<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>f70838dedef14a.txt
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
eBay Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
6. Amount Previously Paid:
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7. Form, Schedule or Registration Statement No.:
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8. Filing Party:
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9. Date Filed:
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<PAGE> 2
eBay Inc.
2145 Hamilton Avenue
San Jose, California 95125
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2001
To the stockholders of eBay Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of eBay
Inc., a Delaware corporation, will be held on Friday, May 25, 2001, at 9:00 a.m.
local time at Silicon Valley Conference Center, El Camino Room, 2161 North First
Street, San Jose, California 95131 for the following purposes:
1. To elect two directors to hold office until the 2004 Annual Meeting
of Stockholders.
2. To approve our 2001 Equity Incentive Plan.
3. To ratify the selection of PricewaterhouseCoopers LLP as our
independent auditors for our fiscal year ending December 31, 2001.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement of the meeting thereof.
These business items are described more fully in the Proxy Statement
accompanying this Notice.
The Board of Directors has fixed the close of business on March 27, 2001,
as the record date for identifying those stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement of this
meeting.
By Order of the Board of Directors
/s/ MICHAEL R. JACOBSON
Michael R. Jacobson
Secretary
San Jose, California
April 17, 2001
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE TO ENSURE YOUR REPRESENTATION
AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE
UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY,
YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER,
THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND
YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY
ISSUED IN YOUR NAME.
<PAGE> 3
eBay Inc.
2145 Hamilton Avenue
San Jose, California 95125
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2001
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of eBay
Inc. for use at the Annual Meeting of Stockholders to be held on May 25, 2001,
at 9:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement of this meeting, for the purposes set forth in this Proxy Statement
and in the accompanying Notice of Annual Meeting. The Annual Meeting will be
held at Silicon Valley Conference Center, El Camino Room, 2161 North First
Street, San Jose, California 95131. We intend to mail this Proxy Statement and
accompanying proxy card on or about April 17, 2001, to all stockholders entitled
to vote at the Annual Meeting.
SOLICITATION
We will pay for the entire cost of proxy solicitations, including
preparation, assembly, printing and mailing of proxy solicitation materials. We
will provide copies of solicitation materials to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of our common stock,
par value $0.001 per share (the "Common Stock"), beneficially owned by others to
forward these materials to the beneficial owners of Common Stock. We may
reimburse persons representing beneficial owners of Common Stock for their costs
of forwarding solicitation materials. Directors, officers or other regular
employees of ours, or, at our request, Georgeson Shareholder Communications
Inc., a professional proxy solicitation firm ("Georgeson"), may also solicit
proxies by telephone, telegram or in-person. We will not additionally compensate
directors, officers or other regular employees for these services, but Georgeson
will be paid its customary fee, estimated to be approximately $6,500, if it
renders solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record at the close of business on March 27, 2001 will
be entitled to notice of and to vote at the Annual Meeting. At the close of
business on March 27, 2001, 269,456,708 shares of Common Stock were outstanding
and entitled to vote. Each holder of record of Common Stock on that date will be
entitled to one vote for each share held on all matters to be voted upon at the
Annual Meeting.
The inspector of election appointed for the meeting will tabulate all votes
and will separately tabulate affirmative and negative votes, abstentions and
broker non-votes. Abstentions will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether a matter has been approved. Generally, broker
non-votes occur when shares held by a broker for a beneficial owner are not
voted with respect to a particular proposal because (i) the broker has not
received voting instructions from a beneficial owner and (ii) the broker lacks
discretionary voting power to vote such shares.
REVOCABILITY OF PROXIES
Any person giving a proxy in response to this solicitation has the power to
revoke it at any time before it is voted. Proxies may be revoked by any of the
following actions:
- filing a written notice of revocation with our Secretary at our principal
executive office (2145 Hamilton Avenue, San Jose, California 95125);
<PAGE> 4
- filing with our Secretary at our principal executive office (2145
Hamilton Avenue, San Jose, California 95125) a properly executed proxy
showing a later date; or
- attending the meeting and voting in person (attendance at the meeting
will not, by itself, revoke a proxy).
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at our 2002
Annual Meeting of Stockholders in the proxy materials for such meeting must
comply with the requirements of SEC Rule 14a-8 and must be received no later
than December 20, 2001 in order to be included in the Proxy Statement and proxy
relating to that Annual Meeting. A stockholder proposal or a nomination for
director that will not be included in our Proxy Statement and proxy must
generally be submitted no earlier than February 24, 2002 and no later than March
26, 2002. We advise you to review our Bylaws, which contain this and other
requirements with respect to advance notice of stockholder proposals and
director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
eBay's Certificate of Incorporation and Bylaws, as amended to date, provide
that the Board of Directors shall be divided into three classes. The first class
currently consists of two directors, the second class currently consists of
three directors and the third class currently consists of two directors. The
term of office for the first class expires at the annual meeting of stockholders
to be held in 2002, the term of office for the second class expires at the
annual meeting of stockholders to be held in 2003 and the term of office for the
third class expires at the annual meeting of stockholders to be held on May 25,
2001. The term of each of these three classes will then expire at the third
annual meeting following the date of expiration described in the previous
sentence. A director elected to fill a vacancy (including a vacancy created by
an increase in the Board of Directors) will serve for the remainder of the term
of the class of directors in which the vacancy occurred and until his or her
successor is elected and qualified.
The Board of Directors is presently composed of seven members. There are
two directors in the class whose term of office expires in 2001, both of whom
are currently members of the Board of Directors. One of the nominees for
election was previously elected by the stockholders. The other nominee was
appointed by the Board of Directors in December 1999. If elected at the Annual
Meeting, each of the nominees would serve until the 2004 annual meeting and
until his or her successor is elected and has qualified, or until his or her
earlier death, resignation or removal.
Directors are elected by a plurality (excess of votes cast over opposing
nominees) of the votes present in person or represented by proxy and entitled to
vote at the meeting. Shares represented by signed proxies will be voted, if
authority to do so is not withheld, for the election of the two nominees named
below. If either nominee unexpectedly is unavailable for election, these shares
will be voted for the election of a substitute nominee proposed by management.
Each person nominated for election has agreed to serve if elected. Management
has no reason to believe that either nominee will be unable to serve.
Set forth below is biographical information for the nominees as well as for
each director whose term of office will continue after the Annual Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2004 ANNUAL MEETING
PHILIPPE BOURGUIGNON
Mr. Philippe Bourguignon, age 53, has served has a director of eBay since
December 1999. Mr. Bourguignon has served as Chairman of the Board of Club
Mediterranee S.A. since April 1997. Prior to his appointment at Club
Mediterranee S.A. Mr. Bourguignon was Chief Executive Officer of Euro Disney
S.A., the parent Company of Disneyland Paris, since 1993 and Executive Vice
President of The Walt Disney Company (Europe) S.A., since October 1996. Mr.
Bourguignon was named President of Euro Disney in 1992,
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a post he held through April 1993. He joined The Walt Disney Company in 1988 as
head of Real Estate development. Mr. Bourguignon holds a Masters Degree in
Economics at the University of Aix-en-Provence and holds a post-graduate diploma
from the Institut d'Administration des Enterprises (IAE) in Paris.
MARGARET C. WHITMAN
Ms. Margaret C. Whitman, age 44, has served as President and Chief
Executive Officer of eBay since February 1998 and as a director since March
1998. From January 1997 to February 1998, she was General Manager of the
Preschool Division of Hasbro Inc., a toy company. From February 1995 to December
1996, Ms. Whitman was employed by FTD, Inc., a floral products company, most
recently as President, Chief Executive Officer and a director. From October 1992
to February 1995, Ms. Whitman was employed by The Stride Rite Corporation in
various capacities, including President, Stride Rite Children's Group and
Executive Vice President, Product Development, Marketing & Merchandising, Keds
Division. From May 1989 to October 1992, Ms. Whitman was employed by The Walt
Disney Company, an entertainment company, most recently as Senior Vice
President, Marketing, Disney Consumer Products. Before joining Disney, Ms.
Whitman was at Bain & Co., a consulting firm, most recently as a Vice President.
Ms. Whitman is currently on a leave of absence from the board of directors of
Staples, Inc. Ms. Whitman holds an A.B. degree in Economics from Princeton
University and an M.B.A. degree from the Harvard Business School.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
SCOTT D. COOK
Mr. Scott D. Cook, age 48, has served as a director of eBay since June
1998. Mr. Cook is the founder of Intuit Inc., a financial software developer.
Mr. Cook has been a director of Intuit since March 1984 and its Chairman of the
Board since March 1993. From March 1984 to April 1994, Mr. Cook served as
President and Chief Executive Officer of Intuit. Mr. Cook also serves on the
board of directors of Amazon.com, Inc. Mr. Cook holds a B.A. degree in Economics
and Mathematics from the University of Southern California and an M.B.A. degree
from the Harvard Business School.
ROBERT C. KAGLE
Mr. Robert C. Kagle, age 45, has served as a director of eBay since June
1997. Mr. Kagle has been a Member of Benchmark Capital Management Co., L.L.C.,
the General Partner of Benchmark Capital Partners, L.P. and Benchmark Founders'
Fund, L.P., since its founding in May 1995. Mr. Kagle also has been a General
Partner of Technology Venture Investors since January 1984. Mr. Kagle also
serves on the board of directors of Ariba, Inc. and E-LOAN, Inc. Mr. Kagle holds
a B.S. degree in Electrical and Mechanical Engineering from the General Motors
Institute (renamed Kettering University in January 1998) and an M.B.A. degree
from the Stanford Graduate School of Business.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2003 ANNUAL MEETING
DAWN G. LEPORE
Ms. Dawn G. Lepore, age 47, has served as a director of eBay since December
1999. Ms. Lepore is Vice Chairman and Chief Information Officer and a member of
the Executive Management Committee of the Charles Schwab Corporation where she
has served for over 17 years in various capacities. Prior to her appointment as
Chief Information Officer at Schwab in October 1993, Ms. Lepore served as Senior
Vice President of Information Technology at Schwab from May 1993 to October
1993, responsible for the development of a wide range of systems to support
Schwab's growing product offerings and client base. She also led a strategic
initiative for redesigning Schwab's entire technology platform. Ms. Lepore also
serves on the board of directors of Equinix, Inc. and on the board of trustees
of Smith College. Ms. Lepore holds a B.A. degree from Smith College in Music.
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PIERRE M. OMIDYAR
Mr. Pierre M. Omidyar, age 33, founded eBay as a sole proprietorship in
September 1995. He has been a director and Chairman of the Board since eBay's
incorporation in May 1996 and also served as its Chief Executive Officer, Chief
Financial Officer and President from inception to February 1998, November 1997
and August 1996, respectively. Prior to founding eBay, Mr. Omidyar was a
developer services engineer at General Magic, a mobile communication platform
company from December 1994 to July 1996. Mr. Omidyar co-founded Ink Development
Corp. (later renamed eShop) in May 1991 and served as a software engineer there
from May 1991 to September 1994. Prior to co-founding Ink, Mr. Omidyar was a
developer for Claris, a subsidiary of Apple Computer, and for other
Macintosh-oriented software development companies. Mr. Omidyar holds a B.S.
degree in Computer Science from Tufts University.
HOWARD D. SCHULTZ
Mr. Howard D. Schultz, age 47, has served as a director of eBay since June
1998. Mr. Schultz is the founder of Starbucks Corporation, a provider of gourmet
coffee, and has been its Chairman of the Board and Chief Global Strategist since
June 2000. From Starbucks' inception in 1985 to June 2000, he served as its
Chairman of the Board and Chief Executive Officer. From 1985 to June 1994, Mr.
Schultz also served as President of Starbucks. Mr. Schultz was the director of
Retail Operations and Marketing for Starbucks Coffee Company, a predecessor to
Starbucks, from September 1982 to December 1985 and was the Chairman of the
Board, Chief Executive Officer and President of Il Giornale Coffee Company, a
predecessor to Starbucks, from January 1986 to July 1987. Mr. Schultz is also
one of two founding members of Maveron LLC, a company providing advisory
services to consumer-based businesses, and is a member of two LLCs that serve as
General Partners of Maveron LLC's affiliated venture capital funds, Maveron
Equity Partners LP and Maveron Equity Partners 2000 LP. Mr. Schultz also serves
on the board of directors of Drugstore.com, Inc.
BOARD COMMITTEES AND MEETINGS
During 2000, our Board of Directors held 13 meetings. The Board of
Directors has an Audit Committee and a Compensation Committee.
The Audit Committee consists of Messrs. Kagle and Cook and Ms. Lepore. The
Audit Committee held three meetings during fiscal year 2000. The primary
responsibilities of the Audit Committee are to meet with our independent
auditors at least annually to review the results of the annual audit and to
discuss the financial statements, including the independent auditors' judgment
about the quality of accounting principles, the reasonableness of significant
judgments and the clarity of the disclosures in the financial statements.
Additionally, the Audit Committee meets with our independent auditors to review
the interim financial statements prior to the filing of our Quarterly Reports on
Form 10-Q, recommends to the Board of Directors the independent auditors to be
retained, oversees the independence of the independent auditors, evaluates the
independent auditors' performance, receives and considers the independent
auditors' comments as to controls, adequacy of staff and management performance
and procedures in connection with audit and financial controls, including our
system to monitor and manage business risks and legal and ethical compliance
programs, prepares Audit Committee Report for inclusion in our Proxy Statement
and meets with our General Counsel to discuss legal matters that may have a
material impact on our financial statements or our compliance policies. All
members of our Audit Committee are independent within the meaning of the listing
standards of the Nasdaq National Market. The charter of our Audit Committee is
attached hereto as Exhibit B.
The Compensation Committee makes recommendations to the Board of Directors
concerning salaries and incentive compensation for our officers and employees
and administers our employee benefit plans. The Compensation Committee is
composed of three non-employee directors: Messrs. Kagle, Bourguignon and
Schultz. It met three times during 2000.
During 2000, each Board member attended 75% or more of the meetings held by
the Board and each committee member attended 75% or more of the meetings held by
the committees on which he or she served.
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PROPOSAL 2
APPROVAL OF THE 2001 EQUITY INCENTIVE PLAN
In March 2001, our Board of Directors adopted the 2001 Equity Incentive
Plan (the "2001 Plan") and reserved 10,000,000 shares of Common Stock for
issuance under the 2001 Plan, subject to stockholder approval.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
A summary of the 2001 Plan is set forth below. The discussion below is
qualified in its entirety by reference to the 2001 Plan, a copy of which is
attached as Exhibit A to this Proxy Statement.
GENERAL
The 2001 Plan provides for the grant of incentive stock options and
nonstatutory stock options. Incentive stock options granted under the 2001 Plan
are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Nonstatutory stock options granted under the 2001 Plan are not intended to
qualify as incentive stock options under the Code.
PURPOSE
We adopted the 2001 Plan to provide a means by which employees, directors
and consultants of eBay and its affiliates may be given an opportunity to
purchase our common stock. We anticipate that the 2001 Plan will assist us in
retaining the services of such persons, in securing and retaining the services
of persons capable of filling such positions and in providing incentives for
such persons to exert maximum efforts for our success.
ADMINISTRATION
The Board administers the 2001 Plan. Subject to the provisions of the 2001
Plan, it may construe and interpret the 2001 Plan and determine the persons to
whom and the dates on which options will be granted. Subject to the provisions
of the 2001 Plan, it also may determine the number of shares of our Common Stock
to be subject to each option, the exercise and vesting schedule, the exercise
price, the type of consideration and other terms of the option. Pursuant to its
authority to delegate administration of the 2001 Plan to a committee of one or
more members of the Board of Directors, the Board of Directors has delegated
such administration to its Compensation Committee. Therefore, as used herein,
the "Board" refers to the Compensation Committee as well as to the Board of
Directors itself.
The regulations under Section 162(m) of the Code require that the directors
who serve as members of the committee must be "outside directors." The 2001 Plan
provides that, in the Board's discretion, directors serving on the committee may
be "outside directors" within the meaning of Section 162(m). This limitation
would exclude from the committee directors who are: (i) current employees of
ours or of an affiliate of ours; (ii) former employees of ours or an affiliate
of ours receiving compensation for past services (other than benefits under a
tax-qualified pension plan); (iii) current and former officers of ours or an
affiliate of ours; (iv) directors currently receiving direct or indirect
remuneration from us or an affiliate of ours in any capacity (other than as a
director); and (v) any other person who is otherwise considered an "outside
director" for purposes of Section 162(m). The definition of an "outside
director" under Section 162(m) is generally narrower than the definition of a
"non-employee director" under Rule 16b-3 of the Securities Exchange Act of 1934,
as amended.
ELIGIBILITY
We intended the 2001 Plan to benefit all of our employees and consultants
and the employees, directors and consultants of our affiliates. As such, all are
eligible to participate in the 2001 Plan. However, nonemployee directors are
eligible only for grants where the essential terms have been set forth in the
2001
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Plan and been approved by our stockholders, and the 2001 Plan currently does not
provide for such nondiscretionary grants. In addition, the Board may grant
incentive stock options under the 2001 Plan only to our employees and employees
of our affiliates.
The Board may not grant an incentive stock option under the 2001 Plan to
any person who, at the time of the grant, owns (or is deemed to own) stock
possessing more than 10% of the total combined voting power of us or any of our
affiliates, unless the exercise price is at least 110% of the fair market value
of the Common Stock subject to the option on the date of grant and the term of
the option does not exceed five years from the date of grant. In addition, the
aggregate fair market value, determined at the time of grant, of the shares of
our Common Stock with respect to which incentive stock options are exercisable
for the first time by the optionholder during any calendar year (under the 2001
Plan and any other plan of ours or our affiliates) may not exceed $100,000.
No employee may be granted options under the 2001 Plan covering more than
1,000,000 shares of our Common Stock during any calendar year ("Section 162(m)
Limitation").
STOCK SUBJECT TO THE 2001 PLAN
We have reserved an aggregate of 10,000,000 shares of our Common Stock for
issuance under the 2001 Plan. If options granted under the 2001 Plan expire or
otherwise terminate without being exercised, the shares of our Common Stock not
acquired pursuant to such options again become available for issuance under the
2001 Plan. To date we have not granted any options under the 2001 Plan.
TERMS OF OPTIONS
Exercise Price; Payment. The exercise price of incentive stock options may
not be less than 100% of the fair market value of the Common Stock subject to
the option on the date of the grant and, in some cases (see "Eligibility"
above), may not be less than 110% of such fair market value. The exercise price
of nonstatutory options generally may not be less than 100% of the fair market
value of the Common Stock on the date of grant. However, the Board may establish
an exercise price for a nonstatutory stock option with up to a 15% discount if
the discount is expressly granted in lieu of a reasonable amount of salary or a
cash bonus. If options were granted with exercise prices below fair market
value, deductions for compensation attributable to the exercise of such options
could be limited by Section 162(m) of the Code. See "-- Federal Income Tax
Information." As of April 9, 2001, the closing price of our Common Stock as
reported on the Nasdaq National Market System was $37.98 per share. The
optionholder may pay the exercise price either in cash or, if allowed by the
Board, by delivery of other shares of our Common Stock or in any other form of
legal consideration acceptable to the Board.
Option Exercise. Options granted under the 2001 Plan may become exercisable
in cumulative increments ("vest") as determined by the Board, and the Board may
accelerate the time during which an option may vest or be exercised. In
addition, options may permit exercise prior to vesting, but in such event the
optionholder will be required to enter into an early exercise stock purchase
agreement that allows us to repurchase unvested shares, generally at the
optionholder's exercise price, should the optionholder's service terminate
before vesting. To the extent provided by the terms of an option, an
optionholder may satisfy any tax withholding obligation relating to the exercise
of the option by a cash payment upon exercise, by authorizing us to withhold a
portion of the Common Stock otherwise issuable to the optionholder, by
delivering already-owned shares of our Common Stock or by a combination of these
means.
Term. The term of options will be 10 years or less, and options generally
will terminate three months after termination of the optionholder's service. If
such termination is due to the optionholder's disability, the option generally
may be exercised (to the extent the option was exercisable at the time of the
termination of service) at any time within 12 months of such termination. If the
optionholder dies during the option term, or within three months after
termination of service other than for cause or because of disability, the option
generally may be exercised (to the extent the option was exercisable at the time
of the optionholder's death) within 12 months of the optionholder's death. An
optionholder may designate a beneficiary who may exercise the option following
the optionholder's death.
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RESTRICTIONS ON TRANSFER
The optionholder may not transfer an incentive stock option otherwise than
by will or by the laws of descent and distribution. The Board may grant
nonstatutory stock options that are transferable to the extent provided in the
stock option agreement.
ADJUSTMENT PROVISIONS
Transactions not involving our receipt of consideration, such as a merger,
consolidation, reorganization, stock dividend, or stock split, may change the
class and number of shares of our Common Stock subject to the 2001 Plan and to
outstanding options. In that event, the Board will appropriately adjust the 2001
Plan as to the class and the maximum number of shares of our Common Stock
subject to the 2001 Plan and to the Section 162(m) Limitation, and will adjust
outstanding options as to the class, number of shares and price per share of our
Common Stock.
EFFECT OF CERTAIN CORPORATE EVENTS
In the event of our dissolution or liquidation, outstanding options will
terminate. However, outstanding options do not automatically terminate in the
event of a change in control. A "change in control" means a sale, lease or other
disposition of all or substantially all of our assets, a merger or consolidation
in which we are not the surviving corporation, or a reverse merger in which we
are the surviving corporation but the shares of our stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property. In the event of a change in control, any surviving corporation
or acquiring corporation may assume or continue outstanding options or may
substitute similar options. If it refuses to do so, then with respect to options
held by optionholders whose service has not terminated, the vesting of such
options (and, if applicable, the time during which such options may be
exercised) will be accelerated in full. The unexercised portion of all
outstanding options will terminate upon the change in control. The acceleration
of an option in the event of a change in control may be viewed as an
anti-takeover provision, which may have the effect of discouraging a proposal to
acquire or otherwise obtain control of us.
DURATION, AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the 2001 Plan at any time or from
time to time. Stockholder approval of the 2001 Plan or an amendment must be
sought if necessary under applicable laws or regulations. Stockholder approval
also must be sought for any material amendment to the 2001 Plan. However, the
Board may submit the 2001 Plan and any amendment thereto for stockholder
approval at its discretion.
FEDERAL INCOME TAX INFORMATION
Options granted under the 2001 Plan to persons subject to United States
taxation generally have the following federal income tax consequences:
Incentive Stock Options. Incentive stock options under the 2001 Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionholder
or to us by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the
optionholder's alternative minimum tax liability, if any.
If an optionholder holds stock acquired through exercise of an incentive
stock option for at least two years from the date on which the option is granted
and at least one year from the date on which the shares are transferred to the
optionholder upon exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss if the optionholder held the
stock for more than one year.
Generally, if the optionholder disposes of the stock before the expiration
of either of these holding periods (a "disqualifying disposition"), then at the
time of disposition the optionholder will realize taxable ordinary income equal
to the lesser of (i) the excess of the stock's fair market value on the date of
exercise over the
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exercise price, or (ii) the optionholder's actual gain, if any, on the purchase
and sale. The optionholder's additional gain or any loss upon the disqualifying
disposition will be a capital gain or loss, which will be long-term or
short-term depending on whether the stock was held for more than one year.
To the extent the optionholder recognizes ordinary income by reason of a
disqualifying disposition, we will generally be entitled (subject to the
requirement of reasonableness, the provisions of Section 162(m) of the Code and
the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
Nonstatutory Stock Options. There are no tax consequences to the
optionholder or to us by reason of the grant of a nonstatutory stock option.
Upon acquisition of the stock, the optionholder normally will recognize taxable
ordinary income equal to the excess, if any, of the stock's fair market value on
the acquisition date over the purchase price. However, to the extent the stock
is subject to certain types of vesting restrictions, the taxable event will be
delayed until the vesting restrictions lapse unless the optionholder elects to
be taxed on receipt of the stock. With respect to employees, we are generally
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, we generally will be entitled to a
business expense deduction equal to the taxable ordinary income realized by the
optionholder.
Upon disposition of our stock, the optionholder will recognize a capital
gain or loss equal to the difference between the selling price and the sum of
the amount paid for such stock plus any amount recognized as ordinary income
upon acquisition (or vesting) of the stock. Such gain or loss will be long-term
or short-term depending on whether the optionholder held our stock for more than
one year. Slightly different rules may apply to optionholders who acquire stock
subject to certain repurchase options or who are subject to Section 16(b) of the
Exchange Act.
Capital Gains. Long-term capital gains currently are generally subject to
lower tax rates than ordinary income or short-term capital gains. The maximum
long-term capital gains rate for federal income tax purposes is currently 20%
while the maximum ordinary income rate and short-term capital gains rate is
effectively 39.6%. Slightly different rules may apply to participants who
acquire stock subject to our repurchase right.
Potential Limitation on Company Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain "covered employees" in a taxable year to the extent that compensation to
such covered employee exceeds $1 million. It is possible that compensation
attributable to options, when combined with all other types of compensation
received by a covered employee from us, may cause this limitation to be exceeded
in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation if
the option is granted by a compensation committee comprised solely of "outside
directors" and either (i) the plan contains a per-employee limitation on the
number of shares for which such options may be granted during a specified
period, the per-employee limitation is approved by the stockholders, and the
exercise price of the option is no less than the fair market value of the stock
on the date of grant, or (ii) the option is granted (or exercisable) only upon
the achievement (as certified in writing by the compensation committee) of an
objective performance goal established in writing by the compensation committee
while the outcome is substantially uncertain, and the option is approved by
stockholders.
8
<PAGE> 11
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
We have selected PricewaterhouseCoopers LLP as our independent auditors for
the fiscal year ending December 31, 2001. We are submitting our selection of
independent auditors for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited our financial statements since November
1997. We expect that representatives of PricewaterhouseCoopers LLP will be
present at the Annual Meeting, will have an opportunity to make a statement if
they wish and will be available to respond to appropriate questions.
The Bylaws do not require that the stockholders ratify the selection of
PricewaterhouseCoopers LLP as our independent auditors. However, we are
submitting the selection of PricewaterhouseCoopers LLP to the stockholders for
ratification as a matter of good corporate practice. If the stockholders do not
ratify the selection, the Board of Directors and the Audit Committee will
reconsider whether or not to retain PricewaterhouseCoopers LLP. Even if the
selection is ratified, the Board of Directors and the Audit Committee in their
discretion may change the appointment at any time during the year if we
determine that such a change would be in the best interests of eBay and our
stockholders.
AUDIT AND OTHER PROFESSIONAL FEES
During the fiscal year ended December 31, 2000, the aggregate fees billed
by PricewaterhouseCoopers LLP were as follows:
AUDIT FEES. PricewaterhouseCoopers LLP's fee for its audit of our financial
statements and the review of our interim financial statements was $532,449,
of which $232,674 was billed in fiscal year 2000.
FINANCIAL INFORMATION DESIGN AND IMPLEMENTATION
FEES. PricewaterhouseCoopers LLP did not render information technology
consulting services to us in fiscal year 2000.
ALL OTHER FEES. PricewaterhouseCoopers LLP's fee for other professional
service fees, including fees pertaining to acquisition and other
transactional related due diligence, was $406,772, all of which was billed
in fiscal year 2000.
The Audit Committee has determined that the rendering of non-audit services
by PricewaterhouseCoopers LLP was compatible with maintaining their
independence.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
9
<PAGE> 12
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us with respect
to beneficial ownership of the Common Stock as of April 1 2001, by (i) each
stockholder that we know is the beneficial owner of more than 5% of the Common
Stock, (ii) each director and nominee for director, (iii) each of the executive
officers named in the Summary Compensation Table set forth under "Executive
Compensation -- Compensation of Executive Officers -- Summary of Compensation"
and (iv) all executive officers and directors as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ----------- -------
<S> <C> <C>
Pierre M. Omidyar(2)........................................ 69,198,342 25.7%
Jeffrey S. Skoll(3)......................................... 39,868,830 14.8
Janus Capital Corporation(4)................................ 14,549,255 5.4
Margaret C. Whitman(5)...................................... 11,251,329 4.2
Maynard G. Webb, Jr.(6)..................................... 427,500 *
Jeffrey D. Jordan(7)........................................ 159,062 *
Matthew J. Bannick(8)....................................... 94,430 *
Michael R. Jacobson(9)...................................... 716,924 *
Philippe Bourguignon(10).................................... 71,250 *
Scott D. Cook(11)........................................... 1,006,666 *
Robert C. Kagle(12)......................................... 2,213,943 *
Dawn G. Lepore(13).......................................... 71,250 *
Howard D. Schultz(14)....................................... 520,913 *
All directors and executive officers as a group (16
persons)(15).............................................. 129,412,277 47.4
</TABLE>
---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities. Unless
otherwise indicated below, the persons and entities named in the table have
sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where applicable.
Shares of Common Stock subject to options that are currently exercisable or
exercisable within 60 days of April 1, 2001 are deemed to be outstanding
for the purpose of computing the percentage ownership of the person holding
those options, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person. The percentage of
beneficial ownership is based on 269,476,908 shares of Common Stock
outstanding as of April 1, 2001.
(2) Mr. Omidyar is our Founder and Chairman of the Board. Includes 828,800
shares held by his spouse as to which he disclaims beneficially ownership.
In addition, it includes 250,000 shares held by The Omidyar Foundation. Mr.
Omidyar is trustee of the entity and disclaims beneficial ownership of the
shares. The address for Mr. Omidyar is 2145 Hamilton Avenue, San Jose,
California 95125.
(3) Mr. Skoll is our Vice President Strategic Planning and Analysis. The
address for Mr. Skoll is 2145 Hamilton Avenue, San Jose, California 95125.
(4) The address for Janus Capital Corporation is 100 Fillmore Street, Denver,
Colorado 80206-4923.
(5) Ms. Whitman is our President and Chief Executive Officer. Includes
3,777,184 shares held by the Griffith R. Harsh, IV & Margaret C. Whitman
TTEES of Sweetwater Trust U/A/D 10/15/99. In addition, it includes (a)
1,198 shares held by Griffith Rutherford Harsh IV Custodian Griffith
Rutherford Harsh V UTMA California as to which Ms. Whitman's spouse is
custodian for the trust and as to which Ms. Whitman disclaims beneficially
ownership and (b) 1,198 shares held by Griffith Rutherford Harsh IV
Custodian William Whitman Harsh UTMA California as to which
10
<PAGE> 13
Ms. Whitman's spouse is custodian for the trust and as to which Ms. Whitman
disclaims beneficially ownership. As of May 31, 2001, 8,551,333 shares of
the 11,251,329 shares beneficially owned by Ms. Whitman were vested and
2,699,996 were unvested and subject to our right of repurchase at their
original purchase price of $0.0334 per share. The address for Ms. Whitman
is 2145 Hamilton Avenue, San Jose, California 95125.
(6) Mr. Webb is our President of Technologies. Includes 427,500 shares Mr. Webb
has the right to acquire pursuant to outstanding options exercisable within
60 days. The address for Mr. Webb is 2145 Hamilton Avenue, San Jose,
California 95125.
(7) Mr. Jordan is our Senior Vice President and General Manager, US Business.
Includes 158,333 shares Mr. Jordan has the right to acquire pursuant to
outstanding options exercisable within 60 days. The address for Mr. Jordan
is 2145 Hamilton Avenue, San Jose, California 95125.
(8) Mr. Bannick is our Senior Vice President, International. Includes 93,749
shares Mr. Bannick has the right to acquire pursuant to outstanding options
exercisable within 60 days. The address for Mr. Bannick is 2145 Hamilton
Avenue, San Jose, California 95125.
(9) Mr. Jacobson is our Vice President, Legal Affairs, General Counsel and
Secretary. Includes 629,395 shares Mr. Jacobson has the right to acquire
pursuant to outstanding options exercisable within 60 days. The address for
Mr. Jacobson is 2145 Hamilton Avenue, San Jose, California 95125.
(10) Includes 71,250 shares Mr. Bourguignon has the right to acquire pursuant to
outstanding options exercisable within 60 days. The address for Mr.
Bourguignon is c/o Club Mediterranee, 11 rue de Cambrai, 75019 Paris,
France.
(11) Includes 663,750 shares Mr. Cook has the right to acquire pursuant to
outstanding options exercisable within 60 days. The address for Mr. Cook is
c/o Intuit, Inc., 2535 Garcia Avenue, Mountain View, California 94043.
(12) The shares are held by Robert & Joanne Kagle Trust UAD 4/4/96, Robert Kagle
and Joanne Kagle, TTEES. Includes 7,500 shares Mr. Kagle has the right to
acquire pursuant to outstanding options exercisable within 60 days. The
address for Mr. Kagle is c/o Benchmark Capital Management Co., L.L.C., 2480
Sand Hill Road, Suite 200, Menlo Park, California 94025.
(13) Includes 71,250 shares Ms. Lepore has the right to acquire pursuant to
outstanding options exercisable within 60 days. The address for Ms. Lepore
is c/o The Charles Schwab Corporation, 101 Montgomery Street, M.S.,
120-30-305, San Francisco, California 94104.
(14) Includes 147,819 shares held by Maveron LLC, 4,043 shares held by
Maveron-Herlick LLC and 147,656 shares held by Maveron Equity Partners,
L.P., a limited partnership in which Mr. Schultz is a member of the general
partner. Mr. Schultz disclaims beneficial ownership of shares held by these
entities except for his proportional interest in those shares. Includes
7,500 shares Mr. Schultz has the right to acquire pursuant to outstanding
options exercisable within 60 days. The address for Mr. Schultz is c/o
Starbucks Corporation, 2401 Utah Ave. South, Seattle, Washington 98134. The
address for Maveron is 505 Fifth Avenue, Suite 600, Seattle, Washington
98104.
(15) Includes 3,788,352 shares subject to options exercisable within 60 days.
11
<PAGE> 14
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers are elected annually by the Board and serve at the
discretion of the Board. Set forth below is information regarding our executive
officers as of April 1, 2001.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Margaret C. Whitman.................. 44 President & Chief Executive Officer
Matthew J. Bannick................... 36 Senior Vice President, International
Gary F. Bengier...................... 46 Senior Vice President, Strategic Planning and
Development
William C. Cobb...................... 44 Senior Vice President, Global Marketing
Rajiv Dutta.......................... 39 Senior Vice President, Chief Financial Officer
Michael R. Jacobson.................. 46 Vice President, Legal Affairs, General Counsel &
Secretary
Jeffrey D. Jordan.................... 42 Senior Vice President and General Manager, US Business
Jeffrey S. Skoll..................... 36 Vice President, Strategic Planning and Development
Brian T. Swette...................... 47 Executive Vice President, Chief Operating Officer
Maynard G. Webb, Jr. ................ 45 President of eBay Technologies
------------------
</TABLE>
The biography of Margaret C. Whitman is set forth under the heading
"Proposal 1 -- Election of Directors -- Nominees For Election for a Three-Year
Term Expiring at the 2004 Annual Meeting."
Matthew J. Bannick serves eBay as Senior Vice President, International.
From June 2000 to December 2000, Mr. Bannick served as eBay's Vice President,
International. From November 1999 to June 2000, Mr. Bannick served as eBay's
Vice President, Product and Community. From February 1999 to November 1999, Mr.
Bannick served as eBay's Vice President, Customer Support. From April 1995 to
January 1999, Mr. Bannick was an executive for Navigation Technologies
(NavTech), the leading provider of digital map databases for the vehicle
navigation and Internet mapping industries. Mr. Bannick was President of NavTech
North America for three years and also served as Senior Vice President of
Marketing and Vice President of Operations. From June 1992 to August 1992, Mr.
Bannick served as a consultant for McKinsey & Company, in Europe and from June
1993 to April 1995 in the U.S. Mr. Bannick also served as a US diplomat in
Germany during the period of German unification. Mr. Bannick holds a B.A. in
Economics and International Studies from University of Washington and an M.B.A.
degree from the Harvard Business School.
Gary F. Bengier serves as eBay Senior Vice President, Strategic Planning
and Development. From November 1997 to January 2001, Mr. Bengier served as
eBay's Vice President, Chief Financial Officer. From February 1997 to October
1997, Mr. Bengier was Vice President and Chief Financial Officer of VXtreme,
Inc. a developer of Internet video streaming products. Prior to that time, Mr.
Bengier was Corporate Controller at Compass Design Automation, a publisher of
electronic circuit design software, from February 1993 to February 1997. Mr.
Bengier has also held senior financial positions at Kenetech Corp., an energy
services company, and Qume Corp., a computer peripherals company, where he
participated in numerous debt and equity financing transactions. Mr. Bengier
holds a B.B.A. degree in Computer Science and Operations Research from Kent
State University and an M.B.A. degree from the Harvard Business School.
William C. Cobb serves eBay as Senior Vice President, Global Marketing.
From February 2000 to June 2000, Mr. Cobb served as the General Manager of
Consumer Sales for Netpliance, Inc., an Internet-based content Company. From
July 1997 to February 2000, Mr. Cobb served as the Senior Vice President of
International Marketing for Tricon Global Restaurants, Inc. From August 1995 to
July 1997, Mr. Cobb served as the Senior Vice President and Chief Marketing
Officer for Pizza Hut, Inc., a division of Tricon Global Restaurants, Inc. From
May 1994 to August 1995, Mr. Cobb served as Vice President of Colas for the
Pepsi-Cola Company, a division of PepsiCo., Inc. Mr. Cobb holds a B.S. in
Economics from the University of Pennsylvania and a M.B.A. degree from
Northwestern University.
Rajiv Dutta serves eBay as Senior Vice President, Chief Financial Officer.
From August 1999 to January 2001, Mr. Dutta served as eBay's Vice President of
Finance and Investor Relations. From July 1998 to August 1999, Mr. Dutta served
as eBay's Finance director. From February 1998 to July 1998, Mr. Dutta served as
the World Wide Sales Controller of KLA-Tencor. Prior to KLA-Tencor, Mr. Dutta
spent nine
12
<PAGE> 15
years, from January 1989 to February 1998, at Bio-Rad Laboratories, Inc., a
manufacturer and distributor of life science and diagnostic products with
operations in over 24 countries. Mr. Dutta held a variety of positions with the
Company, including the group controller of the Life Science Group. Prior to that
position, Mr. Dutta was in a general management role, responsible for opening
and building the company's operations in India as well as serving as the
director of finance for the Asia-Pacific region. Mr. Dutta holds a B.A. in
Economics from St. Stephen's College, Delhi University in India and a M.B.A.
from Drucker School of Management.
Michael R. Jacobson has served as eBay's Vice President, Legal Affairs,
General Counsel and Secretary since August 1998. From 1986 to August 1998, Mr.
Jacobson was a partner with the law firm of Cooley Godward LLP, specializing in
securities law, mergers and acquisitions and other transactions. Mr. Jacobson
holds an A.B. degree in Economics from Harvard College and a J.D. degree from
Stanford Law School.
Jeffrey D. Jordan serves as Senior Vice President and General Manager, US
Business. From September 1999 to April 2000 served as eBay's Vice President,
Regionals and Services. From September 1998 to September 1999, Mr. Jordan served
as Chief Financial Officer for Hollywood Entertainment and President of their
subsidiary, Reel.com. From September 1990 to September 1998, Mr. Jordan served
in various capacities including most recently Senior Vice President and Chief
Financial Officer of The Disney Store Worldwide, a subsidiary of The Walt Disney
Company. Mr. Jordan holds a B.A. in Political Science and Psychology from
Amherst College and a M.B.A. degree from the Stanford Graduate School of
Business.
Jeffrey S. Skoll has served as eBay's Vice President Strategic Planning and
Analysis since February 1998, its President from August 1996 to February 1998
and as a director from December 1996 to March 1998. From July 1995 to July 1996,
Mr. Skoll served as Channel Marketing Manager for Knight-Ridder Information
Inc., an online information services company and from September 1993 to July
1995 was a student at the Stanford Graduate School of Business. Prior to that
time, Mr. Skoll was President of Skoll Engineering, a systems consulting firm
that he founded, from September 1987 to August 1993. Mr. Skoll also co-founded
Micros on the Move Ltd., a computer rentals company, as an adjunct to Skoll
Engineering in 1990. Mr. Skoll holds a B.a.S.C. degree in Electrical Engineering
from the University of Toronto and an M.B.A. degree from the Stanford Graduate
School of Business.
Brian T. Swette serves as eBay's Executive Vice President, Chief Operating
Officer. From October 1999 to November 2000, Mr. Swette served as Vice
President, Chief Operating Officer. From August 1998 to October 1999, Mr. Swette
served as Senior Vice President of Marketing. From 1981 to June 1998, Mr. Swette
was employed by Pepsi-Cola Beverages, a global beverage company, in various
capacities including most recently Executive Vice President and Chief Marketing
Officer-Global Beverages. Mr. Swette holds a B.S. degree in Economics from
Arizona State University.
Maynard G. Webb, Jr. has served as President, eBay Technologies since
August 1999. From July 1998 to August 1999, Mr. Webb was Senior Vice President
and Chief Information Officer at Gateway, Inc. From February 1995 to July 1998,
Mr. Webb was Vice President and Chief Information Officer at Bay Networks, Inc.
From June 1991 to January 1995, Mr. Webb was Director, IT at Quantum
Corporation. Mr. Webb also serves on the board of directors of Extensity, Inc.,
an Internet-based software company, and Niku Corporation, an Internet-based
software company. Mr. Webb holds a B.A.A. degree from Florida Atlantic
University.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than 10% of a registered class
of our equity securities, to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the company. Officers, directors and greater than 10% stockholders are required
by SEC regulation to furnish us with copies of all Section 16(a) forms they
file.
To our knowledge, based solely on a review of the copies of such reports
furnished to us and written representations that no other reports were required,
during the fiscal year ended December 31, 2000, all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with, except that Mr. Kagle failed to timely
report, by two days, a transaction on a Form 4 that occurred in November 2000.
13
<PAGE> 16
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Our directors do not receive cash compensation for their services as
directors but are reimbursed for their reasonable expenses for attending Board
and Board committee meetings.
Under the 1998 Directors Stock Option Plan (the "Directors Plan"), members
of the Board who are not employees of eBay, or any parent, subsidiary or
affiliate of eBay, are eligible to participate in the Directors Plan. 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 will initially be
granted an option to purchase 180,000 shares (an "Initial Grant") on the date
elected to the Board of Directors. At each Annual Meeting, each eligible
director will automatically be granted an additional option to purchase 30,000
shares if he or she has served continuously as a member of the Board since the
date of his or her Initial Grant. 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 term of these options is ten years, provided that they
will terminate seven months following the date on which the director ceases to
be a director or consultant of eBay (12 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
director or consultant of eBay.
14
<PAGE> 17
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows certain compensation earned during fiscal year
ending December 31, 1998, 1999 and 2000, by our Chief Executive Officer and four
most highly-compensated executive officers (based on their salary and bonus
compensation) at December 31, 2000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM AND OTHER
COMPENSATION
-------------------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------- SECURITIES ALL OTHER
NAME AND FISCAL OTHER ANNUAL UNDERLYING COMPENSATION
2000 PRINCIPAL POSITIONS YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(3) (4)
------------------------ ------ -------- -------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Margaret C. Whitman...... 2000 $210,000 $ 87,914 $1,500 500,000 $ 382
President and Chief 1999 195,000 97,500 1,500 -- 455
Executive Officer 1998 145,833 100,000 1,500 14,400,000 34,894
Maynard G. Webb, Jr. .... 2000 450,000 503,151 -- 100,000 384
President, eBay 1999 184,327(5) 108,000 -- 1,000,000 23,175
Technologies 1998 -- -- -- -- --
Jeffrey D. Jordan........ 2000 290,000 136,254 1,500 300,000 29,250
Senior Vice President
and 1999 64,481(6) 16,323 1,500 300,000 5,096
General Manager, 1998 -- -- -- -- --
US Business
Matthew J. Bannick....... 2000 207,250 86,139 1,500 140,000 372
Senior Vice President, 1999 131,106(7) 61,381 1,500 260,000 244
International 1998 -- -- -- -- --
Michael R. Jacobson...... 2000 190,000 65,139 1,500 200,000 365
Vice President, Legal 1999 160,000 56,000 1,500 -- 379
Affairs, General 1998 52,265(8) 60,000 1,500 1,500,012 --
Counsel and Secretary
</TABLE>
---------------
(1) All 2000 bonuses represent amounts paid in 2000 and 2001 for services
rendered in 2000, all 1999 bonuses represent amounts paid in 2000 for
services rendered in 1999 and all 1998 bonuses represent amounts paid in
1999 for services rendered in 1998, except for signing bonuses of $108,000
paid to Mr. Webb in 1999 and $50,000 paid to Mr. Jacobson in 1998.
(2) Represents matching contributions under our 401(k) Plan.
(3) Certain option grants were subsequently rescinded and cancelled by agreement
between eBay and the applicable Named Executive Officer in July 2000. See
the table entitled "-- Option Grants During 2000" and "-- Report of the
Compensation Committee of the Board of Directors on Executive Compensation."
(4) Represents: (i) in the case of Ms. Whitman, a reimbursement for relocation
expenses paid to her in 1998; (ii) in the case of Mr. Webb, a reimbursement
for relocation expenses paid to him in 1999 ($22,815); (iii) in the case of
Mr. Jordan, a reimbursement for relocation expenses paid to him in 1999
($5,000) and 2000 ($28,866); and (iv) in the case of each of the Named
Executive Officers, insurance premiums we paid with respect to group life
insurance for their benefit.
(5) Mr. Webb was hired by eBay in July 1999. Accordingly, the amounts shown in
the table above for fiscal year 1999 are for a period of less than a year.
Mr. Webb's salary in 1999 was $450,000 per annum.
(6) Mr. Jordan was hired by eBay in September 1999. Accordingly, the amounts
shown in the table above for fiscal year 1999 are for a period of less than
a year. Mr. Jordan's salary in 1999 was $210,000 per annum.
(7) Mr. Bannick was hired by eBay in February 1999. Accordingly, the amounts
shown in the table above for fiscal year 1999 are for a period of less than
a year. Mr. Bannick's salary in 1999 was $175,000 per annum.
(8) Mr. Jacobson was hired by eBay in August 1998. Accordingly, the amounts
shown in the table above for fiscal year 1998 are for a period of less than
a year. Mr. Jacobson's salary in 1998 was $150,000 per annum.
15
<PAGE> 18
The following executive officers received grants of options in 2000 under
eBay's 1998 Equity Incentive Plan (the "1998 Plan").
OPTION GRANTS DURING 2000
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENTAGE OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(4)
OPTIONS EMPLOYEES PER EXPIRATION ------------------------------
NAME GRANTED(1) DURING 2000(2) SHARE(3) DATE 5% 10%
---- ---------- -------------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Margaret C. Whitman....... 250,000(5) 2.2% $58.00 05/23/10 $9,118,972 $23,109,266
250,000(5) 2.2 62.32 06/20/10 9,796,999 24,827,519
Maynard G. Webb, Jr. ..... 50,000(5) 0.4 58.00 05/23/10 1,823,794 4,621,853
50,000(5) 0.4 62.32 06/20/10 1,959,400 4,965,504
Jeffrey D. Jordan......... 100,000 0.9 71.12 01/10/10 4,473,013 11,335,493
100,000(5) 0.9 58.00 05/23/10 3,647,589 9,243,706
100,000(5) 0.9 62.32 06/20/10 3,918,800 9,931,008
Matthew J. Bannick........ 70,000(5) 0.6 58.00 05/23/10 2,553,312 6,470,594
70,000(5) 0.6 62.32 06/20/10 2,743,160 6,951,705
Michael R. Jacobson....... 100,000(5) 0.9 58.00 05/23/10 3,647,589 9,243,706
100,000(5) 0.9 62.32 06/20/10 3,918,800 9,931,008
</TABLE>
---------------
(1) Options granted in 2000 were granted under the 1998 Plan. All options
granted were nonqualified stock options. The options were granted by the
Board and generally vest over four years at the rate of 25% of the shares
subject to the option on the first vesting date and 2.08% per month
thereafter.
(2) Based on options to purchase 11,349,635 shares of our Common Stock granted
in fiscal year ended December 31, 2000, of which 2,402,400 shares subject to
such options were cancelled by agreement between eBay and the holders of
such cancelled options in July 2000.
(3) Options were granted at an exercise price equal to the fair market value of
our Common Stock, as determined by the Board of Directors on the date of
grant. The exercise prices per shares listed in the table above are rounded
to the nearest cent.
(4) Reflects the value of the stock option on the date of grant assuming (i) for
the 5% column, a 5% annual rate of appreciation in our Common Stock over the
ten-year term of the option and (ii) for the 10% column, a ten-percent
annual rate of appreciation in our Common Stock over the ten-year term of
the option, in each case without discounting to net present value and before
income taxes associated with the exercise. The 5% and 10% assumed rates of
appreciation are based on the rules of the SEC and do not represent our
estimate or projection of the future Common Stock price. The amounts in this
table may not necessarily be achieved.
(5) Reflects an option grant rescinded and cancelled by agreement between eBay
and the applicable Named Executive Officer in July 2000. See "-- Report of
the Compensation Committee of the Board of Directors on Executive
Compensation."
16
<PAGE> 19
The following table sets forth the number of shares acquired and the value
realized upon exercise of stock options during 2000 and the number of shares of
common stock subject to exercisable and unexercisable stock options held as of
December 31, 2000, by each of the Named Executive Officers. The value at fiscal
year end is measured as the difference between the exercise price and the fair
market value at close of market on December 31, 2000, which was $33.00.
AGGREGATE OPTION EXERCISES IN 2000 AND VALUES AT DECEMBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
NUMBER OF DECEMBER 31, 2000 DECEMBER 31, 2000(2)
SHARES --------------------------- ---------------------------
ACQUIRED ON VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME EXERCISE REALIZED(1) (#) (#) ($) ($)
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Margaret C. Whitman........ -- -- -- -- -- --
Maynard G. Webb............ 10,000 $ 158,775 323,333 666,667 -- --
Jeffrey D. Jordan.......... -- -- 93,750 306,250 -- --
Matthew J. Bannick......... 35,000 932,899 66,666 158,334 -- --
Michael R. Jacobson........ 249,996 14,901,350 482,518 587,508 $14,716,799 $17,918,994
</TABLE>
---------------
(1) Value realized is based on the fair market value of our Common Stock or the
sale price on date of exercise minus the exercise price and does not
necessarily reflect proceeds actually received by the officer.
(2) Calculated using the fair market value of our Common Stock on December 31,
2000 ($33.00) less the exercise price of the option.
17
<PAGE> 20
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION((1))
We constitute the Compensation Committee of the Board of Directors of eBay.
None of us has been an officer or employee of eBay. We are responsible for
establishing the compensation for eBay's executive officers, including the CEO.
The goals of eBay's compensation program are to align compensation with
business objectives and performance and to enable it to attract, retain and
reward executive officers and other key employees who contribute to our
long-term success and to motivate them to enhance long-term stockholder value.
To meet these goals, we have adopted a mix of the compensation elements of
salary, bonus and stock options.
Base Salary. We meet at least annually to review and approve each executive
officer's salary for the ensuing year. When reviewing base salaries, we consider
the following factors: competitive pay practices, individual performance against
goals, levels of responsibility, breadth of knowledge and prior experience. The
relative importance of these factors varies, depending on the particular
individual whose salary is being reviewed. To provide us with more information
for making compensation comparisons, eBay provides us with surveys of
compensation for a group of comparable companies with revenues similar to its
own. In 2000, eBay also made available a compensation consultant who analyzed
salary and option alternatives. Our objective in setting base salary is
generally to pay salaries at a level roughly comparable to the median for
similar sized companies (measured by revenue) and to bias cash compensation
towards bonus compensation rather than salaries. For 2000, based in part on the
recommendation of the CEO, we again increased the salary levels of the executive
officers to a level closer to this median level. We set base salaries at
$160,000 to $200,000 for all of the executive officers hired prior to 1999. The
salaries of executive officers hired after our public offering were determined
primarily by negotiation with such individuals at the time of their hiring,
adjusted for subsequent promotions. Meg Whitman's 2000 salary was increased by
$20,000 to $215,000 based on her 1999 performance tempered by her equity
compensation and our desire to substantially bias her cash compensation towards
her bonus. The performance factors we took into account in making this decision
were revenue growth, the successful recovery from the long outage in June 1999
(tempered by the factors that led to the outage), infrastructure development,
the continued filling out of the executive team, and eBay's successful follow-on
public offering.
Bonus. Early in 2000, we adopted management incentive plans for our
officers and other key employees relating to cash bonus compensation. The plan
for our officers provides for quarterly bonuses split evenly between a bonus
based upon financial targets set by our committee for each quarter and a bonus
based on achievement of quarterly individual goals, so long as a minimum
financial target threshold has been met. In addition, a year end bonus is
payable based on the eBay's achievements relative to annual financial goals. The
financial goals for the plan in 2000 were contribution from operations and
revenue. Target bonus amounts for officers were 30% to 50% of base salary
depending upon their position. One fifth of this target amount was payable each
quarter, with the final fifth available for the year end bonus. Quarterly bonus
payouts ranged from 0 to 137.5% of target for the bonus based on financial
targets and generally 80% to 100% of target for the individual performance
targets. We set the annual payout at 100% of target based primarily upon eBay's
results with respect to contribution from operations.
Stock Options. eBay's stock option plans are designed to provide its
employees with an opportunity to share, along with its stockholders, in eBay's
long-term performance. Initial grants of stock options are generally made to
eligible employees upon commencement of employment, with additional grants being
made to pursuant to a periodical focal grant program or following a significant
change in job responsibilities, scope or title. Stock options under the option
plans generally vest over a four-year period and expire ten years from the date
of grant. The exercise price of our option grants has been set at 100% of the
fair market value of our Common Stock on the date of grant.
---------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference in any of
our filings under the 1933 Act or 1934 Act, whether made before or after the
date hereof and irrespective of any general incorporation language contained
in such filing.
18
<PAGE> 21
Guidelines for the initial number of stock options for each participant
under the option plans are generally determined by a formula providing a range
of option grants for each job level. Follow-on option grants are based upon a
number of factors, including performance of the individual, job level,
potential, competitive factors and past option grants. eBay makes follow-on
grants for key employees other than the executive staff twice a year, during the
first and third quarters. The Board of Directors has delegated the authority to
make option grants to non-officers to a Non-Officer stock option grant committee
consisting of Meg Whitman.
In 2000, in addition to grants made upon promotions, we made our first
follow-on grants to the executive staff. Consistent with our practice for
new-hire grants, these grants were made in two equal pieces, one grant following
Committee approval and the second grant four weeks later. All grants were made
at 100% of the closing price of our shares of common stock on the date of grant.
Executive staff members who joined eBay after the initial public offering
received additional grants based on the factors noted above. Executive officers
who had received pre-IPO initial grants were due to be fully vested on those
grants in one to two years from the time we met to discuss grants. We considered
a number of alternative approaches to new option grants to these individuals as
outlined by the compensation consultant. We ultimately determined to make a set
of substantial grants, which would vest over the period three to five years
after grant, well after the full vesting of the initial grants for these
executives. The number of shares to be granted were based upon performance,
potential, and, in some cases, the longer term plans of the affected
individuals. The follow-on grants made in May and June 2000 were subsequently
voluntarily cancelled by agreement between the executives and eBay after it was
determined that the grants might call into question the desired accounting
treatment of eBay's acquisition of Half.com.
We established a key employee relocation loan program in 2000. This program
permits eBay to make loans to officers and certain other key new employees
relocating as the result of accepting offers from eBay. These loans have a
four-year term, are secured by the house purchased using the proceeds of the
loan, are due if the employee stops being employed by eBay for any reason,
require a minimum down payment and are subject to certain eligibility and other
criteria.
We also created a special retention bonus plan in 2000 for Jeff Jordan.
Under this plan, he will receive payments in May of 2001, 2002, 2003 and 2004,
if he is then employed by eBay. Payment amounts decline from $314,000 to
$266,000 over the period and may be used to pay principal and interest payments
Mr. Jordan will then owe to eBay under a loan secured by his principal place of
residence. A similar program was put into place in January 2001 for Mr. Webb,
with payment amounts increasing from $230,800 in 2001 to $1,154,000 in 2004.
eBay is limited by Section 162(m) of the Internal Revenue Code of 1986 to a
deduction for federal income tax purposes of up to $1 million of compensation
paid to certain Named Executive Officers in a taxable year. Compensation above
$1 million may be deducted if it is "performance-based compensation." We do not
expect this limitation to affect eBay in 2001.
CEO Compensation. The Committee used the same procedures described above in
setting the annual compensation for our CEO. In considering Meg Whitman's salary
and bonus we not only considered the factors described above, but also took into
consideration her accomplishments in reorganizing and increasing eBay's senior
management team as eBay's business expanded is scope and grew in size. The
portion of Ms. Whitman's bonus that was based on financial factors was
calculated in accordance with the same formula used for all other officers. Her
individual performance bonus varied quarter by quarter from 85% to 100% of
target, based upon not only eBay's financial performance but also on the growth
and maturation of our management team, and our strategic progress, including our
acquisitions. Taking all of this into account, Ms. Whitman received a bonus of
41% of her base salary, as compared to a target of 50% of base salary. In
addition, we determined to make an option grant of 500,000 shares, vesting 50%
on May 23, 2003 and 25% on May 23, 2004 and 2005. This grant, like all of the
other follow-on grants made in May and June 2000 to the executive staff, was
cancelled by agreement between Ms. Whitman and eBay after it was determined that
the grant might call into question the desired accounting treatment of eBay's
acquisition of Half.com.
19
<PAGE> 22
Summary. Through the plans described above, a significant portion of our
compensation program for our executive officers (including our CEO) is
contingent upon the individual's and the eBay's performance, and realization of
benefits by our CEO and the other executive officers is closely linked to
increases in long-term stockholder value. We remain committed to this philosophy
of pay for performance, recognizing that the competitive market for talented
executives and the volatility of our business may result in highly variable
compensation during any given annual period.
COMPENSATION COMMITTEE
Philippe Bourguignon
Robert C. Kagle
Howard D. Schultz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Compensation Committee was comprised of two
non-employee directors until March 21, 2000, when Mr. Bourguignon was added to
the Committee with Messrs. Kagle and Schultz. No member of the Compensation
Committee is or was formerly an officer or an employee of eBay. No interlocking
relationship exists between the Board of Directors or Compensation Committee and
the board of directors or compensation committee of any other company, nor has
such interlocking relationship existed in the past.
20
<PAGE> 23
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows the total stockholder return of an investment of
$100 in cash on September 24, 1998 (eBay's first day of trading) for our Common
Stock and an investment of $100 in cash on that day for (i) the Nasdaq National
Market Index and (ii) the Goldman Sachs Internet Index. The Goldman Sachs
Internet Index is a modified-capitalization weighted index of 33 stocks
representing the Internet industry, including Internet content and access
providers, Internet software and services companies and e-commerce companies.
Historic stock performance is not necessarily indicative of future stock price
performance. No dividends were paid in respect of our Common Stock during this
period. All values assume reinvestment of the full amount of any dividends and
are calculated daily.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Nasdaq
Measurement Goldman Sachs Composite
Point eBay Stock Internet Index Index
----------- ---------- -------------- ---------
<S> <C> <C> <C>
9/24/98 100.00000 100.00000 100.00000
9/25/98 94.72295 102.80485 101.35148
9/28/98 101.84697 105.04123 101.09746
9/29/98 103.16622 105.24113 100.79694
9/30/98 95.11873 102.46127 98.45961
10/1/98 84.43271 90.99200 93.72159
10/2/98 84.43271 96.02700 93.87563
10/5/98 75.72559 92.77861 89.32478
10/6/98 77.04486 90.42354 87.82508
10/7/98 65.17151 83.21465 85.01866
10/8/98 61.21372 78.39205 82.49067
10/9/98 64.90765 82.04023 86.75552
10/12/98 66.49076 87.94977 89.87061
10/13/98 62.00528 85.35108 87.74138
10/14/98 63.58839 86.74413 89.57358
10/15/98 68.86543 93.34083 93.64486
10/16/98 75.98944 92.02900 94.22266
10/19/98 95.77836 94.34657 95.83746
10/20/98 98.15303 92.57871 95.28291
10/21/98 106.72823 95.83958 97.34995
10/22/98 108.83905 100.33109 98.97114
10/23/98 105.80475 100.04997 98.46077
10/26/98 154.88130 103.97926 100.26971
10/27/98 174.14250 103.61069 99.84248
10/28/98 168.86540 104.27911 100.98876
10/29/98 168.60160 108.11469 102.14200
10/30/98 175.46170 107.39630 102.96744
11/2/98 177.30870 114.95500 104.68338
11/3/98 177.30870 112.67491 103.95794
11/4/98 174.53830 117.94727 106.00056
11/5/98 171.37200 118.89680 106.78703
11/6/98 177.30870 119.95252 107.91821
11/9/98 217.41420 125.86207 108.17920
11/10/98 276.25330 129.97250 108.44485
11/11/98 244.72290 124.85007 108.24081
11/12/98 265.96300 127.02400 107.59850
11/13/98 261.60950 124.58771 107.42004
11/16/98 269.39320 128.77940 108.21582
11/17/98 271.50400 131.16570 109.19469
11/18/98 311.34570 141.92900 110.29448
11/19/98 303.43000 140.49220 111.58725
11/20/98 310.29000 141.39810 112.08308
11/23/98 407.38790 155.28490 114.94356
11/24/98 415.43530 153.95430 114.27277
11/25/98 431.66230 155.16000 115.39638
11/27/98 460.15830 161.11320 117.21172
11/30/98 417.15040 147.00150 113.32295
12/1/98 437.46700 152.06770 116.47407
12/2/98 428.49600 148.55070 115.97766
12/3/98 394.72290 140.62970 113.60139
12/4/98 385.22420 146.38310 116.43977
12/7/98 367.81000 149.95630 118.61842
12/8/98 373.35090 154.05420 118.27604
12/9/98 378.95780 155.54720 119.18690
12/10/98 392.87600 152.58620 117.18382
12/11/98 405.27700 154.37910 117.95982
12/14/98 397.88920 149.98750 114.33321
12/15/98 409.49870 155.68470 116.98850
12/16/98 471.76780 159.34530 116.80017
12/17/98 503.03430 160.98830 118.80675
12/18/98 532.45390 166.37300 121.26323
12/21/98 625.59360 184.95130 124.27950
12/22/98 635.35620 189.03050 123.28842
12/23/98 629.02380 202.43000 126.28551
12/24/98 603.69400 204.05420 125.73270
12/28/98 602.90240 224.44400 126.73658
12/29/98 578.23220 219.70270 126.82203
12/30/98 533.77300 206.27810 125.96057
12/31/98 509.23480 211.60670 127.45679
1/4/99 506.59630 210.22610 128.34960
1/5/99 472.82320 211.94400 130.86190
1/6/99 597.36150 227.25510 134.90710
1/7/99 629.02380 237.41250 135.21110
1/8/99 617.15050 245.37110 136.27600
1/11/99 615.30340 284.56400 138.61160
1/12/99 507.65170 268.12220 134.90070
1/13/99 454.88130 253.43580 134.67160
1/14/99 475.59370 244.44650 132.34710
1/15/99 471.50400 240.15490 136.49630
1/19/99 485.22430 255.09120 139.98220
1/20/99 451.18730 238.21840 140.40770
1/21/99 383.64110 223.58820 136.29400
1/22/99 415.30340 229.14170 135.95450
1/25/99 459.10290 237.45000 137.72340
1/26/99 466.22690 252.25510 141.44940
1/27/99 640.63320 259.19540 139.92230
1/28/99 617.67800 278.42950 144.00290
1/29/99 586.01580 279.22290 145.66250
2/1/99 553.03430 273.76310 145.90660
2/2/99 536.67550 264.03670 143.19380
2/3/99 587.33510 270.06500 144.93700
2/4/99 504.48550 260.30730 140.09270
2/5/99 467.01850 254.13540 137.97390
2/8/99 487.59890 241.93530 139.79330
2/9/99 449.34040 221.66420 134.32170
2/10/99 447.49340 224.80640 134.24670
2/11/99 505.54090 251.86780 139.83000
2/12/99 498.15300 239.62390 134.96690
2/16/99 487.86280 231.50920 134.50070
2/17/99 491.82060 223.70690 130.72470
2/18/99 496.30610 225.37480 131.40140
2/19/99 505.54090 232.39630 132.74120
2/22/99 588.39040 246.33930 136.13650
2/23/99 596.57000 257.72740 138.13260
2/24/99 603.69400 253.49820 135.98360
2/25/99 632.19000 253.41700 135.25350
2/26/99 705.01320 254.49770 132.99870
3/1/99 681.79410 259.13290 133.41430
3/2/99 741.29280 257.31510 131.31300
3/3/99 782.05800 256.62790 131.67160
3/4/99 828.36410 257.59000 133.28120
3/5/99 945.11870 263.06220 135.85160
3/8/99 1082.85000 280.50350 139.36900
3/9/99 1052.77000 279.26040 139.09690
3/10/99 981.92610 286.16320 139.85610
3/11/99 949.86800 286.90030 140.21940
3/12/99 899.20840 280.43480 138.43370
3/15/99 993.00790 294.01550 141.33490
3/16/99 999.34030 296.73910 141.79000
3/17/99 986.27970 298.40080 141.19130
3/18/99 1017.94200 306.37180 143.16710
3/19/99 1011.60950 309.93250 140.74370
3/22/99 982.32190 321.76410 139.27130
3/23/99 926.91290 303.48570 135.02220
3/24/99 920.58040 301.58670 137.48910
3/25/99 1009.23480 325.40000 141.53000
3/26/99 978.36410 324.46900 140.62160
3/29/99 935.81790 337.90600 144.90390
3/30/99 868.33770 342.41630 144.17440
3/31/99 869.52500 345.57720 143.07640
4/1/99 877.83640 352.25510 144.93470
4/5/99 941.95250 389.85510 148.81130
4/6/99 962.53300 394.38410 148.99210
4/7/99 949.86800 381.57790 147.90270
4/8/99 1087.60000 387.41880 149.58610
4/9/99 1161.21400 396.78910 150.72890
4/12/99 1118.47000 412.41250 151.06380
4/13/99 1094.72300 416.80410 150.17380
4/14/99 1031.40000 383.57700 145.74330
4/15/99 1132.71800 372.67610 146.58560
4/16/99 1114.51200 361.27560 144.39240
4/19/99 975.98940 298.36330 136.34570
4/20/99 1029.02400 324.46280 140.06770
4/21/99 1055.93700 351.58040 144.68540
4/22/99 1089.18200 366.36680 148.90140
4/23/99 1267.28200 373.56950 150.59180
4/26/99 1323.48300 399.21910 154.15850
4/27/99 1325.06600 386.44430 151.27300
4/28/99 1219.39300 359.84510 148.24800
4/29/99 1361.47800 357.03400 146.97330
4/30/99 1317.94200 360.71960 147.81090
5/3/99 1207.12400 340.86700 147.38830
5/4/99 1147.75700 329.77260 144.45520
5/5/99 1182.98200 346.84530 147.32260
5/6/99 1111.34600 327.23000 143.70880
5/7/99 1118.86500 328.24210 145.53050
5/10/99 1224.53800 345.65220 146.85410
5/11/99 1236.80700 363.29330 149.19610
5/12/99 1258.57500 361.76290 151.51310
5/13/99 1218.99700 349.14410 150.08660
5/14/99 1177.04500 339.03050 146.93960
5/17/99 1256.59600 353.54200 148.91480
5/18/99 1200.39600 348.91930 148.71250
5/19/99 1246.30600 351.52420 149.81920
5/20/99 1181.79400 335.61340 147.77490
5/21/99 1206.13500 328.49830 146.49080
5/24/99 1160.42200 304.17290 142.62640
5/25/99 1038.12700 287.59370 138.39700
5/26/99 1103.82600 304.27290 141.08720
5/27/99 1070.18500 293.89060 140.62050
5/28/99 1122.03200 308.95180 143.60650
6/1/99 1054.35400 289.53000 140.20660
6/2/99 1068.99700 285.52600 141.39120
6/3/99 1021.50400 272.29510 139.70030
6/4/99 1067.01800 285.15120 144.06110
6/7/99 1160.42200 296.50800 146.72740
6/8/99 1163.58800 283.81430 143.84130
6/9/99 1158.83900 285.20110 146.44490
6/10/99 1156.86000 276.18690 144.42610
6/11/99 1050.39600 259.53900 142.29050
6/14/99 861.21370 232.49000 139.40910
6/15/99 858.04750 240.05500 140.36000
6/16/99 941.95250 273.10720 146.35660
6/17/99 929.28760 280.98450 147.88650
6/18/99 925.72560 288.23090 149.00780
6/21/99 962.92870 304.47900 152.89300
6/22/99 938.39050 291.61040 149.98550
6/23/99 927.30870 298.90050 151.02370
6/24/99 900.00000 288.90550 148.45850
6/25/99 861.21370 279.62890 148.38050
6/28/99 886.93930 287.92480 151.27470
6/29/99 891.29280 296.28930 153.58070
6/30/99 958.57520 309.56400 156.13890
7/1/99 947.69130 313.48700 157.30490
7/2/99 909.49870 319.59000 159.33000
7/6/99 891.29280 326.83030 159.08370
7/7/99 875.46170 320.50230 159.44760
7/8/99 849.73610 327.16140 161.12280
7/9/99 859.63060 325.07500 162.35570
7/12/99 809.76250 309.55770 162.20280
7/13/99 791.55670 312.70000 161.49310
7/14/99 778.89180 312.88100 163.81240
7/15/99 804.22160 307.02150 165.04700
7/16/99 778.69390 301.54920 166.50660
7/19/99 745.25070 294.52770 164.51920
7/20/99 715.17150 282.01520 158.81630
7/21/99 730.21110 294.25910 160.53630
7/22/99 688.25850 282.36510 156.04120
7/23/99 682.71770 283.13340 156.50400
7/26/99 660.95000 266.05450 152.24840
7/27/99 630.47490 267.87860 155.74420
7/28/99 664.51180 278.64820 157.28520
7/29/99 647.49340 266.20440 153.45860
7/30/99 618.60160 261.20690 153.37030
8/2/99 577.83640 252.87360 152.50650
8/3/99 534.30080 239.77390 150.43480
8/4/99 479.68340 228.16090 147.64520
8/5/99 588.12660 239.27410 149.14670
8/6/99 527.17680 234.33910 148.10850
8/9/99 504.22160 224.98750 146.42340
8/10/99 565.17150 226.38680 144.74520
8/11/99 555.27700 232.26510 149.09730
8/12/99 578.62790 237.78740 148.19690
8/13/99 620.58040 246.42680 153.33070
8/16/99 690.23740 250.02500 153.76500
8/17/99 745.64640 258.09590 155.27280
8/18/99 797.49340 262.06270 154.48860
8/19/99 720.31660 249.21290 152.37860
8/20/99 778.89180 253.44830 153.94220
8/23/99 787.99470 264.08670 158.08330
8/24/99 752.77040 266.60420 159.99000
8/25/99 816.88650 275.99950 163.08400
8/26/99 813.32450 269.97750 161.28320
8/27/99 805.80470 264.20540 160.36950
8/30/99 756.33250 255.20360 157.68340
8/31/99 795.11870 257.49620 159.23310
9/1/99 772.16360 251.20560 159.89860
9/2/99 768.99740 249.21910 158.93600
9/3/99 845.38260 267.61000 165.26440
9/7/99 847.36150 264.43650 164.92440
9/8/99 853.29820 260.74460 163.26660
9/9/99 914.64380 270.38350 165.78230
9/10/99 1000.52770 277.57370 167.81920
9/13/99 936.80740 263.41830 165.36090
9/14/99 981.53030 268.39700 166.72810
9/15/99 962.53300 263.29340 163.58220
9/16/99 960.95000 260.44480 163.14920
9/17/99 892.87600 260.37000 166.80540
9/20/99 861.21370 260.27610 167.76630
9/21/99 890.50130 258.48320 163.98500
9/22/99 944.32710 272.70110 166.13930
9/23/99 875.46170 260.13240 159.84220
9/24/99 924.93400 269.50900 159.29470
9/27/99 878.62790 270.37110 160.53510
9/28/99 873.87860 275.94950 160.21540
9/29/99 880.21110 287.20000 158.70530
9/30/99 893.27170 285.03250 159.62890
10/1/99 875.26390 283.70810 159.08770
10/4/99 881.79420 282.35880 162.52430
10/5/99 894.06330 287.43130 162.73930
10/6/99 960.55410 303.12340 166.08400
10/7/99 950.65960 313.69940 166.28690
10/8/99 956.99210 317.17270 167.79070
10/11/99 948.28490 311.83160 169.49850
10/12/99 916.62270 299.48780 166.96870
10/13/99 867.54610 285.81340 162.83240
10/14/99 896.83370 290.61720 163.15610
10/15/99 849.34030 276.93650 158.79590
10/18/99 820.05270 272.27000 156.31500
10/19/99 846.17410 280.04120 156.25870
10/20/99 923.74670 292.44130 162.06850
10/21/99 940.36940 293.72810 162.87190
10/22/99 903.16620 287.60000 163.71880
10/25/99 955.40890 292.73490 163.68570
10/26/99 962.53300 290.13620 163.42530
10/27/99 878.23220 280.71590 162.90500
10/28/99 862.40110 283.23340 167.13090
10/29/99 855.67280 290.94200 172.43280
11/1/99 867.54610 294.94000 172.50370
11/2/99 831.13450 291.55420 173.31630
11/3/99 804.61740 296.37680 176.04140
11/4/99 823.21900 302.57370 177.63640
11/5/99 843.79940 311.30060 180.33000
11/8/99 867.54610 330.34730 182.75280
11/9/99 854.08970 322.06400 181.65250
11/10/99 844.19530 322.03900 183.45000
11/11/99 843.00790 318.09090 185.85220
11/12/99 866.75460 330.49730 187.23920
11/15/99 890.89710 333.06470 187.14560
11/16/99 926.12130 348.60690 191.41860
11/17/99 893.66750 344.55900 190.04330
11/18/99 964.11610 357.59620 194.56100
11/19/99 924.14250 357.05270 195.84790
11/22/99 977.17680 374.52520 197.20290
11/23/99 1061.08200 373.31960 194.31450
11/24/99 1136.67500 385.94450 198.82700
11/26/99 1122.03200 390.69210 200.41450
11/29/99 1074.14200 379.97880 198.87750
11/30/99 1045.25100 359.02040 193.92450
12/1/99 1013.19260 364.21790 194.94460
12/2/99 1057.91600 384.75760 200.70340
12/3/99 1131.92600 390.80460 204.64730
12/6/99 1117.67800 404.16040 206.12260
12/7/99 1036.93900 419.22790 208.50070
12/8/99 1028.62800 417.20390 208.45180
12/9/99 1017.15040 439.69270 208.92210
12/10/99 1041.29300 453.51070 210.43750
12/13/99 1022.69130 457.48380 212.64230
12/14/99 953.43000 430.52850 207.61360
12/15/99 923.35090 427.31760 210.53690
12/16/99 943.53560 436.81280 215.94920
12/17/99 952.24270 435.35730 218.15800
12/20/99 943.93140 441.86030 219.94900
12/21/99 914.24800 472.15770 227.34750
12/22/99 946.70180 468.33460 228.86760
12/23/99 901.18730 453.26090 230.73580
12/27/99 848.54880 443.45950 231.08110
12/28/99 885.75200 439.19920 230.89100
12/29/99 909.10290 453.81680 234.92220
12/30/99 854.48550 444.35280 234.65540
12/31/99 792.74400 445.02120 236.54100
1/3/00 894.45910 485.98830 240.13570
1/4/00 810.55410 453.36080 226.79760
1/5/00 864.77570 435.40100 225.39380
1/6/00 854.08970 404.21660 216.65080
1/7/00 853.29820 431.02820 225.68910
1/10/00 900.79160 456.58420 235.39940
1/11/00 881.39840 426.40550 227.93110
1/12/00 825.59360 397.15140 223.79410
1/13/00 872.69130 422.08900 230.02490
1/14/00 847.36150 420.61470 236.24810
1/18/00 883.37730 421.59550 240.11590
1/19/00 910.29000 434.03920 241.30640
1/20/00 980.73880 434.12040 243.52800
1/21/00 953.03430 432.84610 246.19550
1/24/00 863.58840 413.57450 238.09710
1/25/00 870.71240 421.04570 242.24340
1/26/00 972.42740 412.19390 236.57590
1/27/00 974.80210 417.82860 234.81170
1/28/00 934.43270 393.07850 225.94780
1/31/00 950.26390 388.52450 229.04480
2/1/00 955.80470 395.55220 235.53370
2/2/00 956.20050 400.70590 236.81130
2/3/00 1044.85500 427.74240 244.77600
2/4/00 1064.24800 414.95500 246.70360
2/7/00 1073.74700 418.56570 251.21600
2/8/00 1074.93400 434.78880 257.36190
2/9/00 1038.52200 424.56900 253.62660
2/10/00 1028.23200 434.09550 260.74090
2/11/00 971.24000 417.42250 255.49890
2/14/00 975.98940 415.32360 256.84160
2/15/00 940.36940 418.32210 256.97070
2/16/00 890.89710 411.41930 257.37060
2/17/00 919.78890 415.40480 264.42000
2/18/00 869.12930 406.06570 256.44580
2/22/00 851.71500 396.41430 254.72410
2/23/00 981.13450 428.72310 264.50180
2/24/00 1038.52200 438.28090 268.41500
2/25/00 955.01320 433.42700 266.83680
2/28/00 918.60160 423.20720 266.10150
2/29/00 907.91550 431.59670 273.00940
3/1/00 945.11870 439.31160 278.08920
3/2/00 950.65960 432.07150 276.37040
3/3/00 946.70180 451.39930 285.68710
3/6/00 1023.08700 472.00150 285.10930
3/7/00 1031.00300 462.05650 281.79550
3/8/00 1165.17200 471.30810 284.66810
3/9/00 1155.67300 490.34230 293.36410
3/10/00 1223.74700 484.30780 293.46640
3/13/00 1328.23200 474.06300 285.24830
3/14/00 1336.14800 455.36000 273.58720
3/15/00 1200.10000 431.72790 266.37880
3/16/00 1389.97400 450.99330 274.21260
3/17/00 1386.41200 459.78260 278.90590
3/20/00 1241.95300 432.77110 267.97030
3/21/00 1358.31100 454.56650 273.88080
3/22/00 1473.08700 467.68490 282.77840
3/23/00 1415.70000 461.25690 287.18800
3/24/00 1543.53600 473.79430 288.49120
3/27/00 1518.60000 472.15140 288.23140
3/28/00 1417.28200 456.88410 280.98460
3/29/00 1260.15800 422.35130 269.98560
3/30/00 1311.60900 407.45880 259.12840
3/31/00 1114.51200 405.87200 265.80970
4/3/00 907.12400 358.99550 245.51430
4/4/00 1057.52000 357.37760 241.16690
4/5/00 1050.79200 356.94030 242.34860
4/6/00 1152.50700 369.52770 248.06490
4/7/00 1145.38300 387.06900 258.46350
4/10/00 985.88390 353.68560 243.45190
4/11/00 985.09230 334.08290 235.76150
4/12/00 907.91550 307.76490 219.12120
4/13/00 879.02370 289.30540 213.72400
4/14/00 883.77310 260.07620 193.06000
4/17/00 907.12400 270.49600 205.72450
4/18/00 1031.79400 300.85580 220.51280
4/19/00 951.84690 297.61370 215.44640
4/20/00 951.45120 291.12940 211.81160
4/24/00 898.41690 267.58500 202.43000
4/25/00 972.42740 292.34130 215.72650
4/26/00 945.11870 285.53220 211.01000
4/27/00 1025.46200 300.68720 219.37700
4/28/00 1008.04750 314.24910 224.41260
5/1/00 985.48810 317.34130 230.07550
5/2/00 907.91550 296.16440 220.04080
5/3/00 886.54350 292.81000 215.49870
5/4/00 867.15040 296.03320 216.25030
5/5/00 848.54880 298.00100 221.86430
5/8/00 813.72030 286.94400 213.29390
5/9/00 767.41420 280.26610 208.38960
5/10/00 702.90230 265.89210 196.74770
5/11/00 745.64640 272.57000 203.42380
5/12/00 768.20580 273.56950 205.13740
5/15/00 807.38780 289.28040 209.70560
5/16/00 854.08970 302.89860 216.09510
5/17/00 811.34560 295.87080 211.87440
5/18/00 785.62000 284.13920 205.69830
5/19/00 748.41690 268.27210 197.07730
5/22/00 862.40110 269.83380 195.55490
5/23/00 734.56460 248.45080 183.94910
5/24/00 822.82320 255.54720 190.11420
5/25/00 766.22690 244.68390 186.32070
5/26/00 784.43270 243.34080 186.30680
5/30/00 848.74670 268.26590 201.09280
5/31/00 792.34830 258.83310 197.68820
6/1/00 853.29820 276.54920 208.24370
6/2/00 977.57250 311.40050 221.66430
6/5/00 955.40890 307.88350 222.15140
6/6/00 909.49870 296.32060 218.35040
6/7/00 957.78360 311.81280 223.16870
6/8/00 907.91550 312.30630 222.37230
6/9/00 926.91290 312.33130 225.23690
6/12/00 846.17410 291.93530 219.02120
6/13/00 861.21370 294.89000 223.85460
6/14/00 794.72300 288.48070 220.73600
6/15/00 811.34560 291.99150 223.54530
6/16/00 774.14250 290.63590 224.40680
6/19/00 758.31130 295.77090 231.92100
6/20/00 789.18210 305.24740 233.28880
6/21/00 782.05800 303.44830 236.23300
6/22/00 736.93930 290.06750 228.84080
6/23/00 682.32190 272.85730 223.52210
6/26/00 664.11610 269.72760 227.40390
6/27/00 664.11610 272.93230 224.31380
6/28/00 658.57520 275.68720 229.04430
6/29/00 654.61740 270.18370 225.37580
6/30/00 687.86280 275.54350 230.54220
7/3/00 668.86540 278.16090 232.04310
7/5/00 640.36940 268.20340 224.55450
7/6/00 645.91030 270.75840 230.22000
7/7/00 630.07920 265.50470 233.86070
7/10/00 608.70710 256.42180 231.36650
7/11/00 556.46440 245.46480 229.97900
7/12/00 666.49070 272.20760 238.30110
7/13/00 676.78100 284.78260 242.67650
7/14/00 774.93400 302.99220 246.82220
7/17/00 762.26910 305.75960 248.47820
7/18/00 728.23220 298.79430 242.81070
7/19/00 720.31660 287.96850 235.74580
7/20/00 772.55930 303.51070 243.24030
7/21/00 744.06330 293.27210 238.00240
7/24/00 698.15300 280.65340 231.44090
7/25/00 712.40110 280.85330 234.23100
7/26/00 667.28230 275.98700 231.79840
7/27/00 629.28760 261.52550 223.34130
7/28/00 593.66750 247.80110 212.92300
7/31/00 633.24540 255.28490 218.96780
8/1/00 615.03960 247.67620 214.23210
8/2/00 618.99740 247.50750 212.65910
8/3/00 633.24540 256.11570 218.55450
8/4/00 642.74410 259.42650 220.15180
8/7/00 633.24540 266.87280 224.54810
8/8/00 636.41160 267.13520 223.70870
8/9/00 632.45380 260.42600 223.99640
8/10/00 618.99740 257.68370 218.56090
8/11/00 614.24800 256.50920 220.27450
8/14/00 610.29000 261.43800 223.77500
8/15/00 656.99210 266.04820 223.88950
8/16/00 728.23220 267.77860 224.44400
8/17/00 798.68070 271.33930 229.07510
8/18/00 696.57000 269.50900 228.46300
8/21/00 710.81790 272.88230 229.78890
8/22/00 718.73350 273.81310 230.08300
8/23/00 732.19000 282.72110 233.15220
8/24/00 777.30870 288.60570 235.60920
8/25/00 787.59890 287.38750 234.99310
8/28/00 797.09760 283.69560 236.61540
8/29/00 774.14250 285.63840 237.28860
8/30/00 773.35090 298.23210 238.54640
8/31/00 785.22420 299.89380 244.50690
9/1/00 796.30600 298.30080 246.13330
9/5/00 854.88120 302.24260 240.83500
9/6/00 831.13450 292.18520 233.28760
9/7/00 843.79940 294.50270 238.22910
9/8/00 833.31130 285.32610 231.25720
9/11/00 820.05270 282.56500 226.48720
9/12/00 787.59890 278.37330 223.76450
9/13/00 791.55670 281.23440 226.34420
9/14/00 866.75460 288.29330 227.50500
9/15/00 854.08970 281.99030 222.93440
9/18/00 836.67540 273.56320 216.61530
9/19/00 831.92610 282.67740 224.70210
9/20/00 969.65700 284.53900 226.55060
9/21/00 901.58310 279.78510 222.56470
9/22/00 910.09230 283.70190 221.10510
9/25/00 916.62270 280.35360 217.47000
9/26/00 895.25070 272.47630 214.44000
9/27/00 804.22160 259.80760 212.53360
9/28/00 875.46170 268.58440 219.62640
9/29/00 869.92080 263.26840 213.49390
10/2/00 846.96570 251.88660 207.45320
10/3/00 785.22420 237.97480 200.88060
10/4/00 818.46970 247.58250 204.79090
10/5/00 808.97090 241.69790 201.82640
10/6/00 752.77040 230.59720 195.36890
10/9/00 771.76780 237.71240 195.05210
10/10/00 733.77310 227.19890 188.36630
10/11/00 671.24000 207.64000 184.17810
10/12/00 647.49340 192.45380 178.72510
10/13/00 707.65170 208.05220 192.79740
10/16/00 755.14510 209.74510 191.25760
10/17/00 668.07390 194.03420 186.82120
10/18/00 675.98940 194.86510 184.35660
10/19/00 724.27440 210.16370 198.71650
10/20/00 735.35620 216.67920 202.46810
10/23/00 754.35360 218.47200 201.62820
10/24/00 684.69650 213.49950 198.78570
10/25/00 684.69650 202.36130 187.72860
10/26/00 664.90770 204.72260 190.20540
10/27/00 650.65960 199.71260 190.56470
10/30/00 623.74670 188.32460 185.51000
10/31/00 652.24270 206.61540 195.87000
11/1/00 684.10290 212.25640 193.76340
11/2/00 727.44060 223.60690 199.32220
11/3/00 694.19530 223.05720 200.63360
11/6/00 688.65440 224.87510 198.57760
11/7/00 717.94200 228.87310 198.55320
11/8/00 653.82590 214.04920 187.85240
11/9/00 616.62270 199.30660 186.03000
11/10/00 583.37730 188.04350 176.06930
11/13/00 543.00790 178.02350 172.44960
11/14/00 603.95780 190.01750 182.42150
11/15/00 580.21110 186.83160 184.00380
11/16/00 543.00790 176.46800 176.23730
11/17/00 550.13190 174.05670 175.96460
11/20/00 436.93930 158.12720 167.15530
11/21/00 399.73610 147.10770 166.91180
11/22/00 416.35880 133.82060 160.16250
11/24/00 467.81000 147.24510 168.82590
11/27/00 483.64110 144.22790 167.43730
11/28/00 456.33250 132.59620 158.97900
11/29/00 470.18470 133.60820 157.34860
11/30/00 434.56460 129.66000 151.01260
12/1/00 440.10550 131.81530 153.76550
12/4/00 409.23480 130.45350 152.04840
12/5/00 500.26390 151.15570 167.97840
12/6/00 459.89440 146.57050 162.55510
12/7/00 443.27180 142.47250 160.00670
12/8/00 489.18200 157.17140 169.58450
12/11/00 550.92350 163.00000 175.26190
12/12/00 518.46970 159.19540 170.41810
12/13/00 497.09760 150.98080 164.08210
12/14/00 468.60160 145.04000 158.60300
12/15/00 481.26650 145.34610 154.22940
12/18/00 485.22430 135.95700 152.55820
12/19/00 409.23480 124.93128 146.00080
12/20/00 353.82580 111.43179 135.60000
12/21/00 360.15830 106.66541 136.02660
12/22/00 443.27180 118.19715 146.30940
12/26/00 439.31400 117.62244 144.94350
12/27/00 446.43800 116.71664 147.60750
12/28/00 478.89180 119.14668 148.67760
12/29/00 417.94200 113.46826 143.60650
</TABLE>
---------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any of our filings under
the 1933 Act or the 1934 Act whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
21
<PAGE> 24
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS((1))
The Audit Committee oversees our financial reporting process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process, including the systems of
internal controls. The Audit Committee adopted a written charter on June 14,
2000, a copy of which is attached to this proxy as Exhibit B. In fulfilling its
oversight responsibilities, the Audit Committee reviewed the audited financial
statements in our Annual Report on Form 10-K for the year ended December 31,
2000, with management, including a discussion of the quality of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
The Audit Committee reviewed with PricewaterhouseCoopers LLP, our
independent auditors, who are responsible for expressing an opinion on the
conformity of our audited financial statement with generally accepted accounting
principles, their judgments as to the quality of our accounting principles and
the other matters required to be discussed with the Audit Committee under
generally accepted auditing standards, including the matters required by the
Statement on Auditing Standards No. 61. In addition, the Audit Committee has
discussed with the independent auditors the auditors' independence from
management and the Company, including the written disclosure and the letter
regarding its independence as required by Independence Standards Board Standard
No. 1.
The Audit Committee discussed with our independent auditors the overall
scope and plans for their audit. The Audit Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations or our internal controls, and the overall
quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2000, for filing with the Securities and
Exchange Commission. The Audit Committee and the Board have also recommended,
subject to stockholder approval, the selection of our independent auditors.
AUDIT COMMITTEE
Scott D. Cook
Robert C. Kagle
Dawn G. Lepore
---------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any of our filings under
the 1933 Act or the 1934 Act whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
22
<PAGE> 25
CERTAIN TRANSACTIONS
eBay has entered into indemnification agreements with each of its directors
and executive officers. These agreements require eBay to indemnify such
individuals, to the fullest extent permitted by Delaware law, for certain
liabilities to which they may become subject as a result of their affiliation
with eBay.
On August 28, 1999, Mr. Webb, President of eBay Technologies, entered into
a one-year term loan with eBay at an interest rate of 5.43% per annum and an
original principal amount of $2,958,044.63, which amount was immediately paid
down to a principal amount of $2,058,044.63. On August 28, 2000, eBay loaned Mr.
Webb an amount of $2,169,796.46, which was equal to the principal and accrued
interest due to eBay at the end of Mr. Webb's one-year term loan (i.e., August
28, 2000). The August 2000 loan to Mr. Webb has a four-year term with accrued
interest at 6.37% and 10%, 15%, 25% and 50% of principal being due on each of
the first, second, third and fourth anniversary of the date of issue,
respectively. The maximum indebtedness for Mr. Webb during 2000 was $2,263,139.
On May 16, 2000, Mr. Jordan, our Senior Vice President and General Manager,
U.S. Business, entered into two four-year term loans with eBay at an interest
rate of 6.40% per annum, with principal and accrued interest payable on each
loan in equal installments on each anniversary. The principal amounts on the
loans were $1,000,000 and $900,000, respectively. The maximum indebtedness for
Mr. Jordan during 2000 was $1,940,000. On July 26, 2000, Mr. Jordan repaid in
full the principal and accrued interest on the $900,000 term loan.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, the persons named in the accompanying proxy intend to vote
on those matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ MICHAEL R. JACOBSON
Michael R. Jacobson
Secretary
A COPY OF OUR ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000, IS AVAILABLE WITHOUT ANY
CHARGE UPON WRITTEN REQUEST TO: SECRETARY, EBAY INC., 2145 HAMILTON AVENUE, SAN
JOSE, CALIFORNIA 95125.
23
<PAGE> 26
EXHIBIT A
eBay Inc.
2001 EQUITY INCENTIVE PLAN
Adopted March 22, 2001
Approved by Stockholders , 2001
Termination Date: March 21, 2011
1. PURPOSES.
(A) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options are
the Employees, Directors and Consultants of the Company and its Affiliates.
(B) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which eligible recipients of Options may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of (i) Incentive
Stock Options and (ii) Nonstatutory Stock Options.
(C) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain the
services of the group of persons eligible to receive Options, to secure and
retain the services of new members of this group and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(A) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code, and any other entity which
is controlled, directly or indirectly, by the Company.
(B) "BOARD" means the Board of Directors of the Company.
(C) "CODE" means the United States Internal Revenue Code of 1986, as
amended.
(D) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(E) "COMMON STOCK" means the common stock of the Company.
(F) "COMPANY" means eBay Inc., a Delaware corporation.
(G) "CONSULTANT" means any person, whether a natural person or an entity
(subject to the provisions of subsection 5(e)), including an advisor, (i)
engaged by the Company or an Affiliate to render consulting or advisory services
and compensated for such services, or (ii) who is a member of the Board of
Directors or comparable governing body of an Affiliate. However, the term
"Consultant" shall not include either Directors who are not compensated by the
Company for their services as Directors or Directors who are merely paid a
director's fee by the Company for their services as Directors.
(H) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's service with the Company or an Affiliate. For example, a
change in status from an Employee of the Company to a Consultant of an Affiliate
or a Director will not constitute an interruption of Continuous Service. The
Board or the chief executive officer of the Company, in that party's sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave.
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(I) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(J) "DIRECTOR" means a member of the Board of Directors of the Company.
(K) "DISABILITY" means the inability of a natural person to continue to
perform services for the Company or any Affiliate of the type previously
performed prior to the occurrence of such Disability, whether as a result of
physical and/or mental illness or injury, as determined by a physician
acceptable to the Company, for a period of no less than six (6) months.
(L) "EMPLOYEE" means any person employed for tax purposes by the Company or
an Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(M) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended.
(N) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or
traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the
Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(O) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(P) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(Q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(R) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(S) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock Option
granted pursuant to Section 6 of the Plan.
(T) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(U) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(V) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of
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the Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the Company or an
"affiliated corporation" at any time and is not currently receiving direct or
indirect remuneration from the Company or an "affiliated corporation" for
services in any capacity other than as a Director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code.
(W) "PLAN" means this eBay Inc. 2001 Stock Option Plan.
(X) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
(Y) "SECURITIES ACT" means the United States Securities Act of 1933, as
amended.
(Z) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates.
3. ADMINISTRATION.
(A) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless and
until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(B) POWERS OF BOARD. The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(I) To determine from time to time which of the persons eligible under
the Plan shall be granted Options; when and how each Option shall be
granted; what type or combination of types of Option shall be granted; the
provisions of each Option granted (which need not be identical), including
the time or times when a person shall be permitted to receive Common Stock
pursuant to an Option; and the number of shares of Common Stock with
respect to which an Option shall be granted to each such person.
(II) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement,
in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.
(III) To amend the Plan or an Option as provided in Section 11.
(IV) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient in its sole discretion to promote
the best interests of the Company and its stockholders that are not in
conflict with the provisions of the Plan.
(C) DELEGATION TO COMMITTEE.
(I) GENERAL. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such
authority has been delegated. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board, including the
power to delegate to a subcommittee of one (1) or more members of the Board
any of the administrative powers the Committee is authorized to exercise
(and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.
(II) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two (2) or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of
such authority, the
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Board or the Committee may (1) delegate to a committee of one or more
members of the Board who are not Outside Directors the authority to grant
Options to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Option or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Options to eligible persons
who are not then subject to Section 16 of the Exchange Act.
(D) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
anyone and shall be final, binding and conclusive on all Optionholders and any
other person having an interest in such determination, interpretation or
construction.
4. SHARES SUBJECT TO THE PLAN.
(A) SHARE RESERVE. Subject to the provisions of Section 10 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Options shall not exceed in the aggregate Ten Million (10,000,000)
shares of Common Stock.
(B) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such Option
shall revert to and again become available for issuance under the Plan.
(C) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(A) ELIGIBILITY FOR SPECIFIC OPTIONS. Incentive Stock Options may be
granted only to Employees. Nonstatutory Stock Options may be granted to
Employees, Directors and Consultants.
(B) NON-EMPLOYEE DIRECTORS. Notwithstanding the provisions of subsection
5(a) hereof, a Director who is not an Employee only may be granted
nondiscretionary Options that the Stockholders have approved as to the following
option provisions: Number of shares, date of automatic grant, term, exercise
price, consideration, vesting schedule, exercise schedule, and the
post-termination exercise periods.
(C) TEN PERCENT STOCKHOLDERS. Notwithstanding the provisions of subsection
5(a) hereof, a Ten Percent Stockholder shall not be granted an Incentive Stock
Option unless the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of the Common Stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from
the date of grant.
(D) SECTION 162(M) LIMITATION. Notwithstanding the provisions of subsection
5(a) hereof and subject to the provisions of Section 10 relating to adjustments
upon changes in the shares of Common Stock, no Employee shall be eligible to be
granted Options covering more than One Million (1,000,000) shares of Common
Stock during any calendar year.
(E) CONSULTANTS. Notwithstanding the provisions of subsection 5(a) hereof,
a Consultant shall not be eligible for the grant of an Option if, at the time of
grant, a Form S-8 Registration Statement under the Securities Act ("Form S-8")
is not available to register either the offer or the sale of the Company's
securities to such Consultant because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by the rules governing the use of Form
S-8, unless the Company determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.
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6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(A) TERM. Subject to the provisions of subsection 5(c) regarding Ten
Percent Stockholders, no Option shall be exercisable after the expiration
of ten (10) years from the date it was granted.
(B) EXERCISE PRICE.
(I) Subject to the provisions of subsection 5(c) regarding Ten
Percent Stockholders and subsections 6(b)(ii) and 6(b)(iii) below, the
exercise price of each Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted.
(II) A Nonstatutory Stock Option may be granted with an exercise
price not less than eighty-five percent (85%) of the Fair Market Value
of the Common Stock subject to the Option on the date the Option is
granted if such discount from Fair Market Value is expressly granted in
lieu of a reasonable amount of salary or a cash bonus.
(III) An Option may be granted with an exercise price lower than
that set forth in subsection 6(b)(i) above if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.
(C) CONSIDERATION.
(I) The purchase price of Common Stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or
(ii) at the discretion of the Board at the time of the grant of the
Option (or subsequently in the case of a Nonstatutory Stock Option) (1)
by delivery to the Company of other Common Stock or (2) in any other
form of legal consideration that may be acceptable to the Board.
(II) Unless otherwise specifically provided, the purchase price of
Common Stock acquired pursuant to an Option that is paid by delivery to
the Company of other Common Stock shall be paid only by shares of the
Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a
charge to earnings for financial accounting purposes).
(D) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. Incentive Stock
Option shall not be transferable except by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the
Option.
(E) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(F) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become
exercisable in periodic installments that may, but need not, be equal. The
Option may be subject to such other terms and conditions on the time or
times when it may be
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exercised (which may be based on performance or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options
may vary. The provisions of this subsection 6(f) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to
which an Option may be exercised.
(G) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of the date
of termination) but only within such period of time ending on the earlier
of (i) the date three (3) months following the termination of the
Optionholder's Continuous Service (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified
in the Option Agreement, the Option shall terminate.
(H) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the
termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option or
(ii) the expiration of a period of three (3) months after the termination
of the Optionholder's Continuous Service during which the exercise of the
Option would not be in violation of such registration requirements.
(I) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability,
the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer
or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or her Option
within the time specified herein, the Option shall terminate.
(J) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or
(ii) the Optionholder dies within the period (if any) specified in the
Option Agreement after the termination of the Optionholder's Continuous
Service for a reason other than death, then the Option may be exercised (to
the extent the Optionholder was entitled to exercise such Option as of the
date of death) by the Optionholder's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person
designated to exercise the option upon the Optionholder's death, but only
within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period
specified in the Option Agreement) or (2) the expiration of the term of
such Option as set forth in the Option Agreement. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate.
7. COVENANTS OF THE COMPANY.
(A) AVAILABILITY OF SHARES. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Options.
(B) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Options and to issue and sell shares of Common Stock
upon exercise of the Options; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Option or
any Common Stock issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell Common Stock
upon exercise of such Options unless and until such authority is obtained.
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8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(A) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Option unless and until such Optionholder has
satisfied all requirements for exercise of the Option pursuant to its terms.
(B) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Option granted pursuant thereto shall confer upon any
Optionholder any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Option was granted or shall affect the right
of the Company or an Affiliate to terminate (i) the employment of an Employee
with or without notice and with or without cause, for any reason or no reason,
(ii) the service of a Consultant pursuant to the terms of such Consultant's
agreement with the Company or an Affiliate or (iii) the service of a Director
pursuant to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the jurisdiction in which the Company or the
Affiliate is incorporated, as the case may be.
(C) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(D) INVESTMENT ASSURANCES. The Company may require an Optionholder, as a
condition of exercising an Option or acquiring Common Stock under any Option,
(i) to give written assurances satisfactory to the Company as to the
Optionholder's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; (ii) to give
written assurances satisfactory to the Company stating that the Optionholder is
acquiring Common Stock subject to the Option for the Optionholder's own account
and not with any present intention of selling or otherwise distributing the
Common Stock; and/or (iii) to give such other written assurances as the Company
shall determine are necessary, desirable or appropriate to comply with
applicable securities regulation and other governing law. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.
(E) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of an
Option Agreement, the Optionholder may satisfy any tax withholding obligation
arising under the laws or regulations of any country, state or local
jurisdiction relating to the exercise or acquisition of Common Stock under an
Option by any of the following means (in addition to the Company's right to
withhold from any compensation paid to the Optionholder by the Company) or by a
combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Optionholder as a result of the exercise or
acquisition of Common Stock under the Option, provided, however, that no shares
of Common Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(A) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common Stock
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation,
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reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted in the class(es) and maximum number of securities subject
to the Plan pursuant to subsection 4(a) and the maximum number of securities
subject to award to any person pursuant to subsection 5(d), and the outstanding
Options will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Options. The
Board shall make such adjustments, and its determination shall be final, binding
and conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a transaction "without receipt of consideration" by the
Company.)
(B) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to such event.
(C) CHANGE IN CONTROL -- ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation, or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation shall assume
or continue any Options outstanding under the Plan or shall substitute similar
stock awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 10(c) for those
outstanding under the Plan. In the event any surviving corporation or acquiring
corporation refuses to assume or continue such Options or to substitute similar
stock awards for those outstanding under the Plan, then with respect to Options
held by Optionholders whose Continuous Service has not terminated, the vesting
of such Options (and, if applicable, the time during which such Options may be
exercised) shall be accelerated in full, and the Options shall terminate if not
exercised (if applicable) at or prior to such event. With respect to any other
Options outstanding under the Plan, such Options shall terminate if not
exercised (if applicable) at or prior to such event.
11. AMENDMENT OF THE PLAN AND OPTIONS.
(A) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 10 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary under applicable laws or regulations or to the extent that such
amendment constitutes a material amendment of the Plan.
(B) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit any
other amendment to the Plan for stockholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section
162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(C) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(D) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.
(E) AMENDMENT OF OPTIONS. The Board at any time, and from time to time, may
amend the terms of any one or more Options; provided, however, that the rights
under any Option shall not be impaired by any
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such amendment unless (i) the Company requests the consent of the Optionholder
and (ii) the Optionholder consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(A) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(B) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the Optionholder.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Option
shall be exercised unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.
14. CHOICE OF LAW.
The law of the State of Delaware shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state's conflict of laws rules.
A-9
<PAGE> 35
EXHIBIT B
eBay Inc.
CHARTER OF THE AUDIT COMMITTEE
PURPOSE AND POLICY
The Audit Committee shall provide assistance and guidance to the Board of
Directors of the Company in fulfilling its oversight responsibilities to the
Company's stockholders with respect to the Company's corporate accounting and
reporting practices as well as the quality and integrity of the Company's
financial statements and reports. The policy of the Audit Committee, in
discharging these obligations, shall be to maintain and foster an open avenue of
communication between the Audit Committee and the independent auditors, the
Company's financial management and internal auditors.
COMPOSITION AND ORGANIZATION
The Audit Committee shall consist of at least three members of the Board of
Directors. The members of the Audit Committee shall satisfy the independence and
experience requirements of the Nasdaq National Market.
The Audit Committee shall hold such regular or special meetings as its
members shall deem necessary or appropriate, it being understood that the
Committee would ordinarily meet quarterly in advance of the release of quarterly
financial results. Minutes of each meeting of the Audit Committee shall be
prepared and distributed to each director of the Company after each meeting. The
operation of the Audit Committee shall be subject to the Bylaws of the Company
as in effect from time to time and Section 141 of the Delaware General
Corporation Law.
RESPONSIBILITIES
In fulfilling its responsibilities, the Audit Committee believes that its
functions and procedures should remain flexible in order to address changing
conditions most effectively. To implement the policy of the Audit Committee, the
Committee shall be charged with the following functions:
1. To recommend annually to the Board of Directors the firm of
certified public accountants to be employed by the Company as its
independent auditors for the ensuing year, which firm is ultimately
accountable to the Audit Committee and the Board, as representatives of the
Company's stockholders.
2. To review the engagement of the independent auditors, including the
scope, extent and procedures of the audit and the compensation to be paid
therefor, and all other matters the Audit Committee deems appropriate.
3. To evaluate, together with the Board, the performance of the
independent auditors and, if so determined by the Audit Committee, to
recommend that the Board replace the independent auditors.
4. To receive written statements from the independent auditors
delineating all relationships between the auditors and the Company
consistent with Independence Standards Board Standard No. 1, to consider
and discuss with the auditors any disclosed relationships or services that
could affect the auditors' objectivity and independence and otherwise to
take, and if so determined by the Audit Committee, to recommend that the
Board take, appropriate action to oversee the independence of the auditors.
5. To review, upon completion of the audit, the financial statements
to be included in the Company's Annual Report on Form 10-K.
6. To discuss with the independent auditors the results of the annual
audit, including the auditors' assessment of the quality and conservatism,
not just acceptability, of accounting principles, the reasonableness of
significant judgments, the nature of significant risks and exposures, the
adequacy of the
B-1
<PAGE> 36
disclosures in the financial statements and any other matters required to
be communicated to the Committee by the independent auditors under
generally accepted accounting standards.
7. To evaluate the cooperation received by the independent auditors
during their audit examination, including any restrictions on the scope of
their activities or access to required records, data and information.
8. To confer with the independent auditors and with the senior
management of the Company regarding the scope, adequacy and effectiveness
of internal accounting and financial reporting controls in effect.
9. To confer with the independent auditors and senior management in
separate executive sessions to discuss any matters that the Audit
Committee, the independent auditors or senior management believe should be
discussed privately with the Audit Committee.
10. To review with counsel any significant regulatory or other legal
matters that could have a material impact on the Company's financial
statements if, in the judgment of the Audit Committee, such review is
necessary or appropriate.
11. To investigate any matter brought to the attention of the Audit
Committee within the scope of its duties, with the power to retain outside
counsel and a separate accounting firm for this purpose if, in the judgment
of the Audit Committee, such investigation or retention is necessary or
appropriate.
12. To prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual Proxy Statement.
13. To review and assess the adequacy of this charter annually and
recommend any proposed changes to the Board for approval.
14. To report to the Board of Directors from time to time or whenever
it shall be called upon to do so.
15. To perform such other functions and to have such powers as may be
necessary or appropriate in the efficient and lawful discharge of the
foregoing.
B-2
<PAGE> 37
eBay Inc.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2001
The undersigned hereby appoints MICHAEL R. JACOBSON and RAJIV DUTTA, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of eBay Inc. that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
eBay Inc. to be held on Friday, May 25, 2001, at 9:00 a.m. local time at the
Silicon Valley Conference Center, El Camino Room, 2161 North First Street, San
Jose, California 95131, and at any and all continuations and adjournments of
that meeting, with all powers that the undersigned would possess if personally
present, upon and in respect of the following matters and in accordance with the
following instructions, with discretionary authority as to any and all other
matters that may properly come before the meeting.
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<PAGE> 38
<TABLE>
<CAPTION>
<S> <C>
UNLESS YOU INDICATE OTHERWISE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED Please mark your votes as [X]
IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE SPECIFICALLY DESCRIBED IN THE indicated in this example
PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS.
WE RECOMMEND A VOTE FOR THE FOR WITHHOLD AUTHORITY
NOMINEES FOR DIRECTOR all nominees listed to the to vote for all nominees Nominees: 01 Philippe Bourguignon and
LISTED TO THE RIGHT. right (except as written in) listed to the right 02 Margaret C. Whitman
[ ] [ ]
Proposal 1: To elect two directors to hold office until the To withhold authority to vote for any
2004 Annual Meeting. nominee, write that nominee's name below:
------------------------------------------
WE RECOMMEND A VOTE FOR PROPOSALS 2 AND 3.
Proposal 2: To approve the 2001 Proposal 3: To ratify the selection of
Equity Incentive Plan. PricewaterhouseCoopers LLP I/WE WILL ATTEND
as independent auditors of THE MEETING [ ]
the Company for our fiscal
year ending December 31, 2001.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
Dated:________________________________, 2001
____________________________________________
____________________________________________
Signature(s)
Please sign exactly as your name or names appear
hereon. If the stock is registered in the names
of two or more persons, each should sign.
Executors, administrators, trustees, guardians
and attorneys-in-fact should add their titles.
If signer is a corporation, please give full
corporate name and have a duly authorized
officer sign, stating title. If signer is a
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN partnership, please sign in partnership name by
ENVELOPE THAT IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES. an authorized person.
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</TABLE>
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</TEXT>
</DOCUMENT>