eBay 2008 Annual Report Download - page 111

Treasury Stock
In June 2006, our Board of Directors authorized a stock repurchase program for $2.0 billion of our common
stock, excluding broker commissions. In January 2007, our Board authorized an expansion of the stock repurchase
program to provide for the repurchase of up to an additional $2.0 billion of our common stock by January 2009. In
January 2008, our Board approved an additional stock repurchase program to repurchase an additional $2.0 billion
of our common stock. The stock repurchase activity under our stock repurchase program during 2008 is
summarized as follows (in thousands, except per-share amounts):
Shares
Repurchased
Average
Price per
Share
Value of
Shares
Repurchased
Remaining
Amount
Authorized
Balance at January 1, 2008 .............. 99,084 $31.84 $3,154,682 $ 845,318
Authorization of new plan in January 2008 . . . — — — 2,000,000
Repurchase of common stock ............. 80,608 27.15 2,188,818 (2,188,818)
Balance at December 31, 2008 ............ 179,692 $29.74 $5,343,500 $ 656,500
These repurchased shares are recorded as treasury stock and are accounted for under the cost method. No
repurchased shares have been retired or reissued.
From time to time, we enter into structured equity hedging transactions. According to the terms of these
transactions, if the market price of our common stock exceeds a pre-determined price on the maturity date, we have
the option to settle these transactions in cash or by repurchasing shares of our common stock. If the market price of
our common stock is below that pre-determined price on the maturity date, we are required to settle these
transactions by repurchasing shares of our common stock. The number of shares repurchased through the use of
structured equity hedging transactions is included in the table above. The structured equity hedging transactions that
settled in cash during the year ended December 31, 2008, resulted in premiums of approximately $12.3 million,
which were recorded as additional paid-in capital.
Our stock repurchase programs may be limited or terminated at any time without prior notice. Stock repurchases
under these programs may be made through a variety of open market and privately negotiated transactions, including
structured stock repurchase transactions or other derivative transactions, at times and in such amounts as management
deems appropriate and will be funded from the company’s working capital or other financing alternatives. The timing
and actual number of shares repurchased will depend on a variety of factors including corporate and regulatory
requirements, price and other market conditions. The programs are intended to comply with the volume, timing and
other limitations set forth in Rule 10b-18 under the Securities Exchange Act of 1934.
In addition to the above, we have withheld shares from employees to satisfy tax obligations.
Note 15 — Benefit Plans:
Equity Incentive Plans
We have equity incentive plans for directors, officers and employees that consist of stock options, restricted
stock units, nonvested shares and performance based restricted stock units. At December 31, 2008, 627.5 million
shares were authorized under our equity incentive plans and 79.4 million shares were available for future grant.
All stock options granted under these plans generally vest 25% one year from the date of grant (or 12.5% six
months from the date of grant for grants to existing employees) and the remainder vest at a rate of 2.08% per month
thereafter, and generally expire seven to 10 years from the date of grant. The cost of stock options is determined
using the Black-Scholes option pricing model on the date of grant.
Restricted stock units and nonvested shares are granted to eligible employees under our equity incentive plans.
In general, restricted stock units and nonvested shares cliff vest over one to five years, are subject to the employees’
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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)