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Soliciting Material Pursuant to §240.14a-12 |
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TABLE OF CONTENTS
Homestore, Inc.
30700 Russell Ranch Road
Westlake Village, California 91362
Notice of Annual Meeting of Stockholders
To Be Held June 22, 2005
To Our Stockholders:
The annual meeting of stockholders of Homestore, Inc., a
Delaware corporation, will be held on June 22, 2005 at
9:30 a.m., local time, at the Hilton Los Angeles Airport
located at 5711 West Century Blvd., Los Angeles, California
90045-5631, for the following purposes:
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1. To elect three Class III directors to each serve
for a term of three years and until each of their successors has
been duly elected and qualified; |
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2. To approve a restated certificate of incorporation that
would amend and restate our Amended and Restated Certificate of
Incorporation, as amended, in order to: |
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eliminate the classification of our board of directors and
provide for annual election of all directors beginning at the
annual meeting of stockholders in 2008; |
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eliminate, effective as of the annual meeting of stockholders in
2008, the provision that directors may be removed only for
cause, because Delaware law permits this restriction only when a
board is classified; |
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correct cross-references within the Amended and Restated
Certificate of Incorporation, as amended; and |
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integrate into a single instrument all of the provisions of the
Amended and Restated Certificate of Incorporation, as amended,
currently in effect and the amendments described above; and |
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3. To transact such other business as may properly come
before the meeting or any postponement or adjournment thereof. |
The foregoing matters are described in more detail in the
enclosed proxy statement. Only stockholders of record at the
close of business on the record date, April 25, 2005, are
entitled to receive notice of and to vote at the annual meeting
or any postponement or adjournment thereof.
All stockholders are cordially invited to attend the annual
meeting in person. However, if you do not plan to attend the
annual meeting, please mark, sign, date and return the enclosed
proxy card as promptly as possible in the enclosed,
postage-prepaid envelope.
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By Order of the Board of Directors, |
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Michael R. Douglas
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Executive Vice President,
General Counsel |
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and Secretary |
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Westlake Village, California
May 24, 2005
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
PROXY STATEMENT
This proxy statement is furnished on behalf of the board of
directors of Homestore, Inc., a Delaware corporation, for use at
Homestores annual meeting of stockholders to be held on
June 22, 2005 at 9:30 a.m., local time, and at any
postponement or adjournment thereof. The annual meeting will be
held at the Hilton Los Angeles Airport located at 5711 West
Century Blvd., Los Angeles, California 90045-5631.
These proxy solicitation materials were first mailed on or about
May 24, 2005 to all stockholders entitled to vote at the
annual meeting.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the annual meeting, stockholders will vote on the matters
outlined in the accompanying notice of annual meeting of
stockholders, including the election of three Class III
directors and the approval of a restated certificate of
incorporation (the Proposed Restated Certificate)
that would amend and restate our Amended and Restated
Certificate of Incorporation, as amended (the Existing
Certificate).
Who is entitled to vote?
Only stockholders of record at the close of business on the
record date, April 25, 2005, are entitled to vote at the
annual meeting or any postponement or adjournment of the meeting.
What is the board of directors recommendation on the
proposals?
The board of directors recommends a vote FOR the nominees,
and FOR the approval of the Proposed Restated Certificate.
How do I vote?
Sign and date each proxy card you receive and return it in the
postage-prepaid envelope enclosed with your proxy materials. If
you are a registered stockholder and attend the annual meeting,
then you may deliver your completed proxy card in person or you
may vote in person at the annual meeting.
If your shares are held in street name by your
broker or bank, you will receive a form from your broker or bank
seeking instructions as to how your shares should be voted. If
you do not instruct your broker or bank how to vote, your broker
or bank will vote your shares if it has discretionary power to
vote on a particular matter.
Can I change my vote after I return my proxy card?
Yes, you have the right to revoke your proxy at any time before
the annual meeting by notifying our corporate secretary in
writing, returning a later-dated proxy card, or voting in person
at the annual meeting.
Who will count the votes?
Mellon Investor Services LLC will count the votes and act as the
inspector of election.
What shares are included on the proxy card(s)?
The shares on your proxy card(s) represent ALL of your shares.
If you do not return your proxy card(s), your shares will not be
voted.
What does it mean if I get more than one proxy
card?
If your shares are registered differently and are in more than
one account, you will receive more than one proxy card. Sign and
return all proxy cards to ensure that all of your shares are
voted. We encourage you to have all accounts registered in the
same name and address (whenever possible). You can accomplish
this by contacting our transfer agent, Mellon Investor Services
(800-356-2017), or, if your shares are held in street name, by
contacting the broker or bank that holds your shares.
How many shares can vote?
As of the record date, 147,231,468 shares of common stock,
our only voting securities entitled to vote at the meeting, were
issued and outstanding. Every stockholder is entitled to one
vote for each share of common stock held.
What is a quorum?
The presence at the meeting in person or by proxy of the holders
of a majority of the shares of stock entitled to vote at the
meeting will constitute a quorum for the transaction of
business. Proxies marked as abstaining on any matter to be acted
upon by stockholders and broker non-votes will be
treated as present for purposes of determining a quorum. A
broker non-vote occurs when you fail to provide voting
instructions for shares you hold in street name. Under those
circumstances, your broker may be authorized to vote for you on
some routine matters but is prohibited from voting on other
matters. Those matters for which your broker cannot vote result
in broker non-votes.
What is required to approve the proposals?
For the election of the Class III directors, once a quorum
has been established, the nominees for director shall be elected
by a plurality of the votes cast at the meeting. Accordingly,
the three nominees for director who receive the most votes will
become Class III directors of Homestore.
To approve the Proposed Restated Certificate, the affirmative
vote of the holders of a majority of the outstanding shares of
stock entitled to vote must be voted in favor of the proposal.
If a broker indicates on its proxy that it does not have
discretionary authority to vote on a particular matter, the
affected shares will be counted as shares present for the
purpose of determining the presence of a quorum. Broker
non-votes will be treated as not present and not entitled to
vote with respect to the election of a director and accordingly
will have no impact on the outcome of the vote with respect to
this proposal. With respect to the proposal to approve the
Proposed Restated Certificate, which requires the approval of
holders of a majority of the shares of stock outstanding as of
the record date, an abstention will have the same effect as a
vote against the proposal, because it is one less vote for
approval.
What happens if I abstain?
Proxies marked abstain will be counted as shares
present for the purpose of determining the presence of a quorum,
but for purposes of determining the outcome of a proposal,
shares represented by these proxies will not be treated as
affirmative votes. Therefore, with respect to the election of
directors, an abstention will result in nominees for director
receiving fewer votes for election. Broker non-votes with
respect to the proposal to approve the Proposed Restated
Certificate will have the same effect as a vote against the
proposal, because it is one less vote for approval. For
proposals requiring the approval of holders of a majority of the
shares of stock entitled to vote thereon that are present in
person or represented by proxy at the meeting and are voted for
or against the proposal, an abstention will have no impact on
the outcome of the vote with respect to this proposal.
How will Homestore solicit proxies?
We have retained Mellon Investor Services to assist in the
distribution of proxy materials. The costs and expenses of
preparing and mailing proxy solicitation materials for the
annual meeting and reimbursements
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paid to brokerage firms and others for their reasonable
out-of-pocket expenses for forwarding proxy solicitation
materials to stockholders will be borne by us. We have not
retained a proxy solicitation service to assist in soliciting
proxies. If, however, a proxy solicitation service is retained,
the costs will be borne by us. Proxies may also be solicited in
person, by telephone, or by facsimile by our directors,
officers, and employees without additional compensation being
paid to these persons.
PROPOSAL 1 ELECTION OF DIRECTORS
Our bylaws provide that the authorized number of directors may
be fixed by resolution of the board of directors from time to
time. Pursuant to our bylaws, the board has the authority to fix
the number of directors that serve on the board. Currently, the
board has fixed the number of directors at eight. Our bylaws
also provide for the board to be divided into three classes as
nearly equal in size as possible with staggered three-year
terms. The term of office for Class I, Class II, and
Class III directors will expire at the annual meeting of
stockholders to be held in 2006, 2007, and 2005, respectively.
The term of office for each of the Class III directors
elected at this annual meeting will expire at the annual meeting
of stockholders to be held in 2008 or upon his earlier death,
resignation or removal. The terms of the Class III
directors elected at the annual meeting will continue until the
2008 annual meeting, and the terms of the incumbent Class I
directors and Class II directors will continue until the
2006 annual meeting and the 2007 annual meeting, respectively,
regardless of whether the Proposed Restated Certificate is
approved. For a description of the changes in the terms of our
directors that would be implemented if the Proposed Restated
Certificate is approved, see Proposal 2
Approval of Proposed Restated Certificate below.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the nominees named below. If any
nominee is unable or declines to serve as a Class III
director at the time of the annual meeting, the proxies will be
voted for any nominee designated by the present board of
directors to fill the vacancy. Each of the nominees has agreed
to serve as director, if elected.
The nominees for election as Class III directors are Joe F.
Hanauer, L. John Doerr and W. Michael Long. Information about
these nominees, our other directors and our executive officers
is set forth below in the section entitled
Management Directors and Executive
Officers.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
EACH OF THE CLASS III NOMINEES LISTED ABOVE.
PROPOSAL 2 APPROVAL OF PROPOSED RESTATED
CERTIFICATE
Background of and Reasons for the Proposed Restated
Certificate
Pursuant to the settlement agreement that we entered into with
the California State Teachers Retirement System, the lead
plaintiff in the securities class action lawsuit against us, to
resolve all outstanding claims against us in that lawsuit (the
Settlement Agreement), we agreed to submit to our
stockholders an amendment to our Existing Certificate that would
eliminate the classification of our board of directors. If
approved by the stockholders, the Proposed Restated Certificate
will:
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eliminate the classification of our board of directors and
provide for annual election of all directors beginning at the
annual meeting of stockholders in 2008; |
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eliminate, effective as of the annual meeting of stockholders in
2008, the provision that directors may be removed only for
cause, because Delaware law permits this restriction only when a
board is classified; |
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correct cross-references within the Existing
Certificate; and |
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integrate into a single instrument all of the provisions of the
Existing Certificate currently in effect and the amendments
described above. |
The Existing Certificate includes a previous amendment that
changed our name to Homestore, Inc. In addition, we
previously changed our registered agent in the State of Delaware
and the location of our registered office in the State of
Delaware and filed a certificate with the Delaware Secretary of
State reflecting these changes in accordance with
Section 133 of the General Corporation Law of the State of
Delaware. The Proposed Restated Certificate reflects the
foregoing.
Our board of directors has determined that it is advisable and
in the best interests of Homestore to adopt the Proposed
Restated Certificate. Approval of the Proposed Restated
Certificate requires the affirmative vote of the holders of a
majority of the outstanding shares of our common stock entitled
to vote at the annual meeting.
Amendments to the Existing Charter to be Effected by the
Proposed Restated Certificate
If Proposal 2 is adopted by the stockholders and the
Proposed Restated Certificate is filed with the Secretary of
State of the State of Delaware, the following changes will be
made to the Existing Charter:
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Paragraph (d) of Article VI will be deleted in
its entirety and replaced with the following: |
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Subject to the rights of the holders of any series of
Preferred Stock, until the annual meeting of stockholders to be
held in 2008, a director may be removed only for cause by, and
only by, the holders of a majority of the shares then entitled
to vote at an election of directors. |
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Paragraph (e) of Article VI will be deleted in
its entirety and replaced with the following: |
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(e) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified
circumstances, until the annual meeting of stockholders to be
held in 2008, the directors shall be divided, with respect to
the time for which they severally hold office, into three
classes designated as Class I, Class II and
Class III, respectively, as follows: |
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(i) Directors shall be assigned to each class in accordance
with a resolution or resolutions adopted by the Board of
Directors, with the number of directors in each class to be
divided as equally as reasonably possible. |
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(ii) The term of office of the Class I directors
elected in 2003 shall expire at the annual meeting of the
stockholders to be held in 2006; the term of office of the
Class I directors elected in 2006 shall expire at the
annual meeting of the stockholders to be held in 2008. |
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(iii) The term of office of the Class II directors
elected in 2004 shall expire at the annual meeting of the
stockholders to be held in 2007; the term of office of the
Class II directors elected in 2007 shall expire at the
annual meeting of the stockholders to be held in 2008. |
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(iv) The term of office of the Class III directors
elected in 2005 shall expire at the annual meeting of the
stockholders to be held in 2008. |
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Commencing at the annual meeting of the stockholders to be held
in 2008, the Board of Directors shall cease to be classified and
all directors shall be elected to a term of office of one year
to expire at the next annual meeting of stockholders. |
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Article IX will be amended so that each reference to
this Article VIII within that Article will be
replaced with a reference to this Article IX. |
Effects of Approval of the Proposed Restated Certificate
Pursuant to the Existing Certificate, our board is divided into
three classes with staggered three-year terms and not more than
one class of directors is elected at any annual meeting of
stockholders. If the Proposed Restated Certificate is approved,
the terms of the directors elected at our stockholders meeting
in each of 2005, 2006 and 2007 will expire in 2008, and
beginning with our 2008 annual stockholders meeting, all
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directors will be elected at each annual meeting for a term of
one year. To the extent that any vacancy occurs during the term
of a director elected at any of the annual meetings in 2005,
2006 or 2007, the board may elect a director to serve for the
remainder of the expired term. In addition, because Delaware law
permits such a provision only when a board is classified, the
provision requiring removal of directors to be with cause only
will be eliminated.
Proponents of classified boards of directors believe that a
classified board helps the board of directors maintain a greater
continuity of experience because the majority of directors at
any given time will have experience with the business affairs
and operations of the company. This continuity may assist the
company in long-term strategic planning. Additionally,
proponents argue that a classified board reduces the possibility
of a sudden change in majority control of the board of
directors; in the event of a hostile takeover attempt, a
classified board may encourage a person seeking control of the
company to initiate arms-length discussions with
management and the board, who are in a position to negotiate a
more favorable transaction for stockholders.
On the other hand, a classified board of directors limits the
ability of stockholders to elect directors and exercise
influence over Homestore. The election of directors is the
primary avenue for stockholders to influence corporate
governance policies and to hold management accountable for its
implementation of those policies. Many potential investors are
opposed to the concept of a classified board. Also, because
there is no limit to the number of terms an individual may
serve, the continuity and stability of the boards
membership and our policies and long-term strategic planning
should not be affected.
Form of Proposed Restated Certificate
If Proposal 2 is approved, we intend to file the Proposed
Restated Certificate (as included as Appendix A to this
proxy statement) with the Secretary of State of the State of
Delaware. The Proposed Restated Certificate will become
effective upon filing. In addition, the board of directors has
approved certain corresponding amendments to our bylaws that
will be effective immediately upon the filing of the Proposed
Restated Certificate. The text of the Existing Certificate may
be obtained upon written request directed to our Secretary at
our principal office set forth on the notice of annual meeting
of stockholders accompanying this proxy statement. Such
documents have also been filed as exhibits to our filings with
the SEC and may be obtained on our website or from the SEC as
described in Additional Information below.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE THE PROPOSED RESTATED CERTIFICATE.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth information regarding our
nominees for election as Class III directors, our incumbent
Class I and Class II directors, and our executive
officers.
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Position |
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Joe F. Hanauer
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67 |
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Chairman of the Board and Director |
L. John Doerr
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53 |
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Director |
William E. Kelvie
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57 |
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Director |
Kenneth K. Klein
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61 |
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Director |
W. Michael Long
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52 |
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Chief Executive Officer and Director |
Terrence M. McDermott
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62 |
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Director |
Bruce G. Willison
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56 |
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Director |
V. Paul Unruh
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56 |
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Director |
Jack D. Dennison
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48 |
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Chief Operating Officer |
Lewis R. Belote, III
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49 |
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Chief Financial Officer |
Allan P. Merrill
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39 |
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Executive Vice President, Strategy and Corporate Development |
Michael R. Douglas
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51 |
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Executive Vice President, General Counsel and Secretary |
Allan D. Dalton
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56 |
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President and Chief Executive Officer, REALTOR.com® |
Stephen T. Feltner
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34 |
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President, Homebuilder.com |
Sunil N. Mehrotra
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55 |
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President, Consumer Media Services |
Maria L. Pietroforte
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47 |
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President, RentNet |
As previously disclosed, on March 15, 2005, Terrence M.
McDermott, one of our Class I directors, provided us with
notice of his intention to resign as a director effective as of
our 2005 annual stockholders meeting. Mr. McDermotts
term is scheduled to expire at our annual stockholders meeting
in 2006. Since December 2000, Mr. McDermott has served as
the National Association of Realtors® (the NAR)
representative on our board of directors. By virtue of its
ownership of our sole outstanding share of Series A
preferred stock, the NAR has the right to elect one of our
directors. In addition, if there is any vacancy in the office of
a director elected by the holder of the Series A preferred
stock, then a director to hold office for the unexpired term of
such director may be elected by the vote or written consent of
the holder of the Series A preferred stock.
The NAR has informed us that it intends to elect Alan Yassky as
its representative to serve on our board of directors effective
as of Mr. McDermotts resignation. If so elected,
Mr. Yassky will become a Class I director.
Mr. Yassky currently serves as the NARs
representative on the board of directors of RealSelect, Inc., a
wholly-owned subsidiary of the Company. Alan Yassky is currently
69 years of age. He has been a Realtor since 1964, and has
served as a director of the NAR since 1984. From 1997 to 2000,
Mr. Yassky additionally served as Treasurer for the NAR.
Mr. Yassky also founded Rockland Realty in 1964, a real
estate firm in New York, which he continues to operate as
co-owner.
Joe F. Hanauer has served as one of our directors since
November 1996, as vice chairman of the board from November 2001
to January 2002, chairman of the board since January 2002 and
lead independent director since December 2004; he was the
National Association of REALTORS® representative on the
board through November 2000. Mr. Hanauer is a
Class III director. Since 1988, Mr. Hanauer, through
Combined Investments, L.P., has directed investments in
companies primarily involved in real estate and financial
services. Mr. Hanauer is a former chairman and director of
Grubb & Ellis Company and a former chairman of Coldwell
Banker Residential Group, Inc. Mr. Hanauer is a director of
MAF Bancorp, Inc., a trustee of each of
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Calamos Investment Trust, Calamos Advisors Trust and Calamos
Convertible Opportunities and Income Fund, and a member of the
National Association of REALTORS®.
L. John Doerr has served as one of our directors
since August 1998. Mr. Doerr is a Class III director.
Mr. Doerr has been a general partner of Kleiner Perkins
Caufield & Byers, a venture capital firm, since 1980.
Prior to his tenure at Kleiner Perkins, Mr. Doerr was
employed by Intel Corporation for five years. He serves on the
board of directors of Amazon.com, Inc., Google Inc., Intuit
Inc., palmOne, Inc. and Sun Microsystems, Inc.
William E. Kelvie has served as one of our directors
since August 1998. Mr. Kelvie is a Class II director.
He has served as chief executive officer of Overture
Corporation, an information technology company, since July 2000.
Prior to his tenure at Overture Corporation, Mr. Kelvie was
the executive vice president and chief information officer
responsible for information technology systems at the Federal
National Mortgage Association (Fannie Mae), the worlds
largest non-bank financial services company, from 1992 to 2000.
He then served as special adviser to the chief executive officer
of Fannie Mae until January 2003. Mr. Kelvie joined Fannie
Mae in 1990 as senior vice president and chief information
officer. Prior to his tenure at Fannie Mae, Mr. Kelvie was
a partner with Nolan, Norton & Co., a management
consulting company specializing in information technology
strategies and plans. He also served in various capacities with
The Dexter Corporation, a specialized manufacturing company, and
The Travelers Insurance Company, an insurance and financial
services company.
Kenneth K. Klein has served as one of our directors since
August 1998. Mr. Klein is a Class II director. He is
president and chief executive officer of a privately held group
of companies involved in diversified residential and light
commercial construction and land development, including Kleinco
Construction Services, Inc. of which Mr. Klein has served
as president and chief executive officer since 1980.
Mr. Klein was national vice president of the National
Association of Home Builders during the calendar years 1999 and
2000.
W. Michael Long has served as our chief executive
officer and as one of our directors since January 2002.
Mr. Long is a Class III director. From November 1999
to April 2001, Mr. Long served as chairman of the board and
as a director of WebMD Corporation (formerly Healtheon/ WebMD
Corporation), a provider of healthcare information services and
technology solutions. From July 1997 to November 1999,
Mr. Long served as chief executive officer of Healtheon
Corporation. From August 1996 to July 1997, Mr. Long served
as president and chief executive officer of CSC Continuum, Inc.,
a unit of Computer Sciences Corporation. Prior to its
acquisition by CSC, Mr. Long was president and chief
executive officer of The Continuum Company, Inc.
Terrence M. McDermott has served as one of our directors
(as the NAR representative) since December 2000.
Mr. McDermott is a Class I director. He has served as
executive vice president/chief executive officer of the National
Association of REALTORS® since 1997. From 1993 to 1997,
Mr. McDermott served as executive vice president and chief
executive officer of the American Institute of Architects.
Mr. McDermott was president of Cahners Publishing Co. from
1987 to 1993, a firm he joined in 1969.
Bruce G. Willison has served as one of our directors
since December 2002. Mr. Willison is a Class I
director. Since 1999, Mr. Willison has served as Dean of
the UCLA Anderson School of Management. This appointment
followed a 26-year career in the banking industry, most recently
as president and chief operating officer of H.F.
Ahmanson & Co., the parent company of Home Savings of
America. Prior to that, Mr. Willison held several executive
positions at First Interstate Bancorp, including chairman and
chief executive officer of First Interstates Oregon
operation and chairman, president, and chief executive officer
of First Interstate Bank of California, as well as vice chairman
of the banks holding company, First Interstate Bancorp.
Mr. Willison began his banking career at Bank of America
Corp. in 1973. Mr. Willison is a director of Health Net,
Inc., an integrated managed care organization.
V. Paul Unruh has served as one of our directors
since May 2003. Mr. Unruh is a Class I director. For
25 years, Mr. Unruh worked at Bechtel, a privately
held global engineering and construction services organization.
Prior to his retirement in 2002, Mr. Unruh served as vice
chairman of Bechtel Group, Inc. from January 2001 to December
2002 and president of Bechtel Enterprises, a development and
financing subsidiary,
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from July 1997 to January 2001. His previous responsibilities at
Bechtel included both operating and financial positions,
including chief financial officer, treasurer and controller.
Mr. Unruh is currently a director of VERITAS Software
Corporation and Heidrick and Struggles International, Inc., a
provider of senior-level executive search and leadership
services. Prior to joining Bechtel in 1978, Mr. Unruh
practiced as a certified public accountant with what is now
PricewaterhouseCoopers LLP for seven years.
Jack D. Dennison has served as our chief operating
officer since January 2002. From July 1998 to January 2001,
Mr. Dennison served as executive vice president, general
counsel and secretary of WebMD Corporation. From 1996 to July
1998, Mr. Dennison served as vice president and deputy
general counsel to Computer Sciences Corporation. Prior to that
time, Mr. Dennison was general counsel at The Continuum
Company, Inc.
Lewis R. Belote, III has served as our chief
financial officer since January 2002. From May 1998 to April
2001, Mr. Belote served as senior vice president, finance
of WebMD Corporation. From June 1996 to May 1998,
Mr. Belote served as senior vice president and chief
financial officer for ActaMed Corporation. Prior to 1996,
Mr. Belote served for twelve years with the accounting firm
of Ernst & Young LLP.
Allan P. Merrill has served as executive vice president
of strategy and corporate development since October 2001. From
April 2000 to October 2001, Mr. Merrill was president of
Homebuilder.com, one of our consumer websites. Mr. Merrill
joined us following a 13-year tenure, from 1987 to March 2000,
with the investment banking firm Warburg Dillon Read (now UBS
Investment Bank), where he was a managing director and served
most recently as co-head of the Global Resources Group,
overseeing the construction and building materials, chemicals,
forest products, mining and energy industry groups.
Mr. Merrill is a member of the Policy Advisory Board of the
Joint Center for Housing Studies at Harvard University.
Michael R. Douglas has served as our executive vice
president, general counsel, and secretary since October 2002.
From 1997 to October 2002, Mr. Douglas served as a product
liability consultant. From 1987 to 1997, Mr. Douglas was
senior vice president, general counsel and secretary at
Fibreboard Corporation. Mr. Douglas has also served as
director of law of the Asbestos Claims Facility, litigation
counsel for Jim Walter Corporation and as an attorney in private
practice.
Allan D. Dalton has served as president and chief
executive officer of REALTOR.com®, one of our consumer
websites and the official Internet site of the National
Association of REALTORS®, since October 2002. From August
2002 to October 2002, Mr. Dalton served as executive vice
president of Coldwell Banker New England Metro, the largest real
estate services organization in New England. From January 1998
to August 2002, Mr. Dalton was senior vice president of
NRT, a residential real estate brokerage company and a
subsidiary of Cendant Corporation. Mr. Daltons
20-plus year career in the real estate industry includes
12 years as president and co-owner of an independent real
estate brokerage with more than 20 offices. He has also served
as executive vice president of Coldwell Banker Hunneman.
Stephen T. Feltner has served as president of
Homebuilder.com, one of our consumer websites and the official
new homes site of the National Association of Home Builders,
since December 2004. Mr. Feltner has been with us since
1999, holding key management positions in both operations and
finance, including Vice President of Operations from February
2003 to December 2004, Assistant to the Chief Executive Officer
from June 2002 to February 2003, Vice President of Strategic
Planning from August 2001 to June 2002, Director of Strategic
Planning from August 2000 to August 2001 and Manager of Sales
Operations from April 1999 to July of 2000. Prior to joining us,
Mr. Feltner served as the director of operations at Arch
Wireless (formerly PageNet, Inc.), based in Los Angeles,
California. A graduate of the UCLA Anderson School of
Management, Mr. Feltner holds a Master of Business
Administration degree.
Sunil N. Mehrotra has served as president of Consumer
Media Services, which includes our Welcome Wagon, Homeplans and
Retail advertising businesses, since December 2004. Since 2000
he has served as adjunct professor of marketing management and
strategy management in the MBA program at the Graziadio School
of Business Management at Pepperdine University.
Mr. Mehrotra also founded KnowledgeLINKS in 1996, a
collaborative Internet commerce company, and served as its
Chairman until January 2002. Prior to 1996, Mr. Mehrotra
served as executive vice president of Harman
Internationals consumer group, general manager of the RCA
brand for Thomson Consumer Electronics, vice president segment
manager for Chase
8
Manhattan Bank, managing consumer marketing and was employed by
General Electric as a product manager.
Maria L. Pietroforte has served as president of RentNet,
one of our consumer websites, since September 2004.
Ms. Pietroforte formerly served as president of KSI
Management Corporation, one of Greater
Washington D.C.s largest developers of rental
properties from 2001 to June 2004. Prior to that,
Ms. Pietroforte was president of E&S Ring Company from
1997 to 2001, one of the largest apartment managers in Los
Angeles.
Meetings and Committees of the Board of Directors
Other than Mr. Long, due to his position as our chief
executive officer, and Mr. McDermott, due to his position
with the National Association of REALTORS®, the board of
directors has determined that each member of the board meets the
requirements for being independent as defined by
applicable law, SEC rules and regulations, and NASDAQ Stock
Market listing standards, each as they may be interpreted and
amended from time to time, as well as other legal requirements
applicable to us. If NAR elects Mr. Yassky to the board of
directors, the board of directors would likely not determine,
due to Mr. Yasskys his position with NAR, that he
meets these requirements for being independent.
The board of directors held a total of 7 meetings during the
year ended December 31, 2004. During that period,
each director attended at least 75% of the aggregate of the
total number of meetings of the board (held
during the period for which he has been a director) and the
total number of meetings of all committees of the
board on which that director served (during the periods that
he served), except for Messrs. Doerr and
McDermott. The board has the following standing committees: an
audit committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
as amended, a management development and compensation committee,
and a governance and nominating committee. The charters of these
committees, as well as our corporate governance guidelines,
code of conduct and business ethics, and other
governing documents, can be found on our website at
http://ir.homestore.com/phoenix.zhtml?c=111114&p=irol-govHighlights.
The audit committees principal functions are to:
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independently and objectively monitor the periodic reporting of
our financial condition and results of operations; |
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monitor reviews of the adequacy of the accounting and financial
reporting processes and systems of internal control conducted by
our independent auditors and financial and senior management; |
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review and evaluate the independence and performance of our
independent auditors; |
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approve related party transactions; |
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retain and manage the relationship with our independent
auditors; and |
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facilitate communication among our independent auditors,
management and the board of directors. |
Our audit committee consists of Messrs. Klein, Willison and
Unruh. Until April 1, 2004, Mr. Kelvie also served as
a member of the audit committee. Each of the members of the
audit committee meets the standards of independence applicable
to audit committee members under applicable SEC rules and NASDAQ
Stock Market listing standards. The board has determined that
Mr. Unruh meets the requirements of an audit
committee financial expert as defined in SEC rules and
regulations. The audit committee held 11 meetings during 2004.
The charter of the audit committee, reflecting amendments made
to the charter by the board in 2004 and 2005, is included as
Appendix B to this proxy statement.
9
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Management Development and Compensation Committee |
The management development and compensation committees
principal functions are to:
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review the ongoing development of our leadership development
programs, succession planning, mission statement and operating
values; |
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review, evaluate and make recommendations to the board of
directors with respect to managements proposals regarding
our overall compensation policies, including as they relate to
the board, our chief executive officer and other executive
officers, and other senior officers and employees; and |
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administer and make recommendations to the board with respect to
our incentive-compensation plans and equity-based compensation
plans. |
Our management development and compensation committee consists
of Messrs. Hanauer and Willison. During 2004 and until
March 16, 2005, Mr. Doerr also served as a member of
the management development and compensation committee. Each of
these directors is a non-employee director within the meaning of
Section 16 of the Securities Exchange Act, an outside
director within the meaning of Section 162(m) of the
Internal Revenue Code and an independent director under
applicable NASDAQ Stock Market listing standards. The management
development and compensation committee held four meetings during
2004.
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Governance and Nominating Committee |
The governance and nominating committees principal
functions are to:
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identify and make recommendations to the board of directors on
individuals qualified to serve as our board members; |
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review and re-evaluate our corporate governance guidelines at
least twice per year; |
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review and recommend the re-nomination of incumbent directors; |
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review and recommend appointments to other committees; |
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lead the board in its annual review of the boards
performance; and |
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perform other tasks, such as studying the size, committee
structure, or meeting frequency of the board. |
Our governance and nominating committee consists of
Messrs. Hanauer and Kelvie. During 2004 and until
March 16, 2005, Mr. Doerr also served as a member of
the governance and nominating committee. Each of these directors
is an independent director under applicable NASDAQ Stock Market
listing standards. The committee held two meetings during 2004.
The governance and nominating committee will consider all
stockholder recommendations for candidates for the board, which
should be sent by stockholders to the governance and nominating
committee, in the care of our Secretary, in accordance with the
timeliness and information requirements of our Bylaws. To
facilitate consideration by the governance and nominating
committee, the recommendation should also be accompanied by a
full statement of the qualifications of the recommended nominee
and the consent of the recommending stockholder to be named in
our proxy materials. In addition to considering candidates
suggested by stockholders, the governance and nominating
committee considers potential candidates recommended by current
directors, company officers, employees and others.
Potential new board members are identified, screened,
recommended, and nominated by the governance and nominating
committee. The governance and nominating committee screens all
potential candidates in the same manner regardless of the source
of the recommendation. Any vacancy on the board is filled by the
affirmative vote of a majority of the independent board members
then in office.
10
In addition to the mandatory retirement age of 75, the
governance and nominating committee has adopted the following
criteria for the evaluation of director nominees:
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the board as a whole shall be appropriately diverse with members
coming from targeted industries and a variety of career paths
and skill sets, including experience in business and management,
leadership and strategic planning and crisis response; |
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the board seeks to attract members from several industries,
including technology, the Internet, real estate, real estate
finance or related activities, financial services, media,
marketing, accounting and finance, education and other core
industries related to Homestore; |
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we expect that a preponderance of the boards members will
have occupied positions in senior management, including CEO
positions, with companies engaged in the industries referenced
above and that the related companies will have generated at
least $250 million in revenues annually; |
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all board members must be able to meet the time commitment of
active board responsibility, and no candidate will be nominated
for director if the board determines that such candidate serves
on a number of other boards of directors, or has extensive other
obligations, that prevent such candidate from meeting the time
commitments required for service on the board; |
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the board seeks members representing a diversity of skill sets
in order to both enable the board to consider the variety of
issues it expects to consider, as well as to offer management
the kinds of resources they may need to operate more
effectively; and |
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board members are sought who possess personal integrity and high
moral and ethical standards, and who can be expected to be
committed to represent the long-term interests of stockholders. |
The board provides a process for stockholders to send
communications to the entire board or any of the directors
individually. Stockholders may send written communications to
the board, or to any of the individual directors, in the care of
our Secretary. All communications will be compiled by the
Secretary and are forwarded to the addressees or distributed at
the next scheduled board meeting.
The board of directors encourages its members to attend our
annual meeting of stockholders. Messrs. Hanauer, Kelvie,
Klein, Long and Unruh attended our 2004 annual meeting.
Director Compensation
Prior to 2002, directors did not generally receive cash
compensation for their services as directors, but were
reimbursed for their reasonable and necessary expenses in
attending meetings of board of directors and committees of the
board. Compensation for services was provided solely in the form
of stock options. However, in 2002, we began to pay cash
compensation in addition to stock options and the reimbursement
of these expenses because these activities involved significant
additional efforts and time commitments. We intend to continue
to pay cash compensation in addition to equity compensation and
expense reimbursements to directors due to the directors
increased time commitments as well as increased corporate
governance responsibilities.
Non-employee directors receive an annual retainer of $25,000 in
cash, which is paid in quarterly installments. Each committee
chair receives an additional annual retainer of $5,000 in cash,
except the chairman of the audit committee receives $10,000 in
cash. Each of these directors also receives $1,500 in cash per
meeting for each board meeting attended in person (and $1,000
for each telephonic meeting attended after April 4, 2005)
that requires a significant commitment of time. In addition,
members of the committees of the board receive, depending on the
committee, either $2,000 or $1,500 for each committee meeting
attended (and either $1,500 or $1,000 for each telephonic
meeting attended after April 4, 2005) that requires a
significant commitment of time. In 2004, Mr. Hanauer, in
his capacity as chairman of the board, received an additional
annual retainer of $70,000 in cash, which was paid in quarterly
installments.
In 2004, each non-employee director (other than any director who
is entitled to a seat on our board of directors on a contractual
basis) was granted 10,300 restricted shares of our common stock
under our 1999
11
Stock Incentive Plan. Mr. Hanauer, in his capacity as
chairman of the board, was granted an additional 15,450
restricted shares. No options were included as part of these
2004 grants to directors. Each restricted share will vest three
years after the grant date. All restricted stock will
immediately vest if the director is not nominated for
re-election, is nominated for re-election and is not elected or
must resign due to health reasons, or upon such directors
death. Upon a directors resignation or termination for
other reasons, including but not limited to business conflicts
with us, all of the directors unvested restricted stock
will be terminated immediately.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to
beneficial ownership of our common stock as of April 25,
2005, by
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each stockholder known by us to be the beneficial owner of 5% or
more of our common stock, |
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each of our directors, |
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each of the executive officers listed in the summary
compensation table, and |
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all of our directors and executive officers as a group. |
Unless otherwise noted, the address for each stockholder listed
is c/o Homestore, Inc., 30700 Russell Ranch Road, Westlake
Village, California 91362. As noted above, the NAR, which has
the right, by virtue of its ownership of our sole outstanding
share of Series A preferred stock, to elect one of our
directors, has informed us that it intends to elect Alan Yassky
as its representative to serve on our board of directors
effective as of Mr. McDermotts resignation, which is
expected to occur after the annual meeting. As of April 25,
2005, Mr. Yassky did not beneficially own any shares of our
common stock.
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Shares of | |
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Shares of Series A | |
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Common Stock | |
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Preferred Stock | |
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Beneficially Owned | |
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Beneficially Owned | |
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Name of Beneficial Owner |
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Number | |
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Percent | |
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Number | |
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Percent | |
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FMR Corp.(1)
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17,923,989 |
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12.2 |
% |
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Amerindo Investment Advisors Inc(2)
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7,526,538 |
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5.1 |
% |
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W. Michael Long(3)
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5,153,308 |
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3.5 |
% |
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L. John Doerr(4)
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4,283,541 |
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2.9 |
% |
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National Association of REALTORS®(5)
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4,025,640 |
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2.7 |
% |
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1 |
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100 |
% |
Terrence M. McDermott(6)
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4,025,640 |
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2.7 |
% |
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1 |
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100 |
% |
Jack D. Dennison(7)
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2,471,397 |
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1.6 |
% |
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Lewis R. Belote, III(8)
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1,658,632 |
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1.1 |
% |
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Allan P. Merrill(9)
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1,333,543 |
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* |
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Michael R. Douglas(10)
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978,348 |
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* |
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Joe F. Hanauer(11)
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831,966 |
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* |
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Allan D. Dalton(12)
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732,156 |
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* |
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Kenneth K. Klein(13)
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138,912 |
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* |
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Bruce G. Willison(14)
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94,362 |
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* |
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V. Paul Unruh(15)
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90,300 |
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* |
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William E. Kelvie(16)
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90,112 |
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* |
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All 16 directors and executive officers as a group
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22,462,186 |
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15.3 |
% |
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1 |
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100 |
% |
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* |
Represents beneficial ownership of less than 1%. |
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(1) |
The information shown is as of December 31, 2004 and is
based upon information disclosed by FMR Corp., Edward C. Johnson
3d, Abigail P. Johnson, Fidelity Management & Research
Company and |
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Fidelity OTC Portfolio in an amendment to a Schedule 13G
filed with the SEC. Such persons reported that FMR Corp. and
other members of the filing group have sole power to dispose or
to direct the disposition of 17,920,259 shares of our
common stock. Sole power to vote these shares resides in the
respective boards of trustees of the funds that have invested in
the shares. Such persons also reported that Fidelity Management
Trust Company and other members of the filing group have sole
power to dispose or to direct the disposition of and sole power
to vote or direct the voting of 3,730 shares of our common
stock. The address of the above persons is 82 Devonshire Street,
Boston, Massachusetts 02109. |
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(2) |
Based upon the information contained in a Schedule 13G
filed on February 1, 2005 by these persons, at
December 31, 2004 the following entities and persons
beneficially owned in the aggregate 7,526,538 shares: |
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Shares | |
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Sole | |
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Shared | |
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Sole | |
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Shared | |
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Beneficially | |
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Voting | |
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Voting | |
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Dispositive | |
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Dispositive | |
Entity or Person |
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Owned | |
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Power | |
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Power | |
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Power | |
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Power | |
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Amerindo Investment Advisors Inc.
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7,473,138 |
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7,473,138 |
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7,473,138 |
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Amerindo Investment Advisors, Inc.
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Amerindo Investment Advisors Inc. Profit Sharing Plan
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7,500 |
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7,500 |
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7,500 |
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Amerindo Advisors (UK) Limited Retirement Benefits Scheme
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45,900 |
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45,900 |
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45,900 |
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Alberto W. Vilar
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7,526,538 |
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7,500 |
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7,473,138 |
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7,500 |
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7,473,138 |
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Gary A. Tanaka
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7,519,038 |
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7,480,638 |
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7,480,638 |
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James P.F. Stableford
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45,900 |
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45,900 |
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45,900 |
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Renata Le Port
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45,900 |
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45,900 |
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45,900 |
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These entities and persons in the aggregate claim sole voting
and sole dispositive power over 7,500 of these shares and shared
voting and shared dispositive power over 7,473,138 of these
shares. Except for 53,400 shares beneficially owned by
Mr. Vilar and 45,900 shares beneficially owned by each
of Messrs. Tanaka and Stableford and Ms. Le Port,
these persons and entities disclaim beneficial ownership of all
of these shares. The address of Amerindo Investment Advisors
Inc. is One Embarcadero Center, Suite 2310,
San Francisco, California 94111. |
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(3) |
Includes 186,662 shares of restricted stock, none of which
will be vested or transferable as of June 24, 2005. Also
includes 4,962,500 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
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(4) |
Includes 45,300 shares of restricted stock, none of which
will be vested or transferable as of June 24, 2005. Also
includes 55,312 shares issuable upon the exercise of
options that are held by Mr. Doerr, which are vested and
exercisable as of June 24, 2005. Also includes
3,657,895 shares held by Kleiner Perkins
Caufield & Byers VIII, 210,967 shares held by KPCB
VIII Founders Fund, and 1,615 shares held by KPCB
Information Sciences Zaibatsu Fund II. Mr. Doerr is a
general partner of KPCB Associates VIII, which is the general
partner of each of Kleiner Perkins Caufield & Byers
VIII and KPCB VIII Founders Fund, and a general partner of KPCB
Associates VII, which is the general partner of KPCB Information
Sciences Zaibatsu Fund II. Mr. Doerr disclaims
beneficial ownership of these shares except to the extent of his
pecuniary interest in these entities. Also includes
2,602 shares in the Brook H. Byers Trust dated 1986 of
which Mr. Doerr is trustee, with respect to which
Mr. Doerr disclaims beneficial ownership. The address of
the Kleiner Perkins Caufield & Byers entities is
2750 Sand Hill Road, Menlo Park, California 94025. |
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(5) |
We have authorized the issuance of one share of Series A
preferred stock, which is held by the National Association of
REALTORS®. Although the Series A preferred stockholder
is generally not entitled to notice of any stockholders
meetings or to vote on any matters with respect to any question
upon which holders of our common stock or preferred stock have
the right to vote, except as may be required by law (in which
case, the Series A preferred would have one vote per share
and would vote together with the common stock as a single
class), the holder of Series A preferred is entitled to
elect one member of our |
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board of directors. The address of the National Association of
REALTORS® is 430 North Michigan Avenue, Chicago, Illinois
60611. |
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(6) |
Includes 4,025,640 shares of common stock and one share of
Series A Preferred Stock held by National Association of
REALTORS®, of which Mr. McDermott is the executive
vice president/chief executive officer. Mr. McDermott
disclaims beneficial ownership of all of these shares. |
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(7) |
Includes 2,440,625 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
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(8) |
Includes 1,628,281 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
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(9) |
Includes 1,303,817 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
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(10) |
Includes 974,998 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
|
(11) |
Includes 237,338 shares of restricted stock, none of which
shares will be vested or transferable as of June 24, 2005.
Also includes 188,280 shares issuable upon the exercise of
options that are held by Mr. Hanauer that are vested and
exercisable as of June 24, 2005. Also includes
406,348 shares held by Ingleside Interests, L.P.
Mr. Hanauer is a general partner of this entity.
Mr. Hanauer disclaims beneficial ownership of these shares
except to the extent of his pecuniary interest in this entity. |
|
(12) |
Includes 720,832 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
|
(13) |
Includes 57,300 shares of restricted stock, of which
45,300 shares will not be vested or transferable as of
June 24, 2005. Also includes 63,812 shares issuable
upon the exercise of options that are vested and exercisable as
of June 24, 2005. |
|
(14) |
Includes 70,300 shares of restricted stock, none of which
will be vested or transferable as of June 24, 2005. Also
includes 24,062 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
|
(15) |
Includes 70,300 shares of restricted stock, none of which
will be vested or transferable as of June 24, 2005. Also
includes 20,000 shares issuable upon the exercise of
options that are vested and exercisable as of June 24, 2005. |
|
(16) |
Includes 57,300 shares of restricted stock, of which
45,300 shares will not be vested or transferable as of
June 24, 2005. Also includes 32,812 shares issuable
upon the exercise of options that are vested and exercisable as
of June 24, 2005. |
14
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation paid during
2004, 2003, and 2002 to all persons who served as our chief
executive officer during 2004 and our other five most highly
compensated executive officers during 2004. We collectively
refer to these persons as the named executive
officers.
Summary Compensation Table
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|
Annual Compensation | |
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| |
|
Long Term Compensation | |
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| |
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Bonus($) | |
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Securities | |
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| |
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Other Annual | |
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Underlying | |
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Restricted | |
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All Other | |
Name and Principal Position |
|
Year | |
|
Salary($) | |
|
Sign-On | |
|
Performance | |
|
Compensation($) | |
|
Options(#) | |
|
Shares($) | |
|
Compensation($) | |
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| |
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| |
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| |
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| |
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| |
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| |
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| |
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W. Michael Long(1)
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2004 |
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|
500,000 |
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|
|
|
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|
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500,000 |
|
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|
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1,000,000 |
|
|
|
250,000 |
(2) |
|
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|
|
Chief Executive Officer |
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2003 |
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|
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500,000 |
|
|
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|
|
500,000 |
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|
|
|
|
|
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300,000 |
(3) |
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2002 |
|
|
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480,769 |
|
|
|
500,000 |
(4) |
|
|
500,000 |
|
|
|
|
|
|
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5,200,000 |
|
|
|
|
|
|
|
|
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Jack D. Dennison(1)
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2004 |
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400,000 |
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400,000 |
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500,000 |
|
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|
|
|
|
|
|
Chief Operating Officer |
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2003 |
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|
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400,000 |
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425,000 |
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|
|
|
|
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|
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6,775 |
(5) |
|
|
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2002 |
|
|
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384,616 |
|
|
|
400,000 |
(4) |
|
|
400,000 |
|
|
|
|
|
|
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2,600,000 |
|
|
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|
|
|
|
|
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Allan D. Dalton(6)
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2004 |
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325,000 |
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406,250 |
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350,000 |
|
|
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|
|
|
|
|
|
President and CEO, |
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2003 |
|
|
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325,000 |
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|
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|
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425,000 |
|
|
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17,526 |
(7) |
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90,933 |
(8) |
|
REALTOR.com®
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2002 |
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68,750 |
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81,250 |
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28,249 |
(7) |
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1,200,000 |
|
|
|
|
|
|
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53,751 |
(5) |
Lewis R. Belote, III(1)
|
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2004 |
|
|
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350,000 |
|
|
|
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|
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350,000 |
|
|
|
|
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|
|
350,000 |
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
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2003 |
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|
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350,000 |
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350,000 |
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2002 |
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336,539 |
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350,000 |
(4) |
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350,000 |
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1,730,000 |
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|
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Michael R. Douglas(6)
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2004 |
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325,000 |
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325,000 |
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350,000 |
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|
Executive Vice |
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2003 |
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325,000 |
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350,000 |
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78,292 |
(7) |
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|
|
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156,129 |
(9) |
|
President and General |
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2002 |
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68,750 |
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|
|
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81,250 |
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25,227 |
(7) |
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1,200,000 |
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|
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41,198 |
(5) |
|
Counsel |
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|
|
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|
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|
|
|
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|
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Allan P. Merrill
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|
2004 |
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|
|
325,000 |
|
|
|
|
|
|
|
325,000 |
|
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|
|
350,000 |
|
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|
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|
|
Executive Vice |
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2003 |
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325,000 |
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|
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|
|
350,000 |
|
|
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|
|
|
|
550,001 |
(10) |
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|
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|
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President, Strategy and |
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2002 |
|
|
|
315,385 |
|
|
|
|
|
|
|
500,000 |
|
|
|
|
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|
|
1,150,000 |
|
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|
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Corporate Development |
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(1) |
The executive officer joined us in January 2002. |
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(2) |
Represents 115,740 shares of restricted stock granted to
Mr. Long on March 17, 2005 in consideration for his
services to us during 2004. These shares will vest in full on
March 17, 2008. The aggregate number of restricted stock
held by Mr. Long as of December 31, 2004 was 70,922.
The aggregate value of restricted stock held by Mr. Long as
of December 31, 2004 is $214,894. |
|
|
(3) |
Represents 70,922 shares of restricted stock granted to
Mr. Long on March 31, 2004 in consideration for his
services to us during 2003. These shares will vest in full on
March 31, 2007. |
|
|
(4) |
We provided this sign-on bonus to the executive officer as part
of his employment agreement in order to attract him to join us. |
|
|
(5) |
Represents relocation expenses paid by us. |
|
|
(6) |
The executive officer joined us in October 2002. |
|
|
(7) |
Represents amounts reimbursed for the payment of taxes and tax
gross-up amounts associated with relocation expenses. |
|
|
(8) |
Represents $13,357 of expense paid by us for travel on an
airplane indirectly owned by Mr. Long, and $77,576 of
relocation expenses paid by us. |
|
|
(9) |
Represents $100,000 payment for the expected loss on the sale of
executive officers residence in connection with relocation
and $56,129 of relocation expenses paid by us. |
|
|
(10) |
50,001 of which were granted in connection with an option
exchange offer in which we offered our employees the opportunity
to exchange all outstanding options granted to them (or assumed
by us) between August 5, 1999 (the date of our initial
public offering) and December 31, 2001 for new options. |
15
Stock Option Grants in 2004
The following table sets forth grants of stock options to the
named executive officers in 2004.
All options granted to the named executive officers in 2004 are
either incentive stock options or nonqualified stock options.
The options expire ten years from the date of grant and were
granted at an exercise price equal to the fair market value of
our common stock on the date of grant.
Potential realizable values are computed by (a) multiplying
the number of shares of common stock subject to a given option
by the exercise price per share, (b) assuming that the
aggregate stock value derived from that calculation compounds at
the annual 5% or 10% rates shown in the table for the entire
ten-year term of the option, and (c) subtracting from that
result the aggregate option exercise price. The 5% and 10%
assumed annual rates of stock price appreciation are provided in
accordance with the rules of the SEC and do not represent our
estimate or projection of future common stock prices.
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Percent of | |
|
|
|
|
|
Potential Realizable Value | |
|
|
Number of | |
|
Total | |
|
|
|
|
|
of Assumed Annual Rates of | |
|
|
Securities | |
|
Options | |
|
|
|
|
|
Stock Price Appreciation for | |
|
|
Underlying | |
|
Granted to | |
|
Exercise | |
|
|
|
Option Term($) | |
|
|
Options | |
|
Employees | |
|
Price | |
|
Expiration | |
|
| |
Name |
|
Granted(#) | |
|
in 2004 | |
|
($/Sh) | |
|
Date | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
W. Michael Long
|
|
|
750,000 |
(1) |
|
|
8.87 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
1,929,134 |
|
|
|
4,888,805 |
|
|
|
|
250,000 |
(2) |
|
|
2.96 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
643,045 |
|
|
|
1,629,602 |
|
Jack D. Dennison
|
|
|
375,000 |
(1) |
|
|
4.43 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
964,567 |
|
|
|
2,444,402 |
|
|
|
|
125,000 |
(2) |
|
|
1.48 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
321,522 |
|
|
|
814,801 |
|
Allan D. Dalton
|
|
|
262,500 |
(1) |
|
|
3.10 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
675,197 |
|
|
|
1,711,082 |
|
|
|
|
87,500 |
(2) |
|
|
1.03 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
225,066 |
|
|
|
570,361 |
|
Lewis R. Belote, III
|
|
|
262,500 |
(1) |
|
|
3.10 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
675,197 |
|
|
|
1,711,082 |
|
|
|
|
87,500 |
(2) |
|
|
1.03 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
225,066 |
|
|
|
570,361 |
|
Michael R. Douglas
|
|
|
262,500 |
(1) |
|
|
3.10 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
675,197 |
|
|
|
1,711,082 |
|
|
|
|
87,500 |
(2) |
|
|
1.03 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
225,066 |
|
|
|
570,361 |
|
Allan P. Merrill
|
|
|
262,500 |
(1) |
|
|
3.10 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
675,197 |
|
|
|
1,711,082 |
|
|
|
|
87,500 |
(2) |
|
|
1.03 |
|
|
|
4.09 |
|
|
|
5/11/2014 |
|
|
|
225,066 |
|
|
|
570,361 |
|
|
|
(1) |
Option vests ratably on a quarterly basis over four years
beginning on May 11, 2004. |
|
(2) |
Option vests in full either on (i) May 11, 2007 if the
Company meets certain performance criteria for the fiscal year
ended December 31, 2006, or (ii) May 11, 2009 if
the Company fails to meet such performance criteria. |
The percentage of total options granted to employees is based on
options to purchase a total of 8,459,534 shares of our
common stock granted during 2004. If exercised, the options
granted to employees would represent 5.76% of the total number
of shares of our common stock outstanding at December 31,
2004.
16
Aggregated Option Exercises in 2004 and Option Values at
December 31, 2004
The following table sets forth the number of shares acquired and
the value realized upon exercise of stock options during 2004
and the number of shares of common stock subject to exercisable
and unexercisable stock options held as of December 31,
2004 by the named executive officers. Also reported are values
of in-the-money options, which represent the positive spread
between the exercise prices of outstanding stock options and the
fair market value of $3.03 per share, which was the closing
price of our common stock on December 31, 2004.
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|
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|
|
Number of Securities | |
|
Value of Unexercised | |
|
|
Number of | |
|
|
|
Underlying Unexercised | |
|
In-the-Money Options at | |
|
|
Shares | |
|
|
|
Options at 12/31/04 | |
|
12/31/04($) | |
|
|
Acquired on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercise | |
|
Realized | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
W. Michael Long
|
|
|
|
|
|
|
|
|
|
|
4,237,500 |
|
|
|
1,962,500 |
|
|
|
5,262,562 |
|
|
|
1,341,437 |
|
Jack D. Dennison
|
|
|
|
|
|
|
|
|
|
|
2,118,750 |
|
|
|
981,250 |
|
|
|
2,631,281 |
|
|
|
670,719 |
|
Allan D. Dalton
|
|
|
250,000 |
|
|
|
930,872 |
|
|
|
547,394 |
|
|
|
752,606 |
|
|
|
1,358,496 |
|
|
|
1,149,504 |
|
Lewis R. Belote, III
|
|
|
|
|
|
|
|
|
|
|
1,411,405 |
|
|
|
668,595 |
|
|
|
1,750,813 |
|
|
|
446,287 |
|
Michael R. Douglas
|
|
|
|
|
|
|
|
|
|
|
795,311 |
|
|
|
754,689 |
|
|
|
2,012,997 |
|
|
|
1,115,003 |
|
Allan P. Merrill
|
|
|
|
|
|
|
|
|
|
|
1,035,936 |
|
|
|
1,014,065 |
|
|
|
976,207 |
|
|
|
387,294 |
|
Employment-Related Agreements
We entered into an employment agreement with Mr. Long dated
as of March 6, 2002 that provides for his employment as our
chief executive officer.
Mr. Longs employment agreement provides for annual
base compensation of $500,000. We provided Mr. Long a
signing bonus of $500,000 to be paid in four equal quarterly
installments, the last of which was paid on January 31,
2003. Under his 2004 executive bonus plan, Mr. Long was
also eligible to receive a performance bonus of up to twice his
annual base compensation for 2004; he received $500,000 and
115,740 shares of restricted stock which will vest in full
on March 17, 2008.
We granted Mr. Long a Sign-On Option, which
fully vested on January 24, 2002, to
purchase 1,300,000 shares of our common stock at an
exercise price of $1.76 per share. We also granted
Mr. Long a Principal Option to
purchase 3,900,000 shares of our common stock at an
exercise price of $1.76 per share. Mr. Longs
Principal Option vests ratably on a monthly basis over
48 months beginning on February 1, 2002.
The Sign-On Option and Principal Option may be exercised after a
termination of employment (but no later than their expiration
date, January 23, 2012) as follows: (i) within
90 days after termination for cause; (ii) within one
year after voluntary termination prior to a change in control;
or (iii) within three years after termination for any other
reason.
We agreed to provide residential accommodations to Mr. Long
within reasonable commuting distance of our offices, with costs
not to exceed $5,000 per month. We will reimburse
Mr. Long the actual and reasonable fixed operating costs
and the actual and reasonable business related variable
operating costs of an airplane indirectly owned by him;
Mr. Long was reimbursed approximately $1.4 million for
the use of this airplane in 2004. We also will reimburse him for
actual and reasonable business expenses. If the foregoing
reimbursements are subject to federal or state income taxes, we
will pay an amount necessary to place Mr. Long in the same
after-tax position as he would have been in had no such taxes
been imposed.
If there is a termination of employment without cause, a
termination for death or disability or a constructive
termination of employment, whether or not in connection with a
change in control, subject to his execution of a release of
claims, Mr. Long will receive his annual base salary and
his full annual bonus for the fiscal year in which the
termination occurs, payable in equal installments over twelve
months. In the event of
17
termination without cause, constructive termination, death or
disability, Mr. Longs Principal Option will vest and
become exercisable.
In the event that any portion of the amounts payable are subject
to the excise tax imposed by Section 4999 of the Internal
Revenue Code, we will pay Mr. Long an amount necessary to
place him in the same after-tax position as he would have been
in had no such excise tax been imposed.
On May 11, 2004, we granted Mr. Long options to
purchase 1,000,000 shares of our common stock at an
exercise price of $4.09 per share. An option to
purchase 750,000 shares of our common stock vests
ratably on a quarterly basis over four years beginning on
May 11, 2004, and an option to
purchase 250,000 shares of our common stock vests in
full either on (i) May 11, 2007, if the Company meets
certain performance criteria for the fiscal year ended
December 31, 2006, or (ii) May 11, 2009, if the
Company fails to meet such performance criteria. In the event of
termination upon a change of control, or termination without
cause in the absence of a change of control, subject to his
provision of transition services if requested and his execution
of a release of claims, such options will vest and become
exercisable for a period of one year following such termination.
We entered into an employment agreement with Mr. Dennison
dated as of March 6, 2002 that provides for his employment
as our chief operating officer.
Mr. Dennisons employment agreement provides for
annual base compensation of $400,000. We provided
Mr. Dennison a signing bonus of $400,000 to be paid in four
equal quarterly installments, the last of which was paid on
January 31, 2003. Under his 2004 executive bonus plan,
Mr. Dennison was also eligible to receive a performance
bonus of up to twice his annual base compensation for 2004; he
received $400,000.
We granted Mr. Dennison a Sign-On Option, which
fully vested on January 24, 2002, to
purchase 650,000 shares of our common stock at an
exercise price of $1.76 per share. We also granted
Mr. Dennison a Principal Option to
purchase 1,950,000 shares of our common stock at an
exercise price of $1.76 per share. Mr. Dennisons
Principal Option vests ratably on a monthly basis over
48 months beginning on February 1, 2002.
The Sign-On Option and Principal Option may be exercised after a
termination of employment (but no later than their expiration
date, January 23, 2012) as follows: (i) within
90 days after termination for cause; (ii) within one
year after voluntary termination prior to a change in control;
or (iii) within three years after termination for any other
reason.
We agreed to provide residential accommodations to
Mr. Dennison for up to two years within reasonable
commuting distance of our offices, with costs not to exceed
$5,000 per month. Mr. Dennison relocated to our
headquarters in 2003 at which time we ceased providing him with
residential accommodations. We reimburse Mr. Dennison for
actual and reasonable business expenses. In addition,
Mr. Dennison was reimbursed for reasonable expenses
associated with his relocation to our headquarters as described
above under Summary Compensation Table. If the
foregoing reimbursements are subject to federal or state income
taxes, we will pay an amount necessary to place
Mr. Dennison in the same after-tax position as he would
have been in had no such taxes been imposed.
If there is a termination of employment without cause, a
termination for death or disability or a constructive
termination of employment, whether or not in connection with a
change in control, subject to his execution of a release of
claims, Mr. Dennison will receive his annual base salary
and his full annual bonus for the fiscal year in which the
termination occurs, payable in equal installments over twelve
months. In the event of termination without cause, constructive
termination, death or disability, Mr. Dennisons
Principal Option will vest and become exercisable.
In the event that any portion of the amounts payable are subject
to the excise tax imposed by Section 4999 of the Internal
Revenue Code, we will pay Mr. Dennison an amount necessary
to place him in the same after-tax position as he would have
been in had no such excise tax been imposed.
18
On May 11, 2004, we granted Mr. Dennison options to
purchase 500,000 shares of our common stock at an
exercise price of $4.09 per share. An option to
purchase 375,000 shares of our common stock vests
ratably on a quarterly basis over four years beginning on
May 11, 2004, and an option to
purchase 125,000 shares of our common stock vests in
full either on (i) May 11, 2007, if the Company meets
certain performance criteria for the fiscal year ended
December 31, 2006, or (ii) May 11, 2009, if the
Company fails to meet such performance criteria. In the event of
termination upon a change of control, or termination without
cause in the absence of a change of control, subject to his
provision of transition services if requested and his execution
of a release of claims, such options will vest and become
exercisable for a period of one year following such termination.
On September 30, 2002, we entered into an executive
retention and severance agreement with Mr. Dalton pursuant
to which he agreed to serve as President, REALTOR.com®.
Additionally, we entered into a compensation arrangement with
Mr. Dalton that provides for annual base compensation of
$325,000. Under his 2004 executive bonus plan, Mr. Dalton
was also eligible to receive a performance bonus of up to twice
his annual base compensation for 2004; he received $406,250.
We reimburse Mr. Dalton for actual and reasonable business
expenses. In addition, as described above under Summary
Compensation Table, Mr. Dalton was reimbursed for
reasonable expenses associated with his relocation to our
headquarters. This included taxes and tax gross-up amounts
associated with payments made to relocate Mr. Dalton to our
headquarters. We purchased a residence in the fourth quarter of
2002 from Mr. Dalton for $1.95 million , based on its
appraised value, to facilitate his move to our headquarters. We
sold this house in 2004 for approximately $1.4 million.
Effective October 8, 2002, we granted Mr. Dalton an
option to purchase 1,200,000 shares of our common
stock at an exercise price of $0.39 per share. This option
vested as to 250,000 shares on the date of grant and the
remainder vests ratably on a monthly basis over 48 months
beginning on November 1, 2002.
In the event of a termination without cause, subject to his
provision of transition services if requested and his execution
of a release of claims, Mr. Dalton will receive a lump sum
payment in an amount equal to his annual base salary, payment of
his continued medical coverage premiums for up to
12 months, and a payment in an amount equal to 50% of his
target bonus for the year in which his termination occurs (the
Minimum Bonus Payment). In addition, if the
termination occurs after June 30 of any year, and before
January 1 of the next year, and our financial performance goals
for the year have been achieved, we will pay Mr. Dalton a
prorated portion of his target bonus less his Minimum Bonus
Payment. All equity awards Mr. Dalton was granted by us
prior to September 30, 2002 will vest and any such options
will remain exercisable for a period of 12 months following
the later of his termination date or the end of any transition
services period.
On May 11, 2004, we granted Mr. Dalton options to
purchase 350,000 shares of our common stock at an
exercise price of $4.09 per share. An option to
purchase 262,500 shares of our common stock vests
ratably on a quarterly basis over four years beginning on
May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in
full either on (i) May 11, 2007, if the Company meets
certain performance criteria for the fiscal year ended
December 31, 2006, or (ii) May 11, 2009, if the
Company fails to meet such performance criteria. In the event of
termination upon a change of control, or termination without
cause in the absence of a change of control, subject to his
provision of transition services if requested and his execution
of a release of claims, such options will vest and become
exercisable for a period of one year following such termination.
We entered into an employment agreement with Mr. Belote
dated as of March 6, 2002 that provides for his employment
as our chief financial officer.
Mr. Belotes employment agreement provides for annual
base compensation of $350,000. We provided Mr. Belote a
signing bonus of $350,000 to be paid in four equal quarterly
installments, the last of which was
19
paid on January 31, 2003. Under his 2004 executive bonus
plan, Mr. Belote was also eligible to receive a performance
bonus of up to twice his annual base compensation for 2004; he
received $350,000.
We granted Mr. Belote a Sign-On Option, which
fully vested on January 24, 2002, to
purchase 432,500 shares of our common stock at an
exercise price of $1.76 per share. We also granted
Mr. Belote a Principal Option to
purchase 1,297,500 shares of our common stock at an
exercise price of $1.76 per share. Mr. Belotes
Principal Option vests ratably on a monthly basis over
48 months beginning on February 1, 2002.
The Sign-On Option and Principal Option may be exercised after a
termination of employment (but no later than their expiration
date, January 23, 2012) as follows: (i) within
90 days after termination for cause; (ii) within one
year after voluntary termination prior to a change in control;
or (iii) within three years after termination for any other
reason.
We agreed to provide residential accommodations to
Mr. Belote within reasonable commuting distance of our
offices, with costs not to exceed $5,000 per month. We will
reimburse Mr. Belote for actual and reasonable business
expenses. If the foregoing reimbursements are subject to federal
or state income taxes, we will pay an amount necessary to place
Mr. Belote in the same after-tax position as he would have
been in had no such taxes been imposed.
If there is a termination of employment without cause, a
termination for death or disability or a constructive
termination of employment, whether or not in connection with a
change in control, subject to his execution of a release of
claims, Mr. Belote will receive his annual base salary and
his full annual bonus for the fiscal year in which the
termination occurs, payable in equal installments over twelve
months. In the event of termination without cause, constructive
termination, death or disability, Mr. Belotes
Principal Option will vest and become exercisable.
In the event that any portion of the amounts payable are subject
to the excise tax imposed by Section 4999 of the Internal
Revenue Code, we will pay Mr. Belote an amount necessary to
place him in the same after-tax position as he would have been
in had no such excise tax been imposed.
On May 11, 2004, we granted Mr. Belote options to
purchase 350,000 shares of our common stock at an
exercise price of $4.09 per share. An option to
purchase 262,500 shares of our common stock vests
ratably on a quarterly basis over four years beginning on
May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in
full either on (i) May 11, 2007, if the Company meets
certain performance criteria for the fiscal year ended
December 31, 2006, or (ii) May 11, 2009, if the
Company fails to meet such performance criteria. In the event of
termination upon a change of control, or termination without
cause in the absence of a change of control, subject to his
provision of transition services if requested and his execution
of a release of claims, such options will vest and become
exercisable for a period of one year following such termination.
On September 30, 2002, we entered into an executive
retention and severance agreement with Mr. Douglas pursuant
to which he agreed to serve as Executive Vice President, General
Counsel and Secretary. Additionally, we entered into a
compensation arrangement with Mr. Douglas that provides for
annual base compensation of $325,000. Under his 2004 executive
bonus plan, Mr. Douglas was also eligible to receive a
performance bonus of up to twice his annual base compensation
for 2004; he received $325,000.
We will reimburse Mr. Douglas for actual and reasonable
business expenses. In addition, Mr. Douglas was reimbursed
for reasonable expenses associated with his relocation to our
headquarters as described above under Summary Compensation
Table. In connection with the expected loss on the sale of
his residence, we paid $100,000 to Mr. Douglas in the first
quarter of 2003 to facilitate his move to our headquarters.
Effective October 8, 2002, we granted Mr. Douglas an
option to purchase 1,200,000 shares of our common
stock at an exercise price of $0.39 per share. This option
vested as to 200,000 shares on the date of
20
grant and the remaining 1,000,000 options vests ratably on a
monthly basis over 48 months beginning on October 1,
2002.
In the event of a termination without cause, subject to his
provision of transition services if requested and his execution
of a release of claims, Mr. Douglas will receive a lump sum
payment in an amount equal to his annual base salary, payment of
his continued medical coverage premiums for up to
12 months, and a payment in an amount equal to 50% of his
target bonus for the year in which his termination occurs (the
Minimum Bonus Payment). In addition, if the
termination occurs after June 30 of any year, and before
January 1 of the next year, and our financial performance goals
for the year have been achieved, we will pay Mr. Douglas a
prorated portion of his target bonus less his Minimum Bonus
Payment. All equity awards Mr. Douglas was granted by us
prior to September 30, 2002 will vest and any such options
will remain exercisable for a period of 12 months following
the later of his termination date or the end of any transition
services period.
On May 11, 2004, we granted Mr. Douglas options to
purchase 350,000 shares of our common stock at an
exercise price of $4.09 per share. An option to
purchase 262,500 shares of our common stock vests
ratably on a quarterly basis over four years beginning on
May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in
full either on (i) May 11, 2007, if the Company meets
certain performance criteria for the fiscal year ended
December 31, 2006, or (ii) May 11, 2009, if the
Company fails to meet such performance criteria. In the event of
termination upon a change of control, or termination without
cause in the absence of a change of control, subject to his
provision of transition services if requested and his execution
of a release of claims, such options will vest and become
exercisable for a period of one year following such termination.
On April 24, 2002, we entered into an executive retention
and severance agreement with Mr. Merrill pursuant to which
he agreed to continue to serve as executive vice president of
strategy and corporate development. Additionally, we entered
into a new compensation arrangement with Mr. Merrill that
provides for annual base compensation of $325,000, effective
January 21, 2002. Under his 2004 executive bonus plan,
Mr. Merrill was also eligible to receive a performance
bonus of up to twice his annual base compensation for 2004; he
received $325,000.
Effective January 17, 2002, we granted Mr. Merrill an
option to purchase 450,000 shares of our common stock
at an exercise price of $2.25 per share. This option vests
ratably on a monthly basis over 48 months beginning on
February 1, 2002. Additionally, effective January 24,
2002, we granted Mr. Merrill an option to
purchase 700,000 shares of our common stock at an
exercise price of $1.76 per share. This option vested as to
87,500 shares on July 24, 2002 and the remainder vests
ratably on a monthly basis over 42 months beginning on
August 1, 2002.
In the event of a termination without cause, subject to his
provision of transition services if requested and his execution
of a release of claims, Mr. Merrill will receive a lump sum
payment in an amount equal to his annual base salary, payment of
his continued medical coverage premiums for up to
12 months, and a payment in an amount equal to 50% of his
target bonus for the year in which his termination occurs (the
Minimum Bonus Payment). In addition, if the
termination occurs after June 30 of any year, and before
January 1 of the next year, and our financial performance goals
for the year have been achieved, we will pay Mr. Merrill a
prorated portion of his target bonus less his Minimum Bonus
Payment. All equity awards Mr. Merrill was granted by us
prior to April 24, 2002 will vest and any such options will
remain exercisable for a period of 12 months following the
later of his termination date or the end of any transition
services period.
On May 11, 2004, we granted Mr. Merrill options to
purchase 350,000 shares of our common stock at an
exercise price of $4.09 per share. An option to
purchase 262,500 shares of our common stock vests
ratably on a quarterly basis over four years beginning on
May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in
full either on (i) May 11, 2007, if the Company meets
certain performance criteria for the fiscal year ended
December 31, 2006, or (ii) May 11, 2009, if the
Company fails to meet such performance criteria. In the event of
termination upon a change of control, or termination without
cause in the absence of a change of control, subject to his
provision of transition services if requested and his execution
of a release of claims, such options will vest and become
exercisable for a period of one year following such termination.
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Operating Agreement with the National Association of
REALTORS®
In November 1996, we entered into an operating agreement with
the National Association of REALTORS® (the
NAR), which governs how our subsidiary, RealSelect,
Inc., operates the REALTOR.com® web site on behalf of the
NAR. For a description of the operating agreement, please see
Item 1 of our annual report on Form 10-K for 2004,
filed with the SEC.
Under our operating agreement as originally entered into with
the NAR, we were required to make quarterly royalty payments of
up to 15% of RealSelects operating revenue in the
aggregate to the NAR and the entities that provide us the
information for our real property listings (data content
providers).
In 2002, we and the NAR amended the NAR operating agreement. In
accordance with the operating agreement, as amended, we paid
$1,400,000 to the NAR in 2004 and will make the following fixed
payments to the NAR:
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For 2005, we must pay $1,500,000 in four installments of
$375,000 due on the last day of each calendar quarter of 2005. |
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For 2006, we must pay $1,500,000 plus or minus, as the case may
be, the percentage change in the Consumer Price Index for 2005,
in four equal installments due on the last day of each calendar
quarter of 2006. |
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|
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For 2007 and beyond, we must pay the amount due during the prior
calendar year plus or minus, as the case may be, the percentage
change in the Consumer Price Index for the prior calendar year,
in four equal installments due on the last day of each calendar
quarter for that calendar year. |
Loans to and Transactions with Executive Officers
As part of an employment agreement entered into in 2002, we
reimburse Mr. Long for the business use of an airplane that
is owned indirectly by him. Total reimbursement for usage in
2004 was approximately $1.4 million.
22
REPORT OF THE AUDIT COMMITTEE
To The Board of Directors:
The Audit Committee of the Board of Directors of Homestore, Inc.
(the Company) reviewed and discussed the audited
financial statements for the year ended December 31, 2004
with Company management and with Ernst & Young LLP, the
Companys independent registered public accounting firm.
The Audit Committee also discussed with the independent auditors
the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees, as
then in effect. The Audit Committee received the written
disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as then in
effect, and has discussed with the auditors their independence.
Based on the review and discussions described in this Report,
the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the
Companys Annual Report on Form 10-K for the year
ended December 31, 2004 for filing with the Securities and
Exchange Commission.
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By the Audit Committee |
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of the Board of Directors |
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Kenneth K. Klein, Chairman |
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V. Paul Unruh |
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Bruce G. Willison |
INDEPENDENT AUDITORS
Effective September 29, 2003, our Audit Committee dismissed
PricewaterhouseCoopers LLP (PricewaterhouseCoopers)
as our accountants and engaged Ernst & Young LLP
(Ernst & Young) to serve as our accountants
for the year ending December 31, 2003.
PricewaterhouseCooperss reports on our financial
statements for the two most recent fiscal years ended
December 31, 2002 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles.
During our two most recent fiscal years ended December 31,
2002 and the subsequent interim period through
September 29, 2003, there were no disagreements between us
and PricewaterhouseCoopers on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not
resolved to PricewaterhouseCooperss satisfaction, would
have caused them to make reference to the subject matter of the
disagreement in connection with their reports on the financial
statements for such years.
During our two most recent fiscal years ended December 31,
2002, there were no reportable events as described in
Item 304(a)(1)(v) of Regulation S-K, except that in
connection with their audit of our consolidated financial
statements for the year ended December 31, 2001,
PricewaterhouseCoopers advised management and discussed with our
Audit Committee that (i) a material weakness existed in the
operation of internal controls caused by a concerted effort by
former senior management, assisted by third parties, to subvert
the internal control structure in its entirety (which resulted
in a restatement of previously issued quarterly financial
information for the first three quarters of 2001) and
(ii) a weakness, characterized as a reportable
condition, as such term is defined by professional
auditing standards, existed concerning three operating units
which did not have appropriate operating controls around the
revenue and accounts receivable cycle. In response to being
advised of these matters, management and our board of directors
took remedial actions that they believed to be appropriate.
After taking these actions, PricewaterhouseCoopers did not
advise us of any material weaknesses or reportable conditions in
connection with PricewaterhouseCooperss audit of our
financial statements for the year ended December 31, 2002.
23
We requested that PricewaterhouseCoopers furnish us with a
letter addressed to the Securities and Exchange Commission
stating whether or not it agrees with the above statements. A
copy of such letter, dated October 6, 2003, is filed as
Exhibit 16.1 to our Current Report Form 8-K filed on
October 6, 2003.
During our two most recent years ended December 31, 2002
and the subsequent interim period through September 29,
2003, we did not consult Ernst & Young with respect to
the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our financial statements, or
any other matters or reportable events as set forth in
Items 304(a)(2)(i) and (ii) of Regulation S-K.
The Audit Committee has retained Ernst & Young as our
independent certified public accountants to audit the our
consolidated financial statements for the year ending
December 31, 2005. Representatives of Ernst &
Young are expected to be present at the Annual Meeting, with the
opportunity to make a statement should they desire to do so, and
to be available to respond to questions, as appropriate.
Fees Billed for Services Rendered by Independent Auditors
PricewaterhouseCoopers LLP (PricewaterhouseCoopers)
served as the Companys principal independent accountant to
audit the Companys financial statements for the fiscal
year ended December 31, 2002. As previously disclosed, on
September 29, 2003 our audit committee notified
PricewaterhouseCoopers that it would not be retained to perform
the audit of the financial statements of the Company for the
fiscal year ending December 31, 2003 and engaged
Ernst & Young LLP (Ernst & Young)
as independent accountants to audit the Companys financial
statements for the fiscal period ended December 31, 2003
and December 31, 2004. The fees billed in the fiscal years
ended December 31, 2003 and December 31, 2004 for
PricewaterhouseCooperss services to us and the fees billed
in the fiscal period ended December 31, 2003 and
December 31, 2004 for Ernst & Youngs
services to us were:
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PricewaterhouseCoopers LLP | |
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Ernst & Young LLP | |
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| |
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| |
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|
Year Ended | |
|
Year Ended | |
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Year Ended | |
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December 31, 2003 | |
|
December 31, 2003 | |
|
December 31, 2004 | |
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| |
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| |
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| |
Audit Fees(1)
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$ |
365,000 |
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|
$ |
1,090,000 |
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|
$ |
2,892,000 |
|
Audit-Related Fees(2)
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|
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|
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Tax Fees(3)
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|
88,000 |
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|
|
8,000 |
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|
|
94,000 |
|
All Other Fees(4)
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|
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|
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|
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Total Fees
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$ |
453,000 |
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|
$ |
1,098,000 |
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|
$ |
2,986,000 |
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(1) |
Audit fees are fees billed by the independent
auditors for professional services for the audit of the
consolidated financial statements included in our Form 10-K
and review of financial statements included in our
Form 10-Qs, or for services that are normally provided by
the auditors in connection with statutory and regulatory filings
or engagements. |
|
(2) |
Audit-related fees are fees billed by the
independent auditors for assurance and related services that are
reasonably related to the performance of the audit or review of
the financial statements, and are not reported under audit fees.
Fees associated with registration statements that were
previously included in audit-related fees in the proxy statement
for our 2003 annual meeting of stockholders have been
reclassified under audit fees above. |
|
(3) |
Tax fees are fees billed by the independent auditors
for professional services for tax compliance, tax advice, and
tax planning. |
|
(4) |
All other fees are fees billed by the independent
auditors to the Company for any services not included in the
first three categories, and include fees for accounting services
provided to us and in connection with our response to inquires
from the SEC. |
The audit committees policy is to approve in advance all
audit and permitted non-audit services provided by the
independent accountant. In 2004, the audit committee approved in
advance any services provided by
24
the independent auditors and the related fees. Those services
only involved accounting consultation and general corporate tax
services. In addition, in December 2003, the audit committee
authorized the committees audit committee financial expert
to pre-approve on behalf of the audit committee permitted
auditing and non-auditing services of $50,000 or less to be
provided by Ernst & Young or any other accounting
services firms, with the audit committee financial expert to
report each pre-approval of services to the full committee at
its next scheduled meeting after such pre-approval.
None of the audit and non-audit services described above were
approved by the audit committee pursuant to the waiver of
pre-approval provisions set forth in applicable rules of the SEC.
25
REPORT OF THE MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
To The Board of Directors:
The Management Development and Compensation Committee (the
Committee) of the Board of Directors of Homestore,
Inc. (the Company) makes final decisions regarding
compensation and grants of incentive and equity awards to
executive officers and employees.
General Compensation Policy
The Committee acts on behalf of the board of directors to
establish the general compensation policy of the Company. The
Committee reviews base salary levels, target bonuses, and other
elements of compensation for the chief executive officer
(CEO) and other executive officers of the Company
each year. The Committee also administers the Companys
incentive and equity plans, including the Companys 1999
Stock Incentive Plan and 2002 Stock Incentive Plan. The
Committee believes that, to help the Company become a strong,
profitable, and attractive enterprise, a proper combination of
cash and equity compensation provides the best incentive to
attract talented management, encourage outstanding performance
and align management and stockholder interests.
The Committees philosophy in compensating executive
officers of the Company is to relate compensation to corporate,
business unit and individual performance, and increases in
shareholder value, while providing a total compensation package
that is competitive and enables the Company to attract,
motivate, reward and retain key executives and employees.
Consistent with this philosophy, annual salary adjustments and
the cash incentive component of executive officer compensation
is determined after a review of the Companys and
individuals performance for the previous year. The
long-term equity incentives for executive officers may be stock
options and/or restricted stock granted under the Companys
stock incentive plans. In order to ensure that the compensation
program was competitive and appropriate, since late 2001, the
Committee has from time to time retained an independent
consulting firm to review the compensation policy for its
executives compared to other companies considered comparable to
the Company in terms of size, type of business, performance,
position and compensation philosophy. The Committee also uses
salary surveys obtained from time to time for reference
purposes, but it does not target salaries to a specific level of
comparable compensation.
2004 Executive Compensation
Executive compensation for 2004 included base salary, cash
bonuses, restricted stock and stock option grants. Base salaries
for the Companys executive officers are evaluated annually
and are based on the executives contribution to Company
performance, level of responsibility, experience and breadth of
knowledge. In the first quarter of 2004, the Committee approved
a bonus plan for the Companys executives for performance
based on the following measures: Company results of operations,
Company financial position, and the executives individual
contribution to the Companys results.
The Company in the past has relied heavily on long-term
equity-based compensation to compensate and incentivize its
executive officers. In 2004, stock options were granted to
certain executive officers to aid in retaining them and to align
their interests with those of the stockholders. Stock options
typically have been granted to executive officers when the
executive first joined the Company, in connection with a
significant change in responsibilities and to achieve equity
within the executives peer group and comparable companies.
The number of shares subject to options granted is within the
discretion of the Committee and is based on anticipated future
contribution to corporate and/or business unit results, past
performance, and work consistency within the executives
peer group.
26
2004 CEO Compensation
As described in the section of the Companys proxy
statement in which this Report is to be included entitled
Employment-Related Agreements, the Company entered
into an employment agreement with Mr. Long with respect to
his services as CEO commencing in January 2002. The
Committees executive compensation philosophy described
above applies in all respects to Mr. Long. The Committee
believes that Mr. Longs base salary for 2004,
$500,000, was commensurate with the compensation paid to chief
executive officers with similar experience at comparable
companies. Mr. Long was awarded a $500,000 cash bonus for
2004 related to his continuing contributions to the
Companys restructuring and integration efforts, reduction
in the Companys operating loss and the achievement of
individual performance objectives set by the Committee.
Mr. Long also received 115,740 shares of restricted
stock in consideration for his services to us during 2004 which
will vest in full on March 17, 2008.
Section 162(m) of the Internal Revenue Code of 1986
Section 162(m) of the Internal Revenue Code of 1986, as
amended, disallows the deduction for certain compensation in
excess of $1 million paid to certain executive officers of
the Company, unless the compensation qualifies as
performance-based as defined in the Code and
applicable regulations. In order to maintain flexibility, the
Committee reserves the discretion to determine whether to seek
to comply with the requirements of 162(m) based on the goals and
objectives established by the Committee. The Company believes
that stock options granted in 2004 satisfy the requirements for
performance-based compensation, but all other
compensation of executives in 2004 was subject to the
Section 162(m) limits on deductibility.
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By the Management Development and Compensation Committee of the
Board of Directors |
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Bruce G. Willison, Chairman |
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Joe F. Hanauer |
Compensation Committee Interlocks and Insider
Participation
During 2004, the management development and compensation
committee was composed of three non-employee directors,
Messrs. Hanauer, Doerr and Willison, none of whom have any
interlocking relationships as defined by the SEC. In March 2005,
Mr. Doerr resigned from the management development and
compensation committee. Messrs. Hanauer and Willison are
the current members of this committee.
27
STOCK PERFORMANCE GRAPH
The following graph compares, for the period that our common
stock has been registered under Section 12 of the Exchange
Act, which commenced on August 4, 1999 (including the
period from November 18, 2002 through January 2, 2004
during which our common stock was listed on the NASDAQ SmallCap
Market), the cumulative total stockholder return for our common
stock, The NASDAQ National Market Index (U.S. Companies),
and Media Generals Internet and Software Services Index.
The results reflected in the graph assume the investment of $100
on August 5, 1999, the first trading day of our common
stock, in our common stock and those indices and reinvestment of
dividends by those companies that paid dividends. The
information contained in this graph was prepared by Media
General Financial Services, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers and beneficial owners of more than 10% of our
common stock (the Reporting Persons), to file with
the SEC initial reports of ownership and reports of changes in
ownership of our common stock. Reporting Persons are required by
SEC regulations to furnish us with copies of all
Section 16(a) reports they file.
Based solely on our review of the copies of Section 16(a)
reports received or written representations from certain
Reporting Persons, we believe that all reporting requirements
under Section 16(a) for the fiscal year ended
December 31, 2004 were met in a timely manner by the
Reporting Persons.
STOCKHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING OF
STOCKHOLDERS
Proposals of stockholders that are intended to be presented at
our 2006 annual meeting must be received by us no later than
January 24, 2006 in order that they may be included in the
proxy statement and form of proxy relating to that meeting.
Notice of a stockholder-sponsored proposal submitted outside of
the process of Rule 14a-8 under the Exchange Act (i.e., a
proposal to be presented at the 2006 annual meeting of
stockholders but not submitted for inclusion in our proxy
statement) will be considered untimely under our bylaws unless
it is received between March 24, 2006 and April 23,
2006.
OTHER MATTERS
We know of no other matters to be submitted to the stockholders
at the annual meeting. If any other matters properly come before
the stockholders at the annual meeting, it is the intention of
the persons named on the enclosed proxy card to vote the shares
they represent as the board may recommend.
28
ADDITIONAL INFORMATION
We file annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, as well as our
proxy statements and other information, with the Securities and
Exchange Commission, or SEC. A copy of our Annual Report to
Stockholders for the fiscal year ended December 31, 2004
accompanies this proxy statement. In most cases, those documents
are available, without charge, on our website at
http://ir.homestore.com as soon as reasonably practicable
after they are filed electronically with the SEC. Copies are
also available, without charge, from Homestore, Inc., Investor
Relations, 30700 Russell Ranch Road, Westlake Village, CA
91362. You may also read and copy these documents at the
SECs public reference room located at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549 under our SEC
file number (000-26659), and you may obtain information on
the operation of the public reference room by calling the SEC at
1-800-SEC-0330. In most cases, these documents are available
over the Internet from the SECs web site at
http://www.sec.gov.
29
APPENDIX A
RESTATED
CERTIFICATE OF INCORPORATION
OF
HOMESTORE, INC.
Homestore, Inc., a corporation organized and existing under the
laws of the State of Delaware (the Corporation),
hereby certifies as follows:
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1. The name of the Corporation is Homestore, Inc. and the
name under which the Corporation was originally incorporated is
InfoTouch Corporation. The date of filing of its original
Certificate of Incorporation with the Secretary of State was
July 29, 1993. |
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2. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation
of this Corporation. |
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3. The text of the Certificate of Incorporation as amended
or supplemented heretofore is further amended hereby to read in
its entirety as follows: |
ARTICLE I
The name of the Corporation (the Corporation)
is: Homestore, Inc.
ARTICLE II
The address of the Corporations registered office in the
State of Delaware is 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808. The name of its registered agent at
such address is Corporation Service Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
ARTICLE IV
(a) The Corporation is authorized to issue two classes of
shares which shall be designated as Common Stock,
$0.001 par value per share, and Preferred Stock,
$0.001 par value per share. The total number of shares that
the Corporation is authorized to issue is
500,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock.
(b) The shares of Preferred Stock may be issued from time
to time in one or more series. The Board of Directors of the
Corporation (the Board of Directors)
is expressly authorized to provide for the issue of all or any
of the remaining shares of the Preferred Stock in one or more
series, to determine the designation of each such series, to fix
the number of shares and to determine or alter for each such
series, such voting powers, full or limited, or no voting
powers, and such designations, preferences, and relative,
participating, optional, or other rights and such
qualifications, limitations, or restrictions thereof, as shall
be stated and expressed in the resolutions or resolutions
adopted by the Board of Directors providing for the issue of
such shares and as may be permitted by the General Corporation
Law of the State of Delaware. Except as otherwise expressly
provided in any certificate of designation designating any
series of Preferred Stock pursuant to the foregoing provisions
of this Article IV, any new series of Preferred Stock may
be designated, fixed and determined as provided herein by the
Board of Directors without approval of the holders of Common
Stock or the holders of Preferred Stock, or any series thereof,
and any such new series may have powers, preferences and rights,
including, without limitation, voting rights, dividend rights,
liquidation rights, redemption rights and conver-
A-1
sion rights, senior to, junior to or pari passu with the rights
of the Common Stock, the Preferred Stock, or any future class or
series of Preferred Stock or Common Stock. The Board of
Directors is also expressly authorized to increase or decrease
(but not below the number of shares of such series then
outstanding) the number of shares of any series subsequent to
the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares
constituting such decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the
number of shares of such series.
ARTICLE V
There is hereby designated a series of Preferred Stock,
designated as Series A Preferred Stock, $0.001 par
value per share (the Series A
Preferred). The authorized number of shares of
Series A Preferred is one (1) share. The relative
rights, preferences, privileges, and restrictions granted to or
imposed upon the Series A Preferred are as follows:
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(a) Dividends. In each calendar year, the
holder of the Series A Preferred shall be entitled to
receive, when, as and if declared by the Board, out of any funds
and assets of the Corporation legally available therefor,
non-cumulative dividends in an amount equal to $0.08 per
share (as appropriately adjusted for stock splits, stock
dividends, recapitalizations and the like), prior and in
preference to the payment of any dividend on the Common Stock in
such calendar year. Dividends on the Series A Preferred
shall not be mandatory or cumulative, and no rights or interest
shall accrue to the holder of the Series A Preferred by
reason of the fact that the Corporation shall fail to declare or
pay dividends on the Series A Preferred in any calendar or
fiscal year of the Corporation. If, after dividends in the full
preferential amounts specified in this Section for the
Series A Preferred have been paid or declared and set apart
in any calendar year of the Corporation, the holder of
Series A Preferred shall have no further rights to receive
any further dividends that the Board may declare or pay in that
calendar year. |
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(b) Liquidation. In the event of any
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the Series A Preferred
shall be entitled to receive, prior and in preference to any
payment or distribution on any shares of Common Stock, an amount
per share equal to $1.00 per share of Series A
Preferred. After payment of such amount, any further amounts
available for distribution shall be distributed among the
holders of Common Stock and the holder of Preferred Stock other
than Series A Preferred, if any, entitled to receive such
distributions. |
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(c) Redemption. Upon the earlier to occur of
(i) termination of that certain Operating Agreement dated
November 26, 1996, as the same may be amended from time to
time (the Operating Agreement), or
(ii) the National Association of Realtors
(NAR) ceases to own at least
149,778 shares of Common Stock of the Corporation, or
(iii) the existence and continuance of a material breach by
the NAR of that certain Joint Ownership Agreement, dated as of
November 26, 1996, among the NAR, NetSelect and NetSelect,
L.L.C., or the Trademark License dated as of November 26,
1996, by and between NAR and RealSelect, at any time thereafter
the Corporation may, at the option of the Board, redeem the
Series A Preferred. The redemption price for each share of
Series A Preferred shall be $1.00 per share. If the
Corporation elects to redeem the Series A Preferred, it
shall give written notice (the Redemption
Notice) to the holder of the Series A
Preferred, at the address last shown on the records of the
Corporation for such holder, notifying the holder of the
redemption to be effected, the redemption date (which may be
selected by the Corporation in its discretion), and the place at
which payment may be obtained, and calling upon such holder to
surrender to the Corporation, in the manner and at the place
designated, the certificate or certificates representing the
shares to be redeemed. On or before the designated redemption
date, each holder of Series A Preferred to be redeemed
shall surrender the certificate(s) representing such shares to
be redeemed to the Corporation, in the manner and at the place
designated in the Redemption Notice, and thereupon the
redemption price for such shares shall be payable to the order
of the person whose name appears on such certificate(s) as the
owner thereof, and each surrendered certificate shall be
canceled and retired. If the Redemption Notice shall have
been duly given, and if on the Redemption Date the
redemption price is either paid or made available for payment,
then notwithstanding that the certificates evidencing any of the
shares of Series A Preferred so called for |
A-2
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redemption shall not have been surrendered, all dividends with
respect to such shares shall cease to accrue after the
redemption date, such shares shall not thereafter be transferred
on the Corporations books and the rights of all of the
holders of such shares with respect to such shares shall
terminate after the redemption date, except only the right of
the holder to receive the redemption price without interest upon
surrender of their certificate(s) therefor. |
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(d) Voting. Except as provided in this
paragraph, the Series A Preferred shall not be entitled to
notice of any stockholders meetings and shall not be
entitled to vote on any matters with respect to any question
upon which holders of Common Stock or Preferred Stock have the
right to vote, except as may be required by law (and, in any
such case, the Series A Preferred shall have one vote per
share and shall vote together with the Common Stock as a single
class). The holder of Series A Preferred shall be entitled
to elect one (1) director of the Corporation. If there
shall be any vacancy in the office of a director elected by the
holder of the Series A Preferred, then a director to hold
office for the unexpired term of such directorship may be
elected by the vote or written consent of the holder of the
Series A Preferred. Subject to Section 141(k) of the
Delaware General Corporation Law, any director who shall have
been elected to the Board by the holders of Series A
Preferred, or by any directors elected by holders of the
Series A Preferred as provided above, may be removed during
his or her term of office only for cause by, and only by, the
affirmative vote of shares representing a majority of the voting
power of the outstanding shares of Series A Preferred. The
provisions of this Article may not be amended without the
approval of the holder of the Series A Preferred. |
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(e) Automatic Conversion. Each share of
Series A Preferred Stock shall automatically be converted
into one fully paid and nonassessable share of Common Stock upon
any sale, transfer, pledge, or other disposition of the share of
Series A Preferred to any person or entity other than the
initial holder of such share of Series A Preferred, or any
successor by operation of law that functions as a non-profit
trade association for Realtors under Section 501(c)(6) of
Internal Revenue Code of 1986, as amended, that owns the REALTOR
trademark, or any wholly-owned affiliate of such holder as long
as the holder continues to own such affiliate. |
ARTICLE VI
For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition,
limitation and regulation of the powers of the Corporation, of
its directors and of its stockholders or any class thereof, as
the case may be, it is further provided that:
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(a) The conduct of the affairs of the Corporation shall be
managed under the direction of its Board of Directors. The
number of directors shall be fixed from time to time exclusively
by resolution of the Board of Directors; effective on the date
that this Restated Certificate is filed with the Delaware
Secretary of State, and subject to the preceding provisions of
this sentence, the initial number of directors shall be eight
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(b) Notwithstanding the other provisions of this
Article VI, each director shall hold office until such
directors successor is elected and qualified, or until
such directors earlier death, resignation or removal. No
decrease in the authorized number of directors constituting the
Board of Directors shall shorten the term of any incumbent
director. |
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(c) Subject to the rights of the holders of any series of
Preferred Stock, any vacancy occurring in the Board of Directors
for any cause, and any newly created directorship resulting from
any increase in the authorized number of directors, shall,
unless (i) the Board of Directors determines by resolution
that any such vacancies or newly created directorships shall be
filled by the stockholders, or (ii) as otherwise provided
by law, be filled only by the affirmative vote of a majority of
the directors then in office, although less than a quorum, or by
a sole remaining director, and not by the stockholders. Any
director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the director
for which the vacancy was created or occurred. |
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(d) Subject to the rights of the holders of any series of
Preferred Stock, until the annual meeting of stockholders to be
held in 2008, a director may be removed only for cause by, and
only by, the holders of a majority of the shares then entitled
to vote at an election of directors. |
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(e) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified
circumstances, until the annual meeting of stockholders to be
held in 2008, the directors shall be divided, with respect to
the time for which they severally hold office, into three
classes designated as Class I, Class II and
Class III, respectively, as follows: |
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(i) Directors shall be assigned to each class in accordance
with a resolution or resolutions adopted by the Board of
Directors, with the number of directors in each class to be
divided as equally as reasonably possible. |
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(ii) The term of office of the Class I directors
elected in 2003 shall expire at the annual meeting of the
stockholders to be held in 2006; the term of office of the
Class I directors elected in 2006 shall expire at the
annual meeting of the stockholders to be held in 2008. |
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(iii) The term of office of the Class II directors
elected in 2004 shall expire at the annual meeting of the
stockholders to be held in 2007; the term of office of the
Class II directors elected in 2007 shall expire at the
annual meeting of the stockholders to be held in 2008. |
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(iv) The term of office of the Class III directors
elected in 2005 shall expire at the annual meeting of the
stockholders to be held in 2008. |
Commencing at the annual meeting of the stockholders to be held
in 2008, the Board of Directors shall cease to be classified and
all directors shall be elected to a term of office of one year
to expire at the next annual meeting of stockholders.
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(f) Election of directors need not be by written ballot
unless the Bylaws of the Corporation shall so provide. |
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(g) No action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of
stockholders called in accordance with the Bylaws of the
Corporation, and no action shall be taken by the stockholders by
written consent. |
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(h) Advance notice of stockholder nominations for the
election of directors of the Corporation and of business to be
brought by stockholders before any meeting of stockholders of
the Corporation shall be given in the manner provided in the
Bylaws of the Corporation. Business transacted at special
meetings of stockholders shall be confined to the purpose or
purposes stated in the notice of meeting. |
ARTICLE VII
The Board of Directors of the Corporation is authorized and
empowered from time to time in its discretion to make, alter,
amend or repeal Bylaws of the Corporation.
ARTICLE VIII
The Corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of
the State of Delaware, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have
power to indemnify under said section from and against any and
all expenses, liabilities, or other matters referred to in or
covered by said section, and the indemnification provided for
herein shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such person.
A-4
ARTICLE IX
To the fullest extent permitted by law, no director of the
Corporation shall be personally liable for monetary damages for
breach of fiduciary duty as a director. Without limiting the
effect of the preceding sentence, if the Delaware General
Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then
the liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted by the
Delaware General Corporation Law, as so amended. Neither any
amendment nor repeal of this Article IX, nor the adoption
of any provision of this Certificate of Incorporation
inconsistent with this Article IX, shall eliminate, reduce
or otherwise adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time
of such amendment, repeal or adoption of such an inconsistent
provision.
4. This Restated Certificate of Incorporation has been duly
adopted by the Corporations Board of Directors in
accordance with Sections 242 and 245 of the General
Corporation Law of the State of Delaware and by the stockholders
of the Corporation at the Corporations annual meeting of
stockholders held on June 22, 2005, in accordance with
Sections 242 and 245 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation,
which restates and integrates and further amends the provisions
of the Amended and Restated Certificate of Incorporation of the
Corporation as amended to date, has been duly executed by its
duly authorized officer this
[ ] day
of
[ ],
2005.
A-5
APPENDIX B
HOMESTORE, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The purpose of the Audit Committee (the Committee)
of the Board of Directors (the Board) of Homestore,
Inc. (the Company) is to assist the Board in
fulfilling its statutory and fiduciary oversight
responsibilities relating to the Companys financial
accounting, reporting and controls. In particular, the
Committees purpose is to assist Board oversight of
(1) the integrity of the Companys financial
statements, (2) the Companys compliance with legal
and regulatory requirements, (3) the independent
auditors qualifications and independence and (4) the
performance of the Companys internal audit staff and
independent auditors.
As such, the Committee shall have the following primary
responsibilities: (a) to independently and objectively
monitor the periodic reporting of the Companys financial
condition and results of operations; (b) to monitor reviews
of the adequacy of the accounting and financial reporting
processes and systems of internal control conducted by the
Companys independent auditors and financial and senior
management; (c) to review and evaluate the independence and
performance of the Companys independent auditors;
(d) to retain and manage the relationship with the
Companys independent auditors; and (e) to facilitate
communication among the Companys independent auditors,
internal auditors, management and the Board, within the scope of
this Charter of the Audit Committee of the Board of Directors
(the Charter) and consistent with the Certificate of
Incorporation and Bylaws of the Company, as the Committee deems
necessary or appropriate. The Committee will fulfill these
functions primarily by carrying out the activities enumerated in
Part IV of this Charter. In order to serve these functions,
the Committee shall have unrestricted access to Company
personnel (including its legal and financial advisors) and
documents and shall have authority to direct and supervise an
investigation into any matters within the scope of its duties,
including the power to retain outside counsel or other advisors
in connection with any such investigation.
While the Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Committee to
plan or conduct audits or to determine that the Companys
financial statements are complete, accurate and prepared in
accordance with generally accepted accounting principles or to
certify the Companys financial statements. Those processes
and determinations are the responsibility of management and/or
the Companys independent auditors. Similarly, it is not
the duty of the Committee to conduct investigations or to assure
the compliance of the Companys policies and procedures
with applicable laws and regulations.
All members of the Committee will be appointed by the Board
based on the recommendation of the Companys Governance and
Nominating Committee. Further, all Committee members shall be
members of, and serve at the discretion of, the Board. Unless a
chairperson (Chairperson) is appointed by the full
Board, the members of the Committee may designate a Chairperson
by majority vote of the Committee membership. The Board may at
any time remove one or more directors as members of the
Committee and may fill any vacancy on the Committee.
The Committee shall consist of at least three, but no more than
five members, with the exact number being determined by the
Board. No member of the Committee shall be an officer, employee
or consultant of the Company or any subsidiary or have any other
relationship which, in the opinion of the Board, would interfere
with the exercise of independent judgment in carrying out the
responsibilities of a Committee member. Each member of the
Committee shall be independent as defined by
applicable law, SEC rules and regulations, and the rules of the
NASD, each as they may be interpreted and amended from time to
time, as well as other legal requirements applicable to the
Company (Applicable Law, Rules and Regulations),
B-1
except as otherwise permitted by Applicable Law, Rules and
Regulations and as determined by the Boards independence
review process. Each member of the Committee shall have the
ability to read and understand fundamental financial statements
and a working familiarity with basic finance and accounting
principles at the time he or she joins the Committee, and at
least one member shall have met the requirements of an
audit committee financial expert as required by
Applicable Law, Rules and Regulations. No member of the
Committee shall have been a partner or employee of the
Companys independent auditors, or former partner or former
employee of such auditors, for a period of three years after
that persons employment with such auditors terminates.
The Committee shall meet with such frequency, and at such times
as its Chairperson, or a majority of the Committee, or the
Board, determines or as frequently as required by Applicable
Law, Rules and Regulations; provided, however, that the
Committee shall meet no less frequently than once per quarter.
The Committee may establish rules and procedures for the conduct
of its meetings that are consistent with this Charter. A
majority of the members of the Committee shall constitute a
quorum. When a quorum is present at any meeting, a majority of
the Committee members present may take any action or make any
recommendation to the Board, except where otherwise required by
Applicable Law, Rules and Regulations. Written minutes should be
kept of all such meetings of the Committee.
The Committee shall report its activities and recommendations to
the Board at the Boards next scheduled meeting or as
otherwise appropriate, including through the preparation of a
quarterly written report to the Board summarizing the
Committees activities, conclusions, and recommendations,
which report shall include, but not be limited to, the
information required in the Companys annual proxy
statement and/or annual report. The Committee members, or the
Chairperson of the Committee on behalf of all of the Committee
members, should communicate with management, internal auditors
and the independent auditors on a quarterly basis in connection
with their review of the Companys financial statements.
The Committee must disclose that (1) each member has met,
and continues to meet, the independence and other Committee
membership requirements; (2) it has adopted a written
charter; and (3) it has annually reviewed and reassessed
the adequacy of its charter. The Committee shall disclose in the
Companys proxy statement that the Committee is governed by
a charter and include a copy of the charter in the proxy
statement at least once every three years.
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IV. |
Responsibilities and Duties |
The following shall be the principal recurring processes of the
Committee in carrying out its oversight responsibilities. These
processes are set forth as a guide, with the understanding that
the Committee may supplement them as appropriate and may
establish other policies and procedures from time to time that
it deems necessary or advisable in fulfilling its
responsibilities. To these ends, the Committee shall have and
may exercise all of the powers and authority of the Board to the
extent permitted under the Delaware General Corporation Law.
Oversight of Financial Statements and Disclosure
Practices
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1. Review the independent
auditors audit plan and discuss with the independent
auditors the Companys general accounting policies and
practices. |
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2. Discuss with the independent
auditors: all critical accounting policies and practices to be
used; all alternative treatments within generally accepted
accounting principles for policies and practices related to
material items that have been discussed with management,
including ramifications of the use of such alternative
disclosures and treatments and the treatment preferred by the
independent auditors; other material written communications
between the independent auditors and management, such as any
management letter or schedule of unadjusted differences; and any
other matter that generally accepted accounting standards
require that the independent auditors should communicate with
the Committee. |
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3. At least quarterly, meet
separately with management, the independent auditors, and the
internal audit staff (or other personnel responsible for the
internal audit function) to review the adequacy and
appropriateness of the Companys accounting and financial
reporting processes, systems of internal control (including
computerized information system controls and security), the
adequacy of the systems of reporting to the Committee by each
such group and any recommendations that each such group may
have, the fullness and accuracy of the Companys financial
statements, and any other matters that the Committee or any such
group believes should be discussed privately with the Committee. |
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4. Review with the independent
auditors and the internal audit staff the completeness of audit
coverage, reduction of redundant efforts, and the effective use
of audit resources. |
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5. Determine, as regards to new
transactions or events, the independent auditors reasoning
for the appropriateness of the accounting principles and
disclosure practices adopted by management. |
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6. Discuss with management and the
independent auditors the effect of regulatory and accounting
initiatives, as well as any off-balance sheet structures, on the
Companys financial statements. |
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7. Discuss with management and the
independent auditors, as appropriate, the Companys risk
assessment and risk management policies, including the
Companys major financial risk exposures and steps taken by
management to monitor and control such exposures. |
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8. Determine open years on federal,
state and local tax returns and whether there are any
significant items in dispute with the Internal Revenue Service
or state or local taxing authorities that might result or have
resulted in litigation; inquire as to the status of related tax
reserves and interest accruals. |
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9. Review the results of the annual
audits of Committee member reimbursements, directors and
officers expense accounts and management perquisites as
prepared by internal audit staff and the independent auditors. |
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10. Review whether management has
sought a second opinion regarding any significant accounting
issue and, if so, obtain the rationale for the particular
accounting treatment chosen. |
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11. Review, and discuss with
management and the independent auditors, as appropriate, the
Companys quarterly and annual financial statements,
including any report or opinion of the independent auditors, and
earnings press releases (including the Companys use of
pro-forma or adjusted non- GAAP
financial information), as well as financial information and
earnings guidance provided to analysts and ratings agencies,
prior to distribution to the public or filing with the
Securities and Exchange Commission. |
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12. In connection with the
Committees review of the annual financial statements: |
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Receive and review a draft of the financial statements section
of the Companys annual report, complete with footnotes,
and the Managements Discussion and Analysis of
Financial Condition and Results of Operations section of
the report. |
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Discuss with the independent auditors, internal auditors and
management the financial statements section, including the
results of the independent auditors audit of the financial
statements, and the Companys disclosures under
Managements Discussion and Analysis of Financial
Condition and Results of Operations. |
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Discuss any items required to be communicated by the independent
auditors in accordance with Statement of Accounting Standards
(SAS) 61, as amended. These discussions should
include the independent auditors judgments about the
quality and appropriateness of the Companys accounting
principles, the reasonableness of significant judgments, the
clarity of the disclosures in the Companys financial
statements, any audit problems or difficulties, including any
restrictions on the scope of work or access to required
information, and managements response to these matters. |
B-3
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Discuss with management and/or the independent auditors any
questions or concerns pertaining to the fullness and accuracy of
the Companys financial statements and any other matters
the Committee believes should be so discussed. |
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13. In connection with the
Committees review of the quarterly financial statements: |
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Receive and review a draft of the financial statements section
of the Companys quarterly reports, complete with
footnotes, and the Managements Discussion and
Analysis of Financial Condition and Results of Operations
section of the reports. |
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Discuss with the independent auditors, internal auditors and
management the financial statements section, including the
results of the independent auditors SAS 71 review of the
quarterly financial statements, and the Companys
disclosures under Managements Discussion and
Analysis of Financial Condition and Results of Operations. |
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Discuss significant issues, events and transactions and any
significant changes regarding accounting principles, practices,
judgments or estimates with management and the independent
auditors, including any problems or difficulties among
management and the independent auditors and managements
response. |
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Discuss with management and/or the independent auditors any
questions or concerns pertaining to the fullness and accuracy of
the Companys financial statements and any other matters
the Committee believes should be so discussed. |
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14. Review the Companys
disclosure controls and procedures and internal controls and
procedures for financial reporting and the certifications
required to be made by any officer of the Company in each of the
Companys quarterly reports on Form 10-Q and the
Companys annual report on Form 10-K. |
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15. Review disclosures made to the
Committee by the Companys principal executive officer and
principal financial officer during their certification process
for each Form 10-K and Form 10-Q relating to any
significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in
maintaining the Companys internal controls. |
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16. Request a letter from the
independent auditors to management concerning any significant
weaknesses or breaches in internal controls discovered during
their audit. Discuss any comments or recommendations of the
independent auditors outlined in their such management letter or
in discussions. Review any management response letters to the
independent auditors. Approve a schedule for implementing any
recommended changes and monitor compliance with that schedule. |
Oversight of Independent Auditors
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1. With sole authority and
responsibility, the Committee shall appoint, retain, compensate
and, if necessary, replace the independent auditors. The
Committee shall be directly responsible for the evaluation and
oversight of the work of the Companys independent auditors
(including resolution of disagreements between management and
the independent auditors regarding financial reporting) for the
purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company;
provided, that the Committee shall be prohibited from retaining
independent auditors if any member of the Companys senior
management was a partner or employee of such auditors within the
prior two years. The Board of Directors may approve a waiver of
the preceding proviso if (a) the Company acquires a member
of senior management who was a partner or employee of a retained
independent auditing firm as a result of a future acquisition or
(b) if necessary to permit competition for retention by at
least two national independent auditing firms. With sole
authority, the Committee shall approve all audit engagement fees
and terms, which fees and related costs the Company shall pay
promptly to the independent auditors in accordance with the
Companys normal business practices. The Committee shall
pre-approve, including pursuant to established policies and
procedures for pre-approval, or have pre-approved by a member of
the Committee delegated the authority to grant pre-approvals, any |
B-4
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audit or significant permitted non-audit service provided to the
Company by the Companys independent auditors and ensure
that any such non-audit service be disclosed to stockholders in
the appropriate periodic report of the Company. If a member of
the Committee pre-approves such service, the decisions of such
member shall be presented to the full Committee at its next
scheduled meeting. No such services that are prohibited under
applicable law shall be approved. The Company shall not be
prohibited from retaining the independent auditors to assist in
tax matters. |
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2. Communicate with the
Companys independent auditors about the Companys
expectations regarding its relationship with the auditors,
including the following: (i) the independent auditors
ultimate accountability to report directly to the Committee; and
(ii) the ultimate authority and responsibility of the
Committee to appoint, retain, compensate, evaluate and, where
appropriate, replace the independent auditors. |
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3. At least annually, make
inquiries of management and internal auditor staff regarding the
qualification, independence and performance of the independent
auditors. |
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4. At least annually, obtain and
review a report by the independent auditors describing: the
independent auditors internal quality-control procedures;
any material issues raised by the most recent internal
quality-control review, or peer review, of the independent
auditors, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
independent auditors, and any steps taken to deal with any such
issues; and (to assess the independent auditors
independence) all relationships between the independent auditors
and the Company. |
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5. Review and approve processes and
procedures to ensure the continuing independence of the
Companys independent auditors. These processes shall
include obtaining and reviewing, on an annual basis, a letter
from the independent auditors describing all relationships
between the independent auditors and the Company required to be
disclosed by Independence Standards Board Standard No. 1,
reviewing the nature and scope of such relationships and
requiring discontinuance of any relationships that the Committee
believes could compromise the independence of the auditors
(including but not limited to requiring audit partner rotation
every five years or otherwise in accordance with Applicable
Laws, Rules and Regulations and requiring that the independent
auditors have no conflicts of interests with the Company), and
setting clear Company hiring policies for employees or former
employees of the independent auditors, which shall include,
among other policies, prohibitions on the hiring of any partner
or employee of the Companys independent auditors, or
former partner or former employee of such auditors, for a period
of three years after that persons employment with such
auditors terminates, to serve as a member of management in the
finance and accounting department of the Company. |
Oversight of Internal Auditors
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1. Review the activities of the
internal audit department, including the proposed annual audit
plan, periodic progress reports on the status of the plan and
all concluded internal audits, including summaries of any
significant issues raised during the performance of the internal
audits. |
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2. Discuss with the independent
auditors and management the internal audit department
responsibilities, budget and staffing and any recommended
changes in the planned scope of the internal audit function. |
Oversight of Compliance with Legal and Regulatory
Requirements
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1. At least quarterly, meet with
the Companys external and internal legal counsel to review
the status of any legal or regulatory matters that could have a
material impact on the Companys financial statements;
inquire as to any related reserves taken with respect thereto. |
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2. Review all related-party
transactions for potential conflict of interest situations on an
ongoing basis and approve only those that are the subject of
arms length negotiations and have terms that would be no worse
than those that could be obtained by negotiating with an outside
party. Review all |
B-5
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transactions with the National Association of Realtors® and
the National Association of Homebuilders with a value in excess
of one million dollars. |
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3. Engage and retain such outside
counsel, experts and other advisors as the Committee may deem
appropriate or necessary to carry out its duties in its sole
discretion. Approve related fees and retention terms, which fees
and related costs the Company shall pay promptly to such
advisors in accordance with the Companys normal business
practices. To the extent that the Committee chooses to retain
such advisors to investigate any circumstances that come to the
attention of the Committee related to the risk of financial
misstatements or fraud, such advisors shall be persons
completely independent of the Company. |
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4. Determine and approve ordinary
administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties, which fees and related
costs the Company shall pay promptly in accordance with the
Companys normal business practices. |
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5. Establish and maintain
procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the
confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing
matters. |
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6. Review compliance by directors,
officers and employees with the Companys Code of
Conduct and Business Ethics, including the Policies and
Procedures for Reporting by Attorneys Pursuant to the
Sarbanes-Oxley Act Standards of Professional Conduct
addendum thereto. |
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7. Annually conduct and present to
the Board a performance evaluation of the Committee and make
recommendations to the Board on such matters within the scope of
its functions as may come to its attention and which in its
discretion warrant consideration by the Board. |
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8. Annually prepare a report to the
Companys stockholders for inclusion in the Companys
annual proxy statement as required by the rules and regulations
of the Securities and Exchange Commission as they may be amended
from time to time. |
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9. At least annually review the
adequacy of this Charter and recommend any proposed changes to
the Board for approval. Include a copy of this Charter as an
appendix to the Companys proxy statement at least once
every three years as required by the rules and regulations of
the Securities and Exchange Commission as they may be amended
from time to time. |
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10. Perform any other activities
required by Applicable Law, Rules and Regulations and perform
other activities that are consistent with this Charter, the
Companys Bylaws and governing laws, as the Committee or
the Board deems necessary or appropriate. |
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11. Implement and enforce, together
with the Companys Chief Executive Officer and Chief
Financial Officer, a revenue recognition policy at the Company
that conforms to all relevant accounting standards, including
generally accepted accounting principles in the United States,
and that is designed to prevent material misstatements and
omissions in the Companys financial statements. Fully
apprise all employees of the Company involved in revenue
recognition of such revenue recognition policy. |
In addition to the indemnification, exculpation and similar
rights and provisions contained in the Companys
Certificate of Incorporation and Bylaws or in statutory and
common law and in addition to applicable insurance, the
Committee, and each member of the Committee in his or her
capacity as such, shall be entitled to rely, in good faith, on
information, opinions, reports or statements, or other
information prepared or presented to them by (i) officers
and other employees of the Company, whom such member believes to
be reliable and competent in the matters presented; and
(ii) counsel, public accountants or other persons as to
matters which the members believe to be within the professional
competence of such person.
B-6
PROXY
HOMESTORE, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of Homestore, Inc. (Homestore) common stock hereby nominate(s),
constitute(s) and appoint(s) Lewis R. Belote, III and Michael R. Douglas (together, the Proxy
Holders), and each of them, the attorneys, agents and proxies of the undersigned, with full power
of substitution to each, to attend and act as proxy or proxies of the undersigned at the annual
meeting of stockholders (the Annual Meeting) of Homestore to be held at the Hilton Los
Angeles Airport located at 5711 West Century Blvd., Los Angeles, California 90045-5631 on June 22,
2005 at 9:30 a.m., local time, or any postponement or adjournment thereof, and to vote as specified
herein the number of shares which the undersigned, if personally present would be entitled to vote.
(Continued, and to be marked, dated and signed, on the other side)
Address Change/Comments (Mark the corresponding box on the reverse side)
5Detach here from proxy voting card 5
You can now access your ABC 1 account online.
Access your Homestore, Inc. shareholder/stockholder account online via Investor ServiceDirect®
(ISD).
Mellon Investor Services LLC, Transfer Agent for Homestore, Inc., now makes it easy and
convenient to get current information on your shareholder account.
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View account status
View certificate history
View book-entry information
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View payment history for dividends
Make address changes
Obtain a duplicate 1099 tax form
Establish/change your PIN |
Visit us on the web at http://www.melloninvestor.com
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
Investor
ServiceDirect® is a registered trademark of Mellon Investor Services LLC
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Mark Here for Address Change or Comments
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PLEASE
SEE REVERSE SIDE |
The board recommends a vote FOR the election of the directors nominated by the board and FOR
the approval of the Proposed Restated Certificate. The proxy when properly executed shall be voted
as directed. If no direction is made for a given proposal, the proxy will be voted
FOR the election of the directors nominated by the board; if no direction is made regarding
approval of the Proposed Restated Certificate, the proxy will be voted FOR the approval of the
Proposed Restated Certificate.
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1. Election of Directors.
Nominees:
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FOR all nominees
listed to the left
(except as marked
to the contrary)
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WITHHOLD
AUTHORITY
to vote for all
nominees |
01 Joe F. Hanauer 02 L. John Doerr 03 W. Michael Long
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(INSTRUCTIONS: To
withhold authority
to vote for any
individual nominee,
strike
through that
individuals name) |
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WILL
ATTEND |
Will you be
attending the
annual meeting?
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2.
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APPROVAL OF PROPOSED RESTATED
CERTIFICATE. Approval of an amended and
restated certificate of incorporation that would,
among other things, eliminate the classification of our board of directors and provide for
annual election of all directors beginning at
the annual meeting of stockholders in 2008.
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FOR
o
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AGAINST
o
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ABSTAIN
o |
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3.
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OTHER BUSINESS. In their discretion, the Proxy Holders are
authorized to vote upon such other business as may properly
come before the Annual Meeting or any postponements or
adjournments thereof. The board of directors of Homestore
currently knows of no other business to be presented by or on
behalf of Homestore or the board at the annual meeting. |
Choose
MLinkSM for fast, easy and secure 24/7 online
access to your future proxy materials, investment plan statements,
tax documents and more. Simply log on to Investor
ServiceDirect® at www.melloninvestor.com/isd where
step-by-step instructions will prompt you through enrollment.
The undersigned hereby ratifies and confirms all that the Proxy Holders, or any of them, or their substitutes, shall lawfully do or cause to be done by virtue hereof, and hereby revokes any and all proxies heretofore given by the undersigned to vote at the Annual Meeting. The undersigned acknowledges receipt
of the Notice of Annual Meeting of Stockholders, the Proxy Statement accompanying that notice and the audited financial statements of Homestore delivered with or prior to that notice.
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(Please Print Name)
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(Signature of Holder of Common Stock)
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Date _______________, 2005 |
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(Please date this Proxy and sign above as your name(s) appear(s) on this card.
Joint owners each should sign personally. Corporate proxies should be signed by
an authorized officer. Executors, administrators, trustees, etc. should give
their full titles).
5Detach here from proxy voting card5
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days
a Week
Internet and telephone voting is available through 11:59 PM EST
the day prior to annual meeting day.
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
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Internet
http://www.proxyvoting.com/homs
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Telephone
1-866-540-5760
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Mail |
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
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OR
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Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
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OR
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Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. |
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.