Exhibit 10.13

Yahoo! Executive Incentive Plan

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

I. Introduction

A. Applicability

 

  1. Employees eligible to participate in the Yahoo! Inc. Executive Incentive
Plan (the “EIP” or “this Plan”) are those employees of Yahoo! Inc. and its
subsidiaries (collectively, the “Company”) at job levels E3, E4, E5 and EX. The
Compensation Committee of Yahoo!’s Board of Directors (the “Compensation
Committee”) has the sole discretion to determine whether the EIP will be offered
to any executive for whom the Compensation Committee sets the executive’s
compensation level (an “Executive Officer”). Yahoo!’s Chief Executive Officer
(“CEO”) or his or her designee will determine whether any other eligible person
(other than an Executive Officer) is a participant. Participants will be
notified in writing of their participation in this Plan and will be provided
with a copy of the EIP, which they must sign and accept in order to participate
(any person so notified who timely accepts participation is referred to as a
“Participant”).

 

  2. The Compensation Committee reserves the right to amend, modify or terminate
the EIP, in whole or in part, at any time, in its sole discretion including,
without limitation, to comply with applicable local law, rules and regulations.
The Compensation Committee may remove any individual (and the CEO may remove any
individual other than an Executive Officer) from participation in the EIP at any
time.

B. Objectives of the EIP

 

  •  

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. EIP Elements

A. Target Awards

A target cash bonus award (“Target Award”) will be established for each
Participant. Target Awards are determined by position level and will be
typically expressed as a percentage of a Participant’s annual base salary rate
as of the last day of the applicable fiscal 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 for Executive Officers may be reviewed and revised in the sole
discretion of the Compensation Committee. Target Awards for other Participants
may be reviewed and revised in the sole discretion of the CEO or his or her
designee.

This EIP 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.

 

 

February 2011

2

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

B. EIP Bonus Pool Funding

Individual Target Awards will be aggregated to determine the Company’s target
bonus pool (the “Target Bonus Pool”) for the applicable fiscal year. The actual
EIP bonus pool (the “EIP Bonus Pool”) for the applicable fiscal year may vary
from 50% to 200% of the Target Bonus Pool for that year based on the Company’s
achievement of performance goals established by the Compensation Committee for
the applicable fiscal year, such performance goals to be established not later
than ninety (90) days after the start of the fiscal year. The methodology to
determine the EIP Bonus Pool is set forth in Appendix A attached hereto.

C. EIP Bonus Pool Allocation and Individual Awards

Allocation of the EIP Bonus Pool among the Participants in a particular fiscal
year will be determined based on a combination of Company performance and
individual performance. Payout of seventy percent (70%) of each Participant’s
EIP Target Award will be determined based on the Company’s achievement of
performance goals established by the Compensation Committee for the applicable
fiscal year. The remainder of a Participant’s EIP bonus will be determined based
on the Participant’s individual performance and relative contribution as
determined by the CEO or his or her designee (or by the Compensation Committee
in the case of Executive Officers) in his/her or its sole discretion.

The calculation of a Participant’s EIP bonus will be made in conjunction with
the Company’s year-end review process for the applicable fiscal year, which
shall occur in the first quarter of the following fiscal year and follow the
process below.

Step 1: Determine the total EIP Bonus Pool as described in Section B.

Step 2: Determine the portion of the EIP Bonus Pool payable to each Participant
for Company performance:

 

  Individual Target Award (Dollars) × EIP Bonus Pool Funding % × 70%    =   
EIP Bonus for Company Performance   

Step 3: Determine the portion of the EIP Bonus Pool payable to each Participant
for individual performance.

Step 4: Calculate the total EIP bonus to be paid to each Participant:

 

    a) Portion of EIP Bonus for Company Performance      =     
Amount determined in Step 2             b) Portion of EIP Bonus for Individual
Performance      =      Amount determined in Step 3                   

 

Total EIP Bonus

    

 

=

    

 

Sum of (a + b)

       

The CEO or his or her designee shall determine the EIP bonus for the
non-Executive Officer Participants. The Compensation Committee shall determine
the EIP bonus for Executive Officers.

 

 

February 2011

3

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

The aggregate total of bonuses payable to all Participants under this Plan for a
particular fiscal year shall not exceed the EIP Bonus Pool determined as
described in Section B above for that year.

Any EIP 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.

III. TERMS AND CONDITIONS

A. EIP Effective Period

Each fiscal year covered by this Plan is the period from January 1 to
December 31 of the applicable fiscal year. This EIP supersedes all previous
executive cash incentive plans, management incentive plans (MIP), or leadership
bonus plans and agreements and all other previous or contemporaneous oral or
written statements by the Company on this subject.

B. Date for Incentive Payments

EIP bonuses paid under this Plan are not earned until paid and in all events
remain subject to Section III.M. It is a condition for EIP 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 EIP bonuses (except as otherwise
provided in Section I – Terminations of Employment). Payment will not occur
until after financial results for the applicable fiscal year are determined by
the Company and the year end review process for the applicable year is
completed.

C. Form and Timing of Payment

If the conditions for payment described above are met, the EIP 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 of the year
following the end of the applicable fiscal year (except that, in the case of
Participants not on the United States payroll of the Company at the start of the
applicable fiscal year and who are not added to the United States payroll of the
Company during the applicable fiscal year, payment will occur not later than
March 31 of the year following the end of the applicable fiscal year).

D. New Hires

If an employee is hired on or before October 1 of the applicable fiscal year
into a position that qualifies for the EIP, the employee will participate in the
EIP only if the Company notifies the employee in writing that he or she is a
Participant under the EIP for that year. The employee’s Target Award amount for
the fiscal year may be prorated based on the date of hire.

Employees who are hired after October 1 of the applicable fiscal year will not
be considered Participants under the EIP for that fiscal year.

 

 

February 2011

4

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

E. Transfers

If a Participant transfers from one EIP-eligible position to another during the
applicable fiscal year, the following guidelines may apply:

 

  •  

If the Participant has a different Target Award upon transfer, his/her annual
Target Award amount may be prorated based on the Target Award percentages for
the amount of time spent in each position during the fiscal year.

 

  •  

If a Participant transfers mid-year from an EIP-eligible position to one that is
not EIP eligible (for example, a transition from a role that participates in the
EIP to a position that is covered by a sales incentive plan), the Compensation
Committee with respect to Executive Officers (or the CEO or his or her designee
with respect to non-Executive Officers), in its sole discretion, may award the
employee an EIP bonus based on a prorated EIP Target Award. Any such payment
will be paid at the same time as other EIP payments are paid.

 

  •  

EIP eligibility for employees participating in a global assignment during the
applicable fiscal year will be handled on a case-by-case basis based on
individual facts and circumstances.

The Compensation Committee with respect to Executive Officers (and the CEO or
his or her designee with respect to non-Executive Officers) has the sole
discretion to pro-rate, reduce, offset, or eliminate EIP bonuses to account for
advances or payouts to employees under other bonus plans in effect during the
same fiscal year, or for other reasons as it deems appropriate.

F. Promotions into EIP-Eligible Positions

If a Participant is promoted from one EIP-eligible position to another during
the applicable fiscal year, the payouts will be administered the same as
described above for Transfers. If an employee is not in a position that is
eligible for the EIP and is promoted to an EIP-eligible position during the
applicable fiscal year, the Compensation Committee or the CEO or his or her
designee as applicable, may select the employee for participation in the EIP by
notifying the employee that he or she is a Participant under the EIP. The
employee’s Target Award amount for the fiscal year shall be prorated based on
the date of the promotion.

G. Adjustments to Target Awards

The Compensation Committee in its sole discretion can approve adjustments to
Target Awards for Executive Officers during the applicable fiscal year. The CEO
or his or her designee in his or her sole discretion may approve adjustments to
Target Awards for other Participants during the applicable fiscal year. Any such
changes will be communicated to the Participant in writing. Any payout amount
may be prorated based on the effective date of the change to the Target Award as
determined by the Compensation Committee or the CEO or designee thereof, as
applicable. Any adjustment to a Target Award will result in a corresponding
adjustment to the Target Bonus Pool.

 

 

February 2011

5

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

H. Leaves of Absence and Part-Time Employees

To the extent permitted by applicable law, the amount of the EIP bonus may be
prorated for Participants who have been on an approved leave of absence of more
than 90 days during the fiscal year and for Participants who work less than
full-time.

I. Terminations of Employment

To the extent permitted by applicable law, and except as otherwise approved by
the Compensation Committee (or the CEO in the case of non-Executive Officer
Participants), 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 EIP bonus will not be eligible for and shall not receive any
EIP bonus.

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

J. EIP Interpretation

The EIP shall be interpreted by the Compensation Committee. The Compensation
Committee 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 the EIP
may file a claim in writing to the Compensation Committee, 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 Compensation
Committee 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 Compensation Committee 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 EIP 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 EIP provisions.

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 United
States Internal Revenue Code of 1986, as amended.

K. Exceptions and Modifications

All exceptions, adjustments, additions, or modifications to the EIP require the
written approval of the Compensation Committee, or its designee(s).

This version of the EIP is first effective with respect to 2011. All aspects of
the EIP (including, but not limited to, financial targets, Target Awards,
performance measures,

 

 

February 2011

6

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

and funding formulas) may be reviewed and revised at any time without advance
notice in the sole discretion of the Compensation Committee.

L. 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 EIP shall not be construed to
create a contract of employment for a specified period of time between Yahoo!
and any U.S. Participant.

M. Recoupment

Notwithstanding any other provision herein, any recoupment or “clawback”
policies adopted by the Compensation Committee and applicable to incentive
awards shall apply to this EIP and any bonuses paid or payable under this EIP to
the extent that the Compensation Committee designates the policy as applicable
to this EIP and any such bonuses at the time the policy is adopted.

[signature page follows]

 

 

February 2011

7

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

N. EIP Acknowledgement

By signing below, the Participant acknowledges that the Participant has read,
comprehended, and agreed to this EIP and will abide by the guidelines outlined
herein for all bonus payments. The EIP sets forth the entire agreement and
understanding between the Company and the Participant relating to the subject
matter herein and supersedes and replaces any and all prior plans, agreements,
discussions and understandings whether oral or written regarding these subject
matters including but not limited to any provision regarding cash incentive plan
compensation contained in a Participant’s employment agreement, if any.

I have read and understood the provisions of this EIP and hereby agree to and
accept its terms:

 

Participant (print name)

 

Signature

 

Title

 

Date

 

CC: Personnel File

 

 

February 2011

8

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

Appendix A - 2011 EIP

For fiscal 2011, the Compensation Committee has approved the following method
for determining the EIP Bonus Pool.

 

  •  

The EIP Bonus Pool will be funded at an amount equal to (1) 100% of the Target
Bonus Pool, multiplied by (2) a percentage (the “Funding Percentage”) determined
based on the actual Revenue ex-TAC Growth Rate and the actual Ex-TAC Operating
Margin for fiscal 2011 in comparison with target levels of Revenue ex-TAC Growth
Rate and Ex-TAC Operating Margin established by the Compensation Committee for
the fiscal year.

 

  •  

The Funding Percentage will be determined based on the formulas set forth on the
“EIP Pool Funding Methodology” chart attached as Exhibit 1 to this Appendix A
(the “Funding Methodology”). A matrix illustrating the Funding Percentage at
different levels of actual Revenue ex-TAC Growth Rate and Ex-TAC Operating
Margin in comparison with the target levels is attached as Exhibit 2 to this
Appendix A.

 

  •  

In applying the formulas set forth in the Funding Methodology, the Funding
Percentage will be prorated to give effect to actual performance between the
levels specified in the Funding Methodology (e.g., if the Funding Methodology
provides that the Funding Percentage will be increased by 3% for each 1% by
which actual performance exceeds the target level and actual performance exceeds
the target level for the fiscal year by 0.5%, the Funding Percentage will be
increased by 1.5%).

 

  •  

In no event, however, will the EIP Bonus Pool be funded at a level less than 50%
of the Target Bonus Pool or at a level greater than 200% of the Target Bonus
Pool.

 

  •  

Notwithstanding anything herein to the contrary, the Compensation Committee may,
in its sole discretion, reduce the amount of bonuses payable hereunder from the
levels provided above.

Definitions

For purposes of the EIP, the following definitions will apply:

“Ex-TAC Operating Margin” means the Company’s Operating Income divided by
Revenue ex-TAC (prior to any adjustments of the MIP funding pool) expressed as a
percentage.

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

“Microsoft Transition” means the global transition of the Company’s algorithmic
and paid search platforms and migration of the Company’s paid search advertisers
and publishers to Microsoft Corporation (“Microsoft”) under the Search Agreement
based on the Company’s timetable and operational plans as of the date of the
Plan.

“Operating Income” as to a particular fiscal year means the Company’s income
from operations for that fiscal year as determined by the Company in accordance
with GAAP and reflected in its annual financial statements.

“Plan” as to a particular fiscal year means the Company’s financial plan for
that fiscal year used by the Compensation Committee to set the Revenue ex-TAC
Growth Rate and Ex-TAC Operating Margin targets for that fiscal year.

 

 

February 2011

9

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

“Revenue” as to a particular fiscal year means the Company’s revenue for that
fiscal year as determined by the Company in accordance with GAAP and reflected
in its annual financial statements.

“Revenue ex-TAC” as to a particular fiscal year means Revenue less TAC as
determined by the Company and reflected in the Company’s annual financial
statements.

“Revenue ex-TAC Growth Rate” as to a particular fiscal year means (a) the
difference between that fiscal year’s Revenue ex-TAC and the Revenue ex-TAC for
the immediately preceding year, divided by (b) Revenue ex-TAC for the preceding
year.

“Search Agreement” means the Search and Advertising Services and Sales Agreement
between the Company and Microsoft.

“TAC” as to a particular fiscal year means total traffic acquisition costs as
determined by the Company and reflected in its annual financial statements.

For purposes of calculating Revenue ex-TAC and Ex-TAC Operating Margin for a
particular fiscal year, the Revenue ex-TAC and Ex-TAC Operating Margin for that
year shall be adjusted (without duplication) for the following items to the
extent such items were not included in the Plan:

 

(a) increased or decreased to eliminate the financial statement impact of
acquisitions and costs associated with such acquisitions and the costs incurred
in connection with potential acquisitions that are required to be expensed under
GAAP;

 

(b) increased or decreased to eliminate the financial statement impact of
divestitures and costs associated with such divestitures and the costs incurred
in connection with potential divestitures that are required to be expensed under
GAAP;

 

(c) increased or decreased to eliminate the financial statement impact of
financing costs or costs related to the restructuring of any of the Company’s
equity investments (that are accounted for under the equity method of
accounting) that are required to be expensed under GAAP;

 

(d) 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;

 

(e) increased or decreased to eliminate the financial statement impact of
restructuring charges that are required to be expensed (or reversed) under GAAP;

 

(f) increased or decreased to eliminate the financial statement impact of
goodwill and intangible asset impairment charges that are required to be
recorded under GAAP;

 

(g) increased or decreased to eliminate the financial statement impact of legal
settlements that are required to be recorded under GAAP;

 

(h) increased or decreased to eliminate the financial statement impact of search
costs to the extent such search costs are less than or exceed the estimated
search costs expected to be paid or reimbursed by Microsoft reflected in the
Plan solely as a result of the Microsoft Transition occurring earlier or later
than the implementation plan incorporated in the Plan;

 

 

February 2011

10

--------------------------------------------------------------------------------

Yahoo! EIP

 

 

 

(i) increased or decreased to eliminate the financial statement impact of
Microsoft revenue sharing solely as a result of the Microsoft Transition
occurring earlier or later than the implementation plan incorporated in the
Plan; and

 

(j) with respect to calculating the Company’s Revenue ex-TAC Growth Rate,
increased or decreased to eliminate the financial statement impact of changes in
foreign exchange rates compared to the foreign exchange rates incorporated in
the Plan. No adjustment shall be made for changes in foreign exchange rates in
calculating the Company’s ex-TAC Operating Margin Rate.

 

 

February 2011

11

--------------------------------------------------------------------------------

LOGO [g119785g66h82.jpg]

Yahoo! EIP

Exhibit 1 – EIP Pool Funding Methodology

Revenue

Ex-TAC

Growth%

Revenue

0% - 3% Rev.ex-TAC outperformance

+2% for each 1% revenue outperformance

>3.0% - 7.0% Revenue ex-TAC outperformance

+3% for each 1% revenue outperformance

>7.0% + revenue outperformance

+4% for each 1% revenue outperformance

Operating Margin

-2% penalty for each 10bp mission OM%

Revenue

0% - 3% Rev.ex-TAC outperformance

+3% for each 1% revenue outperformance

>3.0% - 7.0% Revenue ex-TAC outperformance

+5% for each 1% revenue outperformance

>7.0% + revenue outperformance

+8% for each 1% revenue outperformance

Operating Margin

No funding adjustment for OM outperformance

2011

Financial Plan Targets

Ex-TAC

Operating Margin%

Revenue

-5% penalty for each 1% Rev.ex-TAC underperformance

Operating Margin

-2% penalty for each 10bp mission OM%

Revenue

-5% penalty for each 1% Rev.ex-TAC underperformance

Operating Margin

No funding adjustment for OM outperformance

200% Maximum Pool Funding / 50% Minimum Pool Funding

--------------------------------------------------------------------------------

LOGO [g119785g61x14.jpg]

Yahoo! EIP

Exhibit 2 - EIP Funding Matrix

Ex-TAC Operating Margin

Revenue ex-TAC Growth Rate

-5.5% -5% -4% -3.5% -3% -2.5% -2% -1.5% -1% -0.5% Target +0.4% +1% +1.5% +2%
+2.5% +3% +3.5% +4% +13% 50% 52% 72% 82% 92% 102% 112% 122% 132% 142% 200% 200%
200% 200% 200% 200% 200% 200% 200% +12% 50% 50% 68% 78% 88% 98% 108% 118% 128%
138% 196% 196% 196% 196% 196% 196% 196% 196% 196% +11% 50% 50% 64% 74% 84% 94%
104% 114% 124% 134% 188% 188% 188% 188% 188% 188% 188% 188% 188% +10% 50% 50%
60% 70% 80% 90% 100% 110% 120% 130% 180% 180% 180% 180% 180% 180% 180% 180% 180%
+9% 50% 50% 56% 66% 76% 86% 96% 106% 116% 126% 172% 172% 172% 172% 172% 172%
172% 172% 172% +8% 50% 50% 52% 62% 72% 82% 92% 102% 112% 122% 164% 164% 164%
164% 164% 164% 164% 164% 164% +7% 50% 50% 50% 51% 61% 71% 81% 91% 101% 111% 135%
135% 135% 135% 135% 135% 135% 135% 135% +6% 50% 50% 50% 50% 58% 68% 78% 88% 98%
108% 130% 130% 130% 130% 130% 130% 130% 130% 130% +5% 50% 50% 50% 50% 55% 65%
75% 85% 95% 105% 125% 125% 125% 125% 125% 125% 125% 125% 125% +4% 50% 50% 50%
50% 52% 62% 72% 82% 92% 102% 120% 120% 120% 120% 120% 120% 120% 120% 120% +3%
50% 50% 50% 50% 50% 56% 66% 76% 86% 96% 109% 109% 109% 109% 109% 109% 109% 109%
109% +2% 50% 50% 50% 50% 50% 54% 64% 74% 84% 94% 106% 106% 106% 106% 106% 106%
106% 106% 106% +1% 50% 50% 50% 50% 50% 52% 62% 72% 82% 92% 103% 103% 103% 103%
103% 103% 103% 103% 103% Target 50% 50% 50% 50% 50% 50% 60% 70% 80% 90% 100%
100% 100% 100% 100% 100% 100% 100% 100% -1% 50% 50% 50% 50% 50% 50% 55% 65% 75%
85% 95% 95% 95% 95% 95% 95% 95% 95% 95% -2% 50% 50% 50% 50% 50% 50% 50% 60% 70%
80% 90% 90% 90% 90% 90% 90% 90% 90% 90% -3% 50% 50% 50% 50% 50% 50% 50% 55% 65%
75% 85% 85% 85% 85% 85% 85% 85% 85% 85% -4% 50% 50% 50% 50% 50% 50% 50% 55% 60%
70% 80% 80% 80% 80% 80% 80% 80% 80% 80% -5% 50% 50% 50% 50% 50% 50% 50% 50% 55%
65% 75% 75% 75% 75% 75% 75% 75% 75% 75% -6% 50% 50% 50% 50% 50% 50% 50% 50% 50%
60% 70% 70% 70% 70% 70% 70% 70% 70% 70% -7% 50% 50% 50% 50% 50% 50% 50% 50% 50%
55% 65% 65% 65% 65% 65% 65% 65% 65% 65% -8% 50% 50% 50% 50% 50% 50% 50% 50% 50%
50% 60% 60% 60% 60% 60% 60% 60% 60% 60% -9% 50% 50% 50% 50% 50% 50% 50% 50% 50%
50% 55% 55% 55% 55% 55% 55% 55% 55% 55% -10% 50% 50% 50% 50% 50% 50% 50% 50% 50%
50% 50% 50% 50% 50% 50% 50% 50% 50% 50%

February 2011 12