1
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:
[ ] 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 Rule 14a-11(c) or Rule 14a-12
CAREERBUILDER, 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:
- --------------------------------------------------------------------------------
2
CAREERBUILDER, INC.
10780 PARKRIDGE BOULEVARD
SUITE 200
RESTON, VA 20191
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 11, 2000
The Annual Meeting of Stockholders of CareerBuilder, Inc. (the "Company")
will be held at The Tower Club, 8000 Crescent Drive, Vienna, Virginia, on
Thursday, May 11, 2000 at 10:00 a.m., local time, to consider and act upon the
following matters:
1. To elect two Class I directors for the ensuing three years.
2. To ratify the selection by the Board of Directors of KPMG LLP as
the Company's independent auditors for the current fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on March 20, 2000 will be
entitled to notice of and to vote at the meeting or any adjournment thereof. The
stock transfer books of the Company will remain open following the record date.
By Order of the Board of Directors,
/s/ JAMES A. THOLEN
--------------------------------------
James A. Tholen, Secretary
Reston, Virginia
March 27, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
3
CAREERBUILDER, INC.
10780 PARKRIDGE BOULEVARD
SUITE 200
RESTON, VA 20191
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 11, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CareerBuilder, Inc. (the "Company") for use
at the Annual Meeting of Stockholders to be held on Thursday, May 11, 2000 and
at any adjournment of that meeting. All executed proxies will be voted in
accordance with the stockholders' instructions, and if no choice is specified,
executed proxies will be voted in favor of the matters set forth in the
accompanying Notice of Meeting. Any proxy may be revoked by a stockholder at any
time before its exercise by delivery of written revocation or a subsequently
dated proxy to the Secretary of the Company or by voting in person at the Annual
Meeting.
On March 20, 2000, the record date for the determination of stockholders
entitled to vote at the Annual Meeting (the "Record Date"), there were
outstanding and entitled to vote an aggregate of 23,753,160 shares of Common
Stock of the Company (constituting all of the voting stock of the Company).
Holders of Common Stock are entitled to one vote per share.
The Company's Annual Report for the year ended December 31, 1999 is being
mailed to stockholders, along with these proxy materials, on or about April 5,
2000.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1999 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS INCLUDED IN THE
COMPANY'S ANNUAL REPORT.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock outstanding and
entitled to vote at the Annual Meeting will constitute a quorum for the
transaction of business at the Annual Meeting. Shares of Common Stock
represented in person or by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum is present at the
Annual Meeting.
The affirmative vote of a plurality of the votes cast by stockholders
entitled to vote on the matter is required for the election of directors. The
affirmative vote of a majority of the shares of Common Stock voting on the
matter is required to ratify the selection by the Board of Directors of KPMG LLP
as the Company's independent auditors for the current year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as shares voting on such matter. Accordingly, abstentions and "broker
non-votes" will have no effect on the voting on matters (such as the election of
directors and the ratification of the selection of the auditors) that require
the affirmative vote of a plurality or a majority of the votes cast or the
shares voting on the matter.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 20, 2000 by (i) each person
or entity who is known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) by each director or nominee for
director, (iii) by each of the executive officers named in the Summary
Compensation Table set forth under the caption "Executive Compensation" below
and (iv) by all directors and executive officers as a group. Unless otherwise
indicated, each person or entity named in the table has sole voting power and
investment
4
power (or shares such power with his or her spouse) with respect to all shares
of capital stock listed as owned by such person or entity.
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENTAGE OWNED
------------------------ ---------------------- ----------------
New Enterprise Associates(2)............................... 4,022,551 16.9%
1119 St. Paul Street
Baltimore, MD 21202
Microsoft Corporation(3)................................... 2,246,351 9.1
One Microsoft Way
Redmond, WA 98052
ADP, Inc.(4)............................................... 1,283,569 5.3
1 ADP Boulevard
Roseland, NJ 07068
Robert J. McGovern(5)...................................... 3,350,540 14.0
Eugene J. Austin........................................... 382,477 1.6
James A. Tholen............................................ 89,311 *
James A. Winchester........................................ 693,750 2.9
Peter J. Barris(6)......................................... 4,042,551 17.0
Gary C. Butler(7).......................................... 1,293,569 5.4
D. Jarrett Collins(8)...................................... 654,891 2.8
David C. Wetmore(9)........................................ 594,480 2.5
All executive officers and directors as a group(8
persons)(10)............................................. 11,101,569 45.4
- ---------------
* Less than 1%
(1) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
as to which the individual or entity has sole or shared voting power or
investment power and any shares as to which the individual or entity has
the right to acquire beneficial ownership within 60 days after March 20,
2000 through the exercise of stock options ("Presently Exercisable
Options"). The inclusion herein of such shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares.
(2) Consists of 3,930,446 shares of Common Stock held of record by New
Enterprise Associates VI, Limited Partnership, 78,947 shares of Common
Stock held of record by NEA President's Fund, L.P. and 13,158 shares of
Common Stock held of record by NEA Ventures 1996, L.P.
(3) Includes 873,534 shares of Common Stock issuable upon exercise of the
warrant issued to Microsoft in May 1999.
(4) Includes 380,000 shares of Common Stock issuable upon exercise of the
warrant issued to ADP in January 1998.
(5) Includes 250,000 shares of Common Stock held of record by the Robert
McGovern Bypass Trust. Mr. McGovern disclaims beneficial ownership of
shares held of record by such trust.
(6) Includes 3,930,446 shares of Common Stock held of record by New Enterprise
Associates VI, Limited Partnership, 78,947 shares of Common Stock held of
record by NEA President's Fund, L.P. and 13,158 shares of Common Stock held
of record by NEA Ventures 1996, L.P. Mr. Barris disclaims beneficial
ownership of all such shares of Common Stock. Also includes 20,000 shares
subject to Presently Exercisable Options.
(7) Consists of 903,569 shares of Common Stock held of record by ADP and
380,000 shares of Common Stock issuable upon exercise of the warrant issued
to ADP in January 1998. Mr. Butler disclaims beneficial ownership of all
such shares of Common Stock. Also includes 10,000 shares subject to
Presently Exercisable Options.
(8) Includes 644,891 shares of Common Stock held of record by Thomson U.S. Inc.
Mr. Collins disclaims beneficial ownership of all such shares of Common
Stock. Also includes 10,000 shares subject to Presently Exercisable
Options.
2
5
(9) Includes 15,000 shares subject to Presently Exercisable Options. Excludes
40,000 shares of Common Stock held of record by adult children of Mr.
Wetmore.
(10) See footnotes (1) and (5) through (9) above.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board of
Directors is classified into three classes (designated Class I Directors, Class
II Directors and Class III Directors), with members of each class holding office
for staggered three-year terms. There are currently two Class I Directors, whose
terms expire at the Annual Meeting, two Class II Directors, whose terms expire
at the 2001 Annual Meeting of Stockholders, and three Class III Directors, whose
terms expire at the 2002 Annual Meeting of Stockholders (in all cases subject to
the election and qualification of their successors and to their earlier death,
resignation or removal). J. Neil Weintraut resigned as a Class I Director in
February 2000, leaving one Class I vacancy. D. Jarrett Collins, a current Class
I Director, intends to resign from the Board of Directors prior to the Annual
Meeting.
Peter J. Barris, who is currently a Class II Director, and David C.
Wetmore, who is currently a Class III Director, will stand for election as Class
I Directors. The persons named in the enclosed proxy will vote to elect Mr.
Barris and Mr. Wetmore as the Class I Directors, unless authority to vote for
the election of Mr. Barris or Mr. Wetmore is withheld by marking the proxy to
that effect. Mr. Barris and Mr. Wetmore have each indicated their willingness to
serve, if elected, but if Mr. Barris or Mr. Wetmore should be unable or
unwilling to serve, proxies may be voted for a substitute nominee designated by
the Board of Directors. Mr. Barris and Mr. Wetmore will each be elected to hold
office until the 2003 Annual Meeting of Stockholders (each subject to the
election and qualification of his successor and to his earlier death,
resignation or removal). It is currently expected that the Board of Directors
will identify suitable candidates and fill the one Class II vacancy and the one
Class III vacancy caused by the election of Mr. Barris and Mr. Wetmore as Class
I Directors.
The following table sets forth, for each director of the Company (including
the nominees for Class I Director), his name and age, his positions with the
Company, his principal occupation and business experience during the past five
years, the names of the other publicly held corporations of which he serves as a
director and the year during which he first became a director of the Company.
Information with respect to the number of shares of Common Stock beneficially
owned by each director, directly or indirectly, as of March 20, 2000 appears
under the heading "Beneficial Ownership of Common Stock."
NOMINEES FOR CLASS I DIRECTOR
PETER J. BARRIS is 48 years old and has served as a director of the Company
since July 1996. Mr. Barris has been a General Partner with New Enterprise
Associates L.P., a private investment firm, since 1992. Prior to that, he served
as President and Chief Operating Officer of Legent Corporation from 1988 to
1990. Prior to that, Mr. Barris served as Senior Vice President and General
Manager of UCCEL, a systems software developer, and held a variety of marketing
and general management positions with General Electric Company, a manufacturing
company. Mr. Barris serves as a director of Mobius Management Systems, Inc. and
pcOrder.com, Inc., both of which are computer software systems and services
companies.
DAVID C. WETMORE is 51 years old and has served as a director of the
Company since December 1995. Mr. Wetmore has served as Managing Director of
Updata Capital, Inc., a private investment firm, since November 1995. From 1992
to August 1995, Mr. Wetmore served as Chief Operating Officer and a director of
Legent Corporation. From 1988 to 1992, he served as President, Chief Operating
Officer and a director of Goal Systems International, Inc., a systems software
company, and served as its Chief Executive Officer from 1989 to 1992 and its
Chairman from 1991 to 1992. Mr. Wetmore serves as a director of Walker
Interactive Systems, Inc., a financial and analytical software developer.
3
6
INCUMBENT CLASS II DIRECTOR
GARY C. BUTLER is 53 years old and has served as a director of the Company
since January 1998. Mr. Butler has served as President, Chief Operating Officer
and a director of Automatic Data Processing, Inc., or ADPI, the parent of ADP,
since April 1998. From January 1995 to April 1998, he served as Group President
of the Employer Services Group of ADPI. Prior to that time, he served as Group
President for the Dealer Services Group of ADPI for more than five years. Mr.
Butler serves as a director of Convergys Corporation, a provider of financial
and management services.
INCUMBENT CLASS III DIRECTORS
ROBERT J. MCGOVERN is 38 years old and is the founder of the Company, and
has served as Chairman of the Board of Directors, President and Chief Executive
Officer of the Company since its founding in November 1995. From May 1993 until
August 1995, he served as Vice President and General Manager of the Availability
and Performance Management Group, a division of Legent Corporation, a systems
software company. Prior to that time, he served in various senior positions in
sales with Hewlett-Packard Company, a computer hardware and software company.
JAMES A. THOLEN is 40 years old and has served as a director of the Company
since its founding in November 1995 and as Senior Vice President and Chief
Financial Officer of the Company since September 1998. From April 1997 until
September 1998, he served as Chief Operating Officer and Chief Financial Officer
of FTP Software, Inc., a software communications company. From September 1995 to
February 1997, he served as Chief Financial Officer of The Compucare Company, a
healthcare information systems provider. From August 1993 until August 1995, he
served as Vice President of Corporate Strategy and Development for Legent
Corporation.
BOARD AND COMMITTEE MEETINGS
The Board of Directors has a Compensation Committee composed of Messrs.
Barris and Butler, which makes recommendations concerning salaries and incentive
compensation for executive officers and administers and grants stock options and
awards pursuant to the Company's stock option plans (except that grants to
directors and certain officers must be made by the Board of Directors as a
whole). The Compensation Committee met three times during 1999.
The Board of Directors also has an Audit Committee, currently composed of
Messrs. Collins and Wetmore, which reviews the results and scope of the audit
and other services provided by the Company's independent public accountants. The
Audit Committee met four times during 1999.
The Board of Directors met five times during 1999. Each director attended
at least 75% of the aggregate of the number of Board meetings and the number of
meetings held by all committees on which he then served.
DIRECTOR COMPENSATION
Directors do not receive any cash fees for their services on the Board, but
are reimbursed for expenses incurred in connection with their attendance at
Board and committee meetings. On April 1, 1999, the Company's non-employee
directors were each granted a non-qualified stock option to purchase 5,000
shares of Common Stock at a purchase price of $9.00 per share, vesting on March
31, 2000. The non-employee directors of the Company are eligible to receive
stock options under the Company's 1999 Non-Employee Director Stock Option Plan.
4
7
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued for
the last two years for the Company's Chief Executive Officer and its three other
executive officers (together, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION(1) SHARES
------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(2) COMPENSATION(3)
--------------------------- ---- -------- ------- ------------ ---------------
CURRENT EXECUTIVE OFFICERS
Robert J. McGovern........................ 1999 $171,046 $25,228 -- $2,264
Chairman of the Board, President and 1998 145,000 2,902 -- $2,125
Chief Executive Officer
James A. Tholen........................... 1999 160,004 31,100 70,000 --
Senior Vice President, Chief Financial 1998 40,614 -- 255,000 --
Officer and Director
James A. Winchester, Jr................... 1999 135,369 25,700 35,000 2,536
Senior Vice President of Engineering and 1998 115,000 -- -- 2,382
Chief Technology Officer
FORMER EXECUTIVE OFFICER
Eugene J. Austin(4)....................... 1999 95,694 4,587 -- 3,000
Senior Vice President of Sales 1998 130,000 5,804 -- 2,809
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total annual
salary of the Named Executive Officer.
(2) Represents the number of shares covered by options to purchase shares of
Common Stock granted during the applicable year.
(3) These amounts represent executive disability insurance premiums.
(4) Mr. Austin resigned effective August 6, 1999.
STOCK OPTION GRANTS
The following table sets forth grants of stock options to each of the Named
Executive Officers during the year ended December 31, 1999:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
---------- ---------------- ----------- ---------- ---------- ----------
Robert J. McGovern............. -- -- -- -- -- --
James A. Tholen................ 70,000 7.9% $6.06 12/8/09 $266,887 $676,344
James A. Winchester, Jr........ 35,000 3.9% 6.06 12/8/09 133,444 338,172
Eugene J. Austin............... -- -- -- -- -- --
- ---------------
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compound rates of appreciation (5% and 10%) on
the market value of the Common Stock on the date of option grant over the
term of the
5
8
options. These numbers are calculated based on rules promulgated by the
Securities and Exchange Commission and do not reflect the Company's estimate of
future stock price growth. Actual gains, if any, on stock option exercises and
Common Stock holdings are dependent on the timing of such exercise and the
future performance of the Common Stock. There can be no assurance that the
rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the individuals.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning option
exercises by the Named Executive Officers in 1999 and the number and value of
unexercised options held by each of the Named Executive Officers on December 31,
1999:
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR END AT FISCAL YEAR END(2)
NUMBER OF --------------------------- ---------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
Robert J. McGovern.......... -- -- -- -- -- --
James A. Tholen............. 72,500 $ 438,894 -- 257,500 -- $998,906
James A. Winchester, Jr..... -- -- -- -- -- --
Eugene J. Austin............ 199,144 1,595,277 -- 35,000 -- 13,125
- ---------------
(1) Represents the difference between the exercise price and the fair market
value per share of the Common Stock at the date of exercise. For exercises
prior to the Company's initial public offering, the fair market value was
the value determined from time to time by the Company's Board of Directors.
For exercises after the initial public offering, the fair market value was
the last sale price of the Common Stock on the date of exercise as reported
on the Nasdaq National Market.
(2) Represents the difference between the exercise price and the last sale price
of the Common Stock as reported on the Nasdaq National Market on December
31, 1999 ($6.44).
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Transactions With ADP
In January 1998, the Company entered into the ADP joint marketing and sales
representative agreement with ADP, Inc., which was amended in March 1999. Under
the terms of this agreement, ADP agreed to market the Company's services to
ADP's current and prospective clients using, at a minimum, ADP's major accounts
division direct sales force. This sales force is currently comprised of
approximately 500 salespeople and is generally responsible for selling to
companies with between 100 and 1,000 employees. Under the terms of the
agreement, ADP has the right, but not the obligation, to market the Company's
online recruitment offerings on a worldwide basis. The agreement provides for
ADP to market the Company's online recruitment offerings using a co-branding
strategy, which allows ADP to sell the Company's online recruitment offerings
using materials incorporating ADP's name and logo. As its commission for sales
made to ADP clients and prospects through orders procured by ADP, ADP is
entitled to retain a percentage of total monthly revenue to the Company for job
advertisements on CareerBuilder.com purchased through such ADP orders and a
percentage of total monthly revenue to the Company for job advertisements on the
other sites on the CareerBuilder Network purchased through such ADP orders. ADP
is also entitled to receive a percentage of the Company's revenue from sales of
online banner advertising to ADP customers and prospects whose orders were
procured by ADP, as well as other fees associated with account installation and
support. Based on the Company's current revenues, ADP will receive commissions
from 33 1/3% to 50% of revenue generated from job advertisements from customers
for which ADP served as sales agent. The Company is also obligated to pay ADP a
sales commission of 50% of all revenue received from sales of banner advertising
to customers for
6
9
whom ADP served as sales agent. In the year ended December 31, 1999, ADP
received sales commissions of approximately 39% of revenue from customers for
which ADP acted as sales agent. The agreement also generally prohibits ADP's
Employer Services Division, during the term of the agreement, from entering into
any new joint marketing, reseller, distribution or other arrangement with any
other provider of Internet recruitment offerings that offers products or
services similar to TeamBuilder Online in the United States or Canada. However,
under the terms of this agreement, if ADP determines that the CareerBuilder
Network or TeamBuilder Online have material inadequacies that reduce their
ability to perform competitively in relation to other online recruiting
products, the Company must correct the deficiencies specified by ADP or ADP is
free to market alternative online recruitment services, including those of the
Company's competitors, during the term of the agreement. The agreement generally
provides that, during the term of the agreement, the Company will not enter into
any new reseller, distribution or similar agreement with any provider of human
resources information systems offering payroll software or payroll processing
services similar to those offered by ADP to sell the Company's online
recruitment offerings in the United States or Canada, or with another payroll or
benefits administration provider. The ADP agreement continues until January 23,
2002, and thereafter continues automatically unless terminated by either of the
parties. ADP can terminate the agreement at any time after January 23, 2002 by
giving the Company at least 120 days written notice. The Company can terminate
the agreement at any time after January 23, 2002, after giving written notice to
ADP ranging from one to three years depending upon the total revenue generated
from ADP customers and prospects whose orders were procured by ADP.
Notwithstanding termination of the ADP agreement for any reason, ADP will be
entitled to continue to receive on an ongoing basis its allocated share of
recurring revenue to the Company derived from an ADP-acquired customer for as
long as such customer continues to receive any of the Company's online
recruitment offerings for which orders were procured by ADP.
In connection with the execution of the joint marketing and sales
representative agreement and its amendment and the sale of shares of capital
stock to ADP, the Company issued a warrant to ADP, which vests in three
installments. The first installment of 380,000 shares vested at the signing of
the amendment. The exercise price of the first installment is $12.00 per share.
Warrants for the second and third installments of up to 380,000 shares of Common
Stock each will vest based on ADP achieving specified revenue-based milestones.
The revenue-based milestones are measured for a specific time period, by
subtracting from total revenue received from customers for which ADP has acted
as sales agent, sales commissions paid to ADP. In order for the minimum number
of shares under the March 2001 installment of the warrant to vest, the milestone
of revenue minus sales commission for the period from April 1, 2000 through
March 31, 2001 must exceed $10.2 million, with $20.4 million required for the
maximum number of shares issued under the installment to vest. In order for the
minimum number of shares under the March 2002 installment to vest, the milestone
of revenue minus sales commission for the period from April 1, 2001 through
March 31, 2002 must exceed $23.0 million, with $30.0 million required for the
maximum number of shares issuable under the installment to vest. The exercise
price for the second and third installments is $5.00 per share. The ADP warrant
contains antidilution provisions that increase the number of shares for which
the warrant is exercisable if the Company issues additional equity securities
primarily for financing purposes. Each remaining installment of the warrant may
be issuable upon exercise for a maximum of 516,824 shares based on current
antidilution calculations. The number of shares of Common Stock issuable upon
exercise of the warrant may increase up to a maximum of 568,506 shares for each
of the second and third installments as a result of these provisions. The first,
second and third installments are each exercisable, to the extent vested, during
the five-year period following March 4, 1999, March 31, 2001 and March 31, 2002,
respectively.
The Company is recognizing expenses under the first installment of the ADP
warrant. The Company may be required to record significant expenses if the
second and third installments of the ADP warrant vest. See Note 7 of Notes to
the Company's Financial Statements, which are set forth in the Annual Report.
Stock Purchases By Affiliates
In January 1999, the Company issued shares of Class F Convertible Preferred
Stock to entities affiliated with directors of the Company and stockholders of
the Company at a purchase price of $5.45 per share. The number of shares of
Class F Convertible Preferred Stock issued to each entity is set forth below.
Upon
7
10
completion of the Company's initial public offering, each share of Class F
Convertible Preferred Stock automatically converted into one share of Common
Stock.
NUMBER OF SHARES OF CLASS F
NAME OF INVESTOR CONVERTIBLE PREFERRED STOCK
---------------- ---------------------------
New Enterprise Associates VI, Limited Partnership........... 279,792
ADP, Inc.................................................... 63,232
Transactions with Microsoft
In May 1999, the Company entered into a service and distribution agreement
with Microsoft Corporation. In September 1999, pursuant to the terms of this
agreement, the Company began operating a career site for the Microsoft Network.
The service and distribution agreement has a term of two years, with Microsoft
able to extend the agreement for an additional two-year term at its option. The
Company is obligated to provide two individuals dedicated solely to designing,
developing and implementing unique Microsoft-specific features. These
Microsoft-specific developments may not be offered to other parties without
Microsoft's permission for six months following implementation. Under the terms
of the agreement, Microsoft is entitled to "most favored nations" treatment with
respect to revenue allocations relating to the sale of job positions and
advertisements that the Company may agree to in future arrangements with any of
its CareerBuilder Network affiliates. If Microsoft achieves agreed upon website
traffic goals based on percentages of projected site visits, the Company will be
obligated to make guaranteed revenue payments of up to $2.2 million in 2000 and
up to $3.1 million in 2001. The Company has incurred expenses of $293,142 to
Microsoft under this agreement in 1999.
For a payment to the Company of not less than $18.0 million and not more
than $40.0 million, Microsoft may exercise, during the term of the service and
distribution agreement, a right to purchase a perpetual, royalty-free,
irrevocable license to the object code and source code for the software, job
posting databases and other components that make up the career center sites,
including the right to use a TeamBuilder Online product directly associated with
posting to the Microsoft sites. Upon exercise of this option, Microsoft would be
able to offer a job posting service to entities controlled by it. Microsoft
would be prohibited, however, from using the offerings subject to the license to
compete directly with the Company. The amount of the payment Microsoft is
required to make upon exercise of the license option is based on calculations of
revenues earned prior to the option exercise.
Also in May 1999, Microsoft purchased 1,372,817 shares of the Company's
Common Stock for an aggregate purchase price of $17,846,621, or $13.00 per
share. In addition, for no additional cash consideration the Company issued a
warrant to Microsoft representing the right to purchase 873,534 shares of Common
Stock at an exercise price of $13.00 per share. The warrant is immediately
exercisable in full.
Microsoft was not affiliated with the Company at the time the service and
distribution agreement was entered into.
Other Transactions With Affiliates
Pursuant to the Certificate of Incorporation, the Company's board of
directors currently consists of one director designated by the holders of Class
A Convertible Preferred Stock, one director designated by the holders of Class B
Convertible Preferred Stock, two directors designated by the holders of Common
Stock, one director designated by Thomson U.S. Inc. on behalf of the holders of
Class D Convertible Preferred Stock and one director designated by ADP also on
behalf of the holders of Class D Convertible Preferred Stock. This arrangement
terminated upon the completion of the initial public offering.
The Company has adopted a policy that all transactions between it and its
executive officers, directors and affiliates must (i) be on terms no less
favorable to the Company than could be obtained from unaffiliated third parties
and (ii) be approved by a majority of the members of the Board of Directors and
by a majority of the disinterested members of the Board of Directors.
8
11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report addresses the compensation policies of the Company applicable
to its officers during fiscal 1999. The Company's executive compensation program
is administered by the Compensation Committee of the Board of Directors (the
"Committee"), which is composed of two non-employee directors. The Committee is
responsible for determining the compensation package of each executive officer,
including the Chief Executive Officer. In fiscal 1999, the Board of Directors
did not modify in any material way or reject any action or recommendation of the
Committee with respect to executive officer compensation.
OVERVIEW AND PHILOSOPHY
The Company's executive compensation program is designed to promote the
following objectives:
- To provide competitive compensation that will help attract, retain
and reward highly qualified executives who contribute to the
long-term success of the Company.
- To align management's interests with the success of the Company by
placing a portion of the executive's compensation at risk in
relation to the Company's performance.
- To align management's interests with stockholders by including
long-term equity incentives.
The Committee believes that the Company's executive compensation program
provides an overall level of compensation that is competitive within its
industry and among companies of comparable size and complexity. To ensure that
compensation is competitive, the Company regularly compares its compensation
practices with those of other similar companies and sets its compensation
guidelines based on this review. The Committee also seeks to achieve an
appropriate balance of the compensation paid to a particular individual and the
compensation paid to other executives and attempts to maintain an appropriate
mix of salary and incentive compensation. While compensation data are useful
guides for comparative purposes, the Committee believes that a successful
compensation program also requires the application of judgment and subjective
determinations of individual performance.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program consists of base salary,
annual incentive compensation in the form of cash bonuses, and long-term equity
incentives in the form of stock options. Executive officers also are eligible to
participate in certain benefit programs which are generally available to all
employees of the Company, such as life insurance benefits and the Company's 1999
Employee Stock Purchase Plan and 401(k) savings plan.
BASE SALARY
At the beginning of each year, the Committee establishes an annual salary
plan for the Company's senior executive officers based on recommendations made
by the Company's Chief Executive Officer. The Committee attempts to set base
salary compensation within the range of salaries of executive officers with
comparable qualifications, experience and responsibilities at other companies in
the same or similar businesses, and of comparable size and success. In setting
the annual cash compensation for Company executives, the Committee reviews
compensation for comparable positions by reviewing compensation data available
in a number of publicly available surveys and databases. In addition to external
market data, salary determinations depend both upon the Company's financial
performance and upon the individual's performance as measured by certain
subjective non-financial objectives. These non-financial objectives include the
individual's contribution to the Company as a whole, including his or her
ability to motivate others, develop the skills necessary to grow as the Company
matures, recognize and pursue new business opportunities and initiate programs
to enhance the Company's growth and success.
9
12
ANNUAL INCENTIVE COMPENSATION
The Company's bonus program is designed to provide its key employees with
cash incentives to achieve the Company's financial goals. At the beginning of
each year, the Committee establishes target semi-annual bonuses for each
executive officer, which the executive will receive based on the Company
achieving its targeted financial objectives for that time period, as well as the
executive achieving certain management objectives. Cash bonuses are then paid
semi-annually based upon the Company's attainment of these targeted financial
objectives for the year. During 1999, annual cash bonus targets for the Named
Executive Officers, including Mr. McGovern, were 40% of base salary. Total
bonuses of $86,615 were awarded to the Named Executive Officers on the basis of
1999 performance.
LONG-TERM EQUITY INCENTIVES
The Company's stock option program is designed to promote the identity of
long-term interests between the Company's employees and its stockholders and to
assist in the retention of executives. The size of option grants is generally
intended by the Committee to reflect the executive's position with the Company
and his or her contributions to the Company. Stock options generally vest over a
three to five year period in order to encourage key employees to continue in the
employ of the Company. In 1999, all stock options were granted at an option
price equal to the fair market value of the Company's Common Stock on the date
of the grant.
BENEFITS
The Company's executive officers are entitled to receive medical and life
insurance benefits and to participate in the Company's 401(k) retirement savings
plan on the same basis as other full-time employees of the Company. The
Company's 1999 Employee Stock Purchase Plan, which is available to virtually all
employees including executive officers, allows participants to purchase shares
at a discount of 15% from the fair market value at the beginning or end of the
applicable purchase period.
The amount of perquisites, as determined in accordance with the rules of
the Securities and Exchange Commission relating to executive compensation, did
not exceed 10% of salary and bonus for 1999 for any of the Named Executive
Officers.
SUMMARY OF COMPENSATION OF CHIEF EXECUTIVE OFFICER
In 1999, Mr. McGovern, the Company's Chief Executive Officer, received a
salary of $171,046. Mr. McGovern's target bonus was 40% of his base salary, and
was based on targeted growth revenue and achievement of certain objectives as
set by the compensation committee.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation in excess of $1 million paid to
the corporation's Chief Executive Officer and four other most highly paid
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limitation if certain requirements are met. The
Committee has determined that it will make every reasonable effort, consistent
with sound executive compensation principles and the needs of the Company, to
ensure that all amounts paid to the Company's Chief Executive Officer or to any
of the other Named Executive Officers comply with Section 162(m).
COMPENSATION COMMITTEE
Peter J. Barris
Gary C. Butler
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Barris and Mr. Butler served during 1999 as members of the Compensation
Committee. Neither Mr. Barris nor Mr. Butler was at any time during 1999, or at
any other time, an officer or employee of the
10
13
Company. See "Certain Relationships and Transactions" for a description of
certain relationships and transactions between the Company and affiliates of Mr.
Barris and Mr. Butler.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from May 12, 1999 (the first trading date following
the Company's initial public offering) to December 31, 1999 with the cumulative
total return of (i) U.S. companies traded on the Nasdaq Stock Market (the
"Nasdaq Index") and (ii) an index of 5 similar publicly traded companies (the
"Peer Group"). The Peer Group is composed of E-Cruiter.com Inc, Headhunter.Net
Inc., HotJobs.com, topjobs.net plc and TMP Worldwide Inc. This graph assumes the
investment of $100.00 on May 12, 1999 in the Company's Common Stock, the Nasdaq
Index and the Peer Index, and assumes any dividends are reinvested.
COMPARATIVE STOCK PERFORMANCE CHART
CAREERBUILDER, INC. NASDAQ INDEX PEER GROUP
------------------- ------------ ----------
May 12, 1999........................... 100 100 100
December 31, 1999...................... 50 157 195
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of KPMG LLP as the Company's
independent auditors for the current fiscal year. KPMG LLP has served as the
Company's independent auditors since February 1996. Although stockholder
approval of the Board of Directors' selection of KPMG LLP is not required by
law, the Board of Directors believes that it is advisable to give stockholders
an opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors may reconsider its selection of KPMG LLP.
11
14
Representatives of KPMG LLP are expected to be present at the Annual
Meeting and will have the opportunity to make a statement if they desire to do
so and will also be available to respond to appropriate questions from
stockholders.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Mr. Tholen reported the exercise of certain options to purchase shares of
the Company's Common Stock exercised in October and December 1999 on a Form 5
filed in February 2000. Mr. Tholen had previously not reported these
transactions on Form 4. The Company is not aware of any other instance whereby
its officers, directors and holders of 10% of the Company's Common Stock had not
complied in a timely manner during 1999 with Section 16(a) filing requirements.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews, and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and, as required by law, the Company will
reimburse them for their out-of-pocket expenses in this regard.
Pursuant to Securities Exchange Act Rule 14a-8(e), proposals of
stockholders intended to be presented at the 2001 Annual Meeting of Stockholder
proposals must be received by the Company at its principal office at 10780
Parkridge Boulevard, Suite 200, Reston, VA 201910, not later than December 6,
2000 for inclusion in the proxy statement for that meeting. Under the Company's
By-laws, proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders that do not comply with Rule 14a-8(e) must be received
by the Company at its principal office in Reston, Virginia no less than 60 days
nor more than 90 days prior to the date of that meeting. If public notice of the
annual meeting of stockholders of the Company is not given at least 70 days
before the meeting date, any stockholder proposal must be received by the
Company within 10 days after such public notice. A copy of the Company's By-laws
may be obtained from the Secretary of the Company.
By Order of the Board of Directors,
/s/ JAMES A. THOLEN
--------------------------------------
James A. Tholen, Secretary
March 27, 2000
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. STOCKHOLDERS WHO ATTEND
THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN IF THEY HAVE SENT IN THEIR
PROXIES.
12
15
Appendix A
- --------------------------------------------------------------------------------
CAREERBUILDER, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY AND SHOULD BE RETURNED AS SOON AS POSSIBLE
The undersigned, having received notice of the Annual Meeting of
Stockholders and the Board of Directors' proxy statement therefor, and
revoking all prior proxies, hereby appoint(s) James A. Tholen and
Michelle R. Slagle, and each of them, attorneys or attorney of the
undersigned (with full power of substitution in them and each of them)
for and in the name(s) of the undersigned to attend the Annual Meeting
of Stockholders of CareerBuilder, Inc. (the "Company") to be held on
Thursday, May 11, 2000 at 10:00 a.m. at The Tower Club, 8000 Crescent
Drive, Vienna, VA, and any adjournments thereof, and there to vote and
act upon, with all the powers the undersigned would possess if
personally present.
In their discretion, the proxy holders are authorized to vote upon such
matters as may properly come before the meeting or any adjournments
thereof. The shares represented by this proxy will be voted as directed
by the undersigned. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY
ELECTION TO OFFICE OR PROPOSAL, THIS PROXY WILL BE VOTED AS RECOMMENDED
BY THE BOARD OF DIRECTORS. Attendance of the undersigned at the meeting
or at any adjournment thereof will not be deemed to revoke this proxy
unless the undersigned shall revoke this proxy in writing.
(TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
CAREERBUILDER, INC.
MAY 11, 2000
- Please Detach and Mail in the Envelope Provided-
- --------------------------------------------------------------------------------
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE.
WITHHOLD
FOR all nominees AUTHORITY
listed at right, except for all nominees
as marked below listed below FOR AGAINST ABSTAIN
[ ] [ ] NOMINEES: Peter J. Barris 2. To ratify the [ ] [ ] [ ]
1. To elect David C. Wetmore appointment of
two Class I KPMG LLP as the
Directors listed Company's independent
at right for the ensuing three years public accountants
for 2000.
INSTRUCTION: TO WITHHOLD A VOTE FOR THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
AN INDIVIDUAL NOMINEE(S), WRITE THE VOTED IN THE MANNER DIRECTED HEREIN BY THE
NAME OF SUCH NOMINEE(S) IN THE UNDERSIGNED STOCKHOLDER(S). IF NO OTHER
SPACE PROVIDED BELOW. YOUR SHARES INDICATION IS MADE, THE PROXIES SHALL VOTE
WILL BE VOTED FOR THE REMAINING "FOR" ALL DIRECTOR NOMINEES AND "FOR"
NOMINEE(S). PROPOSAL 2. A VOTE "FOR" ALL DIRECTOR
NOMINEES AND A VOTE "FOR" PROPOSAL 2 ARE
RECOMMENDED BY THE BOARD OF DIRECTORS.
- ---------------------------------------
IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING AND ANY ADJOURNMENT THEREOF.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE ENCOURAGED TO COMPLETE,
DATE, SIGN AND RETURN THIS PROXY IN THE
ACCOMPANYING ENVELOPE.
Stockholder __________________________ Dated: ____, 2000 Signature (if held jointly) _______________________ Dated: _____, 2000
NOTE: Please sign as name appears hereon. When shares are held by joint
owners, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by authorized officer
giving full title. If a partnership, please sign in partnership name by
authorized person, giving full title.