Yahoo! EIP   Exhibit 10.15

Yahoo! Executive Incentive Plan

 

 

February 2010

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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.

 

 

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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
actual Operating Income for that year (the “Operating Income”) and actual
Revenue for that year (“Revenue”). The Compensation Committee will establish
prior to March 31 of the applicable fiscal year an Operating Income target for
that year (“Operating Income Target”) and a Revenue target for that year
(“Revenue Target”). The EIP Bonus Pool for a particular fiscal year will be
determined as follows:

 

  •  

If the Operating Income equals or exceeds the Operating Income Target, the EIP
Bonus Pool will be funded at 100% of the Target Bonus Pool, subject to
adjustment as described below.

 

  •  

For every 1% (or fraction thereof) that the Operating Income exceeds the
Operating Income Target, the EIP Bonus Pool will be funded at an additional
equal percentage of the Target Bonus Pool (e.g., if Operating Income exceeds the
Operating Income Target by 1.5%, the EIP Bonus Pool will be funded at an
additional 1.5% of the Target Bonus Pool). The percentage (if any) by which the
Operating Income exceeds the Operating Income Target is referred to as the
“Incremental Bonus Pool Allocation” (which may be subject to increase as set
forth below).

 

  •  

For every 1% (or fraction thereof) that the Operating Income is less than the
Operating Income Target, the EIP Bonus Pool will be decreased by an amount equal
to 2.5 times that percentage of the Target Bonus Pool (e.g., if Operating Income
is 1.5% less than the Operating Income Target, the EIP Bonus Pool will be
decreased by 3.75% of the Target Bonus Pool).

 

  •  

If the Operating Income exceeds the Operating Income Target, and the Revenue
exceeds the Revenue Target, then the Incremental Bonus Pool Allocation
referenced above will be increased as follows:

 

  •  

If the Revenue exceeds the Revenue Target by less than 3% the Incremental Bonus
Pool Allocation will be multiplied by 1.5.

 

  •  

If the Revenue exceeds the Revenue Target by at least 3% but less than 5%, the
Incremental Bonus Pool Allocation will be multiplied by 2.

 

  •  

If the Revenue exceeds the Revenue Target by at least 5%, the Incremental Bonus
Pool Allocation will be multiplied by 2.5.

 

  •  

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.

The terms “Operating Income” and “Revenue” are used as defined in Appendix A.

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 actual Operating
Income and actual Revenue performance against the Operating Income Target and
Revenue Target, respectively, 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.

 

 

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The calculation of a Participant’s EIP bonus will be made in conjunction with
the Company’s Focal 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) X EIP Bonus Pool Funding % X 70%

   =    EIP Bonus for Company Performance

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

The CEO or his or her designee shall determine the portion of the EIP bonus for
the non-Executive Officer Participants based on individual performance and
relative contribution. The Compensation Committee shall determine the portion of
the EIP bonus for Executive Officers based on individual performance and
relative contribution.

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 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.

 

 

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B. Date for Incentive Payments

EIP bonuses paid under this Plan are not earned until paid. It is a condition
for EIP eligibility that Participants must be employed, and 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
Focal 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.

E. Transfers

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

 

 

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F. Promotions into EIP-Eligible Positions

If a Participant is promoted from one EIP-eligible position to another, 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.

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, 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 local 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.

 

 

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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 2010. All aspects of
the EIP (including, but not limited to, financial targets, Target Awards,
performance measures, 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.

[signature page follows]

 

 

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M. 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

 

 

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Appendix A

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

“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 Operating Income
Target and Revenue Target for that fiscal year.

“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
on its annual financial statements.

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

For purposes of calculating Operating Income and Revenue for a particular fiscal
year, the Operating Income and Revenue (actual or target, as appropriate) 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 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
restructuring charges that are required to be expensed (or reversed) under GAAP;

 

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

 

  (f) 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 transaction closing earlier or
later than the closing date assumed in the Plan, the amount of such adjustment
to be determined on the basis of the estimated monthly search costs assumed in
the Plan (pro-rated to reflect an earlier or later closing date);

 

  (g) increased or decreased to eliminate the financial statement impact of
transaction costs related to the Microsoft Agreement which are booked to
specific Microsoft transaction cost centers and which are not reimbursed by
Microsoft;

 

 

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  (h) increased or decreased to eliminate the financial statement impact of any
portion of the $150 million expense reimbursement payments received by the
Company from Microsoft under the Search Agreement; and

 

  (i) increased or decreased to eliminate the financial statement impact of
revenue recognition changes resulting solely from revenue sharing under the
Search Agreement.

 

 

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