================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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 Section 240.14a-11(c) or Section 240.14a-12
LOOKSMART, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
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 Tuesday, June 12,
2001, at 10 a.m. local time. The annual meeting is being held for the
following purposes:
(1) To elect three directors for three-year terms expiring at the annual
meeting of stockholders in 2004;
(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, 2001, 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 LookSmart's annual report for the year ended December 31, 2000,
is enclosed with this notice. The annual report, proxy statement and enclosed
proxy are being furnished to stockholders on or about April 30, 2001.
By order of the board of directors,
/s/ Martin E. Roberts
Martin E. Roberts, Esq.
Vice President, General Counsel and
Secretary
April 30, 2001
- -------------------------------------------------------------------------------
Your vote is very important. Even if you plan to attend the meeting,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
- -------------------------------------------------------------------------------
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 Tuesday, June 12, 2001, 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 April 30, 2001
together with the Company's annual report 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, 2001, will be entitled to vote at the
annual meeting. As of the close of business on the record date, there were
91,804,272 shares of common stock outstanding and held of record by
approximately 654 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 three candidates for election as directors at the annual meeting who
receive the highest number of affirmative votes entitled to vote at the annual
meeting 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 seven directors, three of whom are
standing for election: Anthony Castagna, Scott Whiteside and James Tananbaum.
In addition to the three directors standing for election, we have two
incumbent directors with terms expiring in 2002 and two incumbent directors
with terms expiring in 2003. 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, 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, 2001 are as follows:
Name Age Position
---- --- --------
Evan Thornley........... 36 Chief Executive Officer and Chairman, LookSmart
Tracey Ellery........... 38 Director, LookSmart
Mariann Byerwalter (1).. 40 Special Advisor to the President of
Stanford University
Robert Ryan (2)......... 52 Chairman, Entrepreneur America, LLC
Anthony Castagna (1) 52 Director, GlobalGate LLC and Macquarie
(2).................... Technology Funds Management Pty Ltd.
James Tananbaum (2)..... 37 Managing Partner, Prospect Venture Partners
Scott Whiteside (1)..... 49 Chief Operating Officer, Cox Interactive Media,
Inc.
- --------
(1) Member of audit committee
(2) Member of compensation committee
2
Unless marked otherwise, proxies received will be voted FOR the election of
the three nominees named below. All of the nominees are presently directors of
the Company whose terms will expire at the annual meeting. The proposed
nominees are willing to be elected and to serve. If any 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 nominees, 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 2004
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 Anthony Castagna,
Scott Whiteside and James Tananbaum. The board of directors unanimously
recommends that you vote for election of all nominees as directors.
Anthony Castagna has served as one of our directors since March 1999. Dr.
Castagna presently serves as a non-executive director of BT LookSmart, the
joint venture between LookSmart and British Telecommunications, 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.J. in
journalism from the University of Missouri, an M.B.A. from Rockhurst College
and a J.D. from Oklahoma University.
James Tananbaum has served as one of our directors since May 2000. Dr.
Tananbaum has served as Managing Partner of Prospect Venture Partners, a
venture capital firm specializing in healthcare, since December 2000. He also
serves as Vice-Chairman of the Harvard Medical School Advisory Council for
Cell Biology and Pathology, is a founding member of the Harvard/MIT Health
Sciences and Technology Advisory Group and a member of the board of directors
of the California Healthcare Institute. From 1996 until December 2000, he
founded and served as Chief Executive Officer of Advanced Medicine, a
biotechnology company. From 1994 to 1996, he served as a Partner at Sierra
Ventures, a venture capital firm. Dr. Tananbaum has also served as a founder
and board member in healthcare companies including Geltex Pharmaceuticals,
Intensiva Healthcare, and NovaMed Eyecare. He holds an M.D. from Harvard
Medical School, an M.B.A. from Harvard Business School and B.S.E.E. and B.S.
degrees from Yale University.
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 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 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.
3
Tracey Ellery co-founded LookSmart and has served as a director since
September 1997. Ms. Ellery served as President of LookSmart from June 1999
through March 2001 and 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.
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 2003:
Mariann Byerwalter has served as one of our directors since February 2000.
Ms. Byerwalter has served as Special Advisor to the President of Stanford
University since March 2001. From February 1996 through March 2001, Ms.
Byerwalter 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. and SchwabFunds (a subsidiary of the Charles Schwab Co.), as well
as several privately-held or non-profit institutions, including America First
Companies, SRI International 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 company
devoting to mentoring high technology entrepreneurs. 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.
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. The Company does not have a nominating committee.
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. Prior to December 1999, the audit committee was composed of director
Whiteside and former director Paul Riley. In December 1999, Mr. Riley resigned
from the board of directors and was replaced in March 2000 with Ms.
Byerwalter. Mr. Castagna was appointed as a member of the audit committee in
June 2000. Currently, the audit committee consists of directors Byerwalter,
Castagna and Whiteside, all of whom are "independent" directors as defined in
Rule 4200(a)(14) of the National Association of Securities Dealers' listing
standards. In 2000, the audit committee held three meetings. The charter of
the audit committee is attached to this proxy statement as Exhibit A.
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 August 1999 to June 2000, the compensation
committee consisted of directors Castagna and Ryan, both of whom are non-
employee directors. Dr. Tananbaum, a non-employee director, was appointed as a
member of the committee in June 2000. In 2000, the compensation committee held
three meetings.
In 2000, the board of directors held eight regular meetings and took action
by written consent on eleven occasions. Each of the directors attended 75% or
more of the aggregate of (i) the total number of meetings
4
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
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 are automatically granted an option to purchase
50,000 shares of common stock upon joining the board of directors, and (ii)
each year, non-employee directors are 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
twelve months after a change of control of the Company. In May 2000, the board
of directors granted to Mariann Byerwalter an option to purchase 16,667
additional shares because the exercise price of her previous stock options was
substantially higher than the then-current market price of the Company's
common stock. Ms. Byerwalter surrendered those options as part of the
repricing of stock options in March 2001. Directors received no other
compensation for their services as directors in 2000, other than reimbursement
of reasonable out-of-pocket expenses for attendance at board meetings.
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, the Chief Executive Officer and Chairman, actively
participated in deliberations concerning executive officer compensation. The
compensation committee currently consists of directors Castagna, Ryan and
Tananbaum, none of whom is or has been an officer or employee of the Company.
Mr. Thornley 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, 2000.
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, 2001, 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, 2001. Percentage ownership is based on 91,804,272 shares of common stock
outstanding as of April 15, 2001. Stock options exercisable within 60 days of
April 15, 2001 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, CA 94107.
Shares Percent
Beneficially Beneficially
Name and Address of Beneficial Owner Owned (1) Owned
- ------------------------------------ ------------ ------------
Five Percent Stockholders
Cox LOOK, Inc. (2).................................. 18,987,801 20.7%
3773 Howard Hughes Pkwy., Suite 300N
Las Vegas, NV 89109
The Reader's Digest Association, Inc. (3)........... 8,025,000 8.7
Reader's Digest Road
Pleasantville, NY 10570
Named Executive Officers and Directors
Evan Thornley (4)................................... 14,292,000 15.6
Tracey Ellery (4)................................... 14,292,000 15.6
Brian Cowley (5).................................... 1,044,773 1.1
Ned Brody (6)....................................... 357,499 *
Richard Boulderstone................................ 156,250 *
Chris Tucher (7).................................... 217,500 *
Mariann Byerwalter.................................. 23,888 *
Anthony Castagna.................................... 6,666 *
Robert Ryan (8)..................................... 905,413 *
Scott Whiteside (9)................................. 18,994,467 20.7
James Tananbaum..................................... 16,666 *
All current directors and executive officers as a
group (10)......................................... 16,142,690 17.6
- --------
* Less than 1%.
6
(1) Includes shares that may be acquired by the exercise of stock options
granted under the Company's stock option plans within 60 days after April
15, 2001. The number of shares subject to stock options exercisable
within 60 days after April 15, 2001, for each listed person is shown
below:
Ned Brody........................................................ 303,125
Richard Boulderstone............................................. 156,250
Chris Tucher..................................................... 162,500
Brian Cowley..................................................... 157,500
Mariann Byerwalter............................................... 23,888
Anthony Castagna................................................. 6,666
Robert Ryan...................................................... 6,666
Scott Whiteside.................................................. 6,666
James Tananbaum.................................................. 16,666
All current directors and executive officers as a group.......... 501,773
(2) Consists of (i) 1,500,000 shares of common stock issuable upon exercise
of a warrant held by Cox Interactive Media, Inc., and (ii) 17,487,801
shares held by Cox LOOK, Inc., a wholly owned subsidiary of Cox
Interactive Media.
(3) Consists of shares held by Pegasus Finance Corp., a wholly owned
subsidiary of The Reader's Digest Association, Inc.
(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
12,092,000 shares by trust.
(5) Mr. Cowley resigned as Senior Vice President, Global Sales in January
2001.
(6) Mr. Brody resigned as Chief Financial Officer in March 2001.
(7) Mr. Tucher resigned as Senior Vice President, Business Development in
January 2001.
(8) Includes 171,247 shares held by Entrepreneur America, LLC. Mr. Ryan is
the founder and Chief Executive Officer of Entrepreneur America, LLC. Mr.
Ryan disclaims beneficial ownership of the shares held by Entrepreneur
America, LLC, except to the extent of his pro rata interest.
(9) Includes (i) 1,500,000 shares of common stock issuable upon exercise of a
warrant held by Cox Interactive Media, Inc., and (ii) 17,487,801 shares
held by Cox LOOK, Inc., a wholly owned subsidiary of Cox Interactive
Media. Mr. Whiteside is Chief Operating Officer of 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 Interactive
Media and Cox LOOK, Inc.
(10) Includes shares beneficially owned by the Company's current executive
officers and directors, and does not include shares beneficially owned by
named executive officers who are no longer employed at LookSmart.
7
EXECUTIVE COMPENSATION
Executive Officers
Our executive officers, and their respective ages as of April 15, 2001, are
as follows:
Name Age Position
---- --- --------
Evan Thornley............... 36 Chief Executive Officer and Chairman
Martha Clark................ 47 Interim Chief Financial Officer and Vice
President, Finance and Administration
Brian Goler................. 29 Senior Vice President, Sales and
Marketing
Jim Kaufman................. 36 Senior Vice President, Business
Development
Kevin Berk.................. 27 Senior Vice President, Product
Robert Mally................ 34 Vice President, Finance and Senior
Controller
Jason Kellerman............. 31 Vice President, International and CEO,
LookSmart International Pty Ltd.
Martin Roberts.............. 40 Vice President, General Counsel and
Secretary
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, a member of our board of directors.
Martha Clark has served as our interim Chief Financial Officer since March
2001 and our Vice President, Finance and Administration since January 2001.
From May 1999 to January 2000, Ms. Clark served as our Vice President of Human
Resources. 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. Prior to 1995,
Ms. Clark held various positions in investment banking, financial planning and
analysis and strategy consulting. Ms. Clark holds a B.A. in economics from
Wellesley College and an M.B.A. from Stanford University.
Brian Goler has served as our Senior Vice President, Sales and Marketing
since January 2001 and as our Vice President, Strategy since October 2000.
From January 1999 through October 2000, Mr. Goler was the co-founder and Chief
Executive Officer of Zeal Media, Inc., a community web directory company. From
June 1996 through October 1998, he worked at CitySearch, Inc., an online
community-based information service, most recently as a Director of Business
Development. Prior to that time, he served as a Business Analyst at McKinsey &
Company. Mr. Goler holds an A.B. in Chemistry from Harvard College and an
M.Sc. in Economic History from the London School of Economics.
Jim Kaufman has served as our Senior Vice President, Business Development
since January 2001 and as our Vice President, Strategic Analysis since October
2000. From 1987 until September 2000, Mr. Kaufman served with Mercer
Management Consulting, a management consulting firm, most recently as a Vice
President with responsibility for business development and managing major
accounts and account teams. Mr. Kaufman holds a B.A. in Economics from
Williams College.
Kevin Berk has served as our Senior Vice President, Product since January
2001 and as our Vice President, Community since October 2000. From January
1999 through October 2000, Mr. Berk was the co-founder and President of Zeal
Media, Inc., a community web directory company. From October 1997 through
November 1998, he served as Manager of Strategic Planning at Ticketmaster
Online-City Search, an online ticket and community-based information service.
From July 1996 through October 1997, he served as a Technology Analyst in the
Corporate Strategic Planning Division of the Walt Disney Company. Mr. Berk
holds a B.S. in Industrial Engineering from Stanford University.
8
Robert Mally has served as our Vice President, Finance and Senior
Controller since June 2000. From September 1999 through June 2000, Mr. Mally
served as Senior Director of Corporate Financial Planning at Go.com/Disney
Internet Group. From September 1997 through July 1999, he served as Director
of Financial Planning and Analysis at BMG Direct/BMG Music Services, an
operating unit of Bertelsmann, AG. Prior to that time, Mr. Mally served in the
worldwide financial reporting and analysis division of Bertelsmann
Entertainment's corporate offices. Mr. Mally holds a B.A. in Economics from
the University of Maryland and an M.S.I.A. in Finance and Accounting from
Carnegie Mellon University.
Jason Kellerman has served as our Vice President, International and Chief
Executive Officer of LookSmart International Pty Ltd., our Australian
subsidiary, since September 2000. Mr. Kellerman served as Director of the
revenue management team from May 1999 through August 2000 and as Director of
the ecommerce group in March and April 1999. Prior to that time, he worked at
Mercer Management Consulting from June 1990 to February 1999, most recently as
a Principal. Mr. Kellerman holds a B.S.E. in Civil Engineering and Operations
Research from Princeton University.
Martin Roberts has served as our General 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, 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.
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, and (ii) four other most highly compensated executive officers of the
Company as of December 31, 2000. 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 Compensation Number of Shares Compensation
Position Year Salary ($) ($) Underlying Options ($)(1)
- ------------------ ---- ---------- ------------ ------------------ ------------
Evan Thornley........... 2000 250,008 -- -- --
Chief Executive
Officer, 1999 212,328 -- -- 8,408
Chairman and Director 1998 137,136 -- -- 36,928
Ned Brody (2)........... 2000 181,010 -- 234,375 8,217
Chief Financial Officer 1999 125,000 -- -- 5,208
1998 10,417 -- 750,000 --
Brian Cowley (3)........ 2000 225,000 -- -- 8,438
Senior Vice President, 1999 280,239 -- -- 10,000
Global Sales 1998 190,000 -- -- 7,969
Richard Boulderstone
(4).................... 2000 151,385 50,000 781,250 65,029
Senior Vice President, 1999 -- -- -- --
Engineering 1998 -- -- -- --
Chris Tucher (5)........ 2000 168,635 -- -- 3,608
Senior Vice President, 1999 120,000 -- -- 3,470
Business Development 1998 42,770 -- 600,000 --
- --------
(1) The amounts in this column for 2000 consist entirely of matching
contributions made by the Company to the accounts of the named executive
officers under the Company's 401(k) plan, except for a payment of
9
$61,721 to Mr. Boulderstone in connection with his relocation to the San
Francisco area. Under the 401(k) plan, matching contributions are 50%
vested after the first year of employment and 100% vested after the second
year of employment.
(2) Mr. Brody's employment with the Company began in November 1998 and ended
in March 2001. Amounts shown for 1998 reflect compensation for services
rendered for less than the full fiscal year in 1998.
(3) Mr. Cowley's employment with the Company ended in January 2001.
(4) Mr. Boulderstone's employment with the Company began in February 2000.
Amounts shown for 2000 reflect compensation for services rendered for less
than the full fiscal year in 2000.
(5) Mr. Tucher's employment with the Company began in August 1998 and ended in
January 2001. Amounts shown for 1998 reflect compensation for services
rendered for less than the full fiscal year in 1998.
Stock Option Grants in the Last Fiscal Year
The following table sets forth information regarding stock options granted
to the named executive officers in 2000 and the values of those options:
Individual Grants
------------------------------------------
Potential Realizable
Percent Value at Assumed Annual
Number of of Total Rate of Stock Price
Securities Options Appreciation for Option
Underlying Granted to Exercise Term ($)
Options Employees Price Expiration -----------------------
Name Granted in 2000 Per Share Date 5% 10%
- ---- ---------- ---------- --------- ---------- ----------- -----------
Ned Brody............... 150,000 1.8% $43.00 3/27/10 $ 4,056,370 $10,279,639
37,500 0.5% 18.75 4/25/10 442,192 1,120,600
46,875 0.6% 6.16 10/25/10 181,484 459,917
Richard Boulderstone.... 500,000 6.1% 39.00 2/24/10 12,263,445 31,077,978
125,000 1.5% 18.75 4/25/10 1,473,972 3,735,334
156,250 1.9% 6.16 10/25/10 604,947 1,533,056
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 in 2000 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.
10
Aggregated Option Exercises and Fiscal Year-End Values
The following table provides information concerning option exercises in
2000 and unexercised options held as of December 31, 2000 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, 2000 ($2.4375) minus the exercise price of the option, multiplied
by the number of shares subject to the option.
Number of Securities
Underlying Unexercised Value of Unexercised
Number Options at Fiscal Year- In-the-Money Options
of Shares End at Fiscal Year-End
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------
Ned Brody............... 332,375 $7,769,866 92,188 532,812 $70,963 $816,069
Brian Cowley............ 112,500 3,812,837 112,500 146,250 273,150 355,095
Richard Boulderstone.... -- -- -- 781,250 -- --
Chris Tucher............ 225,000 7,445,473 125,000 250,000 290,100 580,200
Employment, Severance and Change of Control Agreements
Employment Agreements. The Company generally 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. Except
as set forth below, each of its executive officers serves on an at-will basis.
The Company has an employment agreement with Kevin Berk, its Senior Vice
President, Product. The agreement provides for (i) a minimum annual base
salary of $40,000 until March 31, 2001, $80,000 until September 30, 2001 and
$140,000 starting on October 1, 2001, with annual reviews thereafter, (ii) a
signing bonus of $80,000, payable within 30 days after October 27, 2000, (iii)
a grant of 25,000 stock options, (iv) relocation benefits, and (v) severance
payments equal to 12 months' salary and a pro-rated bonus in event of
termination of employment without cause at any time prior to October 27, 2003.
The Company has an employment agreement with Brian Goler, its Senior Vice
President, Sales and Marketing. The agreement provides for (i) a minimum
annual base salary of $40,000 until March 31, 2001, $80,000 until September
30, 2001 and $140,000 starting on October 1, 2001, with annual reviews
thereafter, (ii) a signing bonus of $80,000, payable within 30 days after
October 27, 2000, (iii) a grant of 25,000 stock options, (iv) relocation
benefits, and (v) severance payments equal to 12 months' salary and a pro-
rated bonus in event of termination of employment without cause at any time
prior to October 27, 2003.
Stock Options. Pursuant to individual stock option agreements with the
Company, the stock options held by executive officers and directors 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
11
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.
Certain Relationships and Related Transactions
In June 2000, the Company loaned $400,000 to Richard Boulderstone, its Vice
President, Engineering, in connection with the purchase of a personal
residence. The loan bears no interest and is payable in full upon the earliest
of 120 days after his resignation, 180 days after termination by the Company,
or 30 days after the closing of the sale of the property which is collateral
for the promissory note.
In January 2001, the Company entered into a severance agreement and mutual
release with Brian Cowley, its Senior Vice President, Global Sales, providing
for: (i) continued payment of base salary through April 1, 2001, (ii) payment
of a lump sum amount of $56,250, and (iii) continued vesting of stock options
through April 1, 2001.
In January 2001, the Company entered into a severance agreement and mutual
release with Chris Tucher, its Senior Vice President, Business Development,
providing for: (i) continued payment of base salary through April 1, 2001,
(ii) payment of a lump sum amount of $63,935, (iii) continued vesting of stock
options through April 1, 2001, and (iv) continuation of benefits through April
1, 2001 and reimbursement for COBRA costs for three months thereafter.
In March 2001, the Company entered into an agreement with Ned Brody, its
Chief Financial Officer, providing for the acceleration of vesting of 187,500
stock options in connection with Mr. Brody's employment with the Company
through March 31, 2001. Mr. Brody resigned effective as of March 31, 2001.
12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee is composed of directors Castagna, Ryan and
Tananbaum, none 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 J.P. Morgan 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 slightly below the median
percentile of base salaries paid for comparable positions by companies
included in
13
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 2000
were near the median of salaries paid by companies included in the surveys.
The 2000 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, 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 2000 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 2000 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. In May 1999, the board of directors approved an increase to Mr.
Thornley's salary from $140,000 to $250,000, primarily due to the performance
of the Company during the past several years, which the compensation committee
believed was significantly due to his leadership. The compensation committee
may recommend, and the board of directors may approve, an adjustment to Mr.
Thornley's salary in 2001.
Mr. Thornley has none of his total compensation "at risk" because none of
his potential compensation is based upon the stock option plan described
above. 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.
14
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 2000 did not
exceed the $1,000,000 limit per officer, nor is the cash compensation to be
paid to executive officers in 2001 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
James Tananbaum
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 JP
Morgan H&Q Internet 100 Index. The graph covers the period from August 20,
1999, the first trading date of LookSmart's common stock, to December 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 16 MONTH CUMULATIVE TOTAL RETURN*
AMONG LOOKSMART, LTD., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE JP MORGAN H&Q INTERNET 100 INDEX
[PERFORMANCE GRAPH APPEARS HERE]
- --------
* $100 invested on August 20, 1999 in stock or index, including reinvestment
of dividends. Fiscal year ending December 31.
The dollar values for total stockholder return plotted in the graph above
are shown in the table below:
JP Morgan
Nasdaq Stock H&Q Internet
Period LookSmart Market (U.S.) 100 Index
------ --------- ------------- ------------
August 20, 1999 (inception)........... $100.00 $100.00 $100.00
September 30, 1999.................... 198.44 103.57 114.76
December 31, 1999..................... 225.00 153.41 222.16
March 31, 2000........................ 366.67 172.20 232.04
June 30, 2000......................... 154.17 149.72 172.14
September 30, 2000.................... 93.23 137.78 165.60
December 31, 2000..................... 20.32 92.32 85.48
16
The preceding stock performance graph and the Compensation Committee Report
are not considered proxy solicitation materials and are not deemed filed with
the SEC. Notwithstanding anything to the contrary set forth in any of
LookSmart's previous filings made under the Securities Act of 1933 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.
REPORT OF THE AUDIT COMMITTEE
The audit committee is composed of directors Byerwalter, Castagna and
Whiteside. The audit committee assists the board of directors in monitoring
the integrity of LookSmart's financial statements, LookSmart's compliance with
legal requirements and LookSmart's internal and external auditors. The board
of directors has adopted a charter for the audit committee, a copy of which is
attached as Exhibit A to this proxy statement.
The audit committee has reviewed and discussed LookSmart's audited
consolidated balance sheets as of December 31, 2000 and 1999 and consolidated
statements of income, cash flows and stockholders' equity for the three years
ended December 31, 2000 with LookSmart's management. The audit committee has
discussed with PricewaterhouseCoopers LLP, LookSmart's independent auditors,
the matters required to be discussed by Statement of Auditing Standards No. 61
(concerning the accounting methods used in the financial statements).
The audit committee has also received and reviewed written disclosures and
the letter from PricewaterhouseCoopers LLP required by Independent Standards
Board No. 1 (concerning matters that may affect an auditor's independence) and
has discussed with PricewaterhouseCoopers LLP their independence. The audit
committee has considered whether the provision of non-audit services is
compatible with maintaining the independence of our principal accountants.
Based on the foregoing review and discussions, the audit committee recommended
to the board of directors that the audited financial statements be included in
LookSmart's Annual Report on Form 10-K for the year ended December 31, 2000
for filing with the SEC.
AUDIT COMMITTEE
Mariann Byerwalter
Anthony Castagna
Scott Whiteside
INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed PricewaterhouseCoopers LLP to examine
the financial statements of LookSmart for the fiscal year 2001. In addition to
audit services, PricewaterhouseCoopers LLP also provided certain non-audit
services to LookSmart in 2000. The audit committee has considered whether the
provision of these additional services is compatible with maintaining the
independence of PricewaterhouseCoopers LLP. The following table sets forth the
fees incurred by LookSmart for the services of PricewaterhouseCoopers LLP in
2000.
Audit
Fees All Other Fees
----- --------------
$262,000 $225,100
17
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 2000, except that (i) the Form 3 (initial statement of ownership) for
Mariann Byerwalter, a director of the Company, was filed late and (ii) the
Form 4 (monthly reporting) in connection with the exercise of 114,375 stock
options in October 2000 by Ned Brody, the former Chief Financial Officer, was
filed late.
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the annual meeting of
stockholders in 2002 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,
2002. 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 SEC Rule 14a-8. All other stockholder proposals that
are intended to be presented at the annual meeting of stockholders in 2002
must be presented to the Company by April 10, 2002, or will be considered
untimely. Stockholder proposals should be addressed to the attention of the
Company's Secretary, 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.
ANNUAL REPORT ON FORM 10-K
A copy of LookSmart's annual report for the year ended December 31, 2000
accompanies this proxy statement. An additional copy will be furnished without
charge to beneficial stockholders or stockholders of record upon request to
LookSmart Investor Relations, 625 Second Street, San Francisco, CA 94107, or
by calling (415) 348-7000.
18
Exhibit A
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF LOOKSMART, LTD.
PURPOSE:
The Audit Committee will make such examinations as are necessary to monitor
the corporate financial reporting and the internal and external audits of
LookSmart, Ltd. (the "Company"), to provide to the Board of Directors the
results of its examinations and recommendations derived therefrom, to outline
to the Board improvements made, or to be made, in internal accounting
controls, to nominate independent auditors, and to provide to the Board such
additional information and materials as it may deem necessary to make the
Board aware of significant financial matters that require Board attention.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
from time to time prescribe.
MEMBERSHIP:
The Audit Committee will consist of at least three (3) non-employee members
of the Board. The members of the Audit Committee will be appointed by and will
serve at the discretion of the Board of Directors.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
1. Reviewing on a continuing basis the adequacy of the Company's system of
internal controls;
2. Reviewing on a continuing basis the activities, organizational structure
and qualifications of the Company's internal audit function;
3. Reviewing the independent auditors' proposed audit scope and approach;
4. Conducting a post-audit review of the financial statements and audit
findings, including any significant suggestions for improvements provided to
management by the independent auditors;
5. Reviewing the performance of the independent auditors;
6. Recommending the appointment of independent auditors to the Board of
Directors;
7. Reviewing fee arrangements with the independent auditors;
8. Reviewing management's monitoring of compliance with the Company's
standards of business conduct and with the Foreign Corrupt Practices Act;
9. Reviewing, in conjunction with counsel, any legal matters that could
have a significant impact on the Company's financial statements;
10. Providing oversight and review of the Company's asset management
policies, including an annual review of the Company's investment policies and
performance for cash and short-term investments;
11. If necessary, instituting special investigations and, if appropriate,
hiring special counsel or experts to assist therewith;
19
12. Reviewing related party transactions for potential conflicts of
interest;
13. Providing oversight of the independence of the independent auditors and
ensuring that the Company annually receives from the independent auditors a
formal written statement delineating all relationships between the company and
the independent auditors;
14. Performing other oversight functions as requested by the full Board of
Directors.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the Board of Directors delegates to it, and
will report, at least annually, to the Board regarding the Committee's
examinations and recommendations.
MEETINGS:
The Audit Committee may establish its own schedule which it will provide to
the Board of Directors in advance. The Audit Committee will meet separately
with the Chief Executive Officer and separately with the Chief Financial
Officer of the Company at least annually to review the financial affairs of
the Company. The Audit Committee will meet with the independent auditors of
the Company, at such times as it deems appropriate, to review the independent
auditor's examination and management report.
REPORTS:
The Audit Committee will record its summaries of recommendations to the
Board in written form which will be incorporated as a part of the minutes of
the Board of Directors meeting at which those recommendations are presented.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
20
PROXY PROXY
LOOKSMART, LTD.
COMMON STOCK
ANNUAL MEETING OF STOCKHOLDERS, JUNE 12, 2001
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 June 12, 2001 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 June 12, 2001 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)
V FOLD AND DETACH HERE V
Please mark [X]
your votes
as in this
example.
FOR ALL
NOMINEES WITHHOLD
EXCEPT AS AUTHORITY
NOTED BELOW TO VOTE FOR AGAINST ABSTAIN
1. To elect three directors [_] [_] 2. To ratify the appointment of [_] [_] [_]
to serve on the Company's PricewaterhouseCoopers LLP
Board of Directors until as independent auditors of
the Annual Meeting of the Company for the fiscal
Stockholders in 2004 or year ending December 31,
until their successors are 2001.
duly elected and qualified:
3. In accordance with the
Anthony Castagna, discretion of the proxy
James Tananbaum and holders, to act upon all
Scott Whiteside. 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: _____
Pease print the name(s) appearing on each share certificate(s) over which you have voting authority.
V FOLD AND DETACH HERE V