SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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[_] Soliciting Material Pursuant to sections 240.14a-11(c) or sections
240.14a-12
LookSmart, Ltd.
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NOTICE OF ANNUAL MEETING
LOOKSMART, LTD.
625 Second Street
San Francisco, California 94107
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
LookSmart, Ltd. ("LookSmart" or the "Company") to be held at our headquarters
located at 625 Second Street, San Francisco, California, on Thursday, May 25,
2000, at 10 a.m. local time. The annual meeting is being held for the
following purposes:
(1) To elect two directors for three-year terms expiring at the annual
meeting of stockholders in 2003;
(2) To ratify the appointment of the accounting firm PricewaterhouseCoopers
LLP as the Company's independent auditors for the current fiscal year;
and
(3) To transact of any other business that may properly come before the
annual meeting or any adjournment or postponement thereof.
These items are fully discussed in the following pages, which are made part
of this notice. Only stockholders of record on the books of the Company at the
close of business on April 15, 2000, are entitled to vote at the annual
meeting. A list of stockholders entitled to vote will be available for
inspection at the offices of LookSmart, 625 Second Street, San Francisco,
California, during ordinary business hours for the 10 days prior to the annual
meeting.
A copy of the annual report on Form 10-K for the year ended December 31,
1999, is enclosed with this notice. The annual report, proxy statement and
enclosed proxy are being furnished to stockholders on and after May 3, 2000.
By order of the board of directors,
/s/ MARTIN E. ROBERTS
Martin E. Roberts, Esq.
Vice President, Senior Counsel and
Secretary
May 3, 2000
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Your vote is very important. Even if you plan to attend the meeting,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
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PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
LookSmart, Ltd.
625 Second Street
San Francisco, California 94107
----------------
INFORMATION ABOUT SOLICITATION AND VOTING
General
The enclosed proxy is solicited by the board of directors of LookSmart for
use in voting at the annual meeting of stockholders to be held at 10:00 a.m.,
local time, on Thursday, May 25, 2000, at our headquarters located at 625
Second Street, San Francisco, California, and any postponement or adjournment
of that meeting. The Company's telephone number is (415) 348-7000. The purpose
of the annual meeting is to consider and vote upon the proposals outlined in
this proxy statement and the attached notice.
These proxy solicitation materials were mailed on or about May 3, 2000
together with the Company's annual report on Form 10-K to all stockholders
entitled to vote at the meeting.
Record Date and Outstanding Shares
Only stockholders of record on the books of the Company at the close of
business on the record date, April 15, 2000, will be entitled to vote at the
annual meeting. As of the close of business on the record date, there were
89,136,961 shares of common stock outstanding and held of record by
approximately 507 stockholders.
Voting and Solicitation
Every stockholder voting in the election of directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares held by
such stockholder, or distribute the stockholder's votes on the same principle
among as many candidates as the stockholder may select, provided that votes
cannot be cast for more candidates than the number of directors to be elected.
However, no stockholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
stockholder, or any other stockholder, has given notice at the meeting prior
to the voting of the intention to cumulate the stockholder's votes. On all
other matters, each share has one vote.
When proxies are properly dated, executed and returned, the shares they
represent will be voted at the annual meeting in accordance with the
instructions of the stockholder. If no specific instructions are given, the
shares will be voted FOR the election of the nominees for directors set forth
herein and FOR ratification of the appointment of auditors. In addition, if
other matters come before the annual meeting, the persons named in the
accompanying form of proxy will vote in accordance with their best judgment
with respect to such matters.
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by the Company's officers, directors and regular employees, without
compensation, personally or by telephone or facsimile.
Required Vote
The two candidates for election as directors at the annual meeting who
receive the highest number of affirmative votes will be elected. The
ratification of the independent auditors for the Company for the current year
will require the affirmative vote of a majority of the shares of the Company's
common stock present or represented and entitled to vote at the annual
meeting.
1
Revocability of Proxies
A proxy given pursuant to this solicitation may be revoked at any time
before its use by delivering a written revocation to the Secretary of the
Company, delivering a duly executed proxy bearing a later date or attending
and voting in person at the annual meeting.
Quorum; Abstentions; Broker Non-Votes
A quorum is required for the transaction of business during the annual
meeting. A quorum is present when a majority of stockholder votes are present
in person or by proxy. Shares that are voted "FOR", "AGAINST" or "WITHHELD" on
a matter are treated as being present at the meeting for purposes of
establishing a quorum and are also treated as votes cast by the common stock
present in person or represented by proxy at the annual meeting and entitled
to vote on the subject matter.
The Company will count abstentions for purposes of determining both (i) the
presence or absence of a quorum for the transaction of business and (ii) the
total number of votes cast with respect to a proposal (other than the election
of directors). As a result, abstentions will have the same effect as a vote
against the proposal.
Broker non-votes will be counted for purposes of determining the presence
or absence of a quorum for the transaction of business. Broker non-votes will
not be counted for purposes of determining the number of votes cast with
respect to the particular proposal. Thus, a broker non-vote will not have any
effect on the outcome of the voting on a proposal.
PROPOSAL ONE -- ELECTION OF DIRECTORS
Our board of directors consists of six directors, two of whom are standing
for election: Mariann Byerwalter and Robert Ryan. In addition to the two
directors standing for election, we have two incumbent directors with terms
expiring in 2001 and two incumbent directors with terms expiring in 2002. Our
bylaws provide that the board of directors is divided into three classes, with
each class to be as nearly equal in number as possible. There is no difference
in the voting rights of the members of each class of directors. Each class of
directors serves a term of office of three years, with the term of one class
expiring at the annual meeting of stockholders in each successive year. There
are no family relationships among any directors or executive officers of the
Company, except that Evan Thornley, Chairman, Chief Executive Officer and a
member of the board of directors, is married to Tracey Ellery, President and a
member of the board of directors.
The names, ages and principal occupations of the members of the board of
directors as of April 15, 2000 are as follows:
Name Age Position
---- --- --------
Evan Thornley............. 35 Chief Executive Officer and Chairman,
LookSmart
Tracey Ellery............. 37 President, LookSmart
Mariann Byerwalter (1).... 39 Chief Financial Officer and Vice President
of Business Affairs, Stanford University
Robert Ryan (2)........... 52 Chairman, Entrepreneur America, LLC
Anthony Castagna (2)...... 52 Director, GlobalGate LLC and Macquarie
Technology Funds Management Pty Ltd.
Scott Whiteside (1)....... 49 Chief Operating Officer, Cox Interactive
Media, Inc.
- --------
(1) Member of Audit Committee
(2) Member of Compensation Committee
Unless marked otherwise, proxies received will be voted FOR the election of
the two nominees named below. Both of the nominees are presently directors of
the Company whose terms will expire at the annual
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meeting. The proposed nominees are willing to be elected and to serve. If
either nominee is unable or unwilling to serve as a director at the time of
the annual meeting, the proxies may be voted either (i) for a substitute
nominee who shall be designated by the proxy holders or by the incumbent board
of directors to fill the vacancy or (ii) for the other nominee, leaving a
vacancy. Alternatively, the size of the board of directors may be reduced
accordingly. The board of directors has no reason to believe that any of the
nominees will be unwilling or unable to serve if elected as a director. Such
persons have been nominated to serve for three-year terms until the annual
meeting of stockholders in 2003 or until their successors, if any, are elected
or appointed.
Nominees for Election to the Board of Directors
The nominees for election to the board of directors are Mariann Byerwalter
and Robert Ryan. The board of directors unanimously recommends that you vote
for election of both nominees as directors.
Mariann Byerwalter has served as one of our directors since February 2000.
Since February 1996, Ms. Byerwalter has served as Chief Financial Officer and
Vice President of Business Affairs at Stanford University. Prior to that time,
Ms. Byerwalter was Executive Vice President and Chief Financial Officer of
Eureka Bank and Chief Operating Officer and Chief Financial Officer of America
First Eureka Holdings. Ms. Byerwalter is a member of the board of directors of
Redwood Trust, Inc., as well as several privately-held or non-profit
institutions, including America First Companies, SRI International, Stanford
Management Company and Stanford Hospital and Clinics. Ms. Byerwalter holds a
B.A. in economics and political science/public policy from Stanford University
and an M.B.A. from Harvard University.
Robert Ryan has served as one of our directors since May 1998. Since 1995,
Mr. Ryan has served as Chairman of Entrepreneur America, LLC, a business
consulting company. Mr. Ryan founded and served as Chief Executive Officer and
Chairman of Ascend Communications, Inc., a networking company, from 1989 to
1995. Mr. Ryan holds a B.A. in mathematics from Cornell University and an M.A.
in mathematics from the University of Wisconsin.
Incumbent Directors Whose Terms Continue After the Annual Meeting
Biographical information is presented below for each person who is
continuing as an incumbent director whose term expires at the annual meeting
of stockholders in 2001:
Anthony Castagna has served as one of our directors since March 1999. Dr.
Castagna presently serves as a non-executive director of GlobalGate LLC, an
Internet-related technology holding company, and as a non-executive director
of Macquarie Technology Funds Management Pty Limited, an Australian venture
capital fund. From 1994 to present, Dr. Castagna has served as an independent
advisor to the Macquarie Technology Investment Banking Division of Macquarie
Bank Limited, an investment banking company, and other technology-based
companies in Australia, Asia and the United States. Dr. Castagna holds a
Bachelor of Commerce degree from the University of Newcastle, Australia, and
an M.B.A. and Ph.D. in finance from the University of New South Wales,
Australia.
Scott Whiteside has served as one of our directors since May 1998. Since
August 1999, Mr. Whiteside has served as Chief Operating Officer of Cox
Interactive Media, Inc., a wholly owned subsidiary of Cox Enterprises, Inc., a
media conglomerate. From October 1995 to August 1999, Mr. Whiteside served as
Director of Strategy and Technology/New Media at Cox Enterprises, Inc. From
1993 to 1995, Mr. Whiteside served as a Director of Strategic Development at
Times Mirror Company, a publishing company. Mr. Whiteside holds a B.S. in
journalism from the University of Missouri, an M.B.A. from Rockhurst College
and a J.D. from Oklahoma University.
Biographical information is presented below for each person who is
continuing as an incumbent director whose term expires at the annual meeting
of stockholders in 2002:
Evan Thornley co-founded LookSmart and has served as its Chairman and Chief
Executive Officer and a director since July 1996. From July 1996 to June 1999,
Mr. Thornley also served as President. From 1991 to
3
1996, Mr. Thornley was a consultant at McKinsey & Company, a global consulting
company, in their New York, Kuala Lumpur and Melbourne offices. Mr. Thornley
holds a Bachelor of Commerce and a Bachelor of Laws from the University of
Melbourne, Australia. Mr. Thornley is married to Ms. Ellery.
Tracey Ellery co-founded LookSmart and has served as its President since
June 1999 and as a director since September 1997. Ms. Ellery was Senior Vice
President of Product from July 1996 to June 1999. From 1991 to 1994, Ms.
Ellery was Chief Executive Officer of Student Services Australia, an
Australian college publishing and retail company. Ms. Ellery studied drama and
legal studies at Deakin University, Australia. Ms. Ellery is married to Mr.
Thornley.
Board Committees and Meetings
In March 1999, the board of directors established two standing committees:
the audit committee and the compensation committee. Prior to that time, the
functions of these two standing committees were performed by the board of
directors.
Audit Committee. The audit committee recommends to the board of directors
the selection of independent accountants, approves the nature and scope of
services to be performed by the independent accountants and reviews the range
of fees for such services, confers with the independent accountants and
reviews the results of the annual audit, reviews with the independent
accountants the Company's accounting and financial controls, and reviews
policies and practices regarding compliance with laws and conflicts of
interest. From March 1999 to August 1999, the audit committee was composed of
directors Ellery, Paul Riley and Whiteside. From August 1999 to December 1999,
the audit committee was composed of directors Whiteside and Riley. In December
1999, Mr. Riley resigned from the board of directors and was replaced in March
2000 with Ms. Byerwalter. Currently, the audit committee consists of directors
Byerwalter and Whiteside, both of whom are non-employee directors. In 1999,
the audit committee held four meetings.
Compensation Committee. The compensation committee is responsible for
reviewing and recommending to the board of directors the timing and amount of
compensation for the Chief Executive Officer and other key employees,
including salaries, bonuses and other benefits. The compensation committee
also is responsible for administering the Company's stock option and other
equity-based incentive plans. From March 1999 to August 1999, the compensation
committee consisted of directors Castagna, Ryan and Thornley. Since August
1999, the compensation committee has consisted of directors Castagna and Ryan,
both of whom are non-employee directors. In 1999, the compensation committee
held five meetings.
During the Company's last fiscal year, the board of directors held 15
regular meetings and took action by written consent on two occasions. Each of
the directors attended 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 of directors on which he or she served (during
the periods that he or she served).
Compensation of Directors
Directors received no compensation for their services as directors in 1999,
other than reimbursement of reasonable out-of-pocket expenses for attendance
at board meetings. Starting in February 2000, the board of directors resolved
to provide for automatic grants of stock options under the 1998 Stock Option
Plan as follows: (i) new non-employee directors shall automatically be granted
an option to purchase 50,000 shares of common stock upon joining the board of
directors, and (ii) each year, non-employee directors shall be granted an
option to purchase 20,000 shares of common stock, based upon the continued
service of the director during the prior year. These stock options vest at a
rate of 1/36th per month over the three years following the commencement of
vesting, based on continued service as a director. Vesting accelerates 100% in
the event of involuntary termination of the director's membership on the board
of directors within 12 months after a change of control of the Company.
4
Compensation Committee Interlocks and Insider Participation
The compensation committee was established in March 1999. Prior to that
time, the entire board of directors participated in compensation decisions. In
particular, Mr. Thornley and Ms. Ellery, each an officer and employee of
LookSmart, actively participated in the deliberations concerning executive
officer compensation. The compensation committee currently consists of
directors Castagna and Ryan, neither of whom is or has been an officer or
employee of the Company. Evan Thornley, Chairman and Chief Executive Officer
of the Company, is not a member of the compensation committee and cannot vote
on matters decided by the committee. He participates in compensation committee
discussions regarding salaries and incentive compensation for all employees of
and consultants to the Company, but Mr. Thornley is excluded from discussions
regarding his own salary and incentive compensation.
No interlocking relationship exists between the Company's board of
directors or compensation committee and the board of directors or compensation
committee of any other party, nor has such relationship existed in the past.
PROPOSAL TWO -- RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to the approval of stockholders, the board of directors has
reappointed the firm of PricewaterhouseCoopers LLP, certified public
accountants, as independent accountants of the Company for the current fiscal
year. PricewaterhouseCoopers LLP has audited the financial statements of the
Company and its subsidiaries for the fiscal year ended December 31, 1999.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the annual meeting, will have an opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions from stockholders.
The board of directors recommends that you vote FOR ratification of the
appointment of PricewaterhouseCoopers LLP.
5
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
To the Company's knowledge, the following table sets forth the number of
shares of LookSmart common stock beneficially owned as of April 15, 2000, by
. each beneficial owner of 5% or more of the Company's outstanding
common stock,
. each of LookSmart's directors and nominees for director,
. each of the named executive officers, and
. all of LookSmart's directors, nominees for director and executive
officers as a group.
Except as otherwise indicated below and subject to applicable community
property laws, each owner has sole voting and sole investment powers with
respect to the stock issued. Beneficial ownership is determined in accordance
with SEC regulations and generally includes voting or investment power with
respect to securities. Beneficial ownership also includes securities issuable
upon exercise of stock options or warrants exercisable within 60 days of April
15, 2000. Percentage ownership is based on 89,136,961 shares of common stock
outstanding as of April 15, 2000. Stock options exercisable within 60 days of
April 15, 2000 are deemed outstanding for computing the percentage of the
person holding such options but are not deemed outstanding for computing the
percentage of any other person. Unless otherwise indicated below, the address
of the persons listed is c/o LookSmart, Ltd., 625 Second Street, San
Francisco, 94107.
Shares Percent
Beneficially Beneficially
Name and Address of Beneficial Owner Owned(1) Owned
- ------------------------------------ ------------ ------------
Five Percent Stockholders
Cox LOOK, Inc. (2)................................. 18,987,801 21.3%
3773 Howard Hughes Pkwy.
Suite 300N
Las Vegas, NV 89109
The Reader's Digest Association, Inc............... 9,000,000 10.1
Reader's Digest Road
Pleasantville, NY 10570
Entities Affiliated with Macquarie Bank Limited
(3)............................................... 5,052,252 5.7
Macquarie Bank Limited
Level 16, 20 Bond Street
Sydney, NSW, 2000 Australia
Named Executive Officers and Directors
Evan Thornley (4).................................. 7,535,000 8.5
Tracey Ellery (4).................................. 7,535,000 8.5
Brian Cowley....................................... 1,286,250 1.4
Patricia Cole...................................... 57,250 *
David Neylon....................................... -- *
Val Landi.......................................... 262,500 *
Mariann Byerwalter................................. 5,555 *
Anthony Castagna................................... -- *
Robert Ryan........................................ 832,500 *
Scott Whiteside (5)................................ 18,987,801 21.3
All directors and executive officers as a group (17
persons).......................................... 39,275,842 43.5
- --------
* Less than 1%.
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(1) Includes shares that may be acquired by the exercise of stock options
granted under the Amended and Restated 1998 Stock Plan within 60 days
after April 15, 2000. The number of shares subject to stock options
exercisable within 60 days after April 15, 2000, for each listed person is
shown below:
Brian Cowley................................................... 45,000
Patricia Cole.................................................. 56,250
Mariann Byerwalter............................................. 5,555
Val Landi...................................................... 25,000
All directors and executive officers as a group................ 1,106,670
(2) Includes 1,500,000 shares of common stock issuable upon exercise of a
warrant. Cox LOOK, Inc. is a wholly owned subsidiary of Cox Interactive
Media, Inc., which is a wholly owned subsidiary of Cox Enterprises, Inc.
Barbara Cox Anthony and Ann Cox Chambers, who are sisters, exercise
beneficial ownership of 98.4% of the common stock of Cox Enterprises, Inc.
Therefore, each of Cox Interactive Media, Inc., Cox Enterprises, Inc., Ms.
Anthony and Ms. Chambers may also be deemed to be beneficial owners of the
shares held by Cox LOOK, Inc.
(3) Consists of 1,938,843 shares of common stock held by Macquarie Bank
Limited; 1,897,566 shares held by Belike Nominees Pty Limited; 373,740
shares held by Perpetual Trustee Company Limited as trustee for Macquarie
Technology Fund 1A; 373,740 shares held by Perpetual Trustee Company
Limited as trustee for Macquarie Technology Fund 1B; 201,000 shares held
by Macquarie Select Opportunities Fund; and 267,363 shares held by
Macquarie PRISM Pty Limited.
(4) Mr. Thornley and Ms. Ellery are husband and wife and, accordingly, each is
the beneficial owner of shares held by the other. Mr. Thornley and Ms.
Ellery each hold 1,100,000 shares in their own name and jointly hold
12,870,000 shares by trust. The shares of common stock beneficially owned
by Mr. Thornley and Ms. Ellery have been counted once in the total number
of shares beneficially owned by them.
(5) Consists entirely of shares held by Cox LOOK, Inc. Mr. Whiteside is Chief
Operating Officer at Cox Interactive Media, Inc., of which Cox LOOK, Inc.
is a wholly owned subsidiary. Mr. Whiteside disclaims beneficial ownership
of the shares held by Cox LOOK, Inc.
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EXECUTIVE COMPENSATION
Executive Officers
Our executive officers, and their respective ages as of April 15, 2000, are
as follows:
Name Age Position
---- --- --------
Evan Thornley............. 35 Chief Executive Officer, Chairman and
director
Tracey Ellery............. 37 President and director
Ned Brody................. 36 Chief Financial Officer
Richard Boulderstone...... 43 Senior Vice President, Engineering
Brian Cowley.............. 40 Senior Vice President, Global Sales
Martin Hosking............ 39 Senior Vice President, Product
Val Landi................. 55 Senior Vice President, Marketing
Chris Tucher.............. 39 Senior Vice President, Business
Development
Martha Clark.............. 46 Vice President, Human Resources
Derek Malmquist........... 39 Vice President, Marketing
Timothy Pethick........... 37 Vice President, International
Martin Roberts............ 39 Vice President, Senior Counsel and
Secretary
Scott Stanford............ 29 Vice President, Strategy and Development
Evan Thornley co-founded LookSmart and has served as its Chairman and Chief
Executive Officer and a director since July 1996. From July 1996 to June 1999,
Mr. Thornley also served as President. From 1991 to 1996, Mr. Thornley was a
consultant at McKinsey & Company, a global consulting company, in their New
York, Kuala Lumpur and Melbourne offices. Mr. Thornley holds a Bachelor of
Commerce and a Bachelor of Laws from the University of Melbourne, Australia.
Mr. Thornley is married to Ms. Ellery.
Tracey Ellery co-founded LookSmart and has served as its President since
June 1999 and as a director since September 1997. Ms. Ellery served as our
Senior Vice President of Product from July 1996. From 1991 to 1994, Ms. Ellery
was Chief Executive Officer of Student Services Australia, an Australian
college publishing/retail company. Ms. Ellery studied drama and legal studies
at Deakin University, Australia. Ms. Ellery is married to Mr. Thornley.
Ned Brody has served as our Chief Financial Officer since March 2000. Prior
to that time, Mr. Brody served as our Vice President of Ecommerce since
November 1998. From 1993 to November 1998, Mr. Brody was a partner at Mercer
Management Consulting, a management consulting company. Mr. Brody holds a B.S.
in economics and an M.B.A. from Wharton School, University of Pennsylvania.
Richard Boulderstone has served as our Senior Vice President of Engineering
since March 2000. Prior to that time, Mr. Boulderstone served as Chief
Technical Officer at Thomson Financial Services, a financial services company,
from July 1997 to February 2000. At Thomson Financial Services, Mr.
Boulderstone was responsible for product management, product development and
information systems. From January 1997 to June 1997, Mr. Boulderstone was Vice
President of Research Systems Development at Reed Elsevier, Inc., a
professional information company. From October 1993 to December 1996, Mr.
Boulderstone was Senior Vice President of Technology for Knight-Ridder
Information, a professional information company. Mr. Boulderstone holds a
Bachelor of Science and Technology in chemical engineering and fuel technology
from Sheffield University, England.
Brian Cowley has served as our Senior Vice President of Global Sales since
December 1998. From August 1997 to December 1998, Mr. Cowley served as our
Senior Vice President of Global Sales and Distribution and as our Vice
President of Advertising Sales from October 1996 to August 1997. From March
1996 to October 1996, Mr. Cowley served as Business Development Manager at
Netscape Communications Corporation, overseeing advertising sales on the
Netscape Netcenter website. From April 1995 to March 1996, Mr. Cowley served
as Vice President of Sales and Product Marketing in the Data Products Division
of Strategic Mapping,
8
Inc., a marketing data company. From June 1994 until April 1995, Mr. Cowley
worked as a Vice President of Sales at Consumer Direct Access, a company he
co-founded, in San Francisco. Mr. Cowley holds a B.S. in marketing from Bryant
College.
Martin Hosking joined the Company in January 1996 and has held a variety of
senior management positions, most recently as Senior Vice President of Product
since July 1998. From 1994 to 1996, Mr. Hosking was a consultant at McKinsey &
Company, a management consulting company. Prior to that time, Mr. Hosking
served with the Australian Department of Foreign Affairs and Trade as a
Diplomat in Egypt and Syria and held various senior posts in Canberra,
Australia. Mr. Hosking holds a B.A. in history and economics from the
University of Melbourne, Australia.
Val Landi has served as our Senior Vice President of Marketing and Media
Services since August 1998. From October 1997 to July 1998, Mr. Landi served
as Vice President, Sales and Marketing of Carnelian, Inc., an Internet
software company, and from April 1997 to September 1997 as Executive Vice
President of Power Agent, an Internet media company. From March 1995 to March
1997, Mr. Landi served as Publisher and General Manager of International Data
Group/Computerworld Internet Media, an information technology company,
Corporate Vice President of International Data Group from 1994 to 1995, and as
Executive Vice President of International Data Group's International Marketing
Services from 1991 to 1995. Mr. Landi holds an M.A. from Harvard University.
Chris Tucher has served as our Vice President of Business Development and
Syndication since August 1998 and Senior Vice President of Business
Development from June 1999. From August 1995 to August 1998, Mr. Tucher served
as Director of Sales and Marketing and Media and Financial Markets at Netscape
Communications Corporation, an Internet software company. From 1991 to 1995,
Mr. Tucher was a vice president and member of the executive board of the
Contra Costa Newspapers, Inc., a news publishing company. Mr. Tucher holds a
B.A. in English and economics from Occidental College, and an M.B.A. from
Harvard Business School.
Martha Clark has served as our Vice President of Human Resources since May
1999. From October 1998 to April 1999, Ms. Clark was a consultant. From
January 1997 to October 1998, Ms. Clark was Senior Vice President and Human
Resources Division Manager of Sumitomo Bank of California, a commercial bank.
From August 1995 to January 1997, Ms. Clark was Director and co-founder of
John Parry & Alexander, a human resources consulting company. From 1993 to
1995, Ms. Clark was Director of Human Resources of Fritz Companies, Inc., a
global logistics services company. Ms. Clark holds a B.A. in economics from
Wellesley College and an M.B.A. from Stanford University.
Derek Malmquist has served as our Vice President of Marketing since April
1999. From 1991 to April 1999, Mr. Malmquist worked at The Clorox Company, a
consumer packaged goods company, most recently as Group Marketing Manager with
responsibility for the home cleaning division. Prior to attending business
school, Mr. Malmquist was an Account Executive with Bates Advertising
Worldwide in New York, a Saatchi & Saatchi Company. Mr. Malmquist holds a B.A.
in history from Harvard University, a Master of Philosophy from Cambridge
University in England, and an M.B.A. from Harvard Business School.
Timothy Pethick has served as our Vice President of International and as
Chief Executive Officer and director of LookSmart International Pty Ltd., our
Australian subsidiary, since March 1999. From August 1996 to March 1999, Mr.
Pethick was employed in several positions by Encyclopedia Britannica, Inc., a
publishing company, most recently as General Manager of Sales and Marketing.
From 1995 to 1996, Mr. Pethick was Marketing Director of On Australia Pty
Limited, an Internet/online publishing company, and from 1994 to 1995, he was
General Manager of Roadshow New Media, a CD-rom distribution and publishing
company. Mr. Pethick holds a Bachelor of Commerce from the University of New
South Wales, a Masters of Economics from Macquarie University and an M.B.A.
from Deakin University, Australia. Mr. Pethick is a Chartered Accountant in
Australia.
Martin Roberts has served as our Senior Counsel since May 1999 and as a
Vice President since February 2000. From April 1997 to May 1999, he served as
Senior Counsel of The PMI Group, Inc., a provider of mortgage-related
services. From September 1995 to April 1997, Mr. Roberts served as Senior
Counsel of Fair,
9
Isaac and Company, Inc., a risk assessment technology company. Prior to
September 1995, Mr. Roberts was Managing Attorney at the Federal Deposit
Insurance Corporation branch office in Los Angeles, California. Mr. Roberts
holds a B.A. in English from the University of Virginia and a J.D. from the
University of Alabama.
Scott Stanford has served as our Vice President of Strategy and Development
since January 1999. From July 1999 to December 1999, Mr. Stanford served as
our Director of Strategy and Development and from January 1999 to July 1999 as
our Director of Ecommerce. From September 1996 to July 1998, Mr. Stanford
studied for his M.B.A and was an Associate at General Atlantic Partners, a
venture capital company. From March 1993 to May 1996, Mr. Stanford was a
financial analyst for Goldman Sachs & Co., an investment bank. Mr. Stanford
holds a B.A. in social studies from Harvard University and an M.B.A. from
Harvard Business School.
Summary Compensation Table
The following table shows information concerning the compensation earned
during each of the last three full fiscal years by our (i) Chief Executive
Officer, (ii) four other most highly compensated executive officers of the
Company as of December 31, 1999, and (iii) one executive officer, David
Neylon, who was one of the four most highly compensated executive officers but
was not employed with the Company at the end of 1999. The persons listed below
are referred to throughout this proxy statement as the "named executive
officers."
Long-Term
Compensation
Annual Compensation Awards
-------------------- ------------------
Other Annual All Other
Name and Principal Salary Compensation Number of Shares Compensation
Position Year ($) ($)(1) Underlying Options ($)(2)
- ------------------ ---- ------- ------------ ------------------ ------------
Evan Thornley........... 1999 212,328 -- -- 8,408
Chief Executive
Officer, 1998 137,136 -- -- 36,928
Chairman and director 1997 105,132 -- -- --
Patricia Cole (3)....... 1999 164,098 7,132 900,000 --
Chief Financial Officer 1998 -- -- -- --
1997 -- -- -- --
Brian Cowley............ 1999 280,239 10,000 -- --
Senior Vice President, 1998 190,000 7,969 -- --
Global Sales 1997 190,000 771 1,620,000 --
Tracey Ellery........... 1999 203,807 -- -- 8,408
President and director 1998 95,297 -- -- 3,918
1997 62,582 -- -- --
Val Landi (4)........... 1999 149,908 -- -- 20,000
Senior Vice President, 1998 50,000 -- 600,000 --
Marketing 1997 -- -- -- --
David Neylon (5)........ 1999 207,595 6,000 -- --
Senior Vice President, 1998 30,000 1,125 1,050,000 --
Engineering 1997 -- -- -- --
- --------
(1) The compensation listed in this column consists entirely of matching
contributions made by the Company to the accounts of the named executive
officers under the Company's 401(k) plan. Under the 401(k) plan, matching
contributions are 50% vested after the first year of employment and 100%
vested after the second year of employment.
(2) The compensation listed in this column for 1999 consisted of: (i)
reimbursement of housing-related expenses in the amount of $6,405,
telephone-related expenses in the amount of $633, and relocation expenses
in the amount of $1,370 incurred by Mr. Thornley, (ii) reimbursement of
housing-related expenses in the amount of $6,405, telephone-related
expenses in the amount of $633, and relocation expenses in the
10
amount of $1,370 incurred by Ms. Ellery, and (iii) reimbursement of
$20,000 of personal travel expenses incurred by Mr. Landi.
(3) Ms. Cole's employment with the Company as Chief Financial Officer began in
February 1999 and ended in March 2000. Amounts shown for 1999 reflect
compensation for services rendered for less than the full fiscal year in
1999.
(4) Mr. Landi's employment with the Company began in August 1999. Amounts
shown for 1999 reflect compensation for services rendered for less than
the full fiscal year in 1999.
(5) Mr. Neylon's employment with the Company began in November 1998 and ended
in August 1999. Amounts shown for 1998 and 1999 reflect compensation for
services rendered for less than the full fiscal years in 1998 and 1999.
Stock Option Grants in the Last Fiscal Year
The following table sets forth information regarding stock options granted
to the named executive officers in 1999 and the values of those options:
Individual Grants
-----------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rate of Stock
Number of Percent of Total Price Appreciation
Securities Options Granted Exercise for Option Term ($)
Underlying to Employees Price Per Expiration ---------------------
Name Options Granted in 1999 Share Date 5% 10%
- ---- --------------- ---------------- --------- ---------- ---------- ----------
Patricia Cole........... 900,000 13.25% $1.25 2/25/09 $3,165,557 $5,706,995
The amounts shown in the column entitled "Potential Realizable Value at
Assumed Annual Rate of Stock Price Appreciation for Option Term" are based on
the fair market value per share of common stock on the date of grant,
compounded annually at 5% or 10% per annum over the 10-year term of the stock
option, minus the exercise price per share, multiplied by the number of shares
subject to the stock option. The real value of the options depends on the
actual performance of the Company's stock during the applicable period. The
use of this valuation method should not be construed as an endorsement of its
accuracy in valuing LookSmart options or common stock.
Stock options noted above are exercisable with respect to 25% of the shares
on the first anniversary of the date of grant and become exercisable with
respect to 1/48th of the shares on each month thereafter with full vesting
occurring on the fourth anniversary of the grant. Vesting may be partially
accelerated upon certain events relating to a change in control of the
Company. Stock options granted under the Amended and Restated 1998 Stock Plan
generally: (i) expire after a term of ten years, (ii) terminate, with limited
exercise provisions for a period of time, in the event of death, retirement or
other termination of employment, and (iii) permit the optionee to pay the
exercise price by delivery of cash or shares of the Company's common stock.
11
Aggregated Option Exercises and Fiscal Year-End Values
The following table provides information concerning option exercises in
1999 and unexercised options held as of December 31, 1999 by the named
executive officers. The amounts shown in the column entitled "Value Realized"
are based on the market price of the purchased shares on the exercise date
minus the exercise price of the option, multiplied by the number of shares
subject to the option. The amounts shown in the columns entitled "Value of
Unexercised In-the-Money Options at Fiscal Year End" are based on the closing
sales price of the Company's common stock on the Nasdaq National Market on
December 31, 1999 ($27.00) minus the exercise price of the option, multiplied
by the number of shares subject to the option.
Number of Securities
Number Underlying Unexercised Value of Unexercised
of Shares Options at Fiscal Year In-the-Money Options
Acquired End at Fiscal Year-End
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------- ---------- ----------- ------------- ----------- -------------
Patricia Cole........... -- -- -- 900,000 -- $23,175,000
Brian Cowley............ 1,248,750 $9,618,102 45,000 326,250 $1,214,573 8,805,651
Val Landi............... -- -- 200,000 400,000 5,376,660 10,753,320
David Neylon............ 262,500 3,106,241 -- -- -- --
Employment, Severance and Change of Control Agreements
Employment Agreements. The Company has no written employment agreements
governing the length of service of its executive officers, or any severance or
change of control agreements, with its executive officers. Each of its
executive officers serves on an at-will basis.
Stock Options. Pursuant to individual stock option agreements with the
Company, the stock options held by executive officers are subject to
accelerated vesting in the event of termination without cause following a
change in control of the Company. In such event, the vesting of stock options
will be accelerated in amounts between 25% and 100% of the shares subject to
the stock option. A "change of control" is generally defined in the agreements
as a merger or acquisition of the Company in which the stockholders of the
Company prior to the transaction do not retain 50% of the voting securities of
the surviving corporation or a sale of all or substantially all of the assets
of the Company. Generally, under the stock option agreements, 25% of each
option becomes exercisable on the first anniversary of the date of grant and
1/48th of the shares become exercisable each month thereafter, so that all
options are vested after four years.
Indemnity Agreements. The Company has entered into indemnity agreements
with its directors and officers providing for indemnification of each director
and officer against expenses incurred in connection with any action or
investigation involving the director or officer by reason of his or her
position with the Company (or with another entity at the Company's request).
The directors and officers will also be indemnified for costs, including
judgments, fines and penalties, indemnifiable under Delaware law or under the
terms of any current or future liability insurance policy maintained by the
Company that covers directors and officers. A director or officer involved in
a derivative suit will be indemnified for expenses and amounts paid in
settlement. Indemnification is dependent in each instance on the director or
officer meeting the standards of conduct set forth in the indemnity
agreements.
12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors is composed of two
directors, Messrs. Castagna and Ryan, neither of whom is a current or former
employee of the Company or its subsidiaries. The compensation committee
develops and recommends to the board of directors the compensation policies of
the Company. The compensation committee also administers the Company's
compensation plans and recommends for approval by the board of directors the
compensation to be paid to the Chief Executive Officer and, with the advice of
the Chief Executive Officer, the compensation of the other executive officers
of the Company.
General Compensation Policy
The basic compensation philosophy of the compensation committee and the
Company is to provide competitive salaries as well as competitive incentives
to achieve superior financial performance. The Company's executive
compensation policies are designed to achieve four primary objectives:
. Attract and retain well-qualified executives who will lead the
Company and achieve and inspire superior performance;
. Provide incentives for achievement of specific short-term individual,
business unit and corporate goals;
. Provide incentives for achievement of longer-term financial goals;
and
. Align the interests of management with those of the stockholders to
encourage achievement of continuing increases in stockholder value.
Executive compensation at LookSmart consists primarily of the following
components:
. base salary and benefits;
. amounts paid, if any, under individual-specific discretionary bonus
plans designed to encourage achievement of individual goals; and
. participation in the Company's stock option and equity-based
incentive plans.
Each component of compensation is designed to accomplish one or more of the
four compensation objectives described above.
The participation of specific executive officers and other key employees in
the stock option and equity-based incentive plans of the Company is
recommended by management and all recommendations (including the level of
participation) are reviewed, modified (to the extent appropriate) and approved
by the compensation committee. Senior executive officers are normally eligible
to receive a greater percentage of their potential compensation in the form of
awards under these incentive plans to reflect the compensation committee's
belief that the percentage of an executive's total compensation that is "at
risk" should increase as the executive's corporate responsibilities and
ability to influence profits increase.
Base Salary
To attract and retain well-qualified executives, it is the compensation
committee's policy to establish base salaries and provide benefit packages at
levels that have been confirmed to be competitive. Base salaries of senior
executives are determined by the compensation committee by comparing each
executive's position with similar positions in companies of similar type, size
and financial performance. In making that comparison, the compensation
committee uses independent surveys of companies of a comparable stage of
development. Included in the survey are some, but not all, of the companies
included in the Chase H&Q Internet 100 Index, with the primary focus on
Internet companies at a similar stage in the San Francisco Bay Area which may
compete for the same pool of employees. In general, the compensation committee
has targeted salaries to be at the median to
13
slightly below the median percentile of base salaries paid for comparable
positions by companies included in the surveys. Other factors considered by
the compensation committee are the executive's performance, the executive's
current compensation and the Company's or the applicable business unit's
performance (determined by reference to revenues, costs and other quantitative
measures of performance). Although the compensation committee does not give
specific weight to any particular factor, the most weight is given to the
executive's performance (in determining whether to adjust above or below the
current salary level), and a significant but lesser weight is generally given
to the comparative salary levels in the industry.
In general, base salaries for the Company's executive officers during 1999
were near the median of salaries paid by companies included in the surveys.
The 1999 average base salary of senior executives increased over the previous
year's level as a result of a combination of factors, including improved
individual performance, improved or continued excellent performance by the
applicable business unit and Company, promotions and increased
responsibilities.
Stock-Based Incentive Compensation
Awards under the Company's stock option and employee stock purchase plans
are designed to encourage long-term investment in the Company by participating
executives, more closely align executive and stockholder interests and reward
executives and other key employees for building stockholder value. The
compensation committee believes stock ownership by management has been
demonstrated to be beneficial to all stockholders. Periodic grants of stock
options are generally made annually to all eligible employees based on
performance, with additional grants made to certain employees following a
significant change in job responsibility.
Under the Company's stock option plan, the compensation committee may grant
to executives and other key employees options to purchase shares of stock. The
compensation committee reviews, modifies (to the extent appropriate) and takes
action on the amount, timing, price and other terms of all options granted to
employees of the Company. The compensation committee grants both incentive
stock options and nonqualified options within the meaning of the Internal
Revenue Code. A majority of the options granted have been incentive stock
options with an exercise price equal to the closing price of LookSmart common
stock on the last trading day before the grant. Under the terms and conditions
of the plan, the compensation committee may, however, grant nonqualified
options with an exercise price above or below the market price on the date of
grant.
In determining the number of stock options to be awarded to an executive,
the compensation committee generally takes into consideration the levels of
responsibility and compensation practices of similar companies. The
compensation committee also considers the recommendations of management
(except for awards to the Chief Executive Officer), the individual performance
of the executive and the number of shares previously awarded to the executive.
As a general practice, the number of options granted increases in proportion
to each executive's responsibilities.
Chief Executive Officer Compensation
Mr. Thornley's compensation in 1999 is consistent with the compensation
policy of LookSmart described above and the compensation committee's
evaluation of his overall leadership and management of the Company. In setting
Mr. Thornley's 1999 base salary and total annual cash compensation, the
compensation committee compared Mr. Thornley's cash compensation with that of
chief executive officers in a group of companies of similar general type and
size. Mr. Thornley's cash compensation for 1999 increased 54.8% above his 1998
level, primarily due to the performance of the Company during the past several
years which the compensation committee believed was significantly due to his
leadership.
In May 1999, the board of directors approved an increase to Mr. Thornley's
salary from $140,000 to $250,000. The compensation committee may recommend,
and the board of directors may approve, an adjustment to Mr. Thornley's salary
in 2000. The Chief Executive Officer has a lower percentage of total
compensation "at risk" because none of his potential compensation is based
upon the stock option plan described above.
14
Mr. Thornley's equity position in the Company consists entirely of common
stock beneficially owned by him and his wife, Ms. Ellery, none of which is
subject to vesting. Mr. Thornley and Ms. Ellery do not hold stock options in
LookSmart.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code provides that a company may not
deduct compensation paid to certain executive officers in excess of $1,000,000
per officer in any one year, except for "performance-based" compensation. The
cash compensation paid to the Company's executive officers in 1999 did not
exceed the $1,000,000 limit per officer, nor is the cash compensation to be
paid to executive officers in 2000 expected to reach that level. Because it is
very unlikely that the cash compensation payable to any of the Company's
executive officers in the foreseeable future will approach the $1,000,000
limitation, the compensation committee has decided not to take any action at
this time 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 compensation of any executive officer ever
approach the $1,000,000 level.
The foregoing report has been submitted by the undersigned in our capacity
as members of the compensation committee of the Company's board of directors.
Respectfully submitted,
Anthony Castagna
Robert Ryan
15
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
LookSmart common stock to the Nasdaq Stock Market (U.S.) Index and the Chase
H&Q Internet 100 Index. The graph covers the period from August 20, 1999, the
first trading date of LookSmart's common stock, to March 31, 2000. The graph
assumes that $100 was invested on August 20, 1999 in LookSmart common stock
and in each index, and that all dividends were reinvested. LookSmart has not
paid or declared any cash dividends on its common stock. Stockholder returns
over the indicated period should not be considered indicative of future
stockholder returns.
Comparison of Seven-Month Cumulative Total Return*
Among LookSmart Common Stock, the Nasdaq Stock Market (U.S.) Index
and the Chase H&Q Internet 100 Index
[PERFORMANCE GRAPH APPEARS HERE]
- --------
* $100 invested on August 20, 1999 in stock or index, including reinvestment
of dividends.
The dollar values for total stockholder return plotted in the graph above
are shown in the table below:
Nasdaq Stock Chase H&Q
Period LookSmart Market (U.S.) Internet 100 Index
------ --------- ------------- -------------------
August 20, 1999 (inception)... $100.00 $100.00 $100.00
September 30, 1999............ 198.44 103.57 114.76
December 31, 1999............. 225.00 152.59 222.16
March 31, 2000................ 366.67 171.65 232.05
The preceding stock performance graph and the Compensation Committee Report
are not considered proxy solicitation materials and are not deemed filed with
the Securities and Exchange Commission. Notwithstanding anything to the
contrary set forth in any of LookSmart's previous filings made under the
Securities Act of 1933
16
or the Securities Exchange Act of 1934 that incorporate future filings made by
the Company under those statutes, neither the above stock performance graph
nor the Compensation Committee Report is to be incorporated by reference into
any prior filings, nor shall the graph or report be incorporated by reference
into any future filings made by the Company under those statutes.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires LookSmart's
directors, officers and persons who beneficially own more than 10% of the
outstanding shares of common stock to file with the SEC initial reports of
ownership and reports of changes in ownership. Directors, officers and 10%
stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the reports the
Company has received, or written representations that no other reports were
required for those persons, the Company believes that its officers and
directors complied with all applicable filing requirements applicable to
fiscal 1999, except that the Form 4 for Paul Riley, a director of the Company
prior to December 1999, was filed timely and subsequently amended to reflect
the purchase of 3,750 shares of LookSmart common stock in August 1999, rather
than the purchase of 500 shares as initially reported.
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the annual meeting of
stockholders in 2001 and included in the Company's proxy statement and form of
proxy relating to that meeting must be presented to the Company by January 1,
2001. Stockholder proposals intended for consideration for inclusion in the
Company's proxy statement and form of proxy relating to that meeting should be
made in accordance with Securities and Exchange Commission Rule 14a-8. All
other stockholder proposals that are intended to be presented at the annual
meeting of stockholders in 2001 must be presented to the Company by April 10,
2001, or will be considered untimely. Stockholder proposals should be
addressed to the attention of Company Counsel, 625 Second Street, San
Francisco, California 94107.
SOLICITATION OF PROXIES
Solicitation of proxies will be made initially by mail. In addition,
directors, officers and employees of the Company and its subsidiaries may
solicit proxies by telephone or facsimile or personally without additional
compensation. Proxies may be solicited by nominees and other fiduciaries who
may mail materials to or otherwise communicate with the beneficial owners of
shares held by them. The Company will bear all costs of solicitation of
proxies, including the charges and expenses of brokerage firms, banks,
trustees or other nominees for forwarding proxy materials to beneficial
owners.
17
PROXY PROXY
LOOKSMART, LTD.
COMMON STOCK
ANNUAL MEETING OF STOCKHOLDERS, MAY 25, 2000
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF LOOKSMART, LTD.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held May 25, 2000 and the
Proxy Statement, and appoints Evan Thornley and Martin Roberts, and each of
them, the Proxy of the undersigned, with full power of substitution, to vote
all shares of common stock of LookSmart, Ltd. (the "Company") which the
undersigned is entitled to vote, either on his or her own behalf or on behalf
of any entities, at the Annual Meeting of Stockholders of the Company to be
held at the Company's headquarters at 625 Second Street, San Francisco,
California, 94107, on May 25, 2000 at 10:00 a.m. Pacific Time, and at any
adjournments or postponements 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 and on
the reverse side.
(Continued, and to be marked, dated and signed, on the reverse side)
FOLD AND DETACH HERE
Please mark [X]
your votes
as in this
example.
FOR ALL
NOMINEES WITHHOLD
EXCEPT AS AUTHORITY
NOTED BELOW TO VOTE
[_] [_]
1. To elect two directors to serve on the Company's
Board of Directors until the Annual Meeting of
Stockholders in 2003 or until their successors
are duly elected and qualified:
Mariann Byerwalter and Robert Ryan.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. To ratify the appointment of PricewaterhouseCoopers
LLP as independent auditors of the Company for the
fiscal year ending December 31, 2000.
3. In accordance with the discretion of the proxy
holders, to act upon all matters incident to the
conduct of the meeting and upon such 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 each of the listed proposals. 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 ELECTION OF THE DIRECTORS LISTED ABOVE AND
IN FAVOR OF THE OTHER PROPOSALS.
(Print name(s) on certificate)_________________________________________________
Please sign your name(s) Authorized Signature(s)______________________________
Date:__________________________________________________________________________
Please print the name(s) appearing on each share certificate(s) over which you
have voting authority.
FOLD AND DETACH HERE