|
2003 |
|
|
|
382,519 |
|
|
|
368,899 |
(10) |
|
|
|
|
|
|
500,000 |
|
|
|
2,173 |
|
|
eBay North America |
|
|
2002 |
|
|
|
312,185 |
|
|
|
240,390 |
(10) |
|
|
|
|
|
|
500,000 |
|
|
|
2,173 |
|
|
|
|
|
(1) |
Effective March 1, 2004, all eligible employees of eBay,
including certain of the Named Executive Officers, received an
annual salary increase representing: (i) in the case of
Ms. Whitman, a salary of $995,016 per annum;
(ii) in the case of Mr. Webb, a salary of
$625,008 per annum; (iii) in the case of
Mr. Jordan, a salary of $500,016 per annum;
(iv) in the case of Mr. Bannick, a salary of
$480,000 per annum; and (v) in the case of
Mr. Cobb, a salary of $415,008 per annum. In addition,
Mr. Cobb received a salary increase to $450,000 per
annum effective October 1, 2004. Total salary amounts
reported are lower than these annual salaries because lower
salaries were in effect for portions of 2004. |
|
|
(2) |
All 2004 bonuses represent amounts paid in 2004 and 2005 for
services rendered in 2004, all 2003 bonuses represent amounts
paid in 2003 and 2004 for services rendered in 2003, and all
2002 bonuses represent amounts paid in 2002 and 2003 for
services rendered in 2002. |
|
|
(3) |
Represents: (i) in the case of Ms. Whitman for 2004,
personal use of eBays corporate aircraft, valued at the
incremental cost of such use to the company ($229,145), and an
additional $128,390 bonus granted by the Compensation Committee
in 2005 to cover any income taxes relating to such aircraft use;
(ii) in the case of Ms. Whitman for 2003, personal use
of eBays corporate aircraft, valued at the incremental
cost of such use to the company ($307,496), and an additional
$70,000 bonus granted by the Compensation Committee in 2004 to
cover any income taxes relating to such aircraft use;
(iii) in the case of Ms. Whitman for 2002, her
personal use of eBays corporate aircraft ($171,693),
valued at the incremental cost of such use to the company, and
of a corporate aircraft from an unaffiliated third-party vendor,
which is valued at actual invoiced amounts ($74,961); and an
additional $90,000 bonus granted by the Compensation Committee
in 2003 to cover any income taxes relating to such aircraft use;
(iv) in the case of Mr. Webb for 2004, personal use of
eBays corporate aircraft, valued at the incremental cost
of such use to the company ($28,070), and an additional $7,265
bonus granted by the Compensation Committee in 2005 to cover any
income taxes relating to such aircraft use; (v) in the case
of Mr. Bannick for 2002, costs associated with family
transportation while |
25
|
|
|
|
|
Mr. Bannick worked out of our European offices during the
summer of 2002; and (vi) in the case of Mr. Cobb for
2004, personal use of eBays corporate aircraft, valued at
the incremental cost of such use to the company. |
|
|
|
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.
Beginning in 2004, eBay calculated the value of the personal use
of its corporate aircraft by estimating the incremental cost to
the company of such use. The calculation of incremental cost is
based on the weighted average cost of fuel, maintenance
expenses, parts and supplies, landing fees, ground services,
catering and crew expenses associated with such use. Had eBay
used the IRSs SIFL tables to calculate the value of the
personal use of its corporate aircraft by Ms. Whitman,
Mr. Webb, and Mr. Cobb in 2004, such use would have
been valued at $154,267, $13,050, and $7,070, respectively.
Because eBay has determined that this 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 and 2002. Prior
annual reports and proxy statements reflected the value of
Ms. Whitmans personal use of corporate aircraft in
2003 and 2002 using the SIFL calculation method, and valued such
use at $115,857 and $58,101, respectively. |
|
|
|
|
(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, in the case of each of the Named Executive Officers,
insurance premiums we paid with respect to group life insurance
for their benefit and matching contributions under our 401(k)
Plan (subject to the maximum of $1,500 per annum). |
|
|
(6) |
Represents amounts paid to Ms. Whitman under eBays
Management Incentive Plan. |
|
|
(7) |
Represents (i) for 2004, $726,279 paid under eBays
Management Incentive Plan and $1,154,000 paid under
Mr. Webbs special retention plan; (ii) for 2003,
$620,501 paid under eBays Management Incentive Plan and
$646,100 paid under Mr. Webbs special retention plan;
and (iii) for 2002, $387,254 paid under eBays
Management Incentive Plan and $449,900 paid under
Mr. Webbs special retention plan. See Certain
Relationships and Related Transactions, below |
|
|
(8) |
Represents (i) for 2004, $462,948 for 2004 paid under
eBays Management Incentive Plan, $472,025 under
Mr. Jordans special retention plans and an additional
$2,065 bonus granted by the Compensation Committee in 2005;
(ii) for 2003, $361,505 for 2003 paid under eBays
Management Incentive Plan and $497,288 under
Mr. Jordans special retention plans; and
(iii) for 2002, $202,212 paid under eBays Management
Incentive Plan, $522,550 paid under Mr. Jordans
special retention plans and $15,000 paid pursuant to our
discretionary reward program. See Certain Relationships
and Related Transactions, below. |
|
|
(9) |
Represents (i) for 2004, $444,950 paid under eBays
Management Incentive Plan, and $500,000 paid under
Mr. Bannicks special retention plan; (ii) for
2003, $346,264 paid under eBays Management Incentive Plan,
and $250,000 paid under Mr. Bannicks special
retention plan; and (iii) for 2002, $207,540 paid under
eBays Management Incentive Plan, $250,000 paid under
Mr. Bannicks special retention plan and $15,000 paid
pursuant to our discretionary reward program. See Certain
Relationships and Related Transactions, below. |
|
|
(10) |
Represents (i) for 2004, $392,211 paid under eBays
Management Incentive Plan, $350,000 paid under
Mr. Cobbs special retention plans, a performance
bonus of $280,000 granted by the Compensation Committee in 2004,
and an additional $3,935 bonus granted by the Compensation
Committee in 2005; (ii) for 2003, $298,899 paid under
eBays Management Incentive Plan, and $70,000 paid under
Mr. Cobbs special retention plan; and (iii) for
2002, $170,390 paid under eBays Management Incentive Plan
and $70,000 paid under Mr. Cobbs special retention
plan. See Certain Relationships and Related
Transactions, below. |
26
The following executive officers received grants of options in
2004 under eBays 2001s Equity Incentive Plan, which
we also refer to as the 2001 Plan.
Option Grants During
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable | |
|
|
|
|
|
|
|
|
|
|
Value at Assumed | |
|
|
Number of | |
|
Percentage of | |
|
|
|
|
|
Annual Rates of Stock | |
|
|
Securities | |
|
Total Options | |
|
|
|
|
|
Price Appreciation for | |
|
|
Underlying | |
|
Granted to | |
|
Exercise | |
|
|
|
Option Term(4) | |
|
|
Options | |
|
Employees | |
|
Price Per | |
|
Expiration | |
|
| |
Name |
|
Granted(1) | |
|
during 2004(2) | |
|
Share(3) | |
|
Date | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Margaret C. Whitman
|
|
|
1,200,000 |
|
|
|
2.8 |
% |
|
$ |
34.62 |
|
|
|
3/1/14 |
|
|
$ |
26,123,025 |
|
|
$ |
66,200,874 |
|
Maynard G. Webb, Jr
|
|
|
650,000 |
|
|
|
1.5 |
|
|
|
34.62 |
|
|
|
3/1/14 |
|
|
|
14,149,972 |
|
|
|
35,858,807 |
|
Jeffrey D. Jordan
|
|
|
440,000 |
|
|
|
1.0 |
|
|
|
34.62 |
|
|
|
3/1/14 |
|
|
|
9,578,443 |
|
|
|
24,273,654 |
|
Matthew J. Bannick
|
|
|
440,000 |
|
|
|
1.0 |
|
|
|
34.62 |
|
|
|
3/1/14 |
|
|
|
9,578,443 |
|
|
|
24,273,654 |
|
William C. Cobb
|
|
|
300,000 |
|
|
|
0.7 |
|
|
|
34.62 |
|
|
|
3/1/14 |
|
|
|
6,530,756 |
|
|
|
16,550,219 |
|
|
|
(1) |
Options granted in 2004 were granted under the 2001 Plan. All
options granted in 2004 to the Named Executive Officers were
granted by our Board, are nonqualified stock options and are
subject to a four-year vesting schedule, vesting 12.5% after six
months and 1/48 per month thereafter. Amounts have been
adjusted to reflect the two-for-one stock split effective on
February 16, 2005. |
|
(2) |
Based on options to purchase 42,964,094 shares of our
common stock granted to employees in 2004. |
|
(3) |
Options were granted at an exercise price equal to the fair
market value of our common stock, as determined by the Board of
Directors on the date of grant. The exercise prices per share
listed in the table above are rounded to the nearest cent. The
exercise per share has been adjusted to reflect the two-for-one
stock split effective on February 16, 2005. |
|
(4) |
Reflects the value of the stock option on the date of grant
assuming (i) for the 5% column, a 5% annual rate of
appreciation in our common stock over the ten-year term of the
option and (ii) for the 10% column, a 10% annual rate of
appreciation in our common stock over the ten-year term of the
option, in each case without discounting to net present value
and before income taxes associated with the exercise. The 5% and
10% assumed rates of appreciation are based on the rules of the
SEC and do not represent our estimate or projection of the
future common stock price. The amounts in this table may not
necessarily be achieved. |
27
The following table sets forth the number of shares acquired and
the value realized upon exercise of stock options during 2004
and the number of shares of our common stock subject to
exercisable and unexercisable stock options held as of
December 31, 2004, 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, 2004, which was $58.17.
Aggregate Option Exercises in 2004 and Values at
December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
Underlying |
|
Value of Unexercised |
|
|
Shares |
|
|
|
Unexercised Options |
|
In-The-Money Options(3) |
|
|
Acquired on |
|
Value |
|
|
|
|
Name |
|
Exercise(1) |
|
Realized(2) |
|
Exercisable(#) |
|
Unexercisable(#) |
|
Exercisable($) |
|
Unexercisable($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Margaret C. Whitman
|
|
|
|
|
|
$ |
|
|
|
|
4,162,500 |
|
|
|
3,437,500 |
|
|
$ |
179,531,119 |
|
|
$ |
125,116,931 |
|
Maynard G. Webb, Jr.
|
|
|
1,400,000 |
|
|
|
43,896,366 |
|
|
|
1,188,124 |
|
|
|
1,321,876 |
|
|
|
47,708,954 |
|
|
|
44,076,742 |
|
Jeffrey D. Jordan
|
|
|
800,000 |
|
|
|
22,358,985 |
|
|
|
1,268,368 |
|
|
|
852,500 |
|
|
|
51,442,810 |
|
|
|
28,386,063 |
|
Matthew J. Bannick
|
|
|
791,660 |
|
|
|
17,813,071 |
|
|
|
298,334 |
|
|
|
858,334 |
|
|
|
10,427,623 |
|
|
|
28,640,760 |
|
William C. Cobb
|
|
|
466,000 |
|
|
|
14,259,643 |
|
|
|
633,166 |
|
|
|
670,834 |
|
|
|
25,564,447 |
|
|
|
23,015,857 |
|
|
|
(1) |
Amounts have been adjusted to reflect the two-for-one stock
split effective on February 16, 2005. |
|
(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 officer. |
|
(3) |
Calculated using the fair market value of our common stock on
December 31, 2004 ($58.17), as adjusted to reflect the
two-for-one stock split effective February 16, 2005, less
the exercise price of the option. |
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, 2004, 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 or rights are
outstanding under any of the foregoing plans.
As of April 1, 2005, there were 1,348,840,742 shares
of eBays common stock outstanding. As of April 1,
2005, there were (i) 144,172,474 shares to be issued
upon the exercise of outstanding options or awards under our
Equity Compensation Plans at a weighted average exercise price
of $26.38, and with a weighted average remaining life of
8.00 years, and (ii) 140,000 shares of restricted
stock granted under our Equity Compensation Plans. As of
April 1, 2005, there were 99,556,806 shares available
for future grants under our Equity Compensation Plans.
28
The following table gives information about our Equity
Compensation Plans as of December 31, 2004:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
134,119,868 |
|
|
$ |
24.08 |
|
|
|
122,712,098 |
(1) |
Equity compensation plans not approved by securityholders
|
|
|
1,690,000 |
(2)(3)(4)(5)(6) |
|
|
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
135,809,868 |
|
|
$ |
23.79 |
|
|
|
122,712,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes 5,987,748 shares of our common stock remaining
available for future issuance under our 1998 Employee Stock
Purchase Plan, as amended, or the ESPP, as of December 31,
2004. Our ESPP contains an evergreen provision that
automatically increases, on each January 1, the number of
securities available for issuance under the ESPP by the number
of shares purchased under the ESPP in the preceding calendar
year. An aggregate amount of 1,212,252 shares was purchased
under the ESPP in 2004. None of our other plans has an
evergreen provision. |
|
(2) |
Does not include 396 shares of our common stock, with a
weighted average exercise price of $0.27 per share, to be
issued upon exercise of outstanding options assumed by us under
the Billpoint, Inc. 1999 Stock Option Plan, or the Billpoint
Plan, in connection with our acquisition of Billpoint in 1999,
as we cannot make subsequent grants or awards of our equity
securities under the Billpoint Plan. Prior to our acquisition of
Billpoint, the stockholders of Billpoint approved the Billpoint
Plan. Our stockholders, however, did not approve the Billpoint
Plan in connection with our acquisition of Billpoint. |
|
(3) |
Does not include 26,884 shares of our common stock, with a
weighted average exercise price of $9.53 per share, to be
issued upon exercise of outstanding options assumed by us under
the Half.com, Inc. 1999 Equity Compensation Plan, or the
Half.com Plan, in connection with our acquisition of Half.com in
2000, as we cannot make subsequent grants or awards of our
equity securities under the Half.com Plan. Prior to our
acquisition of Half.com, the stockholders of Half.com approved
the Half.com Plan. Our stockholders, however, did not approve
the Half.com Plan in connection with our acquisition of Half.com. |
|
(4) |
Does not include 780 shares of our common stock, with a
weighted average exercise price of $0.19 per share, to be
issued upon exercise of outstanding options assumed by us under
the Confinity, Inc. 1999 Stock Plan, or the Confinity Plan, in
connection with our acquisition of PayPal in October 2002, as we
cannot make subsequent grants or awards of our equity securities
under the Confinity Plan. The Confinity Plan was assumed by
PayPal in connection with its merger with Confinity in 2000.
Prior to our acquisition of PayPal and PayPals merger with
Confinity, the stockholders of Confinity approved the Confinity
Plan. Our stockholders, however, did not approve the Confinity
Plan in connection with our acquisition of PayPal. |
|
(5) |
Does not include 165,994 shares of our common stock, with a
weighted average exercise price of $0.76 per share, to be
issued upon exercise of outstanding options assumed by us under
the X.com Corporation 1999 Stock Plan, or the X.com Plan, in
connection with our acquisition of PayPal in October 2002, as we
cannot make subsequent grants or awards of our equity securities
under the X.com Plan. Prior to our acquisition of PayPal, the
stockholders of PayPal approved the X.com Plan. Our
stockholders, however, did not approve the X.com Plan in
connection with our acquisition of PayPal. |
|
(6) |
Does not include 1,234,440 shares of our common stock, with
a weighted average exercise price of $8.95 per share, to be
issued upon exercise of outstanding options assumed by us under
the PayPal, Inc. 2001 Equity Incentive Plan, or the PayPal Plan,
in connection with our acquisition of PayPal in October 2002, as
we cannot make subsequent grants or awards of our equity
securities under the PayPal Plan. Prior to our acquisition of
PayPal, the stockholders of PayPal approved the PayPal Plan. Our
stockholders, however, did not approve the PayPal Plan in
connection with our acquisition of PayPal. |
The only outstanding Non-Plan Grant as of December 31, 2004
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
29
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
and exercised options to purchase an additional
1,430,000 shares during 2003. As of December 31, 2004,
options to purchase 1,690,000 shares remained
outstanding under the Non-Plan Grant.
Employment Agreements, Change-in-Control Arrangements, and
Retention Bonus Plans
We do not have long-term employment agreements or
change-in-control arrangements with any of our executive
officers, nor are any of our executive officers covered by any
pension plan or deferred compensation plan. We do not have any
severance payment arrangements with any of our executive
officers, except that 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 received additional salary compensation for the
lesser of six months or commencement of other employment.
Certain Relationships and Related Transactions,
below, contains descriptions of the special retention bonus
plans that we have entered into with certain of our executive
officers.
Compensation of Directors
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 of the Board 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.
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. Each
non-employee director also receives meeting fees of $2,000 for
each Board meeting and $1,000 for each committee meeting. During
2004, in connection with travel to Board meetings, the company
purchased commercial airfare for the spouses of
Mr. Anderson and Mr. Schlosberg valued at
approximately $8,800 and $7,300, respectively.
Mr. Omidyar, eBays founder and the Chairman of its
Board of Directors, does not receive compensation for his
service on the Board of Directors.
30
Report of the Compensation Committee of the Board of
Directors
on Executive
Compensation(1)
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
compensation elements currently composed of base salary, cash
bonus and stock options.
eBays pay positioning strategy is to target total annual
cash (i.e., base salary and short-term incentives) of the
executive group as a whole at median competitive levels. eBay
also adds benefits and perquisites to salary and bonus in order
to evaluate the companys positioning of total annual
compensation relative to the competitive market.
The positioning of eBays long-term incentive awards
reflect eBays growth, stage of development, compensation
strategy and performance alignment as well as the financial and
market performance of the company in the preceding year. Based
on these factors, the Committee has concluded that stock options
continue to be the optimal long term incentive award for the
company at this time. 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,
target long-term incentive values will be positioned at the 50th
percentile of the market. If eBays performance is high,
target long-term incentive values could be positioned as high as
the 75th percentile of the market. If eBays performance is
low, target long-term incentive values could be positioned as
low as the 25th percentile of the market.
The Committee retains 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, the consultant provides competitive data for each
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 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 2004, 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, 2004. We set the base
salaries of our executive officers (other than our CEO) in a
range from $335,016 to $625,008. As reported last year in the
companys proxy statement for eBays 2004 Annual
Meeting, Meg Whitmans salary was increased from $990,000
to $995,016 effective March 1, 2004.
Bonus. In 2004, payments made through eBays bonus
plan were variable and designed to reward participants quarterly
based on Company financial and individual performance. The
management incentive plan, or MIP, for our officers
(including our executive officers) provides for
(i) quarterly bonuses based upon financial targets set by
our Committee for each quarter and on achievement of quarterly
individual goals, so long as minimum financial performance
thresholds have been met and (ii) an annual bonus based
solely on attainment of annual financial targets. The financial
performance measures for the plan in 2004 were pro-forma net
income and net revenue. The Committee believes these goals are
the strongest drivers of long-term value for the company.
In 2004, 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 2004 bonus target was based on quarterly performance
(12.5% per quarter) and 50% was based on annual
performance. Quarterly
(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.
31
bonus payments were based on attainment of financial and
individual goals and the annual payment was based solely on
attainment of financial goals. Total annual target bonus amounts
for the named executive officers (other than the CEO) were 60%
to 75% of base salary, depending upon position. The target bonus
amount for our CEO was 100%.
In 2004, eBay exceeded financial targets for every quarter
except the fourth quarter, which contributed, along with
individual performance, to quarterly bonus payments for eBay
executives ranging from 0% to 160% of quarterly target
opportunity. Based on eBays 2004 performance, the annual
component for all executives, including the CEO, was paid out at
200%.
In 2004, payments were made to several executives in accordance
with the terms of the special retention plans and other bonus
plans established for these officers in prior years. The
individual payments made are shown in the Summary Compensation
Table and explained under the heading Certain
Relationships and Related Transactions.
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. 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. 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.
As described above, the targeted positioning for the value of
eBays long term incentives would be the
50th percentile of the market for average performance, up
to 75th percentile for high performance, and as low as
25th percentile for low performance. Given eBays
superior performance in 2003, long-term incentive values for
2004 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 performance in 2004, the Committee
approved 75th percentile positioning of long-term incentive
values for 2005, subject to the dilution objective described
below.
In 2004, eBay engaged an independent consulting firm 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 2005 through 2006. This study
indicated a downward trend in annual gross dilution in the
competitive market. As a result, the Committee adopted a gross
dilution rate of 2.5% for employee stock option grants during
2005, including grants to existing employees and grants
associated with anticipated growth in eBays employee base.
The 2.5% dilution level for 2005 is down from approximately 4%
in 2004. The Company believes that the current 2.5% gross
dilution rate target is consistent with current market
conditions.
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 non-officers to a Non-Officer Stock Option Grant Committee
consisting of Ms. Whitman.
CEO Compensation. 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 2004 other than the fourth
quarter. Accordingly, taking financial and individual
performance into account, Ms. Whitman received an aggregate
annual bonus of 156% 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 $128,390 to
cover any income taxes relating to personal use of the
companys aircraft during the year.
As previously reported, during the first quarter of 2004, the
Committee considered Ms. Whitmans compensation for
2004. The Committee determined it would be appropriate to apply
similar criteria to Ms. Whitman as it applied to other
executive officers. Accordingly, it increased
Ms. Whitmans salary from $990,000 to $995,016,
effective March 1, 2004. Ms. Whitmans bonus
target was maintained at 100%. In March 2004, Ms. Whitman
was also granted an option to
purchase 1,200,000 shares, vesting over four years.
32
During the first quarter of 2005, the Committee considered
Ms. Whitmans compensation for 2005. To assist it in
its determination, it again received advice from its independent
compensation consultant. 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 maintained Ms. Whitmans
salary at $995,016, kept her bonus target at 100% and granted
her an option to purchase 550,000 shares, vesting over
four years. The options expire ten years from the date of grant.
Ms. Whitman does not have a change-in-control or severance
payment arrangements or any 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 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. If stockholder approval
is obtained for the eBay Incentive Plan, or eIP, the eIP will
satisfy the requirements of Section 162(m) for
performance-based compensation. As a result, the
companys stockholders are being asked to approve the eIP
(Proposal 2). This is the first year that eBay is asking
stockholders to approve the eIP. However, the plan that is
submitted for stockholder approval is almost identical to the
MIP that eBay has used in the past. 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).
In 2004, because the MIP did not satisfy Section 162(m)
requirements, a portion of the cash compensation of
Mr. Webb, Mr. Jordan, and Ms. Whitman was not
deductible.
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 |
|
|
Philippe Bourguignon |
|
Robert C. Kagle |
|
Thomas J. Tierney |
33
Compensation Committee
Interlocks and Insider Participation
The members of the Compensation Committee of our Board are
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.
Mr. Kagle, a member of our Compensation Committee, is a
member of the general partner of certain venture capital funds
that beneficially hold greater than a 10% equity interest in
Business.com, Inc. In late 2003, we entered into an advertising
and related services agreement with Business.com, Inc., under
which we incurred fees of approximately $80,000 in 2004 and
under which we currently expect to incur a similar amount of
fees in 2005. We believe this transaction was made on terms no
less favorable to us than we could have obtained from
unaffiliated third parties.
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Performance Measurement
Comparison(1)
The graph below shows the cumulative total stockholder return of
an investment of $100 (and the reinvestment of any dividends
thereafter) on December 31, 1999 in (i) our common
stock, (ii) the Nasdaq National Market Index,
(iii) the S&P 500 Index and (iv) the Goldman Sachs
Internet Index. We were added to the S&P 500 Index on
July 19, 2002. The Goldman Sachs Internet Index is a
modified-capitalization weighted index of 13 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.
(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.
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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.
In August 2000, Mr. Webb, our Chief Operating Officer,
entered into a four-year term loan with us at an interest rate
of 6.37% per annum, with 10%, 15%, 25% and 50% of principal
on the loan due on each of the first, second, third and fourth
anniversary of the loans issue date, respectively. The
principal amount on the loan was approximately $2,169,800, which
amount represented the principal and accrued interest due at the
end of a one-year term loan entered into in August 1999 between
Mr. Webb and us shortly after his relocation to
San Jose as a result of his joining eBay in 1999, and was
secured by Mr. Webbs principal place of residence. In
January 2001, we entered into a special retention bonus plan
with Mr. Webb, under which Mr. Webb received bonus
payments in August of 2001, 2002, 2003, and 2004. Payment
amounts under Mr. Webbs bonus plan are $355,200 for
2001, $449,900 for 2002, $646,100 for 2003 and $1,154,000 for
2004, and the terms of the bonus plan allowed those amounts to
be used to pay principal and interest owed to us under the terms
of his loan. In August 2001 and August 2002, in accordance with
the terms of his loan, Mr. Webb paid down $355,200 and
$449,900, respectively, of principal and accrued interest on the
loan. In January 2003, Mr. Webb prepaid in full the
principal and accrued interest on his loan in the amount of
approximately $1,670,800.
In May 2000, Mr. Jordan, our President, PayPal, entered
into two four-year term loans with us at an interest rate of
6.40% per annum, with principal and accrued interest
payable on each loan in equal installments on each anniversary.
The principal amounts on the loans were $1,000,000 and $900,000,
respectively, with the loan amounts secured by
Mr. Jordans principal place of residence. 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. Payment amounts
under this Mr. Jordans bonus plan were $314,000 for
2001, $298,000 for 2002, $282,000 for 2003, and $266,000 for
2004, and the terms of the bonus plan allowed those amounts to
pay principal and interest owed to us under the loans described
in this paragraph. In July 2000, Mr. Jordan repaid in full
the principal and accrued interest on the $900,000 term loan. In
addition, in April 2001, Mr. Jordan entered into a
four-year term loan with us at an interest rate of
4.94% per annum, with principal and accrued interest
payable in equal installments on each anniversary of this loan.
The principal amount on this loan was $750,000, with the loan
amount secured by Mr. Jordans principal place of
residence. 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,
and 2004 and remains eligible to receive a bonus payment in
April 2005 if he is then employed by us. Payment amounts under
this bonus plan with Mr. Jordan are $224,550 for 2002,
$215,288 for 2003, $206,025 for 2004, and $196,763 for 2005, and
the terms of the bonus plan allowed those amounts to be used to
pay principal and interest owed to us under the loans described
in this paragraph. In May 2001, May 2002, and May 2003,
Mr. Jordan paid down $314,000, $298,000 and $282,000,
respectively, of principal and accrued interest on his May 2000
loan. In April 2002 and April 2003, Mr. Jordan paid down
$224,550 and $215,288, respectively, of principal and accrued
interest on his April 2001 loan. In July 2003, Mr. Jordan
prepaid in full the principal and accrued interest on both the
May 2000 and April 2001 loans in the amounts of $252,762 and
$380,380, respectively.
In March 2001, in connection with his relocation to
San Jose as a result of his joining eBay in November 2000,
Mr. Cobb, our President, eBay North America, entered into a
four-year, non-interest bearing term loan with us in the amount
of $840,000. The loan to Mr. Cobb was secured by his
principal place of residence. Principal payments of $70,000 were
due on the first, second and third anniversary of his start
date, and a balloon payment of the remaining principal was due
on the fourth anniversary of his start date. In November 2000,
we entered into a special retention bonus plan with
Mr. Cobb under which Mr. Cobb received a $70,000 bonus
payment in November of 2001, 2002, 2003 and 2004. In April 2002,
we entered into a second special retention bonus plan with
Mr. Cobb under which Mr. Cobb received a $280,000
bonus payment in November 2004. The terms of the bonus plans
allowed these bonus payments to be used to pay principal
payments due under Mr. Cobbs loan. In each of
November 2001, 2002 and 2003, Mr. Cobb paid down $70,000 of
principal on his loan, and in November 2004 Mr. Cobb paid
the remaining $630,000 in principal on his loan.
Mr. Cobbs maximum indebtedness to eBay during 2004
was $630,000.
In September 2002, we entered into a special retention bonus
plan with Mr. Bannick. Under the terms of this bonus plan,
Mr. Bannick received a $250,000 bonus payment after the
closing of our acquisition of PayPal in October 2002 and upon
his acceptance of the new position as our Senior Vice President
and General Manager, Global Online Payments. In addition, the
terms of the bonus plan provided for three performance-based
bonus payments of up to $250,000 related primarily to the
integration and performance of our PayPal subsidiary, payable on
each of the nine months, 18 months, and 24 months
after the October 2002 closing of the PayPal acquisition.
Mr. Bannick received $250,000 payments in July 2003, April
2004 and October 2004.
Mr. Omidyar, our Founder and the Chairman of our Board of
Directors, 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.
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Another transaction is described under the caption
Compensation Committee Interlocks and Insider
Participation.
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,
2004, our directors, executive officers, and greater than 10%
stockholders complied with all applicable Section 16(a)
filing requirements, except that:
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one late Form 3 was filed by Douglas Jeffries, our
Principal Accounting Officer, on August 27, 2004 to report
Mr. Jeffries becoming a Section 16 reporting
individual as of August 5, 2004, and two late Form 4
reports were filed on August 27, 2004 to show purchases of
eBay stock made by Mr. Jeffries on August 10, 2004 and
August 12, 2004; and |
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one late Form 3 was filed by Eskander E. Kazim, our
Senior Vice President, New Ventures, on December 20, 2004
to report Mr. Kazim becoming a Section 16 reporting
individual as of December 7, 2004 and one late Form 4
report was filed on December 20, 2004 to report a stock
option granted to Mr. Kazim on December 10, 2004. |
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.
37
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.
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By Order of the Board of Directors |
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Michael R. Jacobson |
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Secretary |
May 16, 2005
Copies of this proxy statement and of our annual report for
the fiscal year ended December 31, 2004 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.
38
APPENDIX A
EBAY INCENTIVE PLAN
1. Purpose.
The eBay Incentive Plan is an element of eBays overall
compensation strategy to align employee compensation with
eBays business objectives, strategy, and performance. The
Plan is designed to reward eBays employees for delivering
measurable results. The purpose of the Plan is to align
compensation with quarterly and annual performance and to enable
eBay to attract, retain, and reward highly qualified individuals
who contribute to eBays success and motivate them to
enhance the value of the Company.
2. Definitions.
(a) Board means eBays Board
of Directors.
(b) Code means the Internal
Revenue Code of 1986, as amended, or the corresponding
provisions of any subsequent federal internal revenue law.
(c) Committee means the
Compensation Committee of eBays Board of Directors (and
any committee to which the Compensation Committee has delegated
its authority as set forth in Section 3(b) hereof); in any
event the Committee shall be comprised of not less than two
directors of the Company, each of whom shall qualify in all
respects as an outside director for purposes of
Section 162(m) of the Code.
(d) eBay or
Company means eBay Inc. or any
corporation or business entity of which eBay (i) directly
or indirectly has an ownership interest of 50% or more, or
(ii) has a right to elect or appoint 50% or more of the
board of directors or other governing body.
(e) Eligible Employee means all
active regular full-time and part-time employees who are
notified by the Company are eligible to participate in the Plan.
(f) Incentive Award means any
cash or equity incentive payment made under the Plan.
(g) Performance Period means the
period in which performance is measured for which Incentive
Awards are paid, as determined by the Committee.
(h) Plan means this plan, which
shall be known as the eBay Incentive Plan or eIP.
(i) Plan Year means the calendar
year.
(a) The Plan shall be administered by the Committee.
The Committee shall have full power and authority to:
(i) interpret, construe, and administer all
questions of policy and expediency pertaining to the Plan;
(ii) adopt such rules, regulations, agreements, and
instruments as it deems necessary for its proper administration;
(iii) select Eligible Employees to receive Incentive
Awards;
(iv) determine the terms of the Incentive Awards;
(v) determine the amounts subject to Incentive
Awards, including the exclusive right to establish, adjust, pay
or decline to pay the Incentive Award for each Eligible
Employee, provided that the exercise of such discretion shall
not have the effect of increasing the Incentive Award that is
payable;
(vi) determine whether Incentive Awards will be
granted in replacement of, or alternatives to, any other
incentive or compensation plan of eBay or an acquired business
unit;
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(vii) grant waivers of Plan or Incentive Award
conditions (including any waiver that would cause an Incentive
Award not to be deductible by the Company);
(viii) determine the form of payment of an Incentive
Award, which may be in cash, stock or other property as
determined by the Committee;
(ix) correct any defect, supply any omission, or
reconcile any inconsistency in the Plan, or any Incentive Award
or notice;
(x) take any and all actions it deems necessary or
advisable for the proper administration of the Plan;
(xi) adopt such Plan procedures, regulations,
subplans and the like as deemed necessary to enable Eligible
Employees to receive awards; and
(xii) amend the Plan at any time and from time to
time, provided that no amendment to the Plan shall be effective
unless approved by eBays stockholders to the extent that
such stockholder approval is required under Section 162(m)
of the Code with respect to Incentive Awards that are intended
to qualify under that Section.
(b) The Committee may delegate its authority to
grant and administer Incentive Awards to a separate committee;
however, only the Committee may grant and administer Incentive
Awards with are intended to qualify as performance-based
compensation under Section 162(m) of the Code.
4. Eligibility.
All active regular full-time and part-time employees who are
notified by the Company that they are eligible to participate in
the Plan are eligible to participate in the Plan. Except as
otherwise provided by the Committee, Participation begins
January 1 or the first full Performance Period of employment for
newly hired employees. Employees joining eBay via an acquisition
during the Plan Year will generally be eligible as of the first
full Performance Period of employment unless otherwise notified
by the Company. Employees who participate in other bonus
programs, such as any sales incentive plan, are not eligible to
participate in the Plan unless they are specifically made
eligible in writing by an executive officer of the Company. In
addition, the Company may, in its sole discretion, provide for a
payout under the Plan for any employee who has changed positions
and, as a result, may have been eligible to participate in the
Plan and another bonus program during a Performance Period.
5. Performance
Measures and Goals.
(a) The Compensation Committee shall establish
performance measures and goals applicable to a particular
Performance Period, provided that the outcome of the performance
goals are substantially uncertain at the time such goals are
established. Under ordinary circumstances, these performance
measures shall be established within 90 days of the
commencement of an annual Performance Period, or within the
period that is the first 25% of each quarter or other
Performance Period.
(b) Each performance measure applicable to a
Performance Period shall identify one or more of the following
criteria that are to be monitored for eBay or any business unit
during the Performance Period:
(i) trading volume;
(ii) users;
(iii) gross merchandise volume;
(iv) total payment volume;
(v) revenue;
(vi) operating income;
(vii) EBITDA;
(viii) net income;
(ix) earnings per share;
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(x) return on net assets;
(xi) return on gross assets;
(xii) return on equity;
(xiii) cash flow;
(xiv) net or operating margin;
(xv) economic profit;
(xvi) stock price appreciation;
(xvii) total stockholder return;
(xviii) employee productivity; and
(xix) customer satisfaction metrics.
The measures may be described in terms of growth, an absolute
number, or relative to an external group, and may be calculated
on a pro forma basis or in accordance with Generally Accepted
Accounting Principles. The Compensation Committee may set
Performance Periods and performance goals that differ among
Eligible Employees.
(c) The Committee may base performance measures and
goals on one or more of the foregoing business criteria.
6. Establishment
of Target Bonuses.
The Compensation Committee will designate those Eligible
Employees who are to be participants in the eIP for that year
and will specify the terms and conditions for the determination
and payment of an Incentive Award to each Eligible Employee. The
Compensation Committee may condition the payment of an Incentive
Award upon the satisfaction of such objective or subjective
standards as it deems appropriate. Under ordinary circumstances,
these performance measures shall be established within
90 days of the commencement of an annual Performance
Period, or within the period that is the first 25% of each
quarter or other Performance Period.
7. Incentive
Awards.
(a) Incentive Awards may be made on the basis of
eBay and/or business unit performance measures, goals, and
formulas determined by the Committee.
(b) No Eligible Employee may receive an Incentive
Award of more than $3,000,000 or an equivalent amount of equity
based on the fair market value of the Companys common
stock on the date of grant in any Plan Year.
(c) As soon as practicable after the end of each
Performance Period, the Compensation Committee will certify in
writing whether the stated performance goals have been met and
will determine the amount, if any, of the Incentive Award to be
paid to each Eligible Employee.
(d) In determining the Incentive Award, the
Compensation Committee will consider the target goals
established at the beginning of the Plan Year or applicable
Performance Period, the degree to which the established goals
were satisfied and any other objective or subjective factors it
deems appropriate. The Committee may reduce the amount of, or
eliminate altogether, any Incentive Award that would otherwise
be payable. Individuals who enter the eIP during the Plan Year
may have their awards prorated.
8. Payment
of Incentive Awards.
Subject to any election duly and validly made by an Eligible
Employee with respect to the deferral of all or a portion of his
or her Incentive Award, Incentive Awards shall be paid in cash
or equity pursuant to an eBay equity-based award plan under
which securities have been registered on Form S-8 at such
times and on such terms as are determined by the Committee in
its sole and absolute discretion.
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9. No
Right to Bonus or Continued Employment.
(a) Neither the establishment of the Plan, the
provision for or payment of any amounts hereunder nor any action
of the Company, the Board or the Committee with respect to the
Plan shall be held or construed to confer upon any person:
(i) any legal right to receive, or any interest in,
an Incentive Award or any other benefit under the Plan, or
(ii) any legal right to continue to serve as an
officer or employee of the Company or any subsidiary or
affiliate of the Company.
(b) The Company expressly reserves any and all
rights to discharge any Eligible Employee without incurring
liability to any person under the Plan or otherwise. Upon such
discharge and notwithstanding any other provision hereof and
regardless of whether or not specified performance goals have
been achieved or the amount of an Incentive Award has been
determined, the Company shall have no obligation to pay any
Incentive Award, unless the Committee otherwise expressly
provides by written contract or other written commitment.
10. Withholding.
The Company shall have the right to withhold, or require an
Eligible Employee to remit to the Company, an amount sufficient
to satisfy any applicable federal, state, local or foreign
withholding tax requirements imposed with respect to the payment
of any Incentive Award.
11. Nontransferability.
Except as expressly provided by the Committee, the rights and
benefits under the Plan are personal to an Eligible Employee and
shall not be subject to any voluntary or involuntary alienation,
assignment, pledge, transfer or other disposition.
12. Unfunded
Plan.
The Company shall have no obligation to reserve or otherwise
fund in advance any amounts that are or may in the future become
payable under the Plan. Any funds that the Company, acting in
its sole and absolute discretion, determines to reserve for
future payments under the Plan may be commingled with other
funds of the Company and need not in any way be segregated from
other assets or funds held by the Company. An Eligible
Employees rights to payment under the Plan shall be
limited to those of a general creditor of the Company.
13. Adoption,
Amendment, Suspension and Termination of the Plan.
(a) Subject to the approval of the Plan by the
holders of a majority of the Company common stock represented
and voting on the proposal at the annual meeting of Company
stockholders to be held on June 23, 2005 (or any
adjournment thereof), the Plan shall be effective for the fiscal
year of the Company commencing January 1, 2005 and shall
continue in effect until the fifth anniversary of the date of
such stockholder approval, unless earlier terminated as provided
below. Upon such approval of the Plan by the Companys
stockholders, all Incentive Awards awarded under the Plan on or
after January 1, 2005 shall be fully effective as if the
stockholders had approved the Plan on or before January 1,
2005.
(b) Subject to the limitations set forth in this
subsection, the Board may at any time suspend or terminate the
Plan and may amend it from time to time in such respects as the
Board may deem advisable; provided, however, that the Board
shall not amend the Plan in any of the following respects
without the approval of stockholders then sufficient to approve
the Plan in the first instance:
(i) To increase the maximum amount of Incentive
Award that may be paid under the Plan or otherwise materially
increase the benefits accruing to any Eligible Employee under
the Plan;
(ii) To materially modify the requirements as to
eligibility for participation in the Plan; or
(iii) To change the material terms of the stated
performance goals.
(c) No Incentive Award may be awarded during any
suspension or after termination of the Plan, and no amendment,
suspension or termination of the Plan shall, without the consent
of the person affected thereby, alter or impair any rights or
obligations under any Incentive Award previously awarded under
the Plan.
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14. Governing
Law.
The validity, interpretation and effect of the Plan, and the
rights of all persons hereunder, shall be governed by and
determined in accordance with the laws of Delaware without
regard to principles of conflict of laws.
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APPENDIX B
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
eBay Inc.
[Pursuant to Section 242 and 245 of the General Corporation
Law of the State of Delaware]
eBay Inc., a corporation organized and existing under the laws
of the State of Delaware, does hereby certify as follows:
1. The name of the corporation is eBay Inc. The date of the
filing of its original certification of incorporation with the
Secretary of State was March 13, 1998.
2. This amended and restated certificate of incorporation
amends, restates and integrates the certificate of incorporation
of said corporation and has been duly adopted in accordance with
the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware by the favorable vote
of the holders of a majority of the outstanding stock entitled
to vote thereon.
3. The text of the certificate of incorporation is hereby
amended and restated to read herein as set forth in full.
ARTICLE I
The name of the corporation is eBay Inc.
ARTICLE II
The address of the registered office of the corporation in the
State of Delaware is 9 East Loockerman Street, Suite 1B,
City of Dover 19901, County of Kent. The name of its registered
agent at that address is National Registered Agents, Inc.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the
corporation has the authority to issue is Three Billion Five
Hundred Ninety Million (3,590,000,000) shares, consisting
of two classes: Three Billion Five Hundred Eighty Million
(3,580,000,000) shares of Common Stock, $0.001 par
value per share, and Ten Million (10,000,000) shares of
Preferred Stock, $0.001 par value per share.
The Board of Directors is authorized, subject to any limitations
prescribed by the law of the State of Delaware, to provide for
the issuance of the shares of Preferred Stock in one or more
series, and, by filing a Certificate of Designation pursuant to
the applicable law of the State of Delaware, to establish from
time to time the number of shares to be included in each such
series, to fix the designation, powers, preferences and rights
of the shares of each such series and any qualifications,
limitations or restrictions thereof, and to increase or decrease
the number of shares of any such series (but not below the
number of shares of such series then outstanding). The number of
authorized shares of Preferred Stock may also be increased or
decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a
majority of the stock of the corporation entitled to vote,
unless a vote of any other holders is required pursuant to a
Certificate or Certificates establishing a series of Preferred
Stock.
Except as otherwise expressly provided in any Certificate of
Designation designating any series of Preferred Stock pursuant
to the foregoing provisions of this Article IV, any new
series of Preferred Stock may be designated, fixed and
determined as provided herein by the Board of Directors without
approval of the holders of Common Stock or the holders of
Preferred Stock, or any series thereof, and any such new series
may have powers, preferences and rights, including, without
limitation, voting rights, dividend rights, liquidation rights,
redemption rights and conversion rights, senior to, junior to or
pari passu with the rights of the Common Stock, the Preferred
Stock, or any future class or series of Preferred Stock or
Common Stock.
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ARTICLE V
The Board of Directors of the corporation shall have the power
to adopt, amend or repeal Bylaws of the corporation.
ARTICLE VI
A. Election of directors need not be by written ballot
unless the Bylaws of the corporation shall so provide.
B. The directors, other than those who may be elected by
the holders of Preferred Stock under specified circumstances,
shall be divided into three classes with the term of office of
the first class (Class I) to expire at the annual meeting
of the stockholders held in 1999; the term of office of the
second class (Class II) to expire at the annual meeting of
stockholders held in 2000; the term of office of the third class
(Class III) to expire at the annual meeting of stockholders
held in 2001; and thereafter for each such term to expire at
each third succeeding annual meeting of stockholders after such
election. All directors shall hold office until the expiration
of the term for which elected, and until their respective
successors are elected, except in the case of the death,
resignation, or removal of any director.
C. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting
from death, resignation or other cause may be filled (a) by
a majority of the directors, although less than a quorum, or
(b) by a sole remaining director, and directors so chosen
shall hold office for a term expiring at the next annual meeting
of stockholders at which the term of office of the class to
which they have been elected expires, and until their respective
successors are elected, except in the case of the death,
resignation, or removal of any director. No decrease in the
number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
D. Any action required or permitted to be taken by the
stockholders of the corporation must be effected at a duly
called annual or special meeting of stockholders of the
corporation and may not be effected by any consent in writing by
such stockholders.
E. Special meetings of stockholders of the corporation may
be called only by either the Board of Directors pursuant to a
resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies
in previously authorized directorships at the time any such
resolution is presented to the Board for adoption), the Chairman
of the Board or the Chief Executive Officer.
ARTICLE VII
A. To the fullest extent permitted by law, no director of
the corporation shall be personally liable for monetary damages
for breach of fiduciary duty as a director. Without limiting the
effect of the preceding sentence, if the Delaware General
Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then
the liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted by the
Delaware General Corporation Law, as so amended.
B. To the fullest extent permitted by applicable law, this
corporation is also authorized to provide indemnification of
(and advancement of expenses to) agents (and any other persons
to which Delaware law permits this corporation to provide
indemnification) through bylaw provisions, agreements with such
agents or other persons, vote of stockholders or disinterested
directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the
Delaware General Corporation Law, subject only to limits created
by applicable Delaware law (statutory or non-statutory), with
respect to actions for breach of duty to the corporation, its
stockholders, and others.
C. Neither any amendment nor repeal of this
Article VII, nor the adoption of any provision of this
Amended and Restated Certificate of Incorporation inconsistent
with this Article VII, shall eliminate, reduce or otherwise
adversely affect any limitation on the personal liability of a
director of the corporation existing at the time of such
amendment, repeal or adoption of such an inconsistent provision.
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In Witness
Whereof, this Amended and Restated Certificate of
Incorporation of eBay Inc. has been signed and attested as of
this day
of June, 2005.
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Margaret C. Whitman, |
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President and Chief Executive Officer |
Attest:
Michael R. Jacobson, Secretary
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eBay Inc.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 2005
The undersigned hereby appoints MARGARET C. WHITMAN, RAJIV DUTTA 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 23, 2005, at 8:00 a.m. Pacific time at the Silicon
Valley Conference Center, El Camino Room, 2161 N. First Street, San Jose, California 95131 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.
eBay Inc.
2145 HAMILTON AVE.
SAN JOSE, CA 95125
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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EBAY03
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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.
eBay Inc.
Vote on Directors
The Board of Directors recommends a vote FOR
the listed nominees.
1. |
Election of four directors to hold office until our 2008 Annual
Meeting of Stockholders.
Nominees: 01) Fred D. Anderson, 02) Edward W. Barnholt, 03) Scott D. Cook and
04) Robert C. Kagle |
Vote on Proposals
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The Board of Directors recommends a vote FOR Proposals 2, 3 and 4. |
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Against |
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Abstain |
2.
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To approve our eBay Incentive Plan in order to qualify it
under Section 162(m) of the Internal Revenue Code.
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3.
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To approve an amendment to our Certificate of
Incorporation to increase the authorized number of shares
of common stock from 1,790,000,000 to 3,580,000,000 shares.
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4.
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To ratify the selection of PricewaterhouseCoopers LLP
as our independent auditors for our fiscal year ending
December 31, 2005.
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For
All
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Withhold
All
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For All
Except
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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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The Board of Directors recommends a vote AGAINST Proposals 5 and 6. |
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Against |
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Abstain |
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5.
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Stockholder proposal regarding granting of
performance-vesting shares to senior executives.
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6.
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Stockholder proposal regarding the voting standard for
director elections.
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Yes
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No |
HOUSEHOLDING ELECTION Please indicate if you consent to
receive certain future investor communications in a single package
per household.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
Signature (Joint Owners) |
Date |