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-SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] 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
GETTY IMAGES, 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 was 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:
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GETTY IMAGES LOGO
April 6, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of Getty Images, Inc. ("Getty Images" or the "Company") which will be held at
the headquarters of Getty Images, 701 North 34th Street, Suite 400, Seattle,
Washington 98103, on May 8, 2001, at 2:30 p.m. We hope that you will be able to
attend the Annual Meeting.
Details of the business to be conducted at the Annual Meeting are presented
in the attached Notice of Annual Meeting and Proxy Statement.
At the Annual Meeting, you will be asked (i) to elect two (2) Class I
Directors to serve three-year terms, and (ii) to ratify the appointment of
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as independent accountants
for the 2001 fiscal year.
Whether or not you attend the Annual Meeting, it is important that your
shares be represented and voted at the meeting. After reading the enclosed Proxy
Statement, kindly complete, sign, date, and promptly return the enclosed Proxy
in the enclosed postage-paid envelope. Returning the Proxy will not preclude you
from voting in person at the meeting should you later decide to attend.
Your management and the Board of Directors unanimously recommend that you
vote FOR both of the nominees for Director and FOR the proposal to ratify the
appointment of PricewaterhouseCoopers as independent accountants for the 2001
fiscal year.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company.
Sincerely,
/s/ MARK H. GETTY
Mark H. Getty
Executive Chairman of the Board of
Directors
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GETTY IMAGES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 2001
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Getty Images, Inc., a Delaware corporation (the "Company"), will be
held at the headquarters of the Company, 701 North 34th Street, Suite 400,
Seattle, Washington, on Tuesday, May 8, 2001 at 2:30 p.m., Pacific Standard
Time, for the following purposes:
1. To elect two (2) Class I Directors to serve until the 2004 Annual
Meeting of Stockholders and until their respective successors are
elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending December 31, 2001;
and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
Only stockholders of record at the close of business on March 27, 2001 are
entitled to notice of, to attend and to vote at the Annual Meeting and any
adjournment or postponement thereof. Additional information regarding the
matters to be acted on at the Annual Meeting can be found in the accompanying
Proxy Statement.
By Order of the Board of Directors
/s/ JEFFREY L. BEYLE
Jeffrey L. Beyle
Senior Vice President, General Counsel
and Secretary
Seattle, WA
April 6, 2001
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, WE URGE YOU TO COMPLETE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. THIS WILL
ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. AN ADDRESSED ENVELOPE FOR
WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT
PURPOSE. SENDING IN YOUR PROXY WILL NOT PREVENT YOU FROM VOTING YOUR SHARES AT
THE ANNUAL MEETING IF YOU DESIRE TO DO SO, AS YOUR PROXY IS REVOCABLE AT YOUR
OPTION.
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GETTY IMAGES, INC.
701 N. 34th Street, Suite 400
Seattle, WA 98103
------------------------
PROXY STATEMENT
------------------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors") of Getty Images,
Inc., a Delaware corporation ("Getty Images" or the "Company"), from the holders
(the "Stockholders") of the issued and outstanding shares of common stock, par
value $0.01 per share (the "Common Stock"), of the Company, to be exercised at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held at 2:30
p.m. on Tuesday, May 8, 2001, at the headquarters of Getty Images, located at
701 North 34th Street, Suite 400, Seattle, Washington.
The purpose of the Annual Meeting is to consider and act upon the following
proposals:
1. To elect two (2) Class I Directors to serve until the 2004 Annual
Meeting of Stockholders and until their respective successors are
elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as independent accountants of the Company for
the fiscal year ending December 31, 2001; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
This Proxy Statement, the enclosed Proxy and the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 are being mailed to the
stockholders entitled to vote at the meeting on or about April 6, 2001.
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 delivering to the Secretary of the
Company a written notice of revocation or a duly executed Proxy bearing a later
date, or by attending the Annual Meeting and voting in person.
RECORD DATE; VOTING SECURITIES
Stockholders of record as of the close of business on March 27, 2001 (the
"Record Date") will be entitled to notice of, to attend and to vote at the
Annual Meeting on the basis of one vote for each share held. At the close of
business on the Record Date, the Company had 51,009,054 shares of Common Stock
outstanding (the "Outstanding Common Stock") held of record by 183 stockholders.
VOTING AND SOLICITATION
The presence at the Annual Meeting, in person or by Proxy, of Stockholders
entitled to cast a majority of the votes entitled to be cast by all the
Stockholders shall constitute a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes (i.e., votes not cast by a
broker or other record holder in "street" or nominee name solely because such
record holder does not have discretionary authority to vote on the matter) will
be counted toward the presence of a quorum, but will not be counted for purposes
of determining the number of votes cast and therefore will not have any effect
on the results of the votes on the proposals. The election of Directors
(Proposal No. 1) requires a plurality of the votes cast on the matter at the
Annual Meeting. The ratification of the appointment of PricewaterhouseCoopers as
independent accountants of the Company (Proposal No. 2) requires the affirmative
vote of Stockholders holding a majority of the shares of Outstanding Common
Stock present or represented by Proxy at the Annual Meeting. Under the
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Delaware General Corporation Law ("DGCL"), holders of shares of Outstanding
Common Stock will not be entitled to appraisal rights with respect to such
shares with respect to either of the proposals.
The expense of preparing, printing and mailing this Proxy Statement will be
paid by the Company. In addition to solicitation by mail, directors, officers
and employees of the Company, without receiving any additional compensation, may
solicit proxies personally or by telephone or facsimile. To assist in the
solicitation process, the Company has engaged Corporate Investor Communications,
Inc. to request brokerage houses, banks and other custodians or nominees holding
stock in their names for others to forward proxy materials to their customers or
principals who are the beneficial owners of shares and will reimburse them for
their expenses in doing so. The Company does not anticipate that the costs and
expenses incurred in connection with this proxy solicitation will exceed those
normally expended for a proxy solicitation for those matters to be voted on in
the Annual Meeting.
This Proxy Statement is accompanied by a proxy card for use by the
Stockholders. The shares of Outstanding Common Stock represented by a proxy card
properly executed, duly returned and not subsequently revoked will be voted at
the Annual Meeting as indicated or, if no instructions are given, in favor of
both of the nominees for Director (Proposal No. 1), in favor of the ratification
of PricewaterhouseCoopers as independent accountants of the Company (Proposal
No. 2), and otherwise in accordance with the judgment of the person or persons
voting the proxy on any other matter properly brought before the meeting. The
Company does not presently know of any other business that may come before the
Annual Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company has a classified Board of Directors, consisting of Class I
Directors, Class II Directors and Class III Directors, the members of which
serve staggered three-year terms. Effective at the time of the Annual Meeting
and until further action of the Board, the Board of Directors has set the number
of members of the Board of Directors at six, two of which are designated as
Class I Directors, two as Class II Directors and two as Class III Directors. The
Company's Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") provides that the term of the Class I Directors terminates on
the date of the Annual Meeting. Accordingly, the Stockholders, voting as a
class, have the right to elect two Directors to serve until the date of the
annual meeting of Stockholders held in 2004 and until their respective
successors are duly elected and qualified. The terms of the Class II and Class
III Directors will terminate on the date of the annual meeting of Stockholders
in the years 2002 and 2003, respectively.
The Board of Directors has nominated James N. Bailey and Andrew S. Garb,
the Class I Director nominees named below, to serve as Class I Directors to hold
office until the annual meeting of Stockholders to be held in 2004 and until
their respective successors are duly elected and qualified. Mr. Bailey and Mr.
Garb are currently Class I Directors of the Company. The remaining four
Directors named below will continue in office. The Board of Directors does not
anticipate that either of these nominees will be unable or unwilling to serve,
but if either nominee should be unable or unwilling to serve, the Proxies will
be voted for the election of such other person as is designated by the Board of
Directors. Set forth below is a brief description of the background of each
nominee for election as a Director and each Director continuing in office.
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NOMINEES FOR CLASS I DIRECTORS
DIRECTOR
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
---- --- ------------------------------------------ --------
James N. Bailey 54 Mr. Bailey has been a Director since February 1998 1998
(Class I) and served as a Director of Getty Communications plc,
our predecessor, from September 1996 to February
1998. Mr. Bailey co-founded Cambridge Associates LLC,
an investment consulting firm, in May 1973 and serves
as its Senior Managing Director. He also serves on
the board of The Plymouth Rock Company, SRB
Corporation, Inc., Direct Response Corporation,
Coolidge Investment Company Inc., Homeowners Direct
Company and a number of not-for-profit organizations,
including the New England Aquarium.
Andrew S. Garb 58 Mr. Garb has been a Director since February 1998 and 1998
(Class I) served as Director of Getty Communications plc from
May 1996 to February 1998. Mr. Garb also has served
as a director of Getty Investments L.L.C. ("Getty
Investments") and its predecessor, Getty Investment
Holdings L.L.C., since 1993. Mr. Garb is a partner in
the law firm of Loeb & Loeb LLP, and he was the
firm's Managing Partner from 1986 to 1992.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE ELECTION OF BOTH OF THE NOMINEES TO THE BOARD OF DIRECTORS LISTED
ABOVE.
DIRECTORS CONTINUING IN OFFICE
DIRECTOR
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
---- --- ------------------------------------------ --------
Christopher H. Sporborg 61 Mr. Sporborg has been a Director since February 1998 1998
(Class II) and served as a Director of Getty Communications plc
from May 1996 to February 1998. From its inception in
1993 until April 1996, he served as a Chairman of
Getty Investment Holdings L.L.C. Mr. Sporborg held
various positions at Hambros Bank Limited from 1962
to 1998, including Deputy Chairman of Hambros PLC and
Chairman of Hambros Insurance Services Group PLC.
Among other positions, Mr. Sporborg is founder and
Chairman of Hambros Countrywide Assured PLC. He is
currently Chairman of Atlas Copco Holdings Ltd. and
Racecourse Holdings Trust Ltd., and he is a Director
of Lindsey Morden Group Inc.
Mark H. Getty 40 Mr. Getty is a co-founder of Getty Images and has 1998
(Class II) been our Executive Chairman since September 1998 and
a Director since February 1998. Mr. Getty served as
Co-Chairman from February 1998 until September 1998.
He served as Executive Chairman of Getty
Communications plc from April 1996 to February 1998.
From March 1995 to April 1996, Mr. Getty served as
the Joint Chairman of Getty Communications plc. In
1993, Mr. Getty co-founded Getty Investment Holdings
L.L.C. From 1990 to 1993, Mr. Getty worked in the
corporate finance division of Hambros Bank Limited.
Mr. Getty serves on the board of directors of Wisden
Cricket Magazine Ltd., John Wisden & Co. Ltd., the
National Gallery Company Ltd., and the National
Gallery Board of Trustees, and he is the Chairman of
Getty Investments.
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DIRECTOR
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
---- --- ------------------------------------------ --------
Jonathan D. Klein 40 Mr. Klein is a co-founder of Getty Images and has 1998
(Class III) been our Chief Executive Officer and a Director since
February 1998. Mr. Klein served as Chief Executive
Officer and as a Director of Getty Communications plc
from April 1996 to February 1998. From March 1995 to
April 1996, Mr. Klein served as the Joint Chairman of
Getty Communications plc. In 1993, Mr. Klein
co-founded Getty Investment Holdings L.L.C. From 1983
to 1993, Mr. Klein held various positions in the
corporate finance division of Hambros Bank Limited.
Mr. Klein serves on the board of Getty Investments,
ACT Theatre, The Accelerator Group Limited, and
Click2learn.com, Inc.
Mark Torrance 54 Mr. Torrance has been our non-executive Vice Chairman 1998
(Class III) since September 1998 and a Director since February
1998. From February 1998 until September 1998, Mr.
Torrance served as our Co-Chairman. Mr. Torrance
co-founded PhotoDisc, Inc. in 1992 and served as its
Chairman of the Board and Chief Executive Officer
from 1992 to February 1998. Prior to founding
PhotoDisc, Inc., Mr. Torrance served as President of
Muzak, Inc. from 1985 to 1987, and as President of
Yesco from 1972 to 1985, both of which are foreground
music distribution companies. Mr. Torrance also
serves as a Director of the Washington Software
Foundation, Atom Films Corporation and Vista
Corporation.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during 2000. Each member of the
Board of Directors attended at least 75% of the aggregate number of meetings of
the Board of Directors and the committees of which he was a member during the
last year. The Company has no nominating committee of the Board of Directors.
The Company has an Audit Committee that consists of Messrs. Bailey, Garb
and Sporborg. The Audit Committee reviews the internal controls of the Company
and reviews the services performed and to be performed by the independent
accountants of the Company during the year. The members of the Audit Committee
also meet regularly with the independent accountants to review the scope and
results of the annual audit. The Audit Committee held six meetings during 2000.
The Company also has a Compensation Committee that consists of Messrs.
Bailey, Garb and Sporborg. The Compensation Committee reviews the compensation
of the senior officers of the Company, including executive bonus plan
allocations, and is responsible for the administration of the Getty Images, Inc.
1998 Stock Incentive Plan (the "Stock Incentive Plan"). The Compensation
Committee held three meetings during 2000.
DIRECTOR COMPENSATION
Members of the Board of Directors did not receive any cash compensation in
connection with their service on the Board of Directors or any committee thereof
during fiscal year 2000. Directors are reimbursed for their reasonable
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors or any committee thereof. In 2000, Messrs. Bailey, Garb and
Sporborg each received grants of options to purchase 15,000 shares of the
Company's Common Stock as compensation for their service as Directors of the
Company. These options were granted under the Stock Incentive Plan and are
scheduled to vest over a four-year period, 25% on the first anniversary from the
date of grant and monthly on a pro rata basis thereafter, and were granted with
an exercise price equal to the average of the high and low prices of the Common
Stock of the Company on the date of grant.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of Messrs. Bailey, Garb or Sporborg is an executive officer of an
entity for which an executive officer of the Company during the last fiscal year
served as a member of a compensation committee or as a director.
BUSINESS EXPERIENCE OF OTHER EXECUTIVE OFFICERS
Set forth below is certain information with respect to other current
executive officers of Getty Images:
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
---- --- ------------------------------------------
A. D. "Bud" Albers 37 Mr. Albers has been our Senior Vice President and Chief
Technology Officer since October 1999. Prior to joining the
Company, Mr. Albers was responsible for global technology
strategies and architectures, as well as enterprise
applications for Monsanto Corporation from November 1997 to
October 1999. From April 1996 through November 1997, he was
the subsidiary Vice President responsible for the
technology, product management and professional services
functions for Ameritech's Electronic Commerce Products
Group. Mr. Albers held senior roles as Vice President of
Advanced Research and Development and Vice President of
Operations for NxTrend Technologies from May 1992 through
April 1996.
Jeffrey L. Beyle 39 Mr. Beyle has been Senior Vice President and General Counsel
since November 2000. Prior to joining the Company, Mr. Beyle
was General Counsel of Coca-Cola's Asia-Pacific Group in
Hong Kong from April 2000 to October 2000. Prior to that,
Mr. Beyle was Vice President of Legal and Business
Development for Coca-Cola China Limited from May 1997 to
April 2000, heading the legal and business development
functions for Coca-Cola's operations in Greater China and,
for several years, South Korea, North Korea and Micronesia.
From July 1994 to May 1997, Mr. Beyle was Vice President of
Legal for Coca-Cola China Limited, heading the legal
function for Coca-Cola's operations in Greater China.
Nick Evans-Lombe 34 Mr. Evans-Lombe has been Senior Vice President, Strategy and
Corporate Development since February 1998 and served as the
Director of Strategy and Corporate Development of Getty
Communications plc from February 1996 to February 1998.
Prior to joining Getty Communications plc in February 1996,
Mr. Evans-Lombe held various positions in the corporate
finance division at Hambros Bank Limited from 1989 to
December 1995. At Getty Communications plc and Getty Images,
he has been involved with strategy, business development and
acquisitions.
John Hallberg 44 Mr. Hallberg has been Senior Vice President and General
Manager of Art.com since April 2000. Before that, Mr.
Hallberg was Senior Vice President and General Manager,
gettyone, Americas from July 1999 to April 2000 and
President of Tony Stone Images North America from October
1998 to July 1999. From September 1996 to October 1998, Mr.
Hallberg served as Senior Vice President of Worldwide
Marketing for Encyclopedia Britannica. From January 1995
until September 1996, he served as Senior Vice President of
Client Services for Information Resources, Inc. Prior to
that time, he held various executive positions at General
Mills.
Elizabeth J. Huebner 43 Ms. Huebner has been Senior Vice President and Chief
Financial Officer since October 2000. Prior to joining the
Company, Ms. Huebner was Executive Vice President and Chief
Financial Officer for Primus Knowledge Solutions, Inc. from
August 1998 to August 2000. Before that, Ms. Huebner was
Vice President and Chief Financial Officer of Fluke
Corporation from March 1996 to July 1998. Before joining
Fluke, Ms. Huebner was with AT&T Wireless (formerly McCaw
Cellular) from 1989 to 1996, where she served as Vice
President, Finance for their Western region from 1992 until
1996.
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NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
---- --- ------------------------------------------
N. William O'Neill 44 Mr. O'Neill has been the Senior Vice President of Human
Resources since April 2000. Prior to joining the Company,
Mr. O'Neill served as the Vice President of Human Resources
and Learning for Coca-Cola China Limited from April 1998 to
March 2000 where he was responsible for all human resources
activities for China, Hong Kong, Taiwan and South Korea.
Prior to that, Mr. O'Neill worked for Motorola, Inc. for
fifteen years, including positions as the Vice President of
Human Resources for their worldwide Paging Products Group
from 1994 to 1997, and Director of Human Resources
Motorola's Asia Pacific region from 1992 until 1994, as well
as Regional Director of Human Resources for Motorola Japan
from 1988 to 1992. Mr. O'Neill also has worked with various
leading high technology companies including United
Technologies Corporation -- Mostek Semiconductor and
Electronic Data Systems (EDS).
Sally von Bargen 52 Ms. Von Bargen has been Senior Vice President and Director
of Marketing since February 2001. Prior to that, Ms. von
Bargen was the President of our Creative Professional
Division from July 1999 to February 2001. Ms. von Bargen
served as President of PhotoDisc, Inc. from February 1998 to
July 1999 and served as its Senior Vice President of Sales
and Service from March 1997 to February 1998. Ms. von Bargen
served as a director of PhotoDisc, Inc. from 1992 to August
1996, and as an advisor and consultant to the chief
executive officer and president from September 1995 to March
1997. She was also a senior management consultant with
Satellite Market Resources from December 1993 to December
1995.
Warwick Woodhouse 49 Mr. Woodhouse has been Senior Vice President, Operations and
Logistics since September 2000 and had previously been
Senior Vice President, Planning since February 1998. He
served as Group Planning Director of Getty Communications
plc from October 1996 to February 1998. From early 1996
until October 1996, Mr. Woodhouse was Executive Director of
Strategic Development of Rennies Travel Pty, a travel and
travel-related services company. During 1995, he was an
Associate Partner at PA Consulting Group, a London-based
international management consulting firm. From 1990 to 1995,
Mr. Woodhouse held various executive positions at the Thomas
Cook Group Ltd., a travel and travel-related services
company.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers, certified public accountants, served as independent
accountants of the Company for the fiscal year ended December 31, 2000. The
Board of Directors, acting upon the recommendation of the Audit Committee, has
appointed PricewaterhouseCoopers as independent accountants to audit the
financial statements of the Company for the fiscal year ending December 31, 2001
and to perform other appropriate accounting services. A proposal will be
presented at the Annual Meeting to ratify the appointment of
PricewaterhouseCoopers as the Company's independent accountants. A
representative of PricewaterhouseCoopers will be present at the Annual Meeting
and will have the opportunity to make a statement if the representative so
desires and to respond to appropriate questions from the Stockholders. If the
Stockholders do not ratify this appointment, the Board of Directors will
reconsider its appointment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS
INDEPENDENT ACCOUNTANTS OF THE COMPANY.
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OTHER MATTERS
The Company knows of no other matters to be presented at the Annual Meeting
other than those described in this Proxy Statement. In the event that other
business properly comes before the meeting, the persons named as Proxies will
have discretionary authority to vote the shares represented by the accompanying
Proxy in accordance with their own judgment.
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INFORMATION REGARDING BENEFICIAL OWNERSHIP OF
PRINCIPAL STOCKHOLDERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of shares of the Company's Common Stock as of March 1, 2001
for (i) each person who is known by the Company to own beneficially more than 5%
of the shares of Outstanding Common Stock, (ii) each Director of the Company,
(iii) each of the executive officers of the Company named in the Summary
Compensation Table of this Proxy Statement, and (iv) by all directors and
executive officers of the Company as a group.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
PERCENT
NAMES NUMBER OF SHARES(1) OF CLASS
----- ------------------- ---------
Getty Investments....................................... 10,755,247(2) 21.09
Pilgrim Baxter & Associates Ltd. ....................... 4,077,000 8.00
Waddell & Reed Investment Management Company............ 3,772,950 7.40
Mark Torrance........................................... 2,543,680(3) 4.94
Mark H. Getty........................................... 2,093,879(4) 3.99
Jonathan D. Klein....................................... 1,407,279(5) 2.71
Sally von Bargen........................................ 139,190(6) *
Stephen M. Powell....................................... 41,563(7) *
A.D. "Bud" Albers....................................... 37,500(8) *
John Hallberg........................................... 27,792(9) *
Andrew S. Garb.......................................... 10,000 *
Christopher H. Sporborg................................. 800 *
James N. Bailey......................................... 0 *
Christopher J. Roling................................... 0 *
All Executive Officers and Directors as a group (16
persons).............................................. 6,531,540(10) 12.02
- ---------------
* Less than 1%
(1) Beneficial ownership represents sole or shared voting and investment power
and is defined by the Securities and Exchange Commission (the "Commission")
to mean generally the power to vote or dispose of securities, regardless of
economic interest. The numbers were calculated pursuant to Rule 13d-3(d) of
the Securities and Exchange Act of 1934, as amended. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by any other
person listed. Getty Images had 50,991,925 shares of Outstanding Common
Stock as of March 1, 2001. To the Company's knowledge, the only
stockholders who beneficially owned more than 5% of the shares of
Outstanding Common Stock as of March 1, 2001, were Getty Investments,
Pilgrim Baxter & Associates Ltd., and Waddell & Reed Investment Management
Company.
(2) Includes shares beneficially owned or deemed to be owned beneficially by
Getty Investments as follows: 622,602 shares held by the October 1993
Trust, to which Getty Investments shares voting power with Mr. Getty
pursuant to the Getty Parties Shareholders' Agreement; 512,602 shares held
by Abacus Trust Company (Isle of Man) as Trustees of the J D Klein Family
Settlement (the "Klein Family Trust"), to which Getty Investments shares
voting power with Mr. Klein pursuant to the Getty Parties Shareholders'
Agreement; and 9,620,043 shares held directly by Getty Investments. The
address of Getty Investments is 1325 Airmotive Way, Suite 262, Reno, Nevada
89502.
(3) Includes 550,000 shares of Common Stock issuable upon exercise of
outstanding options and shares beneficially owned or deemed to be owned
beneficially by Mr. Torrance as follows: 1,337,921 held by PDI, L.L.C., a
Washington limited liability company, 67,500 held by The Mark Torrance
Foundation, and 588,259 shares held directly by Mr. Torrance. Mr.
Torrance's business address is 3004 Webster Pointe Rd. NE, Seattle, WA
98105.
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(4) Includes 1,471,277 shares of Common Stock issuable upon exercise of
outstanding options and shares beneficially owned or deemed to be owned
beneficially by Mr. Getty as follows: 622,602 shares held by October 1993
Trust, to which Mr. Getty shares voting power with Getty Investments
pursuant to the Getty Parties Shareholders' Agreement. Mr. Getty is
Chairman of Getty Investments.
(5) Includes 893,777 shares of Common Stock issuable upon exercise of
outstanding options and shares beneficially owned or deemed to be owned
beneficially by Mr. Klein as follows: 512,602 shares held by the Klein
Family Trust, to which Mr. Klein shares voting power with Getty Investments
pursuant to the Getty Parties Shareholders' Agreement, and 900 shares held
by Mr. Klein's children, for which Mr. Klein disclaims beneficial
ownership. Mr. Klein is one of six directors of Getty Investments.
(6) Includes 109,625 shares of Common Stock issuable upon exercise of
outstanding options.
(7) Consists of 41,563 shares of Common Stock issuable upon exercise of
outstanding options.
(8) Consists of 37,500 shares of Common Stock issuable upon exercise of
outstanding options.
(9) Consists of 27,792 shares of Common Stock issuable upon exercise of
outstanding options.
(10) Includes 3,357,601 shares of Common Stock issuable upon exercise of
outstanding options.
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EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid or earned for all services rendered to Getty Images or Getty Communications
plc, our predecessor, in all capacities during the fiscal years ended December
31, 2000, 1999 and 1998 by our Chief Executive Officer, our four other most
highly compensated executive officers and additional officers for whom
disclosures would have been provided but for the fact that the individuals were
not serving as executive officers at the end of the last completed fiscal year,
whose total annual salary and bonus exceeded $100,000, based on salary and
bonuses earned during the fiscal year ended December 31, 2000 (collectively, the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE (1)
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(7) OPTIONS(#) COMPENSATION(8)
--------------------------- ---- -------- -------- ------------ ---------------
Jonathan D. Klein........................ 2000 $463,177 $500,000 400,000 $525,269(9)
Chief Executive Officer 1999 355,976 224,250 15,000 194,356
1998 356,982 224,750 675,000 79,832
Mark H. Getty............................ 2000 481,292 500,000 400,000 71,208(10)
Executive Chairman 1999 343,904 224,250 15,000 97,375
1998 303,129 245,000 675,000 79,832
Sally von Bargen(2)...................... 2000 344,551 162,500 0 1,633(11)
Senior Vice President, Marketing 1999 235,365 75,000 110,000 11,692
1998 187,789 57,000 65,000 7,331
A.D. "Bud" Albers(3)..................... 2000 248,542 137,500 50,000 2,646(12)
Senior Vice President and 1999 44,128 17,000 100,000 44,000
Chief Technology Officer 1998 -- -- -- --
John Hallberg(4)......................... 2000 272,917 78,000 30,000 4,219(13)
Senior Vice President, Art.com 1999 230,108 89,000 25,000 4,480
1998 42,689 0 20,000 10,000
Stephen M. Powell(5)..................... 2000 249,059 81,000 0 0
Director of Sports Industry Relations 1999 239,080 78,625 90,000 29,464
1998 213,628 14,429 0 35,295
Christopher J. Roling(6)................. 2000 169,590 82,500 0 168,811(14)
Former Chief Financial Officer 1999 205,061 132,000 115,000 93,035
1998 -- -- -- --
- ---------------
(1) The cash compensation paid to Mark Getty and Stephen Powell during 2000,
1999 and 1998, to Jonathan Klein for part of 1999 and all of 1998, and to
Nick Evans-Lombe for part of 2000 and all of 1999 and 1998 was paid in
pounds sterling and has been converted into U.S. dollars on an annual
average basis. The exchange rates in U.S. dollars per pound sterling based
on the average of the noon buying rate in the City of New York for cable
transfers in pounds sterling as certified for customs purposes by the
Federal Reserve Bank of New York in effect on each day for the years ended
December 31, 2000, 1999 and 1998 were $1.50, 1.62 and 1.66, respectively.
(2) Ms. von Bargen became an executive officer on February 9, 1998 in
connection with our acquisition of PhotoDisc, Inc.
(3) Mr. Albers became an executive officer in October 1999 when he joined the
Company.
(4) Mr. Hallberg became an executive officer in July 1999 when he became Senior
Vice President and General Manager, gettyone.
(5) Mr. Powell became an executive officer on February 10, 1998 in connection
with our acquisition of Allsport Photographic plc. Mr. Powell assumed the
position of Director of Sports Industry Relations and ceased being an
executive officer of the Company on November 28, 2000.
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(6) Mr. Roling became an executive officer in January 1999. Mr. Roling resigned
from his position with the Company with effect from May 10, 2000.
(7) The amounts disclosed in the bonus column were awarded under our Executive
Bonus Plan for the years ended December 31, 1998, December 31, 1999 and
December 31, 2000. The bonus amounts shown for 2000 in respect of the Named
Executive Officers were not approved by the Compensation Committee until
February 8, 2001 and were not actually paid until March 2001, the only
exception being Christopher Roling who received his bonus payment on June
30, 2001, pursuant to the terms of his Separation Agreement of May 3, 2000.
These executives were not entitled to any minimum bonus amounts in 2000
under the terms of their respective employment agreements.
(8) The amounts disclosed in this column include contributions by the Company
to the Getty Images, Inc. 401(k) Profit Sharing Plan ("401(k) Plan") and
our subsidiaries' 401(k) and other defined contribution pension plans and
other miscellaneous benefits as described in the footnotes below.
(9) Includes $92,635 in lieu of monthly contributions to a pension plan scheme,
$46,318 in respect of a foreign service allowance, $71,000 as a cost of
living allowance, $141,259 in respect of a tax gross-up, $50,651 for motor
vehicle lease costs and related expenses, $53,051 in return flights to the
United Kingdom for Mr. Klein and his family, and $70,354 in other expenses.
(10) Includes $58,600 cash in lieu of monthly contributions to a pension plan
scheme, and $12,608 for motor vehicle lease costs and related expenses.
(11) Represents $1,633 contributed by the Company to the 401(k) Plan.
(12) Represents $2,646 contributed by the Company to the 401(k) Plan.
(13) Represents $4,219 contributed by the Company to the 401(k) Plan.
(14) Includes $37,919 as a living allowance, $3,705 for motor vehicle costs and
related expenses, $46,500 in travel reimbursement and $50,000 as payment
for consultancy services pursuant to his Separation Agreement of May 3,
2000, $27,500 as cash in lieu of accrued vacation time, and $3,187
contributed by the Company to the 401(k) Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted to the Named Executive Officers during fiscal year 2000 to purchase
shares of the Company's Common Stock. The Company has no outstanding stock
appreciation rights. In accordance with the rules of the Commission, the table
shows the hypothetical "gains" or "option spreads" that would exist for the
respective options based on assumed rates of annual stock price appreciation of
5% and 10% from the date the options were granted over the full option term.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
NUMBER OF PERCENT OF TOTAL OPTION TERM(1)
SECURITIES OPTIONS EXERCISE --------------------------
UNDERLYING GRANTED TO PRICE PER EXPIRATION FIVE PERCENT TEN PERCENT
NAME OPTIONS GRANTED(2) EMPLOYEES SHARE DATE 5% 10%
---- ------------------ ---------------- --------- ---------- ------------ -----------
Jonathan D. Klein.... 400,000 8.6% $28.63 5/24/10 $7,202,101 $18,251,539
Mark H. Getty........ 400,000 8.6 28.63 5/24/10 7,202,101 18,251,539
Sally von Bargen..... 0 0 -- -- -- --
A.D. Bud Albers...... 25,000 0.5 40.41 8/28/10 635,341 1,610,078
25,000 0.5 24.78 10/11/10 389,600 987,323
John Hallberg........ 30,000 0.6 $31.07 4/6/10 586,193 1,485,527
Stephen M. Powell.... 0 0 -- -- -- --
Christopher J.
Roling............. 0 0 -- -- -- --
- ---------------
(1) The value is based on the assumption that the price of the Company's Common
Stock appreciates at the rate shown (compounded annually) from the date of
grant to the expiration date. These numbers are
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presented in accordance with the requirements of the Commission and do not
reflect the Company's estimate of future stock price performance.
(2) These options granted under the Stock Incentive Plan are scheduled to vest
over a four-year period, 25% on the first anniversary from the date of grant
and monthly on a pro rata basis thereafter. Under the Stock Incentive Plan,
the options were granted with an exercise price equal to the average of the
high and low prices of the Common Stock of the Company on the date of grant.
AGGREGATE OPTION EXERCISES IN 2000 AND VALUES AT YEAR-END 2000
The following table sets forth information regarding the number of shares
acquired and value realized for options exercised by the Named Executive
Officers during the year ended December 31, 2000, and the number and aggregate
dollar value of unexercised options held at the end of 2000:
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2000 DECEMBER 31, 2000(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
Jonathan D. Klein....... 577,500 $15,809,535 832,110 604,375 $11,532,842 $3,997,759
Mark H. Getty........... -- -- 1,409,610 604,375 24,237,842 3,997,759
Sally von Bargen........ -- -- 95,043 88,124 1,174,504 931,020
A.D. "Bud" Albers....... -- -- 29,167 120,833 243,253 771,247
John Hallberg........... 2,000 56,940 16,541 58,459 279,321 480,429
Stephen M. Powell....... -- -- 34,062 55,938 358,522 611,428
Christopher J. Roling... 44,271 708,379 0 0 -- --
- ---------------
(1) Values are calculated for options that are "in-the-money" by subtracting the
exercise price per share of the option from the per share closing price of
Getty Images on December 29, 2000 (the last trading day of the year), which
was $32.00.
(2) Value realized is calculated by subtracting the aggregate exercise price of
the options exercised from the aggregate market value of the shares of
Common Stock acquired on the date of exercise.
ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company has from time to time entered into employment and separation
agreements with certain of its executive officers. The Named Executive Officers
with whom the Company has such agreements, the date of the agreements and a
summary of such agreements are set forth in the following paragraphs.
Employment Agreement with Jonathan D. Klein. On June 1, 1999, the Company
entered into an employment agreement with Mr. Klein that superseded the prior
employment agreements between the parties. The 1999 employment agreement is for
a term commencing on June 1, 1999 and continuing until June 1, 2001. Thereafter,
the term will continue until either party provides the other with at least
twelve months' notice of its intent to terminate the agreement.
Under the agreement, as the Chief Executive Officer of Getty Images, Mr.
Klein initially received an annual base salary of $373,750 (which could be
increased from time to time) and was eligible under the Company's bonus plan to
earn up to 60% of his base salary as a bonus in each calendar year during the
term. On January 25, 2000, the Compensation Committee approved a bonus for Mr.
Klein for 1999 in the amount of $224,250. At a Compensation Committee meeting
held on April 28, 2000, the Board of Directors approved an amendment to Mr.
Klein's employment agreement dated April 1, 2000, which increased Mr. Klein's
annual salary to $500,000. On February 8, 2001, the Compensation Committee
approved an increase in his bonus eligibility to 100% of annual salary for
fiscal year 2000. Further, the Compensation Committee approved a bonus for Mr.
Klein for fiscal year 2000 in the amount of $500,000. Mr. Klein's employment
agreement also
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provides him with certain other benefits, such as reimbursement of relocation
expenses, a supplemental pension program, a foreign service allowance, a cost of
living allowance and other welfare and fringe benefits.
In the event that Mr. Klein is terminated without "cause" or for
"disability" or resigns for "good reason" (as each such term is defined in his
employment agreement), he will receive (in addition to amounts accrued and
unpaid) a lump sum payment in an amount equal to his base salary, maximum bonus
and supplemental pension contributions for the remainder of the term of the
agreement. In the event of a change in control of Getty Images (as defined in
the Stock Incentive Plan), Mr. Klein will have the right to resign his
employment and receive a lump sum payment in an amount equal to his base salary,
maximum bonus and supplemental pension contributions for the remainder of the
term of the agreement. In either of these circumstances, Mr. Klein and his
eligible dependents will continue to participate in the Company's medical
benefit plans for the longer of two years following the termination or
resignation, as the case may be, and the remainder of the term. In the event
that any of the payments to be made to Mr. Klein would constitute "excess
parachute payments" within the meaning of Section 280G of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"), the aggregate amount of his
parachute payments will be reduced to $1.00 less than three times Mr. Klein's
"base amount" (as defined under Section 280G of the Code).
Employment Agreement with Mark H. Getty. Effective February 9, 1998 , Getty
Communications plc entered into an employment agreement with Mark H. Getty,
pursuant to which Mr. Getty agreed to serve as the Co-Chairman (now serving as
Executive Chairman) of the Board of Directors of Getty Images for a term
commencing on February 9, 1998 and continuing until either party provides the
other with at least twelve months' notice of its intent to terminate the
agreement, provided that neither party could provide the other with a notice of
termination prior to February 9, 2001.
Under the agreement, Mr. Getty initially received an annual base salary of
$275,000 (which could be increased from time to time) and was eligible under the
Company's bonus plan to earn up to 50% of his base salary as a bonus in each
calendar year during the term. On February 8, 1999, the Compensation Committee
approved an increase in Mr. Getty's salary to $325,000 per year and an increase
in his bonus eligibility to 60% of annual salary, beginning in fiscal year 1999.
Further, the Compensation Committee approved a bonus for Mr. Getty for 1998 in
the amount of $245,000. At a Compensation Committee meeting held on April 9,
1999, the Board of Directors approved an increase in Mr. Getty's annual salary
to $373,750. On January 25, 2000, the Compensation Committee approved a bonus
for Mr. Getty for 1999 in the amount of $224,250. At a Compensation Committee
meeting held on April 28, 2000, the Board of Directors approved an increase in
Mr. Getty's annual salary to $500,000. On February 8, 2001, the Compensation
Committee approved an increase in his bonus eligibility to 100% of annual salary
for fiscal year 2000. Further, the Compensation Committee approved a bonus for
Mr. Getty for fiscal year 2000 in the amount of $500,000. Mr. Getty's employment
agreement also provides him with certain other benefits and perquisites, such as
a supplemental pension program, a company car and reimbursement of expenses
associated therewith, and certain other welfare and fringe benefits.
In the event that Mr. Getty is terminated without "cause" or for
"disability" or resigns for "good reason" (as each such term is defined in his
employment agreement), he will receive (in addition to amounts accrued and
unpaid) a lump sum payment in an amount equal to his base salary, maximum bonus
and supplemental pension contributions for the remainder of the term of the
agreement. In the event of a change in control of Getty Images (as defined in
the Stock Incentive Plan), Mr. Getty will have the right to resign his
employment and receive a lump sum payment in an amount equal to his base salary,
maximum bonus and supplemental pension contributions for the remainder of the
term of the agreement. In either of these circumstances, Mr. Getty and his
eligible dependents will continue to participate in the Company's medical
benefit plans for the longer of two years following the termination or
resignation, as the case may be, and the remainder of the term. In the event
that any of the payments to be made to Mr. Getty would constitute "excess
parachute payments" within the meaning of Section 280G of the Code, the
aggregate amount of his parachute payments will be reduced to $1.00 less than
three times Mr. Getty's "base amount" (as defined under Section 280G of the
Code).
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Employment Agreement with Sally von Bargen. Effective February 9, 1998,
PhotoDisc, Inc. ("PhotoDisc") entered into an employment agreement with Sally
von Bargen, pursuant to which Ms. von Bargen agreed to serve as the Co-President
(later serving as President) of PhotoDisc for a term commencing on February 9,
1998 and continuing until either party provided the other with at least six
months' written notice of its intent to terminate the agreement. Currently Ms.
von Bargen serves as the Senior Vice President, Marketing for the Company.
During the term of the agreement, Ms. von Bargen initially received a base
salary of $190,000 (which could be increased from time to time) and participated
in the Company's bonus plan pursuant to which she had the opportunity to earn up
to 30% of her base salary as a bonus in each calendar year during the term. At a
Board Meeting held on April 9, 1999, the Board of Directors approved an increase
in Ms. von Bargen's annual salary to $235,000. On March 1, 2000, the Company
entered into a new employment agreement with Ms. von Bargen. During the term of
this agreement, Ms. von Bargen receives a base salary of $325,000 (which may be
increased from time to time). This agreement also provided for an annual salary
rate of $275,000 to be applied retroactively from July 16, 1999 through February
29, 2000. This agreement allows Ms. von Bargen to participate in the Company's
bonus plan pursuant to which she again has the opportunity to earn up to 30% of
her base salary as a bonus in each calendar year during the term. On February 8,
2001, the Compensation Committee granted an increase in her bonus eligibility to
50% of annual salary for fiscal year 2000 and approved a bonus for Ms. Von
Bargen for fiscal year 2000 in the amount of $162,500. Ms. von Bargen's
employment agreement also provides her with certain other benefits and
perquisites.
In the event that Ms. von Bargen is terminated without "cause" or resigns
for "good reason" (as each such term is defined in her employment agreement),
she will receive (in addition to amounts accrued and unpaid) a lump sum payment
in an amount equal to her base salary and accrued bonus up to and including the
date of termination, as well as any unreimbursed expenses. In the event that any
of the payments to be made to Ms. von Bargen would constitute "excess parachute
payments" within the meaning of Section 280G of the Code, the aggregate amount
of her parachute payments will be reduced to $1.00 less than three times Ms. von
Bargen's "base amount" (as defined under Section 280G of the Code).
Employment Agreement with A.D. "Bud" Albers. Effective October 11, 1999,
the Company entered into an employment agreement with Bud Albers, pursuant to
which Mr. Albers agreed to serve as the Senior Vice President and Chief
Technology Officer of the Company for a term commencing on October 11, 1999 and
continuing for an initial period of 12 months and terminable thereafter by
either party giving to the other at least one month's written notice of its
intent to terminate the agreement.
During the term of the agreement, Mr. Albers initially received a base
salary of $220,000 (which could be increased from time to time) and was eligible
to participate in the Company's bonus plan pursuant to which he had the
opportunity to earn up to 30% of his base salary as a bonus in each calendar
year during the term. Effective November 1, 2000, Mr. Albers' salary was
increased to $275,000. On May 25, 2000, Mr. Albers' employment agreement was
amended to reflect an increase in his bonus eligibility to 40% of annual salary,
beginning in fiscal year 2000. On February 8, 2001, the Compensation Committee
granted an increase in his bonus eligibility to 50% of annual salary for fiscal
year 2000 and approved a bonus for Mr. Albers for fiscal year 2000 in the amount
of $137,500. Mr. Albers' employment agreement also provides him with certain
other benefits and perquisites.
In the event that Mr. Albers is terminated without "cause" or resigns for
"good reason" (as each such term is defined in his employment agreement), he
will receive (in addition to amounts accrued and unpaid) a lump sum payment in
an amount equal to his base salary and accrued bonus up to and including the
date of termination, as well as any unreimbursed expenses. In the event that any
of the payments to be made to Mr. Albers would constitute "excess parachute
payments" within the meaning of Section 280G of the Code, the aggregate amount
of his parachute payments will be reduced to $1.00 less than three times Mr.
Albers' "base amount" (as defined under Section 280G of the Code).
Employment Agreement with John Hallberg. On October 26, 1998, the Company
entered into an employment agreement with John Hallberg, pursuant to which Mr.
Hallberg agreed to serve as President of Tony Stone Images North America. Mr.
Hallberg now serves as Senior Vice President, Art.com. During the
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term of the agreement, Mr. Hallberg could received a base salary of $230,000,
which could be increased from time to time. The Company entered into a new
employment agreement with Mr. Hallberg commencing on April 10, 2000 and
continuing until it is terminated by either party giving to the other at least
one month's notice, provided that neither party could provide the other with a
notice of termination prior to March 1, 2001. During the term of this agreement,
Mr. Hallberg received a base salary of $260,000 (which may be increased from
time to time). This agreement allows Mr. Hallberg to participate in the
Company's bonus plan pursuant to which he has the opportunity to earn up to 30%
of his base salary as a bonus in each calendar year during the term. Mr.
Hallberg's agreement also provides him with certain other benefits and
prerequisites.
In the event that Mr. Hallberg is terminated without "cause" or resigns for
"good reason" (as each such term is defined in his employment agreement), he
will receive (in addition to amounts accrued and unpaid) a lump sum payment in
an amount equal to his base salary and accrued bonus up to and including the
date of termination, as well as any unreimbursed expenses. In the event that any
of the payments to be made to Mr. Hallberg would constitute "excess parachute
payments" within the meaning of Section 280G of the Code, the aggregate amount
of his parachute payments will be reduced to $1.00 less than three times Mr.
Hallberg's "base amount" (as defined under Section 280G of the Code).
Employment Agreement with Stephen Powell. Effective February 9, 1998,
Allsport Photographic plc entered into an employment agreement with Stephen
Powell, pursuant to which Mr. Powell agreed to serve as Chief Executive Officer
of the Allsport Group for a term commencing on the February 9, 1998 and
continuing for an initial period of 24 months and terminable thereafter by
either party giving to the other at least twelve months' written notice of its
intent to terminate the agreement.
During the term of the agreement, Mr. Powell initially received a base
salary of L120,750 ($195,615 using an assumed exchange rate of $1.62) (as could
be increased from time to time by the Company) and was entitled to participate
in the Company's bonus plan on such terms as the Company could in its absolute
discretion decide. At a Board Meeting held on April 9, 1999, the Board of
Directors approved an increase in Mr. Powell's annual salary to $227,330. Mr.
Powell's employment agreement also provided him with certain other benefits and
perquisites, such as a supplemental pension program, a company car and
reimbursement of expenses associated therewith, and certain other welfare and
fringe benefits. On November 28, 2000, Mr. Powell's employment agreement was
amended, whereby he assumed the position of Director of Sports Industry
Relations at a new salary of L48,000 ($71,784 using an assumed exchange rate of
$1.50) for a term of 36 months, and he ceased being an executive officer of the
Company. On February 8, 2001, the Compensation Committee approved a bonus for
Mr. Powell for fiscal year 2000 in the amount of $80,757.
Agreements with Christopher Roling. Effective July 1, 1999, the Company
entered into an employment agreement with Christopher Roling, pursuant to which
Mr. Roling agreed to serve as the Chief Financial Officer of Getty Images for a
term commencing on July 1, 1999 and continuing until it is terminated by either
party giving to the other at least six months' notice, provided that neither
party could provide the other with a notice of termination prior to July 1,
2000.
During the term of the agreement, Mr. Roling initially received a base
salary of $220,050 (as could be increased from time to time) and participated in
the Company's bonus plan pursuant to which he had the opportunity to earn
between 20% and 50% of his base salary as a bonus in each calendar year during
the term. On February 1, 2000, Mr. Roling's employment agreement was amended to
reflect an increase in Mr. Roling's annual salary to $275,000. Mr. Roling's
employment agreement also provided him with reimbursement of relocation
expenses, and certain other welfare and fringe benefits. In the event that Mr.
Roling was terminated without "cause" or for "disability" or resigns for "good
reason" (as each such term is defined in his employment agreement) prior to July
1, 2000, he would continue to receive (in addition to amounts accrued and
unpaid) his base salary through July 1, 2000. In the event that any of the
payments to be made to Mr. Roling would constitute "excess parachute payments"
within the meaning of Section 280G of the Code, the aggregate amount of his
parachute payments would be reduced to $1.00 less than three times Mr. Roling's
"base amount" (as defined under Section 280G of the Code).
On May 3, 2000, the Company entered into a Separation Agreement with Mr.
Roling, pursuant to which Mr. Roling agreed to resign as Chief Financial Officer
of Getty Images with effect from May 10, 2000. Under
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this agreement, Mr. Roling continued to be paid through July 1, 2000, and he
received other welfare and fringe benefits until that time. Mr. Roling continued
to serve in a consultancy capacity until December 31, 2000 for which he was paid
$50,000 and received a pro rata bonus in the amount of $82,500.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Stockholders' Agreement. The Company and (i) the Getty Group (as
defined below) and (ii) the Torrance Group (as defined below) have entered into
a Stockholders' Agreement dated as of February 9, 1998, as amended (the
"Stockholders' Agreement"), which, among other things, provides for
representation on the Company's Board of Directors and limits the rights of the
parties thereto to transfer their respective shares of Common Stock. Certain
provisions of the Stockholders' Agreement are described below. The "Getty Group"
refers collectively to Getty Investments, Mr. Mark H. Getty, Mr. Jonathan D.
Klein, the Klein Family Trust, as successor by assignment from Crediton Limited
(a trust established by Mr. Klein) and the October 1993 Trust (a trust
established by Mr. Getty). The "Torrance Group" refers collectively to PDI,
L.L.C., Mr. Mark Torrance, Ms. Wade Ballinger (Torrance) and certain of their
family members. The Getty Group together with the Torrance Group are
collectively the "Significant Stockholders".
Pursuant to the Stockholders' Agreement, no Significant Stockholder may
sell, encumber or otherwise transfer such Significant Stockholder's shares of
Common Stock except (i) to a Permitted Transferee (as defined below); (ii)
pursuant to the terms of the Stockholders' Agreement; (iii) subject to the
arrangements within their respective "Group", pursuant to a registered public
offering of shares of Common Stock in which, to the knowledge of such
significant stockholder, no person or "Group" will purchase more than 5% of the
then outstanding shares of Common Stock; or (iv) subject to any arrangements
within their respective "Group", sales within the Rule 144 volume limitation, or
in a cashless exercise of options. A "Permitted Transferee" is defined generally
as (i) Getty Images or its subsidiaries; (ii) in the case of any Significant
Stockholder who is a natural person, a person to whom shares of Common Stock are
transferred from such Significant Stockholder by gift, will or the laws of
descent and distribution; (iii) any other member of the Getty Group or the
Torrance Group, as the case may be; (iv) any affiliate of any Significant
Stockholder; or (v) with respect to the taking of an encumbrance, any commercial
bank or other financial institution that lends funds to a Significant
Stockholder on condition of taking such encumbrance.
If any Significant Stockholder (a "Prospective Seller") receives from or
negotiates with a person, other than a Permitted Transferee or another
Significant Stockholder (a "Stockholders' Agreement Third Party"), a bona fide
offer to purchase any or all of such Prospective Seller's shares of Common Stock
(the "Offered Stock") and such Prospective Seller intends to sell the Offered
Stock to such Stockholder's Agreement Third Party, the Prospective Seller must
provide written notice (the "Offer Notice") of such offer to Getty Images and
the other Significant Stockholders constituting the Significant Stockholders'
"Group" in which the Prospective Seller does not belong. The Offer Notice will
constitute an offer by such Prospective Seller to sell to the recipients of such
Offer Notice all (but not less than all) of the Offered Stock at the price per
share of Common Stock at which the sale to the Stockholders' Agreement Third
Party is proposed to be made in cash and will be irrevocable for ten days after
receipt of such Offer Notice. The Prospective Seller has the right to reject any
or all of the acceptances of the offer to sell the Offered Stock and sell all,
but not less than all, the Offered Stock to the Stockholders' Agreement Third
Party if (i) the Prospective Seller has not received acceptances as to all the
Offered Stock prior to the expiration of the ten-day period following receipt of
the Offer Notice or (ii) an accepting party fails to consummate the purchase of
the Offered Stock and neither Getty Images nor the other Significant
Stockholders who received the Offer Notice are prepared to purchase such Offered
Stock within five business days of receiving notice of such failed purchase.
Each of the Torrance Group and Getty Group will have the right, subject to
termination conditions, to nominate one director. For so long as the Getty Group
has the right to nominate one director of Getty Images, it shall also have the
right to appoint the Chairman from among the directors of Getty Images, provided
however, that for so long as either Mark Torrance or Mark Getty is the Chairman
or Co-Chairman of the Board, such rights shall not be in effect.
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The obligations and rights of the Significant Stockholders relating to the
rights of first refusal and right to nominate one director will terminate when
the Getty Group or the Torrance Group, as the case may be, and any of such
Group's Permitted Transferees, collectively beneficially own fewer than the
greater of (x) 3,000,000 shares of Common Stock and (y) such number of shares of
Common Stock as is equal to two percent of the then outstanding shares of Common
Stock.
The Registration Rights Agreements. In connection with the consummation of
the merger of the businesses of Getty Communications plc and PhotoDisc, Inc.
(the "Transactions"), Getty Images entered into Registration Rights Agreements,
one with PDI, L.L.C. and Mr. Mark Torrance (the "PDI Shareholders") and a second
with Getty Investments. Pursuant to the terms of the Registration Rights
Agreement between Getty Images and the PDI Shareholders (the "PDI Registration
Rights Agreement"), the PDI Shareholders, subject to the terms and conditions
set forth in the PDI Registration Rights Agreement, may require Getty Images to
file a registration statement with respect to all or a portion of the PDI
Shareholders' shares of Common Stock (a "PDI Demand Right"), subject to certain
limitations that may be imposed by the managing underwriter. The PDI
Shareholders have a total of five Demand Rights, provided that the PDI
Shareholders may not require the Company to file a registration statement on a
"long form" on more than three occasions. In addition to their PDI Demand
Rights, the PDI Shareholders have the right to have any or all of their shares
of Common Stock included in any registration by Getty Images with respect to an
offering of Common Stock (a "PDI Piggy-Back Right"), subject to certain
limitations that may be imposed by the managing underwriter. Both the PDI Demand
Rights and PDI Piggy-Back Rights will terminate on the earlier of (i) the date
that all of the PDI Shareholders' shares of the Common Stock can be sold within
a three-month period under the volume limitation of Rule 144(e) of the
Securities Act or (ii) the 15th anniversary of the date of the PDI Registration
Rights Agreement.
Pursuant to the terms of the Registration Rights Agreement between Getty
Images and Getty Investments (the "Getty Investments Registration Rights
Agreement"), Getty Investments, subject to the terms and conditions set forth in
the Getty Investments Registration Rights Agreement, may require Getty Images to
file a registration statement with respect to all or a portion of Getty
Investments' shares of Common Stock (a "Getty Demand Right"), subject to certain
limitations that may be imposed by the managing underwriter. Getty Investments
has five Getty Demand Rights. In addition to their Getty Demand Rights, Getty
Investments has the right to have any or all of their shares of Common
Stockholder included in any registration by Getty Images with respect to an
offering of Common Stock (a "Getty Piggy-Back Right"), subject to certain
limitations that may be imposed by the managing underwriter. Both the Getty
Demand Rights and the Getty Piggy-Back Rights will terminate on the earlier of
(i) the date that all of the shares of Common Stock held by Getty investments
can be sold within a three-month period under the volume limitation of Rule
144(e) of the Securities Act or (ii) the 15th anniversary of the date of the
Getty Investments Registration Rights Agreement.
The Getty Investments Registration Rights Agreement was amended on November
22, 1999 to include the right to register an additional 1,579,353 shares of
Common Stock that were acquired by Getty Investments on November 22, 1999.
In addition to the registration rights described above, upon the
consummation of the Transactions, Getty Images assumed the obligations of Getty
Communications plc and PhotoDisc, Inc. with respect to certain demand and
piggy-back registration rights granted by the companies to certain of their
respective shareholders, including, in the case of PhotoDisc, Inc. certain
registration rights granted to holders of its Series A Preferred Stock, and, in
the case of Getty Communications plc, certain registration rights granted to the
October 1993 Trust and the Klein Family Trust, Messrs. Getty and Klein, RIT
Capital Partners, Mr. Anthony Stone, Mr. Lawrence Gould and The Schwartzberg
Family L.P.
Getty Parties Shareholders' Agreement. Getty Images, Getty Investments,
Mark Getty, Jonathan Klein, the October 1993 Trust and the Klein Family Trust
(as assigned from Crediton Limited) have entered into a Shareholders' Agreement
with respect to their ownership of shares of Common Stock (the "Getty Parties
Shareholders' Agreement"), dated February 9, 1998, as amended. Certain
provisions of the Getty Parties Shareholders' Agreement are described below.
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The Getty Parties Shareholders' Agreement provides that all the Common
Stock held by the parties thereto (other than the Company, Mark Getty and
Jonathan Klein) will be voted as directed by the board of directors of Getty
Investments. Before transferring shares (other than certain permitted transfers
to affiliates or family members who, as a condition of such permitted transfer,
must agree to be bound by the terms of the Getty Parties Shareholders'
Agreement), the parties (other than the Company) must first offer such shares to
the other parties. The price at which such shares must be offered is either the
price that another purchaser is willing to pay for such shares or, in the event
of a transfer pursuant to an exercise of registration rights, the average
closing market price of the shares of Common Stock over the preceding ten
business days. In the event that these rights of first refusal are not exercised
with respect to all shares of Common Stock offered for sale, then the
transferring shareholder may proceed with the proposed sale of shares.
In the Getty Parties Shareholders' Agreement, the October 1993 Trust and
the Klein Family Trust have each agreed to retain at least 311,301 shares of
Common Stock until July 8, 2001 and thereafter to retain at least 155,651 for an
additional two years, provided, however, that the October 1993 Trust and the
Klein Family Trust may sell shares in the event that (i) Mr. Mark Getty (in the
case of the October 1993 Trust) or Mr. Jonathan Klein (in the case of the Klein
Family Trust) ceases to be employed by the Company or any of its subsidiaries,
or (ii) Getty Investments and its members cease at any time to hold at least 7%
of the then outstanding shares of Common Stock. In addition, if Getty
Investments or any of its members sells any shares of Common Stock, the October
1993 Trust and the Klein Family Trust will be permitted to sell the same
proportion of their shares of Common Stock that are subject to this sale
restriction as the number of shares of Common Stock sold by Getty Investments
bears to its total number of shares of Common Stock. The Getty Parties
Shareholders' Agreement provides that each of the October 1993 Trust and the
Klein Family Trust will, in consideration of its participation under such
agreement, receive an annual fee from Getty Investments in July 2001 of L30,147
and L104,439 ($45,220 and $156,659, respectively, using an assumed exchange rate
of $1.50), and will be entitled to a final payment of such amounts in July 2002,
subject to certain inflation adjustments in each year.
The Getty Parties Shareholders' Agreement also provides that each of the
October 1993 Trust and the Klein Family Trust have the right to nominate a
director to the board of directors of Getty Investments (the "Getty Investments
Board"). Such parties have nominated Mr. Getty and Mr. Klein to the Getty
Investments Board. The October 1993 Trust also has the right to nominate the
chairman of the Getty Investments Board. The October 1993 Trust has appointed
Mr. Getty as Chairman of Getty Investments.
Getty Investments has agreed in the Getty Parties Shareholders' Agreement
that, subject to certain exceptions, it will not operate or own or control any
other business in the visual content industry.
The Getty Parties Shareholders' Agreement expires on July 7, 2003, but may
be terminated early with respect to a party (or its permitted transferees) who
ceases to be a stockholder of Getty Images. The Getty Parties Shareholders'
Agreement terminates for all parties if the parties to the agreement cease to
own beneficially fewer than the greater of (x) 3,000,000 shares of Common Stock
and (y) such number of shares as is equal to two percent or less of the then
outstanding shares of Common Stock.
Getty Investments Company Agreement. Getty Investments is a limited
liability company organized in the State of Delaware and is governed by a
limited liability company agreement among four various Getty family trusts (the
"Getty Trusts") and Transon Limited (as assignee of 525 Investments Limited)
(the "Getty Investments Company Agreement"). As of March 1, 2001, the membership
interests of the Getty Trusts in Getty Investments were held as to 42.36% by the
Cheyne Walk Trust, as to 18.75% by the Ronald Family Trust A, as to 15.68% by
the Ronald Family Trust B and as to 12.5% by the Gordon P. Getty Family Trust.
The remaining 10.71% interest was held by Transon Limited. The four Getty Trusts
resulted from a partition in 1988 of the Sarah C. Getty Trust in accordance with
a 1985 court order. Two of the four trustees of the Cheyne Walk Trust are also
two of the three trustees of the Ronald Family Trust B, and one of the two
trustees of the Ronald Family Trust A is also one of the three trustees of the
Ronald Family Trust B. The life income beneficiaries of the four Getty Trusts
referred to above are children of J.P. Getty, and the remainder beneficiaries
are his grandchildren (including Mr. Mark Getty) and other descendants. Transon
Limited is a
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company owned by Sir Paul Getty, one of the children of J.P. Getty. Mr. Mark
Getty is the son of Sir Paul Getty.
The Getty Investments Company Agreement provides that the Getty Investments
Board consists of six directors. One director is appointed by each of the four
Getty Trusts. In addition, the members of Getty Investments have agreed to
appoint one person nominated by each of the October 1993 Trust and the Klein
Family Trust. The members also agree to appoint the director nominated by the
October 1993 Trust as the Chairman of the Board of Getty Investments. Mr. Getty
has been appointed a director and chairman by the October 1993 Trust and Mr.
Klein has been appointed a director by the Klein Family Trust. Decisions at
meetings of the Getty Investments Board require the approval (at a meeting or in
writing) of a majority of directors. Of the six members of the Getty Investments
Board, three (Mr. Getty, Mr. Klein and Mr. Garb) are also directors of Getty
Images. There are currently no voting arrangements whereby one member of Getty
Investments can control a majority of the members of the Getty Investments
Board.
Getty Trademarks. Getty Images, directly or through its subsidiaries, has
trademark registrations and applications for the trademarks and trademark
applications in respect of the names Getty Communications and Hulton Getty, and
derivatives thereof (including the name "Getty Images") and the related logos
(together, the "Getty Trademarks"). Getty Images and Getty Investments have
agreed that in the event that Getty Images becomes controlled by a third party
or parties not affiliated with the Getty family, Getty Investments will have the
right to call for an assignment to it, for a nominal sum, of all rights to the
Getty Trademarks. Upon such assignment, Getty Images will have 12 months in
which it will be permitted to continue to use the Getty Trademarks and
thereafter will have to cease such use.
Indemnification. Getty Images has agreed to indemnify Getty Investments and
its members for liabilities arising in connection with the merger of the
business of Getty Communications plc and PhotoDisc, Inc. as well as various
securities offerings by the Company. In addition, Getty Images has entered into
agreements to indemnify its directors and certain executive officers, in
addition to indemnification provided for in the Company's Bylaws and Amended and
Restated Certificate of Incorporation. These agreements, among other things,
indemnify the Company's directors and certain executive officers for certain
expenses (including attorneys' fees), judgments, fines and settlement amounts
incurred by any such person in any action or proceeding, including any action by
or in the right of the Company, arising out of such person's services as a
director or executive officer of the Company, any subsidiary of the Company or
any other company or enterprise to which the person provides services at the
request of the Company. The Company believes that these provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers.
Torrance Lease. PhotoDisc, Inc. and the Marshall Building LLC, an entity of
which Mr. Torrance is the owner, have entered into a lease under which
PhotoDisc, Inc. leases the majority of the Marshall Building (46,957 total
square feet). This lease has a term of five years and four months (which may be
extended for a further five years at the option of PhotoDisc, Inc.) beginning
November 1, 1997, and provides for rent at the weighted average rate of $13.47
per square foot per year, which the Company believes is a fair market rate, and
under which Mr. Torrance pays a monthly service and maintenance fee of $1,375.
In addition, PhotoDisc, Inc. has made certain improvements to the Marshall
Building in the amount of approximately $360,000 for which it is being
reimbursed by a reduction in monthly lease payments ratably over the term of the
lease. Interest on the outstanding amount of unreimbursed improvements is
charged at a rate of 5.77% per annum.
On June 1, 1999, PhotoDisc, Inc. entered into a sublease agreement with
Soma Corporation (now known as CVS Washington, Inc.) to sublease 34,108 square
feet of the Marshall Building commencing on October 1, 1999, and an additional
3,281 square feet on June 1, 2000. The term of the sublease ends on February 27,
2003. The base rent for the sublease from October 1, 2000 through September 30,
2001 is $47,515 ($15.25 per square foot). From October 1, 2001 through September
30, 2002, the base rent increases to $49,073 ($15.75 per square foot). Rent
received from CVS Washington, Inc. was $536,187 in 2000 and PhotoDisc, Inc. paid
an aggregate amount of $501,277, to Mr. Torrance for lease payments in 2000.
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BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION FOR 2000
The following Report of the Compensation Committee and the performance
graphs included elsewhere in this proxy statement do not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this
Report or the performance graphs by reference therein.
Compensation Committee Governance. The Compensation Committee of Getty
Images was composed in 2000 of Messrs. Bailey, Garb and Sporborg. The
Compensation Committee is responsible for the general compensation policies of
the Company, and in particular is responsible for setting and administering the
policies that govern senior executive compensation and administering the
Company's equity-based employee compensation benefit plans. The Compensation
Committee evaluates the performance of the Chief Executive Officer and Executive
Chairman and reviews the compensation levels for all executive officers.
Compensation Policies. The primary objectives of the Company's executive
compensation policies and programs are (i) to attract and retain key executives,
(ii) to reward performance by the executives that benefits the Stockholders of
Getty Images and (iii) to align the financial interests of the Company's
executive officers directly with those of the Stockholders. The primary elements
of executive officer compensation are base salary, annual cash bonuses, and
stock option grants. The salary is based on factors such as related experience,
level of responsibility, and comparison to similar positions in comparable
companies. The annual cash bonuses are based on the Company's performance and on
individual performance. Stock option grants are intended to align the executive
officer's interest with those of the Stockholders, and are determined based on
the executive officer's level of responsibility, number of options or shares
previously granted, and contributions toward achieving the goals and objectives
of the Company. The compensation paid to Mr. Klein as Chief Executive Officer
and to Mr. Getty as Executive Chairman were determined using the same criteria
described above for executive officers generally. Additional information on each
of these compensation elements follows.
- Salaries. Base salaries for the executive officers are based on
performance of the individual, increases in responsibility and salaries
for similar positions.
- Executive Bonus Plan. Annual bonuses are awarded on a discretionary basis
and reflect both Company and individual performance. The Compensation
Committee considers numerous qualitative and quantitative factors in
determining these bonus awards, including individual performance,
corporate and segment revenue and profit goals, performance and
compensation levels of comparable companies.
- Option Grants. Stock options are an integral part of an executive
officer's compensation and are utilized by the Company to provide an
incentive to the executive officer, and to align the interests of the
executive officer with those of the Stockholders by providing the
executive officer with a financial interest in the Company. In making
grants, the Compensation Committee takes into account the executive
officer's contributions to the Company, scope of responsibilities, salary
and the number of options previously granted.
All options granted by Getty Images following the consummation of the
merger of the businesses of Getty Communications plc and PhotoDisc, Inc. (the
"Transactions"), have been granted under, and governed by, the Getty Images,
Inc. 1998 Stock Incentive Plan ("the Stock Incentive Plan"), which was adopted
by the Company in connection with the Transactions. Options granted by the
Compensation Committee under the Stock Incentive Plan have been made at fair
market value (based on the average of the high and low prices of the Company's
Common Stock on the date of grant), vest over a period of four years, 25% on the
first anniversary of the grant date and monthly on a pro rata basis thereafter,
and expire after ten years from the date of grant (with the exception of certain
options granted to executive officers upon the consummation of the Transactions
that became fully exercisable upon the first anniversary of the date of grant
and a grant made to Mr. Evans-Lombe in April 2000, which had a two-year vesting
schedule).
Section 162(m). Section 162(m) of the Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to a
company's CEO and the four other most highly compensated
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executive officers, as reported in its proxy statement, unless that compensation
is considered performance-based. Certain types of compensation are deductible
only if performance criteria are specified in detail, and stockholders have
approved these compensation arrangements. The Compensation Committee will
monitor issues concerning the tax deductibility of executive compensation and
will take appropriate action if we believe it is warranted. The Compensation
Committee is prepared, if we believe it is appropriate, to enter into
compensation arrangements or provide compensation under which payments may not
be deductible under Section 162(m). Tax deductibility will not be the sole
factor we consider in determining appropriate levels or types of compensation.
The Board of Directors accepted the Compensation Committee's
recommendations regarding Executive Compensation in 2000.
COMPENSATION COMMITTEE,
Andrew S. Garb (Chairman)
Christopher H. Sporborg
James N. Bailey
REPORT OF THE AUDIT COMMITTEE
The members of the Audit Committee are independent as that term is defined
in Rule 4200(a)(15) of the National Association of Securities Dealers listing
standards. On June 13, 2000, the Board of Directors adopted a written Audit
Committee Charter, a copy of which is provided herewith as Appendix A. The Audit
Committee has reviewed and discussed the audited financial statements for fiscal
year 2000 with the management of the Company. Additionally, the Audit Committee
has discussed with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61. The Audit Committee has
received the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1 and has discussed with
the independent accountants the independent accountants' independence. Based on
the discussions and reviews noted above, the Audit Committee recommended to the
Company's Board of Directors that the audited financial statements be included
in the Company's Annual Report on Form 10-K for fiscal year 2000.
AUDIT COMMITTEE,
Christopher H. Sporborg (Chairman)
James N. Bailey
Andrew S. Garb
INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has selected PricewaterhouseCoopers, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 2000. PricewaterhouseCoopers has audited our financial
statements since 1995. Representatives of PricewaterhouseCoopers are expected to
be present at the meeting with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions. The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers for fiscal year 2000 are as follows:
(1) AUDIT FEES (for audit of our annual financial statements for
fiscal year 2000 and reviews of our quarterly financial
statements)................................................. $ 995,000
(2) FINANCIAL INFORMATION AND SYSTEMS DESIGN AND IMPLEMENTATION
FEES........................................................ 0
(3) ALL OTHER FEES (for all other services)..................... $1,411,000
The Audit Committee has considered whether the provision of financial
information and systems design and implementation services and other services is
compatible with maintaining the independence of PricewaterhouseCoopers and
concluded that it is compatible with maintaining the independence of
PricewaterhouseCoopers.
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PERFORMANCE GRAPH
Set forth below is a graph comparing cumulative total stockholder returns
on the Common Stock, the Nasdaq Stock Market Index of U.S. Companies (the
"Nasdaq Market Index") and the S&P Photography/ Imaging Index (the "S&P Image
Index"). The graph assumes that $100 was invested on July 2, 1996 (the date of
Getty Communications plc's initial public offering) in Getty Images (using Getty
Communications plc's initial offering price of $10.00 per share) and that no
dividends were paid or reinvested, and is rounded to the nearest whole dollar.
The stock price performance on the following graph is not necessarily indicative
of future stock price performance.
[PERFORMANCE GRAPH]
7/2/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Getty Images, Inc. 100 150 149 172 489 320
NASDAQ Market
Index 100 108 132 186 327 206
S&P Group Index 100 102 102 133 80 35
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than 10% of
the Common Stock (collectively, "Reporting Persons") to file with the Commission
initial reports of ownership and changes in ownership of the Common Stock.
Reporting Persons are also required by Commission regulations to furnish the
Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on its review of copies of such
reports received by the Company, or on written representations from certain
Reporting Persons that no other reports were required for such persons, the
Company believes that during fiscal year 2000, all Section 16(a) filing
requirements were satisfied on a timely basis, with the following exceptions:
(a) Jonathan Klein filed a Form 5 in February 2001 to report sales of the
Company's Common Stock in June, August and September 2000 that should have been
reported on a Form 4 in July, September and October 2000, respectively; (b)
Sally von Bargen filed a Form 5 in February 2001 to report the sale of the
Company's Common Stock in June 2000 that should have been reported on a Form 4
filed in July 2000; (c) John Hallberg filed a Form 5 in February 2001 to report
the sale of the Company's Common Stock in August 2000 that should have been
reported on a Form 4 in September 2000; (d) Mark Torrance filed a Form 5 in
February 2001 to report sales of the Company's Common Stock in June, July,
August and November 2000 that should have been reported on a Form 4 in July,
August, September and December 2000; respectively (e) Brock Bohonos filed a Form
5 in Febru-
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ary 2001 to report sales of the Company's Common Stock in February and August
2000 that should have been reported on a Form 4 in March and September 2000; (f)
Stephen Powell filed a Form 5 in February 2001 to report sales of the Company's
Common Stock in March, May and December 2000 that should have been reported on a
Form 4 in April and June, 2000, and January 2001, respectively; (g) John
Gonzalez filed a Form 5 in February 2001 to report sales of the Company's Common
Stock in August and November 2000 that should have been reported on a Form 4 in
September and December 2000; (h) Christopher Roling filed a Form 5 in February
2001 to report sales of the Company's Common Stock in July 2000 that should have
been reported on a Form 4 in August 2000; and (i) Suzanne Page filed a Form 5 in
February 2001 to report sales of the Company's Common Stock in August 2000 that
should have been reported on a Form 4 in September 2000.
PROPOSALS OF STOCKHOLDERS
Under the Commission's proxy rules, shareholder proposals that meet certain
conditions may be included in the Company's proxy statement and form of proxy
for a particular annual meeting. Shareholders that intend to present a proposal
at the Company's 2002 Annual Meeting must give notice of the proposal to the
Secretary of the Company no later than December 7, 2001 to be considered for
inclusion in the Company's proxy materials relating to the 2002 Annual Meeting.
Receipt by the Company of any such proposals from a qualified shareholder in a
timely manner will not guarantee its inclusion in the Company's proxy materials
or its presentation at the 2002 Annual Meeting because the proposals must meet
the other requirements of the rules of the Commission.
Pursuant to Rule 14a-4 under the Securities Exchange Act of 1934, as
amended, the Company intends to retain discretionary authority to vote proxies
with respect to shareholder proposals for which the proponent does not seek
inclusion of the proposed matter in the Company's proxy statement for our 2002
Annual Meeting, except in circumstances where (i) the Company receives notice of
the proposed matter no later than December 7, 2001, and (ii) the proponent
complies with the other requirements set forth in Rule 14a-4.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR ENDED
DECEMBER 31, 2000, CONTAINING INFORMATION ON OPERATIONS, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE UPON REQUEST. PLEASE WRITE TO:
INVESTOR RELATIONS DEPARTMENT
GETTY IMAGES, INC.
701 N. 34TH STREET, SUITE 400
SEATTLE, WASHINGTON 98103
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APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
GETTY IMAGES, INC.
I. PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling their responsibility to the
shareholders, potential shareholders, and investment community relating to
corporate accounting, reporting practices of Getty Images, Inc. (the
"Corporation"), and the quality and integrity of the financial reports of the
Corporation. The Committee's primary duties and responsibilities are to:
- Oversee that management has maintained the reliability and integrity of
the accounting policies and financial reporting and disclosure practices
of the Corporation.
- Oversee that management has established and maintained processes to
assure that an adequate system of internal control is functioning within
the Corporation.
- Oversee that management has established and maintained processes to
assure compliance by the Corporation with all applicable laws,
regulations and corporate policy.
The Committee will fulfill these responsibilities primarily by carrying out
the activities enumerated in Section IV of this Charter.
II. MEMBERSHIP
The Committee shall be comprised of not less than three members of the
Board. The Board shall elect the members of the Committee at the annual meeting
of the Board or until their successors shall be duly elected and qualified. In
accordance with NASD Rules, each member of the Committee must be an independent
director,* and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall have a working familiarity
with basic finance and accounting practices,* and at least one member of the
Committee shall have accounting or related financial management expertise.*
Committee members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Corporation or an outside
consultant.
Unless a Chairperson of the Committee is elected by the full Board, the
members of the Committee may designate a Chairperson by majority vote of the
full Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director of the
internal auditing department and the independent accountants separately to
discuss any matters that the Committee or each of these groups believes should
be discussed privately. In addition, the Committee or at least its Chairperson
should meet with the independent accountants and management quarterly to review
the Corporation's financials consistent with Section IV.4 below.
- ---------------
* See NASD Rules, as amended from time to time, for specific requirements.
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IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Committee shall:
Documents/Reports Review
1. Review and reassess, at least annually, the adequacy of this Charter.
Make recommendations to the Board, as conditions dictate, to update
this Charter.
2. Review with management and the independent accountants the
Corporation's annual financial statements, including a discussion with
the independent accountants of the matters required to be discussed by
Statement of Auditing Standards No. 61, as amended from time to time
("SAS No. 61").
3. Review with management and the independent accountants the 10-Q prior
to its filing, including a discussion with the independent accountants
of the matters to be discussed by SAS No. 61. The Chairperson of the
Committee may represent the entire Committee for purposes of this
review.
Independent Accountants
4. Review the performance of the independent accountants and make
recommendations to the Board regarding the appointment or termination
of the independent accountants. The Committee and the Board have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditor. The Committee and the Board
have the authority and responsibility to nominate the outside auditor
to be proposed for shareholder approval in any proxy statement. The
independent accountants are ultimately accountable to the Committee and
the entire Board for such accountants' audit of the financial
statements of the Corporation. On an annual basis, the Committee should
review and discuss with the accountants all significant relationships
the accountants have with the Corporation to determine the accountants'
independence.
5. Oversee independence of the accountants by:
- receiving from the accountants, on a periodic basis, a formal written
statement delineating all relationships between the accountants and
the Corporation consistent with Independence Standards Board Standard
1 ("ISB No. 1");
- reviewing, and actively discussing with the Board, if necessary, and
the accountants, on a periodic basis, any disclosed relationships or
services between the accountants and the Corporation or any other
disclosed relationships or services that may impact the objectivity
and independence of the accountants; and
- recommending, if necessary, that the Board take certain action to
satisfy itself of the auditor's independence.
6. Based on the review and discussions referred to in section IV.2 and
IV.5, the Committee shall determine whether to recommend to the Board
that the Corporation's audited financial statements be included in the
Corporation's Annual Report on Form 10-K for the last fiscal year for
filing with the Securities and Exchange Commission.
Financial Reporting Process
7. In conjunction with the independent accountants and the internal
auditors, review the integrity of the Corporation's financial reporting
processes, both internal and external.
8. Consider and approve, if appropriate, major changes to the
Corporation's accounting principles and practices proposed by
management. Discuss with the independent accountants any significant
changes in auditing standards or their audit scope. Consider and
approve, if appropriate, any significant changes to the auditing
practices of the internal auditing department.
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9. Establish regular systems of reporting to the Committee by each of
management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation of
the financial statements and any significant difficulties encountered
during the course of the review or audit, including any restrictions on
the scope of the work or access to required information.
10. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
Legal Compliance/General
11. Review with the Corporation's General Counsel, any legal matter that
could have a significant impact on the Corporation's financial
statements.
12. Report through its Chairperson to the Board following meetings of the
Committee.
13. Maintain minutes or other records of meetings and activities of the
Committee.
V. CHARTER AMENDMENTS
The Board shall have the authority to amend this Charter from time to time
by a resolution approved by a majority of the Board members.
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GETTY IMAGES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 8, 2001
The undersigned stockholder of Getty Images, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement with respect to the Annual Meeting of Stockholders of Getty
Images, Inc. to be held at the headquarters of Getty Images, Inc., located at
701 North 34th Street, Suite 400, Seattle, WA 98103, on May 8, 2001 at 2:30
p.m., and hereby appoints Elizabeth J. Huebner and Jeffrey L. Beyle, and each of
them, proxies and attorneys-in-fact, each with power of substitution and
revocation, and each with all powers that the undersigned would possess if
personally present, to vote the Getty Images, Inc. Common Stock of the
undersigned at such meeting and any postponements or adjournments of such
meeting, as set forth below, and in their discretion upon any other business
that may properly come before the meeting (and any postponements or
adjournments thereof).
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR
THE ELECTION OF ALL OF THE NOMINEES TO THE BOARD OF DIRECTORS LISTED ON THE
REVERSE SIDE, FOR PROPOSAL 2 AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF.
IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE
GETTY IMAGES, INC.
P.O. BOX 11053
NEW YORK, N.Y. 10203-0053
31
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1. To elect two (2) Class I directors for FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
three-year terms. listed below for all nominees listed below
NOMINEES: James N. Bailey and Andrew S. Garb
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions
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2. To ratify the appointment of PricewaterhouseCoopers as indepen-
dent auditors of the Company for the 2001 fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and [ ]
or Comments Mark Here
This proxy card should be signed by
the stockholder(s) exactly as his
or her name(s) appear(s) hereon,
dated and returned promptly in the
enclosed envelope. Persons signing
in a fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both persons should sign.
Dated: , 2001
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Signature
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Signature
Votes must be indicated
(x) in Black or Blue ink. [x]
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD.