Yahoo 1998 Annual Report Download - page 52

SHAREHOLDERS’ EQUITY
Common Stock. On April 11, 1996, the Company completed its initial public offering
of 17.9 million shares of its Common Stock. Net proceeds to the Company aggre-
gated $35.1 million. As of the closing date of the offering, all of the Convertible
Preferred Stock outstanding was converted into an aggregate of approximately 77
million shares of Common Stock. On July 14, 1998, the Company received proceeds
of $250 million in exchange for 5,453,760 newly issued shares of Yahoo! Common
Stock through a private placement with SOFTBANK. The shares purchased by
SOFTBANK are subject to a pre-existing agreement, entered into in 1996, that
prohibits SOFTBANK from purchasing additional shares of the Company’s capital
stock if such purchase would result in SOFTBANK owning more than 35% of the
Company’s capital stock (assuming the exercise of all outstanding options and
warrants to purchase capital stock).
Stock Option Plans. Pursuant to the consummation of the acquisitions of Viaweb
Inc. and Yoyodyne Entertainment, Inc. during 1998, the Company assumed the
Viaweb 1997 Stock Option Plan (the “Viaweb Plan”) and the 1996 Yoyodyne Stock
Option Plan (the “Yoyodyne Plan”), respectively. As of December 31, 1998, the
Company had five stock-based compensation plans which are described below.
The 1995 Stock Plan (the “Stock Plan”), the 1995 Four11 Stock Option Plan (the
“Four11 Plan”), the Viaweb Plan, and the Yoyodyne Plan (collectively the “Plans”)
allow for the issuance of incentive stock options, non-qualified stock options,
and stock purchase rights to purchase a maximum of 87.6 million shares of the
Company’s Common Stock. Under the Plans, incentive stock options may be granted
to employees, directors, and officers of the Company and non-qualified stock
options and stock purchase rights may be granted to consultants, employees, direc-
tors, and officers of the Company. Options granted under the Plans are for periods
not to exceed ten years, and must be issued at prices not less than 100% and 85%,
for incentive and nonqualified stock options, respectively, of the fair market value
of the stock on the date of grant as determined by the Board of Directors. Options
granted to shareholders who own greater than 10% of the outstanding stock are for
periods not to exceed five years and must be issued at prices not less than 110% of
the fair market value of the stock on the date of grant as determined by the Board
of Directors. Options granted under the Stock Plan and the Four11 Plan generally
vest 25% after the first year of service and ratably each month over the remaining
thirty-six month period. Options granted under the Viaweb Plan generally vest 25%
on each anniversary over four years. Options granted under the Yoyodyne Plan
have various vesting periods that do not exceed thirty-six months. Options issued
under the Four11 Plan may be exercised prior to vesting and are subject to repur-
chase in the event of a voluntary termination, at the original purchase price. At
December 31, 1998, shares subject to repurchase under the provisions of the
Four11 Plan were insignificant.
The 1996 Directors’ Stock Option Plan (the “Directors’ Plan”) provides for the
issuance of up to 1.2 million non-statutory stock options to non-employee directors
of the Company. Each person who becomes a non-employee director of the
Company after the date of the Company’s initial public offering will automatically
be granted a non-statutory option (the “First Option”) to purchase 240,000 shares of
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