Case | HBS Case Collection | November 2000 (Revised January 2003)

Yahoo!'s Stock-Based Compensation

by Paul M. Healy and Jacob Cohen

Abstract

Amy Maislos, an investor in Internet and technology companies, was excited to read that Yahoo! had reported a positive net income for 1998 operations. During the late 1990s, stock prices of Internet companies had risen rapidly even though most companies were reporting losses. Amy believed that investors and Wall Street analysts would soon expect profits from tech companies. When she reviewed the annual report she noticed a compensation footnote that reported that if Yahoo! had booked an expense for stock options, the company would have experienced a loss for 1998 operations.

Keywords: Stock Options; Online Technology; Financial Statements; Corporate Disclosure; Business Earnings; Earnings Management; Information Technology Industry;

Citation:

Healy, Paul M., and Jacob Cohen. "Yahoo!'s Stock-Based Compensation." Harvard Business School Case 101-059, November 2000. (Revised January 2003.)