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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. )
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
CNET NETWORKS, INC.
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(Name of Registrant as Specified In Its Charter)
BOARD OF DIRECTORS OF CNET NETWORKS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
- --------------------------------------------------------------------------------
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No:
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(3) Filing Party:
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(4) Date Filed:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
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CNET NETWORKS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: WEDNESDAY, MAY 24, 2000
TIME: 9:00 A.M., LOCAL TIME
PLACE: CNET NETWORKS, INC.
150 CHESTNUT STREET,
SAN FRANCISCO, CALIFORNIA 94111
MATTERS TO BE VOTED ON:
1. Election of two directors;
2. Approval of an amendment to our 1997 Stock Option Plan to increase the
aggregate number of shares of common stock we can issue upon the
exercise of options granted under the Plan;
3. Ratification of the appointment of our independent auditors for 2000;
and
4. Any other matters properly brought before the stockholders at the
meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE THREE PROPOSALS
OUTLINED IN THIS PROXY STATEMENT.
By Order of the Board of Directors
SHELBY W. BONNIE,
Chief Executive Officer
San Francisco, California
April 21, 2000
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PROXY STATEMENT
------------------
Your vote at the annual meeting is important to us. Please vote your shares
of common stock by completing the enclosed proxy card and returning it to us in
the enclosed envelope. This proxy statement has information about the annual
meeting and was prepared by the Company's management for the board of directors.
This proxy statement was first mailed to shareholders on April 24, 2000.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information About Voting............................ 1
Proposals You May Vote On................................... 3
Stock Ownership............................................. 7
Management.................................................. 9
Executive Compensation...................................... 12
Stockholder Proposals....................................... 15
Persons Making the Solicitation............................. 15
Independent Public Accountants.............................. 15
Other Matters............................................... 16
Financial Statements........................................ 16
</TABLE>
<PAGE> 4
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE?
You can vote your shares of common stock if our records show that you owned
the shares on the record date, March 31, 2000. A total of 84,676,456 shares of
common stock can vote at the annual meeting. You get one vote for each share of
common stock that you hold.
WHAT SHARES ARE INCLUDED ON THE PROXY CARD?
The shares on your proxy card represent ALL of your shares of common stock.
If you do not return your proxy card, your shares will not be voted.
HOW DO I VOTE BY PROXY?
Follow the instructions on the enclosed proxy card to vote on each proposal
to be considered at the annual meeting. Sign and date the proxy card and mail it
back to us in the enclosed envelope. The proxyholders named on the proxy card
will vote your shares as you instruct. If you sign and return the proxy card but
do not vote on a proposal, the proxyholders will vote for you on that proposal.
Unless you instruct otherwise, the proxyholders will vote FOR each of the two
director nominees and FOR each of the other proposals to be considered at the
meeting.
The proxies for the stockholders are Shelby W. Bonnie, Richard J. Marino
and Douglas N. Woodrum. A stockholder wishing to name another person as his or
her proxy may do so by crossing out the names of the designated proxies and
inserting the name of such other person to act as his or her proxy. In that
case, it will be necessary for the stockholder to sign the proxy card and
deliver it to the person named as his or her proxy and for the person so named
to be present and vote at the annual meeting. Proxy cards so marked should not
be mailed to us.
WHAT MAY I VOTE ON?
1. Election of two directors;
2. Approval of an amendment to our 1997 Stock Option Plan; and
3. Approval of the appointment of our independent auditors for 2000.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?
The board of directors recommends a vote FOR each of the proposals.
WHAT IF OTHER MATTERS COME UP AT THE ANNUAL MEETING?
The matters described in this proxy statement are the only matters we know
will be voted on at the annual meeting. If other matters are properly presented
at the meeting, the proxyholders will vote your shares as they see fit.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. At any time before the vote on a proposal, you can change your vote
either by giving our secretary a written notice revoking your proxy card, by
personally appearing at the annual meeting or by signing, dating and returning
to us a new proxy card. We will honor the proxy card with the latest date.
However, no revocation will be effective unless notice of such revocation has
been received by us at or prior to the annual meeting.
CAN I VOTE IN PERSON AT THE ANNUAL MEETING RATHER THAN BY COMPLETING THE PROXY
CARD?
Although we encourage you to complete and return the proxy card to ensure
that your vote is counted, you can attend the annual meeting and vote your
shares in person.
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WHAT DO I DO IF MY SHARES ARE HELD IN "STREET NAME"?
If your shares are held in the name of your broker, a bank or other
nominee, that party should give you instructions for voting your shares.
HOW ARE VOTES COUNTED?
We will hold the annual meeting if holders of a majority of the shares of
common stock entitled to vote either sign and return their proxy cards or attend
the meeting. If you sign and return your proxy card, your shares will be counted
to determine whether we have a quorum even if you abstain or fail to vote on any
of the proposals listed on the proxy card. If your shares are held in the name
of a nominee, and you do not tell the nominee how to vote your shares, these
shares will be counted for purposes of determining the presence or absence of a
quorum for the transaction of business. However, abstentions or broker non-votes
are not counted in the tally of votes FOR or AGAINST a proposal. A WITHHELD vote
is the same as an abstention.
WHAT IS A "QUORUM"?
A "quorum" is a majority of the shares of common stock outstanding on the
record date. A quorum must be present either in person or represented by proxy
for the annual meeting to be held. If a quorum is not present at the annual
meeting, the meeting may be adjourned from time to time until a quorum is
obtained.
HOW MANY VOTES ARE REQUIRED TO APPROVE THE PROPOSALS?
The election of directors will be decided by a plurality of the votes cast
at the annual meeting. Approval of the other proposals requires that they be
approved by more than 50% of the votes cast.
WHO WILL COUNT THE VOTE?
Harris Trust & Savings Bank will count the votes and act as the inspector
of election.
WHO PAYS FOR THIS PROXY SOLICITATION?
CNET Networks.
IS MY VOTE CONFIDENTIAL?
Proxy cards, ballots and voting tabulations that identify individual
shareholders are mailed or returned directly to Harris Trust, and handled in a
manner that protects your voting privacy. Your vote will not be disclosed
EXCEPT:
1. as needed to permit Harris Trust to tabulate and certify the vote;
2. as required by law; or
3. in limited circumstances such as a proxy contest in opposition to
the board of directors.
In addition, all comments written on the proxy card or elsewhere will be
forwarded to management, but your identity will be kept confidential unless you
ask that your name be disclosed.
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PROPOSALS YOU MAY VOTE ON
PROPOSAL ONE -- ELECTION OF DIRECTORS
Two persons, Shelby W. Bonnie and Eric Robison, each of whom is currently a
Class I Director, are proposed to be re-elected as Class I Directors at the
annual meeting. If elected, each of these directors will hold office until the
annual meeting of stockholders in the year 2003 or until his successor is duly
elected and qualified.
GENERAL INFORMATION ABOUT NOMINEES. Both of the nominees are currently
directors. Each has agreed to be named in this proxy statement and to serve as a
director if elected. For information regarding each of the nominees for Class I
Director, see "Management."
VOTE REQUIRED. The election of directors will be decided by a plurality of
the votes entitled to be cast at the meeting.
NOMINATIONS. At the annual meeting, we will nominate Shelby W. Bonnie and
Eric Robison as directors. Although we do not know of any reason why one of
these nominees might not be able to serve, the board of directors will propose a
substitute nominee if any nominee is not available for election.
Other nominations for election to the board may be made by the board, a
nominating committee appointed by the board or by any stockholder that has been
the beneficial owner of at least $1,000 of common stock for at least one year.
Nominations made by stockholders for next year's annual meeting must be made by
written notice, certified mail, return-receipt requested and received by the
Secretary of the Company by December 1, 2000.
THE BOARD URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
PROPOSAL TWO -- APPROVAL OF THE AMENDMENT TO THE CNET NETWORKS, INC. 1997 STOCK
OPTION PLAN
The 1997 Plan
GENERAL. Effective as of April 16, 1997, the board adopted the CNET
Networks, Inc. 1997 Stock Option Plan, which was approved by our stockholders at
our annual meeting held May 22, 1997. Since then, our stockholders have approved
increases in the number of shares issuable under the 1997 plan. The purpose of
the 1997 plan is to attract and retain the best available personnel for
positions of substantial responsibility and to provide incentives to such
personnel to promote the success of our business. The 1997 plan provides for the
grant of stock options to certain of our directors and to our officers,
employees and consultants. The 1997 plan is administered by the compensation
committee of the board or by the board as a whole.
ADMINISTRATION OF THE 1997 PLAN. The board or the compensation committee
administers the 1997 plan and has authority to select the participants that are
granted options, based on its own determinations and the recommendations of
management with respect to the contributions of each participant to our success.
The board or the compensation committee also has authority to terminate the 1997
plan or to accelerate the vesting of options, to determine the nature, extent,
timing, exercise price, vesting and duration of options, to prescribe all other
terms and conditions consistent with the 1997 plan, to interpret the 1997 plan,
to establish any rules or regulations relating to the 1997 plan that it
determines to be appropriate, and to make any other determination that it
believes necessary or advisable for the proper administration of the 1997 plan.
GRANT OF OPTIONS. The board or the compensation committee may grant
nonqualified stock options or incentive stock options ("ISOs") to purchase
shares of common stock; provided that, if the compensation committee does not
consist entirely of non-employee directors, then grants of options to officers,
directors, and ten percent stockholders must be approved by the board as a
whole. The grant of options will be evidenced by option agreements containing
such terms and provisions as are determined and approved by the board or the
compensation committee, including, but not limited to, the term of the option,
vesting of the option, and the exercise price of the option. The exercise price
of the option must be at least 100% of the fair market value of the common
stock. All ISOs must be granted within ten years of the date on which the board
approved the latest increase in the number of shares available for issue under
the 1997 plan, or the date such an increase was
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<PAGE> 7
approved by the stockholders, whichever is earlier. The option exercise price
may be paid in cash, check or, at our option, in shares of common stock. In no
event may any optionee be granted options to purchase more than the total number
of shares authorized for issuance under the 1997 plan during any calendar year.
Options that lapse or are cancelled or forfeited continue to count against this
limit, and a repriced option is treated as if it had been cancelled and a new
option granted.
OPTION EXPIRATION AND TERMINATION. Subject to the expiration and
termination provisions of individual option agreements, ISOs expire ten years
after the date of grant or, if held by a ten percent stockholder, ISOs expire
five years after the date of grant. The expiration and termination periods of
nonqualified stock options are determined by the board or the compensation
committee and set forth in the individual option agreements. Subject to the
expiration and termination provisions of individual option agreements, if a
participant dies or becomes disabled, all vested options may be exercised at any
time within one year (or the remaining term of the option, if less). If a
participant ceases to be our employee for any other reason, he or she must
exercise any vested options within ninety days (or the remaining term of the
option, if less).
AMENDMENTS TO THE 1997 PLAN. The board may amend or discontinue the 1997
plan at any time, subject to certain restrictions set forth in the 1997 plan.
Following our board's amendments of the 1997 plan to increase the authorized
shares, our stockholders, on May 20, 1998 and May 26, 1999, approved and adopted
such increases in the number of shares of common stock authorized for issuance
under the 1997 plan from the original 2,000,000 shares to a total of 6,200,000
shares. On April 3, 2000, the board approved and adopted another amendment to
the 1997 plan, which increased the number of shares of common stock authorized
for issuance under the 1997 plan from 6,200,000 shares to 11,200,000 shares. The
board could amend the 1997 plan in the future to increase further the number of
shares reserved for issuance thereunder. Except in limited circumstances, no
amendment or discontinuation of the 1997 plan may adversely affect any
previously granted option award without the consent of the recipient thereof.
FEDERAL INCOME TAX CONSEQUENCES. The following general description of
federal income tax consequences is based upon current statutes, regulations and
interpretations and does not purport to be complete. Reference should be made to
the applicable provisions of the Internal Revenue Code of 1986, as amended.
There also may be state, local and foreign income tax consequences applicable to
transactions involving options. In addition, the following description does not
address specific tax consequences applicable to an individual participant who
receives an ISO and does not address special rules that may be applicable to
directors and officers.
Incentive Stock Options. No income will be recognized by an optionee for
federal income tax purposes upon the grant or exercise of an ISO. However, the
excess of the fair market value of shares received upon the exercise of an ISO
over the option price for such shares is an item of adjustment for the optionee
for purposes of the alternative minimum tax. Generally, the basis of shares
transferred to an optionee pursuant to the exercise of an ISO is the price paid
for such shares. If the optionee holds such shares for at least one year after
exercise and two years after the grant of the option, the optionee will
recognize capital gain or loss upon sale of the shares equal to the difference
between the amount realized on such sale and the exercise price. Generally, if
the shares are not held for that period, the optionee will recognize ordinary
income upon disposition in an amount equal to the excess of the fair market
value of the shares on the date of exercise over the option price of such
shares. Any additional gain realized by the optionee upon such disposition will
be a capital gain.
We are not entitled to a deduction upon the exercise of an ISO by an
optionee. If the optionee disposes of the shares of stock received pursuant to
such exercise less than one year following exercise or two years after grant of
the option, however, generally, we may deduct an amount equal to the ordinary
income recognized by the optionee upon disposition of the shares at the time
such income is recognized by the optionee.
Nonqualified Stock Options. No income will be recognized by an optionee for
federal income tax purposes upon the grant of a nonqualified option. Upon
exercise of a nonqualified option, the optionee will recognize income equal to
the excess of fair market value of the shares received over the exercise price.
Income recognized upon the exercise of nonqualified options will be considered
compensation subject to withholding. Therefore, we (or one of our affiliates)
must make the necessary arrangements with the optionee to ensure that the amount
of the tax required to be withheld is available for payment. Nonqualified
options are designed to ensure that we will
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be entitled to a deduction equal to the amount of ordinary income recognized by
the optionee at the time of such recognition by the optionee.
Generally, the basis of shares transferred to an optionee pursuant to
exercise of a nonqualified option is the price paid for such shares plus an
amount equal to any income recognized by the optionee as a result of the
exercise of such option. If an optionee thereafter sells shares acquired upon
exercise of a nonqualified option, any amount realized over the basis of such
shares will constitute capital gain to such optionee for federal income tax
purposes.
Stock for Stock Exercise. If an optionee uses already owned shares of
common stock to pay the exercise price for shares under an option, generally,
the number of shares received pursuant to the option which is equal to the
number of shares delivered in payment of the exercise price will be considered
received in a nontaxable exchange. The optionee will have a carryover basis with
respect to those shares of common stock received that are equal in number to the
shares of common stock surrendered as payment. The optionee's basis in the
additional shares of common stock received will be equal to any amount included
in the optionee's gross income (i.e., from the exercise of a nonqualified
option), plus any cash paid for such shares. The optionee will have a carryover
holding period with respect to those shares of common stock received that are
equal in number to the shares of common stock surrendered as payment. The
holding period of any additional shares of common stock received will begin on
the date that the option is exercised.
The resulting tax consequences will vary if such already owned shares of
common stock are "statutory option stock," (as defined in Section 424(c)(3)(B)
of the Code) and such statutory option stock has not been held by the optionee
for the applicable holding period referred to in Section 424(c)(3)(A) of the
Code. If the stock used to pay the exercise price of an ISO is statutory option
stock with respect to which the applicable holding period has not been
satisfied, the transfer of such stock will be a disqualifying disposition
described in Section 421(b) of the Code, which will result in the recognition of
ordinary income by the optionee in an amount equal to the excess of the fair
market value of the statutory option stock at the time the option covering such
stock was exercised over the option price of such stock.
Performance-Based Compensation. Certain stock options granted to executive
officers are intended to comply with the "qualified performance based
compensation" rules under Code Section 162(m)(4)(C), so that the we can
generally obtain a full deduction for federal income tax purposes for the income
recognized on exercise of such options. Any option granted to such officers will
have an exercise price equal to or in excess of the fair market value of a share
of common stock as of the date of grant will be granted and administered in
accordance with the "qualified performance based compensation" rules. The
compensation committee (which is comprised solely of outside directors)
administers such grants.
THE SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES UPON THE PARTICIPANTS IN
THE 1997 PLAN CONTAINED IN THIS PROXY DOES NOT PURPORT TO BE COMPLETE.
Reasons for Proposal
GENERAL. The 1997 plan is designed to attract and retain the best available
personnel for positions of substantial responsibility and to provide incentives
to such personnel to promote the success of our business. We are recommending
the amendment in order to ensure that sufficient shares are available under the
1997 plan to reward and motivate existing employees and to attract new employees
in the future, particularly in light of the rapid growth we have experienced.
The board believes that the amendment is in our best interests and in the best
interests of our stockholders.
SHARES ISSUABLE UNDER THE 1997 PLAN. A total of 2,000,000 shares of common
stock were originally authorized and reserved for issuance upon exercise of
options granted under the 1997 plan, subject to proportionate adjustments in the
event of any recapitalization, stock dividend, stock split, combination of
shares or other change in the common stock. On April 15, 1998, May 20, 1998, and
May 26, 1999, our board and our stockholders, respectively, approved and adopted
increases in the number of shares of common stock authorized for issuance under
the 1997 plan from 2,000,000 shares to 6,200,000 shares. The board or the
compensation committee may also provide additional anti-dilution protection to a
participant under the terms of such
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participant's option agreement. Shares of common stock subject to options that
are canceled, terminated or forfeited will again be available for issuance under
the 1997 plan.
As of March 31, 2000, options were outstanding under the 1997 plan to
purchase a total of 12,687,865 shares of common stock, and an additional
2,126,914 shares were available for future grants under the 1997 plan. In
addition, we had options outstanding under the 1994 plan to purchase a total of
602,384 shares of common stock, and no additional shares were available for
future grants under the 1994 plan.
Pursuant to unanimous written consent on April 3, 2000, the board approved
and adopted the amendment to the 1997 plan, which increased the number of shares
of common stock authorized for issuance under the 1997 plan from 6,200,000
shares to 11,200,000 shares. Unless the amendment is approved by holders of a
majority of the outstanding shares of common stock, any options granted in
excess of the 6,200,000 shares originally approved by the stockholders would not
be eligible for treatment as ISOs. Also, without stockholder approval we would
lose the benefit of the "qualified performance based compensation" rule which
allows us to obtain full tax deductibility with respect to options granted to
certain executive officers. Consequently, the board is asking stockholders to
approve the amendment in order to allow the compensation committee to grant
additional ISOs under the 1997 plan and to preserve the qualified performance
based compensation tax benefit.
Interests of Certain Persons in Matters to be Acted Upon
In considering whether to vote for approval of the amendment to the 1997
plan, stockholders should be aware that each of our directors and executive
officers will be eligible for option grants under the 1997 plan. If the proposal
is not approved by holders of a majority of the votes cast on this issue,
additional options granted under the 1997 plan will not be eligible for ISO
treatment, which will have negative tax consequences to the recipients of such
options, and the company would lose the benefit of the "qualified performance
based compensation" rule.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE 1997 PLAN
PROPOSAL THREE -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
KPMG LLP, independent certified public accountants, served as independent
auditors for us for the fiscal year ended December 31, 1999 and has reported on
our financial statements. The board, upon the recommendation of the audit
committee, has selected KPMG LLP as our independent auditors for fiscal year
2000 and recommends that the stockholders ratify this selection. The board has
been advised that KPMG LLP has no relationship with us or our subsidiaries.
A representative of KPMG LLP is expected to be present at the annual
meeting, will have an opportunity to make a statement if he desires to do so and
is expected to be available to respond to appropriate questions.
Stockholder ratification is not required for the selection of KPMG LLP as
our independent auditors for fiscal year 2000 because the board has
responsibility for selection of our independent auditors. The selection is being
submitted for ratification with a view toward soliciting the opinion of
stockholders, which opinion will be taken into consideration in future
deliberations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF KPMG LLP AS OUR INDEPENDENT AUDITORS
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STOCK OWNERSHIP
The following table shows the number of shares of common stock beneficially
owned (as of March 31, 2000) by:
- each person who we know beneficially owns more than 5% of the common
stock;
- each director;
- each executive officer named in the Summary Compensation Table on page
14; and
- the directors and executive officers as a group.
Unless otherwise indicated below, the address for each listed director and
executive officer is CNET Networks, Inc., 150 Chestnut Street, San Francisco,
California 94111.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) SHARES
- ------------------------------------ -------------------- -----------
<S> <C> <C>
Halsey M. Minor............................................. 9,580,076(2) 11.3%
Shelby W. Bonnie............................................ 10,455,284(3) 12.3
Eric Robison................................................ 19,562(4) *
John C. "Bud" Colligan...................................... 107,078(5) *
Mitchell Kertzman........................................... 32,964(6) *
Richard J. Marino........................................... 112,001(7) *
Douglas N. Woodrum.......................................... 395,200(8) *
Gilder Gagnon Howe & Co. LLC................................ 8,216,451(9) 9.7
All executive officers and directors as a group (7
persons).................................................. 20,702,165(10) 24.4
</TABLE>
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* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Percentages for each person are based
on the 84,676,456 shares outstanding at March 31, 2000, plus the total
number of outstanding options or warrants held by such person that are
exercisable within 60 days of such date. Shares issuable upon exercise of
outstanding options and warrants, however, are not deemed outstanding for
purposes of computing the percentage ownership of any other person. Except
as indicated in the footnotes to this table and pursuant to applicable
community property laws, each stockholder named in the table has sole
voting and investment power with respect to the shares set forth opposite
such stockholder's name.
(2) Includes 337,952 shares held by a trust for the benefit of Mr. Minor's
descendants, as to which he disclaims beneficial ownership. Also includes
663,332 shares subject to options that are exercisable within 60 days.
(3) Includes 29,740 shares held by a trust of which Mr. Bonnie is a
beneficiary, and 25,000 shares subject to options that are exercisable
within 60 days. Also includes 332,000 shares held by trusts for the benefit
of Mr. Minor's descendants, of which Mr. Bonnie is trustee and as to which
Mr. Bonnie disclaims beneficial ownership.
(4) Consists of shares subject to options that are exercisable within 60 days.
(5) Consists of shares subject to options that are exercisable within 60 days.
(6) Consists of shares subject to options that are exercisable within 60 days.
(7) Consists of shares subject to options that are exercisable within 60 days.
(8) Includes 328,440 shares subject to options that are exercisable within 60
days.
(9) The address for Gilder Gagnon Howe & Co. LLC is 1775 Broadway, 26th Floor,
New York, New York 10019.
(10) Includes a total of 1,291,295 shares subject to options that are
exercisable within 60 days.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors and officers must file reports with the Securities and
Exchange Commission indicating the number of shares of common stock they
beneficially own and any changes in their beneficial ownership. Copies of these
reports must be provided to us. For transactions completed in 1999, based on our
review, we know of one late Form 4 filed by each of Mr. Robison and Mr.
Kertzman.
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MANAGEMENT
The following table sets forth the names, ages and positions of our
executive officers and directors as of March 31, 2000. Their respective
backgrounds are described following the table:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Halsey M. Minor(3).................. 35 Chairman of the Board
Shelby W. Bonnie(1)................. 35 Chief Executive Officer and Director
Richard J. Marino................... 51 President
Douglas N. Woodrum(3)............... 42 Executive Vice President, Chief Financial Officer and Director
John C. "Bud" Colligan(2)........... 45 Director
Mitchell Kertzman(3)................ 51 Director
Eric Robison(1)..................... 40 Director
</TABLE>
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(1) Class I Director (term expires at the annual meeting)
(2) Class II Director (term expires in 2001)
(3) Class III Director (term expires in 2002)
Halsey M. Minor founded CNET in December 1992, served as Chairman of the
Board, President and Chief Executive Officer from that time until March 2000,
and has served as Chairman of the Board since March 2000. Prior to founding
CNET, Mr. Minor was employed by Russell Reynolds Associates, Inc., an executive
search firm; founded Global Publishing Corporation, a producer of computer-based
multimedia business training applications distributed over computer networks;
and worked as an investment banker for Merrill Lynch Capital Markets in New
York.
Shelby W. Bonnie has served as our Chief Executive Officer since March
2000, and a director since July 1993. Mr. Bonnie also served as our Chief
Financial Officer from July 1993 until December 1997 and as our Executive Vice
President and Chief Operating Officer for July 1993 until March 2000. Prior to
joining CNET, Mr. Bonnie held positions at Tiger Management Corporation, a New
York based investment managing firm, and Lynx Capital, a private equity fund,
and in the mergers and acquisitions department at Morgan Stanley & Co. Inc.
Douglas N. Woodrum joined CNET as Executive Vice President and Chief
Financial Officer and was elected as a director in December 1997. Prior to
joining CNET, Mr. Woodrum served as Executive Vice President and Chief Financial
Officer of Heritage Media Corporation, a diversified media company which he
helped found in 1987.
Richard J. Marino joined CNET in April 1999 as President. Prior to joining
CNET, Mr. Marino served as President and Chief Executive Officer of PC World
Communications, Inc., a technology publisher, where he was employed from 1990
until he came to CNET in 1999. Prior to joining PC World, Mr. Marino worked for
Ziff-Davis Publishing, where he headed up the sales staff for PC Magazine, and
for ABC/Cap Cities Publishing Corp. where he served as Senior Vice President of
Advertising and Marketing.
John C. "Bud" Colligan became a director of CNET in May 1996. Since March
1998, Mr. Colligan has been a partner with Accel Partners, a venture capital
firm in Palo Alto, California. From November 1996 until August 1998, Mr.
Colligan served as Chairman of Macromedia, Inc., a multimedia software company
and from 1993 to 1996 he was Chief Executive Officer of Macromedia. Prior to
forming Macromedia in 1992 through the merger of Macromind -- Paracomp and
Authorware Mr. Colligan was President and Chief Executive Officer of Authorware,
a multimedia software company. Prior to that, Mr. Colligan held various
positions with Apple Computer, Inc.
Mitchell E. Kertzman became a director of CNET in May 1996. Since November
1998, Mr. Kertzman has served as President and Chief Executive Officer of
Liberate Technologies, Inc., an information appliance and software provider.
From July 1996 until November 1998, Mr. Kertzman served as Chairman of the Board
and Chief Executive Officer of Sybase, Inc., a leading provider of enterprise
database software which Mr. Kertzman joined in February 1995 as Executive Vice
President. Prior to joining Sybase, Inc., Mr. Kertzman served as Chief Executive
Officer and a director of Powersoft Corporation, an application development
tools provider. Mr. Kertzman also serves on the Board of Directors of Chordiant
Software, Inc. and Extensity, Inc.
9
<PAGE> 13
Eric Robison became a director of CNET in December 1994. Since January
1994, Mr. Robison has served as Business Development Associate of Vulcan
Ventures Inc. ("Vulcan"), a venture capital firm. Prior to joining Vulcan, Mr.
Robison was co-founder and Vice President of The Stanton Robison Group, Inc., a
business development, marketing and advertising consultant firm. Mr. Robison
also served in key marketing management positions with SGS, Inc., Ashton-Tate,
Inc. and Denny's Inc. Mr. Robison also serves on the Board of Directors of
Cumulus Media, Inc. and Liquid Audio, Inc.
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
Our business is managed under the direction of the board. The board meets
during our fiscal year to review significant developments affecting us and to
act on matters requiring board approval. The board held ten formal meetings
during the fiscal year ended December 31, 1999. All of the directors attended at
least 75% of the board meetings.
The board has established an audit committee and a compensation committee
to devote attention to specific subjects and to assist the board in the
discharge of its responsibilities. The functions of these committees and their
current members are described below.
Audit Committee
Meetings During 1999
- Six formal meetings held in 1999.
- Did not act by written consent.
Function
- Review internal financial information
- Review audit program
- Review the results of audits with the independent auditors
- Oversee quarterly reporting
- Selection of our independent accountants
- Review fees to be paid to independent accountants
- Reviews our accounting practices
Members During 1999
- John C. "Bud" Colligan
- Eric Robison
10
<PAGE> 14
Compensation Committee
Meetings During 1999
- Two formal meetings held in 1999.
- Did not act by written consent.
Function
- Reviews salaries, incentives and other forms of compensation for our
officers and other employees
- Administers our existing stock option plans and our employee stock
purchase plan
Members During 1999
- Mitchell Kertzman
- John C. "Bud" Colligan
The board does not have a standing nominating committee or any other
committee performing a similar function. The function customarily attributable
to a nominating committee is performed by the board as a whole.
11
<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the compensation
paid by the Company to its chief executive officer and to each other executive
officer of the Company who received at least $100,000 in salary and bonus during
1999.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
------------------ ------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
--------------------------- ------ -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Halsey M. Minor......................... 1999 $225,000 0 400,000 0
Chairman of the Board 1998 194,000 0 1,200,000 0
1997 175,000 0 0 0
Shelby W. Bonnie........................ 1999 160,000 0 100,000 0
Chief Executive Officer 1998 160,000 0 0 0
1997 160,000 0 0 0
Richard J. Marino....................... 1999 193,846 246,538 450,000 0
President and Chief Operating
Officer(2) 1998 -- -- -- --
1997 -- -- -- --
Douglas N. Woodrum...................... 1999 250,000 75,000 60,000 0
Executive Vice President and 1998 250,000 0 0 --
Chief Financial Officer(3) 1997 -- -- 740,000 --
</TABLE>
- ---------------
(1) The aggregate value of perquisites and other personal benefits does not
exceed the lesser of $50,000 or 10% of the total annual salary and bonus
reported for the Named Executive Officer.
(2) Mr. Marino joined the Company in May 1999.
(3) Mr. Woodrum joined the Company in December 1997.
During 1999, options to purchase an aggregate of 4,987,850 shares of common
stock at fair market value on the date of grant were granted under our stock
options plans. The following table provides information regarding stock options
granted during 1999 to persons listed in the Summary Compensation Table.
OPTIONS GRANTED IN 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS DURING PRICE EXPIRATION -----------------------------
NAME GRANTED (#) 1999 ($/SHARE) DATE 5% 10%
---- ----------- ---------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Halsey M. Minor.......... 400,000 8.0% $58.6875 4/28/09 $14,763,301 $37,413,104
Shelby W. Bonnie......... 100,000 2.0% 58.6875 4/28/09 3,690,825 9,353,276
Richard J. Marino........ 448,006 9.0% 48.75 5/25/09 13,735,243 34,807,802
1,994 * 50.125 6/01/09 62,858 159,293
Douglas N. Woodrum....... 60,000 1.2% 58.6875 4/28/09 2,214,495 5,611,966
</TABLE>
- ---------------
* Less than 1%.
(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities and Exchange Commission. The
actual value, if any, that an executive officer may realize will
12
<PAGE> 16
depend on the excess of the stock price over the exercise price on the date
the option is exercised. There is no assurance the value realized by an
executive officer will be at or near the assumed 5% or 10% levels.
The following table sets forth information regarding the exercise of stock
options by persons named in the Summary Compensation Table and year-end option
values.
OPTION EXERCISES
AND YEAR END VALUE TABLE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT YEAR-END OPTIONS AT YEAR-END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Halsey M. Minor...... 0 $ 0 733,332 866,668 $35,704,102 $22,720,898
Shelby W. Bonnie..... -- -- 0 100,000 0 0
Richard J. Marino.... -- -- 0 450,000 0 3,597,258
Douglas N. Woodrum... 38,280 $1,480,917 331,720 430,000 17,104,312 19,078,125
</TABLE>
- ---------------
(1) Value based on $56.75 closing price per share of common stock on December
31, 1999.
DIRECTOR COMPENSATION
We do not pay cash compensation to our directors, but we do reimburse
directors for expenses incurred in attending board and committee meetings. Under
our 1994 plan, each non-employee director received an automatic grant of
nonqualified stock options on June 5, 1996 to purchase 40,000 shares of common
stock at an exercise price of $7.00 per share. Non-employee directors elected to
the board in the future will automatically receive, upon such election,
nonqualified stock options to purchase 40,000 shares of common stock at an
exercise price equal to the fair market value of the common stock on the date of
grant. In addition, each non-employee director serving on June 30 of each year
(beginning on June 30, 1997) automatically receives nonqualified stock options
to purchase 10,000 shares of common Stock. All of the options granted pursuant
to these provisions are immediately exercisable on the date of grant, but the
common stock issued upon exercise is subject to repurchase by us at original
cost. This repurchase right lapses, and the optionee's rights with respect to
each grant vest, in a series of 48 equal monthly installments following the date
of grant, for so long as the optionee remains a director of CNET. In addition,
vesting will automatically accelerate upon any sale of CNET through a merger,
recapitalization, reorganization, asset sale, tender offer or similar event. The
1997 plan contains identical terms and provisions with respect to automatic
grants of nonqualified stock options to non-employee directors; provided that,
to the extent a non-employee director receives option grants under the 1994
plan, such director will not receive a duplicate option grant under the 1997
plan.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement with Mr. Woodrum in December 1997.
The term of the agreement expires on December 1, 2000 unless Mr. Woodrum's
employment is terminated earlier for cause. The agreement provides for an annual
base salary of $250,000 with a guaranteed bonus of $75,000 the first year of
employment and bonuses in the discretion of the board thereafter.
We entered into an employment agreement with Mr. Marino in April 1999. The
term of the agreement expires on May 24, 2003 unless Mr. Marino's employment is
terminated earlier for cause. The agreement provides for an annual base salary
of $350,000 with a guaranteed bonus of $150,000 the first year of employment and
bonuses in the discretion of the board thereafter.
INCENTIVE PLAN
The board of directors adopted our Incentive Plan on April 15, 1998.
Pursuant to the terms of the plan, certain of our key employees are eligible to
earn cash bonuses if the Company achieves certain financial targets.
13
<PAGE> 17
In 1999, we paid an aggregate of approximately $1.8 million to employees with
respect to our financial performance in 1998 under the Incentive Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions concerning our executive officers for 1999 were made
by the compensation committee, subject to the terms of any pre-existing
employment agreements between us and such executive officers. Mr. Kertzman and
Mr. Colligan served as members of the compensation committee during 1999. None
of the compensation committee members is or has been a company officer or
employee. None of our executive officers currently serves on the compensation
committee or any similar committee of another public company.
COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
The compensation committee is responsible for recommending to the full
board salary amounts for our executive officers and making the final
determination regarding bonus arrangements for such persons. The compensation
committee is also responsible for making the final determination regarding
awards of stock options to such persons.
COMPENSATION PHILOSOPHY. Compensation to executive officers is designed to
attract and retain highly capable executives, to motivate the performance of
executives in support of the achievement of our strategic financial and
operating performance objectives and to reward performance that meets this
standard. We are engaged in a highly competitive business and must attract and
retain qualified executives in order to be successful. In 1999, executive
compensation was comprised of the following elements:
Base Salary and Bonuses. To the extent not determined pursuant to
pre-existing employment agreements, the base salary for our executive
officers was determined after review of publicly available information
concerning the base salaries of executives with similar responsibilities in
companies engaged in businesses similar to us, the responsibilities of each
executive officer and the subjective evaluation of each officer's
contribution and potential contribution to us. The compensation committee
also has the authority to grant year-end cash bonuses to motivate the
executive officers to achieve annual financial and other goals.
Stock Option Plans. Our stock option plans form the basis of our
long-term incentive plan for executive officers and other key employees.
The compensation committee believes that a significant portion of executive
compensation should be dependent on value created for the stockholders. In
selecting recipients for option grants and in determining the size of such
grants, the compensation committee considers various factors such as the
performance of CNET and the contributions of the individual recipient to
CNET.
Benefits. Executive officers also receive benefits typically offered
to executives by companies engaged in businesses similar to ours, as well
as various benefits generally available to our employees (such as health
insurance). The compensation committee intends to design our compensation
programs so that compensation paid to executive officers will qualify for
deductibility under applicable provisions of the Internal Revenue Code,
including Section 162(m). However, we may pay compensation which is not
deductible in limited circumstances when prudent management so requires.
1999 Compensation of Chief Executive Officer. Mr. Minor served as our
Chief Executive Officer during 1999. Mr. Minor's base salary for 1999 was
$225,000. In addition, in 1999 Mr. Minor received option grants totaling
400,000 shares. The board ratified decisions made by the committee with
respect to Mr. Minor's compensation. Mr. Minor's overall compensation
reflects a higher degree of responsibility with respect to the strategic
decision making authority and higher level of responsibility with respect
to our strategic direction and our financial and operational results. The
compensation committee believes that Mr. Minor's salary was substantially
below competitive salaries paid to executives with similar qualifications
and responsibilities.
Mitchell Kertzman
Member of the Compensation Committee
14
<PAGE> 18
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total return of the common
stock during the period commencing July 2, 1996, the date public trading of the
common stock began following our initial public offering, to December 31, 1999,
with the Standard & Poor's 500 Stock Index (the "S&P 500 Index") and the
Hambrecht & Quist Internet Index (the "Peer Group Index"). The S&P 500 Index
includes 500 United States companies in the industrial, transportation,
utilities and financial sectors and is weighted by market capitalization. The
graph depicts the results of investing $100 in the common stock, the S&P 500
Index and the Peer Group Index at closing prices on July 2, 1996, and assumes
that all dividends were reinvested.
[PERFORMNACE GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CNET 100.00 181.25 184.38 332.83 1,418.75
S&P 500 100.00 117.90 172.32 237.66 306.54
Peer Index 100.00 96.11 128.98 300.27 909.34
</TABLE>
THE STOCK PRICE PERFORMANCE DEPICTED IN THE CORPORATE PERFORMANCE GRAPH IS
NOT NECESSARILY INDICATIVE OF FUTURE PRICE PERFORMANCE. THE CORPORATE
PERFORMANCE GRAPH WILL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE IN ANY
FILING BY THE COMPANY UNDER THE SECURITIES ACT OR THE EXCHANGE ACT.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with applicable
rules and regulations for presentation at the Company's next annual meeting that
is received at our principal executive office by December 1, 2000 will be
included in our proxy statement and form of proxy for that meeting.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the our board. We will pay the
cost of soliciting proxies in the accompanying form. Our officers may solicit
proxies by mail, telephone or telegraph. Upon request, we will reimburse
brokers, dealers, banks and trustees, or their nominees, for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of shares of
the common stock.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP, independent certified public accountants, has been selected by
the board as our independent auditor for the current year. A representative of
KPMG LLP is expected to be present at the annual meeting, will have an
opportunity to make a statement if he or she desires to do so and is expected to
be available to respond to appropriate questions.
15
<PAGE> 19
OTHER MATTERS
The board is not aware of any matter to be presented for action at the
meeting other than the matters set forth herein. Should any other matter
requiring a vote of stockholders arise, the proxies in the enclosed form confer
upon the person or persons entitled to vote the shares represented by such
proxies discretionary authority to vote the same in accordance with their best
judgment in the interest of CNET.
FINANCIAL STATEMENTS
WE WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM A COPY OF THIS
PROXY STATEMENT IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON
AND BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS WITHIN ONE BUSINESS DAY OF
RECEIPT OF SUCH REQUEST, A COPY OF THE OUR ANNUAL REPORT ON FORM 10-K. REQUESTS
SHOULD BE DIRECTED TO INVESTOR RELATIONS, CNET NETWORKS, INC., 150 CHESTNUT, SAN
FRANCISCO, CALIFORNIA 94111; TELEPHONE NUMBER: (415) 364-8000; FAX NUMBER: (415)
395-9205.
By Order of the Board of Directors,
SHELBY W. BONNIE,
Chief Executive Officer
April 21, 2000
16
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
CNET NETWORKS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
WITHHOLD
FOR ALL AUTHORITY FOR all nominees,
nominees to vote for except vote withheld
all nominees for those named below:
1. Election of Class I Directors: [ ] [ ] [ ] 3. Ratification of FOR AGAINST ABSTAIN
01 SHELBY W. BONNIE AND 02 KPMG LLP, independent [ ] [ ] [ ]
ERIC ROBISON certified public
accountants, to serve
as the Company's
independent auditors
for the fiscal year
ending December 31, 2000:
-------------------------
Nominee Exceptions
2. Approval of an amendment to FOR AGAINST ABSTAIN 4. On any other business
the Company's 1997 Stock Option that may properly come
Plan to increase the number of [ ] [ ] [ ] before the meeting; hereby
shares of common stock authorized revoking any proxy or
for issuance from 6,200,000 to proxies heretofore given
11,200,000 shares: by the undersigned.
DATED: , 2000.
--------------------------------------
--------------------------------------
--------------------------------------
(SIGNATURE OF STOCKHOLDER(S))
(JOINT OWNERS MUST EACH SIGN. PLEASE
SIGN EXACTLY AS YOUR NAME(S) APPEAR(S)
ON THIS CARD. WHEN SIGNING AS ATTORNEY,
TRUSTEE, EXECUTOR, ADMINISTRATOR,
GUARDIAN OR CORPORATE OFFICER, PLEASE
GIVE YOUR FULL TITLE.)
PLEASE SIGN, DATE AND MAIL TODAY.
- -----------------------------------------------------------------------------------------------------------------------------------
O FOLD AND DETACH HERE O
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
<PAGE> 21
CNET NETWORKS, INC.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS AT
9:00 A.M., WEDNESDAY, MAY 24, 2000
CNET NETWORKS, INC., 150 CHESTNUT STREET, SAN FRANCISCO, CALIFORNIA 94111
The undersigned stockholder of CNET NETWORKS, Inc. (the "Company") hereby
appoints Shelby W. Bonnie, Richard J. Marino and Douglas N. Woodrum, or any of
them, as proxies, each with full powers of substitution, to vote the shares of
the undersigned at the above-stated Annual Meeting and at any adjournment(s)
thereof:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE. IF A
CHOICE IS NOT INDICATED WITH RESPECT TO ITEMS (1), (2), (3) AND (4), THIS PROXY
WILL BE VOTED "FOR" SUCH ITEMS. THE PROXIES WILL USE THEIR DISCRETION WITH
RESPECT TO ANY MATTER REFERRED TO IN ITEM (5). THIS PROXY IS REVOCABLE AT ANY
TIME BEFORE IT IS EXERCISED.
Receipt herewith of the Company's Annual Report and Notice of Meeting and
Proxy Statement, dated April 21, 2000, is hereby acknowledged.
