ITEM 11. EXECUTIVE COMPENSATION.
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes the compensation of our “named executive officers” (“NEOs”) for 2019:
|
|
|
Scott Schenkel
|
Andrew Cring
|
Jae Hyun Lee
|
Interim Chief Executive
Officer (“Interim
CEO”)(1)
|
Interim Chief Financial
Officer (“Interim CFO”)(2)
|
Senior Vice President,
International(3)
|
|
|
|
Pete Thompson
|
Kristin Yetto
|
|
Senior Vice President,
Chief Product Officer(4)
|
Senior Vice President,
Chief People Officer(5)
|
|
|
|
(1)
|
Mr. Schenkel served as Senior Vice President, Finance and Chief Financial Officer for a majority of the year. Effective as of September 24, 2019, in connection with Mr. Wenig’s departure as CEO, Mr. Schenkel served as the interim CEO until Mr. Iannone’s appointment on April 27, 2020 as CEO. Effective as of April 27, 2020, Mr. Schenkel assumed the role of
Senior Advisor for a transition period commencing on April 27, 2020. His employment will terminate upon the conclusion of such transition period which is expected to end on June 19, 2020. Mr. Wenig is also a named executive officer due to his status as the CEO during a portion of 2019.
|
(2)
|
Mr. Cring served as Vice President, Global Financial Planning and Analysis for the majority of the year. Effective as of September 24, 2019, in connection with Mr. Schenkel’s appointment to interim CEO, Mr. Cring has served as the interim CFO. In this position, Mr. Cring leads all aspects of eBay’s finance, analytics, and information technology functions – including controllership, financial planning and analysis, tax, treasury, audit, mergers and acquisitions, and investor relations.
|
(3)
|
Mr. Lee served as Senior Vice President, General
Manager, Markets until January 2020 when he was named Senior Vice President, International. In this role, Mr. Lee is
responsible for leading eBay’s core Marketplaces’ international business outside the UK, Germany, France, Italy
and Spain. He oversees a diverse portfolio of businesses: off-platform businesses in Korea, Japan and Turkey; our fourth
largest on-platform business, in Australia; cross-border trade out of Greater China; and 180+ unsited markets in Asia, Latin
America, Eastern Europe, the Middle East and Africa.
|
(4)
|
Mr. Thompson was hired in 2019 as Senior Vice President, Chief Product Officer. In this position, Mr. Thompson leads eBay’s product experience, where he is focused on making the shopping journey simple, personalized and discovery-based, while providing the enhanced tools and insights that help eBay sellers succeed.
|
(5)
|
Since 2015, Ms. Yetto serves as Senior Vice President, Chief People Officer. In this position, Ms. Yetto is responsible for all aspects of human resources across eBay, including business performance, talent development and acquisition, learning and development, compensation, benefits, HR shared services, and people tools and technologies.
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20
Table of Contents
Our Compensation Program
The goals of our executive compensation program are to:
✓
|
align compensation with our business objectives, performance and stockholder interests,
|
✓
|
motivate executive officers to enhance short-term results and long-term stockholder value,
|
✓
|
position us competitively among the companies against which we recruit and compete for talent, and
|
✓
|
enable us to attract, reward and retain executive officers and other key employees who contribute to our long-term success.
|
We achieve these objectives primarily by employing the following elements of pay for our executive officers: (1) equity awards, both restricted stock unit (RSU) and performance-based restricted stock unit (PBRSU) grants under the eBay Inc. 2008 Equity Incentive Award Plan, (2) an annual bonus program (the eBay Incentive Plan or eIP); and (3) base salary.
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Table of Contents
Introduction
This Compensation Discussion and Analysis is presented as follows:
|
Elements of Our Executive Compensation Programs provides a description of our executive compensation practices, programs, and processes.
|
|
2019 NEO Target Compensation discusses how we use the elements of compensation program to achieve our target pay mix.
|
|
2019 Compensation Decisions explains executive compensation decisions made for our executive officers for 2019.
|
|
Further Considerations for Setting Executive Compensation discusses the role of the Company’s compensation consultant, peer group considerations, and the impact of accounting and tax requirements on compensation.
|
|
Severance and Change in Control Arrangements with Executive Officers and Clawbacks discusses the Company’s severance and change in control plans and other arrangements with executive officers.
|
To achieve our executive compensation goals, we have three principal components of our executive compensation program: equity compensation (the “eBay Inc. 2008 Equity Incentive Award Plan”), an annual cash incentive (the “eBay Incentive Plan”), and base salary. We seek to ensure that total compensation for our executive officers is heavily weighted to variable, performance-based compensation by delivering a majority of compensation in the form of PBRSUs and annual cash incentives.
|
Elements of Our Executive Compensation Program
|
The following chart provides a summary of the elements of our 2019 executive compensation program.
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Table of Contents
|
Compensation
Elements
|
|
Performance
Metrics
|
|
Performance and
Vesting Periods
|
|
Rationale
|
|
Base Salary
|
|
●Assessment and Target Positioning Strategy
|
|
●N/A
|
|
●Rewards executives’ current contributions to the Company
●Reflects the scope of executives’ roles and responsibilities
|
|
Annual Cash Incentive Awards
|
|
Threshold company performance measures:
●FX-neutral revenue (threshold)
●Non-GAAP net income (threshold)
If BOTH thresholds are met, then payout based on
●Total non-GAAP net income (75%)
●Individual performance (25%)
|
|
●Annual
|
|
●Aligns executive compensation with annual Company and individual performance
●Motivates executives to enhance annual results
|
|
|
|
|
|
|
|
|
|
Equity Incentive Awards
|
|
Time-based RSUs: N/A
PBRSUs:
●FX-neutral revenue
●Non-GAAP operating margin dollars
●Return on invested capital (modifier)
●Payments (modifier)
|
|
Time-based RSUs:
●Quarterly vesting over a four-year period subject to continued employment
PBRSUs:
●For CEO and CFO: 100% PBRSU awards granted will vest more than 14 months following the end of the applicable two-year performance.
●For other NEOs: One-half of the PBRSUs vest in March following the end of the applicable performance period, and the other half of the award vests in March of the following year, more than 14 months following the completion of the performance period.
Mr. Cring is not eligible for the PBRSU program due to his position as a VP.
|
|
●Aligns executive incentives with the long-term interests of our stockholders
●Positions award guidelines at target level with the median of the market levels paid to peer group executives
●Recognizes individual executive’s recent performance and potential future contributions
●Retains executives for the long term
●Provides a total compensation opportunity with payouts varying based on our operating and stock price performance
|
23
Table of Contents
We chose a mix of equity and cash compensation vehicles to compensate executive officers based on sustainable long-term value drivers of Company performance over one- and multi-year periods (and, in the case of certain monthly performance bonuses to Messrs. Schenkel and Cring, during their interim service) and individual contributions to the Company.
Our executive officers were also eligible to receive a comprehensive set of benefits:
●
|
Health and welfare benefits plans;
|
●
|
Employee stock purchase plan;
|
●
|
Limited use of the corporate airplane (CEO and CFO only; with reimbursement required by the CFO and voluntarily provided by the CEO). Both Mr. Schenkel and Mr. Cring are authorized to use the corporate airplane in their interim CEO and CFO positions, respectively, subject to the same principles described in the preceding sentence.
|
●
|
Broad-based 401(k) retirement savings plan and a VP and above deferred compensation plan (each plan is available to U.S.- based employees only); and
|
●
|
Certain other limited perquisites.
|
|
|
We provide certain executive officers with limited perquisites and other personal benefits not available to all employees that we believe are reasonable and consistent with our overall compensation program and philosophy. These benefits are provided to enable the Company to attract and retain these executive officers. We periodically review the levels of these benefits provided to our executive officers.
The Compensation Committee encouraged Mr. Wenig (and Mr. Schenkel in the interim CEO position) to use the corporate airplane for personal travel to reduce possible security concerns where relevant. Prior to his appointment to interim CEO and in his CFO role, Mr. Schenkel’s access to the corporate airplane was limited to 20 hours of personal use, subject to Mr. Schenkel fully reimbursing the Company for the incremental costs associated with such use. The Company does not grant bonuses to cover, reimburse, or otherwise “gross-up” any income tax owed for personal travel on the corporate airplane.
|
2019 NEO Target Compensation
|
When making compensation decisions for our NEOs, the Compensation Committee evaluated each individual based on his or her leadership, competencies, innovation, and both past and expected future contributions toward the Company’s financial, strategic, and other priorities. The Company’s performance was reflected in our executive compensation program, holding leadership accountable for Company performance.
Incentive Compensation
Long-Term Equity Awards. The value of annual equity awards is determined within guidelines that the Compensation Committee approves on an annual basis for each position. These guidelines are based on our desired pay positioning relative to companies with which we compete for talent. The midpoint of the guidelines, or the median target award, reflects the 50th percentile of the competitive market.
In 2019, the Compensation Committee approved equity award guidelines by position based on the following:
●
|
equity compensation practices of technology companies in our peer group, as disclosed in their public filings (see page 35 for our 2019 peer group), and
|
●
|
equity compensation practices for comparable technology companies that are included in proprietary third-party surveys.
|
|
|
The Compensation Committee is also cognizant of dilution resulting from equity compensation, and so it carefully considers share usage each year and sets an upper limit on the number of shares that can be used for equity compensation, including awards to executive officers and the overall employee population.
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Table of Contents
Each executive officer’s individual contribution and impact, projected level of contribution and impact in the future, and competitive positioning are considered when determining individual awards. The retention value of current year awards and the total value of unvested equity from previous awards are also considered. The individual awards can be higher or lower than the median target award by an amount ranging from zero to three times the median target award.
Based on its assessment, the Compensation Committee approved individual compensation arrangements for each NEO based on the factors and guidelines described above and in this section.
Annual Cash Incentive. The Compensation Committee also assesses annual cash incentive award opportunities against data from public filings of our peer group companies and general industry data for comparable technology companies that are included in proprietary third-party surveys, and it approves target annual cash incentive opportunities for our NEOs at approximately the 50th percentile based on that data. We review market data annually, and periodically adjust incentive opportunities to the extent necessary where our practices are inconsistent with such market data.
Base Salary
Assessment and Target Positioning Strategy. We review market data annually and approve each executive officer’s base salary for the year. Increases, if any, generally become effective on or around April 1st of the year. We assess competitive market data on base salaries from public filings of our peer group companies and general industry data for comparable technology companies that are included in proprietary third-party surveys. When considering the competitive market data, we also recognize that the data is historical and does not necessarily reflect those companies’ current pay practices. We assess each executive officer’s base salary against the 50th percentile of the salaries paid to comparable executives at peer group companies and also consider individual performance, levels of responsibility, expertise, and prior experience in our evaluation of base salary adjustments.
Determining 2019 Target Annual Compensation for our CEO
Mr. Schenkel, Interim CEO
At Mr. Schenkel’s appointment as the interim CEO, the Compensation Committee focused on incentivizing Mr. Schenkel for leading the Company during this transition while remaining committed to the philosophy of tying compensation to Company performance.
In determining Mr. Schenkel’s compensation as the interim CEO, the Compensation Committee determined that a monthly performance bonus was appropriate in order to bring his cash compensation in line with that of the CEO position. Prior to his appointment, Mr. Schenkel’s salary was determined at a level appropriate for his role as the CFO in accordance with the methodology described below for NEOs other than the CEO. The Compensation Committee also determined that supplemental 2019-2020 PBRSU and RSU grants were necessary and appropriate to further compensate Mr. Schenkel for the additional responsibilities of the CEO position.
Mr. Wenig, Former CEO
Prior to Mr. Wenig’s departure, the Compensation Committee sought to link Mr. Wenig’s compensation with the sustainable long-term performance of the Company. The Compensation Committee considered many factors in setting the various components of Mr. Wenig’s compensation, including factors such as execution against long-term strategic plans and innovation and execution across eBay’s platforms. The Compensation Committee reviewed and approved the salary, target annual cash incentive award, and value of equity awards for Mr. Wenig considering available market data as well as Company and individual performance.
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Table of Contents
Name
|
|
2019
Base
Salary
|
|
Year-
Over-Year
Change
for
Base Salary
($)
|
|
2019
Target
Annual Cash
Incentive
Award
|
|
Year-Over-
Year
Change
for Target
Annual Cash
Incentive
Award
($)
|
|
2019
Target
Value of
Equity
Awards
($)
|
|
|
Year-Over-
Year
Change
for Target
Value of
Equity Awards
($)
|
Mr. Schenkel
|
|
$
|
750,000
|
(1)
|
|
No Change
|
|
100
|
%
|
|
No Change
|
|
$
|
13,460,000
|
(2)
|
|
73
|
%
|
Mr. Wenig
|
|
$
|
1,000,000
|
|
|
No Change
|
|
200
|
%
|
|
No Change
|
|
$
|
10,850,000
|
|
|
-30
|
%
|
(1)
|
The amount does not include monthly performance bonuses.
|
(2)
|
The amount includes a special grant of RSUs in the amount of $4,000,000 and a special grant of PBRSUs in the amount of $4,000,000 in recognition of the additional responsibilities of the Interim CEO position.
|
Summary of Target Value of Equity Awards, Target Cash Incentive Award, and Salary for other NEOs
The Compensation Committee considered many factors in approving the various components of the other NEOs’ compensation, including those set forth below. In evaluating performance against these factors, the Compensation Committee assigned no specific weighting to any one of the factors, instead evaluating individual performance in a holistic manner.
●
|
Performance against target financial results for the NEO’s business unit or function
|
●
|
Defining business unit or function strategy and executing against relevant goals
|
●
|
Recognition of the interconnection between the eBay business units and functions and the degree to which the NEO supported and drove the success of other business units or functions and the overall business
|
●
|
Driving innovation and execution for the business unit or function
|
●
|
Organization development, including hiring, developing, and retaining the senior leadership team of the business unit or function
|
●
|
Achievement of strategic or operational objectives, including control of costs in an environmentally and socially responsible manner
|
The Compensation Committee reviewed and approved the target value of equity awards, target annual cash incentive award, and salary for our NEOs based on available market data as well as Company and individual performance.
The Compensation Committee approved a salary increase for Ms. Yetto in order to remain competitive with current market conditions. The Compensation Committee determined that the other NEOs’ target annual cash incentive awards remained competitive without an increase and that their overall cash compensation was consistent with creating an ownership culture by focusing the compensation mix on equity rather than cash. The Committee determined annual equity awards based on delivery against business metrics, financial targets and Company-level leadership.
The Compensation Committee limits the use of out-of-cycle compensation for executive officers to extraordinary circumstances only. In addition to the annual awards and the supplemental grant to Mr. Schenkel described above, two of our NEOs, Mr. Cring and Ms. Yetto, received additional equity grants. Mr. Cring received an RSU grant related to the additional responsibilities of his interim CFO role. Ms. Yetto received a 2019-2020 PBRSU grant and an RSU grant to recognize the critical nature of her role as Chief People Officer in the portfolio and operational review initiatives.
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Table of Contents
The following table shows the compensation arrangements for our other NEOs:
Name
|
|
2019 Base
Salary
|
|
Year-
Over-Year
Change for
Base Salary
($)
|
|
|
2019
Target
Annual Cash
Incentive
Award
|
|
Year-Over-
Year
Change
for Target
Annual Cash
Incentive
Award
($)
|
|
2019
Target
Value of
Equity
Awards
($)
|
|
Year-Over-
Year
Change
for Target
Value of
Equity Awards
($)
|
Mr. Cring
|
|
$
|
440,000
|
(1)
|
|
N/A
|
(2)
|
|
55
|
%
|
|
N/A(2)
|
|
$
|
4,400,000
|
(3)
|
|
N/A
|
(2)
|
Mr. Lee
|
|
$
|
675,000
|
(4)
|
|
No Change
|
|
75
|
%
|
|
No Change
|
|
$
|
4,250,000
|
(5)
|
|
-15
|
%
|
Mr. Thompson
|
|
$
|
625,000
|
|
|
N/A
|
(6)
|
|
65
|
%
|
|
N/A(4)
|
|
$
|
8,000,000
|
(5)(7)
|
|
N/A
|
(4)
|
Ms. Yetto
|
|
$
|
675,000
|
|
|
N/A
|
(8)
|
|
75
|
%
|
|
N/A(7)
|
|
$
|
6,150,000
|
(5)(9)
|
|
N/A
|
(7)
|
(1)
|
Does not include monthly performance bonuses.
|
(2)
|
Mr. Cring was not an NEO for fiscal year 2018.
|
(3)
|
Reflects 100% RSUs since Mr. Cring is not eligible for the PBRSU program due to his position as a VP. The amount also includes a special grant of RSUs in the amount of $3,000,000 in recognition of the additional responsibilities of the Interim CFO position.
|
(4)
|
Mr. Lee’s base salary is reported in U.S. dollars on an FX-neutral basis.
|
(5)
|
For the PBRSU portion of the award, if performance targets are met, 50% of the achieved portion of the award will vest on March 15, 2020 and the remaining 50% of the achieved portion of the award will vest on March 15, 2021.
|
(6)
|
Mr. Thompson was hired in July 2019 and therefore was not an NEO for fiscal year 2018.
|
(7)
|
Mr. Thompson received a new hire grant of $1,600,000 in RSUs and $2,400,000 in PBRSUs in accordance with the Company’s 2019 allocation of 60% PBRSUs and 40% RSUs. Mr. Thompson also received a supplemental grant of RSUs in the amount of $4,000,000.
|
(8)
|
Ms. Yetto was not an NEO for fiscal year 2018.
|
(9)
|
In addition to the annual focal equity award, on October 15, 2019, Ms. Yetto received a special grant of PBRSUs for the 2019-2020 performance period in the amount of $1,500,000 and a special grant of RSUs in the amount of $1,500,000.
|
|
|
|
2019 Incentive Compensation Decisions
|
Our executive compensation program is highly performance-based, with payouts under the program dependent on meeting financial and operational targets over designated performance periods. For 2019, we selected financial metrics and targets that the Compensation Committee believes incentivize our management team to achieve our strategic objectives and drive the Company’s financial performance and long-term stock performance, including FX-neutral revenue, non-GAAP operating margin dollars, return on invested capital, payment intermediation usage and non-GAAP net income. As mentioned above, we made one-time equity grants to Mr. Schenkel and Mr. Cring in recognition of the increased responsibilities inherent to their new roles. On October 15, 2019, Mr. Schenkel received grants of $4,000,000 in RSUs vesting over four years on a quarterly basis and a grant of $4,000,000 in PBRSUs for the 2019-2020 performance period. On October 15, 2019, Mr. Cring received a grant of $3,000,000 in RSUs vesting over four years on a quarterly basis. In addition, we made a one-time grant to recognize the critical nature of Ms. Yetto’s role as Chief People Officer in the portfolio and operational review initiatives. On October 15, 2019, Ms. Yetto received a grant of PBRSUs for the 2019-2020 performance period in the amount of $1,500,000 and a grant of RSUs in the amount of $1,500,000 vesting over four years on a quarterly basis.
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Table of Contents
2019 Long-Term Equity Incentive Awards
In general, the formula used to allocate the annual equity awards is as follows:
In 2019, our NEOs received equity-related compensation as part of the Company’s standard annual equity award.
|
PBRSU Program
The PBRSU Program is a key component of the annual equity compensation for each executive officer. At the beginning of each performance period, executive officers receive PBRSU grants that are subject to performance- and time-based vesting requirements.
Performance Period and Vesting
Each PBRSU cycle has a two-year performance period. The performance goals for each cycle are approved by the Compensation Committee at the beginning of the performance period. Each executive officer is awarded a target number of shares subject to the PBRSU award at the beginning of the performance period.
If the Company’s actual performance exceeds or falls short of the target performance goals, the actual number of shares subject to the PBRSU award will be increased or decreased formulaically.
Under the PBRSU program, under which PBRSUs are awarded to executives at the level of Senior Vice President and above, 100% of any PBRSU awards granted to the CEO and CFO will vest, if at all, more than 14 months following the end of the applicable two-year performance period. This provision subjects 100% of the CEO and CFO PBRSU awards to at least three years of stock price volatility before the shares vest. For all SVPs other than the CEO and CFO, one-half of the PBRSUs vest in March following the end of the applicable performance period, and the other half of the award vests in March of the following year, more than 14 months following the completion of the performance period. The Compensation Committee believes that the post-performance-period vesting feature of the PBRSUs provides an important mechanism that helps to retain executive officers and align their interests with long-term stockholder value.
PBRSU Timeline
*
|
Mr. Cring is not eligible for the PBRSU program due to his position as a VP.
|
28
Table of Contents
Performance Measures and Rationale
As discussed above, the number of shares subject to a target PBRSU award are adjusted based on whether the Company’s actual performance exceeds or falls short of the target performance goals for the applicable performance period.
The following table outlines the performance measures for the 2018-2019 and 2019-2020 performance periods and the rationale for their selection.
Performance
Measures
|
FX-neutral revenue(1)
Non-GAAP operating margin dollars(2)
Return on invested capital (modifier)
Payments (modifier)(3)
|
Rationale
|
The Compensation Committee believes these measures are key drivers of our long-term business success and stockholder value, and are directly affected by the decisions of the Company’s management.
Both FX-neutral revenue and non-GAAP operating margin dollars measures are used to help ensure that leaders are accountable for driving profitable growth, and making appropriate tradeoffs between investments that increase operating expense and future growth in revenue.
The return on invested capital modifier is used to hold leaders accountable for the efficient use of capital.
Beginning with the 2018-2019 PBRSU cycle, we added a Payments component to the modifier element of the PBRSU Program design. This Payments modifier was used to incentivize the senior leadership team to work cross-functionally on a critical growth initiative and profit driver that impacts multiple areas of the business. Given the importance of the success of the Payments initiative to the Company’s success generally, as well as the priority placed on this initiative in the Company’s operational strategy for 2018 and 2019, our Compensation Committee determined that payout of PBRSUs for the 2018-2019 cycle should be subject to achievement in growing the use of our intermediation platform, as well as our existing Company financial performance metrics. The Payments modifier was also included for the 2019-2020 PBRSU cycle, but has been removed from the 2020-2021 PBRSU calculation as we believe, given the success and growth of the platform, that the other metrics will now accurately capture the performance of the Payments business.
|
Targets
|
The two-year performance targets are generally set in a manner consistent with the current year budget and multi-year strategic plan.
At the time the performance targets were set, the target goals were designed to be achievable with strong management performance, while the maximum goals were designed to be very difficult to achieve.
|
(1)
|
Calculated on a fixed foreign exchange basis.
|
(2)
|
Non-GAAP operating margin dollars excludes certain items, primarily stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, impairment of goodwill, separation expenses, and certain one-time gains, losses and/or expenses.
|
(3)
|
Applicable only to the 2018-2019 and 2019-2020 PBRSU cycles. Measures performance based on market launch thresholds and then percentage of intermediated GMV.
|
29
Table of Contents
Calculation Mechanics
2018-2019 and 2019-2020 PBRSU Cycles*. Shares that vest under the 2018-2019 and 2019-2020 PBRSU awards reflect the potential impact of the Payments modifier. The shares that vest will be 0% to 340% of the initial grant for the 2018-2019 performance period and 0% to 330% for the 2019-2020 performance period, based on eBay’s FX-neutral revenue, non-GAAP operating margin dollars, and return on invested capital and Payments modifiers, with the calculation as set forth below:
FX-neutral
revenue
Payout %
|
+
|
Non-GAAP
operating
$ margin
Payout %
|
×
|
ROIC Modifier
and Payments
Modifier
Payout %
|
=
|
Total
Payout %
|
|
|
|
|
|
|
|
|
|
Total
Payout %
|
×
|
Target
Shares
Awarded
|
=
|
Total Shares
Earned
(subject to
additional
vesting periods)
|
|
|
|
|
|
|
|
|
March 15, 2020
50% vesting for all NEOs
except CEO and CFO
|
March 15, 2021
100% vesting for CEO and CFO;
50% vesting for all other NEOs
|
|
*
|
Mr. Cring is not eligible for the PBRSU program due to his position as a VP.
|
To receive any shares subject to a PBRSU award, at least one of the FX-neutral revenue or non-GAAP operating margin dollars minimum performance thresholds must be met. Each of the minimum performance thresholds are independent and, if any of the FX-neutral revenue or non-GAAP operating margin dollar performance thresholds are met, the award is adjusted with respect to that performance measure in accordance with the percentages outlined in the illustration below. If the minimum performance threshold for either FX-neutral revenue or non-GAAP operating margin dollars is not met, then no shares are awarded for that performance measure. The Compensation Committee may approve adjustments to the calculations of the performance measures due to material events not contemplated at the time the targets were set (such as major acquisitions or unusual or extraordinary corporate transactions, events, or developments) and the Compensation Committee may apply negative discretion to reduce the payout levels of the awards.
2018-2019 PBRSU Cycle Performance and Shares Earned
The following graphs show the goals and results achieved for the 2018-2019 performance period:
|
|
Threshold
|
Target
|
Maximum
|
Foreign-exchange neutral
(FX-neutral) revenue ($ billions)
|
|
|
Non-GAAP operating
margin dollars ($ billions)
|
|
|
Return on Invested
Capital (%) Modifier
|
|
|
Payments Modifier
|
|
|
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Table of Contents
|
|
|
|
|
|
|
FX-neutral
revenue
Payout %
65%
|
+
|
Non-GAAP
operating
$ margin
Payout %
55%
|
×
|
ROIC Modifier
and Payments
Modifier
Payout %
144%
|
=
|
Total
Payout %
86%
|
For the 2018-2019 performance period, actual awards under the PBRSU Program could range from 0% to 340% of the target awards. Based on the Company’s financial performance during the 2018-2019 performance period, the actual PBRSU awards were 86% of target and our NEOs received the following awards:
|
|
Total
Payout %
|
×
|
Target
Shares
Awarded
|
=
|
Total Shares
Earned
(subject to
additional
vesting periods)
|
|
Name
|
|
Percentage of
Target
|
|
Target
Shares
|
|
Shares
Awarded for
2018-2019
Performance
Cycle
|
|
Vesting Schedule
|
Mr. Schenkel
|
|
86%
|
|
108,124
|
|
92,987
|
|
100% on March 15, 2021
|
Mr. Cring*
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Mr. Lee
|
|
86%
|
|
69,310
|
|
59,607
|
|
50% on March 15, 2020; 50% on March 15, 2021
|
Mr. Thompson**
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Ms. Yetto
|
|
86%
|
|
62,379
|
|
53,646
|
|
50% on March 15, 2020; 50% on March 15, 2021
|
Mr. Wenig***
|
|
N/A
|
|
231,114
|
|
N/A
|
|
N/A
|
*
|
Mr. Cring is not eligible for our PBRSU program due to his position as VP.
|
**
|
Mr. Thompson was hired in July 2019 and therefore, did not participate in the 2018-2019 PBRSU cycle.
|
***
|
In accordance with the terms of the Mr. Wenig’s Letter Agreement dated September 29, 2014, his 2018-2019 PBRSU award was deemed earned prior to his separation date assuming achievement of target performance during the 2018-2019 performance period, and as such 231,114 shares were made payable to him in a cash lump sum, using certain value assumptions.
|
Mr. Cring is not eligible for the PBRSU program due to his position as a VP.
Time-Based RSUs
Each executive officer receives a portion of his or her annual equity award as a grant of RSUs that vest on a quarterly basis over a four-year period subject to continued employment. For newly hired executive officers, 25% of the initial grant of RSUs vest on the first anniversary of the date of grant and the remainder vest on the quarterly schedule. This vesting schedule is aligned with market practice and helps enable the Company to remain competitive in attracting talent.
31
Table of Contents
2019 Annual Cash Incentive Awards (the eBay Incentive Plan)
Plan Design
The eBay Incentive Plan (“eIP”) is a broad-based short-term cash incentive plan. The Compensation Committee has set an annual performance period under the plan.
In the first quarter of the year, the Compensation Committee approves Company performance measures based on business criteria and target levels of performance. After the end of each year, the Compensation Committee approves the actual performance against the Company financial performance measures to determine the payout percentage for that portion of the annual cash incentive plan.
Performance Measures and Rationale
The following table provides information on the Company performance measures set in 2019 and rationale for their selection:
Performance Measures(1)
|
|
Rationale
|
|
Target
|
Company financial performance measure
|
|
|
|
FX-neutral revenue (threshold)
|
|
The Compensation Committee believes that a minimum revenue threshold should be met before any cash incentive is paid. Once the minimum revenue threshold has been met, the Company financial performance component of the annual cash incentive payment is paid based on results in relation to the non-GAAP net income goal.
|
|
Targets are set based primarily on the Company’s Board-approved budget for the year.
|
Non-GAAP net income(2)
|
|
Non-GAAP net income is the key measure of short- and intermediate-term results for the Company given that it can be directly affected by the decisions of the Company’s management and provides the most widely followed measure of financial performance.
|
|
Targets are set based primarily on the Company’s Board-approved budget for the year.
|
Individual measure
|
|
|
|
Individual performance
|
|
The Compensation Committee believes that a portion of the compensation payable under this plan should be differentiated based on individual performance for which a review is conducted at the end of the year.
|
|
●CEO’s assessment of the individual performance of the executive officers who are his direct reports.
●In making its determination of the individual performance of each executive officer, the Compensation Committee does not give any specific weighting to individual goals.
●A downward modifier to individual performance is applied if the Company fails to achieve target performance, regardless of individual goal achievement.
|
(1)
|
Both minimum FX-neutral revenue and minimum non-GAAP net income performance thresholds must be met in order for there to be any incentive payout based on Company performance or individual performance, with the payout level for Company financial performance component based on the amount of non-GAAP net income.
|
(2)
|
Non-GAAP net income excludes certain items, primarily stock-based compensation expense and related employer payroll taxes, amortization or impairment of acquired intangible assets, impairment of goodwill, amortization of the deferred tax asset associated with the realignment of the Company’s legal structure and related foreign exchange effects, significant gains or losses and transaction expenses from the acquisition or disposal of a business and certain gains or losses on investments. Non-GAAP net income is calculated quarterly, is publicly disclosed as part of our quarterly earnings releases, and is a basis of third-party analysts’ estimates of the Company’s results.
|
32
Table of Contents
Calculation Mechanics
The plan is designed to support a tight link between Company performance and any incentive payouts. The annual cash incentives payable for 2019 had both a FX-neutral revenue threshold and a non-GAAP net income minimum performance threshold. Unless both of these minimum performance thresholds are met, there is no incentive payout. If both minimum performance thresholds are met, the Company uses total non-GAAP net income to determine the payout percentage of the Company financial performance component of the annual cash incentive.
The following table shows the threshold, target, and maximum payout percentage for non-GAAP net income:
|
|
Threshold
|
|
Target
|
|
Maximum
|
Non-GAAP net income
|
|
|
Additionally, if the minimum performance thresholds are met, 75% of executive officers’ payouts under the plan are based on the Company’s performance as described above. To facilitate differentiation based on individual performance, the remaining 25% of awards are generally based on individual performance. As discussed in more detail below, the Compensation Committee considers many factors in determining the CEO’s individual performance, but does not assign specific weighting to these factors. The CEO partners with the Compensation Committee to similarly assess the individual performance of the other executive officers. Consistent with our commitment to aligning executive compensation with Company performance, in circumstances (such as 2018) where the Company’s financial performance is above its minimum performance threshold and below the target performance threshold, a modifier is applied to the individual performance component to reduce it proportionately based on the Company financial performance component.
In 2019, the FX-neutral revenue threshold and a non-GAAP net income minimum performance threshold were met. The non-GAAP net income exceed target performance resulting in a payout of 122%.
Individual Performance
With respect to individual performance, our CEO presents the Compensation Committee with his assessment of the individual performance of the executive officers who are his direct reports and recommends a bonus payout percentage for the individual performance component of the annual incentive plan based on his assessment. The Compensation Committee reviews his assessments and payout recommendations and makes a subjective determination of the level of individual performance and payouts for each of those executive officers. In addition, the Compensation Committee (with input from the Chairman of the Board and other independent members of the Board) makes a subjective determination of the individual performance of the CEO. In making its determination of the individual performance of each executive officer, the Compensation Committee does not give any specific weighting to individual goals. In addition, as described above, when the Company fails to achieve target performance, the Compensation Committee applies a downward modifier to individual performance regardless of individual goal achievement in order to take a more holistic approach to assessing performance.
2019 Performance and Payouts
The following graphs show the goals and results achieved for the 2019 performance period:
|
|
Threshold
|
|
Target
|
|
Maximum
|
FX-neutral revenue ($ billions)
|
|
|
Non-GAAP net income ($ billions)
|
|
|
The performance goals for the 2019 performance period were set in early 2019 based primarily on the Company’s budget for the year. The performance goal for FX-neutral revenue is a minimum revenue threshold that must be met for the annual cash incentive payment to be paid based on actual results in relation to the non-GAAP net income performance goals.
33
Table of Contents
In early 2020, as part of its review of the Company’s financial performance against the annual cash incentive plan targets and in accordance with its authority under the cash incentive plan, the Compensation Committee considered whether the impact of any significant corporate events not contemplated at the time the targets were set should lead to an adjustment of any of the performance results. The Compensation Committee determined that it was appropriate to adjust non-GAAP net income for certain unanticipated legal changes, portfolio review advisor costs, higher and accelerated capital returns, which, on a net basis, resulted in an upward adjustment to the net income achievement. The Company financial performance component was paid at 122% of target for participants at or above the director level, including all NEOs.
The Compensation Committee reviewed Mr. Schenkel’s performance for the purpose of determining the individual portion of his 2019 annual cash incentive award, with input from the entire Board. The Compensation Committee considered the factors listed above when assessing Mr. Schenkel’s individual performance. Mr. Schenkel’s individual component of the annual cash incentive was established at 150% of target. Mr. Schenkel’s total earned annual incentive award for 2019, including the Company financial component and the individual component, was 129% of target.
For the other NEOs, the individual performance component was recommended by Mr. Schenkel based on his assessment of each person’s performance using the factors described above, and was reviewed and approved by the Compensation Committee. The total earned annual incentive award as a percentage for 2019 for each of our NEOs was paid at between 113% and 129% of target as follows:
Name
|
|
Annual Cash
Incentive Target
as Percentage of
Base Salary
|
|
Annual Cash
Incentive
Award for
2019
|
|
Company
Performance
Payout %
|
|
Performance
Payout as %
of Target
|
Mr. Schenkel
|
|
100%
|
|
$
|
967,450
|
|
|
122%
|
|
129%
|
Mr. Cring
|
|
55%
|
|
$
|
312,180
|
|
|
122%
|
|
129%
|
Mr. Lee
|
|
75%
|
|
$
|
567,864
|
|
|
122%
|
|
113%
|
Mr. Thompson
|
|
65%
|
|
$
|
182,031
|
|
|
122%
|
|
117%
|
Ms. Yetto
|
|
75%
|
|
$
|
616,781
|
|
|
122%
|
|
129%
|
Mr. Wenig
|
|
200%
|
|
$
|
1,819,192
|
*
|
|
122%
|
|
117%
|
*
|
In accordance with Mr. Wenig’s letter agreement dated September 29, 2014, his eIP payout was based on the actual performance of the Company for the full year (and did not take into account any individual performance factors), but prorated for the time that he was employed during 2019.
|
|
|
|
Further Considerations for Setting
Executive Compensation
|
Role of Consultants in Compensation Decisions
Pay Governance LLC (“Pay Governance”) serves as the Compensation Committee’s independent compensation consultant. It provides the Compensation Committee with advice and resources to help the Compensation Committee assess the effectiveness of the Company’s executive compensation strategy and programs. Pay Governance reports directly to the Compensation Committee, and the Compensation Committee has the sole power to terminate or replace Pay Governance at any time.
As part of its engagement, the Compensation Committee
has directed Pay Governance to work with our Senior Vice President, Chief People Officer and other members of management to
obtain information necessary for Pay Governance to form recommendations and evaluate management’s recommendations to
the Compensation Committee. Pay Governance also meets with the Compensation Committee during its regular meetings, in
executive session (where no members of management are present), and with the Compensation Committee chair and other members
of the Compensation Committee outside of the Compensation Committee’s regular meetings. As part of its engagement in
2019, Pay Governance provided a market overview of executive compensation, evaluated the Company’s peer group
composition, evaluated compensation levels at the peer group companies, assessed and proposed equity and cash compensation
guidelines for various executive job levels, assessed compensation for the Company’s executive officers, advised on the
framework for the Company’s long-term incentive awards, and assessed Board compensation. Pay Governance also provided
guidance to the Committee with respect to the leadership transition. Pay Governance does not provide any other
services to the Company.
34
Table of Contents
Compensation Consultant Conflict of Interest Assessment
The Compensation Committee recognizes that it is essential to receive objective advice from its compensation advisors. To that end, the Compensation Committee closely examines the procedures and safeguards that its compensation advisor takes to ensure that its services are objective. The Compensation Committee has assessed the independence of Pay Governance pursuant to SEC rules and concluded that Pay Governance’s work for the Compensation Committee does not raise any conflict of interest.
Peer Group Considerations
To set total compensation guidelines, we review market data of companies that are comparable to eBay and that we believe compete with eBay for executive talent, business, and capital. We review both specific data from peer group companies’ public filings and general industry data for comparable technology companies that are included in proprietary third party surveys. We believe that it is necessary to consider this market data in making compensation decisions to attract and retain talent. We also recognize that, at the executive level, we compete for talent against larger global companies, as well as smaller, non-public companies.
To assess whether the peer group continues to reflect the markets in which we compete for executive talent, the Compensation Committee reviews and approves the peer group each year with the assistance of its compensation consultant. In deciding whether a company should be included in the peer group, the Compensation Committee generally considers the following screening criteria:
●
|
revenue;
|
●
|
market value;
|
●
|
historical growth rates;
|
●
|
primary line of business;
|
●
|
whether the company has a recognizable and well-regarded brand; and
|
●
|
whether we compete with the company for talent.
|
For each member of the peer group, one or more of the factors listed above was relevant to the reason for inclusion in the group, and, similarly, one or more of these factors may not have been relevant to the reason for inclusion in the group.
The Compensation Committee evaluates the Company’s peer group on an annual basis. The peer group consisted of the following companies for 2019:
Adobe Inc.
|
Expedia Group, Inc.
|
PayPal Holdings, Inc.
|
Alphabet Inc.
|
Facebook, Inc.
|
salesforce.com, Inc.
|
Amazon.com, Inc.
|
Intel Corporation
|
Symantec Corporation
|
Booking Holdings Inc.
|
Intuit Inc.
|
Twitter, Inc.
|
Cisco Systems, Inc.
|
Microsoft Corporation
|
|
Electronic Arts Inc.
|
Netflix, Inc.
|
|
35
Table of Contents
|
Severance and Change in Control Arrangements with Executive Officers and Clawbacks
|
The objective of our severance and change in control arrangements described below is to provide fair and reasonable severance that will also serve as a retention incentive for those impacted by a change in control or similar transactions. We believe that these protections help the Company attract and retain highly talented executive officers.
Mr. Wenig separated from the Company on September 24, 2019, and was paid severance pursuant to a separation agreement between him and the Company dated September 24, 2019 and the letter agreement between Mr. Wenig and the Company dated September 29, 2014 (collectively, the “Wenig Separation Arrangements”). Pursuant to the Wenig Separation Arrangements, in exchange for Mr. Wenig’s execution and non-revocation of a release of claims in favor of the Company, Mr. Wenig became entitled to severance payments. For more information about the Wenig Separation Arrangements, please see the Executive Compensation Tables included in this Form 10-K/A.
Jamie Iannone was appointed CEO effective April 27, 2020 as disclosed in our Current Report on Form 8-K filed with the SEC on April 13, 2020. The details of his appointment are included therein.
Severance Arrangements Outside a Change in Control
The Company’s SVP and Above Standard
Severance Plan (“SVP and Above Severance Plan” or “Standard Severance Plan”), which covers each
officer employed as a senior vice president or in a more senior position, provides severance protection outside of a change
in control period if a participant is terminated without cause and signs and does not revoke a waiver of claims against the
Company. Mr. Thompson and Mr. Lee participate in the SVP and Above Severance Plan. Since Mr. Cring is at the VP level, he is
eligible to participate in the Company’s VP Standard Severance Plan (“VP Severance Plan”), which also
provides severance protection outside of a change in control period. Under the VP Severance Plan, if a participant is
terminated without cause and signs and does not revoke a waiver of claims against the Company, then he is entitled to a lump
sum payment of one-half of target cash incentive (i.e., one-half of annual salary and one-half of target eIP payment) and an
amount equal to 4 months of COBRA coverage. In addition, the participant would also receive a prorated eIP payment based on
actual Company performance and target individual performance for the year in which the termination occurs and one-half of the
value of the equity that would have vested in the 12 month period after the termination date (as if the participant had
remained employed).
Mr. Schenkel and Ms. Yetto do not participate in the SVP and Above Severance Plan. Mr. Schenkel and Ms. Yetto entered into offer letters with the Company in 2014 and 2015, respectively, in connection with their appointments to the leadership team on or about the time of the separation of PayPal Holdings, Inc. Each offer letter provides for certain severance benefits if there is a termination without cause or resignation for good reason not in connection with a change in control, and if the applicable executive signs and does not revoke a waiver of claims against the Company.
Under the terms of Mr. Lee’s offer letter entered into in connection with his appointment to his role of Senior Vice President, General Manager, Markets (which is still effective in his new role as SVP, International), Mr. Lee is entitled to receive a separation payment in the event he voluntarily terminates his employment with the Company. This separation payment is intended to replicate benefits offered under a retirement program in which Mr. Lee formerly participated when he was employed with the Company in Korea. The benefit is equal to three times his average monthly salary multiplied by his years of service since January 1, 2013. Should the Company terminate Mr. Lee’s employment for reason other than cause, Mr. Lee is entitled to benefits under the Standard Severance Plan. Mr. Lee’s offer letter also includes any non-competition restrictive covenant for 12-months post termination of employment.
Please see the “Compensation Tables—Potential Payments Upon Termination or Change in Control” section of this Form 10-K/A for further information regarding the Company’s Standard Severance Plan, including amounts received by Mr. Wenig in connection with his departure, and the treatment of awards upon qualifying termination events or a change in control.
36
Table of Contents
The following table describes the severance benefits (other than certain accrued benefits which are paid (such as earned but unpaid bonuses, payment of unreimbursed expenses, etc.)) that each of our NEOs (except Mr. Cring) would receive if terminated outside of a change in control.
|
|
|
|
SVP and Above Severance Plan Participants
|
|
Mr. Schenkel and Ms. Yetto
|
|
|
Severance
|
|
2x salary and 2x bonus
|
|
For
Mr. Schenkel, 2x salary and 2x cash
incentive award (determined as the greater of base salary or target bonus)
For Ms. Yetto, 1x salary and 1x cash incentive award (determined as the greater of 75% of base salary or target bonus)
|
|
|
eIP
|
|
Prorated payment for year in which termination occurs(1)
|
Cash Elements
|
|
Health Premium
|
|
The cost of 24 months of health coverage
|
|
No payment
|
|
Make-Good Payment
|
|
Payment of any unpaid cash
“make good” awards
|
|
n/a
|
Equity Elements
|
|
Options and RSUs (2)
|
|
100% acceleration of awards that would have otherwise vested within 12 months of
termination date(3)
|
|
PBRSUs (2)
|
|
100% acceleration of awards that would have otherwise vested within 12 months of
termination date(3)
|
(1)
|
For Mr. Schenkel and Ms. Yetto, based only on actual performance with respect to the Company performance element for the full year. For Standard Severance Plan Participants, based on actual performance with respect to the Company performance element for the full year and target performance with respect to the individual performance element.
|
(2)
|
For Mr. Schenkel and Ms. Yetto and the participants in the SVP and Above Severance Plan, he/she would receive a lump sum amount equal to the dividend equivalents that have already accrued and would have vested in connection with applicable shares. In addition, Mr. Schenkel and Ms. Yetto would receive an amount equal to dividend equivalents that have not yet accrued, but would have accrued for the next 12 months, notwithstanding the termination.
|
(3)
|
For Mr. Schenkel and Ms. Yetto, the Company shall pay
cash based on the value of the shares that would have vested in lieu of accelerated vesting. Pursuant to their offer letters, Mr.
Schenkel and Ms. Yetto’s outstanding PBRSUs would be treated as vested at the time of termination. For Standard Severance Plan Participants, the Company can elect to pay cash in lieu of accelerated vesting.
|
Severance Arrangements in Connection with a Change in Control
The Company has not entered into any arrangements with any of its executive officers to provide “single trigger” severance payments upon a change in control.
The Company’s equity incentive plans generally provide for the acceleration of vesting of awards granted under the plans upon a change in control only if the acquiring entity does not agree to assume or continue the awards. These provisions generally apply to all holders of awards under the equity incentive plans.
The Company’s Change in Control Severance Plan provides severance protection for executives at the level of Vice President or in a more senior position in connection with a change in control if a participant is terminated without cause or resigns for good reason and signs and does not revoke a waiver of claims against the Company. Mr. Cring, Mr. Thompson, and Mr. Lee participate in the Change in Control Severance Plan.
Mr. Schenkel and Ms. Yetto do not participate in the Change in Control Severance Plan. Mr. Schenkel and Ms. Yetto entered into offer letters with the Company in 2014 and 2015, respectively, in connection with their appointments to the leadership team on or about the time of the separation of PayPal Holdings, Inc. Each offer letter provides for certain severance benefits if the individual is terminated without cause or resigns for good reason in the ninety days preceding or the twenty-four months following, a change in control, and signs and does not revoke a waiver of claims against the Company.
37
Table of Contents
The following table describes the severance benefits that each of our NEOs would receive if they are terminated in connection with a change in control.
|
|
|
|
Change in Control Severance
Plan Participants
|
|
Mr. Schenkel and Ms. Yetto
|
|
|
Severance
|
|
For Mr. Lee and Mr. Thompson, 2x salary and 2x bonus
For Mr. Cring, 1x salary and 1x bonus
|
|
2x base salary and 2x bonus
|
|
|
|
(determined as the greater of base salary or target bonus opportunity or, for Ms. Yetto, 75% of target bonus opportunity)
|
|
|
eIP
|
|
1x target cash incentive award(1)
|
|
Prorated payment for year in which termination occurs(1)
|
Cash Elements
|
|
Health Premium
|
|
For Mr. Lee and Mr. Thompson, the cost of 24 months of health coverage
For Mr. Cring, the cost of 12 months of health coverage
|
|
No payment
|
|
|
Make-Good Payment
|
|
Payment of any unpaid cash “make good” awards
|
|
n/a
|
Equity Elements
|
|
Options and RSUs
|
|
100% acceleration of awards(2)
|
|
PBRSUs
|
|
100% acceleration of awards(2)(3)
|
(1)
|
For Mr. Schenkel and Ms. Yetto, based only on actual performance with respect to the Company performance element for the full year. For Change in Control Severance Plan Participants, based on target performance with respect to both the Company performance component and the individual performance component.
|
(2)
|
For Mr. Schenkel and Ms. Yetto, the Company will pay cash based on the value of the shares that would have vested in lieu of accelerated vesting. For Change in Control Severance Plan Participants, the Company can elect to pay cash in lieu of accelerated vesting. The cash value of such unvested equity is determined using the average closing price of the Company’s common stock for the ten consecutive trading days ending on and including the trading day immediately prior to his or her termination date.
|
(3)
|
This payment includes the target amount of shares subject to PBRSUs for performance periods for which achievement has not yet been determined.
|
Clawbacks
The Compensation Committee has adopted a clawback policy that covers each officer employed as a Vice President or in a more senior position and applies to incentive compensation, which includes any cash incentive award, equity award, or equity-based award paid or awarded to any covered employee during the period in which he or she is designated as a covered employee. For all covered employees, the occurrence of either of the following events is covered: (a) an action or omission by the covered employee that constitutes a material violation of the Company’s Code of Business Conduct or (b) an action or omission by the covered employee that results in material financial or reputational harm to the Company. In addition, for covered employees that are employed as a Senior Vice President or in a more senior position or a Vice President who is a member of the finance function, the following event is also covered: a material restatement of all or a portion of the Company’s financial statements that is the result of a supervisory or other failure by the covered employee.
Under the clawback policy, the Compensation Committee has the authority and discretion to determine whether an event covered by the policy has occurred and, depending on the facts and circumstances, may (but need not) require the full or partial forfeiture and/or repayment of any incentive compensation covered by the policy that was paid or awarded to a covered employee. The forfeiture and/or repayment may include all or any portion of the following:
●
|
Any incentive compensation that is greater than the amount that would have been paid to the covered employee had the covered event been known;
|
●
|
Any outstanding or unpaid incentive compensation, whether vested or unvested, that was awarded to the covered employee; and
|
●
|
Any incentive compensation that was paid to or received by the covered employee (including gains realized through the exercise of stock options) during the
twelve-month period preceding the date on which the Company had actual knowledge of the covered event or the full impact of the covered event was
known, or such longer period of time as may be required by any applicable statute or government regulation.
|
Compensation Committee Report
The Compensation Committee of the Board is currently composed of five independent directors. The Compensation Committee reviews
and approves Company compensation programs on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation
Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Form 10-K/A. Based
upon the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be included in eBay’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
COMPENSATION COMMITTEE
Paul S. Pressler, Chair
Anthony J. Bates
Bonnie S. Hammer
Kathleen C. Mitic
Thomas J. Tierney
The information contained above under the caption “Compensation Committee Report” will not be considered “soliciting material” or to be “filed” with the SEC, nor will that information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a filing.
38
Table of Contents
Executive Compensation Tables
Summary Compensation Table
The following table, footnotes, and narrative summarize the total compensation earned by each of our named executive officers, or NEOs, for the fiscal year ended December 31, 2019 and, to the extent required under the SEC executive compensation disclosure rules, the fiscal years ended December 31, 2018 and 2017.
Name and Principal
Position (a)
|
|
Year
(b)
|
|
Salary
($) (c)
|
|
Bonus
($) (d)
|
|
Stock
Awards
($) (e)
|
|
Option
Awards
($) (f)
|
|
Non-Equity
Incentive Plan
Compensation
($) (g)
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) (h)
|
|
All Other
Compensation
($) (i)
|
|
Total
($)
|
Scott F. Schenkel
Interim Chief Executive Officer(1)
|
|
2019
|
|
750,000
|
|
375,000
|
|
15,515,744
|
|
0
|
|
967,500
|
|
0
|
|
39,012
|
|
17,647,255
|
|
2018
|
|
736,538
|
|
0
|
|
7,251,530
|
|
0
|
|
574,500
|
|
0
|
|
11,000
|
|
8,573,568
|
|
2017
|
|
686,539
|
|
0
|
|
6,856,169
|
|
0
|
|
928,543
|
|
0
|
|
10,800
|
|
8,482,051
|
Andrew J. Cring
Interim Chief Financial Officer(2)
|
|
2019
|
|
440,000
|
|
210,000
|
|
4,947,044
|
|
0
|
|
312,180
|
|
0
|
|
11,200
|
|
5,920,424
|
Jae Hyun Lee
SVP, International(3)
|
|
2019
|
|
711,735
|
|
0
|
|
5,719,824
|
|
0
|
|
580,683
|
|
0
|
|
1,483,753
|
|
8,495,994
|
|
2018
|
|
653,238
|
|
0
|
|
4,648,404
|
|
0
|
|
367,814
|
|
0
|
|
357,376
|
|
6,026,832
|
|
2017
|
|
595,163
|
|
0
|
|
7,113,476
|
|
0
|
|
603,719
|
|
0
|
|
131,958
|
|
8,444,316
|
Peter B. Thompson
SVP, Chief Product Officer(4)
|
|
2019
|
|
240,385
|
|
3,500,000
|
|
7,852,346
|
|
0
|
|
182,031
|
|
0
|
|
9,615
|
|
11,784,377
|
Kristin A. Yetto
SVP, Chief People Officer
|
|
2019
|
|
637,500
|
|
0
|
|
7,302,044
|
|
0
|
|
616,781
|
|
0
|
|
11,200
|
|
8,567,525
|
Devin N. Wenig
Former President and Former Chief Executive Officer(5)
|
|
2019
|
|
780,769
|
|
0
|
|
14,601,000
|
|
0
|
|
1,819,192
|
|
0
|
|
40,024,909
|
|
57,225,871
|
|
2018
|
|
1,000,000
|
|
0
|
|
15,500,046
|
|
0
|
|
1,501,500
|
|
0
|
|
170,620
|
|
18,172,166
|
|
2017
|
|
1,000,000
|
|
0
|
|
14,000,033
|
|
0
|
|
2,580,000
|
|
0
|
|
90,558
|
|
17,670,591
|
(1)
|
Mr. Schenkel served as Senior Vice President, Finance and Chief Financial Officer for a majority of the year. From September 24, 2019 to April 26, 2020, Mr. Schenkel
served as the interim CEO until Mr. Iannone appointment as
CEO. Effective as of April 27, 2020, Mr. Schenkel assumed the
role of Senior Advisor.
|
(2)
|
Mr. Cring served as Vice President, Global Financial Planning and Analysis for the majority of the year. Effective as of September 24, 2019, in connection with Mr. Schenkel’s appointment to interim CEO, Mr. Cring serves as the interim CFO.
|
(3)
|
Mr. Lee served as Senior Vice President, General Manager, Markets until January 2020 when he was named SVP, International. Mr. Lee’s base salary was converted from Singapore dollars to U.S. dollars based on Company FX planning rates.
|
(4)
|
Mr. Thompson was
hired as Chief Product
Officer in July 2019
and received an equity
transition payment of
$3,500,000.
|
(5)
|
Mr. Wenig’s employment with the Company was terminated on September 24, 2019.
|
39
Table of Contents
Bonus (Column (d))
Beginning in October 2019, Mr. Schenkel received a monthly performance bonus in the amount of $125,000 for each month he served as Interim CEO.
Beginning in October 2019, Mr. Cring received a monthly performance bonus in the amount of $70,000 for each month he served as Interim CFO.
Mr. Thompson received an equity transition payment of $3,500,000, subject to repayment if he leaves prior to the first anniversary of his start date and partial repayment if he leaves prior to the end of his third year of employment.
Stock Awards (Column (e))
The amounts reported in the Stock Awards column represent the aggregate grant date fair value of time-based restricted stock units, or RSUs, and performance-based restricted stock units, or PBRSUs, granted to each of our NEOs in each of the applicable years, calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation — Stock Compensation. The grant date fair value of RSUs is determined using the fair value of our common stock on the date of grant, and the grant date fair value of PBRSUs is calculated based on the fair value of our common stock on the date of grant and the probable outcome of the performance measures for the applicable performance period as of the date on which the PBRSUs are granted. This estimated fair value for PBRSUs is different from (and lower than) the maximum value of PBRSUs set forth below. The equity incentive awards included in this column were all awarded under the Company’s 2008 Equity Incentive Award Plan, as amended and restated.
RSUs: Focal RSU awards were granted to our NEOs in connection with the Company’s annual equity grant on April 1, 2019 with a grant date value of, $2,939,040 for Mr. Schenkel, $1,884,000 for Mr. Cring, $2,287,930 for Mr. Lee, $1,695,600 for Ms. Yetto, and $5,840,400 for Mr. Wenig. On August 15, 2019, Mr. Thompson was granted two RSU awards with grant date values of $1,570,461 and $3,926,173, respectively. On October 15, 2019, Mr. Schenkel was granted an RSU award with a grant date value of $4,084,072 in connection with his appointment as the Interim CEO. On October 15, 2019, Mr. Cring was granted an RSU award with a grant date value of $3,063,044 in connection with his appointment as the Interim CFO. On October 15, 2019, Ms. Yetto was granted an RSU award with a grant date value of $1,531,522 in recognition of the critical nature of her role during the operating and portfolio initiatives.
PBRSUs: PBRSUs provide an opportunity for our NEOs to receive time-based RSUs if the performance measures for a particular time period — typically 24 months — are met. For a description of the performance measures for the 2018-2019 PBRSU awards, see “Compensation Discussion and Analysis — Elements of Our Executive Compensation Program — Equity Incentive Awards — PBRSU Program” above.
For 2019, PBRSU awards were granted to our NEOs in connection with the Company’s annual equity grant on April 1, 2019 with a grant date value of $4,408,560 for Mr. Schenkel, $3,431,894 for Mr. Lee, $2,543,400 for Ms. Yetto and $8,760,600 for Mr. Wenig. On August 15, 2019, Mr. Thompson was granted a PBRSU award with a grant date value of $2,543,400. On October 15, 2019, Mr. Schenkel was granted a PBRSU award with a grant date value of $4,084,072 in connection with his appointment as the Interim CEO. On October 15, 2019, Ms. Yetto was granted a PBRSU award with a grant date value of $1,531,522 in recognition of the critical nature of her role during the operating and portfolio initiatives. Mr. Cring is not eligible for the PBRSU program due to his position as a Vice President.
40
Table of Contents
Assuming the highest level of performance is achieved under the applicable performance measures for the 2019-2020 PBRSU awards, the maximum possible value of the PBRSU awards allocated to our NEOs for such performance period using the fair value of our common stock on the date that such awards were granted is presented below:
Name
|
|
Maximum Value
of PBRSUs (as
of Grant Date)
|
Mr. Schenkel
|
|
$28,025,685
|
Mr. Cring(1)
|
|
N/A
|
Mr. Lee
|
|
$11,325,252
|
Mr. Thompson
|
|
$7,773,849
|
Ms. Yetto
|
|
$13,447,243
|
Mr. Wenig
|
|
$28,909,980
|
(1)
|
Mr. Cring is not eligible for our PBRSU program due to his position as VP.
|
The value that our NEOs received in 2019 from the vesting of stock awards is reflected in the 2019 Option Exercises and Stock Vested table below. Additional information on all outstanding stock awards as of December 31, 2019 is reflected in the 2019 Outstanding Equity Awards at Fiscal Year-End table below.
Option Awards (Column (f))
Since 2016, in accordance with our revised equity guidelines, no option awards were granted to our NEOs.
The value that our NEOs received in 2019 from the exercise of previously granted stock options is reflected in the 2019 Option Exercises and Stock Vested table below. Additional information on all outstanding option awards as of December 31, 2019 is reflected in the 2019 Outstanding Equity Awards at Fiscal Year-End table below.
Non-Equity Incentive Plan Compensation (Column (g))
The amounts reported in the Non-Equity Incentive Plan Compensation column represent amounts earned by each of our NEOs under the annual cash incentive plan for services they rendered in each of the applicable years. See “Compensation Discussion and Analysis — Elements of Our Executive Compensation Program — Annual Cash Incentive Awards (the eBay Incentive Plan (eIP))” above for more information.
All Other Compensation (Column (i))
General
The amounts reported in the All Other Compensation column reflect:
a)
|
An amount of $11,200 for Mr. Schenkel, Mr. Cring, and Ms. Yetto, representing the maximum matching contributions made by the Company to the Company’s 401(k) savings plan for the benefit of our U.S.-based NEOs, which also is the same maximum amount applicable to each participating employee for 2019. Mr. Thompson also received matching contributions from the Company’s 401(k) savings plan in the amount of $9,615. Mr. Lee is not eligible to participate in the Company’s 401(k) savings plan and therefore did not receive any matching contributions under the plan.
|
b)
|
On September 24, 2019, the Company and Mr. Wenig entered into a letter agreement regarding his departure (the “Wenig Letter”). Pursuant to the terms of the Wenig Letter, in exchange for his execution and non-revocation of a release of claims against the Company, the Company paid the amounts required to be paid to him under his letter agreement with the Company dated September 29, 2014 upon a termination without cause (the “Letter Agreement”). The Letter Agreement payments include: (i) two times his annual base salary which equals $2,000,000; (ii) two times his annual target bonus amount which equals $4,000,000; (iii) a prorated portion of the bonus under the eBay Incentive Plan (“eIP”) that Mr. Wenig
|
41
Table of Contents
|
otherwise would have earned and been paid (using his accrued eligible compensation under the eIP through the last day of employment) for the 2019 fiscal year under the eIP which equals $1,819,192 (which is reflected in the “Non-Equity Plan Compensation” column of the Summary Compensation Table); (iv) the amount of $5,849,674, which is the dollar value of outstanding and unvested RSU awards that were treated as vested under the Letter Agreement; (v) the amount of $27,357,280, which is the dollar value of outstanding and unvested PBRSU Awards that were treated as vested under the Letter Agreement; and (vi) the amount of $545,288, which is the dollar value of dividend equivalents associated with the equity awards that were treated as vested under the Letter Agreement.
|
c)
|
In his role as SVP, General Manager, Markets, Mr. Lee was provided certain expatriate allowances due to extended travel and temporary relocations, totaling $1,483,753.
|
d)
|
An amount of $4,260 in home security expenses for Mr. Wenig relating to monitoring services by outside security providers. The incremental cost associated with the home security services is determined based upon the amount paid to the applicable outside security provider.
|
e)
|
An amount of $26,303 in secured chauffeured transportation allowances provided to Mr. Wenig. The incremental cost associated with such services is determined based upon the amount paid to the applicable service provider.
|
f)
|
Mr. Wenig was permitted personal airplane usage in 2019. $230,904 is included in the amount for Mr. Wenig to reflect his personal airplane use. This amount is the cost of fuel, oil, lubricants, and other additives related to the applicable trips times two.
|
g)
|
Mr. Schenkel was permitted personal airplane usage in 2019 due to his previous CFO position and as the Interim CEO. $27,812 is included in the amount for Mr. Schenkel in this column to reflect his personal airplane use. This amount is the cost of fuel, oil, lubricants, and other additives related to the applicable trips times two.
|
42
Table of Contents
2019 Grants of Plan-Based Awards
The following table, footnotes, and narrative set forth certain information regarding grants of plan-based awards to each of our NEOs for the fiscal year ended December 31, 2019. Jamie Iannone, who is currently a member of the Board, is not included for these purposes as he was appointed to the Board in 2020 in connection with his appointment as our chief executive officer. As a result, he did not serve as a director, and was not paid any amounts, in respect of fiscal year 2019.
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(j)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(j)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(l)
|
|
Grant
Date Fair
Value
($)(m)
|
Name (a)
|
|
Approval
Date (b)
|
|
Grant
Date (c)
|
|
Threshold
($)(d)
|
|
Target
($)(e)
|
|
Maximum
($)(f)
|
|
Threshold
(#)(g)
|
|
Target
(#)(h)
|
|
Maximum
(#)(i)
|
Mr. Schenkel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Company
|
|
N/A
|
|
N/A
|
|
281,250
|
|
562,500
|
|
1,125,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Individual
|
|
N/A
|
|
N/A
|
|
—
|
|
187,500
|
|
375,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
1/25/2019
|
|
4/1/2019
|
|
—
|
|
—
|
|
—
|
|
23,400
|
|
117,000
|
|
386,100
|
|
—
|
|
—
|
|
—
|
|
4,408,560
|
(2019-2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
9/25/2019
|
|
10/15/2019
|
|
—
|
|
—
|
|
—
|
|
21,009
|
|
105,043
|
|
346,642
|
|
—
|
|
—
|
|
—
|
|
4,084,072
|
(2019-2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
1/25/2019
|
|
4/1/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
78,000
|
|
—
|
|
—
|
|
2,939,040
|
RSUs
|
|
9/25/2019
|
|
10/15/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
105,043
|
|
—
|
|
—
|
|
4,084,072
|
Mr. Cring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Company
|
|
N/A
|
|
N/A
|
|
90,750
|
|
181,500
|
|
363,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Individual
|
|
N/A
|
|
N/A
|
|
—
|
|
60,500
|
|
121,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
1/25/2019
|
|
4/1/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50,000
|
|
—
|
|
—
|
|
1,884,000
|
RSUs
|
|
9/25/2019
|
|
10/15/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
78,782
|
|
—
|
|
—
|
|
3,063,044
|
Mr. Lee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Company
|
|
N/A
|
|
N/A
|
|
193,132
|
|
386,263
|
|
772,527
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Individual
|
|
N/A
|
|
N/A
|
|
—
|
|
128,754
|
|
257,509
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
1/25/2019
|
|
4/1/2019
|
|
—
|
|
—
|
|
—
|
|
18,216
|
|
91,080
|
|
300,564
|
|
—
|
|
—
|
|
—
|
|
3,431,894
|
(2019-2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
1/25/2019
|
|
4/1/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
60,720
|
|
—
|
|
—
|
|
2,287,930
|
43
Table of Contents
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(j)
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(j)
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(l)
|
Grant
Date Fair
Value
($)(m)
|
Name (a)
|
Approval
Date (b)
|
Grant
Date (c)
|
Threshold
($)(d)
|
Target
($)(e)
|
Maximum
($)(f)
|
|
Threshold
(#)(g)
|
Target
(#)(h)
|
Maximum
(#)(i)
|
Mr. Thompson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Company
Performance
|
N/A
|
N/A
|
58,594
|
117,187
|
234,375
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
eIP - Individual
Performance
|
N/A
|
N/A
|
—
|
39,062
|
78,125
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
PBRSUs
(2019-2020
Performance
period)
|
7/3/2019
|
8/15/2019
|
—
|
—
|
—
|
|
11,946
|
59,729
|
197,106
|
—
|
—
|
—
|
2,355,712
|
RSUs
|
7/3/2019
|
8/15/2019
|
—
|
—
|
—
|
|
—
|
—
|
—
|
39,819
|
—
|
—
|
1,570,461
|
RSUs
|
7/3/2019
|
8/15/2019
|
—
|
—
|
—
|
|
—
|
—
|
—
|
99,548
|
—
|
—
|
3,926,173
|
Ms. Yetto
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Company
Performance
|
N/A
|
N/A
|
179,297
|
358,594
|
717,187
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
eIP - Individual
Performance
|
N/A
|
N/A
|
—
|
119,531
|
239,062
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
PBRSUs
(2019-2020
Performance
period)
|
1/25/2019
|
4/1/2019
|
—
|
—
|
—
|
|
13,500
|
67,500
|
222,750
|
—
|
—
|
—
|
2,543,400
|
PBRSUs
(2019-2020
Performance
period)
|
10/14/2019
|
10/15/2019
|
—
|
—
|
—
|
|
7,878
|
39,391
|
129,990
|
—
|
—
|
—
|
1,531,522
|
RSUs
|
1/25/2019
|
4/1/2019
|
—
|
—
|
—
|
|
—
|
—
|
—
|
45,000
|
—
|
—
|
1,695,600
|
RSUs
|
10/14/2019
|
10/15/2019
|
—
|
—
|
—
|
|
—
|
—
|
—
|
39,391
|
—
|
—
|
1,531,522
|
Mr. Wenig
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eIP - Company
Performance
|
N/A
|
N/A
|
585,577
|
1,171,154
|
2,342,308
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
eIP - Individual
Performance
|
N/A
|
N/A
|
—
|
390,385
|
780,769
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
PBRSUs
(2019-2020
Performance
period)
|
1/25/2019
|
4/1/2019
|
—
|
—
|
—
|
|
46,500
|
232,500
|
767,250
|
—
|
—
|
—
|
8,760,600
|
RSUs
|
1/25/2019
|
4/1/2019
|
—
|
—
|
—
|
|
—
|
—
|
—
|
155,000
|
—
|
—
|
5,840,400
|
44
Table of Contents
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (Annual Cash Incentive Plan) (Columns (d), (e), and (f))
The amounts reported under these columns relate to the possible awards under the annual cash incentive plan. In 2019, the total annual target incentive amounts under the annual cash incentive plan for the NEOs were as follows:
Mr. Schenkel
|
$750,000
|
Mr. Cring
|
$242,000
|
Mr. Lee
|
$703,125
|
Mr. Thompson
|
$156,250
|
Ms. Yetto
|
$478,125
|
Mr. Wenig
|
$1,561,539
|
The total 2019 annual target incentive amounts under the annual cash incentive plan for the NEOs were allocated 75% to Company performance and 25% to individual performance. No payment occurs for the individual performance component of the annual cash incentive plan unless the minimum thresholds for both FX-neutral revenue and non-GAAP net income are met; for 2019, both these Company performance thresholds were met.
Actual payouts to our NEOs under the annual cash incentive plan for the fiscal year ended December 31, 2019 are reflected in the Non-Equity Incentive Plan Compensation column in the 2019 Summary Compensation Table above.
eIP—Company Performance: The amounts shown in the rows entitled “eIP – Company Performance” reflect estimated payouts for the fiscal year ended December 31, 2019 under the annual cash incentive plan for the portion of the award payable based on the Company’s performance, as follows:
●
|
Threshold: The amounts shown in this column reflect the minimum payment levels if the minimum FX-neutral revenue and non-GAAP net income thresholds are met, which are 50% of the amounts shown under the Target column.
|
●
|
Target: The amounts shown in this column reflect the target payment levels if target non-GAAP net income is met.
|
●
|
Maximum: The amounts shown in this column represent the maximum amounts payable based on Company performance, which are 200% of the amounts shown under the Target column.
|
eIP—Individual Performance: The amounts shown in the rows entitled “eIP – Individual Performance” reflect estimated payouts for the fiscal year ended December 31, 2019 under the annual cash incentive plan for the portion of the award payable based on individual performance, as follows:
●
|
Threshold: Although there are no thresholds under the annual cash incentive plan for individual performance, there is no payout for individual performance unless the minimum thresholds for both Company-wide FX-neutral revenue and non-GAAP net income are met. In addition, in circumstances where the Company’s financial performance is above its thresholds but below its targets, a modifier is applied to the individual performance component to reduce it proportionately based on the Company financial performance component.
|
●
|
Target: The amounts shown in this column reflect 100% of the target award for individual performance.
|
●
|
Maximum: The amounts shown in this column are 200% of the amounts shown under the Target column.
|
See “Compensation Discussion and Analysis — Elements of Our Executive Compensation Program — Annual Cash Incentive Awards (the eBay Incentive Plan (eIP))” above.
45
Table of Contents
Estimated Future Payouts Under Equity Incentive Plan Awards (PBRSUs) (Columns (g), (h), and (i))
The amounts shown reflect estimated payouts of PBRSUs for the 2019-2020 performance period, as follows:
●
|
Threshold: The amounts shown in this column reflect the awards if the minimum FX-neutral revenue and non-GAAP operating margin dollar thresholds are met and the lowest return on invested capital and the Payments modifier is applied, and are 20% of the amounts shown under the Target column.
|
●
|
Target: The amounts shown in this column reflect the awards if the target FX-neutral revenue and non-GAAP operating margin dollar amounts are met, and the target return on invested capital and the Payments modifier is applied.
|
●
|
Maximum: The amounts shown in this column reflect the awards if the maximum FX-neutral revenue and non-GAAP operating margin dollar amounts are met and the maximum return on invested capital and the Payments modifier is applied, and are 330% of the amounts shown under the Target column.
|
For further discussion of the PBRSUs, including their
vesting schedules, see “Compensation Discussion and Analysis — Elements of Our Executive Compensation Program
— Equity Incentive Awards — PBRSU Program” above.
All Other Stock Awards: Number of Shares or Stock Units (RSUs) (Column (j))
The awards reflect the number of RSUs on the grant date. RSU awards granted to our NEOs in 2019 vest over a four-year period with 1/16th of the shares underlying the RSU award vesting on June 15, 2019 and additional 1/16th of the shares underlying the RSU award vesting each quarter thereafter.
Grant Date Fair Value (Column (m))
The grant date fair value of each RSU award was calculated using the fair value of our common stock on the date of grant. The estimated fair value of PBRSUs was calculated based on the fair value of our common stock on the date of grant and the probable outcome of the performance measures for the 2019-2020 performance period as of the date on which those PBRSUs were granted for accounting purposes.
46
Table of Contents
2019 Outstanding Equity Awards at Fiscal Year-End
The following table and footnotes set forth certain information regarding outstanding equity awards for each of our NEOs as of December 31, 2019.
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Grant
Date
|
Option
Expiration
Date
|
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
|
Market
Value
Shares
or Units
of Stock
That
Have Not
Vested ($)(1)
|
Stock
Grant
Date
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(2)
|
Mr. Schenkel
|
47,252
|
—
|
—
|
20.41
|
10/15/2014
|
10/15/2021
|
|
|
|
|
|
27,914
|
—
|
—
|
22.63
|
4/1/2013
|
4/1/2020
|
|
|
|
|
|
1,799
|
—
|
—
|
22.76
|
4/1/2014
|
4/1/2021
|
|
|
|
|
|
24,747
|
—
|
—
|
23.21
|
4/1/2015
|
4/1/2022
|
|
|
|
|
|
14,144
|
—
|
—
|
26.92
|
7/17/2015
|
7/17/2022
|
|
|
|
|
|
94,288
|
—
|
—
|
26.92
|
7/17/2015
|
7/17/2022
|
|
|
|
|
|
|
|
|
|
|
|
6,253
|
225,796
|
4/1/2016
|
|
|
|
|
|
|
|
|
25,530
|
921,888
|
4/1/2017
|
|
|
|
|
|
|
|
|
40,547
|
1,464,152
|
4/1/2018
|
|
|
|
|
|
|
|
|
63,375
|
2,288,471
|
4/1/2019
|
|
|
|
|
|
|
|
|
105,043
|
3,793,103
|
10/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
732,742
|
26,459,314
|
Mr. Cring
|
29,710
|
—
|
—
|
23.03
|
2/15/2013
|
2/15/2020
|
|
|
|
|
|
17,779
|
—
|
—
|
22.76
|
4/1/2014
|
4/1/2021
|
|
|
|
|
|
11,959
|
—
|
—
|
23.21
|
4/1/2015
|
4/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
5,211
|
188,169
|
4/1/2016
|
|
|
|
|
|
|
|
|
14,079
|
508,393
|
4/1/2017
|
|
|
|
|
|
|
|
|
4,693
|
169,464
|
4/1/2017
|
|
|
|
|
|
|
|
|
25,992
|
938,571
|
5/15/2018
|
|
|
|
|
|
|
|
|
40,625
|
1,466,969
|
4/1/2019
|
|
|
|
|
|
|
|
|
78,782
|
2,844,818
|
10/15/2019
|
|
|
Mr. Lee
|
8,319
|
—
|
—
|
23.21
|
4/1/2015
|
4/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
3,126
|
112,880
|
4/1/2016
|
|
|
|
|
|
|
|
|
15,018
|
542,300
|
4/1/2017
|
|
|
|
|
|
|
|
|
14,039
|
506,948
|
9/15/2017
|
|
|
|
|
|
|
|
|
25,992
|
938,571
|
4/1/2018
|
|
|
|
|
|
|
|
|
49,335
|
1,781,487
|
4/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
300,564
|
10,853,366
|
Mr. Thompson
|
|
|
|
|
|
|
39,819
|
1,437,864
|
8/15/2019
|
|
|
|
|
|
|
|
|
99,548
|
3,594,678
|
8/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
197,106
|
7,117,498
|
47
Table of Contents
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Grant
Date
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
|
|
Market
Value
Shares
or Units
of Stock
That
Have Not
Vested
($)(1)
|
|
Stock
Grant
Date
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(2)
|
Ms. Yetto
|
|
25,398
|
|
—
|
|
—
|
|
22.76
|
|
4/1/2014
|
|
4/1/2021
|
|
|
|
|
|
|
|
|
|
|
49,912
|
|
—
|
|
—
|
|
23.21
|
|
4/1/2015
|
|
4/1/2022
|
|
|
|
|
|
|
|
|
|
|
47,144
|
|
—
|
|
—
|
|
26.92
|
|
7/17/2015
|
|
7/17/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,126
|
|
112,880
|
|
4/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,079
|
|
508,393
|
|
4/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,392
|
|
844,685
|
|
4/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,563
|
|
1,320,290
|
|
4/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,391
|
|
1,422,409
|
|
10/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
352,741
|
|
12,737,478
|
Mr. Wenig(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
(1)
|
Market Value is calculated based on a price per share of $36.11, which was the closing price of our common stock on December 31, 2019.
|
(2)
|
In accordance with the SEC executive compensation disclosure rules, represents the estimated future award of PBRSUs at the maximum performance level under the 2019-2020 performance period based on Company performance through 2019. PBRSUs are earned based on the Company’s FX-neutral revenue and non-GAAP operating margin dollars during the performance period (with the application of a return on invested capital and Payments modifier). See “Compensation Discussion and Analysis — Elements of Our Executive Compensation Program — Equity Incentive Awards — PBRSU Program” above for a more detailed discussion of these awards and related performance measures.
|
(3)
|
In connection with Devin Wenig’s termination of employment on September 24, 2019, the Company cancelled his outstanding RSUs and PBRSUs. Mr. Wenig had a 90-day post-termination exercise period with respect to his vested, outstanding options.
|
48
Table of Contents
2019 Options Exercises and Stock Vested
The following table and footnotes set forth the number of shares acquired and the value realized upon exercise of stock options and the vesting of stock awards for each of our NEOs for the fiscal year ended December 31, 2019.
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Shares Acquired
on Exercise
(#)
|
|
Value Realized
on Exercise
($)(1)
|
|
Number of
Shares Acquired
on Vesting
(#)
|
|
Value Realized
on Vesting
($)(2)
|
Mr. Schenkel
|
|
10,157
|
|
190,850
|
|
266,009
|
|
9,797,110
|
Mr. Cring
|
|
0
|
|
0
|
|
65,103
|
|
2,462,484
|
Mr. Lee
|
|
0
|
|
0
|
|
157,297
|
|
5,805,324
|
Mr. Thompson
|
|
0
|
|
0
|
|
0
|
|
0
|
Ms. Yetto
|
|
0
|
|
0
|
|
121,786
|
|
4,495,967
|
Mr. Wenig(3)
|
|
866,782
|
|
13,203,710
|
|
520,231
|
|
19,225,313
|
(1)
|
Value realized on exercise of stock options is based on the fair market value of our common stock on the date of exercise minus the exercise price and does not reflect actual proceeds received.
|
(2)
|
Value realized on vesting of stock awards is based on the fair market value of our common stock on the vesting date and does not reflect actual proceeds received.
|
(3)
|
In connection with Devin Wenig’s termination of employment on September 24, 2019, the Company cancelled his outstanding RSUs and PBRSUs. Mr. Wenig had a 90-day post-termination exercise period with respect to his vested, outstanding options.
|
Potential Payments Upon Termination or Change in Control
The following table, footnotes, and narrative set forth our payment obligations pursuant to the compensation arrangements for each of our NEOs, under the circumstances described below, assuming that their employment was terminated or a change in control occurred on December 31, 2019. In the case of Mr. Wenig, whose employment with the Company was terminated on September 24, 2019 outside of a change in control, the amounts and descriptions in the table, footnotes, and narrative set forth the payments actually made by the Company in connection with his termination.
Name
|
|
Voluntary
Termination
($)(a)
|
|
Change
in Control
($)(b)
|
|
Involuntary
Termination
Outside of
a Change in
Control
($)(c)(1)
|
|
Involuntary
Termination
in Connection
with a Change
in Control
($)(d)(1)
|
|
Death or
Disability
($)(e)
|
Mr. Schenkel
|
|
0
|
|
0
|
|
|
22,291,138
|
|
27,697,069
|
|
12,867,116
|
Mr. Cring
|
|
0
|
|
0
|
|
|
1,763,475
|
|
7,063,878
|
|
1,132,677
|
Mr. Lee
|
|
1,143,167
|
|
0
|
|
|
9,254,425
|
|
14,109,872
|
|
8,722,221
|
Mr. Thompson
|
|
0
|
|
0
|
|
|
4,194,268
|
|
9,728,160
|
|
3,894,040
|
Ms. Yetto
|
|
0
|
|
0
|
|
|
10,269,019
|
|
13,992,233
|
|
7,781,858
|
Mr. Wenig(2)
|
|
N/A
|
|
N/A
|
|
$
|
39,752,242
|
|
N/A
|
|
N/A
|
(1)
|
With respect to Mr. Schenkel and Ms. Yetto, an involuntary termination includes a termination without cause or resignation for good reason. With respect to Mr. Lee and Mr. Thompson, under the Company’s SVP and Above Standard Severance Plan, an involuntary termination includes only a termination without cause, and under the Company’s Change in Control Plan for Key Employees, an involuntary termination in connection with a change in control includes termination without cause or resignation for good reason. With respect to Mr. Cring, under the Company’s VP Standard Severance Plan, an involuntary termination includes only a termination without cause and under the Company’s Change in Control Plan for Key Employee, an involuntary termination in connection with a change in control includes termination without cause.
|
49
Table of Contents
(2)
|
On September 24, 2019, the Company and Mr. Wenig entered into a letter agreement regarding his departure (the “Wenig Letter”). Pursuant to the terms of the Wenig Letter, in exchange for his execution and non-revocation of a release of claims against the Company, the Company paid the amounts required to be paid to him under his letter agreement with the Company dated September 29, 2014 upon a termination without cause (the “Letter Agreement”). The Letter Agreement payments include: (i) two times his annual base salary which equals $2,000,000; (ii) two times his annual target bonus amount which equals $4,000,000; (iii) a prorated portion of the bonus under the eBay Incentive Plan (“eIP”) that Mr. Wenig otherwise would have earned and been paid (using his accrued eligible compensation under the eIP through the last day of employment) for the 2019 fiscal year under the eIP which equals $1,819,192 (which is reflected in the “Non-Equity Plan Compensation” column of the Summary Compensation Table); (iv) the amount of $5,849,674, which is the dollar value of outstanding and unvested RSU awards that were treated as vested under the Letter Agreement; (v) the amount of $27,357,280, which is the dollar value of outstanding and unvested PBRSU Awards that were treated as vested under the Letter Agreement; and (vi) the amount of $545,288, which is the dollar value of dividend equivalents associated with the equity awards that were treated as vested under the Letter Agreement.
|
Voluntary Termination (Column (a))
Mr. Lee’s offer letter provides for severance benefits upon a voluntary termination.
Change in Control (Column (b))
The Company has not entered into any arrangements with any of its executive officers to provide “single trigger” severance payments upon a change in control.
The Company’s equity incentive plans generally provide for the acceleration of vesting of awards granted under the plans upon a change in control only if the acquiring entity does not agree to convert, assume, or replace the awards. These provisions generally apply to all holders of awards under the equity incentive plans.
The amounts reported in the Change in Control column assume that, in a change in control transaction, the successor entity would convert, assume, or replace outstanding equity awards. If the successor entity does not convert, assume, or replace any outstanding equity awards and all the unvested and outstanding awards are fully accelerated upon a change in control, the aggregate value of accelerated vesting of such awards to each of the NEOs that were executive officers of the Company as of December 31, 2019, calculated based on the closing price of our common stock on December 31, 2019, would be as follows:
Name
|
|
Acceleration Value of
All Outstanding Equity
Awards as of 12/31/19
($)(*)
|
Mr. Schenkel
|
|
23,874,632
|
Mr. Cring
|
|
6,116,384
|
Mr. Lee
|
|
11,190,092
|
Mr. Thompson
|
|
7,189,357
|
Ms. Yetto
|
|
11,054,968
|
Mr. Wenig
|
|
0
|
*
|
No amounts are included for Mr. Wenig because his employment with the Company terminated on September 24, 2019.
|
50
Table of Contents
Involuntary Termination outside of a Change in Control (Column (c))
The Company’s SVP and Above Standard Severance Plan (“SVP and Above Severance Plan”), which covers each officer employed as a senior vice president or in a more senior position, provides severance protection outside of a change in control period if a participant is terminated without cause and signs and does not revoke a waiver of claims against the Company.
Mr. Thompson and Mr. Lee participate in the SVP and Above Severance Plan. Since Mr. Cring is at the VP level, he is eligible to participate in the Company’s VP Standard Severance Plan (“VP Severance Plan”), which also provides severance protection outside of a change in control period. Under the VP Severance Plan, if a participant is terminated without cause and signs and does not revoke a waiver of claims against the Company, then he is entitled to a lump sum payment of one-half of target cash incentive (i.e., one-half of annual salary and one-half of target eIP payment) and an amount equal to 4 months of COBRA coverage. In addition, the participant would also receive a prorated eIP payment based on actual Company performance and target individual performance for the year in which the termination occurs and one-half of
the value of the equity that would have vested in the 12 month period after the termination date (as if the participant had remained employed).
Mr. Schenkel and Ms. Yetto do not participate in the SVP and Above Severance Plan. Mr. Schenkel and Ms. Yetto entered into offer letters with the Company in 2014 and 2015, respectively, in connection with their appointments to the leadership team on or about the time of the separation of PayPal Holdings, Inc. Each offer letter provides for certain severance benefits if there is a termination without cause or resignation for good reason not in connection with a change in control, and if the applicable executive signs and does not revoke a waiver of claims against the Company.
Under the terms of Mr. Lee’s offer letter entered into in connection with his appointment to his role of Senior Vice President, General Manager, Markets (which is still effective in his new role as SVP, International), Mr. Lee is entitled to receive a separation payment in the event he voluntarily terminates his employment with the Company. This separation payment is intended to replicate benefits offered under a retirement program in which Mr. Lee formerly participated when he was employed with the Company in Korea. The benefit is equal to three times his average monthly salary multiplied by his years of service since January 1, 2013. Should the Company terminate Mr. Lee’s employment for reason other than cause, Mr. Lee is entitled to benefits under the Standard Severance Plan. Mr. Lee’s offer letter also includes any non-competition restrictive covenant for 12-months post termination of employment.
Please see the “Compensation Tables—Potential Payments Upon Termination or Change in Control” section of this Form 10-K/A Statement for further information regarding the Company’s Standard Severance Plan, including amounts received by Mr. Wenig in connection with his departure, and the treatment of awards upon qualifying termination events or a change in control.
The following table describes the severance benefits (other than certain accrued benefits which are paid (such as earned but unpaid bonuses, payment of unreimbursed expenses, etc.)) that each of our NEOs (except Mr. Cring) would receive if terminated outside of a change in control.
|
|
|
|
SVP and Above Severance Plan Participants
|
|
Mr. Schenkel and Ms. Yetto
|
|
|
Severance
|
|
2x salary and 2x bonus
|
|
For
Mr. Schenkel, 2x salary and 2x cash incentive award (determined as the greater of base salary or target bonus)
For Ms. Yetto,1x salary and 1x cash incentive award (determined as the greater of 75% of base salary or target bonus)
|
Cash
Elements
|
|
eIP
|
|
Prorated payment for year in which termination occurs(1)
|
|
Health Premium
|
|
The cost of 24 months of health coverage
|
|
No payment
|
|
Make-Good Payment
|
|
Payment of any unpaid cash
“make good” awards
|
|
n/a
|
Equity
Elements
|
|
Options and RSUs(2)
|
|
100% acceleration of awards that would have otherwise vested within 12 months of
termination date(3)
|
PBRSUs(2)
|
|
100% acceleration of awards that would have otherwise vested within
12 months of termination date(3)
|
(1)
|
For Mr. Schenkel and Ms. Yetto, based only on actual performance with respect to the Company performance element for the full year. For Standard Severance Plan Participants, based on actual performance with respect to the Company performance element for the full year and target performance with respect to the individual performance element.
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(2)
|
For Mr. Schenkel and Ms. Yetto and the participants in the SVP and Above Severance Plan, he/she would receive a lump sum amount equal to the dividend equivalents that have already accrued and would have vested in connection with applicable shares. In addition, Mr. Schenkel and Ms. Yetto would receive an amount equal to dividend equivalents that have not yet accrued, but would have accrued for the next 12 months, notwithstanding the termination.
|
(3)
|
For Mr. Schenkel and Ms. Yetto, the Company
shall pay cash based on the value of the shares that would have vested in lieu of accelerated vesting. Pursuant to their
offer letters, Mr. Schenkel and Ms. Yetto’s outstanding PBRSUs would be treated as vested at the time of termination. For
Standard Severance Plan Participants, the Company can elect to pay cash in lieu of accelerated vesting. The cash value of
such unvested equity is determined using the average closing price of the Company’s common stock for the ten
consecutive trading days ending on and including the trading day immediately prior to his or her termination
date.
|
Involuntary Termination in Connection with a Change in Control (Column (d))
The Company has not entered into any arrangements with any of its executive officers to provide “single trigger” severance payments upon a change in control.
The Company’s equity incentive plans generally provide for the acceleration of vesting of awards granted under the plans upon a change in control only if the acquiring entity does not agree to assume or continue the awards. These provisions generally apply to all holders of awards under the equity incentive plans.
The Company’s Change in Control Severance Plan provides severance protection for executives at the level of Vice President or in a more senior position in connection with a change in control if a participant is terminated without cause or resigns for good reason and signs and does not revoke a waiver of claims against the Company. Mr. Cring, Mr. Thompson, and Mr. Lee participate in the Change in Control Severance Plan.
Mr. Schenkel and Ms. Yetto do not participate in the Change in Control Severance Plan. Mr. Schenkel and Ms. Yetto entered into offer letters with the Company in 2014 and 2015, respectively, in connection with their appointments to the leadership team on or about the time of the separation of PayPal Holdings, Inc. Each offer letter provides for certain severance benefits if the individual is terminated without cause or resigns for good reason in the ninety days preceding or the twenty-four months following, a change in control, and signs and does not revoke a waiver of claims against the Company.
The following table describes the severance benefits that each of our NEOs would receive if they are terminated in connection with a change in control.
|
|
Change in Control Severance Plan Participants
|
Mr. Schenkel and Ms. Yetto
|
Cash
Elements
|
Severance
|
For Mr. Lee and Mr. Thompson, 2x salary and 2x bonus
For Mr. Cring, 1x salary and 1x bonus
|
2x base salary and 2x bonus
|
(determined as the greater of base salary or target bonus opportunity or, for Ms. Yetto, 75% of target bonus opportunity)
|
eIP
|
1x target cash incentive award(1)
|
Prorated payment for year in which termination occurs(1)
|
Health Premium
|
For Mr. Lee and Mr. Thompson, the cost of 24 months of health coverage
For Mr. Cring, the cost of 12 months of health coverage
|
No payment
|
Make-Good Payment
|
Payment of any unpaid cash “make good” awards
|
n/a
|
Equity
Elements
|
Options and RSUs
|
100% acceleration of awards(2)
|
PBRSUs
|
100% acceleration of awards(2)(3)
|
(1)
|
For Mr. Schenkel and Ms. Yetto, based only on actual performance with respect to the Company performance element for the full year. For Change in Control Severance Plan Participants, based on target performance with respect to both the Company performance component and the individual performance component.
|
(2)
|
For Mr. Schenkel and Ms. Yetto, the Company will pay cash based on the value of the shares that would have vested in lieu of accelerated vesting. For Change in Control Severance Plan Participants, the Company can elect to pay cash in lieu of accelerated vesting. The cash value of such unvested equity is determined using the average closing price of the Company’s common stock for the ten consecutive trading days ending on and including the trading day immediately prior to his or her termination date.
|
(3)
|
This payment includes the target amount of shares subject to PBRSUs for performance periods for which achievement has not yet been determined.
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Death or Disability (Column (e))
Mr. Schenkel and Ms. Yetto
Pursuant Mr. Schenkel’s and Ms. Yetto’s offer letters, if Mr. Schenkel’s or Ms. Yetto’s employment terminates due to death or disability (as defined in the applicable offer letter), he or she will be entitled to receive, within 30 days of his or her termination date, a cash payment equal to the value of any outstanding and unvested equity awards, including the target amount of shares subject to PBRSUs for performance periods for which achievement has not yet been determined, that would have otherwise vested within 24 months of his termination date (where the value of such unvested equity is determined using the average closing price of the Company’s common stock for the ten consecutive trading days ending on and including the trading day immediately prior to his termination date).
Mr. Thompson and Mr. Lee
Pursuant to the SVP and Above Severance Plan, if, outside a change in control, either Mr. Thompson’s or Mr. Lee’s employment terminates due to his death or disability (as defined in the SVP and Above Severance Plan) then the applicable executive will be entitled to receive, within 60 days of his termination date, the full vesting (or payment of cash in lieu of vesting at the election of the Company) of his outstanding and unvested equity awards, including the target amount of shares subject to PBRSUs for performance periods for which achievement has not yet been determined, that would have otherwise vested within 24 months of his or her termination date (where the cash value of such unvested equity is determined using the average closing price of the Company’s common stock for the ten consecutive trading days ending on and including the trading day immediately prior to his termination date).
Pursuant to the Change in Control Severance Plan, if, in connection with a change in control, either Mr. Thompson’s or Mr. Lee’s employment terminates due to his death or disability (as defined in the Change in Control Severance Plan) then the applicable executive is entitled to receive, within 60 days of his termination date, the full vesting (or payment of cash in lieu of vesting at the election of the Company) of all his outstanding and unvested equity, including the target amount of shares subject to PBRSUs for performance periods for which achievement has not yet been determined (where the cash value of such unvested equity is determined using the average closing price of the Company’s common stock for the ten consecutive trading days ending on and including the trading day immediately prior to his termination date).
Mr. Cring
Pursuant to the VP Severance Plan, if, outside a change in control, Mr. Cring's employment terminates due to his death or disability (as defined in the VP Severance Plan) then the applicable executive will be entitled to receive, within 60 days of his termination date, one half of the vesting (or payment of cash in lieu of vesting at the election of the Company) of all his outstanding and unvested equity awards that would have otherwise vested within 12 months of his termination date.
Pursuant to the Change in Control Severance Plan, if, in connection with a change in control, Mr. Cring's employment terminates due to his or her death or disability (as defined in the Change in Control Severance Plan) then he is entitled to receive, within 60 days of his termination date, the vesting (or payment of cash in lieu of vesting at the election of the Company) of all his outstanding and unvested equity awards.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following disclosure about the relationship of the annual total compensation of our employees to the annual total compensation of Mr. Schenkel, our interim CEO. Because we had two CEOs during 2019, SEC rules allow us the option of calculating the compensation provided to each CEO during 2019 for the time each served as CEO and combine those amounts, or the CEO serving in that position on the date we selected to identify the median employee and annualize that CEO's compensation. Because Mr. Schenkel was employed by us prior to his promotion to interim CEO, we did not need to annualize the compensation Mr. Schenkel received during his role as Interim CEO, and instead used his actual total compensation. We believe that the pay ratio disclosed below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and apply various assumptions and, as result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.
To better understand this disclosure, we think it is important to
give context to our operations. eBay is a global commerce leader with operations requiring a wide range of talents and roles.
As a global organization, we strive to create a competitive total compensation program in the locations we operate. As a
result, our compensation program varies by local market in order to allow us to provide a competitive total compensation
package.
Ratio. For 2019,
●
|
The median employees annual total compensation was $130,636.
|
●
|
Mr. Schenkels annual total compensation, as reported in the 2019 Summary Compensation Table, was $17,647,255.
|
●
|
Based on this information and the disclosures provided in this section, the ratio of the annual total compensation of Mr. Schenkel to the median employees annual total compensation is 135 to 1.
|
In determining the annual total compensation of the median employee, we calculated such employees compensation in accordance with Item 402(c)(2)(x) of Regulation S-K as required pursuant to SEC executive compensation disclosure rules. This calculation is the same calculation used to determine total compensation for purposes of the 2019 Summary Compensation Table with respect to each of the NEOs. For purposes of this disclosure, we converted employee compensation from local currency to U.S. dollars using the exchange rate the Company used for 2020 internal budgeting purposes.
Identification
of Median Employee. As permitted by SEC rules, we have
used the same median employee as we did for the last two years because we do not believe there has been a change in our
employee population or employee compensation program that would significantly impact the CEO pay ratio disclosure. To
identify our median employee, we elected to use total target direct compensation which we calculated as salary, target bonus
and target annual equity awards. We chose this compensation measure because we believe it is the most accurate reflection of
pay at eBay. A complete description of the methodology that we used to identify the median employee can be found in our 2018
Proxy Statement, filed on April 16, 2018.
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Compensation of Directors
The Compensation Committee is responsible for reviewing and making recommendations to the Board regarding compensation paid to all directors who are not employees of eBay, or any parent, subsidiary or affiliate of eBay, for their Board and committee services.
Except for Mr. Omidyar, eBay’s founder and member of the Board, 2019 annual compensation to continuing non-employee directors consisted of (a) Company common stock with a grant date value equal to $250,000 or, for a non-employee director serving as the Chairman of the Board, $350,000, in each case rounded up to the nearest whole share, granted at the time of the annual meeting and (b) an annual cash retainer of $80,000 paid in quarterly installments (or, at the non-employee director’s discretion, paid in additional common stock of an equivalent value rounded up to the nearest whole share). The annual retainer is pro-rated in the event that a director serves for a portion of a year.
Deferred Stock Units (“DSUs”) granted prior to August 1, 2013 are payable in Company common stock or cash (at our election) following the termination of a non-employee director’s service on the Board. DSUs granted on or after August 1, 2013 are payable solely in Company common stock following the termination of a non-employee director’s service on the Board. Since January 1, 2017, RSUs have been granted in lieu of DSUs as compensation for non-employee directors. In the event of a change in control of eBay, any equity awards granted to our non-employee directors will accelerate and become fully vested and exercisable.
The following table sets forth annual retainers paid to our non-employee directors who serve as Chairman of the Board; the Chairs of the Audit, Compensation, Corporate Governance and Nominating, and Risk Committees; and the members of those Committees. Directors with an interest and background in technology who meet regularly with our senior technologists and report significant matters to the Board do not receive any additional compensation for such service.
Role
|
2019
Annual Retainer
|
All Independent Directors
|
$
|
80,000
|
Board Chairman
|
$
|
100,000
|
Lead Independent Director (if applicable)
|
$
|
25,000
|
Committee Chairs
|
|
|
Audit
|
$
|
25,000
|
Compensation
|
$
|
15,000
|
Corporate Governance & Nominating
|
$
|
15,000
|
Risk
|
$
|
15,000
|
Committee Members
|
|
|
Audit
|
$
|
18,000
|
Compensation
|
$
|
15,000
|
Corporate Governance & Nominating
|
$
|
10,000
|
Risk
|
$
|
10,000
|
2019 Director Compensation Table
The following table and footnotes summarize the total compensation paid by the Company to non-employee directors for the fiscal year ended December 31, 2019.
Name (a)
|
|
Fees
Earned or
Paid in Cash
($)(b)
|
|
Stock
Awards
($)(c)(1)
|
|
Option
Awards
($)(d)
|
|
All
Other
Compensation
($)(e)
|
|
Total
($)(f)
|
Fred D. Anderson Jr.
|
|
123,000
|
|
250,000
|
|
—
|
|
—
|
|
373,000
|
Anthony J. Bates
|
|
102,500
|
|
250,000
|
|
—
|
|
—
|
|
352,500
|
Adriane M. Brown
|
|
105,500
|
|
250,000
|
|
—
|
|
—
|
|
355,500
|
Jesse A. Cohn
|
|
43,820
|
|
250,000
|
|
—
|
|
—
|
|
293,820
|
Diana Farrell
|
|
87,500
|
|
250,000
|
|
—
|
|
—
|
|
337,500
|
Logan D. Green
|
|
90,000
|
|
250,000
|
|
—
|
|
—
|
|
340,000
|
Bonnie S. Hammer
|
|
95,000
|
|
250,000
|
|
—
|
|
—
|
|
345,000
|
Kathleen C. Mitic
|
|
120,000
|
|
250,000
|
|
—
|
|
—
|
|
370,000
|
Matthew J. Murphy
|
|
46,772
|
|
250,000
|
|
—
|
|
—
|
|
296,772
|
Pierre M. Omidyar
|
|
—
|
|
—
|
|
—
|
|
28,034
|
|
28,034
|
Paul S. Pressler
|
|
120,000
|
|
250,000
|
|
—
|
|
—
|
|
370,000
|
Robert H. Swan
|
|
98,750
|
|
250,000
|
|
—
|
|
—
|
|
348,750
|
Thomas J. Tierney
|
|
205,000
|
|
350,000
|
|
—
|
|
—
|
|
555,000
|
Perry M. Traquina
|
|
108,000
|
|
250,000
|
|
—
|
|
—
|
|
358,000
|
(1)
|
In connection with the non-employee director’s service to the Company, the non-employee director was granted RSUs. The number of RSUs granted represents the quotient of (A) $250,000 (and $100,000 with respect to the additional award to Mr. Tierney, the non-employee director serving as Chairman of the Board) divided by (B) the Company’s closing stock price on the date of grant, rounded up to the nearest whole RSU. 100% of the RSUs vest on the earlier of: (i) the one-year anniversary of the date of grant or (ii) the date of the Company’s first annual meeting of stockholders that occurs after the date of grant, provided the non-employee director continues to provide service to the Company through such date.
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Fees Earned or Paid in Cash (Column (b))
The amounts reported in the Fees Earned or Paid in Cash column reflect the cash fees earned by each non-employee director in 2019, which includes fees with respect to which the following directors elected to receive shares in lieu of cash.
|
|
Fees
Forgone
|
|
Shares
Received
|
Name
|
|
($)
|
|
(#)
|
Jesse
A. Cohn
|
|
40,000
|
|
1,055
|
Paul
S. Pressler
|
|
120,000
|
|
3,251
|
Robert
H. Swan
|
|
98,750
|
|
2,662
|
Thomas
J. Tierney
|
|
205,000
|
|
5,551
|
Perry
M. Traquina
|
|
108,000
|
|
2,925
|
Stock Awards (Column (c))
The amounts reported in the Stock Awards column reflect the aggregate grant date fair value of RSUs granted in 2019. The grant date fair value of each RSU was calculated using the fair value of our common stock on the date of the grant. Each non-employee director (other than Mr. Omidyar) providing service as a director through May 30, 2019, the date of our 2019 Annual Meeting, was granted 6,872 RSUs with a value of $250,000 on such date (or, in the case of Mr. Tierney, our Chairman of the Board, 9,621 RSUs with a value of $350,000 on such date). Such RSUs become fully vested upon the earlier of (i) the first anniversary of the grant date, and (ii) the first annual meeting of the stockholders of the Company that occurs after the grant date.
As of December 31, 2019, each individual who served as a non-employee director during 2019 held the aggregate numbers of DSUs and RSUs as set forth below. There were no outstanding options held by non-employee directors as of December 31, 2019.
Name
|
DSUs
Held
as of
12/31/19
(#)
|
|
Total
RSUs
Held as of
12/31/19
(#)
|
Fred
D. Anderson Jr.
|
44,402
|
|
6,872
|
Anthony
J. Bates
|
5,810
|
|
6,872
|
Adriane
M. Brown
|
0
|
|
6,872
|
Jesse
A. Cohn
|
0
|
|
6,872
|
Diana
Farrell
|
0
|
|
6,872
|
Logan
D. Green
|
0
|
|
6,872
|
Bonnie
S. Hammer
|
3,711
|
|
6,872
|
Kathleen
C. Mitic
|
25,212
|
|
6,872
|
Matthew
J. Murphy
|
0
|
|
6,872
|
Paul
S. Pressler
|
1,128
|
|
6,872
|
Robert
H. Swan
|
836
|
|
6,872
|
Thomas
J. Tierney
|
52,784
|
|
9,621
|
Perry
M. Traquina
|
6,198
|
|
6,872
|
All Other Compensation (Column (e))
The amount reported in the All Other Compensation column for Mr. Omidyar consists of that portion of the premiums paid by eBay for health insurance coverage for the benefit of Mr. Omidyar. Other than this benefit, the Company provides no other reportable compensation or benefits to non-employee directors.
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Compensation Committee Interlocks and Insider Participation
All members of the Compensation Committee during 2019 were independent directors, and no member was an employee or former employee of eBay. No Compensation Committee member had any relationship requiring disclosure under Item 404 of Regulation S-K promulgated by the SEC. During 2019, none of our executive officers served on the Compensation Committee (or its equivalent) or board of directors of another entity whose executive officer served on our Compensation Committee or Board.