SecProbe.io

CORRESP
1
filename1.htm

corresp

    October 12, 2007

    Pam Howell, Esq.

    Securities and Exchange Commission

    Division of Corporation Finance

    450 Fifth Street, N.W.

    Mail Stop: 3561

    Washington, D.C. 20549

    Re:

    eBay Inc.

    Definitive 14A Filed on April 30, 2007

    SEC File
    No. 0-24821

    Dear Ms. Howell:

    We refer to the comments received from the staff (the
    “Staff”) of the Securities and Exchange Commission
    (the “Commission”) by letter dated August 21,
    2007, with respect to the definitive proxy statement of eBay
    Inc. (“eBay” or the “Company”) filed on
    April 30, 2007. The numbering of the paragraphs below
    corresponds to the numbering of the comments, which for the
    Staff’s convenience have been incorporated into this
    response letter.

    The contents of this response letter were reviewed and discussed
    by the members of the Company’s Compensation Committee at a
    regularly-scheduled meeting held on October 5, 2007.

    Our
    Corporate Governance Practices, page 6

    1. Provide the disclosure required by
    Item 407(a)(3) of
    Regulation S-K.
    For each director and nominee for director that is identified as
    independent, describe, by specified category or type, any
    transactions, relationships or arrangements, not disclosed
    pursuant to Item 404(a) that were considered by the board
    of directors under the applicable independence definitions in
    determining that the director is independent. See also
    Instruction 3 to Item 407(a).

    In future filings, the Company will disclose any transactions,
    relationships or arrangements not disclosed pursuant to
    Item 404(a) that were considered by the board of directors.
    As described on page 6 of the proxy statement, eBay’s
    board of directors has adopted guidelines setting forth
    categories of relationships that it has deemed immaterial and
    will not consider for purposes of making a determination
    regarding a director’s independence. With respect to other
    relationships that might be considered by the board of
    directors, such as situations where two or more directors serve
    as trustees for the same charity or as members of the board of
    directors for the same company, the Company will disclose and
    discuss any such relationships that are considered by the board
    of directors in determining independence.

    Compensation
    Discussion and Analysis, page 30

    2. Individual officer performance is one of the factors
    considered in making executive compensation decisions. In
    particular, you indicate that half of quarterly incentive awards
    are based upon individual performance. Please disclose how the
    specific forms of compensation are structured and implemented to
    reflect each named executive officer’s individual
    performance
    and/or
    individual contribution to these items of the registrant’s
    performance, describing the elements of individual performance
    and/or
    contribution taken into account. See Item 402(b)(2)(vii) of
    Regulation S-K.

    In future filings, the Company will disclose how individual
    performance is taken into account in structuring and
    implementing specific forms of compensation. The Company will
    also explain that for its named executive officers, individual
    performance is often tied to the financial performance of the
    business unit that he or she manages, and in the case of the
    CEO, is tied to the financial performance of the entire company.
    The financial performance of the business units is typically
    measured by the business unit’s revenue, profit margin, and
    growth rate, but also takes into account its cost structure and
    how it has handled risks. In addition, the Company will

    disclose other criteria used in individual evaluations, such as
    strategic decision-making capabilities, strategic agility, and
    ability to grow and mentor management teams.

    3. Refer to Release
    33-8732A,
    Section II.B.1. The Compensation Discussion and Analysis
    should be sufficiently precise to identify material differences
    in compensation policies with respect to individual executive
    officers. Please explain the reasons for the differences in the
    amounts of compensation awarded to the named executive officers.
    For example, in 2006, Ms. Whitman received option grants
    that were significantly greater than the amount received by the
    other named executive officers. We direct your attention to
    Item 402(b)(2)(vii)of
    Regulation S-K.

    In future filings, the Company will clarify that its
    compensation policies are the same for all of its executive
    officers and that decisions regarding elements of compensation
    for each of the Company’s executive officers take into
    account the size and complexity of the executive’s job and
    business unit in addition to individual performance factors. For
    example, the compensation of Mr. Donahoe, President of eBay
    Marketplaces, is significantly higher than that of
    Mr. Dutta, President of PayPal (Marketplaces reported
    2006 net revenues of $4.2 billion, compared to
    $1.4 billion of net revenues reported by PayPal). The
    Company will also disclose that its executive officers fall into
    four different job levels (and the named executive officers for
    2006 fell into three different job levels). Guidelines for each
    element of compensation are set for each of those job levels. It
    should be noted, and the Company will disclose in future
    filings, that the Company’s CEO is in a higher job level
    than the rest of the executive team and that the guidelines for
    her job level are significantly higher than the next highest job
    level. Because the CEO has overall responsibility for the entire
    Company, her job responsibilities are significantly greater than
    those of the other executive officers, who are responsible for
    individual business units (i.e., Marketplaces, PayPal, or Skype)
    or corporate functions (such as finance, legal, or human
    resources). The Company and the Compensation Committee believe
    that the guidelines for the CEO’s job level are appropriate
    given the scope of her job responsibilities. As the Company
    disclosed on page 32 of the proxy statement, the
    Compensation Committee sets the midpoint of the salary range for
    the CEO’s job level based on the median level of the
    salaries of the CEOs of the Company’s peer groups (although
    more weight is given to the high-tech sector than the consumer
    products sector). All elements of the CEO’s compensation
    for 2006 fell within the guidelines for her job level.

    Competitive
    Considerations, page 31

    4. Provide clear analysis as to how the peer group
    benchmark information is used in determining total or individual
    elements of compensation. For example, explain what you mean by
    your cash compensation for executives being “somewhat
    higher” than the median level and explain how the pay
    practices of companies in your peer groups are used to determine
    base salaries.

    As the Company disclosed on page 32 of the proxy statement,
    it is the Company’s pay positioning strategy to target
    annual base salary and short-term cash incentives of the
    executive group as a whole at median levels relative to its peer
    groups in the high-tech and consumer products sectors. However,
    the pay practices of the two peer groups are quite different. In
    future filings, the Company will clarify that its cash
    compensation is below the median level of its consumer product
    peer group and above the median level of its high-tech peer
    group and will provide quantitative disclosure describing the
    differences between its cash compensation and the median levels
    at the peer groups. In future filings, the Company will disclose
    that it considers the median increases for people in selected
    job levels for each of the peer groups. The Company then
    considers those increases in setting the salary guidelines
    (i.e., ranges) for each job level. After the guidelines have
    been set, the Compensation Committee considers the role of each
    individual in setting his or her base salary. As the Company
    disclosed on page 33 of the proxy statement, in the case of
    some executives, base salaries are determined in large part by
    the salary the executive negotiated at the time he or she joined
    the Company (which often reflects the high cash compensation he
    or she received at his or her previous position).

    Short-term
    Cash Incentive Awards, page 33

    5. You state that annual targets are ordinarily set
    within 90 days of commencement of the year. Disclose the
    2007 performance targets that were known as of the time of the
    filing of the proxy statement, including the performance targets
    for the 2007 performance based restricted stock units,
    consistent with Instruction 2 to Item 402(b), or
    provide a supplemental analysis as to why it is appropriate to
    omit these targets pursuant to

    2

    Instruction 4 to Item 402(b) of
    Regulation S-K.
    To the extent that it is appropriate to omit specific targets,
    please provide the disclosure pursuant to Instruction 4 to
    Item 402(b). General statements regarding the level of
    difficulty, or ease, associated with achieving performance goals
    either corporately or individually are not sufficient. In
    discussing how likely it will be for the company to achieve the
    target levels or other factors, provide as much detail as
    necessary without providing information that poses a reasonable
    risk of competitive harm.

    We respectfully submit that Instruction 2 of
    Item 402(b) of
    Regulation S-K
    does not require disclosure of the specific financial and
    operational thresholds and targets for 2007. Instruction 2
    of Item 402(b) of
    Regulation S-K
    states that the compensation discussion and analysis
    “should also cover actions regarding executive compensation
    that were taken after the registrant’s last fiscal
    year’s end.” Instruction 2 further provides that
    “[a]ctions that should be addressed might include, as
    examples only, the adoption or implementation of new or modified
    programs and policies or specific decisions that were made or
    steps that were taken that could affect a fair understanding of
    the named executive officer’s compensation for the last
    fiscal year.” Instruction 2 indicates that
    compensation actions or decisions after the fiscal year end
    should be disclosed if such actions or decisions could affect a
    fair understanding of a named executive officer’s
    compensation for the fiscal year. Question 3.03 of the
    Item 402
    Regulation S-K
    Interpretations, last updated August 8, 2007, also
    indicates that companies are only required to include disclosure
    about actions regarding executive compensation taken in a period
    after a completed fiscal year where necessary to an
    understanding of a named executive officer’s compensation
    for the completed fiscal year.

    Awards under the eBay Incentive Plan (“eIP”) are made
    on a quarterly and annual basis and are based on specific
    quarterly and annual net income and revenue thresholds and
    targets set only for the fiscal year of the award. The bonuses
    paid to eBay’s named executive officers under the eIP in
    any given year are not affected by the financial and operational
    thresholds and targets set in subsequent years for subsequent
    year bonus awards. As a result, disclosure of the financial and
    operational thresholds and targets for a subsequent fiscal
    year’s award is not necessary for a fair understanding of
    the named executive officer’s compensation for the
    preceding fiscal year. Consequently, we do not believe
    disclosure of the specific net income and revenue thresholds and
    targets for 2007 was required under Instruction 2 of
    Item 402(b) of
    Regulation S-K.
    The same analysis would apply to the performance-based
    restricted stock unit targets established in 2007 for the 2007
    and 2007/2008 plans.

    To the extent that performance targets for the current fiscal
    year have been set at the time the proxy statement is filed, the
    Company will comply with the applicable requirements of the
    Commission’s regulations, although it reserves the right to
    omit specific performance targets to the extent consistent with
    the Commission’s regulations.

    Long-term
    Equity Incentive Awards, page 35

    6. When discussing long-term equity incentive awards,
    provide an analysis of how you arrived at and why you paid each
    of the particular levels and forms of compensation for 2006.
    While you provide a detailed discussion as to how the annual
    long-term incentive award guidelines are set, you should provide
    a more general discussion of the factors considered in
    determining the actual focal grants. The current disclosure
    indicates that focal grants are based on performance of the
    individual, job level, future potential contributions to the
    company, etc. Please analyze how the committee’s
    consideration of these factors and the others mentioned resulted
    in the amounts paid for long-term equity incentives.

    In future filings, the Company will provide more disclosure
    regarding the factors considered by the Compensation Committee
    in determining the actual focal grants and analysis of how those
    factors affected long-term equity incentives and will explain
    that the Compensation Committee takes into account the size and
    complexity of the executive’s job and business unit and
    considers the individual’s expected contributions to
    eBay’s overall results.

    7. You state that the proprietary third-party survey
    provides data on the equity guidelines of companies in the
    high-tech industry. It appears from the disclosure in this
    section that your long-term incentive award guidelines are
    benchmarked to the companies included in this survey. Therefore,
    please disclose the companies in the high-tech industry that are
    part of the third-party survey. See Item 402(b)(2)(xiv) of
    Regulation S-K.

    For 2006, the long-term incentives for the Company’s
    executive officers were benchmarked only against the peer group
    companies disclosed on page 32 of the proxy statement and
    were not benchmarked to the companies

    3

    included in the third-party survey prepared by Buck Consultants.
    In future filings, the Company will clarify this disclosure and
    will disclose the names of any companies that were used as
    benchmarks.

    8. The Compensation Committee may make special
    compensation-related decisions for performance, recognition,
    long-term retention value,
    and/or other
    recruitment purposes that cause that cause individual
    compensation to differ from the regular stated compensation
    strategy and guidelines. Provide clear disclosure as to whether
    any special compensation-related decisions were made in 2006 for
    any of the named executive officers and, if so, clearly state
    how the compensation differed.

    The Company disclosed each instance where the Compensation
    Committee made special compensation-related decisions in 2006
    for any of the named executive officers. For example, on pages
    33, 34, and 35 of the proxy statement, the Company disclosed and
    explained special decisions made with respect to
    Mr. Donahoe’s compensation, and on pages 34, 35, 36,
    and 37 of the proxy statement, the Company disclosed and
    explained special decisions made with respect to