SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
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 Pursuant to Section240.14a-12
LIVEPERSON, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(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):
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/ / 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:
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[LOGO]
April 26, 2001
Dear LivePerson Stockholders:
On behalf of the Board of Directors of LivePerson, Inc., I cordially invite
you to attend our Annual Meeting of Stockholders, which will be held on May 24,
2001 at 10:00 A.M. (Eastern Daylight time) at W--The Court Hotel, 130 East 39th
Street, New York, New York 10016 (Tel: 212-685-1100).
The purposes of this meeting are to elect two directors, ratify the
appointment of KPMG LLP as independent public accountants and act upon such
other matters as may properly come before the Annual Meeting. You will find
attached a Notice of Annual Meeting of Stockholders and a Proxy Statement that
contain more information about these proposals. Please give all of this
information your careful attention. The Board of Directors recommends a vote FOR
the proposals listed as Items 1 and 2 in the Notice.
You will also find enclosed a Proxy Card appointing proxies to vote your
shares at the Annual Meeting. If you do not plan to attend the Annual Meeting in
person, please sign, date and return your Proxy Card as soon as possible so that
your shares can be represented and voted in accordance with your instructions.
If you decide to attend the Annual Meeting and wish to change your proxy vote,
you may do so automatically by voting in person at the Annual Meeting.
The Proxy Statement and the accompanying Proxy Card are first being mailed
on or about May 1, 2001 to stockholders entitled to vote. Our 2000 Annual Report
to Stockholders is being mailed with the Proxy Statement.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Robert LoCascio
Robert P. LoCascio
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
LIVEPERSON, INC.
330 WEST 34TH STREET, 10TH FLOOR
NEW YORK, NEW YORK 10001
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M. MAY 24, 2001
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TO THE STOCKHOLDERS OF LIVEPERSON, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of LivePerson, Inc., a Delaware corporation (the "Company"), will be
held at W--The Court Hotel, 130 East 39th Street, New York, New York 10016 on
May 24, 2001 at 10:00 A.M. (Eastern Daylight time) for the following purposes,
as more fully described in the Proxy Statement accompanying this notice:
(1) To elect two (2) Class I directors to serve until the 2004 Annual
Meeting of Stockholders or until their respective successors shall have
been duly elected and qualified;
(2) To ratify the appointment of KPMG LLP as independent public accountants
of the Company for the fiscal year ending December 31, 2001; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 12, 2001 will
be entitled to notice of, and to vote at, the Annual Meeting or any adjournments
or postponements thereof. The stock transfer books of the Company will remain
open between the record date and the date of the Annual Meeting. A list of
stockholders entitled to vote at the meeting will be available for inspection at
the Annual Meeting and for a period of ten days prior to the meeting during
regular business hours at the offices of the Company listed above.
All stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you plan to attend the Annual Meeting in person, your
vote is important. To assure your representation at the Annual Meeting, please
sign and date the enclosed Proxy Card and return it promptly in the enclosed
envelope, which requires no additional postage if mailed in the United States or
Canada. Should you receive more than one Proxy Card because your shares are
registered in different names and addresses, each Proxy Card should be signed
and returned to assure that all your shares will be voted. You may revoke your
proxy in the manner described in the Proxy Statement at any time prior to it
being voted at the Annual Meeting. If you attend the Annual Meeting and vote by
ballot, your proxy will be revoked automatically and only your vote at the
Annual Meeting will be counted.
By Order of the Board of Directors
Timothy E. Bixby
PRESIDENT, CHIEF FINANCIAL OFFICER,
SECRETARY AND DIRECTOR
New York, New York
April 26, 2001
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
LIVEPERSON, INC.
330 WEST 34TH STREET, 10TH FLOOR
NEW YORK, NEW YORK 10001
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PROXY STATEMENT
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GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of LivePerson, Inc., a Delaware
corporation, for use at the Annual Meeting of Stockholders to be held on
May 24, 2001. The Annual Meeting will be held at 10:00 A.M.
(New York City time) at W--The Court Hotel, 130 East 39th Street, New York, New
York 10016 (Tel: 212-685-1100). This Proxy Statement and the accompanying Proxy
Card and Notice of Annual Meeting of Stockholders were first mailed on or about
May 1, 2001 to all stockholders entitled to vote at the Annual Meeting.
VOTING
The specific proposals to be considered and acted upon at the Annual Meeting
are to (i) elect two directors, (ii) ratify the appointment of KPMG LLP as
independent public accountants and (iii) act upon such other matters as may
properly come before the Annual Meeting. These proposals are described in more
detail in this Proxy Statement. On April 12, 2001, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, 33,969,381 shares of the Company's Common Stock, par value $0.001 per
share, were issued and outstanding. No shares of the Company's Preferred Stock,
par value $0.001 per share, were outstanding. Each stockholder is entitled to
one vote for each share of Common Stock held by such stockholder on April 12,
2001. Stockholders may not cumulate votes in the election of directors.
The presence in person or by proxy of the holders of a majority of the votes
entitled to be cast at the Annual Meeting is necessary to constitute a quorum in
connection with the transaction of business at the Annual Meeting. All votes
will be tabulated by the inspector of election appointed for the meeting, who
will separately tabulate affirmative and negative votes, abstentions and broker
non-votes (I.E., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other persons
entitled to vote shares as to a matter with respect to which the brokers or
nominees do not have discretionary power to vote). Abstentions and broker
non-votes are counted as present for purposes of determining the presence or
absence of a quorum for the transaction of business.
If a quorum is present, the two nominees who receive the greatest number of
votes properly cast will be elected as Class I Directors. Neither abstentions
nor broker non-votes will have any effect on the outcome of voting with respect
to the election of directors.
Proposals other than for the election of directors shall be approved by the
affirmative vote of a majority of the shares of the Common Stock present at the
Annual Meeting, in person or by proxy, and entitled to vote thereon. Abstentions
will be counted towards the tabulations of votes cast on these proposals
presented to the stockholders and will have the same effect as negative votes,
whereas broker non-votes will not be counted for purposes of determining whether
such a proposal has been approved.
PROXIES
If the enclosed Proxy Card is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the Proxy Card does not specify how the
shares represented thereby are to be voted, the proxy will be voted FOR the
election of the directors proposed by the Board, unless the authority to vote
for the election of such directors is withheld and, if no contrary instructions
are given, the proxy will be voted FOR the approval of Proposal Two described in
this Proxy Statement, and as the proxy holders deem advisable for all other
matters as may properly come before the Annual Meeting. You may revoke or change
your proxy at any time before the Annual Meeting by filing with the Secretary of
the Company, at the Company's principal executive offices at 330 West 34th
Street, 10th Floor, New York, New York 10001, a notice of revocation or another
signed Proxy Card with a later date. You may also revoke your proxy by attending
the Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
Card and any additional solicitation materials furnished to the stockholders.
Copies of solicitation materials will be furnished to brokerage houses,
fiduciaries and custodians holding shares in their names that are beneficially
owned by others so that they may forward this solicitation material to such
beneficial owners. In addition, the Company may reimburse such persons for their
costs in forwarding the solicitation materials to such beneficial owners. The
original solicitation of proxies by mail may be supplemented by a solicitation
by telephone, telegram or other means by directors, officers or employees of the
Company. No additional compensation will be paid to these individuals for any
such services. Except as described above, the Company does not presently intend
to solicit proxies other than by mail.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's Proxy Statement and
Proxy Card relating to the 2002 Annual Meeting of Stockholders, pursuant to
Rule 14a-8 of the Securities Exchange Act of 1934, as amended, any proposal by a
stockholder must be received by the Company at its principal executive offices
in New York, New York, on or before January 1, 2002. In addition, under the
Company's bylaws, any proposal for consideration at the 2002 Annual Meeting of
Stockholders submitted by a stockholder not pursuant to Rule 14a-8 will be
considered untimely unless it is received by the Secretary of the Company at its
principal executive offices between the close of business on January 23, 2002
and the close of business on February 22, 2002, and is otherwise in compliance
with the requirements set forth in the Company's bylaws. The proxy solicited by
the Board of Directors for the 2002 Annual Meeting of Stockholders will confer
discretionary authority to vote as the proxy holders deem advisable on such
stockholder proposals which are considered untimely.
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MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL ONE--ELECTION OF DIRECTORS
GENERAL
The Company's certificate of incorporation provides for a classified Board
of Directors, consisting of three classes of directors with staggered three-year
terms, with each class consisting, as nearly as possible, of one-third of the
total number of directors. The Board currently consists of seven persons.
Class I currently consists of two directors, whose term of office expires at the
Annual Meeting. The directors elected to Class I at the Annual Meeting will each
serve for a term of three years, expiring at the 2004 Annual Meeting of
Stockholders or until each of their successors have been duly elected and
qualified. The nominees listed below are currently directors of the Company. If
this proposal is approved, the Board will consist of seven persons, with Classes
I and II consisting of two directors each and Class III consisting of three
directors.
The nominees for election have agreed to serve if elected, and management
has no reason to believe that such nominees will be unavailable to serve. In the
event any of the nominees is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who may be
designated by the present Board of Directors to fill the vacancy. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR each of the nominees named below.
NOMINEES FOR TERM ENDING UPON THE 2004 ANNUAL MEETING OF STOCKHOLDERS (CLASS I)
RICHARD L. FIELDS has been a director since July 1999. Mr. Fields is a
Managing Director of the investment banking firm Allen & Company Incorporated,
where he has been employed since 1986. Mr. Fields is a director of VoiceStream
Wireless Corporation and the Telecommunications Development Fund. Mr. Fields
received a J.D. from Harvard University, a M.B.A. from Stanford University and a
B.S. from the Massachusetts Institute of Technology.
EDWARD G. SIM has been a director since January 1999. Since October 1999,
Mr. Sim has been a Managing Director of Wit SoundView Ventures Corp. Since
April 1998, Mr. Sim has also been a member of DT Advisors LLC, the managing
entity of the Dawntreader Funds group of Wit SoundView Ventures. From
April 1996 to April 1998, Mr. Sim was an Associate with Prospect Street
Ventures, a New York venture capital firm, and from May 1994 to April 1996, he
was a member of the Structured Derivatives Group at J.P. Morgan Investment
Management Inc. Mr. Sim is a director of Atomica Corporation,
Expertcity.com, inc., MaterialNet, Inc., Metapa Inc. and Moreover.com, Inc.
Mr. Sim received an A.B. from Harvard University.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES LISTED ABOVE.
CONTINUING DIRECTORS FOR TERM ENDING UPON THE 2002 ANNUAL MEETING OF
STOCKHOLDERS (CLASS II)
TIMOTHY E. BIXBY has been our Chief Financial Officer since June 1999, our
Secretary and a director since October 1999 and our President since March 2001.
In addition, Mr. Bixby was an Executive Vice President from January 2000 until
March 2001. From March 1999 until May 1999, Mr. Bixby was a private investor.
From January 1994 until February 1999, Mr. Bixby was Vice President of Finance
for Universal Music & Video Distribution Inc., a manufacturer and distributor of
recorded music and video products, where he was responsible for internal
financial operations, third party distribution deals and strategic business
development. From October 1992 through January 1994, Mr. Bixby was Associate
Director, Business Development, with the Universal Music Group. Prior to
3
that, Mr. Bixby spent three years in Credit Suisse First Boston's mergers and
acquisitions group as a financial analyst. Mr. Bixby received a M.B.A. from
Harvard University and an A.B. from Dartmouth College.
WYCLIFFE K. GROUSBECK has been a director since July 1999. Mr. Grousbeck has
been a General Partner of Highland Capital Partners, Inc., a venture capital
firm, since August 1996 and joined as an Associate in May 1995. Mr. Grousbeck is
a director of Atomica Corporation, EXACT Sciences Corporation, NuGenesis
Technologies Corporation and PLmarket, Inc. Mr. Grousbeck received a M.B.A. from
Stanford University, a J.D. from the University of Michigan and an A.B. from
Princeton University.
CONTINUING DIRECTORS FOR TERM ENDING UPON THE 2003 ANNUAL MEETING OF
STOCKHOLDERS (CLASS III)
KEVIN C. LAVAN has been a director since January 2000. Since October 2000,
Mr. Lavan has been serving as an independent consultant to marketing services
organizations. From March 1999 until October 2000, Mr. Lavan was an Executive
Vice President of Impiric, the direct marketing and customer relationship
marketing division of Young & Rubicam Inc. From February 1997 to March 1999,
Mr. Lavan was Senior Vice President of Finance at Young & Rubicam. From
January 1995 to February 1997, Mr. Lavan held various positions at Viacom Inc.,
including Controller, and Chief Financial Officer for Viacom's subsidiary, MTV
Networks. Mr. Lavan received a B.S. from Manhattan College.
ROBERT P. LOCASCIO has been our Chief Executive Officer and Chairman of our
Board of Directors since our inception in November 1995. In addition,
Mr. LoCascio was our President from November 1995 until January 2001.
Mr. LoCascio founded our company as Sybarite Interactive Inc., which developed a
community-based web software platform known as TOWN. Before founding Sybarite
Interactive, through November 1995, Mr. LoCascio was the founder and Chief
Executive Officer of Sybarite Media Inc. (known as IKON), a developer of
interactive public kiosks that integrated interactive video features with
advertising and commerce capabilities. Mr. LoCascio received a B.B.A. from
Loyola College.
ROBERT W. MATSCHULLAT has been a director since March 2000. Since
June 2000, Mr. Matschullat has been a private investor. From October 1995
through May 2000, Mr. Matschullat was Vice Chairman of the board of directors of
The Seagram Company Ltd., and also served as Chief Financial Officer of Seagram
from October 1995 to December 1999. Previously, he was Managing Director and
Head of Worldwide Investment Banking for Morgan Stanley & Co., Inc. and a
director of Morgan Stanley Group, Inc., from 1991 through June 1995.
Mr. Matschullat is a director of The Clorox Company. Mr. Matschullat received a
M.B.A. and a B.A. from Stanford University.
BOARD COMMITTEES AND MEETINGS
The Board of Directors held eleven meetings and acted by unanimous written
consent on three occasions during the fiscal year ended December 31, 2000 (the
"2000 Fiscal Year"). The Board of Directors has an Audit Committee, a
Compensation Committee and no Nominating Committee. In the 2000 Fiscal Year,
each director attended or participated in 75% or more of the aggregate of
(i) the total number of meetings of the Board of Directors, and (ii) the total
number of meetings held by all committees of the Board on which such director
served (in each case for meetings held during the period in the 2000 Fiscal Year
for which such director served).
The Audit Committee of our Board of Directors reviews, acts on and reports
to our Board with respect to various auditing and accounting matters, including
the recommendations of our independent public accountants, the scope of the
annual audits, the fees to be paid to the auditors, the performance of our
auditors and our accounting practices. The members of the Audit Committee are
Mr. Fields, Mr. Lavan and Mr. Sim. The Audit Committee held two meetings during
the 2000 Fiscal Year.
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The Compensation Committee of our Board of Directors recommends, reviews and
oversees the salaries, benefits and stock option plans for our employees,
consultants, directors and other individuals whom we compensate. The
Compensation Committee also administers our compensation plans. The members of
the Compensation Committee are Mr. Fields, Mr. Grousbeck and Mr. Lavan. The
Compensation Committee held five meetings during the 2000 Fiscal Year.
DIRECTOR COMPENSATION
Directors who are also our employees receive no additional compensation for
their services as directors. Directors who are not our employees will not
receive a fee for attendance in person at meetings of the Board of Directors or
committees of the Board of Directors, but they will be reimbursed for travel
expenses and other out-of-pocket costs incurred in connection with attendance at
meetings. Non-employee directors will be granted options to purchase 15,000
shares of our Common Stock upon their election to the Board of Directors. In
addition, non-employee directors will be granted options to purchase 5,000
shares of our Common Stock on the date of each annual meeting of stockholders.
At the completion of our initial public offering of Common Stock in April 2000,
we granted options to purchase 15,000 shares of our Common Stock to each of
Messrs. Fields, Grousbeck, Lavan and Sim, at an exercise price of $8.00 per
share (equal to the price of our Common Stock in the offering), which options
vested on April 12, 2001. In addition, at the completion of the initial public
offering, we granted an option to purchase 30,000 shares of our Common Stock to
Mr. Matschullat at an exercise price of $8.00 per share, 15,000 of which vested
on April 12, 2001 and 15,000 of which will vest in three equal annual
installments beginning on April 12, 2002.
STOCKHOLDER APPROVAL
Directors shall be elected by the affirmative vote of a plurality of the
shares of the Common Stock present at the Annual Meeting, in person or by proxy,
and entitled to vote in the election of directors. Pursuant to applicable
Delaware law, abstentions and broker non-votes will have no effect on the
outcome of the vote.
OWNERSHIP OF SECURITIES
The following table sets forth information with respect to the beneficial
ownership of our outstanding Common Stock as of April 1, 2001, by:
- each person or group of affiliated persons whom we know to beneficially
own five percent or more of our Common Stock;
- each of our directors (including those nominated for re-election as
director);
- each of our executive officers named in the Summary Compensation Table of
the Executive Compensation and Other Information section of this Proxy
Statement; and
- each of our directors and executive officers as a group.
The following table gives effect to the shares of Common Stock issuable
within 60 days of April 1, 2001 upon the exercise of all options and other
rights beneficially owned by the indicated stockholders on that date. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect to
shares. Percentage of beneficial ownership is based on 33,969,381 shares of
Common Stock outstanding at April 1, 2001.
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Unless otherwise indicated, the persons named in the table directly own the
shares and have sole voting and sole investment control with respect to all
shares beneficially owned.
NUMBER OF SHARES PERCENTAGE OF COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING
- ---------------- ------------------ --------------------------
5% STOCKHOLDERS
Highland Capital Partners IV Limited
Partnership and affiliates(1).............. 2,820,584 8.3%
Dell Computer Corporation(2)................. 2,631,579 7.7%
DIRECTORS AND EXECUTIVE OFFICERS
Robert P. LoCascio(3)........................ 6,681,963 19.7%
Timothy E. Bixby(4).......................... 182,875 *
Richard L. Fields(5)......................... 444,971 1.3%
Wycliffe K. Grousbeck(1)..................... 2,953,742 8.7%
Kevin C. Lavan(6)............................ 31,065 *
Robert W. Matschullat(7)..................... 35,000 *
Edward G. Sim(8)............................. 60,342 *
Directors and Executive Officers as a group
(7 persons)(9)............................. 10,389,958 30.3%
- ------------------------
* Less than 1%.
(1) Based on the Schedule 13G filed with the Securities and Exchange Commission
on February 5, 2001 for the year ended December 31, 2000 by: Highland
Capital Partners IV Limited Partnership ("Highland Capital"); Highland
Management Partners IV LLC ("Highland Management"); and Robert F. Higgins,
Paul A. Maeder, Daniel J. Nova, Keith E. Benjamin and Wycliffe K. Grousbeck
(the managing members of Highland Management and together, the "Investing
Managing Members"). The address for Highland Capital, Highland Management
and each of the Investing Managing Members is c/o Highland Capital
Partners, Inc., Two International Place, Boston, Massachusetts 02110.
Highland Capital is the record owner of and beneficially owns 2,820,584
shares (the "Highland Shares") of Common Stock. Highland Capital has the
power to vote or direct the disposition of all of the Highland Shares. Such
power is exercised through Highland Management as the sole general partner
of Highland Capital. Highland Management, as the general partner of Highland
Capital, may be deemed to own the Highland Shares beneficially. The
Investing Managing Members have the power over all investment decisions of
Highland Management and therefore may be deemed to share beneficial
ownership of the Highland Shares by virtue of their status as controlling
persons of Highland Management. In addition, Highland Entrepreneurs' Fund IV
Limited Partnership ("HEF") is the record owner of and beneficially owns
117,525 shares (the "HEF Shares") of Common Stock. HEF has the power to vote
or direct the disposition of all of the HEF Shares. Such power is exercised
through Highland Entrepreneurs' Fund IV LLC (the "LLC") as the sole general
partner of HEF. The LLC, as the general partner of HEF, may be deemed to own
the HEF Shares beneficially. The Investing Managing Members have the power
over all investment decisions of the LLC and therefore may be deemed to
share beneficial ownership of the HEF Shares by virtue of their status as
controlling persons of the LLC.
Each of Highland Capital and Highland Management has sole voting or
investment power over zero shares. Highland Capital, Highland Management and
each of the Investing Managing Members have shared voting and investment
power over the Highland Shares. In addition, each of the Investing Managing
Members have shared voting and investment power over the HEF Shares.
Highland Management disclaims beneficial ownership of the Highland Shares
and each of the
6
Investing Managing Members disclaims beneficial ownership of the Highland
Shares and the HEF Shares.
Mr. Higgins is the record owner of, has sole voting and investment power
over, and beneficially owns 1,852 shares of Common Stock in addition to the
shares listed above. Mr. Maeder is the record owner of, has sole voting and
investment power over, and beneficially owns 1,791 shares of Common Stock in
addition to the shares listed above. Mr. Nova is the record owner of, has
sole voting and investment power over, and beneficially owns 1,720 shares of
Common Stock in addition to the shares listed above. Mr. Grousbeck is the
record owner of, has sole voting and investment power over, and beneficially
owns 633 shares of Common Stock and options to acquire 15,000 shares of
Common Stock exercisable within sixty days of April 1, 2001 in addition to
the shares listed above. Mr. Benjamin is the record owner of, has sole
voting and investment power over, and beneficially owns 212 shares of Common
Stock in addition to the shares listed above.
Each of Highland Capital and Highland Management may be deemed to own
beneficially 8.3% of the outstanding Common Stock. Each of the Investing
Managing Members may be deemed to own beneficially 8.7% of the outstanding
Common Stock.
(2) Based on the Schedule 13G filed with the Securities and Exchange Commission
on February 14, 2001 for the year ended December 31, 2000 by Dell Computer
Corporation ("Dell") and Dell USA L.P., an indirect wholly-owned subsidiary
of Dell ("Dell USA"). The address for Dell and Dell USA is One Dell Way,
Round Rock, Texas 78682. Consists of 2,631,579 shares of Common Stock held
by Dell USA. Dell and Dell USA may be deemed to share voting and investment
power over the shares.
(3) The address for Mr. LoCascio is c/o LivePerson, Inc., 330 West 34th Street,
10th Floor, New York, New York 10001.
(4) Includes 181,875 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of April 1, 2001.
(5) Includes 321,460 shares of Common Stock and 46,887 shares of Common Stock
issuable upon exercise of warrants held of record by Allen & Company
Incorporated ("Allen & Company") and beneficially owned by Mr. Fields, over
which he exercises sole voting and investment power. Mr. Fields is a
Managing Director of Allen & Company. Mr. Fields does not exercise voting or
investment power over, and disclaims beneficial ownership of, 1,119,177
shares and 148,426 shares issuable upon exercise of warrants which are held
of record by Allen & Company and beneficially owned by Allen & Company or
other of its officers and related persons. Also includes 15,000 shares of
Common Stock issuable upon exercise of options exercisable within 60 days of
April 1, 2001.
(6) Consists of 31,065 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of April 1, 2001.
(7) Includes 15,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of April 1, 2001.
(8) Includes 15,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of April 1, 2001.
(9) Includes 319,827 shares of Common Stock issuable upon exercise of options or
warrants exercisable within 60 days of April 1, 2001.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
The executive officers of LivePerson, and their ages and positions as of
April 1, 2001, are:
NAME AGE POSITION
- ---- -------- --------------------------------------
Robert P. LoCascio.................... 32 Chief Executive Officer and Chairman
of the Board
Timothy E. Bixby...................... 36 President, Chief Financial Officer,
Secretary and Director
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned for all services
rendered to us in all capacities in the fiscal years ended December 31, 2000 and
1999 by our Chief Executive Officer and our four most highly compensated
executive officers other than our Chief Executive Officer, who served as
executive officers at the end of 2000 and who earned more than $100,000 in 2000,
or who would be listed below under such criteria but for the fact that that the
individual was not serving as an executive officer at the end of 2000. The Chief
Executive Officer and our four most highly compensated executive officers other
than the Chief Executive Officer listed below are referred to as the "Named
Executive Officers" in this Proxy Statement.
LONG-TERM COMPENSATION OTHER
ANNUAL COMPENSATION AWARDS COMPENSATION
---------------------- ---------------------- ---------------
SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) UNDERLYING OPTIONS (#) COMMISSIONS ($)
- --------------------------- -------- ---------- --------- ---------------------- ---------------
Robert P. LoCascio.............. 2000 185,650 -- -- --
Chief Executive Officer 1999 125,000 50,000 -- --
Dean Margolis(1)................ 2000 159,164 -- 600,000 --
Chief Operating Officer 1999 -- -- -- --
Timothy E. Bixby................ 2000 172,740 -- 300,000 --
Chief Financial Officer 1999 73,231 35,000 300,000 --
Scott E. Cohen(2)............... 2000 185,000 50,000 240,000 278,638
Executive Vice President, 1999 138,250 -- 588,960 --
Worldwide Sales and
Strategic Alliances
James L. Reagan(3).............. 2000 165,000 60,000 400,000 --
Chief Technology Officer 1999 -- -- -- --
- ------------------------
(1) Mr. Margolis joined the Company in January 2000 and left the Company in
January 2001.
(2) Mr. Cohen joined the Company in March 1999 and left the Company in
February 2001. The bonus listed for 2000 reflects the amount paid in 2000
and earned over the 12-month period ending in April 2000.
(3) Mr. Reagan joined the Company in January 2000 and left the Company in
November 2000.
OPTION GRANTS IN THE FISCAL YEAR ENDED DECEMBER 31, 2000
The following table sets forth information regarding exercisable and
unexercisable stock options granted to each of the Named Executive Officers in
the last fiscal year. No stock appreciation rights were granted to the Named
Executive Officers during the fiscal year ended December 31, 2000. Potential
realizable values are computed by (1) multiplying the number of shares of Common
Stock subject to a given option by the market price or assumed fair market value
on the date of grant,
8
(2) assuming that the aggregate stock value derived from that calculation
compounds annually for the entire term of the option and (3) subtracting from
that result the aggregate option exercise price.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM (2)
---------------------------------------------------------------- ----------------------------------
PERCENT OF
TOTAL MARKET
NUMBER OF OPTIONS PRICE ON
SECURITIES GRANTED TO DATE OF
UNDERLYING EMPLOYEES IN EXERCISE OR GRANT
OPTIONS FISCAL YEAR BASE PRICE ($/SH) EXPIRATION
NAME GRANTED (#) (%) ($/SH) (1) DATE 0% ($) 5% ($) 10% ($)
- ---- ----------- ------------ ----------- -------- ---------- --------- --------- ----------
Robert P. LoCascio....... -- -- -- -- -- -- -- --
Dean Margolis(3)......... 510,000 9.0 3.33 13.00 1/28/10 4,931,700 9,101,271 15,498,213
90,000 1.6 1.9375 1.9375 10/20/10 -- 109,664 277,909
Timothy E. Bixby(4)...... 75,000 1.3 3.33 13.00 1/28/10 725,250 1,338,422 2,279,149
225,000 4.0 1.9375 1.9375 10/20/10 -- 274,159 694,772
Scott E. Cohen(5)........ 240,000 4.2 6.67 13.00 3/7/10 1,519,200 3,481,351 6,491,676
James L. Reagan(6)....... 300,000 5.3 2.00 10.65 1/10/10 2,595,000 4,604,318 7,687,007
100,000 1.8 1.9375 1.9375 10/20/10 -- 121,848 308,788
- ------------------------------
(1) Each price per share listed in this column for grants before our initial
public offering of Common Stock on April 7, 2000 is the deemed fair market
value of the Common Stock on the date of grant. From January 1, 2000 to
January 27, 2000, the deemed fair market value of our Common Stock was
$10.65 per share. From January 28, 2000 to April 6, 2000, the deemed fair
market value of our Common Stock was $13.00 per share.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 0%, 5%
and 10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future Common Stock prices.
These amounts represent assumed rates of appreciation in the value of our
Common Stock from the market price or deemed fair market value on the date
of grant. Actual gains, if any, on stock option exercises are dependent on
the future performance of our Common Stock. The amounts reflected in the
table may not necessarily be achieved.
(3) Mr. Margolis left the Company in January 2001. Twenty-five percent of
Mr. Margolis's option to purchase up to 510,000 shares had vested at the
date of his resignation and pursuant to the terms of his employment
agreement, this 25% and an additional 25%, which will continue to vest under
the option's original vesting schedule, will remain exercisable until the
option's original expiration date. One-twelfth of Mr. Margolis's option to
purchase up to 90,000 shares had vested at the date of his resignation and
pursuant to the terms of his employment agreement, this 8.33% and an
additional 16.66%, which will continue to vest under the option's original
vesting schedule, will remain exercisable until the option's original
expiration date.
(4) Twenty-five percent of Mr. Bixby's option to purchase up to 75,000 shares
vested on July 1, 2000 and the remainder will vest in three equal
installments on each anniversary thereof. One-twelfth of Mr. Bixby's option
to purchase up to 225,000 shares vested on January 1, 2001 and the remainder
will vest in 11 equal installments on a quarterly basis thereafter.
(5) Mr. Cohen left the Company in February 2001. Mr. Cohen's option to purchase
up to 240,000 shares was completely exercisable at the date of his departure
and will remain exercisable until its original expiration date.
(6) Mr. Reagan left the Company in November 2000. Pursuant to the terms of
Mr. Reagan's employment agreement, 25% of each of his options to purchase up
to 300,000 shares and 100,000 shares will continue to vest under the
options' original vesting schedules and will remain exercisable until the
options' original expiration dates.
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED DECEMBER 31, 2000 AND
YEAR-END OPTION VALUES
The following table provides certain summary information concerning stock
options held at December 31, 2000 by each of the Named Executive Officers. No
options were exercised during fiscal 2000 by any of the Named Executive
Officers. The value of the unexercised in-the-money options at
9
December 31, 2000 is based on the market value of our Common Stock at
December 31, 2000, less the exercise price of the option, multiplied by the
number of shares underlying the option.
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS
DECEMBER 31, 2000(#) AT DECEMBER 31, 2000 ($)(1)
--------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ------------ --------------
Robert P. LoCascio..................... -- -- -- --
Dean Margolis.......................... 127,500 472,500 -- --
Timothy E. Bixby....................... 93,750 506,250 19,870 59,611
Scott E. Cohen......................... 534,480 294,480 77,301 77,301
James L. Reagan........................ -- -- -- --
- ------------------------
(1) The last quoted bid price of our Common Stock on the Nasdaq National Market
on the last trading day of the fiscal year ended December 31, 2000 was
$1.0625 per share.
EMPLOYMENT AGREEMENTS
Robert P. LoCascio, our Chief Executive Officer, is employed pursuant to an
employment agreement entered into as of January 1, 1999. After its initial term,
which expires on January 1, 2002, our agreement with Mr. LoCascio will extend
automatically for one-year terms on each of January 1, 2002 and January 1, 2003,
unless either we or Mr. LoCascio gives notice not to extend the term of the
agreement. Pursuant to the agreement, Mr. LoCascio is entitled to receive an
annual base salary of not less than $125,000, plus an annual discretionary bonus
of up to $50,000, determined by our Board of Directors based upon achievement of
performance objectives. Our Board raised Mr. LoCascio's annual salary to
$185,000, effective April 2000. If Mr. LoCascio is terminated by us without
cause or following a material change or diminution in his duties, a reduction in
his salary or bonus, or if we are sold or following a change in control of our
company, or if we relocate him to a location outside the New York metropolitan
area, we must pay him an amount equal to the amount of his salary for the
12 months following the date of termination, and the pro rata portion of the
bonus he would have been entitled to receive for the fiscal year in which the
termination occurred. These amounts are payable in three monthly installments
beginning 30 days after his termination. Pursuant to the agreement, for a period
of one year from the date of termination of Mr. LoCascio's employment, he may
not directly or indirectly compete with us, including, but not limited to, being
employed by any business which competes with us, or otherwise acting in a manner
intended to advance an interest of a competitor of ours in a way that will or
may injure an interest of ours.
Timothy E. Bixby, our President and Chief Financial Officer, is employed
pursuant to an employment agreement entered into as of June 23, 1999, which
shall continue until it is terminated by either party. Pursuant to the
agreement, Mr. Bixby receives an annual base salary of not less than $140,000
and an annual discretionary bonus. Our Board raised Mr. Bixby's annual salary to
$185,000, effective April 2000. Mr. Bixby is also eligible to receive a
long-term incentive award determined by our Board consisting of options to
purchase Common Stock, with the initial award consisting of options to purchase
up to 202,500 shares of Common Stock at a purchase price of $0.67 per share. If
Mr. Bixby is terminated following a change in control of our company or if he
terminates his employment with us following a reduction in his salary, a
material change or diminution in his duties or if Robert LoCascio is no longer
our President or Chief Executive Officer, all of his options then outstanding
will vest immediately, and we must pay him a lump-sum amount equal to his annual
salary, and the pro rata portion of the bonus he would have been entitled to
receive for the year in which the termination occurred. Pursuant to the
agreement, for a period of one year from the date of termination of Mr. Bixby's
employment, he may not directly or indirectly compete with us, including, but
not limited
10
to, being employed by any business which competes with us, or otherwise acting
in a manner intended to advance an interest of a competitor of ours in a way
that will or may injure an interest of ours.
Our former Chief Operating Officer, Dean Margolis, was employed pursuant to
an employment agreement entered into on January 28, 2000. Mr. Margolis left
LivePerson in January 2001. We paid Mr. Margolis a fixed annual base salary of
not less than $175,000. Mr. Margolis was also eligible under the agreement to
receive a long-term incentive award, determined by our Board, consisting of
options to purchase Common Stock, with the initial award consisting of options
to purchase up to 510,000 shares of Common Stock at a purchase price of $3.33
per share. Pursuant to the agreement, for a period of one year from the date of
termination of Mr. Margolis's employment, he may not directly or indirectly
compete with us including, but not limited to, being employed by any business
which competes with us, or otherwise acting in a manner intended to advance an
interest of a competitor of ours in a way that will or may injure an interest of
ours.
Our former Executive Vice President for Worldwide Sales and Strategic
Alliances, Scott E. Cohen, was employed pursuant to an employment agreement
entered into as of March 29, 1999. Mr. Cohen left LivePerson in February 2001.
The agreement's initial term expired on March 31, 2000 and was extended for one
year. Mr. Cohen received an annual base salary of not less than $185,000 and an
annual discretionary bonus. For the first year of the agreement's term, we
agreed to pay Mr. Cohen commissions on a quarterly basis in the amount of 10% of
the portion of our gross sales (consisting of revenues from sales invoiced by
us, net of tax and other surcharges payable by us and amounts rebated or
refunded) in excess of $1,000,000 during the first year of his employment. For
the second year of the agreement's term, we paid him commissions on a quarterly
basis in the amount of 10% of the first $1,000,000 of gross sales in excess of
the amount of gross sales in the first year, plus 7.5% of all gross sales in
excess of that amount. Additionally, we granted Mr. Cohen options to purchase up
to 588,960 shares of Common Stock at a purchase price of $0.80 each. Pursuant to
the agreement, for a period of one year from the date of termination of
Mr. Cohen's employment, he may not directly or indirectly compete with us,
including, but not limited to, being employed by any business which competes
with us, or otherwise acting in a manner intended to advance an interest of a
competitor of ours in a way that will or may injure an interest of ours.
Our former Chief Technology Officer, James L. Reagan, was employed pursuant
to an employment agreement entered into on January 3, 2000. Mr. Reagan left
LivePerson in November 2000. We paid Mr. Reagan a fixed annual base salary of
not less than $165,000, plus an annual discretionary bonus, of which $20,000 was
paid upon commencement of his employment. In addition, Mr. Reagan received a
starting bonus of $20,000. Mr. Reagan was also eligible under the agreement to
receive a long-term incentive award, determined by our Board, consisting of
options to purchase Common Stock, with the initial award consisting of options
to purchase up to 300,000 shares of Common Stock at a purchase price of $2.00
per share. Pursuant to the agreement, for a period of one year from the date of
termination of Mr. Reagan's employment, he may not directly or indirectly
compete with us including, but not limited to, being employed by any business
which competes with us, or otherwise acting in a manner intended to advance an
interest of a competitor of ours in a way that will or may injure an interest of
ours.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Board of Directors created its Compensation Committee on January 12,
2000. Prior to that time, the Board of Directors as a whole made decisions
relating to the compensation of our executive officers. The members of the
Compensation Committee since April 6, 2000 have been Mr. Fields, Mr. Grousbeck
and Mr. Lavan, none of whom has been an officer or employee of LivePerson at any
time since our inception. In addition, Mr. LoCascio and Mr. Sim served on the
Compensation Committee at different times prior to April 6, 2000. Mr. LoCascio
was our President and Chief Executive Officer for the entire fiscal year ended
December 31, 2000. No executive officer of LivePerson serves or has served
during the fiscal year ended December 31, 2000 as a member of the Board of
Directors or compensation committee of any entity which has one or more
executive officers serving as a member of our Board of Directors or Compensation
Committee.
11
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors is composed entirely of
independent non-employee directors. It is the duty of the Compensation Committee
to review and determine the salaries and bonuses of executive officers of the
Company, including the Chief Executive Officer, and to establish the general
compensation policies for such individuals. The Compensation Committee also has
the sole and exclusive authority to make discretionary option grants to the
Company's executive officers under the Company's 2000 Stock Incentive Plan.
The Compensation Committee believes that the compensation programs for the
Company's executive officers should reflect the Company's performance and the
value created for the Company's stockholders. In addition, the compensation
programs should support the short-term and long-term strategic goals and values
of the Company and should reward individual contribution to the Company's
success. The Company is engaged in a very competitive industry, and the
Company's success depends upon its ability to attract and retain qualified
executives through the competitive compensation packages it offers to such
individuals.
GENERAL COMPENSATION POLICY. The Compensation Committee's policy is to
provide the Company's executive officers with compensation opportunities which
are based upon their personal performance, the financial performance of the
Company and their contribution to that performance and which are competitive
enough to attract and retain highly skilled individuals. Generally, each
executive officer's compensation package is comprised of three elements:
(i) base salary that is competitive with the market and reflects individual
performance, (ii) annual variable performance awards payable in cash and tied to
the Company's achievement of annual financial performance goals and
(iii) long-term stock-based incentive awards designed to strengthen the
mutuality of interests between the executive officers and the Company's
stockholders. As an officer's level of responsibility increases, a greater
proportion of his or her total compensation will be dependent upon the Company's
financial performance and stock price appreciation rather than base salary.
FACTORS. The principal factors that were taken into account in establishing
each executive officer's compensation package for the 2000 Fiscal Year are
described below. However, the Compensation Committee may in its discretion apply
entirely different factors, such as different measures of financial performance,
for future fiscal years.
BASE SALARY. In setting base salaries, the Compensation Committee reviewed
published compensation survey data for its industry. The base salary for each
officer reflects the salary levels for comparable positions in comparable
companies, as well as the individual's personal performance and internal
alignment considerations. The relative weight given to each factor varies with
each individual in the sole discretion of the Compensation Committee. Each
executive officer's base salary is adjusted each year on the basis of (i) the
Compensation Committee's evaluation of the officer's personal performance for
the year and (ii) the competitive marketplace for persons in comparable
positions. The Company's performance and profitability may also be a factor in
determining the base salaries of executive officers.
ANNUAL INCENTIVES. Bonuses for executive officers are based on the
Company's actual performance compared to plan.
LONG TERM INCENTIVES. Stock option grants are made by the Compensation
Committee to the Company's executive officers, generally upon hire, upon a
material change in responsibilities or at other times at the discretion of the
Compensation Committee. Each grant is designed to align the interests of the
executive officer with those of the stockholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. Each grant allows the officer to
acquire shares of the Company's Common Stock at a fixed price per share (the
market price on the grant date) over a specified period of time (up to ten
years). Generally, each option becomes exercisable in a series of installments
over a 4-year period, contingent upon the officer's continued employment with
the Company. Accordingly, the option will provide a
12
return to the executive officer only if he or she remains employed by the
Company during the vesting period, and then only if the market price of the
shares appreciates over the option term.
The size of the option grant to each executive officer is set by the
Compensation Committee at a level that is intended to create a meaningful
opportunity for stock ownership based upon the individual's current position
with the Company, the individual's personal performance in recent periods and
his or her potential for future responsibility and promotion over the option
term. The Compensation Committee also takes into account the number of unvested
options held by the executive officer in order to maintain an appropriate level
of equity incentive for that individual. The relevant weight given to each of
these factors varies from individual to individual. The Compensation Committee
has established certain guidelines with respect to the option grants made to the
executive officers, but has the flexibility to make adjustments to those
guidelines at its discretion.
CEO COMPENSATION. In setting the total compensation payable to the
Company's Chief Executive Officer for the 2000 Fiscal Year, the Compensation
Committee sought to make that compensation competitive with the compensation
paid to the chief executive officers of similar companies, while at the same
time assuring that a significant percentage of compensation was tied to Company
performance and stock price appreciation.
The Compensation Committee adjusted Robert P. LoCascio's base salary for the
2000 Fiscal Year in recognition of his personal performance and with the
objective of maintaining his base salary at a competitive level when compared
with the base salary levels in effect for similarly situated chief executive
officers. With respect to Mr. LoCascio's base salary, it is the Compensation
Committee's intent to provide him with a level of stability and certainty each
year and not have this particular component of compensation affected to any
significant degree by Company performance factors. For the 2000 Fiscal Year,
Mr. LoCascio's base salary was competitive with the base salary levels of other
chief executive officers at the surveyed companies.
The remaining components of Mr. LoCascio's 2000 Fiscal Year compensation,
however, were primarily dependent upon corporate performance. Mr. LoCascio is
eligible for a cash bonus for each year conditioned on the Company's attainment
of certain goals with additional consideration to be given to individual
business plan objectives.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code disallows a tax deduction to publicly held companies for
compensation paid to certain of their executive officers, to the extent that
compensation exceeds $1 million per covered officer in any fiscal year. The
limitation applies only to compensation which is not considered to be
performance-based. Non-performance based compensation paid to the Company's
executive officers for the 2000 Fiscal Year did not exceed the $1 million limit
per officer, and the Compensation Committee does not anticipate that the
non-performance based compensation to be paid to the Company's executive
officers for the 2000 Fiscal Year will exceed that limit. The Company's 2000
Stock Incentive Plan has been structured so that any compensation deemed paid in
connection with the exercise of option grants made under that plan with an
exercise price equal to the fair market value of the option shares on the grant
date will qualify as performance-based compensation which will not be subject to
the $1 million limitation. Because it is unlikely that the cash compensation
payable to any of the Company's executive officers in the foreseeable future
will approach the $1 million limit, the Compensation Committee has decided at
this time not to take any action to limit or restructure the elements of cash
compensation payable to the Company's executive officers. The Compensation
Committee will reconsider this decision should the individual cash compensation
of any executive officer ever approach the $1 million level.
It is the opinion of the Compensation Committee that the executive
compensation policies and plans provide the necessary total remuneration program
to properly align the Company's performance and the interests of the Company's
stockholders through the use of competitive and equitable executive compensation
in a balanced and reasonable manner, for both the short and long-term.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
RICHARD L. FIELDS
WYCLIFFE K. GROUSBECK
KEVIN C. LAVAN
13
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
MEMBERSHIP AND ROLE OF THE AUDIT COMMITTEE
The Audit Committee consists of the following members of the Company's Board
of Directors: Richard L. Fields, Kevin C. Lavan, and Edward G. Sim. Each of the
members of the Audit Committee is "independent," as defined under the listing
standards of the National Association of Securities Dealers, Inc. The Audit
Committee operates under a written charter adopted by the Board of Directors
which is included in this Proxy Statement as Appendix A.
REVIEW OF THE COMPANY'S AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2000
The Audit Committee has reviewed and discussed the audited consolidated
financial statements of the Company for the fiscal year ended December 31, 2000
with the Company's management. The Audit Committee has separately discussed with
KPMG LLP, the Company's independent public accountants, the matters required to
be discussed by Statement on Auditing Standards No. 61 ("Communication with
Audit Committees"), as amended, which includes, among other things, matters
related to the conduct of the audit of the Company's consolidated financial
statements.
The Audit Committee has also received the written disclosures and the letter
from KPMG LLP required by Independence Standards Board Standard No. 1
("Independence Discussions with Audit Committees"), as amended, and the Audit
Committee has discussed with KPMG LLP the independence of that firm from the
Company.
CONCLUSION
Based on the Audit Committee's review and discussions noted above, the Audit
Committee recommended to the Board of Directors that the Company's audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 for filing with the
Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
RICHARD L. FIELDS
KEVIN C. LAVAN
EDWARD G. SIM
14
STOCK PERFORMANCE GRAPH
The graph depicted below shows a comparison of cumulative total stockholder
returns for the Company, the Standard & Poor's SmallCap 600 Index and the
Standard & Poor's SmallCap 600 Information Technology Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
7-APR-00 APR-00 MAY-00 JUN-00 JUL-00 AUG-00 SEP-00 OCT-00 NOV-00 DEC-00
LIVEPERSON INC 100 65.79 80.26 91.45 100 68.42 46.05 24.34 13.16 11.18
S&P SMALLCAP 600 INDEX 100 96.88 94.01 99.57 97.12 105.73 102.85 103.5 92.72 104.14
S&P SMALLCAP TECHNOLOGY 100 91.9 82.98 91.65 82.31 90.35 79.81 78.6 61.19 66.06
- ------------------------
Notes:
(1) The graph covers the period from April 7, 2000, the first trading day of the
Common Stock following the Company's initial public offering, to
December 31, 2000.
(2) The graph assumes that $100 was invested on April 7, 2000, in the Company's
Common Stock, in the Standard & Poor's SmallCap 600 Index and in the
Standard & Poor's SmallCap 600 Information Technology Index, and that all
dividends were reinvested. No cash dividends have been declared on the
Company's Common Stock.
(3) Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE BY REFERENCE
THIS PROXY STATEMENT OR FUTURE FILINGS MADE BY THE COMPANY UNDER THOSE STATUTES,
THE COMPENSATION COMMITTEE REPORT, THE AUDIT COMMITTEE REPORT, THE AUDIT
COMMITTEE CHARTER, REFERENCE TO THE INDEPENDENCE OF THE AUDIT COMMITTEE MEMBERS
AND THE STOCK PERFORMANCE GRAPH ARE NOT DEEMED FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AND SHALL NOT BE DEEMED INCORPORATED BY REFERENCE INTO ANY
OF THOSE PRIOR FILINGS OR INTO ANY FUTURE FILINGS MADE BY THE COMPANY UNDER
THOSE STATUTES.
15
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of our Board of Directors, our executive officers and persons
who hold more than ten percent of our outstanding Common Stock are subject to
the reporting requirements of Section 16(a) of the Securities Exchange Act of
1934, as amended, which requires them to file reports with respect to their
ownership of our Common Stock and their transactions in such Common Stock. Based
upon a review of (i) the copies of Section 16(a) reports which LivePerson has
received from such persons or entities for transactions in our Common Stock and
their Common Stock holdings for the fiscal year ended December 31, 2000, and
(ii) the written representations received from one or more of such persons or
entities that no annual Form 5 reports were required to be filed by them for the
fiscal year ended December 31, 2000, LivePerson believes that all reporting
requirements under Section 16(a) for such fiscal year were met in a timely
manner by its directors, executive officers and beneficial owners of greater
than ten percent of its Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2000, we sold 1,754,386 shares of our Series D Redeemable
Convertible Preferred Stock to, among other investors, an affiliate of Dell
Computer Corporation, with gross proceeds from Dell of $10.0 million. As of
April 1, 2001, Dell beneficially owned more than five percent of our Common
Stock.
16
PROPOSAL TWO--RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG LLP, independent
public accountants for the Company during the 2000 Fiscal Year, to serve in the
same capacity for the fiscal year ending December 31, 2001, and is asking the
stockholders to ratify this appointment. The affirmative vote of a majority of
the shares represented and voting at the Annual Meeting is required to ratify
the selection of KPMG LLP.
Although stockholder ratification of the Board of Directors' appointment is
not required, the Board of Directors considers it desirable for the stockholders
to pass upon the selection of the independent public accountants. In the event
the stockholders fail to ratify the appointment, the Board of Directors will
reconsider its selection. Even if the selection is ratified, the Board of
Directors in its discretion may direct the appointment of a different
independent public accounting firm at any time during the year if the Board of
Directors believes that such a change would be in the best interests of the
Company and its stockholders.
A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to respond to appropriate questions.
FEES BILLED TO THE COMPANY BY KPMG LLP FOR SERVICES RENDERED DURING THE 2000
FISCAL YEAR
AUDIT FEES
An aggregate of $190,000 was billed for professional services rendered for
the audit of the Company's annual consolidated financial statements for the 2000
Fiscal Year and reviews of financial statements included in the Company's
quarterly reports on Form 10-Q.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage KPMG LLP to provide advice to the Company
regarding financial information systems design and implementation during the
2000 Fiscal Year.
ALL OTHER FEES
Fees billed to the Company by KPMG LLP for the 2000 Fiscal Year for all
other non-audit services rendered to the Company, including tax related
services, totaled $555,150.
The Audit Committee of the Board of Directors has considered whether the
provision of the services covered by the category "All Other Fees" is compatible
with maintaining the independence of KPMG LLP.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF KPMG LLP TO SERVE AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
17
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
Proxy Card to vote the shares they represent as such persons deem advisable.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed Proxy Card.
ANNUAL REPORT
A copy of the Annual Report of the Company for the 2000 Fiscal Year is being
mailed concurrently with this Proxy Statement to all stockholders entitled to
notice of and to vote at the Annual Meeting. The Annual Report is not
incorporated into this Proxy Statement and is not considered proxy solicitation
material.
FORM 10-K
The Company filed an Annual Report on Form 10-K with the Securities and
Exchange Commission on March 30, 2001. Stockholders may obtain a copy of this
report, without charge, by writing to Timothy E. Bixby, President, Chief
Financial Officer and Secretary, at the Company's principal executive offices
located at 330 West 34th Street, 10th Floor, New York, New York 10001.
By Order of the Board of Directors
Timothy E. Bixby
PRESIDENT, CHIEF FINANCIAL OFFICER,
SECRETARY AND DIRECTOR
Dated: April 26, 2001
18
APPENDIX A--AUDIT COMMITTEE CHARTER
LIVEPERSON, INC.
(THE "CORPORATION")
AUDIT COMMITTEE CHARTER
(I) PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information which will be provided to the shareholders and others, the
systems of internal controls which management and the Board of Directors have
established, and the Corporation's audit and financial reporting process.
The independent accountants' ultimate responsibility is to the Board of
Directors and the Audit Committee, as representatives of the shareholders. These
representatives have the ultimate authority to select, evaluate, and, where
appropriate, replace the independent accountants.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
(II) COMPOSITION
The Audit Committee shall be comprised of three or more independent
directors.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee shall
have accounting or related financial management expertise.
(III) MEETINGS
The Committee shall meet on a regular basis and shall hold special meetings
as circumstances require.
(IV) RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
(1) Review this Charter at least annually and recommend any changes to the
Board.
(2) Review the organization's annual financial statements and any other
relevant reports or other financial information.
(3) Review the regular internal financial reports prepared by management and
any internal auditing department.
(4) Recommend to the Board of Directors the selection of the independent
accountants and approve the fees and other compensation to be paid to the
independent accountants. On an annual basis, the Committee shall obtain a
formal written statement from the independent accountants delineating all
relationships between the accountants and the Corporation consistent with
Independence Standards Board Standard 1, and shall review and discuss
with the accountants all significant relationships the accountants have
with the Corporation to determine the accountants' independence.
(5) Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
(6) Following completion of the annual audit, review separately with the
independent accountants, the internal auditing department, if any, and
management any significant difficulties encountered during the course of
the audit.
(7) Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
19
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LIVEPERSON, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS, MAY 24, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF LIVEPERSON, INC.
The undersigned stockholder of LivePerson, Inc. (the "Company") revokes all
previous proxies, acknowledges receipt of the Notice of the Annual Meeting of
Stockholders to be held May 24, 2001 and the Proxy Statement, and appoints
Robert P. LoCascio, Chief Executive Officer, and Timothy E. Bixby, Chief
Financial Officer and President, and each of them, the Proxy of the undersigned,
with full power of substitution, to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote, either on his or her own
behalf or on behalf of any entity or entities, at the Annual Meeting of
Stockholders of the Company to be held at W--The Court Hotel, 130 East 39th
Street, New York, New York 10016, on Thursday, May 24, 2001 at 10:00 a.m.
Eastern Daylight time (the "Annual Meeting"), and at any adjournment or
postponement thereof, with the same force and effect as the undersigned might or
could do if personally present thereat. The shares represented by this Proxy
shall be voted in the manner set forth below.
(CONTINUED, AND TO BE DATED AND SIGNED ON OTHER SIDE)
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|X| PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE USING
DARK INK ONLY.
1. TO ELECT TWO CLASS I DIRECTORS TO SERVE FOR A THREE-YEAR TERM ENDING IN THE
YEAR 2004 OR UNTIL EACH OF THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED;
FOR ALL NOMINEES LISTED AT RIGHT WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS WRITTEN BELOW TO THE CONTRARY) FOR ALL NOMINEES LISTED AT RIGHT
|_| |_|
NOMINEES:
RICHARD L. FIELDS
EDWARD G. SIM
Instruction: To withhold authority to vote for an
individual nominee, write the nominee's name in the
space provided at left.
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2. TO RATIFY THE APPOINTMENT OF KPMG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In accordance with the discretion of the proxy holders, to act upon all
matters incident to the conduct of the meeting and upon other matters as may
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN
FAVOR OF THE DIRECTORS LISTED ABOVE AND A
VOTE IN FAVOR OF THE LISTED PROPOSAL. THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED
AS SPECIFIED ABOVE. IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED IN FAVOR OF
THE DIRECTORS LISTED ABOVE AND IN FAVOR OF
THE LISTED PROPOSAL.
Date: , 2001
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Signature (title, if any) Signature, if held jointly
Please print the name(s) appearing on each
share certificate(s) over which you have voting --------------------------------
authority (Print name(s) on certificate)
(JOINT OWNERS SHOULD EACH SIGN. PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEARS ON
THE ENVELOPE IN WHICH THIS CARD WAS MAILED. WHEN SIGNING AS ATTORNEY, TRUSTEE,
EXECUTOR, ADMINISTRATOR, GUARDIAN OR CORPORATE OFFICER, PLEASE SIGN UNDER FULL
TITLE, CORPORATE OR ENTITY NAME).
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