Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Departure of Directors or Certain Officers
On January 13, 2009, Jerry Yang stepped down as Chief Executive Officer of Yahoo! Inc. (the
“Company”). Mr. Yang returned to his former role as Chief Yahoo and continues to serve on the
Company’s Board of Directors (the “Board”).
The Company also announced, on January 13, 2009, that Sue Decker, the President of the
Company, has informed the Board that she will resign after remaining for a transition period.
Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
On January 13, 2009, the Board appointed Carol Bartz, 60, to serve as Chief Executive Officer
of the Company (“CEO”). The Board also increased the size of the Board from 11 to 12 members and
appointed Bartz as a director.
Bartz served most recently as executive chairman of the board of directors of Autodesk, Inc.
She was chairman, president and chief executive officer of Autodesk for 14 years prior to becoming
executive chairman in May 2006. Prior to joining Autodesk, Bartz held management positions at Sun
Microsystems, Digital Equipment Corporation and 3M Corporation. Bartz also currently serves on the
board of directors of Cisco Systems, Intel Corporation and NetApp, Inc. She holds a bachelors
degree in computer science from the University of Wisconsin.
On January 13, 2009, the Company entered into an employment agreement (the “Agreement”) with
Bartz to serve as CEO, effective immediately. The Agreement provides for an initial term of four
years (the “Term”) which may be extended by mutual agreement thereafter.
The Agreement provides that Bartz will receive an annual base salary of $1,000,000, subject to
annual review for increases, and will be eligible to receive an annual bonus with a target amount
of 200% of base salary and a maximum amount of two times the target amount. The actual amount of
the annual bonus will be determined by the Compensation Committee of the Board (the “Compensation
Committee”) based upon both the Company’s and Bartz’s performance for the relevant year.
In addition, Bartz will receive stock options (the “Inducement Options”) for 5,000,000 shares
of the Company’s common stock (“Common Stock”), with a per share exercise price equal to the
closing price of the Common Stock on the grant date (expected to be January 30, 2009) and a maximum
term of seven years. Vesting of the option will be dependent upon the attainment of average
closing prices for the Common Stock for twenty consecutive trading days prior to January 1, 2013
(or, if a Change in Control occurs prior to January 1, 2013 or after that date if it is pursuant to
an agreement signed before that date, the price immediately preceding the closing of the Change in
Control) as follows: (i) 1/3 (1,666,667 shares) will vest at 150% of the
exercise price; (ii) 1/6
(833,333 shares) will vest at 175% of the exercise price; (iii) 1/6 (833,334 shares) will vest at 200% of
the exercise price; (iv) 1/12 (416,666 shares) will vest at 225% of the exercise price; (v) 1/12 (416,666 shares)
will vest at 250% of the exercise price; and (vi) 1/6 (833,334 shares) will vest at 300% of the exercise
price (the “Vesting Levels”). Any shares acquired upon
exercise of the Inducement Options must be held until January 1, 2013, except in the event of death
or a Change in Control.
Bartz will also be granted annual equity grants at the time grants are generally made to
senior executives as determined by the Compensation Committee. She will receive an annual grant
for 2009 with a value of approximately $8,000,000 which is expected to be granted in February 2009.
Bartz will be eligible to participate in the benefit programs generally available to senior
executives of the Company, including health insurance, life and disability insurance, the Employee
Stock Purchase Plan, 401(k) plan, and a Flexible Spending Plan. She will be entitled to four weeks
of vacation per year. The Company will also pay or reimburse her for reasonable expenses incurred
in connection with her employment, including up to $150,000 for advisory fees incurred in connection with entering into the
In addition, to compensate Bartz for the forfeiture of the value of equity grants and
post-employment medical coverage from her previous employer, the Agreement provides for an equity
grant with a grant-date value of $10,000,000, payable 25% in cash and 75% in restricted stock,
which will vest and be settled in equal and proportionate quarterly installments in 2009 (the
“Make-Up Grant”). The Make-Up Grant will be subject to certain clawback provisions in the event of
a termination for Cause or without Good Reason during the Term. The Company will also provide post
employment medical coverage under its plans to Bartz, her spouse and eligible dependants as
necessary, with Bartz paying the full premiums.
Under the Agreement, either party may terminate Bartz’s employment at any time. On any
termination, other than a termination for Cause or without Good Reason, she will receive: (a)
Accrued Amounts, (b) full vesting of the Make-Up Grant and cessation of clawback rights, (c)
vesting of a pro-rata portion of the Inducement Options based on achievement of the Vesting Levels
and a service fraction with a numerator equal to actual service plus 12 months and a denominator of
48 months, (d) a pro-rated bonus for the year of termination, (e) treatment of other grants during
the Term, including annual grants, in accordance with their terms but with a minimum pro-rata
vesting based on service during the vesting period (plus credit for an additional 12 months of
service with respect to the 2009 annual grant), (f) options will be exercisable for 12 months after
termination and those vesting in the last 90 days of such year, or thereafter as a result of
performance achievements, will be exercisable for 90 days after the vesting date, and (g)
post-employment access to the Company’s medical plan as described above. Upon termination without
Cause or for Good Reason (other than in a Change in Control situation), Bartz will also receive a
lump sum equal to one times her base salary and target bonus. Upon a termination of employment by
the Company for Cause or by Bartz without Good Reason during the Term, she will be entitled only to
Accrued Amounts, the standard treatment of equity grants in accordance with the Company’s stock
plan, and post-employment access to the Company’s medical plan.
If the termination of employment is after the Term and other than for Cause, Bartz will
receive Accrued Amounts, the same termination treatment as provided for termination during the Term
for equity grants made during the Term, equity vesting per grant terms for any grants made after
the Term, and post-employment access to the Company’s medical plan.
Upon termination by the Company without Cause or by Bartz for Good Reason at or within two
years after a Change in Control (whether such termination is before or after the four years if the
Change in Control occurs during the Term or an agreement for a Change in Control
is signed before and closes after the Term, as well as between the signing of the agreement for a
Change in Control and the Change in Control), she will receive the same payments, benefits and
treatment as a termination without Cause or for Good Reason in the absence of a Change in Control,
except that: (a) the lump sum payment will be equal to two times base salary and target bonus, and
(b) the 2009 annual grants will fully vest (with performance based grants vesting on the basis of
actual performance for past periods and at target for future periods). This treatment will only
apply for a termination without Cause or for Good Reason.
Receipt of any amounts upon termination of employment beyond the Accrued Amounts and other
standard benefits upon termination of employment will require Bartz to execute a release in the
form attached to the Agreement.
On a Change in Control, if outstanding equity awards granted during the Term are continued,
assumed or substituted by acquiror: (a) performance targets that have not expired will continue
(subject to deal exchange adjustments on target price) and (b) equity awards granted during the
Term will be treated in the same manner as grants to other senior executives made at the same time
and in the same form, subject to certain protection for termination without Cause or for Good
Reason, provided that the Inducement Grant will not have any accelerated vesting even if other
grants are so treated or so covered. If outstanding equity awards are not continued, assumed or
substituted, then (a) the Inducement Award will become vested or forfeited based on the Change in
Control price, (b) the Make-Up Grant will fully vest and cease to be subject to clawback, and (c)
other equity awards granted during the Term will be treated in the same manner as grants to other
senior executives made at the same time and in the same form, subject to certain protection for
termination without Cause or for Good Reason.
Bartz is not entitled to any tax gross-ups in the event of a Change in Control, but may
voluntarily forfeit certain benefits if it would result in her receiving a higher after-tax amount.
The foregoing description of the Agreement is qualified in its entirety by reference to the
full text of the Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and
is incorporated by reference herein. Capitalized terms used herein without definition have the
meanings given such terms in the Agreement.
Bartz is not a party to any transaction required to be disclosed pursuant to Item 404(a) of
A copy of the press release is furnished with this Form 8-K and attached hereto as Exhibit
99.1. Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities
under that Section and shall not be deemed to be incorporated by reference into any filing of the
Company under the Securities Act of 1933, as amended, or the Exchange Act.