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
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
Cybergold, 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed 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
May 9, 2000
TO THE STOCKHOLDERS OF
CYBERGOLD, INC.:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Cybergold, Inc. (the "Company") on June 23, 2000, at 9:00
a.m., local time, which will be held at the Oakland Marriott City Center, 1001
Broadway, Oakland, California.
Details of business to be conducted at the Annual Meeting are given in the
attached Notice of Annual Meeting and Proxy Statement.
After careful consideration, the Company's Board of Directors has
unanimously approved the proposals and recommends that you vote FOR each such
proposal.
We hope that you will attend the Annual Meeting. In any event, after
reading the Proxy Statement, please mark, date, sign and return the enclosed
proxy card in the accompanying reply envelope. If you decide to attend the
Annual Meeting, please notify the Secretary of the Company if you wish to vote
in person and your proxy will not be voted.
A copy of the Company's 1999 Annual Report to Stockholders has been mailed
concurrently herewith to all stockholders entitled to notice of and to vote at
the Annual Meeting.
Sincerely yours,
/s/ A. NATHANIEL GOLDHABER
A. NATHANIEL GOLDHABER
Chairman of the Board and
Chief Executive Officer
3
CYBERGOLD, INC.
1330 BROADWAY, 12TH FLOOR
OAKLAND, CALIFORNIA 94612
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Cybergold, Inc. (the "Company") will
be held at the Oakland Marriott City Center, 1001 Broadway, Oakland, California,
on Friday, June 23, 2000, at 9:00 a.m. local time, to:
1. Elect two Directors to serve until the 2003 Annual Meeting and
until their successors have been elected and qualified;
2. Ratify the selection of Arthur Andersen LLP as independent public
accountants for the Company for the fiscal year ending December 31, 2000;
and
3. Transact any other business, which may properly come before the
meeting and any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement that accompanies this Notice.
Stockholders of record at the close of business on April 26, 2000, will be
entitled to notice of and to vote at the Annual Meeting and at any continuation
or adjournment thereof.
All stockholders are cordially invited and encouraged to attend the Annual
Meeting. In any event, to ensure your representation at the Annual Meeting,
please carefully read the accompanying Proxy Statement, which describes the
matters to be voted on at the Annual Meeting and sign, date and return the
enclosed proxy card in the reply envelope provided. Should you receive more than
one proxy because your shares are registered in different names and addresses,
each proxy should be returned to assure that all your shares will be voted. If
you attend the Annual Meeting and vote by ballot, your proxy will be revoked
automatically and only your vote at the Annual Meeting will be counted. The
prompt return of your proxy card will assist us in preparing for the Annual
Meeting.
We look forward to seeing you at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ A. NATHANIEL GOLDHABER
A. NATHANIEL GOLDHABER
Chairman of the Board and
Chief Executive Officer
Oakland, California
May 9, 2000
4
CYBERGOLD, INC.
1330 BROADWAY, 12TH FLOOR
OAKLAND, CALIFORNIA, 94612
------------------------
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Cybergold, Inc., a Delaware corporation ("CGLD" or the
"Company"), of proxies for the Annual Meeting of Stockholders of the Company
(the "Annual Meeting") to be held on June 23, 2000, at 9:00 a.m., Pacific time,
at the Oakland Marriott City Center, 1001 Broadway, Oakland, California, and any
adjournment or postponement thereof. This Proxy Statement was first mailed to
stockholders on or about May 9, 2000.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders. Each proposal is described in more detail in a subsequent section
of this Proxy Statement.
VOTING
Only holders of record of the Common Stock of the Company ("Common Stock")
at the close of business on April 26, 2000, will be entitled to vote at the
Annual Meeting and any continuations or adjournments thereof. Each share
entitles the holder to one vote on each matter to come before the Annual
Meeting. On April 26, 2000, there were approximately 21,438,180 shares of Common
Stock outstanding and entitled to vote at the Annual Meeting.
If any stockholder is unable to attend the Annual Meeting, such stockholder
may vote by proxy. The enclosed proxy is solicited by the CGLD Board of
Directors (the "Board of Directors" or the "Board"), and, when returned properly
completed, will be voted as you direct on your proxy card. In the discretion of
the proxy holder, shares represented by such proxies will be voted upon any
other business as may properly come before the Annual Meeting. Abstentions and
broker non-votes are each included in the number of shares present for quorum
purposes. The presence in person or by proxy of the holders of shares
representing a majority of all outstanding shares will constitute a quorum.
Abstentions, which may be specified on all proposals other than the election of
Directors, are counted as votes against the proposal in determining whether a
proposal has been approved, and broker non-votes are not counted as votes for or
against the proposal. Proposal 1 requires a plurality of votes cast. However,
votes withheld and broker non-votes are not counted toward a nominee's total.
The affirmative vote of the holders of a majority of the shares present or
represented by proxy at the Annual Meeting is required for the adoption of
Proposal 2. If no specific instructions are given with respect to matters to be
acted upon at the Annual Meeting, shares of Common Stock represented by a
properly executed proxy will be voted FOR (i) the election of management's
nominees for Directors listed in Proposal 1 and (ii) the ratification of the
selection of the independent public accountants for the Company.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivery to the Secretary of the Company
of a written notice of revocation or a duly executed proxy bearing a later date
or by attending the Annual Meeting and voting in person.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may also be solicited by Directors, officers and
employees of the Company who will not receive additional compensation for such
solicitation. Brokerage firms and other custodians, nominees and fiduciaries
will be reimbursed by the Company for their reasonable expenses incurred in
sending proxy material to beneficial owners of the Common Stock.
5
The Annual Report of the Company for the fiscal year ended December 31,
1999 has been mailed concurrently with the mailing of the Notice of Annual
Meeting and Proxy Statement to all stockholders entitled to notice of and to
vote at the Annual Meeting.
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, two Directors are to be elected to serve until the
2003 Annual Meeting and until their successors are elected and qualified, or
until the death, resignation, or removal of such Director. It is intended that
the proxies will be voted for the election of the two nominees named below as
Directors unless authority to vote for any such nominee is withheld. The two
nominees receiving the highest number of votes will be elected. In the
unanticipated event that a nominee is unable or declines to serve as a Director
at the time of the Annual Meeting, the proxies will be voted for any nominee
named by the current Board of Directors to fill the vacancy. As of the date of
this Proxy Statement, the Board of Directors is not aware of any nominee who is
unable or will decline to serve as a Director.
Classified Board. Our certificate of incorporation provides for a
classified Board of Directors consisting of three classes of Directors, each
serving staggered three-year terms. As a result, a portion of our Board of
Directors is elected each year. To implement the classified structure, prior to
the Company's initial public offering, two of the nominees to the Board of
Directors were elected to one-year terms, two were elected to two-year terms,
and three were elected to three-year terms. Thereafter, Directors will be
elected for three-year terms. Christopher D. Alafi and Jay Chiat have been
designated Class I Directors whose term expires at the 2000 annual meeting of
stockholders. A. Nathaniel Goldhaber and Garrett D. Gruener have been designated
Class II Directors whose term expires at the 2001 annual meeting of
stockholders. Regis P. McKenna, Alan Salzman and Peter Sealey have been
designated Class III Directors whose term expires at the 2002 annual meeting of
stockholders.
Executive officers are appointed by the Board of Directors on an annual
basis and serve until their successors have been duly elected and qualified.
In the event that additional persons are nominated, other than by the Board
of Directors, for election as Directors, the proxy holders intend to vote all
proxies received by them for the nominees listed below and any additional Board
of Directors' nominee as described above. The following are the nominees of the
Board of Directors for election as Directors at the date hereof:
NAME AGE TITLE
---- --- -----
Christopher D. Alafi, Ph.D.(1)........................ 36 Director
Jay Chiat(1).......................................... 68 Director
- ---------------
(1) Member Compensation Committee
Christopher D. Alafi, Ph.D. has served as one of our Directors since July
1997. Dr. Alafi is currently a general partner of Alafi Capital Co., a venture
capital firm. Prior to joining Alafi Capital in 1995, Dr. Alafi was a visiting
scholar in the Department of Chemistry at Stanford University. Dr. Alafi is
currently a member of the Board of Directors of a number of private companies.
Dr. Alafi received a B.A. from Pomona College and a Ph.D. in Biochemistry from
the University of Oxford.
Jay Chiat has served as one of our Directors since May 1996. Since October
1998 Mr. Chiat has been the Chief Executive Officer of ScreamingMedia.net, an
Internet news service. From June 1968 to November 1996, Mr. Chiat served as the
Chief Executive Officer of Chiat/Day Advertising, an advertising firm. Mr. Chiat
is a member of the Board of Directors of Department 56, Inc., a designer,
importer and distributor of collectibles and giftware. Mr. Chiat received a B.S.
in Education from Rutgers University and an Executive M.B.A. from the Anderson
School at U.C.L.A.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
ABOVE NOMINEES FOR ELECTION AS DIRECTORS.
2
6
PROPOSAL 2:
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors appointed Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December 31, 2000.
Although the appointment of Arthur Andersen LLP is not required to be
submitted to a vote of the stockholders, the Board of Directors believes it
appropriate as a matter of policy to request that the stockholders ratify the
appointment of the independent public accountants for the fiscal year ending
December 31, 2000. In the event a majority of the votes cast at the meeting are
not voted in favor of ratification, the adverse vote will be considered as a
direction to the Board of Directors of the Company to select other auditors for
the fiscal year ending December 31, 2000.
The Company anticipates that a representative of Arthur Andersen LLP will
be present at the Annual Meeting. The representative will be given the
opportunity to make a statement if they desire to do so, and is expected to be
available to respond to questions submitted either orally or in writing at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
A. Nathaniel Goldhaber has served as President, Chairman of the Board and
Chief Executive Officer since October 1994. Prior to joining Cybergold, Mr.
Goldhaber was self-employed as a venture capitalist. Prior to that Mr. Goldhaber
was the Chief Executive Officer of Kaleida Labs, Inc., a multimedia joint
venture between IBM and Apple Computer, and the Chief Executive Officer of
Centram Systems West, a developer of local area networks. Mr. Goldhaber is a
Member of the Executive Board of the University of California, Berkeley, College
of Letters and Sciences. Mr. Goldhaber received a B.A. from Maharishi
International University and an M.A. from the University of California,
Berkeley.
Garrett P. Gruener has served as one of our Directors since May 1998. Mr.
Gruener has been a general partner of Alta Partners L.P., a venture capital
firm, since February 1996. Since 1992, Mr. Gruener has been a general partner of
funds affiliated with Burr, Egan, Deleage & Co., a venture capital firm. Mr.
Gruener is a member of the Board of Directors of several private companies. Mr.
Gruener received a B.S. from the University of California, San Diego, and an
M.A. from the University of California, Berkeley.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
Regis P. McKenna has served as one of our Directors since May 1996. Mr.
McKenna has been Chairman of The McKenna Group, a Silicon Valley-based
management and marketing consulting firm, since 1970. Mr. McKenna serves on the
Board of the Economic Strategies Institute and is a member of the Council on
Competitiveness. Mr. McKenna also serves on the advisory Board to Stanford's
Graduate School of Business. Mr. McKenna is a trustee of Santa Clara University
and is the Chairman of the Board of the Santa Clara University Center for
Science, Technology and Society. Mr. McKenna serves as a member of the Board of
Directors of Cylink Corporation, a supplier of network information security
products. Mr. McKenna received a B.A. from Duquesne University.
Alan Salzman has served as one of our Directors since May 1998. Mr. Salzman
is a founder and managing partner of VantagePoint Venture Partners, a venture
capital firm focused on the Internet, data networking and communications
services. Prior to joining VantagePoint in 1995, Mr. Salzman was a general
partner with Canaan Partners, a venture capital firm. Prior to that Mr. Salzman
was a partner with Brobeck, Phleger & Harrison, LLP, a law firm. Mr. Salzman
received a B.A. from the University of Toronto, a J.D. from Stanford Law School
and an L.L.M. from the University of Brussels.
Peter Sealey has served as one of our Directors since May 1996. Dr. Sealey
has been a Lecturer and an Adjunct Professor of Marketing at the Haas School of
Business at the University of California, Berkeley since
3
7
1994. In addition, Dr. Sealey has been self-employed as a management consultant,
serving primarily technology-oriented companies, during the same period. Prior
to that, Dr. Sealey was employed by the Coca-Cola Company for 24 years, where he
held a series of senior management positions, including Senior Vice President,
Global Marketing. Dr. Sealey serves on the Board of Directors of Autoweb.com, a
consumer automotive Internet service provider, and USWeb Corporation, an
Internet professional services and integrated marketing communications services
company. Dr. Sealey received a B.S. from the University of Florida, an M.I.A.
from Yale University and an M.A. and a Ph.D. from Claremont Graduate University.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of April 26, 2000, by (i) each
person known by the Company to own beneficially more than five percent (5%) of
the outstanding Common Stock of the Company; (ii) each of the Company's
Directors; (iii) the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company, determined for the year
ended December 31, 1999 (collectively, the "Named Executive Officers"); and (iv)
all Directors and executive officers as a group.
SHARES BENEFICIALLY APPROXIMATE PERCENT
NAME OWNED(1) BENEFICIALLY OWNED(2)
---- ------------------- ---------------------
A. Nathaniel Goldhaber(3).................. 4,812,441 22.48%
Entities affiliated with Alta California
Partners, L.P.(4)........................ 2,712,351 12.67%
VantagePoint Venture Partners, 1996(5)..... 2,230,016 10.42%
Alafi Capital Company(6)................... 1,291,492 6.03%
Gary Fitts(7).............................. 233,333 1.09%
Christopher D. Alafi, Ph.D.(6)............. 1,291,492 6.03%
Jay Chiat.................................. 373,710 1.75%
Garrett P. Gruener(4)...................... 2,712,351 12.67%
Regis P. McKenna(8)........................ 217,011 1.01%
Alan Salzman(5)............................ 2,230,016 10.42%
Peter S. Sealey, Ph.D.(9).................. 77,434 *
Steven F. Farber(10)....................... 199,406 *
Daniel W. Berger(11)....................... 133,332 *
Michael Koifman(12)........................ 133,333 *
All Directors and officers as a group (14
persons)(13)............................. 12,797,360 59.69%
- ---------------
* Represents beneficial ownership of less than 1%.
(1) To the Company's knowledge, except as set forth in the footnotes to this
table, and subject to applicable community property laws, each person named
in this table has sole voting and investment power with respect to the
shares set forth opposite such person's name.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options currently exercisable or exercisable on or before June 26, 2000,
are deemed outstanding for computing the percentage of the person holding
such options but are not deemed outstanding for computing the percentage of
any other person. On April 26, 2000, there were 21,438,180 shares of the
Company's Common Stock outstanding. Options granted to Directors under the
Company's 1996 Employee Stock Option Plan are immediately exercisable;
however any shares purchased under such options are subject to repurchase
by the Company, upon the Director's cessation of Board service prior to
vesting in those shares. Such options vest, and the Company's repurchase
rights lapse, annually over a period of three years commencing on the first
anniversary of the grant date.
4
8
(3) Includes 560,000 shares of Common Stock, which Mr. Goldhaber has
transferred to trusts for family members.
(4) Includes 2,586,153 shares beneficially owned by Alta California Partners,
L.P., and 59,083 shares beneficially owned by Alta Embarcadero Partners
LLC. Of these shares, a total of 67,115 are issuable upon exercise of
warrants. Garrett P. Gruener, one of our Directors, is a general partner of
the general partner Alta California Partners, L.P. and a member of Alta
Embarcadero Partners LLC. The address of Alta California Partners, L.P. and
Alta Embarcadero Partners LLC is One Embarcadero Center, Suite 4050, San
Francisco, CA 94111. Mr. Gruener disclaims beneficial ownership of the
shares held by Alta California Partners, L.P. and Alta Embarcadero Partners
LLC, except to the extent of his pecuniary interest therein.
(5) Alan Salzman, one of our Directors, is a managing partner of VantagePoint
Venture Partners, 1996. The address of VantagePoint Venture Partners, 1996
is 1001 Bayhill Drive, Suite 100, San Bruno, CA 94066. Mr. Salzman
disclaims beneficial ownership of the shares held by VantagePoint Venture
Partners, 1996, except to the extent of his pecuniary interest therein.
(6) Christopher Alafi, one of our Directors, is a general partner of Alafi
Capital Company. The address of Alafi Capital Company is 9 Commodore Drive,
Suite 405, Emeryville, CA 94608. Dr. Alafi disclaims beneficial ownership
of the shares held by Alafi Capital Company, except to the extent of his
pecuniary interest therein.
(7) Includes 33,333 shares of Common Stock issuable upon exercise of
immediately exercisable options, none of which are subject to our right of
repurchase.
(8) Includes 46,666 shares of Common Stock issuable upon exercise of
immediately exercisable options, none of which are subject to our right of
repurchase.
(9) Includes 16,389 shares of Common Stock issuable upon exercise of
immediately exercisable options, none of which are subject to our right of
repurchase.
(10) Includes 199,406 shares of Common Stock issuable upon exercise of
immediately exercisable options, none of which are subject to our right of
repurchase. Mr. Farber resigned his position on February 10, 2000.
(11) Includes 133,332 shares of Common Stock issuable upon exercise of
immediately exercisable options, 87,501 shares of which are subject to our
right of repurchase on or before June 26, 2000.
(12) Includes 133,333 shares of Common Stock issuable upon exercise of
immediately exercisable options, 80,556 shares of which are subject to our
right of repurchase on or before June 26, 2000.
(13) Includes 792,457 shares of Common Stock issuable upon exercise of
immediately exercisable options, 265,629 shares of which are subject to our
right of repurchase on or before June 26, 2000.
5
9
COMPENSATION OF DIRECTORS
AND CERTAIN EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company for the
fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS(1)($) COMPENSATION($) OPTIONS
--------------------------- ------ --------- ----------- --------------- ------------
A. Nathaniel Goldhaber.......... 1999 $120,833 -- -- --
Chairman of the Board and 1998 -- -- -- --
Chief Executive Officer
Steven M. Farber(2)(3).......... 1999 $148,750 $46,049 -- 200,000
Chief Operating Officer 1998 $ 47,744 -- -- 133,333
Gary Fitts...................... 1999 $141,188 $ 7,000 -- 100,000
Chief Technology Officer 1998 $125,000 -- -- --
Michael Koifman(2).............. 1999 $130,000 $ 6,000 -- 50,000
Vice President of Engineering 1998 $ 15,758 -- -- 133,333
Daniel W. Berger(2)............. 1999 $139,169 $33,029 -- 166,666
Senior Vice President, 1998 $ 27,563 -- -- 66,666
General Manager Incentives
Division
- ---------------
(1) The Company's executive officers are eligible for annual cash bonuses. Such
bonuses are generally based upon achievement of individual, as well as
corporate performance objectives determined by the Compensation Committee.
(2) Joined Cybergold, Inc. during 1998.
(3) Mr. Farber resigned his position on February 10, 2000.
6
10
STOCK OPTIONS
The following table contains information concerning stock options grants
made to each of the Named Executive Officers during the fiscal year ended
December 31, 1999. No stock appreciation rights were granted during such fiscal
year to the Named Executive Officers.
OPTION GRANTS IN FISCAL YEAR 1999(1)
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
-------------------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM($)(2)
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION ---------------------------
NAME GRANTED(#)(1) 1999 FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ------------- ---------------- -------------- ---------- ----------- -------------
A. Nathaniel
Goldhaber............ -- -- -- -- -- --
Steven F. Farber(7).... 200,000 17.1(3) $3.90 05/10/09 $490,538 $1,243,119
Gary Fitts(5).......... 100,000 12.8(4) $7.75 12/01/09 $487,393 $1,235,150
Michael Koifman(5)..... 50,000 6.4(4) $7.75 12/01/09 $243,697 $ 617,575
Daniel W. Berger(6).... 66,666 5.7(3) $3.90 05/18/09 $163,511 $ 414,369
Daniel W. Berger(5).... 100,000 12.8(4) $7.75 12/01/09 $487,393 $1,235,150
- ---------------
(1) All options granted, except as specifically noted, had ten-year terms and
vest ratably over four years.
(2) The 5% and 10% annual rates of compounded stock price appreciation are
mandated by rules of the Securities and Exchange Commission. There is no
assurance provided to any Named Executive Officer or any other holder of the
Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock does in fact
appreciate over the option term, no value will be realized from the option
grants made to the Named Executive Officers.
(3) Based on a total of 1,166,264 options granted to our employees under our
1996 Stock Option Plan during the 12 months ended December 31, 1999.
(4) Based on a total of 779,033 options granted to our employees under our 1999
Omnibus Equity Incentive Plan during the 12 months ended December 31, 1999.
(5) Under these grants, 25% of shares vest after completing 12 months of service
from December 1, 1999. The balance vests in equal installments over 36
months of service beginning December 1, 2000.
(6) The 66,666 options granted to Mr. Berger are immediately exercisable.
Cybergold may repurchase shares purchasable under this grant, at the
original exercise price paid per share if Mr. Berger ceases service before
vesting in those shares. Under this grant, 25% of shares vest after
completing 12 months of service and the balance vests in equal installments
over the next 36 months.
(7) The 200,000 shares of Common Stock granted to Mr. Farber at an exercise
price of $3.90 per share were immediately exercisable. 33,333 of these
shares vested upon the closing of the initial public offering on September
22, 1999. The additional 166,667 shares vest based on Cybergold's
performance with respect to several criteria. These criteria include
Cybergold's revenues, the number of merchants utilizing Cybergold's
micropayments system, the introduction of new offerings, the number of
Cybergold members, the number of transactions entered into by members, the
number of visitors to Cybergold's website and Cybergold's general
productivity. To the extent these criteria are not achieved, Mr. Farber's
option will vest in full in five years from the date of grant. Mr. Farber
resigned his position on February 10, 2000.
7
11
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named
Executive Officers concerning their exercise of stock options during the fiscal
year ended December 31, 1999, and the unexercised options held by them as of
December 31, 1999.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND OPTION VALUES AT DECEMBER 31, 1999(1)
NUMBER OF SECURITIES
VALUE REALIZED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
(MARKET PRICE OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
SHARES AT EXERCISE DATE 1999(#) AT DECEMBER 31, 1999(1)
ACQUIRED ON LESS EXERCISE --------------------------- ---------------------------
NAME EXERCISE(#) PRICE)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------------- ----------- ------------- ----------- -------------
A. Nathaniel
Goldhaber............. -- -- -- -- -- --
Steven M. Farber........ -- -- 199,406 -- $3,044,147 --
Gary Fitts.............. 200,000 $777,000 33,333 100,000 $ 589,161 $994,000
Michael Koifman......... -- -- 133,333 50,000 $2,328,661 $497,000
Daniel W. Berger........ -- -- 133,332 100,000 $2,083,646 $994,000
- ---------------
(1) The value of unexercised "in-the-money" options represents the difference
between the exercise price of stock options and $17.6875, the closing sales
price of the Common Stock on December 31, 1999.
EMPLOYMENT AND TERMINATION ARRANGEMENTS
None.
BOARD MEETINGS AND COMMITTEES
During the year ended December 31, 1999, the Board of Directors held eight
meetings and acted once by written consent. During the same period, each
Director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board held during the period for which they were a Director and
(ii) the total number of meetings by all Committees of the Board on which such
Director served held during the period for which they were a Director, except
for Mr. McKenna who attended less than 75% of the Board meetings. There are no
family relationships among any of the executive officers or Directors of the
Company.
The Company currently has an Audit Committee and a Compensation Committee
of the Board of Directors. The Audit Committee of the Board of Directors reviews
and monitors our internal accounting procedures and reviews the results and
scope of the annual audit and other services provided by our independent
accountants. The Audit Committee also consults with our management and our
independent auditors prior to the presentation of financial statements to
stockholders and, as appropriate, initiates inquiries into aspects of our
financial affairs. In addition, the audit committee has the responsibility to
consider and recommend the appointment of, and to review fee arrangements with,
our independent auditors. The Audit Committee, which currently consists of Mr.
McKenna, Mr. Salzman, and Dr. Sealey, held one meeting during the year ended
December 31, 1999.
The Compensation Committee of the Board of Directors reviews and makes
recommendations to the Board regarding the compensation and benefits provided to
our key executive officers and Directors, including stock compensation and
loans. In addition, the compensation committee reviews policies regarding
compensation arrangements and benefits for all of our employees. As part of the
foregoing, the Compensation Committee also administers our 1999 Omnibus Equity
Incentive Plan and 1999 Employee Stock Purchase Plan. This committee, which
currently consists of Dr. Alafi, Mr. Chiat, and Mr. Gruener, held four meetings
and acted two times by written consent during the year ended December 31, 1999.
Pursuant to the Company's 1999 Omnibus Equity Incentive Plan, the Board of
Directors established a Stock Option Committee, which consists of A. Nathaniel
Goldhaber. The Stock Option Committee has the
8
12
authority to grant a limited number of stock options to employees and
consultants who are not considered officers and Directors of the Company under
Section 16 of the Securities Exchange Act of 1934.
The Company does not currently have a Nominating Committee. Although there
are no formal procedures for stockholders to recommend nominees for election to
the Board, the Board will consider recommendations from stockholders, which
should be addressed to Mr. John Steuart, the Company's Secretary, at the
Company's address set forth above.
COMPENSATION OF DIRECTORS
Our Directors receive $5,000 for attendance at each Board meeting and
$2,500 for attendance at each Board committee meeting. In addition, our
Directors are reimbursed for all reasonable out-of-pocket expenses incurred in
connection with their attendance at Board and Board committee meetings. From
time to time, Directors who are not employees of Cybergold have received grants
of options to purchase shares of our Common Stock. On June 25, 1996, we granted
Messrs. Chiat and McKenna each an option to purchase 46,666 shares of our Common
Stock. In addition, on June 25, 1996, in connection with a consulting agreement
with Mr. Sealey, we granted Mr. Sealey an option to purchase 16,666 shares of
our Common Stock at an exercise price of $0.015 per share. On November 11, 1996,
we also granted to Mr. Sealey an option to purchase 30,000 shares of our Common
Stock at an exercise price of $0.225 per share, and on June 19, 1998, in
connection with a consulting agreement with Mr. Sealey, we granted him an option
to purchase 20,000 shares of our Common Stock at an exercise price of $0.75 per
share. Subsequent to our public offering, all Directors will receive automatic
option grants under our 1999 Omnibus Equity Incentive Plan.
Pursuant to the Company's 1999 Omnibus Equity Incentive Plan, outside
Directors are only eligible to receive nonstatutory stock options. Each outside
Director who first becomes a member of the Board after the date of the Company's
initial public offering will receive a one-time option grant for 15,000 shares
of our Common Stock upon taking office. Upon conclusion of each regular annual
meeting of the Company's stockholders held in the year 2000 and thereafter, each
outside Board member who will continue to serve as a Board member will receive
an option covering 7,500 shares. However, an outside Director who received the
one-time grant for 15,000 shares may not in the same calendar year also receive
the annual grant of 7,500 shares. These options have a 10-year term, but will
terminate earlier if the outside Director's service ends. Each one-time or
annual periodic option grant will become exercisable and vested in full on the
first anniversary of the grant date. All options granted to an outside Director
will become fully exercisable if: The Director's service as a Director ends
because of death, total and permanent disability or retirement at or after age
65, or the Company is subject to a change in control. However, if the change in
control transaction is to be treated as a "pooling of interests" for financial
reporting purposes, then the options will not become fully exercisable upon a
change in control if the Company's independent accountants and the other party's
independent accountants determine that accelerated vesting would preclude the
use of "pooling of interests" accounting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists of
three members of the Board: Mr. Gruener, Mr. Chiat and Dr. Alafi. No member of
this committee is a present or former officer or employee of the Company or any
of its subsidiaries.
No executive officer of the Company served on the Board of Directors or
compensation committee of any entity, which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During fiscal 1999 the Board of Directors established a Compensation
Committee (the "Committee") of the Company's Board of Directors. The Committee
is comprised of Dr. Alafi, Mr. Chiat and Mr. Gruener, none of whom is an officer
or employee of the Company.
9
13
The Committee's philosophy regarding the compensation of its executive
officers is (i) to provide a competitive total compensation package that enables
the Company to attract and retain qualified executives; (ii) to provide
executives with incentive bonuses linked to Company and individual performance;
and (iii) to provide executive officers with a significant equity stake in the
Company through stock options or other equity incentives.
Base salaries for all executive officers in fiscal 1999 were determined
with reference to the experience of the executive together with comparisons of
salaries paid by companies in the same and related industries. The Committee
believes that there is little comparative compensation data available bearing on
the compensation of its executives, since there are very few public companies in
the same lines of business as the Company that are comparable in size to the
Company. Base salaries for all executive officers for fiscal 1999, other than
Mr. Goldhaber, were established by the Committee based on recommendations by Mr.
Goldhaber. Generally, base salaries for these executive officers increased
modestly over fiscal 1998 based on the Company's continued increase in revenues.
Executive officers were eligible to receive cash bonuses for fiscal 1999 with
bonus levels established based on each executive's function and level of
responsibility.
The Committee believes that the interests of executives most responsible
for the management and growth of the Company should be closely aligned with the
long-term interests of the Company's stockholders. As a consequence, during
fiscal 1999, the Committee granted stock options in connection with the
Company's initial public offering. In determining the number of options awarded
to an individual executive, the Committee generally establishes a level of award
based upon the position of the individual and his or her level of
responsibility. During the 1999 fiscal year, the Company awarded options to
purchase an aggregate of 516,666 shares of Common Stock to the Named Executive
Officers. All of the stock options vest (i) over time, and (ii) only if certain
performance levels are attained.
Prior to May 1, 1999, Mr. Goldhaber did not receive a salary from the
Company. The compensation arrangements for Mr. Goldhaber are determined based on
the Committee's subjective assessment of his performance, measured by the
Company's overall financial performance and the Committee's assessment of his
contributions to achieving strategic objectives during the year. In assessing
Mr. Goldhaber's contributions, the Committee took into account the fact that the
Company (i) achieved its highest level of revenues during fiscal 1999, (ii)
successfully completed an initial public offering, and (iii) acquired one
internet company.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of the Company's executive officers. The limitation
applies only to compensation, which is not considered to be performance-based.
The non-performance-based compensation paid to the Company's executive officers
in fiscal year 1999 did not exceed the $1 million limit per officer. The Board
approved the implementation of the 1999 Omnibus Equity Incentive Plan under
which the number of shares of Common Stock for which any one individual
participating in the 1999 Omnibus Equity Incentive Plan may be granted stock
options, stock appreciation rights or direct stock issuances is limited to
500,000 shares in any given fiscal year. However, we may grant to a new employee
options or stock appreciation rights covering a maximum of one million shares in
the fiscal year in which his or her service as an employee first begins. As a
result of this limitation and certain other administrative provisions of the
1999 Omnibus Equity Incentive Plan, any compensation deemed paid to a covered
executive officer in connection with the exercise of stock options or stock
appreciation rights granted under the 1999 Omnibus Equity Incentive Plan with an
exercise price equal to the market price of the shares covered by the option or
stock appreciation right on the grant date will qualify as performance-based
compensation.
10
14
The Compensation Committee does not expect that the compensation to be paid
to the Company's covered executive officers for the 1999 fiscal year will exceed
the $1 million limit per officer.
Submitted by the Compensation Committee of the Company's Board of
Directors:
Christopher D. Alafi, Ph.D.
Jay Chiat
Garrett P. Gruener
11
15
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in (i) the
cumulative total stockholder return on the Company's Common Stock since
September 22, 1999 with (ii) cumulative total stockholder return on (a) the
Nasdaq Composite Index and (b) the Hambrecht & Quist Internet Index. The
comparison assumes an investment of $100 on September 23, 1999 and reinvestment
of dividends, if any. The stock price performance shown on the graph is not
necessarily indicative of future price performance.
PERFORMANCE GRAPH
HAMBRECHT & QUIST INTERNET
CYBERGOLD, INC. NASDAQ COMPOSITE INDEX INDEX
--------------- ---------------------- --------------------------
9/23/99 100 100 100
9/30/99 82 100 99
12/31/99 147 148 195
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings made by
the Company under those statutes, the preceding Compensation Committee Report on
Executive Compensation and the Company Stock Performance Graph will not be
incorporated by reference into any of those prior filings; nor will such report
or graph be incorporated into any future filings made by the Company under those
statutes.
OTHER MATTERS
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
beneficial ownership of Common Stock and other equity securities of the Company.
Officers, Directors and greater than ten percent (10%) stockholders are required
by Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all of
the Company's officers, Directors and greater than ten percent beneficial owners
complied with applicable Section 16(a) filing requirements during the 1999
fiscal year.
12
16
STOCKHOLDER PROPOSALS
Requirements for Stockholder Proposals to be brought before an Annual
Meeting. For stockholder proposals to be considered properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
therefore in writing to the Secretary of the Company. To be timely for the
Company's 2001 Annual Meeting of Stockholders, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company between January 31, 2001 and February 28, 2001. A stockholder's notice
to the Secretary must set forth as to each matter the stockholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of shares of the
Company which are beneficially owned by the stockholder, and (iv) any material
interest of the stockholder in such business. Such proposals may be included in
next year's Proxy Statement if they comply with certain rules and regulations
promulgated by the Securities and Exchange Commission.
OTHER BUSINESS
The Board of Directors is not aware of any other matter, which may be
presented for action at the Annual Meeting. Should any other matter requiring a
vote of the stockholders arise, the enclosed proxy card gives authority to the
persons listed on the card to vote at their discretion in the best interest of
the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ A. NATHANIEL GOLDHABER
A. NATHANIEL GOLDHABER
Chairman of the Board
and Chief Executive Officer
Oakland, California
May 9, 2000
13
17
PROXY
CYBERGOLD, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 23, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints A. Nathaniel Goldhaber and John Steuart and
each of them, as proxies, with full power of substitution, and hereby authorizes
them to represent and vote, as designated on the reverse, all shares of common
stock of Cybergold, Inc., a Delaware corporation, held of record by the
undersigned, on April 26, 2000, at the annual meeting of Stockholders to be held
on Friday, June 23, 2000, at 9:00 a.m., pacific standard time, at Oakland
Marriott City Center, 1001 Broadway, Oakland, California, or at any adjournment
or postponement thereof, upon the matters set forth on the reverse, all in
accordance with and as more fully described in the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement, receipt of which is hereby
acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF THE DIRECTOR NOMINEES NAMED ON THE REVERSE AND
"FOR" THE PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY WHERE INDICATED AND RETURN PROMPTLY IN
THE ACCOMPANYING PREPAID ENVELOPE.
(To be Signed on Reverse Side.)
18
1. ELECTION OF DIRECTORS. This proxy will be voted for each of the nominees
identified in the proxy statement at the annual meeting of stockholders
unless authority to vote for one or more of the nominees is expressly
withheld.
[ ] FOR All Nominees [ ] WITHHOLD AUTHORITY To vote for any individual nominee [ ] ABSTAIN
(TO WITHHOLD AUTHORITY FOR ONE OR MORE INDIVIDUAL NOMINEES,
CROSS OUT THE NAME OF EACH SUCH PERSON): Christopher D.
Alafi, Ph.D., Jay Chiat.
2. Ratify the selection of Arthur Andersen LLP as independent public accountants
for the Company for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the annual meeting or any adjournment or
postponement thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE.
-------------------------
-------------------------
SIGNATURE(S)
Date
---------------------
Note: Please sign above
exactly as the shares are
issued. When shares are
held by joint tenants,
both should sign. When
signing as an attorney,
executor, administrator,
trustee or guardian,
please give full title as
such. If a corporation,
please sign in full
corporate name by
president or other
authorized officer. If a
partnership, please sign
in partnership name by
authorized person.