SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary Proxy Statement
[_] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
EarthWeb Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
EARTHWEB INC.
3 Park Avenue
New York, New York 10016
April ___, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders of
EarthWeb Inc., to be held on Wednesday, June 13, 2001, at The Crowne Plaza at
the United Nations, 304 East 42nd Street, New York, New York 10017
(Knightsbridge Room) beginning at 10:00 A.M. local time.
The business to be conducted at the meeting includes the following: (1)
election of five directors, (2) approval of an amendment to the Restated
Certificate of Incorporation of EarthWeb Inc. to change the Company's name to
Dice Inc., (3) ratification of the selection of Ernst & Young LLP as independent
auditors and (4) consideration of any other matter that may properly come before
the meeting and any adjournment thereof. These matters are discussed in more
detail in the Notice of Annual Meeting of Stockholders and Proxy Statement that
follow.
It is important that your shares be represented. Even if you presently plan to
attend the meeting, please complete, sign, date and promptly return the enclosed
proxy card. Alternately, registered stockholders (i.e., stockholders who own
their stock in their own names) may vote through the Internet or by telephone by
following the instructions set forth on the proxy card. If you do attend the
meeting and wish to vote in person, you may withdraw your proxy at that time.
Sincerely,
Scot W. Melland
President and Chief Executive Officer
EARTHWEB INC.
3 Park Avenue
New York, New York 10016
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 13, 2001
The Annual Meeting of Stockholders of EarthWeb Inc., a Delaware
corporation (the "Company"), will be held at The Crowne Plaza at the United
Nations, 304 East 42nd Street, New York, New York 10017 (Knightsbridge Room)
on Wednesday, June 13, 2001, at 10:00 A.M., local time, for the following
purposes:
(1) The election of five directors;
(2) Approval of an amendment to the Restated Certificate of Incorporation
of the Company to change the Company's name to Dice Inc.;
(3) The ratification of the selection of Ernst & Young LLP as the Company's
independent auditors; and
(4) The transaction of such other business as may properly come before the
meeting.
These items are more fully described in the accompanying Proxy Statement.
A copy of EarthWeb's Annual Report for the fiscal year ended December 31,
2000, containing consolidated financial statements, is included with this
mailing.
The Board of Directors has fixed the close of business on May 10, 2001, as
the record date for determining stockholders entitled to receive notice of and
to vote at the Annual Meeting and at any adjournment thereof. A list of such
stockholders will be available for examination by any stockholder at the Annual
Meeting and, for any purpose relevant to the Annual Meeting, at the New York
City office of EarthWeb, during ordinary business hours, for a period of ten
days prior to the Annual Meeting. The officers and directors of EarthWeb
cordially invite you to attend the Annual Meeting.
By Order of the Board of Directors
Brian P. Campbell
Vice President, General Counsel and
Secretary
New York, New York
April _____, 2001
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE,
SIGN AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. ALTERNATIVELY,
REGISTERED STOCKHOLDERS MAY VOTE THROUGH THE INTERNET OR BY TELEPHONE BY
FOLLOWING THE INSTRUCTIONS SET FORTH ON THEIR PROXY CARD. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE TO EARTHWEB OF FURTHER SOLICITATION, WE ASK FOR YOUR
COOPERATION IN PROMPTLY MAILING IN YOUR PROXY CARD OR VOTING THROUGH THE
INTERNET OR BY TELEPHONE.
- --------------------------------------------------------------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of EarthWeb Inc., a Delaware corporation (the
"Company"), for use at EarthWeb's Annual Meeting of Stockholders to be held on
June 13, 2001, at 10:00 A.M. local time, at The Crowne Plaza at the United
Nations, 304 East 42nd Street, New York, New York 10017 (Knightsbridge Room)
and at any adjournment thereof. This Proxy Statement and the accompanying proxy
are first being sent to stockholders entitled to vote at the Annual Meeting on
or about May 14, 2001. The mailing address of EarthWeb's principal executive
offices is EarthWeb Inc., 3 Park Avenue, New York, New York 10016.
The Proxy
Michael P. Durney and Norman E. Lorentz, executive officers of EarthWeb, and
Constance Melrose have been selected by the Board of Directors to be the
proxyholders.
Shares represented by a properly executed, unrevoked proxy or properly voted
via the internet or telephonically and received in time for the Annual Meeting
will be voted in the manner specified therein. If no specification is made on
the proxy as to any one or more of the proposals, the shares represented by the
proxy will be voted FOR the election of five directors named in this Proxy
Statement, FOR the approval of the amendment to the Certificate of Incorporation
to change the name of the Company to Dice Inc., FOR the ratification of the
selection of Ernst & Young LLP as EarthWeb's independent auditors for the 2001
fiscal year, and, with respect to any other matters that may come before the
Annual Meeting, at the discretion of the proxyholders. EarthWeb does not
presently know of any other such business. An executed proxy may be revoked at
any time before its exercise by delivering to the Secretary of EarthWeb a
written instrument of revocation or a duly executed proxy bearing a later date.
The execution of the enclosed proxy will not affect a stockholder's right to
vote in person should such stockholder find it convenient to attend the Annual
Meeting and desire to vote in person.
Voting at the Annual Meeting
The only issued and outstanding voting securities of EarthWeb are its shares
of Common Stock, $.01 par value, of which 10,492,414 shares were outstanding at
the close of business on March 31, 2001, not including shares issuable upon
exercise of options. Only holders of record at the close of business on May 10,
2001 are entitled to receive notice of and to vote at the Annual Meeting and any
adjournment thereof. The holders of the Common Stock of EarthWeb are entitled to
one vote per share on each matter submitted to a vote of the stockholders,
including the election of directors. EarthWeb's Bylaws do not provide for
cumulative voting by stockholders.
The holders of a majority of EarthWeb's outstanding common stock, present in
person or by proxy, will constitute a quorum for the transaction of business at
the Annual Meeting or any adjournment thereof. EarthWeb believes that
abstentions should be counted for purposes of determining if a quorum is present
at the Annual Meeting for the transaction of business. With respect to broker
nominee votes, broker nominee votes may be counted as present or represented for
purposes of determining the presence of a quorum. Abstentions are included in
determining the number of shares voted on the proposals submitted to
stockholders and will have the same effect as a no vote on such proposals,
whereas broker non-votes are not counted. Directors are elected by plurality of
the votes of the shares of common stock represented and voted at the meeting and
abstentions and broker non-votes will have no effect on the outcome of the
election of directors. The affirmative vote of a majority of the total voting
power of all outstanding securities of EarthWeb entitled to vote generally in
the election of directors, voting as a single class, is required for approval of
Proposal Two--the amendment to EarthWeb's Restated Certificate of Incorporation.
The affirmative vote of a majority of the shares of common stock represented and
voted at the Annual Meeting is required for approval of Proposal Three--the
ratification of the selection of EarthWeb's independent auditors.
Solicitation
The expense of soliciting proxies will be borne by EarthWeb. Proxies will be
solicited principally through the use of the mail. Directors, officers and
regular employees of EarthWeb may also solicit proxies personally or by
telephone or special letter without any additional compensation. EarthWeb also
will reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for any reasonable expenses incurred in forwarding proxy materials
to beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock as of March 31, 2001 by (i) each person (or
group within the meaning of section 13(d)(3) of the Securities Exchange Act of
1934) known by EarthWeb to beneficially own more than 5% of such shares, (ii)
each of EarthWeb's directors, including the nominees for director, (iii)
EarthWeb's Chief Executive Officer and each of its executive officers listed in
the "Summary of Executive Compensation" table herein, and (iv) all directors and
executive officers as a group. As of March 31, 2001, there were 10,492,414
issued and outstanding shares of Common Stock of EarthWeb, not including
treasury shares or shares issuable upon exercise of options. Unless otherwise
noted, ownership information has been supplied by the person concerned.
Beneficial Ownership
of Shares(2)
---------------------------------
Name and Address of Beneficial Owners(1)(2) Number Percentage
- -------------------------------------------- --------- ------------
Warburg, Pincus Ventures, L.P.(3).............................. 1,817,093 17.3%
Jack D. Hidary(4).............................................. 922,823 8.8%
Murray Hidary(5)............................................... 912,823 8.7%
Cary Davis(6).................................................. 1,817,093 17.3%
Henry Kressel(6)............................................... 1,817,093 17.3%
Peter A. Derow(7).............................................. 71,788 *
Scot W. Melland................................................ -- *
Jeremy Davis................................................... -- *
James M. Citrin................................................ -- *
Irene Math(8).................................................. 104,637 *
Norman E. Lorentz(9)........................................... 27,500 *
Michael P. Durney(10).......................................... 38,860 *
Harold Miltsch(11)............................................. 15,255 *
Brian P. Campbell(12).......................................... 12,538 *
Feirstein Capital Management, L.L.C. (13)...................... 1,378,100 13.1%
All directors and executive officers as a group
(13 Persons) (4)(5)(6)(7)(8)(9)(10)(11)(12)........... 3,923,317 37.4%
__________
* Less than 1%
(1) Unless otherwise noted, the address of each of the persons listed is 3
Park Avenue, New York, New York 10016.
(2) As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the
disposition of any security. For purposes of this table, a person is
deemed to be the beneficial owner of securities that can be acquired
within 60 days from March 31, 2001 through the exercise of any option,
warrant or right. Shares of common stock subject to options, warrants or
rights that are currently exercisable or exercisable within 60 days are
deemed outstanding for computing the ownership percentage of the person
holding such options, warrants or rights, but are not deemed outstanding
for computing the ownership percentage of any other person. The amounts
and percentages are based upon 10,492,414 shares of common stock
outstanding as of March 31, 2001.
(3) The sole general partner of Warburg, Pincus Ventures, L.P. ("Warburg") is
Warburg, Pincus & Co., a New York general partnership ("WP"). E.M.
Warburg, Pincus & Co., LLC, a New York limited liability company
("EMWP"), manages Warburg. The members of EMWP are substantially the same
as the partners of WP. Lionel I. Pincus is the managing partner of WP and
the managing member of EMWP and may be deemed to control both WP and
EMWP. WP has a 15% interest in the profits of Warburg as the general
partner and also owns approximately 1.5% of the limited partnership
interests in Warburg. Henry Kressel, director of EarthWeb, is also Senior
Managing Director of Warburg Pincus and Cary Davis, director of EarthWeb,
is also Managing Director of Warburg Pincus, and thus each of them may be
deemed to have an indirect, pecuniary interest (within the meaning of
Rule 16a-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) in an indeterminate portion of the shares beneficially
owned by Warburg and WP. The address for Warburg is 466 Lexington Avenue,
New York, New York 10017.
(4) Includes 98,125 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(5) Includes 98,125 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(6) All of the shares indicated as owned by Dr. Kressel and Mr. C. Davis are
owned directly by Warburg and are included because of Dr. Kressel's and
Mr. C. Davis' affiliation with Warburg. Dr. Kressel and Mr. C. Davis
disclaim beneficial ownership of these shares within the meaning of Rule
13d-3 under the Exchange Act except to the extent of their indirect
pecuniary interests as described in note 3.
(7) Includes 51,788 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(8) Includes 98,298 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(9) Includes 27,500 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(10) Includes 18,750 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(11) Includes 14,688 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(12) Includes 10,000 shares subject to stock options that are exercisable
within 60 days of March 31, 2001.
(13) This information is based on a Form 3, Initial Statement of Beneficial
Ownership, filed by Barry Feirstein and Feirstein Capital Management, on
April 4, 2001. The address for Feirstein Capital Management is 390 Park
Ave., 4th fl., NY, NY 10022
MANAGEMENT
Directors and Executive Officers
The following table sets forth the names, ages and positions of all directors
and executive officers of EarthWeb, including the nominees, as of March 31,
2001. A summary of the background and experience of each of these individuals is
set forth after the table.
Name Age Position(s)
---- --- -----------
Jack D. Hidary(1) 32 Chairman of the Board of Directors
Peter A. Derow(3) 60 Vice Chairman of the Board of Directors
Scot W. Melland(3) 38 President, Chief Executive Officer and Nominee for Director
Michael Durney 38 Senior Vice President, Finance, Chief
Financial Officer and Treasurer
Norman E. Lorentz 53 Senior Vice President & Chief Technology Officer
Brian Campbell 36 Vice President, General Counsel and Secretary
Cary Davis(1)(2) 33 Director
Murray Hidary 29 Director
Henry Kressel(1)(2) 66 Director
James M. Citrin 41 Nominee for Director
Jeremy Davis 46 Nominee for Director
- ----------
(1) Member of the Compensation Committee of the Board of Directors
(2) Member of the Audit Committee of the Board of Directors
(3) As of April 23, 2001, Mr. Derow resigned his position as President and
Chief Executive Officer and Mr. Melland was appointed President and Chief
Executive Officer.
Messrs. Jack D. Hidary and Murray Hidary are brothers. There are no other
family relationships among the directors, director nominees or executive
officers of EarthWeb.
EarthWeb's Bylaws and Restated Certificate of Incorporation provide for the
Board of Directors to be divided into three classes, with each class to be as
nearly equal in the number of directors as possible. At each annual meeting of
stockholders, the successors to the class of directors whose term expires at
that time are elected to hold office for a term of three years until their
respective successors are elected and qualified, so that the term of one class
of directors expires at each such annual meeting. Under the terms of EarthWeb's
Restated Certificate of Incorporation and Bylaws, the terms of office expire as
follows: Mr. Jack D. Hidary, 2001; Dr. Kressel, 2001; Mr. Derow, 2002; Mr.
Murray Hidary, 2003; and Mr. C. Davis, 2003. If elected, Mr. Melland's term
would expire in 2002, Mr. J. Davis's term would expire in 2003 and Mr. Citrin's
term would expire in 2004.
Jack D. Hidary has served as Chairman of the Board of Directors since January
2001. He served as the President, Chief Executive Officer and a director of
EarthWeb from April 1996 until January 2001 and co-managed its predecessors
from January 1995. Mr. Hidary is a co-founder of EarthWeb. From November 1991 to
July 1994, Mr. Hidary served as a Stanley Fellow in Clinical
Neuroscience at the National Institutes of Health, where he helped establish a
digital brain imaging laboratory making use of Internet, neural network and
other advanced technologies. Prior to this fellowship, Mr. Hidary helped build
ColumbiaNet, the online service of Columbia University, where he also studied
Philosophy and Neuroscience.
Peter A. Derow has been Vice Chairman of the Board of Directors since April
23, 2001 and has been a director of EarthWeb since May 1999. He served as
President and Chief Executive Officer from January 2001 through April 23, 2001.
Prior to joining EarthWeb, Mr. Derow served as President and Chief Executive
Officer of Institutional Investor, Inc., a wholly owned subsidiary of Capital
Cities/ABC and later The Walt Disney Company, from 1988 until his retirement in
1997. Earlier, Mr. Derow served as Chairman and President of Newsweek, Director
of The Washington Post Company, President of CBS Publishing Group, and Senior
Vice President and Director of CBS, Inc. Mr. Derow holds a B.A. degree from
Harvard College and an M.B.A. from Harvard University's Graduate School of
Business Administration.
Scot W. Melland joined EarthWeb as President and Chief Executive Officer,
effective April 23, 2001. Prior to joining the Company, he served as President
and Chief Executive Officer of Vcommerce Corporation since 1999. From 1996 to
1999, he was Senior Vice President-Interactive Services for Cendant Corporation.
Previously, Mr. Melland served as Vice President, Investments and Alliances for
Ameritech Development Corp. Mr. Melland began his career as a consultant,
joining McKinsey & Company in 1985. Mr. Melland holds a B.S. in economics from
the University of Pennsylvania and an M.B.A. from Harvard University's Graduate
School of Business Administration.
Michael P. Durney has been Senior Vice President, Finance and Chief Financial
Officer since June 1, 2000 and, since July, 2000, has also been the Company's
Treasurer. Prior to joining EarthWeb, Mr. Durney held the position of Vice
President and Controller of USA Networks, Inc. from March 1998 to May 2000;
Chief Financial Officer of Newport Media, Inc. from 1996 to 1998; Executive
Vice President of Finance of Hallmark Entertainment, Inc. from 1994 to 1996; and
Vice President, Controller of Univision Television Group from 1989 to 1994. Mr.
Durney started his finance career at the accounting firm of Arthur Young &
Company. Mr. Durney holds a B.S. degree in Accounting from the State University
of New York at Oswego, and is a Certified Public Accountant.
Norman E. Lorentz has been a Senior Vice President since July 2000 and Chief
Technology Officer of EarthWeb since January 2000. Prior to joining EarthWeb,
Mr. Lorentz was a Senior Vice President and Chief Technology Officer with the
United States Postal Service from August 1998 to December 1999 and the Vice
President of Quality from July 1994 to August 1998. From December 1976 to July
1994, Mr. Lorentz held several positions at U S West and was Director of Quality
from July, 1991 until July 1994. Mr. Lorentz holds an M.B.A. degree from Arizona
State University.
Brian P. Campbell has been the Vice President, General Counsel and Secretary
of EarthWeb since January 2000. Prior to joining EarthWeb, Mr. Campbell was Vice
President, General Counsel and Secretary of CMP Media Inc. and Miller Freeman,
Inc. Prior to joining CMP in 1995, Mr. Campbell was an attorney in the corporate
department of Mudge Rose Guthrie Alexander & Ferdon since 1988. Mr. Campbell
received a J.D. from St. John's University School of Law and a B.A. from the
University of Virginia.
Cary Davis has been a director of EarthWeb since February 1998. Mr. Davis has
served with E.M. Warburg, Pincus & Co., LLC, an investment firm, since October
1994 and has been a Managing Director since January 1999. From August 1992 to
September 1994, Mr. Davis was employed by Dell Computer Corporation, where his
last position was Manager of Worldwide Desktop Marketing. Mr. Davis also serves
as a director of BEA Systems, Inc. and several private companies. Mr. Davis
holds a B.A. from Yale University and an M.B.A. from Harvard University's
Graduate School of Business Administration.
Murray Hidary has been a director of EarthWeb since April 1996. He was the
Executive Vice President and a director of EarthWeb from April 1996 until
January 2001, as well as Treasurer from April 1996 until July 2000, and co-
managed its predecessors since January 1995. Mr. Hidary is a co-founder of
EarthWeb. Mr. Hidary studied Music and Composition at New York University.
Henry Kressel has been a director of EarthWeb since October 1996. Dr. Kressel
has served with Warburg Pincus since 1983 and has been a Senior Managing
Director since 2000. Prior to 1983, Dr. Kressel was Staff Vice President for
research and development in solid-state technology at the RCA Corporation. Dr.
Kressel also serves as a director of Alysis Technologies, Inc., a software
development company, Nova Corporation, a credit card processing company, and
SynQuest Inc., a supply chain management software company. Dr. Kressel received
a B.A. from Yeshiva University, a Masters in Applied Physics from Harvard
University, a Ph.D. in Engineering from the University of Pennsylvania and an
M.B.A. from The Wharton School of Business at the University of Pennsylvania.
James M. Citrin is a Managing Director and member of the Board of Directors of
Spencer Stuart Inc., a leading provider of top-level executive search and
recruitment services. He also serves as Chairman of Spencer Stuart Talent
Network, the firm's middle management Internet recruiting operation. Prior to
1994 when he joined Spencer Stuart, Mr. Citrin was director of corporate
planning at The Reader's Digest Association. Prior to that, Mr. Citrin spent
five years with McKinsey and Company. Earlier, he was an associate with Goldman,
Sachs & Company and spent three years as a financial analyst with Morgan,
Stanley & Co. Mr. Citrin is a member of the Advisory Boards of Maveron Equity
Partners and ClubMom, Inc., and serves as a member of the Vassar Board of
Trustees. He earned an M.B.A. from Harvard University's Graduate School of
Business Administration and received a B.A. in economics from Vassar College.
Jeremy Davis is Chairman of ProActivity, Inc., a provider of business process
solutions. From 1999 to 2000, Mr. Davis was President & Chief Executive Officer
of InterWorld Corp. From 1997 to 1999, he was President and Chief Executive
Officer of InConcert, Inc. Mr. Davis served as President & Chief Executive
Officer of Business Matters, Inc. from 1995 to 1996. Mr. Davis joined Dun &
Bradstreet Corporation in 1990, serving as President of two of its subsidiary
companies through 1995: Erisco, Inc. and Sales Technologies Inc. In the
1980's, Mr. Davis held positions of increasing responsibility at McDonnell
Douglas Automation Company and was a founding partner of Vanguard International
Management Systems, Inc., an international consulting firm for high technology
companies. He holds an M.B.A. in International Business from the University of
Missouri.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Annual Meeting, five individuals will be elected as directors for
various terms and until their successors are elected and qualified. The Board of
Directors has nominated Jack D. Hidary and Henry Kressel for re-election at the
Annual Meeting and they would serve as directors for three-year terms. The
Board of Directors has nominated Scot W. Melland, Jeremy Davis and James M.
Citrin for election at the annual meeting and they would serve for one-year,
two-year and three-year terms, respectively.
The proxies given to the proxyholders will be voted or not voted as indicated
in accordance with the terms of the proxy card, and if no direction is given,
will be voted FOR approval of the nominees. Directors are elected by plurality
of the votes of the shares of common stock represented and voted at the meeting
and abstentions and broker non-votes will have no effect on the outcome of the
election of directors. The Board of Directors knows of no reason why any of the
nominees should be unable or unwilling to serve, but if one or more of the
nominees should, for any reason, be unable or unwilling to serve, the proxies
will be voted for the election of such other nominee or nominees to the office
of director as the Board of Directors may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR ELECTION AS
MEMBERS OF THE BOARD OF DIRECTORS.
Compensation of Directors
EarthWeb has not historically paid any director's fees. Although EarthWeb has
not historically had any formal program to grant options to its directors,
during 1999 and 2000, Peter A. Derow was granted options to purchase 20,000
shares and 40,000 shares, respectively, of Common Stock under the 1998 Stock
Incentive Plan. Directors who are also employees of EarthWeb receive no
additional compensation for their service as directors of EarthWeb. EarthWeb
intends to pay directors of EarthWeb who are not also employees of EarthWeb
an annual fee of $15,000. Upon becoming a director, each new non-EarthWeb
employee director will be granted options to purchase 30,000 shares of Common
Stock, which will vest over a period of three years.
Indemnification
The General Corporation Law of the State of Delaware provides that a
corporation may indemnify its directors and officers for certain liabilities.
EarthWeb's Restated Certificate of Incorporation and Bylaws provide for the
indemnification of its directors and officers. The effect of such provisions is
to indemnify to the fullest extent permitted by law the directors and officers
of EarthWeb against all costs, expenses and liabilities incurred by them in
connection with any action, suit or proceeding in which they are involved by
reason of their affiliation with EarthWeb. EarthWeb maintains directors and
officers liability insurance.
Committees of the Board
The Board of Directors has established an Audit Committee, the members of
which are Henry Kressel and Cary Davis. Peter A. Derow also served as a member
of the Audit Committee from June 14, 2000 until he assumed the role of President
and Chief Executive Officer on January 29, 2001. Upon the election of directors
at the Annual Meeting, EarthWeb intends to add one or more additional
independent directors to the Audit Committee, bringing EarthWeb into compliance
with Nasdaq rules and the Company's Audit Committee Charter. The Board of
Directors has also established a Compensation Committee, the members of which
are Henry Kressel and Cary Davis, who are nonemployee directors and Jack D.
Hidary, who became a non-employee director on January 26, 2001. EarthWeb does
not have a nominating committee or a committee performing similar functions.
Attendance at Board and Committee Meetings
During the fiscal year ended December 31, 2000, the Board of Directors met ten
times and acted by unanimous written consent seven times, with each director
attending each meeting and executing each consent. The Audit Committee met three
times and acted once by unanimous written consent and the Compensation Committee
acted by unanimous written consent four times during the fiscal year ended
December 31, 2000, with all members of such committees attending each meeting
and executing each consent of the respective committees.
The Audit Committee
The Audit Committee is responsible for recommending to the Board of Directors
the engagement of the independent auditors of EarthWeb and reviewing with the
independent auditors the scope and results of the audits, the internal
accounting controls of EarthWeb, the financial reporting process, audit
practices and the professional services furnished by the independent auditors.
AUDIT COMMITTEE REPORT
The following report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this
report by reference therein.
Upon the recommendation of the Audit Committee and in compliance with Nasdaq
rules, the Board has adopted an Audit Committee Charter setting forth the
requirements for the composition of the Audit Committee, the qualifications of
its members and the responsibilities of the Audit Committee. The Audit
Committee Charter is set forth in Exhibit A to this proxy statement. In
addition in accordance with the regulations of the Securities and Exchange
Commission, the Audit Committee has issued the following report.
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Company's accounting principles and
such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board.
The Committee discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The Committee met with
the independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
committee held three meetings and acted once by unanimous written consent
during fiscal 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
stockholder approval, the selection of Ernst & Young LLP as the Company's
independent auditors.
Henry Kressel
Cary Davis
April 19, 2001
The Compensation Committee
The Compensation Committee is responsible for overseeing administration of the
Company's compensation policies and practices, including reviewing and approving
all compensation arrangements for officers of EarthWeb, and is also responsible
for administering, or making recommendations with respect to, EarthWeb's stock
plans. A subcommittee of the Compensation Committee consisting of Dr. Kressel
and Mr. C. Davis administers the 1998 Stock Incentive Plan with respect to
EarthWeb's officers subject to Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code").
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Executive Compensation
The table below sets forth information concerning the annual and long-term
compensation for services rendered in all capacities to EarthWeb during the
years ended December 31, 2000, 1999 and 1998 for: (1) the Chief Executive
Officer of EarthWeb, (2) the four other most highly compensated executive
officers of EarthWeb who were serving as executive officers at December 31,
2000, and (3) one highly compensated executive officer who was not an executive
officer as of December 31, 2000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
Annual -------------
Compensation Securities
Name and Principal ---------------------------- Other Annual Underlying
Position Year Salary($) Bonus($) Compensation($) Options(#)
- ------------------- ---- ---------- --------- --------------- -------------
Jack D. Hidary(1) 2000 $215,000 $53,750(3) -- --
Former President and 1999 175,000 99,000(4) -- 260,000
Chief Executive Officer 1998 160,000 41,000(5) -- --
Irene Math(2) 2000 215,000 85,250(3) -- 15,000
Former Senior Vice 1999 173,000 48,000(4) $ 18,000(6) 60,000
President, Finance 1998 132,000 38,000(5) -- 46,150
Norman E. Lorentz 2000 206,666 117,625(3) 49,250(7) 100,000
Senior Vice President,
Chief Technology Officer
Murray Hidary(1) 2000 215,000 58,750(3) -- --
Former Executive Vice 1999 164,000 96,000(4) -- 260,000
President and Treasurer 1998 130,000 36,000(5) -- --
Harold Miltsch(8) 2000 159,346 89,125(3) 51,000(9) 25,000
Former Vice President, Chief
Marketing Officer
Brian P. Campbell 2000 177,757 56,063(3) -- 60,000
Vice President, General
Counsel and Corporate
Secretary
- ----------
(1) Resigned effective January 26, 2001.
(2) Ceased being an executive officer as of June 1, 2000; separated from the
Company effective January 26, 2001.
(3) Represents bonuses earned in 2000, a portion of which were paid in 2001.
(4) Represents bonuses earned in 1999, a portion of which were paid in 2000.
(5) Represents bonuses earned in 1998, a portion of which were paid in 1999.
(6) Represents reimbursement for certain underwriting discounts incurred in
connection with the sale of shares in EarthWeb's secondary offering in
May 1999.
(7) Includes relocation expenses and corporate apartment rental paid in
2000.
(8) Separated from the Company effective March 31, 2001.
(9) Includes relocation expenses paid in 2000.
Summary of Option Grants
The following table sets forth information regarding stock options granted by
EarthWeb pursuant to the EarthWeb Inc. 1998 Stock Incentive Plan (the "1998
Stock Incentive Plan") during the fiscal year ended December 31, 2000 to each of
the Named Executive Officers. EarthWeb has never granted stock appreciation
rights.
Option Grants in Last Fiscal Year
-------------------------------------------------------
Potential Realizable
Value at Assumed
Number of Percent of Total Options Annual Rates of Stock
Securities Granted to Employees Exercise or Price Appreciation
Underlying (net of forfeitures) Base Price for Option Term(4)
Options in Fiscal Year Ended Per Share Expiration --------------------------
Name Granted(1) December 31, 2000(2) ($/Share)(3) Date 5% 10%
---- ----------- ------------------------ ------------ ----------- --------------------------
Jack D. Hidary --- --- --- --- --- ---
Murray Hidary --- --- --- --- --- ---
Norman E. Lorentz 75,000 3.946% $ 9.75 4/17/10 $459,879 $1,165,424
25,000 1.315% $13.0625 7/27/10 $205,373 $ 520,457
Brian Campbell 40,000 2.104% $ 9.75 4/17/10 $245,269 $ 621,560
20,000 1.052% $13.0625 7/27/10 $164,299 $ 416,365
Irene Math 15,000 0.789% $ 9.75 4/17/10 $ 91,976 $ 233,085
Harold Miltsch 15,000 0.789% $13.0625 7/27/10 $123,224 $ 312,274
10,000 0.526% $12.4375 8/22/10 $ 78,219 $ 198,222
- ----------
(1) The options were granted under the 1998 Stock Incentive Plan.
(2) Based on an aggregate of 1,900,800 options granted to employees in the year
ended December 31, 2000, including options granted to Named Executive
Officers.
(3) The exercise price per share of each option was equal to the fair market
value of the common stock on the date preceding the date of the grant,
based on the closing sales price for the Common Stock as reported on the
Nasdaq National Market.
(4) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates required by applicable regulations of the Securities
and Exchange Commission and, therefore, are not intended to forecast
possible future appreciation, if any, of the Common Stock price. Assumes
all options are exercised at the end of their respective terms. Actual
gains, if any, on stock option exercises depend on the future performance
of the Common Stock and overall market conditions, as well as the
optionee's continued employment through the vesting period. The amounts
reflected in this table may not necessarily be achieved and are before any
taxes associated with exercise.
On February 7, 2001, Peter A. Derow was granted options to purchase 393,303
shares of Common Stock of the Company at a grant price of $5.625, vesting
monthly over a three-year period. On April 12, 2001, Scot W. Melland was granted
options to purchase 697,391 shares of Common Stock of the Company at a grant
price of $2.43, vesting 25% upon the first anniversary of the grant and 6 1/4%
quarterly thereafter.
Summary of Options Exercised
The following table sets forth information concerning options exercised by any
Named Executive Officer during the fiscal year ended December 31, 2000 and
unexercised options held by the Named Executive Officers as of December 31,
2000. The values of unexercised in-the-money options represent the positive
spread between the respective exercise prices of outstanding stock options and
the last reported sale price of the Common Stock on December 31, 2000 of $7.375.
Aggregate Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
--------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money
Shares End Options at Fiscal Year End
Acquired Value ----------------------------- ----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ------------- -------------- ------------ --------------
Jack D. Hidary --- --- 98,125 161,875(1) $ --- $ ---
Murray Hidary --- --- 98,125 161,875(2) $ --- $ ---
Norman Lorentz --- --- 11,250 88,750 $ --- $ ---
Brian Campbell --- --- --- 60,000 $ --- $ ---
Harold Miltsch --- --- 8,750 51,250(3) $ --- $ ---
Irene Math 19,862 $422,523 65,738 35,434(4) $49,195 $66,157
(1) The unexercisable options were canceled effective January 26, 2001, upon
the resignation Mr. Jack D. Hidary.
(2) The unexercisable options were canceled effective January 26, 2001, upon
the resignation Mr. Murray Hidary.
(3) Of the total unexercisable options for Mr. Miltsch, 49,063 were canceled
effective March 31, 2001, upon the separation of Mr. Miltsch from the
Company.
(4) Of the total unexercisable options for Ms. Math, 2,875 were cancelled and
the vesting of the remaining 32,559 was accelerated effective January 26,
2001, upon the separation of Ms. Math from the Company.
Employment and Consulting Agreements
Jack D. Hidary and Murray Hidary (the "Former Managers") entered into
employment agreements (individually, an "Employment Agreement" and,
collectively, the "Employment Agreements") with Global Network Partners LLC
("GNP") effective January 1, 1995. Each Employment Agreement provided for an
initial two-year term and for automatic extensions of additional one-year terms
unless terminated by 60 days prior notice from the respective Former Manager.
Through an Intercompany Services Agreement dated as of October 25, 1996 among
the Former Managers, a former officer, EarthWeb, GNP and EarthWeb LLC (the
"Intercompany Services Agreement"), which amends certain provisions of each of
the Employment Agreements (and for purposes of the following discussion, all
references to the Employment Agreements shall be to the Employment Agreements as
amended by the Intercompany Services Agreement), each of the Former Managers
agreed to serve as an officer and employee of EarthWeb as if EarthWeb were "the
Company" under his respective Employment Agreement. In connection therewith,
EarthWeb agreed to assume all of the obligations of GNP under the Employment
Agreements, including payments of salary and other compensation. In 2000, Mr.
Jack D. Hidary received an annual base salary of $215,000 per annum. In 2000,
Mr. Murray Hidary received an annual base salary of $215,000 per annum. Each
Former Manager was also entitled to receive bonuses as may from time to time be
awarded by the Board of Directors to such Former Manager.
On January 26, 2001, Mr. Jack D. Hidary and Mr. Murray Hidary tendered their
resignations to the Board of Directors. Each of Mr. Jack D. Hidary and Mr.
Murray Hidary entered into a Resignation Agreement with the Company that
provides for the Company to make severance payments to each of them equal to
their then current salary of $215,000 for the period through February 26, 2003,
plus the unpaid portion of his bonus for 2000. The continued payment of such
Former Manager's base salary is contingent upon such Former Manager's not
disclosing EarthWeb's confidential information or competing with the business of
EarthWeb.
EarthWeb entered into employment agreements with Michael P. Durney, Senior
Vice President and Chief Financial Officer, Irene Math; who served as Senior
Vice President, Finance until June 1, 2001 and Senior Vice President until
January 26, 2001, Harold Miltsch, who served as Vice President and Chief
Marketing Officer until March 31, 2001, Norman E. Lorentz; Senior Vice President
and Chief Technology Officer, and Brian P. Campbell; Vice President, General
Counsel and Secretary. These employment contracts provide for base salaries
ranging from $195,000 to $215,000 and bonuses based on both individual and
overall EarthWeb performance measures. The material terms of these employment
agreements (including Ms. Math's and Mr. Miltsch's, which are no longer in
effect) are: (1) if any executive is terminated without cause, she/he will
receive severance pay between six and twelve months; and (2) during the term of
the agreement and for a period of up to three years thereafter, the executive is
prohibited from competing with EarthWeb.
Effective January 26, 2001, the Company entered into a Separation Agreement
with Irene Math that provides for the Company to make severance payments equal
to $360,125, accelerate the vesting of all options previously granted to Ms.
Math that would have vested through March 31, 2002 and allow all vested options
to continue to be exercisable through the term of each such option. As of March
31, 2001, the Company entered into a Separation Agreement with Harold Miltsch
that provided for the Company to make a lump sum severance payment of $195,000.
Ms. Math and Mr. Miltsch have agreed not to disclose EarthWeb's confidential
information or compete with the business of EarthWeb under their respective
Separation Agreements.
Compensation Committee Interlocks and Insider Participation
On August 1, 1998, Messrs. Jack D. Hidary, Cary Davis and Henry Kressel were
appointed as members of the Compensation Committee. A subcommittee of the
Compensation Committee consisting of Dr. Kressel and Mr. C. Davis administers
the 1998 Stock Incentive Plan with respect to EarthWeb's officers subject to
Section 162(m) of the Code. Mr. Jack D. Hidary served as President and Chief
Executive Officer of EarthWeb from April 1996 until January 2001. Mr. Jack D.
Hidary abstained from Compensation Committee decisions regarding his own
compensation. Mr. C. Davis has served with E.M. Warburg, Pincus & Co., LLC since
October 1994 and has been a Managing Director since January 1999. Dr. Kressel
has served with E.M. Warburg, Pincus & Co., LLC since 1983 and has been a Senior
Managing Director since 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that EarthWeb's executive officers
and directors, and any persons holding more than 10 percent of the Common Stock,
file reports of beneficial ownership on Form 3 and changes in beneficial
ownership on Forms 4 and 5 with the Securities and Exchange Commission ("SEC").
Such reporting persons are also required by the SEC rules to furnish EarthWeb
with copies of all Section 16(a) reports they file. Based solely on its review
of the Forms 3, 4 and 5 and any amendments thereto filed by such reporting
persons, as well as written representations from certain reporting persons that
no Forms 5 are required, EarthWeb believes that, during the fiscal year ended
December 31, 2000, all Section 16(a) filing requirements applicable to such
reporting persons were complied with pursuant to the SEC rules, with the
following exception: Ms. Irene Math filed a late Form 4 in August 2000
reflecting a sale of stock.
1996 Amended and Restated Stock Plan
The 1996 Amended and Restated Stock Plan (as amended to date, the "1996 Stock
Plan") was adopted by the Board of Directors of EarthWeb in October 1996 and was
subsequently ratified by the stockholders of EarthWeb. The 1996 Stock Plan
provides for the grant of incentive stock options and non-qualified stock
options. The 1996 Stock Plan also provides for the issuance of stock
appreciation rights and restricted stock. Directors, employees and consultants
of EarthWeb are eligible to receive grants under the 1996 Stock Plan. The 1996
Stock Plan authorized 525,000 shares of Common Stock for issuance, subject to
adjustment as set forth in the 1996 Stock Plan. As of March 31, 2001, options
relating to 77,328 shares of Common Stock were outstanding. EarthWeb has ceased
granting additional options pursuant to the 1996 Stock Plan.
1998 Stock Incentive Plan
EarthWeb's 1998 Stock Incentive Plan was adopted by the Board of Directors in
November 1998 and has been approved by EarthWeb's stockholders. The 1998 Stock
Incentive Plan was amended in 2000, as approved by EarthWeb's stockholders. As
of December 31, 2000 the total number of shares of Common Stock reserved for
issuance under the plan was 3,907,674. In accordance with the terms of the 1998
Stock Incentive Plan as amended in 2000 (as approved by EarthWeb's Board of
Directors and stockholders), starting in 2001, the number of shares of Common
Stock reserved for issuance increases annually by a number equal to four percent
(4%) of the total number of shares of Common Stock then outstanding on the first
day of the Company's fiscal year or a lesser number of shares as determined by
the plan administrator. Accordingly, as of January 2001, an additional 416,000
shares of Common Stock were reserved for issuance under the 1998 Stock Incentive
Plan, bringing the total reserved shares up to 4,323,674 as of March 13, 2001.
1998 Employee Stock Purchase Plan
EarthWeb's 1998 Employee Stock Purchase Plan (the "Stock Purchase Plan") was
approved by the Board of Directors in November 1998 and has been approved by
EarthWeb's stockholders. The Stock Purchase Plan is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Code, in order to
provide employees of EarthWeb with an opportunity to purchase Common Stock
through payroll deductions. An aggregate of 159,000 shares of Common Stock was
initially reserved for issuance under the Stock Purchase Plan and available for
purchase thereunder, which amount is increased annually on the first day of
EarthWeb's fiscal year, beginning in 2000, equal to the least of (1) 400,000
shares, (2) two percent of the outstanding shares on such date or (3) a lesser
number of shares determined by the Compensation Committee, subject to adjustment
in the event of a stock split, stock dividend or other similar change in the
Common Stock or the capital structure of EarthWeb. Accordingly, as of January
2001, an additional 208,040 shares of Common Stock were reserved for issuance
under the 1998 Employee Stock Purchase Plan, bringing the total reserved shares
up to 430,373 as of March 31, 2001. Except for any employees (a) who, after
giving effect to the grant under the Stock Purchase Plan, would own shares and
options equal to 5% or more of the total voting power of EarthWeb's outstanding
Common Stock, (b) whose rights under all of EarthWeb's stock purchase plans
accrue at a rate exceeding $25,000 per year, (c) whose customary employment is
20 or fewer hours per week or five or fewer months per year or (d) who are
subject to laws of a foreign jurisdiction that prohibit or make impracticable
such employee's participation in the Stock Purchase Plan, all employees of
EarthWeb are eligible to participate in the Stock Purchase Plan.
Offer periods under the Stock Purchase Plan ("Offer Periods") are generally
overlapping periods of 24 months. The initial Offer Period commenced on the
closing date of the IPO. Additional Offer Periods commence each February 1 and
August 1. Purchase periods under the Stock Purchase Plan ("Purchase Periods")
are generally six-month periods. The initial Purchase Period commenced on the
closing date of the IPO. Additional Purchase Periods commence each August 1 and
February 1. Exercise dates under the Stock Purchase Plan ("Exercise Dates") are
the last day of each Purchase Period. An Offer Period may be shortened in the
event of a merger of EarthWeb with or into another corporation, the sale of all
or substantially all of the assets of EarthWeb, or certain other transactions.
On the first day of each Offer Period, a participating employee is granted a
purchase right that is a form of option to be automatically exercised on the
forthcoming Exercise Dates within the Offer Period. During the Offer Period
deductions are made from the pay of participants (in accordance with their
authorizations) and credited to their accounts under the Stock Purchase Plan.
When the purchase right is exercised, the participant's withheld salary is used
to purchase shares of Common Stock of EarthWeb. The price per share at which
shares are to be purchased under the Stock Purchase Plan during any Purchase
Period is the lesser of an amount equal to eighty five percent (85%) of the fair
market value of the Common Stock (as defined in the Stock Purchase Plan) on (a)
the date of the grant of the option (the commencement of the Offer Period) or
(b) the Exercise Date (the last day of a Purchase Period). The participant's
purchase right is exercised in this manner on both Exercise Dates arising in the
Offer Period unless, on the first day of any Purchase Period, the fair market
value of the Common Stock is lower than the fair market value of the Common
Stock on the first day of the Offer Period. If so, the participant's
participation in the original Offer Period is terminated, and the participant is
automatically enrolled in the new Offer Period effective the same date.
Payroll deductions may range from 1% to 15% (in whole percentage increments)
of a participant's regular base pay plus commissions, exclusive of overtime,
bonuses or shift-premiums, but not more than $21,250 per year. Participants may
not make additional payments to their accounts. The maximum number of shares of
Common Stock that any employee may purchase under the Stock Purchase Plan during
a Purchase Period is determined by dividing 15% of the employee's regular base
pay by the applicable purchase price. Certain additional limitations on the
amount of Common Stock that may be purchased during any calendar year are
imposed by the Code.
The Stock Purchase Plan is administered by the Compensation Committee, which
has the authority to terminate or amend the Stock Purchase Plan (subject to
specified restrictions) and otherwise to administer the Stock Purchase Plan and
to resolve all questions relating to the administration of the Stock Purchase
Plan.
401(k) Plan
As a result of several acquisitions, EarthWeb maintains four 401(k) retirement
savings plans (the "401(k) Plans"). All employees of EarthWeb and its
subsidiaries, meeting certain minimum eligibility requirements are eligible to
participate in the 401(k) Plans. The 401(k) Plans generally provide that the
employee may contribute up to 20% of his or her pre-tax gross compensation (but
not greater than a statutorily prescribed annual limit). The 401(k) Plans permit
additional contributions to the 401(k) Plans by EarthWeb. All amounts
contributed by the employee participants in conformity with plan requirements
and earnings on such contributions are fully vested at all times. For the year
ended December 31, 2000, EarthWeb contributed $144,000 to the 401(k) Plans. The
Company intends to consolidate the various 401(k) Plans into one Plan during
2001.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EarthWeb's executive compensation program has been administered by the
Compensation Committee of the Board of Directors since August 1, 1998. Prior to
August 1, 1998, compensation decisions and grants of stock options were made by
the Board of Directors. The current members of the Compensation Committee are
Dr. Kressel and Mr. C. Davis, each of whom is a non-employee director within the
meaning of Section 16 of the Exchange Act and an "outside director" within the
meaning of Section 162(m) of the Code, and Mr. Jack D. Hidary. A subcommittee of
the Compensation Committee consisting of Dr. Kressel and Mr. C. Davis administer
the 1998 Stock Incentive Plan with respect to EarthWeb's officers subject to
Section 162(m) of the Code. Mr. Jack D. Hidary abstained from Compensation
Committee decisions regarding his own compensation.
General Compensation Philosophy
The role of the Compensation Committee is to review and administer all
compensation arrangements for officers of EarthWeb (including all of the Named
Executive Officers), and to be responsible for administering or making
recommendations with respect to EarthWeb's stock plans. EarthWeb's compensation
philosophy for officers is to relate compensation to corporate performance and
increases in stockholder value, while providing a total compensation package
that is competitive and enables EarthWeb to attract, motivate, reward and retain
key executives and employees. EarthWeb uses salaries, bonuses and stock options
to meet these goals.
EXECUTIVE COMPENSATION
Base Salary. Salaries for executive officers for 2000 were generally
determined by the Board of Directors or Compensation Committee on an individual
basis. For 2001, the Compensation Committee reviewed the base salaries of the
executive officers by evaluating each executive's scope of responsibility,
performance, prior experience and salary history, as well as the salaries for
similar positions at comparable companies.
Annual Incentive Awards. EarthWeb's executive officers are eligible for cash
bonus awards. Awards under this program are based on individual performance
objectives and on the attainment of specific company performance measures
established by the Compensation Committee each year. Awards under this program
for 2000 were determined by the Compensation Committee of the Board of
Directors.
Long-Term Incentive Awards. The Compensation Committee believes that equity-
based compensation in the form of stock options links the interests of
executives with the long-term interests of EarthWeb's stockholders and
encourages executives to remain in EarthWeb's employ. EarthWeb grants stock
options in accordance with the 1998 Stock Incentive Plan and previously granted
stock options in accordance with the 1996 Stock Plan. Grants are awarded based
on a number of factors, including the individual's level of responsibility, the
amount and term of options already held by the individual, the individual's
contributions to the achievement of EarthWeb's financial and strategic
objectives, and industry practices and norms.
Chief Executive Officer Compensation
Mr. Jack D. Hidary's annual base salary and bonus for 2000 were determined by
the Compensation Committee. During 2000, the Compensation Committee authorized
an increase in Mr. Jack D. Hidary's annual base salary to $215,000. Mr. Jack D.
Hidary was awarded bonuses of $53,750 for his service in 2000. During 2000, Mr.
Jack D. Hidary did not receive any grants of stock options.
For 2001, the Compensation Committee authorized Mr. Jack D. Hidary's annual
base salary of $215,000. Mr. Jack D. Hidary resigned from his position as
President and Chief Executive Officer effective January 26, 2001. The
Compensation Committee authorized Mr. Derow's annual base salary of $300,000,
which he earned between January 29, 2001 and April 23, 2001. The Compensation
Committee authorized Mr. Melland's annual base salary of $300,000, effective
April 23, 2001, when he was appointed President and Chief Executive Officer.
Internal Revenue Code Section 162(m) Limitation
Section 162(m) of the Code limits the tax deduction to $1.0 million for
compensation paid to certain executives of public companies. Having considered
the requirements of Section 162(m), the Compensation Committee believes that
grants made pursuant to the Stock Plan and the 1998 Stock Incentive Plan meet
the requirements that such grants be "performance based" and are, therefore,
exempt from the limitations on deductibility. Historically, the combined salary
and bonus of each executive officer has been below the $1.0 million limit. The
Compensation Committee's present intention is to comply with Section 162(m)
unless the Compensation Committee feels that required changes would not be in
the best interest of EarthWeb or its stockholders.
COMPENSATION COMMITTEE
Jack D. Hidary
Henry Kressel
Cary Davis
EARTHWEB STOCK PRICE PERFORMANCE
The following performance graph assumes an investment of $100 on November 11,
1998 (the date EarthWeb's Common Stock began trading on the Nasdaq National
Market) and compares the change to December 31, 2000 in the market prices of
the Common Stock with a broad market index (Nasdaq Stock Market--U.S.) and an
industry index (JP Morgan H & Q Internet 100 Index). EarthWeb paid no dividends
during the periods shown; the performance of the indexes is shown on a total
return (dividend reinvestment) basis. The graph lines merely connect the prices
on the dates indicated and do not reflect fluctuations between those dates. The
comparisons provided in this graph are not intended to be indicative of possible
future performance of EarthWeb's Common Stock.
COMPARISON OF 26 MONTH CUMULATIVE TOTAL RETURN*
AMONG EARTHWEB INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE JP MORGAN H & Q INTERNET 100 INDEX
[CHART]
11/11/98 12/31/98 12/31/99 12/31/00
-------- -------- -------- --------
EarthWeb............................................. 100 278 359 53
Nasdaq Stock Market (US) Index....................... 100 105 214 132
JP Morgan H&Q Internet 100 Index..................... 100 140 486 187
The foregoing report of the Compensation Committee of the Board of Directors
on executive compensation and the performance graph that appears immediately
above shall not be deemed to be soliciting material or to be filed with the SEC
under the Securities Act of 1933 or the Exchange Act, or incorporated by
reference in any document so filed.
PROPOSAL TWO
AMENDMENT TO EARTHWEB'S RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE NAME
OF THE COMPANY TO DICE INC.
The Company's Restated Certificate of Incorporation currently provides that
the Company's name is EarthWeb Inc. After considering a variety of factors,
including the Company's corporate identity, the importance of leveraging the
brand recognition of the Company's existing dice.com business, and the Company's
contractual obligations to internet.com Corporation to cease using EarthWeb as
its corporate name by December 26, 2001, the Board of Directors has determined
that it is in the best interests of the Company to amend the Restated
Certificate of Incorporation to change the Company's name to "Dice Inc."
In connection with the proposed name change, the Company intends to adopt
"DICE" as its trading ticker symbol on the Nasdaq National Market. If Proposal
Two is approved by the stockholders, both the name change and the ticker symbol
will become effective as soon as practicable after the Annual Meeting.
The affirmative vote of a majority of the total voting power of all
outstanding securities of EarthWeb entitled to vote generally in the election of
directors, voting as a single class is required for approval of Proposal Two.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO
EARTHWEB'S RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE
COMPANY TO DICE INC.
The persons designated in the enclosed proxy will vote your shares FOR
adoption of this proposal unless instructions to the contrary are indicated in
accordance with the terms of the proxy card.
PROPOSAL THREE
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has recommended that the stockholders ratify the
appointment of Ernst & Young LLP to serve as independent auditors for EarthWeb
for the fiscal year ending December 31, 2001, or until a successor is appointed.
On April 18, 2001, EarthWeb dismissed PricewaterhouseCoopers LLP ("PWC") as
its independent certified public accountant. PWC had been the independent public
accounting firm utilized by EarthWeb from 1995 through 2000. During this time,
PWC has examined EarthWeb's consolidated financial statements, made limited
reviews of the interim financial reports, reviewed filings with the SEC and
provided general advice to EarthWeb regarding related accounting matters. The
reports of PWC on the Company's financial statements for the fiscal years ended
December 31, 2000 and 1999 did not contain an adverse opinion, or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles. During the Company's two most recent fiscal years and
subsequent interim periods, there were no disagreements with PWC on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of PWC would have caused it to make reference to such disagreement
in its reports. The Audit Committee of the Company's Board of Directors
recommended the change of accountants and that action was approved by the
Company's Board of Directors.
The Company engaged Ernst & Young LLP ("E&Y") to act as the Company's
independent certified public accountant effective for the audit of fiscal year
2001, subject to ratification by the stockholders at the Company's 2001 annual
meeting. During the two most recent fiscal years and subsequent interim periods,
the Company has not consulted E&Y regarding the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements,
or any matter that was the subject of a disagreement or a reportable event.
Audit Fees
The aggregate fees billed by PWC for professional services rendered for the
audit of the Company's annual financial statements for the fiscal year ended
December 31, 2000, and for the reviews of the financial statements included in
the Company's Quarterly Reports on Form 10-Q for that fiscal year were $158,000.
Financial Information Systems Design and Implementation Fees
PWC rendered no professional services to the Company for information
technology services relating to financial information systems design and
implementation for the fiscal year ended December 31, 2000.
All Other Fees
The aggregate fees billed by PWC for services rendered to the Company, other
than the services described above under "Audit Fees", for the fiscal year ended
December 31, 2000 were $326,000. These fees were principally for tax consulting
services, professional services rendered in connection with the acquisition of
MeasureUp and compilation of separate financial statements related to the sale
of the Company's content business. The Audit Committee has considered whether
the provision of these services is compatible with maintaining the independent
auditors' independence.
The affirmative vote of a majority of the shares of common stock represented
and voted at the annual meeting is required for approval of Proposal Three.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION
OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF EARTHWEB FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2001.
The persons designated in the enclosed proxy will vote your shares FOR
adoption of this proposal unless instructions to the contrary are indicated in
accordance with the terms of the proxy card.
Representatives of PricewaterhouseCoopers LLP and Ernst & Young LLP are
expected to be present at the Annual Meeting to respond to appropriate questions
and to make statements should they desire to do so.
OTHER BUSINESS
The Board of Directors is not aware of any other matters to come before the
Annual Meeting. If any matter not mentioned herein is properly brought before
the meeting, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
COPIES OF EARTHWEB'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2000 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED
TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR RELATIONS,
EARTHWEB INC., 3 PARK AVENUE, NEW YORK, NEW YORK 10016.
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
In order for stockholder proposals that are submitted pursuant to Rule 14a-8
of the Exchange Act to be considered by EarthWeb for inclusion in the proxy
material for the Annual Meeting of Stockholders to be held in 2002, they must be
received by the Secretary of EarthWeb by December 31, 2001.
For proposals that stockholders intend to present at the Annual Meeting of
Stockholders to be held in 2002 outside the processes of Rule 14a-8 of the
Exchange Act, unless the stockholder notifies the Secretary of EarthWeb of such
intent by March 15, 2002, any proxy that management solicits for such Annual
Meeting will confer on the holder of the proxy discretionary authority to vote
on any such proposal properly presented at such Annual Meeting.
All such communications to the Secretary of EarthWeb must be in writing and
must be received by EarthWeb at its principal executive offices, 3 Park Avenue,
New York, New York 10016 by the applicable date.
By Order of the Board of Directors
Scot W. Melland
President and Chief Executive Officer
New York, New York
April ____, 2001
Exhibit A - Audit Committee Charter
CHARTER FOR THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF EARTHWEB INC.
Organization
This charter governs the operations of the Audit Committee of the Board of
Directors (the "Committee") of EarthWeb Inc. (the "Company"). The Committee
shall review and reassess the charter at least annually and obtain the approval
of the Board of Directors. The Committee shall be appointed by the Board of
Directors and shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the Committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company. All Committee
members shall be financially literate at the time of appointment, or shall
become financially literate within one year after appointment to the Committee,
and at least one member shall have accounting or related financial management
expertise. For purposes of this paragraph, the terms "independence" and
"financially literate" shall be interpreted as the National Association of
Securities Dealers (NASD) defines those terms.
Statement of Policy
The Committee shall provide assistance to the Board of Directors in fulfilling
their oversight responsibility to the stockholders, potential stockholders, the
investment community, and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the internal audit function, the annual independent audit of
the Company's financial statements, and the legal compliance and ethics programs
as established by management and the Board. In so doing, it is the
responsibility of the Committee to maintain free and open communication between
the Committee, independent auditors, the internal auditors, management of the
Company and any employee. In discharging its oversight role, the Committee is
empowered to investigate any matter brought to its attention with full access to
all books, records, facilities, and personnel of the Company and the power to
retain outside counsel or other experts for this purpose.
Meetings
The Committee will have a standing meeting quarterly and at such other times as
it deems appropriate. A majority of the members of the Committee must be
present for the valid transaction of business. The meetings will be with
representatives of the independent auditors, General Counsel, Chief Financial
Officer and other members of the financial management team and with other
members of management at the request of the Committee. Written minutes of
Committee meetings shall be maintained.
Responsibilities and Processes
The primary responsibility for financial and other reporting, internal controls
and compliance with laws, regulations and ethics within the Company rests with
executive management. The primary responsibility of the Committee is to oversee
the Company's financial reporting process on behalf of the Board and report the
results of their activities to the Board on a regular basis. Management is
responsible for preparing the Company's financial statements, and the
independent auditors are responsible for auditing those financial statements.
The Committee in carrying out its responsibilities believes its policies and
procedures should remain flexible, in order to best react to changing conditions
and circumstances. The Committee should take the appropriate actions to set the
overall corporate tone for quality financial reporting, sound business risk
practices, and ethical behavior and provide direction in establishing Company
policies in accordance therewith.
The following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
. The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately accountable
to the Board and the Committee, as representatives of the Company's
stockholders. The Committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, replace the independent
auditors. The Committee shall discuss with the auditors their independence
from management
and the Company and the matters included in the written disclosures required
by the Independence Standards Board. Annually, the Committee shall review and
recommend to the Board the selection of the Company's independent auditors,
subject to stockholders' approval.
. The Committee shall discuss with the internal auditors and the independent
auditors the overall scope and plans for their respective audits including
the adequacy of staffing and compensation. Also, the Committee shall discuss
with management, the internal auditors, and the independent auditors the
adequacy and effectiveness of the accounting and financial controls,
including the Company's system to monitor and manage business risk, and legal
and ethical compliance programs. Further, the Committee shall meet separately
with the internal auditors and the independent auditors, with and without
management present, to discuss the results of their examinations.
. The Committee shall review the interim financial statements with management
and the independent auditors prior to the filing of the Company's Quarterly
Report on Form 10-Q. The Committee shall discuss significant matters
impacting the Company's interim financial statements with management and the
independent auditors. Also, the Committee shall discuss the results of the
quarterly review and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted auditing
standards. The chair of the Committee may represent the entire Committee for
the purposes of this review.
. The Committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on Form
10-K (or the annual report to stockholders if distributed prior to the filing
of Form 10-K), including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
Also, the Committee shall discuss the results of the annual audit and any
other matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards.
. The Committee will include a report of certain of its activities in the
Company's annual proxy statement, beginning with the proxy relating to the
year ended December 31, 2000. The report will state whether the Committee has
reviewed the Company's annual audited financial statements with management;
discussed with the independent auditors those matters required to be
communicated under generally accepted auditing standards; discussed with the
independent auditors their independence and received from them the written
communication required by the Independence Standards Board; and, based upon
the above reviews and discussions, recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Form 10-K. A sample of such report to be included in the Company's annual
proxy statement is attached.
. The Committee will review with the General Counsel significant litigation and
other regulatory compliance issues, and evaluate counsel and management's
assessment of potential financial impact, if any, and allegations of
impropriety pursuant to the Committee's procedures concerning internal
investigations.
. The Committee will review annually the Company's conflict of interest policy
and recommend to the Board of Directors changes that the Committee may deem
appropriate.
EXHIBIT B
FORM OF CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
EARTHWEB INC.
EarthWeb Inc. a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That by the Unanimous Written Consent of its members, the Board of
Directors of the Corporation adopted resolutions proposing and declaring
advisable the following amendments to the Amended and Restated Certificate
of Incorporation:
RESOLVED, that Article 1 on the Amended and Restated Certificate of
Incorporation of EarthWeb Inc. be amended in its entirety as follows:
"The name of the corporation is Dice Inc. (the "Company" or the
"Corporation")."
SECOND: That the Amended and Restated Certificate of Incorporation of the
Corporation was filed with the Delaware Secretary of State on June 7, 2000.
THIRD: That the Amendment to the Amended and Restated Certificate of
Incorporation set forth herein was authorized by the requisite majority of
the Board of Directors followed by the holders of a majority of all
outstanding shares entitled to vote thereon pursuant to Section 242 of the
General Corporation Law of the State of Delaware and Article VIII of the
Restated Certificate of Incorporation.
FOURTH: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Section 242 of the General Corporation Law of
the State of Delaware and Article VIII of the Restated Certificate of
Incorporation.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by
Scot W. Melland, its President and Chief Executive Officer, and attested by
Brian P. Campbell, its Secretary, this day of , 2001.
By: _________________________________
Title: President and Chief Executive Officer
ATTEST:
By: _________________________________
Title: Secretary