EX-10.11(B)



 Exhibit 10.11(B) 
  

 
 



 
 2016 Executive Incentive Plan 

  
  

(March 2016) 









 Yahoo 2016 Executive Incentive Plan 

 
  
  

 I. Introduction 

A. Applicability 
  

	 	1.	The Employees eligible to participate in the Yahoo! Inc. 2016 Executive Incentive Plan (the “Executive Incentive Plan” or this “Plan”) are Marissa A. Mayer, Ken Goldman, David Filo, Ronald S. Bell,
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) and specifically designated as a Plan participant by the Compensation and Leadership Development Committee of the Board (the “Compensation Committee,” and any such other employee a “New
Participant”). Any employee eligible to Participate in this Plan is referred to as a “Participant.” 

  

	 	2.	The Compensation Committee 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 Compensation Committee 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 Compensation Committee. 

 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 Compensation Committee. 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 Compensation Committee. Notwithstanding the foregoing, the Compensation
Committee may determine that one or more Participants will not have a Target Award. 

  
  

 
  

(March 2016) 
  

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 Yahoo 2016 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 2016, a “Company Performance Factor” (based on the Company’s financial and operational performance
during 2016) and an “Individual Performance Factor” (evaluating the individual’s performance during the year) will be determined by the Compensation Committee. A Participant’s Executive Incentive Plan bonus for 2016, subject to
the other terms and conditions of this Plan, will equal the Participant’s Target Award for 2016 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 Compensation Committee 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 2016. The Compensation Committee 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, 2016 and ending on December 31, 2016. 

  

	 	•	 	“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. 


  
  

 
  

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 Yahoo 2016 Executive Incentive Plan 

 
  
  


	 	•	 	“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 Compensation Committee 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 Compensation Committee 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 Section III.E, each Participant’s Executive Incentive Plan bonus for 2016 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 Compensation Committee, and no Executive Incentive Plan bonus may be paid unless and until the Compensation Committee 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 2016 Executive Incentive Plan 

 
  
  

 The maximum aggregate bonus pool for 2016 under this Plan will equal 3 percent of Yahoo!
Inc.’s Adjusted EBITDA for 2016 (the “Section 162(m) Bonus Pool Limit”). The Compensation Committee established each Participant’s maximum Executive Incentive Plan bonus for 2016 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); Ronald S. Bell—two-fifteenths (2/15); David Filo—two-fifteenths (2/15); and Lisa Utzschneider—
two-fifteenths (2/15). (For example, if the Compensation Committee 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 2016 will be subject to the
limit of Section A.3 of the Stock Plan and any other maximum bonus amount established by the Compensation Committee for that Participant, in each case if lower than the amount determined pursuant to this Section C. The Compensation Committee 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 Compensation Committee 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 2016, 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 2016: 

 

	 	(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;


  

	 	(f)	increased or decreased to eliminate the financial statement impact of costs associated with the Company’s exploration of strategic alternatives, including transactions to separate the remaining stake in Alibaba
Group Holding Limited from the Company’s operating business focusing on a reverse spin transaction, as well as exploring strategic proposals for the operating business; 


 

	 	(g)	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); and 


  
  

 
  

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 Yahoo 2016 Executive Incentive Plan 

 
  
  


	 	(h)	increased or decreased to eliminate the financial statement impact of costs associated with a potential proxy contest. 


“Financial Plan” for 2016 means the Company’s final financial plan for 2016 approved by the Board of Directors. 

III. TERMS AND CONDITIONS 
 A.
Executive Incentive Plan Effective Period 
 This Plan covers the period from January 1, 2016 to December 31, 2016. 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. 
 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 2016 are determined by the Company and the year end review process for 2016 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, 2017 (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, 2017). 

D. Adjustments to Target Awards 

The Compensation Committee in its sole discretion can approve adjustments to Target Awards for Participants during 2016. 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 2016 (due to being newly hired, promoted, or otherwise), the
Compensation Committee 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 Compensation Committee at the time a New
Participant is selected for participation in this Plan (in which case the Compensation Committee 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 2016 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 2016 Executive Incentive Plan 

 
  
  

 The following rules shall also apply except as otherwise determined by the Compensation
Committee 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 Compensation Committee, 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 Compensation Committee 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 Compensation Committee 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. 

Participants whose employment terminates due to the employee’s total disability during 2016 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 2016, 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. 

H. Executive Incentive Plan Interpretation 

This Plan 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. 

  
  

 
  

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 Yahoo 2016 Executive Incentive Plan 

 
  
  

 Participants who have issues regarding payments or the administration of this Plan 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 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 Compensation Committee 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 2016) 
  

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