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EcommerceBytes-NewsFlash, Number 3025 - March 20, 2013 - ISSN 1539-5065    1 of 4

eBay CEO Compensation Spikes 81 Percent in 2012 to $30 Million

By Kenneth Corbin
EcommerceBytes.com
March 20, 2013




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Thanks to a one-time performance bonus of nearly $15 million, eBay CEO John Donahoe saw his compensation soar 81 percent in 2012, amounting to a payout of nearly $30 million for the year, according to the company's proxy statement.

Donahoe's base salary of $970,353 in 2012 represented only a modest uptick of 3 percent from the previous year. His compensation through the eBay Incentive Plan, performance-based restricted stock unit awards and time-based restricted stock unit awards saw single-digit percentage increases in each category.

But the one-time performance award of $14,880,000 more than offset declines in stock-option awards and unspecified other compensation, lofting Donahoe's total compensation to $29,705,081, up from $16,456,528 in 2011.

eBay Executive Compensation

Executive 2011 2012

Change

John Donahoe, CEO $16,456,528 $29,705,081 81%
Bob Swan, CFO $7,702,818 $11,826,340 54%
David Marcus, President, PayPal

N/A

$8,276,028 N/A
Devin Wenig, President eBay Marketplaces $13,083,579 $6,944,500 -47%

Chief Financial Officer Robert Swan also received a one-time performance award, which in his case checked in at $5,952,000, slightly more than half of his overall 2012 compensation of $11,826,340.

eBay explained that the valuation of those awards, a decision made by the company's compensation committee, was arrived at by an evaluation of the performance of eBay common stock compared with how shares of comparable companies in eBay's "peer group" fared. Those companies, which include Amazon, Google and Visa, are a sampling of the firms with which eBay competes for top talent.

The company explained that the individual component of Donahoe's compensation under the eBay Incentive Plan (eIP) came in recognition of a variety of recent initiatives undertaken at eBay under his stewardship.

"The committee considered, among other things, the company's above-plan financial results; continued progress in innovation in mobile commerce, local/social commerce, cross-border trade, multi-channel commerce, mobile payments, PayPal's offline products (Point of Sale and PayPal Here), as well as the company's continued geographic expansion; and the promotion and hiring of additional key leaders, most notably David Marcus, as president, PayPal," eBay said in its proxy statement.

The eIP program accounted for 10 percent of Donahoe's 2012 compensation, and 12 percent of the payouts to other named executive officers.

Filling out the roster of named executives are Marcus, who netted $8,276,028 in his first year with the company, and eBay Marketplaces President Devin Wenig ($6,944,500 in 2012 compensation) and Elizabeth Axelrod, eBay's senior vice president of human relations ($6,873,988).

The company describes the eIP as "a cash incentive program designed to align executive compensation with annual company performance and motivate individuals to enhance the value of eBay." Payouts under the eIP are pegged to both individual and company-wide performance, counting non-GAAP net income as the primary determinant.

eBay says that it does not pay out any bonuses under the eIP if minimum thresholds for both net income and revenue are not met in the preceding year.

In 2012, eBay surpassed both targets to trigger the bonus, reporting $3.1 billion in net income, over a threshold of $2.83 billion, and $14.07 billion in revenues, exceeding the threshold of $13.02 billion that the company had set.

eBay had also held out the prospect of further eIP payments in 2012 if the company met targets that it had set for multi-year improvements in employee engagement or customer service. eBay reported that it hit its target for employee engagement, but missed the mark for customer service.

Nonetheless, on the strength of its 2012 financial performance, the company funded the portion of eIP that is pegged to company performance at 150 percent. Corporate performance accounts for 75 percent of the eIP payout, with the remaining 25 percent determined by the performance of the individual executive.

Additionally, eBay reported that it met the goals it had set for the 2011-2012 period for its performance-based stock awards sufficient to grant eligible executives shares at 174 percent of the target the company had set.

About the author:

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.

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