Exhibit 10.12(B)

 

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2017 Executive Incentive Plan

 

 

 

 

(March 2017)

 

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Yahoo 2017 Executive Incentive Plan

 

 

 

I. Introduction

A. Applicability

 

  1. The Employees eligible to participate in the Yahoo! Inc. 2017 Executive
Incentive Plan (the “Executive Incentive Plan” or this “Plan”) are Marissa A.
Mayer, Ken Goldman, David Filo, and Lisa Utzschneider, as well as any other
employee who is designated by the Board of Directors (the “Board”) of Yahoo!
Inc. (“Yahoo” or the “Company”) as an “Executive Officer” (as defined in Rule
3b-7 under the Securities Exchange Act of 1934 (the “Exchange Act”)) and
specifically designated as a Plan participant by the Plan administrator (the
“Plan Administrator,” and any such other employee a “New Participant”). Any
employee eligible to Participate in this Plan is referred to as a “Participant.”
The Plan Administrator shall be the Compensation and Leadership Development
Committee of the Board; provided however that following a Change in Control (as
defined below) the Plan Administrator will be such person or committee as the
Participants’ employer may select.

 

  2. The Plan Administrator reserves the right to amend, modify or terminate
this Plan, in whole or in part, at any time, in its sole discretion including,
without limitation, to comply with applicable local law, rules and regulations;
provided that any such amendment will be consistent with the intent that each
Participant’s bonus opportunity under this Plan qualify (except as otherwise
provided by Section III.E) as performance-based compensation under Section
162(m) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The
Plan Administrator may remove any individual from participation in this Plan at
any time. All exceptions, adjustments, additions, or modifications to this Plan
require the approval of the Plan Administrator.

B. Objectives of the Executive Incentive Plan

 

  •   To enhance the Company’s competitiveness and the Company’s ability to
attract, motivate and retain top talent;

 

  •   To recognize the role of senior leadership in the success of the Company;

 

  •   To reward annual financial and individual performance that complements the
Company’s longer-term strategic focus; and

 

  •   To encourage collaboration and teamwork across the Company.

II. Executive Incentive Plan Elements

A. Target Awards

A target cash bonus award (“Target Award”) has been established for each
Participant by the Plan Administrator. Target Awards are typically expressed as
a percentage of a Participant’s annual base salary rate as of the last day of
the applicable year, where such salary rate does not include other forms of
compensation (such as, without limitation, expense reimbursements,
superannuation, bonus payments, long-term incentives, overtime compensation, and
other variable compensation). Target Awards may also be a specified fixed dollar
(or local currency) amount. Target Awards may be reviewed and revised in the
sole discretion of the Plan Administrator. Notwithstanding the foregoing, the
Plan Administrator may determine that one or more Participants will not have a
Target Award.

 

 

(March 2017)

 

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Yahoo 2017 Executive Incentive Plan

 

 

 

This Plan and Target Awards do not constitute a guarantee of or entitlement to a
bonus payment. A Participant’s actual bonus payment may vary from his or her
Target Award.

B. Executive Incentive Plan Bonus Formula

Following the end of 2017, a “Company Performance Factor” (based on the
Company’s financial and operational performance during 2017) and an “Individual
Performance Factor” (evaluating the individual’s performance during the year)
will be determined by the Plan Administrator. A Participant’s Executive
Incentive Plan bonus for 2017, subject to the other terms and conditions of this
Plan, will equal the Participant’s Target Award for 2017 multiplied by the
Company Performance Factor and multiplied by the Participant’s Individual
Performance Factor; provided, however, that each Participant’s Plan bonus shall
not exceed 200 percent of his or her Target Award (or, as to any Participant for
whom the Plan Administrator did not establish a Target Award, the applicable
limits under Section II.C below).

The metrics used to determine the financial performance of the Company in
determining the Company Performance Factor will be the Company’s GAAP Revenue,
Revenue ex-TAC, Adjusted EBITDA, and TSR (each as defined below) for 2017. The
Plan Administrator will also assess (a) operational performance of the Company
in determining the Company Performance Factor, and (b) individual performance in
determining a Participant’s Individual Performance Factor.

 

  •   “Adjusted EBITDA” as to a particular year means the Company’s income from
operations before depreciation, amortization, restructuring charges (and
reversals), impairment charges, and stock-based compensation expense for such
year, as such items are determined by the Company and reflected in its reporting
of financial results.

 

  •   “GAAP” means U.S. generally accepted accounting principles.

 

  •   “GAAP Revenue” as to a particular year means the Company’s worldwide
revenue for such year, as determined by the Company in accordance with GAAP and
reflected in its reporting of financial results.

 

  •   “Revenue ex-TAC” as to a particular year means the Company’s worldwide
GAAP Revenue less TAC that has been recorded as a cost of revenue for such year,
as determined by the Company and reflected in its reporting of financial
results.

 

  •   “TAC” means traffic acquisition costs.

 

  •   “TSR” means total shareholder return with respect to the Company’s common
stock for the Performance Period and shall be determined by dividing: (a) the
sum of (i) the difference obtained by subtracting the Beginning Price from the
Ending Price plus (ii) all Dividends for which the ex-Dividend date occurs
during the Performance Period by (b) the Beginning Price. Such quotient shall be
rounded to the nearest one percent.

 

  •   “Performance Period” means the period commencing on January 1, 2017 and
ending on December 31, 2017.

 

 

(March 2017)

 

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Yahoo 2017 Executive Incentive Plan

 

 

 

 

  •   “Beginning Price” means the average of the closing market prices of the
Company’s common stock on the Nasdaq Global Select Market (“Nasdaq”) for the
twenty (20) consecutive trading days ending with the last trading day prior to
the Performance Period.

 

  •   “Ending Price” means the average of the closing market prices of the
common stock of the Company (or any successor thereto) on the Nasdaq (or, if
such common stock ceases trading on such market, the principal exchange on which
such stock is traded) for the twenty (20) consecutive trading days ending with
the last trading day of the Performance Period. In the event such common stock
goes ex-Dividend during such 20-day period, the closing market prices for the
portion of the 20-day period preceding the ex-Dividend date shall be equitably
adjusted to exclude the value of the related Dividend.

 

  •   “Dividend” means any normal cash dividend on the Company’s common stock
(i.e., a dividend that does not trigger an adjustment under section 15(a) of the
Stock Plan).

If during the Performance Period an equity award adjustment occurs pursuant to
Section 15(a) of the Stock Plan (in connection with an extraordinary cash
dividend, a dividend of stock or property (such as a spin-off), a stock split or
reverse stock split, or any other event contemplated therein), then the Plan
Administrator shall (to the extent necessary and without duplication) equitably
adjust the Beginning Price or the Ending Price in a manner consistent with such
15(a) adjustment in order to preserve (but not increase) the level of incentive
intended by this Plan.

GAAP Revenue, Revenue ex-TAC, and Adjusted EBITDA will be subject to the
adjustment provisions set forth in Section II.C.

Notwithstanding the foregoing provisions, the Plan Administrator retains
discretion (a) to reduce or eliminate the amount of any Executive Incentive Plan
bonus otherwise payable, or (b) subject to Section II.C to below, to increase
the amount of any Executive Incentive Plan bonus otherwise payable.

Any Executive Incentive Plan bonus payable to a Participant under this Plan
shall not be considered as “salary” in any circumstance and shall not be
included in calculations for overtime pay, retirement benefits, severance, or
any other benefits under any applicable plan, policy, agreement or applicable
law.

C. Bonus Limit

Subject to Sections II.D and III.E, each Participant’s Executive Incentive Plan
bonus for 2017 is (notwithstanding anything to the contrary above) subject to
the limitations of this Section C. The intent of this Section C is to structure
Executive Incentive Plan bonus opportunities to qualify as performance-based
compensation within the meaning of Section 162(m) of the Code
(“Section 162(m)”). Accordingly, this Plan will be construed and interpreted
consistent with that intent. The Participants’ Executive Incentive Plan bonus
opportunities are structured as performance-based awards under Appendix A to the
Yahoo! Inc. Stock Plan, as amended (the “Stock Plan”). Any determination
contemplated by this Plan for the applicable year will be made by the Plan
Administrator, and no Executive Incentive Plan bonus may be paid unless and
until the Plan Administrator certifies, by resolution or other appropriate
action in writing, that the bonus is not more than the Participant’s maximum
bonus determined pursuant to this Section C and that any other material terms
applicable to the bonus were in fact satisfied.

 

 

(March 2017)

 

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The maximum aggregate bonus pool for 2017 under this Plan will equal 3 percent
of Yahoo! Inc.’s Adjusted EBITDA for 2017 (the “Section 162(m) Bonus Pool
Limit”). The Plan Administrator established each Participant’s maximum Executive
Incentive Plan bonus for 2017 as follows (in each case expressed as a portion of
the Section 162(m) Bonus Pool Limit for that year): Marissa A.
Mayer—seven-fifteenths (7/15); Ken Goldman—two-fifteenths (2/15); David
Filo—two-fifteenths (2/15); and Lisa Utzschneider—two-fifteenths (2/15) (with
the remaining two-fifteenths (2/15) held in reserve for any potential new
Participant). (For example, if the Plan Administrator allocated two-fifteenths
of the Section 162(m) Bonus Pool Limit to a particular Participant, the
Participant’s maximum Executive Incentive Plan bonus will equal two-fifteenths
of 3 percent of Yahoo! Inc.’s Adjusted EBITDA, which is 0.4 percent of Yahoo’s
Adjusted EBITDA.) Notwithstanding the foregoing, in all cases each Participant’s
maximum Executive Incentive Plan bonus for 2017 will be subject to the limit of
Section A.3 of the Stock Plan and any other maximum bonus amount established by
the Plan Administrator for that Participant, in each case if lower than the
amount determined pursuant to this Section C. The Plan Administrator has
discretion to reduce (but not increase) the maximum amount of a Participant’s
bonus determined pursuant to this Section C. For purposes of clarity, if the
Plan Administrator exercises its discretion to reduce the maximum amount of any
Executive Incentive Plan bonus (or any Executive Incentive Plan bonus is
otherwise not paid at the maximum amount), the amount of the difference may not
be allocated to any other Participant.

Adjustment Provisions. When calculating GAAP Revenue, Revenue ex-TAC, and
Adjusted EBITDA for purposes of determining actual performance for 2017, the
Company’s actual GAAP Revenue, Revenue ex-TAC, and Adjusted EBITDA for such year
shall be adjusted (without duplication) for the following items to the extent
such items were not included in the Financial Plan for 2017:

 

  (a) increased or decreased to eliminate the financial statement impact of
acquisitions with a GAAP purchase price of $500 million or more and costs
associated with such acquisitions;

 

  (b) increased or decreased to eliminate the financial statement impact of
divestitures with a cumulative GAAP sale price of $500 million or more and costs
associated with such divestitures;

 

  (c) increased or decreased to eliminate the financial statement impact of any
new changes in accounting standards announced during the year that are required
to be applied during the year in accordance with GAAP;

 

  (d) increased or decreased to eliminate the financial statement impact of
legal settlements that have an impact on revenues or expenses under GAAP;

 

  (e) increased or decreased to eliminate the financial statement impact of any
changes in how the Company reports any portion of its GAAP revenue (i.e.,
whether on a gross or net (after TAC) basis) during the year; and

 

  (f) increased or decreased to eliminate the financial statement impact of
changes in foreign exchange rates (compared to the foreign exchange rates
incorporated in the Financial Plan).

“Financial Plan” for 2017 means the Company’s final financial plan for 2017
approved by the Board of Directors.

 

 

(March 2017)

 

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Yahoo 2017 Executive Incentive Plan

 

 

 

D. Change in Control

In the event of a Change in Control (as defined below) during 2017, the Company
Performance Factor of Section II.B shall cease to apply such that each
Participant’s Plan bonus for 2017 shall, subject to the other terms and
conditions of this Plan, equal the Participant’s Target Award for 2017
multiplied by the Participant’s Individual Performance Factor; provided,
however, that each Participant’s Plan bonus shall not exceed 200 percent of his
or her Target Award (or, as to any Participant for whom the Plan Administrator
did not establish a Target Award, the applicable limit under Section II.C) and
the limit of Section II.C shall continue to apply.

“Change in Control” means the first of the following events to occur after
March 6, 2017:

 

  (a) any person or group of persons (as defined in Section 13(d) and 14(d) of
the Exchange Act) together with its Affiliates (as defined below), but excluding
(1) the Company or any of its subsidiaries, (2) any employee benefit plans of
the Company or (3) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company (individually a “Person” and collectively,
“Persons”), is or becomes, directly or indirectly, the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act) of securities of the Company
representing 40% or more of the combined voting power of the Company’s then
outstanding securities (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Affiliates);

 

  (b) the consummation of a merger or consolidation of the Company or any direct
or indirect subsidiary of the Company with any other corporation or entity
regardless of which entity is the survivor, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity)
more than 50% of the combined voting power of the voting securities of the
Company, such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation; or

 

  (c) the stockholders of the Company approve a plan of complete liquidation or
winding-up of the Company; or

 

  (d) the consummation of a sale or disposition (whether directly or by merger
or other business combination) of all or substantially all of the assets of the
Company to a Person or Persons in one or a series of related transactions;
provided, however, that, for purposes of this paragraph (d), the assets of the
Company shall not include the Company’s direct and indirect equity interests in
Alibaba Group Holding Limited and Yahoo Japan Corporation.

“Affiliate” means, with respect to any individual or entity, any other
individual or entity who, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with, such
individual or entity.

 

 

(March 2017)

 

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Yahoo 2017 Executive Incentive Plan

 

 

 

III. TERMS AND CONDITIONS

A. Executive Incentive Plan Effective Period

This Plan covers the period from January 1, 2017 to December 31, 2017. This Plan
supersedes all previous executive cash incentive plans, management incentive
plans (MIP), Yahoo Incentive Plans for Excellence and Execution (YIPEE), Sales
Incentive Plans, or leadership bonus plans and agreements and all other previous
or contemporaneous oral or written statements by the Company on this subject as
to the Participants in this Plan.

B. Date for Incentive Payments

Executive Incentive Plan bonuses paid under this Plan are not earned until paid
and in all events remain subject to Section III.J. It is a condition for
Executive Incentive Plan eligibility that Participants must be employed, and to
the extent permitted by applicable law, not under notice of termination given by
the Company or the Participant (if applicable), on the payment date of the
Executive Incentive Plan bonuses (except as otherwise provided below in Section
G). Payment will not occur until after financial results for 2017 are determined
by the Company and the year end review process for 2017 is completed.

C. Form and Timing of Payment

If the conditions for payment described above are met, the Executive Incentive
Plan bonus will be payable in a lump sum cash payment (in local currency),
subject to required payroll deductions and tax withholdings no later than
March 15, 2018 (except that, in the case of any Participants not on the United
States payroll of the Company at the start of the applicable year and who are
not added to the United States payroll of the Company during the applicable
year, payment will occur not later than March 31, 2018).

D. Adjustments to Target Awards

The Plan Administrator in its sole discretion can approve adjustments to Target
Awards for Participants during 2017. Any such changes will be communicated to
the Participant in writing.

E. New Participants; Changes in Position; Other Prorations

If an employee is designated by the Board as an Executive Officer during 2017
(due to being newly hired, promoted, or otherwise), the Plan Administrator may
select the employee for participation in this Plan by notifying the employee
that he or she has been designated as a Participant under this Plan. Unless
otherwise provided by the Plan Administrator at the time a New Participant is
selected for participation in this Plan (in which case the Plan Administrator
shall also, at such time, specify the applicable Section 162(m) limitation(s)
applicable to the New Participant), any New Participant’s Executive Incentive
Plan bonus for 2017 will not be subject to the limitations of Section II.C and,
accordingly, will not qualify as performance-based compensation within the
meaning of Section 162(m).

 

 

(March 2017)

 

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Yahoo 2017 Executive Incentive Plan

 

 

 

The following rules shall also apply except as otherwise determined by the Plan
Administrator with respect to a particular Participant:

 

  •   If a Participant’s Target Award as to the year changes during the year, or
if a New Participant is added during the year, his/her annual Target Award
amount shall be prorated based on the number of days each amount was in effect
during the year.

 

  •   If a Participant transfers mid-year from an Executive Incentive
Plan-eligible position to one that is not Executive Incentive Plan eligible (for
example, if a Participant ceases to be designated as an Executive Officer by the
Board but remains employed by the Company), the Plan Administrator, in its sole
discretion, shall award the employee an Executive Incentive Plan bonus based on
a prorated Executive Incentive Plan Target Award. Any such payment will be paid
at the same time as other Executive Incentive Plan payments are paid.

The Plan Administrator has the sole discretion to prorate, reduce, offset, or
eliminate Executive Incentive Plan bonuses to account for advances or payouts to
employees under other bonus plans in effect during the same year, or for other
reasons as it deems appropriate.

F. Leaves of Absence

To the extent permitted by applicable law, the amount of the Executive Incentive
Plan bonus may be prorated for Participants who have been on an approved leave
of absence during the year.

G. Terminations of Employment

To the extent permitted by applicable law, and except as otherwise approved by
the Plan Administrator or expressly set forth in a written agreement between the
Participant and the Company, Participants whose employment is voluntarily or
involuntarily terminated (with or without cause) by the Participant or the
Company or are under notice of termination given by either party (if applicable)
prior to the payment date of the Executive Incentive Plan bonus will not be
eligible for and shall not receive any Executive Incentive Plan bonus. Following
a Change in Control, a Participant whose employment continues uninterrupted with
the acquiring company (or any of its affiliates) will not be considered to have
incurred a termination of employment for purposes of this Plan, notwithstanding
the lack of any continuing employment relationship between such Participant and
Yahoo! Inc.

Participants whose employment terminates due to the employee’s total disability
during 2017 will be eligible for a prorated Executive Incentive Plan bonus,
based on the date of termination, and paid at the time other Executive Incentive
Plan bonuses are paid under this Plan, to the extent permitted by applicable
law. If a Participant dies during 2017, the Executive Incentive Plan bonus will
be prorated based on the date of death and paid to the estate of the deceased
Participant, at the time other Executive Incentive Plan bonuses are paid.

 

 

(March 2017)

 

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H. Executive Incentive Plan Interpretation

This Plan shall be interpreted by the Plan Administrator. The Plan Administrator
has the sole discretion to interpret or construe ambiguous, unclear or implied
(but omitted) terms and shall resolve any and all questions regarding
interpretation and/or administration.

Participants who have issues regarding payments or the administration of this
Plan may file a claim in writing to the Plan Administrator, c/o the Secretary of
the Company, within 90 days of the date on which the Participant first knew (or
should have known) of the facts on which the claim is based. The Plan
Administrator or its designee(s) shall consider the claim and notify the
Participant in writing of the determination and resolution of the issue. Claims
that are not pursued through this procedure shall be treated as having been
irrevocably waived. The determination of the Plan Administrator or its
designee(s) as to any complaint or dispute will be final and binding and shall
be upheld unless arbitrary or capricious or made in bad faith.

The provisions of this Plan are severable and if any provision is held to be
unenforceable by any court of competent jurisdiction then such unenforceability
shall not affect the enforceability of the remaining provisions of this Plan.

This Plan shall be construed and interpreted consistent with, and so as to avoid
the imputation of any tax, penalty or interest under, Section 409A of the Code.
However, other than the Company’s right to withhold required payroll deductions
and tax withholdings, each Participant is solely responsible for his or her tax
liability that may result from the payment of any bonus under this Plan.

I. Employment At-Will (U.S. Employees only)

The employment of all Participants in the United States is “at will” and is
terminable by either the Participant or Yahoo! at any time, with or without
advance notice and with or without cause. This Plan shall not be construed to
create a contract of employment for a specified period of time between Yahoo!
and any U.S. Participant.

J. Recoupment

Notwithstanding any other provision herein, the recoupment or “clawback”
policies adopted by the Plan Administrator and applicable to incentive awards,
as such policies are in effect from time to time, shall apply to this Plan and
any bonuses paid or payable under this Plan.

 

 

(March 2017)

 

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