SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrantx Filed by a Party other than the Registrant¨
Check | the appropriate box: |
¨ | Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
x | Definitive Proxy Statement |
¨ | Definitive Additional Materials |
¨ | Soliciting Material Under Rule 14a-12 |
ONVIA, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials: |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
2010 PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Seattle, Washington
April 7, 2010
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders of Onvia, Inc. It will be held on Friday, May 7, 2010 at 11:00 a.m. Pacific Time, at our executive offices located at 509 Olive Way, Suite 400, Seattle, Washington 98101.
The principal business of the Annual Meeting is stated on the attached Notice of Annual Meeting of Stockholders. The Board of Directors recommends a voteFOR Item 1.
Please read this Proxy Statement carefully to learn more about these and related matters. Our Annual Report for 2009 is also included to give you more information about our progress.
YourVOTE is important. Whether or not you plan to attend the Annual Meeting, please vote your shares using the Internet, the phone or by mail.
Sincerely, |
Michael D. Pickett |
Chairman of the Board, Chief Executive Officer, and President |
Notice of Annual Meeting of Stockholders
When: | 11:00 a.m., Pacific Time, Friday, May 7, 2010 | |
Where: | 509 Olive Way, Suite 400 Seattle, Washington 98101 | |
Record Date: | March 17, 2010 | |
Agenda: | 1. Election of two directors to serve a term of three years. | |
2. Any other business that may properly come before the Annual Meeting. |
The Board of Directors urges you to vote FOR Item 1.
More information on all of these matters is included in the following Proxy Statement. You are entitled to vote on these matters and to attend the Annual Meeting if you held Onvia shares as of the close of business on our record date, March 17, 2010.
This Proxy Statement is being sent to Onvia’s stockholders on or about April 7, 2010.
Voting Instructions—YOUR VOTE IS IMPORTANT!
Please vote your shares, whether or not you plan to attend the Annual Meeting, by completing and returning your proxy card or using the Internet or phone and following the instructions on your proxy card or voting instruction form. This helps to ensure the presence of a quorum at our Annual Meeting so we can transact business. When you vote your shares promptly, you also help save costs we might otherwise incur for additional proxy solicitation. Voting now by Internet, phone or mail will not prevent you from changing your vote later. Instructions for changing your vote are given on page 2.
For ten days prior to the Annual Meeting, a complete list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder, for any purpose related to the Annual Meeting, during ordinary business hours at our executive offices located at 509 Olive Way, Suite 400, Seattle, Washington 98101.
PLEASE DO NOT SUBMIT A PAPER PROXY CARD OR VOTING INSTRUCTION FORM
IF YOU ARE VOTING BY INTERNET OR PHONE.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on May 7, 2010.
This Proxy Statement and 2009 Annual Report are available athttp://www.edocumentview.com/ONVI.
ONVIA, INC.
509 Olive Way, Suite 400
Seattle, Washington 98101
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 7, 2010
The Board of Directors is issuing this Proxy Statement to solicit proxies for the Annual Meeting of Stockholders on May 7, 2010 at 509 Olive Way, Suite 400, Seattle, Washington 98101. This Proxy Statement contains important information about the business matters that will be voted on at the Annual Meeting. This Proxy Statement and proxy card were first sent to stockholders on or about April 7, 2010.
GENERAL INFORMATION
Voting Rights and Quorum
Stockholders eligible to vote at the Annual Meeting are those identified as owners at the close of business on the record date, March 17, 2010. Each outstanding share of common stock is entitled to one vote on all items presented at the Annual Meeting. At the close of business on March 17, 2010, Onvia had 8,284,254 shares of common stock outstanding and entitled to vote.
A majority of the outstanding shares of common stock present in person or represented by proxy constitutes a quorum for the transaction of business at the Annual Meeting. Votes for and against, abstentions, and “broker non-votes” will be counted as present in determining the presence of a quorum.
Multiple Proxy Cards
If you received more than one proxy card, it means that you hold shares in more than one account. Please sign and return all proxy cards to ensure that all of your shares are voted.
Proxies Not Returned and Broker Non-Votes
If your shares are held in your name, you must return your proxy, vote by telephone or via the Internet, or attend the Annual Meeting in person in order to vote on the proposal. If your shares are held in street name and you do not vote your proxy, your brokerage firm may either:
• | vote your shares on routine matters; or |
• | leave your shares unvoted. |
Under the rules that govern brokers who have record ownership of shares that are held in street name for their clients, brokers may vote such shares on behalf of their clients with respect to routine matters, but not with respect to non-routine matters. If the proposals to be acted upon at any meeting include both routine and non-routine matters, the broker may turn in a proxy card for uninstructed shares that vote FOR the routine matters, but the broker may not vote on non-routine matters in the absence of client instruction. This is called a “broker non-vote.” Broker non-votes will be counted for the purpose of determining the presence of a quorum, but will not be counted for the purpose of determining the number of votes cast.
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Vote Required to Pass a Proposal
Directors are elected by a plurality of the votes cast for election of directors. If a stockholder does not vote for the election of directors because the authority to vote is withheld, because the proxy is not returned, because the broker holding the shares does not vote, or because of some other reason, the shares will not count in determining the total number of votes for each nominee. Proxies signed and returned unmarked will be voted FOR the nominees for Class I directors.Please note that brokers may no longer vote on the election of directors in the absence of specific client instruction. Those who hold shares in a brokerage account are encouraged to provide voting instructions to their broker.
If any nominee is unable to act as director because of an unexpected occurrence, the proxy holders may vote the proxies for another person or the Board of Directors may reduce the number of directors to be elected.
Proxy Solicitation
The accompanying proxy is solicited by the Board of Directors for use at the Annual Meeting. We will bear the costs of soliciting proxies. In addition to soliciting stockholders by mail and through our employees, we may request banks, brokers, custodians, nominees, and fiduciaries to solicit customers for whom they hold shares of our common stock, and will reimburse them for their reasonable, out-of-pocket costs. We may use the services of our directors, officers, and others to solicit proxies, personally, by telephone or otherwise, without additional compensation. We have not retained the services of a proxy solicitor in connection with the Annual Meeting.
Voting of Proxies and Revocation
The shares represented by the proxy cards received, properly marked, dated, signed, and not revoked, will be voted at the Annual Meeting. If the proxy card specifies a choice with respect to any matter to be acted on, the shares will be voted in accordance with that specified choice. Any proxy card that is returned but not marked will be voted FOR each of the director nominees and in accordance with the best judgment of the named proxies on any other matters that may come before the meeting. Broker non-votes will not be considered as voting with respect to any matter for which the broker does not have voting authority. A stockholder giving a proxy has the power to revoke his or her proxy at any time before it is exercised by delivering to Onvia’s Corporate Secretary a written instrument revoking the proxy with a later date, or by attending the Annual Meeting and voting in person.
We urge you to promptly vote and submit your proxy by telephone, over the Internet, or by signing, dating, and returning the accompanying proxy card in the enclosed, prepaid, return envelope. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
Onvia’s Board of Directors currently consists of seven directors. However, the Board recently amended its bylaws to decrease the size of the Board to six directors, effective May 7, 2010, the date of the Annual Meeting. For election purposes, the Board is divided into three classes. Each class serves a different three-year term, such that one of the three classes stands for election each year. Accordingly, two Class I directors are to be elected at this Annual Meeting. The persons named below have been designated by the Board as nominees for election as Class I directors for a term expiring at the Annual Meeting of Stockholders in 2013, and until their respective successors are duly elected and qualified. All of the nominees are currently serving as directors of Onvia.
Class I Director Nominees (if elected, Terms Expire at the 2013 Annual Meeting)
James L. Brill, age 58, has served as a director of the Company since March 2004. Since January 1, 2007, he has served as Senior Vice President of Finance and Chief Financial Officer of On Assignment, Inc., a staffing agency for science, information technology and healthcare professionals. From July 1999 to December 2006, he served as Vice President of Finance and Chief Financial Officer of Diagnostic Products Corporation, a medical diagnostics manufacturer. From August 1998 to June 1999, Mr. Brill served as Chief Financial Officer of Jafra Cosmetics International, a cosmetics manufacturer, and Vice President of Finance and Administration and Chief Financial Officer of Vertel Corporation from 1996 to 1998. Mr. Brill has a strong executive background, with extensive experience in corporate finance, accounting and strategic planning.
D. Van Skilling, age 76, has served as a director of the Company since November 2004. He has been President of Skilling Enterprises since March 1999. He retired in April 1999 as Chairman and CEO of Experian Information Systems Inc., positions he held since Experian was formed in 1996. Previously he was employed by TRW, Inc. for twenty-seven years, and was Executive Vice President from 1989 to 1996. He is a director of First American Corporation and The American Business Bank and a former director of First Advantage Corporation, The Lamson and Sessions Company and McData Corporation. He is also a member of the Board of Trustees of Colorado College. Mr. Skilling has a strong executive background with extensive executive experience in corporate finance and strategic planning, corporate governance and public company executive compensation.
Class II Directors (Terms Expire at the 2011 Annual Meeting)
Michael D. Pickett, age 62, has served as a director of the Company since February 1999, as Chief Executive Officer and Chairman of the Board of the Company from February 1999 to August 2000 and since April 2001, and as President since September 2004. Mr. Pickett also served as President and Chief Operating Officer of the Company from August 2000 to April 2001. From July 1999 to August 2000, Mr. Pickett served as Chief Executive Officer of Hardware.com, Inc., an online source for total home improvement solutions, which was acquired by the Company in September 2000. From July 1997 to March 1999, Mr. Pickett was Chairman and Chief Executive Officer of Technology Solutions Network, LLC, a provider of turnkey technology solutions for small businesses. From October 1983 to February 1996, Mr. Pickett served in a variety of positions and most recently as Chairman, Chief Executive Officer, and President of Merisel, Inc., a wholesale distributor of computer hardware and software products and a provider of logistics services. Mr. Pickett has extensive experience in strategic planning and general operating management and a strong executive background in corporate finance and accounting.
Roger L. Feldman, age 48, has served as a director of the Company since March 2004. Mr. Feldman is a principal of West Creek Capital, an investment firm he co-founded in 1992. Prior to forming West Creek Capital, Mr. Feldman was an investment banker and an attorney. Mr. Feldman has a strong background in business and finance, corporate and securities laws and corporate governance matters.
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Class III Directors (Terms Expire at the 2012 Annual Meeting)
Jeffrey C. Ballowe, age 54, has served as a director of the Company since December 1999. Before leaving Ziff Davis at the end of 1997 where he was president of the Interactive Media Division, Mr. Ballowe led the launches of five magazines, ZDNet on the Web, ZDTV (became TechTV), and the initial ZD/Softbank investments in Yahoo!, Inc. Mr. Ballowe has served on a number of public and private company boards besides Onvia, including NBCi. He currently serves on the board of or advises a number of companies including Anvato, Inc., Iconology, Inc., IncentAlign, Inc., and Transpera, Inc. Mr. Ballowe is the co-founder and past president of the not-for-profit Electronic Literature Organization. Mr. Ballowe has a strong background in business and finance, with extensive experience in sales and marketing, strategic planning, and public company executive compensation.
Robert G. Brown,age 63, has served as a director of the Company since November 2004 and the lead director since October 2005. Mr. Brown is currently President of Brightwood Advisors, a private company providing business consulting to technology companies and investors. Prior to Brightwood Advisors, Mr. Brown was Group President with Harte-Hanks, a provider of direct marketing services, and President and CEO of ZD Market Intelligence, a division of Ziff Davis, Inc. Mr. Brown has a strong executive background with extensive executive experience in sales and marketing, corporate finance and accounting, and strategic planning.
THE BOARD RECOMMENDS A VOTEFOR EACH OF THE DIRECTOR NOMINEES
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COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 26, 2010, certain information with respect to the beneficial ownership of Onvia’s common stock by: (i) each stockholder known by Onvia to be the beneficial owner of more than 5% of its common stock; (ii) each of its directors; (iii) the Named Executive Officers identified in the 2009 Summary Compensation Table; and (iv) all executive officers and directors as a group.
Name and Address of Beneficial Owner(1) | Number of Shares Beneficially Owned (2) | Percent of Class(3) | |||
Asamara, LLC(4) | 1,598,239 | 19.29 | % | ||
Nadel and Gussman Energy, LLC | |||||
James F. Adelson | |||||
Stephen J. Heyman | |||||
15 East 5th Street, 32nd Floor | |||||
Tulsa, OK 74103 | |||||
Michael D. Pickett,Director, CEO and President(5) | 1,043,117 | 11.36 | % | ||
509 Olive Way, Suite 400 | |||||
Seattle, WA 98101 | |||||
Burnham Asset Management Corporation(6) | 926,956 | 11.19 | % | ||
Burnham Securities, Inc. | |||||
1325 Avenue of the Americas | |||||
New York, NY 10019 | |||||
Diker Management, LLC(7) | 819,248 | 9.89 | % | ||
Diker GP, LLC | |||||
Charles M. Diker | |||||
Mark N. Diker | |||||
745 Fifth Avenue, Suite 1409 | |||||
New York, NY 10151 | |||||
Federated Investors, Inc.(8) | 812,300 | 9.81 | % | ||
Voting Shares Irrevocable Trust | |||||
John F. Donahue | |||||
Rhodora J. Donahue | |||||
J. Christopher Donahue | |||||
Federated Investors Tower | |||||
1001 Liberty Avenue | |||||
Pittsburgh, PA 15222-3779 | |||||
Roger Feldman,Director(9) (10) | 474,888 | 5.70 | % | ||
1919 Pennsylvania Avenue NW, Suite 725 | |||||
Washington, DC 20006 | |||||
Harvey Hanerfeld(9) (11) | 438,118 | 5.29 | % | ||
1919 Pennsylvania Avenue NW, Suite 725 | |||||
Washington, DC 20006 | |||||
Irvine N. Alpert,Executive Vice President(12) | 170,456 | 2.02 | % | ||
Jeffrey C. Ballowe,Director(13) | 119,575 | 1.44 | % | ||
Michael S. Balsam,Chief Strategy Officer(14) | 101,440 | 1.21 | % | ||
Eric T. Gillespie,Senior Vice President, Products, Technology and Information (15) | 71,051 | * | |||
Cameron S. Way,Chief Financial Officer(16) | 65,212 | * | |||
Robert G. Brown,Director(17) | 59,873 | * | |||
James Brill,Director(18) | 54,250 | * | |||
D. Van Skilling,Director(19) | 52,776 | * | |||
Steven D. Smith,Director(20) | 44,500 | * | |||
Michael J. Tannourji, Former Senior Vice President of Sales and Marketing(21) | 44,384 | * | |||
All directors and officers as a group (12 persons)(22) | 2,301,523 | 23.36 | % |
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* | Less than 1% |
(1) | Except as otherwise indicated, the persons or entities named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information in the footnotes to this table. |
(2) | Under the Securities and Exchange Commission, or SEC’s rules, a person is deemed to be the beneficial owner of shares that can be acquired by such person upon the exercise of options within 60 days of February 26, 2010. |
(3) | Calculated on the basis of 8,283,270 shares of common stock outstanding as of February 26, 2010, provided that any additional shares of common stock that a stockholder has the right to acquire within 60 days after February 26, 2010 are deemed to be outstanding for the purpose of calculating that stockholder’s beneficial ownership. |
(4) | According to Schedule 13D filed on June 17, 2005. Asamara, LLC has sole voting and dispositive power over 1,236,481 shares. Nadel and Gussman Energy, LLC has sole voting and dispositive power over 361,758 shares. James F. Adelson and Stephen J. Heyman are managers of Asamara, LLC and Nadel and Gussman Energy, LLC. Mr. Adelson and Mr. Heyman are reported to have shared voting and dispositive power over 1,598,239 shares. |
(5) | Includes 138,234 shares of common stock, 1,904 shares of common stock held in the Onvia Unitized Stock Fund, or Unitized Fund, under the Onvia, Inc. Savings and Retirement Plan, or 401(k) Plan and 902,979 shares issuable upon exercise of options granted to Mr. Pickett under the Amended and Restated 1999 Stock Option Plan, or 1999 Plan, which are exercisable within 60 days of February 26, 2010. |
(6) | According to Schedule 13G/A filed on February 12, 2010. Burnham Asset Management Corporation serves as the investment manager for a number of managed accounts and has shared dispositive authority over 926,956 shares, with respect to which Burnham Asset Management Corporation disclaims beneficial ownership. Burnham Securities, Inc. is a registered broker-dealer with a number of discretionary accounts and has shared dispositive authority over 115,400 shares, with respect to which Burnham Securities disclaims beneficial ownership. |
(7) | According to Schedule 13G filed on February 12, 2010. Diker GP, LLC, is the general partner of Diker Value-Tech Fund, LP, Diker Value Tech QP Fund, LP, Diker Micro-Value Fund, LP, Diker Micro-Value QP Fund, LP, Diker Micro and Small Cap Fund, LP, and Diker M&S Cap Master, Ltd. (collectively, the “Diker Funds”), and beneficially owns 731,983 shares. Diker Management, LLC is the investment manager of Diker Funds, and beneficially owns 819,248 shares. Charles M. Diker and Mark N. Diker are the managing members of Diker GP, LLC and Diker Management, LLC, and beneficially own 819,248 shares. |
(8) | According to Schedule 13G filed on February 10, 2010. Federated Investors, Inc. is the parent holding company of Federated Equity Management Company of Pennsylvania and Federated Global Investment Management Corp., which act as investment advisers to various registered investment companies and separate accounts that own shares of Onvia common stock. All of the outstanding voting stock of Federated Investors, Inc. is held in the Voting Shares Irrevocable Trust for which John F. Donahue, Rhodora J. Donahue, and J. Christopher Donahue act as trustees. |
(9) | Mr. Feldman and Mr. Hanerfeld are the sole owners and managing members of West Creek Capital, LLC (“West Creek”), which is the investment adviser to West Creek Partners Fund L.P., or Partners Fund, which owns 407,502 shares. Mr. Feldman is a member owner of Oliver Street Capital, LLC, which owns 8,386 shares and Mr. Feldman personally owns 14,750 shares. Mr. Feldman and Mr. Hanerfeld may be deemed to have the shared power to direct the voting and disposition of the shares owned by the Partners Fund and Oliver Street Capital. |
(10) | Mr. Feldman’s beneficial ownership includes 407,502 shares owned by the Partners Fund, 8,386 shares owned by Oliver Street Capital, 14,750 shares personally owned by Mr. Feldman, 35,000 shares issuable upon exercise of options granted to Mr. Feldman under the 1999 Plan, 1,250 shares issuable upon exercise of options granted to Mr. Feldman under the Onvia, Inc. 2008 Equity Incentive Plan, or the 2008 Plan, and 8,000 shares issuable upon exercise of options granted to Mr. Feldman under the Directors’ Plan, all of which are exercisable within 60 days of February 26, 2010. |
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(11) | Mr. Hanerfeld’s beneficial ownership includes 407,502 shares owned by the Partner’s Fund, 8,386 shares owned by Oliver Street Capital and 22,230 shares personally owned by Mr. Hanerfeld. |
(12) | Includes 6,629 shares of common stock, 1,904 shares of common stock held in the Unitized Fund under the Onvia 401(k) Plan, and 161,923 shares issuable upon exercise of options granted to Mr. Alpert under the 1999 Plan, all of which are exercisable within 60 days of February 26, 2010. |
(13) | Includes 82,199 shares of common stock, 35,376 shares issuable upon exercise of options granted under the 1999 Plan, and 2,000 shares issuable upon exercise of options granted to Mr. Ballowe under the Directors’ Plan, all of which are exercisable within 60 days of February 26, 2010. |
(14) | Includes 5,710 shares of common stock, 1,426 shares of common stock held in the Unitized Fund under the Onvia 401(k) Plan and 94,304 shares issuable upon exercise of options granted to Mr. Balsam under the 1999 Plan, which are exercisable within 60 days of February 26, 2010. |
(15) | Includes 11,200 shares of common stock, 269 shares of common stock held in the Unitized Fund under the Onvia 401(k) Plan and 59,582 shares issuable upon exercise of options granted to Mr. Gillespie under the 1999 Plan, which are exercisable within 60 days of February 26, 2010. |
(16) | Includes 7,351 shares of common stock, 1,165 shares of common stock held in the Unitized Fund under the Onvia 401(k) Plan, and 56,696 shares issuable upon exercise of options granted to Mr. Way under the 1999 Plan, which are exercisable within 60 days of February 26, 2010. |
(17) | Includes 10,000 shares of common stock, 41,873 shares issuable upon exercise of options granted to Mr. Brown under the 1999 Plan, and 8,000 shares issuable upon exercise of options granted under the Directors’ Plan, all of which are exercisable within 60 days of February 26, 2010. |
(18) | Includes 10,000 shares of common stock, 35,000 shares issuable upon exercise of options granted under the 1999 Plan, 1,250 shares issuable upon exercise of options granted under the 2008 Plan and 8,000 shares issuable upon exercise of options granted to Mr. Brill under the Directors’ Plan, all of which are exercisable within 60 days of February 26, 2010. |
(19) | Includes 11,966 shares of common stock, 31,040 shares issuable upon exercise of options granted under the 1999 Plan, 1,770 shares issuable upon exercise of options granted under the 2008 Plan and 8,000 shares issuable upon exercise of options granted to Mr. Skilling under the Directors’ Plan, all of which are exercisable within 60 days of February 26, 2010. |
(20) | Includes 36,250 shares issuable upon exercise of options granted under the 1999 Plan, 1,250 shares issuable upon exercise of options granted under the 2008 Plan and 7,000 shares issuable upon exercise of options granted to Mr. Smith under the Directors’ Plan, all of which are exercisable within 60 days of February 26, 2010. Mr. Smith retired from the Board effective May 7, 2010. |
(21) | Includes 12,101 shares of common stock, 283 shares of common stock held in the Unitized Fund under the Onvia 401(k) Plan and 32,000 shares issuable upon exercise of options granted to Mr. Tannourji under the 1999 Plan, which are exercisable within 60 days of February 26, 2010. Mr. Tannourji resigned from Onvia on February 5, 2010. |
(22) | Includes 1,568,543 shares of common stock subject to options exercisable within 60 days of February 26, 2010. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Onvia’s directors, its executive officers, and persons who beneficially own more than 10% of its common stock to file initial reports of beneficial ownership and reports of changes in beneficial ownership of Onvia’s common stock with the SEC. These individuals are required by SEC regulations to furnish Onvia with copies of all Section 16(a) reports that they file.
To Onvia’s knowledge, based solely on its review of the copies of such reports furnished to Onvia and written representations from certain reporting persons that no other reports were required, Onvia believes that during 2009 all reporting persons complied with all applicable filing requirements.
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CORPORATE GOVERNANCE
Board of Director and Committee Information
The Board of Directors has determined that each of Onvia’s directors, with the exception of Onvia’s President and Chief Executive Officer, is independent within the meaning of NASDAQ’s listing standards. The independent directors meet in separate executive session without any member of management present. The lead director presides over these meetings.
The Board of Directors established the role of “lead director” to serve as a liaison with independent directors when the chairman of the board is also Onvia’s chief executive officer, to ensure constructive relationships among the directors, and to provide leadership to enhance effectiveness at Board meetings. In 2005, our Board elected Mr. Brown to serve as lead director and reconfirmed him as our lead director for 2010. The Board believes that the combined role of chairman and chief executive officer promotes unified leadership and direction for Onvia, which allows for a single, clear focus for management to execute Onvia’s strategy and business plans.
The Board is actively involved in oversight of risks that could affect Onvia. This oversight is conducted primarily through committees of the Board, as disclosed in the descriptions of each of the committees below and in the charters of each of the committees, but the full Board has retained responsibility for general oversight of risks. The Board satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within Onvia.
The Board of Directors has three committees that perform certain functions for the Board. The current committees of the Board are the Audit Committee, Compensation Committee and Nominating and Governance Committee.
The Board of Directors met four times during 2009. During the year, all of our directors attended 75% or more of the Board meetings and meetings of the committees on which they served. The following table shows which directors presently serve on each committee and how many times the committees met in 2009.
Name | Audit | Compensation | Nominating and Governance | |||
Jeffrey C. Ballowe | X | |||||
James L. Brill | Chair | X | ||||
Robert G. Brown | X | |||||
Roger L. Feldman | X | Chair | ||||
Michael D. Pickett | ||||||
Steven D. Smith(1) | X | |||||
D. Van Skilling | Chair | X | ||||
Total Meetings in 2009 | 5 | 5 | 1 |
(1) | Mr. Smith retired from the Board and the Audit Committee effective May 7, 2010. The Board intends to fill the vacancy created by Mr. Smith’s retirement as soon as practicable after the Annual Meeting. |
Audit Committee
The Audit Committee provides oversight of the quality and integrity of Onvia’s accounting, auditing and financial reporting practices. It exercises its oversight obligations through regular meetings with management and Onvia’s independent registered public accounting firm, Deloitte & Touche LLP (“Deloitte”). The Audit Committee retains our independent auditors, reviews their independence, reviews and approves the planned scope of our annual audit, reviews and approves any fee arrangements with our auditors, oversees their work,
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reviews and pre-approves, as appropriate, any non-audit services that they may perform, reviews the adequacy of accounting and financial controls, reviews our critical accounting policies, and reviews and approves any related person transactions. The Audit Committee charter describes the Committee’s responsibilities. It is posted athttp://media.corporate-ir.net/media_files/irol/10/102122/CorpGov/OnviaAuditCommitteeCharter.pdf. The Board of Directors has determined that each member of the Audit Committee meets the independence and financial literacy requirements of the SEC and NASDAQ rules. The Board of Directors designated James L. Brill, chair, as the Audit Committee financial expert.
The Audit Committee is responsible for oversight of risks relating to Onvia’s accounting matters, financial reporting and legal and regulatory compliance. To satisfy these oversight responsibilities, the Committee meets regularly with Onvia’s Chief Financial Officer, General Counsel, Deloitte and management. The Committee also receives regular reports regarding issues such as the status and findings of audits being conducted by the independent auditors, the status of material litigation, accounting changes that can affect Onvia’s financial statements and proposed audit adjustments.
Compensation Committee
The Compensation Committee is responsible for reviewing and approving the strategy and design of Onvia’s compensation and benefits programs, making recommendations to the Board for incentive compensation and equity based plans, making recommendations to the Board regarding the chief executive officer’s compensation, reviewing and approving salaries and incentive compensation of Onvia’s executive officers, and administering Onvia’s stock option and incentive compensation plans. The Compensation Committee’s charter describes the Committee’s responsibilities. It is posted athttp://media.corporate-ir.net/media_files/irol/10/102122/CorpGov/OnviaCompensationCommitteeCharter.pdf. The Board of Directors has determined that each member of the Compensation Committee meets the independence requirements of the NASDAQ rules and the “outside director” requirements of Section 162(m) of the Internal Revenue Code.
The Compensation Committee is responsible for risks relating to Onvia’s compensation and benefits programs. To assist it in satisfying these oversight responsibilities, the Committee has retained its own compensation consultant and meets regularly with management to understand the financial, human resources and stockholder implications of compensation decisions being made.
Nominating and Governance Committee
The Nominating and Governance Committee identifies and recruits individuals to serve as Onvia’s directors, makes recommendations to the Board of Directors regarding director membership and chairs of the Board’s committees, advises the Board of Directors with respect to matters of Board composition and procedures, develops and recommends to the Board of Directors corporate governance guidelines, considers nominations to the Board of Directors received from stockholders, monitors company compliance with Onvia’s Code of Business Ethics and Conduct, a copy of which is available on Onvia’s website at www.onvia.com, and oversees the annual evaluation of the effectiveness of the Board of Directors and its committees. The Nominating and Governance Committee charter describes the Committee’s responsibilities. It is posted athttp://media.corporate-ir.net/media_files/irol/10/102122/CorpGov/OnviaNominatingGovernanceCharter.pdf. The Board has determined that each member of the Nominating and Governance Committee meets the independence requirements of the NASDAQ rules.
The Nominating and Governance Committee is responsible for the oversight of risks relating to management and Board succession planning and stakeholder responses to Onvia’s ethics and business practices. To satisfy these oversight responsibilities, the Committee receives reports from Onvia’s officers responsible for each of these risk areas.
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Stockholder Communications with Directors
We have established a communication mechanism so that our stockholders can communicate with our directors. Stockholders are welcome to communicate directly with the Board of Directors by contacting our Chairman, Chief Executive Officer, and President Mr. Pickett by email atinvestorrelations@onvia.com with a subject line noting “Stockholder Communications to Michael Pickett” or by writing to Michael D. Pickett, Onvia, Inc., 509 Olive Way, Suite 400, Seattle, Washington 98101, ATTN: Stockholder Communications. Mr. Pickett will forward all such stockholder communications to the entire Board of Directors, a Board committee, or an individual director, as appropriate, at the next scheduled Board of Directors or committee meeting. No action has been taken by the Board of Directors resulting from a stockholder communication during 2009.
Director Attendance at Annual Stockholders Meetings
Onvia invites all directors to attend the Annual Meeting each year. Mr. Pickett is planning to attend our 2010 Annual Meeting.
Code of Ethics
All of our directors, officers and employees must adhere to our code of ethics, which is publicly available on our website at www.onvia.com and is also available in print to any stockholder upon request. This code reflects our long-standing commitment to honest and ethical conduct. The code addresses a number of topics, but is designed primarily to promote:
• | Ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
• | Full, fair, accurate, timely and understandable disclosure in the reports and documents we file with the SEC and in our other public communications; |
• | Compliance with applicable laws, rules and regulations; |
• | Prompt internal reporting of violations of the code; and |
• | Accountability for adherence to the ethical standards set forth in the code. |
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee or executive officer of Onvia has, or during 2009 had, a relationship that would constitute an interlocking relationship with executive officers or directors of another entity.
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DIRECTOR NOMINATIONS
The Board of Directors has adopted procedures for nominating director candidates and considering nominees recommended by stockholders (the “Nomination Procedures”). The Nomination Procedures describe the process by which director candidates are selected, the qualifications that those candidates must and should possess, and the procedure for stockholders to submit recommendations for director nominees. The Nomination Procedures are administered by the Nominating and Governance Committee and are described below.
The Nominating and Governance Committee believes that candidates for director should meet certain minimum qualifications, including being able to read and understand financial statements, having substantial business experience, having high moral character and personal integrity, and having sufficient time to attend to their duties and responsibilities to Onvia. Exceptional candidates who do not meet all of these criteria may still be considered. The Nominating and Governance Committee will also consider the potential director’s independence, whether the member would be considered an “Audit Committee Financial Expert” as described in the applicable SEC standards, and the diversity that the potential director would add to the Board of Directors in terms of gender, ethnic background, and professional experience.
The Nominating and Governance Committee identifies potential candidates through its members’ networks of contacts, by soliciting recommendations from other directors or executive officers, and, as appropriate, engaging search firms to identify and screen suitable director nominees. After the Nominating and Governance Committee has identified a potential candidate, publicly available information about the person is collected and reviewed. If the Nominating and Governance Committee decides to further pursue the potential candidate after this initial review, contact is made with the person. If the potential candidate expresses a willingness to serve on the Board of Directors, interviews are conducted with the potential candidate and additional information is requested. Candidates are chosen by a majority vote of the members of the Nominating and Governance Committee for recommendation to the Board of Directors.
Director Nominations by Stockholders
The Nominating and Governance Committee will consider director candidates recommended by stockholders on the same basis as other candidates, provided that the following procedures are followed in submitting recommendations:
1. | Stockholders desiring to nominate a director candidate should submit a written recommendation to Onvia’s Corporate Secretary at 509 Olive Way, Suite 400, Seattle, WA 98101. |
2. | Submissions must include the potential candidate’s five-year employment history with employer names and a description of the employer’s business, the candidate’s experience with financial statements, and the candidate’s other board memberships. |
3. | Submissions must be accompanied by a written consent of the director candidate to stand for election if nominated by the Nominating and Governance Committee and approved by the Board of Directors, and to serve if elected by the stockholders. |
4. | Submissions must be accompanied by proof of ownership of Onvia’s common stock by the person submitting the recommendation. |
5. | Recommendations must be received by February 5, 2011 to be considered for nomination at the 2011 Annual Meeting. Recommendations received after February 5, 2011 will be considered for nomination at the 2012 Annual Meeting. |
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AUDIT COMMITTEE REPORT
The Audit Committee has three members, each of whom is an independent director, and operates under a written charter adopted by the Board of Directors in March 2004.
The Audit Committee selects an independent registered public accounting firm to be engaged as our independent auditors. The independent auditors are responsible for performing an audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue a report thereon. Management is responsible for our internal controls and the financial reporting process. The Audit Committee is responsible for monitoring and overseeing these processes.
The Audit Committee held five meetings during 2009. The meetings were designed to facilitate and encourage communications between the Audit Committee, management, and our independent registered public accounting firm, Deloitte & Touche LLP (“Deloitte”). Management represented to the Audit Committee that our consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee reviewed and discussed the audited consolidated financial statements for fiscal year 2009 with management and the independent auditors.
The Audit Committee discussed and reviewed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61,Communication with Audit Committees, as amended.
The Audit Committee has received and reviewed the written disclosures and the letter from Deloitte, as required by Independence Standards Board Standard No. 1,Independence Discussions with Audit Committees. Additionally, the Audit Committee has discussed with Deloitte the issue of its independence from Onvia, and satisfied itself as to the auditors’ independence.
Based on its review of the audited consolidated financial statements and the various discussions noted above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
Audit Committee
James L. Brill, Chair
Robert G. Brown
Steven D. Smith (1)
(1) | Mr. Smith retired from the Board and the Audit Committee effective May 7, 2010. The Board intends to fill the vacancy created by Mr. Smith’s retirement as soon as practicable after the Annual Meeting. |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S FEES AND SERVICES
Deloitte served as our independent registered public accounting firm in 2009 and 2008. The following table shows the fees Onvia paid or accrued for audit and other services provided by Deloitte for the years ended December 31, 2009 and 2008:
2009 | 2008 | |||||
Audit Fees | $ | 318,000 | $ | 270,200 | ||
Audit-Related Fees | 3,000 | 7,800 | ||||
Tax Fees | 13,650 | 13,200 | ||||
Total | $ | 334,650 | $ | 291,200 | ||
Audit Fees
Audit fees for 2009 and 2008 consist of the fees paid to Deloitte for the audit of Onvia’s annual financial statements and for reviews of Onvia’s financial statements included in Onvia’s quarterly Reports on Form 10-Q during 2009 and 2008.
Audit-Related Fees
Audit-related fees for 2009 related to a consultation regarding a stock option exercise scenario. There was no impact to the financial statements related to the scenario for 2009 or 2008. Audit-related fees for 2008 consist of consultations in conjunction with a comment letter received from the SEC related to the Company’s 2007 Form 10-K. Onvia’s responses to those comments were filed with the SEC on August 22, 2008
Tax Fees
Tax fees consist of various tax compliance and consulting services for 2009 and 2008.
All Other Fees
Deloitte did not provide any professional services in the “All Other Fees” category in 2009 or 2008.
The Audit Committee’s charter provides that it shall pre-approve all audit and non-audit services. The Audit Committee pre-approved all services provided by our auditor in 2009. The Audit Committee has considered the role of Deloitte in providing non-audit services to Onvia and has concluded that such services are compatible with Deloitte’s independence as our auditors.
A representative of Deloitte will be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will be available to answer questions.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis section of this Proxy Statement with Onvia’s management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Compensation Committee
D. Van Skilling, Chair
Jeffrey C. Ballowe
Roger L. Feldman
Notwithstanding anything to the contrary set forth in any of Onvia’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings, including this Proxy Statement, in whole or in part, the Compensation Committee Report and the Audit Committee Report shall not be deemed to be incorporated by reference into any such filings.
Compensation Discussion and Analysis
The Compensation Committee is responsible for establishing and monitoring our general compensation policies and compensation plans, as well as the specific compensation levels for executive officers, including our Chief Executive Officer. The Compensation Committee reviews and establishes annual base salary levels, annual cash bonus opportunity levels, and long-term incentive opportunities for each Named Executive Officer.
General Compensation Philosophy
Our compensation philosophy is designed to attract and retain highly-qualified executive talent, to tie annual and long-term cash and equity incentives to achievement of measurable corporate and individual performance objectives, and to align executives’ incentives with stockholder value creation. To achieve these objectives, the Compensation Committee implements and maintains compensation plans that tie a significant portion of an executive’s overall compensation to Onvia’s financial performance and common stock price. Overall, the total compensation opportunity is intended to be competitive with public companies of our size and industry, and is reviewed by our Compensation Committee using independent, national survey data. Each executive officer’s compensation package is generally comprised of four elements: (i) base salary, which reflects an individual’s qualifications, scope of responsibilities, experience level, expertise, performance, and impact on Onvia’s results; (ii) cash-based annual incentive compensation tied to personal achievement and overall Company success; (iii) long-term incentives, which consist of stock options and are designed to strengthen the mutuality of interests between the executive officers and our stockholders; and (iv) other compensation programs that our executives participate in along with all of our employees, including a qualified 401(k) plan and the 2000 Employee Stock Purchase Plan, or ESPP. The Compensation Committee regularly reviews and establishes base salaries, annual cash bonus opportunity levels, and long-term incentive opportunities for each executive officer. While an executive officer does not play a role in setting his or her own compensation, the Compensation Committee considers the opinion of the Chief Executive Officer when determining compensation for the executive officers.
The summary below describes in more detail the factors that the Compensation Committee considers in establishing each of the four primary components of the compensation package provided to the Named Executive Officers.
Base Salary
The level of base salary is established primarily on the basis of an executive’s qualifications and relevant experience, the scope of his or her responsibilities, the strategic goals that he or she manages, the compensation
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levels of executive officers at companies of similar revenue and employee size in the information services industry and in the Seattle marketplace, the relationship between the executive’s performance and Onvia’s results, and market rates of compensation required to retain qualified management. Generally, we believe that executive base salaries should be competitive (within a range around the median of the salaries of executives at comparable companies). The Compensation Committee uses independent, national salary survey data to calibrate competitive salaries for our executive officers. The Compensation Committee reviews the base salary of each executive annually and may adjust base salary to take into account the individual’s performance, any changes in responsibility, and to maintain competitive salary levels. Company performance does not play a significant role in the determination of base salary. The Compensation Committee reviewed each executive’s base salary in October 2009 in connection with setting 2010 base salary levels. Because of challenging economic conditions and to control costs, the Compensation Committee did not increase base salaries for the Named Executive Officers for 2010. As a result, executive base salaries for 2010 fall below the median of the competitive market.
Cash-Based Incentive Compensation
At Onvia, cash-based incentive compensation takes two forms: sales incentives, or commissions, for our sales executives and a management incentive plan. Onvia’s executives who have sales responsibilities can earn commissions tied to specific sales results. Sales incentive commissions are intended to reward individual performance that will significantly impact Onvia’s overall performance. The sales incentive levels are market driven and reflect what other companies of Onvia’s size within Onvia’s industry are doing based on the assessments of market practice. Mr. Alpert, Mr. Balsam and Mr. Tannourji earned sales incentive compensation in 2009 and Mr. Alpert and Mr. Balsam are on sales incentive plans for 2010. The Compensation Committee reviewed the sales incentive programs of each sales executive in March 2010 and adjusted sales incentive goals as well as targeted incentive payouts for performance.
Onvia’s 2009 Management Incentive Plan, or MIP allowed for a target bonus award of 11% to 33% of base salary for participating executive officers. Mr. Way, Mr. Alpert, Mr. Balsam, Mr. Gillespie, and Mr. Tannourji were participants in the 2009 MIP. Mr. Pickett was not a participant in the 2009 MIP because Mr. Pickett, as Chief Executive Officer, was evaluated separately by the Compensation Committee. The objectives of the 2009 MIP were to achieve certain profitability goals and annual bookings under the 2009 budget plan as well as achieve positive cash flow in 2009. Although only two of the three targets under the 2009 MIP were achieved, the Committee felt that some incentive compensation to participants in the 2009 MIP was appropriate in light of Onvia’s performance under challenging market conditions. Accordingly, the Committee approved an incentive payout equal to approximately 60% of the participating executive’s bonus target under the 2009 MIP.
In March 2010, the Compensation Committee established a new management incentive plan, payable in early 2011, if Onvia achieves predetermined targets based on annual bookings and net income metrics. All Named Executive Officers, except for Mr. Pickett, Mr. Alpert and Mr. Tannourji are participants. The Compensation Committee did not include Mr. Pickett in the 2010 MIP and has not established a separate bonus plan for Mr. Pickett. The Compensation Committee believes that the options granted to Mr. Pickett in 2004 continue to provide sufficient incentives to Mr. Pickett through 2010. The 2010 MIP is funded upon achievement of both the predetermined metrics described above and allows for a target bonus award of 33% of base salary for Mr. Way and Mr. Gillespie and 18% of base salary for Mr. Balsam. Participants in the 2010 MIP will receive 50% of his or her bonus award upon achievement of both predetermined metrics and the remaining 50% upon achievement of individual performance goals. In addition, the 2010 MIP allows for awards beyond target if Onvia’s performance against bookings and net income exceeds the target goals established by the Board. 67% of a participant’s bonus award will be paid in cash and the remaining 33% will be awarded in the form of restricted stock units, subject to a vesting period of one year.
The Compensation Committee based the incentive plan on bookings growth and net income metrics for three reasons. First and most important, these targets track corporate performance that most reflect stockholder interests. Second, the targets drive and reward unified performance across the executive team. Third, the targets focus Onvia
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on building for long-term, profitable growth. The participating executive officers earn bonuses under the 2010 MIP only when both targets have been reached and when predetermined individual goals have been reached.
Long-Term Incentive Compensation
The Compensation Committee believes the grant of long-term stock options provides executives and other key employees with an incentive to maximize long-term stockholder value. Stock option awards are designed to give the recipient a significant equity stake in Onvia and thereby closely align his or her interests with those of our stockholders. Factors considered in making such awards include the individual’s position, his or her performance and responsibilities, market comparisons based on independent salary survey data, and internal comparisons among our executive officers. The Compensation Committee also takes into consideration the number of stock options that an executive officer already holds. Long-term stock options are not granted annually to our executive officers. The Compensation Committee considers other factors in determining the size of the option grant made to each executive officer where it determines that the circumstances warrant alternative treatment.
Each option grant allows the executive officer to acquire shares of common stock at a fixed price per share (the fair market value on the grant date or above) over a specified period of time (up to 10 years). The options typically vest in equal periodic installments over a four or five year period, contingent upon the executive officer’s continued employment with Onvia. The majority of stock options granted in the last few years have had a five-year vesting period (but never less than a four-year vesting period), with the exercise price set higher than the fair market value of the stock on the date of grant. For example, one-fifth of the options had an exercise price set at the fair market value on the grant date, the second one-fifth was set at $1.00 above the fair market value, the third one-fifth was set at $2.00 above the fair market value, the fourth one-fifth was set at $3.00 above the fair market value, and the last one-fifth was set at $4.00 above the fair market value. Upon the recommendation of the Compensation Committee, the Board determined that such premium-priced stock options are atypical in the compensation programs of public companies of our size and within our industry and discontinued the practice. In addition, such options created higher levels of dilution to stockholders in order to deliver competitive compensation to the executives. Accordingly, all stock options granted going forward will be granted with an exercise price equal to the fair market value on the grant date. Stock options were not granted in 2009 to our Named Executive Officers.
At our 2008 Annual Meeting on September 5, 2008, our stockholders approved the amendment and restatement of the Amended and Restated 1999 Stock Option Plan, or 1999 Plan, as the 2008 Equity Incentive Plan, or 2008 Plan. All stock option awards to executives, employees as well as members of the Board of Directors will be granted from the 2008 Plan going forward.
Other Compensation Programs
Onvia has a Savings and Retirement Plan, or 401(k) Plan. The 401(k) Plan is a qualified salary deferral plan in which all eligible employees may elect to have a percentage of their pre-tax compensation contributed to the 401(k) Plan, subject to certain guidelines issued by the Internal Revenue Service. The 401(k) Plan provides a discretionary matching contribution of up to 6% of all eligible employee contributions, made in the form of Onvia common stock. The purpose of the Company’s matching contribution into the 401(k) Plan is to encourage employees to participate in their own retirement savings and to provide another competitive recruiting tool to attract and retain employees. The matching contributions are subject to a four year vesting schedule, with vesting measured from the employee’s date of hire. The matching contributions are made in the first quarter following each 401(k) Plan year, and employees must be employed on the last day of the 401(k) Plan year to be eligible to receive the matching contribution. In March 2010, all of our executive officers, along with other employees who made contributions into the 401(k) Plan, received matching contributions for the 2009 plan year.
Onvia also has an ESPP, which allows an eligible employee to purchase shares of common stock, based on certain limitations, at a price equal to the lesser of 85% of the fair market value of the common stock at the
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beginning or end of the respective offering period. Under the ESPP, an eligible employee may purchase up to 600 shares per year. All of our Named Executive Officers, except for Mr. Pickett, who is exempt from participation because he holds more than five percent (5%) of the total combined voting power of Onvia stock, participated in the ESPP in 2009. The Board extended the term of the ESPP for another ten years in January 2010.
Compensation Committee’s Processes and Procedures for Consideration and Determination of Executive Compensation
The Compensation Committee has authority to administer the 2008 Plan, the ESPP and the 2010 MIP, and make policy recommendations from time to time with respect to our benefit plans. The Compensation Committee also oversees all of our executive compensation policies and decisions. In particular, the Committee exercises all power and authority of the Board in the administration and interpretation of our benefit plans, including establishing guidelines, selecting participants in the plans, approving grants and awards, and exercising such other power and authority as is required and permitted under the plans. The Compensation Committee also reviews and approves executive officer compensation, including, as applicable, salary, bonus and incentive compensation levels, equity compensation (including awards to induce employment), severance arrangements, change-in-control agreements, special or supplemental benefits and other forms of executive officer compensation. The Committee periodically reviews regional and industry-wide compensation practices and trends to assess the adequacy and competitiveness of our compensation programs. The Committee’s responsibilities are reflected in its charter, which is reviewed periodically by the Committee, and the Committee recommends any proposed changes to the Board. The Committee’s membership is determined annually by the full Board and includes only independent directors. The Committee meets as often as it deems appropriate, but not less frequently than annually.
Michael D. Pickett has served as our Chief Executive Officer since April 2001. His base salary for the fiscal year ended December 31, 2009 was $250,000. No other compensation, bonus, commission, or stipend was paid to Mr. Pickett during 2009 because the Compensation Committee believed that the 600,000 stock options granted to Mr. Pickett on November 29, 2004 continue to provide a competitive compensation level as well as align his interests with those of our stockholders.
With respect to Mr. Pickett, the Compensation Committee weighed: (i) the factors discussed above in “Base Salary,” “Cash-Based Incentive Compensation,” and “Long-Term Incentive Compensation,” as well as his previous experience as Chairman, President, and Chief Executive Officer of a publicly held company; (ii) the compensation levels at companies that compete with Onvia for business and executive talent; and (iii) Onvia’s performance, in establishing the amount of Mr. Pickett’s base salary, bonus, and stock option grant.
The Compensation Committee has not delegated any authority to make compensation decisions to any other persons. The Compensation Committee only makes recommendations about stock option grants to the Board of Directors, which makes the final decision to grant stock options.
Role of Executive Officers in Compensation Process
In addition to reviewing executive officers’ compensation against a group of comparable companies, the Compensation Committee also solicits appropriate input from our Chief Executive Officer regarding base salaries, cash incentives and equity grants for our executive officers. Moreover, only our Chief Executive Officer has a role in recommending the amount and/or form of employee-level director compensation.
External Advisors
The Compensation Committee has the authority to engage the services of outside advisers and purchase independent salary surveys to assist the Committee in fulfilling its duties. The Committee has engaged Milliman, Inc., an independent compensation consultant, to assist the Committee in the assessment of the competitiveness
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of Onvia’s executive compensation programs compared to other public companies of our size and industry. Milliman does not provide non-executive compensation consulting services to Onvia. In addition, the Committee reviewed independent national salary survey data to help the Committee assess the Company’s current executive compensation practices, including relative to a group of similar-sized companies within our industry.
Deductibility of Executive Compensation
Under Section 162(m) of the Internal Revenue Code, the Company’s deduction for certain compensation paid to Named Executive Officers is subject to an annual limit of $1 million per employee, unless it is deferred or considered performance-based. As the cash compensation paid by Onvia to each of its executive officers is expected to be below $1 million and the Compensation Committee believes that options granted under the 2008 Plan to such officers will qualify as performance-based, the Compensation Committee believes that Section 162(m) will not affect the tax deductions available to Onvia with respect to the compensation of its executive officers. It is the Compensation Committee’s policy to qualify, to the extent reasonable, its executive officers’ compensation for deductibility under applicable tax law. However, Onvia may from time to time pay compensation to its executive officers that may not be deductible.
Timing of Awards
In making stock option grants under our option plans, our Compensation Committee has not timed the award of any stock option to coincide with the release of favorable or unfavorable information about us. The Compensation Committee has no intention of timing the award of stock options or other equity-based compensation to coincide with the release of favorable or unfavorable information about us in the future.
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Executive Compensation
Summary Compensation Table
The following table sets forth the compensation paid to or earned by: (a) our President and Chief Executive Officer; (b) our Chief Financial Officer; and (c) our three other most highly compensated executive officers in 2009. It also shows compensation for one additional individual who is no longer an executive of Onvia, but would otherwise have qualified for inclusion in the table because of his total compensation during 2009 (together, the “Named Executive Officers”).
Name and Principal Position | Year | Salary ($) | Bonus ($) | Grant Date Fair Value of Option Awards(1) ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | |||||||||||||
Michael D. Pickett(2) Chairman, Chief Executive Officer and President | 2009 | $ | 250,000 | $ | — | $ | — | $ | — | $ | 3,950 | $ | 253,950 | |||||||
2008 | 250,000 | — | — | — | 1,587 | 251,587 | ||||||||||||||
2007 | 250,000 | — | — | — | 3,375 | 253,375 | ||||||||||||||
Cameron S. Way(3) Chief Financial Officer | 2009 | $ | 172,000 | $ | — | $ | — | $ | 34,056 | $ | 3,231 | $ | 209,287 | |||||||
2008 | 172,000 | — | — | — | 1,193 | 173,193 | ||||||||||||||
2007 | 136,250 | 5,000 | — | — | 2,044 | 143,294 | ||||||||||||||
Irvine N. Alpert(4) Executive Vice President | 2009 | $ | 180,000 | $ | — | $ | — | $ | 95,430 | $ | 3,950 | $ | 279,380 | |||||||
2008 | 180,000 | — | — | 79,068 | 1,587 | 260,655 | ||||||||||||||
2007 | 180,000 | — | — | 130,116 | 3,375 | 313,491 | ||||||||||||||
Eric T. Gillespie(5) Senior Vice President, Products, Technology and Information | 2009 | $ | 225,000 | $ | — | $ | — | $ | 44,550 | $ | 3,750 | $ | 273,300 | |||||||
2008 | 225,000 | — | 19,350 | — | 1,511 | 245,862 | ||||||||||||||
2007 | 104,423 | 5,000 | 372,025 | — | 6,000 | 487,449 | ||||||||||||||
Michael S. Balsam(6) Chief Strategy Officer | 2009 | $ | 171,875 | $ | — | $ | — | $ | 40,055 | $ | 3,263 | $ | 215,193 | |||||||
2008 | 165,000 | — | — | 5,443 | 1,221 | 171,664 | ||||||||||||||
2007 | 165,000 | 5,000 | 59,149 | 5,381 | 2,556 | 237,086 | ||||||||||||||
Michael J. Tannourji(7) Former Senior Vice President of Sales and Marketing | 2009 | $ | 225,000 | $ | — | $ | — | $ | 125,387 | $ | 3,950 | $ | 354,337 | |||||||
2008 | 225,000 | — | 206,337 | 20,000 | 1,587 | 452,924 | ||||||||||||||
2007 | 21,996 | — | — | — | 75,000 | 96,996 |
(1) | Amounts in the Option Awards column represent the aggregate grant date fair value of option awards. |
(2) | Mr. Pickett’s annual base salary as of December 31, 2009 was $250,000. The 401(k) company matching contribution of $2,450 and the transportation/benefit subsidy of $1,500 appear in the All Other Compensation column. |
(3) | Mr. Way’s annual base salary as of December 31, 2009 was $172,000. Mr. Way’s non-equity incentive compensation in 2009 consists of $34,056 in earned incentive under the 2009 MIP. The 401(k) matching contribution of $1,731 and the transportation/benefit subsidy of $1,500 appear in the All Other Compensation column. |
(4) | Mr. Alpert’s annual base salary as of December 31, 2009 was $180,000. Mr. Alpert’s non-equity incentive compensation in 2009 consists of $80,430 in sales commissions pursuant to his commission agreement with Onvia and $15,000 in earned incentive under the 2009 MIP. The 401(k) matching contribution of $2,450 and the transportation/benefit subsidy of $1,500 appear in the All Other Compensation column. |
(5) | Mr. Gillespie’s annual base salary as of December 31, 2009 was $225,000. Mr. Gillespie’s non-equity incentive compensation in 2009 consists of $44,550 in earned incentive under the 2009 MIP. The 401(k) matching contribution of $2,250 and the transportation/benefit subsidy of $1,500 appear in the All Other Compensation column. |
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(6) | Mr. Balsam’s annual base salary as of December 31, 2009 was $180,000. Mr. Balsam’s non-equity incentive compensation in 2009 consists of $35,640 in earned incentive under the 2009 MIP and $4,415 in earned sales commissions. The 401(k) matching contribution of $1,763 and the transportation/benefit subsidy of $1,500 appear in the All Other Compensation column. |
(7) | Mr. Tannourji’s annual base salary as of December 31, 2009 and on February 5, 2010, the date of his termination of employment with Onvia, was $225,000. Mr. Tannourji’s non-equity incentive compensation in 2009 consists of $110,387 in sales commissions pursuant to his commission agreement with Onvia and $15,000 in earned incentive under the 2009 MIP. The 401(k) matching contribution of $2,450 and the transportation/benefit subsidy of $1,500 appear in the All Other Compensation column. In addition, Mr. Tannourji received six months of annual base salary, six months of medical coverage costs and accrued but unused paid time off in connection with his termination of employment with Onvia. The details of the payments he received in connection with his termination of employment are described on page 23. |
Other Compensatory Arrangements
The Named Executive Officers participate in medical, dental, life and disability insurance plans provided to all of our employees.
2009 Grants of Plan-Based Awards
The following table presents information regarding non-equity incentive awards and options granted to the Named Executive Officers during fiscal year 2009. The Compensation Committee approved an incentive payout under the 2009 MIP equal to approximately 60% of the participating executive’s bonus target.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Option Awards ($) | |||||||
Michael D. Pickett | — | — | — | — | — | — | ||||||||
Cameron S. Way(1) | 01/21/2009 | — | 56,760 | — | — | — | — | |||||||
Irvine N. Alpert(2) | 01/21/2009 | — | 83,000 | — | — | — | — | |||||||
Eric T. Gillespie(3) | 01/21/2009 | — | 74,250 | — | — | — | — | |||||||
Michael S. Balsam(4) | 01/21/2009 | — | 59,400 | — | — | — | — | |||||||
Michael J. Tannourji(5) | 01/21/2009 | — | 125,000 | — | — | — | — |
(1) | Mr. Way’s target non-equity incentive reflects the target annual bonus approved by the Compensation Committee on January 21, 2009 for fiscal year 2009. |
(2) | Mr. Alpert’s target non-equity incentive includes $58,000 in target annual incentives under his sales commission plan for fiscal year 2009 and $ 25,000 for his target annual bonus approved by the Compensation Committee on January 21, 2009 for fiscal year 2009. |
(3) | Mr. Gillespie’s target non-equity incentive reflects the target annual bonus approved by the Compensation Committee on January 21, 2009 for fiscal year 2009. |
(4) | Mr. Balsam’s target non-equity incentive reflects the target annual bonus approved by the Compensation Committee on January 21, 2009 for fiscal year 2009. |
(5) | Mr. Tannourji’s target non-equity incentive includes $100,000 in target annual incentives under his sales commission plan for fiscal year 2009 and $25,000 for his target annual bonus approved by the Compensation Committee on January 21, 2009 for fiscal year 2009. Mr. Tannourji resigned from Onvia on February 5, 2010. |
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Outstanding Equity Awards at Fiscal Year-End
The following table presents information regarding the outstanding equity awards held by each Named Executive Officer at the end of fiscal year 2009.
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($/Share) | Option Expiration Date | |||||
Michael D. Pickett | 4,000 | — | $ | 206.10 | 02/28/2010 | ||||
302,979 | — | 2.66 | 03/06/2011 | ||||||
600,000 | — | 10.00 | 11/29/2014 | ||||||
Cameron S. Way | 320 | — | $ | 21.73 | 11/01/2010 | ||||
4,376 | — | 1.77 | 10/16/2011 | ||||||
22,000 | — | 2.55 | 01/31/2013 | ||||||
30,000 | — | 7.50 | 11/29/2014 | ||||||
Irvine N. Alpert | 15,375 | — | $ | 1.48 | 8/31/2011 | ||||
16,548 | — | 1.48 | 2/22/2012 | ||||||
30,000 | — | 2.55 | 1/31/2013 | ||||||
100,000 | — | 7.50 | 11/29/2014 | ||||||
Eric T. Gillespie(1) | 9,666 | 10,334 | $ | 8.95 | 7/25/2017 | ||||
9,666 | 10,334 | 9.95 | 7/25/2017 | ||||||
9,666 | 10,334 | 10.95 | 7/25/2017 | ||||||
9,666 | 10,334 | 11.95 | 7/25/2017 | ||||||
9,666 | 10,334 | 12.95 | 7/25/2017 | ||||||
3,750 | 6,250 | 5.05 | 6/25/2018 | ||||||
Michael S. Balsam(2) | 11,300 | — | $ | 2.55 | 1/31/2013 | ||||
2,333 | 1,667 | 6.10 | 1/24/2017 | ||||||
2,335 | 1,665 | 7.10 | 1/24/2017 | ||||||
40,000 | — | 7.50 | 11/29/2014 | ||||||
2,335 | 1,665 | 8.10 | 1/24/2017 | ||||||
29,500 | — | 8.17 | 1/26/2015 | ||||||
2,335 | 1,665 | 9.10 | 1/24/2017 | ||||||
2,335 | 1,665 | 10.10 | 1/24/2017 | ||||||
Michael J. Tannourji(3) | 6,133 | 9,867 | $ | 7.69 | 1/23/2018 | ||||
6,133 | 9,867 | 8.69 | 1/23/2018 | ||||||
6,134 | 9,866 | 9.69 | 1/23/2018 | ||||||
6,134 | 9,866 | 10.69 | 1/23/2018 | ||||||
6,135 | 9,865 | 11.69 | 1/23/2018 |
(1) | Mr. Gillespie’s unexercisable options expiring on July 25, 2017 have a five year vesting schedule, with twenty percent vesting upon the first anniversary of the grant date and ratable monthly vesting thereafter until fully vested in July 2012. His unexercisable options expiring on June 25, 2018 have a four year vesting schedule, with twenty-five percent vesting upon the first anniversary of the grant date and ratable monthly vesting thereafter until fully vested in June 2012. |
(2) | Mr. Balsam’s unexercisable options expiring on January 24, 2017 have a five year vesting schedule, with twenty percent vesting upon the first anniversary of the grant date and ratable monthly vesting thereafter until fully vested in January 2012. |
(3) | Mr. Tannourji’s unexercisable options have a five year vesting schedule, with twenty percent vesting upon the first anniversary of the grant date and ratable monthly vesting thereafter until fully vested in January 2013. Mr. Tannourji resigned from Onvia on February 5, 2010. |
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Option Exercises
The following table presents information regarding the value realized by the Named Executive Officers upon the exercise of stock options during fiscal year 2009.
Name | Number of Shares Acquired on Exercised (#) | Value Realized on Exercise(1) ($) | ||
Michael D. Pickett | — | — | ||
Cameron S. Way | 1,134 | 6,458 | ||
Irvine N. Alpert | — | — | ||
Eric T. Gillespie | — | — | ||
Michael S. Balsam | — | — | ||
Michael J. Tannourji | — | — |
(1) | Value realized represents the difference between the market value of the exercised options on the exercise date and the exercise price of the options. |
Pension Benefits and Non-Qualified Defined Contribution and Other Non-Qualified Deferred Compensation Plans
Onvia does not offer any pension or non-qualified deferred compensation plans. However, Onvia offers a defined contribution plan (401(k) Plan) for all of its employees pursuant to which it offers a discretionary match, made in Onvia common stock, on employee contributions up to six percent of eligible employee earnings.
Potential Payments upon Termination or Change in Control
Each of our Named Executive Officers is entitled to certain payments and benefits in the event of a termination of employment or a change in control transaction.
Mr. Pickett and Onvia entered into an employment agreement in March 2001. Pursuant to this agreement, upon termination of Mr. Pickett’s employment by Onvia without cause or by Mr. Pickett for good reason, he will receive a lump sum payment of $250,000, twelve months of (i) medical and dental insurance benefits, (ii) accelerated vesting of all unvested options granted to Mr. Pickett solely in his capacity as a director pursuant to Onvia’s 2000 Directors’ Stock Option Plan, and (iii) accelerated vesting of all unvested shares pursuant to that certain Common Stock Purchase Agreement dated April 9, 1999 between Onvia and Mr. Pickett. Upon a change in control transaction, fifty percent of the then-unvested options granted under Onvia’s Amended and Restated 1999 Stock Option Plan to Mr. Pickett shall vest, and the remaining unvested options shall vest and become exercisable upon termination of Mr. Pickett’s employment without cause or by Mr. Pickett for good reason within twelve months after a change of control transaction. Upon termination of Mr. Pickett’s employment due to Mr. Pickett’s disability, Mr. Pickett will receive base salary and medical and dental insurance benefits for ninety (90) days following the effective date of such termination.
Mr. Alpert and Onvia entered into an employment agreement in February 2002. Pursuant to this agreement, upon termination of Mr. Alpert’s employment by Onvia without cause or by Mr. Alpert for good reason, he will receive six months of (i) base salary, (ii) medical and dental insurance benefits, and (iii) accelerated vesting on unvested options. Upon a change in control transaction, twenty-five percent of the then-unvested options granted to Mr. Alpert shall vest, and the remaining unvested options shall vest and become exercisable upon termination of Mr. Alpert’s employment without cause or by Mr. Alpert for good reason within twelve months after a change of control transaction. Upon termination of Mr. Alpert’s employment due to Mr. Alpert’s disability, Mr. Alpert will receive base salary and medical and dental insurance benefits for ninety (90) days following the effective date of such termination.
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In a separate resolution, Onvia’s Board of Directors approved a severance package for Mr. Way. Pursuant to that resolution, upon termination of Mr. Way’s employment by Onvia for other than cause, or by Mr. Way for good reason, he will receive six months of base salary and accrued and unused paid time off. Upon a change in control transaction, one hundred percent of the then-unvested options granted to Mr. Way shall vest if such options are not assumed by the successor corporation (twenty-five percent if such options are assumed). If such options are assumed and Mr. Way’s employment with Onvia is either terminated other than for cause or good reason within twelve (12) months of a change of control transaction, one hundred percent of Mr. Way’s then-unvested options shall vest and become exercisable.
For the other Named Executive Officers, upon termination of employment with Onvia without cause or by the executive for good reason, the executive will receive six months of (i) base salary, and (ii) medical and dental insurance benefits. Upon a change in control transaction, one hundred percent of the then-unvested options granted to the executive shall vest if such options are not assumed by the successor corporation (twenty-five percent if such options are assumed). If such options are assumed and the Named Executive Officer’s employment is either terminated other than for cause or good reason within twelve (12) months of a change of control transaction, one hundred percent of the Named Executive Officer’s then-unvested options shall vest and become exercisable.
Michael J. Tannourji, former Senior Vice President of Sales and Marketing of Onvia, resigned effective February 5, 2010. In connection with Mr. Tannourji’s resignation, we entered into a Separation and Release Agreement with him. This agreement is filed as an exhibit to our Annual Report on Form 10-K filed on March 31, 2010, available at www.onvia.com. Pursuant to the this agreement, Mr. Tannourji received six months of annual base salary, six months of medical coverage costs and accrued but unused paid time off (consistent with the treatment of employees generally), in exchange for a release that subjects Mr. Tannourji to non-compete and non-solicitation provisions for one year from the termination date, as well as confidentiality and non-disparagement obligations, which last indefinitely.
Termination of employment for “cause” means: (i) any material and willful misconduct, fraud, or bad faith on the part of the executive in the performance of the executive’s duties as an employee of Onvia; (ii) the conviction of the executive of, or the entry of the executive of a plea of guilty or no contest to, any felony; (iii) the material breach by the executive of any provision in any material agreement between the executive and Onvia, if such breach is unremediated within 30 days after the executive receives written notice of such breach; (iv) the failure of the executive to comply with any lawful order or instruction of Onvia’s Board of Directors or its Chief Executive Officer within five days after written notice of such failure; or (v) the executive’s repeated and serious violations of the published and written rules or policies of Onvia.
Termination of employment by the executive for “good reason” means: (i) Onvia’s material breach of the terms of any employment agreement; (ii) the assignment to the executive of any duties that are substantially inconsistent with or materially diminish the executive’s position; (iii) a material reduction of the executive’s salary, or material adverse modifications to the stock options awarded to the executive, or material reduction in the executive’s total compensation hereunder; or (iv) a requirement that the executive be based at any office or location more than fifty miles from the executive’s primary work location.
Only terminations of employment by the Company without cause or by the Named Executive Officer for good reason or termination of employment due to disability will trigger the severance benefits described above and detailed in the table below.
Upon termination, and as a condition to the receipt of any severance payments or option acceleration, each Named Executive Officer must sign a release agreement and is subject to certain non-compete and non-solicitation provisions for one year from the termination date, as well as certain confidentiality and non-disparagement obligations, which last indefinitely.
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POTENTIAL PAYMENTS UPON TERMINATION UNRELATED TO A CHANGE OF CONTROL
The following table summarizes the potential payments to the Named Executive Officers upon termination unrelated to a change of control transaction assuming that the triggering event took place on December 31, 2009.
Name | Severance Pay ($) | Medical and Dental Benefits ($) | Accrued and Unpaid PTO ($) | Number of Accelerated Stock Options | Value of Accelerated Stock Options (1) ($) | |||||
Michael D. Pickett | 250,000 | 4,754 | 12,019 | — | — | |||||
Cameron S. Way | 86,000 | 7,251 | 8,269 | — | — | |||||
Irvine N. Alpert | 90,000 | 7,251 | 8,654 | — | — | |||||
Eric T. Gillespie | 112,500 | 5,315 | 10,817 | — | — | |||||
Michael S. Balsam | 90,000 | 7,251 | 8,654 | — | — | |||||
Michael J. Tannourji | 112,500 | 7,251 | 10,817 | — | — |
(1) | The value of the accelerated stock options was based on the assumption that the change of control transaction occurred on December 31, 2009 with accelerated vesting from such date, and represents the intrinsic value, calculated as the difference between the closing price of Onvia’s common stock of $7.87 at December 31, 2009 and the exercise price of the underlying options in which the exercise price is less than $7.87. |
A change of control generally means the occurrence of any of the following events:
• | an acquisition by any individual, entity or group of beneficial ownership of more than 50% of either (a) the then outstanding shares of common stock or (b) the combined voting power of the then outstanding voting securities of Onvia entitled to vote generally in the election of directors (excluding generally any acquisition directly from Onvia, any acquisition by Onvia, any acquisition by any employee benefit plan of Onvia or an affiliate, or the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of Onvia’s assets of pursuant to which certain requirements are met); |
• | a change in the composition of the Board such that the incumbent board members cease to constitute at least a majority of the Board (not including directors whose election, or nomination for election by stockholders, was approved by a majority of the incumbent board); or |
• | consummation of certain business combinations, such as reorganizations, mergers or consolidations or other disposition of all or substantially all of Onvia’s assets. |
OPTION ACCELERATION IN CONNECTION WITH A CHANGE OF CONTROL
The following table summarizes the option acceleration for the Named Executive Officers upon a change of control transaction.
With Assumption of Options | No Assumption of Options | |||||||
Name | Number of Accelerated Stock Options | Value of Accelerated Stock Options (2) ($) | Number of Accelerated Stock Options | Value of Accelerated Stock Options (2) ($) | ||||
Michael D. Pickett | — | — | — | — | ||||
Cameron S. Way | — | — | — | — | ||||
Irvine N. Alpert | — | — | — | — | ||||
Eric T. Gillespie(1) | 14,480 | 4,406 | 57,920 | 17,625 | ||||
Michael S. Balsam(1) | 2,207 | 1,058 | 8,827 | 4,233 | ||||
Michael J. Tannourji(1) | 12,333 | 444 | 49,331 | 1,776 |
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(1) | 25% of the unvested stock options accelerate upon a change of control transaction if such options are assumed by the successor corporation. 100% of the unvested stock options accelerate upon a change of control transaction if such options are not assumed by the successor corporation. |
(2) | The value of the accelerated stock options was based on the assumption that the change of control transaction occurred on December 31, 2009 with accelerated vesting from such date, and represents the intrinsic value, calculated as the difference between the closing price of Onvia’s common stock of $7.87 at December 31, 2009 and the exercise price of the underlying options in which the exercise price is less than $7.87. |
POTENTIAL PAYMENTS UPON TERMINATION RELATED TO A CHANGE OF CONTROL
The following table summarizes the potential payments to the Named Executive Officers upon termination of employment within twelve (12) months of a change of control transaction assuming that the triggering event took place on December 31, 2009.
Name | Severance Pay ($) | Medical and Dental Benefits ($) | Accrued and Unpaid PTO ($) | Number of Accelerated Stock Options | Value of Accelerated Stock Options (1) ($) | |||||
Michael D. Pickett | 250,000 | 4,754 | 12,019 | — | — | |||||
Cameron S. Way | 86,000 | 7,251 | 8,269 | — | — | |||||
Irvine N. Alpert | 90,000 | 7,251 | 8,654 | — | — | |||||
Eric T. Gillespie | 112,500 | 5,315 | 10,817 | 57,920 | 17,625 | |||||
Michael S. Balsam | 90,000 | 7,251 | 8,654 | 8,827 | 4,233 | |||||
Michael J. Tannourji | 112,500 | 7,251 | 10,817 | 49,331 | 1,776 |
(1) | The value of the accelerated stock options was based on the assumption that the change of control transaction occurred on December 31, 2009 with accelerated vesting from such date, and represents the intrinsic value, calculated as the difference between the closing price of Onvia’s common stock of $7.87 at December 31, 2009 and the exercise price of the underlying options in which the exercise price is less than $7.87. |
POTENTIAL PAYMENTS UPON TERMINATION DUE TO DISABILITY UNRELATED TO A CHANGE OF CONTROL
The following table summarizes the potential payments to the Named Executive Officers upon termination of employment due to disability assuming that the triggering event took place on December 31, 2009.
Name | Severance Pay ($) | Medical and Dental Benefits ($) | Accrued and Unpaid PTO ($) | Number of Accelerated Stock Options | Value of Accelerated Stock Options ($) | |||||
Michael D. Pickett | 62,500 | 1,692 | 12,019 | — | — | |||||
Cameron S. Way | — | — | 8,269 | — | — | |||||
Irvine N. Alpert | 45,000 | 3,751 | 8,654 | — | — | |||||
Eric T. Gillespie | — | — | 10,817 | — | — | |||||
Michael S. Balsam | — | — | 8,654 | — | — | |||||
Michael J. Tannourji | — | — | 10,817 | — | — |
Disability generally means the death, incapacity or inability of the executive, whether due to accident, sickness or otherwise, as determined by a medical doctor, to perform the essential functions of the executive’s position, with or without reasonable accommodation for an aggregate of ninety (90) days during any period of one hundred eighty (180) consecutive days or such longer period as may be required under applicable disability law.
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Director Compensation
General Description of Director Compensation
Onvia’s directors receive an initial stock option grant to purchase 4,000 shares of our common stock under our 2008 Equity Incentive Plan (“2008 Plan”) upon becoming an independent director, vesting over four years with a ten year term and with an exercise price equal to the fair market value as of the grant date. Each independent director receives an automatic annual stock option grant to purchase 1,000 shares of our common stock under our 2008 Plan on the date of each Annual Meeting, vesting 100% in twelve months, with a ten year term and with the exercise price equal to the fair market value as of the grant date. At the 2009 Annual Meeting, Mr. Ballowe, Mr. Brill, Mr. Brown, Mr. Feldman, Mr. Skilling, and Mr. Smith each received an option to purchase 1,000 shares of our common stock under our 2008 Plan.
In addition, the Board of Directors approved a policy to compensate each director who is an independent director as follows: (i) $5,000 per quarter ($7,500 per quarter for the lead director) for attendance at Board and committee meetings during such quarter; and (ii) a stock option grant to purchase 18,750 shares of our common stock, vesting over four years with a ten year term and with an exercise price equal to the fair market value as of the grant date, on the date on which such director first qualified as an independent director, followed by annual stock option grants to purchase 5,000 shares (10,000 shares for the lead director) of our common stock, vesting over four years with a ten year term and with an exercise price equal to the fair market value as of the grant date, on each anniversary date of the 18,750 share grant. These stock option grants are made under our 2008 Plan. Mr. Ballowe, Mr. Brill, Mr. Feldman, Mr. Skilling, and Mr. Smith each received an annual stock option grant to purchase 5,000 shares under the 2008 Plan on their respective anniversary dates on which they qualified as independent directors. As the lead director, Mr. Brown received an annual stock option grant to purchase 10,000 shares under the 2008 Plan on his anniversary date. Upon a change in control transaction, 100% of the then-unvested options granted under the 2008 Plan to directors shall vest if such options are not assumed by a successor corporation.
All directors are reimbursed for out-of-pocket expenses incurred in connection with activities as directors, including attendance at Board and committee meetings.
The following table presents the compensation paid to or earned by Onvia’s directors in fiscal 2009. Mr. Pickett is excluded from the below table because, he is not compensated for his services as a director; his compensation as Chief Executive Officer and President is fully reflected in the Summary Compensation Table under the Executive Compensation section above.
Name | Fees Earned or Paid in Cash ($) | Grant Date Fair Value of Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | |||||
Jeffrey C. Ballowe(1) | 20,000 | 15,225 | — | 10,000 | 45,225 | |||||
James L. Brill(2) | 20,000 | 9,758 | — | — | 29,758 | |||||
Robert G. Brown(3) | 30,000 | 27,516 | — | — | 57,516 | |||||
Roger L. Feldman(4) | 20,000 | 9,758 | — | — | 29,758 | |||||
D. Van Skilling(5) | 20,000 | 15,315 | — | — | 35,315 | |||||
Steven D. Smith(6) | 20,000 | 9,716 | — | — | 29,716 |
(1) | Mr. Ballowe received compensation of $20,000 and 6,000 stock options under the 2008 Plan for his Board and committee service in 2009. Mr. Ballowe also received $10,000 as compensation for advisory services provided under an agreement with Onvia, which was terminated effective December 20, 2009. |
(2) | Mr. Brill received compensation of $20,000 and 6,000 stock options under the 2008 Plan for his Board and committee service in 2009. |
(3) | Mr. Brown received compensation of $30,000 and 11,000 stock options under the 2008 Plan for his role as the lead director and his committee service in 2009. |
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(4) | Mr. Feldman received compensation of $20,000 and 6,000 stock options under the 2008 Plan for his Board and committee service in 2009. |
(5) | Mr. Skilling received compensation of $20,000 and 6,000 stock options under the 2008 Plan for his Board and committee service in 2009. |
(6) | Mr. Smith received compensation of $20,000 and 6,000 stock options under the 2008 Plan for his Board and committee service in 2009. Mr. Smith retired from the Board effective May 7, 2010. |
Aggregate Number of Outstanding Options at Fiscal Year-End
The following table presents the aggregate number of outstanding options held by each director as of December 31, 2009. Mr. Pickett is excluded from the table below because his outstanding options are fully reflected in the Outstanding Awards at Fiscal Year End table under the Executive Compensation section above. 4,000 of Mr. Pickett’s outstanding options were granted to him on March 1, 2000 as director compensation. His remaining options were granted for his roles as Chief Executive Officer and President.
Name | Aggregate Options Outstanding (#) (#) | |
Jeffrey C. Ballowe | 53,001 | |
James L. Brill | 52,750 | |
Robert G. Brown | 72,750 | |
Roger L. Feldman | 52,750 | |
D. Van Skilling | 52,750 | |
Steven D. Smith(1) | 57,000 |
(1) | Mr. Smith retired from the Board effective May 7, 2010. |
Legal Proceedings
IPO Class Action
In 2001, five securities class action suits were filed against Onvia, certain former executive officers, and the lead underwriter of Onvia’s Initial Public Offering, or IPO, Credit Suisse First Boston, or CSFB. The suits were filed in the U.S. District Court for the Southern District of New York on behalf of all persons who acquired securities of Onvia between March 1, 2000 and December 6, 2000. In 2002, a consolidated complaint was filed. The complaint charged defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (and Rule 10b-5 promulgated thereunder) and Sections 11 and 15 of the Securities Act of 1933, for issuing a Registration Statement and Prospectus that failed to disclose and contained false and misleading statements regarding certain commissions purported to have been received by the underwriters, and other purported underwriter practices in connection with their allocation of shares in the offering. The complaint sought an undisclosed amount of damages, as well as attorneys’ fees. This action is being coordinated with approximately 300 other nearly identical actions filed against other companies. At the Court’s request, plaintiffs selected six “focus” cases, which do not include Onvia. The Court indicated that its decisions in the six focus cases are intended to provide strong guidance for the parties in the remaining cases.
The parties in the coordinated cases, including Onvia’s case, reached a settlement. The insurers for the issuer defendants in the coordinated cases will make the settlement payment on behalf of the issuers, including Onvia. On October 5, 2009, the Court granted final approval of the settlement. A group of three objectors to the settlement filed a petition to the Second Circuit seeking permission to appeal the District Court’s final approval order. Plaintiffs filed an opposition to the petition. Six notices of appeal to the Second Circuit have also been filed by different groups of objectors, including the objectors that filed the petition. The time to file additional notices of appeal has run. The briefing schedule for the appeals has not been set.
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Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of this matter. If the settlement does not survive appeal and Onvia is found liable, we are unable to estimate or predict the potential damages that might be awarded, whether such damages would be greater than Onvia’s insurance coverage, and whether such damages would have a material impact on our results of operations or financial condition in any future period.
On October 2, 2007, Vanessa Simmonds, a purported stockholder of Onvia, filed suit in the U.S. District Court for the Western District of Washington against Credit Suisse Group, JPMorgan Chase & Co. and Bank of America Corporation, the lead underwriters of Onvia’s IPO in March 2000, alleging violations of Section 16(b) of the Securities Exchange Act of 1934. The complaint alleges that the combined number of shares of Onvia’s common stock beneficially owned by the lead underwriters and certain unnamed officers, directors, and principal stockholders exceeded ten percent of its outstanding common stock from the date of Onvia’s IPO on March 2, 2000, through at least February 28, 2001. It further alleges that those entities and individuals were thus subject to the reporting requirements of Section 16(a) and the short-swing trading prohibition of Section 16(b), and failed to comply with those provisions. The complaint seeks to recover from the lead underwriters any “short-swing profits” obtained by them in violation of Section 16(b). Onvia was named as a nominal defendant in the action, but has no liability for the asserted claims. No directors or officers of Onvia are named as defendants in this action. On October 29, 2007, the case was reassigned to Judge James L. Robart along with fifty-four other Section 16(b) cases seeking recovery of short-swing profits from underwriters in connection with various initial public offerings. On February 25, 2008, Ms. Simmonds filed an Amended Complaint asserting substantially similar claims as those set forth in the initial complaint. Onvia waived service. On July 25, 2008, Onvia joined with 29 other issuers to file the Issuer Defendants’ Joint Motion to Dismiss. Underwriter Defendants also filed a Joint Motion to Dismiss on July 25, 2008. Plaintiff filed oppositions to both motions on September 8, 2008. All replies in support of the motions to dismiss were filed on October 23, 2008. Oral argument on the motions to dismiss was held on January 16, 2009. On March 12, 2009, the Court granted the Issuer Defendants’ Joint Motion to Dismiss, dismissing the complaint without prejudice on the grounds that Ms. Simmonds had failed to make an adequate demand on Onvia prior to filing her complaint. In its order, the Court stated it would not permit Plaintiff to amend her demand letters while pursuing her claims in the litigation. Because the Court dismissed the case on the ground that it lacked subject matter jurisdiction, it did not specifically reach the issue of whether Plaintiff’s claims were barred by the applicable statute of limitations. However, the Court also granted the Underwriters’ Joint Motion to Dismiss with respect to cases involving non-moving issuers, holding that the cases were barred by the applicable statute of limitations because the issuers’ shareholders had notice of the potential claims more than five years prior to filing suit.
Ms. Simmonds filed a Notice of Appeal on March 31, 2009, and an Amended Notice of Appeal on April 10, 2009. The underwriters subsequently filed a Notice of Cross-Appeal, arguing that the dismissal of the claims involving the moving issuers should have been with prejudice because the claims were untimely under the applicable statute of limitations. Ms. Simmonds’ opening brief in the appeal was filed on August 26, 2009; Onvia and the underwriters’ responses and the underwriters’ brief in support of their cross-appeal were filed on October 2, 2009; Ms. Simmonds’ reply brief and opposition to the cross-appeal was filed on November 2, 2009; and the underwriters’ reply brief in support of their cross-appeals was filed on November 17, 2009. Onvia currently believes that the outcome of this litigation will not have a material adverse impact on its consolidated financial position and results of operations.
Potential Future Litigation
In addition, from time to time Onvia is subject to various other legal proceedings that arise in the ordinary course of business. While management believes that the disposition of these matters will not have a material adverse effect on Onvia’s financial position, results of operations, or cash flows, the ultimate outcomes are inherently uncertain.
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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
In accordance with our Audit Committee charter, our Audit Committee is responsible for reviewing and approving the terms and conditions of all related person transactions. There were no such reportable transactions during 2009. Although we have not entered into any financial transactions with any immediate family member of a director or executive officer of our Company, if we were to do so, any such material financial transaction would need to be approved by our Audit Committee prior to our Company entering into such transaction. A report is made to our Audit Committee annually disclosing all related persons that are employed by us and related persons that are employed by other companies that we had a material relationship with during that year, if any. Our Audit Committee also reviews and approves our Proxy Statement and the information contained herein.
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TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors does not know of any business to be considered at the 2010 Annual Meeting other than the proposal described in this Proxy Statement. If any other matter or matters are properly brought before the meeting, or any adjournment or postponement of the meeting, it is the intention of the person named in the accompanying form of proxy to vote the proxy on such matters in accordance with his or her best judgment.
PROPOSALS FOR 2011 ANNUAL MEETING
To be considered for inclusion in next year’s proxy statement, stockholder proposals must be received at our principal executive offices not later than the close of business on December 8, 2010.
Our Bylaws outline the process for stockholders to nominate a director or present any other business at an annual stockholders’ meeting. Generally, Onvia’s Bylaws provide that notice of such business must be received at Onvia’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the previous year’s annual stockholders’ meeting. However, if the date of the 2010 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date and less than 60 days notice or public disclosure of the date of the meeting is given, the notice must be received not later than the tenth day following public disclosure of the meeting date. Our bylaws specify the information that must accompany any such stockholder notice.
By order of the Board of Directors, |
Michael D. Pickett |
Chairman of the Board, Chief Executive Officer, and President |
April 7, 2010
Seattle, Washington
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ONVIA, INC.
PROXY FOR ANNUAL STOCKHOLDERS MEETING
To Be Held May 7, 2010
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ONVIA, INC.
The undersigned hereby appoints Michael D. Pickett and Cameron S. Way as proxies for the undersigned, with full powers of substitution, with all the powers the undersigned would possess if personally present, to vote the stock of the undersigned in ONVIA, INC. at the Annual Stockholders Meeting to be held on May 7, 2010 at 11:00 a.m. local time, at Onvia’s executive offices at 509 Olive Way, Suite 400, Seattle, Washington 98101, and any adjournment or postponements thereof with all powers the undersigned would possess if personally present. The undersigned hereby revokes any proxy previously given with respect to such stock.
This proxy, if properly executed, will be voted in accordance with the instructions given. Unless revoked or otherwise instructed, the shares represented by this proxy will be voted FOR the director nominees and in accordance with the discretion of the proxies upon all other matters which may properly come before the meeting or any adjournment or postponement thereof. The Board of Directors presently knows of no other matters to be brought before the meeting. PLEASE DATE AND MAIL IN THE ENCLOSED POSTAGE-PAID ENVELOPE, OR VOTE BY INTERNET OR TELEPHONE.
(Continued and to be signed on other side)
ONVIA, INC.
VOTE BY INTERNET OR TELEPHONE
24 Hours a Day – 7 Days a Week
It’s Fast and Convenient
INTERNET www.investorvote.com/ONVI | TELEPHONE 1-800-652-VOTE (8683) | |||
1. Go to the website listed above 2. Have your proxy card ready 3. Enter your Control Number located above your name and address 4. Follow the simple instructions on the website | 1. Use any touch-tone telephone 2. Have your proxy card ready 3. Enter your Control Number above your name and address 4. Follow the simple recorded instructions | 1. Mark, sign and date your proxy card 2. Detach your proxy card 3. Return your proxy card in the postage paid envelope provided |
Detach proxy card here if you are voting by mail.
q DETACH PROXY CARD HEREq
Please Detach Here
qYou Must Detach This Portion of the Proxy Cardq
Before Returning it in the Enclosed Envelope
Please mark your votes as in this example:x
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THIS PROXY. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE DIRECTOR NOMINEES AND OTHERWISE IN THE DISCRETION OF THE PERSONS NAMED AS PROXIES ON ALL OTHER MATTERS THAT PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
1. | To elect as directors the two (2) nominees set forth below: |
¨ | FOR all the nominees listed below (except as marked to the contrary below) | ¨ | WITHHOLD AUTHORITY to vote for all nominees listed below. |
Instruction: | To withhold authority to vote for any individual nominee, strike a line through the nominee’s name in the list below: | |||||
01. James L. Brill | 02. D. Van Skilling |
2. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. |
Please vote, date, and sign below, and promptly return in the enclosed envelope.
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Date: |
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Signature | ||||||
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NOTE: Please sign exactly as the name appears stenciled on this proxy. When signing as attorney, executors, administrators, trustee, or guardian, please set forth your full title. If the stockholder is a corporation, the signature should be that of an authorized officer who should indicate his or her title.