UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
|
|
Preliminary Proxy Statement
|
o
|
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
)
|
þ
|
|
Definitive Proxy Statement
|
o
|
|
Definitive Additional Materials
|
o
|
|
Soliciting Material Pursuant to §240.14a-12
|
ANCESTRY.COM INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ
|
|
No fee required.
|
o
|
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
(1)
|
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Aggregate number of securities to which transaction applies:
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Proposed maximum aggregate value of transaction:
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
Total fee paid:
|
|
|
|
|
|
|
|
|
|
o
|
|
Fee paid previously with preliminary materials.
|
|
o
|
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
|
|
(1)
|
|
Amount Previously Paid:
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Form, Schedule or Registration Statement No.:
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Filing Party:
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Date Filed:
|
|
|
|
|
|
|
|
|
|
April 12, 2010
Dear Ancestry.com Stockholder:
I am pleased to invite you to attend the 2010 Annual Meeting of
Stockholders of Ancestry.com Inc. to be held on Wednesday,
May 26, 2010 at 2:00 p.m. Mountain Daylight Time
at the Provo Marriott Hotel and Conference Center, which is
located at 101 West 100 North, Provo, Utah 84601.
Details regarding the meeting and the business to be conducted
are more fully described in the accompanying Notice of Annual
Meeting and Proxy Statement.
Your vote is important. Whether or not you plan to attend the
Annual Meeting, I hope you will vote as soon as possible. You
may vote over the Internet or in person at the Annual Meeting
or, if you receive your proxy materials by U.S. mail, you
also may vote by mailing a proxy card or voting by telephone.
Please review the instructions on the Notice or on the proxy
card regarding your voting options.
Thank you for your ongoing support of and continued interest in
Ancestry.com. We look forward to seeing you at our Annual
Meeting.
Sincerely,
Timothy Sullivan
Chief Executive Officer
Provo, Utah
April 12, 2010
YOUR VOTE IS IMPORTANT
In order to ensure your representation at the meeting, whether
or not you plan to attend the meeting, please vote your shares
as promptly as possible over the Internet by following the
instructions on your Notice or, if you receive your proxy
materials by U.S. mail, by following the instructions on
your proxy card. Your participation will help to ensure the
presence of a quorum at the meeting and save Ancestry.com the
extra expense associated with additional solicitation. Under new
rules that became effective January 1, 2010, your broker is
no longer permitted to vote on your behalf in the election of
directors unless you provide specific instructions to the broker
by completing and returning any voting instruction form that the
broker provides (or following any instructions that allow you to
vote your broker-held shares via telephone or the Internet). For
your vote to be counted, you will need to communicate your
voting decision before the date of the Annual Meeting. Voting
your shares in advance will not prevent you from attending the
Annual Meeting, revoking your earlier submitted proxy or voting
your stock in person.
ANCESTRY.COM
INC.
360 West 4800
Provo, Utah 84604
NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS
Ancestry.com Inc. will hold its 2010 Annual Meeting of
Stockholders on Wednesday, May 26, 2010 at
2:00 p.m. Mountain Daylight Time at the Provo Marriott
Hotel and Conference Center, which is located at 101 West
100 North, Provo, Utah 84601, for the following purposes:
|
|
|
|
|
To elect two Class I directors to hold office until the
2013 annual meeting of stockholders;
|
|
|
|
To ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2010; and
|
|
|
|
To transact any other business that properly comes before the
Annual Meeting (including adjournments and postponements).
|
Only stockholders of record at the close of business on
March 31, 2010 are entitled to notice of and to vote at the
Annual Meeting as set forth in the Proxy Statement. You should
be prepared to present photo identification such as a valid
drivers license and verification of stock ownership for
admittance. You are entitled to attend the Annual Meeting only
if you were a stockholder as of the close of business on
March 31, 2010 or hold a valid proxy for the Annual
Meeting. If you are a stockholder of record, your ownership as
of the record date will be verified prior to admittance into the
meeting. If you are not a stockholder of record but hold shares
through a broker, trustee, or nominee, you must provide proof of
beneficial ownership as of the record date, such as an account
statement or similar evidence of ownership. Please allow ample
time for the admittance process.
By Order of the Board of Directors,
William C. Stern
General Counsel and Corporate Secretary
Provo, Utah
April 12, 2010
INTERNET AVAILABILITY
We are taking advantage of the Securities and Exchange
Commission rules that allow companies to furnish proxy materials
to their stockholders over the Internet. We believe these rules
allow us to provide you with the information you need while
lowering the costs of delivery and reducing the environmental
impact of the Annual Meeting. On or about April 12, 2010,
we mailed to stockholders as of the record date a Notice
Regarding the Availability of Proxy Materials (the
Notice). If you received a Notice by mail, you will
not receive a printed copy of the proxy materials, unless you
specifically request the materials. Instead, the Notice
instructs you on how to access and review all of the important
information contained in this Proxy Statement and in our 2009
Annual Report on
Form 10-K
(which we posted on the same date), as well as how to submit
your proxy over the Internet. If you received the Notice and
would still like to receive a printed copy of our proxy
materials, you may request a printed copy of the proxy materials
by following the instructions on the Notice. We may choose to
mail or deliver a paper copy of the proxy materials, including
our Proxy Statement and 2009 Annual Report on
Form 10-K,
to one or more stockholders.
TABLE OF CONTENTS
ANCESTRY.COM
INC.
360 West 4800
Provo, Utah 84604
Our Board of Directors (the Board) solicits your
proxy for the 2010 Annual Meeting of Stockholders (the
Annual Meeting) and at any postponement or
adjournment of the Annual Meeting for the purposes set forth in
this Proxy Statement and the accompanying Notice of 2010 Annual
Meeting of Stockholders. The Annual Meeting will be held at
2:00 p.m. Mountain Daylight Time on Wednesday,
May 26, 2010 at the Provo Marriott Hotel and Conference
Center, which is located at 101 West 100 North, Provo, Utah
84601. We made this Proxy Statement available to stockholders
beginning on April 12, 2010.
|
|
|
Record Date
|
|
March 31, 2010.
|
|
|
|
Quorum
|
|
Holders of a majority in voting power of all issued and
outstanding stock entitled to vote on the record date must be
present in person or represented by proxy.
|
|
|
|
Shares Outstanding
|
|
42,468,386 shares of common stock outstanding as of March
31, 2010.
|
|
|
|
Voting
|
|
There are four ways a stockholder of record can vote:
|
|
|
|
|
|
(1) By Internet: You vote over the Internet by following
the instructions provided in the Notice or, if you receive your
proxy materials by U.S. mail, by following the instructions on
the proxy card.
|
|
|
|
|
|
(2) By Telephone: If you receive your proxy materials by
U.S. mail, you may vote by telephone by following the
instructions on the proxy card.
|
|
|
|
|
|
(3) By Mail: If you receive your proxy materials via the
U.S. mail, you may complete, sign and return the accompanying
proxy card in the postage-paid envelope provided.
|
|
|
|
|
|
(4) In Person: If you are a stockholder as of the record
date, you may vote in person at the meeting. Submitting a proxy
will not prevent a stockholder from attending the Annual
Meeting, revoking their earlier-submitted proxy, and voting in
person.
|
|
|
|
|
|
In order to be counted, proxies submitted by telephone or
Internet must be received by 11:59 p.m. Eastern Time on May
25, 2010. Proxies submitted by U.S. mail must be received
before the start of the Annual Meeting.
|
|
|
|
|
|
If you hold your shares through a bank or broker, please follow
their instructions.
|
|
|
|
Revoking Your Proxy
|
|
Stockholders of record may revoke their proxies by attending the
Annual Meeting and voting in person, by filing an instrument in
writing revoking the proxy or by filing another duly executed
proxy bearing a later date with our Corporate Secretary before
the vote is counted or by voting again using the telephone or
Internet before the cutoff time (your latest telephone or
Internet proxy is the one that will be counted). If you hold
shares through a bank or broker, you may revoke any prior voting
instructions by contacting that firm.
|
|
|
|
Votes Required to Adopt Proposals
|
|
Each share of our common stock outstanding on the record date is
entitled to one vote on each of the two director nominees and
one vote on each other matter. To be elected, directors must
receive a plurality of the votes cast. Ratification of the
appointment of Ernst & Young LLP (Ernst &
Young) requires the affirmative vote of holders of a
majority in voting power of the stock entitled to vote present
in person or represented by proxy.
|
|
|
|
Effect of Abstentions and Broker Non-Votes
|
|
Both abstentions and broker nonvotes (
i.e.
,
where a broker has not received voting instructions from the
beneficial owner and for which the broker does not have
discretionary power to vote on a particular matter) are counted
as present for purposes of determining the presence of a
quorum. Shares voting withheld have no effect on
the election of directors. On the ratification of Ernst &
Young, abstentions have the same effect as negative votes.
|
|
|
|
|
|
Under the rules that govern brokers who are record holders of
shares that are held in brokerage accounts, brokers who do not
receive voting instructions from their clients have the
discretion to vote uninstructed shares on routine matters, but
do not have discretion to vote such uninstructed shares on
non-routine matters. Due to recent changes in rules, brokers
are not permitted to vote on the election of directors without
instructions from the beneficial owners, because the election of
directors is deemed a non-routine matter. If your shares are
held through a broker, those shares will not be voted in the
election of directors unless you affirmatively provide
instructions on how to vote. The proposal regarding the
ratification of the appointment of Ernst & Young is
considered a routine matter, and brokers are permitted to vote
shares held by them without instruction.
|
|
|
|
Voting Instructions
|
|
If you complete and submit your proxy voting instructions, the
persons named as proxies will follow your instructions. If you
submit proxy voting instructions but do not direct how your
shares should be voted on each item, the persons named as
proxies will vote for the election of the nominees and for the
ratification of the appointment of Ernst & Young. The
persons named as proxies will vote on any other matters properly
presented at the Annual Meeting in accordance with their best
judgment, although we have not received timely notice of any
other matters that may be properly presented for voting at the
Annual Meeting.
|
|
|
|
Voting Results
|
|
We will announce preliminary results at the Annual Meeting. We
will report final results by filing a Form 8-K within four
business days after the Annual Meeting.
|
|
|
|
Additional Solicitation/Costs
|
|
We are paying for the distribution of the proxy materials and
solicitation of the proxies. As part of this process, we
reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to our stockholders.
Our directors, officers, and employees may also solicit proxies
on our behalf in person, by telephone, email or facsimile, but
they do not receive additional compensation for providing those
services.
|
2
PROPOSAL ONE
Election
of Directors
Number of
Directors; Board Structure
Our bylaws provide that our Board may be comprised of between
five and nine directors. Our Board currently consists of seven
members, although this may be changed by resolution of the
Board. As provided in our Amended and Restated Certificate of
Incorporation, our Board is divided into three staggered classes
of directors as nearly equal in number as possible. The term of
the Class I directors expires at the Annual Meeting. The
term of the Class II directors expires at the 2011 annual
meeting and the term of the Class III directors expires at
the 2012 annual meeting. After the initial terms expire,
directors are expected to be elected to hold office for a
three-year term or until the election and qualification of their
successors in office.
Nominees
Our Board has nominated Charles M. Boesenberg and Benjamin Spero
for election as directors to serve for a three-year term ending
at the 2013 annual meeting or until their successors are elected
and qualified. Each of the nominees is a current member of our
Board and has consented to serve if elected.
Unless you direct otherwise through your proxy voting
instructions, the persons named as proxies will vote all proxies
received for the election of each nominee. If any
nominee is unable or unwilling to serve at the time of the
Annual Meeting, the persons named as proxies may vote for a
substitute nominee chosen by the present Board. In the
alternative, the proxies may vote only for the remaining
nominees, leaving a vacancy that may be filled at a later date
by the Board or the Board may reduce the size of the Board. We
have no reason to believe that any of the nominees will be
unwilling or unable to serve if elected as a director.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF EACH OF THE FOLLOWING NOMINEES.
Our Nominating and Corporate Governance Committee is charged
with identifying and evaluating individuals qualified to serve
as members of the Board and recommending to the full Board
nominees for election as directors. We seek directors with
experience in areas relevant to the strategy and operations of
the company. Although our Board has no formal diversity policy
for Board membership, our Corporate Governance Guidelines
provide that our Nominating and Corporate Governance Committee
is to take into account such factors as the range and diversity
of skills, experience, age, industry knowledge and other factors
in the context of the needs of the Board. The biographies of
each of the nominees and continuing directors below contains
information regarding the persons service as a director,
business experience, director positions held currently or at any
time during the last five years and the experiences,
qualifications, attributes or skills that cause the Nominating
and Corporate Governance Committee to determine that the person
should serve as a director of the company. In addition to the
information presented below regarding each directors
specific experience, qualifications, attributes and skills that
led our Nominating and Corporate Governance Committee and Board
to the conclusion that he or she should serve as a director, we
also believe that each of our directors has a reputation for
integrity, honesty and adherence to high ethical standards. Each
of our directors has demonstrated business acumen and an ability
to exercise sound judgment, as well as a commitment of service
to our company and our Board. Finally, we value our Board
members experience in relevant areas of business
management and on other boards of directors and board committees.
Our Corporate Governance Guidelines also dictate that a majority
of the Board be comprised of independent directors whom the
Board has determined have no material relationship with the
company and who are otherwise independent directors
under the published listing requirements of the Nasdaq Stock
Market.
Nominees
for Election for a Three-Year Term Ending at the 2013 Annual
Meeting
Charles M. Boesenberg
, 61, has served as one of our
directors since July 2006. From January 2002 to June 2006,
Mr. Boesenberg served as the President and Chief Executive
Officer at NetIQ Corporation and he also served as the Chairman
of the board of directors at NetIQ Corporation from August 2002
to June 2006. Mr. Boesenberg served as a director of
Interwoven, Inc. from July 2006 to March 2009, as lead
independent director of Maxtor
3
Corporation from January 2002 until May 2006, and as a director
of Onyx Software Corporation from December 2004 to December
2005. From March 2000 to December 2001, Mr. Boesenberg
served as the President of Post PC Ventures, a management and
investment group. Mr. Boesenberg serves on the board of
directors of Silicon Graphics International Corp., Keynote
Systems, Inc. and Callidus Software Inc. Mr. Boesenberg
holds an M.S. in Business Administration from Boston University
and a B.S. from Rose Hulman Institute of Technology. We believe
Mr. Boesenbergs qualifications to serve on our Board
include extensive experience serving on the boards of directors
of other public companies, including experience dealing with
corporate governance matters, and his executive management
experience in other technology companies.
Benjamin Spero
, 34, has served as one of our directors
since December 2007. Mr. Spero joined Spectrum Equity
Investors (a majority stockholder in the company) in January
2001 and currently is a Managing Director. Prior to joining
Spectrum Equity Investors, Mr. Spero was the co-founder of
TouchPak, Inc. Before joining TouchPak, Inc., Mr. Spero was
a strategy consultant at Bain & Company.
Mr. Spero serves on the board of directors of SurveyMonkey,
LLC, iPay Technologies, LLC, NetQuote Inc., and Mortgagebot,
LLC. Mr. Spero holds a B.A. from Duke University. We
believe Mr. Speros qualifications to serve on our
Board include his financial expertise, his experience advising
technology companies and a long history and familiarity with
Ancestry.com.
Directors
Continuing in Office Until the 2011 Annual Meeting
David Goldberg
, 42, has served as one of our directors
since February 2008. Since April 2009, Mr. Goldberg has
served as the Chief Executive Officer of SurveyMonkey.com LLC.
From May 2007 to April 2009, Mr. Goldberg was an
Entrepreneur in Residence with Benchmark Capital. From August
2001 to May 2007, Mr. Goldberg was the head of global music
operations at Yahoo! Inc. From February 1994 to August 2001,
Mr. Goldberg was Chairman and Chief Executive Officer of
Launch Media Inc. Mr. Goldberg holds an A.B. from Harvard
University. We believe Mr. Goldbergs qualifications
to serve on our Board include his extensive executive management
experience in other companies focused on consumer-facing
Internet services.
Victor Parker
, 40, has served as one of our directors
since 2003. Mr. Parker is a Managing Director of Spectrum
Equity Investors and joined the firm in September 1998. He was
previously at ONYX Software and was an associate at Summit
Partners from October 1992 to June 1996. Mr. Parker serves
on the board of directors of Demand Media, Inc., NetQuote, Inc.
and SurveyMonkey, LLC. He holds an M.B.A. from Stanford Graduate
School of Business and a B.A. from Dartmouth College. We believe
Mr. Parkers qualifications to serve on our Board
include his financial expertise, his experience advising
technology companies and a long history and familiarity with
Ancestry.com.
Director
Continuing in Office Until the 2012 Annual Meeting
Thomas Layton
, 47, has served as one of our directors
since October 2009. Since June 2007, Mr. Layton has served
as the Chief Executive Officer of Metaweb Technologies, Inc., an
Internet technology company, where he also serves as a director.
Mr. Layton served as the Chief Executive Officer of
OpenTable, Inc. from September 2001 to June 2007, and has served
on its board of directors since May 1999. From November 1995 to
June 1999, Mr. Layton served as President and Chief
Operating Officer and was co-founder of CitySearch, Inc., which
later merged with Ticketmaster, Inc. Prior to his experience at
CitySearch, Mr. Layton served as Chief Financial Officer of
Score Learning Corporation, an educational services company,
from April 1994 to October 1995, and also as President and Chief
Operating Officer during part of the same period from March 1995
to October 1995. Mr. Layton is also a member of the board
of directors of oDesk Corporation and a co-founder and member of
the board of directors of MAPLight.org, a non-profit
organization. Mr. Layton holds an M.B.A. from Stanford
Graduate School of Business and a B.S. from the University of
North Carolina at Chapel Hill. We believe Mr. Laytons
qualifications to serve on our Board include his extensive
executive management and board experience in other companies
focused on consumer-facing Internet services.
Elizabeth Nelson
, 49, has served as one of our directors
since July 2009. From July 1996 to December 2005,
Ms. Nelson served as the Executive Vice President and Chief
Financial Officer at Macromedia Inc, where she also served as a
director from January 2005 to December 2005. Currently,
Ms. Nelson serves on the board of directors of Autodesk,
Inc. and SuccessFactors, Inc. From December 2003 to July 2008,
Ms. Nelson served as a director of CNET Networks, Inc.
Ms. Nelson holds an M.B.A. in Finance with distinction from
the Wharton School at the
4
University of Pennsylvania and a B.S. from Georgetown
University. We believe Ms. Nelsons qualifications to
serve on our Board include her financial expertise, including
experience serving as the chief financial officer of a public
technology company and her experience serving on the boards of
directors of other companies.
Timothy Sullivan
, 46, has served as our President and
Chief Executive Officer and as a director since September 2005.
Prior to joining us, Mr. Sullivan was Chief Operating
Officer and then President and CEO of Match.com from January
2001 to September 2004. From May 1999 to January 2001,
Mr. Sullivan served as Vice President of
E-commerce
for Ticketmaster Online-Citysearch, Inc. From June 1991 to May
1999, Mr. Sullivan held multiple positions at The Walt
Disney Company, including Vice President and Managing Director
of Buena Vista Home Entertainment Asia Pacific from July 1997 to
May 1999. Mr. Sullivan holds an M.B.A. from Harvard
Business School and was a Morehead Scholar at the University of
North Carolina at Chapel Hill. We believe
Mr. Sullivans qualifications to serve on our Board
include extensive executive management experience, including
experience as our own Chief Executive Officer, as well as former
chief executive officer of a subscription-based Internet company.
Executive
Officers
In addition to Mr. Sullivan, our President and Chief
Executive Officer, who also serves as a director, our executive
officers as of March 31, 2010 consisted of the following:
Howard Hochhauser
, 39, has served as our Chief Financial
Officer since January 2009. From May 2000 to December 2008,
Mr. Hochhauser held multiple positions at Martha Stewart
Living Omnimedia, Inc., most recently serving as Chief Financial
Officer from March 2006 to December 2008. He held multiple
positions at Bear, Stearns & Co. Inc. from September
1996 to May 2000, serving most recently as Vice President Equity
Research Analyst. Prior to joining Bear Stearns & Co.
Inc., he worked at First Boston and he was a Staff Accountant at
KPMG Peat Marwick. Mr. Hochhauser is a Certified Public
Accountant and holds an M.B.A. from Columbia University and a
B.S. from Boston University.
Joshua Hanna
, 38, has served as our General Manager and
Senior Vice President, International since July 2006.
Mr. Hanna held multiple positions with us from November
2001 until July 2006, including Vice President of International
Business, Director of International Business, Director of
Product Management, Senior Product Manager, and Business
Manager. Prior to joining us, he held several marketing and
business development roles with Netcentives, Inc. and Cyrk, Inc.
Mr. Hanna holds an M.B.A. from Harvard Business School and
a B.A. from Dartmouth College.
David Rinn
, 46, has served as our Senior Vice President
of Strategy and Corporate Development since January 2009. Prior
to serving in this role, he served as our Chief Financial
Officer from June 2004 to January 2009. Prior to joining us in
June 2004, Mr. Rinn spent 12 years at Microsoft
Corporation, most recently as Chief Financial Officer of the
Mobile and Embedded Devices Division. At Microsoft Corporation,
he also served as General Manager of Finance and Administration,
General Manager, Chief Financial Officer and as a member of the
board of directors of HomeAdvisor Technologies (a majority-owned
subsidiary of Microsoft Corporation). Other roles at Microsoft
Corporation included Senior Director of Product Group Finance
and senior director of Corporate Development. Prior to joining
Microsoft, he held various positions at Morgan Stanley.
Mr. Rinn holds an M.B.A. from the Anderson Graduate School
of Management at the University of California, Los Angeles and a
B.A. from Vassar College.
Eric Shoup
, 37, has served as our Senior Vice President
of Product since March 2010. He joined us in August 2008 as Vice
President of Product. Prior to working with us, Mr. Shoup
was at eBay for over five years, where he served as Director of
ProStores from January 2007 to August 2008, Group Product
Manager from March 2005 to January 2007, Senior Product Manager
from August 2004 to March 2005 and Product Manager from April
2003 to August 2004. Mr. Shoup holds a B.A. from the
University of California, Los Angeles.
William Stern
, 46, has served as our General Counsel and
Corporate Secretary since July 2009. From October 2005 to July
2009, Mr. Stern held multiple positions at Martha Stewart
Living Omnimedia, Inc., most recently serving as the General
Counsel and Secretary from September 2008 to July 2009. From
October 2002 to September 2005, Mr. Stern was a Principal
at Fish & Richardson, PC. Prior to joining
Fish & Richardson, PC, he was a Partner
5
at Morrison & Foerster, LLP. Mr. Stern holds an
M.B.A. and a J.D. from the University of Chicago and an A.B.
from Brown University.
Christopher Tracy
, 41, has served as our Senior Vice
President of Global Content since January 2010. Prior to serving
in this role, Mr. Tracy served as our Senior Vice President
of Operations from January 2008 to January 2010 and Vice
President of Member Services from November 2004 to December
2007. From June 2002 to October 2004, Mr. Tracy was a Vice
President and General Manager at Time Warner Inc. From April
1999 to January 2002, Mr. Tracy held various leadership
positions at Nextcard, Inc. Mr. Tracy holds an M.B.A. from
Harvard Business School and a B.S. from California Polytechnic
State University.
Andrew Wait
, 48, has served as our General Manager and
Senior Vice President, United States since January 2010. Prior
to serving in this role, Mr. Wait was our Senior Vice
President and General Manager, Family History from March 2006 to
January 2010. Prior to joining us, Mr. Wait served as
Senior Director of Marketing at Kodak Gallery from October 2003
to January 2006. From January 2000 to October 2003, he was the
Senior Director of Marketing for EarthLink, Inc.s PeoplePC
Brand. Prior to joining Earthlink, he held various marketing
positions with Pacific Bell Telephone Company/SBC Communications
Inc., Bank of America Corporation and Hilton Hotels Corporation.
Mr. Wait holds an M.I.B.A. (Master of International
Business Administration) from Saint Marys College and a
B.A. from the University of California, Berkeley.
Michael Wolfgramm
, 43, has served as our Chief Technology
Officer since February 2009. Mr. Wolfgramm held multiple
positions with us from June 1999 until February 2009, including
Senior Vice President of Technology, Vice President of
Development and Senior Director of Development. Prior to joining
us, from March 1997 to June 1999, Mr. Wolfgramm served as
Senior Director of Development and Senior Architect at Open
Market Inc. Mr. Wolfgramm holds a B.S. in Computer Science
from Brigham Young University.
Board
Responsibilities and Corporate Governance
The Board had adopted Corporate Governance Guidelines designed
to promote the functioning of the Board and its committees.
These guidelines are available at the following Web site:
ir.ancestry.com/governance.cfm
.
These guidelines address Board composition, Board functions and
responsibilities, qualifications, leadership structure,
committees and meetings.
Our Corporate Governance Guidelines do not dictate a particular
Board structure, and the Board is given the flexibility to
select its Chairperson and our Chief Executive Officer in the
manner that it believes is in the best interests of our
stockholders. Accordingly, the Chairperson and the Chief
Executive Officer may be filled by one individual or two. The
Board has currently determined that having Victor Parker serve
as Chairman and Timothy Sullivan serve as Chief Executive
Officer is in the best interests of the stockholders. We
currently separate the roles of Chief Executive Officer and
Chairman in recognition of the differences between the two roles
as they are presently defined. The Chief Executive Officer is
responsible for setting the strategic direction for the company
and for the
day-to-day
leadership and performance of the company, while the Chairman
provides guidance to the Chief Executive Officer and leads the
Board. In addition, because Mr. Parker is not
independent within the meaning of the Nasdaq listing
standards, our Corporate Governance Guidelines call for one of
the directors who is independent to serve as the lead
independent director, and to perform such functions in
that capacity as the Board directs. The lead independent
director is responsible for coordinating the activities of the
independent directors and has the authority to call meetings of
the independent directors. His specific responsibilities include
(i) consulting with the Chairman on an appropriate schedule
of Board meetings; (ii) providing the Chairman with input
on Board meeting agendas; (iii) consulting with the
Chairman on the flow of information from management to the
directors; (iv) coordinating and moderating the executive
sessions of the Boards independent directors;
(v) serving as the principal liaison between our
independent directors and our Chairman and Chief Executive
Officer; (vi) being available to consult with major
stockholders as applicable; and (vii) chairing Board
meetings if the Chairman is not present. Our Board has
designated Charles Boesenberg as our lead independent director.
Mr. Boesenberg has historically taken an active leadership
role on our Board and has gained extensive knowledge of our
business and history. The Board believes its administration of
its risk oversight function has not affected the Boards
leadership structure.
6
Director
Independence
As described above, our Corporate Governance Guidelines require
that a majority of our Board be comprised of independent
directors whom the Board has determined have no material
relationship with the company and who are otherwise
independent within the meaning of the Nasdaq listing
standards. In making its determination of independence for each
director, the Board considers all pertinent facts to determine
if the director has a relationship that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director. In addition, under the Nasdaq
standards, following persons are not be considered independent:
|
|
|
|
|
a director who is, or at any time during the past three years
was, employed by the company;
|
|
|
|
a director who accepted or who has a family member (
i.e.
,
spouse, parents, children and siblings, whether by blood,
marriage or adoption, or anyone residing in such persons
home) who accepted any compensation from the company in excess
of $120,000 during any period of twelve consecutive months
within the three years preceding the determination of
independence, other than the following:
|
(a) compensation for board or board committee service;
(b) compensation paid to a family member who is an employee
(other than as an executive officer) of the company; or
(c) benefits under a tax-qualified retirement plan, or
non-discretionary compensation.
|
|
|
|
|
a director who is a family member of an individual who is, or at
any time during the past three years was, employed by the
company as an executive officer;
|
|
|
|
a director who is, or has a family member who is, a partner in,
or a controlling shareholder or an executive officer of, any
organization to which the company made, or from which the
company received, payments for property or services in the
current or any of the past three fiscal years that exceed 5% of
the recipients consolidated gross revenues for that year,
or $200,000, whichever is more, other than the following:
|
(a) payments arising solely from investments in the
companys securities; or
(b) payments under non-discretionary charitable
contribution matching programs.
|
|
|
|
|
a director of the issuer who is, or has a family member who is,
employed as an executive officer of another entity where at any
time during the past three years any of the executive officers
of the issuer serve on the compensation committee of such other
entity; or
|
|
|
|
a director who is, or has a family member who is, a current
partner of the companys outside auditor, or was a partner
or employee of the companys outside auditor who worked on
the companys audit at any time during any of the past
three years.
|
As set forth above, our Board has determined that directors
Charles M. Boesenberg, David Goldberg, Thomas Layton and
Elizabeth Nelson are independent under these listing standards,
as their only relationships with us are as directors and
stockholders. The Board also determined that directors Timothy
Sullivan, Victor Parker and Benjamin Spero are not independent.
Mr. Sullivan is not independent because he is our President
and Chief Executive Officer. Mr. Parker and Mr. Spero
are not independent because of their association with Spectrum
Equity Investors V, L.P. and certain of its affiliates
(collectively, Spectrum), a majority stockholder. In
December 2007, Spectrum contributed cash and equity with an
aggregate value of $138.6 million as part of a larger
transaction, which we refer to as the Spectrum
investment, which resulted in our current structure. Any
transaction, relationship or arrangement considered by the Board
in determining that the applicable independence standards were
met by each of the directors is disclosed under Related
Party Transactions or elsewhere in this Proxy Statement.
Board
Committees
We have established an Audit Committee, a Compensation Committee
and a Nominating and Corporate Governance Committee. Each of
these committees operates under a written charter that
establishes its roles and responsibilities. Copies of these
charters can be accessed at the following Web site:
ir.ancestry.com/governance.cfm
.
7
Audit
Committee
The Audit Committee provides assistance to the Board in
fulfilling its oversight responsibilities regarding the
integrity of financial statements, our compliance with
applicable legal and regulatory requirements, the integrity of
our financial reporting processes including its systems of
internal accounting and financial controls, the performance of
our internal audit function and independent auditor and our
financial policy matters by approving the services performed by
our independent accountants and reviewing their reports
regarding our accounting practices and systems of internal
accounting controls. The Audit Committee also oversees the audit
efforts of our independent accountants and takes those actions
as it deems necessary to satisfy itself that the accountants are
independent of management.
The members of this committee are Charles M. Boesenberg,
Elizabeth Nelson and Benjamin Spero, with Ms. Nelson
serving as the chairperson of the committee. We believe that
Mr. Boesenberg and Ms. Nelson are independent
directors, as defined under the rules of the Nasdaq Stock Market
and meet the additional independence requirements for audit
committee members under
Rule 10A-3
of the Securities Exchange Act of 1934, as amended (the
Exchange Act). Mr. Spero is not independent
because he is a Managing Director of Spectrum, but has been
included on the Audit Committee because of his historical
familiarity with the company. We rely on an exemption from the
independence requirements under
Rule 10A-3
of the Exchange Act that allows us to have a minority of the
members of our Audit Committee not be independent until
November 4, 2010, the one year anniversary of the
effectiveness of our registration statement under the Securities
Act of 1933, as amended (the Securities Act). We
believe Mr. Speros participation on the Audit
Committee has been useful during our transition from a private
to a public company and has not affected the ability of our
Audit Committee to act independently or satisfy our obligations
under
Rule 10A-3.
We expect that our Audit Committee will consist of members who
are independent for purposes of
Rule 10A-3
by November 4, 2010. We believe that each member of our
Audit Committee meets the financial statement literacy
requirements of the Nasdaq listing standards. Our Board has
determined that Mr. Boesenberg and Ms. Nelson are
audit committee financial experts, as defined under applicable
Securities and Exchange Commission (SEC) rules. Our
Audit Committee met three times in 2009.
Compensation
Committee
The Compensation Committee oversees our overall compensation
structure, policies and programs, and assesses whether our
compensation structure establishes appropriate incentives for
officers and employees. The Compensation Committee reviews and
recommends to the board of directors corporate goals and
objectives relevant to compensation of our chief executive
officer and reviews and approves corporate goals and objectives
relevant to compensation of our other executive officers. The
Committee evaluates the performance of these officers in light
of those goals and objectives, and recommends to the board of
directors the compensation of the Chief Executive Officer and
approves the compensation of our other executive officers based
on such evaluations and reviews, including all individuals named
with Mr. Sullivan in the Summary Compensation Table (with
Mr. Sullivan, the named executive officers).
Finally, the Committee recommends to the board of directors any
employment-related agreements, any proposed severance
arrangements or change of control or similar agreements with
respect to our Chief Executive Officer and approves any
employment-related agreements, any proposed severance
arrangements or change of control or similar agreements with
respect to our other executive officers. The Compensation
Committee also administers the issuance of stock options and
other awards under our currently effective stock plan. The
Compensation Committee will review and evaluate, at least
annually, the performance of the Compensation Committee and its
members and the adequacy of the charter of the Compensation
Committee. The Compensation Committee will also prepare a report
on executive compensation, as required by the SEC rules, to be
included in our annual report and annual proxy statement.
Mr. Sullivan, our President and Chief Executive Officer,
reviews the performance of each named executive officer other
than himself and makes recommendations regarding their
compensation.
Prior to our initial public offering in 2009, our Board engaged
Compensia, Inc., an independent compensation consultant, to
review our compensation program for our named executive
officers. Based on Compensias review of severance and
change of control practices at similarly-sized publicly-traded
technology companies, we entered into amended and restated
employment letters with each of our executive officers.
8
Since our initial public offering, the company engaged Frederic
W. Cook & Co., a compensation consultant for the
purpose of providing occasional information and giving insights
into market rates. The Compensation Committee has approved the
terms and scope of that engagement, as our Compensation
Committee charter provides that the Compensation Committee must
approve the material terms of not only its own arrangements with
compensation consultants, but also any company arrangement with
a compensation consultant unless it has its own independent
consultant or the services only relate to broad-based plans.
The Compensation Committee has delegated to an Equity Committee
comprised of Timothy Sullivan, our President and Chief Executive
Officer, and Howard Hochhauser, our Chief Financial Officer, the
authority to make equity awards to employees that are not
executive officers or directors, subject to certain conditions
and limitations. In addition, the Compensation Committee has
delegated to Mr. Sullivan the authority to adjust
Mr. Hannas expatriate allowance.
The members of our Compensation Committee are Charles M.
Boesenberg, Thomas Layton, Elizabeth Nelson and Victor Parker,
with Mr. Boesenberg serving as the chairperson of the
committee. We believe that Mr. Boesenberg, Mr. Layton
and Ms. Nelson are independent directors under the Nasdaq
listing standards and are non-employee directors for
purposes of the Exchange Act and outside directors
for purposes of Section 162(m) of the Internal Revenue
Code. Mr. Parker is not independent because he is also a
Managing Director of Spectrum but has been included in the
Compensation Committee because of his historic familiarity with
the company.
The Compensation Committee met twice in 2009.
Compensation
Committee Interlocks and Insider Participation
None of the members of our Compensation Committee is an officer
or employee of the company. None of our executive officers
currently serves, or in the past year has served, as a member of
the board of directors or Compensation Committee of any entity
that has one or more executive officers serving on our Board or
Compensation Committee. As a Managing Director of Spectrum,
Mr. Parker may be deemed to have an interest in the
following transactions requiring disclosure under Item 404
of
Regulation S-K
under the Securities Act:
Contribution agreement.
As part of the
Spectrum investment, we entered into a Contribution Agreement
with Spectrum Equity Investors V, L.P. and certain of its
affiliates, affiliates of Crosslink Capital, Inc., Timothy
Sullivan, W Capital Partners II, L.P. and the JLS Revocable
Trust, among other individuals and entities (collectively, the
Contributors). Pursuant to this agreement, the
Contributors transferred and assigned to the company certain
shares of the predecessors capital stock and certain
amounts of cash and, in exchange, the company issued certain
amounts of shares of the companys common stock to the
Contributors. With respect to the exchange of certain shares of
the predecessors capital stock, the transaction qualified
as an exchange of property for equity interests pursuant to
Section 351 of the Internal Revenue Code. Spectrum,
affiliates of Crosslink Capital, Inc., W Capital Partners II,
L.P. and the JLS Revocable Trust are our related persons because
each of them, in some cases together with its respective
affiliates, owns more than 5% of our outstanding shares.
Mr. Sullivan is a related person because he is a director
and executive officer of the company. Our directors Victor
Parker and Benjamin Spero are associated with Spectrum and may
therefore be deemed to have an interest in the agreements
described below that we have entered into with Spectrum. The
total value of the cash and shares contributed pursuant to the
Contribution Agreement was $205.5 million. Spectrum
contributed cash and equity with an aggregate value of
$138.6 million.
Merger agreement.
As part of the Spectrum
investment, we entered into an Agreement and Plan of Merger with
Generations Holding, Inc. (now Ancestry.com Inc.), Haley
Acquisition Corporation, The Generations Network, Inc. (now
Ancestry.com Operations Inc.), and David C. Moon. Pursuant to
the agreement, at the effective time of the merger, The
Generations Network, Inc. became a wholly-owned subsidiary of
Generations Holding, Inc. As a result of the Spectrum
investment, Spectrum Equity Investors V, L.P. and certain
of its affiliates, collectively, acquired 25,667,540 shares
of our common stock, which represented approximately 67% of the
outstanding common stock of the company prior to our initial
public offering. The total purchase price for the acquisition
was $354.8 million. The dollar value of Spectrums
interests in the Merger Agreement is the same as the dollar
value of their interests in the Contribution Agreement as
described above.
9
Stockholders agreement.
As part of the
Spectrum investment, we entered into a Stockholders Agreement
with Spectrum Equity Investors V, L.P. and certain of its
affiliates, affiliates of Crosslink Capital, Inc., Timothy
Sullivan, W Capital Partners II, L.P. and the JLS Revocable
Trust, among other individuals and entities. The agreement
established the composition of the Board and contains certain
rights and restrictions with respect to the transfer of shares
of our capital stock. Prior to the completion of our initial
public offering, Spectrum Equity Investors V, L.P. and
certain of its affiliates had the right to appoint or nominate
three of our directors. This right terminated upon completion of
our initial public offering. All three of these appointees
remained on our Board following our initial public offering. We
are under no contractual obligation to retain any of these
directors. One of these directors, Benjamin Spero, is a nominee
for election at the Annual Meeting.
Registration rights.
As part of the Spectrum
investment, Spectrum Equity Investors V, L.P. and certain
of its affiliates, affiliates of Crosslink Capital, Inc., the
JLS Revocable Trust, W Capital Partners II, L.P., Timothy
Sullivan and certain other holders of our stock have
registration rights with respect to shares of capital stock that
they hold.
Demand registration rights.
At any time, the
holders of a majority of the registrable securities held by
Spectrum Equity Investors V, L.P. and certain of its
affiliates, collectively (the Spectrum registrable
securities), may request registration under the Securities
Act of all or part of their registrable securities on a
Registration Statement on
Form S-1
or any similar long-form registration statement or, if
available, on a Registration Statement on Form
S-3
or any
similar short-form registration statement. The holders of a
majority of the Spectrum registrable securities will be entitled
to request three long-form registrations in which the company
will pay all registration expenses. In addition, the holders of
a majority of the Spectrum registrable securities will be
entitled to request an unlimited number of short-form
registrations in which the company will pay all registration
expenses. However, the aggregate offering value of the
registrable securities requested to be registered by Spectrum
Equity Investors V, L.P. and certain of its affiliates in
any short-form registration must equal at least $1,500,000 in
the aggregate.
We will not be obligated to effect any demand registration
within three months after the effective date of a previous
demand registration. Moreover, we may postpone for up to three
months the filing of a registration statement for a demand
registration if our Board determines in its reasonable good
faith judgment and the holders of at least a majority of the
Spectrum registrable securities agree that such demand
registration would reasonably be expected to have a material
adverse effect on any proposal by us to engage in a merger,
consolidation or similar transaction. The company may delay a
demand registration in this manner only once in every
12-month
period.
Piggyback registration rights.
If we register
any securities for public sale, our stockholders with piggyback
registration rights under our Registration Rights Agreement have
the right to include their shares in the registration, subject
to certain exceptions. For example, if the piggyback
registration is an underwritten primary offering and the
managing underwriters advise the company that, in their opinion,
the number of securities requested to be included in the
offering exceeds the number which can be sold in such offering
without adversely affecting the marketability of such offering,
the company is required to include in the offering
(i) first, the securities the company proposes to sell,
(ii) second, the registrable securities requested to be
included in such registration, pro rata among the holders of
such registrable securities on the basis of the number of
registrable securities owned by each such holder and
(iii) third, any other securities requested to be included
in such registration pro rata among those holders on the basis
of the number of such securities owned by each such holder. The
registration expenses of the holders of registrable securities
will be paid by us in all piggyback registrations, regardless of
whether such registration is consummated.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible
for developing and recommending to the board of directors
criteria for identifying and evaluating candidates for
directorships and making recommendations to the board of
directors regarding candidates for election or reelection to the
board of directors at each annual stockholders meeting. In
doing so, it assesses the skills and characteristics of
individual members and the Board as a whole. The Nominating and
Corporate Governance Committee has not to date established any
minimum
10
qualifications for directors, although its charter allows it to
recommend such criteria to the Board. In addition, the
Nominating and Corporate Governance Committee is responsible for
overseeing our Corporate Governance Guidelines and reporting and
making recommendations to the Board concerning corporate
governance matters. The Nominating and Corporate Governance
Committee is also responsible for making recommendations to the
Board concerning the structure, composition and function of the
Board and its committees. It has also assumed certain
responsibilities with respect to the companys risk
management described below.
The members of our Nominating and Corporate Governance Committee
are Charles M. Boesenberg, David Goldberg and Victor Parker,
with Mr. Boesenberg serving as chairperson of the
committee. We believe that Mr. Boesenberg and
Mr. Goldberg are independent directors under the applicable
rules and regulations of the Nasdaq Stock Market.
Mr. Parker is not independent because he is also a Managing
Director of Spectrum, but has been included on the Nominating
and Corporate Governance Committee because of his historic
familiarity with the company. The Nominating and Corporate
Governance Committee did not meet in 2009.
The Nominating and Corporate Governance Committee does not at
this time have a policy regarding its consideration of director
candidates recommended by stockholders, as it has not yet
received any such recommendations. It may adopt a policy if such
recommendations are received.
Risk
Management
The Board is involved in the oversight of risks that could
affect the company. This oversight is conducted primarily
through the Nominating and Corporate Governance Committee, which
on behalf of the Board, is charged with overseeing the principal
risk exposures we face and our mitigation efforts in respect of
these risks. The Nominating and Corporate Governance Committee
is responsible for interfacing with management and discussing
with management the companys principal risk exposures and
the steps management has taken to monitor and control risk
exposures, including risk assessment and risk management
policies. The Compensation Committee also plays a role in that
it is charged, in overseeing the companys overall
compensation structure, with assessing whether that compensation
structure creates risks that are reasonably likely to have a
material adverse effect on us.
Communications
from Stockholders and Other Interested Parties
Stockholders and other interested parties who wish to send
communications on any topic to the Board (including the lead
independent director or the independent directors as a group)
should address the communication to the intended recipient(s)
and send
c/o General
Counsel, Ancestry.com, Inc., 360 West 4800, Provo, Utah
84604.
Attendance
at Board and Stockholder Meetings
The Board held 11 meetings in 2009. All directors attended more
than 75% of the meetings of the Board and of the Board
committees on which they served in 2009. This proxy statement
relates to our first annual meeting of stockholders as a public
company. Under our corporate governance guidelines, our
directors are expected to attend our annual meetings, and we
expect all our directors will do so in person or telephonically.
Compensation
of the Board of Directors
Since July 2009, our non-employee directors have been entitled
to receive a $30,000 annual fee. The Audit Committee chairperson
receives an additional annual fee of $13,000 and other members
of the Audit Committee receive an additional annual fee of
$5,000. The Compensation Committee chairperson receives an
additional $10,000 annual fee and other members of the
Compensation Committee receive an additional $4,000 annual fee.
The Nominating and Corporate Governance Committee chairperson
receives an additional $5,000 annual fee and other members of
the Nominating and Corporate Governance Committee receive an
additional $2,000 annual fee.
New directors generally receive a grant of 87,500 options
vesting ratably over four years. Options held by non-employee
directors generally vest ratably over four years or upon a
change of control as defined in the applicable
option agreement or option plan. There are currently no equity
ownership requirements or guidelines that any of our
non-employee directors must meet or maintain.
11
The following table provides information concerning the
compensation paid by us to each of our non-employee directors
for the year ended December 31, 2009. Mr. Sullivan is
compensated for his service as an employee and does not receive
any additional compensation for his service on our board. His
2009 compensation is set forth in the Summary Compensation Table.
Director
Compensation for Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Option
|
|
|
Name
|
|
Paid in Cash
|
|
Awards(1)
|
|
Total
|
|
Charles M. Boesenberg
|
|
$
|
34,918
|
|
|
$
|
|
|
|
$
|
34,918
|
|
David Goldberg
|
|
|
14,348
|
|
|
|
|
|
|
|
14,348
|
|
Thomas Layton(2)
|
|
|
7,299
|
|
|
|
480,357
|
|
|
|
487,656
|
|
Elizabeth Nelson(3)
|
|
|
21,073
|
|
|
|
304,658
|
|
|
|
325,731
|
|
Victor Parker
|
|
|
16,141
|
|
|
|
|
|
|
|
16,141
|
|
Benjamin Spero
|
|
|
15,693
|
|
|
|
|
|
|
|
15,693
|
|
|
|
|
(1)
|
|
The amounts included in the Option Awards column do
not reflect compensation actually received by the director but
represent the grant date fair value of the options granted in
2009 computed in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification
(ASC) Topic 718. The valuation assumptions used in
determining such amounts are described in Note 8 to our
consolidated financial statements included in our Annual Report
on
Form 10-K
for the year ended December 31, 2009. From time to time, we
have granted stock options to our non-employee directors as
compensation for their services, but in the past have not had a
formal policy in place with respect to such awards. As a result
of the 2009 awards and these earlier awards, our non-employee
directors held options to purchase the following number of
shares of Common Stock at December 31, 2009:
Mr. Boesenberg 249,370 shares; Mr. Goldberg
87,500 shares; Mr. Layton 87,500 shares; and
Ms. Nelson 87,500 shares. Mr. Parker and
Mr. Spero do not hold any options.
|
|
(2)
|
|
On October 14, 2009, we granted Mr. Layton an option
to purchase 87,500 shares of common stock having an
exercise price per share equal to $13.50 per share.
|
|
(3)
|
|
On July 20, 2009, we granted Ms. Nelson an option to
purchase 87,500 shares of common stock having an exercise
price per share equal to $8.54 per share.
|
PROPOSAL TWO
Ratification
of the Appointment of
Our Independent Registered Public Accounting Firm
We have appointed Ernst & Young as our independent
registered public accounting firm to perform the audit of our
financial statements for the fiscal year ending
December 31, 2010, and we are asking you and other
stockholders to ratify this appointment. Ernst & Young
has served as our independent registered public accounting firm
since 2005.
The Audit Committee annually reviews the independent registered
public accounting firms independence, including reviewing
all relationships between the independent registered public
accounting firm and us and any disclosed relationships or
services that may impact the objectivity and independence of the
independent registered public accounting firm, and the
independent registered public accounting firms
performance. As a matter of good corporate governance, the Board
determined to submit to stockholders for ratification the
appointment of Ernst & Young. An affirmative vote of
holders of a majority in voting power of the stock entitled to
vote present in person or represented by proxy at the Annual
Meeting is required in order to ratify the appointment of
Ernst & Young. In the event that holders of a majority
in voting power of the stock entitled to vote present in person
or represented by proxy at the Annual Meeting do not ratify this
appointment of Ernst & Young, we will review our
future appointment of Ernst & Young.
12
We expect that a representative of Ernst & Young will
attend the Annual Meeting and the representative will have an
opportunity to make a statement if he or she so chooses. The
representative will also be available to respond to appropriate
questions from stockholders.
Policy on
Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Registered Public
Accounting Firm
We adopted a policy on September 15, 2009 under which the
Audit Committee must pre-approve all audit and permissible
non-audit services to be provided by the independent registered
public accounting firm. These services may include audit
services, audit-related services, tax services and other
services. Pre-approval would generally be requested annually,
with any pre-approval detailed as to the particular service,
which must be classified in one of the four categories of
services listed below. The Audit Committee may also, on a
case-by-case
basis, pre-approve particular services that are not contained in
the annual pre-approval request. In connection with this
pre-approval policy, the Audit Committee also considers whether
the categories of pre-approved services are consistent with the
rules on accountant independence of the SEC and the Public
Company Accounting Oversight Board.
In addition, the Audit Committee has authorized its Chairperson
to pre-approve services in amounts up to $500,000. Engagements
so pre-approved are to be reported to the Audit Committee at its
next scheduled meeting.
Audit
Fees
The following is a summary of the fees for professional services
rendered by Ernst & Young for 2009 and 2008:
|
|
|
|
|
|
|
|
|
Fee Category
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
1,454,025
|
|
|
$
|
268,741
|
|
Audit-Related Fees
|
|
|
|
|
|
|
|
|
Tax Fees
|
|
|
41,498
|
|
|
|
6,160
|
|
All Other Fees
|
|
|
2,575
|
|
|
|
21,875
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
1,498,098
|
|
|
$
|
296,776
|
|
|
|
|
|
|
|
|
|
|
Audit Fees.
Consist of fees billed for
professional services rendered for the annual audit of our
consolidated financial statements and the review of interim
consolidated financial statements and other information included
in our Registration Statement on
Form S-1.
Audit-Related Fees.
Consist of fees billed for
assurance and related services that are reasonably related to
the performance of the audit or review of our consolidated
financial statements and are not reported under Audit
Fees. There were no such services in 2009 or 2008.
Tax Fees.
Consist of fees billed for
professional services for tax advice and tax planning. These
services included general tax consulting and expatriate tax
services.
All Other Fees.
Consist of fees for services
other than services reported above. All Other Fees for 2009 and
2008 were related to advice on the organization of foreign
subsidiaries and access to accounting research tools.
The Audit Committee pre-approved substantially all services
performed since the pre-approval policy was adopted.
THE BOARD RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS
OUR REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2010.
13
AUDIT
COMMITTEE REPORT
The Audit Committee of the Board consists of the three directors
whose names appear below.
The Audit Committees general role is to assist the Board
in monitoring the companys financial reporting process and
related matters. Its specific responsibilities are set forth in
its charter.
The Audit Committee has reviewed the companys financial
statements for 2009 and met with management, as well as with
representatives of Ernst & Young, LLP, the
companys independent registered public accounting firm, to
discuss the financial statements. The Audit Committee also
discussed with members of Ernst & Young, LLP the
matters required to be discussed by the Statement on Auditing
Standards No. 61, as amended (AICPA
Performance
Standards
Vol. 1. AU Section 380), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T.
In addition, the Audit Committee received the written
disclosures and the letter from Ernst & Young LLP
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountants communications with the Audit Committee
concerning independence, and discussed with members of
Ernst & Young LLP its independence.
Based on these discussions, the financial statement review and
other matters it deemed relevant, the Audit Committee
recommended to the Board that the companys audited
financial statements for 2009 be included in the companys
Annual Report on
Form 10-K
for 2009.
Audit Committee
Elizabeth Nelson (Chairperson)
Charles M. Boesenberg
Benjamin Spero
14
SECURITY
OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of March 31,
2010 with respect to:
|
|
|
|
|
each person known by us to beneficially own 5% or more of the
outstanding shares of our common stock;
|
|
|
|
each member of our board of directors and each named executive
officer; and
|
|
|
|
the members of our board of directors and our executive officers
as a group.
|
Unless otherwise noted below, the address of each beneficial
owner listed in the table below is
c/o Ancestry.com
Inc., 360 West 4800 North, Provo, UT 84604.
We have determined beneficial ownership in accordance with the
rules of the SEC. Except as indicated by the footnotes below, we
believe, based on the information furnished to us, that the
persons and entities named in the table below have sole voting
and investment power with respect to all shares of common stock
that he or she beneficially owns, subject to applicable
community property laws.
Applicable percentage ownership is based on
42,468,386 shares of common stock outstanding on
March 31, 2010. In computing the number of shares of common
stock beneficially owned by a person and the percentage
ownership of that person, we deemed outstanding shares of common
stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of March 31,
2010. We did not deem these shares outstanding, however, for the
purpose of computing the percentage ownership of any other
person.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Percent
|
Name and Address of Beneficial Owner
|
|
Beneficially Owned
|
|
of Class
|
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
Spectrum Equity Investors V, L.P. and affiliates(1)
|
|
|
23,241,953
|
|
|
|
54.7
|
%
|
Crosslink Capital, Inc.(2)
|
|
|
2,584,870
|
|
|
|
6.1
|
|
Directors and Named Executive Officers:
|
|
|
|
|
|
|
|
|
Timothy Sullivan(3)
|
|
|
2,542,827
|
|
|
|
5.7
|
|
Joshua Hanna(4)
|
|
|
258,961
|
|
|
|
*
|
|
Howard Hochhauser(5)
|
|
|
166,667
|
|
|
|
*
|
|
David Rinn(6)
|
|
|
813,541
|
|
|
|
1.9
|
|
William Stern
|
|
|
|
|
|
|
|
|
Christopher Tracy(7)
|
|
|
127,083
|
|
|
|
*
|
|
Charles M. Boesenberg(8)
|
|
|
181,925
|
|
|
|
*
|
|
David Goldberg(9)
|
|
|
51,042
|
|
|
|
*
|
|
Thomas Layton
|
|
|
|
|
|
|
|
|
Elizabeth Nelson
|
|
|
|
|
|
|
|
|
Victor Parker(10)
|
|
|
16,754,952
|
|
|
|
39.5
|
|
Benjamin Spero
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (15
individuals)(11)
|
|
|
4,909,452
|
|
|
|
10.4
|
|
|
|
|
*
|
|
Indicates ownership of less than one percent.
|
|
(1)
|
|
Based on information set forth in a Schedule 13G filed with
the SEC on February 12, 2010. Consists of
16,676,204 shares of our common stock held of record by
Spectrum Equity Investors V, L.P. (SEI V), the
general partner of which is Spectrum Equity Associates V,
L.P., the general partner of which is SEA V Management, LLC,
over which Brion B. Applegate, William P. Collatos, Kevin J.
Maroni, Randy J. Henderson, Michael J. Kennealy, Victor E.
Parker, Benjamin M. Coughlin and Christopher T. Mitchell
exercise voting and dispositive power; 78,748 shares of our
common stock held of record by Spectrum V Investment
Managers Fund, L.P. (IMF V), the general
partner of which is SEA V Management, LLC, over
|
15
|
|
|
|
|
which Brion B. Applegate, William P. Collatos, Kevin J. Maroni,
Randy J. Henderson, Michael J. Kennealy, Victor E. Parker,
Benjamin M. Coughlin and Christopher T. Mitchell exercise voting
and dispositive power; 5,950,719 shares of our common stock
held of record by Spectrum Equity Investors III, L.P. (SEI
III), the general partner of which is Spectrum Equity
Associates III, L.P., over which Brion B. Applegate, William P.
Collatos, Kevin J. Maroni and Randy J. Henderson exercise voting
and dispositive power; 417,483 shares of our common stock
held of record by SEI III Entrepreneurs Fund, L.P.
(Entrepreneurs III), the general partner of
which is SEI III Entrepreneurs LLC, over which Brion B.
Applegate, William P. Collatos, Kevin J. Maroni and Randy J.
Henderson exercise voting and dispositive power;
99,997 shares held of record by Spectrum III
Investment Managers Fund, L.P. (IMF III, and
together with SEI V, IMF V, SEI III and
Entrepreneurs III, the Spectrum Funds), over
which Brion B. Applegate, William P. Collatos, Kevin J. Maroni
and Randy J. Henderson exercise voting and dispositive power and
are the general partners, 11,575 shares of our common stock
held by Brion B. Applegate, 5,781 shares of our common
stock held by William P. Collatos and 1,446 shares of our
common stock held by Randy J. Henderson. Each of the controlling
entities, individual general partners and managing directors of
the Spectrum Funds, as the case may be, including Victor E.
Parker who is a managing director of the general partner of the
general partner of SEI V and a managing director of the general
partner of IMF V, and serves on our Board, Brion B.
Applegate, William P. Collatos, Kevin J. Maroni, Randy J.
Henderson, Michael J. Kennealy, Benjamin M. Coughlin and
Christopher T. Mitchell disclaims beneficial ownership of these
shares except to the extent of any pecuniary interest therein.
The principal business address of each of the Spectrum Funds is
333 Middlefield Road, Suite 200, Menlo Park, CA 94025.
|
|
(2)
|
|
Based on information set forth in a Schedule 13G filed with
the SEC on February 16, 2010. Crosslink Capital, Inc.
(Crosslink) and Michael J. Stark, the President of
Crosslink have shared voting and dispositive power over all such
shares. Crosslink and Mr. Stark disclaim beneficial
ownership of such shares except to the extent of their
respective pecuniary interests therein. The principal business
address of Crosslink Capital, Inc. is Two Embarcadero Center,
Suite 2200, San Francisco, CA 94111.
|
|
(3)
|
|
Includes options to purchase 2,218,753 shares of our common
stock exercisable within 60 days.
|
|
(4)
|
|
Consists of options to purchase 258,961 shares of our
common stock exercisable within 60 days.
|
|
(5)
|
|
Consists of options to purchase 166,667 shares of our
common stock exercisable within 60 days.
|
|
(6)
|
|
Consists of options to purchase 813,541 shares of our
common stock exercisable within 60 days.
|
|
(7)
|
|
Consists of options to purchase 127,083 shares of our
common stock exercisable within 60 days.
|
|
(8)
|
|
Consists of options to purchase 181,925 shares of our
common stock exercisable within 60 days.
|
|
(9)
|
|
Consists of options to purchase 51,042 shares of our common
stock exercisable within 60 days.
|
|
(10)
|
|
Consists of 16,676,204 shares held of record by SEI V
and 78,748 shares held of record by IMF V. Victor
E. Parker is a managing director of the general partner of
the general partner of SEI V and a managing director of the
general partner of IMF V. Mr. Parker disclaims beneficial
ownership of these shares.
|
|
(11)
|
|
Includes options to purchase 4,585,378 shares of our common
stock exercisable within 60 days. Excludes shares held of
record by SEI V and IMF V, of which Victor E. Parker
disclaims beneficial ownership.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors
and executive officers and persons who own more than 10% of a
registered class of equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership
of our common stock and other equity securities. Officers,
directors and greater than 10% stockholders are required by SEC
regulations to furnish us with copies of all such reports.
To our knowledge, based solely on a review of the copies of such
reports furnished to us and written representations that no
other reports were required, during fiscal year 2009 all of the
Section 16(a) filing requirements applicable to our
officers, directors and greater than 10% stockholders were filed
in a timely manner.
16
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This section explains how our executive compensation programs
are designed and operate with respect to our named executive
officers listed in the Summary Compensation Table below. Our
named executive officers in 2009 were Timothy Sullivan,
President and Chief Executive Officer; Howard Hochhauser, Chief
Financial Officer; William Stern, General Counsel and Corporate
Secretary, Joshua Hanna, Senior Vice President and General
Manager of International; Christopher Tracy, Senior Vice
President of Operations; and David Rinn, Senior Vice President
of Strategy and Corporate Development (during the first few
weeks of 2009, Mr. Rinn served as our Chief Financial
Officer).
Executive
Summary
Our compensation strategy focuses on providing a total
compensation package that will not only attract and retain
high-caliber executive officers and employees, but will also be
utilized as a tool to communicate and align employee
contributions with our objectives and stockholder interests. We
intend to provide a competitive total compensation package and
will share our success with our named executive officers, as
well as our other employees, when our objectives are met.
Compensation for our named executive officers consists of the
elements identified in the following table.
|
|
|
Compensation Element
|
|
Objective
|
|
Base salary
|
|
To recognize ongoing performance of job responsibilities and as
a necessary tool in attracting and retaining employees.
|
Annual performance-based cash compensation
|
|
To re-emphasize corporate objectives and provide additional
reward opportunities for our named executive officers (and
employees generally) when key business objectives are met.
|
Long-term equity incentive compensation
|
|
To reward increases in stockholder value and to emphasize and
reinforce our focus on team success.
|
Severance and change of control benefits
|
|
To provide income protection in the event of involuntary loss of
employment and to focus named executive officers on stockholder
interests when considering strategic alternatives.
|
Retirement savings (401(k)) plan
|
|
To provide retirement savings in a tax-efficient manner.
|
Health and welfare benefits
|
|
To provide a basic level of protection from health, dental,
life, and disability risks.
|
Each of the elements of our executive compensation program is
discussed in more detail below. Our compensation programs are
designed to be flexible and complementary and to collectively
serve the compensation objectives described above. We have not
adopted any formal or informal policies or guidelines for
allocating compensation between long-term and short-term
compensation, between cash and non-cash compensation or among
different forms of cash and non-cash compensation.
Determining
Executive Compensation
Mr. Sullivan, our President and Chief Executive Officer,
reviews the performance of each named executive officer other
than himself, and based on this review and the factors described
below, makes recommendations to the Compensation Committee with
respect to each named executive officers total
compensation package. Since consummation of our initial public
offering, the Compensation Committee assumed the responsibility
for this annual review and decision-making process, which was
formerly the responsibility of our board of directors.
17
In determining base salary and target annual performance-based
cash compensation, we use each named executive officers
current level of compensation as the starting point. Through
2009, when our board of directors was charged with these
responsibilities, we based any adjustments to those levels
primarily on the experience of the members of our board of
directors in our industry and their review of anonymous private
company compensation surveys, the individuals performance
and internal pay equity considerations. In reviewing individual
performance, we consider our financial results, including
departmental results, as applicable, as compared to our internal
operating plan for the year, as well as a subjective,
qualitative review of each named executive officers
contribution to the success of the business. We have not
assigned a specific weight to any single factor in evaluating
individual performance and historically have not established
annual performance objectives by which to measure individual
performance. We have not historically benchmarked compensation
(either on an aggregate or
element-by-element
basis) to specific levels relative to peer companies or external
market compensation data. In addition, we have not historically
targeted a specific mix between fixed and variable compensation,
cash and equity incentive awards, or long-term and short-term
compensation. Our mix of compensation elements is simply
designed to reward recent results and motivate long-term
performance through a combination of short-term cash and
long-term equity incentive awards.
Prior to our initial public offering in 2009, our board of
directors engaged Compensia, Inc., an independent compensation
consultant, to review our compensation program for our named
executive officers. Based on Compensias review of
severance and change of control practices at similarly-sized
publicly-traded technology companies, we entered into amended
and restated employment letters with each of our executive
officers as described in more detail below under
Elements of Compensation Severance
and Change of Control Arrangements.
Elements
of Compensation
Base salaries.
In general, base salaries for
our named executive officers were initially established through
arms-length negotiations at the time the individual was
hired, taking into account anonymous private company
compensation surveys and internal pay equity considerations, as
well as the individuals qualifications and experience, as
was the case in 2009 with the initial hiring of
Mr. Hochhauser and Mr. Stern. Base salaries of our
named executive officers were generally reviewed and approved
annually by our board of directors during the first quarter of
each year, and adjustments to base salaries were based on his or
her performance, as well as anonymous private company
compensation surveys and internal pay equity considerations. In
2009, we made adjustments to base salaries for Mr. Hanna
and Mr. Tracy in connection with the execution of new
employment agreements entered into in July 2009. We raised
Mr. Hannas salary from $201,000 to $220,000 to
recognize the strong performance of the international operations
and the higher costs of living in London. We raised
Mr. Tracys salary from $190,000 to $200,000 to
recognize his increased responsibilities and bring his salary in
line with other executive officers of the company. In making
these decisions regarding salary adjustments, we also drew upon
the experience that members of our board of directors have
within our industry. We did not assign a specific weight to any
single factor in making decisions regarding base salaries or
salary adjustments. As of December 31, 2009, the base
salaries for our named executive officers were as follows:
|
|
|
|
|
Named Executive Officer
|
|
Base Salary
|
|
Timothy Sullivan
|
|
$
|
350,000
|
|
Howard Hochhauser
|
|
$
|
275,000
|
|
William Stern
|
|
$
|
235,000
|
|
Joshua Hanna
|
|
$
|
220,000
|
|
Christopher Tracy
|
|
$
|
200,000
|
|
David Rinn
|
|
$
|
246,960
|
|
Since the Compensation Committee assumed responsibility for base
salary determinations following our initial public offering, we
anticipate that we will generally target the base salary range
at the 50th percentile relative to available survey data in
establishing base salary ranges for specific positions.
Annual performance-based cash
compensation.
The named executive officers, as
well as other executives and key employees, participate in our
annual Performance Incentive Program, which provides an
opportunity to
18
earn a cash bonus upon achievement of performance objectives
approved by our board of directors historically, but starting in
2010 by our Compensation Committee. This program was established
to further align individual goals with corporate and business
unit goals and to increase focus on executing key business
deliverables.
Target bonuses.
As with base salaries, the
target annual incentive compensation opportunities (generally
expressed as a percentage of base salary) for our named
executive officers were initially established through
arms-length negotiations at the time the individual was
hired, taking into account anonymous private company
compensation surveys and internal pay equity considerations, as
well as the individuals qualifications and experience.
Along with base salaries, annual incentive compensation targets
have been reviewed and approved annually by the board of
directors during the first quarter of each year. Adjustments to
annual incentive compensation targets have been based on
individual performance, as well as anonymous private company
compensation surveys and internal pay equity considerations. In
making decisions regarding adjustments to annual incentive
compensation targets, we have also drawn upon the experience
that members of our board of directors have within our industry.
We do not assign a specific weight to any single factor in
making decisions regarding adjustments to annual incentive
compensation targets.
For 2009, the annual incentive compensation targets for our
named executive officers under the Performance Incentive Program
were as follows:
|
|
|
|
|
|
|
Target Bonus
|
Named Executive Officer
|
|
(% of base salary)
|
|
Timothy Sullivan
|
|
|
100
|
%
|
Howard Hochhauser
|
|
|
75
|
%
|
William Stern
|
|
|
40
|
%
|
Joshua Hanna
|
|
|
60
|
%
|
Christopher Tracy
|
|
|
40
|
%
|
David Rinn
|
|
|
50
|
%
|
Mr. Sullivans target bonus was increased from 85.7%
(plus an additional $50,000) to 100% to reflect that as Chief
Executive Officer he should be compensated at a higher
percentage than other named executive officers and to eliminate
the $50,000 fixed bonus payment. Mr. Hannas target
bonus was increased from 50% to 60% to reflect the strong
performance of the companys international operations and
the higher costs of living in London.
Bonus determinations.
Under the Performance
Incentive Program, each year (generally during the first
quarter) the board of directors has established company-wide
financial performance objectives, which serve as the basis for
determining the amount of bonuses to be paid under the program.
For 2009, the board of directors established three such
performance objectives tied to our revenues, adjusted EBITDA and
free cash flow. The board of directors determines target levels
for each of these goals in consultation with management and
taking into account our performance for the immediately
preceding year.
After the end of each year, the board of directors reviews our
performance with respect to the performance objectives and
determines the amount of bonuses to be paid under the program as
a whole. We must achieve at least 90% of the target level for
each objective for bonuses to be paid under the program;
performance at the 90% level with respect to each objective
would result in bonus payouts to the named executive officers at
no more than 70% of the named executive officers
individual target bonus opportunity. The maximum bonus payout to
a named executive officer under the program is 130% of the named
executive officers individual target bonus opportunity,
which could only occur if we achieved at least 110% of target
with respect to each objective.
After determining the overall amount of bonuses to be paid under
the Performance Incentive Program for the year, the board of
directors has determined the actual bonus payouts to each named
executive officer based on its subjective determinations of each
individuals overall performance and contribution during
the year (taking into account applicable financial results as
compared to our internal operating plan for the year as well as
a subjective, qualitative review of each named executive
officers contribution to the success of the business),
internal pay equity considerations, and, with respect to each
named executive officer other than Mr. Sullivan, the
recommendations of our President and Chief Executive Officer.
Our Compensation Committee has assumed this responsibility
following our initial public offering.
19
Our targets for 2009 were as follows: revenues of $217,225,000,
adjusted EBITDA of $73,235,000 and free cash flow of
$24,690,000. Our actual results exceeded targets for each of the
three components, except for adjusted EBITDA when taking into
account a one-time charge related to the settlement of a legal
dispute. The Compensation Committee determined the overall bonus
pool at 106% of target bonus based on our performance relative
to these targets. At managements suggestion, the
Compensation Committee agreed to pay the named executive
officers generally at a rate of 105% of target (1% less than the
amount the performance over target would otherwise have
dictated) and use the differential to fund a higher level of
bonuses for other employees.
Each of the named executive officers received a bonus of 105% of
their respective targets, except for Mr. Hanna, who
received a bonus of 110% of his target reflecting the strong
performance of our international operations. The amounts of
these awards are disclosed in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation
Table. Bonuses were paid in February 2010.
Discretionary bonuses.
Mr. Hochhauser and
Mr. Stern received sign on bonuses of $280,000 and $75,000
respectively, in order to induce these executives to join us and
in connection with the arms-length negotiations of their
initial compensation arrangements. These bonuses are disclosed
in the Bonus column of the Summary Compensation
Table.
Long-term equity incentive compensation.
Our
named executive officers are eligible to receive long-term
equity-based incentive awards, which are intended to align the
interests of our named executive officers with the interests of
our stockholders and to emphasize and reinforce our focus on
team success. Historically, our long-term equity-based incentive
compensation awards have been made solely in the form of stock
options subject to vesting based on continued employment. We
believe that stock options are one effective tool for meeting
our compensation goal of increasing long-term stockholder value
by tying the value of the stock options to our future
performance. We find this to be particularly true for senior
management, because employees are only able to profit from stock
options only if our stock price increases relative to the stock
options exercise price. Stock options have provided one
form of meaningful incentive to employees to achieve increases
in the value of our stock over time. Recently, we have begun
granting restricted stock units to less senior employees in lieu
of options and in addition to options for some executives. We
believe that restricted stock units also align the interests of
employees with those of stockholders over the longer term since
they also vest over time, while giving employees greater
certainty with respect to the value of equity they will receive
over time.
Prior to our initial public offering in 2009, all stock option
awards were approved by the board of directors; now awards to
the named executive officers are approved by the Compensation
Committee. In determining the size of a stock option grant, we
take into account individual performance (generally consisting
of financial performance as compared to our internal operating
plan for the year, as well as a subjective, qualitative review
of each named executive officers contribution to the
success of the business), internal pay equity considerations and
the value of existing long-term incentive awards. Each named
executive officer received an initial grant of stock options in
connection with the commencement of his employment. Our named
executive officers and other employees are also eligible to
receive additional or refresher grants from time to
time. We do not have a set program for the award of refresher
grants, and our Compensation Committee retains discretion to
make stock option awards to employees at any time.
The exercise price of each stock option grant is the fair market
value of our common stock on the grant date. Historically, the
determination of the appropriate estimated fair market value was
made by the board of directors based on its consideration of
numerous objective and subjective factors, including but not
limited to arms-length sales of our common stock in
privately negotiated transactions, valuations of our common
stock, our stage of development and financial position and our
future financial projections. Now, the fair market value is the
closing price on the Nasdaq Global Select Market on the date of
grant.
Stock option awards to our named executive officers typically
vest over a four-year period as follows: 25% of the shares
underlying the option vest on the first anniversary of the date
of grant, and the remainder of the shares underlying the option
vest in equal monthly installments of 1/48th of the number
of shares underlying the option over 36 months thereafter.
We believe this vesting schedule appropriately encourages
long-term employment with our company, while allowing our
executives to realize compensation in line with the value they
have created for our stockholders.
20
Based on these factors, in 2009 the board of directors granted
stock options to the named executive officers as set forth below
in the Grants of Plan-Based Awards for Year 2009 table. The
initial grant of 500,000 shares to Mr. Hochhauser and
the grant of 200,000 shares to Mr. Stern were based on
negotiations at the time each was hired in 2009.
Mr. Hochhauser was granted an additional option for
100,000 shares in May 2009 based on increased
responsibilities assumed by him in connection with an
acceleration of the companys plans for conducting an
initial public offering, although the four-year vesting period
for this option did not commence until January 2010.
Mr. Hanna and certain other executive officers were granted
options during 2009 as a means of re-incentivizing officers
whose equity was largely vested, with Mr. Hanna receiving
an option for 25,000 shares. In addition, Mr. Tracy
was granted an option for 75,000 shares to reflect his
increased responsibilities and promotion within our organization.
Severance and change of control
arrangements.
Pursuant to employment letters,
each of our named executive officers is eligible for severance
benefits consisting of base salary continuation and paid COBRA
coverage for six months if his employment is terminated by us
without cause or if the executive resigns for good reason (in
the case of Mr. Sullivan the salary continuation only
applies if termination occurs within three months before or
12 months following a change of control). In addition to
base salary continuation and paid COBRA coverage, upon a
termination without cause or resignation for good reason, each
executive is also entitled to an additional severance payment
equal to 80% of the executives average annual bonus
payment over the preceding two years, prorated based on the
number of months the executive was employed by us in the year of
termination. We provide these benefits to promote retention and
ease the consequences to the executive of an unexpected
termination of employment.
The employment letters with each of our named executive officers
also provide for accelerated vesting of a portion of the
executives then outstanding stock options in the event the
executive is terminated by us without cause or resigns for good
reason, in each case, within 12 months following a change
of control. These arrangements are intended to preserve morale
and productivity and encourage retention in the face of the
disruptive impact of a change of control and to allow them to
focus on the value of strategic alternatives to stockholders
without concern for the impact on their continued employment, as
each of their offices is at heightened risk of turnover in the
event of a change of control.
The provisions of these agreements, which in the case of named
executive officers hired before 2009, were amended and restated
in July 2009, reflect Compensias review of severance and
change of control practices at similarly-sized publicly-traded
technology companies.
Please refer to the discussion below under
Potential Payments upon Termination or Change
of Control for a more detailed discussion of our severance
and change of control arrangements.
Employee benefits.
Our named executive
officers are eligible for the same benefits available to our
employees generally. These include participation in a
tax-qualified 401(k) plan and group life, health, dental, and
disability insurance plans. The type and extent of benefits
offered are intended to be competitive within our industry.
Other
Compensation Practices and Policies
Perquisites and personal benefits.
As noted
above, our named executive officers are eligible to participate
in the same benefits as those offered to all full time employees
and, except for requirements unique to Mr. Hannas
expatriate assignment and relocation benefits provided to
certain new hires, we do not have any programs for providing
material personal benefits or executive perquisites to our named
executive officers.
We entered into an expatriate agreement with Mr. Hanna as a
result of arms-length negotiation at the time he agreed to
relocate to London in January 2005. The benefits provided under
this arrangement are designed to cover the cost of relocation,
family travel, housing, and the differential in the cost of
goods, services and education in the United Kingdom. We also
provide tax equalization to ensure that Mr. Hanna pays no
more or less tax on his base salary and annual cash incentive
compensation than he would have paid had he remained in the
United States. In addition, we reimburse Mr. Hanna for the
cost of tax preparation due to the nature of his expatriate
assignment. Under the July 20, 2009 amendment and
restatement of Mr. Hannas employment letter, in lieu
of certain
21
allowances previously paid and expenses previously reimbursed by
the company, Mr. Hanna is instead entitled to an annual
expatriate allowance of £125,000, which may be adjusted up
to 10% per year in the discretion of our Chief
Executive Officer, along with the tax equalization benefits and
tax preparation assistance described herein, as well as travel
reimbursement for emergency leave due to serious illness or
death in the immediate family.
Our employment letters with Mr. Hochhauser and
Mr. Stern provide for our reimbursement of their relocation
expenses in connection with their 2009 hirings. A portion of
Mr. Hochhausers relocation expenses was not known or
paid until 2010.
Stock ownership guidelines.
There are
currently no equity ownership requirements or guidelines that
any of our named executive officers or other employees must meet
or maintain.
Policy regarding the timing of equity
awards.
As a privately owned company, there was
no market for our common stock. Accordingly, until our initial
public offering, we had no program, plan or practice pertaining
to the timing of stock option grants coinciding with the release
of material non-public information. The Compensation Committee
controls the timing of awards to executive officers subsequent
to our initial public offering. In December 2009, we adopted a
policy regarding the timing of equity awards by the Equity
Committee to other persons. Pursuant to the policy, grants of
equity determined by the Equity Committee during the course of
any calendar month become effective on the first business day of
the following calendar month or, if a blackout period is in
effect, awards are effective on the second business day after
the material non-public information is released.
Policy regarding restatements.
We do not
currently have a formal policy requiring a fixed course of
action with respect to compensation adjustments following later
restatements of financial results. Under those circumstances,
the board of directors or Compensation Committee thereof would
evaluate whether compensation adjustments were appropriate based
upon the facts and circumstances surrounding the restatement.
Tax deductibility.
Section 162(m) of the
Internal Revenue Code places a limit of $1 million on the
amount of compensation that a publicly held corporation may
deduct in any one year with respect to its chief executive
officer and each of the next three most highly compensated
executive officers (other than its chief financial officer). In
general, certain performance-based compensation approved by
stockholders is not subject to this deduction limit. Because we
were not publicly traded until November 2009, our board of
directors has not previously taken the deductibility limit
imposed by Section 162(m) into consideration in making
compensation decisions, although it has considered the potential
future impact. Our Compensation Committee generally seeks to
qualify the variable compensation paid to our named executive
officers for an exemption from the deductibility limitations of
Section 162(m). However, we may authorize compensation
payments that do not comply with the exemptions in
Section 162(m) when we believe that such payments are
appropriate to attract and retain executive talent.
Report of
the Compensation Committee of the Board of Directors
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management. Based on
the review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and
Analysis be included in this Proxy Statement and the
companys Annual Report on
Form 10-K
for the year ended December 31, 2009.
Compensation Committee
Charles M. Boesenberg (Chairperson)
Thomas Layton
Elizabeth Nelson
Victor Parker
22
Tabular
Disclosure Regarding Executive Compensation
The following tables provide information regarding the
compensation awarded to or earned by our named executive
officers, which include our chief executive officer, as well as
those individuals who served as chief financial officer and the
three other most highly compensated executive officers during
2009.
Summary
Compensation Table
The table below summarizes the total compensation earned by our
named executive officers in 2008 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Option Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
Timothy Sullivan
|
|
|
2009
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
367,500
|
|
|
|
3,290
|
(3)
|
|
|
720,790
|
|
President and Chief
|
|
|
2008
|
|
|
|
350,000
|
|
|
|
|
|
|
|
830,663
|
|
|
|
402,500
|
|
|
|
3,317
|
|
|
|
1,586,480
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard Hochhauser
|
|
|
2009
|
|
|
|
267,772
|
|
|
|
280,000
|
|
|
|
1,426,938
|
(4)
|
|
|
216,563
|
|
|
|
67,344
|
(5)
|
|
|
2,258,617
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William Stern
|
|
|
2009
|
|
|
|
110,420
|
|
|
|
75,000
|
|
|
|
696,360
|
|
|
|
49,350
|
|
|
|
35,329
|
(6)
|
|
|
966,459
|
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joshua Hanna(7)
|
|
|
2009
|
|
|
|
215,525
|
|
|
|
|
|
|
|
74,937
|
|
|
|
145,200
|
|
|
|
319,219
|
(8)
|
|
|
754,881
|
|
Senior Vice President
|
|
|
2008
|
|
|
|
211,050
|
|
|
|
4,020
|
|
|
|
553,773
|
|
|
|
115,575
|
|
|
|
709,698
|
|
|
|
1,594,116
|
|
and General Manager of International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher Tracy
|
|
|
2009
|
|
|
|
195,000
|
|
|
|
|
|
|
|
224,812
|
|
|
|
84,000
|
|
|
|
3,209
|
(3)
|
|
|
507,021
|
|
Senior Vice President of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Rinn(9)
|
|
|
2009
|
|
|
|
246,960
|
|
|
|
|
|
|
|
|
|
|
|
129,654
|
|
|
|
3,290
|
(3)
|
|
|
379,904
|
|
Senior Vice President
|
|
|
2008
|
|
|
|
246,960
|
|
|
|
4,939
|
|
|
|
281,428
|
|
|
|
142,000
|
|
|
|
3,321
|
|
|
|
678,648
|
|
of Strategy and Corporate Development; former Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The amounts included in the Option Awards column do
not reflect compensation actually received by the named
executive officer but represent the grant date fair value
computed in accordance with FASB ASC Topic 718. The valuation
assumptions used in determining such amounts are described in
Note 8 to our consolidated financial statements included in
our Annual Report on
Form 10-K
for the year ended December 31, 2009. See also the Grants
of Plan-Based Awards for Year 2009 table for information on
option awards made in 2009.
|
|
(2)
|
|
The amounts included in the Non-Equity Incentive Plan
Compensation column reflect cash bonuses paid pursuant to
our Performance Incentive Program as described in
Executive Compensation Compensation Discussion
and Analysis Elements of Compensation
Annual Performance-Based Cash Compensation above.
|
|
(3)
|
|
These amounts consist solely of matching contributions under our
401(k) plan and disability and life insurance premiums paid by
us.
|
|
(4)
|
|
Includes an option for 100,000 shares granted in May 2009.
A portion of this option related to 1,000 shares with a
grant date fair value of $3,215 was thereafter cancelled.
|
|
(5)
|
|
This amount includes $64,066 in relocation expenses, and
matching contributions under our 401(k) plan and disability and
life insurance premiums paid by us.
|
|
(6)
|
|
This amount includes $33,363 in relocation expenses, and
matching contributions under our 401(k) plan and disability and
life insurance premiums paid by us.
|
|
(7)
|
|
A portion of Mr. Hannas base salary and other
compensation was paid in British pounds rather than United
States dollars. The amounts paid in British pounds rather than
United States dollars were converted to United States dollars
based upon the exchange rates at the time of payment.
|
23
|
|
|
(8)
|
|
This amount includes an annual expatriate allowance of $176,063,
a cost of living allowance of $36,000, tax equalization benefits
of $97,300, and tax preparation assistance of $6,606, all
provided in connection with Mr. Hannas expatriate
assignment in London, along with matching contributions under
our 401(k) plan and life insurance premiums paid by us.
|
|
(9)
|
|
Mr. Rinn served as our Chief Financial Officer until
January 12, 2009.
|
Grants of
Plan-Based Awards for Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Exercise or
|
|
Fair Value of
|
|
|
|
|
Estimated Possible Payouts Under
|
|
Securities
|
|
Base Price
|
|
Stock and
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
Underlying
|
|
of Option
|
|
Option
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(2)
|
|
($/Sh)
|
|
($)(3)
|
|
Timothy Sullivan
|
|
N/A
|
|
|
245,000
|
|
|
|
350,000
|
|
|
|
455,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard Hochhauser
|
|
N/A
|
|
|
144,375
|
|
|
|
206,250
|
|
|
|
268,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
5.50
|
|
|
|
1,105,448
|
|
|
|
5/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(4)
|
|
|
7.36
|
|
|
|
321,490
|
|
William Stern(5)
|
|
N/A
|
|
|
32,900
|
|
|
|
47,000
|
|
|
|
61,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
8.54
|
|
|
|
696,360
|
|
Joshua Hanna
|
|
N/A
|
|
|
92,400
|
|
|
|
132,000
|
|
|
|
171,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
7.36
|
|
|
|
74,937
|
|
Christopher Tracy
|
|
N/A
|
|
|
56,000
|
|
|
|
80,000
|
|
|
|
104,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
7.36
|
|
|
|
224,812
|
|
David Rinn
|
|
N/A
|
|
|
86,436
|
|
|
|
123,480
|
|
|
|
160,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amounts reported represent the potential performance-based
incentive cash payments each executive could earn pursuant to
the Performance Incentive Program for 2009, as described in
Executive Compensation Compensation Discussion
and Analysis Elements of Compensation
Annual Performance-Based Cash Compensation above. At the
time of grant, the incentive payments could range from the
threshold amounts to the maximum amounts indicated. The actual
amounts earned for 2009 are set forth in the Non-Equity
Incentive Plan Compensation column of the Summary
Compensation Table above.
|
|
(2)
|
|
Reflects shares of common stock underlying option awards granted
in 2009 under the Generations Holding, Inc. 2008 Stock Purchase
and Option Plan. Except as otherwise indicated, the options vest
over a four-year period as follows: 25% of the shares underlying
the option vest on the first anniversary of the date of grant,
and the remainder of the shares underlying the option vest in
equal monthly installments over 36 months thereafter.
|
|
(3)
|
|
The grant date fair value of option awards is determined in
accordance with FASB ASC Topic 718. The valuation assumptions
used in determining such amounts are described in Note 8 to
our consolidated financial statements included in our Annual
Report on
Form 10-K
for 2009. These amounts do not correspond to the actual value
that will be recognized by the named executive officers.
|
|
(4)
|
|
This option was granted May 27, 2009, but the vesting did
not commence until January 1, 2010. On July 7, 2009,
this option was cancelled with respect to 1,000 shares as
Mr. Hochhauser elected to transfer his rights to those
shares to another employee.
|
|
(5)
|
|
Mr. Sterns estimated payouts are prorated to reflect
the six months he was employed by us.
|
Narrative
Disclosure to Summary Compensation Table for Year Ended
December 31, 2009 and Grants of Plan-Based Awards in Year
2009 Table
Certain elements of compensation set forth in the Summary
Compensation Table and Grants of Plan-Based Awards for Year 2009
table reflect the terms of employment letter agreements between
us and each of the named executive officers. In addition to the
compensation terms described below, each of the named executive
officers is also entitled to participate in all available
benefits offered generally to the employees of the company. Each
is
24
further entitled to certain payments if the company were to
terminate him without Cause or if he were to
terminate for Good Reason, including in connection
with a Change of Control. These terms and the
severance benefits that would be payable in such events are
described below under Potential Payments Upon
Termination or Change of Control.
Timothy Sullivan.
Our agreement with
Mr. Sullivan, as amended and restated as of July 20,
2009, provides for a base salary of $350,000 per year, and for
Mr. Sullivans participation in our annual Performance
Incentive Program at an annual target bonus of at least 100% of
base salary.
Howard Hochhauser.
Our employment letter
agreement dated July 20, 2009 with Mr. Hochhauser
provides for a base salary of $275,000 and for
Mr. Hochhausers participation in our annual
Performance Incentive Program at an annual target bonus of at
least 75% of his base salary. The employment letter agreement
with Mr. Hochhauser provides that we will reimburse him (on
an after tax basis) for reasonable expenses incurred in
connection with his relocation to Utah. In connection with his
commencement of employment, Mr. Hochhauser was awarded a
sign on bonus of $280,000 and granted an option to acquire
500,000 shares of our common stock at an exercise price
equal to the estimated fair value of the shares on the date of
grant, which options vest in accordance with the standard
vesting schedule described above. Additionally, in May 2009,
Mr. Hochhauser was granted an option to acquire
100,000 shares of our common stock at an exercise price
equal to the estimated fair value of the shares on the date of
grant, which options vest in accordance with the standard
vesting schedule described above with the exception that the
vesting did not commence until January 2010.
William Stern.
Our employment letter agreement
with Mr. Stern provides for a base salary of $235,000 and
for Mr. Sterns participation in our annual
Performance Incentive Program at an annual target bonus of at
least 40% of his base salary. The employment letter agreement
with Mr. Stern provides that we will reimburse him (on an
after tax basis) for reasonable expenses incurred in connection
with his relocation to Utah. The agreement also provided for a
sign on bonus of $75,000 to Mr. Stern and the grant of an
option to acquire 200,000 shares of our common stock at an
exercise price equal to the fair market value on the date of
grant, which options vest in accordance with the standard
vesting schedule described above.
Joshua Hanna.
Our agreement with
Mr. Hanna, as amended and restated as of July 20,
2009, provides for a base salary of $220,000 per year (which
base salary is payable 70% in US dollars and 30% in British
pounds during the term of his expatriate assignment in London,
United Kingdom), and for Mr. Hannas participation in
our annual Performance Incentive Program at an annual target
bonus of at least 60% of his base salary. In addition, the
letter agreement, prior to the July 2009 amendment and
restatement, provided Mr. Hanna with certain expatriate
benefits described in more detail in the Compensation Discussion
and Analysis above. As described in more detail in the
Compensation Discussion and Analysis above, other than tax
equalization benefits, tax preparation assistance, and emergency
leave, these benefits have been replaced in
Mr. Hannas amended and restated letter agreement with
an annual expatriate allowance of £125,000.
Mr. Hannas agreement further provides that at the
conclusion of Mr. Hannas expatriate assignment we
will pay or reimburse Mr. Hanna for relocation costs
incurred in his repatriation to the United States.
Christopher Tracy.
Our agreement with
Mr. Tracy, as amended and restated as of July 20,
2009, provides for a base salary of $200,000 per year, and for
Mr. Tracys participation in our annual Performance
Incentive Program at an annual target bonus of at least 40% of
his base salary.
David Rinn.
Our agreement with Mr. Rinn,
as amended and restated as of July 20, 2009, provides for a
base salary of $246,960 per year, and for Mr. Rinns
participation in our annual Performance Incentive Program at an
annual target bonus of at least 50% of his base salary.
Option
Exercises and Stock Vested
During 2009, none of our named executive officers acquired any
common stock through exercises of stock options.
25
Outstanding
Equity Awards at Year-End 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
|
|
|
Options
|
|
Options
|
|
Price
|
|
Expiration
|
Name
|
|
Grant Date
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
Timothy Sullivan
|
|
|
11/15/2005
|
|
|
|
2,000,000
|
|
|
|
|
|
|
|
4.60
|
|
|
|
11/15/2015
|
|
|
|
|
3/27/2008
|
|
|
|
179,690
|
|
|
|
192,310
|
|
|
|
5.40
|
|
|
|
3/27/2018
|
|
Howard Hochhauser
|
|
|
2/11/2009
|
|
|
|
|
|
|
|
500,000
|
|
|
|
5.50
|
|
|
|
2/11/2019
|
|
|
|
|
5/27/2009
|
|
|
|
|
|
|
|
99,000
|
|
|
|
7.36
|
|
|
|
5/27/2019
|
|
William Stern
|
|
|
7/20/2009
|
|
|
|
|
|
|
|
200,000
|
|
|
|
8.54
|
|
|
|
7/20/2019
|
|
Joshua Hanna
|
|
|
1/20/2006
|
|
|
|
10,000
|
|
|
|
|
|
|
|
4.60
|
|
|
|
12/2/2014
|
|
|
|
|
2/14/2006
|
|
|
|
24,479
|
|
|
|
521
|
|
|
|
4.60
|
|
|
|
2/14/2016
|
|
|
|
|
7/27/2006
|
|
|
|
64,063
|
|
|
|
10,937
|
|
|
|
4.60
|
|
|
|
7/27/2016
|
|
|
|
|
3/27/2008
|
|
|
|
119,793
|
|
|
|
130,207
|
|
|
|
5.40
|
|
|
|
3/27/2018
|
|
|
|
|
5/27/2009
|
|
|
|
|
|
|
|
25,000
|
|
|
|
7.36
|
|
|
|
5/27/2019
|
|
Christopher Tracy
|
|
|
1/20/2006
|
|
|
|
50,000
|
|
|
|
|
|
|
|
4.60
|
|
|
|
11/18/2014
|
|
|
|
|
3/27/2008
|
|
|
|
47,916
|
|
|
|
52,084
|
|
|
|
5.40
|
|
|
|
3/27/2018
|
|
|
|
|
5/27/2009
|
|
|
|
|
|
|
|
75,000
|
|
|
|
7.36
|
|
|
|
5/27/2019
|
|
David Rinn
|
|
|
11/15/2005
|
|
|
|
200,000
|
|
|
|
|
|
|
|
4.60
|
|
|
|
11/15/2015
|
|
|
|
|
1/20/2006
|
|
|
|
500,000
|
|
|
|
|
|
|
|
4.60
|
|
|
|
6/18/2012
|
|
|
|
|
1/20/2006
|
|
|
|
50,000
|
|
|
|
|
|
|
|
4.60
|
|
|
|
3/15/2013
|
|
|
|
|
3/27/2008
|
|
|
|
23,958
|
|
|
|
26,042
|
|
|
|
5.40
|
|
|
|
3/27/2018
|
|
|
|
|
7/30/2008
|
|
|
|
26,562
|
|
|
|
48,438
|
|
|
|
5.40
|
|
|
|
7/30/2018
|
|
|
|
|
(1)
|
|
Except as otherwise indicated, the options vest over a four-year
period following the grant date with 25% of the original shares
underlying the option vesting on the first anniversary of the
grant date, and the remainder of the shares underlying the
option vesting in equal monthly installments over the
36 months thereafter. In the case of the options awarded to
Mr. Hochhauser on May 27, 2009, vesting commenced
January 1, 2010.
|
Potential
Payments upon Termination or Change of Control
The information below describes certain compensation that would
have become payable under existing plans and contractual
arrangements assuming a termination of employment
and/or
change of control had occurred on December 31, 2009 based
upon the fair market value of our common stock on that date of
$14.01, given the named executive officers compensation
and service levels as of such date. There can be no assurance
that an actual triggering event would produce the same or
similar results as those estimated if such event occurs on any
other date or at any other stock price, or if any other
assumption used to estimate potential payments and benefits is
not correct. Due to the number of factors that affect the nature
and amount of any potential payments or benefits, any actual
payments and benefits may be different.
As described above, we entered into employment letter agreements
with each named executive officer. Under each of the agreements
if we terminate the executives employment without Cause,
or if the executive terminates his employment for Good Reason,
the executive will be entitled to receive severance benefits
consisting of base salary continuation and paid COBRA coverage
for a period of six months, plus an additional severance payment
equal to 80% of the executives average annual bonus
payment over the preceding two years, prorated based on the
number of months the executive was employed by us in the year of
termination. However, (i) Mr. Sullivan will only be
entitled to the salary continuation payments if termination
occurs within three months before or twelve months following a
Change of Control and (ii) if termination occurs within the
first 12 months of employment, Mr. Hochhausers
severance payments will be equal to 18 months salary
and Mr. Sterns salary will be equal to
12 months salary, less any months worked, but in the
case of Mr. Stern not less than nine months. In addition,
Mr. Stern would immediately vest as to 25% of his then
unvested shares. In addition, each of the amended and restated
employment letters provided that if we terminate the
executives employment without Cause or the
26
executive resigns for Good Reason within three months before or
12 months following a Change of Control, each executive
will be entitled to accelerated vesting of 50% of the
executives then unvested stock options (100% for
Mr. Sullivan and Mr. Hochhauser, 75% for
Mr. Rinn, and 50% for Mr. Hanna, Mr. Stern and
Mr. Tracy) and the period during which the executive will
receive paid COBRA coverage will increase to 12 months. In
addition, the amended and restated employment letter with
Mr. Hanna also provides for certain relocation benefits and
up to an additional three months of base salary continuation
until his return to the United States.
The severance benefits described above and included in the table
below are contingent upon the executive agreeing to a general
release of claims against us following termination of employment.
The table below sets forth the estimated value of the potential
payments to each of the named executive officers, assuming the
executives employment had terminated on December 31,
2009
and/or
that a Change of Control had also occurred on that date.
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or with
|
|
Termination without Cause or with
|
|
|
Good Reason (not in Connection
|
|
Good Reason in Connection with a
|
Name
|
|
with a Change of Control)
|
|
Change of Control
|
|
Timothy Sullivan
|
|
|
|
|
|
|
|
|
Severance(1)
|
|
$
|
308,000
|
|
|
$
|
483,000
|
|
Option Acceleration(2)
|
|
|
|
|
|
|
1,655,789
|
|
COBRA Coverage(3)
|
|
|
7,200
|
|
|
|
14,400
|
|
Howard Hochhauser
|
|
|
|
|
|
|
|
|
Severance(1)
|
|
|
333,667
|
|
|
|
333,667
|
|
Option Acceleration(2)
|
|
|
|
|
|
|
4,913,341
|
|
COBRA Coverage(3)
|
|
|
7,200
|
|
|
|
14,400
|
|
William Stern
|
|
|
|
|
|
|
|
|
Severance(1)
|
|
|
223,250
|
|
|
|
223,250
|
|
Option Acceleration(2)
|
|
|
273,500
|
|
|
|
547,000
|
|
COBRA Coverage(3)
|
|
|
3,600
|
|
|
|
7,200
|
|
Joshua Hanna
|
|
|
|
|
|
|
|
|
Severance(1)(4)
|
|
|
269,310
|
|
|
|
269,310
|
|
Option Acceleration(2)
|
|
|
|
|
|
|
697,567
|
|
COBRA Coverage(3)
|
|
|
7,200
|
|
|
|
14,400
|
|
Christopher Tracy
|
|
|
|
|
|
|
|
|
Severance(1)
|
|
|
168,560
|
|
|
|
168,560
|
|
Option Acceleration(2)
|
|
|
|
|
|
|
473,592
|
|
COBRA Coverage(3)
|
|
|
7,200
|
|
|
|
14,400
|
|
David Rinn
|
|
|
|
|
|
|
|
|
Severance(1)
|
|
|
232,142
|
|
|
|
232,142
|
|
Option Acceleration(2)
|
|
|
|
|
|
|
480,942
|
|
COBRA Coverage(3)
|
|
|
7,200
|
|
|
|
14,400
|
|
|
|
|
(1)
|
|
Based on 2009 salary.
|
|
(2)
|
|
Accelerated vesting of stock options for the applicable named
executive officers is based on the difference between the fair
market value of our common stock on December 31, 2009 of
$14.01 and the exercise or price of the award.
|
|
(3)
|
|
Estimated based on the cost for such coverage during 2009.
|
|
(4)
|
|
The amount of severance includes a full three months of salary
continuation as provided in Mr. Hannas employment
agreement, but excludes relocation benefits, the estimated
amount of which are $30,000.
|
The severance benefits described above are contingent upon the
executive agreeing to a general release of claims against us
following termination of employment. They do not reflect payment
of unpaid salary and accrued vacation or the amount that might
be realized by each individual on the exercise and sale of
options vested as of such date.
27
Definitions.
For the purposes of the
employment letter, the following terms have the following
definitions:
|
|
|
|
|
Cause means gross negligence or any breach of
fiduciary duties to us, conviction of, or plea of guilty or no
contest to any felony, any act of fraud or embezzlement,
material violation of a corporate policy or any unauthorized use
or disclosure of confidential information or trade secrets of us
or our affiliates or failure to cooperate in any company
investigation. Neither bad judgment nor mere negligence nor an
act of omission reasonably believed by the executive to have
been in, or not opposed to, the interests of the company, shall
constitute examples of gross negligence.
|
|
|
|
An executive may resign for Good Reason within
90 days after the occurrence of any of the following:
without the executives consent (i) a material
reduction of his or her base compensation or (ii) the
executive is relocated to a facility or location more than one
hundred miles from the location as in effect on the date upon
which the employment letter was entered into, unless the move is
part of a relocation of our main corporate offices.
|
|
|
|
An executive may resign for Good Reason within
12 months following a change of control and within
90 days after the occurrence of any of the following
without the executives consent: a material reduction of
the executives compensation, duties, title, authority or
responsibilities, relative to the executives compensation,
duties, titles, authority or responsibilities or the assignment
to the executive of such reduced duties, title, authority or
responsibilities prior to the change.
|
|
|
|
A Change of Control occurs when: (i) any person
or entity who is not a controlling stockholder of the company as
of the date of the execution of the employment letter becomes
the beneficial owner, directly or indirectly, of securities of
the company representing 50% or more of the total voting power
of all of the companys then outstanding voting securities,
(ii) a merger or consolidation of the company in which the
companys voting securities immediately prior to the merger
or consolidation do not represent, or are not converted into
securities that represent, a majority of the voting power of all
voting securities of the surviving entity immediately after the
merger or consolidation, or (iii) a sale of all or
substantially all of the assets of the company or a liquidation
or dissolution of the company.
|
RELATED
PARTY TRANSACTIONS
Certain
Relationships and Transactions
The following is a description of transactions in which we have
been a participant or are proposed to be a participant, in which
the amount involved in the transaction exceeded or will exceed
$120,000, and in which any of our directors, executive officers
or beneficial holders of more than 5% of our capital stock or an
immediate family member had or will have a direct or indirect
material interest since January 1, 2009. As part of the
Spectrum investment, Spectrum, affiliates of Crosslink Capital,
Inc., W Capital Partners II, L.P. and the JLS Revocable Trust
became our related persons and each of them, in some cases
together with its respective affiliates, owned more than 5% of
our outstanding shares during 2009 as a result. Our directors
Victor Parker and Benjamin Spero are associated with Spectrum
and may therefore be deemed to have an interest in the
agreements described below that we have entered into with
Spectrum. Mr. Sullivan is a related person because he is a
director and executive officer of the company.
Stockholders agreement.
As part of the
Spectrum investment, we entered into a Stockholders Agreement
with Spectrum Equity Investors V, L.P. and certain of its
affiliates, affiliates of Crosslink Capital, Inc., Timothy
Sullivan, W Capital Partners II, L.P. and the JLS Revocable
Trust, among other individuals and entities. The agreement
established the composition of the Board and contains certain
rights and restrictions with respect to the transfer of shares
of our capital stock. Prior to the completion of our initial
public offering, Spectrum Equity Investors V, L.P. and
certain of its affiliates had the right to appoint or nominate
three of our directors. This right terminated upon completion of
our initial public offering. All three of these appointees have
remained on our Board following our initial public offering, but
we are under no contractual obligation to retain them. One of
these directors, Benjamin Spero, is a nominee for election at
the Annual Meeting.
28
Registration rights.
As part of the Spectrum
investment, Spectrum Equity Investors V, L.P. and certain
of its affiliates, affiliates of Crosslink Capital, Inc., the
JLS Revocable Trust, W Capital Partners II, L.P., Timothy
Sullivan and certain other holders of our stock have
registration rights with respect to shares of capital stock that
they hold. At any time, the holders of a majority of the
Spectrum registrable securities may request registration under
the Securities Act of all or part of their registrable
securities on a Registration Statement on
Form S-l
or any similar long-form registration statement or, if
available, on a Registration Statement on
Form S-3
or any similar short-form registration statement. The holders of
a majority of the Spectrum registrable securities will be
entitled to request three long-form registrations in which the
company will pay all registration expenses. In addition, the
holders of a majority of the Spectrum registrable securities
will be entitled to request an unlimited number of short-form
registrations in which the company will pay all registration
expenses. However, the aggregate offering value of the
registrable securities requested to be registered by Spectrum
Equity Investors V, L.P. and certain of its affiliates in
any short-form registration must equal at least $1,500,000 in
the aggregate.
We will not be obligated to effect any demand registration
within three months after the effective date of a previous
demand registration. Moreover, we may postpone for up to three
months the filing of a registration statement for a demand
registration if our board of directors determines in its
reasonable good faith judgment and the holders of at least a
majority of the Spectrum registrable securities agree that such
demand registration would reasonably be expected to have a
material adverse effect on any proposal by us to engage in a
merger, consolidation or similar transaction. We may delay a
demand registration in this manner only once in every
12-month
period.
If we register any securities for public sale, our stockholders
with piggyback registration rights under our Registration Rights
Agreement have the right to include their shares in the
registration, subject to certain exceptions. For example, if the
piggyback registration is an underwritten primary offering and
the managing underwriters advise the company that, in their
opinion, the number of securities requested to be included in
the offering exceeds the number which can be sold in such
offering without adversely affecting the marketability of such
offering, we are required to include in the offering
(i) first, the securities we propose to sell,
(ii) second, the registrable securities requested to be
included in such registration, pro rata among the holders of
such registrable securities on the basis of the number of
registrable securities owned by each such holder and
(iii) third, any other securities requested to be included
in such registration pro rata among those holders on the basis
of the number of such securities owned by each such holder. The
registration expenses of the holders of registrable securities
will be paid by us in all piggyback registrations, regardless of
whether such registration is consummated.
Exclusive service agreement.
We entered into
an Exclusive Service Agreement dated May 22, 2007 with
Sorenson Genomics, LLC, an affiliate of the JLS Revocable Trust,
which, together with its affiliates, owned, in the aggregate,
more than 5% of our common stock earlier in 2009. Pursuant to
the agreement, Sorenson Genomics, LLC agreed to provide certain
DNA-testing and specimen storage services to us at negotiated
prices. We paid approximately $1.8 million to Sorenson
Genomics LLC under this agreement from January 1, 2009
through December 31, 2009. This agreement is not material
to us because our DNA services do not represent a material
amount of our revenues.
Procedures
for Approval of Related Party Transactions
Our Board adopted a written related person transaction policy in
2009, which sets forth the policies and procedures for the
review and approval or ratification of related person
transactions. Under SEC rules, a related person is a director,
officer, nominee for director since the beginning of the
previous fiscal year, a 5% stockholder at the time a transaction
occurs and, in each case, any such persons immediate
family members. The related person transaction policy is
administrated by our Audit Committee. This policy provides that,
in determining whether or not to recommend the initial approval
or ratification of a related person transaction, the relevant
facts and circumstances available be considered by the Audit
Committee, including, among other factors it deems appropriate,
whether the interested transaction is on terms no less favorable
than terms generally available to an unaffiliated third-party
under the same or similar circumstances and the extent of the
related persons interest in the transaction. As the
transactions listed above were entered into prior to the
adoption of this policy, they were not approved under the
related party transaction policy.
29
ADDITIONAL
INFORMATION
Stockholder
Proposals for 2011 Annual Meeting
Requirements for Stockholder Proposals to be Brought Before
the Annual Meeting.
Our bylaws provide that, for
nominations of persons for election to our Board or other
proposals to be considered at an annual meeting of stockholders,
a stockholder must give written notice to our Corporate
Secretary at 360 West 4800, Provo, Utah 84604, not later
than 90 days nor earlier than 120 days prior to the
first anniversary of the date of the preceding years
annual meeting. However, the bylaws also provide that in the
event the date of the annual meeting is more than 30 days
before or more than 70 days after such anniversary date,
notice must be delivered not earlier than the 120th day
prior to such annual meeting and not later than the later of the
90th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of
such meeting is first made. Any nomination must include all
information relating to the nominee that is required to be
disclosed in solicitations of proxies for election of directors
in election contests or is otherwise required under
Regulation 14A of the Exchange Act, the persons
written consent to be named in the proxy statement and to serve
as a director if elected and such information as we might
reasonably require to determine the eligibility of the person to
serve as a director. As to other business, the notice must
include a brief description of the business desired to be
brought before the meeting, the text of the proposal or
business, and the reasons for conducting such business at the
meeting, and any substantial interest of such stockholder (and
the beneficial owner) in the proposal. The proposal must be a
proper subject for stockholder action. In addition, to make a
nomination or proposal, the stockholder must be of record at the
time the notice is made and must provide certain information
regarding itself (and the beneficial owner), including the name
and address, as they appear on the companys books, of the
stockholder proposing such business and the number of shares of
the companys common stock owned and certain additional
information.
Requirements for Stockholder Proposals to be Considered for
Inclusion in the Companys Proxy
Materials
. In addition to the requirements stated
above, any stockholder who wishes to submit a proposal for
inclusion in our proxy materials must comply with
Rule 14a-8
promulgated under the Exchange Act. For such proposals to be to
be included in our proxy materials relating to our 2011 annual
meeting of stockholders, all applicable requirements of
Rule 14a-8
must be satisfied and we must receive such proposals no later
than December 13, 2010. Such proposals must be delivered to
our Corporate Secretary,
c/o Ancestry.com
Inc., 360 West 4800, Provo, Utah 84604.
30
ANCESTRY.COM INC.
360 WEST 4800 NORTH
PROVO, UT 84804
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time on May 25, 2010. Have your proxy card in hand when you access the web
site and follow the instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can
consent to receiving all future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to
vote using the Internet and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
on May 25, 2010. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
|
|
|
|
M23139-P92210
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
|
DETACH AND RETURN THIS PORTION ONLY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANCESTRY.COM INC.
The Board of Directors
recommends that you vote FOR
the following:
|
|
For
All
|
|
Withhold
All
|
|
For All
Except
|
|
To withhold authority to vote for any individual nominee(s), mark For All
Except and write the number(s) of the
nominee(s) on the line below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
|
Election of Directors
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01)
|
|
Charles M. Boesenberg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02)
|
|
Benjamin Spero
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you vote FOR the following proposal:
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
2. The ratification of the
appointment of Ernst & Young LLP as Ancestry.coms independent
registered public accounting firm for the fiscal year ending December 31, 2010.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE:
The proxies are authorized to vote on such other business as may properly come before the
meeting or any adjournment thereof.
|
|
|
|
|
|
|
|
|
|
|
|
|
For address changes and/or comments, please check this box and
write them on the back where indicated.
|
|
o
|
|
|
|
|
|
|
|
Yes
|
|
No
|
Please indicate if you plan to attend this meeting.
|
|
o
|
|
o
|
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or partnership, please sign in full corporate
or partnership name, by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
[PLEASE SIGN WITHIN BOX]
|
Date
|
|
|
|
|
|
Signature (Joint Owners)
|
Date
|
|
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M23140-P92210
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF
ANCESTRY.COM INC.
The undersigned hereby appoints William Stern and Howard Hochhauser as proxies and
attorneys-in-fact of the undersigned, each with the power to act without the other and with the
power of substitution, and hereby authorizes them to represent and vote all the shares of common
stock of Ancestry.com Inc. (the Company) standing in the name of the undersigned on March 31,
2010, with all powers which the undersigned would possess if present at the Annual Meeting of
Stockholders of the Company to be held on May 26, 2010 or at any adjournment or postponement
thereof. Receipt of the Notice of the 2010 Annual Meeting of Stockholders and Proxy Statement and
the 2009 Annual Report is hereby acknowledged.
This proxy, when properly executed, will be voted in the manner directed by you.
If you do not give
any direction, the proxy will be voted (i) FOR the election of each of the nominees for director;
(ii) FOR the ratification of the appointment of Ernst & Young LLP as the Companys independent
registered public accounting firm for the fiscal year ending December 31, 2010; and (iii) in the
discretion of the proxies upon such other matters as may properly come before the 2010 Annual
Meeting.
In order for your vote to be submitted by this proxy, you must (i) properly complete the telephone
or Internet voting instructions no later than 11:59 P.M Eastern Time on May 25, 2010 or (ii)
properly complete and return this proxy card so your vote is received prior to the vote at the 2010
Annual Meeting. Submitting your proxy by mail, via the Internet or by telephone will not affect
your right to vote in person should you decide to attend the 2010 Annual Meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address Changes/Comments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
|
Continued and to be signed on reverse side
Ancestry.Com Inc. (MM) (NASDAQ:ACOM)
Historical Stock Chart
From May 2024 to Jun 2024
Ancestry.Com Inc. (MM) (NASDAQ:ACOM)
Historical Stock Chart
From Jun 2023 to Jun 2024