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
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x
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Filed by a Party other than the
Registrant
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Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Rule 14a-12
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THESTREET.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):
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¨
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary
materials.
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¨
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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April 15,
2010
Dear
Stockholder:
I am
pleased to invite you to attend TheStreet.com, Inc.’s Annual Meeting of
Stockholders, which will be held on Thursday, May 27, 2010, at 10:00 a.m., at
the offices of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York,
New York 10004. All stockholders of record as of the close of
business on March 31, 2010 are entitled to vote at the Annual
Meeting. I urge you to be present in person or represented by proxy
at the Annual Meeting.
This
year, we are using the “Notice and Access” method of providing proxy materials
via the Internet. We believe that this process will allow us to
conserve natural resources and reduce the costs of printing and distributing the
proxy materials. On or about April 15, 2010, we are mailing to most
of our stockholders a Notice of Internet Availability of Proxy Materials
containing instructions on how to access our 2010 Proxy Statement and 2009
Annual Report on Form 10-K and vote electronically via the
Internet. The Notice of Internet Availability of Proxy Materials also
contains instructions on how to receive a paper or e-mail copy of the proxy
materials. Stockholders who previously elected to receive a paper or
e-mail copy of the proxy materials will not receive a Notice of Internet
Availability of Proxy Materials and instead will receive the proxy materials in
the form previously elected.
The
enclosed Notice of Annual Meeting and Proxy Statement fully describe the
business to be transacted at the Annual Meeting, which includes (i) the election
of two directors of the Company, (ii) a proposal to amend and restate the
Company’s 2007 Performance Incentive Plan and (iii) the ratification of the
appointment of KPMG LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2010.
The
Company’s Board of Directors believes that a favorable vote on each of the
matters to be considered at the Annual Meeting is in the best interests of the
Company and its stockholders and unanimously recommends a vote “FOR” each such
matter. Accordingly, I urge you to review the accompanying material
carefully and to vote as soon as possible. You may vote by marking,
signing, dating and returning the enclosed proxy card. Alternatively, you may
vote over the Internet or by telephone.
Directors
and officers of the Company will be present to help host the Annual Meeting and
to respond to any questions that you may have. Your vote is
important. Whether or not you plan to attend the Annual Meeting,
please vote as soon as possible. You may vote on the Internet, by
telephone, or by completing and mailing a traditional proxy
card. Please review the instructions on the proxy card regarding each
of these voting options.
Thank you
for your ongoing support of TheStreet.com.
Sincerely,
James J.
Cramer
Chairman
of the Board
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 27, 2010
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders of TheStreet.com, Inc. (the
“Company”) will be held on Thursday, May 27, 2010, at 10:00 a.m., at the offices
of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New York
10004. A proxy card and a Proxy Statement for the Annual Meeting are
enclosed.
The
Annual Meeting is for the purpose of considering and acting upon:
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(1)
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The
election of two Class II Directors for three-year terms expiring at the
Company’s Annual Meeting of Stockholders in 2013;
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(2)
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A
proposal to amend and restate the Company’s 2007 Performance Incentive
Plan;
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(3)
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The
ratification of the appointment of KPMG LLP as the Company’s independent
registered public accounting firm for the fiscal year ending December 31,
2010; and
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(4)
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Such
other matters as may properly come before the Annual Meeting or any
adjournment or postponement
thereof.
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The close
of business on March 31, 2010 has been fixed as the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof.
Information
concerning the matters to be acted upon at the Annual Meeting is set forth in
the accompanying Proxy Statement.
YOUR VOTE
IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL
MEETING IN PERSON, YOU ARE URGED TO VOTE. YOU MAY VOTE ON THE
INTERNET, BY TELEPHONE, OR BY COMPLETING, SIGNING AND RETURNING THE ENCLOSED
PROXY CARD IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
By Order
of the Board of Directors,
Gregory
E. Barton
Secretary
of the Corporation
New York,
New York
April 15,
2010
THESTREET.COM,
INC.
14
Wall Street, New York, New York 10005
(212)
321-5000
TABLE
OF CONTENTS
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Page
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Proxy
Statement
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1
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Purpose
of the Annual Meeting
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1
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Annual
Meeting Admission
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1
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Stockholders
Entitled to Vote
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1
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Proposals
You Are Asked to Vote On and the Board’s Voting
Recommendations
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2
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Quorum
and Voting Requirements to Elect Directors and Approve Each of the
Proposals
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2
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Access
to Proxy Materials
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3
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Voting
Methods
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3
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Changing
Your Vote
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4
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Householding
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4
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Lists
of Stockholders
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4
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Costs
of Proxy Solicitation
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4
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Proposal
1 — Election of Directors
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4
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Nominees
for Director
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5
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Current
Directors
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5
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Designee
of the Series B Preferred Stockholders
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6
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Executive
Officers
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6
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Corporate
Governance and Related Matters
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6
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General
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6
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Independence
of Directors
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7
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Board
of Directors and Committees
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7
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Board
of Directors Leadership Structure and Risk Management
Oversight
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8
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Director
Nominations
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8
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Diversity
Policy
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8
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Stockholder
Communications with the Board of Directors
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9
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Code
of Business Conduct and Ethics
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9
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Related
Person Transaction Policy and Procedures
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9
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Compensation
Committee Interlocks and Insider Participation
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9
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Compensation
of Directors
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10
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Executive
Compensation
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12
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2009
Compensation Discussion and Analysis
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12
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2009
Report of the Compensation Committee
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16
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Summary
Compensation Table
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17
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Employment
Agreements
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19
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Grants
of Plan-Based Awards in 2009
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20
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Outstanding
Equity Awards at 2009 Fiscal Year-End
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21
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Option
Exercises and Stock Vested in 2009
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22
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Potential
Payments Upon Termination or Change in Control
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22
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Transactions
with Related Persons
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25
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Employment
Agreement with James J. Cramer
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25
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Kikucall,
Inc.
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26
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Security
Ownership of Certain Beneficial Owners and Management
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27
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Section
16(a) Beneficial Ownership Reporting Compliance
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29
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Proposal
2 — Approval of the Amendment and Restatement of TheStreet.com, Inc.
2007 Performance Incentive Plan
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30
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Description
of the 2007 Plan
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30
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Federal
Income Tax Consequences
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Miscellaneous
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Equity
Compensation Plan Information
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Proposal
3 — Independent Registered Public Accounting
Firm
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Fees
of Independent Registered Public Accountants
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34
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Information
Regarding Change of Independent Registered Public Accounting
Firm
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2009
Report of the Audit Committee
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35
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Stockholder
Proposals for 2011 Annual Meeting
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36
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Other
Matters
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37
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Appendix
A – TheStreet.com, Inc. 2007 Performance Incentive Plan (as amended and
restated effective May 27, 2010)
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A-1
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PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held May 27, 2010
This
Proxy Statement, or Notice of Internet Availability of Proxy Materials, is being
first mailed on or about April 15, 2010 to stockholders of TheStreet.com, Inc.
(the “Company”) at the direction of the Board of Directors of the Company (the
“Board”) to solicit proxies in connection with the Annual Meeting of
Stockholders (the “Annual Meeting”). The Annual Meeting will be held
on Thursday, May 27, 2010, commencing at 10:00 a.m., at the offices of Hughes
Hubbard & Reed LLP, One Battery Park Plaza, New York, New York 10004, or at
such other time and place to which the Annual Meeting may be adjourned or
postponed. This Proxy Statement describes the matters we would like
you to vote on and provides information on those matters so you can make an
informed decision.
Purpose
of the Annual Meeting
The
purpose of the Annual Meeting is to elect directors and to conduct the business
described in the Notice of Annual Meeting.
Annual
Meeting Admission
Only
stockholders are invited to attend the Annual Meeting. Proof of
ownership of the Company’s stock, along with personal identification, must be
presented in order to be admitted to the Annual Meeting. If you are a
stockholder of record, please bring personal identification (including photo
identification) with you so we can check your name against our list of record
holders. If your shares are held in the name of a bank, broker or
other holder of record, you must bring a brokerage statement or other proof of
ownership with you to the Annual Meeting. If you do not provide photo
identification or comply with the other procedures outlined above, you will not
be admitted to the Annual Meeting.
No
cameras (including cell phone cameras), recording equipment, electronic devices,
large bags, briefcases, or packages will be permitted in the Annual
Meeting.
Stockholders
Entitled to Vote
The close
of business on March 31, 2010 is the record date (the “Record Date”) for
determining the stockholders entitled to notice of and to vote at the Annual
Meeting. As of the Record Date, the Company had issued and
outstanding 31,548,827 shares of common stock. The common stock
constitutes the only outstanding class of voting securities of the
Company.
Most
stockholders of the Company hold their shares through a stockbroker, bank,
trustee, or other nominee rather than directly in their own name. As
summarized below, there are some distinctions between shares held of record and
those owned beneficially:
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Stockholder
of Record
— If your shares are registered directly in
your name with the Company’s transfer agent, American Stock Transfer &
Trust Co., you are considered the stockholder of record of those shares
and these proxy materials are being sent directly to you by the
Company. As the stockholder of record, you have the right to
grant your voting proxy directly to the Company or to vote in person at
the Annual Meeting.
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Beneficial
Owner
— If your shares are held in a stock brokerage
account, by a bank, brokerage firm, trustee, or other nominee, you are
considered the beneficial owner of shares held in street name and these
proxy materials are being forwarded to you by your bank, brokerage firm,
trustee, or nominee which is considered the stockholder of record of those
shares. As the beneficial owner, you have the right to direct
your bank, brokerage firm, trustee, or nominee on how to vote and are also
invited to attend the Annual Meeting. However, since you are not the
stockholder of record, you may not vote these shares in person at the
Annual Meeting. Your bank, brokerage firm, trustee, or nominee
is obligated to provide you with a voting instruction form for you to
use. A large number of banks and brokerage firms are
participating in online programs that allow eligible stockholders to vote
over the Internet or by telephone. If your bank or brokerage
firm is participating in such a program, your voting form will provide
instructions. If your voting form does not contain Internet or
telephone voting information, please complete and return the paper form in
the self-addressed, postage paid envelope provided by your bank, brokerage
firm, trustee or other nominee.
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Proposals
You Are Asked to Vote On and the Board’s Voting Recommendations
Proposals:
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Board’s Voting
Recommendation:
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1.
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Election
of directors.
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“FOR” each nominee to the Board
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2.
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Approval
of the Amendment and Restatement of TheStreet.com, Inc. 2007 Performance
Incentive Plan (the “2007 Plan”).
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“FOR”
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3.
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Ratification
of the appointment of KPMG LLP as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2010.
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“FOR”
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The Board
is not aware of any matters, other than the proposals described in this Proxy
Statement, to be presented for a vote at the Annual Meeting. In the
election of directors, you may vote “FOR” all of the nominees or you may
“WITHHOLD” your vote from one or more of the nominees. For the other
proposals, you may vote “FOR,” “AGAINST,” or “ABSTAIN.” If you
“ABSTAIN,” it has the same effect as a vote “AGAINST.” Where you have
appropriately specified how a proxy is to be voted, it will be voted
accordingly. If you sign a proxy card or voting instruction form with
no further instructions, the shares will be voted in accordance with the Board’s
voting recommendations as specified above. Additionally, if you are a
stockholder of record and you grant a proxy, any of the persons named as proxy
holders will have the discretion to vote your shares on any additional matters
properly presented for a vote at the Annual Meeting in accordance with Delaware
law and our By-laws.
Quorum
and Voting Requirements to Elect Directors and Approve Each of the
Proposals
Quorum
The
presence (in person or by proxy) of the holders of a majority of the outstanding
shares of common stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum. Abstentions and “broker non-votes” are counted
as present and entitled to vote for purposes of determining a
quorum. A “broker non-vote” occurs when a bank, brokerage firm,
trustee, or nominee that is considered the stockholder of record holding shares
for a beneficial owner does not vote on a particular proposal because that
holder does not have discretionary voting power for that particular item and has
not received specific voting instructions for that proposal from the beneficial
owner.
Voting
Requirements
Under
current rules of the New York Stock Exchange to which its members are subject,
certain proposals are considered “discretionary” items upon which brokerage
firms holding shares of common stock in street name may vote in their discretion
on behalf of their clients if such clients have not furnished voting
instructions. Discretionary items include the ratification of KPMG
LLP as our independent registered public accounting firm. On these
matters, your bank, brokerage firm, trustee, or nominee that is considered the
stockholder of record may vote your shares held in street name even if you have
not given them specific voting instructions. With respect to the
election of directors and approval of the amendment and restatement of the 2007
Plan, a broker does not have discretionary authority to vote in the absence of
instructions from the beneficial owner. If you do not provide
specific voting instructions for such proposals, a broker non-vote will
occur. Broker non-votes have no effect and will not be counted
towards the vote total for any proposal.
Vote
Required
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Election of
Directors
— The nominees for election as directors at the
Annual Meeting will be elected by a plurality of the votes cast at the
meeting. This means that the director nominee with the most
votes for a particular slot is elected for that slot. Votes
withheld from one or more director nominees will have no effect on the
election of any director from whom votes are
withheld.
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Approval of the Amendment and
Restatement of the 2007 Plan
— The affirmative “FOR” vote of a
majority of the shares voted on the proposal (in person or by proxy) by
persons entitled to vote is required to approve this
proposal. An abstention will have the same effect as a vote
against this proposal and a broker non-vote will have no effect on the
outcome of the vote.
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Ratification of the
Appointment of KPMG LLP as our Independent Registered Public Accounting
Firm
— The affirmative “FOR” vote of a majority of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to approve this proposal. An
abstention will have the same effect as a vote against this
proposal.
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Stockholder
ratification of the selection of KPMG LLP as the Company’s independent
registered public accounting firm is not required by the Company’s By-laws or
otherwise. However, the Audit Committee of the Board (the “Audit
Committee”) is submitting the selection of KPMG LLP to the stockholders for
ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee will reconsider
whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee in its discretion may direct the appointment of a
different independent registered public accounting firm at any time during the
year if it determines that such a change would be in the best interests of the
Company and its stockholders.
Access
to Proxy Materials
For this
Annual Meeting, we are using the “notice and access” process permitted by the
Securities and Exchange Commission (the “SEC”) to distribute proxy materials to
stockholders. This process allows us to post proxy materials on a
designated web site and notify stockholders of the availability of such proxy
materials on that web site. Thus, for most stockholders, we are
furnishing proxy materials, including this Proxy Statement and our 2009 Annual
Report on Form 10-K, by providing access to such documents on the Internet
instead of mailing paper copies.
The
Notice of Internet Availability of Proxy Materials (the “Notice”), which is
being mailed to most of our stockholders, describes how to access and review all
of the proxy materials on the Internet. The Notice also describes how
to vote electronically via the Internet. If you would like to receive
a paper copy of our proxy materials or receive only e-mail notice of the
availability of proxy materials, you should follow the instructions for
requesting such materials in the Notice. Your request to receive
proxy materials in paper form by mail or electronically by e-mail will remain in
effect until you revoke it. Choosing to receive your future notices
of proxy materials by e-mail will save us the cost of printing and mailing
documents to you and will reduce the impact of our Annual Meeting on the
environment. If you choose to receive future notices by e-mail, you
will receive an e-mail next year with instructions containing a link to those
materials and a link to the proxy voting web site.
This 2010
Proxy Statement and our 2009 Annual Report on Form 10-K are available in digital
form for download or review in the Investor Relations section of our web site
at
http://www.thestreet.com/investor-relations/index.html
, under “SEC
Filings.”
Voting
Methods
If you
hold shares directly as the stockholder of record, you may vote by granting a
proxy or, if you wish to vote at the meeting, by bringing the enclosed proxy
card or using the ballot provided at the meeting. If you are the
beneficial owner of shares held in street name, you must submit voting
instructions to your broker or nominee. In most instances, you will
be able to do this over the Internet, by telephone, or by
mail. Please refer to the instructions included on your proxy card
or, for shares held in street name, the voting instruction form included by your
broker or nominee. If your shares are held in street name and you
wish to vote at the meeting, you will need to contact the broker, trustee or
nominee that holds your shares to obtain a “legal proxy” to bring to the
meeting.
The
Internet and telephone voting procedures are designed to authenticate
stockholders by use of a control number and to allow you to confirm that your
instructions have been properly recorded. If you vote by telephone or
on the Internet, you do not need to return your proxy card or voting instruction
form. Telephone and Internet voting for both stockholders of record
and beneficial owners will be available 24 hours a day, and will close at 11:59
p.m. (Eastern Time) on May 26, 2010, the day before the Annual
Meeting.
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Vote by
Internet
— If you have Internet access, you may vote from
any location in the world 24 hours a day, 7 days a week, at the web site
that appears on your proxy card or voting instruction
form. Have your proxy card or voting instruction form in hand
when you access the web site and follow the
instructions.
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Vote by
Telephone
— If you live in the United States, you may use
any touch-tone telephone to vote toll-free 24 hours a day, 7 days a
week. Have your proxy card or voting instruction form in hand
when you call.
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Vote by
Mail
— You may vote by mail by signing and mailing your
proxy card or, for shares held in street name, the voting instruction form
included by your broker or nominee. If you provide specific
voting instructions, your shares will be voted as you
instruct. If you sign, but do not provide instructions, your
shares will be voted as the Board recommends. Please return your proxy
card or voting instruction form in the postage-paid envelope provided so
that it is received by May 25,
2010.
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All
shares that have been properly voted and not revoked will be voted at the Annual
Meeting. A representative of American Stock Transfer & Trust Co.,
our transfer agent, will tabulate the votes and act as the inspector of
election.
Changing
Your Vote
You may
change your proxy instructions at any time prior to the vote at the Annual
Meeting. For shares held directly in your name, you may accomplish
this by granting a new proxy (or revoking your proxy) or by voting in person at
the Annual Meeting. For shares held in street name, you may change
your vote by submitting new voting instructions to your broker or
nominee. Attendance at the Annual Meeting will not, by itself, revoke
a proxy.
Householding
SEC rules
now allow the Company to deliver a single copy of our Notice of Internet
Availability of Proxy Materials (or, if applicable, our Proxy Statement and
Annual Report on Form 10-K) to two or more registered stockholders residing at
the same address if we believe the stockholders are members of the same
family. This practice, known as “householding,” is designed to
eliminate your receipt of duplicate mailings and to reduce our printing and
postage costs. Accordingly, your household may have received a single set of
proxy materials this year. If you prefer to receive your own copy now
or in future years, please request a duplicate set by contacting us at the
following address: TheStreet.com, Inc., 14 Wall Street, 15
th
Floor,
New York, NY 10005, Attention: Investor Relations, or by telephone at (212)
321-5000.
If your
shares are held in street name, meaning through bank or brokerage accounts, you
may have received a householding notice from your bank or
broker. Stockholders who did not respond that they do not want to
participate in householding are deemed to have consented to it, and only one
copy of the proxy materials is being sent to them. Each stockholder
will continue to receive a separate voting instruction
form. Stockholders wishing to change this election with their bank or
broker may contact their bank or broker directly, or contact Householding
Elections by calling 1-800-542-1061, and be prepared to provide their name, the
name of the brokerage firms or banks where their shares are held, and their
account numbers. The revocation of a consent to householding will be
effective 30 days following its receipt.
Lists
of Stockholders
The names
of stockholders of record entitled to vote at the Annual Meeting will be
available at the Annual Meeting and for ten days prior to the meeting for any
purpose germane to the meeting, between the hours of 9:30 a.m. and 4:30 p.m.
(Eastern Time) at our principal executive offices at 14 Wall Street, 15
th
Floor,
New York, NY 10005, by contacting the Secretary of the Company at least 24 hours
in advance.
Costs
of Proxy Solicitation
All costs
incurred in the solicitation of proxies will be borne by the
Company. In addition to the solicitation by mail, officers and
employees of the Company may solicit proxies by mail, facsimile, email,
telephone, in person or by other means, without additional
compensation. The Company will also reimburse brokerage houses and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses incurred in connection with forwarding proxy solicitation materials to
the beneficial owners of common stock.
PROPOSAL
1
ELECTION
OF DIRECTORS
In
accordance with our Certificate of Incorporation, our Board has been divided
into three classes, denominated Class I, Class II and Class III, which are as
equal in number as practicable. Members of each class hold office for
staggered three-year terms. In addition, one director may be elected by the
holders of Series B Preferred Stock on an annual basis, at their discretion,
pursuant to the Certificate of Designation for the Series B Preferred Stock and
the agreements related to the investment by funds affiliated with Technology
Crossover Ventures (“TCV”) in the Company. However, such board member
is not a member of a class of directors. At each annual meeting of
our stockholders, the successors to the directors whose terms expire are elected
to serve from the time of their election and qualification until the third
annual meeting of stockholders following their election or until a successor has
been duly elected and qualified.
The names
of the nominees and current directors, their ages as of the date of the Annual
Meeting, and certain other information about them are set forth
below.
Nominees
for Director
Daryl
Otte and William R. Gruver each have been nominated for election at the Annual
Meeting as Class II directors to serve as a director for a three-year term
expiring at our Annual Meeting of Stockholders in 2013, or until their
respective successors have been duly elected and qualified. Each of
these nominees has consented to being named in this Proxy Statement as a nominee
of the Board and to serve if elected. It is intended that the persons
named in the proxy will vote for the election of each of these nominees. In case
any of these nominees should become unavailable for election to the Board prior
to the Annual Meeting for any reason not presently known or contemplated, the
proxy holders will have discretionary authority in that instance to vote for a
substitute nominee.
Daryl
Otte,
age 48. Mr. Otte has served as a director of the Company
since June 2001. Mr. Otte has served as the Company’s Chief Executive
Officer since March 2009, serving as Interim Chief Executive Officer from March
2009 – May 2009 and on a permanent basis thereafter. Mr. Otte is a
founding partner of Montefiore Partners, a venture capital investment fund
management firm. Prior to founding Montefiore Partners in 2000, Mr.
Otte was senior vice president and member of the executive committee of
Ziff-Davis, Inc., a leading media company. During his service at
Ziff-Davis from 1995 through 2000, Mr. Otte initiated and managed acquisition
and development projects and venture investments, including some of the early
commercialization efforts of the Internet. The Company believes that
Mr. Otte’s extensive experience as a senior media industry executive, as well as
his years of service on our Board and on the boards of a variety of other
companies, including digital media companies, make him a suitable member of the
Board, able to provide valuable insight and advice.
William R.
Gruver,
age 65. Mr. Gruver has served as a director of the
Company since October 2003 and previously spent 20 years at Goldman, Sachs &
Co., where he was a general partner and served as Chief Administrative Officer
of the equities division until his retirement from the firm in
1992. Still active in finance and business, he sits on the board of
several private companies and charities, works as an international strategic
consultant for financial firms in the U.S., the U.K., Italy and Switzerland, and
is also a national arbitrator of the Financial Industry Regulatory Authority
(“FINRA”). Mr. Gruver currently serves as the Howard I. Scott
Clinical Professor of Global Commerce, Strategy and Leadership at Bucknell
University. The Company believes that Mr. Gruver’s extensive
experience as a senior financial services executive, as well as his years of
service on our Board and on the boards of a variety of other companies, make him
a suitable member of the Board, able to provide valuable insight and
advice.
The
Board of Directors recommends that stockholders vote FOR each named
nominee.
Current Directors
The
current Class III director of the Company, who is not standing for re-election
at the Annual Meeting and whose term will expire at our Annual Meeting of
Stockholders in 2011, is as follows:
Ronni
Ballowe,
age 53. Ms. Ballowe has served as a director of the
Company since August 2009. Ms. Ballowe spent nineteen years at
Ziff-Davis Inc., a leading media company, serving in several senior executive
positions, including Publisher of the flagship
PC Magazine
, Publisher of
Computer Shopper
and
President of Ziff-Davis. After leaving Ziff-Davis in 1998, Ms.
Ballowe turned her attention to helping non-profit organizations in strategic
planning, marketing, fund-raising and organizational dynamics. More recently,
Ms. Ballowe has been consulting to media and other companies in a variety of
roles, including providing strategic advice to digital media
companies. The Company believes that Ms. Ballowe’s extensive
experience as a senior executive and consultant to a variety of media companies
makes her a suitable member of the Board, able to provide valuable insight and
advice.
The
current Class I directors of the Company, who are not standing for re-election
at the Annual Meeting and whose terms will expire at our Annual Meeting of
Stockholders in 2012, are as follows:
James J.
Cramer,
age 55. Mr. Cramer is a co-founder of the Company and
has served as a director since May 1998. He was appointed Chairman of
the Board in October 2008. In addition, Mr. Cramer has served as
markets commentator and as advisor to the Company’s Chief Executive Officer
since his retirement from Cramer, Berkowitz & Co., a hedge fund, at the end
of 2000. Mr. Cramer served as co-host of the “Kudlow & Cramer”
program on the CNBC television network from 2003 through December 2004 and
currently hosts the “Mad Money” program and appears frequently on CNBC business
news programs. From June 1996 to December 1998, he served as
co-chairman of the Company. He has been a columnist and contributor
to the Company’s publications since its formation in 1996 and has been an
employee of the Company since 2001. The Company believes that Mr.
Cramer’s extensive knowledge of financial markets and investing, the Company’s
core editorial focus, extensive experience in financial media and journalism, as
well as his years of service on our Board, make him a suitable member of the
Board, able to provide valuable insight and advice.
Martin
Peretz,
age 70. Dr. Peretz is a co-founder of the Company and
has served as a director since May 1998. He served as co-chairman of
the Company from June 1996 to December 1998. Since 1974, Dr. Peretz
has served as the editor-in-chief of
The New Republic
magazine
and was its chairman from 1974 through 2001. He was a member of the
faculty of Harvard University from 1966 through 2002. Dr. Peretz
also serves as a director of 11 mutual funds managed by the Dreyfus-Mellon Bank
Group. The Company believes that Dr. Peretz’s extensive experience as
a senior media industry executive, as well as his years of service on our Board
and on the boards of a variety of other companies, including media and financial
services companies, make him a suitable member of the Board, able to provide
valuable insight and advice.
Derek
Irwin,
age 45. Mr. Irwin has served as a director of the
Company since November 2007 and is the Senior Vice President, Finance for the
Global Media Client Services division of The Nielsen Company, a marketing and
media information company. Mr. Irwin assumed this position in
2009. Prior to his current role, he was the Senior Vice President,
Finance for the Business Media division of The Nielsen Company. Prior
to joining Nielsen in 2005, he served in senior level financial positions at
Ziff Davis Holdings, Monster Worldwide Inc., and Major League
Baseball. Mr. Irwin started his career at Ernst & Young
LLP. The Company believes that Mr. Irwin’s extensive experience as a
senior finance executive at a variety of leading companies, including media
companies, as well as his years of service on our Board, make him a suitable
member of the Board, able to provide valuable insight and
advice.
Designee
of the Series B Preferred Stockholders
One of
our directors is elected by the holders of our Series B Preferred Stock, being
TCV, on an annual basis, at their discretion, pursuant to the agreements related
to their investment in the Company. In August 2009, TCV elected
Christopher Marshall to serve as the director designee of our Series B Preferred
Stockholders.
Christopher
Marshall,
age 42. Mr. Marshall has served as a director of the
Company since August 2009. Mr. Marshall currently serves as a General
Partner at Technology Crossover Ventures ("TCV"), a leading private equity and
venture capital firm with $7.7 billion under management focused on information
technology companies. Prior to joining TCV in 2008, Mr. Marshall
spent twelve years at Trident Capital, a leading venture capital and private
equity firm focused on the software, business services and Internet
markets. Earlier in his career, Mr. Marshall worked for Banque
Paribas and the Chase Manhattan Bank. Mr. Marshall also serves on the
board of XATA Corporation. While Mr. Marshall was elected by TCV
pursuant to its contractual rights, the Company believes that Mr. Marshall’s
extensive experience as an investor in media and technology companies,
particularly those with subscription businesses, as well as his years of service
on the boards of a variety of companies, including digital media companies, make
him a suitable member of the Board, able to provide valuable insight and
advice.
Executive
Officers
The
following sets forth certain information regarding executive officers of the
Company, including their ages as of the date of the Annual
Meeting. Information pertaining to Mr. Otte, who is both a director
and Chief Executive Officer of the Company, may be found in the section above
entitled “Current Directors.”
Gregory E.
Barton,
age 48, Executive Vice President of Business and Legal Affairs,
General Counsel and Secretary. Mr. Barton joined the Company in June
2009, bringing more than 13 years of experience as general counsel of
SEC-reporting media and technology companies, as well as experience managing
various business and finance operations. From 2007 to 2008, Mr.
Barton served as General Counsel at Martha Stewart Living Omnimedia, Inc., a
media and merchandising company. From 2002 to 2007, Mr. Barton served
at Ziff Davis Media Inc., an integrated media company, holding the positions of
Executive Vice President, Licensing and Legal Affairs, General Counsel and
Secretary (2004 to 2007) and Executive Vice President, General Counsel and
Secretary (2002 to 2004). In March 2008, Ziff Davis filed for
reorganization under chapter 11 of the U.S. Bankruptcy Code and its plan of
reorganization was confirmed effective July 2008. Prior to joining
Ziff Davis Media Inc., Mr. Barton held a variety of positions at Index
Development Partners, Inc. (formerly known as Individual Investor Group, Inc.),
a financial media company, from 1998 to 2002, including President (2001 to
2002), Chief Financial Officer (2000 to 2002) and Executive Vice President of
Business and Legal Affairs, General Counsel and Secretary (1998 to
2002). From 1995 to 1998, Mr. Barton served at Alliance Semiconductor
Corporation, as Vice President of Corporate and Legal Affairs (1996 to 1998) and
General Counsel (1995 to 1998). Mr. Barton began his legal career at
Gibson, Dunn & Crutcher.
Richard
Broitman,
age 56, Chief Accounting Officer. Mr. Broitman has
served as our Chief Accounting Officer since June 2009. Mr. Broitman
joined the Company as Controller in July 2000, was appointed Vice President of
Finance in October 2007 and was named Acting Chief Accounting Officer in May
2009. Before joining the Company, Mr. Broitman was Controller of
Individual Investor Group, Inc., was Director of International Royalties for
Bertelsmann Music Group and worked in an audit capacity for both Deloitte Touche
Tohmatsu (formerly Touche Ross & Co.) and CBS Corporation.
There are
no family relationships between any director or executive officer of the
Company.
CORPORATE
GOVERNANCE AND RELATED MATTERS
General
The
following discussion summarizes corporate governance matters relating to the
Company, including director independence, Board and Committee structure,
function and composition, and other governance charters, policies and
procedures. For information on the Company’s corporate governance,
including the text of the Company’s Certificate of Incorporation and By-laws,
the charters approved by the Board for the Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee, and the
Company’s Code of Business Conduct and Ethics, please visit the Investor
Relations section of the Company’s web site at
http://www.thestreet.com/investor-relations/index.html
, under “Corporate
Governance.”
Independence
of Directors
The Board
has determined that five of its seven members are independent under the
independence standards of listing requirements of The Nasdaq Stock Market, Inc.
(“Nasdaq”). Under these standards, a director is not independent if
he has certain specified relationships with the Company or any other
relationship which in the opinion of the Board would interfere with his exercise
of independent judgment as a director. The independent directors
are: Ms. Ballowe, Mr. Gruver, Mr. Irwin, Mr. Marshall and Dr.
Peretz.
Board
of Directors and Committees
The Board
is responsible for directing and overseeing the business and affairs of the
Company. The Board represents the Company’s stockholders and its
primary purpose is to build long-term shareholder value. The Board
meets on a regularly scheduled basis during the year to review significant
developments affecting the Company and to act on matters that in accordance with
good corporate governance require Board approval. It also holds
special meetings when an important matter requires Board action between
scheduled meetings.
The Board
met seven times during fiscal 2009. During fiscal 2009, each member
of the Board participated in at least 75% of all Board and applicable committee
meetings held during the period for which he or she was a director or member of
the applicable committee, except that Dr. Peretz attended 71% (five of seven)
meetings of the Board.
The Board
has established an Audit Committee, a Compensation Committee and a Nominating
and Corporate Governance Committee to devote attention to specific subjects and
to assist the Board in the discharge of its responsibilities. The
functions of those committees, their current members and the number of meetings
held during fiscal 2009 are described below.
Audit
Committee.
The Audit Committee provides assistance to the
Board in fulfilling its legal and fiduciary obligations with respect to matters
involving the accounting, auditing, financial reporting and internal control
functions of the Company including ensuring the integrity of the Company’s
financial statements. The Audit Committee oversees the Company’s
internal accounting and financial reporting procedures and reviews the
qualifications, independence and performance of the Company’s independent
registered public accounting firm. The Audit Committee has sole
authority to appoint and replace the Company’s independent registered public
accounting firm, to approve their fees and to evaluate their
performance. The Company’s Chief Executive Officer does not attend
Audit Committee meetings unless requested by the Committee. The Audit
Committee currently consists of Mr. Irwin, who serves as its chairman, Ms.
Ballowe and Mr. Gruver. All of the current members of the Audit
Committee satisfy Nasdaq and SEC independence requirements, as well as Nasdaq
rules for financial literacy. In addition, the Board has determined
that Mr. Irwin, the Chairman of the Audit Committee, is an “audit committee
financial expert” as defined under SEC rules. The Audit Committee met
thirty-four times during fiscal 2009. The Audit Committee operates
under a written charter adopted by the Board available on the Company’s web site
at
http://www.thestreet.com/investor-relations/index.html
under “Corporate
Governance.”
Compensation
Committee.
The Compensation Committee makes the final
determinations concerning the base salary and incentive compensation of the
Company’s Chief Executive Officer, certain senior level employees and certain
other individuals compensated by the Company, as well as awards granted to all
employees, consultants and other individuals under the Company’s incentive
compensation plans. The Compensation Committee currently consists of
Mr. Gruver, who serves as its chairman, Mr. Irwin and Mr.
Marshall. All of the current members of the Compensation Committee
are independent under Nasdaq corporate governance listing
standards. The Compensation Committee met twenty-five times during
fiscal 2009. The Compensation Committee operates under a written
charter adopted by the Board available on the Company’s web site at
http://www.thestreet.com/investor-relations/index.html
, under “Corporate
Governance.”
Nominating and
Corporate Governance Committee.
The Nominating and Corporate
Governance Committee (i) identifies and evaluates potential director candidates,
(ii) recommends candidates for appointment or election to the Board, and (iii)
advises the Board on matters of corporate governance. The Nominating
and Corporate Governance Committee currently consists of Ms. Ballowe, who serves
as its chairwoman, Mr. Gruver and Mr. Irwin. All of the current
members of the Nominating and Corporate Governance Committee are independent
under Nasdaq corporate governance listing standards. The Nominating
and Corporate Governance Committee met three times during fiscal
2009. The Nominating and Corporate Governance Committee operates
under a written charter adopted by the Board available on the Company’s web site
at
http://www.thestreet.com/investor-relations/index.html
, under “Corporate
Governance.”
Board
of Directors Leadership Structure and Risk Management Oversight
The Board
does not have a policy on whether or not the roles of Chairman of the Board and
Chief Executive Officer should be separate and, if they are to be separate,
whether the Chairman of the Board should be selected from the non-employee
directors or be an employee. The Board believes that it should be free to
make a choice from time to time in any manner that it believes to be in the best
interests of the Company and its stockholders. Currently, we separate the
roles of Chairman and Chief Executive Officer, with Mr. Cramer serving as
Chairman and Mr. Otte serving as Chief Executive Officer. We believe
that at the present time the separation of roles, which enhances the Board’s
ability to oversee the performance of the Chief Executive Officer, is
appropriate, as it may strengthen investor confidence in our Company and the
integrity of the Board.
The Board
has an active role, as a whole and also at the committee level, in overseeing
management of the Company’s risks. The Board regularly reviews
information regarding the Company’s industry, operations, balance sheet and
technology considerations, among other things, as well as the risks associated
with each. The Compensation Committee is responsible for overseeing
the management of risks relating to the Company’s executive compensation plans
and arrangements. The Audit Committee oversees management of
financial risks. The Nominating and Governance Committee (as well as
the Audit Committee in the context of related party transactions) manages risks
associated with the independence of the members of the Board and potential
conflicts of interest. While each committee is responsible for
evaluating certain risks and overseeing the management of such risks, the entire
Board is regularly informed through committee reports about such
risks.
Director
Nominations
The
Nominating and Corporate Governance Committee will consider candidates for
director who are recommended by its members, by other Board members, by
stockholders and by management. From time to time, the Committee may
also engage third party search firms to assist it in identifying director
candidates.
In
evaluating director candidates for purposes of recommending nominees to the
Board, the Nominating and Corporate Governance Committee will consider (among
other factors the Committee may deem relevant) the candidate’s: (i) personal and
professional ethics and integrity; (ii) business and professional experience in
fields relevant to the Company’s business (including whether that experience
complements the expertise and experience of the other directors); (iii)
commitment to representing the interests of all stockholders of the Company;
(iv) ability to devote sufficient time to Board activities; and (v) status under
applicable independence requirements.
To have a
candidate considered by the Nominating and Corporate Governance Committee, a
stockholder must submit the recommendation in writing and must include the
following information: (i) name, address and biography of the
candidate; (ii) statement from the candidate indicating his or her willingness
to serve if elected; (iii) statement from the recommending stockholder
indicating the particular skills or expertise the candidate would bring to the
Board; (iv) name, address and phone number of the stockholder submitting the
recommendation; (v) number of shares of the Company’s stock owned by the
stockholder submitting the recommendation and the length of time such shares
have been held; (vi) description of all relationships or arrangements between
the stockholder and the proposed candidate; and (vii) any additional information
that would be required under applicable SEC rules to be included in the
Company’s proxy statement in the event the proposed candidate were to be
nominated as a director.
Such
submissions should be sent to the Company’s Nominating and Corporate Governance
Committee, c/o the Secretary, at the Company’s principal executive offices. In
order for a candidate to be considered for any annual meeting of stockholders,
the submission must be received no later than the December 1
st
preceding such annual meeting.
The
Nominating and Governance Committee will evaluate each potential candidate using
publicly available information, biographical and other information obtained from
the candidate (or the submitting stockholder), and may seek additional
information from the potential candidate, the submitting stockholder, and/or
other sources. The Committee and other members of the Board may hold
interviews with selected candidates and contact the candidate’s references
and/or other sources of first-hand information about the
candidate. Individuals recommended by stockholders will be considered
under the same criteria as candidates recommended by other
sources. However, the Committee may also take into consideration the
number of shares held by the recommending stockholder and the length of time
that such shares have been held. In evaluating current director
candidates for re-election to the Board, the Committee may also take into
consideration the director’s record of attendance at Board and committee
meetings.
Diversity
Policy
The Board
has not adopted a formal policy with respect to Board
diversity. Nevertheless, the Nominating and Corporate Governance
Committee and the Board intend to consider, when evaluating potential candidates
to join the Board, whether the candidate’s background may add diversity to the
Board to potentially enhance the variety of perspectives that may be brought to
bear in carrying out the Board’s duties.
Stockholder
Communications with the Board of Directors
The Board
has adopted the following policy concerning stockholder
communications: Any stockholder wishing to contact the Board, any
committee of the Board, or any individual director regarding bona fide issues or
questions about the Company may do so by sending an email to
boardcommunications@thestreet.com or a written communication to the Board or the
appropriate committee or director c/o the Secretary at the following address:
TheStreet.com, Inc., 14 Wall Street, 15
th
Floor,
New York, NY 10005.
The
Secretary will review all such correspondence and forward it (or a summary) to
the appropriate parties. Where the Secretary deems it appropriate, such
forwarding will take place on an expedited basis. Communications
raising concerns relating to the Company’s accounting, internal controls, or
audit matters will immediately be brought to the attention of the chairman of
the Audit Committee and will be handled in accordance with the procedures
established by the Audit Committee for such matters.
The
Company believes that it is important for directors to directly hear concerns
expressed by stockholders. Accordingly, Board members are encouraged
to attend the Annual Meeting of Stockholders. Two of the six members
of the Board at the time of the Annual Meeting in 2009 attended the
meeting.
Code
of Business Conduct and Ethics
The
Company has adopted a Code of Business Conduct and Ethics that applies to all of
its directors, officers and employees. This code is publicly available in the
Investor Relations section of the Company’s web site at
http://www.thestreet.com/investor-relations/index.html
,
under “Corporate Governance.” Any substantive amendments to the code
and any grant of a waiver from a provision of the code requiring disclosure
under applicable SEC or Nasdaq rules will be disclosed in a report on Form
8-K.
Related
Person Transaction Policy and Procedures
Pursuant
to the rules of Nasdaq, the Audit Committee reviews and approves or ratifies any
transaction or series of transactions involving more than $20,000 in which the
Company was, is or will be a participant, and in which any related person had,
has or will have, a direct or indirect interest. For purposes of this
policy, the term “related person” has the meaning contained in Item 404 of
Regulation S-K. In the course of its review and approval or
ratification of a transaction, the Audit Committee is required to consider the
facts and circumstances of the transaction, including, without limitation, the
following:
|
(1)
|
the
related person’s relationship to the Company and interest in the proposed
transaction;
|
|
(2)
|
the
material facts of the proposed transaction, including the proposed
aggregate value of such transaction or, in the case of indebtedness, the
amount of principal that would be
involved;
|
|
(3)
|
the
benefits to the Company of the proposed
transaction;
|
|
(4)
|
the
impact on a director’s
independence;
|
|
(5)
|
the
availability of other sources for comparable products or
services;
|
|
(6)
|
whether
the proposed transaction is on terms that are comparable to the terms
available to an unrelated third party or to employees generally;
and
|
|
(7)
|
any
other matters the Audit Committee deems
appropriate.
|
In
addition, the policy requires Audit Committee review and approval of all
proposed contributions by the Company to any charitable or non-profit
organization for which a related person serves as a trustee, officer or other
principal. In the event the Company becomes aware of a related person
transaction that was not reviewed and approved in advance, then the transaction
will be submitted to the Audit Committee for evaluation as above, and (i) if the
transaction is pending or ongoing, the Committee will determine the appropriate
course of action, including ratification, amendment or termination, and (ii) if
the transaction is completed, the Committee will determine if rescission and/or
disciplinary action is appropriate, and will request that the General Counsel
evaluate the Company’s controls and procedures to ascertain why the transaction
was not properly submitted for prior approval and whether changes to the policy
and procedures are recommended. No Audit Committee member may
participate in any review, consideration or approval of any transaction with
respect to which such member, or any of his or her immediate family members, is
a related person.
Compensation Committee Interlocks and
Insider Participation
During
fiscal 2009, the Compensation Committee consisted of Mr. Gruver and Mr.
Irwin. Each of them is independent, and none of them are employees or
former employees of the Company. During fiscal 2009, none of the
Company’s executive officers served on the compensation committee (or
equivalent) or the board of directors of another entity whose executive officers
served on the Company’s Compensation Committee or Board.
Compensation
of Directors
During
fiscal 2009, our directors earned the following total compensation:
Name
|
|
Fees
Earned
or
Paid
in
Cash
($)
|
|
Stock
Awards
(1)
($)
|
|
Option
Awards
(2)
($)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All
Other
Compensation
(3)
($)
|
|
Total
($)
|
|
Ronni Ballowe
(4)
|
|
|
20,156
|
|
|
21,205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
433
|
|
41,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Cramer
(5)
|
|
|
—
|
|
|
447,828
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,448
|
|
461,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R.
Gruver
(6)
|
|
|
79,650
|
|
|
68,898
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,069
|
|
150,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derek Irwin
(7)
|
|
|
86,200
|
|
|
68,898
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,069
|
|
157,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
Marshall
(8)
|
|
|
12,515
|
|
|
21,205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
433
|
|
34,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daryl Otte
(9)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin
Peretz
|
|
|
34,350
|
|
|
68,898
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,069
|
|
105,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Sonnenfeld
(10)
|
|
|
35,819
|
|
|
68,898
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
104,717
|
|
(1)
|
This
column represents the aggregate grant date fair value for restricted stock
units (“RSUs”) as determined in accordance with Financial Accounting
Standards Board Accounting Standards Codification 718. The
grant date fair value for each RSU was $3.33 for the grants to our
directors other than Ms. Ballowe and Mr. Marshall, and $2.45 for the
grants to Ms. Ballowe and Mr. Marshall, reflecting the closing price of
the Company’s common stock on January 2, 2009 and September 10, 2009,
respectively. As noted below, in January 2009 the directors
compensation policy provided that the number of shares to be awarded on
the first business day of the year to non-executive directors would be
calculated based upon the closing price of the Company’s common stock on
the business day prior to the date of grant (the closing price of the
Company’s common stock on December 31, 2008 was $2.90). The
policy was amended in February 2009 to provide that for subsequent grants,
the number of shares to be awarded on the first business day of the year
to non-executive directors would be calculated based upon the closing
price of the Company’s common stock on the date of grant. As of
December 31, 2008, each of the non-employee directors held 3,769 unvested
RSUs, all of which vested on January 2, 2009. As of December
31, 2009, each of Messrs. Gruver and Irwin and Dr. Peretz held 20,690
unvested RSUs, all of which vested on January 2, 2010 and Ms. Ballowe and
Mr. Marshall held 8,655 unvested RSUs, all of which vested on January 2,
2010. As noted below, Mr. Otte’s compensation as a director
during 2009 is not reported on this chart but appears in the Summary
Compensation Table, below. The above table does not reflect
compensation paid to Mr. Cramer as an employee, which is described below
under the heading “Transactions with Related
Persons.”
|
(2)
|
No
non-employee director held unexercised options as of December 31,
2009. Mr. Cramer held 357,628 unexercised options as of
December 31, 2009 pursuant to awards previously made to him for his
services as an employee, rather than as a
director.
|
(3)
|
Consists
of dividend equivalents accrued on RSUs held by such directors in fiscal
2009.
|
(4)
|
Ms.
Ballowe was elected to the Board in August 2009. Cash
compensation includes a pro rata portion of the $30,000 annual retainer as
well as a pro rata portion of an annual fee of $5,000 for duties
associated with chairing the Nominating and Corporate Governance
Committee.
|
(5)
|
Mr.
Cramer is the Chairman of the Board and an employee but not an executive
officer of the Company. His compensation for his services as an
employee is described below under the heading “Transactions with Related
Persons.” In addition to compensation for his services
described under “Transactions with Related Persons,” Mr. Cramer also
receives compensation for his services as Chairman of the
Board. On January 2, 2009 Mr. Cramer received a one-time grant
of 100,000 RSUs as consideration for his assumption of the Chairmanship
duties on October 24, 2008. This January 2, 2009 award vested
immediately upon the grant date but was settled by delivery of shares of
common stock on January 2, 2010. Additionally, Mr. Cramer
receives a grant of RSUs having a value of $100,000 annually as
compensation for his services as Chairman of the Board and received such
grant with respect to fiscal year 2009 on January 2, 2009, which resulted
in a grant to Mr. Cramer of 34,483 shares (calculated, as noted above,
based upon the closing price of the Company’s common stock on December 31,
2008 in accordance with the Company’s then-current
policy).
|
(6)
|
Cash
compensation includes an annual fee of $15,000 for duties associated with
chairing the Compensation
Committee.
|
(7)
|
Cash
compensation includes an annual fee of $20,000 for duties associated with
chairing the Audit Committee.
|
(8)
|
Mr.
Marshall was elected to the Board in August 2009. Cash
compensation includes a pro rata portion of the $30,000 annual
retainer.
|
(9)
|
Does
not include consideration paid for Mr. Otte’s services as a director prior
to Mr. Otte’s appointment as Chief Executive Officer in March 2009 (on an
interim basis from March 2009 – May 2009, and on a permanent basis
thereafter), which is reflected in the Summary Compensation Table,
below. Since his appointment as Chief Executive Officer, Mr.
Otte does not receive separate consideration for his service as a
director. Mr. Otte’s compensation for service as the Company’s
Chief Executive Officer is described in the section of this Proxy
Statement entitled “Executive
Compensation.”
|
(10)
|
Dr.
Sonnenfeld resigned as a director in August 2009. Cash
compensation includes a pro rata portion of the $30,000 annual retainer as
well as a pro rata portion of the annual fee of $5,000 for duties
associated with chairing the Nominating and Corporate Governance
Committee. The RSU award made to Dr. Sonnenfeld on January 2,
2009 expired unvested upon his resignation from the
Board.
|
The
compensation set forth in the preceding table was based on the following
schedule of fees for 2009 compensation of directors:
|
•
|
Annual
Retainer.
Each non-employee director receives an annual
retainer in the amount of $30,000 for service on the Company’s
Board. The retainer is payable in arrears in equal quarterly
installments (on March 31
st
,
June 30
th
,
September 30
th
and December 31
st
)
and prorated as necessary to reflect service commencement or termination
during the quarter.
|
|
•
|
Equity
Grant.
Each non-executive director receives an
annual grant of restricted stock units (“RSUs”) awarded under an equity
compensation plan approved by the Company’s shareholders. The
RSUs are awarded on the first business day of each year and valued at
$100,000 for a non-executive Chairman and $60,000 for all non-employee
other directors. With respect to the grants in January 2009,
the value was calculated based upon the closing price of the Company’s
common stock on the Nasdaq Stock Market on December 31
st
of the previous year. In February 2009, the Board approved an
amendment to the directors compensation policy in which the value of
shares on a grant date will be the closing price on the date of grant, as
opposed to the closing price on the preceding business day. The
RSUs vest on the first anniversary of the date of grant, subject to
continued service. Vesting of the RSUs will automatically
accelerate upon the occurrence of a change of control of the
Company. In September 2009, the Board approved an amendment to
the directors compensation policy to clarify that if a non-employee
director is elected after the first business day of a year, the $60,000
grant shall be pro rated to reflect the partial year of service and will
vest on the first business day of the following calendar
year.
|
|
•
|
Meeting
Fees.
Each non-employee director is entitled to receive
the following fees for participating in meetings of the Company’s Board
and committees:
|
|
•
|
$1,500
for attending each Board meeting in
person;
|
|
•
|
$450
for attending each committee meeting in person, for committee meetings
that take place on the same day as Board
meetings;
|
|
•
|
$700
for attending each committee meeting in person (other than committee
meetings that take place on the same day as Board
meetings);
|
|
•
|
$450
for participating in each Board or committee conference call, or
participating by telephone in an otherwise in-person Board or committee
meeting.
|
|
•
|
Chairmanship
Fees.
In addition to the fees set forth above, the
chairman of the each committee receives the following additional annual
fees (payable quarterly in arrears), to compensate him or her for the
additional responsibilities and duties of the
position:
|
|
•
|
Nominating and Corporate
Governance
– $5,000
|
Non-employee
directors are reimbursed for the expenses they incur in connection with
attending Board and committee meetings. See “Transactions with Related Persons”
for a discussion of certain agreements between the Company and James J. Cramer,
in his capacity as an employee of the Company. In addition, the
Company made payments in 2009 of $3,400 and $9,450, respectively, to former
directors Jeffrey Cunningham and Jay Hoag, related to their service as directors
of the Company during fiscal 2008, in accordance with the above compensation
policy.
Stock
Ownership of Directors
Pursuant
to the Board’s guidelines for stock ownership by directors adopted in 2007, each
director is expected to beneficially own shares of the Company’s common stock
(excluding shares underlying unexercised stock options) equal to at least
$180,000 in value. Each director who has served as a director
continuously since January 1, 2007 is expected to be in compliance with the
guideline by January 1, 2011. Each director who joined or joins the
Company after January 1, 2007 is expected to be in compliance with this
guideline by the fourth anniversary of the date of his or her election as a
director. The Board recognizes that exceptions to this guideline may
be necessary or appropriate in individual cases, and may approve such exceptions
from time to time as it deems appropriate in the interests of the Company’s
stockholders.
EXECUTIVE
COMPENSATION
2009
Compensation Discussion and Analysis
The
Compensation Committee (the “Committee”) sets the base salary and incentive
compensation of the Company’s executive officers, and is responsible for the
administration of the Company’s 2007 Performance Incentive Plan (the “2007
Plan”).
Compensation
Philosophy and Objectives
It is the
philosophy of the Compensation Committee to enhance shareholders’ long-term
interests by (i) motivating executive officers to achieve the highest levels of
performance; (ii) recruiting and retaining talented employees; (iii) competing
with rapidly growing, respected companies in businesses similar to ours within
clear and rational guidelines; and (iv) creating a compensation environment
driven by accountability.
Elements
of Compensation and Linkage to Objectives
The
Compensation Committee believes that the best way to achieve these objectives is
to establish compensation for the Company’s executive officers consisting of (i)
a base salary; (ii) short-term incentives provided through an annual cash
incentive program; and (iii) long-term incentives provided through grants of
equity. The overall package should be competitive with packages
offered by the Company’s peers and other companies in our industry or
metropolitan area, as the Company competes with such other companies to attract
and retain employees. In establishing the target and payment
methodology for the annual cash incentive awards, the Compensation Committee
seeks to create incentives to achieve goals that we believe will enhance
long-term shareholder value. Commencing with fiscal 2009, we sought
to increase the focus on creating long-term value by altering the vesting
schedule for RSU grants from the schedule that typically had been used by the
Company in recent years (which previously provided for vesting as to one-third
of the underlying shares on each of the first three anniversaries of the date of
grant), such that grants to senior executives made since May 2009 vest over five
years, as to 10% of the underlying shares on each of the first four
anniversaries of the date of grant and the balance on the fifth anniversary,
subject to the executive’s continued employment on the vesting date, and subject
to acceleration in the event of a change of control (as well as partial or full
acceleration upon termination under certain circumstances). Moreover,
the Compensation Committee revised its equity grant practices with respect to
senior executives in 2009, determining that rather than make annual grants of
options and RSUs, equity would be granted in the form of RSUs in connection with
the hiring of executives and that a grant would be made in 2009 to its current
senior executives such that the executives each would have, as of the grant
date, 75,000 equity units (calculated, for this purpose, as the sum of the RSUs
and one-third of the options, if any, that previously had been granted to such
executive). The Compensation Committee intended that such grants
would provide appropriate long-term incentives without need for additional
grants in the near term, although as the competition for executive talent may
evolve in upcoming years the Compensation Committee will review whether it may
be appropriate to make additional equity awards to executives generally, as well
as whether additional equity awards may be appropriate for any individual
executives based upon their performance, assumption of new responsibilities or
for other reasons.
Determination
of Compensation
The
determinations of the Compensation Committee regarding the appropriate form and
level of executive compensation are ultimately judgments based on the
Compensation Committee's assessment of the performance of the Company against
its financial and strategic goals, the level of responsibility and individual
performance of each executive officer, and executive compensation at comparable
companies. At the request of the Compensation Committee, the
Company’s Chief Executive Officer makes compensation recommendations for the
Company’s senior managers (including the named executive officers) other than
himself. He also provides to the Compensation Committee his
evaluations of each manager’s performance. The Compensation Committee
discusses the recommendations with the Chief Executive Officer and amongst its
members. Additionally, the Compensation Committee conducts a review
of the Chief Executive Officer’s performance with the Company’s
Board. The Compensation Committee makes the final decisions on the
compensation of all named executive officers.
In 2009,
the compensation structures for Daryl Otte and Gregory Barton were shaped by
negotiations with such individuals in connection with the hiring of Mr. Otte as
our Chief Executive Officer and Mr. Barton as our Executive Vice President,
Business and Legal Affairs, General Counsel and Secretary. (The
structure for Mr. Barton’s compensation arrangement was modeled after Mr.
Otte’s, although Mr. Otte’s arrangement reflects a higher compensation level,
and contains certain additional features, in light of the unique importance of
the role of Chief Executive Officer.) Mr. Broitman’s compensation in
2009 reflected a raise in his base salary, and participation in our annual cash
incentive plan, in connection with his promotion to become Chief Accounting
Officer. The compensation of the other named executive officers, who
ceased to be employees of the Company during the first half of 2009, primarily
reflected their arrangements from the prior year, together with a grant of RSUs
in January 2009 (which RSUs, other than with respect to Thomas J. Clarke, Jr.,
were forfeited upon the executive’s departure). In connection with
determining the compensation structure for the Company’s named executive
officers in 2009, the Compensation Committee retained a compensation consultant,
Exequity LLP (the “Consultant”), to perform an assessment of our executive
compensation programs as compared to an updated peer group of
companies. However, this peer survey held less importance in 2009
than in prior years in light of the factors described above. The
Consultant did not perform any services for the Company other than the executive
compensation peer assessment and consulting services described
herein. All decisions regarding the engagement of the Consultant were
made by the Compensation Committee. The peer group consisted of
companies deemed by the Consultant and the Compensation Committee to be
representative of companies that compete for the same types of executive talent
as does the Company: Bankrate, Inc.; Dolan Media Company; eDiets.com,
Inc.; The Knot, Inc.; Local.com Corporation; Martha Stewart Living Omnimedia,
Inc.; Media General, Inc.; Morningstar, Inc.; The New York Times Company;
PlanetOut Inc.; Primedia Inc.; Shutterfly, Inc.; Travelzoo Inc.; The Washington
Post Company; and WebMD Health Corp. (now known as HLTH
Corporation).
In
addition to the compensation discussion below, the Compensation Committee
approved the following terms to retain Daryl Otte as a consultant to serve as
our Interim Chief Executive Officer in March 2009, which arrangement was in
place through the Company’s hiring of Mr. Otte in May 2009 to become Chief
Executive Officer: Mr. Otte was paid a base salary of $59,792 per
month and received a grant of 25,000 RSUs, which were to vest on January 2,
2010. These amounts were determined through negotiation with Mr.
Otte.
Base
Salary
Base
salary is the basic element of direct cash compensation, designed to attract and
retain highly qualified executives. Accordingly, in setting base salary, the
Compensation Committee intends to be competitive with other publicly-traded
companies in our industry of providing Internet-related content services (with
the understanding that such comparisons are imperfect). The Committee
also considers the level of responsibility of the position and the level of
experience of the executive. Additionally, in some circumstances, it
is necessary to set compensation at levels that differ from median market
levels, due to recruitment or retention considerations, to recognize roles that
vary in responsibility from standard market positions, or to reward individual
performance.
The base
salaries of Messrs. Otte and Barton ($425,000 and $275,000, respectively) were
determined in connection with negotiations to hire such individuals, and
represent levels that the Compensation Committee believed were reasonable in
connection with their role and experience, as well as in relation to the
compensation levels paid to the Company’s other named executive officers
(including those who left the Company during the first half of
2009). The base salary of Mr. Broitman, who has served as the
Company’s Vice President of Finance since October 2007, was increased by
$20,000, to $200,000 per annum, in connection with his appointment as the
Company’s Chief Accounting Officer in June 2009.
Bonus
The
annual bonus is the short-term incentive component of our executive compensation
program and is designed to provide a direct method of motivating executives to
the achievement of near-term corporate performance goals. This
component provides for the payment of cash bonuses based upon achievement of
annual financial performance measures that are deemed by our Board and
Compensation Committee to be critical to our long-term
success. Generally, the short-term, annual incentive element of our
executive compensation has tended to be a larger portion of total compensation
than among our peer companies, while the long-term, equity incentive portion has
tended to be smaller. This is due to the following factors: (i)
short-term, direct compensation has been viewed by the Board and the
Compensation Committee as the most effective spur to our reaching profitability
on a sustainable basis, (ii) the Internet industry is notable for its high
volatility and rapid pace of change, which make annual incentives more
appropriate and (iii) the Compensation Committee’s desire to reduce the
potential dilution to shareholders resulting from excessive reliance on
long-term equity compensation. The Company issues short-term cash
incentive awards pursuant to the terms of the 2007 Plan.
Under our
short-term cash incentive program, we set a target bonus amount for each
applicable executive, generally expressed as a percentage of the executive’s
base salary (pro rated in the event employment commences during a fiscal
year). In 2009, this target was $320,000 for Mr. Otte; 75% of salary
for Mr. Barton; and 40% of salary for Mr. Broitman. The annual
targets of Messrs. Otte and Barton were determined in connection with
negotiations to hire such individuals; the targets for Messrs. Otte, Barton and
Broitman represent levels that the Compensation Committee believed were
reasonable in connection with their role and experience, as well as in relation
to the compensation levels paid to the Company’s other named executive officers
(including those who left the Company during the first half of
2009).
In 2009,
the short-term cash incentive was based 70% on achievement of an Adjusted EBITDA
target and 30% on achievement of a Free Cash Flow target. The level
of the targets — $4.5 million for Adjusted EBITDA and $8.0 million for Free Cash
Flow – were determined in connection with a forecast prepared by the Company
after Mr. Otte was hired as Chief Executive Officer. Potential payout
with respect to the Adjusted EBITDA measure ranged from 80% of the bonus
opportunity for that measure for achievement of 67% of target performance to
120% of the bonus opportunity for achievement of 133% or more of target
performance, on a straight-line sliding scale. Potential payout with
respect to the Free Cash Flow measure ranged from 80% of the bonus opportunity
for that measure for achievement of 75% of target performance to 120% of the
bonus opportunity for achievement of 125% or more of target performance, on a
straight-line sliding scale. However, the Compensation Committee has
discretion to pay less than these amounts if in its judgment the bonus should be
reduced. (The Compensation Committee also has the ability to award
wholly discretionary bonuses.) The short-term incentive is paid as
soon as practicable after the end of the fiscal year.
The
Compensation Committee viewed Adjusted EBITDA and Free Cash Flow as the most
important metrics on which to focus during 2009, which was a time of severe
dislocation in the financial and advertising markets. In that
difficult environment, the Compensation Committee believed it would assist in
creating long-term value if the Company could demonstrate its ability to
generate profits (as defined by Adjusted EBITDA) and Free Cash Flow in such
challenging conditions, and that the Adjusted EBITDA measure should be weighted
significantly more than the Free Cash Flow measure. The Compensation
Committee each year considers which financial metrics to use in establishing
targets for the short-term cash incentive program, and what respective weight to
give to any such metric.
Following
conclusion of fiscal year 2009, the Compensation Committee determined that the
Company had exceeded 133% of the Adjusted EBTIDA performance target and 125% of
the Free Cash Flow performance target, and determined to pay the maximum 120% of
target bonus opportunity for each such measure. In addition, the
Company also determined to pay discretionary bonuses to Mr. Otte and certain
employees who are not named executive officers, including a bonus of $25,000
payable to James Cramer, in light of the exceptional contributions made by such
employees to the Company during fiscal 2009.
As used
in 2009 for purposes of the short-term cash incentive program, “Adjusted EBITDA”
and “Free Cash Flow” were defined as the Adjusted EBITDA and cash flow, of the
Company for 2009, in each case excluding the positive or negative impact of (i)
asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the
effect of changes in tax laws, accounting principles, or other laws or
provisions affecting reported results, (iv) any reorganization and restructuring
programs, (v) extraordinary nonrecurring items as described in Accounting
Principles Board Opinion No. 30 and/or in management’s discussion and analysis
of financial condition and results of operations appearing in the Company’s
annual report to stockholders for the applicable year, (vi) the impact of
adjustments to the Company’s deferred tax asset valuation allowance, (vii)
acquisitions or divestitures, (viii) foreign exchange gains and losses, (ix)
results of the Promotions.com subsidiary and (x) legal, accounting and other
costs related to the examination of the recognition of revenue in the
Promotions.com subsidiary, the restatement or revision to any prior period
financial statements, or any actions, proceedings, investigations, inquiries or
other matters related thereto.
In
certain prior years, the Company also made awards under a long-term cash
incentive plan, in which, if the ratio of the Company’s Enterprise Value to its
EBITDA achieved a high-enough percentile ranking as compared to a peer group, a
certain amount of “phantom equity” was awarded that would vest over a three-year
period and be settled in cash on each of the first three anniversaries (subject
to continued employment and other conditions). The Compensation
Committee determined to discontinue making awards of this type, finding that
such awards were not as effective as desired in creating incentives, in light of
the complexity of their design. No such awards were made in fiscal
2009. (Mr. Cramer received phantom equity pursuant to such an award
in fiscal 2007 and received cash payments in 2008 and 2009 with respect to the
first two of the three installments under that award).
Long-Term
Equity Incentives
Long-term
incentives are provided by equity awards under the 2007 Plan. The
2007 Plan authorizes the Compensation Committee to grant a variety of types of
equity awards, including stock options, stock appreciation rights (“SARs”),
restricted stock and RSUs. Long-term equity awards enable our
executive officers to maintain an equity interest in the Company, which aligns
their financial interests with those of our shareholders.
Generally,
to encourage executives to remain employed by the Company, stock options have
vested and become exercisable in equal portions over the first three
anniversaries of the grant date and expired on the fifth anniversary of the
grant date. Previously, the Company’s practice with respect to
vesting of RSUs was that RSUs would vest and be settled in the form of common
stock in equal portions over the first three anniversaries of the grant date; as
noted above, commencing with fiscal 2009, the Compensation Committee determined
to change the vesting schedule such that grants to senior executives made since
May 2009 vest over five years, as to 10% of the underlying shares on each of the
first four anniversaries of grant and the balance on the fifth
anniversary. In both the prior and current practice, vesting was
subject to the executive’s continued employment on the vesting date, and subject
to acceleration in the event of a change of control, as defined in the 2007 Plan
(as well as partial or full acceleration upon termination under certain
circumstances). Whereas the Company previously had a practice of making
annual equity incentive grants, the Compensation Committee in 2009 determined
that it would issue special awards to senior executives in 2009 (and in
connection with the hiring of Messrs. Otte and Barton), without an expectation
for additional annual awards, subject to review at a later date by the
Compensation Committee. The Compensation Committee determined to
grant Mr. Otte 650,000 RSUs in connection with hiring him as permanent Chief
Executive Officer in May 2009 and determined to grant Mr. Barton 175,000 RSUs in
connection with hiring him as Executive Vice President of Business and Legal
Affairs, General Counsel and Secretary in June 2009. The grants to
Messrs. Otte and Barton were determined in connection with negotiations to hire
such individuals, and represent levels that the Compensation Committee believed
were reasonable in connection with their role and experience. The
Compensation Committee also determined in July 2009 to issue awards to certain
other current and prospective senior executives, including Mr. Broitman, such
that, as of the grant date, the executive would have 75,000 equity units
(calculated, for this purpose, as the sum of the RSUs and one-third of the
options, if any, that previously had been granted to such executive).
These grants were intended to enhance the long-term incentive of, and the
internal parity of such incentive within, the Company’s executive
team.
Other
Compensation
Currently,
our executives are eligible to participate in Company-wide plans and programs
such as the 401(k) plan (including Company match), group medical and dental,
vision, long- and short-term disability plans, and health care, dependent care
and mass transit spending accounts, in accordance with the terms of the
programs.
Impact
of Tax Treatment on Compensation
Section
162(m) of the Internal Revenue Code (the “Code”) limits deductibility of certain
compensation paid to certain executive officers to $1 million per officer in any
one year. However, performance-based compensation can be excluded
from this limitation so long as it meets certain requirements. Cash
and equity awards granted under the 2007 Plan may, but need not be, structured
so as to qualify as performance-based compensation under Section
162(m). In general, the Company’s short-term cash incentives are
intended to qualify as performance-based. Stock options are generally
intended to qualify, but RSUs are not.
The
severance, change of control and RSU award agreements of Messrs. Otte, Barton
and Broitman (as well as the Employment Agreement and RSU award agreements of
Mr. Cramer, who is a director and employee but is not an executive officer of
the Company) contain provisions that require certain payments to be delayed in
order to avoid the imposition of additional taxes pursuant to Section 409A of
the Code.
Severance
and Change in Control Arrangements
The
Company has entered into severance agreements with its senior executives, which
in general we believe are significantly less generous than arrangements that are
typical at peer companies. Other than with respect to Messrs. Otte
and Barton, our current named executive officers do not have a contractual right
to receive payments upon a change of control of the Company or enhanced
severance payments for terminations following a change of
control. (Messrs. Clarke, Ashman, Morrow and Elkes, who are deemed
named executive officers for fiscal 2009 but who were not employees of ours at
December 31, 2009, did have agreements during 2009 that provided for certain
such rights; and Mr. Cramer’s employment agreement provides for certain such
rights.) In prior years, the Company typically had agreements with
its executives that provided for significantly greater severance and for change
of control payments. The Compensation Committee believed that, in
general, during 2009, such arrangements were not required in order for the
Company to be able to attract and retain talented executives. The
Compensation Committee did, however, feel that it was necessary and desirable,
in order to hire Messrs. Otte and Barton, to provide these individuals with
severance and change of control arrangements that the Compensation Committee
believed were similar to terms available to comparable senior executive officers
of peer companies, with the arrangement for Mr. Otte, as Chief Executive
Officer, being significantly more generous than the arrangement for Mr. Barton,
due to the unique role and importance of the chief executive
officer. Change in control arrangements, in particular, are intended
to help ensure the objectivity of executives who would likely be involved in
decisions regarding a potential change in control and who are at risk for job
loss in such event. We believed that a “single trigger” arrangement
was appropriate for our Chief Executive Officer given the high likelihood that
such officer would face the prospect of job loss in the event of a change of
control. Moreover, with respect to our Chief Executive Officer, we
believed it was appropriate to provide for potential additional payments in the
event that certain payments to him caused him to be subject to change in control
excise taxes. See “Executive Compensation — Potential
Payments Upon Termination or Change in Control” for a summary of the severance
and change in control provisions for our named executive officers.
In
addition to the severance and change of control agreements described above, the
Company’s RSU agreements generally provide for full acceleration of vesting upon
the occurrence of a change of control, and for partial acceleration of vesting
upon the termination of the grantee’s employment due to death or
disability. In addition, the RSU agreements for Messrs. Cramer, Otte
and Barton provide for full or partial acceleration upon the termination of the
grantee’s employment by the Company without Cause or by the grantee for Good
Reason, each as defined in the respective agreements. The
Compensation Committee believed such provisions were necessary and appropriate
to offer in connection with hiring Messrs. Cramer, Otte and Barton.
While in
past years the Company typically had entered into formal written employment
agreements with all of its senior executives, in 2009 the Compensation Committee
recommended the discontinuation of this practice and currently there are no
formal written employment agreements with any executive officers of the
Company. As noted above, however, the Compensation Committee did
approve in 2009 the execution of written severance agreements with the Company’s
senior executives, as well as the issuance of RSU agreements described
above.
Equity
Granting Practices
Historically,
it had been the policy of the Compensation Committee to make annual grants of
stock options and other equity-based awards to our executives, members of our
senior management team and other employees who make significant contributions to
our success. In recent years, these grants have been made shortly
following the end of the fiscal year, in order for the Compensation Committee to
take into account the Company’s actual financial performance for the
year. Pursuant to the 2007 Plan, options have an exercise price equal
to the closing market price of our common stock on the grant
date. Grants also were made in connection with the hiring of certain
prospective employees and occasionally at mid-year, in each case to those
employees or prospective employees whom the Compensation Committee believed
would have the ability to have an impact on the long-term performance of our
stock and should therefore have the opportunity to participate in its
appreciation. For current employees, the grant date is the date the
Compensation Committee approved the award or a prospective date set by the
Compensation Committee, and for prospective employees, the grant date is the
date they commence employment. There is no relationship between the
timing of an equity-based award and the Company’s release of material,
non-public information. It is the policy of the Company that options
may not be repriced without shareholder approval, and this policy has been made
a specific feature of the 2007 Plan. As noted above, in 2009 the
Compensation Committee determined, in light of then-prevailing conditions, to
change its equity grant practices with respect to senior executives, determining
that rather than make annual grants of options and RSUs, equity would be granted
in the form of RSUs in connection with the hiring of new executives and that a
grant would be made in 2009 to its current senior executives such that the
executives each would have, as of the grant date, 75,000 equity units
(calculated, for this purpose, as the sum of the RSUs and one-third of the
options, if any, that previously had been granted to such
executive). Moreover, as noted above, the Compensation Committee determined
that the RSUs granted to senior executives since May 2009 should vest over five
years, as to 10% of the underlying shares on each of the first four
anniversaries of the date of grant and the balance on the fifth anniversary,
subject to the executive’s continued employment on the vesting date, and subject
to acceleration in the event of a change of control (as well as partial or full
acceleration upon termination under certain circumstances). The
Compensation Committee believes its current equity grant policy should be
sufficient to attract and retain executives, although, as noted above, as the
competition for executive talent may evolve in upcoming years the Compensation
Committee will review whether it may be appropriate to make additional equity
awards to executives generally, as well as whether additional equity awards may
be appropriate for any individual executives based upon their performance,
assumption of new responsibilities or for other reasons.
2009 R
e
port of the Compensation
Committee
In
accordance with the SEC’s disclosure requirements for executive compensation,
the Compensation Committee has reviewed and discussed with the Company’s
management the preceding Compensation Discussion and Analysis. Based
on this review and these discussions with the Company’s management, the
Compensation Committee recommended to the Board that the Compensation Discussion
and Analysis be included in this Proxy Statement.
Submitted
by the Compensation Committee of the Company’s Board of Directors
William
R. Gruver, Chairman
Derek
Irwin
Christopher
Marshall
Summary
Compensation Table
The
following table shows the compensation earned during 2009, 2008 and 2007 by each
of the Company’s named executive officers (as determined pursuant to the SEC’s
disclosure requirements for executive compensation in Item 402 of Regulation
S-K).
Name
|
|
Year
|
|
Salary
($)
|
|
($)
|
|
Stock
($)
|
|
Option
($)
|
|
Non-Equity
Incentive
Plan
Compen-
($)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
($)
|
|
|
Total
($)
|
|
Daryl Otte
(6)
|
|
2009
|
|
|
265,625
|
|
|
58,027
|
|
|
1,430,398
|
|
|
—
|
|
|
241,973
|
|
|
|
—
|
|
|
|
180,951
|
|
|
|
2,176,974
|
|
Chief
Executive Officer
|
|
2008
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2007
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory E.
Barton
(7)
|
|
2009
|
|
|
157,388
|
|
|
—
|
|
|
351,750
|
|
|
—
|
|
|
141,649
|
|
|
|
—
|
|
|
|
11,931
|
|
|
|
662,718
|
|
Executive
Vice President, Business
|
|
2008
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
and
Legal Affairs, General Counsel and Secretary
|
|
2007
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Broitman
(8)
|
|
2009
|
|
|
190,682
|
|
|
—
|
|
|
115,073
|
|
|
—
|
|
|
91,527
|
|
|
|
—
|
|
|
|
7,529
|
|
|
|
404,811
|
|
Chief
Accounting Officer
|
|
2008
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2007
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Clarke,
Jr.
(9)
|
|
2009
|
|
|
93,271
|
|
|
—
|
|
|
344,485
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
333,173
|
|
|
|
770,929
|
|
Former
Chief Executive Officer
|
|
2008
|
|
|
410,000
|
|
|
—
|
|
|
237,076
|
|
|
371,438
|
|
|
—
|
|
|
|
—
|
|
|
|
12,905
|
|
|
|
1,031,419
|
|
|
|
2007
|
|
|
410,000
|
|
|
—
|
|
|
390,600
|
|
|
—
|
|
|
222,307
|
|
|
|
—
|
|
|
|
9,141
|
|
|
|
1,032,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Ashman
(10)
|
|
2009
|
|
|
98,345
|
|
|
—
|
|
|
156,510
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
106,096
|
|
|
|
360,951
|
|
Former
Chief Financial Officer
|
|
2008
|
|
|
276,000
|
|
|
—
|
|
|
137,246
|
|
|
207,901
|
|
|
—
|
|
|
|
—
|
|
|
|
6,678
|
|
|
|
627,825
|
|
|
|
2007
|
|
|
265,000
|
|
|
—
|
|
|
104,160
|
|
|
—
|
|
|
124,526
|
|
|
|
—
|
|
|
|
1,200
|
|
|
|
494,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Morrow
(11)
|
|
2009
|
|
|
122,500
|
|
|
—
|
|
|
66,600
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
87,137
|
|
|
|
276,237
|
|
Former
Editor-in-Chief
|
|
2008
|
|
|
245,000
|
|
|
—
|
|
|
108,913
|
|
|
141,960
|
|
|
—
|
|
|
|
—
|
|
|
|
6,626
|
|
|
|
502,499
|
|
|
|
2007
|
|
|
235,000
|
|
|
—
|
|
|
130,200
|
|
|
—
|
|
|
84,949
|
|
|
|
—
|
|
|
|
1,883
|
|
|
|
452,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven Elkes
(12)
|
|
2009
|
|
|
80,118
|
|
|
—
|
|
|
133,200
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
3,229
|
|
|
|
216,547
|
|
Former
Chief Revenue Officer and
|
|
2008
|
|
|
312,000
|
|
|
—
|
|
|
197,225
|
|
|
180,059
|
|
|
—
|
|
|
|
—
|
|
|
|
6,410
|
|
|
|
695,694
|
|
Executive
Vice President of Mergers
and
Acquisitions
|
|
2007
|
|
|
230,682
|
|
|
—
|
|
|
—
|
|
|
462,459
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
693,141
|
|
(1)
|
For
2009, amounts shown in the “Non-Equity Incentive Plan” column reflect the
short-term cash incentive earned in 2009, which was paid in
2010. For 2009, 2008 and 2007, all short-term and long-term
cash incentive opportunities were granted as performance awards under the
2007 Plan. In each of 2008 and 2007, although certain of the
performance goals for the short-term incentive were met, the Compensation
Committee exercised its discretion to reduce the payouts of the short-term
incentive to zero. Amounts shown in the in the “Non-Equity
Incentive Plan” column for 2007 reflect long-term cash incentives which
were earned and would be paid over a three-year period subject to
continued employment as follows: Messrs. Clarke, Ashman and
Morrow earned 13,964, 7,822 and 5,336 phantom shares, respectively, based
upon the closing price of the Company’s common stock on December 31,
2007. The phantom shares would vest as to one-third of the
shares on each of the first three anniversaries of December 31, 2007,
subject to continued employment, and upon vesting the grantee would
receive the cash value of the shares as of the vesting date, together with
any dividends that had accrued on such shares. Amounts shown in
the “Bonus” column reflect discretionary payments awarded by the
Compensation Committee.
|
(2)
|
The
amounts in the “Stock Awards” column reflect the aggregate grant date fair
value computed in accordance with Financial Accounting Standards Board
Accounting Standards Codification 718. Assumptions made in the
calculation of these amounts are included in Note 1 to the Company’s
audited consolidated financial statements for the fiscal year ended
December 31, 2009, included in the Company’s Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 30,
2010.
|
(3)
|
Each
RSU award includes the grant of dividend equivalents with respect to such
RSU. The Company maintains a bookkeeping account to which it
credits, whenever cash dividends are paid on the common stock, an amount
equal to the amount of the dividend paid on a share of common stock for
each then-outstanding RSU granted. The accumulated dividend
equivalents vest on the applicable vesting date for the RSU with respect
to which such dividend equivalents were credited, and will be paid in cash
to the holder. The following amounts were earned as dividend
equivalents for the named executive officers during 2009, 2008 and 2007,
respectively, with respect to unvested RSUs: Mr. Otte, $53,319,
$0 and $0; Mr. Barton, $8,750, $0 and $0; Mr. Broitman, $3,639, $0 and $0
(excludes dividends accrued during 2008 and 2007 prior to Mr. Broitman
becoming an executive officer); Mr. Clarke, $3,312, $6,604 and $7,500; Mr.
Ashman, $1,478, $2,018 and $1,200; Mr. Morrow, $1,572, $1,966 and $1,500;
and Mr. Elkes, $1,292, $1,750 and $0. These amounts are not
reflected in the “Stock Awards” column but rather are reflected in the
“All Other Compensation” column.
|
(4)
|
The
amounts in the “Option Awards” column reflect the aggregate grant date
fair value computed in accordance with Financial Accounting Standards
Board Accounting Standards Codification 718. Assumptions made
in the calculation of these amounts are as follows: 2008
grants: expected life of 3.5 years, expected volatility of
47.07%, risk-free interest rate of 2.37% and expected dividends of 0.75%;
2007 grant: expected life of 3.5 years, expected volatility of 49.73%,
risk-free interest rate of 4.52% and expected dividends of
1.04%.
|
(5)
|
Amounts
in the “All Other Compensation” column include the
following: (i) the Company’s matching contribution of
contributions made by the employee to the Company’s 401(k) Plan in 2009,
2008 and 2007, respectively, in the following amounts: Mr.
Otte, $4,900, $0 and $0; Mr. Barton, $3,148, $0 and $0; Mr. Broitman,
$3,834, $0 and $0 (excludes matching contributions made in 2008 and 2007
prior to Mr. Broitman becoming an executive officer); Mr. Clarke, $4,900,
$4,600 and $0; Mr. Ashman, $4,595, $4,600 and $0; Mr. Morrow, $3,049,
$4,600 and $383; Mr. Elkes, $1,914, $4,600 and $0; (ii) amounts paid by
the Company with respect to group life insurance in 2009, 2008 and 2007,
respectively, in the following amounts: Mr. Otte, $33, $0 and
$0; Mr. Barton, $33, $0 and $0; Mr. Broitman, $56, $0 and $0 (excludes
payments made in 2008 and 2007 prior to Mr. Broitman becoming an executive
officer); Mr. Clarke, $56, $60 and $0; Mr. Ashman, $23, $60 and $0; Mr.
Morrow, $28, $60 and $0; Mr. Elkes, $23, $60 and $0; and (iii) amounts
earned as dividend equivalents during 2009, 2008 and 2007, respectively,
with respect to unvested RSUs: Mr. Otte, $53,319, $0 and $0;
Mr. Barton, $8,750, $0 and $0; Mr. Broitman, $3,639, $0 and $0 (excludes
dividends accrued during 2008 and 2007 prior to Mr. Broitman becoming an
executive officer); Mr. Clarke, $3,312, $6,604 and $7,500; Mr. Ashman,
$1,478, $2,018 and $1,200; Mr. Morrow, $1,572, $1,966 and $1,500; and Mr.
Elkes, $1,292, $1,750 and $0. Amounts in the “All Other
Compensation” column also include the following amounts: (a)
for Mr. Otte, $110,905 earned for his services as interim Chief Executive
Officer and $11,794 cash fees earned for his services as a director prior
to being hired as Chief Executive Officer; (b) for Mr. Clarke, $1,641 paid
for term life insurance in each of 2009, 2008 and 2007; and $316,729 and
$6,535 paid in 2009 for severance and for accrued and unused vacation,
respectively; (c) for Mr. Ashman, $100,000 in severance paid in 2009; and
(d) for Mr. Morrow, $82,488 received for consulting services after he
resigned from the Company.
|
(6)
|
In
March 2009, Mr. Otte was appointed interim Chief Executive Officer as an
outside consultant. In May 2009, Mr. Otte was hired as Chief
Executive Officer. Amounts shown in the “Salary” column reflect
salary earned by Mr. Otte since being hired as Chief Executive Officer,
and exclude (i) $110, 905 earned by Mr. Otte for his services as interim
Chief Executive Officer and (ii) $11,794 cash fees earned for his services
as a director prior to being hired as Chief Executive Officer, which
amounts are reported in the “All Other Compensation”
column. Amounts shown in the “Stock Awards” column for 2009
include (i) $68,898 reflecting RSUs awarded to him in January 2009 in
connection with his service as a director, (ii) $48,500 reflecting RSUs
awarded to him in March 2009 in connection with his appointment as Interim
Chief Executive Officer and (iii) $1,313,000 reflecting RSUs awarded to
him in connection with his appointment as permanent Chief Executive
Officer.
|
(7)
|
In
June 2009, Mr. Barton was hired as Executive Vice President, Business and
Legal Affairs, General Counsel and Secretary.
|
|
|
(8)
|
In
June 2009, Mr. Broitman was appointed Chief Accounting Officer, becoming
an executive officer of the Company. Amounts shown in the
Summary Compensation Table include amounts earned in 2009 as an employee
prior to becoming an executive
officer.
|
(9)
|
Mr.
Clarke was appointed Chief Executive Officer in November
1999. Mr. Clarke ceased being a director or employee of the
Company in March 2009.
|
(10)
|
Mr.
Ashman was appointed Chief Financial Officer in July 2006. Mr.
Ashman resigned from the Company effective May
2009.
|
(11)
|
Mr.
Morrow was appointed an executive officer of the Company in January
2007. Mr. Morrow resigned from the Company in June
2009.
|
(12)
|
Mr.
Elkes was appointed Chief Revenue Officer and Executive Vice President,
Mergers and Acquisitions in March 2007. Mr. Elkes ceased to be an
employee of the Company in March
2009.
|
Employment
Agreements
The
Company has from time to time entered into employment and severance arrangements
with certain of its named executive officers. A summary of some of
the material terms of these arrangements is set forth in the following
paragraphs. Provisions of the agreements dealing with termination of
employment or change in control are described under the heading “Potential
Payments Upon Termination or Change in Control.”
Daryl
Otte – Chief Executive Officer
The
Company does not have in place any formal employment agreement with Mr.
Otte. Nevertheless, the Company and Mr. Otte executed a “CEO Term
Sheet” dated as of May 15, 2009 (the “Otte Term Sheet”). The Otte
Term Sheet provides that Mr. Otte will receive a base salary of $425,000 per
year (with potential annual increases at the discretion of the Compensation
Committee) and a target annual bonus of $320,000 (with potential annual
increases at the discretion of the Compensation Committee), contingent upon
achieving performance goals established by the Compensation Committee with input
from Mr. Otte. The Otte Term Sheet also provided that Mr. Otte would
receive a one-time grant of 650,000 RSUs, to vest as to 10% of the shares
underlying the RSUs on each of the first four anniversaries of the date of
grant, and as to the balance on the fifth anniversary of the date of grant,
subject to continued employment and subject to accelerated vesting in certain
events as described under the heading “Potential Payments Upon Termination or
Change in Control.” The RSU agreement with respect to this grant
provides that the Company reserves the right to claw back any shares of common
stock delivered under the RSU agreement in the event that, within two years of
the cessation of Mr. Otte’s employment with the Company, Mr. Otte engages in any
Competitive Activity (as defined in the RSU agreement) or violates any
restrictive covenants related to non-solicitation of employees, clients and
vendors; non-disparagement; and confidentiality; all as described in the RSU
agreement.
Gregory
E. Barton – Executive Vice President, Business and Legal Affairs, General
Counsel and Secretary
The
Company does not have in place any formal employment agreement with Mr.
Barton. Nevertheless, the Company and Mr. Barton executed a “Term
Sheet” dated as of June 2, 2009 (the “Barton Term Sheet”). The Barton
Term Sheet provides that Mr. Barton will be Executive Vice President, Business
and Legal Affairs, General Counsel and Secretary, reporting to the Chief
Executive Officer; receive a base salary of $275,000 per year (with potential
annual increases at the discretion of the Compensation Committee); and have a
target annual bonus of 75% of his annualized base pay at the beginning of each
calendar year (with potential annual increases at the discretion of the
Compensation Committee and Chief Executive Officer), contingent upon achieving
performance goals established by the Compensation Committee and Chief Executive
Officer with input from Mr. Barton. The Barton Term Sheet also
provided that Mr. Barton would receive a one-time grant of 175,000 RSUs, to vest
as to 10% of the shares underlying the RSUs on each of the first four
anniversaries of the date of grant, and as to the balance on the fifth
anniversary of the date of grant, subject to continued employment and
subject to accelerated vesting in certain events as described under the heading
“Potential Payments Upon Termination or Change in Control.” The RSU
agreement with respect to this grant provides that the Company reserves the
right to claw back any shares of common stock delivered under the RSU agreement
in the event that, within two years of the cessation of Mr. Barton’s employment
with the Company, Mr. Barton engages in any Competitive Activity (as defined in
the RSU agreement) or violates any restrictive covenants related to
non-solicitation of employees, clients and vendors; non-disparagement; and
confidentiality; all as described in the RSU agreement.
Richard
Broitman – Chief Accounting Officer
The
Company does not have in place any formal employment agreement with Mr.
Broitman. The RSU Agreement dated July 1, 2009, with respect to RSUs
granted to Mr. Broitman following his appointment as an executive officer,
provides that the Company reserves the right to claw back any shares of common
stock delivered under the RSU agreement in the event that, within two years of
the cessation of Mr. Broitman’s employment with the Company, Mr. Broitman
engages in any Competitive Activity (as defined in the RSU agreement) or
violates any restrictive covenants related to non-solicitation of employees,
clients and vendors; non-disparagement; and confidentiality; all as described in
the RSU agreement.
Thomas
J. Clarke, Jr. – Former Chief Executive Officer
In March
2009, Mr. Clarke and the Company entered into a separation agreement and mutual
release (the “Clarke Separation Agreement”). The material terms of
this agreement are described under the heading “Potential Payments Upon
Termination or Change in Control.” Prior to his separation, Mr.
Clarke was employed pursuant to the terms of an Employment Agreement dated as of
September 13, 2007, as amended October 24, 2008 (the “Clarke Employment
Agreement”). The Clarke Employment Agreement provided, among other
things, that Mr. Clarke was to receive a base salary of $410,000 per year, an
annual cash target bonus of 75% of his base salary, an annual grant of a
long-term equity incentive having a value of not less than $300,000, and
Company-paid term life insurance with a death benefit equal to two times his
base salary. The Clarke Employment Agreement also contained customary
provisions related to non-competition, non-solicitation, non-disparagement,
confidentiality and intellectual property, as well as provisions described under
the heading “Potential Payments Upon Termination or Change in
Control.”
Eric
Ashman – Former Chief Financial Officer
In May
2009, Mr. Ashman resigned from his position as the Company’s Chief Financial
Officer and he and Company executed a letter agreement (the “Ashman Separation
Agreement”), the material terms of which are described under the heading
“Potential Payments Upon Termination or Change in Control.” Prior to
his resignation, Mr. Ashman was employed pursuant to the terms of an Employment
Agreement dated as of June 30, 2008 (the “Ashman Employment
Agreement”). The Ashman Employment Agreement provided, among other
things, that Mr. Ashman was to receive a base salary of $276,000 per year and,
for 2008, a cash bonus under the 2007 Plan consisting of a short-term incentive
and long-term incentive bonus, the target of such short- and long-term incentive
bonuses being 65% of annual salary, respectively (no cash bonus was paid to Mr.
Ashman for his service in 2008). The Ashman Employment Agreement also
contained customary provisions related to non-competition, non-solicitation,
confidentiality and intellectual property, as well as provisions described under
the heading “Potential Payments Upon Termination or Change in
Control.”
David J. Morrow – Former
Editor-in-Chief
In June
2009, Mr. Morrow resigned from his position as the Company’s
Editor-in-Chief. Prior to his resignation, Mr. Morrow was employed
pursuant to the terms of an Employment Agreement dated as of August, 2007 (the
“Morrow Employment Agreement”). The Morrow Employment Agreement
provided, among other things, that Mr. Morrow was to receive a base salary of
$235,000 per year (the Company paid him $245,000 in base salary 2008) and, for
2007, a cash bonus under the 2007 Plan (no cash bonus was paid to Mr. Morrow for
his service in 2008). The Morrow Employment Agreement also contained
customary provisions related to non-competition, non-solicitation,
confidentiality and intellectual property, as well as provisions described under
the heading “Potential Payments Upon Termination or Change in
Control.”
Steven
Elkes – Former Chief Revenue Officer and Executive Vice President, Mergers and
Acquisitions
In March
2009, the Employment Agreement dated as of March 26, 2007 with Mr. Elkes (the
“Elkes Employment Agreement”) expired and Mr. Elkes ceased to be employed by the
Company. Prior to his separation, Mr. Elkes was employed pursuant to
the terms of the Elkes Employment Agreement which provided, among other things,
that Mr. Elkes was to receive a base salary of $300,000 and an annual cash
target bonus of 65% of his base salary. The Elkes Employment
Agreement also contained customary provisions related to non-competition,
non-solicitation, confidentiality and intellectual property, as well as
provisions described under the heading “Potential Payments Upon Termination or
Change in Control.” Pursuant to the Elkes Employment Agreement, Mr.
Elkes was also granted options to purchase up to 100,000 shares of the Company’s
common stock, which options vested ratably over the first three anniversaries of
the grant date.
Grants
of Plan-Based Awards in 2009
|
|
|
|
Estimated
Future
Payouts
Under
Non-Equity
Incentive
|
|
Estimated
Future
Payouts
Under
Equity
Incentive
Plan
Awards
|
|
All
Other
Stock
Awards:
Number
of
Shares
|
|
All
Other
Option
Awards:
Number
of
|
|
Exercise
or
Base
|
|
Grant
Date
Fair
Value
of
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
of
Stock
or
Units
|
|
Underlying
Options
(#)
|
|
Awards
($/Sh)
|
|
Option
Awards
($)
|
|
Daryl
Otte
|
|
1/2/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,690
|
|
|
—
|
|
|
—
|
|
|
68,898
|
|
|
|
3/13/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
48,500
|
|
|
|
6/9/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
650,000
|
|
|
—
|
|
|
—
|
|
|
1,313,000
|
|
|
|
7/14/09
|
|
|
161,315
|
|
|
201,644
|
|
|
241,973
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
Barton
|
|
7/14/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
175,000
|
|
|
—
|
|
|
—
|
|
|
351,750
|
|
|
|
7/14/09
|
|
|
94,433
|
|
|
118,041
|
|
|
141,649
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Broitman
|
|
1/2/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
|
—
|
|
|
16,650
|
|
|
|
7/1/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47,778
|
|
|
—
|
|
|
—
|
|
|
98,423
|
|
|
|
7/14/09
|
|
|
61,018
|
|
|
76,273
|
|
|
91,527
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
J. Clarke, Jr.
|
|
1/2/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
103,449
|
|
|
—
|
|
|
—
|
|
|
344,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
Ashman
|
|
1/2/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47,000
|
|
|
—
|
|
|
—
|
|
|
156,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Morrow
|
|
1/2/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,000
|
|
|
—
|
|
|
—
|
|
|
66,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Elkes
|
|
1/2/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,000
|
|
|
—
|
|
|
—
|
|
|
133,200
|
|
(1)
|
This
represents the potential payouts to the named executive officers under the
2007 Plan as short-term performance awards for 2009 as determined at the
time of grant. The applicable targets are described in the Compensation
Discussion and Analysis and the actual amount paid to each named executive
officer pursuant to such award is set forth in the Summary Compensation
Table.
|
(2)
|
This
column reflects grants of RSUs made under the 2007 Plan. The
grant made to Mr. Otte on 1/2/09 was made in connection with his services
as a director and vested on 1/2/10, as did the grant made to Mr. Otte on
3/13/09 in connection with his services as interim Chief Executive
Officer. The grant made to Mr. Broitman on 1/2/09 vests as to
one-third of the shares underlying the grant on each of the first three
anniversaries of the grant date. The grants made to Mr. Otte on
6/9/09, to Mr. Barton on 7/14/09 and to Mr. Broitman on 7/1/09 each vest
as to 10% of the shares underlying the grant on each of the first four
anniversaries of the date of grant and as to the balance on the fifth
anniversary of the date of grant, subject to whole or partial acceleration
under certain circumstances as described under the heading “Potential
Payments Upon Termination or Change in Control.” The grants
made to Messrs. Clarke, Ashman, Morrow and Elkes on 1/2/09 were to vest as
to one-third of the shares underlying the grant on
each
of the first three anniversaries of the grant date. The RSU
agreements for Messrs. Clarke, Ashman, Morrow and Elkes provided that 100%
(in the case of Messrs. Clarke and Elkes) or 50% (in the case of Messrs.
Ashman and Morrow) of the then unvested portion would immediately vest in
the event of a Change of Control (as such term is defined in the 2007
Plan). In addition, Mr. Clarke’s RSUs would vest upon the
occurrence of certain events described under the heading “Potential
Payments Upon Termination or Change in Control.” The above RSUs
of Mr. Clarke vested upon his separation from employment in 2009; the
above RSUs for Messrs. Ashman, Morrow and Elkes were forfeited upon such
individual’s respective separation from employment in
2009. Each RSU award includes the grant of dividend equivalents
with respect to such RSU. The Company maintains a bookkeeping
account to which it credits, whenever cash dividends are paid on the
common stock, an amount equal to the amount of the dividend paid on a
share of common stock for each then-outstanding RSU
granted. The accumulated dividend equivalents vest on the
applicable vesting date for the RSU with respect to which such dividend
equivalents were credited, and will be paid in cash at the time a stock
certificate evidencing the shares represented by such vested RSU is
delivered.
|
Outstanding
Equity Awards at 2009 Fiscal Year-End
|
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercis-
able
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expira-
tion
Date
|
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
|
Daryl
Otte
|
|
1/2/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,690
|
|
|
|
49,656
|
|
|
|
3/13/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
60,000
|
|
|
|
6/9/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
650,000
|
|
|
|
1,560,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
Barton
|
|
7/14/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
175,000
|
|
|
|
420,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Broitman
|
|
1/3/05
|
|
|
|
6,667
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4.08
|
|
|
1/2/10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1/19/07
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,500
|
|
|
|
6,000
|
|
|
|
2/14/08
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
12,000
|
|
|
|
1/2/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
12,000
|
|
|
|
7/1/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,778
|
|
|
|
114,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
J. Clarke, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
Ashman
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Morrow
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Elkes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
These
columns represent RSUs that were unvested at 2009 fiscal
year-end. Dollar values reflect the closing price of the
Company’s common stock on December 31, 2009, which was $2.40 per
share. The vesting schedule of these awards is as
follows. Mr. Otte’s 20,690 share RSU grant, awarded to him in
connection with his service as a director of the Company prior to being
named the Company’s Chief Executive Officer, vested on
1/2/10. Mr. Otte’s 25,000 share RSU grant, awarded to him in
connection with his appointment as Interim Chief Executive Officer, vested
on 1/2/10. Mr. Otte’s 650,000 share RSU grant, awarded to him
in connection with the Company hiring him in May 2009 as Chief Executive
Officer, Mr. Barton’s RSU grant and Mr. Broitman’s 47,778 share RSU grant
each vest as to 10% of the underlying shares on each of the first four
anniversaries of the date of grant and as to the balance on the fifth
anniversary of the date of grant, subject to continued employment and
subject to accelerated vesting in certain events as described under the
heading “Potential Payments Upon Termination or Change in
Control.” Mr. Broitman’s other RSU grants vest in equal
installments over the first three anniversaries of the date of
grant.
|
Option
Exercises and Stock Vested in 2009
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
|
Value Realized on
Exercise
($)
|
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value Realized on
Vesting
($)
|
|
Daryl
Otte
|
|
|
—
|
|
|
|
—
|
|
|
|
3,769
|
|
|
|
12,551
|
|
Gregory
Barton
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Richard
Broitman
|
|
|
—
|
|
|
|
—
|
|
|
|
6,667
|
|
|
|
19,701
|
|
Thomas
Clarke, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
169,485
|
|
|
|
375,353
|
|
Eric
Ashman
|
|
|
—
|
|
|
|
—
|
|
|
|
8,059
|
|
|
|
22,633
|
|
David
Morrow
|
|
|
—
|
|
|
|
—
|
|
|
|
8,221
|
|
|
|
23,475
|
|
Steven
Elkes
|
|
|
—
|
|
|
|
—
|
|
|
|
5,833
|
|
|
|
15,166
|
|
Potential
Payments Upon Termination or Change in Control
The
following summaries describe the agreements providing for potential payments to
our named executive officers upon termination of employment or a change in
control.
Pursuant
to Mr. Otte’s RSU agreement with the Company dated June 9, 2009, (i) all shares
underlying his 650,000 share RSU award would vest upon the occurrence of a
Change of Control (as defined in the 2007 Plan), or in the event Mr. Otte’s
employment was terminated by the Company without Cause or by Mr. Otte for Good
Reason (as each such term is defined in the RSU agreement); and (ii) in the
event Mr. Otte’s employment was terminated by reason of his death or Disability
(as defined in the RSU agreement), the RSU would become vested (including
previously-vested shares) as to the number of shares obtained by
multiplying the full number of shares subject to the grant by a fraction, the
numerator of which is the number of months he was employed by the Company and
the denominator of which is twenty-four.
Mr. Otte
and the Company have entered into a Change of Control and Severance Agreement
dated June 9, 2009, which provides that in the event Mr. Otte’s employment is
terminated by the Company without Cause or by Mr. Otte for Good Reason (as each
such term is defined in the agreement), Mr. Otte will receive, subject to his
execution of a release, a general severance in the amount of four weeks of base
pay for each full year of service as full-time Chief Executive Officer of the
Company, plus 1.33 weeks of base pay for each full year of service as a member
of the Company’s Board. In addition, the agreement provides that if a
Change of Control (as defined in the agreement) occurs within two years of Mr.
Otte’s assumption of the full-time Chief Executive Officer role, Mr. Otte will
be paid (subject to his execution of a release and without duplication of the
general severance described above) the sum of $1,490,000, which represents two
times his initial annual base pay plus target bonus, and in the event parachute
excise taxes apply, Mr. Otte will receive an additional payment (a “gross-up
payment”) in order to neutralize the impact of such excise taxes on Mr.
Otte.
Pursuant
to Mr. Barton’s RSU agreement with the Company dated July 14, 2009, (i) all
shares underlying his 175,000 share RSU award would vest upon the occurrence of
a Change of Control (as defined in the 2007 Plan); (ii) in the event Mr.
Barton’s employment was terminated by the Company without Cause or by Mr. Barton
for Good Reason (as each such term is defined in the RSU agreement), then,
subject to Mr. Barton’s execution of a release, the RSU would become vested
(including previously-vested shares) as to a number of shares equal to
the sum of (a) 87,500 plus (b) the product of 87,500 multiplied by a fraction,
the numerator of which is the lesser of 730 and the number of calendar days
between June 5, 2010 and date of termination, and the denominator of which is
730; and (iii) in the event Mr. Barton’s employment was terminated by reason of
his death or Disability (as defined in the RSU agreement), the RSU would become
vested (including previously-vested shares) as to the number of shares
obtained by multiplying the full number of shares subject to the grant by a
fraction, the numerator of which is the number of months he was employed by the
Company and the denominator of which is twenty-four.
Mr.
Barton and the Company have entered into a Severance Agreement dated July 14,
2009, which provides that in the event Mr. Barton’s employment is terminated by
the Company without Cause or by Mr. Barton for Good Reason (as each such term is
defined in the agreement), Mr. Barton will receive, subject to his execution of
a release, a general severance in the amount of four weeks of base pay plus an
amount equal to four weeks of base pay multiplied by a fraction, the numerator
of which is the number of calendar days from and including Mr. Barton’s 366
th
day
of employment with the Company, and the denominator of which is 365, but not to
exceed one year of base salary. In addition, the agreement provides
that if a Change of Control (as defined in the agreement) occurs prior to
November 30, 2011 and if within two years thereafter, Mr. Barton’s employment is
terminated by the Company without Cause or by Mr. Barton for Good Reason (as
such terms are defined in the agreement), Mr. Barton will be paid (subject to
his execution of a release and without duplication of the general severance
described above) a sum equal to twelve months of his base
salary.
Pursuant
to Mr. Broitman’s RSU agreement with the Company dated July 1, 2009, (i) all
shares underlying his 47,778 share RSU award would vest upon the occurrence of a
Change of Control (as defined in the 2007 Plan); and (ii) in the event Mr.
Broitman’s employment was terminated by reason of his death or Disability (as
defined in the RSU agreement), the RSU would become vested (including
previously-vested shares) as to the number of shares obtained by multiplying the
full number of shares subject to the grant by a fraction, the numerator of which
is the number of months he was employed by the Company since the date of grant
and the denominator of which is sixty.
The
executives’ applicable agreements generally define “Cause” to include willful
misconduct or gross negligence, willful and material dishonesty or
misappropriation of Company funds, properties or other assets, unexcused
repeated absence from work, unauthorized disclosure of confidential information
materially harmful to the Company, conviction of a felony involving fraud,
dishonesty or moral turpitude, violation of federal or state securities laws, or
breach of the performance of job duties, which is not cured within 30 days after
notice. “Good Reason” generally is given the meaning ascribed to such
term in Treasury Regulation Section 1.409A-1(n)(2)(ii).
A “Change
of Control” under the 2007 Plan (or under the respective severance agreements of
Messrs. Otte and Barton) occurs upon (1) the acquisition of a majority of the
voting power of the Company’s stock by a person, entity, or group (with certain
exceptions); (2) the date on which a majority of the members of the Board are
not “Current Directors” (which term is defined to mean the Company’s current
directors and directors whose nomination or election was approved by a majority
of the directors who at the time were “Current Directors”); (3) a merger or
consolidation with another entity where the Company’s stockholders immediately
prior to the merger or consolidation would no longer comprise a majority of the
voting shares of the surviving corporation in substantially the same proportions
as their prior ownership, or where the directors of the Company would not
constitute a majority of the board of directors of the surviving corporation;
(4) a sale of all or substantially all of the assets of the Company; or (5)
approval by the stockholders of a plan of complete liquidation of the
Company.
In order
to receive severance payments and benefits, generally each executive is required
to execute a release of claims and not violate his obligations in the applicable
agreement to (i) keep information about the Company’s business confidential,
(ii) refrain from making disparaging comments about the Company (and its
directors, officers and employees) and (iii) for a period of time following
termination (two years for our named executive officers employed by the Company
at December 31, 2009), (a) refrain from competing with the Company, (b) not
solicit or hire anyone who was employed by the Company during the term of the
applicable agreement and (c) not solicit any client or vendor of the Company to
cease its relationship with the Company.
The
following tables set forth the amounts that would have been payable to our
current named executive officers upon termination of employment under various
circumstances or upon a change of control, in each case assuming such event took
place on December 31, 2009 (and assuming that at such time, there was no accrued
but unpaid salary, bonus or vacation with respect to the respective officer and
disregarding amounts payable under the Company’s 401(k) plan).
Daryl
Otte – Chief Executive Officer
Payment
Trigger
|
|
Cash
Severance
($)
|
|
|
Bonus
($)
|
|
|
Benefits
($)
|
|
|
Value of
Accelerated
Equity Awards
($)
(1)
|
|
|
Excise
Tax
Gross-Up
($)
(2)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With
Cause or without Good Reason
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Without
Cause or for Good Reason
|
|
|
112,908
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,669,656
|
|
|
|
—
|
|
|
|
1,782,564
|
|
Change
of Control
|
|
|
1,490,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,669,656
|
|
|
|
1,064,872
|
|
|
|
4,224,528
|
|
Termination
after Change of Control
|
|
|
1,490,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,669,656
|
|
|
|
1,064,872
|
|
|
|
4,224,528
|
|
Death
or Disability
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
548,548
|
|
|
|
—
|
|
|
|
548,548
|
|
|
(1)
|
The
value of RSUs is based on the Company’s stock price on December 31, 2009
at the close of the trading day as reported on Nasdaq, being $2.40 per
common share.
|
|
(2)
|
Assumes
an aggregate 45% income and employment tax rate and a 20% federal excise
tax rate.
|
Gregory
E. Barton – Executive Vice President, Business and Legal Affairs, General
Counsel and Secretary
Payment
Trigger
|
|
Cash
Severance
($)
|
|
|
Bonus
($)
|
|
|
Benefits
($)
|
|
|
Value of
Accelerated
Equity Awards
($)
(1)
|
|
|
Total
($)
|
|
With
Cause or without Good Reason
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Without
Cause or for Good Reason
|
|
|
21,154
|
|
|
|
—
|
|
|
|
—
|
|
|
|
270,411
|
|
|
|
291,565
|
|
Change
of Control
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
420,000
|
|
|
|
420,000
|
|
Termination
after Change of Control
|
|
|
275,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
420,000
|
|
|
|
695,000
|
|
Death
or Disability
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
120,807
|
|
|
|
120,807
|
|
|
(1)
|
The
value of RSUs is based on the Company’s stock price on December 31, 2009
at the close of the trading day as reported on Nasdaq, being $2.40 per
common share.
|
Richard
Broitman – Chief Accounting Officer
Payment
Trigger
|
|
Cash
Severance
($)
(1)
|
|
|
Bonus
($)
|
|
|
Benefits
($)
|
|
|
Value of
Accelerated
Equity Awards
($)
(2)
|
|
|
Total
($)
|
|
With
Cause or without Good Reason
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Without
Cause or for Good Reason
|
|
|
150,341
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,341
|
|
Change
of Control
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
114,667
|
|
|
|
114,667
|
|
Termination
after Change of Control
|
|
|
150,341
|
|
|
|
—
|
|
|
|
—
|
|
|
|
114,667
|
|
|
|
265,008
|
|
Death
or Disability
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,467
|
|
|
|
11,467
|
|
|
(1)
|
Cash
severance amount does not reflect a contractual entitlement to cash
severance, but reflects payments that would have been made pursuant to the
Company’s then-applicable non-binding severance policy for executives,
which the Company may change (or eliminate) at its sole discretion, which
provides for payments of four weeks of base pay for each year of service,
with a maximum payment of fifty-two weeks of base pay
.
|
|
(2)
|
The
value of RSUs is based on the Company’s stock price on December 31, 2009
at the close of the trading day as reported on Nasdaq, being $2.40 per
common share.
|
Thomas
J. Clarke, Jr. – Former Chief Executive Officer
Pursuant
to the Clarke Separation Agreement, among other things: (a) the Clarke
Employment Agreement was terminated, except that certain provisions of the
Clarke Employment Agreement survive, including those relating to
non-competition, non-solicitation, confidentiality and non-disparagement; (b)
Mr. Clarke was to make himself available to assist and cooperate with the
Company in its transition to his successor; (c) Mr. Clarke’s unvested RSUs and
phantom shares awarded pursuant to the 2007 Plan immediately vested and Mr.
Clarke received 132,473 shares of common stock (having a value of $278,593) in
settlement of the RSUs that had been granted to him during his employment,
together with $7,714 in dividend equivalents that had accrued on such RSUs, and
received a cash payment of $21,092 in settlement of 9,494.27 phantom shares
that had been awarded to him under the 2007 Plan during his employment;
(d) the Company paid Mr. Clarke his accrued salary and vacation time
through the effective date of the Clarke Separation Agreement; (e) over the
twelve months following the effective date of the Clarke Separation Agreement,
(i) the Company paid Mr. Clarke an aggregate amount equal to his most recent
annual base salary ($410,000), payable in accordance with the Company’s normal
payroll practices, together with a match of certain 401(k) contributions Mr.
Clarke made from such payments in accordance with Company policy, (ii) paid
$1,666 for term life insurance; and (iii) provided Mr. Clarke certain medical
and insurance benefits equivalent to those most recently provided to him by the
Company during his employment, at a cost of $14,611; and (f) Mr. Clarke and the
Company executed a mutual release in connection with customary
matters.
The
Clarke Employment Agreement had provided that (i) if Mr. Clarke’s employment was
terminated by the Company for Cause or by Mr. Clarke without Good Reason (as
such terms were defined in the Clarke Employment Agreement), or if Mr. Clarke
gave notice of non-renewal of the agreement, Mr. Clarke would be paid his earned
but unpaid base salary, any earned but unpaid annual bonus for a previously
completed fiscal year, reimbursement for any unreimbursed business expenses,
payment for any unused vacation days and payments required to be paid pursuant
to law or any benefit plan; (ii) if Mr. Clarke’s employment was terminated by
the Company without Cause or by Mr. Clarke for Good Reason, or if the Company
gave notice of non-renewal of the agreement, then, in addition to payment of
foregoing amounts, Mr. Clarke also would be paid 150% of his base salary, a
pro-rata bonus for the termination year (based upon the average bonus paid to
him during the two prior years) and group insurance benefits for twelve months;
and (iii) if Mr. Clarke’s employment was terminated due to his death or
Disability (as defined therein), Mr. Clarke or his estate would be paid the
amounts described in clause (ii) above, except that instead of an additional
payment of 150% of his base salary, such payment would be 100% of his base
salary. Further, the Clarke Employment Agreement provided that if Mr.
Clarke’s employment was terminated by the Company without Cause or by Mr. Clarke
for Good Reason, or if the Company gave notice of non-renewal of the agreement,
or if a Change of Control (as defined in the 2007 Plan) occurred prior to the
termination of his employment, then the unvested portion of any long-term equity
awards granted to him since January 1, 2008, would become immediately
vested.
Other
Named Executive Officers
Pursuant
to the Company’s employment and incentive award agreements with Messrs. Ashman,
Morrow and Elkes, if such executive’s employment was terminated by the Company
other than for Cause or if the executive resigned for Good Reason (as each such
term was defined in the applicable agreement), then the executive would be
entitled to receive the following:
|
•
|
with
regard to Mr. Ashman, severance pay equal to two years of his salary and
group medical insurance benefits for one
year;
|
|
•
|
with
regard to Mr. Morrow, severance pay equal to one year of his salary, plus
any earned but unpaid short term incentive bonus and group medical
insurance benefits for one year;
and
|
|
•
|
with
regard to Mr. Elkes, severance pay equal to one year of his salary (two
years in certain circumstances following a Change of Control), plus a pro
rated bonus for the termination year, and continued health, life and
disability insurance benefits for one year (two years in certain
circumstances following a Change of
Control).
|
In
addition, under the terms of the 2007 Plan, the executives’ May 2007 Agreement
for Grant of Cash Performance Award and the 2008 Executive Performance Incentive
Plan, short-term incentives and long-term incentives (phantom shares) awarded
thereunder would be paid upon termination or change of control based upon the
following conditions: in the event of termination of employment, all
short-term incentives and those portions of the phantom shares that had vested
prior to the termination date would be paid to the executive; and in the event
of a change of control or upon termination of employment as a result of the
executive’s death, all vested amounts of short-term incentive and phantom shares
would be paid and all unvested phantom shares would vest and the cash value
would be paid out to the executive or his estate.
As Mr.
Ashman and Mr. Morrow each resigned from employment without Good Reason (as
defined in their respective employment agreements), and Mr. Elkes’ employment
terminated after his employment agreement expired, none of such individuals were
entitled to receive any severance in connection with the separation of their
employment during 2009. However, pursuant to the Ashman Separation
Agreement, the Company paid Mr. Ashman $100,000.
TRANSACTIONS
WITH RELATED PERSONS
Employment
Agreement with James J. Cramer
On April
9, 2008, the Company and James J. Cramer, in his capacity as an employee of the
Company serving as a content contributor, entered into a new employment
agreement (the “Employment Agreement”), effective January 1, 2008 (the
“Effective Date”). The Employment Agreement provides that Mr. Cramer
will, among other things, author articles for the Company’s advertising
supported and paid publications including the Company’s Action Alerts PLUS
product and provide reasonable promotional and other services, subject to
certain terms and conditions. The term of the Employment Agreement
expires on December 31, 2010 and provided that Mr. Cramer could terminate the
Employment Agreement and his employment thereunder as of either January 15, 2009
or January 15, 2010 upon not less than 60 days nor more than 90 days prior
written notice. The Employment Agreement provided that for his
services thereunder, Mr. Cramer would receive, among other consideration, an
annual salary of $1,300,000, $1,560,000 and $1,872,000, respectively, for the
three successive years of the Employment Agreement and would be eligible to
receive a target bonus of 75% of his annual base salary (to be not less than the
annual bonus paid to any other executive, employee or independent contractor
engaged by the Company for such period). Mr. Cramer also received a
signing bonus of $100,000 in April 2008 and a grant of 300,000 Restricted Stock
Units (RSUs), to vest and become payable as to 60,000 shares on January 1 of
2009 through 2013, provided that Mr. Cramer remains an employee of the Company
on such date, subject to accelerated vesting following a Change of Control (as
defined in the Employment Agreement) and other terms and
conditions. Mr. Cramer also is eligible to receive additional awards
under the 2007 Plan as determined by the Company. Subject to certain
terms and conditions, Mr. Cramer also is entitled to a cash payment equal to
slightly under three times his “base amount” (as defined in the Employment
Agreement, which is generally similar to the definition in Section 280G of the
Internal Revenue Code) following a Change of Control, following which Mr. Cramer
also has the right to terminate the Employment Agreement.
On July
30, 2008, the Company and Mr. Cramer amended the Employment Agreement to delete
a provision that had permitted Mr. Cramer to terminate the Employment Agreement
as of January 15, 2009 upon not less than 60 days and not more than 90 days
prior written notice. On December 23, 2008, the Company and Mr.
Cramer amended the Employment Agreement to provide that the salary increase that
was to have taken effect January 1, 2009 would be eliminated. On
April 2, 2009, Mr. Cramer in writing waived his right under the Employment
Agreement to terminate his employment upon not less than 60 days and not more
than 90 days prior written notice. On October 27, 2009, the Company
and Mr. Cramer amended the Employment Agreement to provide that the salary
increase that originally would have taken effect on January 1, 2009 (deleted by
a prior amendment) would take effect October 1, 2009. On January 5,
2010, the Company and Mr. Cramer amended the Employment Agreement to defer to
July 1, 2010 the salary increase that was to have taken effect on January 1,
2010, and agreed that the Company would grant Mr. Cramer 22,200 RSUs, to vest as
to 7,400 shares on each of the first three anniversaries of the date of
grant.
Pursuant
to the Employment Agreement, Mr. Cramer agreed that, during the term of the
Employment Agreement, he will not author articles for other online financial
publications that compete directly with the Company or act in certain capacities
for any other start-up on-line business that competes directly with the Company,
in any case without the Company’s consent, except for certain print publications
(including, for example, his authorship of a column for
New York
magazine) and
contents of Mr. Cramer’s books appearing on the Internet. Mr. Cramer
is permitted to pursue other journalistic and other endeavors, provided that
they are not inconsistent with the performance of his obligations to the
Company. Such prohibitions shall continue for eighteen months
following his termination by the Company for Cause or by him without Good Reason
(as such terms are defined in the Employment Agreement). In addition,
until eighteen months after the termination of his employment, Mr. Cramer will
not solicit for employment any person who was employed by the Company during the
six months prior to such termination.
If the
Company terminates Mr. Cramer’s employment for Cause or Mr. Cramer terminates
his employment without Good Reason, then he will be entitled to, among other
things, salary and vested RSUs through the date of termination, subject to
certain terms and conditions. If Mr. Cramer terminates his employment
for Good Reason, or if the Company terminates Mr. Cramer’s employment without
Cause, then he will be entitled to, among other things, salary through the date
of termination, accelerated vesting of all RSUs, an amount equal to the Change
of Control payment if the termination occurs prior to a Change of Control, the
prior year’s unpaid bonus, if any, and pro-rated then current year bonus, if
any, subject to certain terms and conditions. If Mr. Cramer’s
employment terminates due to his death or Disability (as defined in the
Employment Agreement), he shall be entitled to, among other things, salary and
vested RSUs through the date of termination, the prior year’s unpaid bonus, if
any, and pro-rated then current year bonus, if any, subject to certain terms and
conditions. As noted above, Mr. Cramer also may terminate the
Employment Agreement following a Change of Control, in which event he would be
entitled to, among other things, salary and vested RSUs through the date of
termination, the prior year’s unpaid bonus, if any, pro-rated then current year
bonus, if any, and a Change of Control payment, subject to certain terms and
conditions.
If
certain payments to Mr. Cramer, including pursuant to a Change of Control, are
determined to be a “parachute payment” as defined in Section 280G of the
Internal Revenue Code (a “Parachute Payment”) and also to be subject to the
excise tax imposed under Section 4999 of the Internal Revenue Code (the “Excise
Tax”), then Mr. Cramer will be entitled to an additional payment (a “gross-up
payment”) in an amount such that the net amount of the gross-up payment retained
by Mr. Cramer, after payment of certain income and employment taxes and Excise
Taxes on the gross-up payment, will be equal to the Excise Tax imposed on the
Parachute Payment; provided however that if the Parachute Payment does not
exceed the point at which Excise Taxes apply by at least 10%, then no gross-up
payment shall be made, and instead the Parachute Payment will be reduced to be
the greatest amount that could be paid without giving rise to any Excise
Tax.
The
Employment Agreement contains indemnification provisions pursuant to which the
Company has agreed to defend, indemnify and hold harmless Mr. Cramer, with
certain exceptions, against, among other things, losses suffered in connection
with the provision of his services under the Employment Agreement (and a
previous employment agreement with the Company).
Kikucall,
Inc.
Between
April 1, 2009 and December 16, 2009, the Company retained the services of
Kikucall, Inc., a subscription marketing services company (“Kikucall”), paying
Kikucall a total of approximately $524,000 for such services. Two of
the Company’s directors, Mr. Otte (who is also our Chief Executive Officer) and
Dr. Peretz, were directors of Kikucall and, both directly and indirectly through
investment vehicles, were stockholders and creditors of
Kikucall.
On
December 16, 2009 (the “Closing Date”), the Company, through a wholly-owned
acquisition subsidiary, acquired all of the outstanding securities of Kikucall
(the “Acquisition”), for an aggregate purchase price of approximately $5.2
million, subject to adjustment as provided therein. In connection
with the Acquisition, the Company paid approximately $3.8 million in cash and
issued to the target company’s stockholders 647,901 shares of the Company’s
common stock (the “Stock”), valued at approximately $1.4 million, a portion of
which was placed in escrow pursuant to the terms of an escrow agreement entered
into in connection with the Acquisition. The Stock issued in connection
with the Acquisition was unregistered and the Company has not granted the
recipients any registration rights with respect to the
Stock. Additionally, the Company has assumed net liabilities
approximating $0.1 million. As a result of the Acquisition, the
following amounts were received, respectively, on the Closing Date by (i) Mr.
Otte, (ii) Dr. Peretz, (iii) investment vehicles in which Mr. Otte and Dr.
Peretz had a direct or indirect interest and (iv) other investment vehicles in
which Dr. Peretz had a direct or indirect interest, or by Dr. Peretz’s children,
in each case with respect to such person or entity’s status as a creditor and/or
stockholder of Kikucall: (i) approximately $190,000 cash and 34,524 shares
of Stock, having an aggregate value of approximately $265,000 on the Closing
Date; (ii) approximately $155,000 cash and 20,023 shares of Stock, having an
aggregate value of approximately $200,000 on the Closing Date; (iii)
approximately $520,000 cash and 120,127 shares of Stock, having an aggregate
value of approximately $785,000 on the Closing Date; and (iv) approximately
$680,000 cash and 68,526 shares of Stock, having an aggregate value of
approximately $830,000 on the Closing Date. In connection with the
Acquisition, Mr. Otte and Dr. Peretz each executed a letter agreeing to donate
to charity an amount that approximated the respective gain such donor
recognized as a result of the Acquisition related to his shareholdings in the
acquired company. The negotiation of the Acquisition was overseen by
the Company’s Audit Committee, comprised solely of independent directors, on
behalf of the Company and the Acquisition was unanimously approved by the Audit
Committee and the Company’s board of directors.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of March 31, 2010 (except as otherwise noted),
the beneficial ownership of our common stock by (i) each person known by us to
own beneficially more than 5% of our common stock, (ii) each of our current
directors and nominees for director, (iii) each of the named executive officers
as set forth in the Summary Compensation Table, and (iv) all of our current
executive officers and directors as a group.
Name and Address of Beneficial Owner
(1)
|
|
Amount and Nature of
Beneficial
Ownership
(2)
|
|
|
Percent of
Class
(2)
|
|
Five
Percent Shareholders
|
|
|
|
|
|
|
Technology
Crossover Ventures
(3)
|
|
|
5,026,449
|
|
|
|
15.9
|
|
James
J. Cramer
(4)
|
|
|
4,074,005
|
|
|
|
12.8
|
|
Harvest
Capital Strategies LLC
(5)
|
|
|
2,359,971
|
|
|
|
7.5
|
|
Columbia
Wanger Asset Management, L.P.
(6)
|
|
|
2,256,740
|
|
|
|
7.2
|
|
Munder
Capital Management
(7)
|
|
|
2,103,940
|
|
|
|
6.7
|
|
Martin
Peretz
(8)
|
|
|
1,891,489
|
|
|
|
6.0
|
|
Dimensional
Fund Advisors LP
(9)
|
|
|
1,502,967
|
|
|
|
4.8
|
|
Directors
and Executive Officers
|
|
|
|
|
|
|
|
|
James
J. Cramer
(4)
|
|
|
4,086,098
|
|
|
|
12.8
|
|
Martin
Peretz
(8)
|
|
|
1,891,489
|
|
|
|
6.0
|
|
Daryl
Otte
(10)
|
|
|
145,554
|
|
|
|
0.5
|
|
Ronni
Ballowe
(11)
|
|
|
8,655
|
|
|
|
*
|
|
William
R. Gruver
(12)
|
|
|
68,201
|
|
|
|
0.2
|
|
Derek
Irwin
(13)
|
|
|
24,459
|
|
|
|
0.1
|
|
Christopher
Marshall
(14)
|
|
|
0
|
|
|
|
*
|
|
Gregory
Barton
(15)
|
|
|
0
|
|
|
|
*
|
|
Richard
Broitman
(16)
|
|
|
14,835
|
|
|
|
*
|
|
Thomas
Clarke
|
|
|
(17)
|
|
|
|
(17)
|
|
Eric
Ashman
|
|
|
(17)
|
|
|
|
(17)
|
|
David
Morrow
|
|
|
(17)
|
|
|
|
(17)
|
|
Steven
Elkes
|
|
|
(17)
|
|
|
|
(17)
|
|
|
|
|
|
|
|
|
|
|
All
current executive officers and directors as a group (9
persons)
|
|
|
6,247,946
|
|
|
|
19.6
|
|
*
|
Represents
beneficial ownership of less than
1%.
|
(1)
|
Except
as otherwise indicated, the address for each stockholder is c/o
TheStreet.com, Inc., 14 Wall Street, New York, New York 10005.
Other addresses in the notes below are based on recent filings with the
SEC. With respect to the five percent shareholders, we have
relied upon their beneficial ownership reports as filed with the SEC and
internal company records.
|
(2)
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission. Percentage ownership is based on a total of
31,548,827 common shares outstanding as of March 31, 2010, excluding
treasury stock. Shares of common stock over which the named
person has rights to acquire voting or dispositive power within sixty days
of March 31, 2010 are deemed outstanding for the purpose of computing the
percentage ownership of the person holding such rights but are not deemed
outstanding for computing the percentage ownership of any other
person. Except as noted, the persons and entities named in the
table have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws where
applicable.
|
(3)
|
Consists
of 12,424 shares of common stock, 3,856,942 shares of common stock
immediately issuable upon conversion of 5,500 shares of Series B
convertible preferred stock (representing beneficial ownership of 100% of
the outstanding shares of such class of stock) and 1,157,083 shares
issuable upon exercise of certain warrants to purchase common stock with
an exercise price of $15.69 per share. TCV VI, L.P. (“TCV VI”)
is the record holder of 5,455.95 shares of Series B convertible preferred
stock, convertible into 3,826,051 shares of common stock, and warrants to
purchase 1,147,816 shares of common stock. TCV Member Fund,
L.P. (“Member Fund”) is the record holder of 44.05 shares of Series B
convertible preferred stock, convertible into 30,800 shares of common
stock and warrants to purchase 9,267 shares of common
stock. TCV VI Management, L.L.C. (“TCV VI Management”) is the
record holder of 12,424 shares of common stock. Technology
Crossover Management VI, L.L.C. (“TCM VI”) is the sole general partner of
TCV VI and a general partner of Member Fund. Messrs. Jay C.
Hoag, Richard H. Kimball, John L. Drew, Jon Q. Reynolds, William J.G.
Griffith IV and Robert W. Trudeau are the Class A Members of TCM VI and
Members of TCV VI Management. Messrs. Hoag, Kimball, Drew,
Reynolds, Griffith and Trudeau and TCM VI disclaim beneficial ownership of
these shares except to the extent of their respective pecuniary interests
therein. The total percentage of common stock outstanding for
TCV VI and Member Fund is calculated on an as converted basis with the
number of warrants and Series B preferred shares added to both the
numerator and the denominator. Does not include
24,897 shares that are to vest after May 30, 2010 pursuant to an
outstanding RSU grant to Mr. Marshall which was assigned to funds
affiliated with Technology Crossover Ventures. The principal
business address of Technology Crossover Ventures and each person or
entity listed in this note is 528 Ramona Street, Palo Alto,
California 94301.
|
(4)
|
Includes
2,067,716 shares owned directly by Mr. Cramer; 1,754,538 shares owned by
Cramer Partners, L.L.C.; and 251,751 shares issuable to Mr. Cramer upon
exercise of options within 60 days of March 31, 2010. Does not
include 316,030 shares that are to vest after May 30, 2010 pursuant to
outstanding RSU and option grants.
|
(5)
|
According
to Harvest Capital Strategies LLC’s filing with the SEC on Schedule 13G
dated as of December 31, 2009, Harvest Capital Strategies LLC acts as the
investment advisor of one or more investment partnerships, pooled
investment vehicles and/or one or more client accounts. Harvest
Capital Strategies LLC has been granted authority to dispose of and vote
the securities held by it. The principal business address of
Harvest Capital Strategies LLC is 600 Montgomery Street, Suite 2000, San
Francisco,
California 94111.
|
(6)
|
The
principal business address of Columbia Wanger Asset Management, L.P. is
227 West Monroe Street, Suite 3000, Chicago
Illinois 60606.
|
(7)
|
According
to Munder Capital Management’s filing with the SEC on Schedule 13G dated
as of December 31, 2009, Munder is beneficial owner of such stock on
behalf of numerous clients, none of which has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, more than 5% of the Company’s common stock. The
principal business address of Munder Capital Management is Munder Capital
Center, 480 Pierce Street, Birmingham,
Minnesota 48009.
|
(8)
|
Includes
300,389 shares owned directly by Dr. Peretz. Also includes the
following 1,778,088 shares, over which Dr. Peretz has sole voting and
dispositive power: 1,055,541 shares owned by Peretz Partners,
L.L.C. (“PP”), of which Dr. Peretz is manager; 380,112 shares held
directly or indirectly by Peretz Family Investments, L.P. (“PFI”); and
42,046 shares held directly by Crimson Investments III L.P. (“Crimson”)
representing Dr. Peretz’s beneficial ownership of a majority of the
partnership interests in Crimson. The foregoing shares include
25,305 shares that were received as merger consideration from the Company
in connection with the acquisition of Kikucall, Inc. (“Kikucall”) and that
are currently being held in escrow pending disbursement to the applicable
record holder subject to post-closing adjustments. Dr. Peretz
hereby expressly disclaims beneficial ownership of shares held by PP, PFI,
and Crimson. Also includes the following shares, over which Dr.
Peretz has shared voting and dispositive power: 18,174 shares
held by a trust of which Dr. Peretz is a co-trustee; 73,618 shares held by
a trust for the benefit of Dr. Peretz; and 1,000 shares held by a trust
for the benefit of one of Dr. Peretz’s children, for which Dr. Peretz is a
co-trustee. Does not include 24,897 shares that are to vest
after May 30, 2010 pursuant to an outstanding RSU
grant.
|
(9)
|
According
to Dimensional Fund Advisors LP’s filing with the SEC on Schedule 13G
dated as of December 31, 2009, Dimensional Fund Advisors LP furnishes
investment advice to four investment companies registered under the
Investment Company Act of 1940, and serves as investment manager to
certain other commingled group trusts and separate accounts (such
investment companies, trusts and accounts, collectively referred to as the
“Funds”). In certain cases, subsidiaries of Dimensional Fund
Advisors LP may act as an adviser or sub-adviser to certain
Funds. In its role as investment advisor, sub-adviser and/or
manager, neither Dimensional Fund Advisors LP or its subsidiaries
(collectively, “Dimensional”) possess voting and/or investment power over
the securities of the Company that are owned by the Funds, and may be
deemed to be the beneficial owner of the shares of the Company held by the
Funds. However, all securities reported above are owned by the
Funds. Dimensional disclaims beneficial ownership of such
securities. The principal business address of Dimensional Fund
Advisors LP is Palisades West, Building One, 6300 Bee Cave Road, Austin,
Texas 78746.
|
(10)
|
Consists
of 145,554 shares owned directly by Mr. Otte, of which 3,139 shares were
received as merger consideration from the Company in connection with the
acquisition of Kikucall and are currently being held in escrow pending
disbursement to the applicable record holder subject to post-closing
adjustments. Does not include 650,000 shares that are to vest
after May 30, 2010 pursuant to an outstanding RSU
grant.
|
(11)
|
Consists
of 8,655 shares owned directly by Ms. Ballowe. Does not include
24,897 shares that are to vest after May 30, 2010 pursuant to an
outstanding RSU grant.
|
(12)
|
Consists
of 47,401 shares owned directly by Mr. Gruver and 20,800 shares owned by
Mr. Gruver’s spouse. Does not include 24,897 shares that are to
vest after May 30, 2010 pursuant to an outstanding RSU
grant.
|
(13)
|
Consists
of 24,459 shares owned directly by Mr. Irwin. Does not include
24,897 shares that are to vest after May 30, 2010 pursuant to an
outstanding RSU grant.
|
(14)
|
RSUs
granted to Mr. Marshall in connection with his service as a director of
the Company were assigned to funds affiliated with Technology Crossover
Ventures. See Note 3.
|
(15)
|
Does
not include 175,000 shares that are to vest after May 30, 2010 pursuant to
an outstanding RSU grant.
|
(16)
|
Consists
of 14,835 shares owned by Mr. Broitman. Does not include 55,833
shares that are to vest after May 30, 2010 pursuant to outstanding RSU
grants.
|
(17)
|
Each
of Messrs. Clarke, Ashman, Morrow and Elkes ceased to be employees of the
Company in 2009. As of March 31, 2010, no such individual held
any outstanding options or RSUs from the Company and the Company does not
have a reasonable basis of estimating how many shares, if any, of the
Company’s common stock were beneficially owned as of March 31, 2010 by
such individual (or, in the case of Mr. Morrow, who died in February 2010,
by his estate, if any).
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires the Company’s directors and executive officers, and persons who own
more than 10% of the Company’s outstanding common stock, to file initial reports
of ownership and reports of changes in ownership of common stock with the
SEC. Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file.
Based
solely on its review of such reports received by the Company with respect to
fiscal 2009 and written representations from such reporting persons, the Company
believes that all reports required to be filed under Section 16(a) have been
timely filed by such persons, except that grants made by the Company in January
2009 to Eric Ashman, Thomas J. Clarke, Jr., James Cramer, Steven Elkes, William
Gruver, Jay Hoag, Derek Irwin, David Morrow, Daryl Otte, Martin Peretz, Teresa
Santos and Jeffrey Sonnenfeld were not timely filed; the Company in April 2010
filed Forms 4 for such grants to its then-current directors and officers,
Messrs. Cramer, Gruver, Irwin and Otte and Dr. Peretz, but does not believe that
Form 4 or 5 filings have been made with respect to the other
grantees. In addition, a Form 4 was filed one day late for a sale by
Mr. Cramer in 2009; a Form 4 for each of Ronni Ballowe and Christopher Marshall
were filed late related to an RSU grant; and four Forms 4 were filed late with
respect to sales on six dates in 2009 by Dr. Peretz.
PROPOSAL 2
APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THESTREET.COM, INC.
2007
PERFORMANCE INCENTIVE PLAN
You are being asked to approve the
amendment and restatement of our 2007 Performance Incentive Plan (the “2007
Plan”). The amendment (the “Amendment”) will increase the number of
shares of our common stock that may be issued by 2,000,000
shares. Prior to this amendment, the 2007 Plan authorized the
issuance of up to 2,250,000 shares of our common stock, bringing the cumulative
number of shares issuable under the 2007 Plan from its inception to
4,250,000. The 2007 Plan authorizes the grant of stock options, stock
appreciation rights (SARs), restricted stock, restricted stock units (RSUs),
other stock-based awards, and cash performance awards. The Amendment
also provides that all of the 2,000,000 shares being added by the Amendment may
be used for any of the forms of awards authorized under the plan, including
incentive stock options; prior to the Amendment the 2007 Plan authorized a
maximum of 1,000,000 shares for grants of incentive stock options.
Approval of the amendment and
restatement of the 2007 Plan also constitutes re-approval of the material terms
of the 2007 Plan for purposes of Section 162(m) of the tax code. The
2007 Plan has been structured in such a manner that equity awards and cash
performance awards made under it can satisfy the requirements of
“performance-based” compensation within the meaning of Section 162(m) of
the tax code, while also permitting awards that do not satisfy these
requirements. In general, under Section 162(m) of the tax code,
in order for the Company to be able to deduct compensation in excess of
$1 million paid in any one year to any of specified executive officers,
such compensation must qualify as “performance-based.” One of the
requirements of performance-based compensation for purposes of
Section 162(m) is that the material terms of the performance goals under
which compensation may be paid must be disclosed to and approved by stockholders
within five years before the date of grant. Those material terms were
approved by our stockholders upon the original approval of the 2007 Plan in
2007. Approval of the amendment and restatement of the 2007 Plan
would enable awards that qualify as “performance-based” under Section
162(m) to be granted under the 2007 Plan until the Company’s annual meeting held
in 2015 (and the Amendment language would reflect this date). In
November 2009, the Board amended the definition of change in control in a manner
deemed to be not material. No other changes to the 2007 Plan are
contained in the Amendment.
In April 2010, the Company’s
Compensation Committee recommended and the Company’s full Board adopted the
Amendment, subject to shareholder approval. The Company’s
Compensation Committee and the full Board believe that in order to successfully
attract and retain the best possible candidates, we must continue to offer a
competitive equity incentive program. As of March 31, 2010, 470,716
shares of our common stock remained available for future grant of equity awards
under the 2007 Plan, a number that our Compensation Committee and full Board
believes to be insufficient to meet our anticipated needs.
The following summary of the 2007 Plan
as proposed to be amended and restated is qualified in its entirety by the full
text of the 2007 Plan as proposed to be amended and restated, which is included
as Appendix A to this Proxy Statement.
Description of the 2007 Plan
Purpose.
The
purpose of the 2007 Plan is to enable the Company to attract and motivate highly
qualified employees, directors, consultants, and outside contributors to the
Company’s products and services, align their financial interests with long-term
shareholder value creation, reward exceptional performance, and provide for a
correspondingly negative impact in the event of underperformance.
Eligibility
.
Awards may be
granted to current and prospective employees, directors, consultants and outside
contributors to the Company’s products and services.
Administration
.
The 2007 Plan
will continue to be administered by a committee of the Board consisting of
non-employee directors (the “Committee”), except that the full Board will
continue to administer the 2007 Plan as it relates to awards to non-employee
directors. (References to the Committee in this description include
the Board with respect to non-employee director awards.) The
Committee has the authority to establish rules and guidelines for the
administration of the 2007 Plan; select the individuals to whom awards are
granted; determine the types of awards to be granted and the number of shares or
amount of cash covered by such awards; set the terms and conditions of awards;
amend awards; interpret the 2007 Plan and award documents; and make all
determinations necessary for the administration of the 2007 Plan. The
Committee may delegate to a committee of two or more officers the authority to
grant awards other than to executive officers and directors, provided that the
Committee specifies the total number of shares as to which awards may be granted
under such a delegation.
Shares Available
for Awards
.
Assuming
shareholders approve this proposal, a cumulative total of 4,250,000 shares of
our common stock will have been reserved for issuance under the 2007 Plan (in
addition to any unused shares from the Company’s 1998 Stock Incentive Plan,
which was rolled into the 2007 plan upon its original adoption). If
any shares covered by an award under the 2007 Plan are forfeited or otherwise
terminated without delivery of shares, then the shares covered by that award
will again be available for future awards under the plan. Shares withheld from
awards for the payment of tax withholding obligations, shares surrendered to pay
the exercise price of stock options, and shares that were not issued as a result
of the net exercise or net settlement of stock options or stock appreciation
rights will also become available for future awards under the
plan. No individual may be granted any combination of stock options,
SARs, restricted stock, RSUs, or other stock-based awards with respect to more
than 1,000,000 shares in any fiscal year. The plan limits do not
apply to any shares that may be issued under awards assumed by the Company in a
corporate acquisition or to dividend equivalents that may be awarded as part of
other awards and paid in stock.
Stock Options and
Stock Appreciation Rights
.
The Committee
may award stock options (which may be nonqualified options or incentive stock
options) or stock appreciation rights, each with a maximum term of ten
years. Each stock option or SAR must have an exercise price not less
than the fair market value of the Company’s stock on the date of
grant. Repricing is prohibited. The Committee will
establish the vesting schedule for the award as well as the method of payment of
the option exercise price, which may include cash, shares, broker-assisted
cashless exercise, and net exercise. No more than a cumulative total
of 3,000,000 shares may be issued with respect to incentive stock
options.
Restricted Stock
and Restricted Stock Units
.
The Committee
may award restricted stock and RSUs and establish the conditions on which they
vest, which may include continued employment and/or satisfaction of performance
objectives. The Committee may provide for payment of an RSU award
upon vesting or at a later date. The Committee may determine whether
unvested awards entitle the holder to receive dividends or dividend equivalents,
and if so, the terms on which such amounts will be paid.
Other Stock-Based
Awards
.
The Committee
may grant other stock-based awards that are denominated or payable in shares or
valued in whole or in part by reference to shares, under such terms and
conditions as the Committee may determine.
Cash
Awards
.
The Committee
may grant cash awards which entitle the award holder to receive cash upon the
satisfaction of performance objectives and other terms and conditions set forth
in the award. The performance objectives and amount of the award may
be stated as a range of amounts payable upon attainment of specified levels of
satisfaction of the performance objectives, and may relate to performance
periods of one year or multiple years. The Committee may provide for payment of
the award at the end of the performance period or at a later date, and may
provide for dividend equivalents or other earnings to be credited on deferred
amounts. The maximum cash award which may be paid to any individual
in any fiscal year (measured at the end of the performance period ending in the
fiscal year, and without regard to increase in value of the award during any
deferral period) is $7 million.
Performance
Awards
. The Committee may grant performance awards, which may
be cash or other awards authorized by the 2007 Plan, which are payable upon the
achievement of performance goals during performance periods, as established by
the Committee. Performance awards may, but need not, be structured to comply
with the requirements for deductible “performance-based compensation” under
Section 162(m) of the Internal Revenue Code. Performance awards may be based on
any one or more of the following performance measures, which may be applied to
the Company as a whole or to a subsidiary, business unit, business segment or
business line:
|
(1)
|
net
earnings or net income (before or after
taxes);
|
|
(3)
|
net
sales or revenue growth;
|
|
(4)
|
gross
revenues (and/or gross revenue growth) and/or mix of revenues among the
Company’s business activities;
|
|
(5)
|
net
operating profit (or reduction in operating
loss);
|
|
(6)
|
return
measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or
revenue);
|
|
(7)
|
cash
flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity, and cash flow return on
investment);
|
|
(8)
|
earnings
before or after taxes, interest, depreciation, and/or
amortization;
|
|
(9)
|
gross
or operating margins;
|
|
(10)
|
productivity
ratios (and/or such ratios as compared to various stock market
indices);
|
|
(11)
|
stock
price (including, but not limited to, growth measures and total
shareholder return);
|
|
(12)
|
stock
price and market capitalization ratios (including, but not limited to,
price-to-earnings ratio and enterprise
multiple);
|
|
(15)
|
operating
efficiency;
|
|
(17)
|
customer
satisfaction;
|
|
(18)
|
employee
satisfaction or retention;
|
|
(19)
|
development
and implementation of employee or executive development programs
(including, but not limited to, succession
programs);
|
|
(20)
|
working
capital targets;
|
|
(21)
|
economic
value added or EVA
®
(net operating profit after tax minus the sum of capital multiplied
by the cost of capital);
|
|
(23)
|
debt
to equity ratio;
|
|
(24)
|
strategic
business goals relating to acquisitions, divestitures and joint
ventures;
|
|
(25)
|
business
goals relating to web sites operated by the
Company;
|
|
(26)
|
business
goals relating to advertising on Company web sites;
and
|
|
(27)
|
business
goals relating to subscriptions to Company products and
services.
|
Each goal may be expressed as an
absolute measure, as a measure of improvement relative to prior performance, or
as a measure of comparable performance relative to a peer group of companies or
published or special index.
Change in
Control
. The Committee may provide that awards will become
fully or partially vested upon a change in control and may provide that awards
will be paid as soon afterwards as permitted under the tax laws. A
change in control is deemed to occur in very general terms upon (1) the
acquisition of a majority of the Company’s voting securities, (2) the failure of
the current directors (and any directors approved by them) to constitute a
majority of the Company’s board, (3) a merger in which the Company’s
shareholders before the transaction fail to own at least a majority of the
voting power of the surviving corporation or the Company’s directors fail to
constitute at least a majority of the board of the surviving corporation, (4)
the sale of substantially all of the Company’s assets, and (5) shareholder
approval of the liquidation of the Company.
Adjustments.
In
the event of certain corporate transactions or events affecting the number or
type of outstanding common shares of the Company, including, for example, a
recapitalization, stock split, reverse stock split, reorganization, merger,
spin-off or distribution of assets, the Board will make adjustments as it deems
appropriate to prevent dilution or enlargement of benefits. These
adjustments include changing the number and type of shares to be issued under
the 2007 Plan; changing the per-participant limitation on awards; and changing
the number of shares (or amount of other property) subject to outstanding awards
and the purchase or exercise price of outstanding awards.
Amendments
.
The Board may
amend the 2007 Plan from time to time. The Board will seek
shareholder approval of material amendments to the 2007 Plan as may be required
by law, regulation or stock exchange rules. The Committee may waive conditions
or amend the terms of outstanding awards, subject to certain limitations, such
as the prohibition on repricing.
Termination.
The
Plan is of unlimited duration. However no award intended to qualify
as performance-based compensation under Section 162(m) of the tax code (other
than stock options and SARs) may be granted after the Company’s annual meeting
held in 2015 unless the material terms of the performance goals have been
approved by shareholders within the five years prior to such
grant. In addition, the Board may discontinue the 2007 Plan at any
time, subject to any rights under previously-granted awards.
Federal Income Tax Consequences
The following is a very general
description of some of the basic tax principles that apply to awards under the
2007 Plan. The grant of an option or stock appreciation right will
create no tax consequences for the participant or the Company. A
participant will have no taxable income upon exercise of an incentive stock
option, except that the alternative minimum tax may apply. Upon
exercise of a non-qualified option, a participant generally must recognize
ordinary income equal to the fair market value of the shares acquired minus the
exercise price. Upon a disposition of shares acquired by exercise of
an incentive stock option before the end of the applicable incentive stock
option holding periods, the participant generally must recognize ordinary income
equal to the lesser of (1) the fair market value of the shares at the date of
exercise minus the exercise price or (2) the amount realized upon the
disposition of the option shares minus the exercise price. Otherwise,
a participant’s disposition of shares acquired upon the exercise of an option
generally will result in capital gain or loss. Other awards under the
2007 Plan, including stock appreciation rights, restricted stock, RSUs and cash
awards, generally will result in ordinary income to the participant at the later
of the time of delivery of cash or shares, or the time that either the risk of
forfeiture or restriction on transferability lapses on previously delivered
shares or other property.
Except as discussed below, the Company
generally will be entitled to a tax deduction equal to the amount recognized as
ordinary income by the participant in connection with an award, but will be
entitled to no tax deduction relating to amounts that represent a capital gain
to a participant. Thus, the Company will not be entitled to any tax
deduction with respect to an incentive stock option if the participant holds the
shares for the incentive stock option holding periods.
Section 162(m) of the Internal Revenue
Code generally limits the tax deductibility of compensation paid to each of
certain executive officers to $1 million per year, but allows deductions in
excess of this amount for “performance-based compensation” as defined under
Section 162(m). The Company intends that options and SARs granted
under the 2007 Plan will qualify as performance-based compensation under Section
162(m). The Company intends to make all or a portion of the future
annual bonus awards to executive officers as cash performance awards under the
2007 Plan that qualify for deductibility under Section 162(m). A
number of requirements must be met in order for particular compensation to so
qualify, however, so there can be no assurance that such compensation under the
2007 Plan will be fully deductible under all circumstances. In
addition, other awards under the 2007 Plan, such as restricted stock, RSUs and
other stock-based awards, generally may not qualify, so that compensation paid
to executive officers in connection with such awards may not be
deductible.
This general tax discussion is intended
for the information of shareholders considering how to vote with respect to this
proposal and not as tax guidance to participants in the 2007
Plan. Different tax rules may apply to specific participants and
transactions under the 2007 Plan.
Miscellaneous
On April 8, 2010, the closing price of
the Company’s common stock as reported on the Nasdaq Stock Exchange was
$3.66.
Approval of the amendment and
restatement of the 2007 Plan requires the affirmative vote of a majority of the
total votes present at the meeting (in person or by proxy) and entitled to vote
on the proposal. Abstentions will have the effect of a vote against
the proposal and broker non-votes will have no effect.
The Board of Directors recommends that
stockholders vote FOR approval of the amendment and restatement of the Company’s
2007 Performance Incentive Plan.
EQUITY
COMPENSATION PLAN INFORMATION
The following table shows shares
reserved for issuance for outstanding awards granted under the 2007 Plan and the
Company’s 1998 Stock Incentive Plan, our only equity compensation plans, as of
December 31, 2009. This table does not include the shares which will become
issuable under the proposed amendment of the 2007 Plan upon its approval by
shareholders.
Plan Category
|
|
Number Of Securities
To Be Issued Upon
Exercise Of
Outstanding
Options, Warrants
And
Rights
(a)
|
|
|
Weighted Average
Exercise Price Of
Outstanding
Options,
Warrants And
Rights
(b)
|
|
|
Number Of Securities
Remaining Available
For
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected In Column (a))
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by stockholders
|
|
|
2,670,220
|
(1)
|
|
$
|
2.12
|
(2)
|
|
|
964,614
|
(3)
|
Equity
compensation plans not approved by stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
2,670,220
|
(1)
|
|
$
|
2.12
|
(2)
|
|
|
964,614
|
(3)
|
(1)
|
Includes
714,030 shares subject to outstanding stock options and 1,956,190 shares
subject to outstanding RSU awards.
|
(2)
|
The
weighted average exercise price does not take RSU awards into account
because such awards have no exercise
price.
|
(3)
|
These
shares are available for issuance under the 2007 Plan (which includes
unused shares rolled into that plan from the 1998 Stock Incentive Plan).
The 2007 Plan provides for the issuance of shares pursuant to grants of
stock options, stock appreciation rights, restricted stock, RSUs and other
stock-based awards.
|
PROPOSAL
3
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee is responsible for the appointment of the Company’s independent
registered public accounting firm. The Audit Committee has selected
KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2010 and has further directed that
management submit the selection of such independent registered public accounting
firm for ratification by the stockholders at the Annual Meeting.
Representatives
of KPMG are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
The
Board of Directors recommends that stockholders vote FOR the ratification of
KPMG LLP as the Company’s independent registered public accounting
firm.
Fees
of Independent Registered Public Accountants
The
Company’s independent registered public accounting firm was KPMG with respect to
fiscal year 2009 and Marcum LLP (formerly known as Marcum & Kliegman LLP
(“Marcum”)) with respect to fiscal year 2008. The following table
sets forth the aggregate fees billed to the Company by its independent
registered public accounting firm for services rendered with respect to the
fiscal years ended December 31, 2009 and 2008:
|
|
2009
|
|
|
2008
|
|
|
|
KPMG LLP
|
|
|
Marcum &
Kliegman
LLP
|
|
Audit
fees
|
|
$
|
460,000
|
|
|
$
|
335,000
|
|
Audit-related
fees
|
|
|
515,000
|
|
|
|
91,611
|
|
Tax
fees
|
|
|
60,000
|
|
|
|
—
|
|
All
other fees
|
|
|
7,478
|
|
|
|
33,822
|
|
Total
Fees
|
|
$
|
1,042,478
|
|
|
$
|
460,444
|
|
In
accordance with SEC rules, audit fees are fees that the Company paid to its
independent registered public accounting firm for the audit of the Company’s
annual financial statements included in the Annual Report on Form 10-K and
review of financial statements included in the Quarterly Reports on Form 10-Q,
for the audits of the Company’s internal control over financial reporting with
the objective of obtaining reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects, and
for services that are normally provided by the auditor in connection with
statutory and regulatory filings or engagements.
Audit-related
fees for 2009 consisted of fees relating to examination of the Company’s
accounting for its former Promotions.com subsidiary. Audit-related
fees for 2008 primarily consisted of fees relating to review of continuous
disclosure documents and research regarding proper accounting treatment of
restricted stock units.
Tax fees
for 2009 related to preparation and filing of the Company’s fiscal 2008 tax
returns (the work in 2008 with respect to the Company’s fiscal 2007 tax returns
was not performed by Marcum).
All other
fees for 2009 consisted of fees relating to incremental tax consulting
services. All other fees for 2008 primarily consisted of fees
relating to due diligence discussions regarding mergers and
acquisitions.
The Audit
Committee approves, on a case-by-case basis, all audit, review or attest
services and permitted non-audit services (including the fee arrangements and
terms in respect of such services) to be performed by the Company’s independent
registered public accounting firm prior to its engagement to perform such
services.
Information
Regarding Change of Independent Registered Public Accounting Firm
As
previously disclosed by the Company, on February 26, 2009, the Audit Committee
engaged KPMG to serve as the Company's independent registered public accounting
firm for the year ended December 31, 2009, and notified Marcum that it would not
re-engage Marcum as the Company's independent registered public accounting
firm. The decision not to re-engage Marcum and to select KPMG was the
result of having undertaken our policy-mandated periodic RFP process conducted
by the Audit Committee in the ordinary course of business.
Marcum's
reports on the Company's consolidated financial statements for the fiscal years
ended December 31, 2008 and 2007, as included within the Forms 10-K filed by the
Company on March 13, 2009 (the “Original 2008 Form 10-K”) and on March 14, 2008
(the “2007 Form 10-K”), respectively, did not contain an adverse opinion or
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles. In addition, Marcum's reports
on the effectiveness of internal controls over financial reporting as of
December 31, 2008 and 2007, included within the Original 2008 Form 10-K and the
2007 Form 10-K, respectively, did not contain an adverse opinion or disclaimer
of opinion, and were not qualified or modified as to audit scope. On
February 8, 2010, the Company filed an amendment on Form 10-K/A (the “2008 Form
10-K/A”) in order to restate and correct certain financial information
previously included within the Original 2008 Form 10-K. Marcum's
report on the Company's consolidated financial statements for the fiscal years
ended December 31, 2008 and 2007, as included within the 2008 Form 10-K/A, did
not contain an adverse opinion or disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting principles; however,
Marcum's report on the effectiveness of internal controls over financial
reporting as of December 31, 2008 included within the 2008 Form 10-K/A opined
that, as the Company had subsequently determined, the Company did not maintain
effective internal control over financial reporting as of December 31,
2008. In addition, KPMG’s report on the effectiveness of internal
controls over financial reporting as of December 31, 2009, as included within
the Form 10-K filed by the Company on March 30, 2010 (the “2009 Form 10-K”),
opined that, as the Company had determined, the Company did not maintain
effective internal control over financial reporting as of December 31,
2009. KPMG’s report on the Company's consolidated financial
statements for the fiscal year ended December 31, 2009, as included within the
2009 Form 10-K, did not contain an adverse opinion or disclaimer of opinion, and
was not qualified or modified as to uncertainty, audit scope or accounting
principles.
During
the fiscal years ended December 31, 2008 and 2007 and through the filing of the
Original 2008 Form 10-K, (i) there were no disagreements with Marcum on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure that, if not resolved to the satisfaction of Marcum,
would have caused it to make reference to the subject matter of the disagreement
in connection with its reports on the Company's consolidated financial
statements for such years, and (ii) there were no "reportable events" as defined
in Item 304(a)(1)(v) of Regulation S-K. The Company provided Marcum
with a copy of the foregoing disclosures at the time of the filing of the
Company's Current Reports on Form 8-K reporting the change in accounting
firms. Since January 1, 2007 and through February 26, 2009, the
Company did not consult with KPMG regarding: (i) the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company's financial
statements, and KPMG did not provide either a written report or oral advice that
KPMG concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing or financial reporting issue; or (ii)
any matter that was either the subject of a disagreement or a reportable event
(as such terms are used in Item 304(a)(1) of Regulation S-K).
2009
Report of the Audit Committee
The
primary function of the Audit Committee is to oversee the Company’s accounting,
auditing and financial reporting processes. The Audit Committee operates
pursuant to a written charter adopted by the Board, which is publicly available
on the Investor Relations section of the Company’s web site at
http://www.thestreet.com/investor-relations/index.html
, under “Corporate
Governance.”
Management
is responsible for the Company’s financial statements and overall reporting
process, including the system of internal controls. In addition to
preparing the Company’s financial statements in accordance with U.S. generally
accepted accounting principles, management is responsible for assessing the
effectiveness of the Company’s internal control over financial
reporting. The Company’s independent registered public accounting
firm is responsible for conducting annual audits and quarterly reviews of the
Company’s financial statements and expressing an opinion as to the conformity of
the annual financial statements with generally accepted accounting principles,
as well as expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting.
Generally,
at meetings of the Audit Committee held during fiscal 2009, the Audit Committee
met with senior members of the Company’s finance department and members of the
audit engagement team of the Company’s independent registered public
accountant. The Audit Committee also met regularly with the Company’s
general counsel to discuss legal, corporate governance and regulatory matters
that concern the Company. In the performance of its oversight
functions, the Audit Committee reviewed and discussed with management and
representatives of the independent registered public accounting firm the audited
financial statements as of and for the year ended December 31, 2009, including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the Company’s consolidated financial statements as well as the
auditors’ evaluation of the Company’s internal control over financial
reporting. The Audit Committee also met with representatives of the
independent registered public accounting firm in private sessions, without
members of the Company’s management being present, to discuss accounting,
disclosure and internal control issues, including matters that the auditors are
required to discuss with the Committee as required by professional
standards. The Audit Committee discussed with the independent
registered public accounting firm its independence and received the written
disclosures and letter from its independent registered public accounting firm as
required by professional standards.
Pursuant
to the Audit Committee Charter, the Audit Committee is also responsible for the
appointment of the Company’s independent registered public accounting firm,
evaluation of that firm’s performance and, when circumstances warrant,
termination of that firm’s engagement. Accordingly, the Audit
Committee met with senior members of the Company’s financial management team in
private sessions to discuss KPMG’s performance.
It is not
the duty or responsibility of the Audit Committee to conduct auditing or
accounting reviews and procedures. In performing their oversight
responsibility, members of the Audit Committee rely without independent
verification on the information provided to them and on the representations made
by management and the independent registered public accounting
firm. Accordingly, the Audit Committee’s oversight does not provide
an independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee’s
considerations and discussions do not assure that the audit of the Company’s
financial statements has been carried out in accordance with generally accepted
auditing standards or that the financial statements are presented in accordance
with generally accepted accounting principles.
Based on
the review and discussions described in this report, and subject to the
limitations on the role and responsibilities of the Audit Committee referred to
above and in the Audit Committee Charter, the Audit Committee recommended to the
Board that the audited financial statements be included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009, filed with the
Securities and Exchange Commission.
Submitted
by the Audit Committee of the Company’s Board of Directors
Derek
Irwin, Chairman
Ronni
Ballowe
William
R. Gruver
STOCKHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
Stockholders
may submit proposals on matters appropriate for stockholder action at subsequent
annual meetings of the Company consistent with rules promulgated under the
Exchange Act, which in certain circumstances may call for the inclusion of
qualifying proposals in the Company’s Proxy Statement. For such
proposals to be considered for inclusion in the Proxy Statement and proxy
relating to the Company’s Annual Meeting of Stockholders in 2011, all applicable
requirements of Rule 14a-8 must be satisfied and such proposals must be received
by the Company no later than December 18, 2010. Such proposals should
be directed to TheStreet.com, Inc., Attention: Secretary, 14 Wall Street, New
York, New York 10005.
Except in
the case of proposals made in accordance with Rule 14a-8, the Company’s By-laws
require that stockholders desiring to bring any business before the Company’s
Annual Meeting of Stockholders in 2011 deliver written notice thereof to the
Company no earlier than February 28, 2011 and no later than March 28, 2011, and
comply with all other applicable requirements of the By-laws. However, in the
event that the Annual Meeting of Stockholders in 2011 is called for a date that
is more than 30 days before or after the anniversary date of the Annual Meeting
of Stockholders in 2010, notice by the stockholder in order to be timely must be
received not later than the close of business on the 10
th
day
following the date on which notice of the date of the Annual Meeting of
Stockholders in 2011 was mailed to stockholders or made public, whichever first
occurs. In order for a proposal made outside of the requirements of
Rule 14a-8 to be “timely” within the meaning of Rule 14a-4(c), such proposal
must be received by the Company in accordance with the time limits set forth in
the foregoing advance-notice By-law provision.
The
advance notice by stockholders must include the stockholder’s name and address;
a description of the class and number of shares of capital stock of the Company
owned beneficially or of record by the stockholder; a representation that the
stockholder is a holder of record of the Company’s common stock entitled to vote
at such meeting (or if the record date for such meeting is subsequent to the
date required for such stockholder notice, a representation that the stockholder
is a holder of record at the time of such notice and intends to be a holder of
record on the date of such meeting) and intends to appear in person or by proxy
at such meeting to propose such business; a brief description of the proposed
business and the reason for conducting such business at the annual meeting; and
a description of all arrangements or understandings between the stockholder and
any other person or persons (including their names) in connection with the
proposed business and any material interest of such stockholder in the proposed
business. In the case of nominations for election to the Board,
certain information regarding the nominee must also be
provided.
OTHER
MATTERS
The last
date for timely filing stockholder proposals relating to the Annual Meeting
under the Company’s By-laws was March 29, 2010. As of the date of
this Proxy Statement, the Board knows of no matters other than those described
herein that will be presented for consideration at the Annual
Meeting. However, should any other matters properly come before the
Annual Meeting or any adjournment or postponement thereof, it is the intention
of the persons named in the accompanying proxy card to vote in accordance with
their best judgment in the interests of the Company.
The
Company’s Annual Report on Form 10-K with respect to the fiscal year ended
December 31, 2009, which contains audited financial statements along with other
information about the Company, is not incorporated in the Proxy Statement and is
not to be deemed a part of the proxy soliciting material.
It is
important that the proxies be returned promptly and that your shares be
represented. Stockholders are urged to mark, date, sign and promptly
return the accompanying proxy card in the enclosed envelope or vote their shares
by telephone or over the Internet.
By Order
of the Board of Directors,
Gregory
E. Barton
Secretary
New York,
New York
April 15,
2010
APPENDIX
A
THESTREET.COM,
INC.
2007
PERFORMANCE INCENTIVE PLAN
(As
Amended and Restated effective May 27, 2010)
SECTION
1
|
Compensation
Philosophy and Purpose
|
It is the philosophy of the
Compensation Committee of the Board of Directors of TheStreet.com, Inc. (the
“
Company
”)
to enhance shareholders’ long term interests by (i) motivating executive
officers to achieve the highest levels of performance; (ii) recruiting and
retaining talented employees; (iii) competing with rapidly growing, respected
public companies in businesses similar to ours within clear and rational
guidelines; and (iv) creating a compensation environment driven by
accountability.
In furtherance of this philosophy, the
purpose of TheStreet.com, Inc. 2007 Performance Incentive Plan (the “
Plan
”) is
to enable the Company and its Related Companies (as defined below) to attract
and motivate highly qualified employees, directors, consultants and outside
contributors to the products and services of the Company and its Related
Companies, align their financial interests with long-term shareholder value
creation, reward exceptional performance, and provide for a correspondingly
negative impact in the event of underperformance. For purposes of the Plan, a
“
Related
Company
” means any corporation, partnership, joint venture or other
entity in which the Company owns, directly or indirectly, at least a 20%
beneficial ownership interest.
SECTION
2
|
Types
of Awards
|
Awards under the Plan may be in the
form of Stock Options, Stock Appreciation Rights (SARs), Restricted Stock,
Restricted Stock Units (RSUs), Other Stock-Based Awards, and Cash
Awards.
Awards may be free-standing or granted
in tandem. If two awards are granted in tandem, the award holder may exercise
(or otherwise receive the benefit of) one award only to the extent he or she
relinquishes the tandem award.
3.1 The
Plan shall be administered (i) with respect to awards to directors who are not
employees, by the Company’s Board of Directors (the “
Board
”)
and (ii) with respect to awards to all other participants, by the Compensation
Committee of the Board or such other committee of directors as the Board shall
designate, which shall consist of not less than two directors and whose members
shall serve at the pleasure of the Board. The Board or committee of the Board
which is administering the Plan within the authority granted in the preceding
sentence is hereafter referred to as the “
Committee
.”
3.2 The
Committee shall have the following authority and discretion with respect to
awards under the Plan: to grant awards (subject to any limitations contained in
the Plan); to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall deem advisable; to interpret the terms
and provisions of the Plan and any award granted under the Plan; to make all
factual and other determinations necessary or advisable for the administration
of the Plan; and to otherwise supervise the administration of the Plan. In
particular, and without limiting its authority and powers, the Committee shall
have the authority:
(1) to
determine whether and to what extent any award or combination of awards will be
granted hereunder;
(2) to
select the employees, directors, consultants or outside contributors to whom
awards will be granted;
(3) to
determine the number of shares of the common stock of the Company (the “
Stock
”) to
be covered by each award granted hereunder subject to the limitations contained
herein;
(4) to
determine the terms and conditions of any award granted hereunder, including,
but not limited to, any vesting or other restrictions based on such performance
objectives (the “
Performance
Objectives
”), continued employment, and such other factors as the
Committee may establish, and to determine whether the Performance Objectives and
other terms and conditions of the award have been satisfied;
(5) to
determine the treatment of awards upon an award holder’s retirement, disability,
death, termination for cause or other termination of employment or
service;
(6) to
determine whether amounts equal to the amount of any dividends declared with
respect to the number of shares covered by an award (i) will be paid to the
award holder currently, or (ii) will be deferred and deemed to be reinvested or
otherwise credited to the award holder and paid at the date specified in the
award, or (iii) that the award holder has no rights with respect to such
dividends;
(7) to
amend the terms of any award, prospectively or retroactively;
provided, however
, that no
amendment shall impair the rights of the award holder without his or her written
consent; and
further
provided
, that unless specifically approved by the stockholders the
Committee shall have no power to (i) amend the terms of previously granted Stock
Options or SARs to reduce the option price or base price of such awards, or (ii)
cancel outstanding Stock Options or SARs and grant substitute Stock Options or
SARs with a lower option price or base price than the cancelled
awards;
(8) to
correct any defect, supply any omission, or reconcile any inconsistency in the
Plan or any award in the manner and to the extent it shall deem desirable to
carry out the purpose of the Plan;
(9) to
determine whether, to what extent, and under what circumstances Stock and other
amounts payable with respect to an award will be deferred either automatically
or at the election of an award holder, including providing for and determining
the amount (if any) of deemed earnings on any deferred amount during any
deferral period (in each case, subject to any restrictions imposed by Section
409A of the Internal Revenue Code (the “
Code
”);
(10) to
determine, pursuant to a formula or otherwise, the fair market value of the
Stock on a given date;
provided, however
, that
unless the Committee determines that a different measure is more appropriate,
the fair market value of the Stock shall be the closing price of the Stock (on
such exchange or market as is determined by the Committee to be the primary
market for the Stock) on the date in question or, if the date in question is not
a trading day on such market, then the trading day immediately following the
date in question;
(11) to
provide that the shares of Stock received as a result of an award shall be
subject to a right of repurchase by the Company and/or a right of first refusal,
in each case subject to such terms and conditions as the Committee may
specify;
(12) to
adopt one or more sub-plans, consistent with the Plan, containing such
provisions as may be necessary or desirable to enable awards under the Plan to
comply with the laws of other jurisdictions and/or qualify for preferred tax
treatment under such laws;
(13) to
the extent permitted by law, to delegate to a committee of two or more officers
of the Company the authority to grant awards to employees who are not officers
or directors of the Company for purposes of Section 16 of the Securities
Exchange Act of 1934;
provided, however,
that any
such delegation shall be set forth in a resolution of the Committee that
specifies the total number of shares as to which awards may be granted under
such delegation and any other limitations as may be imposed by the Committee;
and
(14) to
delegate such administrative duties as it may deem advisable to one or more of
its members or to one or more employees or agents of the Company.
3.3 The
Committee shall have the right to designate awards as “
Performance
Awards
.” The grant or vesting of a Performance Award shall be subject to
the achievement of Performance Objectives established by the Committee based on
one or more of the following criteria, in each case applied to the Company on a
consolidated basis and/or to a subsidiary, business unit, business segment or
business line, and which the Committee may use as an absolute measure, as a
measure of improvement relative to prior performance, or as a measure of
comparable performance relative to a peer group of companies or published or
special index that the Committee deems appropriate:
|
(1)
|
Net
earnings or net income (before or after
taxes);
|
|
(3)
|
Net
sales or revenue growth;
|
|
(4)
|
Gross
revenues (and/or gross revenue growth) and/or mix of revenues among the
Company’s business activities;
|
|
(5)
|
Net
operating profit (or reduction in operating
loss);
|
|
(6)
|
Return
measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or
revenue);
|
|
(7)
|
Cash
flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity, and cash flow return on
investment);
|
|
(8)
|
Earnings
before or after taxes, interest, depreciation, and/or
amortization;
|
|
(9)
|
Gross
or operating margins;
|
|
(10)
|
Productivity
ratios (and/or such ratios as compared to various stock market
indices);
|
|
(11)
|
Stock
price (including, but not limited to, growth measures and total
shareholder return);
|
|
(12)
|
Stock
price and market capitalization ratios (including, but not limited to,
price-to-earnings ratio and enterprise
multiple)
|
|
(15)
|
Operating
efficiency;
|
|
(17)
|
Customer
satisfaction;
|
|
(18)
|
Employee
satisfaction or retention;
|
|
(19)
|
Development
and implementation of employee or executive development programs
(including, but not limited to, succession
programs);
|
|
(20)
|
Working
capital targets;
|
|
(21)
|
Economic
value added or EVA
®
(net operating profit after tax minus the sum of capital multiplied
by the cost of capital);
|
|
(23)
|
Debt
to equity ratio;
|
|
(24)
|
Strategic
business goals relating to acquisitions, divestitures and joint
ventures;
|
|
(25)
|
Business
goals relating to web sites operated by the Company or a Related
Company;
|
|
(26)
|
Business
goals relating to advertising on the Company or a Related Company’s web
sites; and
|
|
(27)
|
Business
goals relating to subscriptions to the Company or a Related Company’s
products and services.
|
The Committee may provide in any Cash
Award or other Performance Award that any evaluation of performance may include
or exclude any of the following events that occurs during the performance
period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax laws, accounting principles, or
other laws or provisions affecting reported results, (iv) any reorganization and
restructuring programs, (v) extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s annual report to stockholders for the applicable year, (vi) the impact
of adjustments to the Company’s deferred tax asset valuation allowance, (vii)
acquisitions or divestitures, and (viii) foreign exchange gains and losses. To
the extent such inclusions or exclusions affect awards intended to be
performance-based within the meaning of Section 162(m) of the Code, they shall
be prescribed in a form that meets the requirements of Section
162(m).
3.4 All
determinations and interpretations made by the Committee pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and award holders.
3.5 The
Committee may act by a majority of its members at a meeting (present in person
or by conference telephone), by unanimous written consent or by any other method
of director action then permitted under the General Corporation Law of the State
of Delaware.
SECTION
4
|
Stock
Subject to Plan
|
4.1 The
total number of shares of Stock which may be issued under the Plan shall be
4,250,000 shares plus any unused shares authorized for awards under the
Company’s 1998 Stock Incentive Plan (the “
1998
Plan
”), in each case subject to adjustment as provided in Section 4.4. No
more than 3,000,000 shares may be granted with respect to incentive stock
options (subject to adjustment as provided in Section 4.4) . Shares issued under
the Plan may consist of authorized but unissued shares or shares which have been
issued and reacquired by the Company. The payment of any award in cash shall not
count against this share limit.
In connection with a merger or
consolidation of an entity with the Company or the acquisition by the Company of
property or stock of an entity, the Company may assume or grant Stock Options or
other awards in substitution for awards granted by such entity or an affiliate
thereof, and such assumed or substituted awards shall not count against the
share limit under this Plan. Any dividend equivalents that are granted with
respect to other awards under this Plan and are paid in shares shall also not
count against the share limit for the Plan.
4.2 To
the extent a Stock Option or Stock Appreciation Right terminates without having
been exercised, or an award terminates without the holder having received
payment of the award, or shares awarded are forfeited (in each case including
terminations and forfeitures of outstanding awards granted under the 1998 Plan),
the shares subject to such award shall again be available for distribution in
connection with future awards under this Plan. Shares of Stock equal in number
to the shares surrendered in payment of the option price, and shares of Stock
which are withheld in order to satisfy federal, state or local tax liability
with respect to any award, shall not count against the above limit, and shall
again be available for grants under the Plan. In the event that any Stock Option
or SAR is exercised or settled by delivery of only the net shares representing
the appreciation in the Stock, only the net shares delivered shall be counted
against the Plan’s share limit.
4.3 No
individual shall be granted Stock Options, SARs, Restricted Stock, RSUs, or
Other Stock-Based Awards, or any combination thereof with respect to more than
1,000,000 shares of Stock in any fiscal year (subject to adjustment as provided
in Section 4.4). The maximum Cash Award which may be paid to any individual in
any fiscal year (measured at the end of the performance period or periods ending
in the fiscal year, and without regard to increase in value of the award during
any deferral period) is $7,000,000.
4.4 In
the event of any merger, reorganization, consolidation, sale of substantially
all assets, recapitalization, Stock dividend, Stock split, reverse split,
spin-off, split-up, split-off, extraordinary dividend, distribution of assets or
other change in corporate structure affecting the Stock such that an adjustment
is determined by the Board in its discretion to be appropriate in order to
prevent dilution or enlargement of benefits under the Plan, then the Board
shall, in such manner as it may in its discretion deem equitable, adjust any or
all of (i) the aggregate number and kind of shares reserved for issuance under
the Plan, (ii) the number and kind of shares as to which awards may be granted
to any individual in any fiscal year or which may be granted with respect to
incentive stock options, (iii) the number and kind of shares or other property
subject to outstanding awards, and (iv) the amounts to be paid by award holders
or the Company, as the case may be, with respect to outstanding
awards.
In addition, upon the dissolution or
liquidation of the Company or upon any reorganization, merger, or consolidation
as a result of which the Company is not the surviving corporation (or survives
as a wholly-owned subsidiary of another corporation), or upon a sale of
substantially all the assets of the Company, the Board or the Committee may take
such action as it in its discretion deems appropriate to (i) subject to any
limitations imposed by Section 409A of the Code, accelerate the time when awards
vest and/or may be exercised and/or may be paid, (ii) cash out outstanding Stock
Options and/or other awards at or immediately prior to the date of such event,
(iii) provide for the assumption of outstanding Stock Options or other awards by
surviving, successor or transferee corporations or entities, (iv) provide that
in lieu of shares of Stock, the award recipient shall be entitled to receive the
consideration he or she would have received in such transaction in exchange for
such shares of Stock (or the fair market value thereof in cash), and/or (v)
provide that Stock Options and SARs shall be exercisable for a period of at
least 10 business days from the date of receipt of a notice from the Company of
such proposed event, following the expiration of which period any unexercised
Stock Options or SARs shall terminate.
No fractional shares shall be issued or
delivered under the Plan. The Committee shall determine whether the value of
fractional shares shall be paid in cash or other property, or whether such
fractional shares and any rights thereto shall be cancelled without
payment.
The Board’s determination as to which
adjustments shall be made under this Section 4.4 and the extent thereof shall be
final, binding and conclusive.
Employees, directors, and consultants
of the Company or a Related Company, and outside contributors to products and
services of the Company or a Related Company are eligible to be granted awards
under the Plan. In addition, awards may be granted to prospective employees,
directors, consultants or outside contributors but such awards shall not become
effective until the recipient’s commencement of employment or service with the
Company or Related Company. Incentive Stock Options may be granted only to
employees and prospective employees of the Company or of any parent or
subsidiary of the Company (as those terms are defined in Section 424 of the
Code). The participants under the Plan shall be selected from time to time by
the Committee, in its sole discretion, from among those eligible.
6.1 The
Stock Options awarded under the Plan may be of two types: (i) Incentive Stock
Options within the meaning of Section 422 of the Code or any successor provision
thereto; and (ii) Non-Qualified Stock Options. To the extent that any Stock
Option is either designated as a Non-Qualified Stock Option or does not qualify
as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
6.2 Subject
to the following provisions, Stock Options awarded under the Plan shall be in
such form and shall have such terms and conditions as the Committee may
determine:
(1) Option
Price. The option price per share of Stock purchasable under a Stock Option
shall be determined by the Committee, but shall not be less than the fair market
value of the Stock on the date of grant of the Stock Option. The date of grant
of any Stock Option shall be the date of Committee approval of the Stock Option
or a prospective date specified by the Committee, and for prospective employees,
shall be no earlier than the first day of employment.
(2) Option
Term. The term of each Stock Option shall be fixed by the Committee;
provided, however
, that no
Stock Option shall have a term longer than ten years.
(3) Exercisability.
Stock Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee. The Committee may
waive such exercise provisions or accelerate the exercisability of the Stock
Option at any time in whole or in part.
(4) Method
of Exercise. Stock Options may be exercised in whole or in part at any time
during the option period by giving notice of exercise, in such manner as may be
determined by the Company (which may be written or electronic), specifying the
number of whole shares to be purchased, accompanied by payment of the aggregate
option price for such shares. Payment of the option price shall be made in such
manner as the Committee may provide in the award, which may include (i) cash
(including cash equivalents), (ii) delivery (either by actual delivery of the
shares or by providing an affidavit affirming ownership of the shares) of shares
of Stock already owned by the optionee, (iii) broker-assisted “cashless
exercise” in which the optionee delivers a notice of exercise together with
irrevocable instructions to a broker acceptable to the Company to sell shares of
Stock (or a sufficient portion of such shares) acquired upon exercise of the
Stock Option and remit to the Company a sufficient portion of the sale proceeds
to pay the total option price and any withholding tax obligation resulting from
such exercise, (iv) application of shares subject to the Stock Option to satisfy
the option price, (v) any other manner permitted by law, or (vi) any combination
of the foregoing.
(5) No
Stockholder Rights. An optionee shall have neither rights to dividends or other
rights of a stockholder with respect to shares subject to a Stock Option until
the optionee has duly exercised the Stock Option and a certificate for such
shares has been duly issued (or the optionee has otherwise been duly recorded as
the owner of the shares on the books of the Company).
(6) Surrender
Rights. The Committee may provide that options may be surrendered for cash upon
any terms and conditions set by the Committee.
(7) Non-transferability.
Unless otherwise provided by the Committee, (i) Stock Options shall not be
transferable by the optionee other than by will or by the laws of descent and
distribution, and (ii) during the optionee’s lifetime, all Stock Options shall
be exercisable only by the optionee or by his or her guardian or legal
representative. The Committee, in its sole discretion, may permit Stock Options
to be transferred to such other transferees and on such terms and conditions as
may be determined by the Committee.
(8) Termination
of Employment. Following the termination of an optionee’s employment or service
with the Company or a Related Company, the Stock Option shall be exercisable to
the extent determined by the Committee. The Committee may provide different
post-termination exercise provisions with respect to termination of employment
or service for different reasons. The Committee may provide that,
notwithstanding the option term fixed pursuant to Section 6.2(2), a Stock Option
which is outstanding on the date of an optionee’s death shall remain outstanding
for an additional period after the date of such death. The Committee shall have
absolute discretion to determine the date and circumstances of any termination
of employment or service.
6.3 Notwithstanding
the provisions of Section 6.2, Incentive Stock Options shall be subject to the
following additional restrictions:
(1) No
Incentive Stock Option shall have an option price which is less than 100% of the
fair market value of the Stock on the date of grant of the Incentive Stock
Option (or, with respect to prospective employees, on the first day of
employment).
(2) No
Incentive Stock Option shall be exercisable more than ten years after the date
such Incentive Stock Option is granted.
(3) No
Incentive Stock Option shall be awarded more than ten years after March 30,
2007, the date of Board approval of the Plan.
(4) No
Incentive Stock Option granted to an employee who owns more than 10% of the
total combined voting power of all classes of stock of the Company or any of its
parent or subsidiary corporations, as defined in Section 424 of the Code, shall
(A) have an option price which is less than 110% of the fair market value of the
Stock on the date of grant of the Incentive Stock Option or (B) be exercisable
more than five years after the date such Incentive Stock Option is
granted.
(5) The
aggregate fair market value (determined as of the time the Incentive Stock
Option is granted) of the shares with respect to which Incentive Stock Options
(granted under the Plan and any other plans of the Company, its parent
corporation or subsidiary corporations, as defined in Section 424 of the Code)
are exercisable for the first time by an optionee in any calendar year shall not
exceed $100,000.
(6) An
optionee’s right to exercise an Incentive Stock Option shall be subject to the
optionee’s agreement to notify the Company of any “disqualifying disposition”
(for purposes of Section 422 of the Code) of the shares acquired upon such
exercise.
(7) Incentive
Stock Options shall not be transferable by the optionee, other than by will or
by the laws of descent and distribution. During the optionee’s lifetime, all
Incentive Stock Options shall be exercisable only by such optionee.
The Committee may, with the consent of
the optionee, amend an Incentive Stock Option in a manner that would cause loss
of Incentive Stock Option status, provided the Stock Option as so amended
satisfies the requirements of Section 6.2.
6.4 Substitute
Options. In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity, the
Committee may grant Stock Options in substitution for any options or other stock
awards or stock-based awards granted by such entity or an affiliate thereof.
Such substitute Stock Options may be granted on such terms as the Committee
deems appropriate to prevent dilution or enlargement of the benefits under the
prior award, notwithstanding any limitations on Stock Options contained in other
provisions of this Section 6.
SECTION
7
|
Stock
Appreciation Rights
|
A Stock Appreciation Right (“
SAR
”)
shall entitle the holder thereof to receive, for each share as to which the
award is granted, payment of an amount, in cash, shares of Stock, or a
combination thereof as determined by the Committee, equal in value to the excess
of the fair market value of a share of Stock on the date of exercise over an
amount specified by the Committee. Any such award shall be in such form and
shall have such terms and conditions as the Committee may determine;
provided, however,
that no
SAR shall have a base price below the fair market value of the Stock on the date
of grant or a term longer than ten years. The award shall specify the number of
shares of Stock as to which the SAR is granted.
SECTION
8
|
Restricted
Stock
|
Subject to the following provisions,
all awards of Restricted Stock shall be in such form and shall have such terms
and conditions as the Committee may determine:
(1) The
Restricted Stock award shall specify the number of shares of Restricted Stock to
be awarded, the price, if any, to be paid by the recipient of the Restricted
Stock and the date or dates on which, or the conditions upon the satisfaction of
which, the Restricted Stock will vest. The grant and/or the vesting of
Restricted Stock may be conditioned upon the completion of a specified period of
service with the Company and/or its Related Companies, upon the attainment of
specified Performance Objectives or upon such other criteria as the Committee
may determine.
(2) Stock
certificates representing the Restricted Stock awarded shall be registered in
the award holder’s name (or the holder shall be recorded as the owner of the
shares on the books of the Company), but the Committee may direct that such
certificates be held by the Company or its designee on behalf of the award
holder (or that transfer restrictions be placed on the shares). Except as may be
permitted by the Committee, no share of Restricted Stock may be sold,
transferred, assigned, pledged or otherwise encumbered by the award holder until
such share has vested in accordance with the terms of the Restricted Stock
award. At the time Restricted Stock vests, a certificate for such vested shares
shall be delivered to the award holder (or hi s or her designated beneficiary in
the event of death), (or the award holder (or his or her designated beneficiary
in the event of death) shall be duly recorded as the owner of the shares on the
books of the Company), in each case free of all restrictions.
(3) The
Committee may provide that the award holder shall have the right to vote and/or
receive dividends on Restricted Stock. Unless the Committee provides otherwise,
Stock received as a dividend on, or in connection with a stock split of,
Restricted Stock (or pursuant to adjustment under Section 4.4) shall be subject
to the same restrictions as the Restricted Stock.
(4) Except
as may be provided by the Committee, in the event of an award holder’s
termination of employment or service before all of his or her Restricted Stock
has vested, or in the event any conditions to the vesting of Restricted Stock
have not been satisfied prior to any deadline for the satisfaction of such
conditions set forth in the award, the shares of Restricted Stock which have not
vested shall be forfeited, and the Committee may provide that (i) any purchase
price paid by the award holder shall be returned to the award holder or (ii) a
cash payment equal to the Restricted Stock’s fair market value on the date of
forfeiture, if lower, shall be paid to the award holder.
(5) The
Committee may waive, in whole or in part, any or all of the conditions to
receipt of, or restrictions with respect to, any or all of the award holder’s
Restricted Stock (except that the Committee may not waive conditions or
restrictions with respect to awards intended to qualify under Section 162(m) of
the Code if such waiver would cause the award to fail to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code).
SECTION
9
|
Restricted
Stock Units
|
Subject to the following provisions,
all awards of Restricted Stock Units (“
RSUs
”)
shall be in such form and shall have such terms and conditions as the Committee
may determine:
(1) The
Restricted Stock Unit award shall specify the number of RSUs to be awarded and
the duration of the period (the “
Deferral
Period
”) during which, and the conditions under which, receipt of the
Stock will be deferred. The Committee may condition the grant or vesting of
Restricted Stock Units, or receipt of Stock or cash at the end of the Deferral
Period, upon the completion of a specified period of service with the Company
and/or its Related Companies, upon the attainment of specified Performance
Objectives, or upon such other criteria as the Committee may
determine.
(2) Except
as may be provided by the Committee, RSU awards may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Deferral
Period.
(3) At
the expiration of the Deferral Period, the award holder (or his or her
designated beneficiary in the event of death) shall receive (i) certificates for
the number of shares of Stock equal to the number of shares covered by the RSU
award (or the shares shall be duly recorded as owned by such holder on the books
of the Company), (ii) cash equal to the fair market value of such Stock, or
(iii) a combination of shares and cash, as the Committee may
determine.
(4) Except
as may be provided by the Committee, in the event of an award holder’s
termination of employment or service before the RSU has vested, his or her RSU
award shall be forfeited.
(5) The
Committee may waive, in whole or in part, any or all of the conditions to
receipt of, or restrictions with respect to, Stock or cash under a Restricted
Stock Unit award (except that the Committee may not waive conditions or
restrictions with respect to awards intended to qualify under Section 162(m) of
the Code if such waiver would cause the award to fail to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code). In addition, the Committee shall not accelerate the payment of an RSU if
such acceleration would violate Section 409A of the Code.
SECTION
10
|
Other
Stock-Based Awards
|
The Committee may grant Other
Stock-Based Awards, which shall consist of any right that is not an award
described in Sections 6, 7, 8 or 9 hereof and that is denominated or payable in
Stock, or valued in whole or in part by reference to or otherwise based on or
related to Stock (including, without limitation, securities convertible into
Stock). The Committee shall determine the terms and conditions of any such
award, subject to any limitations contained in the Plan.
11.1 The
Committee may grant Cash Awards, which shall entitle the award holder to receive
cash upon the satisfaction of the Performance Objectives and other terms and
conditions set forth in the award. At the time of grant of a Cash Award, the
Committee shall specify the applicable Performance Objectives and the
performance period to which they apply, as well as the amount of the Cash Award
to be paid upon satisfaction of the Performance Objectives (which may be stated
as a range of amounts payable upon attainment of specified levels of
satisfaction of the Performance Objectives). The Committee may determine that a
Cash Award shall be payable upon achievement of any one Performance Objective,
or any one of several Performance Objectives, or that two or more of the
Performance Objectives must be achieved as a condition to payment of a Cash
Award.
11.2 The
Committee shall specify at the time of grant of a Cash Award the date or dates
such Cash Award, to the extent earned, shall be payable, and may require all or
a portion of the Cash Award to be deferred and payable only upon satisfaction of
continued employment or other specified conditions. The Committee may also
permit all or a portion of a Cash Award to be deferred at the award holder’s
election, subject to Section 409A of the Code. Deferred portions of a Cash Award
may be credited with interest, deemed invested in Stock, or deemed invested in
such other investments as the Committee may specify.
11.3 The
following additional requirements shall apply to Cash Awards intended to qualify
as performance-based under Section 162(m) of the Code:
(1) the
Performance Objectives shall be established by the Committee not later than the
earlier of (i) 90 days after the beginning of the applicable performance period,
or (ii) the time 25% of such performance period has elapsed;
(2) the
Performance Objectives shall be objective and the achievement of such
Performance Objectives shall be substantially uncertain (within the meaning of
Section 162(m) of the Code) at the time the Performance Objectives are
established;
(3) the
amount of the Cash Award payable upon each level of achievement of the
Performance Objectives must be objectively determinable, except that the
Committee shall have the right to reduce (but not increase) the amount payable,
in its sole discretion; and
(4) prior
to payment of any Cash Award, the Committee shall certify in writing, in a
manner which satisfies the requirements of Section 162(m) of the Code, that the
Performance Objectives have been satisfied.
SECTION
12
|
Tax
Withholding
|
Each award holder shall, no later than
the date as of which an amount with respect to an award first becomes includible
in such person’s gross income for applicable tax purposes, pay to the Company,
or make arrangements satisfactory to the Company regarding payment of, any
federal, state, local or other taxes of any kind required by law to be withheld
with respect to the award. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements, and the Company (and, where
applicable, any Related Company), shall, to the extent permitted by law, have
the right to deduct the minimum amount of any required tax withholdings from any
payment of any kind otherwise due to the award holder.
To the extent permitted by the
Committee, and subject to such terms and conditions as the Committee may
provide, an award holder may elect to have the minimum amount of any required
tax withholding with respect to any awards hereunder satisfied by having the
Company withhold shares of Stock otherwise deliverable to such person with
respect to the award. Alternatively, the Committee may require that a portion of
the shares of Stock otherwise deliverable be applied to satisfy the minimum
withholding tax obligations with respect to the award.
SECTION
13
|
Beneficiary
of Award Holder
|
13.1 Each
award holder shall have the right, at any time, to designate any person or
persons as such person’s Beneficiary or Beneficiaries (both primary and
contingent) to whom payment in respect of the award holder’s awards under this
Plan shall be paid in the event of the award holder’s death. Each Beneficiary
designation shall become effective only when filed in writing with the Company
during the award holder’s lifetime on a form provided by the Company. If an
award holder is married, his or her designation of Beneficiary or Beneficiaries
other than his/her spouse or his/her estate shall not be effective unless the
Beneficiary designation has been signed by the spouse and
notarized.
13.2 If
an award holder fails to designate a Beneficiary as provided above or if all
designated Beneficiaries predecease the award holder, payment of the holder’s
awards shall be made to the holder’s estate.
SECTION
14
|
Amendments
and Termination
|
14.1 The
Plan is of unlimited duration. However, no award intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code
(other than Stock Options or SARs) shall be granted after the Company’s annual
meeting held in 2015 unless the material terms of the performance goals (as
defined in Section 162(m)) have been reapproved by the Company’s stockholders
within the five years prior to such grant.
14.2 The
Board may discontinue the Plan at any time and may amend it from time to time.
No amendment or discontinuation of the Plan shall adversely affect any award
previously granted without the award holder’s written consent. Amendments may be
made without stockholder approval except as required to satisfy applicable laws
or regulations or the requirements of any stock exchange or market on which the
Stock is listed or traded.
14.3 The
Committee may amend the terms of any award prospectively or retroactively,
subject to the limitations set forth in Section 3.2(7) hereof.
14.4 Notwithstanding
the foregoing provisions of this Section 14, the Committee shall have the right,
in its sole discretion, to amend the Plan and all outstanding awards without the
consent of stockholders or award holders to the extent the Committee determines
such amendment is necessary or appropriate to comply with Section 409A of the
Code.
14.5 Notwithstanding
any other provision of the Plan or of any award, the Committee shall have the
right, in its sole discretion, to terminate the Plan and all outstanding awards
(or, to the extent permitted under Section 409A of the Code, to terminate all
awards subject to Section 409A of the Code) and distribute amounts payable under
such awards immediately prior to or within 12 months after the occurrence of a
change in control event (as defined under Section 409A).
SECTION
15
|
Change
of Control
|
15.1 In
the event of a Change of Control, if (and only to the extent) so determined by
the Committee and specifically documented in either a special form of agreement
at the time of grant or an amendment to an existing agreement, in each case on
an individual-by-individual basis:
(1) all
or a portion (as determined by the Committee) of outstanding Stock Options
and/or SARs awarded to such individual under the Plan shall become fully
exercisable and vested; and
(2) the
restrictions applicable to all or a portion (as determined by the Committee) of
any outstanding Restricted Stock awards, RSU awards and/or Other Stock-Based
Awards under the Plan held by such individual shall lapse and such shares and
awards shall be deemed fully vested.
In addition, the Committee may, in its
sole discretion, determine the treatment of Cash Awards upon a Change of Control
and, to the extent permitted under Section 409A of the Code, accelerate the
payment date of all or any portion of an award holder’s RSU awards and Cash
Awards upon a Change of Control.
15.2 A
“Change of Control” means the happening of any of the following:
(1)
the acquisition by any person or group deemed a person under Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934 (the “
Exchange
Act
”) (other than the Company and its subsidiaries as determined
immediately prior to that date and any of its or their employee benefit plans)
of beneficial ownership, directly or indirectly (with beneficial ownership
determined as provided in Rule 13d-3, or any successor rule, under the Exchange
Act), of a majority of the total combined voting power of all classes of stock
of the Company having the right under ordinary circumstances to vote at an
election of the Board of Directors of the Company;
(2) the
date on which a majority of the members of the Board consist of persons other
than Current Directors (which term shall mean any member of the Board on the
effective date of this Plan and any member whose nomination or election has been
approved by a majority of Current Directors then on the Board);
(3) the
date of consummation of a merger or consolidation of the Company with another
corporation or other entity where (x) stockholders of the Company immediately
prior to such merger or consolidation would not beneficially own following such
merger or consolidation shares entitling such stockholders to a majority of all
votes (without consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders of the surviving
corporation would be entitled in the election of directors in substantially the
same proportions as their ownership, immediately prior to such merger or
consolidation, of voting securities of the Company, or (y) where the members of
the Company’s Board of Directors, immediately prior to such merger or
consolidation, would not, immediately after such merger or consolidation,
constitute a majority of the board of directors of the corporation issuing cash
or securities in the merger; or
(4) the
sale of all or substantially all of the assets of the Company; or
(5) the
date of approval by the stockholders of the Company of a plan of complete
liquidation of the Company.
SECTION
16
|
General
Provisions
|
16.1 Each
award under the Plan shall be subject to the requirement that, if at any time
the Committee shall determine that (i) the listing, registration or
qualification of the Stock subject or related thereto upon any securities
exchange or market or under any state or federal law, or (ii) the consent or
approval of any government regulatory body or (iii) an agreement by the
recipient of an award with respect to the disposition of Stock, is necessary or
desirable in order to satisfy any legal requirements, or the issuance, sale or
delivery of any shares of Stock is or may in the circumstances be unlawful under
the laws or regulations of any applicable jurisdiction, the right to exercise
such Stock Option or SAR shall be suspended, such award shall not be granted,
and/or the shares subject to such award will not be issued, sold or delivered,
in whole or in part, unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee, and the Committee determines that
the issuance, sale or delivery of the shares is lawful. The application of this
Section shall not extend the term of any Stock Option or other award. The
Company shall have no obligation to effect any registration or qualification of
the Stock under federal or state laws or to compensate the award holder for any
loss caused by the implementation of this Section 16.1.
16.2 Nothing
set forth in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including arrangements providing for the issuance of
Stock. Nothing in the Plan nor any award hereunder shall confer upon any award
holder any right to continued employment or service with the Company or a
Related Company, or interfere in any way with the right of any such company to
terminate such employment or service.
16.3 Determinations
by the Committee under the Plan relating to the form, amount, and terms and
conditions of awards need not be uniform, and may be made selectively among
persons who receive or are eligible to receive awards under the Plan, whether or
not such persons are similarly situated.
16.4 No
member of the Board or the Committee, nor any officer or employee of the Company
acting on behalf of the Board or the Committee, shall be personally liable for
any action, determination or interpretation taken or made with respect to the
Plan or any award hereunder, and all members of the Board or the Committee and
all officers or employees of the Company acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
16.5 Although
the Company may endeavor to qualify an award for favorable tax treatment (e.g.
incentive stock options under Section 422 of the Code) or to avoid adverse tax
treatment (e.g. under Section 409A of the Code), the Company makes no
representation that the desired tax treatment will be available and expressly
disclaims any liability for the failure to maintain favorable or avoid
unfavorable tax treatment.
16.6 Neither
the Plan nor any award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company or
Related Company and an award holder, and no award holder will, by participation
in the Plan, acquire any right in any specific Company property, including any
property the Company may set aside in connection with the Plan. To the extent
that any award holder acquires a right to receive payments from the Company or
any Related Company pursuant to an award, such right shall not be greater than
the right of an unsecured general creditor.
16.7 The
Plan and all awards hereunder shall be governed by the laws of the State of New
York without giving effect to conflict of laws principles.
16.8 This
Plan became effective on March 30, 2007, subject to approval of the Company’s
stockholders at the 2007 annual meeting. The Plan, as amended
and restated, shall be effective on May 27, 2010, subject to approval of the
Company’s stockholders at the 2010 annual meeting.
FORM
OF PROXY CARD
THE
STREET.COM, INC.
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
ANNUAL MEETING OF STOCKHOLDERS, MAY 27, 2010
The
undersigned hereby appoints Daryl Otte and Gregory E. Barton, with power to act
without the other and with full power of substitution and resubstitution, as
Proxies to represent and to vote, as designated on the reverse side, all shares
of Common Stock, $.01 par value, of TheStreet.com, Inc. (the “Company”) owned by
the undersigned, at the Annual Meeting of Stockholders (the “Annual Meeting”) to
be held on Thursday, May 27, 2010, at 10:00 a.m. at the offices of Hughes
Hubbard & Reed LLP, One Battery Park Plaza, New York, New York 10004, upon
such business as may properly come before the Annual Meeting or any adjournment
or postponement thereof, including the matters set forth on the reverse
side. You are encouraged to specify your choice by marking the
appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to
vote in accordance with the Board of Directors' recommendations. The
Proxies cannot vote your shares unless you sign and return this
card. Unless a contrary direction is indicated this Proxy will be
voted for all nominees and for Proposals 2 and 3, as more specifically described
in the Proxy Statement. If specific instructions are indicated, this
Proxy will be voted in accordance therewith.
(Continued
and to be signed on reverse side)
ANNUAL
MEETING OF STOCKHOLDERS OF
THESTREET.COM,
INC.
May
27, 2010
Please
date, sign and mail your proxy card in the
envelope
provided as soon as possible.
Please detach along perforated line and
mail in the envelope provided
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE
x
|
The
Board of Directors recommends that you vote FOR the
following:
|
FOR ALL
NOMINEES
|
FOR ALL EXCEPT
(See instructions
below)
|
WITHHOLD
AUTHORITY FOR
ALL NOMINEES
|
|
|
|
|
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1.
|
Election
of Class II Directors
|
¨
|
¨
|
¨
|
|
|
|
|
|
|
|
Nominees:
|
m
William
R. Gruver
|
|
|
|
|
|
|
|
|
|
|
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m
Daryl
Otte
|
|
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INSTRUCTION:
To withhold authority for any individual nominee(s), mark “
FOR ALL
EXCEPT
”
and fill in the
circle next to each nominee you with to withhold, as shown
here:
·
|
|
The
Board of Directors recommends that you vote FOR the following
proposal:
|
|
|
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
|
|
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2.
|
The
proposal to amend and restate the Company’s 2007 Performance Incentive
Plan.
|
¨
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¨
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¨
|
|
The
Board of Directors recommends that you vote FOR the following
proposal:
|
|
|
|
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FOR
|
AGAINST
|
ABSTAIN
|
|
|
|
|
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3.
|
The
proposal to ratify the appointment of KPMG LLP as the Company's
independent registered public accounting firm for the fiscal year ending
December 31, 2010.
|
¨
|
¨
|
¨
|
To
change the address on your account, please check the box at right and
indicate your new address in the adjacent address space. Please
note that changes to the registered name(s) on the account may not be
submitted via this method.
|
¨
|
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Signature of Stockholder
|
|
|
Date:
|
|
|
|
Note:
|
Please
sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership
name by authorized person.
|
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