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
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
SPORTSLINE.COM, 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 No.:
(3) Filing Party:
(4) Date Filed:
[LOGO]
SportsLine.com
2200 West Cypress Creek Road
Fort Lauderdale, Florida 33309
April 25, 2002
Dear Stockholder:
You are cordially invited to attend our 2002 Annual Meeting of Stockholders,
which will be held at 10:00 a.m. on Wednesday, June 12, 2002, at our offices
located at 2200 West Cypress Creek Road, Fort Lauderdale, Florida 33309.
At the annual meeting, our stockholders will be asked to elect three members
to our board of directors. The accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement describe in more detail the matters to be
presented at the annual meeting.
The board of directors recommends that you vote in favor of the election of
the nominated directors.
Please take this opportunity to become involved in the affairs of your
company. Whether or not you expect to be present at the meeting, please
complete, date, sign and mail the enclosed proxy card in the envelope provided.
Returning the proxy card does NOT deprive you of your right to attend the
meeting and vote your shares in person. If you attend the meeting, you may
withdraw your proxy and vote your own shares.
Sincerely,
/s/ Michael Levy
Michael Levy
Chairman of the Board,
President and Chief Executive Officer
SPORTSLINE.COM, INC.
_________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 12, 2002
_________________________
To our Stockholders:
The 2002 annual meeting of stockholders of SportsLine.com, Inc. will be
held at 10:00 a.m., local time, on Wednesday, June 12, 2002, at our offices
located at 2200 West Cypress Creek Road, Fort Lauderdale, Florida 33309 for the
purpose of considering and acting upon the following:
1. Election of three members to our board of directors to hold office
until our 2005 annual meeting or until their successors are duly
elected and qualified; and
2. Any other matters that properly come before the meeting.
The board of directors is not aware of any other business scheduled for the
annual meeting. Any action may be taken on the foregoing proposals at the
annual meeting on the date specified above, or on any date or dates to which the
annual meeting may be adjourned.
Stockholders of record at the close of business on April 16, 2002 are
entitled to notice of, and to vote at, the meeting or at any postponements or
adjournments of the meeting.
By Order of the Board of Directors,
/s/ Kenneth Sanders
Kenneth W. Sanders
Secretary
Fort Lauderdale, Florida
April 25, 2002
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YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY OR PROXIES, AS THE CASE MAY BE, AS SOON AS POSSIBLE IN THE
ENCLOSED POSTAGE PRE-PAID ENVELOPE.
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TABLE OF CONTENTS
Page
----
About the Meeting............................................................................................... 1
What is the purpose of the annual meeting?............................................................. 1
Who is entitled to notice of and to vote at the meeting?............................................... 1
Who can attend the meeting?............................................................................ 1
What constitutes a quorum?............................................................................. 1
How do I vote?......................................................................................... 2
Can I vote by telephone or electronically?............................................................. 2
Can I change my vote after I return my proxy card?..................................................... 2
What are the board's recommendations?.................................................................. 2
What vote is required to approve each item?............................................................ 2
Who pays for the preparation of the proxy?............................................................. 3
Can I see a List of the Stockholders Entitled to Vote??................................................ 3
Stock Ownership................................................................................................. 4
Who are the largest owners of our stock and how much stock do our directors and executive officers
own?.............................................................................................. 4
Section 16(a) Beneficial Ownership Reporting Compliance................................................ 5
Election of Directors........................................................................................... 6
Directors Standing for Election........................................................................ 6
Directors Continuing in Office......................................................................... 7
How are directors compensated?......................................................................... 8
How often did the board meet during 2001?.............................................................. 8
What committees has the board established?............................................................. 8
Report of the Audit Committee.......................................................................... 9
Management...................................................................................................... 10
Executive Officers..................................................................................... 10
Executive Compensation and Other Information.................................................................... 11
Executive Compensation................................................................................. 11
Stock Option Information............................................................................... 12
Employment Agreements.................................................................................. 13
Report of the Compensation Committee on Option Exchanges............................................... 14
Stock Option Information............................................................................... 14
Historical Information Regarding Repricing, Replacement of, Cancellation and Regrant of Options........ 15
Report of the Compensation Committee on Executive Compensation......................................... 17
Compensation Committee Interlocks and Insider Participation............................................ 18
Performance Graph............................................................................................... 19
Certain Transactions............................................................................................ 20
CBS Agreement.......................................................................................... 20
Planned Licensing Agreement............................................................................ 20
Pezaris Loan........................................................................................... 21
Relationships with Independent Public Accountants............................................................... 21
Audit Fees............................................................................................. 21
Financial Information Systems Design and Implementation Fees........................................... 21
All Other Fees......................................................................................... 21
Other Business.................................................................................................. 21
Shareholder Proposals for the 2003 Annual Meeting............................................................... 21
i
[LOGO]
SportsLine.com
2002 ANNUAL MEETING OF STOCKHOLDERS
___________________________________
PROXY STATEMENT
___________________________________
This proxy statement contains information related to our annual meeting of
stockholders to be held on Wednesday, June 12, 2002, beginning at 10:00 a.m.
local time, at our offices located at 2200 West Cypress Creek Road, Fort
Lauderdale, Florida 33309 and at any adjournments or postponements thereof. The
approximate date that this proxy statement, the accompanying notice of annual
meeting and the enclosed form of proxy are first being sent to stockholders is
May 1, 2002. You should review this information in conjunction with our 2001
Annual Report to Stockholders which accompanies this proxy statement.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the annual meeting, stockholders will elect three directors and act upon
any other matters that properly come before the meeting. In addition, our
management will report on our performance during 2001 and respond to questions
from our stockholders.
Who is entitled to notice of and to vote at the meeting?
Only stockholders of record at the close of business on the record date,
April 16, 2002, are entitled to receive notice of the annual meeting and to vote
shares of our common stock that they held on that date at the meeting, or any
postponements or adjournments of the meeting. Each outstanding share of common
stock entitles its holder to cast one vote on each matter to be voted upon.
Who can attend the meeting?
All stockholders as of the record date, or their duly appointed proxies,
may attend. Please note that if you hold shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the record date.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of all of the shares of common stock outstanding on the record date
will constitute a quorum, permitting us to conduct business at the meeting. As
of the record date, 36,101,489 shares of our common stock were outstanding.
Proxies received but marked as abstentions and broker non-votes will be included
in the calculation of the number of shares considered to be present at the
meeting but will not be counted as votes cast "for" or "against" any given
matter.
If less than a majority of outstanding shares entitled to vote are
represented at the meeting, a majority of the shares present at the meeting,
either in person or by proxy, may adjourn the meeting to another date, time or
place, and notice need not be given of the new date, time or place if the new
date, time or place is announced at the meeting before an adjournment is taken.
How do I vote?
If you complete and properly sign the accompanying proxy card and return it
to us, it will be voted as you direct. If you are a registered stockholder and
you attend the meeting, you may deliver your completed proxy card in person.
"Street name" stockholders who wish to vote at the meeting will need to obtain a
proxy from the institution that holds their shares.
Can I vote by telephone or electronically?
Many stockholders will have the option to submit their proxies or voting
instructions electronically through the Internet or by telephone. Stockholders
should check their proxy card or voting instructions forwarded by their broker,
bank or other holder of record to see which options are available. Stockholders
submitting proxies or voting instructions via the Internet should understand
that there may be costs associated with electronic access, such as usage charges
from Internet access providers and telephone companies, that would be borne by
the stockholder.
The deadline for voting by telephone or electronically is 11:59 p.m. on
June 11, 2002.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with our Secretary
either a notice of revocation or a duly executed proxy bearing a later date.
The powers of the proxy holders will be suspended if you attend the meeting in
person and so request, although attendance at the meeting will not by itself
revoke a previously granted proxy.
What are the board's recommendations?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of our board of directors. The board recommends a vote for the election of the
nominated slate of directors. See "Election of Directors," page 6.
The board does not know of any other matters that may be brought before the
meeting nor does it foresee or have reason to believe that the proxy holders
will have to vote for substitute or alternate board nominees. In the event that
any other matter should properly come before the meeting or any board nominee is
not available for election, the proxy holders will vote as recommended by the
board of directors or, if no recommendation is given, in accordance with their
best judgment.
What vote is required to approve each item?
Election of Directors. The affirmative vote of a plurality of the votes
cast at the meeting (either in person or by proxy) is required for the election
of directors. A properly executed proxy marked "WITHHOLD AUTHORITY" with
respect to the election of one or more directors will not be voted with respect
to the director or directors indicated, although it will be counted for purposes
of determining whether there is a quorum. Stockholders do not have the right to
cumulate their votes for directors.
Other Items. In the event other items are properly brought before the
stockholders at the meeting, the affirmative vote of a majority of the votes
cast at the meeting (either in person or by proxy) will be required for
approval. A properly executed proxy marked "ABSTAIN" with respect to any such
matter will not be voted, although it will be counted for purposes of
determining whether there is a quorum. Accordingly, an abstention will have the
effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be
2
counted in determining the number of shares necessary for approval. Shares
represented by such "broker non-votes" will, however, be counted in determining
whether there is a quorum.
Who pays for the preparation of the proxy?
We will pay the cost of preparing, assembling and mailing the proxy
statement, notice of meeting and enclosed proxy card. In addition to the use
of mail, our employees may solicit proxies personally and by telephone. Our
employees will receive no compensation for soliciting proxies other than their
regular salaries. We may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to the beneficial owners
of our common stock and to request authority for the execution of proxies and we
may reimburse such persons for their expenses incurred in connection with these
activities.
Can I See a List of the Stockholders Entitled to Vote?
Any stockholder of record as of the record date may look at the complete
list of the stockholders that are entitled to vote at the annual meeting so long
as it is for a purpose germane to the annual meeting. A list of stockholders
entitled to vote at the annual meeting will be available in these circumstances,
during normal business hours, at our offices located at 2200 West Cypress Creek
Road, Fort Lauderdale, Florida 33309, for a period of ten days prior to the
meeting and at the meeting itself.
3
STOCK OWNERSHIP
Who are the largest owners of our stock and how much stock do our directors and
executive officers own?
The following table shows the amount of common stock beneficially owned as
of March 31, 2002 by (a) each of our directors and nominees for director, (b)
each of our executive officers named in the Summary Compensation Table below,
(c) all of our directors and executive officers as a group and (d) each person
known by us to beneficially own more than 5% of our outstanding common stock.
Unless otherwise provided, the address of each holder is c/o SportsLine.com,
Inc., 2200 W. Cypress Creek Road, Fort Lauderdale, Florida 33309.
Outstanding
Shares Acquirable Total Number
Beneficially Within of Shares Percentage
Owned 60 Days Beneficially Owned of Shares
Name (a) (b) (columns (a)+(b)) Outstanding (%)
- -------------------------------------------------------------------------------------------------------------------------
CBS Broadcasting Inc. (1)
Westinghouse CBS Holding Company, Inc. (1)
Viacom Inc. (1)
NAIRI, Inc. (2)
National Amusements, Inc. (2)
Sumner M. Redstone (2).......................... 11,872,312 - 11,872,312 (3) 32.89%
Bear Stearns Asset Management Inc. (4).......... 4,023,200 - 4,023,200 (5) 11.14%
Michael Levy.................................... 1,887,792 58,333 1,946,125 (6) 5.38%
Joseph Lacob.................................... 388,574 21,250 409,824 (7) 1.13%
Andrew S. Sturner............................... 202,139 19,172 221,311 *
Mark J. Mariani................................. 189,296 28,466 217,762 *
Kenneth W. Sanders.............................. 195,130 16,666 211,796 *
Daniel L. Leichtenschlag........................ 141,969 12,958 154,927 (8) *
James C. Walsh.................................. 105,000 36,187 141,187 (9) *
Gerry Hogan..................................... 0 64,187 64,187 *
Richard B. Horrow............................... 11,000 34,187 45,187 *
Michael P. Schulhof............................. 0 44,187 44,187 *
Andrew Nibley................................... 0 24,187 24,187 *
Thomas Cullen................................... 800 21,250 22,050 *
Sean McManus.................................... 0 - - *
Russell I. Pillar............................... 0 - - *
All directors and executive officers as a group
(15 persons)................................... 3,674,473 398,738 4,073,211 11.16%
- -------------------------------------------------------------------------------------------------------------------------
- ----------------
* Represents less than 1% of our outstanding common stock.
4
(1) The address for CBS Broadcasting Inc. ("CBSBI"), Westinghouse CBS Holding
Company, Inc. ("W/ CBS HCI") and Viacom Inc. ("Viacom") is 1515 Broadway,
New York, New York 10036.
(2) The address for NAIRI, Inc. ("NAIRI"), National Amusements, Inc. ("NAI")
and Mr. Redstone is 200 Elm Street, Dedham, Massachusetts 02026.
(3) This information is based on a Schedule 13D, filed with the Securities and
Exchange Commission on January 4, 2002, which was jointly filed by CBSBI,
W/ CBS HCI, Viacom, NAIRI, NAI and Sumner M. Redstone (collectively, the
"Viacom Reporting Persons"). 11,422,312 shares (the "CBS Shares") are
indirectly held by W/ CBS HCI thorough its ownership of 100% of the
outstanding stock of CBSBI and are indirectly held by Viacom through its
ownership of 100% of the outstanding stock of W/ CBS HCI. In addition,
Viacom may also be deemed the beneficial owner of 450,000 shares (the "WWO
Shares") held by Westwood One, Inc. ("WWO"), as a result of an agreement
between WWO and one of Viacom's wholly-owned subsidiaries. Approximately
68% of Viacom's voting stock is owned by NAIRI, which in turn is a wholly
owned subsidiary of NAI. Beneficial ownership is attributed to Mr.
Redstone as Mr. Redstone is the Chairman of the Board and the beneficial
owner of a controlling interest in NAI. CBS and W/ CBS HCI have shared
voting power and shared dispositive power over the CBS Shares. Viacom,
NAIRI, NAI and Mr. Redstone each have shared voting power over the CBS
Shares and the WWO Shares and shared dispositive power over the CBS Shares.
(4) The address for Bear Stearns Asset Management Inc. is 383 Madison Avenue,
New York, New York 10179.
(5) This information is based on a Schedule 13G filed with the Securities and
Exchange Commission by Bears Stearns Asset Management Inc. ("BSAM") on
February 22, 2002. According to a Schedule 13G filed with the Securities
and Exchange Commission by Bear Stearns S&P STARS Portfolio ("STARS") on
March 14, 2002, STARS is the beneficial owner of 3,677,500 shares of our
common stock which we believe are included in the reported beneficial
ownership of common stock by BSAM.
(6) Includes 60,000 shares of common stock held of record by a charitable non-
profit corporation of which Mr. Levy is a director and the president.
(7) Includes 9,281 shares of common stock held of record by a trust for the
benefit of Mr. Lacob's children for which Mr. Lacob disclaims beneficial
ownership.
(8) Includes 5,707 shares of common stock held of record by Mr.
Leichtenschlag's wife. Mr. Leichtenschlag resigned from SportsLine.com
effective April 30, 2002.
(9) Includes 6,000 shares of common stock held of record by the children of Mr.
Walsh.
Section 16(a) Beneficial Ownership Reporting Compliance
To our knowledge, based solely on a review of the copies of filings
furnished to us and written or oral representations that no other reports were
required, we believe that all of our directors and executive officers complied
during 2001 with the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended, with the exception of a Form 4 for James Walsh
reporting certain transactions in April 2001 which was inadvertently filed late.
5
ELECTION OF DIRECTORS
Directors Standing for Election
Our board of directors is divided into three classes and each class of
directors serves for a three-year term, or until successors of that class have
been elected and qualified. At the annual meeting, the stockholders will elect
three directors, each of whom will serve for a term expiring at the 2005 annual
meeting of stockholders, or until his successor has been duly elected and
qualified.
The board has no reason to believe that any nominee will refuse or be
unable to serve if elected. However, if any of them should become unavailable
to serve as director, the board may designate a substitute nominee or the number
of directors may be reduced in accordance with our by-laws. If the board
designates a substitute nominee, the persons named as proxies will vote for the
substitute nominee designated by the board.
The directors standing for re-election are:
. Thomas Cullen
Thomas Cullen, 42, was appointed as a director in April 1997. He has
been a Managing Partner of LoneTree Capital, a private equity
investment firm based in Denver, Colorado, since September 2000.
Previously, he served as President of MediaOne Ventures, Inc.
(formerly U S WEST, Inc. Media Group's Interactive Services Division)
from April 1997 until its purchase by AT&T Corp. in June 2000. From
1981 through 1997, Mr. Cullen held various senior positions with U S
WEST and MediaOne in the areas of business development, new product
initiatives and strategic investments.
. Richard B. Horrow
Richard B. Horrow, 47, was appointed as a director in September 1994.
He is an attorney and sports development consultant and has served as
President of Horrow Sports Ventures, Inc., a sports consulting firm,
since its inception in May 1988. Mr. Horrow also currently serves as
a consultant for various sports-related matters to the National
Football League, International Speedway Corporation, the PGA TOUR, the
Baltimore Orioles, Major League Soccer and the cities of Richmond,
Virginia; Birmingham and Montgomery, Alabama; Wilmington and
Charlotte, North Carolina; and Wichita, Kansas. Mr. Horrow is a
visiting expert on sports law at the Harvard Law School and is the
sports business, law and marketing expert for CNN and USA Today/XM
Satellite Radio.
. Russell I. Pillar
Russell I. Pillar, 36, was appointed as a director in March 2000. He
has served as President and Chief Executive Officer of Viacom
Interactive Ventures and its predecessor company, CBS Internet Group,
since its formation in January 2000. Mr. Pillar also has served as
Managing Partner of Critical Mass Ventures LLC, an Internet-focused
venture capital firm, since October 1991. From November 1998 to
January 2000, Mr. Pillar served as President and Chief Executive
Officer and a director of Richard Branson's Virgin Entertainment
Group, Inc., a diversified international entertainment content
retailer. From September 1997 to August 1998, Mr. Pillar served as
President and Chief Executive Officer of Prodigy Internet, an internet
service provider, and served as a member of Prodigy's board of
directors, including serving as its Vice Chairman, from October 1996
to February 2000. From December 1993 to September 1996, Mr. Pillar
served as President, Chief Executive Officer, and a Director of
Precision Systems, Inc., an international telecommunications software
provider. In addition to his service on a number of boards of private
emerging media and technology companies, Mr. Pillar serves as a
director of Marketwatch.com, Inc. Mr. Pillar graduated Phi Beta
Kappa, cum laude, with an A.B. from Brown University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
NAMED ABOVE.
6
Directors Continuing in Office
The terms of the following directors expire at the annual meeting of
stockholders in 2003:
. Gerry Hogan
Gerry Hogan, 56, was appointed as a director in November 1996. He is
currently a private investor. From May 1997 to June 2000, he served
as Chairman and Chief Executive Officer of Cygnus Business Media,
Inc., a magazine publishing and trade show company. He served as
President and Chief Executive Officer of the Home Shopping Network
from February 1993 to September 1995. Prior thereto, Mr. Hogan served
as vice chairman of Whittle Communications, L.P. from October 1990 to
February 1993. From October 1971 to September 1987, Mr. Hogan held
various positions at Turner Entertainment Networks and most recently
served as President.
. Sean McManus
Sean McManus, 47, was appointed as a director in March 1997. He has
served as President of CBS Sports since December 1996. From October
1987 to December 1996, Mr. McManus was Senior Vice President U.S.
Television Sales and Programming at Trans World International, the
television division of International Management Group. From August
1981 to October 1987, Mr. McManus was Vice President Planning and
Development at NBC Sports. From September 1979 to August 1981, Mr.
McManus served as Associate Producer and Producer at NBC Sports and
from August 1977 to September 1979 he was a Production Assistant to
the Associate Producer at ABC Sports.
. Michael P. Schulhof
Michael P. Schulhof, 59, was appointed as a director in November 1997.
He is currently a private investor focused on high technology, new
media and internet companies. From June 1974 to January 1996, Mr.
Schulhof held various positions at Sony Corporation of America, Inc.
and most recently served as President and Chief Executive Officer from
June 1993 to January 1996. Mr. Schulhof is a trustee of Brandeis
University, New York University Medical Center, the International
Tennis Hall of Fame and the Brookings Institution, serves on the Board
of Directors of the Center on Addiction and Substance Abuse at
Columbia University and The American Hospital of Paris Foundations and
is a member of the Council on Foreign Relations. Mr. Schulhof is a
director of j2 Global Communications, Inc.
The terms of the following directors expire at the annual meeting of
stockholders in 2004:
. Michael Levy
Michael Levy, 55, has served as the Chairman of the Board, President
and Chief Executive Officer of SportsLine.com since its inception in
February 1994. From 1979 through March 1993, Mr. Levy served as
President, Chief Executive Officer and as a director of Lexicon
Corporation, a high technology company specializing in data
communications and signal processing technology. From January 1988 to
June 1993, Mr. Levy also served as Chairman of the Board and Chief
Executive Officer of Sports-Tech International, Inc., a company
engaged in the development, acquisition, integration and sale of
computer software, equipment and computer-aided video systems used by
professional, collegiate and high school sports programs. Between
June 1993 and February 1994, Mr. Levy was a private investor.
. Joseph Lacob
Joseph Lacob, 46, was appointed as a director in May 1995. He has
served as a general partner of Kleiner Perkins Caufield & Byers, a
venture capital partnership, since May 1987. Mr. Lacob also serves on
the Board of Directors of Corixa, Inc. and Align Technology, Inc., as
well as several privately held ventures in the medical and sports
media businesses.
7
. Andrew Nibley
Andrew Nibley, 50, was appointed as a director in March 1996. He
served as President and Chief Executive Officer of GetMusic, LLC from
October 1999 to December 2001. From January 1998 to September 1999,
he served as President of Reuters NewMedia, Inc. and had been a
director of Reuters NewMedia, Inc. since January 1994. From January
1994 to January 1998, Mr. Nibley was the Editor and Executive Vice
President of Reuters NewMedia, Inc. Mr. Nibley also serves on the
Board of Directors of several privately held companies in the online
media business.
. James C. Walsh
James C. Walsh, 61, was appointed as a director in August 1994. He is
an attorney who has been engaged in the private practice of law since
1968. Mr. Walsh has also served as the President of Namanco
Productions, Inc., a sports marketing and management firm, since 1969.
Namanco Productions, Inc. is the agent and manager of NFL Hall of Fame
quarterback Joe Namath. Mr. Walsh is also a director of Vestin Group,
Inc.
How are directors compensated?
Compensation. During 2001, we did not pay any fees to our directors for
performance of their duties as directors; however we did reimburse certain
directors for out-of-pocket expenses incurred in the performance of their
duties. Commencing in 2002, each non-employee director, other than directors
employed by an entity with an ownership interest in SportsLine.com in excess of
ten percent (10%) of our outstanding voting securities, will receive an annual
cash retainer of $10,000 as well as $2,000 for each board meeting attended by
such director in person (limited to one such fee per quarter) and $500 for each
committee meeting attended by such director (limited to four such fees per year
for audit committee members and two such fees per year for compensation
committee members). In addition, each such non-employee director shall receive
an annual grant of 6,250 options pursuant to our 1997 Incentive Compensation
Plan on February 1 of each year. The compensation that would otherwise be
payable to a director that is employed by an entity with an ownership interest
in SportsLine.com in excess of ten percent (10%) of our outstanding voting
securities shall be paid directly to such entity.
How often did the board meet during 2001?
Our board of directors met eleven times during 2001, including telephonic
meetings, and took action by unanimous written consent once. Each director
attended more than 75% of the total number of meetings of the board and
committees on which he served.
What committees has the board established?
Our board of directors has a standing compensation committee and audit
committee. We do not have a nominating or similar committee. Our board of
directors performs the functions of a nominating or similar committee.
Compensation Committee. Messrs. Hogan, McManus and Pillar are the current
members of our compensation committee. The compensation committee reviews and
approves the compensation of our directors, officers and employees, including
salaries, bonuses, commission, and benefit plans, and administers our stock
plans, including the 1995 Stock Option Plan, the 1997 Incentive Compensation
Plan and the 1997 Employee Stock Purchase Plan. During 2001, the compensation
committee took action by unanimous written consent twice.
Audit Committee. Messrs. Cullen, Lacob and Schulhof (Chair) are the
current members of our audit committee. The members of our audit committee are
independent as defined by the rules and regulations of the Nasdaq Stock Market.
The audit committee represents the board in its relations with our independent
public accountants and oversees the financial reporting and disclosures prepared
by our management. The functions of the audit committee and its activities
during the year ended December 31, 2001 are described below under the heading
"Report of the Audit Committee."
8
Report of the Audit Committee
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference in any
other filing by us under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
The audit committee's role is to act on behalf of the board of directors in
the oversight of all material aspects of our corporate financial reporting and
our external audit, including, among other things, our internal control
structure, the results and scope of the annual audit and other services provided
by our independent auditors and our compliance with legal requirements that have
a significant impact on our financial reports. Although management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls, the audit committee consults with
management and our independent auditors regarding the preparation of financial
statements 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. A full description of the audit committee's primary
responsibilities, operating principles and relationship with internal and
external auditors is contained in the Charter of the Audit Committee adopted by
our board of directors, a copy of which was filed as Appendix A to
SportsLine.com's proxy statement dated August 3, 2001. During the year ended
December 31, 2001, the audit committee met six times.
In fulfilling its oversight responsibilities, the audit committee reviewed
the audited financial statements for the year ended December 31, 2001 with
management including a discussion of the quality of the accounting principles,
the reasonableness of significant judgments and the clarity of disclosures in
the financial statements. The audit committee reviewed the financial statements
for the year ended December 31, 2001 with the independent auditors and discussed
with them all of the matters required to be discussed by Statement of Auditing
Standards No. 61, including the auditors' judgments as to the quality, not just
the acceptability, of our accounting principles. In addition, the audit
committee has received the written disclosures and the letter from the
independent auditors required by Independent Standards Board No. 1 and has
discussed with the independent auditors their independence from management and
SportsLine.com. Finally, the audit committee has considered whether the
provision by the independent auditors of non-audit services to SportsLine.com is
compatible with maintaining the auditors' independence.
The members of the audit committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Members of
the audit committee rely without independent verification on the information
provided to them and on the representations made by management and the
independent auditors. Accordingly, the audit committee's oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the audit
committee's considerations and discussions referred to above do not assure that
the audits of the financial statements have been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
the auditors are in fact "independent."
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors that the audited financial
statements for the year ended December 31, 2001 be included in SportsLine.com's
Annual Report on Form 10-K for the year ended December 31, 2001 for filing with
the Securities and Exchange Commission.
Members of the Audit Committee
Michael P. Schulhof
Thomas Cullen
Joseph Lacob
9
MANAGEMENT
Executive Officers
Our current executive officers are:
Name Age Position
- ------------------------------------------------------------------------------------------------------------------------
Michael Levy.................................. 55 Chairman of the Board, President and Chief Executive Officer
- ------------------------------------------------------------------------------------------------------------------------
Mark J. Mariani............................... 45 President, Sales and Marketing
- ------------------------------------------------------------------------------------------------------------------------
Peter Pezaris................................. 32 President of Operations and Product Development
- ------------------------------------------------------------------------------------------------------------------------
Kenneth W. Sanders............................ 45 President of Finance and Administration and Chief Financial Officer
- ------------------------------------------------------------------------------------------------------------------------
Andrew S. Sturner............................. 37 President, Corporate and Business Development
- ------------------------------------------------------------------------------------------------------------------------
. Michael Levy
See "Directors Continuing in Office."
. Mark J. Mariani
Mark J. Mariani has served as President, Sales and Marketing, since
June 1999. He joined SportsLine.com in April 1996 as Executive Vice
President, Sales. Mr. Mariani is responsible for Sales, Marketing,
Radio Operations and Vegas Insider. From August 1991 to March 1996,
Mr. Mariani served as Executive Vice President of Sports Sales for
Turner Broadcasting Sales, Inc. From June 1990 to August 1991, Mr.
Mariani served as Senior Vice President and National Sales Manager for
CNN in New York, and from May 1986 to June 1990, Mr. Mariani served as
Vice President for CNN Sales Midwest. Prior to joining Turner
Broadcasting, Mr. Mariani served as an Account Executive for WBBM, an
owned and operated CBS television station in Chicago, Illinois.
. Peter Pezaris
Peter Pezaris has served as SportsLine.com's President of Operations
and Product Development since April 2002, responsible for technology
and computer operations as well as programming, production and fantasy
products. From June 2001 to April 2002, Mr. Pezaris was President,
Product Development, responsible for programming, production and
fantasy products and prior to June 2001 was Senior Vice President,
Product Development, responsible for SportsLine.com's Commissioner.com
subsidiary, which produces Fantasy products for CBS SportsLine.com as
well as official Fantasy games for NFL.com, AOL.com and CNNSI.com. Mr.
Pezaris joined SportsLine in December 1999 when SportsLine acquired
Daedalus World Wide Corporation ("DWWC"), the producer of
Commissioner.com fantasy products that Mr. Pezaris co-founded in 1995.
Prior to DWWC, Mr. Pezaris was a systems and software developer for
the investment banking firms of Bankers Trust and Salomon Brothers.
. Kenneth W. Sanders
Kenneth W. Sanders has served as President of Finance and
Administration and Chief Financial Officer since January 2001. Mr.
Sanders became the Vice President and Chief Financial Officer of
SportsLine.com in September 1997 and was appointed Senior Vice
President in October 1998. From January 1996 to August 1997, Mr.
Sanders served as Senior Vice President, Chief Financial Officer of
Paging Network, Inc., the world's largest paging company during the
1990s. From May 1993 to December 1995, Mr. Sanders served as Executive
Vice President, Chief Financial Officer and a director of CellStar
Corporation, an integrated wholesaler and retailer of cellular phones
and related products. Between July 1979 and April 1993, Mr. Sanders
was with KPMG Peat Marwick, most recently as an Audit Partner from
July 1990 to April 1993.
. Andrew S. Sturner
Andrew S. Sturner has served as President, Corporate and Business
Development since June 1999. He joined SportsLine.com as Vice
President, Business Development in June 1995 and was promoted to
Senior Vice President, Business Development in October 1998. From May
1994 to June 1995, Mr. Sturner served as Vice President of Business
Development for MovieFone, Inc., an interactive telephone service
company. From March 1993 to May 1994, Mr. Sturner served as President
of Interactive Services, an interactive audio text development company
that he co-founded in 1992. From August 1990 to March 1993, Mr.
Sturner was a bankruptcy associate at the law firm of Stroock &
Stroock & Lavan.
10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth information concerning the compensation paid
by us for the three fiscal years ended December 31, 2001 to our Chief Executive
Officer and each of our four other highest paid executive officers in 2001.
Summary Compensation Table
Annual Long Term
-------------------- ------------------------------------------
Compensation ($)(1) Compensation Awards
-------------------- ------------------------------------------
Name and Restricted Stock Securities Underlying All Other
- ------------------------------------- ------------------
Principal Position Year Salary Bonus Awards ($)(3) Options (#) Compensation ($)
- ------------------------------------- --- -------- -------- ------------------ ---------------------- ------------------
Michael Levy......................... 2001 $450,000 $120,000 $552,500 175,000 $26,846 (5)
Chairman, President and 2000 385,000 192,500 345,000 (4) 19,747 (5)
Chief Executive Officer 1999 330,000 - (2) 435,000 (4) 17,420 (5)
Daniel L. Leichtenschlag (6)......... 2001 280,000 40,000 129,195 25,000
President of Operations and 2000 210,000 120,000 110,000 (4)
Chief Technology Officer 1999 157,500 - (2) 90,000 (4)
Mark J. Mariani...................... 2001 350,000 80,000 208,050 50,000
President, Sales and Marketing 2000 270,000 160,000 145,000 (4)
1999 230,000 - (2) 100,000 (4)
Kenneth W. Sanders................... 2001 370,000 100,000 222,300 50,000
President of Finance and
Administration 2000 315,000 157,500 145,000 (4)
and Chief Financial Officer 1999 270,000 - (2) 100,000 (4)
Andrew S. Sturner.................... 2001 350,000 60,000 222,889 50,000
President, Corporate and Business 2000 270,000 135,000 145,000 (4)
Development 1999 220,000 - (2) 100,000 (4)
_________________
(1) The aggregate value of perquisites and other personal benefits received by
the named executive officers are not reflected because the amounts are
below the reporting requirements established by the rules of the Securities
and Exchange Commission.
(2) In lieu of cash bonuses for 1999, in January 2000 each executive officer
was granted options to purchase shares of our common stock in the following
amounts: Levy (50,000), Leichtenschlag (15,000), Mariani (25,000), Sanders
(25,000) and Sturner (25,000). The options were immediately exercisable at
an exercise price of $35.3125 per share and have a term of ten years.
(3) In August 2001, SportsLine.com made offers to its executive officers and
certain other key employees who held stock options with an exercise price
of more than $6.00 per share to exchange these stock options for restricted
shares of SportsLine's common stock at an exchange ratio of one share of
restricted stock for each two shares subject to options exchanged.
Pursuant to such offer, Messrs. Levy, Leichtenschlag, Mariani, Sanders and
Sturner agreed to the cancellation of options covering 1,105,000, 261,000,
365,000, 380,000 and 381,006 shares, respectively, in exchange for 552,500,
130,500, 182,500, 190,000 and 190,503 restricted shares, respectively. The
market value of the restricted shares as of the applicable grant date is
included in this column. All such restricted stock was granted under the
1997 Incentive Compensation Plan and vests as follows: 10% of the total
number of shares of restricted stock granted to each executive officer will
vest each quarter for which SportsLine.com reports positive EBITDA
("performance vesting"); provided, that if pursuant to the performance
vesting less than 25% of the total number of shares of restricted stock
granted to an executive officer vest during any year, a number of shares
equal to 25% of the total number of shares of restricted stock granted to
the executive officer less the amount of shares that vested during the
previous twelve months as a result of performance vesting will vest on each
anniversary of the grant date. Under the 1997 Incentive Compensation Plan,
the shares of restricted stock will vest immediately in the event of
certain change of control transactions. At December 31, 2001, the value of
the aggregate restricted stock holdings of Messrs. Levy, Leichtenschlag,
Mariani, Sanders and Sturner, based on the closing price of our common
stock on the Nasdaq National Market on that date ($2.92), was $1,613,300,
$381,060, $532,900, $554,800 and $556,269, respectively. As of December
31, 2001, none of the restricted stock had vested. Dividends, if any, are
required to be paid on the restricted stock reported in the table above.
(4) Each option was exchanged for shares of restricted stock in August 2001.
See note (3) above.
(5) Represents premiums paid for life and disability insurance policies for the
benefit of Mr. Levy.
(6) Mr. Leichtenschlag resigned from SportsLine.com effective April 30, 2002.
11
Stock Option Information
The following table sets forth, with respect to our Chief Executive Officer
and our four other highest paid current executive officers named in the Summary
Compensation Table, certain information concerning the grant of stock options in
2001.
Option Grants in Last Fiscal Year
-----------------------
Individual Grants Potential Realizable
---------------------------------------------------------- Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation for
Underlying Granted to Exercise Option Term (2)
-----------------------
Date of Options Employees in Price
Name Grant Granted(1) Fiscal Year ($/share) Expiration Date 5%($) 10%($)
- --------------------------- ---------- ---------- ----------- --------- --------------- -------- ----------
Michael Levy............... 01/08/2001 175,000 15.98% $4.625 01/07/2011 $509,562 $1,291,330
Daniel L. Leichtenschlag... 01/08/2001 25,000 2.28 4.625 01/07/2011 72,795 184,476
Mark J. Mariani............ 01/08/2001 50,000 4.57 4.625 01/07/2011 145,589 368,951
Kenneth W. Sanders......... 01/08/2001 50,000 4.57 4.625 01/07/2011 145,589 368,951
Andrew S. Sturner.......... 01/08/2001 50,000 4.57 4.625 01/07/2011 145,589 368,951
____________
(1) All such options were granted under the 1997 Incentive Compensation Plan and
become exercisable in installments over four years. Under our 1997
Incentive Compensation Plan, these options will become immediately
exercisable in the event of certain change of control transactions.
(2) Potential realizable value assumes that the stock price increases from the
date of grant until the end of the option term (10 years) at the annual rate
specified (5% and 10%). The 5% and 10% assumed annual rates of appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of the future price of our common
stock. We do not believe that this method accurately illustrates the
potential value of a stock option.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information concerning the
unexercised options held by our Chief Executive Officer and our four other
highest paid current executive officers named in the Summary Compensation Table
at December 31, 2001 and the value thereof, based on a value per share of Common
Stock of $2.92, the closing price of the Common Stock on the Nasdaq National
Market System on December 31, 2001. No stock options were exercised by such
persons during 2001.
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares December 31, 2001 (#) December 31, 2001 ($)
Acquired on Value --------------------- ---------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
Michael Levy...................... - - - 175,000 - -
Daniel L. Leichtenschlag.......... - - 4,625 25,000 - -
Mark J. Mariani................... - - 11,800 50,000 $ 27,081 -
Kenneth W. Sanders................ - - - 50,000 - -
Andrew S. Sturner................. - - 2,506 50,000 - -
12
Employment Agreements
SportsLine.com has entered into an employment agreement with Michael Levy,
its President and Chief Executive Officer and Chairman of the Board of
Directors. The term of the agreement is three years and is automatically
extended by one day for each day elapsed so that at all times the term shall be
for a three-year period. Mr. Levy will receive an annual base salary of at least
$385,000 for each fiscal year beginning January 1, 2000. On January 1, 2001 and
on each January 1 thereafter, such Base Salary shall be increased by an amount
equal to 10% of the base salary payable to Mr. Levy during the preceding
calendar year. Effective January 1, 2002, Mr. Levy's base salary has been set to
$495,000. In addition, Mr. Levy shall receive an annual bonus equal to 50% of
his base salary for each fiscal year for which SportsLine.com achieves its
budgeted EBITDA target, as approved by the compensation committee, and such
other bonuses as may be awarded from time to time by the board or the
compensation committee. During each calendar year of the term of the agreement,
SportsLine.com will grant Mr. Levy options to purchase at least 175,000 shares
of Common Stock at exercise prices to be determined at the time of grant. If Mr.
Levy's employment is terminated by SportsLine.com other than by reason of death,
Disability (as defined in the agreement) or Cause (as defined in the agreement),
or by Mr. Levy for Good Reason (generally defined as a material breach by
SportsLine.com of the agreement), SportsLine.com will pay Mr. Levy within five
days of such termination the sum of his accrued base salary and vacation pay
through the date of termination, an amount equal to three times his current
annual base salary plus an amount equal to three times the greater of the
average bonus received by Mr. Levy for the prior three years or the most recent
bonus paid to Mr. Levy, and maintain certain benefits for Mr. Levy for a period
of three years. In addition, upon such termination by SportsLine.com other than
by reason of death, Disability or Cause or by Mr. Levy for Good Reason or upon
the happening of a Change of Control (as defined in the agreement), at the time
his employment is so terminated or on the date of such Change of Control, as the
case may be, all shares of restricted stock held by Mr. Levy shall no longer be
subject to forfeiture and all unvested stock options held by Mr. Levy will
immediately vest and be exercisable for one year following the date of
termination or Change of Control, as applicable, or, if earlier, until the then
scheduled expiration date(s) of such options. In addition, upon a change of
control caused by CBS Broadcasting Inc., or any of its affiliates, becoming the
beneficial owner of forty percent or more of SportsLine.com's outstanding voting
securities as a result of the issuance of such securities by SportsLine.com, Mr.
Levy shall be entitled, at his discretion, to surrender any out-of-the-money
stock options held by him at such time for shares of common stock issued
pursuant to the 1997 Incentive Compensation Plan at an exchange rate of one
share of common stock for every two options surrendered. During his employment
and for a period of two years after termination, Mr. Levy is prohibited from
competing with SportsLine.com or soliciting employees or former employees of
SportsLine.com.
SportsLine.com has entered into employment agreements with each of its
other executive officers, specifically Kenneth W. Sanders (President of Finance
and Administration and Chief Financial Officer), Mark J. Mariani (President,
Sales and Marketing), Andrew S. Sturner (President, Corporate and Business
Development) and Peter Pezaris (President of Operations and Product
Development). Each agreement is for a term of three years and is automatically
extended by one day for each day elapsed so that at all times the term shall be
for a three-year period. Messrs. Mariani, Sturner, Sanders and Pezaris will
receive annual base salaries of at least $270,000, $270,000, $315,000 and
$210,000, respectively; an annual bonus equal to 50% of their base salary for
each fiscal year for which SportsLine.com achieves its budgeted EBITDA target
(or revenue target, in the case of Mr. Mariani's agreement), as approved by the
compensation committee; and such other bonuses as may be awarded from time to
time by the board or the compensation committee. During each calendar year,
SportsLine.com will grant each of the foregoing executives options to purchase
at least 50,000 shares of Common Stock, in each case at exercise prices to be
determined at the time of grant. If any of these executive's employment is
terminated by SportsLine.com other than by reason of death, Disability (as
defined) or Cause (as defined), or by the executive for Good Reason (generally
defined as a material breach by SportsLine.com of the agreement), SportsLine.com
will pay such executive within thirty (30) days of such termination the sum of
such executives accrued base salary and any accrued incentive compensation plus
a pro rata portion of his most recent bonus and pay to the executive in bi-
weekly installments for a period of two years an aggregate amount equal to two
times his current base salary plus an amount equal to two times the greater of
the average bonus received by such executive for the prior three years or the
most recent bonus paid to such executive and maintain certain benefits for him
for a period of two years. In addition, upon such termination by SportsLine.com
other than by reason of death, Disability or Cause or by the executive for Good
Reason or upon the happening of a Change of Control (as defined in the
agreement), at the time his employment is so terminated or on the date of such
Change of Control, as the case may be, all shares of restricted stock held by
such executive shall no longer be subject to forfeiture and all unvested stock
options held by him will immediately vest and
13
be exercisable for one year following the date of termination or Change of
Control, as applicable, or, if earlier, until the then scheduled expiration
date(s) of such options. In addition, upon a change of control caused by CBS
Broadcasting Inc., or any of its affiliates, becoming the beneficial owner of
forty percent or more of SportsLine.com's outstanding voting securities as a
result of the issuance of such securities by SportsLine.com, each executive
shall be entitled, at his discretion, to surrender any out-of-the-money stock
options held by him at such time for shares of common stock issued pursuant to
the 1997 Incentive Compensation Plan at an exchange rate of one share of common
stock for every two options surrendered. During each executive's employment and
for a period of two years after termination, each executive is prohibited from
competing with SportsLine.com or soliciting employees or former employees of
SportsLine.com.
Report of the Compensation Committee on Option Exchanges
In August 2001, the compensation committee approved the implementation of a
restricted stock award program pursuant to the stock issuance provisions of the
1997 Incentive Compensation Plan. Each executive officer and certain other key
employees identified to the compensation committee by the chief executive
officer were given the opportunity under the program to surrender his or her
outstanding options with exercise prices in excess of $6.00 per share in return
for shares of restricted stock at an exchange ratio of two option shares for
every one share of restricted stock. Pursuant to this program, an aggregate of
1,909,458 shares of restricted stock were issued in exchange for the
cancellation of outstanding stock options to purchase in the aggregate 3,818,919
shares of common stock, of which an aggregate of 1,265,503 shares of restricted
stock were granted to the executive officers of SportsLine.com, including the
chief executive officer. See note 3 to the Summary Compensation Table above.
The restricted stock granted pursuant to the program vests as follows: 10% of
the total number of shares of restricted stock granted to each employee will
vest each quarter for which SportsLine.com reports positive EBITDA ("performance
vesting"); provided, that if pursuant to the performance vesting less than 25%
of the total number of shares of restricted stock granted to an employee vest
during any year, a number of shares equal to 25% of the total number of shares
granted to the employee less the amount of shares that vested during the
previous twelve months as a result of performance vesting will vest on each
anniversary of the grant date.
The compensation committee believed that this program was necessary because
equity incentives constitute a significant component of the total compensation
package of our executive officers and other key employees and play a substantial
role in our ability to retain the services of these individuals essential to the
Company's long-term financial success. The compensation committee felt that
SportsLine.com's ability to retain these individuals would be significantly
impaired, unless their out-of-the-money options were replaced with valuable
equity incentives which they would forfeit were they to terminate their
employment with SportsLine.com prior to vesting in their awards. Accordingly,
in order for the restricted stock awards to serve their primary purpose of
assuring the continued services of each participant in the program, a new four-
year installment vesting schedule was imposed on those awards, with the ability
for such awards to vest earlier upon the achievement of SportsLine.com's
financial success.
Prior to the approval of the implementation of the program by the
compensation committee, the committee engaged an outside compensation consultant
to review several aspects of SportsLine.com's executive compensation program,
including but not limited to an analysis of the outstanding options under
SportsLine.com's 1997 Incentive Compensation Plan, and our approval of the
program was based in part on the recommendations of such outside consultant.
The restricted stock grants provide a valuable retention incentive to the
executive officers and key employees critical to SportsLine.com's financial
performance. However, those individuals will not receive the benefits of the
awards unless they in fact remain employed by SportsLine.com and earn those
shares through their continued services.
Members of the compensation committee
Gerry Hogan
Sean McManus
Russell Pillar
14
Historical Information Regarding Repricing, Replacement or Cancellation and
Regrant of Options
The following table sets forth information concerning the repricing,
replacement or cancellation and regrant of options held by persons who are
executive officers of SportsLine.com. The table reflects all repricings,
replacements or cancellations and regrants of options that have occurred since
1997 when SportsLine.com became a reporting company under Section 13 of the
Securities and Exchange Act of 1934, as amended. This information is required
to be included in this proxy statement as a result of the "repricing" consisting
of the grants by SportsLine.com to its executive officers and others of
restricted stock vesting over four years, subject to earlier vesting in certain
circumstances, and the relinquishment by such individuals of the indicated
number of stock options set forth below. See "Report of the Compensation
Committee on Option Exchange Program" and note 3 to the Summary Compensation
Table appearing earlier in this proxy statement for further information.
Length of
Market Price Exercise Original Option
Number of of Stock at Price at Term Remaining
Options Time of Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Levy................ 8/17/2001 150,000 $ 1.00 $ 8.0000 - 6 years, 4 months
8/17/2001 175,000 1.00 14.0625 - 7 years, 1 months
8/17/2001 235,000 1.00 31.7500 - 7 years, 10 months
8/17/2001 200,000 1.00 17.0000 - 8 years
8/17/2001 175,000 1.00 35.3125 - 8 years, 5 months
8/17/2001 50,000 1.00 35.3125 - 8 years, 5 months
8/17/2001 20,000 1.00 11.6250 - 8 years, 8 months
8/17/2001 100,000 1.00 7.8125 - 9 years, 2 months
Daniel L. Leichtenschlag.... 8/24/2001 4,000 0.99 8.0000 - 5 years, 9 months
8/24/2001 12,000 0.99 8.0000 - 6 years
8/24/2001 15,000 0.99 8.0000 - 6 years, 4 months
8/24/2001 20,000 0.99 14.0625 - 6 years, 10 months
8/24/2001 10,000 0.99 15.5625 - 7 years, 4 months
8/24/2001 40,000 0.99 30.6875 - 7 years, 9 months
8/24/2001 50,000 0.99 31.7500 - 7 years, 10 months
8/24/2001 25,000 0.99 35.3125 - 8 years, 5 months
8/24/2001 15,000 0.99 35.3125 - 8 years, 5 months
8/24/2001 20,000 0.99 11.625 - 8 years, 8 months
8/24/2001 50,000 0.99 7.8125 - 9 years, 2 months
Peter Pezaris............... 9/04/2001 25,000 0.95 45.875 - 8 years, 3 months
9/04/2001 4,000 0.95 11.625 - 8 years, 8 months
9/04/2001 10,000 0.95 7.8125 - 9 years, 2 months
Mark J. Mariani............. 08/15/01 8,000 1.14 8.0000 - 5 years, 11 months
08/15/01 12,000 1.14 8.0000 - 6 years, 4 months
08/15/01 40,000 1.14 14.0625 - 6 years, 10 months
08/15/01 30,000 1.14 14.0625 - 7 years, 1 month
08/15/01 30,000 1.14 15.5625 - 7 years, 4months
08/15/01 100,000 1.14 31.7500 - 7 years, 10 months
08/15/01 50,000 1.14 35.3125 - 8 years, 5 months
08/15/01 25,000 1.14 35.3125 - 8 years, 5 months
08/15/01 20,000 1.14 11.6250 - 8 years, 8 months
08/15/01 50,000 1.14 7.8125 - 9 years, 2 months
9/16/1998 40,000 14.0625 29.4400 $14.0625 9 years, 9 months
15
Length of
Market Price Exercise Original Option
Number of of Stock at Price at Term Remaining
Options Time of Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth W. Sanders.......... 8/14/2001 17,500 1.17 8.0000 - 5 years, 11 months
8/14/2001 17,500 1.17 8.0000 - 6 years, 4 months
8/14/2001 40,000 1.17 14.0625 - 6 years, 10 months
8/14/2001 30,000 1.17 14.0625 - 7 years, 1 month
8/14/2001 30,000 1.17 15.5625 - 7 years, 4months
8/14/2001 100,000 1.17 31.7500 - 7 years, 10 months
8/14/2001 50,000 1.17 35.3125 - 8 years, 5 months
8/14/2001 25,000 1.17 35.3125 - 8 years, 5 months
8/14/2001 20,000 1.17 11.6250 - 8 years, 8 months
8/14/2001 50,000 1.17 7.8125 - 9 years, 2 months
9/16/1998 40,000 14.0625 29.4400 14.0625 9 years, 9 months
Andrew S. Sturner........... 8/14/2001 3,006 1.17 8.0000 - 5 years, 11 months
8/14/2001 7,049 1.17 8.0000 - 6 years, 4 months
8/14/2001 25,951 1.17 14.0625 - 6 years, 10 months
8/14/2001 70,000 1.17 14.0625 - 7 years, 1 month
8/14/2001 30,000 1.17 15.5625 - 7 years, 4months
8/14/2001 100,000 1.17 31.7500 - 7 years, 10 months
8/14/2001 50,000 1.17 35.3125 - 8 years, 5 months
8/14/2001 25,000 1.17 35.3125 - 8 years, 5 months
8/14/2001 20,000 1.17 11.6250 - 8 years, 8 months
8/14/2001 50,000 1.17 7.8125 - 9 years, 2 months
9/16/1998 30,000 14.0625 29.4400 14.0625 9 years, 9 months
16
The following Report on Executive Compensation and the performance graph
included elsewhere in this proxy statement do not constitute soliciting material
and should not be deemed filed or incorporated by reference into any other
filing by us under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent we specifically incorporate this Report or the
performance graph by reference therein.
Report of the Compensation Committee on Executive Compensation
Compensation Philosophy and Review. Our compensation philosophy for
executive officers serves two principal purposes:
. to provide a total compensation package for officers that is competitive
and enables SportsLine.com to attract and retain key executive and
employee talent needed to accomplish SportsLine.com's long-term business
objectives; and
. to directly link compensation to improvements in SportsLine.com's
performance and increases in stockholder value as measured principally
by the attainment of positive EBITDA, the trading price of
SportsLine.com's Common Stock and an individual's contribution and
personal performance.
The compensation committee reviews, recommends and approves changes to
SportsLine.com's compensation policies and benefits programs, administers
SportsLine.com's stock option plans, including approving stock option grants,
and otherwise seeks to ensure that SportsLine.com's compensation philosophy is
consistent with its best interests and is properly implemented.
Elements of Executive Officer Compensation. SportsLine.com's executive
compensation consists primarily of base salary, health insurance and similar
benefits, cash bonuses, the award of stock options and restricted stock designed
to provide long-term incentive and eligibility to participate in compensation
and benefit programs available to other employees, including SportsLine.com's
Employee Stock Purchase Plan. In addition, the compensation committee may
recommend the grant of discretionary bonuses to SportsLine.com's executive
officers. The compensation committee believes that in the highly competitive,
emerging markets in which SportsLine.com operates, equity-based compensation
provides the greatest incentive for outstanding executive performance and the
greatest alignment of management and stockholder long-term interests.
Officer Salaries. The compensation committee reviews the annual salary of
the executive officers, including the Chief Executive Officer. In determining
the appropriate salary levels, the compensation committee considers, among other
factors, the officer's scope of responsibility, prior experience, past
accomplishments, and data on prevailing compensation levels in relevant markets
for executive talent. The compensation committee did not approve executive
officer salary increases for 2002 for the executive officers other than the
chief executive officer.
SportsLine.com has entered into an employment agreement with Michael Levy,
its President and Chief Executive Officer and Chairman of the Board of
Directors. All aspects of Mr. Levy's fiscal year 2001 compensation were
governed by this employment agreement, including the grant of options to
purchase 175,000 shares of common stock. Pursuant to the terms of this
employment agreement, , Mr. Levy's salary was increased to $495,000, effective
January 1, 2002.
Stock Option Grants and Restricted Stock. SportsLine.com has utilized long-
term equity compensation as an important element for compensating and providing
incentives to its executive officers. It is SportsLine.com's practice to set
option exercise prices for officers at not less than 100% of the stock fair
market value on the date of grant. Thus, the value of the stockholders'
investment in SportsLine.com must appreciate before an optionee receives any
financial benefit from the option. Options are generally granted for a term of
ten years. Options granted to executive officers generally provide that they
are not exercisable until one year after the date of grant, at which time they
become exercisable on a cumulative basis at a maximum annual rate of 25% of the
total number of shares underlying the option grant. In determining the size of
the stock option grants, the compensation committee considers various subjective
factors primarily relating to the responsibilities of the individual officers,
and also to their expected future contributions and the number of shares owned
by the officer or which continue to be subject to vesting under
17
outstanding options. In addition, the compensation committee examines the level
of equity incentives held by each officer relative to the other officers' equity
positions and their tenure, responsibilities, experience, and value to
SportsLine.com. During 2001, the compensation committee granted all executive
officers as a group (including Mr. Levy) additional options to purchase an
aggregate of 350,000 shares of SportsLine.com common stock. The number of
options granted to each executive officer during 2001 was the minimum amount
specified in the employment agreement of each such executive officer. In
addition, the compensation committee granted an aggregate of 1,265,503 shares of
restricted stock to the executive officers (including Mr. Levy) in exchange for
the cancellation of options to purchase an aggregate of 2,531,006 shares of
SportsLine.com common stock. See "Report of the Compensation Committee on Option
Exchanges" and note 3 to the Summary Compensation Table appearing earlier in
this proxy statement for further information.
Annual Cash Bonuses. Annual cash bonus awards are based on both individual
performance and the performance of SportsLine.com relative to an annual plan
prepared before the beginning of each fiscal year and approved by the board of
directors, reflecting appropriate progress toward SportsLine.com's long-term
goals. Bonus awards vary depending on the officer's base salary. In granting
cash bonuses for 2001, the compensation committee considered a number of
factors, including the role played by executive officers in achieving several
important goals during 2001 such as the increase in core advertising revenue
from traditional advertisers, the attainment of the NFL.com relationship and the
extension of the AOL agreement, the successful implementation of cost-
containment initiatives, and the growth of SportsLine.com's fantasy offerings,
and awarded the annual bonuses set forth in the Summary Compensation Table. The
annual bonuses were less than the maximum amounts set forth in each executive's
employment agreement.
Summary. The compensation committee believes that SportsLine.com's
compensation programs are competitive with those of other technology and
Internet companies.
Policy on Deductibility of Compensation. Section 162(m) of the U.S. Internal
Revenue Code limits the tax deductibility by a corporation of compensation in
excess of $1 million paid to the Chief Executive Officer and any other of its
four most highly compensated executive officers. Certain performance-based
compensation is not subject to the limitation on deductibility.
It is our policy to qualify, to the extent reasonable, our executive
officers' compensation for deductibility under applicable tax law. However, we
intend to retain the flexibility necessary to provide total compensation in line
with competitive practice, SportsLine.com's compensation philosophy, and
SportsLine.com's and its stockholders' best interests and may from time to time
pay compensation to its executive officers that may not be deductible.
Members of the compensation committee
Gerry Hogan
Sean McManus
Russell Pillar
Compensation Committee Interlocks and Insider Participation
The compensation committee is comprised of Gerry Hogan, Sean McManus and
Russell Pillar. No member of the compensation committee is a present or former
officer or employee of SportsLine.com. No interlocking relationship exists
between the members of the compensation committee and the board of directors or
compensation committee of any other company.
18
PERFORMANCE GRAPH
The following graph compares, for the period from November 13, 1997 (the date
that our common stock was first publicly traded) to December 31, 2001, the
cumulative total stockholder return on our common stock with:
. the Nasdaq Stock Market (U.S. companies) Index; and
. the J.P. Morgan H&Q Internet Index.
The graph assumes that $100 was invested on November 13, 1997 in our common
stock, the Nasdaq Stock Market Index and the J.P. Morgan H&Q Internet Index, and
further assumes no payment or reinvestment of dividends. The stock price
performance on the following graph is historical and not necessarily indicative
of future stock price performance.
[GRAPH]
11/13/97 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
SPLN $ 100.00 $ 134.38 $ 194.54 $ 626.56 $ 66.41 $ 36.50
Nasdaq $ 100.00 $ 101.13 $ 142.58 $ 264.91 $ 159.34 $ 126.43
Composite
J.P. Morgan $ 100.00 $ 110.04 $ 263.95 $ 919.62 $ 372.99 $ 231.85
H&Q Internet
Index
19
CERTAIN TRANSACTIONS
CBS Agreement
In March 1997, we entered into a strategic alliance with CBS pursuant to
which CBS acquired a minority ownership interest in us and our flagship Web site
was renamed "cbs.sportsline.com." The CBS agreement was amended in February 1999
(as amended, the "CBS Agreement") to extend the term for an additional five
years, effective as of January 1, 1999, through 2006. Over the term of the
agreement, we have the right to use certain CBS logos and television-related
sports content and will receive extensive network television advertising and on-
air promotions. Commencing with calendar year 1999, CBS is obligated to provide
advertising and promotion of the cbs.sportsline.com Web site pursuant to a fixed
promotion schedule. Under the agreement, CBS has the right to receive specified
percentages of our net revenues. The agreement requires us to maintain and
operate our flagship Web site, cbs.sportsline.com, in accordance with certain
guidelines and restrictions and to cease using any content on cbs.sportsline.com
which CBS determines conflicts, interferes with or is detrimental to the
reputation or business of CBS or which becomes subject to any third party
restriction or claim which would prohibit, limit or restrict the use of such
content on the Internet. CBS has the right to terminate the agreement upon the
acquisition by a CBS competitor of 40% or more of the voting power of our equity
securities or in certain other circumstances, including if we breach a material
term or condition or the agreement or if we become insolvent or subject to
bankruptcy or similar proceedings.
In consideration of additional promotional and advertising opportunities,
at the time of the execution of the amendment in 1999, the Company accelerated
the issuance of the remaining shares that were formerly to be issued in 2000 and
2001 (567,579 and 485,358 shares, respectively), issued additional warrants to
purchase 1,200,000 shares of common stock at per share exercise prices ranging
from $23.00 in 1999 to $45.00 in 2001 and became obligated to issue additional
shares of common stock valued at $100 million between 2002 and 2006. As of
December 31, 2001, all unexercised warrants issued to CBS have expired. Shares
having a fair market value of $20 million will be issued each year based on the
average of closing prices of the common stock on the Nasdaq National Market for
the five-day period ending on the day prior to the applicable issue dates. On
January 1, 2002, the Company issued to CBS 6,882,312 shares of the Company's
stock, valued at $20 million. At March 31, 2002, CBS owned approximately 11.4
million shares of our common stock, representing approximately 32% of our 36.1
million outstanding common shares. Additionally, pursuant to the 1999 amendment,
the original revenue sharing provisions of the CBS agreement were eliminated and
replaced by a new revenue sharing formula, which is calculated on a broader
revenue base and at a lower rate. For the year ended December 31, 2001, revenue
share payments of $3,488,184 were payable to CBS pursuant to the agreement.
Furthermore, during 2001, SportsLine.com expensed $3,000,000 related to shares
issued to Westwood One, Inc., a company that may be deemed an affiliate of CBS,
in exchange for advertising and promotion and purchased approximately $2,227,000
of television, radio and outdoor advertising for cash from CBS and certain of
its affiliates.
In July 2001, SportsLine.com entered into a multi-year agreement to produce
the NFL's Internet sites, including nfl.com, superbowl.com, nfleurope.com and
playfootball.com. CBS is also a party to this agreement and, as such, is
entitled to receive a share of the gross revenues, if any, in excess of
approximately $50 million generated during the term of the agreement after the
payment of certain sales commissions and SportsLine.com's recoupment of
production and hosting expenses. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Overview" in our Annual Report
on Form 10-K for the year ended December 31, 2001 for further information
regarding this agreement.
Planned Licensing Agreement
In August 1994, we entered into a five-year agreement with Planned
Licensing, Inc., a wholly owned subsidiary of Namanco Productions, Inc.,
pursuant to which Planned Licensing, Inc. agreed to cause Joe Namath to provide
certain services to us, including endorsements of our products. James C. Walsh,
one of our directors, is the president and sole stockholder of Namanco
Productions, Inc. Our agreement was amended and extended for an additional
five-year period in October 1999. Under the amended agreement, we are obligated
to pay Planned Licensing, Inc. $200,000 per year in cash on a quarterly basis
commencing on January 1, 2000 and royalties at a rate of $0.15 per month for
each paid subscriber who became a member from the date our service became
generally available
20
to end users on a commercial basis through and including June 30, 1999 and
continues to be a paid subscriber. The amounts paid to Planned Licensing
pursuant to this agreement for the year ended December 31, 2001 were $267,000.
Pezaris Loan
In April 2001, SportsLine.com loaned Peter Pezaris, our President, Product
Development, $200,000 at an annual interest rate of 5.5% secured by 50,000
shares of our common stock owned by Mr. Pezaris. The loan was made in
connection with Mr. Pezaris' relocation from New York to our Fort Lauderdale
headquarters. The loan and accrued interest were paid in full by Mr. Pezaris in
December 2001.
RELATIONSHIPS WITH INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors engaged Arthur Andersen LLP as our auditors in 2001.
The board of directors is appreciative of the many years of quality service
rendered by Arthur Andersen LLP, as its independent auditors. However, in light
of the uncertainties created by recent events affecting Arthur Andersen LLP, we
are evaluating our options regarding the selection of independent auditors for
2002 based on what is in the best interests of our stockholders. One or more
representatives of Arthur Andersen LLP are expected to be present at the annual
meeting and will be afforded the opportunity to make a statement if they so
desire and to respond to appropriate stockholder questions. During fiscal 2001,
we retained Arthur Andersen LLP to provide services in the following categories
and amounts:
Audit Fees
The aggregate fees billed by Arthur Andersen LLP for professional services
rendered for the audit of our financial statements for the year ended December
31, 2001 and for the reviews of the financial statements included in our
Quarterly Reports on Form 10-Q during the year ended December 31, 2001 were
$153,000.
Financial Information Systems Design and Implementation Fees
Arthur Andersen LLP billed no fees for professional services rendered to us
for information technology services relating to financial information systems
design and implementation for the year ended December 31, 2001.
All Other Fees
The aggregate fees billed by Arthur Andersen LLP for services rendered to
us, other than the services described above under "Audit Fees" and "Financial
Information Systems Design and Implementation Fees," for the year ended December
31, 2001 were $321,200, of which $140,300 was for tax services.
OTHER BUSINESS
We know of no other business to be brought before the annual meeting. If,
however, any other business should properly come before the annual meeting, the
persons named in the accompanying proxy will vote proxies as in their discretion
they may deem appropriate, unless they are directed by a proxy to do otherwise.
STOCKHOLDER PROPOSALS FOR THE 2003 ANNUAL MEETING
Stockholders interested in submitting a proposal for inclusion in the proxy
materials for our annual meeting of stockholders in 2003 may do so by following
the procedures prescribed in SEC Rule l4a-8. To be eligible for inclusion,
stockholder proposals must be received by our Corporate Secretary no later than
December 31, 2002. Notice of a stockholder proposal submitted outside the
procedures of Rule 14a-8 will be considered untimely unless submitted by such
date. If a proposal is not submitted by that date, the persons named in our
proxy for the 2003 annual meeting will be allowed to exercise their
discretionary authority to vote upon any such proposal without the matter having
been discussed in the proxy statement for the 2003 annual meeting.
21
APPENDIX A
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PROXY
[LOGO] SportsLine.com
Annual Meeting of Stockholders - June 12, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of SportsLine.com, Inc. (the "Company"), a
Delaware corporation, hereby acknowledge(s) receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 25, 2002, and
hereby appoint(s) Michael Levy and Kenneth W. Sanders and each or either of
them, proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
Annual Meeting of Stockholders of the Company, to be held on June 12, 2002 at
10:00 a.m., local time, at the Company's offices located at 2200 West Cypress
Creek Road, Fort Lauderdale, Florida 33309, and at any postponement or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
all matters set forth on the reverse side.
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
(Continued, and to be signed and dated, on the reverse side.)
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[LOGO] SportsLine.com VOTE BY INTERNET - www.proxyvote.com
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Use the Internet to transmit your voting instructions
Investor Relations and for electronic delivery of information. Have your
SportsLine.com, Inc. proxy card in hand when you access the web site. You
2200 W. Cypress Creek Road will be prompted to enter your 12-digit Control Number
Fort Lauderdale, FL 33309 which is located below to obtain your records and
create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions. Have your proxy card in hand when you
call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow
the simple instructions the Vote Voice provides you.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in
the postage-paid envelope we've provided or return to
SPORTSLINE.COM, INC. c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION
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FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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[LOGO] SportsLine.com
THE DIRECTORS RECOMMEND A VOTE "FOR" EACH OF THE DIRECTORS LISTED BELOW
Vote on Directors
1. To elect as Directors of SportsLine.com, Inc. the nominees listed below.
01) Thomas Cullen For Withhold For All
02) Richard B. Horrow All All Except
03) Russell I. Pillar
To withhold authority to vote, mark "For All Except" to the left and write the
nominee's number on the line below.
Vote on Proposals
2. In their discretion, upon such other matters that may properly come before
the meeting or any postponement or adjournments thereof.
The shares represented by this proxy when properly executed will be voted in
the manner directed herein by the undersigned Stockholder(s). If no direction
is made, this proxy will be voted for each of the listed nominees. If any other
matters properly come before the meeting, the person named in this proxy will
vote in their discretion.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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