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. )
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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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x
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No
fee required.
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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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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 17,
2009
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 28, 2009, 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
30, 2009 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 17, 2009, we are mailing to most of our stockholders a Notice
of Internet Availability of Proxy Materials containing instructions on how to
access our 2009 Proxy Statement and 2008 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.
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 three directors of the Company and (ii) the ratification of the appointment
of KPMG LLP as the Company’s independent registered public accounting firm for
the fiscal year ending December 31, 2009.
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
2
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 28, 2009
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders of TheStreet.com, Inc. (the
“Company”) will be held on Thursday, May 28, 2009, 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 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 three Class I Directors for three-year terms expiring at the
Company’s Annual Meeting of Stockholders in
2012;
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(2)
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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,
2009; and
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(3)
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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 30, 2009 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,
Teresa F.
Santos
Secretary
of the Corporation
New York,
New York
April 17,
2009
3
THESTREET.COM,
INC.
TABLE
OF CONTENTS
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Page
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Proxy
Statement
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6
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Purpose
of the Annual Meeting
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6
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Annual
Meeting Admission
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6
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Stockholders
Entitled to Vote
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6
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Proposals
You Are Asked to Vote On and the Board’s Voting
Recommendations
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7
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Quorum
and Voting Requirements to Elect Directors and Approve Each of the
Proposals
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7
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Voting
Methods
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8
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Changing
Your Vote
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9
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Householding
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9
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Lists
of Stockholders
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9
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Costs
of Proxy Solicitation
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9
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Proposal
1 — Election of Directors
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10
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Nominees
for Director
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10
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Current
Directors
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11
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Executive
Officers
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11
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Corporate
Governance and Related Matters
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12
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General
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12
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Independence
of Directors
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12
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Board
of Directors and Committees
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12
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Director
Nominations
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13
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Stockholder
Communications with the Board of Directors
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14
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Code
of Business Conduct and Ethics
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14
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Related
Person Transaction Policy and Procedures
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14
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Compensation
Committee Interlocks and Insider Participation
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15
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Compensation
of Directors
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15
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Executive
Compensation
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17
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2008
Compensation Discussion and Analysis
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17
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2008
Report of the Compensation Committee
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22
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Summary
Compensation Table
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22
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Grants
of Plan-Based Awards in 2008
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25
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Outstanding
Equity Awards at 2008 Fiscal Year-End
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26
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Option
Exercises and Stock Vested in 2008
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27
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4
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Potential
Payments Upon Termination or Change in Control
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27
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Transactions
with Related Persons
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31
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Employment
Agreement with James J. Cramer
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31
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Security
Ownership of Certain Beneficial Owners and Management
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32
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Section
16(a) Beneficial Ownership Reporting Compliance
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Proposal
2 — Independent Registered Public Accounting
Firm
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34
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Fees
of Independent Registered Public Accountants
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34
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2008
Report of the Audit Committee
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35
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Stockholder
Proposals Pursuant to Rule 14a-8
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36
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Other
Matters
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36
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THESTREET.COM,
INC.
14
Wall Street
New
York, NY 10005
(212)
321-5000
5
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held May 28, 2009
This
Proxy Statement, or Notice of Internet Availability of Proxy Materials, is being
first mailed on or about April 17, 2009 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 28, 2009, 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 30, 2009 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
30,602,572 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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6
Proposals
You Are Asked to Vote On and the Board’s Voting Recommendations
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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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Ratification
of the appointment of KPMG LLP as the Company’s independent registered
public accounting firm.
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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 Bylaws.
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 election of directors and 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 other proposals, 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. There are no such proposals at this year’s Annual
Meeting. 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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The 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 Bylaws or
otherwise. However, the Audit Committee of the Board of Directors 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
Starting
with 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 website and notify stockholders of the availability of such proxy
materials on that website. Thus, for most stockholders, we are furnishing proxy
materials, including this proxy statement and our 2008 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 website.
This 2009
Proxy Statement and our 2008 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 27, 2009, 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 do this 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 26,
2009.
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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 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, 15th 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, 15th 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 or in person, 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.
9
PROPOSAL
1
ELECTION
OF DIRECTORS
In
accordance with our Certificate of Incorporation, our Board of Directors 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 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
James J.
Cramer, Martin Peretz and Derek Irwin have each been nominated for election at
the Annual Meeting as Class I directors to serve as a director for a three-year
term expiring at our Annual Meeting of Stockholders in 2012, 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 of Directors 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 of
Directors 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.
James J.
Cramer, age 54. 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.
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.
Derek Irwin,
age 44. Derek 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. 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. He also serves on
the board of Pinpoint Recovery Solutions.
The
Board of Directors recommends that stockholders vote FOR each named
nominee.
10
Current
Directors
The
current Class II 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 2010, are as follows:
Daryl
Otte, age 47. Mr. Otte has served as a director of the Company since June
2001 and was appointed interim Chief Executive Officer of the Company in March
2009. He is a former member of the Company's Audit Committee. 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.
William R.
Gruver, age 64. 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
Distinguished Clinical Professor of Management at Bucknell
University.
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:
Jeffrey A.
Sonnenfeld, age 55. Dr. Sonnenfeld has served as a director of the
Company since January 2003. In April 2005, Dr. Sonnenfeld was appointed the
senior associate dean for executive programs at Yale University’s School of
Management and the Lester Crown Professor of Management Practice. He had
previously served as associate dean for the School of Management since 2001.
From 1998, when he founded the Chief Executive Leadership Institute in Atlanta,
Georgia, through the Institute’s 2001 acquisition by Yale, he served as the
Institute’s president and chief executive officer. From 1988 to 1998, he was a
professor at the Goizueta Business School of Emory University. Prior to this, he
spent ten years as a professor at the Harvard Business School.
Designee
of the Series B Preferred Stockholder
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. On January 8, 2009, Jay Hoag resigned as a
director of TheStreet.com, Inc. Mr. Hoag had served as the
director designee of our Series B Preferred Stockholders. TCV has not elected a
successor to fill the vacancy.
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 our interim Chief Executive
Officer may be found in the section entitled “Current Directors.”
Eric
Ashman, age 41, Chief Financial Officer. Mr. Ashman joined the Company in
May 2006 from Text 100 Public Relations, an international technology public
relations agency, where he served in various roles beginning as the North
American finance manager in 1997 and finally as the Chief Financial Officer and
Chief Operating Officer. Prior to his tenure at Text 100 Public Relations, Mr.
Ashman founded an information management consulting venture, and worked in the
areas of tax and audit at both Canby, Maloney & Company and Kenneth
Leventhal & Company.
David
Morrow, age 48, Editor-in-Chief. Mr. Morrow joined the Company in July
2001 and was appointed an executive officer in January 2007. Previously, he
served as articles editor at SmartMoney magazine since
early 2000, where he assisted in directing the magazine's consumer and
investment coverage. He was employed at The New York Times from 1996
through 2000, covering personal finance, aviation and the pharmaceuticals
industry.
11
Teresa
Santos, age 34, General Counsel and Secretary. Ms. Santos joined the
Company in April 2006 as Associate General Counsel. She was appointed General
Counsel and Secretary of the Corporation in October 2007. Prior to joining the
Company, Ms. Santos was an attorney practicing with the international law firm
of ReedSmith LLP. She has extensive experience in both corporate and large law
firm environments, having worked in both private and public companies such as
ETTE, Inc., Gordon Brothers Group, and Haemonetics Corporation.
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 Bylaws, 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
of Directors has determined that four of its six 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: Mr. Gruver, Mr. Irwin,
Dr. Peretz, and Dr. Sonnenfeld.
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 of Directors 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 twelve times during fiscal 2008. During fiscal 2008, each member of the
Board participated in at least 75% of all Board and applicable committee
meetings held during the period for which he was a director.
The Board
of Directors 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 2008 are set forth 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. In
fiscal 2008, the Audit Committee consisted of Mr. Irwin, Mr. Gruver and Mr.
Otte. Mr. Otte previously served as Chairman of the Audit Committee until
November 2007, when he was replaced by Mr. Irwin. Mr. Otte no longer serves as a
member of the Audit Committee since his appointment as interim Chief Executive
Officer. In April 2009, Mr. Sonnenfeld, a current independent director, was
appointed by the Board to serve on the Audit Committee filling the vacancy left
by Mr. Otte. 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 19 times during fiscal 2008.
The Audit Committee operates under a written charter adopted by the Board
available on the Company’s website at http://www.thestreet.com/investor-relations/
index.html under “Corporate Governance.”
12
Compensation
Committee. The Compensation Committee makes the final
determinations concerning the base salary and incentive compensation of 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. In fiscal 2008, the Compensation
Committee consisted of Mr. Gruver, who serves as chairman, and Mr. Cunningham,
both of whom were appointed in April 2006. Mr. Cunningham who resigned on
October 21, 2008 was replaced by Mr. Irwin on October 24, 2008. All of the
current and former members of the Compensation Committee are independent under
Nasdaq corporate governance listing standards. The Compensation Committee met 32
times during fiscal 2008. The Compensation Committee operates under a written
charter adopted by the Board available on the Company’s website 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 consists of Mr. Sonnenfeld, who serves as
chairman, and Mr. Peretz. All of the members of the Nominating and Corporate
Governance Committee are independent under Nasdaq corporate governance listing
standards. The Nominating and Corporate Governance Committee met once during
fiscal 2008. The Nominating and Corporate Governance Committee operates under a
written charter adopted by the Board available on the Company’s website at http://www.thestreet.com/investor-relations/index.html,
under “Corporate Governance.”
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 1st
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.
13
Stockholder
Communications with the Board of Directors
The Board
of Directors has adopted the following policy concerning stockholder
communications: Any stockholder wishing to contact the Board of Directors, 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 of
Directors or the appropriate committee or director c/o the Secretary at the
following address: TheStreet.com, Inc., 14 Wall Street, 15th 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. Five of the nine members of the Board of
Directors at the time of the Annual Meeting in 2008 attended in
2008.
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.” The code was last amended in January 2005. 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.
14
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee consists of Mr. Gruver and Mr. Irwin. Mr. Cunningham
served as a member of the Compensation Committee for a portion of fiscal 2008.
Each of them is independent, and none of them are employees or former employees
of the Company. During fiscal 2008, 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 of Directors.
Compensation
of Directors
During
fiscal 2008, the Company provided the following total compensation to our
directors:
|
Name(1)
|
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards(2)
($)
|
Option
Awards(3)
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation(4)
($)
|
Total
($)
|
|||||||||||||||||||||
|
James J. Cramer(5)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Jeffrey
Cunningham
|
44,800
|
—
|
—
|
—
|
—
|
377
|
45,177
|
|||||||||||||||||||||
|
William Gruver(6)
|
77,550
|
60,002
|
—
|
—
|
—
|
377
|
137,929
|
|||||||||||||||||||||
|
Jay
Hoag
|
37,650
|
60,002
|
—
|
—
|
—
|
—
|
97,652
|
|||||||||||||||||||||
|
Derek Irwin(7)
|
75,550
|
60,002
|
—
|
—
|
—
|
—
|
135,552
|
|||||||||||||||||||||
|
Daryl
Otte
|
50,600
|
60,002
|
—
|
—
|
—
|
377
|
110,979
|
|||||||||||||||||||||
|
Martin
Peretz
|
40,500
|
60,002
|
—
|
—
|
—
|
377
|
100,879
|
|||||||||||||||||||||
|
Jeffrey Sonnenfeld(8)
|
45,050
|
60,002
|
—
|
—
|
—
|
377
|
105,429
|
|||||||||||||||||||||
|
(1)
|
The
compensation paid to Mr. Clarke is reported in the Summary Compensation
Table. He received no additional compensation for service as a
director.
|
|
(2)
|
This
column represents the dollar amount we recognized for financial statement
reporting purposes with respect to fiscal 2008 for restricted stock units
(“RSUs”) as determined in accordance with SFAS No. 123R. The grant date
fair value for each RSU was $3.33 for each of our non-employee directors.
Each of the non-employee directors held 3,769 unvested RSUs as of December
31, 2008, all of which vested on January 2, 2009.
|
|
(3)
|
Mr.
Gruver held 25,000 unexercised options and Mr. Peretz held 25,000
unexercised options as of December 31, 2008. No other
non-employee directors held unexercised options as of December 31,
2008.
|
|
(4)
|
Consists
of dividends accrued on RSUs held by such Directors in fiscal
2008.
|
|
(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 in this Proxy Statement under “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 Restricted Stock Units (“RSUs”) as
consideration for his assumption of the Chairmanship duties on October 24,
2008. This January 2, 1009 award vested immediately upon the
grant date but will be delivered on January 2,
2010. Additionally, Mr. Cramer receives a grant of
RSUs equal to $100,000 annually as compensation for his services as
Chairman of the
Board.
|
15
|
(6)
|
Includes
fee of $15,000 for duties associated with chairing the Compensation
Committee.
|
|
(7)
|
Includes
fee of $20,000 for duties associated with chairing the Audit
Committee.
|
|
(8)
|
Includes
fee of $5,000 for duties associated with chairing the Nominating and
Corporate Governance
Committee.
|
The
compensation set forth in the preceding table was based on the following
schedule of fees for 2008 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 of
Directors. The retainer is payable in arrears in equal quarterly
installments (on March 31st,
June 30th,
September 30th,
and December 31st)
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
based upon the closing price of the Company’s common stock on the Nasdaq
Stock Market on December 31st
of the previous year. The RSUs vest on the first anniversary of the date
of grant. Vesting of the RSUs will automatically accelerate upon the
occurrence of a change of control of the Company.1
|
|
•
|
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:
|
|
|
•
|
Audit – $20,000
|
|
|
•
|
Compensation – $15,000
|
|
|
•
|
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.
Stock
Ownership of Directors
In
connection with the approval of the non-employee director compensation policy,
the Board also adopted new guidelines for stock ownership by directors effective
January 1, 2007. Pursuant to the new guidelines, 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
current director is expected to be in compliance with the guideline by January
1, 2011. Each new director is expected to be in compliance with this guideline
by the later of January 1, 2011 or the fourth anniversary of the date of his or
her appointment 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.
1 On February 27, 2009 the Board approved
an amended Director Compensation Policy in which it designated the first
business day of the year as the sole date for determining both the number of
shares granted and the actual grant date. The Committee determined
that this approach is consistent with best practices and the manner in which
executive grants at the Company are awarded. The new policy will be
effective with the January 2010 director grants.
16
EXECUTIVE
COMPENSATION
2008
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.
Compensation
Philosophy and Objectives
It is the
philosophy of the Compensation Committee of the Board of Directors of 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.
We
believe that our long-term success in our industry is dependent upon financial
viability. Our compensation programs are therefore designed to reward executives
for performance in support of that goal. In 2008, the Compensation
Committee viewed both revenue and net income as equally important metrics. We
believe that compensation incentives based upon these measures create long-term
shareholder value by creating accountability and aligning compensation of
executives with shareholder value.
Elements
of Compensation and Linkage to Objectives
Elements
of Compensation
Total
compensation for our executive officers is primarily composed of the following
elements: (1) Base salary, (2) a Bonus comprised of: (i) Short-term cash
incentive (“STI”), and (ii) Long-term cash incentive (“LTI”), and (3) long-term
equity awards. Both the long-term and short-term incentives are subject to
continued employment and other terms.
Determination
of Compensation
The
determinations of the Compensation Committee regarding the appropriate form and
level of executive compensation are ultimately judgments based on the
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 Committee, the 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 Committee his evaluations
of each manager’s performance. The Committee discusses the recommendations with
the chief executive officer and amongst its members. Additionally, the Committee
conducts a review of the chief executive officer’s performance with the
Company’s Board of Directors. The Committee makes the final decisions on the
compensation of all named executive officers.
In 2007
the Committee created a new, overall incentive compensation plan which was
adopted by the Board and approved by shareholders at the Company’s annual
meeting in 2007. The 2007 Performance Incentive Plan (the “2007 Plan”) was
intended to replace the Amended and Restated 1998 Stock Incentive Plan (the
“1998 Plan”) as it was apparent to the Committee that the 1998 Plan could not
long remain a viable vehicle for long-term compensation due to the low number of
shares remaining available for awards and the need to update the plan to best
comply with governing technical rules. In that connection, the Committee
retained a compensation consultant, Ross Zimmerman, who at the time was employed
at Hewitt Associates LLP but subsequently left Hewitt, together with several
other consultants, to form Exequity LLP (the “Consultant”). In 2008, the
Consultant was engaged to (i) perform an assessment of our executive
compensation programs as compared to an updated peer group of companies, and
(ii) assist the Committee in the design of our annual incentive bonus program
for 2008. The Consultant does 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 Committee. The Consultant conducted a review of our
executive compensation against a peer group comprised of companies of various
sizes with a variety of business models, although nearly all provide
Internet-related content services. The review compared each element of our
executive compensation to peer group pay, using an average of amounts paid over
a three-year period to account for uneven pay practices among the peer
companies. The peer group consisted of companies deemed by the Consultant and
the Committee to be roughly comparable to the Company: CNET Networks, Inc.,
Google Inc., The Knot, Inc., PlanetOut, Inc., Monster Worldwide, Inc.,
Morningstar, Inc., Move Inc., Bankrate, Inc., Valueclick, Inc., WebMD Health
Corp., and Yahoo!, Inc. These companies, in terms of their operations and
business models, are also representative of companies that compete for the same
types of executive talent as does the Company.
17
Base
Salary
Base
salary is the basic element of direct cash compensation, designed to attract and
motivate 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, as described above, 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.
For 2008,
with respect to executive officers other than Mr. Clarke, our chief executive
officer, the Compensation Committee sought to accomplish the above goals by
using the 50th
percentile of the peer group as a guide while also exercising discretion with
regard to individual performance with regard to base salary increases.
Accordingly, the salary for our Chief Financial Officer, Eric Ashman, was raised
4.15% to $276,000; the salary for our Chief Revenue Officer, Steven Elkes was
raised 4% to $312,000; the salary for our editor-in-chief, David Morrow, was
raised 4.26% to $245,000; and the salary for our General Counsel &
Secretary, Teresa Santos, was raised 5% to $210,000. Mr. Clarke’s base salary
for 2008 remained unchanged in 2008 because the Compensation Committee intended
Mr. Clarke’s contractual salary to be an evergreen base salary subject only to
discretionary increases. Evaluation of other CEO salary benchmarks by the
Compensation Committee demonstrated to the Committee’s satisfaction that Mr.
Clarke’s contractually set salary was within the appropriate level among the
benchmarks.
Bonus
(i)
Short Term Cash Incentive
The short
term cash incentive of our executive compensation program is designed to provide
a direct method of motivating executives to the achievement of corporate
performance goals, and therefore links the payment of cash bonuses to 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 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 Committee’s desire to reduce the potential dilution to
shareholders resulting from excessive reliance on long-term equity
compensation.
In 2008,
the short-term cash incentive was based 50% on achievement of a revenue target
and 50% on achievement of a net income target subject to the Committee’s
discretion regarding revenue mix. Potential payout with respect to each measure
ranges from 50% of the bonus opportunity for that measure for achievement of 80%
of target performance to 200% of the bonus opportunity for achievement of 120%
or more of target performance. The target bonus opportunity was 75% of salary
for the Chief Executive Officer, 65% of salary for the Chief Financial Officer,
65% of salary for the Chief Revenue Officer, 50% of salary for the
Editor-in-Chief, and 35% of salary for the General Counsel & Secretary.
However, the Committee has discretion to pay less than these amounts if in its
judgment the bonus should be reduced. The short-term incentive is paid as soon
as practicable after the end of the fiscal year.
18
The Board
and the Committee viewed revenue growth and fiscal discipline to be of paramount
importance for 2008. Accordingly, the objective criteria used to measure
financial performance in 2008 were net revenue and net income, each of which was
equally weighted. The Committee derived the specific targets from our internal
operating plan, as previously approved by the Board. The revenue target for the
2008 STI was $90.0 million, representing 37.4% growth from 2007 net revenue of
$65.5 million. The adjusted net income target for the 2008 STI was $21.6
million, representing 16.1% growth from 2007 adjusted net income of $18.6
million. The targeted performance levels and payout percentages for the 2008 STI
were as follows:
|
Actual
Revenue/Net Income
(As
a % of Target)
|
Short-term
Cash Incentive
|
|
|
Below
80%
|
0%
|
|
|
Between 80% and 99% of Target
|
A
straight line sliding scale from 50% of the Target Bonus at 80% of
targeted performance, up to 97.5% of Target Bonus at 99% of targeted
performance
|
|
|
100%
(Target)
|
100%
|
|
|
101% – 120%
of Target
|
A
straight line sliding scale from 105% of the Target Bonus at 101% of
targeted performance, up to 200% of Target Bonus at 120% of targeted
performance
|
|
|
121%
and above
|
200%
|
The
Company’s financial performance for 2008 reflected actual net revenue of
$71.9million (80% of the targeted level) and net income of $7.1 million (32.9%
of the targeted level). In determining the appropriate amounts to authorize as
payment of STI, the Compensation Committee reviewed the performance goals
established for 2008 performance as against both the specified goals and other
important financial and operating metrics, particularly the failure to meet
profit expectations for 2008. As a result, the Committee determined to use its
authority under the 2007 Plan to exercise its subjective discretion to reduce
potential payouts. The Committee determined that overall Company performance in
2008 was insufficient to merit bonus payouts to participants under the Plan and
exercised its discretion to reduce the short-term incentive payouts to
zero.
(ii)
Long Term Cash Incentive
The
long-term cash incentive opportunity for the Company’s most senior executives is
based upon the performance of the Company’s stock as compared to a group of peer
companies selected by the Committee. Earned values under these “phantom equity”
awards are typically paid out to the participants in cash over a three-year
period. .
The
long-term cash incentive, as it was in 2007, is based on a comparison of the
Company’s Enterprise Multiple as compared to a peer group, on a sliding scale
calculated within a range whose target is benchmarked at the Company’s
performance against the peer group in 2008. The formula for calculating
Enterprise Multiple is as follows:
Enterprise
Value
EBITDA
(as defined)
The
formula for calculating Enterprise Value is calculated as follows:
Market
Capitalization + (Total Debt - Cash and Cash Equivalents)
EBITDA,
or Earnings before Interest, Taxes, Depreciation and Amortization, is adjusted
by excluding all of the following events that occur 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 a deferred tax asset valuation allowance, (vii) acquisitions
or divestitures, and (viii) foreign exchange gains and losses. If any company in
the peer group is acquired or delisted during the year, that company will be
excluded from the peer group for the full year in calculating the amount of the
long term cash incentive.
19
To ensure
consistency with the application of this provision, EBITDA is calculated as
Operating Income, before Depreciation and Amortization, as reported from Thomson
Financial, and then adjusted as outlined above. For purposes of calculating the
Enterprise Multiple, the previous four reported quarters will be used to
calculate a trailing 12 months EBITDA.
The
Compensation Committee determined that this Enterprise Value calculation best
aligned management with long-term shareholder interests.
The
Company’s performance relative to the Peer Group median Enterprise Multiple is
compared against the benchmark, and the long-term cash incentive award payout
percentages for the 2008 LTI were as follows:
|
Performance
|
%
of LT
|
||||||||||
|
2008
% of Peer
|
Against
2007
|
Bonus
|
|||||||||
|
Group Median
|
Benchmark
|
Earned
|
|||||||||
| 50 | % | 42 | % | 0 | % | ||||||
| 59 | % | 50 | % | 50 | % | ||||||
| 89 | % | 75 | % | 75 | % | ||||||
| 118 | % | 100 | % | 100 | % | ||||||
| 148 | % | 125 | % | 125 | % | ||||||
| 178 | % | 151 | % | 150 | % | ||||||
| 207 | % | 175 | % | 150 | % | ||||||
The
amount of long-term cash incentive earned is determined following the end of the
2008 plan year and converted into phantom shares of the Company which are
credited to a bookkeeping account. The accounts are credited with dividend
equivalents, which are converted into additional phantom shares. On December 31,
2009 (provided the executive is still employed by the Company), one-third of any
awarded phantom shares would vest, and the value thereof would be distributed to
the executive in cash within 60 days. On December 31, 2010 (provided the
executive is still employed by the Company), one-half of the remaining phantom
shares would vest, and the value thereof would be distributed to the executive
in cash within 60 days. Finally, on December 31, 2011 (provided the executive is
still employed by the Company), the remaining phantom shares would vest, and the
value thereof would be distributed to the executive in cash within 60
days.
In 2008
the long-term cash incentive resulted in crediting of the following number of
phantom shares under the Plan: Mr. Clarke was granted 14,241 phantom shares for
his service in 2008, Mr. Ashman was granted 7,977 phantom shares for his service
in 2008 and Mr. Morrow was granted 5,442phantom shares for his
service in 2008. Phantom shares will earn dividend equivalents and account for
the change in stock value.
Long-Term
Equity Incentives
Additional
long-term incentives are provided by equity awards under the 2007 Plan. The plan
authorizes the Compensation Committee to grant a variety of types of equity
awards, including stock options, stock appreciation rights (“SARs”), restricted
stock and restricted stock units (“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.
20
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 expire on the fifth anniversary of the grant
date. RSUs vest and automatically convert to common stock in equal portions over
the first three anniversaries of the grant date. In determining long-term
incentive awards, the Committee particularly considers longer-range strategic
and financial objectives of the Company as a basis for long term incentive
grants. In determining equity awards to executives in 2008, the Committee
considered: the Company’s performance in 2008, the Company’s expected
performance in 2009, the personal performance and contributions of the Company’s
top executives, the effectiveness of incentive awards granted in prior years,
the available share pool for grants to employees, the Company’s financial
position, and competitive pressures for executive talent, among other factors.
On February 14, 2008, Mr. Clarke was granted 21,036 RSUs. This award was above
the median level of the peer group as a result of the Board and the Committee’s
recognition, in connection with the renewal of his employment agreement as
discussed under “Employment Agreements,” below, that Mr. Clarke’s stewardship of
the Company and his role in the Company’s growth and achievement merited higher
long-term equity compensation. The award vests in three equal installments on
each of the first three anniversaries of the grant date. In addition, on
February 14, 2008, the Committee granted Mr. Ashman 12,178 RSUs, Mr. Morrow
9,665 RSUs, Mr. Elkes 17,500 RSUs, and granted Ms. Santos 7,500
RSUs. Each of these awards vest in equal installments on the first
three anniversaries of the date of grant.
Other
Compensation
Our use
of perquisites as an element of compensation is extremely limited. 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, and health care and dependent care
spending accounts, in accordance with the terms of the programs.
Impact
of Tax and Accounting Treatment on Compensation
Section
162(m) of the Internal Revenue Code (the “Code”) limits deductibility of certain
compensation paid to certain executive officers to $1.0 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
long-term and short-term cash incentives granted in 2008 were intended to
qualify as performance based. Stock options are generally intended to qualify,
but RSUs are not.
Base
salary is expensed when earned and is not deductible over $1 million for covered
employees. The Committee generally intends for compensation to qualify for full
deductibility to the extent possible and advisable under applicable tax and
accounting rules. Amounts potentially payable under the 2007 Plan are expensed
during the year to the extent payout is deemed to be probable. Stock options and
other stock-based awards (such as restricted stock units) are expensed under
Financial Accounting Standards No. 123(R), “Accounting for Stock-Based
Compensation.”
The
employment and RSU award agreements of Mr. Clarke, Mr. Elkes, Mr. Morrow and Mr.
Ashman (as well as of James Cramer, who is a Director but is not an executive
officer) contain provisions that require remuneration 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’s employment agreements with its named executive officers generally
provide for severance and for remuneration in the event of a change in control.
Our severance and change-in-control programs generally provide levels of
benefits that fall below median levels of coverage. We believe our arrangements
are appropriate in light of the fact that similar agreements are regularly
offered to senior executives and are a key element in a compensation package
needed to attract and retain talented executives. 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. 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.
Equity
Granting Practices
Historically,
it has 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 Committee to take into account the
Company’s actual financial performance for the year. Grants are also 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
Committee believes will 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 Committee approved the award or a prospective date set by the
Committee, and for prospective employees, the grant date is the date they
commence employment. Pursuant to the 2007 Plan, options have an exercise price
equal to the closing market price of our common stock on the grant date. 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.
21
Report
of the Compensation Committee
In
accordance with the SEC’s disclosure requirements for executive compensation,
the Compensation Committee of the Board of Directors of the Company (the
“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 Committee recommended to the
Board of Directors 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
Summary
Compensation Table
The
following table shows the compensation earned or received during 2006, 2007 and
2008 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
($)
|
Bonus(1)
($)
|
Stock
Awards(2)(3)(4)
($)
|
Option
Awards(5)
($)
|
Non-Equity
Incentive
Plan
Compensation(1)(7)
($)
|
All
Other
Compensation(6)
($)
|
Total
$
|
||||||||||||||||||||||
|
Thomas J. Clarke, Jr.
(8)
|
2008
|
410,000 | — | 319,468 | 109,896 | — | 10,801 | 1,034,602 | ||||||||||||||||||||||
|
Chief
Executive Officer
|
2007
|
410,000 | — | 243,347 | 106,899 | 218,118 | 3,141 | 763,387 | ||||||||||||||||||||||
|
2006
|
410,000 | 478,150 | 115,292 | 319,806 | 341,325 | 21,641 | 1,686,214 | |||||||||||||||||||||||
|
Eric Ashman(9)
|
2008
|
276,000 | — | 75,010 | 242,012 | — | 5,060 | 635,604 | ||||||||||||||||||||||
|
Chief
Financial Officer
|
2007
|
265,000 | — | 33,012 | 160,148 | 124,526 | — | 458,160 | ||||||||||||||||||||||
|
2006
|
129,363 | 100,230 | — | 78,933 | — | 2,587 | 311,113 | |||||||||||||||||||||||
|
Steven Elkes(10)
|
2008
|
312,000 | — | 57,891 | 217,417 | — | 4,660 | 608,026 | ||||||||||||||||||||||
|
Chief
Revenue Officer and
|
2007
|
230,682 | — | — | 118,460 | — | — | 349,142 | ||||||||||||||||||||||
|
Executive
Vice President of
|
2006
|
— | — | — | — | — | — | — | ||||||||||||||||||||||
|
Mergers
and Acquisitions
|
||||||||||||||||||||||||||||||
|
David J. Morrow(11)
|
2008
|
245,000 | — | 75,375 | 41,815 | — | 5,160 | 495,157 | ||||||||||||||||||||||
|
Editor
in Chief
|
2007
|
235,000 | — | 41,266 | 17,899 | 84,949 | 383 | 294,548 | ||||||||||||||||||||||
|
2006
|
— | — | — | — | — | — | — | |||||||||||||||||||||||
|
Teresa F. Santos(12)
|
2008
|
210,000 | — | 50,034 | 80,629 | — | 1,277 | 490,824 | ||||||||||||||||||||||
|
General
Counsel and
|
2007
|
185,000 | — | 11,177 | 7,177 | — | 1,066 | 204,420 | ||||||||||||||||||||||
|
Secretary
|
2006
|
— | — | — | — | — | — | — | ||||||||||||||||||||||
|
(1)
|
For
2007 and 2008, all short term and long term cash incentive opportunities
were granted as performance awards under the 2007 Plan. In each of 2007
and 2008, although certain of the performance goals for the short term
incentive were met, the 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” compensation column for 2007 and 2008 reflect
long term cash incentives which were earned but will be paid over a three
year period subject to continued employment. For 2006, the Company’s
annual incentive bonus program for management and other significant
employees consisted of two components. The first component, which
represented 60% of the bonus opportunity, was based upon the financial
performance of the Company and is reported in the column entitled
“Non-Equity Incentive Plan Compensation.” The second component, which
represented 40% of the bonus opportunity, was discretionary, based on a
subjective evaluation of the individual performance of each participant,
and is reported in the column entitled “Bonus.” Of the current named
executive officers, in 2006 Mr. Clarke was the only recipient of the first
component annual incentive bonus program. Because Mr. Ashman’s employment
began in July 2006, his entire annual incentive bonus compensation for
2006 was discretionary, although pursuant to his employment agreement, he
was guaranteed to receive at least 35% of his annual salary, or
$91,000.
|
22
|
(2)
|
This
table does not include the following grants made in January 2009: Mr.
Clarke was granted 103,449 RSUs. Mr. Ashman was granted 47,000 RSUs. Mr.
Elkes was granted 40,000 RSUs. Mr. Morrow was granted 20,000 RSUs. Ms.
Santos was granted 15,000 RSUs. One-third of these grants will
vest on each of the first three anniversaries of the grant date. In
addition, Mr. Clarke’s RSU agreement provided that 100% of the then
unvested portion of his grant would immediately vest in the event of a
Change of Control (as such term is defined in the 2007 Plan) or in the
event Mr. Clarke’s employment was terminated by the Company without
“Cause” or by Mr. Clarke with “Good Reason” (as such terms are defined in
the employment agreement, dated September 17, 2007, as amended, between
Mr. Clarke and the Company). All of Mr. Clarke’s RSUs immediately vested
upon his separation from the Company in March 2009. See
“Employment Agreements – Thomas J. Clarke, Jr.” for disclosure regarding
the terms and conditions of Mr. Clarke’s separation with the
Company. Mr. Elkes’ employment agreement provides that 100% of
the then unvested portion of his options will immediately vest in the
event of a Change of Control. The RSU agreements of Mr. Ashman, Mr.
Morrow, and Ms. Santos provide that, in the event of a Change of Control,
50% of the then unvested portion of the award will immediately vest. See
“Potential Payments Upon Termination or
Change-in-Control.”
|
|
(3)
|
The
amounts in the Stock Awards column reflect the dollar amounts recognized
as expense to the Company for financial statement reporting purposes for
the fiscal years ended December 31, 2006, 2007 and 2008, in accordance
with FAS 123(R). 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, 2008, included in the
Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 13,
2009.
|
|
(4)
|
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 credited as dividend equivalents for
the named executive officers for RSUs granted in 2007 and 2008: Mr.
Clarke: $9,000 and $4,500; Mr. Ashman: $1,200 and $400; Mr. Morrow: $1,500
and $400; Ms. Santos: $500 and $167. These amounts are not
reflected in the Stock Awards
column.
|
|
(5)
|
The
amounts in the Option Awards column reflect the dollar amounts recognized
as expense to the Company for financial statement reporting purposes for
the fiscal years ended December 31, 2006, 2007 and 2008, in accordance
with FAS 123(R). Values for Mr. Clarke, Mr. Ashman, Mr. Elkes and Mr.
Morrow assume no forfeitures, and values for Ms. Santos assume a 10%
forfeiture rate. 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, 2008, included
in the Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 13,
2009.
|
|
(6)
|
Amounts
in this column consist of the following: Mr. Clarke consists of $4,600
attributable to the Company’s matching of contributions Mr. Clarke made to
the 401(k) Plan, $1,641 paid by the Company for a term life insurance
policy, $4,500 dividend payment for the vesting of Restricted Stock Units,
and $60 paid by the Company for a group life disability insurance policy;
for Mr. Ashman consists of $4,600 attributable to the Company’s matching
of contributions Mr. Ashman made to the 401(k) Plan, $400 dividend payment
for the vesting of Restricted Stock Units, and $60 paid by the Company for
a group life disability insurance policy; for Mr. Elkes consists of $4,600
attributable to the Company’s matching of contributions Mr. Elkes made to
the 401(k) Plan and $60 paid by the Company for a group life disability
insurance policy; for Mr. Morrow consists of $4,600 attributable to the
Company’s matching of contributions Mr. Morrow made to the 401(k) Plan,
$500 dividend payment for the vesting of Restricted Stock Units, and $60
paid by the Company for a group life disability insurance policy; for Ms.
Santos consists of $1,051 attributable to the Company’s matching of
contributions Ms. Santos made to the 401(k) Plan, $167 dividend payment
for the vesting of Restricted Stock Units, and $60 paid by the Company for
a group life disability insurance
policy.
|
|
(7)
|
With
the exception of the value for Mr. Clarke in 2006 (described above in note
1), this column represents the dollar value of the LTI Phantom shares
allocated for service from the named executive officers in 2007 and 2008
based on the closing price of the Company’s common stock on December 31,
2007 and 2008, respectively. In 2008, Mr. Clarke was granted 13,964
phantom shares for his service in 2007, Mr. Ashman was granted 7,822
phantom shares for his service in 2007 and Mr. Morrow was granted 5,336
phantom shares for his service in 2007. Phantom shares will earn dividend
equivalents and account for the change in stock
value.
|
23
|
(8)
|
Mr.
Clarke was appointed chief executive officer of the Company in November
1999. Mr. Clarke ceased being a director and chief executive officer of
the Company in March 2009.
|
|
(9)
|
Mr.
Ashman was appointed chief financial officer of the Company in July
2006.
|
|
(10)
|
Mr.
Elkes was appointed chief revenue officer and executive vice president,
mergers and acquisitions of the Company in March 2007. Effective
March 30, 2009, Mr. Elkes and the Company ended his
engagement.
|
|
(11)
|
Mr.
Morrow was appointed an executive officer of the Company in January
2007.
|
|
(12)
|
Ms.
Santos was appointed general counsel and secretary, and an executive
officer of the Company in October
2007.
|
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 are described under the
heading “Potential Payments Upon Termination or Change in Control.”
Thomas
J. Clarke, Jr. – Former Chief Executive Officer
In March
2009, Mr. Clarke and the Company entered into a separation agreement and mutual
release. Pursuant to such agreement, among other things: (a) Mr. Clarke's
employment agreement with the Company dated September 13, 2007 and amended on
October 24, 2008 was terminated, except that certain provisions of the
employment agreement survive, including those relating to non-competition,
non-solicitation, confidentiality and non-disparagement, (b) Mr. Clarke will
make himself available to assist and cooperate with the Company in its
transition to his successor, (c) Mr. Clarke’s unvested RSUs and LTI Phantom
Shares immediately vested and Mr. Clarke received shares of stock on a
share-for-unit basis in exchange for Mr. Clarke’s RSUs granted during his
employment and received cash payments for phantom shares awarded under the
Company’s Performance Incentive Plan during his employment. Mr.
Clarke will also will be paid over the 12 months following the effective date of
the agreement, an aggregate amount equal to his most recent annual base salary,
payable in accordance with the Company’s normal payroll practices, will be paid
accrued salary and vacation time through the effective date, and will be
entitled over the 12 months following the effective date to certain medical and
insurance benefits equivalent to those most recently provided to him by the
Company during his employment, and (d) Mr. Clarke and the Company executed a
mutual release in connection with customary matters.
Eric
Ashman – Chief Financial Officer
On February 12, 2009, the Company
delivered to Eric Ashman, the Company’s Chief Financial Officer, a notice of
non-renewal of his employment agreement entered into June 30,
2008. The notice advises Mr. Ashman that the Company will provide a
new document detailing the terms of Mr. Ashman’s continued employment prior to
the expiration of his existing employment agreement, which occurs on June 30,
2009. Mr. Ashman’s employment agreement provides for an annual base
salary of $276,000 per year and, for 2008, a cash bonus under the Company’s 2007
Performance Incentive 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.
Steven Elkes – Former Chief Revenue
Officer and Executive Vice President, Mergers and
Acquisitions
On March 26, 2007, the Company entered
into a two-year employment agreement with Steven Elkes, pursuant to which Mr.
Elkes agreed to serve as Chief Revenue Officer and Executive Vice President,
Mergers and Acquisitions. The agreement provides for an annual base salary of
$300,000 per year and, for 2008, a cash bonus under the Company’s annual
incentive bonus plan for management and other significant employees of the
Company, with the target of such bonus being 65% of annual salary. Mr. Elkes was
also granted options to purchase up to 100,000 shares of the Company’s common
stock, which options vest ratably over the first three anniversaries of the
grant date. Mr. Elkes’ employment agreement automatically expired on March 26,
2009. On March 30, 2009 Mr. Elkes’s employment with the Company was
terminated. No cash bonus was paid to Mr. Elkes for his service in
2008 or 2009.
24
David
J. Morrow – Editor-in-Chief
On
February 12, 2009, the Company delivered to David Morrow, the Company’s
Editor-in-Chief, a notice of non-renewal of his employment agreement with the
Company. The notice advises Mr. Morrow that the Company will provide
a new document detailing the terms of Mr. Morrow’s continued employment prior to
the expiration of his existing employment agreement, which occurs on August 23,
2009. Mr. Morrow’s employment agreement provides for an annual base salary of
$235,000 per year and, for 2007, a cash bonus under the Company’s annual
incentive bonus plan. No cash bonus was paid to Mr. Morrow for his service in
2008.
Teresa
F. Santos – General Counsel and Secretary
On
February 12, 2009, the Company delivered to Teresa Santos, the Company’s General
Counsel and Secretary, a notice of non-renewal of her employment agreement
entered into May 15, 2008. The notice advises Ms. Santos that the
Company will provide a new document detailing the terms of Ms. Santos’ continued
employment prior to the expiration of her existing employment agreement, which
occurs on May 14, 2009. Ms. Santos’ employment agreement provides for an annual
base salary of $210,000 per year and eligibility to receive additional annual
bonus compensation at year end or shortly thereafter, which may be cash and/or
equity compensation. No cash bonus was paid to Ms. Santos for her
service in 2008.
Grants
of Plan-Based Awards in 2008
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan Awards(1)
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
|
All
Other
Option
Awards:
Number
of
Shares
of
Underlying
|
Exercise
or
Base
Price
of
Option
|
Grant
Date
Fair
Value
of
Stock
and
Option
|
||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
or
Units
(#)(2)
|
Options
(#)(3)
|
Awards
($/Sh)
|
Awards
($)
|
||||||||||||||||||||||
|
Thomas
J. Clarke, Jr.
|
2/14/2008
|
153,250 | 307,500 | 615,000 | — | — | — | — | ||||||||||||||||||||||
|
2/14/2008
|
— | — | — | 21,036 | — | — | 237,076 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 62,851 | 11.27 | 247,858 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 34,000 | 12.27 | 123,580 | |||||||||||||||||||||||
|
Eric
Ashman
|
2/14/2008
|
89,700 | 179,400 | 358,800 | — | — | — | — | ||||||||||||||||||||||
|
2/14/2008
|
— | — | — | 12,178 | — | — | 137,246 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 35,207 | 11.27 | 138,842 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 19,000 | 12.27 | 69,059 | |||||||||||||||||||||||
|
Steven
Elkes
|
2/14/2008
|
101,400 | 202,800 | 405,600 | — | — | — | — | ||||||||||||||||||||||
|
2/14/2008
|
— | — | — | 17,500 | — | — | 197,225 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 30,451 | 11.27 | 120,086 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 16,500 | 12.27 | 59,973 | |||||||||||||||||||||||
|
David
Morrow
|
2/14/2008
|
61,250 | 122,500 | 245,000 | — | — | — | — | ||||||||||||||||||||||
|
2/14/2008
|
— | — | — | 9,664 | — | — | 108,913 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 24,016 | 11.27 | 94,709 | |||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 13,000 | 12.27 | 47,251 | |||||||||||||||||||||||
|
Teresa
Santos
|
2/14/2008
|
— | — | — | 7,500 | — | — | 84,525 | ||||||||||||||||||||||
|
2/14/2008
|
— | — | — | — | 49,453 | 11.27 | 195,022 | |||||||||||||||||||||||
|
(1)
|
This
represents the potential payouts to the named executive officers under the
Company’s 2007 Plan as STI and LTI performance awards for 2008 awards as
determined at the time of grant to the extent such executive participates
in the Plan. The applicable targets are described in the Compensation
Discussion and Analysis and the actual amount paid to each named executive
officer under the STI and earned under the LTI is set forth in the Summary
Compensation Table. Amounts earned as LTI are credited as phantom shares
in cash in three installments. The first installment was paid
in December 2008, with the remaining two installments to be paid
in December 2009 and 2010 subject to continued
employment.
|
25
|
(2)
|
These
grants were made under the Company’s 2007 Plan. One-third of
the RSUs granted to Mr. Clarke, Mr. Ashman, Mr. Elkes, Ms. Santos and Mr.
Morrow will vest on each of the first three anniversaries of the grant
date. Mr. Clarke’s RSU agreement provides that 100% of the then unvested
portion will immediately vest in the event of a “Change in Control” (as
such term is defined in the 2007 Plan) or in the event Mr. Clarke’s
employment is terminated by the Company without “Cause” or by Mr. Clarke
with “Good Reason” (as such terms are defined in the Employment Agreement,
dated September 13, 2007, as amended, between Mr. Clarke and the Company).
See “Employment Agreements – Thomas J. Clarke, Jr.” Mr. Ashman’s, Mr.
Elkes’, Mr. Morrow’s and Ms. Santos’ RSU agreements provide that, in the
event of a “Change in Control,” 50% of the then unvested portion will
immediately vest. 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.
|
|
(3)
|
These
grants were made under the Company’s 2007 Plan. The closing sale price of
our common stock on February 14, 2008, the date of grant, for all of these
stock options was 11.27. Stock options having an exercise price
above this amount are premium
options.
|
Outstanding
Equity Awards at 2008 Fiscal Year-End
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||||||
|
Name
|
Grant Date(1)
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares or
Units
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares or
Units
of Stock
that
Have Not
Vested
($)
|
||||||||||||||||||
|
Thomas J. Clarke,
Jr.(2)
|
2/14/2008
|
— | 34,000 | 12.27 |
2/14/2013
|
— | — | ||||||||||||||||||
|
2/14/2008
|
— | 62,851 | 11.27 |
2/14/2013
|
— | — | |||||||||||||||||||
|
2/14/2008
|
— | — | — |
—
|
21,036 | 61,004 | |||||||||||||||||||
|
1/19/2007
|
— | — | — |
—
|
30,000 | 87,000 | |||||||||||||||||||
|
1/13/2006
|
— | — | — |
—
|
15,000 | 43,500 | |||||||||||||||||||
|
1/3/2005
|
200,000 | — | 4.08 |
1/2/2010
|
— | — | |||||||||||||||||||
|
1/2/2004
|
200,000 | 4.06 |
1/1/2009
|
— | — | ||||||||||||||||||||
|
Eric
Ashman
|
2/14/2008
|
— | 19,000 | 12.27 |
2/14/2013
|
— | — | ||||||||||||||||||
|
2/14/2008
|
— | 35,451 | 11.27 |
2/14/2013
|
— | — | |||||||||||||||||||
|
2/14/2008
|
— | — | — |
—
|
12,178 | 35,316 | |||||||||||||||||||
|
1/19/2007
|
— | — | — |
—
|
8,000 | 23,200 | |||||||||||||||||||
|
7/5/2006
|
66,666 | 33,334 | 12.78 |
7/4/2011
|
— | — | |||||||||||||||||||
|
Steven
Elkes
|
2/14/2008
|
— | 16,500 | 12.27 |
2/14/2013
|
— | — | ||||||||||||||||||
|
2/14/2008
|
— | 30,451 | 11.27 |
2/14/2013
|
— | — | |||||||||||||||||||
|
2/14/2008
|
— | — | — |
—
|
17,500 | 50,750 | |||||||||||||||||||
|
3/26/2007
|
33,333 | 66,667 | 12.06 |
3/25/2012
|
— | — | |||||||||||||||||||
|
David
Morrow
|
2/14/2008
|
— | 13,000 | 12.27 |
2/14/2013
|
— | — | ||||||||||||||||||
|
2/14/2008
|
— | 24,016 | 11.27 |
2/14/2013
|
— | — | |||||||||||||||||||
|
2/14/2008
|
— | — | — |
—
|
9,664 | 28,026 | |||||||||||||||||||
|
1/19/2007
|
— | — | — |
—
|
10,000 | 29,000 | |||||||||||||||||||
|
1/3/2005
|
30,000 | — | 4.08 |
1/2/2010
|
— | — | |||||||||||||||||||
|
1/2/2004
|
30,000 | 4.06 |
1/1/2009
|
— | — | ||||||||||||||||||||
|
Teresa
Santos
|
2/14/2008
|
— | 49,453 | 11.27 |
2/14/2013
|
— | — | ||||||||||||||||||
|
2/14/2008
|
— | — | — |
—
|
7,500 | 21,750 | |||||||||||||||||||
|
1/19/2007
|
— | — | — |
—
|
3,334 | 9,669 | |||||||||||||||||||
|
4/20/2006
|
2,500 | 2,500 | 7.98 |
4/19/2011
|
— | — | |||||||||||||||||||
26
|
(1)
|
Each
option grant has the following vesting schedule: one-third of the options
vest and become exercisable on each of the first three anniversaries of
the grant date. All of the options have a five-year term. Each stock award
is a grant of RSUs having the following vesting schedule: one-third of the
RSUs vest on each of the first three anniversaries of the grant
date.
|
|
(2)
|
Pursuant
to a Separation and Release Agreement, in March 2009, all of Mr. Clarke’s
outstanding RSUs accelerated to become fully vested and delivered upon his
separation from the Company.
|
Option
Exercises and Stock Vested in 2008
|
Option Awards
|
Stock Awards
|
|||||||||||||||
|
Name
|
Number of Shares
Acquired on Exercise
(#)
|
Value Realized on
Exercise
($)
|
Number of Shares
Acquired on Vesting
(#)
|
Value Realized on
Vesting
($)
|
||||||||||||
|
Thomas J. Clarke,
Jr.
|
— | — | 30,000 | 394,950 | ||||||||||||
|
Eric
Ashman
|
— | — | 4,000 | 45,360 | ||||||||||||
|
Steven
Elkes
|
— | — | — | — | ||||||||||||
|
David
Morrow
|
— | — | 5,000 | 56,700 | ||||||||||||
|
Teresa
Santos
|
— | — | 1,666 | 18,892 | ||||||||||||
Potential
Payments Upon Termination or Change in Control
The
following summaries describe potential payments payable to our named executive
officers upon termination of employment or a change in control. The actual
payments to executives are contingent upon many factors as of the time benefits
would be paid, including elections by the Company and the
executive.
Thomas
J. Clarke, Jr., Former Chief Executive Officer
Thomas J. Clarke, Jr. was the Company’s
chief executive officer in fiscal 2008. In March 2009, the Company and Mr.
Clarke entered into a separation agreement and mutual release. Pursuant to
guidance from the Securities and Exchange Commission, the Company is required to
disclose potential payments upon termination or change in control as if Mr.
Clarke was terminated on December 31, 2008; however, the terms of Mr. Clarke’s
actual separation are described above. See “Employment Agreements – Thomas J.
Clarke, Jr.”
Pursuant
to employment, option and restricted stock unit agreements between the Company
and Thomas J. Clarke, Jr., the Company’s chief executive officer, if, on to
December 31, 2008, we had terminated Mr. Clarke’s employment other than for
“Cause,” or if he resigned for “Good Reason,” then he would have been entitled
to receive the following:
|
•
|
severance
pay of up to 150% of his then current salary, payable in a lump
sum;
|
|
•
|
any
earned but unpaid annual bonus for the year prior to
termination;
|
|
•
|
a
pro rata bonus for the year in which such termination or resignation
occurs (based upon the average of the bonuses paid for the previous two
years);
|
27
|
•
|
one
year of continued health, life and disability insurance benefits;
and
|
|
•
|
accelerated
vesting of 100% of all then-outstanding unvested equity incentive
grants.
|
Mr.
Clarke’s employment agreement in effect as of December 31, 2008 generally
defines “Cause” to include willful misconduct or gross negligence, dishonesty or
misappropriation of Company funds, properties or other assets, unexcused
elongated absence from work, unauthorized disclosure of confidential information
materially harmful to the Company, conviction of a crime involving fraud,
dishonesty or moral turpitude, violation of federal or state securities laws or
failure to attempt to perform his duties or other material breach of his
employment agreement which persists for a period of 30 days or more after notice
without cure. “Good Reason” is defined to include a material adverse change in
Mr. Clarke’s functions, duties, titles, responsibilities or reporting
responsibility in his position with the Company, the assignment of duties
inconsistent with his position and status as Chief Executive Officer, a
reduction in his annual salary during the term of his employment with the
Company, failure of the Company to cure a material breach of his employment
agreement by the Company, a significant reduction of Mr. Clarke’s duties or
responsibilities in connection with a “Change of Control” of the Company (as
defined in the Company’s 2007 Plan and as described below) (other than solely by
virtue of the Company being acquired and made part of a larger entity), and Mr.
Clarke's relocation by the Company to a location more than fifty (50) miles from
the Company’s current headquarters or his New Jersey home.
If his
employment were terminated by reason of death, “Disability” or the expiration of
the agreement then he would be entitled to receive any earned but unpaid annual
bonus for the year prior to termination, plus a pro rata bonus for the year in
which death, Disability or expiration of the agreement occurs (based upon the
average of the bonuses paid for the previous two years). The agreement defines
“Disability” as a physical or mental incapacity that, in the good faith judgment
of the Company’s Board, prevents Mr. Clarke from performing his duties for 90
consecutive days or for 150 days during any year.
If Mr.
Clarke’s employment were terminated due to the expiration of the agreement by
reason of the Company’s notice of non-renewal, then in addition to the bonus
described above, he would have been entitled to receive the
following:
|
•
|
severance
pay of 100% of his then current salary, payable in a lump sum;
and
|
|
•
|
one
year of continued health, life and disability insurance
benefits.
|
The
employment agreement provides that in order to receive the severance payments
and benefits, Mr. Clarke must execute a release of claims and not violate his
obligations in the agreement to keep information about the Company’s business
confidential, and, for a period of one year, not engage in competition with the
Company (i.e., not be
employed by or otherwise affiliated with any company that engages in the
business of providing original editorial financial news and commentary over the
Internet), or solicit for employment or hire anyone who was employed by the
Company during the term of his agreement.
Under the
terms of the Company’s 2007 Plan and Mr. Clarke’s Grants of Cash Performance
Award, short-term (“STI”) and long-term compensation (“LTI”) awarded thereunder
will be paid upon termination or change of control based upon the following
conditions. In the event of termination of employment, all STI and those
portions of LTI Phantom Shares which have vested prior to the termination date
will be paid to Mr. Clarke. In the event of a change of control or upon
termination of employment as a result of Mr. Clarke’s death, all vested amounts
of STI and LTI will be paid and all unvested Phantom Shares will vest and the
cash value will be paid out to Mr. Clarke or his estate. Assuming Mr. Clarke’s
employment was terminated under the circumstances noted in the table below as of
December 31, 2008, payments and benefits to him would have an estimated
potential value as follows:
|
Payment Trigger
|
Cash
Severance
($)
|
Bonus
($)
|
Benefits
($)
|
Value of
Accelerated
Equity Awards
($)
|
Total
($)
|
|||||||||||||||
|
With
"Cause"
|
— | — | — | — | — | |||||||||||||||
|
Without
"Cause" or for Good Reason
|
615,000 | 307,500 | 14,135 | 191,504 | 1,128,139 | |||||||||||||||
|
Change
of Control
|
— | 615,000 | — | 191,504 | 806,504 | |||||||||||||||
|
Termination
after Change of Control
|
615,000 | 307,500 | 14,135 | 191,504 | 1,128,139 | |||||||||||||||
|
Disability
|
— | 307,500 | — | — | 307,500 | |||||||||||||||
|
Non-renewal
of agreement
|
410,000 | 307,500 | 14,135 | — | 731,635 | |||||||||||||||
28
|
(1)
|
The
value of RSUs is based on the Company’s stock price on December 31, 2008
at the close of the trading day as reported on Nasdaq, being $2.90 per
common share. None of the options granted to Mr. Clarke were in
the money on December 31, 2008 and have been excluded from the
calculation.
|
Other
Named Executive Officers
Pursuant
to the Company’s employment and incentive award agreements with Eric Ashman, our
Chief Financial Officer, David Morrow, our Editor-in-Chief, and Teresa Santos,
our General Counsel and Secretary, if we terminate the executive’s employment
other than for “Cause,” or if the executive resigns for “Good Reason,” then each
is entitled to receive the following:
|
•
|
with
regard to Mr. Ashman, severance pay equal to two years of his
salary;
|
|
•
|
with
regard to Ms. Santos, severance pay equal to one year of the executive’s
salary;
|
|
•
|
with
regard to Mr. Morrow, severance pay equal to the higher of 100% of his
then current salary or the salary due under the remaining term of the
agreement, plus any earned but unpaid
STI;
|
|
•
|
with
regard to Mr. Ashman and Ms. Santos, up to one year of continued health,
life and disability insurance
benefits;
|
|
•
|
with
regard to Mr. Morrow, continued health, life and disability insurance
benefits for the greater of the balance of the remaining term of the
agreement or one year.
|
In the
event of a Change of Control, Mr. Ashman and Ms. Santos are entitled to
accelerated vesting of 50% of all then-outstanding unvested equity incentive
grants they received. In addition, each of Mr. Ashman and Mr. Morrow is entitled
to short-term and long-term cash incentive payments. Under the terms of the
Company’s 2007 Plan, the executives’ May 2007 Agreement for Grant of Cash
Performance Award and the 2008 Executive Performance Incentive Plan, STI and LTI
awarded thereunder will be paid upon termination or change of control based upon
the following conditions. In the event of termination of employment, all STI and
those portions of LTI (Phantom Shares) which have vested prior to the
termination date will be paid to the executive. 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 STI and LTI will be paid and all unvested Phantom Shares
will vest and the cash value will be paid out to the executive or his
estate.
In order
to receive the severance payments and benefits, each executive must execute a
release of claims and not violate his or her obligations in the agreement to
keep information about the Company’s business confidential, and for a period of
one year not to engage in competition with the Company (i.e., not to be employed by
or otherwise affiliated with any company that engages in the business of
providing original editorial financial news and commentary over the Internet),
or not to solicit for employment or hire anyone who was employed by the Company
during the term of his agreement. In the case of Mr. Ashman, the non-competition
provision only applies for nine months.
The
executives’ employment agreements generally define “Cause” to include willful
misconduct or gross negligence, 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 crime involving fraud, dishonesty or moral turpitude, violation
of federal or state securities laws or breach of the employment agreement which
is not cured within 30 days after notice. “Good Reason” is generally defined to
include a material adverse change in the executive’s functions, duties, or
responsibilities or reporting responsibility in his position with the Company, a
reduction in the executive’s annual salary, failure of the Company to cure a
material breach of the executive’s employment agreement by the Company, a
significant reduction of the executive’s duties or responsibilities in
connection with a “Change of Control” of the Company (other than solely by
virtue of the Company being acquired and made part of a larger entity), and the
executive’s relocation by the Company to a location more than fifty (50) miles
from the Company’s current headquarters or the executive’s
home.
29
A “Change
of Control” under the 1998 Plan and 2007 Plan 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) that owned less than 5% of such voting power
immediately prior to the Company’s initial public offering; (2) the date on
which a majority of the members of the Board of Directors 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 substantially all of the assets of the Company; or (5) approval by
the stockholders of a plan of complete liquidation of the Company.
Assuming
the employment of the other named executive officers noted in the tables below
was terminated under the circumstances noted in the table on December 31, 2008,
payments and benefits to each would have estimated potential values as follows.
The value of RSUs is based on the Company’s stock price on December 31, 2008 at
the close of the trading day as reported on Nasdaq, being $2.90 per common
share. None of the options granted to the named executive officers
below were in the money on December 31, 2008 and have been excluded from the
calculation.
Eric
Ashman, Chief Financial Officer
|
Payment
Trigger
|
Cash
Severance
($)
|
Bonus
($)
|
Benefits
($)
|
Value of
Accelerated
Equity Awards
($)
|
Total
($)
|
|||||||||||||||
|
With
"Cause"
|
— | — | — | — | — | |||||||||||||||
|
Without
"Cause" or for Good Reason
|
552,000 | — | 14,203 | — | 566,203 | |||||||||||||||
|
Change
of Control
|
— | — | — | 29,258 | 29,258 | |||||||||||||||
|
Termination
after Change of Control
|
552,000 | — | 14,203 | — | 566,203 | |||||||||||||||
|
Disability
|
— | — | — | — | — | |||||||||||||||
|
Non-renewal
of agreement
|
— | — | — | — | — | |||||||||||||||
David
Morrow, Editor-in-Chief
|
Payment
Trigger
|
Cash
Severance
($)
|
Bonus
($)
|
Benefits
($)
|
Value of
Accelerated
Equity Awards
($)
|
Total
($)
|
|||||||||||||||
|
With
"Cause"
|
— | — | — | — | — | |||||||||||||||
|
Without
"Cause" or for Good Reason
|
245,000 | — | 4,719 | — | 249,719 | |||||||||||||||
|
Change
of Control
|
— | 245,000 | — | 28,513 | 273,513 | |||||||||||||||
|
Termination
after Change of Control
|
245,000 | — | — | — | 245,000 | |||||||||||||||
|
Disability
|
— | — | — | — | — | |||||||||||||||
|
Non-renewal
of agreement
|
— | — | — | — | — | |||||||||||||||
Teresa
Santos, General Counsel and Secretary
|
Payment
Trigger
|
Cash
Severance
($)
|
Bonus
($)
|
Benefits
($)
|
Value of
Accelerated
Equity Awards
($)
|
Total
($)
|
|||||||||||||||
|
With
"Cause"
|
— | — | — | — | — | |||||||||||||||
|
Without
"Cause" or for Good Reason
|
210,000 | — | 8,154 | — | 218,154 | |||||||||||||||
|
Change
of Control
|
— | — | — | 15,709 | 15,709 | |||||||||||||||
|
Termination
after Change of Control
|
210,000 | — | 8,154 | — | 218,154 | |||||||||||||||
|
Disability
|
— | — | — | — | — | |||||||||||||||
|
Non-renewal
of agreement
|
— | — | — | — | — | |||||||||||||||
30
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”). On July 30, 2008, the Company and James J. Cramer agreed to
enter an amendment (the “Amendment”) to the Employment
Agreement. Pursuant to the Amendment, Mr. Cramer may terminate the
Employment Agreement as of January 15, 2010 upon not less than 60 days and not
more than 90 days prior written notice to the Company, whereupon he will be
entitled to, among other things, salary, vested RSUs and the prior year’s unpaid
bonus, if any, through the date of termination, subject to certain terms and
conditions.. All other terms and conditions of the Employment
Agreement were unchanged by the Amendment.
Pursuant
to the Employment Agreement, 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.
As
compensation for his services under the Employment Agreement, Mr. Cramer will
receive, among other things, an annual salary of $1,300,000, $1,560,000 and
$1,872,000, respectively, for the three successive years of the Employment
Agreement. However, Mr. Cramer elected not to receive his scheduled increase in
salary for 2009 pending the Company’s mid-year review of compensation for all
executives and key employees. In addition, under the Employment
Agreement, Mr. Cramer received a signing bonus in the amount of $100,000 and is
eligible for an annualized target bonus equal to 75% of salary based upon
achievement of financial targets as determined by the Company.
Mr.
Cramer also will receive restricted stock units under the Company’s 2007 Plan
with respect to 300,000 shares of the Company’s common stock. The RSUs will be
payable in shares of such common stock and vest and become payable in equal
installments on each January 1 of the next successive five years, 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 “Change of Control” 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.
Mr.
Cramer has agreed that, during the term of the Employment Agreement, he will not
author articles for other online financial publications that compete with the
Company or act in certain capacities for any other start-up on-line business
that competes 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 18 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 18 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, the prior year’s unpaid bonus, if any, and pro-rated then
current year bonus, if any, subject to certain terms and
conditions.
If
certain payments to Mr. Cramer, including pursuant to a Change of Control, are
determined to be subject to the excise tax imposed under Internal Revenue Code
Section 4999 (the “Excise Tax”), then Mr. Cramer will be entitled to an
additional payment in an amount such that the net amount of such additional
payment retained by Mr. Cramer after payment of certain income and employment
taxes will be equal to the Excise Tax imposed on the payments to Mr. Cramer;
provided however that such additional payments will only be made to Mr. Cramer
if the total parachute payments payable to Mr. Cramer exceed the point at which
Excise Taxes apply by at least 10%.
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 previous
employment agreements).
31
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of March 31, 2009 (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) the named executive officers as set
forth in the Summary Compensation Table, and (iv) all of our current 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)
|
5,014,025 | 16.4 | ||||||
|
James
J. Cramer(4)
|
3,734,863 | 12.2 | ||||||
|
Harvest
Capital Strategies LLC(5)
|
2,748,389 | 9.0 | ||||||
|
Columbia
Wanger Asset Management, L.P.(6)
|
2,256,740 | 7.4 | ||||||
|
Martin
Peretz(7)
|
1,951,283 | 6.4 | ||||||
|
UBS
AG(8)
|
1,362,469 | 4.5 | ||||||
|
Directors
and Executive Officers
|
||||||||
|
James
J. Cramer(9)
|
3,734,863 | 12.2 | ||||||
|
Martin
Peretz(10)
|
1,951,283 | 6.4 | ||||||
|
Thomas
J. Clarke, Jr.(11)
|
769,507 | 2.5 | ||||||
|
William
R. Gruver(12)
|
47,511 | * | ||||||
|
Derek
Irwin(13)
|
3,769 | * | ||||||
|
Daryl
Otte(14)
|
40,511 | * | ||||||
|
Jeffrey
A. Sonnenfeld(15)
|
24,311 | * | ||||||
|
Eric
Ashman(16)
|
96,488 | * | ||||||
|
Steve
Elkes(17)
|
98,149 | * | ||||||
|
David
Morrow(18)
|
47,943 | * | ||||||
|
Teresa
Santos(19)
|
24,751 | * | ||||||
|
All
current executive officers and directors as a group (9
persons)
|
5,971,430 | 19.5 | ||||||
|
*
|
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, NY 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
30,602,572 common shares outstanding as of March 31, 2009. Shares of
common stock over which the named person has rights to acquire voting or
dispositive power within sixty days of March 31, 2009 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.
|
32
|
(3)
|
Consists
of 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 5455.95 shares of Series B
convertible preferred stock and warrants to purchase 1,147,816 shares of
common stock, and TCV Member Fund, L.P. (“Member Fund”) is the record
holder of 44.05 shares of Series B convertible preferred stock and
warrants to purchase 9,267 shares of common stock. Technology Crossover
Management VI, L.L.C. (“TCM VI”) is the sole general partner of TCV VI and
general partner of Member Fund. Messrs. Jay C. Hoag, Richard H. Kimball,
John L. Drew, Jon Q. Reynolds, William J.G. Griffith and Robert Trudeau
are the Class A Members of TCM VI. 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.
|
|
(4)
|
Includes
1,696,746 shares owned directly by Mr. Cramer, 1,754,538 shares owned by
Cramer Partners, L.L.C. and 282,578 shares issuable to Mr. Cramer upon
exercise of options within 60 days of March 31, 2009.
|
|
(5)
|
According
to Harvest Capital Strategies LLC’s filing with the SEC on Schedule 13G
dated as of December 31, 2008, 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 1100, San Francisco, California 94111.
|
|
(6)
|
The
principal business address of Columbia Wanger Asset Management, L.P. is
227 West Monroe Street, Suite 3000, Chicago IL 60606.
|
|
(7)
|
Includes
208,366 shares owned directly by Dr. Peretz. Also includes the following
shares, over which Dr. Peretz has sole voting and dispositive power:
1,523,413 shares owned by Peretz Partners, L.L.C., of which Dr. Peretz is
manager; and 254,504 shares held by Peretz Family Investments, L.P., of
which Dr. Peretz is general partner. Dr. Peretz disclaims beneficial
ownership of such shares. Also includes the following shares, over which
Dr. Peretz has shared voting and dispositive power: 73,618 shares held by
a trust for the benefit of Dr. Peretz; 79,089 shares held by a trust for
the benefit of Dr. Peretz’s spouse; 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.
|
|
(8)
|
According
to UBS AG’s filing with the SEC on Schedule 13G dated as of December 31,
2008, consists of 1,362,469 shares and reflects the securities
beneficially owned by the UBS Global Asset Management division of UBS AG
and its subsidiaries and affiliates on behalf of its clients. The
principal business address of UBS AG is Bahnhofstrasse 45, PO Box CH-8021,
Zurich, Switzerland.
|
|
|
|
(9)
|
See
footnote 4.
|
|
(10)
|
See
footnote 7.
|
|
(11)
|
Consists
of 537,224 shares owned by Mr. Clarke and 232,283 shares issuable to Mr.
Clarke upon exercise of options within 60 days of March 31,
2009.
|
|
(12)
|
Consists
of 26,711 shares owned directly by Mr. Gruver and 20,800 shares owned by
Mr. Gruver’s spouse.
|
|
(13)
|
Consists
of 3,769 shares owned directly by Mr. Irwin.
|
|
(14)
|
Consists
of 40,511 shares owned directly by Mr. Otte.
|
|
(15)
|
Consists
of 24,311 shares owned directly by Dr. Sonnenfeld.
|
|
(16)
|
Consists
of 11,754 shares owned by Mr. Ashman and 84,734 shares issuable to Mr.
Ashman upon exercise of options within 60 days of March 31,
2009.
|
|
(17)
|
Consists
of 15,833 shares owned by Mr. Elkes and 82,316 shares issuable to Mr.
Elkes upon exercise of options within 60 days of March 31,
2009.
|
|
|
|
(18)
|
Consists
of 5,604 shares owned by Mr. Morrow and 42,339 shares issuable to Mr.
Morrow upon exercise of options within 60 days of March 31,
2009.
|
|
(19)
|
Consists
of 3,267 shares owned by Ms. Santos and 21,484 shares issuable to Ms.
Santos upon exercise of options within 60 days of March 31,
2009.
|
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 2008 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.
33
PROPOSAL
2
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee of the Board of Directors is responsible for the appointment of the
Company’s independent registered public accounting firm. In fulfillment of that
responsibility, on February 26, 2009, the Audit Committee of the Board of
Directors of the Company notified Marcum & Kliegman LLP ("M&K") that the
Company would not re-engage M&K as the Company's independent registered
public accounting firm. On February 26, 2009, the Audit Committee of the Board
of Directors of the Company approved the appointment of KPMG LLP ("KPMG") as its
auditors for the year ending December 31, 2009. The decision not to re-engage
M&K and to select KPMG was the result of having undertaken our
policy-mandated periodic RFP process conducted by the Audit Committee of the
Board of Directors of the Company in the ordinary course of
business.
The report
of M&K on the consolidated financial statements for the fiscal years ended
December 31, 2008 and 2007 did not contain an adverse opinion or disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope, or
accounting principles. In addition, the reports of M&K on the effectiveness
of internal controls over financial reporting as of December 31, 2008 and 2007
did not contain an adverse opinion or disclaimer of opinion, and was not
qualified or modified as to audit scope. There were no "disagreements" (as such
term is used in Item 304 (a)(1)(iv) of Regulation S-K) with M&K at any time
during the periods described above regarding any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
that, if not resolved to the satisfaction of M&K, would have caused it to
make reference to the subject matter of the disagreement in connection with its
reports. In addition, during the same periods, no "reportable events" (as such
term is defined in Item 304(a)(1)(v) of Regulation S-K) arose in the context of
the Company’s relationship with M&K.
During
the periods described above prior to engaging KPMG, the Company did not consult
KPMG regarding either: (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 to the Company 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.
The Audit
Committee has selected KMPG as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2009, 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.
Marcum
& Kliegman served as the Company’s independent registered public accounting
firm for the fiscal years ended December 31, 2008 and
2007. Representatives of M&K 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. Representatives of
KPMG are expected to be present at the Annual Meeting.
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
following table sets forth the aggregate fees billed to the Company by M&K,
its independent registered public accounting firm for services rendered with
respect to the fiscal years ended December 31, 2008 and 2007:
|
2008
|
2007
|
|||||||
|
Marcum
& Kliegman LLP
|
|
|
||||||
|
Audit
Fees
|
$
|
335,000
|
$
|
364,862
|
||||
|
Audit-Related
Fees
|
91,611
|
445,304
|
||||||
|
Tax
Fees
|
—
|
—
|
||||||
|
All
Other Fees
|
33,822
|
36,100
|
||||||
|
Total
M&K Fees
|
$
|
460,444
|
$
|
846,266
|
||||
34
In
accordance with SEC rules, audit fees are fees that the Company paid to M&K
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 report on Form 10-Q’s, 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 2008 primarily consist of fees relating to review of continuous
disclosure documents and research regarding discrete proper accounting treatment
of restricted stock units. Audit-Related Fees for 2007 primarily
consist of fees relating to our acquisitions of Corsis Technology Group II LLC
and Bankers Financial Products Corp. and review of continuous disclosure
documents and research regarding discrete proper accounting treatment of
restricted stock units.
All
Other fees for 2008 primarily consist of fees relating to due diligence
discussions regarding mergers and acquisitions. All Other Fees for
2007 primarily consist of fees relating to due diligence discussions and review
of Company public filings regarding the acquisitions of Corsis Technology Group
II LLC and Bankers Financial Products Corp.
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.
2008
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 Committee operates pursuant to a
written charter adopted by the Board of Directors, 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 2008, the Committee met
with senior members of the Company’s finance department and members of the audit
engagement team of Marcum & Kliegman LLP, the Company’s former independent
registered public accounting firm. The 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 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, 2008, 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 Committee also
monitored the Company’s progress in assessing compliance with Section 404 of the
Sarbanes-Oxley Act of 2002. The 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 Committee discussed with the independent registered
public accounting firm its independence.
Pursuant
to the Audit Committee Charter, the 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 Committee met with
senior members of the Company’s financial management team in private sessions to
discuss Marcum & Kliegman LLP’s performance.
35
It is not
the duty or responsibility of the Committee to conduct auditing or accounting
reviews and procedures. In performing their oversight responsibility, members of
the 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 Committee referred to above
and in the Audit Committee Charter, the Committee recommended to the Board of
Directors that the audited financial statements be included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008, filed with the
Securities and Exchange Commission.
Submitted
by the Audit Committee of the Company’s Board of Directors
Derek
Irwin, Chairman
William
R. Gruver
Jeffrey
Sonnenfeld
STOCKHOLDER
PROPOSALS PURSUANT TO RULE 14a-8
Stockholders
may submit proposals on matters appropriate for stockholder action at subsequent
annual meetings of the Company consistent with Rule 14a-8 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 2010, all applicable requirements of
Rule 14a-8 must be satisfied and such proposals must be received by the Company
no later than December 10, 2009. 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 Bylaws
require that stockholders desiring to bring any business before the Company’s
Annual Meeting of Stockholders in 2010 deliver written notice thereof to the
Company no earlier than February 25, 2010 and no later than March 29, 2010, and
comply with all other applicable requirements of the Bylaws. However, in the
event that the Annual Meeting of Stockholders in 2010 is called for a date that
is more than 30 days before or after the anniversary date of the Annual Meeting
of Stockholders in 2009, notice by the stockholder in order to be timely must be
received not later than the close of business on the 10th day
following the date on which notice of the date of the Annual Meeting of
Stockholders in 2010 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 Bylaw provision.
The
advance notice by stockholders must include the stockholder’s name and address,
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, the reason for
conducting such business at the annual meeting, and any material interest of
such stockholder in the proposed business. In the case of nominations for
election to the Board of Directors, 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 Bylaws was March 29, 2009. As of the date of this Proxy
Statement, the Board of Directors 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.
36
The
Company’s Annual Report on Form 10-K with respect to the fiscal year ended
December 31, 2008 accompanies this Proxy Statement. The annual report, 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,
Teresa F.
Santos
Secretary
New York,
New York
April 17,
2009
37
FORM OF PROXY CARD
THE
STREET.COM, INC.
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
ANNUAL MEETING OF STOCKHOLDERS, MAY 28, 2009
The
undersigned hereby appoints Teresa F. Santos, 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 “Meeting”) to be held on
Thursday, May 28, 2009, 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 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 Proposal 2, 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
28, 2009
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
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FOR ALL
NOMINEES
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FOR ALL EXCEPT
(See instructions
below)
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WITHHOLD
AUTHORITY FOR
ALL NOMINEES
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|||
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1.
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Election
of Class I Directors
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¨
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¨
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¨
|
|
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Nominees:
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m James
J. Cramer
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||||
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m Martin
Peretz
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|||||
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m Derek
Irwin
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|||||
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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: ·
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|||||
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FOR
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AGAINST
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ABSTAIN
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|||
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2.
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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, 2009.
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¨
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¨
|
¨
|
|
|
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.
|
¨
|
|
Signature of Stockholder
|
Date:
|
||||
|
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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