eBay 1998 Annual Report Download - page 77

eBAY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
77
1998 Directors Stock Option Plan
In July 1998, the Board adopted, and in August 1998 the Company’ s stockholders approved, the Directors Plan
and reserved a total of 600,000 shares of the Company’ s Common Stock for issuance thereunder. Members of the
Board who are not employees of the Company, or any parent, subsidiary or affiliate of the Company, are eligible to
participate in the Directors Plan. The option grants under the Directors Plan are automatic and nondiscretionary, and
the exercise price of the options must be 100% of the fair market value of the Common Stock on the date of grant.
Each eligible director who first becomes a member of the Board on or after the effective date of the Registration
Statement of which this Prospectus forms a part (the “Effective Date”) will initially be granted an option to purchase
90,000 shares (an “Initial Grant”) on the date such director first becomes a director. Immediately following each
Annual Meeting of the Company, each eligible director will automatically be granted an additional option to
purchase 15,000 shares if such director has served continuously as a member of the Board since the date of such
director’ s Initial Grant or, if such director was ineligible to receive an Initial Grant, since the Effective Date. In
March 1999, the Board amended the Directors Plan to provide that no such grants would be made to eligible
directors at the 1999 Annual Meeting. The Board is considering other changes to the Directors Plan in light of the
proposed changes in the accounting for this type of plan. The term of such options is ten years, provided that they
will terminate seven months following the date the director ceases to be a director or a consultant of the Company
(twelve months if the termination is due to death or disability). All options granted under the Directors Plan will vest
as to 25% of the shares on the first anniversary of the date of grant and as to 2.08% of the shares each month
thereafter, provided the optionee continues as a member of the Board or as a consultant to the Company.
Unearned stock-based compensation
In connection with certain stock option grants during the years ended December 31, 1997 and 1998, the
Company recognized unearned compensation totaling $1.4 million and $5.4 million, respectively, which is being
amortized over the four-year vesting periods of the related options. Amortization expense recognized during the
years ended December 31, 1997 and 1998 totaled approximately $25,000 and $2.6 million, respectively.
Note 11—Subsequent Events:
Stock split
During January 1999, the Company’ s Board of Directors approved a three-for-one Common Stock split.
Shareholders of record on February 9, 1999 received two additional shares on March 1, 1999. All share and per
share amounts in these consolidated financial statements and notes thereto for all periods presented have been
retroactively adjusted to reflect the stock splits.
Australian joint venture
On February 17, 1999, eBay entered into a joint venture agreement with an Australian company, PBL Online PTY
Limited (PBLO), for the formation of a company which will provide on-line trading services to Internet users based
primarily in Australia and New Zealand (combined, the “Territory”). PBLO is part of the Publishing & Broadcasting
Limited group of companies which provide a wide range of media services in the Territory, including magazine
publishing, television broadcasting, on-line services, broadcast programs and electronic commerce services. The
joint venture company will be based in Australia and will combine technical and software experience, market
knowledge and reputation with PBLO’ s publishing, distribution, advertising and marketing channels. Operations of
the joint venture company are expected to commence during 1999.