UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
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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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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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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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WEBSITE
PROS, INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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x
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to
which transaction applies:
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Aggregate number of securities to
which transaction applies:
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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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Proposed maximum aggregate value of
transaction:
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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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Form, Schedule or Registration
Statement No.:
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Date Filed:
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W
EBSITE
P
ROS
, I
NC
.
12375
Gran Bay Parkway West, Building 200
Jacksonville,
Florida 32258
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 13, 2008
Dear Stockholder:
You are cordially invited to
attend a Annual Meeting of Stockholders of
WEBSITE
PROS, INC.
, a Delaware corporation (the Company). The meeting will
be held on
Tuesday
, May 13, 2008
at 10:30 a.m. local time at the
Sawgrass Marriott, 1000 PGA TOUR Boulevard, Ponte Vedra Beach, FL 32082 for the
following purposes:
1.
To elect three directors to hold office until
the 2011 Annual Meeting of Stockholders.
2.
To approve a Certificate of Amendment to the
Certificate of Incorporation.
3.
To approve
the 2008 Equity Incentive Plan.
4.
To ratify the selection of Ernst &
Young LLP as the independent registered public accounting firm of the Company
for its fiscal year ending December 31, 2008.
5.
To conduct any other business properly
brought before the meeting.
These items of business are
more fully described in the Proxy Statement accompanying this Notice.
The record date for the
Annual Meeting is March 19, 2008. Only stockholders of record at the close
of business on that date may vote at the meeting or any adjournment thereof.
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By Order of the Board of
Directors
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Kevin M. Carney
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Secretary
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Jacksonville, Florida
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April 14, 2008
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You are
cordially invited to attend the meeting in person. Whether or not you expect to
attend the meeting, please complete, date, sign and return the enclosed proxy
,
or vote
over the telephone or the Internet as instructed in these materials, as
promptly as possible in order to ensure your representation at the meeting. A
return envelope (which is postage prepaid if mailed in the United States) is
enclosed for your convenience. Even if you have voted by proxy, you may still
vote in person if you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and you wish to
vote at the meeting, you must obtain a proxy issued in your name from that
record holder.
1
WEBSITE PROS, INC.
12375
Gran Bay Parkway West, Building 200
Jacksonville,
Florida 32258
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
May 13,
2008
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I
receiving these materials?
We sent you this proxy
statement and the enclosed proxy card because the Board of Directors of
W
EBSITE
P
ROS
, I
NC
.
(sometimes referred to as the Company or Website Pros) is soliciting your
proxy to vote at the Annual Meeting of Stockholders. You are invited to attend
this annual meeting to vote on the proposals described in this proxy statement.
However, you do not need to attend the meeting to vote your shares. Instead,
you may simply complete, sign and return the enclosed proxy card, or follow the
instructions below to submit your proxy over the telephone or on the Internet.
The Company intends to mail
this proxy statement and accompanying proxy card on or about April 14,
2008 to all stockholders of record entitled to vote at the annual meeting.
Who can
vote at the annual meeting?
Only stockholders of record
at the close of business on March 19, 2008 will be entitled to vote at the
annual meeting. On this record date, there were 27,609,540 shares of common
stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If on March 19, 2008
your shares were registered directly in your name with Website Pros transfer
agent, Computershare Trust Company, N.A., then you are a stockholder of record.
As a stockholder of record, you may vote in person at the meeting or vote by
proxy. Whether or not you plan to attend the meeting, we urge you to fill out
and return the enclosed proxy card or vote by proxy over the telephone or on
the Internet as instructed below to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or Bank
If on March 19, 2008
your shares were held, not in your name, but rather in an account at a
brokerage firm, bank, dealer, or other similar organization, then you are the
beneficial owner of shares held in street name and these proxy materials are
being forwarded to you by that organization. The organization holding your
account is considered to be the stockholder of record for purposes of voting at
the annual meeting. As a beneficial owner, you have the right to direct your
broker or other agent on how to vote the shares in your account. You are also
invited to attend the annual meeting. However, since you are not the
stockholder of record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or other agent.
What am I
voting on?
There are four matters
scheduled for a vote:
·
Election
of three directors;
·
Approval of a Certificate of Amendment to
Website Pros Certificate of Incorporation changing the name of the company to Web.com, Inc.;
·
Adoption of our 2008 Equity Incentive Plan (the 2008 Plan); and
2
·
Ratification of Ernst & Young LLP as
the independent registered public accounting firm of the Company for its fiscal
year ending December 31, 2008.
How do I
vote?
You may either vote For
all the nominees to the Board of Directors or you may Withhold your vote for
any nominee you specify. You may vote For or Against, or abstain from
voting with respect to, the approval of the Certificate of Amendment to the
Certificate of Incorporation, the adoption of the 2008 Plan and the
ratification of Ernst & Young LLP as our independent registered public
accounting firm for our fiscal year ending December 31, 2008. The
procedures for voting are fairly simple:
Stockholder
of Record: Shares Registered in Your Name
If you are a stockholder of
record, you may vote in person at the annual meeting, vote by proxy using the
enclosed proxy card, vote by proxy over the telephone, or vote by proxy on the
Internet. Whether or not you plan to attend the meeting, we urge you to vote by
proxy to ensure your vote is counted. You may still attend the meeting and vote
in person if you have already voted by proxy.
·
To vote in person, come to the annual meeting
and we will give you a ballot when you arrive.
·
To vote using the proxy card, simply
complete, sign and date the enclosed proxy card and return it promptly in the
envelope provided. If you return your signed proxy card to us before the annual
meeting, we will vote your shares as you direct.
·
To vote over the telephone, dial toll-free
1-800-652-VOTE (8683) using a touch-tone phone and follow the recorded
instructions. You will be asked to provide your holder account number and proxy
access number from the enclosed proxy card. Your vote must be received by 1:00 a.m.
Eastern Time on May 13, 2008 to be counted.
·
To vote on the Internet, go to
www.investorvote.com to complete an electronic proxy card. You will be asked to
provide your holder account number and proxy access number from the enclosed
proxy card. Your vote must be received by 1:00 a.m. Eastern Time on May 13,
2008 to be counted.
Beneficial
Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial
owner of shares registered in the name of your broker, bank, or other agent,
you should have received a proxy card and voting instructions with these proxy
materials from that organization rather than from Website Pros. Simply complete
and mail the proxy card to ensure that your vote is counted. Alternatively, you
may vote by telephone or over the Internet as instructed by your broker or
bank. To vote in person at the annual meeting, you must obtain a valid proxy
from your broker, bank, or other agent. Follow the instructions from your
broker or bank included with these proxy materials, or contact your broker or
bank to request a proxy form.
We provide
Internet proxy voting to allow you to vote your shares on-line, with procedures
designed to ensure the authenticity and correctness of your proxy vote
instructions. However, please be aware that you must bear any costs associated
with your Internet access, such as usage charges from Internet access providers
and telephone companies.
How many
votes do I have?
You have one vote for each
share of common stock you own as of the close of business on March 19,
2008.
What if I
return a proxy card but do not make specific choices?
If you return a signed and
dated proxy card without marking any voting selections, your shares will be
voted For the election of all three nominees, For approval of the
Certificate of Amendment to the Certificate of
3
Incorporation, For adoption of the 2008 Plan, and For the ratification of Ernst & Young
LLP as the independent registered public accounting firm for the fiscal year
ending December 31, 2008. If any other matter is properly presented at the
meeting, your proxy (one of the individuals named on your proxy card) will vote
your shares using his or her best judgment.
Who is
paying for this proxy solicitation?
We will pay for the entire
cost of soliciting proxies. In addition to these mailed proxy materials, our
directors and employees may also solicit proxies in person, by telephone, or by
other means of communication. Directors and employees will not be paid any
additional compensation for soliciting proxies. We may also reimburse brokerage
firms, banks, and other agents for the cost of forwarding proxy materials to
beneficial owners.
What does
it mean if I receive more than one proxy card?
If you receive more than one
proxy card, your shares are registered in more than one name or are registered
in different accounts. Please complete, sign and return
each
proxy card to ensure that all of your
shares are voted.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your
proxy at any time before the final vote at the meeting. If you are the record
holder of your shares, you may revoke your proxy in any one of three ways:
·
You may submit another properly completed
proxy card with a later date.
·
You may send a written notice that you are
revoking your proxy to Website Pros Corporate Secretary at 12375 Gran Bay
Parkway West, Building 200, Jacksonville, Florida 32258.
·
You may attend the annual meeting and vote in
person. Simply attending the meeting will not, by itself, revoke your proxy.
If your shares are held by
your broker or bank as a nominee or agent, you should follow the instructions
provided by your broker or bank.
When are
stockholder proposals due for next years annual meeting?
To be considered for
inclusion in next years proxy materials, your proposal must be submitted in
writing by January 13, 2009, to the Corporate Secretary of Website Pros at
12375 Gran Bay Parkway West, Building 200, Jacksonville, Florida 32258.
A stockholder nomination for
director or a proposal that will not be included in next years proxy
materials, but that a stockholder intends to present in person at next years
Annual Meeting, must comply with the notice, information and consent provisions
contained in the Companys Bylaws. In part, the Bylaws provide that to timely
submit a proposal or nominate a director you must do so by submitting the proposal
or nomination in writing, to the Companys Corporate Secretary at the Companys
principal executive offices no later than the close of business on February 13,
2009 (90 days prior to the first anniversary of the 2008 Annual Meeting Date)
nor earlier than the close of business on January 14, 2009 (120 days prior
to the first anniversary of the 2008 Annual Meeting date). In the event that
the Company sets an Annual Meeting date for 2009 that is not within 30 days
before or after the anniversary of the 2008 Annual Meeting date, notice by the
stockholder must be received no later than the close of business on the 120th
day prior to the 2009 Annual Meeting and not later than the close of business
on the later of the 90th day prior to the 2009 Annual Meeting or the 10th day
following the day on which public announcement of the date of the 2009 Annual
Meeting is first made. The Companys Bylaws contain additional requirements to
properly submit a proposal or nominate a director. If you plan to submit a
proposal or nominate a director, please review the Companys Bylaws carefully.
You may obtain a copy of the Companys Bylaws by mailing a request in writing
to the Corporate Secretary of Website Pros at 12375 Gran Bay Parkway West,
Building 200, Jacksonville, Florida 32258.
4
How are
votes counted?
Votes will be counted by the
inspector of elections appointed for the meeting, who will separately count For
and Withhold and, with respect to proposals other than the election of
directors, Against votes, abstentions and broker non-votes. Abstentions will
be counted towards the vote total for each proposal and will have the same
effect as Against votes. Broker non-votes have no effect and will not be
counted towards the vote total for any proposal.
If your shares are held by
your broker as your nominee (that is, in street name), you will need to
obtain a proxy form from the institution that holds your shares and follow the
instructions included on that form regarding how to instruct your broker to
vote your shares. If you do not give instructions to your broker, your broker
can vote your shares with respect to discretionary items, but not with
respect to non-discretionary items. Discretionary items are proposals
considered routine under the rules of the New York Stock Exchange (NYSE)
on which your broker may vote shares held in street name in the absence of your
voting instructions. On non-discretionary items for which you do not give your
broker instructions, the shares will be treated as broker non-votes.
How many
votes are needed to approve each proposal?
·
For the election of directors, the three
nominees receiving the most For votes (among votes properly cast in person or
by proxy) will be elected. Only votes For or Withheld will affect the
outcome.
·
To be approved, Proposal 2Approval of the
Certificate of Amendment must receive a For vote from the majority of shares
present and entitled to vote either in person or by proxy. If you Abstain
from voting, it will have the same effect as an Against vote. Broker
non-votes will have no effect.
·
To be approved, Proposal 3Adoption of the 2008 Equity Incentive Plan
must receive a For vote from the majority of shares present and entitled to
vote either in person or by proxy. If you Abstain from voting, it will have
the same effect as an Against vote. Broker non-votes will have no effect.
·
To be approved, Proposal 4Ratification of
Ernst & Young LLP as independent registered public accounting firm for
the Company for its fiscal year ending December 31, 2008 must receive a For
vote from the majority of shares present and entitled to vote either in person
or by proxy. If you Abstain from voting, it will have the same effect as an Against
vote. Broker non-votes will have no effect.
What is the
quorum requirement?
A quorum of stockholders is
necessary to hold a valid meeting. A quorum will be present if a majority of
the outstanding shares are represented by stockholders present at the meeting
or by proxy. On the record date, there were 27,609,540 shares outstanding and
entitled to vote. Thus at least 13,804,771 shares must be represented by
stockholders present at the meeting or by proxy to have a quorum.
Your shares will be counted
towards the quorum only if you submit a valid proxy (or one is submitted on
your behalf by your broker, bank or other nominee) or if you vote in person at
the meeting. Abstentions and broker non-votes will be counted towards the
quorum requirement. If there is no quorum, either the chairman of the meeting
or a majority of the votes present at the meeting may adjourn the meeting to
another date.
How can I
find out the results of the voting at the annual meeting?
Preliminary
voting results will be announced at the annual meeting. Final voting results
will be published in the Companys quarterly report on Form 10-Q for the
second quarter of 2008.
5
PROPOSAL 1
ELECTION OF DIRECTORS
Website
Pros Board of Directors is divided into three classes. Each class consists, as
nearly as possible, of one-third of the total number of directors, and each
class has a three-year term. Vacancies on the Board may be filled only by
persons elected by a majority of the remaining directors. A director elected by
the Board to fill a vacancy in a class shall serve for the remainder of the
full term of that class, and until the directors successor is elected and
qualified or until the directors death, resignation or removal. This includes
vacancies created by an increase in the number of directors.
The
Board of Directors presently has seven members. There are three directors in
the class whose term of office expires in 2008. Mr. Brown, our Chief
Executive Officer, was appointed to the Board of Directors in August 1999
in connection with Website Pros acquisition of Atlantic Teleservices. Mr. Maudlin
was appointed to the Board of Directors in February 2002 in connection
with Website Pros acquisition of Innuity, Inc. and was appointed Lead
Director in January 2007. Mr. Kazerani was appointed to the Board of
Directors in September 2007, in connection with Website Pros acquisition
of Web.com. If elected at the annual
meeting, each of these nominees would serve until the 2011 annual meeting and
until his successor is elected and has qualified, or until the directors
death, resignation or removal.
It
is the Companys policy to encourage directors and nominees for director to
attend the annual meeting, and three directors attended the Companys 2007
Annual Meeting.
The
following is a brief biography of the nominees for election at the 2008 Annual
Meeting and each director whose term will continue after the annual meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE
2011 ANNUAL MEETING
David L. Brown
,
age 54, has served as our Chief Executive
Officer since August 2000 and as a member of our Board of Directors since August 1999.
Mr. Brown served as our President from August 1999 until March 2000
and from August 2000 until September 2007. Mr. Brown was
employed by Atlantic Partners Group, a private equity firm, from March 2000
until August 2000. Prior to joining us, Mr. Brown founded Atlantic
Teleservices, a technology services company, in 1997 and served as its Chief
Executive Officer from 1997 until its acquisition by us in August 1999. Mr. Brown
holds a B.A. from Harvard University.
Timothy I. Maudlin,
age 57, has served as a member of our Board
of Directors since February 2002 and was appointed Lead Director in January 2007.
Mr. Maudlin currently serves on the board of directors for Sucampo
Pharmaceutical, Inc. (NASDAQ: SCMP), a position held since September 2006, and
is a member of its Audit Committee and its Nominating and Corporate Governance
Committee. Mr. Maudlin also serves on the board of directors for several
private companies. Mr. Maudlin served as a managing partner of Medical
Innovation Partners, a venture capital firm, from 1989 until 2007. From 1999 to
2001, he served as a principal and as Chief Financial Officer of Venturi Group,
LLC, an incubator and venture capital firm. From February 2005 until June 2006,
Mr. Maudlin served as chairman of the board of directors of Curative
Health Services, Inc. (Curative), a biopharmaceutical company. In March 2006,
Curative filed a voluntary petition for bankruptcy under Chapter 11 and in June 2006,
it emerged from bankruptcy. He is a certified public accountant and holds a
B.A. from St. Olaf College and a M.M. from Kellogg School of Management at
Northwestern University.
Alex Kazerani,
age 35, has served as a member of our Board
of Directors since September 30, 2007. From August 2005 until joining
our Board of Directors, Mr. Kazerani served on Web.coms board of
directors. Mr. Kazerani is currently Chief Executive Officer of EdgeCast
Networks Inc., where he has served since August of 2006. Prior to
co-founding EdgeCast, he was the Chairman and Chief Executive Officer of KnowledgeBase.net,
a hosted enterprise knowledge management company with many fortune 1000
customers that he started in 2001. Additionally, Mr. Kazerani was the
founder of HostPro, an industry-leading web hosting and application services
provider that was acquired by Micron Electronics in August of 1999. Mr. Kazerani
has extensive experience developing and designing technology solutions and
operations for web hosting applications and data center build-outs. Mr. Kazerani
earned a B.A. degree in International Relations and Economics from Tufts
University.
6
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2009 ANNUAL MEETING
Hugh M. Durden
, age 65, has served as a member of our Board
of Directors since January 2006. Mr. Durden is currently a director
of The St. Joe Company, a real estate development company, and the chairman of
the Alfred I. duPont Testamentary Trust. Prior to serving as chairman, Mr. Durden
served as the representative of the corporate trustee of the DuPont Trust from July 1997
until December 2004. Prior to joining the DuPont Trust, Mr. Durden
served as president of Wachovia Corporate Services, a banking corporation, from
January 1994 until December 2000. Mr. Durden holds a B.A. from
Princeton University and a M.B.A. from Tulane University.
Jeffrey M. Stibel,
age 34, has served as a member of our Board
of Directors since September 30, 2007, when he also assumed the role of
President. From August 2005 until joining Website Pros upon Website Pros
acquisition of Web.com, Mr. Stibel was the President and Chief Executive
Officer of Web.com, and a member of its board of directors. From August 2000
to August 2005, Stibel held executive positions at United Online, Inc.
(NASDAQ: UNTD), a technology company that owns and operates branded ISPs
(NetZero, Juno and BlueLight Internet) and Web services (Classmates.com,
MySite, PhotoSite and FreeServers). Mr. Stibel currently serves on the
board of directors for Autobytel (NASDAQ: ABTL) and several private companies.
He also serves on the board of Brown Universitys Entrepreneurship Program and
Tufts Universitys Gordon Center for Leadership. Mr. Stibel received a
masters degree from Brown University and studied business and brain science at
MITs Sloan School of Management and at Brown University, where he was a Brain
and Behavior Fellow.
DIRECTORS
CONTINUING IN OFFICE UNTIL THE 2010 ANNUAL MEETING
Julius Genachowski
,
age 45, has served as a member of our Board
of Directors since January 2006. Mr. Genachowski is co-founder and
managing director of Rock Creek Ventures and a special advisor at General
Atlantic. From 1997 until 2005, Mr. Genachowski served in senior executive
positions at IAC/InterActiveCorp, a publicly-traded e-commerce and media
company. His positions at IAC included Chief of Business Operations, General
Counsel and member of the Office of the Chairman. Prior to joining IAC, Mr. Genachowski
served as Chief Counsel to the Chairman of the Federal Communications
Commission. Prior to joining the FCC, he served as a law clerk to U.S. Supreme
Court Justice David H. Souter and, before that, to retired U.S. Supreme Court
Justice William J. Brennan, Jr., and to Chief Judge Abner J. Mikva of the
U.S. Court of Appeals for the D.C. Circuit.
He has served as an aide to U.S. Senator (then Representative) Charles
E. Schumer, and to the House Iran-Contra Committee. Mr. Genachowski holds
a B.A. from Columbia University and a J.D. from Harvard Law School.
Robert S. McCoy, Jr.
, age 69, has served as a member of our Board
of Directors since March 28, 2007. Mr. McCoy has been a director of
Krispy Kreme Doughnuts, Inc. since November 2003 and is currently the
Chairman of its Audit Committee and a member of its Governance Committee. Mr. McCoy
has been a director of MedCath Corporation since October 2003 and is
currently the Chairman of its Audit Committee and a member of its Compliance
Committee and Governance and Nominating Committee. Mr. McCoy retired in September 2003
as Vice Chairman and Chief Financial Officer of Wachovia Corporation, a
diversified financial services company, where he had been a senior executive
officer since 1991.
INDEPENDENCE OF THE BOARD OF DIRECTORS
As
required under The NASDAQ Global Market (Nasdaq) listing standards, a
majority of the members of a listed companys Board of Directors must qualify
as independent, as affirmatively determined by the Board of Directors. The
Board consults with the Companys counsel to ensure that the Boards
determinations are consistent with all relevant securities and other laws and
regulations regarding the definition of independent, including those set
forth in pertinent listing standards of Nasdaq, as in effect from time to time.
Consistent
with these considerations, after review of all relevant transactions or
relationships between each director, or any of his or her family members, and
the Company, its senior management and its independent registered public
accounting firm, the Board affirmatively has determined that the following
directors are
7
independent directors within the meaning of
the applicable Nasdaq listing standards: Mr. Durden, Mr. Genachowski,
Mr. Kazerani, Mr. Maudlin, and Mr. McCoy. In making this
determination, the Board found that none of the directors or nominees for
director have a material or other disqualifying relationship with the Company. Mr. Brown,
the Chief Executive Officer of the Company, and Mr. Stibel, the President
of the Company, are not independent directors.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS
COMMITTEES
On
January 25, 2007, the Board of Directors documented the governance
practices followed by the Company by adopting Corporate Governance Principles
to assure that the Board will have the necessary authority and practices in
place to review and evaluate the Companys business operations as needed and to
make decisions that are independent of the Companys management. The principles
are also intended to align the interests of directors and management with those
of the Companys stockholders. The Corporate Governance Principles set forth
the practices the Board will follow with respect to board composition and
selection, board meetings and involvement of senior management, Chief Executive
Officer performance evaluation and succession planning, and board committees
and compensation. The Corporate Governance Principles were adopted by the Board
to, among other things, reflect changes to the Nasdaq listing standards and
Securities and Exchange Commission rules adopted to implement provisions
of the Sarbanes-Oxley Act of 2002. The Corporate Governance Principles, as well
as the charters for each committee of the Board, may be viewed at
http://ir.websitepros.com/documents.cfm
.
As
required under applicable Nasdaq listing standards, in the fiscal year ended December 31,
2007, the Companys independent directors met three times in regularly
scheduled executive sessions at which only independent directors were present. Mr. Maudlin,
Lead Director and chairman of the Audit Committee, presided over the executive
sessions. Persons interested in communicating with the independent directors
with their concerns or issues may address correspondence to a particular
director, or to the independent directors generally, in care of Website Pros at
12375 Gran Bay Parkway West, Building 200, Jacksonville, Florida 32258. If no
particular director is named, letters will be forwarded, depending on the
subject matter, to the Chairman of the Audit, Compensation, or Nominating and
Corporate Governance Committee.
The
Board has three committees: an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee. The following table provides the
current membership and the meeting information for the fiscal year ended December 31,
2007 for each of the Board committees:
Name
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Audit
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Compensation
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Nominating and
Corporate
Governance
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Hugh
M. Durden
|
|
X
|
|
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X*
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Julius
Genachowski
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X*
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X
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Alex
Kazerani (1)
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X
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Timothy
I. Maudlin
|
|
X*
|
|
X
|
|
|
|
Robert
S. McCoy, Jr.
|
|
X
|
|
X
|
|
|
|
Total
meetings in fiscal year 2007
|
|
5
|
|
6
|
|
4
|
|
* Committee Chairperson
(1) Appointed
effective September 30, 2007, in connection with our acquisition of
Web.com, Inc.
Below
is a description of each committee of the Board of Directors. The Board of
Directors has determined that each member of each committee meets the
applicable rules and regulations regarding independence and that each
member is free of any relationship that would interfere with his or her
individual exercise of independent judgment with regard to the Company.
AUDIT COMMITTEE
The
Audit Committee of the Board of Directors oversees the Companys corporate
accounting and financial reporting process. For this purpose, the Audit
Committee performs several functions. The Audit Committee evaluates the
performance of and assesses the qualifications of the independent registered
public accounting firm;
8
determines and approves the engagement of the
independent registered public accounting firm; determines whether to retain or
terminate the existing independent registered public accounting firm or to
appoint and engage a new independent registered public accounting firm; reviews
and approves the retention of the independent registered public accounting firm
to perform any proposed permissible non-audit services; monitors the rotation
of partners of the independent registered public accounting firm on the Companys
audit engagement team as required by law; confers with management and the
independent registered public accounting firm regarding the effectiveness of
internal controls over financial reporting; establishes procedures, as required
under applicable law, for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls or
auditing matters and the confidential and anonymous submission by employees of
concerns regarding questionable accounting or auditing matters; and meets to
review the companys annual audited financial statements and quarterly
financial statements with management and the independent auditor, including
reviewing the Companys disclosures under Managements Discussion and Analysis
of Financial Condition and Results of Operation set forth in the Companys
quarterly reports on Form 10-Q and annual report on Form 10-K. In the
fiscal year ended December 31, 2007, the Audit Committee met four times in
executive session with the Companys independent auditor.
Our
Audit Committee charter can be found on our corporate website at
http://ir.websitepros.com/documents.cfm
.
The Board of Directors annually reviews the Nasdaq listing standards definition
of independence for Audit Committee members and has determined that all members
of the Companys Audit Committee are independent (as required by Rule 4350(d)(2)(A)(i) and
(ii) of the Nasdaq listing standards). The Board of Directors has
determined that Mr. Maudlin qualifies as an audit committee financial
expert, as defined in applicable SEC rules. The Board made a qualitative
assessment of Mr. Maudlins level of knowledge and experience based on a
number of factors, including his formal education and experience as an audit
manager with Arthur Andersen and as a chief financial officer.
COMPENSATION COMMITTEE
The
Compensation Committee of the Board of Directors reviews and approves the
overall compensation policies, plans and programs for the Company. The
Compensation Committee reviews and approves corporate performance goals and
objectives relevant to the compensation of the Companys independent directors,
executive officers and other senior management; determines and approves the
compensation and other terms of employment of the Companys Chief Executive
Officer; reviews and approves the compensation and other terms of employment of
the other executive officers; administers the Companys stock option and
purchase plans, pension and profit sharing plans, stock bonus plans, deferred
compensation plans and other similar programs; and reviews succession planning
for executive positions. Commencing this year, the Compensation Committee also
began to review with management the Companys Compensation Discussion and
Analysis and to consider whether to recommend that it be included in proxy
statements and other filings. Our Compensation Committee charter can be found
on our corporate website at
http://ir.websitepros.com/documents.cfm
.
All members of the Companys Compensation Committee are independent (as
independence is currently defined in Rule 4200(a)(15) of the Nasdaq
listing standards).
The
Compensation Committee meets regularly in executive session. In addition,
various members of management and other employees as well as outside advisors
or consultants are invited by the Compensation Committee to make presentations,
provide financial or other background information or advice or otherwise
participate in Compensation Committee meetings. The Chief Executive Officer may
not participate in or be present during any deliberations or determinations of
the Compensation Committee regarding his compensation or individual performance
objectives. The charter of the Compensation Committee grants the Compensation
Committee full access to all books, records, facilities and personnel of the
Company, as well as authority to obtain, at the expense of the Company, advice
and assistance from internal and external legal, accounting or other advisors
and consultants and other external resources that the Compensation Committee
considers necessary or appropriate in the performance of its duties. In
particular, the Compensation Committee has the authority to retain compensation
consultants to assist in its evaluation of executive and director compensation,
including the sole authority to approve the consultants reasonable fees and
other retention terms.
9
In
connection with setting executive compensation for fiscal 2008, the
Compensation Committee engaged an outside compensation consulting firm to
evaluate the Companys existing compensation strategy and practices in
supporting and reinforcing the Companys long-term strategic goals and to
assist in refining the Companys compensation strategy. As part of its
engagement, the compensation consulting firm developed a comparative group of
companies and performed analyses of competitive performance and compensation
levels for that group. At the request of the Compensation Committee, the
compensation consulting firm also conducted individual interviews with members
of the Compensation Committee and certain employees identified by the
Compensation Committee to learn more about the Companys business operations
and strategy, key performance metrics and strategic goals, as well as the labor
markets in which the Company competes. The compensation consulting firm
developed recommendations that were presented to the Compensation Committee for
its consideration. Following an active dialogue with the compensation
consulting firm, the Compensation Committee recommended that the Board of
Directors approve modified recommendations of the compensation consulting firm.
Under
its charter, the Compensation Committee may form and delegate authority to
subcommittees as appropriate, including, but not limited to, a subcommittee
composed of one or more members of the Board to grant stock awards under the
Companys equity incentive plans to persons who are not (a) Covered
Employees under Section 162(m) of the Internal Revenue Code of 1986,
as amended (the Code); (b) individuals with respect to whom the Company
wishes to comply with Section 162(m) of the Code or (c) then
subject to Section 16 of the Exchange Act. Prior to October 26, 2006,
the Compensation Committee had delegated authority to the Chief Executive
Officer to grant options under the Companys 2005 Equity Incentive Plan in
amounts not exceeding 5,000 shares per grant. In 2006, the Chief
Executive Officer exercised this authority to grant options covering a total of
36,400 shares. On October 26, 2006, in order to implement best practices
regarding equity grants the Compensation Committee withdrew this authority and
determined that the Compensation Committee would act on all awards under the
2005 Equity Incentive Plan at its regularly scheduled meetings.
Historically,
the Compensation Committee has made most significant adjustments to annual
compensation, determined bonus and equity awards and established new
performance objectives at one or more meetings held during the first quarter of
the year. However, the Compensation Committee also considers matters
related to individual compensation as necessary throughout the year. For
executives other than the Chief Executive Officer, the Compensation Committee
solicits and considers evaluations and recommendations submitted to the
Compensation Committee by the Chief Executive Officer. In the case of the Chief
Executive Officer, the evaluation of his performance is conducted by the
Compensation Committee, which determines any adjustments to his compensation as
well as awards to be granted. For all executives and directors, as part of its
deliberations, the Compensation Committee may review and consider materials
such as financial reports and projections, operational data, tax and accounting
information, tally sheets that set forth the total compensation that may become
payable to executives in various hypothetical scenarios, executive and director
stock ownership information, company stock performance data, analyses of
historical executive compensation levels and current Company-wide compensation
levels, and recommendations of the Compensation Committees compensation
consultant, including analyses of executive and director compensation paid at
other companies identified by the compensation consulting firm.
The
specific determinations with respect to executive compensation for fiscal 2008
are described in greater detail in the Compensation Discussion and Analysis
section of this Proxy Statement.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The
Nominating and Corporate Governance Committee of the Board of Directors is
responsible for identifying, reviewing and evaluating candidates to serve as
directors of the Company, reviewing and evaluating incumbent directors,
recommending to the Board for selection candidates for election to the Board of
Directors, making recommendations to the Board regarding the membership of the
committees of the Board, assessing the performance of the Board and developing
a set of corporate governance principles for the Company. Our Nominating and
Corporate Governance Committee charter can be found on our corporate website at
http://ir.websitepros.com/documents.cfm
. All members of the
Nominating and Corporate Governance Committee are independent (as independence
is currently defined in Rule 4200(a)(15) of the Nasdaq listing standards).
The
Nominating and Corporate Governance Committee believes that candidates for
director should have certain minimum qualifications, including being able to
read and understand basic financial statements, being over 21 years
10
of age and having the highest personal
integrity and ethics. The Nominating and Corporate Governance Committee also
intends to consider such factors as possessing relevant expertise upon which to
be able to offer advice and guidance to management, having sufficient time to
devote to the affairs of the Company, demonstrated excellence in his or her
field, having the ability to exercise sound business judgment and having the
commitment to rigorously represent the long-term interests of the Companys
stockholders. However, the Nominating and Corporate Governance Committee
retains the right to modify these qualifications from time to time. Candidates
for director nominees are reviewed in the context of the current composition of
the Board, the operating requirements of the Company and the long-term interests
of stockholders. In conducting this assessment, the Nominating and Corporate
Governance Committee considers diversity, age, skills, and such other factors
as it deems appropriate given the current needs of the Board and the Company,
to maintain a balance of knowledge, experience and capability.
In
the case of incumbent directors whose terms of office are set to expire, the
Nominating and Corporate Governance Committee reviews such directors overall
service to the Company during their term, including the number of meetings
attended, level of participation, quality of performance, and any other
relationships and transactions that might impair such directors independence.
In the case of new director candidates, the Nominating and Corporate Governance
Committee also determines whether the nominee must be independent for Nasdaq
purposes, which determination is based upon applicable Nasdaq listing
standards, applicable SEC rules and regulations and the advice of counsel,
if necessary. The Nominating and Corporate Governance Committee then uses its
network of contacts to compile a list of potential candidates, but may also
engage, if it deems appropriate, a professional search firm. The Nominating and
Corporate Governance Committee conducts any appropriate and necessary inquiries
into the backgrounds and qualifications of possible candidates after
considering the function and needs of the Board. The Nominating and Corporate
Governance Committee meets to discuss and consider such candidates
qualifications and then selects a nominee for recommendation to the Board by
majority vote. To date, the Nominating and Corporate Governance Committee has
not paid a fee to any third party to assist in the process of identifying or
evaluating director candidates. To date, the Nominating and Corporate
Governance Committee has not rejected a timely director nominee from a
stockholder or stockholders holding more than 5% of our voting stock.
At
this time, the Nominating and Corporate Governance Committee does not consider
director candidates recommended by stockholders. The Nominating and Corporate
Governance Committee believes that it is in the best position to identify,
review, evaluate and select qualified candidates for Board membership, based on
the comprehensive criteria for Board membership approved by the Board.
C
OMPENSATION
OF
D
IRECTORS
Until January 25, 2007,
each non-employee director of the Company received a payment of $1,000 for each
in-person meeting of the Board of Directors or any committee thereof attended
by such non-employee director and $250 for any telephonic meeting of the Board
of Directors or any committee thereof attended by such non-employee director.
On January 25, 2007,
the Board of Directors completed a review of compensation for non-employee
directors. The review included a study
performed by a compensation consulting firm.
Based on the analysis, and the increased responsibility and time
commitment associated with Board and committee service, effective January 26,
2007, the Company began paying a quarterly retainer as follows:
|
|
Quarterly
|
|
|
|
Retainer
|
|
Position
|
|
($)
|
|
Non-Employee, Non-Chair Board Member
|
|
4,000
|
|
Audit Committee Chair
|
|
5,000
|
|
Compensation Committee Chair
|
|
4,500
|
|
Nominating and Corporate Governance
Committee Chair
|
|
4,250
|
|
Also effective January 26,
2007, the Company began paying per meeting fees of $1,500 for Tier I meetings
and $750 for Tier II meetings. The
determination of Tier I and II meetings is at the discretion of the chairman of
the Board of Directors and is primarily based on the items to be reviewed
and/or acted on at the meeting. The
members
11
of the Board of Directors are also eligible for reimbursement for their
expenses incurred in attending Board meetings in accordance with Company
policy.
During 2007, each
non-employee director of the Company also received stock option grants under
the 2005 Non-Employee Directors Stock Option Plan (the 2005 Directors Plan).
Only non-employee directors of the Company are eligible to receive options
under the 2005 Directors Plan. Options granted under the 2005 Directors Plan
are intended by the Company not to qualify as incentive stock options under the
Internal Revenue Code.
Pursuant to the original
terms of the 2005 Directors Plan, any individual who served as a non-employee
director upon the effectiveness of the Companys initial public offering, or
became a non-employee director after the Companys initial public offering and
prior to January 25, 2007 was automatically granted an initial option to
purchase 40,000 shares of common stock. The initial grants issued upon the
effectiveness of the initial public offering have an exercise price per share
equal to $10.00, the price per share in the Companys initial public offering.
The shares subject to each initial grant vest in a series of 36 successive
equal monthly installments measured from the date of grant.
On January 25, 2007,
the Board of Directors approved, upon the recommendation of the Compensation
Committee and subject to stockholder approval, an amendment to the 2005
Directors Plan to modify, among other things, the initial and annual grants to
non-employee directors by providing for restricted stock grants and reducing
the size of the option grants. This
amendment was approved by our stockholders at the 2007 annual meeting of
stockholders.
During the last completed
fiscal year, the Company granted under the 2005 Directors Plan 4,250 shares of
restricted stock and options covering 8,500 shares of common stock to each
non-employee then serving as director of the Company and additional options
covering 5,000, 3,000 and 2,000 for the individuals who were serving as the
chairperson of each of the audit committee, compensation committee and the
nominating and corporate governance committee, respectively, immediately
following the 2007 Annual Meeting of Stockholders, at an exercise price per
share of $8.70, the fair market value of such shares at such time. The shares
subject to such options vest in a series of 12 successive equal monthly
installments measured from the date of grant and the shares of restricted stock
vest on the first anniversary of the date of grant. The Company granted initial
options covering 40,000 shares to a new director with an exercise price of $8.90,
vesting monthly over three years. The
Company granted initial options covering 25,000 shares with an exercise price
of $8.90, vesting monthly over three years, and 12,500 shares of restricted
stock, vesting annually over three years, to another new director. As of March 19,
2008, no options had been exercised under the 2005 Directors Plan. In connection with Mr. Duritys
resignation upon the Web.com acquisition, and in recognition of his service to
Website Pros, the board of directors modified the equity grants held by Mr. Durity
so that any restricted stock and any options to purchase Website Pros common
stock held by him immediately prior to the closing to the Web.com acquisition
became fully vested and extended the time period in which Mr. Durity would
have to exercise any stock option to the end of the term of each such option.
The following table provides
information for fiscal 2007 compensation for non-employee directors who served
during fiscal 2007.
|
|
Fees Earned or
|
|
Stock
|
|
Option
|
|
|
|
Name
|
|
Paid in Cash
|
|
Awards (1)
|
|
Awards (1)
|
|
Total
|
|
Hugh M. Durden(2)
|
|
$
|
32,768
|
|
$
|
23,978
|
|
$
|
144,865
|
|
$
|
201,611
|
|
G. Harry Durity (3)
|
|
$
|
25,340
|
|
$
|
41,935
|
|
$
|
227,284
|
|
$
|
294,559
|
|
Julius Genachowski (4)
|
|
$
|
31,945
|
|
$
|
23,978
|
|
$
|
147,884
|
|
$
|
203,807
|
|
Alex Kazerani (5)
|
|
$
|
5,500
|
|
$
|
10,986
|
|
$
|
11,092
|
|
$
|
27,578
|
|
Timothy I. Maudlin (6)
|
|
$
|
36,300
|
|
$
|
23,978
|
|
$
|
167,617
|
|
$
|
227,895
|
|
Robert S. McCoy, Jr. (7)
|
|
$
|
22,500
|
|
$
|
23,978
|
|
$
|
73,308
|
|
$
|
119,786
|
|
Deven Parekh (8) (9)
|
|
$
|
5,840
|
|
$
|
|
|
$
|
50,837
|
|
$
|
56,677
|
|
George J. Still, Jr. (10) (9)
|
|
$
|
3,840
|
|
$
|
|
|
$
|
60,351
|
|
$
|
64,191
|
|
(1) The amounts shown reflect the dollar amount
recognized for financial statement reporting purposes for the fiscal year ended
December 31, 2007, in accordance with FAS 123(R) and thus includes
amounts from awards granted in and prior to 2007. Assumptions used in the calculation of this
amount are included in footnote 10 to the
12
Companys
audited financial statements for the fiscal year ended December 31, 2007
included in the Companys Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 11, 2008.
(2) Includes an option to purchase 40,000 shares
of common stock granted on January 17, 2006 with a grant date fair value
(as calculated under FAS 123R for financial reporting purposes) of $88,897, an
option to purchase 10,000 shares of common stock granted on May 9, 2006
with a grant date fair value (as calculated under FAS 123R for financial
reporting purposes) of $24,813, an option to purchase 10,500 shares of common
stock granted on May 8, 2007 with a grant date fair value (as calculated
under FAS 123R for financial reporting purposes) of $31,154 and 4,250 shares of
restricted common stock granted on May 8, 2007 with a grant date fair
value (as calculated under FAS 123R for financial reporting purposes) of
$23,978. As of December 31, 2007,
the director had options outstanding to purchase 60,500 shares of common stock.
(3) Includes an option to purchase 40,000 shares
of common stock granted on January 17, 2006 with a grant date fair value
(as calculated under FAS 123R for financial reporting purposes) of $156,244, an
option to purchase 10,000 shares of common stock granted on May 9, 2006
with a grant date fair value (as calculated under FAS 123R for financial
reporting purposes) of $24,813, an option to purchase 8,500 shares of common
stock granted on May 8, 2007 with a grant date fair value (as calculated
under FAS 123R for financial reporting purposes) of $46,226 and 4,250 shares of
restricted common stock granted on May 8, 2007 with a grant date fair
value (as calculated under FAS 123R for financial reporting purposes) of
$41,935. As of December 31, 2007,
the director had options outstanding to purchase 58,500 shares of common stock.
Effective September 30, 2007, Mr. Durity resigned from the Board of
Directors in connection with our transaction with Web.com.
(4) Includes an option to purchase 40,000 shares
of common stock granted on January 17, 2006 with a grant date fair value
(as calculated under FAS 123R for financial reporting purposes) of $88,897, an
option to purchase 10,000 shares of common stock granted on May 9, 2006
with a grant date fair value (as calculated under FAS 123R for financial reporting
purposes) of $24,813, an option to purchase 11,500 shares of common stock
granted on May 8, 2007 with a grant date fair value (as calculated under
FAS 123R for financial reporting purposes) of $34,124 and 4,250 shares of
restricted common stock granted on May 8, 2007 with a grant date fair
value (as calculated under FAS 123R for financial reporting purposes) of
$23,978. As of December 31, 2007,
the director had options outstanding to purchase 61,500 shares of common stock.
(5) Includes an option to purchase 25,000 shares
of common stock granted on October 1, 2007 with a grant date fair value
(as calculated under FAS 123R for financial reporting purposes) of $11,092 and
12,500 shares of restricted common stock granted on October 1, 2007 with a
grant date fair value (as calculated under FAS 123R for financial reporting
purposes) of $10,986. As of December 31,
2007, the director had options outstanding to purchase 25,000 shares of common
stock. Effective September 30,
2007, Mr. Kazerani joined the Board of Directors in connection with our
transaction with Web.com.
(6) Includes an option to purchase 40,000 shares
of common stock granted on November 7, 2005 with a grant date fair value
(as calculated under FAS 123R for financial reporting purposes) of $90,340, an
option to purchase 15,000 shares of common stock granted on May 9, 2006
with a grant date fair value (as calculated under FAS 123R for financial
reporting purposes) of $37,221, an option to purchase 13,500 shares of common
stock granted on May 8, 2007 with a grant date fair value (as calculated
under FAS 123R for financial reporting purposes) of $40,057 and 4,250 shares of
restricted common stock granted on May 8, 2007 with a grant date fair
value (as calculated under FAS 123R for financial reporting purposes) of
$23,978. As of December 31, 2007,
the director had 68,500 options outstanding.
(7) Includes an option to purchase 40,000 shares
of common stock granted on March 28, 2007 with a grant date fair value (as
calculated under FAS 123R for financial reporting purposes) of $48,087
,
an option to purchase 8,500 shares of common stock granted
on May 8, 2007 with a grant date fair value (as calculated under FAS 123R
for financial reporting purposes) of $25,221 and 4,250 shares of restricted
common stock granted on May 8, 2007 with a grant date fair value (as
calculated under FAS 123R for financial reporting purposes) of $23,978. As of December 31, 2007, the director
had 48,500 options outstanding. Effective March 28, 2007, Mr. McCoy
joined the Board of Directors.
(8) Includes an option to purchase 40,000 shares
of common stock granted on November 7, 2005 with a grant date fair value
(as calculated under FAS 123R for financial reporting purposes) of $31,811 and
an option to purchase 15,000 shares of common stock granted on May 9, 2006
with a grant date fair value (as calculated under FAS 123R for financial
reporting purposes) of $19,026. As of December 31,
2007, the director had no options outstanding.
(9) Messrs. Parekh
and Still did not stand for reelection to our board of directors and,
accordingly, are no longer members of our board of directors effective as of
the 2007 annual meeting of stockholders.
(10) Includes an option to purchase 40,000 shares of
common stock granted on November 7, 2005 with a grant date fair value (as
calculated under FAS 123R for financial reporting purposes) of $31,810.73 and
an option to purchase
13
15,000
shares of common stock granted on May 9, 2006 with a grant date fair value
(as calculated under FAS 123R for financial reporting purposes) of
$28,539.87. As of December 31,
2007, the director had no options outstanding.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From
January 1, 2007, through September 30, 2007, the Compensation
Committee consisted of Messrs. Genachowski (Chair), Durity and
Maudlin. Mssrs. Parekh and Still also
were members of the Compensation Committee from January 1, 2007 until they
ceased to be members of the Board of Directors effective May 8, 2007. From
October 1, 2007, through December 31, 2007, the Compensation
Committee consisted of Messrs. Genachowski (Chair), Maudlin and McCoy. No
member of the Compensation Committee is an officer or employee of Website Pros,
and none of our executive officers serve as a member of a compensation
committee of any entity that has one or more executive officers serving as a
member of our Compensation Committee. Each of our directors holds Website Pros
securities as set forth under the heading
Security
Ownership of Certain Beneficial Owners and Management
.
MEETINGS OF THE BOARD OF DIRECTORS
The
Board of Directors met seven times during the last fiscal year. Each incumbent
Board member attended 75% or more of the aggregate of the meetings of the Board
and of the committees on which he served, held during the period for which he
was a director or committee member, respectively.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The
Companys Board has adopted a formal process by which stockholders may
communicate with the Board or any of its directors. Stockholders who wish to
communicate with the Board may do so by sending written communications
addressed to the Corporate Secretary of Website Pros at 12375 Gran Bay Parkway
West, Building 200, Jacksonville, Florida 32258. All communications will be
compiled by the Secretary of the Company and submitted to the Board or the
individual directors on a periodic basis. These communications will be reviewed
by one or more employees of the Company designated by the Board, who will
determine whether they should be presented to the Board. The purpose of this
screening is to allow the Board to avoid having to consider irrelevant or
inappropriate communications (such as advertisements, solicitations and
communications not requiring Board consideration). The screening procedures
have been approved by a majority of the independent directors of the Board. All
communications directed to the Audit Committee in accordance with the Companys
whistleblower Policy that relate to questionable accounting or auditing matters
involving the Company will be promptly and directly forwarded to the Audit
Committee.
CODE OF ETHICS
The
Company has adopted the Website Pros, Inc. Code of Conduct that applies to
all officers, directors and employees. The Code of Conduct is available on our
website at
http://ir.websitepros.com/documents.cfm
. If the Company
makes any substantive amendments to the Code of Conduct or grants any waiver
from a provision of the Code of Conduct to any executive officer or director,
the Company will promptly disclose the nature of the amendment or waiver on its
website.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following report of the Audit Committee shall not
constitute soliciting material, shall not be deemed filed with the SEC and
is not to be incorporated by reference into any of other the Companys filing
under the Securities Act or the Exchange Act, except to the extent the Company
specifically incorporates this report by reference therein.
Communications with Management and
Independent Registered Public Accounting Firm
The
Audit Committee has reviewed and discussed our audited financial statements
with management. In addition, the Audit Committee has discussed with Ernst &
Young LLP, Website Pros independent registered public accounting firm, the
matters required to be discussed by Statement of Auditing Standards No. 61,
Communications
14
with Audit
Committees
, which
includes, among other items, matters related to the conduct of the audit of our
financial statements. The Audit Committee has also received written disclosures
and the letter from Ernst & Young LLP required by the Independence
Standards Board Standard No. 1, which relates to Ernst & Young
LLPs independence from Website Pros and its related entities, and has
discussed their independence from Website Pros, including whether Ernst &
Young LLPs provision of non-audit services was compatible with that independence.
Committee Member Independence and Financial
Expert
From
January 1, 2007, through September 30, 2007, the Audit Committee was
comprised of Mr. Maudlin (Chair), Mr. Durden and Mr. Durity, all
of whom satisfy the independence criteria of the Nasdaq listing standards for
serving on an audit committee. From October 1, 2007, through October 24,
2007, the Audit Committee was comprised of Mr. Maudlin (Chair) and Mr. Durden.
From October 25, 2007, through December 31, 2007, the Audit Committee
was comprised of Mr. Maudlin (Chair), Mr. Durden, and Mr. McCoy,
all of whom satisfy the independence criteria of the Nasdaq listing standards
for serving on an audit committee. SEC
regulations require Website Pros to disclose whether its Board has determined
that a director qualifying as a financial expert serves on the Website Pros
Audit Committee. Website Pros Board has determined that Mr. Maudlin
qualifies as a financial expert within the meaning of such regulations.
Recommendation Regarding Financial Statements
Based
on the review and discussions referred to above, the Audit Committee
recommended to our Board that Website Pros audited financial statements for
the fiscal year ended December 31, 2007, be included in its Annual Report
on Form 10-K for the fiscal year ended December 31, 2007.
|
AUDIT COMMITTEE
|
|
|
Timothy
Maudlin, Chair
|
|
|
Hugh
Durden
|
|
|
Robert
S. McCoy, Jr.
|
|
15
PROPOSAL 2
APPROVAL OF CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION
On January 31, 2008, our Board of Directors
approved a Certificate of Amendment to our Certificate of Incorporation,
subject to stockholder approval, to effect a corporate name change from Website
Pros, Inc. to Web.com, Inc. The Certificate of Amendment is attached
hereto as Appendix A.
Our management and our Board of Directors believe
that the corporate name change will better align our corporate name with our
mission.
The change of our name will not affect in any way
the validity of currently outstanding stock certificates or the trading of our
securities. Stockholders will not be required to surrender or exchange any
stock certificates currently held by them. Website Pros expects to trade on the
NASDAQ Global Market under the symbol WWWW if the stockholders approve the
amendment to the Certificate of Incorporation changing our name to Web.com, Inc.
Stockholders are requested in this Proposal No. 2
to adopt the amendment to the Certificate of Incorporation. The affirmative
vote of the holders of a majority of the shares present in person or
represented by proxy and entitled to vote at the meeting will be required to
approve the amendment to the Certificate of Incorporation. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2
16
PROPOSAL 3
APPROVAL OF THE ADOPTION OF THE
WEBSITE
PROS, INC. 2008 EQUITY INCENTIVE PLAN
We are asking our stockholders to approve the
adoption of our 2008 Equity Incentive Plan at the annual meeting of
stockholders. In this Proposal, we call this plan the 2008 Plan. On March 31,
2008, our board of directors, or the Board, approved the 2008 Plan, subject to
stockholder approval. The 2008 Plan is critical to our ongoing effort to build
stockholder value. As discussed in the
Compensation
Discussion and Analysis
beginning on page 28 of this proxy
statement, equity incentive awards are central to our compensation program. The
Board believes that our ability to grant stock awards to new and existing
employees has helped and will continue to help us attract, retain, and motivate
employees.
Vote
Required and Recommendation of The Board
The
affirmative vote of the holders of a majority of the shares present in person
or represented by proxy
and
entitled to vote at the meeting will be required to approve the adoption of the
2008 Plan. Abstentions and broker
non-votes will be counted towards a quorum.
Abstentions will be counted toward the tabulation of votes cast on
proposals presented to the stockholders and will have the same effect as
negative votes. Broker non-votes are not
counted for any purpose in determining whether this matter has been approved.
THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE FOR THIS PROPOSAL 3.
Summary of the 2008 Plan
A
summary of the principal features of the 2008 Plan follows below. The summary
is qualified by the full text of the 2008 Plan that is attached as Appendix B
to this proxy statement.
Types of Awards
The
2008 Plan provides for the following types of awards: incentive stock options,
nonstatutory stock options, restricted stock awards, restricted stock unit
awards, stock appreciation rights, performance stock awards, performance cash
awards, and other stock-based awards. In this Proposal, we refer to the various
types of stock awards collectively as the stock awards and to the various types
of stock awards and cash awards collectively as the awards.
Eligibility
Awards
may be granted under the 2008 Plan to our employees, directors and consultants.
Only our employees may receive incentive stock options. As of March 19,
2008, approximately 722 employees and five non-employee directors were eligible
to participate in the 2008 Plan.
Administration
The
Board, or a committee of the Board, will administer the 2008 Plan. A committee
may consist of two or more non-employee directors within the meaning of Rule 16b-3
of the Exchange Act, or of two or more outside directors within the meaning
of Section 162(m) of the Internal Revenue Code of 1980, as amended,
or the Code. For grants of awards to employees other than the named executive
officers, the 2008 Plan also permits delegation of administration of the 2008
Plan to one or more of our officers within the meaning of Section 16 of
the Exchange Act, as amended, and the rules and regulations promulgated
thereunder.
As
administrator of the 2008 Plan, the Board has the authority to implement,
construe and interpret its provisions. Among other things, the Board has the
power to determine award recipients and the terms of awards including the
exercise price, the number of shares subject to each award, the exercisability
of stock awards and the form of consideration payable at exercise. The Board
has the power to approve forms of award agreements, and to adopt procedures and
sub-plans to permit employees, directors or consultants who are foreign
nationals or employed outside the United States to participate in the 2008
Plan.
17
Prohibition of Repricing.
The
2008 Plan expressly provides that neither the Board nor its committee shall
have the authority to reprice any outstanding stock awards under the 2008 Plan or to cancel and
re-grant any outstanding stock awards under the 2008 Plan, unless our
shareholders have approved such an action within 12 months prior to such an
event.
Stock Subject to the 2008 Plan
Up
to 3,000,000 shares of common stock may be issued pursuant to stock awards
granted under the 2008 Plan. As of March 31,
2008, no awards had been granted under the 2008 Plan. The Board or its committee may not provide
for the increase in the shares reserved under the 2008 Plan without the
approval of a majority of the votes cast in person or by proxy by our
shareholders.
The
shares of common stock subject to stock awards granted under the 2008 Plan that
expire, are forfeited because of a failure to vest, or otherwise terminate
without being exercised in full will return to the 2008 Plan and be available
for issuance under the 2008 Plan. However, any shares that are withheld to
satisfy tax requirements or that are used to pay the exercise or purchase price
of a stock award may not be issued under the 2008 Plan.
Terms of Options
A
stock option is the right to purchase shares of our common stock at a fixed
exercise price for a fixed period of time. Stock option grants may be incentive
stock options or nonstatutory stock options; however, no more than 3,000,000
shares of common stock may be issued under the 2008 Plan pursuant to the
exercise of incentive stock options. Each option is evidenced by a stock option
agreement. The Board determines the terms of a stock option including the
exercise price, the form of consideration to be paid on exercise, the vesting
schedule, restrictions on transfer and the term. The exercise price of a stock
option may not be less than 100% of the fair market value of the stock subject
to the option on the date of grant (for an incentive stock option 110% if the
optionee is a 10% holder). The term of an option will not be longer than ten years
(five years if the optionee is a 10% holder) and may be subject to restrictions
on transfer. When exercised, the exercise price may be paid in a form permitted
by the stock option agreement, which may include payment in cash, by check,
bank draft, or money order payable to us, pursuant to a program developed under
Regulation T promulgated by the Federal Reserve Board, by delivery of other
shares of common stock, by a net exercise arrangement, or by any other means
acceptable to the Board and permissible under applicable law.
Options
generally terminate three months after termination of an optionees service (or
such longer or shorter period as set forth in the option agreement). As set
forth in the 2008 Plan, the optionee generally (subject to the terms of the
option agreement) will have longer to exercise when termination is due to
disability (12 months) or death (18 months).
No option may be exercised beyond the expiration of its term.
Terms of Restricted Stock Awards
Restricted
stock awards are awards of shares of our common stock that vest in accordance
with terms and conditions established by the Board. Each restricted stock award
is evidenced by an award agreement that sets forth the terms and conditions of
the award. The Board sets the terms of the restricted stock awards including
the size of the restricted stock award, the price (if any) to be paid by the
recipient, the vesting schedule, and any performance criteria that may be
required for the stock to vest. The restricted stock award may vest based on
continued employment and/or the achievement of performance goals. If a
participants service terminates before the restricted stock is fully vested,
all of the unvested shares may be forfeited to, or repurchased by, the Company,
as provided for in the restricted stock award agreement.
Terms of Restricted Stock Unit
Awards
A
restricted stock unit is a right to receive stock or cash equal to the value of
a share of stock at the end of a set period. No stock is issued at the time of
grant. Each restricted stock unit award is evidenced by an agreement that sets
forth the terms and conditions of the award. The Board sets the terms of the
restricted stock unit award,
18
including the size of the restricted stock
unit award, the consideration (if any) to be paid by the recipient, the vesting
schedule, any performance criteria and
the form (stock or cash) in which the award will be settled. When a participants
service terminates, the unvested portion of the restricted stock unit award
will be forfeited unless otherwise provided in the restricted stock unit award
agreement.
Terms of Stock Appreciation Rights
A
stock appreciation right, or SAR, is the right to receive the appreciation in
the fair market value of our common stock between the date of grant and the
exercise date for the number of shares of our common stock that are exercised.
SARs may be granted as stand-alone stock awards or in tandem with other stock
awards. Each SAR is evidenced by an agreement specifying the exercise price,
vesting schedule, number of shares granted and the other terms of the SAR.
When
a SAR is exercised, the holder is entitled to an amount equal to the difference
between (a) the fair market value of a share of our common stock on the
date the SAR was granted and (b) the fair market value of a share of our
common stock on the date the SAR is exercised. We may pay the amount of the
appreciation in cash or shares of our common stock, a combination of both or in
any other form of consideration determined by the Board and set forth in the
SAR agreement. SARs generally terminate three months after termination of a
holders service or as set forth in the SAR agreement.
Terms of Performance Based Stock
Awards and Performance Cash Awards
Performance Stock Awards
. A
performance stock award may be granted, may vest, or may be exercised upon
achievement of pre-determined performance goals. A performance stock award may
require the completion of a specified period of continuous service. The length
of any performance period, the performance goals to be achieved during the
performance period, and the measure of whether and to what degree such
performance goals have been attained will be determined by the Board or a
committee of the Board. The maximum number of shares of our common stock that
may be granted to any participant in a calendar year attributable to
performance stock awards under the 2008 Plan shall not exceed 1,000,000 shares
of stock In addition, to the extent
permitted by applicable law and the award agreement, the Board (or committee as
applicable) may determine that cash may be used in payment of performance stock
awards.
Performance Cash Awards
. A
performance cash award is a cash award that is paid upon the achievement of
performance goals during a performance period. A performance cash award may
also require the completion of a specified period of continuous service. The
length of any performance period, the performance goals to be achieved during
the performance period, and the measure of whether and to what degree such
performance goals have been attained will be determined by the Board or a
committee of the Board. The Board (or committee as applicable) may specify the
form of payment of performance cash awards, which may be cash or other
property, or may provide for a participant to have an election for his or her
performance cash award, or such portion thereof as the Board (or committee as
applicable) may specify, to be paid in whole or in part in cash or other property.
The maximum value that may be granted to any participant in a calendar year
attributable performance cash awards under the 2008 Plan shall not exceed
$3,000,000. In addition, to the extent
permitted by applicable law and the applicable award agreement, the Board (or
committee as applicable) may determine that common stock authorized under the
2008 Plan may be used in payment of performance cash awards.
Performance Criteria
.
Performance-based stock and cash awards may be made subject to one or more
of the following criteria: (i) earnings per share; (ii) earnings
before interest, taxes and depreciation; (iii) earnings before interest,
taxes, depreciation and amortization; (iv) total stockholder return; (v) return
on equity; (vi) return on assets, investment, or capital employed; (vii) operating
margin; (viii) gross margin; (ix) operating income; (x) net
income (before or after taxes); (xi) net operating income; (xii) net operating
income after tax; (xiii) pre-tax profit; (xiv) operating cash flow; (xv)
sales or revenue targets; (xvi) increases in revenue or product revenue; (xvii)
expenses and cost reduction goals; (xviii) improvement in or attainment of
working capital levels; (xix) economic value added (or an equivalent metric);
(xx) market share; (xxi) cash flow; (xxii) cash flow per share; (xxiii) share
price performance; (xxiv) debt reduction; (xxv) implementation or completion of
projects or processes; (xxvi) customer satisfaction; (xxvii) stockholders
equity; and (xxviii) to the extent that an Award is not intended to comply with
Section 162(m) of the Code, other measures of performance selected by
the Board.
19
Terms of
Other Stock Awards
The
Board may grant other incentive awards that are based in whole or in part by
reference to the value of our common stock. Subject to the provisions of the
2008 Plan, the Board has the authority to determine the persons to whom and the
dates on which such other stock awards will be granted, the number of shares of
common stock (or cash equivalents) to be subject to each award, and other terms
and conditions of such awards. Such awards may be granted either alone or in
addition to other stock awards granted under the 2008 Plan.
Changes to Capital Structure
In
the event any change is made in the shares subject to the 2008 Plan or any
stock award granted under the 2008 Plan, whether through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure, or otherwise, the
Board will adjust: (a) the class(es) and maximum number of securities
subject to the 2008 Plan, (b) the class(es) and maximum number of
securities that may be issued pursuant to the exercise of incentive stock
options, (c) the class(es) and maximum number of securities (or amount of
cash consideration) that may be awarded to any person pursuant to performance
stock awards and other stock-based awards intended to satisfy the requirements
of Section 162(m) of the Code (such as options and stock appreciation
rights), and (d) the class(es) and number of securities and price per
share of stock subject to outstanding stock awards.
Corporate Transactions; Changes in
Control
In
the event of a corporate transaction (as such term is defined in the 2008
Plan), outstanding stock awards under the 2008 Plan may be assumed, continued,
or substituted by the surviving corporation. If the surviving corporation does
not assume, continue, or substitute such stock awards, then (a) any stock
awards that are held by individuals performing services for us immediately prior
to the effective time of the corporate transaction, the vesting and
exercisability provisions of such stock awards will be accelerated in full and
such stock awards will be terminated if not exercised prior to the effective
time of the corporate transaction, and (b) all other outstanding stock
awards will be terminated if not exercised on or prior to the effective time of
the corporate transaction.
Notwithstanding the foregoing, if a stock award would terminate if not
exercised prior to the effective time of a corporate transaction, the Board, in
its sole discretion, may provide that the holder of such stock award may not
exercise it but instead will receive a payment, in such form as may be
determined by the Board, equal in value to the excess, if any, of the value of
the property such holder would have received upon exercise of the stock award
(including, at the discretion of the Board, any unvested portion of the stock
award) over any exercise price payable by such holder in connection with such exercise.
A
stock award may be subject to additional acceleration of vesting and
exercisability upon or after a change in control (as such term is defined in
the 2008 Plan) as may be provided in the stock award agreement or as may be
provided in any other written agreement between us or any of our affiliates and
the participant; however, in the absence of such provision, no such
acceleration shall occur.
Duration, Suspension, Termination,
and Amendment
The
Board may suspend or terminate the 2008 Plan at any time. The 2008 Plan is
scheduled to terminate on March 31, 2018. No awards may be granted under
the 2008 Plan while the 2008 Plan is suspended or after it is terminated.
The
Board may amend the 2008 Plan at anytime. However, if legal, regulatory or
listing requirements require stockholder approval, the amendment will not go
into effect until the stockholders have approved the amendment.
Tax Withholding
The
Board may require a participant to satisfy any federal, state, local, or
foreign tax withholding obligation relating to a stock award by (a) causing
the participant to tender a cash payment; (b) withholding shares of common
20
stock
from the shares of common stock issued or otherwise issuable to the participant
in connection with the award; (c) withholding cash from an award settled in
cash or other amounts payable to the participant; or (d) by other method
set forth in the award agreement.
Summary
of Federal Income Tax Consequences of the 2008 Plan
The
following summary is intended only as a general guide to the U.S. federal
income tax consequences under current law of participation in the 2008 Plan and
does not attempt to describe all possible federal or other tax consequences of
such participation or tax consequences based on particular circumstances.
Furthermore, the tax consequences are complex and subject to change, and a
taxpayers particular situation may be such that some variation of the
described rules is applicable.
Incentive Stock Options
. A
participant recognizes no taxable income for regular income tax purposes as a
result of the grant or exercise of an incentive stock option qualifying under Section 422
of the Code.
If
a participant holds stock acquired through exercise of an incentive stock
option for more than two years from the date on which the option was granted
and more than one year after the date the option was exercised for those
shares, any gain or loss on a disposition of those shares (a qualifying
disposition) will be a long-term capital gain or loss. Upon such a qualifying
disposition, we will not be entitled to any income tax deduction.
If
a participant disposes of shares within two years after the date of grant or
within one year after the date of exercise (a disqualifying disposition), the
difference between the fair market value of the shares on the option exercise
date and the exercise price (not to exceed the gain realized on the sale if the
disposition is a transaction with respect to which a loss, if sustained, would
be recognized) will be taxed as ordinary income at the time of disposition. Any
gain in excess of that amount will be a capital gain. If a loss is recognized,
there will be no ordinary income, and such loss will be a capital loss. To the
extent the participant recognizes ordinary income by reason of a disqualifying
disposition, generally we will be entitled (subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code, and the
satisfaction of a tax reporting obligation) to a corresponding income tax
deduction in the tax year in which the disqualifying disposition occurs.
The
difference between the option exercise price and the fair market value of the
shares on the exercise date of an incentive stock option is treated as an
adjustment in computing the participants alternative minimum taxable income
and may be subject to an alternative minimum tax which is paid if such tax
exceeds the regular tax for the year. Special rules may apply with respect
to certain subsequent sales of the shares in a disqualifying disposition,
certain basis adjustments for purposes of computing the alternative minimum
taxable income on a subsequent sale of the shares and certain tax credits which
may arise with respect to participants subject to the alternative minimum tax.
Nonstatutory Stock Options.
Options not designated or qualifying as incentive stock options will be
nonstatutory stock options having no special tax status. A participant generally recognizes no taxable
income as the result of the grant of such an option. Upon exercise of a nonstatutory stock option,
the participant normally recognizes ordinary income in the amount of the
difference between the option exercise price and the fair market value of the
shares purchased. Generally, we will be
entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of
the Code, and the satisfaction of a tax reporting obligation) to an income tax
deduction in the tax year in which such ordinary income is recognized by the
participant.
Upon
the disposition of stock acquired by the exercise of a nonstatutory stock
option, any gain or loss, based on the difference between the sale price and
the fair market value on the exercise date, will be taxed as capital gain or loss.
Stock Appreciation Rights.
A
participant recognizes no taxable income upon the receipt of a stock
appreciation right. Upon the exercise of
a stock appreciation right, the participant will recognize ordinary income in
an amount equal to the excess of the fair market value of the underlying shares
of common stock on the exercise date over the exercise price. If the participant is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. We generally should be entitled
to a deduction equal to the amount of ordinary income recognized by the
participant in connection with the exercise of the stock appreciation right,
except to the extent such deduction is limited by applicable provisions of the
Code.
21
Restricted Stock.
A
participant acquiring restricted stock generally will recognize ordinary income
equal to the difference between the fair market value of the shares on the determination
date (as defined below) and their purchase price, if any. If the participant is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. The determination date is the
date on which the participant acquires the shares unless they are subject to a
substantial risk of forfeiture and are not transferable, in which case the
determination date is the earlier of (i) the date on which the shares
become transferable or (ii) the date on which the shares are no longer
subject to a substantial risk of forfeiture.
If the determination date is after the date on which the participant
acquires the shares, the participant may elect, pursuant to Section 83(b) of
the Code, to have the date of acquisition be the determination date by filing
an election with the Internal Revenue Service no later than 30 days after the
date the shares are acquired. Upon the
sale of shares acquired pursuant to a restricted stock award, any gain or loss,
based on the difference between the sale price and the fair market value on the
determination date, will be taxed as capital gain or loss. Such gain or loss will be long-term or
short-term depending on whether the stock was held for more than one year. We
will be entitled (subject to the requirement of reasonableness, the provisions
of Section 162(m) of the Code, and the satisfaction of a tax
reporting obligation) to a corresponding income tax deduction in the year in
which such ordinary income is recognized by the participant.
Restricted Stock Units
. No
taxable income is recognized upon receipt of a restricted stock unit award. In
general, the participant will recognize ordinary income in the year in which
the units vest and are settled in an amount equal to any cash received and the
fair market value of any nonrestricted shares issued on the date of issuance.
We will be entitled (subject to the requirement of reasonableness, the
provisions of Section 162(m) of the Code, and the satisfaction of a
tax reporting obligation) to an income tax deduction equal to the amount of
ordinary income recognized by the participant. In general, the deduction will
be allowed for the taxable year in which such ordinary income is recognized by
the participant.
Performance Awards.
A
participant generally will recognize no income upon the grant of a performance
share or performance units award. Upon
the settlement of such awards, participants normally will recognize ordinary
income in the year of receipt in an amount equal to the cash received and the
fair market value of any nonrestricted shares received. If the participant is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. If the participant receives shares
of restricted stock, the participant generally will be taxed in the same manner
as described under Restricted Stock. Upon the sale of any shares received,
any gain or loss, based on the difference between the sale price and the fair
market value on the determination date, will be taxed as capital gain or
loss. We generally should be entitled to
a deduction equal to the amount of ordinary income recognized by the
participant on the determination date, except to the extent such deduction is
limited by applicable provisions of the Code.
Potential Limitation on Deductions
.
Compensation of persons who are covered employees of the Company is
subject to the tax deduction limits of Section 162(m) of the Code.
Awards that qualify as performance-based compensation are exempt from Section 162(m),
thereby permitting us to claim the full federal tax deduction otherwise allowed
for such compensation. The 2008 Plan is intended to enable the Committee to
grant awards that will be exempt from the deduction limits of Section 162(m).
In accordance with Treasury Regulations issued under Section 162(m),
compensation attributable to restricted stock
awards, restricted stock unit
awards, performance stock awards and
performance cash awards will qualify as performance-based compensation if (i) such
awards are approved by a compensation committee composed solely of outside
directors, (ii) the plan contains a per-employee limitation on the number
of shares for which such awards may be granted during a specified period, (iii) the
per-employee limitation is approved by the shareholders, and (iv) the
exercise or strike price of the award is no less than the fair market value of
the stock on the date of grant.
Compensation attributable to restricted stock, restricted stock units,
performance shares, performance units, deferred stock and other stock-based
awards will qualify as performance-based compensation, provided that (i) the
award is approved by a compensation committee composed solely of outside
directors, (ii) the award is granted, becomes vested or is settled, as
applicable, only upon the achievement of an objective performance goal
established in writing by the compensation committee while the outcome is
substantially uncertain, (iii) our Compensation Committee certifies in
writing prior to the granting (or vesting or settlement) of the award that the
performance goal has been satisfied, and (iv) prior to the granting (or
vesting or settlement) of the award, the shareholders have approved the
material terms of the award (including the class of employees eligible for such
award, the business criteria on which
22
the performance goal is based, and the maximum amount, or formula used
to calculate the amount, payable upon attainment of the performance goal). It is intended that options and stock
appreciation rights granted under the 2008 Plan qualify as performance-based
compensation that is exempt from the $1 million deduction limitation.
It is intended that the Committee may grant restricted stock awards,
restricted stock unit awards,
performance stock awards and performance cash awards under the 2008 Plan
that qualify as performance-based compensation that is exempt from the $1
million deduction limitation.
New
Plan Benefits
We
cannot currently determine the benefits or number of shares subject to awards
that may be granted in the future to executive officers and employees under the
2008 Plan. The first table below sets
forth information about awards granted under our 2005 Equity Incentive Plan
(the
2005 Plan
) to the Named
Executive Officers, all current executive officers as a group, all non-employee
directors as a group, and all non-executive employees and consultants as a
group. Whether or not the 2008 Plan is
approved by our shareholders at this Annual Meeting, our non-employee directors
will receive their annual awards under our 2005 Non-Employee Director Stock
Option Plan (the
2005 Director Plan
). Accordingly, the second table below sets
forth the proposed grants to be made under the 2005 Director Plan to our
non-employee directors, individually and as a group, in connection with this
Annual Meeting. On March 19, 2008,
the closing price of our common stock on NASDAQ was $9.91 per share.
New Plan Benefits Awards Granted in 2007 under the 2005 Plan
Name
|
|
Number of
Securities
Underlying
Awards Granted
|
|
Weighted
Average
Exercise
Price Per
Share ($)
|
|
David L. Brown,
Chief
Executive Officer
|
|
200,000
|
|
8.92
|
|
Jeffrey M. Stibel,
President
|
|
|
|
|
|
Kevin M. Carney,
Chief
Financial Officer
|
|
70,000
|
|
8.92
|
|
Executive Group (3 persons)
|
|
270,000
|
|
8.92
|
|
Non-Employee Director Group (5 persons)
|
|
|
|
|
|
Non-Executive Officer Employee and
Consultant Group (691 persons)
|
|
1,222,200
|
|
9.52
|
|
New Plan Benefits Awards Anticipated in 2008 under the 2005 Director Plan
Name
|
|
Number of
Securities
Underlying
Awards
Granted (1)
|
|
Hugh M. Durden
|
|
14,750
|
|
Julius Genachowski
|
|
15,750
|
|
Alex Kazerani
|
|
12,750
|
|
Timothy I. Maudlin
|
|
17,750
|
|
Robert S. McCoy, Jr.
|
|
12,750
|
|
Non-Employee Director Group (5 persons)
|
|
73,750
|
|
(1)
Includes
4,250 shares of restricted common stock to be issued to each non-employee
director. Because these awards have not
been granted, the exercise price is unknown.
23
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The
Audit Committee of the Board of Directors has selected Ernst & Young
LLP as the Companys independent registered public accounting firm for the
fiscal year ending December 31, 2008 and has further directed that management
submit the selection of the independent registered public accounting firm for
ratification by the stockholders at the annual meeting. Ernst & Young
LLP has audited the Companys financial statements since 2002. Representatives
of Ernst & Young LLP are expected to be present at the annual meeting
at which they will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Neither
the Companys Bylaws nor other governing documents or law require stockholder
ratification of the selection of Ernst & Young LLP as the Companys
independent registered public accounting firm. However, the Audit Committee of
the Board is submitting the selection of Ernst & Young LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee of the Board
will reconsider whether to retain Ernst & Young LLP as the Companys
independent registered public accounting firm. Even if the selection is
ratified, the Audit Committee of the Board in its discretion may direct the
appointment of a different independent registered public accounting firm at any
time during the year if the Audit Committee determines that such a change would
be in the best interests of the Company and its stockholders.
The
affirmative vote of the holders of a majority of the shares present in person
or represented by proxy and entitled to vote at the annual meeting will be
required to ratify the selection of Ernst & Young LLP as the Companys
independent registered public accounting firm. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether
this matter has been approved.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
following table represents aggregate fees billed to the Company for fiscal
years ended December 31, 2006 and December 31, 2007, by Ernst &
Young LLP, the Companys principal accountant (all fees described below were
approved by the Audit Committee):
|
|
Fiscal Year Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
2006
|
|
|
|
(in
thousands)
|
|
Audit Fees (1)
|
|
$
|
814
|
|
$
|
578
|
|
Audit-related Fees (2)
|
|
25
|
|
234
|
|
Tax Fees (3)
|
|
178
|
|
76
|
|
All Other Fees
|
|
2
|
|
2
|
|
|
|
|
|
|
|
|
|
(1)
|
The
2006 amount includes audit fees associated with a follow-on offering of the
Companys common stock.
|
|
|
(2)
|
Consists
of fees pertaining to the acquisitions of the assets of 1ShoppingCart.com
Canada Corp., 1ShoppingCart.com Corp. and Renex, Inc. in 2006 and the
acquisition of Web.com in 2007.
|
|
|
(3)
|
Consists
of fees pertaining to tax consultations in connection with the acquisitions
of the assets of 1ShoppingCart.com Canada Corp., 1ShoppingCart.com Corp. and
Renex, Inc. during 2006, to the acquisition of Web.com in 2007. The 2007
and 2006 amounts also include fees for tax compliance services.
|
PRE-APPROVAL POLICIES AND PROCEDURES
The
Audit Committee pre-approves all audit and non-audit services rendered by our
independent registered accounting firm, Ernst & Young LLP. While the
Audit Committee Charter permits the Audit Committee to delegate pre-approval
authority to one or more individuals, as well as to pre-approve defined
categories of services, the Audit Committee has not yet done so. To date, all
pre-approval has been given as part of the Audit Committees approval
24
of
the scope of the engagement of the independent auditor or on an individual
explicit case-by-case basis before the independent auditor is engaged to
provide each service.
The
Audit Committee has determined that the rendering of the services other than
audit services by Ernst & Young LLP is compatible with maintaining the
principal accountants independence.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4
.
25
S
ECURITY
O
WNERSHIP
O
F
C
ERTAIN
B
ENEFICIAL
O
WNERS
A
ND
M
ANAGEMENT
The following table sets
forth certain information regarding the ownership of the Companys common stock
as of March 19, 2008 by: (i) each director; (ii) each of the
executive officers named in the Summary Compensation Table; (iii) all
executive officers and directors of the Company as a group; and (iv) all
those known by the Company to be beneficial owners of more than five percent of
its common stock.
|
|
Beneficial Ownership (1)
|
|
Beneficial Owner
|
|
Number of Shares
|
|
Percent of Total
|
|
Five Percent Stockholders:
|
|
|
|
|
|
Parties Affiliated with William Blair
Capital Management LLC
|
|
|
|
|
|
222 West Adams Street
|
|
|
|
|
|
Chicago, IL 60606-5312
|
|
2,278,988
|
|
8.25
|
%
|
|
|
|
|
|
|
Parties Affiliated with Par Capital
Management, Inc.
|
|
|
|
|
|
One International Place, Suite 2401
|
|
|
|
|
|
Boston, MA 02110
|
|
2,216,700
|
|
8.03
|
%
|
|
|
|
|
|
|
Parties Affiliated with NorthPointe
Capital, LLC
|
|
|
|
|
|
101 W. Big Beaver, Suite 745
|
|
|
|
|
|
Troy, MI 48084
|
|
1,696,233
|
|
6.14
|
%
|
|
|
|
|
|
|
Directors and Executive Officers:
|
|
|
|
|
|
David L. Brown (2)
|
|
1,545,442
|
|
5.31
|
%
|
Jeffrey M. Stibel (3)
|
|
1,511,318
|
|
5.24
|
%
|
Kevin M. Carney (4)
|
|
302,658
|
|
1.09
|
%
|
Hugh M. Durden (5)
|
|
55,861
|
|
*
|
|
Julius Genachowski (6)
|
|
56,861
|
|
*
|
|
Alex Kazerani (7)
|
|
57,695
|
|
*
|
|
Timothy I. Maudlin (8)
|
|
223,570
|
|
*
|
|
Robert S. McCoy, Jr. (9)
|
|
27,194
|
|
*
|
|
All executive officers and directors as a
group (8 persons) (10)
|
|
3,477,921
|
|
11.28
|
%
|
* Less than one percent.
(1) This table is based upon information supplied
by officers, directors and stockholders and Schedules 13D, 13F and 13G filed
with the Securities and Exchange Commission (the SEC). Unless otherwise
indicated in the footnotes to this table and subject to community property laws
where applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on 27,609,540
shares outstanding on March 19, 2008, adjusted as required by rules promulgated
by the SEC.
(2) Includes 36,414 shares held by Atlantic
Teleservices, L.P. (Atlantic Teleservices), 68 shares held by Mr. Browns
wife, 68 shares held by Mr. Browns son and 1,482,951 shares issuable upon
the exercise of options exercisable within 60 days after March 19,
2008. Mr. Brown is a member of CIMC
Atlantic II, LLC, which is the general partner of Atlantic Teleservices. Mr. Brown
shares voting and investment power with respect to these shares with Alton G.
Keel, Jr.
(3) Includes 9,834 shares held by a trust and
1,254,686 shares issuable upon the exercise of options exercisable within 60
days after March 19, 2008.
(4) Includes 270,753 shares issuable upon the
exercise of options exercisable within 60 days after March 19, 2008.
(5) Includes 51,611 shares issuable upon the
exercise of options exercisable within 60 days after March 19, 2008.
(6) Includes 52,611 shares issuable upon the
exercise of options exercisable within 60 days after March 19, 2008.
(7) Includes 18,611 shares issuable upon the
exercise of options exercisable within 60 days after March 19, 2008.
(8) Includes 57,122 shares held by Mr. Maudlins
wife, Janice K. Maudlin and 61,833 shares issuable upon the exercise of options
exercisable within 60 days after March 19, 2008.
26
(9) Includes of 22,944 shares issuable upon the
exercise of options exercisable within 60 days after March 19, 2008.
(10) Includes 3,216,000 shares issuable upon
exercise of options exercisable within 60 days after March 19, 2008. See
notes (2) through (9) above.
EXECUTIVE
OFFICERS
The following table sets
forth certain information about our executive officers, including their ages as
of March 19, 2008.
Name
|
|
Age
|
|
Position
|
David L. Brown
|
|
54
|
|
Director and Chief
Executive Officer
|
|
|
|
|
|
Jeffrey M. Stibel
|
|
34
|
|
President
|
|
|
|
|
|
Kevin M. Carney
|
|
44
|
|
Chief Financial Officer
|
David L. Brown
has served as our Chief Executive Officer since August 2000 and
as a member of our Board of Directors since August 1999. Mr. Brown
served as our President from August 1999 until March 2000 and from August 2000
until September 2007. Mr. Brown was employed by Atlantic Partners
Group, a private equity firm, from March 2000 until August 2000.
Prior to joining us, Mr. Brown founded Atlantic Teleservices, a technology
services company, in 1997 and served as its Chief Executive Officer from 1997
until its acquisition by us in August 1999. Mr. Brown holds a B.A.
from Harvard University.
Jeffrey M. Stibel
has served as a member of our Board of
Directors since September 30, 2007, when he also assumed the role of
President. From August 2005 until joining Website Pros upon Website
Pros acquisition of Web.com, Mr. Stibel was the President and Chief
Executive Officer of Web.com, and a member of its board of directors. From
August 2000 to August 2005, Stibel held executive positions at United
Online, Inc. (NASDAQ: UNTD), a technology company that owns and operates
branded ISPs (NetZero, Juno and BlueLight Internet) and Web services
(Classmates.com, MySite, PhotoSite and FreeServers). Mr. Stibel
currently serves on the board of directors for Autobytel (NASDAQ: ABTL) and
several private companies. He also serves on the board of Brown Universitys
Entrepreneurship Program and Tufts Universitys Gordon Center for
Leadership. Mr. Stibel received a masters degree from Brown
University and studied business and brain science at MITs Sloan School of
Management and at Brown University, where he was a Brain and Behavior Fellow.
Kevin M. Carney
has served as our Chief Financial Officer since January 2002. Mr. Carney
served as our director of finance from September 2000 until January 2002
and from August 1999 until June 2000. Mr. Carney was employed by
Atlantic Partners Group, a private equity firm, from June 2000 until September 2000.
Prior to joining us, Mr. Carney served as the chief financial officer of
Atlantic Teleservices, a technology services company, from June 1998 until
its acquisition by us in August 1999. Mr. Carney is a certified
public accountant and holds a B.S. in accounting and finance from Boston
College.
27
E
XECUTIVE
C
OMPENSATION
C
OMPENSATION
D
ISCUSSION AND
A
NALYSIS
Introduction
The Board of Directors has
delegated the power and authority to review, modify and approve compensation
policies and practices and to administer the Companys equity plans to the
Compensation Committee. The Compensation Committee annually evaluates and
establishes the compensation policies for the Chief Executive Officer and other
members of senior management including the named executive officers. Messrs. Genachowski
(Chairman), Maudlin and McCoy comprise the Compensation Committee and are
non-employees and independent within the meaning of Rule 4200(a)(15) of
the Nasdaq listing standards.
Compensation Philosophy and Objectives
The Compensation Committee
believes that compensation of the Companys executive officers should:
·
provide a means for Website Pros to attract,
retain and reward high-quality executives and other employees who will
contribute to the long-term success of the Company;
·
inspire executive officers, including the
Companys Chief Executive Officer, to achieve the Companys business
objectives; and
·
align the financial interests of the
executive officers and other employees with those of the stockholders.
The Compensation Committees
approach regarding base salaries for executives is conservative, with the goal
of maintaining base salaries at or somewhat below the industry median for Web
services companies of comparable size and giving greater weight in total
compensation in target bonus and gains related to equity. The Company believes significant equity-based
incentives for executives and other key employees help ensure that the
executives and key employees are motivated over the long-term to respond to the
Companys business challenges and opportunities as owners and not just as
employees.
In connection with setting
executive compensation for fiscal 2007, the Compensation Committee engaged an
outside compensation consulting firm to evaluate the Companys existing
compensation strategy and practices in supporting and reinforcing the Companys
long-term strategic goals and to assist in refining the Companys compensation
strategy. The compensation consulting firm developed recommendations that were
presented to the Compensation Committee for its consideration. The Board of
Directors approved modified recommendations of the compensation consulting
firm, consistent with the above considerations.
Compensation Benchmarking
In order to compare the Companys compensation
approach with market practices, in 2007 the Compensation Committee reviewed
compensation data compiled by the Companys compensation consulting firm, which
was drawn from individual company proxy filings and survey data with respect to
the Companys peer group. In determining the peer group, the compensation
consulting firm and management recommended, and the Compensation Committee
approved, a list of companies which compete for talent within the Companys
labor markets. The peer group consisted of Internet software and services
companies with similar revenue to that anticipated by the Company in 2008 and
similar revenue growth rates. For fiscal
year 2007, our compensation peer group consisted of the following 21 companies,
referred to below as the peer group companies:
24/7 Real
Media, Inc.
|
|
Interwoven, Inc.
|
|
Sina Corp.
|
Concur
Technologies, Inc.
|
|
Kenexa Corp.
|
|
Sonicwall, Inc.
|
Cybersource
Corp.
|
|
Knot, Inc.
|
|
Stellent, Inc.
|
Dealertrack
Holdings, Inc.
|
|
Marchex, Inc.
|
|
Taleo Corp.
|
Digital
Insight, Inc.
|
|
Online
Resources Corp.
|
|
Ultimate
Software Group, Inc.
|
Digital
River, Inc.
|
|
Perficient, Inc.
|
|
WebMD, Inc.
|
Internap
Network Services Corp.
|
|
Rightnow
Technologies, Inc.
|
|
Websense, Inc.
|
28
In general, we strive to
position salaries near the 50
th
percentile of these peer group
companies. Our total cash and equity compensation is targeted near the
75
th
percentile of these peer group companies
for on-target performance.
Elements of Compensation
The Compensation Committee
uses two types of compensation to achieve its overall compensation objectives:
annual compensation and long-term compensation. Annual compensation is
comprised of base salary and variable cash compensation, while long-term
compensation is generally comprised of stock options.
Annual
Compensation
Base
Salary.
The
Compensation Committee recognizes the importance of maintaining base cash
compensation levels that are competitive with the companies with which Website
Pros competes for talent. Base salary for executives is targeted in reference
to companies in similar businesses and with similar characteristics such as
revenue and market capitalization. The Compensation Committee received this
data in 2007 from a compensation consulting firm. The Compensation Committee
reviews annual salaries for all of the Companys executive officers. In addition
to other features, the annual salary plan takes into account past performance
and expected future contributions of the individual executive.
Variable
Compensation.
In
addition to earning a base salary, executives and certain members of senior
management are eligible to receive additional cash compensation through
variable bonuses. The variable bonuses are intended to motivate executives to
achieve company-wide and individual operating and strategic objectives.
Potential payment levels are equal to a percentage of base salary, which
percentage is set annually by the Compensation Committee for the ensuing year.
Payouts of bonuses, which generally are made in the first quarter of the
following year (February 2008 in the case of 2007), are based upon the
Compensation Committees review and analysis as to the extent to which both
Company and individual operating and strategic objectives have been achieved,
though the Compensation Committee may modify these goals and criteria or grant
additional variable cash compensation to the executive officers even if the
performance goals are not met. The combination of annual salary and variable
compensation is targeted to bring the participants total cash compensation to
levels that are at or near the 75
th
percentile of companies the
Company considers comparable, as discussed above.
Long-Term
Compensation
Equity
Compensation.
Equity
compensation, which the Compensation Committee considers to be long term
compensation, is an integral component of the Companys efforts to attract and
retain exceptional executives, senior management and employees. The
Compensation Committee believes that properly structured equity compensation
aligns the long-term interests of stockholders and employees by creating a
strong, direct link between employee compensation and stock appreciation since
stock options are only valuable to the employee if the value of the Companys
common stock increases after the date of grant. While equity compensation is an
important part of the overall compensation policy, the Compensation Committee
is sensitive to the concerns of the Companys stockholders regarding the
potentially dilutive impact of stock option grants and other equity
compensation awarded to employees. Stock option grants are determined, therefore,
by taking into account each executive officers performance and responsibility
level, a comparison with comparable awards to individuals in similar positions
in the industry, each executive officers current level of equity
participation, the dilutive impact of the potential grant, and the Companys
operating performance. However, the Compensation Committee does not strictly
adhere to these factors in all cases and may vary grants made to each executive
officer as the particular circumstances warrant. Exercise prices for options
are set at the fair market value of the Companys common stock on the date of
grant.
Options granted to executive
employees during 2007 generally vest monthly over four years, provided that the
executive officer continues his or her employment with the Company.
Accordingly, an option will provide a return to the executive officer only if he
or she remains employed by the Company, and then only if the market price of
the Companys common stock appreciates over the option term.
29
Based upon the factors noted above, the Company granted the named
executive officers the option grants set forth in the Grants of Plan-Based
Awards in 2007 table below. The Compensation Committee reexamines long-term
compensation levels annually.
Executive officers are also
generally eligible to participate in the 2005 Employee Stock Purchase Plan. As
a result of applicable laws regarding stock ownership, no employee owning more
than five percent (5%) of our stock is eligible to participate in this plan. During
2007 the Company did not commence an offering under the 2005 Employee Stock
Purchase Plan.
The Compensation Committee
believes that the programs described above provide compensation that is
competitive with comparable technology companies, that they provide the basis
for the Company to attract and retain qualified executive officers, and that
they link the interests of executive officers together with those of the
stockholders. The Compensation Committee will continue to monitor the
relationship among executive compensation, the Companys performance and
stockholder value. The Compensation Committee believes that these programs were
appropriate and plans to continue to monitor the Companys equity compensation
plans in light of changing market, financial and regulatory conditions.
We encourage our executive
officers to hold a significant equity interest in the Company, however, we do
not have any specific ownership guidelines.
We do have a policy that prohibits our executive officers, directors or
other members of management from engaging in short sales, transactions in put
or call options, hedging transactions or other inherently speculative
transactions with respect to our stock.
Severance
Benefits.
Executive
officers other than those that have employment agreements are eligible to
participate in the Companys Executive Severance Benefit Plan. The executives
with employment agreements are entitled to severance benefits as well, pursuant
to their employment agreement. The Compensation Committee considers these
severance benefits critical to attracting and retaining high caliber
executives.
Personal
Benefits.
Website
Pros seeks to maintain an egalitarian culture in its facilities and operations.
Accordingly, Website Pros does not provide officers with reserved parking
spaces or separate dining or other facilities. The Company also does not have
programs that provide personal-benefit perquisites to officers, such as lodging
or defraying the cost of personal entertainment or family travel. Website Pros
health care and other insurance programs are the same for all eligible
employees, including officers. There are no outstanding loans of any kind to
any executive officer, and federal law and the Companys Code of Conduct
prohibit loans to executive officers by the Company. Website Pros expects its
officers to be role models under its Code of Conduct, which is applicable to
all employees, and officers are not entitled to operate under lesser standards.
Employment Agreements and Offer
Letters.
Certain of our senior officers are parties to
employment agreements in the form previously filed with the SEC. We have no current plans to make any changes
to any employment agreements or offer letters.
2007 Named Executive Officer Compensation
David L.
Brown
Mr. Brown is eligible
to receive the same categories of compensation as discussed above, which are
available to other executive officers of the Company. Mr. Browns
compensation in 2007 was based primarily upon the terms of the employment
agreement between Mr. Brown and Website Pros dated as of April 2005
and effective as of the Companys initial public offering.
In
establishing Mr. Browns 2007 compensation arrangements, the Compensation
Committee evaluated, among other things, the Companys overall success throughout
2006 and also considered certain quantifiable measures of growth and
performance that are derived from our financial statements, including the
Companys total revenue, net income and earnings per share as well
as non-GAAP revenue and earnings measurements which the Compensation
Committee believes are key to evaluating the Companys result.
30
The
Compensation Committee considered other important indications of the Companys
recent growth and success, such as completing the Companys follow-on offering
and the acquisitions of assets from Renex and 1shoppingcart.com in 2006. In
addition, in evaluating Mr. Browns performance and establishing his 2007
compensation arrangements, the Compensation Committee took into account certain
qualitative and intangible factors that relate individually to Mr. Brown,
such as Mr. Browns leadership and vision, that have played a significant
role in the continuing success of the Company.
Based on the Compensation Committees
review of the peer companies and with the advice of the compensation consulting
firm, Mr. Browns 2007 compensation included an annual salary of $335,000
in cash and a discretionary cash bonus targeted to be approximately
seventy-five percent (75%) of base salary. Consistent with the Compensation
Committees philosophy, a greater portion of Mr. Browns overall
compensation was equity-based or based upon a variable bonus. The Compensation Committee believes that Mr. Browns
compensation structure for 2007 was in the best interests of the Company and
was commensurate with the Compensation Committees philosophy of aligning
compensation with the creation of long-term value for Website Pros
stockholders. Mr. Browns 2007 cash
and equity compensation was approximately 37% of the 75
th
percentile
of the peer group companies.
On February 20, 2008,
the Compensation Committee completed a review of the executive officers
compensation. The review included a study performed by a compensation
consulting firm. Based on the analysis and upon an evaluation of Mr. Browns
overall leadership and management, as well as the Companys achievements during
2007 such as the acquisition of assets of Submitawebsite, Inc. and the
acquisition of Web.com, Inc., Mr. Browns salary was increased to
$385,000 and he was awarded a cash bonus of $200,000. The salary increase
aligns Mr. Browns salary with approximately 99% of the 50
th
percentile of the peer group companies.
Jeffrey M. Stibel
Mr. Stibel is eligible
to receive the same categories of compensation as are available to other
executive officers of the Company. Mr. Stibels compensation in 2007 was
based primarily upon the terms of the employment agreement between Mr. Stibel
and Website Pros dated as of September 2007 and effective as of the
Companys acquisition of Web.com. Mr. Stibels 2007 compensation included
an annual salary of $325,000. Mr. Stibels
2007 cash compensation aligned with approximately the 112% of the 50
th
percentile of the peer group companies.
Kevin M. Carney
Mr. Carney is eligible
to receive the same categories of compensation as are available to other
executive officers of the Company. Mr. Carneys compensation in 2007 was
based primarily upon the terms of the employment agreement between Mr. Brown
and Website Pros dated as of April 2005 and effective as of the Companys
initial public offering.
In
establishing Mr. Carneys 2007 compensation arrangements, the Compensation
Committee evaluated, among other things, the Companys overall success throughout
2006 and also considered certain quantifiable measures of growth and
performance that are derived from our financial statements such as the Companys
total revenues (a non-GAAP measurement which the Compensation Committee believe
is key to evaluating the Companys results), net income and earnings per share.
The
Compensation Committee considered other important indications of the Companys
recent growth and success, such as completing the Companys follow-on offering
and the acquisitions of assets from Renex and 1shoppingcart.com in 2006. In
addition, in evaluating Mr. Carneys performance and establishing his 2007
compensation arrangements, the Compensation Committee took into account certain
qualitative and intangible factors that relate individually to Mr. Carney
such as the consolidation of acquired accounting and financial systems and
continued development of our Sarbanes-Oxley procedures.
Based on the Compensation
Committees review of the peer group companies
and with the advice of the compensation consulting firm, Mr. Carneys
2007 compensation included an annual salary of $230,000 in cash and a
discretionary cash bonus targeted to be approximately forty percent (40%) of
base salary. Consistent with the
Compensation Committees philosophy, a greater portion of Mr. Carneys
overall compensation was equity-based or
31
based upon a variable bonus.
The Compensation Committee believes that Mr. Carneys compensation
structure for 2007 was in the best interests of the Company and was
commensurate with the Compensation Committees philosophy of aligning
compensation with the creation of long-term value for Website Pros
stockholders. Mr. Carneys 2007
cash and equity compensation was approximately 67% of the 75
th
percentile of the peer group companies.
On February 20, 2008,
the Compensation Committee completed a review of the executive officers
compensation. The review included a study performed by a compensation
consulting firm. Based on the analysis as well as the Companys achievements
during 2007 such as the acquisition of assets of Submitawebsite, Inc. and
the acquisition of Web.com, Inc., Mr. Carneys salary was increased
to $245,000 and he was awarded a cash bonus of $100,000. The salary increase
aligns Mr. Carneys salary with approximately the 50
th
percentile of the peer group companies.
Tax Deductibility of Executive Compensation
Section 162(m) of
the Internal Revenue Code of 1986, as amended, places a limit of $1 million on
the amount of compensation that Website Pros may deduct in any one year with
respect to its Chief Executive Officer and each of its next four most highly
compensated executive officers. Certain performance-based compensation within
the meaning of Section 162(m) is not subject to the deduction limit.
To maintain flexibility in compensating the Chief Executive Officer and the
executive officers in a manner designed to promote varying corporate goals, the
Compensation Committee has not adopted a policy that all compensation must be
deductible. The Compensation Committee intends to continue to evaluate the
effects of the compensation limits of Section 162(m) and to grant
compensation awards in the future in a manner consistent with the best
interests of the Company and its stockholders.
Conclusion
Through the compensation
arrangements described above, a significant portion of Website Pros
compensation program and Mr. Browns compensation are contingent on
Website Pros performance, and the realization of benefits is closely linked to
increases in long-term stockholder value and the Companys achievements.
Website Pros remains committed to this philosophy of paying for performance,
recognizing that the competitive market for talented executives and the
volatility of its business may result in highly variable compensation for a
particular time period.
C
OMPENSATION
C
OMMITTEE
I
NTERLOCKS
AND
I
NSIDER
P
ARTICIPATION
No member of the
Compensation Committee is an officer or employee of Website Pros, and none of
our executive officers serve as a member of a compensation committee of any
entity that has one or more executive officers serving as a member of our
Compensation Committee. Each of our directors holds Website Pros securities as
set forth under the heading
Security Ownership of
Certain Beneficial Owners and Management
.
C
OMPENSATION
C
OMMITTEE
R
EPORT
The
following report of the Compensation Committee shall not constitute soliciting
material, shall not be deemed filed with the SEC and is not to be
incorporated by reference into any of other the Companys filing under the
Securities Act or the Exchange Act, except to the extent we specifically
incorporate this report by reference therein.
The Compensation Committee
of the Company has reviewed and discussed the Compensation Discussion and
Analysis required by Item 402(b) of Regulation S-K with management and,
based on such review and discussions, the Compensation Committee recommended to
the Board that the Compensation Discussion and Analysis be included in this
Proxy Statement and incorporated into our Annual Report on Form 10-K for
the fiscal year ended December 31, 2007.
|
C
OMPENSATION
C
OMMITTEE
|
|
Julius Genachowski, Chair
|
|
Timothy I. Maudlin
|
|
Robert S. McCoy, Jr.
|
32
C
OMPENSATION
OF
E
XECUTIVE
O
FFICERS
The following table shows
for the fiscal year ended December 31, 2007 compensation awarded or paid
to, or earned by, the Companys Chief Executive Officer, President and Chief
Financial Officer at December 31, 2007 (the Named Executive Officers).
S
UMMARY
C
OMPENSATION
T
ABLE
|
|
|
|
|
|
|
|
Option
|
|
All Other
|
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($) (1)
|
|
($) (2)
|
|
($)
|
|
David L. Brown
|
|
2007
|
|
333,558
|
|
200,000
|
|
284,934
|
|
5,674
|
|
824,166
|
|
Chief Executive Officer
|
|
2006
|
|
312,706
|
|
88,000
|
|
52,577
|
|
5,439
|
|
458,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey M. Stibel (3)
|
|
2007
|
|
81,250
|
|
|
|
|
|
107
|
|
81,357
|
|
President
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin M. Carney
|
|
2007
|
|
229,038
|
|
100,000
|
|
133,016
|
|
3,261
|
|
465,315
|
|
Chief Financial Officer
|
|
2006
|
|
212,706
|
|
40,000
|
|
45,293
|
|
4,479
|
|
302,478
|
|
(1) The amounts shown reflect the dollar amount
recognized for financial statement reporting purposes for the fiscal year ended
December 31, 2007, in accordance with FAS 123(R) and thus includes
amounts from awards granted in and prior to 2007. Assumptions used in the
calculation of this amount are included in footnote 10 to the Companys audited
financial statements for the fiscal year ended December 31, 2007 included
in the Companys Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 11, 2008.
(2) Includes the following payments we made on
behalf of the executives:
|
|
|
|
Life Insurance
Premiums
|
|
401(K)
|
|
Total
|
|
Name
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
David Brown
|
|
2007
|
|
497
|
|
5,177
|
|
5,674
|
|
|
|
2006
|
|
454
|
|
4,985
|
|
5,439
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey M. Stibel
|
|
2007
|
|
107
|
|
|
|
107
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Carney
|
|
2007
|
|
475
|
|
2,786
|
|
3,261
|
|
|
|
2006
|
|
454
|
|
4,025
|
|
4,479
|
|
(3) Mr. Stibel became an employee and an
executive officer effective September 30, 2007.
33
S
TOCK
O
PTION
G
RANTS
A
ND
E
XERCISES
The Company grants options
to its executive officers under the 2005 Plan. Prior to the adoption of the
2005 Plan, the Company granted options to its executive officers under the 1999
Equity Incentive Plan (the
1999 Plan
). On September 30, 2007, each
outstanding stock option to purchase shares of common stock of Web.com, Inc.
(
Web.com
) converted into and became
an option to purchase Company common stock, and the Company assumed such option
in accordance with the terms of the stock option plan under which that option
was issued (the
Web.com
Plan
), subject to an option exchange ratio calculated in
accordance with the Agreement and Plan of Merger and Reorganization executed on
June 26, 2007 by and among the Company, Augusta Acquisition Sub, Inc.,
a wholly owned subsidiary of the Company, and Web.com.
As of March 31, 2008, (i) 3,000,000
shares were reserved for issuance pursuant to the 2008 Plan, subject to
stockholder approval; (ii) options to purchase a total of 1,999,212 shares
and 10,000 shares of restricted stock were outstanding under the 2005 Plan and
338,588 shares remained available for grant under the 2005 Plan; (iii) options
to purchase a total of 2,421,725 shares were outstanding under the 1999 Plan
and no shares remained available for grant under the 1999 Plan; and (iv) options
to purchase a total of 2,177,757 shares were outstanding that are governed by
the terms of the Web.com Plan, and no shares remained available for grant under
the Web.com Plan. The Company has never granted any stock appreciation rights.
The following tables show
for the fiscal year ended December 31, 2007, certain information regarding
options granted to, held at year end by, and exercised by the Named Executive
Officers:
G
RANTS
O
F
P
LAN
-B
ASED
A
WARDS IN
2007
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
Awards
|
|
Exercise
|
|
|
|
|
|
|
|
Number of
|
|
Or Base
|
|
Grant
Date
|
|
|
|
|
|
Securities
|
|
Price of
|
|
Fair
Value of
|
|
|
|
|
|
Underlying
|
|
Option
|
|
Stock
and
|
|
|
|
Grant
|
|
Options
|
|
Awards
|
|
Option Awards
|
|
Name
|
|
Date
|
|
(#)
|
|
($/Sh)
|
|
($) (1)
|
|
David Brown
|
|
1/25/2007
|
|
200,000
|
|
8.92
|
|
996,000
|
|
Jeffrey Stibel
|
|
|
|
|
|
|
|
|
|
Kevin Carney
|
|
1/25/2007
|
|
70,000
|
|
8.92
|
|
348,600
|
|
(1) The amounts in this column reflect the grant
date fair value of stock options calculated in accordance with FAS 123(R).
34
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
David L. Brown
|
|
45,832
|
|
154,168
|
(1)
|
|
|
8.92
|
|
1/25/2017
|
|
|
|
260,412
|
|
239,588
|
(2)
|
|
|
9.00
|
|
4/6/2015
|
|
|
|
528,621
|
|
|
|
|
|
2.00
|
|
11/26/2013
|
|
|
|
489,101
|
|
|
|
|
|
0.50
|
|
5/28/2012
|
|
|
|
85,714
|
|
|
|
|
|
2.00
|
|
10/18/2010
|
|
|
|
928
|
|
|
|
|
|
2.00
|
|
10/6/2009
|
|
|
|
3,593
|
|
|
|
|
|
2.00
|
|
8/11/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Stibel
|
|
103,124
|
|
|
|
|
|
8.63
|
|
3/30/2016
|
|
|
|
1,151,562
|
|
|
|
|
|
3.34
|
|
7/28/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin M. Carney
|
|
16,041
|
|
53,959
|
(1)
|
|
|
8.92
|
|
1/25/2017
|
|
|
|
11,458
|
|
13,542
|
(3)
|
|
|
11.25
|
|
2/24/2016
|
|
|
|
53,332
|
|
26,668
|
(2)
|
|
|
9.00
|
|
4/6/2015
|
|
|
|
165,103
|
|
|
|
|
|
2.00
|
|
11/26/2013
|
|
|
|
1,428
|
|
|
|
|
|
2.00
|
|
11/20/2011
|
|
|
|
7,142
|
|
|
|
|
|
2.00
|
|
10/18/2010
|
|
(1) 1/48
th
of the shares vest on each
monthly anniversary of January 25, 2007 until all of the shares are fully
vested; provided that no shares shall vest on any vesting date if on such date
the option holder is not providing Continuous Service (as such term is defined
in the 2005 Plan) to the Company.
(2) 1/48
th
of the shares vest on each
monthly anniversary of April 6, 2005 until all of the shares are fully
vested; provided that no shares shall vest on any vesting date if on such date
the option holder is not providing Continuous Service (as such term is defined
in the 2005 Plan) to the Company.
(3) 1/48
th
of the shares vest on each
monthly anniversary of February 24, 2006 until all of the shares are fully
vested; provided that no shares shall vest on any vesting date if on such date
the option holder is not providing Continuous Service (as such term is defined
in the 2005 Plan) to the Company.
OPTION
EXERCISES DURING THE FISCAL YEAR
|
|
Number of
|
|
|
|
|
|
Shares
|
|
Value
|
|
|
|
Acquired
|
|
Realized
|
|
|
|
on Exercise
|
|
on Exercise
|
|
Name
|
|
(#)
|
|
($)
|
|
David L. Brown
|
|
|
|
|
|
Jeffrey M. Stibel
|
|
|
|
|
|
Kevin M. Carney
|
|
|
|
|
|
35
E
QUITY
C
OMPENSATION
P
LAN
I
NFORMATION
The number of shares
issuable upon exercise of outstanding stock options, the weighted-average
exercise price of the outstanding options, and the number of stock options
remaining for future issuance for each of our equity compensation plans as of December 31,
2007 are summarized as follows:
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
remaining available for
|
|
|
|
Number of securities to
|
|
Weighted-average
|
|
issuance under equity
|
|
|
|
be issued upon exercise of
|
|
exercise price of
|
|
compensation plans
|
|
|
|
outstanding options,
|
|
outstanding options,
|
|
(excluding securities
|
|
|
|
warrants and rights
|
|
warrants and rights
|
|
reflected in column (a))
|
|
Plan
Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by
security holders
|
|
6,873,462
|
|
$
|
6.36
|
|
1,166,471
|
(1)
|
Equity compensation plans not approved by
security holders (2)
|
|
|
|
N/A
|
|
|
|
Total
|
|
6,873,462
|
|
$
|
6.36
|
|
1,166,471
|
(1)
|
(1) Includes 534,603 shares reserved for issuance
pursuant to the Companys 2005 Employee Stock Purchase Plan.
(2) None of Website Pros equity compensation
plans were adopted without the approval of the Companys security holders.
E
MPLOYMENT
, S
EVERANCE
AND
C
HANGE
OF
C
ONTROL
A
GREEMENTS
Employment
Agreements
In 2005, each of Mr. Brown
and Mr. Carney entered into an employment agreement which became effective
immediately following the Companys initial public offering. These agreements
provided for initial base salaries of $275,000 and $175,000, respectively. In
2006 Mr. Browns base salary was increased to $320,000 and Mr. Carneys
base salary was increased to $220,000. In 2007 Mr. Browns base salary was
increased to $335,000 and Mr. Carneys base salary was increased to
$230,000. In September 2007, Mr. Stibel entered into an employment
agreement which provided for a base salary of $325,000. These agreements also provided for other
customary benefits and terms, including initial discretionary bonuses of up to
50% of base salary for Mr. Brown, up to 60% of base salary for Mr. Stibel
and up to 40% of base salary for Mr. Carney, medical insurance and
participation in our 401(k) plan. In 2007, the discretionary bonuses were
targeted at 75% of base salary for Mr. Brown and 55% of base salary for Mr. Carney.
No particular performance goals have been established with respect to bonus
eligibility for Mr. Brown, Mr. Stibel or Mr. Carney. The
Compensation Committee of our Board of Directors may modify the compensation
and benefits provided under these agreements as they deem necessary. Each of
these officers is employed by us on an at will basis, notwithstanding the
existence of these agreements.
Mr. Stibel has relocated his primary work
location to the Companys corporate headquarters in Jacksonville, Florida and
his familys primary residence to the Jacksonville area. He has agreed that
such relocation will not give rise to a right to resign for good reason under
his employment agreement with the Company. Mr. Stibel is entitled to
relocation payments and benefits for expenses reasonably incurred in the
relocation process (which is capped at $100,000).
In addition, Mr. Stibel earned a relocation
bonus which was paid in January 2008 upon his relocation and sale of his home
in Atlanta, Georgia. Payments of the relocation bonus will be subject to
forfeiture on a pro rata basis if Mr. Stibel terminates his employment
with the Company without good reason, of if the Company terminates his
employment for cause, within 12 months following the date on which such amount
was paid. In the event of any other termination of Mr. Stibels employment
prior to 12 months following the date on which such amount was paid, and
subject to his execution of a release of claims and observation of his
continuing obligations to the Company, Mr. Stibel will not be required to
forfeit any amount of the relocation bonus. However, this amount will be offset
against, and reduce on a dollar-for-dollar basis, the amount of the severance
benefits (as described below), if any, owed by the Company to Mr. Stibel.
36
Under Mr. Browns employment
agreement, if at any time his employment is terminated by us without cause or
by Mr. Brown for good reason, we would be obligated to pay Mr. Brown
severance equal to eighteen months of salary plus 150% of the prior years
bonus and health benefits, and Mr. Brown would be entitled to an
additional eighteen months of vesting of shares subject to any stock options
held by him at the time of such termination.
Under Mr. Stibels employment agreement,
subject to his execution of an effective release of claims in favor of the
Company, and his observation of his continuing obligations to the Company
following termination, Mr. Stibel will be eligible to receive severance
benefits, as follows:
Termination
Prior to the First Anniversary of the Closing
·
If Mr. Stibels employment is terminated
by the Company without cause or by Mr. Stibel for good reason (certain
material adverse changes in the terms and conditions of his employment), and
such termination occurs prior to the first anniversary of the closing of the
acquisition of Web.com, Inc., Mr. Stibel will receive a lump sum cash
severance payment equal to eighteen (18) months of his then-current base salary
plus $212,640, each of his then-outstanding, unvested equity awards will become
fully vested, and the Company will reimburse him for continued health insurance
premiums for up to 12 months.
Termination
On or After the First Anniversary of the Closing
·
If Mr. Stibels employment is terminated
by the Company without cause or by Mr. Stibel for good reason, and such
termination occurs on or after to the first anniversary of the closing of the
acquisition of Web.com, Inc., Mr. Stibel will receive a lump sum cash
severance payment equal to eighteen (18) months of his then-current base salary
plus 150% of the prior years bonus actually earned, each of his
then-outstanding, unvested equity awards will become vested as to the number of
shares that would have vested in the 18 months following termination, and the
Company will reimburse him for continued health insurance premiums for up to 18
months.
Any lump sum severance benefits owed to Mr. Stibel
under his employment agreement will be paid within ten (10) business days
following the date on which his release of claims against the Company becomes
effective, but in no event later than March 15 of the year following the
year in which termination occurs. All severance benefits offered to Mr. Stibel
under his employment agreement will be offset against any amounts owed to him
under applicable laws governing payments upon a reduction in force (such as the
Worker Adjustment and Retraining Notification Act) and under any other company
plan or policy providing for compensation and benefits following a termination
of employment.
Under Mr. Carneys
employment agreement, if at any time his employment is terminated by us without
cause or by Mr. Carney for good reason, we would be obligated to pay Mr. Carney
severance equal to twelve months of salary plus prior years bonus and health
benefits, and Mr. Carney would be entitled to an additional twelve months
of vesting of shares subject to any stock options held by him at the time of
such termination.
Additionally, Mr. Brown,
Mr. Stibel and Mr. Carney are entitled to accelerated vesting
benefits described below under Change of Control Provisions.
Change of
Control Provisions
Our named executive
officers, other than David Brown and Kevin Carney, and some of our other key
employees are entitled to cash severance and vesting acceleration benefits in
connection with changes of control as described below under Executive
Severance Benefit Plan. Mr. Brown, Mr. Stibel and Mr. Carney
are entitled to the following vesting acceleration in the event of a change of
control:
·
In the event of a change of control, Mr. Brown
and Mr. Stibel will receive accelerated vesting of all shares subject to
vesting under any of his outstanding options or other stock awards effective
immediately prior to the closing of the change of control.
37
·
In the event of a change of control, Mr. Carney
will receive accelerated vesting of 20% of the then-unvested shares subject to
his then outstanding options or other stock awards effective immediately prior
to the closing of the change of control. In addition, if Mr. Carneys
employment is terminated without cause or for good reason within eighteen
months following the change of control, an additional 30% of the shares subject
to his then outstanding options or other stock awards that were unvested at the
time of the change of control will become immediately vested upon such
termination.
2005 Equity Incentive Plan
Under our 2005 Equity
Incentive Plan, in the event of specified significant corporate transactions,
such as a sale of all or substantially all of our assets, a sale of at least
90% of our outstanding securities, a merger in which we are not the surviving
entity, or a merger in which we are the surviving entity but our common stock
outstanding immediately prior to the transaction is exchanged or converted into
other property, all outstanding stock awards under the 2005 Equity Incentive
Plan may be assumed, continued or substituted for by any surviving or acquiring
entity (or its parent company). If the surviving or acquiring entity (or its
parent company) elects not to assume, continue or substitute for such stock
awards, then (i) with respect to any such stock awards that are held by
individuals whose service with us or our affiliates has not terminated more
than three months prior to the effective date of the corporate transaction, the
vesting and exercisability provisions of such stock awards will be accelerated
in full and such awards will be terminated if not exercised prior to the
effective date of the corporate transaction, and (ii) all other outstanding
stock awards will terminate if not exercised prior to the effective date of the
corporate transaction. Our Board of Directors may also provide that the holder
of an outstanding stock award not assumed in the corporate transaction will
surrender such stock award in exchange for a payment equal to the excess of (i) the
value of the property that the optionee would have received upon exercise of
the stock award, over (ii) the exercise price otherwise payable in
connection with the stock award.
2005 Non-Employee Directors Stock Option Plan
Under the 2005 Non-Employee
Directors Stock Option Plan, in the event of specific significant corporate
transactions, such as a sale of all or substantially all of our assets, a sale
of at least 90% of our outstanding securities in a merger, consolidation or
similar transaction in which we are not the surviving entity, or a merger,
consolidation or similar transaction in which we are the surviving entity but
our common stock outstanding immediately prior to the transaction is exchanged
for or converted into other property, all outstanding awards under the 2005
Non-Employee Directors Stock Option Plan may be assumed, continued or
substituted for by any surviving or acquiring entity (or its parent company).
If the surviving or acquiring entity (or its parent company) elects not to
assume, continue or substitute for such awards, then (i) with respect to
any such awards that are held by optionees then performing services for us or
our affiliates, the vesting and exercisability of such awards will be
accelerated in full and such awards will be terminated if not exercised prior
to the effective date of the corporate transaction, and (ii) all other
outstanding awards will terminate if not exercised prior to the effective date
of the corporate transaction. Our Board of Directors may also provide that the
holder of an outstanding award not assumed in the corporate transaction will
surrender such award in exchange for a payment equal to the excess of (i) the
value of the property that the holder would have received upon exercise of the
award, over (ii) the exercise price otherwise payable in connection with
the award.
2005 Employee Stock Purchase Plan
Under the 2005 Employee
Stock Purchase Plan, in the event of specified significant corporate
transactions, any then-outstanding rights to purchase our stock under the 2005
Employee Stock Purchase Plan will be assumed, continued or substituted for by
any surviving or acquiring entity (or its parent company). If the surviving or
acquiring entity (or its parent company) elects not to assume, continue or
substitute for such purchase rights, then the participants accumulated
contributions will be used to purchase shares of our common stock within ten
business days prior to such corporate transaction, and such purchase rights
will terminate immediately thereafter.
2008 Equity Incentive Plan
Please see Proposal 3
Approval of 2008 Equity Incentive Plan
for information
regarding the change in control provisions of the 2008 Plan.
38
Executive Severance Benefit Plan
In April 2005, our
Board of Directors adopted the Executive Severance Benefit Plan, which became
effective immediately following the initial public offering. Under the
Executive Severance Benefit Plan, officers, other than David Brown, Kevin
Carney and Jeffrey Stibel and certain others who have employment agreements,
and some of our other key employees, as designated by our Board of Directors,
are eligible for severance benefits, including cash severance payments and accelerated
vesting of outstanding stock and options.
Termination
without Cause or Resignation for Good Reason.
Under the Executive Severance Benefit Plan,
if a beneficiarys employment with us terminates without cause, or the
beneficiary terminates his or her employment with good reason, the beneficiary
is entitled to cash severance in an amount equal to six months salary, payable
in accordance with our standard payroll practices. Additionally, the
beneficiary would be entitled to acceleration of six months worth of vesting
of the shares of stock held by the beneficiary and the shares of stock subject
to any options held by the beneficiary. Further, we will pay any Consolidated
Omnibus Budget Reconciliation Act of 1985, or COBRA, payments for six months.
Termination
without Cause or Resignation for Good Reason Following a Change of Control
. Under the Executive Severance Benefit Plan,
if within eighteen months following a change of control a beneficiarys
employment with us terminates without cause, or the beneficiary terminates his
or her employment with good reason, the beneficiary is entitled to cash
severance in an amount equal to six months salary, payable in accordance with
our standard payroll practices. Additionally, the beneficiary would be entitled
to acceleration of 50% of the then-unvested shares of stock held by the
beneficiary and the shares of stock subject to any options held by the
beneficiary. Further, we will pay any COBRA payments for six months.
Conditions
to Receipt of Benefits
.
To be eligible to receive benefits under the Executive Severance Benefit Plan,
the beneficiary must execute a general waiver and release of claims in our
favor. If a beneficiary is terminated for cause or resigns without good reason,
the beneficiary is ineligible for benefits under the Executive Severance
Benefit Plan.
39
Summary of Estimated Amounts Payable Upon a Separation or Change of
Control
The table below estimates
amounts payable upon a separation, change of control and a separation following
a change of control as of December 28, 2007 using the closing stock price
of the Company as of that date:
|
|
As of December 28, 2007
|
|
|
|
|
|
|
|
|
|
|
Termination Without
|
|
|
|
|
|
|
|
Cause or Resignation
|
|
|
|
Termination Without
|
|
|
|
for Good Reason
|
|
|
|
Cause or Resignation
|
|
|
|
Following a
|
|
Name
|
|
for Good Reason
|
|
Change of Control
|
|
Change of Control
|
|
David L. Brown
|
|
|
|
|
|
|
|
Separation Benefit (1)
|
|
$
|
612,000
|
|
$
|
|
|
$
|
612,000
|
|
Stock Options
|
|
$
|
451,954
|
(2)
|
$
|
860,595
|
(3)
|
$
|
860,595
|
(3)
|
COBRA Premiums (4)
|
|
$
|
17,151
|
|
$
|
|
|
$
|
17,151
|
|
Total
|
|
$
|
1,081,105
|
|
$
|
860,595
|
|
$
|
1,489,746
|
|
|
|
|
|
|
|
|
|
Jeffrey M. Stibel(5)
|
|
|
|
|
|
|
|
Separation Benefit (6)
|
|
$
|
700,140
|
|
$
|
|
$
|
700,140
|
|
Stock Options
|
|
$
|
|
(3)
|
$
|
|
(3)
|
$
|
|
(3)
|
COBRA Premiums (7)
|
|
$
|
10,195
|
|
$
|
|
$
|
10,195
|
|
Total
|
|
$
|
710,335
|
|
$
|
|
$
|
710,335
|
|
|
|
|
|
|
|
|
|
Jeffrey M. Stibel (8)
|
|
|
|
|
|
|
|
Separation Benefit (1)
|
|
$
|
487,500
|
|
$
|
|
$
|
487,500
|
|
Stock Options
|
|
$
|
|
(2)
|
$
|
|
(3)
|
$
|
|
(3)
|
COBRA Premiums (4)
|
|
$
|
15,292
|
|
$
|
|
$
|
15,292
|
|
Total
|
|
$
|
502,792
|
|
$
|
|
$
|
502,792
|
|
|
|
|
|
|
|
|
|
Kevin M. Carney
|
|
|
|
|
|
|
|
Separation Benefit (9)
|
|
$
|
260,000
|
|
$
|
|
|
$
|
260,000
|
|
Stock Options
|
|
$
|
138,880
|
(10)
|
$
|
74,207
|
(11)
|
$
|
111,312
|
(12)
|
COBRA Premiums (7)
|
|
$
|
13,154
|
|
$
|
|
|
$
|
13,154
|
|
Total
|
|
$
|
412,034
|
|
$
|
74,207
|
|
$
|
384,466
|
|
(1)
Lump sum severance payment in an amount equal to 18 months of
then-current base salary plus 150% of prior years bonus.
(2)
Acceleration of the vesting of shares of stock subject to options held
such that the shares vest to the same extent as such shares would have been
vested had employment continued for an additional 18 months.
(3)
Acceleration of the vesting of shares of stock subject to options held
such that all shares become immediately and fully vested.
(4)
Reimbursement of COBRA premiums for a maximum of 18 months.
(5)
Assumes a termination prior to September 30, 2008.
(6)
Lump sum severance payment in an amount equal to 18 months of
then-current base salary plus $212,640.
(7)
Reimbursement of COBRA premiums for a maximum of 12 months.
(8)
Assumes a termination after September 30, 2008.
(9)
Lump sum severance payment in an amount equal to 12 months of
then-current base salary plus prior years bonus.
(10)
Acceleration of the vesting of shares of stock subject to options held
such that the shares vest to the same extent as such shares would have been
vested had employment continued for an additional 12 months.
(11)
Acceleration of the vesting of shares of stock subject to options held
such that 20% of the shares that were unvested become immediately vested.
(12)
Acceleration of the vesting of shares of stock subject to options held
such that an additional 30% of the shares that were unvested become immediately
vested.
40
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided
for therein, for expenses, damages, judgments, fines and settlements he or she
may be required to pay in actions or proceedings which he or she is or may be
made a party by reason of his or her position as a director, officer or other
agent of the Company, and otherwise to the fullest extent permitted under
Delaware law and the Companys Bylaws.
RELATED
TRANSACTIONS POLICY AND PROCEDURES
Our
Audit Committee has authority to review and approve all related party
transactions as set forth in the Audit Committee Charter. To identify related
party transactions, each year, we submit and require our directors and
officers to complete Director and Officer Questionnaires identifying any
transactions with us in which the executive officer or director or their family
members have an interest. We review related party transactions due to the
potential for a conflict of interest. A conflict of interest occurs when an
individuals private interest interferes, or appears to interfere, with our
interests. In addition, our Nominating and Corporate Governance Committee
determines, on an annual basis, which members of our Board of Directors are
independent (as independence is currently defined in Rule 4200(a)(15) of
the Nasdaq listing standards). Our Nominating and Corporate Governance
Committee reviews and discusses any relationships with directors that would
potentially interfere with his or her exercise of independent judgment in
carrying out the responsibilities of a director. Finally, our Code of Conduct
establishes the standards of behavior for all employees, officers, and
directors.
H
OUSEHOLDING
OF
P
ROXY
M
ATERIALS
The SEC has adopted rules that
permit companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with respect to two or
more stockholders sharing the same address by delivering a single proxy
statement addressed to those stockholders. This process, which is commonly referred to as householding,
potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of
brokers with account holders who are Website Pros stockholders will be householding
our proxy materials. A single proxy statement will be delivered to multiple
stockholders sharing an address unless contrary instructions have been received
from the affected stockholders. Once you have received notice from your broker
that they will be householding communications to your address, householding
will continue until you are notified otherwise or until you revoke your consent.
If, at any time, you no longer wish to participate in householding and would
prefer to receive a separate proxy statement and annual report, please notify
your broker, direct your written request to Corporate Secretary, Website Pros, Inc.,
12735 Gran Bay Parkway West, Building 200, Jacksonville, Florida 32258 or
contact Kevin Carney at (904) 680-6600. Stockholders who currently receive
multiple copies of the proxy statement at their address and would like to
request householding of their communications should contact their broker.
A copy of
the Companys Annual Report on Form 10-K for the fiscal year ended December 31,
2007, is available without charge on
our corporate website at
http://ir.websitepros.com/sec.cfm
or by mail upon written
request to: Corporate Secretary, Website Pros, Inc., 12735 Gran Bay
Parkway West, Building 200, Jacksonville, Florida 32258.
41
O
THER
M
ATTERS
The Board of Directors knows
of no other matters that will be presented for consideration at the annual
meeting. If any other matters are properly brought before the meeting, it is
the intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their best judgment.
|
By Order of the Board of
Directors
|
|
|
|
|
|
Kevin M.
Carney
|
|
Secretary
|
April 14, 2008
|
|
42
APPENDIX A
WEBSITE PROS, INC.
CERTIFICATE
OF AMENDMENT TO CERTIFICATE OF INCORPORATION
CERTIFICATE OF AMENDMENT
TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
WEBSITE PROS, INC.
Jeffrey M. Stibel and Kevin
M. Carney hereby certify that:
FIRST: That the
name of this corporation is Website Pros, Inc. (the
Corporation
)
and that the Corporation was originally incorporated pursuant to the General
Corporation Law with the Secretary of State of the State of Delaware on March 2,
1999.
SECOND: They
are the duly elected and acting President and Secretary, respectively, of
Website Pros, Inc., a Delaware corporation.
THIRD: That Article I
of the Amended and Restated Certificate of Incorporation of the Corporation be
amended and restated in its entirety as follows:
I.
The name of this corporation is Web.com, Inc.
This Certificate of Amendment to Amended and Restated
Certificate of Incorporation has been duly adopted in accordance with the
provisions of Sections 228 and Section 242 of the General Corporation Law
of the State of Delaware by the Board of Directors and stockholders of the
corporation.
|
|
|
JEFFREY
M. STIBEL
|
|
President
|
|
|
|
|
|
KEVIN
M. CARNEY
|
|
Secretary
|
|
|
|
Dated:
,
2008
|
43
APPENDIX B
WEBSITE PROS, INC.
2008
EQUITY INCENTIVE PLAN
WEBSITE PROS, INC.
2008 EQUITY INCENTIVE PLAN
APPROVED BY BOARD ON: ,
2008
APPROVED BY STOCKHOLDERS:
,
2008
TERMINATION DATE:
, 2018
1.
General.
(a)
Eligible Award Recipients.
The persons eligible to receive Awards are
Employees, Directors and Consultants.
(b)
Available Awards.
The Plan provides for the grant of the
following Awards: (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Restricted Stock Awards, (iv) Restricted Stock
Unit Awards, (v) Stock Appreciation Rights, (vi) Performance Stock
Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards.
(c)
General Purpose.
The Company, by means of the Plan, seeks to
secure and retain the services of the group of persons eligible to receive
Awards as set forth in Section 1(a), to provide incentives for such
persons to exert maximum efforts for the success of the Company and any
Affiliate and to provide a means by which such eligible recipients may be given
an opportunity to benefit from increases in value of the Common Stock through
the granting of Stock Awards.
2.
Administration.
(a)
Administration
by Board.
The Board shall administer
the Plan unless and until the Board delegates administration of the Plan to a
Committee or Committees, as provided in Section 2(c).
(b)
Powers
of Board.
The Board shall have the
power, subject to, and within the limitations of, the express provisions of the
Plan:
(i)
To
determine from time to time (A) which of the persons eligible under the
Plan shall be granted Awards; (B) when and how each Award shall be
granted; (C) what type or combination of types of Award shall be granted; (D) the
provisions of each Award granted (which need not be identical), including the
time or times when a person shall be permitted to receive cash or Common Stock
pursuant to a Stock Award; and (E) the number of shares of Common Stock
with respect to which a Stock Award shall be granted to each such person.
(ii)
To
construe and interpret the Plan and Awards, and to establish, amend and revoke rules and
regulations for the Plans administration.
The Board, in the exercise of this power, may correct any defect,
omission or inconsistency in the Plan or in any Stock Award Agreement or in the
written terms of a Performance Cash Award, in a manner and to the extent it
shall deem necessary or expedient to make the Plan or Award fully effective.
(iii)
To
settle all controversies regarding the Plan and Awards.
44
(iv)
To
accelerate the time at which a Stock Award may first be exercised or the time
during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest.
(v)
To suspend or terminate the Plan at any
time. Suspension or termination of the
Plan shall not impair rights and obligations under any Stock Award granted
while the Plan is in effect except with the written consent of the affected
Participant.
(vi)
To
amend the Plan in any respect the Board deems necessary or advisable,
including, without limitation, relating to Incentive Stock Options and certain
nonqualified deferred compensation under Section 409A of the Code and to
bring the Plan and/or Stock Awards into compliance therewith, subject to the
limitations, if any, of applicable law. However, except as provided in Section 9(a) relating
to Capitalization Adjustments, stockholder approval shall be required for any
amendment of the Plan that either (A) materially increases the number of
shares of Common Stock available for issuance under the Plan, (B) materially
expands the class of individuals eligible to receive Awards under the Plan, (C) materially
increases the benefits accruing to Participants under the Plan or materially
reduces the price at which shares of Common Stock may be issued or purchased
under the Plan, (D) materially extends the term of the Plan, or (E) expands
the types of Awards available for issuance under the Plan, but only to the
extent required by applicable law or listing requirements. Except as provided
above, rights under any Award granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (1) the Company requests the
consent of the affected Participant, and (2) such Participant consents in
writing.
(vii)
To submit any amendment to the Plan
for stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of (A) Section 162(m) of
the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to Covered Employees, (B) Section 422 of the Code
regarding incentive stock options or (C) Rule 16b-3.
(viii)
To
approve forms of Award Agreements for use under the Plan and to amend the terms
of any one or more Awards, including, but not limited to, amendments to provide
terms more favorable to the Participant than previously provided in the Award
Agreement, subject to any specified limits in the Plan that are not subject to
Board discretion;
provided however,
that the
Participants rights under any Award shall not be impaired by any such
amendment unless (A) the Company requests the consent of the affected
Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, subject to the
limitations of applicable law, if any, and without the affected Participants
consent, the Board may amend the terms of any one or more Awards if necessary
to maintain the qualified status of the Award as an Incentive Stock Option or
to bring the Award into compliance with Section 409A of the Code and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued or amended after the Effective Date.
(ix)
Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan or Awards.
(x)
To
adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees, Directors or Consultants who are
foreign nationals or employed outside the United States.
(c)
Delegation to
Committee.
(i)
General.
The Board may delegate some or all of the
administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to
a Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee
of the Committee any of the administrative powers the Committee is authorized
to exercise (and references in this Plan to the Board shall thereafter be to
the Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the
45
provisions of the Plan,
as may be adopted from time to time by the Board. The Board may retain the authority to
concurrently administer the Plan with the Committee and may, at any time,
revest in the Board some or all of the powers previously delegated to the
Committee, Committees, subcommittee or subcommittees.
(ii)
Section 162(m) and Rule 16b-3
Compliance.
In the sole
discretion of the Board, the Committee may consist solely of two (2) or
more Outside Directors, in accordance with Section 162(m) of the
Code, or solely of two (2) or more Non-Employee Directors, in accordance
with Rule 16b-3. In addition, the
Board or the Committee, in its sole discretion, may (A) delegate to a
Committee which need not consist of Outside Directors the authority to grant
Awards to eligible persons who are either (1) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award, or (2) not persons with respect to
whom the Company wishes to comply with Section 162(m) of the Code, or
(B) delegate to a Committee which need not consist of Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.
(d)
Delegation to an Officer.
The Board may delegate to one (1) or
more Officers the authority to do one or both of the following (i) designate
Employees who are not Officers
to be recipients of Options (and, to the extent permitted by applicable law,
other Stock Awards) and the terms thereof, and (ii) determine the number
of shares of Common Stock to be subject to such Stock Awards granted to such
Employees;
provided, however
,
that
the Board resolutions regarding such delegation shall specify the total number
of shares of Common Stock that may be subject to the Stock Awards granted by
such Officer and that such Officer may not grant a Stock Award to himself or
herself. Notwithstanding anything to the
contrary in this Section 2(d), the Board may not delegate to an Officer
authority to determine the Fair Market Value pursuant to Section 13(u)(ii) below.
(e)
Effect of Boards Decision.
All
determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.
(f)
Cancellation and Re-Grant of Stock Awards
. Neither the Board nor any Committee shall
have the authority to: (i) reprice any outstanding Stock Awards under the
Plan, or (ii) cancel and re-grant any outstanding Stock Awards under the
Plan, unless the stockholders of the Company have approved such an action
within twelve (12) months prior to such an event.
3.
Shares Subject to the
Plan.
(a)
Share
Reserve.
Subject to the provisions of Section 9 relating to
adjustments upon changes in stock, the aggregate number of shares of Common
Stock that may be issued pursuant to Stock Awards after the Effective Date
shall not exceed three million (3,000,000) shares (the
Share
Reserve
). For clarity,
the foregoing is a limitation on the number of shares of the Common Stock that
may be issued pursuant to the Plan and does not limit the granting of Stock
Awards except as provided in Section 7(a).
Shares may be issued in connection with a merger or acquisition as
permitted by NASD Rule 4350(i)(1)(A)(iii) or, if applicable, NYSE Listed
Company Manual Section 303A.08, or AMEX Company Guide Section 711,
and such issuance shall not reduce the number of shares available for issuance
under the Plan. Furthermore, if a Stock
Award (i) expires or otherwise terminates without having been exercised in
full or (ii) is settled in cash (
i.e.
, the
holder of the Stock Award receives cash rather than stock), such expiration,
termination or settlement shall not reduce (or otherwise offset) the number of
shares of the Common Stock that may be issued pursuant to the Plan.
(b)
Reversion
of Shares to the Share Reserve
. If
any shares of common stock issued pursuant to a Stock Award are forfeited back
to the Company because of the failure to meet a contingency or condition
required to vest such shares in the Participant, then the shares which are
forfeited shall revert to and again become available for issuance under the
Plan. Also, any shares reacquired by the
Company pursuant to Section 8(g) or as consideration for the exercise
of an Option shall again become available for issuance under the Plan. Notwithstanding the provisions of this Section 3(b),
any such shares shall not be subsequently issued pursuant to the exercise of
Incentive Stock Options.
(c)
Incentive Stock Option Limit.
Notwithstanding anything to the
contrary in this Section 3(d), subject to the provisions of Section 9(a) relating
to Capitalization Adjustments the aggregate maximum number of
46
shares of Common Stock
that may be issued pursuant to the exercise of Incentive Stock Options shall be
the number of shares of Common Stock in the Share Reserve.
(d)
Section 162(m) Limitation on Annual
Grants
. Subject to the
provisions of Section 9(a) relating to Capitalization Adjustments, at
such time as the Company may be subject to the applicable provisions of Section 162(m) of
the Code, no Employee shall be eligible to be granted during any calendar year
Stock Awards whose value is determined by reference to an increase over an
exercise or strike price of at least one hundred percent (100%) of the Fair
Market Value on the date the Stock Award is granted covering more than one
million (1,000,000)
shares of
Common Stock.
(e)
Source
of Shares.
The stock issuable under
the Plan shall be shares of authorized but unissued or reacquired Common Stock,
including shares repurchased by the Company on the market or otherwise.
4.
Eligibility.
(a)
Eligibility
for Specific Stock Awards
. Incentive
Stock Options may be granted only to employees of the Company or a parent
corporation or subsidiary corporation (as such terms are defined in Sections
424(e) and (f) of the Code).
Stock Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants.
(b)
Ten
Percent Stockholders.
A Ten Percent
Stockholder shall not be granted an Incentive Stock Option unless the exercise
price of such Option is at least one hundred ten percent (110%) of the Fair
Market Value on the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c)
Consultants.
A Consultant shall be eligible for the grant of a Stock Award
only if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act (
Form S-8
)
is available to register either the offer or the sale of the Companys
securities to such Consultant because of the nature of the services that the
Consultant is providing to the Company, because the Consultant is a natural
person, or because of any other rule governing the use of Form S-8.
5.
Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate.
All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are
issued, a separate certificate or certificates shall be issued for shares of
Common Stock purchased on exercise of each type of Option. If an Option is not
specifically designated as an Incentive Stock Option, then the Option shall be
a Nonstatutory Stock Option. The provisions of separate Options need not be
identical;
provided, however
,
that each Option Agreement shall include (through incorporation of provisions
hereof by reference in the Option Agreement or otherwise) the substance of each
of the following provisions:
(a)
Term.
Subject to the provisions of Section 4(b) regarding
Ten Percent Stockholders, no Option shall be exercisable after the expiration
of ten (10) years from the date of its grant or such shorter period
specified in the Option Agreement.
(b)
Exercise
Price.
Subject to the provisions of Section 4(b) regarding
Ten Percent Stockholders, the exercise price of each Option shall be not less
than one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option may
be granted with an exercise price lower than one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Option if such Option is
granted pursuant to an assumption of or substitution for another option in a
manner consistent with the provisions of Section 424(a) of the Code
(whether or not such options are Incentive Stock Options).
(c)
Consideration.
The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion,
47
by any combination of the
methods of payment set forth below. The
Board shall have the authority to grant Options that do not permit all of the
following methods of payment (or otherwise restrict the ability to use certain
methods) and to grant Options that require the consent of the Company to
utilize a particular method of payment.
The methods of payment permitted by this Section 6(c) are:
(i)
by
cash, check, bank draft or money order payable to the Company;
(ii)
pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of the stock subject to the Option, results
in either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds;
(iii)
by
delivery to the Company (either by actual delivery or attestation) of shares of
Common Stock;
(iv)
by
a net exercise arrangement pursuant to which the Company will reduce the
number of shares of Common Stock issued upon exercise by the largest whole
number of shares with a Fair Market Value that does not exceed the aggregate
exercise price;
provided, however
, that the Company shall accept a
cash or other payment from the Participant to the extent of any remaining balance
of the aggregate exercise price not satisfied by such reduction in the number
of whole shares to be issued;
provided,
further,
that shares of Common Stock will no longer be outstanding
under an Option and will not be exercisable thereafter to the extent that (A) shares
are used to pay the exercise price pursuant to the net exercise, (B) shares
are delivered to the Participant as a result of such exercise, and (C) shares
are withheld to satisfy tax withholding obligations; or
(v)
in
any other form of legal consideration that may be acceptable to the Board.
(d)
Transferability
of Options.
The Board may, in its
sole discretion, impose such limitations on the transferability of Options as
the Board shall determine. In the
absence of such a determination by the Board to the contrary, the following
restrictions on the transferability of Options shall apply:
(i)
Restrictions
on Transfer.
An Option shall not be
transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder;
provided, however
, that the Board
may, in its sole discretion, permit transfer of the Option in a manner
consistent with applicable tax and securities laws upon the Optionholders request.
(ii)
Domestic
Relations Orders.
Notwithstanding
the foregoing, an Option may be transferred pursuant to a domestic relations
order,
provided, however
, that an Incentive
Stock Option may be deemed to be a Nonqualified Stock Option as a result of
such transfer.
(iii)
Beneficiary
Designation.
Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to the Company,
in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of the death of the Optionholder, shall
thereafter be the beneficiary of an Option with the right to exercise the
Option and receive the Common Stock or other consideration resulting from an
Option exercise.
(e)
Vesting
Generally.
The total number of
shares of Common Stock subject to an Option may vest and therefore become
exercisable in periodic installments that may or may not be equal. The Option may be subject to such other terms
and conditions on the time or times when it may or may not be exercised (which may
be based on the satisfaction of Performance Goals or other criteria) as the
Board may deem appropriate. The vesting
provisions of individual Options may vary.
The provisions of this Section 5(e) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which
an Option may be exercised.
(f)
Termination of Continuous Service.
Except as otherwise provided in the
applicable Option Agreement or other agreement between the Optionholder and the
Company, in the event that an Optionholders Continuous Service terminates
(other than upon the Optionholders death or Disability), the Optionholder may
48
exercise his or her Option (to
the extent that the Optionholder was entitled to exercise such Option as of the
date of termination of Continuous Service) but only within such period of time
ending on the earlier of (i) the date three (3) months following the
termination of the Optionholders Continuous Service (or such longer or shorter
period specified in the Option Agreement), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.
(g)
Extension of Termination Date.
Unless otherwise provided in an Optionholders
Option Agreement, if the exercise of the Option following the termination of
the Optionholders Continuous Service (other than upon a Change in Control or
the Optionholders death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of a period equal to the post-termination
exercise period described in Section 5(f), 5(h) or 5(i) after
the termination of the Optionholders Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements, or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. In addition,
unless otherwise provided in an Optionholders Option Agreement, if the sale of
the Common Stock received upon exercise of an Option following the termination
of the Optionholders Continuous Service (other than upon a Change in Control
or the Optionholders death or Disability) would violate the Companys insider
trading policy, then the Option shall terminate on the earlier of (i) the
expiration of a period equal to the post-termination exercise period described
in Section 5(f), 5(h) or 5(i) above after the termination of the
Optionholders Continuous Service during which the exercise of the Option would
not be in violation of the Companys insider trading policy, (ii) the 15
th
day of the third month
after the date
on which the Option would cease to be exercisable but for this Section 5(g),
or such longer period as would not cause the Option to become subject to Section 409A(a)(1) of
the Code; or (iii) the expiration of the term of the Option as set forth
in the Option Agreement.
(h)
Disability of Optionholder.
In the event that an Optionholders
Continuous Service terminates as a result of the Optionholders Disability, the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination
of Continuous Service), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination of
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, after
termination of Continuous Service, the Optionholder does not exercise his or
her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.
(i)
Death of Optionholder.
In the event that (i) an Optionholders
Continuous Service terminates as a result of the Optionholders death, or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholders Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholders estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated as the beneficiary
of the Option upon the Optionholders death, but only within the period ending
on the earlier of (A) the date eighteen (18) months following the date of
death (or such longer or shorter period specified in the Option Agreement), or (B) the
expiration of the term of such Option as set forth in the Option
Agreement. If, after the Optionholders
death, the Option is not exercised within the time specified herein or in the
Option Agreement (as applicable), the Option shall terminate. If the Optionholder designates a third party
beneficiary of the Option in accordance with Section 5(d)(iii), then upon
the death of the Optionholder such designated beneficiary shall have the sole
right to exercise the Option and receive the Common Stock or other
consideration resulting from an Option exercise.
(j)
Non-Exempt Employees
. No Option granted to an Employee who is a
non-exempt employee for purposes of the Fair Labor Standards Act shall be first
exercisable for any shares of Common Stock until at least six (6) months
following the date of grant of the Option.
The foregoing provision is intended to operate so that any income
derived by a non-exempt employee in connection with the exercise or vesting of
an Option will be exempt from his or her regular rate of pay.
49
6.
Provisions of Stock
Awards other than Options.
(a)
Restricted
Stock Awards.
Each Restricted Stock
Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate.
To the extent consistent with the Companys Bylaws, at the Boards
election, shares of Common Stock may be (x) held in book entry form
subject to the Companys instructions until any restrictions relating to the
Restricted Stock Award lapse; or (y) evidenced by a certificate, which
certificate shall be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock
Award Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Award Agreements need not be identical;
provided, however
, that each Restricted
Stock Award Agreement shall include (through incorporation of provisions hereof
by reference in the agreement or otherwise) the substance of each of the
following provisions:
(i)
Consideration.
A Restricted Stock Award may be awarded in
consideration for (A) past or future services actually or to be rendered
to the Company or an Affiliate, or (B) any other form of legal
consideration that may be acceptable to the Board in its sole discretion and
permissible under applicable law.
(ii)
Vesting.
Shares
of Common Stock awarded under the Restricted Stock Award Agreement may be
subject to forfeiture to the Company in accordance with a vesting schedule to
be determined by the Board.
(iii)
Termination
of Participants Continuous Service.
In the event a Participants Continuous Service terminates, the Company
may receive via a forfeiture condition, any or all of the shares of Common
Stock held by the Participant that have not vested as of the date of
termination of Continuous Service under the terms of the Restricted Stock Award
Agreement.
(iv)
Transferability.
Rights to acquire shares of Common Stock
under the Restricted Stock Award Agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
Restricted Stock Award Agreement, as the Board shall determine in its sole
discretion, so long as Common Stock awarded under the Restricted Stock Award
Agreement remains subject to the terms of the Restricted Stock Award Agreement.
(b)
Restricted Stock Unit
Awards.
Each Restricted Stock Unit
Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate.
The terms and conditions of Restricted Stock Unit Award Agreements may
change from time to time, and the terms and conditions of separate Restricted
Stock Unit Award Agreements need not be identical;
provided, however
,
that each Restricted Stock Unit
Award Agreement shall include (through incorporation of the provisions hereof
by reference in the Agreement or otherwise) the substance of each of the
following provisions:
(i)
Consideration.
At the time of grant of a Restricted Stock
Unit Award, the Board will determine the consideration, if any, to be paid by
the Participant upon delivery of each share of Common Stock subject to the
Restricted Stock Unit Award. The consideration to be paid (if any) by the
Participant for each share of Common Stock subject to a Restricted Stock Unit
Award may be paid in any form of legal consideration that may be acceptable to
the Board in its sole discretion and permissible under applicable law.
(ii)
Vesting.
At the time of the grant of a Restricted Stock Unit Award,
the Board may impose such restrictions or conditions to the vesting of the
Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii)
Payment
. A Restricted Stock Unit Award may be settled
by the delivery of shares of Common Stock, their cash equivalent, any
combination thereof or in any other form of consideration, as determined by the
Board and contained in the Restricted Stock Unit Award Agreement.
(iv)
Additional Restrictions.
At the time of the grant of a
Restricted Stock Unit Award, the Board, as it deems appropriate, may impose
such restrictions or conditions that delay the delivery of the shares of
50
Common Stock (or their
cash equivalent) subject to a Restricted Stock Unit Award to a time after the
vesting of such Restricted Stock Unit Award.
(v)
Dividend Equivalents.
Dividend equivalents may be
credited in respect of shares of Common Stock covered by a Restricted Stock
Unit Award, as determined by the Board and contained in the Restricted Stock
Unit Award Agreement. At the sole
discretion of the Board, such dividend equivalents may be converted into
additional shares of Common Stock covered by the Restricted Stock Unit Award in
such manner as determined by the Board.
Any additional shares covered by the Restricted Stock Unit Award
credited by reason of such dividend equivalents will be subject to all the
terms and conditions of the underlying Restricted Stock Unit Award Agreement to
which they relate.
(vi)
Termination
of Participants Continuous Service.
Except
as otherwise provided in the applicable Restricted Stock Unit Award Agreement,
such portion of the Restricted Stock Unit Award that has not vested will be
forfeited upon the Participants termination of Continuous Service.
(vii)
Compliance with Section 409A of the
Code.
Notwithstanding
anything to the contrary set forth herein, any Restricted Stock Unit Award
granted under the Plan that is not exempt from the requirements of Section 409A
of the Code shall contain such provisions so that such Restricted Stock Unit
Award will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be
determined by the Board and contained in the Restricted Stock Unit Award
Agreement evidencing such Restricted Stock Unit Award.
(c)
Stock
Appreciation Rights.
Each Stock
Appreciation Right Agreement shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. Stock Appreciation Rights may be granted as
stand-alone Stock Awards or in tandem with other Stock Awards. The terms and conditions of Stock
Appreciation Right Agreements may change from time to time, and the terms and
conditions of separate Stock Appreciation Right Agreements need not be
identical;
provided, however
,
that each Stock Appreciation Right Agreement shall include (through
incorporation of the provisions hereof by reference in the Agreement or
otherwise) the substance of each of the following provisions:
(i)
Term.
No Stock Appreciation Right shall be
exercisable after the expiration of ten (10) years from the date of its
grant or such shorter period specified in the Stock Appreciation Right
Agreement.
(ii)
Strike Price.
Each Stock
Appreciation Right will be denominated in shares of Common Stock
equivalents. The strike price of each
Stock Appreciation Right shall not be less than one hundred percent (100%) of
the Fair Market Value of the Common Stock equivalents subject to the Stock
Appreciation Right on the date of grant.
(iii)
Calculation of Appreciation.
The appreciation distribution payable on the
exercise of a Stock Appreciation Right will be not greater than an amount equal
to the excess of (A) the aggregate Fair Market Value (on the date of the
exercise of the Stock Appreciation Right) of a number of shares of Common Stock
equal to the number of Common Stock equivalents in which the Participant is
vested under such Stock Appreciation Right, and with respect to which the
Participant is exercising the Stock Appreciation Right on such date, over (B) the
strike price that will be determined by the Board at the time of grant of the
Stock Appreciation Right.
(iv)
Vesting.
At the time of the grant of a Stock Appreciation Right, the
Board may impose such restrictions or conditions to the vesting of such Stock
Appreciation Right as it, in its sole discretion, deems appropriate.
(v)
Exercise.
To exercise any outstanding Stock Appreciation
Right, the Participant must provide written notice of exercise to the Company
in compliance with the provisions of the Stock Appreciation Right Agreement
evidencing such Stock Appreciation Right.
(vi)
Payment
. The appreciation distribution in respect to a
Stock Appreciation Right may be paid in Common Stock, in cash, in any
combination of the two or in any other form of consideration, as determined by
the Board and contained in the Stock Appreciation Right Agreement evidencing
such Stock Appreciation Right.
51
(vii)
Termination of Continuous Service.
In the event that a Participants Continuous
Service terminates, the Participant may exercise his or her Stock Appreciation
Right (to the extent that the Participant was entitled to exercise such Stock
Appreciation Right as of the date of termination) but only within such period
of time ending on the earlier of (A) the date three (3) months
following the termination of the Participants Continuous Service (or such
longer or shorter period specified in the Stock Appreciation Right Agreement),
or (B) the expiration of the term of the Stock Appreciation Right as set
forth in the Stock Appreciation Right Agreement. If, after termination, the Participant does
not exercise his or her Stock Appreciation Right within the time specified
herein or in the Stock Appreciation Right Agreement (as applicable), the Stock
Appreciation Right shall terminate.
(viii)
Compliance
with Section 409A of the Code.
Notwithstanding
anything to the contrary set forth herein, any Stock Appreciation Rights
granted under the Plan that are not exempt from the requirements of Section 409A
of the Code shall contain such provisions so that such Stock Appreciation
Rights will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be
determined by the Board and contained in the Stock Appreciation Right Agreement
evidencing such Stock Appreciation Right.
(d)
Performance Awards
.
(i)
Performance Stock Awards
. A Performance Stock Award is a Stock Award
that may be granted, may vest, or may be exercised based upon the attainment
during a Performance Period of certain Performance Goals. A Performance Stock Award may, but need not,
require the completion of a specified period of Continuous Service. The length
of any Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such
Performance Goals have been attained shall be conclusively determined by the
Committee in its sole discretion. The
maximum number of shares that may be granted to any Participant in a calendar
year attributable to Stock Awards described in this Section 6(d)(i) shall
not exceed one million (1,000,000) shares of Common Stock. In addition, to the extent permitted by
applicable law and the applicable Award Agreement, the Board may determine that
cash may be used in payment of Performance Stock Awards.
(ii)
Performance Cash Awards
. A Performance Cash Award is a cash award that
may be granted upon the attainment during a Performance Period of certain
Performance Goals. A Performance Cash
Award may also require the completion of a specified period of Continuous
Service. The length of any Performance
Period, the Performance Goals to be achieved during the Performance Period, and
the measure of whether and to what degree such Performance Goals have been
attained shall be conclusively determined by the Committee in its sole
discretion. The maximum value that may
be granted to any Participant in a calendar year attributable to cash awards
described in this Section 6(d)(i) shall not exceed three million
dollars ($3,000,000). The Board may provide for or, subject to such terms and
conditions as the Board may specify, may permit a Participant to elect for, the
payment of any Performance Cash Award to be deferred to a specified date or
event. The Committee may specify the
form of payment of Performance Cash Awards, which may be cash or other
property, or may provide for a Participant to have the option for his or her
Performance Cash Award, or such portion thereof as the Board may specify, to be
paid in whole or in part in cash or other property. In addition, to the extent permitted by
applicable law and the applicable Award Agreement, the Board may determine that
Common Stock authorized under this Plan may be used in payment of Performance
Cash Awards, including additional shares in excess of the Performance Cash
Award as an inducement to hold shares of Common Stock.
(e)
Other Stock Awards
. Other forms of Stock Awards valued in whole
or in part by reference to, or otherwise based on, Common Stock may be granted
either alone or in addition to Stock Awards provided for under Section 5
and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the
Board shall have sole and complete authority to determine the persons to whom
and the time or times at which such Other Stock Awards will be granted, the
number of shares of Common Stock (or the cash equivalent thereof) to be granted
pursuant to such Other Stock Awards and all other terms and conditions of such
Other Stock Awards.
7.
Covenants of the
Company.
(a)
Availability
of Shares.
During the terms of the
Stock Awards, the Company shall keep available at all times the number of
shares of Common Stock reasonably required to satisfy such Stock Awards.
52
(b)
Securities
Law Compliance.
The Company shall
seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Stock Awards and to
issue and sell shares of Common Stock upon exercise of the Stock Awards;
provided, however
, that this undertaking shall not require
the Company to register under the Securities Act the Plan, any Stock Award or
any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority that
counsel for the Company deems necessary for the lawful issuance and sale of
Common Stock under the Plan, the Company shall be relieved from any liability
for failure to issue and sell Common Stock upon exercise of such Stock Awards
unless and until such authority is obtained.
(c)
No
Obligation to Notify.
The Company
shall have no duty or obligation to any holder of a Stock Award to advise such
holder as to the time or manner of exercising such Stock Award. Furthermore, the Company shall have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of a Stock Award or a possible period in which the Stock Award may
not be exercised. The Company has no
duty or obligation to minimize the tax consequences of a Stock Award to the
holder of such Stock Award.
8.
Miscellaneous.
(a)
Use of Proceeds from Sales of Common
Stock.
Proceeds from the sale
of shares of Common Stock pursuant to Stock Awards shall constitute general
funds of the Company.
(b)
Corporate Action Constituting Grant of Stock
Awards.
Corporate action
constituting a grant by the Company of a Stock Award to any Participant shall
be deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Stock Award is communicated to, or actually received or
accepted by, the Participant.
(c)
Stockholder
Rights.
No Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Stock Award unless and
until such Participant has exercised the Stock Award pursuant to its terms and
the Participant shall not be deemed to be a stockholder of record until the
issuance of the Common Stock pursuant to such exercise has been entered into
the books and records of the Company.
(d)
No
Employment or Other Service Rights.
Nothing in the Plan, any Stock Award Agreement or other instrument
executed thereunder or in connection with any Award granted pursuant to the
Plan shall confer upon any Participant any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Stock Award
was granted or shall affect the right of the Company or an Affiliate to terminate
(i) the employment of an Employee with or without notice and with or
without cause, (ii) the service of a Consultant pursuant to the terms of
such Consultants agreement with the Company or an Affiliate, or (iii) the
service of a Director pursuant to the Bylaws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.
(e)
Incentive
Stock Option $100,000 Limitation.
To
the extent that the aggregate Fair Market Value (determined at the time of
grant) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any calendar year
(under all plans of the Company and any Affiliates) exceeds one hundred
thousand dollars ($100,000), the Options or portions thereof that exceed such
limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable
Option Agreement(s).
(f)
Investment
Assurances.
The Company may require
a Participant, as a condition of exercising or acquiring Common Stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as
to the Participants knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award;
and (ii) to give written assurances satisfactory to the Company stating
that the Participant is acquiring Common Stock subject to the Stock Award for
the Participants own account and not with any present intention of selling or
otherwise distributing the Common Stock.
The foregoing
53
requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (A) the
issuance of the shares upon the exercise or acquisition of Common Stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (B) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.
(g)
Withholding
Obligations.
Unless prohibited by
the terms of a Stock Award Agreement, the Company may, in its sole discretion,
satisfy any federal, state or local tax withholding obligation relating to an
Award by any of the following means (in addition to the Companys right to
withhold from any compensation paid to the Participant by the Company) or by a
combination of such means: (i) causing the Participant to tender a cash
payment; (ii) withholding shares of Common Stock from the shares of
Common Stock issued or otherwise issuable to the Participant in connection with
the Award; (iii) withholding cash from an Award settled in cash; or (iv) by
such other method as may be set forth in the Award Agreement.
(h)
Electronic
Delivery
. Any reference herein to a written
agreement or document shall include any agreement or document delivered
electronically or posted on the Companys intranet.
(i)
Deferrals.
To the extent permitted by applicable law,
the Board, in its sole discretion, may determine that the delivery of Common
Stock or the payment of cash, upon the exercise, vesting or settlement of all
or a portion of any Award may be deferred and may establish programs and
procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in
accordance with Section 409A of the Code. Consistent with Section 409A
of the Code, the Board may provide for distributions while a Participant is
still an employee. The Board is
authorized to make deferrals of Stock Awards and determine when, and in what
annual percentages, Participants may receive payments, including lump sum
payments, following the Participants termination of employment or retirement,
and implement such other terms and conditions consistent with the provisions of
the Plan and in accordance with applicable law.
(j)
Compliance
with Section 409A of the Code.
To
the extent that the Board determines that any Award granted under the Plan is
subject to Section 409A of the Code, the Award Agreement evidencing such
Award shall incorporate the terms and conditions necessary to avoid the
consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Award
Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued or amended after the Effective Date. Notwithstanding any provision of the Plan to
the contrary, in the event that following the Effective Date the Board
determines that any Award may be subject to Section 409A of the Code and
related Department of Treasury guidance (including such Department of Treasury
guidance as may be issued after the Effective Date), the Board may adopt such
amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Board determines are
necessary or appropriate to (i) exempt the Award from Section 409A of
the Code and/or preserve the intended tax treatment of the benefits provided
with respect to the Award, or (ii) comply with the requirements of Section 409A
of the Code and Department of Treasury regulations and other interpretive
guidance issued thereunder, including without limitation any such regulations
or other guidance that may be issued or amended after the Effective Date.
9.
Adjustments upon
Changes in Common Stock; Other Corporate Events.
(a)
Capitalization
Adjustments
. In the event of a
Capitalization Adjustment, the Board shall appropriately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a),
(ii) the class(es) and maximum number of securities that may be issued
pursuant to the exercise of Incentive Stock Options pursuant to Section 3(d),
(iii) the class(es) and maximum number of securities that may be awarded
to any person pursuant to Section 3(d) and 6(d)(i) , and (iv) the
class(es) and number of securities and price per share of stock subject to
outstanding Stock Awards. The Board
shall make such adjustments, and its determination shall be final, binding and
conclusive.
54
(b)
Dissolution
or Liquidation
. Except as otherwise
provided in the Stock Award Agreement, in the event of a dissolution or
liquidation of the Company, all outstanding Stock Awards (other than Stock
Awards consisting of vested and outstanding shares of Common Stock not subject
to the Companys right of repurchase) shall terminate immediately prior to the
completion of such dissolution or liquidation, and the shares of Common Stock
subject to the Companys repurchase option may be repurchased by the Company
notwithstanding the fact that the holder of such Stock Award is providing
Continuous Service,
provided, however
, that the Board may, in its sole
discretion, cause some or all Stock Awards to become fully vested, exercisable
and/or no longer subject to repurchase or forfeiture (to the extent such Stock
Awards have not previously expired or terminated) before the dissolution or
liquidation is completed but contingent on its completion.
(c)
Corporate Transaction.
The following provisions shall apply to Stock
Awards in the event of a Corporate Transaction unless otherwise provided in the
instrument evidencing the Stock Award or any other written agreement between
the Company or any Affiliate and the Participant or unless otherwise expressly
provided by the Board at the time of grant of a Stock Award.
(i)
Stock Awards May Be Assumed.
Except as otherwise stated in the Stock Award
Agreement, in the event of a Corporate Transaction, any surviving corporation
or acquiring corporation (or the surviving or acquiring corporations parent
company) may assume or continue any or all Stock Awards outstanding under the
Plan or may substitute similar stock awards for Stock Awards outstanding under
the Plan (including but not limited to, awards to acquire the same
consideration paid to the stockholders of the Company pursuant to the Corporate
Transaction), and any reacquisition or repurchase rights held by the Company in
respect of Common Stock issued pursuant to Stock Awards may be assigned by the
Company to the successor of the Company (or the successors parent company, if
any), in connection with such Corporate Transaction. A surviving corporation or acquiring
corporation (or its parent) may choose to assume or continue only a portion of
a Stock Award or substitute a similar stock award for only a portion of a Stock
Award. The terms of any assumption,
continuation or substitution shall be set by the Board in accordance with the
provisions of Section 2.
(ii)
Stock Awards Held by Current Participants.
Except as otherwise stated in the Stock Award
Agreement, in the event of a Corporate Transaction in which the surviving
corporation or acquiring corporation (or its parent company) does not assume or
continue such outstanding Stock Awards or substitute similar stock awards for
such outstanding Stock Awards, then with respect to Stock Awards that have not
been assumed, continued or substituted and that are held by Participants whose
Continuous Service has not terminated prior to the effective time of the
Corporate Transaction (referred to as the
Current Participants
), the vesting of such
Stock Awards (and, with respect to Options and Stock Appreciation Rights, the
time at which such Stock Awards may be exercised) shall be accelerated in full to a date prior to the
effective time of such Corporate Transaction (contingent upon the effectiveness
of the Corporate Transaction) as the Board shall determine (or, if the Board
shall not determine such a date, to the date that is five (5) days prior
to the effective time of the Corporate Transaction), and such Stock Awards
shall terminate if not exercised (if applicable) at or prior to the effective
time of the Corporate Transaction, and any reacquisition or repurchase rights
held by the Company with respect to such Stock Awards shall lapse (contingent
upon the effectiveness of the Corporate Transaction).
(iii)
Stock Awards Held by Persons other than
Current Participants.
Except
as otherwise stated in the Stock Award Agreement, in the event of a Corporate
Transaction in which the surviving corporation or acquiring corporation (or its
parent company) does not assume or continue such outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted and
that are held by persons other than Current Participants, such Stock Awards
shall terminate if not exercised (if applicable) prior to the effective time of
the Corporate Transaction;
provided, however
, that any reacquisition or
repurchase rights held by the Company with respect to such Stock Awards shall
not terminate and may continue to be exercised notwithstanding the Corporate
Transaction.
(iv)
Payment for Stock Awards in Lieu of Exercise.
Notwithstanding the foregoing, in the event a
Stock Award will terminate if not exercised prior to the effective time of a
Corporate Transaction, the Board may provide, in its sole discretion, that the
holder of such Stock Award may not exercise such Stock Award but will receive a
payment, in such form as may be determined by the Board, equal in value to the
excess, if any, of (A) the value of the property the holder of the Stock
Award would have received upon the exercise of the Stock Award
55
(including, at the discretion
of the Board, any unvested portion of such Stock Award), over (B) any
exercise price payable by such holder in connection with such exercise.
(d)
Change
in Control.
A Stock Award may be
subject to additional acceleration of vesting and exercisability upon or after
a Change in Control as may be provided in the Stock Award Agreement for such
Stock Award or as may be provided in any other written agreement between the
Company or any Affiliate and the Participant, but in the absence of such
provision, no such acceleration shall occur.
10.
Termination or
Suspension of the Plan.
(a)
Plan
Term.
Unless sooner terminated by
the Board pursuant to Section 2, the Plan shall automatically terminate on
the day before the tenth (10th) anniversary of the date the Plan is adopted by
the Board or approved by the stockholders of the Company, whichever is
earlier. No Awards may be granted under
the Plan while the Plan is suspended or after it is terminated.
(b)
No
Impairment of Rights.
Termination of
the Plan shall not impair rights and obligations under any Award granted while
the Plan is in effect except with the written consent of the affected
Participant.
11.
Effective Date of
Plan.
This Plan shall become
effective on the Effective Date.
12.
Choice of Law.
The law of the State of Delaware shall govern all
questions concerning the construction, validity and interpretation of this
Plan, without regard to such states conflict of laws rules.
13.
Definitions.
AS USED IN THE PLAN, THE DEFINITIONS
CONTAINED IN THIS SECTION 13 SHALL APPLY TO THE CAPITALIZED TERMS
INDICATED BELOW:
(a)
Affiliate
means, at the time of determination, any parent
or subsidiary of the Company as such terms are defined in Rule 405 of
the Securities Act. The Board shall have
the authority to determine the time or times at which parent or subsidiary
status is determined within the foregoing definition.
(b)
Award
means a Stock Award or a Performance Cash Award.
(c)
Board
means the Board of Directors of the Company.
(d)
Capitalization Adjustment
means any change that is
made in, or other events that occur with respect to, the Common Stock subject
to the Plan or subject to any Stock Award after the Effective Date without the
receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction not
involving the receipt of consideration by the Company. Notwithstanding the foregoing, the conversion
of any convertible securities of the Company shall not be treated as a
transaction without receipt of consideration by the Company.
(e)
Change in Control
means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:
(i)
any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the combined voting power of the Companys then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction. Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person from the Company in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the
Company through the
56
issuance
of equity securities or (B) solely because the level of Ownership held by
any Exchange Act Person (the
Subject
Person
) exceeds the
designated percentage threshold of the outstanding voting securities as a
result of a repurchase or other acquisition of voting securities by the Company
reducing the number of shares outstanding, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in
Control shall be deemed to occur;
(ii)
there
is consummated a merger, consolidation or similar transaction involving (directly
or indirectly) the Company and, immediately after the consummation of such
merger, consolidation or similar transaction, the stockholders of the Company
immediately prior thereto do not Own, directly or indirectly, either (A) outstanding
voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the
surviving Entity in such merger, consolidation or similar transaction or (B) more
than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction, in each case in substantially the
same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;
(iii)
the
stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or
liquidation of the Company shall otherwise occur, except for a liquidation into
a parent corporation;
(iv)
there
is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty
percent (50%) of the combined voting power of the voting securities of
which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition; or
(v)
individuals
who, on the date this Plan is adopted by the Board, are members of the Board
(the Incumbent Board) cease for any reason to constitute at least a majority
of the members of the Board;
provided, however
,
that if the appointment or election (or nomination for election) of any new
Board member was approved or recommended by a majority vote of the members of
the Incumbent Board then still in office, such new member shall, for purposes
of this Plan, be considered as a member of the Incumbent Board.
For the avoidance of doubt,
the term Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of
the Company.
Notwithstanding the
foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the
Company or any Affiliate and the Participant shall supersede the foregoing
definition with respect to Awards subject to such agreement;
provided, however
, that if no definition of Change in Control or any analogous
term is set forth in such an individual written agreement, the foregoing
definition shall apply.
(f)
Code
means the Internal Revenue Code of 1986, as
amended.
(g)
Committee
means a committee of one (1) or more
Directors to whom authority has been delegated by the Board in accordance with Section 2(c).
(h)
Common Stock
means the common stock of the Company.
(i)
Company
means Website Pros, Inc., a Delaware
corporation.
57
(j)
Consultant
means any person, including an advisor, who is (i) engaged by the Company
or an Affiliate to render consulting or advisory services and is compensated
for such services, or (ii) serving as a member of the board of directors
of an Affiliate and is compensated for such services. However, service solely as a Director, or
payment of a fee for such service, shall not cause a Director to be considered
a Consultant for purposes of the Plan.
(k)
Continuous Service
means that the Participants
service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated.
A change in the capacity in which the Participant renders service to the
Company or an Affiliate as an Employee, Consultant or Director or a change in
the entity for which the Participant renders such service, provided that there
is no interruption or termination of the Participants service with the Company
or an Affiliate, shall not terminate a Participants Continuous Service. For example, a change in status from an
employee of the Company to a consultant to an Affiliate or to a Director shall
not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or
the chief executive officer of the Company, in that partys sole discretion,
may determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave.
Notwithstanding the foregoing, a leave of absence shall be treated as
Continuous Service for purposes of vesting in a Stock Award only to such extent
as may be provided in the Companys leave of absence policy, in the written
terms of any leave of absence agreement or policy applicable to the
Participant, or as otherwise required by law.
(l)
Corporate Transaction
means the occurrence, in a
single transaction or in a series of related transactions, of any one or more
of the following events:
(i)
a
sale
or other disposition of all or
substantially all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;
(ii)
a
sale or other disposition of at least ninety
percent (90%) of the outstanding securities of the Company;
(iii)
the
consummation of a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or
(iv)
the
consummation of a merger, consolidation or similar transaction following which
the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation
or similar transaction into other property, whether in the form of securities,
cash or otherwise.
(m)
Covered Employee
shall have the meaning provided in Section 162(m)(3) of
the Code and the regulations promulgated thereunder.
(n)
Director
means a member of the Board.
(o)
Disability
means, with respect to a Participant, the inability of such Participant to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve (12)
months, as provided in Section 22(e)(3) and 409A(a)(2)(c)(i) of
the Code.
(p)
Effective Date
means
the effective date of this Plan document, which is the date of the annual
meeting of stockholders of the Company held in 2008 provided this Plan is
approved by the Companys stockholders at such meeting.
(q)
Employee
means any person employed by the Company or an Affiliate. However, service solely as a Director, or
payment of a fee for such services, shall not cause a Director to be considered
an Employee for purposes of the Plan.
58
(r)
Entity
means a corporation, partnership, limited
liability company or other entity.
(s)
Exchange Act
means the Securities Exchange Act of
1934, as amended.
(t)
Exchange Act Person
means any natural person, Entity
or group (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), except that Exchange Act Person shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee benefit plan
of the Company or any Subsidiary of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any Subsidiary of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, (iv) an Entity
Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company;
or (v) any natural person, Entity or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act) that, as of the Effective Date of the Plan as
set forth in Section 11, is the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Companys then outstanding securities.
(u)
Fair Market Value
means, as of any date, the value of
the Common Stock determined as follows:
(i)
If
the Common Stock is listed on any established stock exchange or traded on the
Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of
a share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common Stock)
on the date in question, as reported in
The
Wall Street Journal
or such other source as the Board deems
reliable. Unless otherwise provided by the Board, if there is no closing sales
price (or closing bid if no sales were reported) for the Common Stock on the
date in question, then the Fair Market Value shall be the closing selling price
(or closing bid if no sales were reported) on the last preceding date for which
such quotation exists.
(ii)
In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined by the Board in good faith.
(v)
Incentive Stock Option
means an option granted
pursuant to Section 5 of the Plan that is intended to be, and qualifies
as, an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(w)
Non-Employee Director
means a Director who either (i) is
not a current employee or officer of the Company or an Affiliate, does not
receive compensation, either directly or indirectly, from the Company or an
Affiliate for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (
Regulation
S-K
)), does not possess an interest in any other transaction
for which disclosure would be required under Item 404(a) of Regulation
S-K, and is not engaged in a business relationship for which disclosure would
be required pursuant to Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a non-employee director for purposes of Rule 16b-3.
(x)
Nonstatutory Stock Option
means any option granted
pursuant to Section 5 of the Plan that does not qualify as an Incentive
Stock Option.
(y)
Officer
means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(z)
Option
means an Incentive Stock Option or a
Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant
to the Plan.
(aa)
Option Agreement
means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an Option
grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.
59
(bb)
Optionholder
means a person to whom an Option is
granted pursuant to the Plan or, if permitted under the terms of this Plan,
such other person who holds an outstanding Option.
(cc)
Other Stock Award
means an award based in whole or in part by reference to the Common Stock which
is granted pursuant to the terms and conditions of Section 6(d).
(dd)
Other Stock Award
Agreement
means a written agreement between the Company and a
holder of an Other Stock Award evidencing the terms and conditions of an Other
Stock Award grant. Each Other Stock
Award Agreement shall be subject to the terms and conditions of the Plan.
(ee)
Outside Director
means a Director who either (i) is
not a current employee of the Company or an affiliated corporation (within
the meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an affiliated
corporation who receives compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable year, has not been an
officer of the Company or an affiliated corporation, and does not receive
remuneration from the Company or an affiliated corporation, either directly
or indirectly, in any capacity other than as a Director, or (ii) is
otherwise considered an outside director for purposes of Section 162(m) of
the Code.
(ff)
Own, Owned, Owner, Ownership
A person or Entity shall be deemed to Own,
to have Owned, to be the Owner of, or to have acquired Ownership of
securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.
(gg)
Participant
means a person to whom an Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(hh)
Performance Cash Award
means an award of cash granted
pursuant to the terms and conditions of Section 6(d)(ii).
(ii)
Performance Criteria
means the one or more criteria that the Board shall select for purposes of
establishing the Performance Goals for a Performance Period. The Performance Criteria that shall be used
to establish such Performance Goals may be based on any one of, or combination
of, the following: (i) earnings per share; (ii) earnings before
interest, taxes and depreciation; (iii) earnings before interest, taxes,
depreciation and amortization; (iv) total stockholder return; (v) return
on equity; (vi) return on assets, investment, or capital employed; (vii) operating
margin; (viii) gross margin; (ix) operating income; (x) net
income (before or after taxes); (xi) net operating income; (xii) net operating
income after tax; (xiii) pre-tax profit; (xiv) operating cash flow; (xv)
sales or revenue targets; (xvi) increases in revenue or product revenue; (xvii)
expenses and cost reduction goals; (xviii) improvement in or attainment of
working capital levels; (xix) economic value added (or an equivalent metric);
(xx) market share; (xxi) cash flow; (xxii) cash flow per share; (xxiii) share
price performance; (xxiv) debt reduction; (xxv) implementation or completion of
projects or processes; (xxvi) customer satisfaction; (xxvii) stockholders
equity; and (xxviii) to the extent that an Award is not intended to comply with
Section 162(m) of the Code, other measures of performance selected by
the Board. Partial achievement of the
specified criteria may result in the payment or vesting corresponding to the
degree of achievement as specified in the Stock Award Agreement or the written
terms of a Performance Cash Award. The Board
shall, in its sole discretion, define the manner of calculating the Performance
Criteria it selects to use for such Performance Period.
(jj)
Performance Goals
means, for a Performance Period, the one or more goals established by the Board
for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a
Company-wide basis, with respect to one or more business units, divisions,
Affiliates, or business segments, and in either absolute terms or relative to
the performance of one or more comparable companies or the performance of one
or more relevant indices. At the time of
the grant of any Award, the Board is authorized to determine whether, when
calculating the attainment of Performance Goals for a Performance Period: (i) to
exclude restructuring and/or other nonrecurring charges; (ii) to exclude
exchange rate effects, as applicable, for non-U.S. dollar denominated net sales
and operating earnings; (iii) to exclude the effects of changes to
generally accepted accounting standards required by the Financial Accounting
Standards Board; (iv) to exclude the effects of any statutory adjustments
to corporate tax rates; and (v) to exclude the effects of any extraordinary
items as determined under generally accepted accounting
60
principles. In addition, the Board retains the discretion
to reduce or eliminate the compensation or economic benefit due upon attainment
of Performance Goals.
(kk)
Performance Period
means the period of time selected by the Board over which the attainment of one
or more Performance Goals will be measured for the purpose of determining a
Participants right to and the payment of a Stock Award or a Performance Cash
Award. Performance Periods may be of
varying and overlapping duration, at the sole discretion of the Board.
(ll)
Performance Stock Award
means a Stock Award granted
under the terms and conditions of Section 6(d)(i).
(mm)
Plan
means this Website Pros, Inc. 2008 Equity
Incentive Plan.
(nn)
Restricted Stock Award
means an award of shares of Common Stock which is granted pursuant to the terms
and conditions of Section 6(a).
(oo)
Restricted Stock Award
Agreement
means a written agreement between the Company and a
holder of a Restricted Stock Award evidencing the terms and conditions of a
Restricted Stock Award grant. Each
Restricted Stock Award Agreement shall be subject to the terms and conditions
of the Plan.
(pp)
Restricted Stock Unit
Award
means a right to receive shares of Common Stock which is
granted pursuant to the terms and conditions of Section 6(b).
(qq)
Restricted Stock Unit
Award Agreement
means a written agreement between the Company
and a holder of a Restricted Stock Unit Award evidencing the terms and
conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement
shall be subject to the terms and conditions of the Plan.
(rr)
Rule 16b-3
means Rule 16b-3 promulgated
under the Exchange Act or any successor to Rule 16b-3, as in effect from
time to time.
(ss)
Securities Act
means the Securities Act of 1933, as
amended.
(tt)
Stock Appreciation Right
means a right to receive the appreciation on Common Stock that is granted
pursuant to the terms and conditions of Section 6(c).
(uu)
Stock Appreciation Right
Agreement
means a written agreement between the Company and a
holder of a Stock Appreciation Right evidencing the terms and conditions of a
Stock Appreciation Right grant. Each
Stock Appreciation Right Agreement shall be subject to the terms and conditions
of the Plan.
(vv)
Stock Award
means any right to receive Common Stock granted under the Plan, including an
Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award,
a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock
Award or any Other Stock Award.
(ww)
Stock Award Agreement
means a written agreement between the Company and a Participant evidencing the
terms and conditions of a Stock Award grant.
Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.
(xx)
Subsidiary
means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly
or indirectly, Owned by the Company, and (ii) any partnership, limited
liability company or other entity in which the Company has a direct or indirect
interest (whether in the form of voting or participation in profits or capital)
of more than fifty percent (50%).
61
(yy)
Ten Percent Stockholder
means a person who Owns (or is
deemed to Own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Affiliate.
62
Electronic Voting
Instructions
You can vote by Internet or
telephone!
Available 24 hours a day, 7 days a
week!
Instead of mailing your proxy, you may choose one of
the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or
telephone must be received by 1:00 a.m., Eastern Time, on May 13,
2008.
Vote by Internet
·
Log on to the
Internet and go to
www.investorvote.com
·
Follow the steps
outlined on the secured website.
Vote
by telephone
·
Call toll free
1-800-652-VOTE (8683) within the United States, Canada & Puerto Rico
any time on a touch tone telephone. There is
NO
CHARGE
to you for the call.
·
Follow the
instructions provided by the recorded message.
Using a
black ink
pen, mark your votes with an
X
as
shown in
this example. Please do not write outside the designated areas.
x
Annual Meeting Proxy Card
IF YOU
HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A
Proposals
The Board of Directors recommends a vote
FOR
the nominees listed and
FOR
Proposals 2, 3 and 4.
1. Election of Directors
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01 David L. Brown*
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02 Timothy I. Maudlin*
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03 Alex Kazerani*
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* Each nominee to hold office until the 2011 Annual Meeting of
Stockholders.
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2. To Approve a Certificate of Amendment to
the Certificate of Incorporation.
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3. To Approve the 2008 Equity Incentive
Plan.
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4. To ratify selection by the Audit
Committee of the Board of Directors of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending December 31,
2008.
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B
Non-Voting Items
Change
of Address
Please print your new address below.
C
Authorized
Signatures This section must be completed for your vote to be counted. Date
and Sign Below
Please sign exactly as name(s) appears hereon.
Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
Date (mm/dd/yyyy) Please print date below.
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Signature 1 - Please keep signature within the box
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Signature 2 - Please keep signature within the box
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IF YOU
HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy WEBSITE PROS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FORTHE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 13,
2008
The undersigned hereby appoints
David L. Brown, Jeffrey M. Stibel
and
Kevin M. Carney
, and each of them, as
attorneys and proxies of the undersigned, with full power of substitution, to
vote all of the shares of stock of Website Pros, Inc. that the undersigned
may be entitled to vote at the Annual Meeting of Stockholders of Website Pros, Inc.
to be held at the
Sawgrass Marriott, 1000 PGA
TOUR Boulevard, Ponte Vedra Beach,
Florida
on
Tuesday, May 13,
2008
at
10:30 a.m.
(local time), and at any and all postponements, continuations and adjournments
thereof, with all powers that the undersigned would possess if personally
present, upon and in respect of the following matters and in accordance with
the following instructions, with discretionary authority as to any and all
other matters that may properly come before the meeting.
Unless a contrary direction is indicated, this Proxy will be
voted FOR all nominees listed in Proposal 1, FOR Proposal 2, FOR Proposal 3 and
FOR Proposal 4, as more specifically described in the Proxy Statement. If
specific instructions are indicated, this Proxy will be voted in accordance
therewith.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
If you vote by telephone or Internet, please do not send your
proxy by mail.
(Continued and to be signed on reverse side)
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