EX-10.12(B)



 Exhibit 10.12(B) 
  





 
 2017 Executive Incentive Plan 

 
  
  

 
 (March 2017) 

  








 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. 
  
  

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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. 

  

 
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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. 
  

 
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 Yahoo 2017 Executive Incentive Plan 
  

 
  

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. 

 
  

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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). 
  

 
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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. 

 
  

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 Yahoo 2017 Executive Incentive Plan 
  

 
  

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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