<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
[ ] Confidential for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
MEDIA METRIX, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[MEDIA METRIX logo]
MEDIA METRIX, INC.
250 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10003
April 19, 2000
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders to
be held at 10:00 a.m. on Tuesday, May 23, 2000, at The Ney Center at the offices
of Young & Rubicam, 285 Madison Avenue, New York, New York 10017.
At the meeting you will be asked to elect two directors to our Board of
Directors and to approve the adoption of our 2000 Employee Stock Purchase Plan
and our 2000 Equity Incentive Plan. In addition, we will be pleased to report on
the affairs of Media Metrix and a discussion period will be provided for
questions and comments of general interest to stockholders.
We look forward to personally greeting those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
TOD JOHNSON
Chairman of the Board of Directors
and Chief Executive Officer
THIS PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD ARE BEING MAILED TO MEDIA
METRIX STOCKHOLDERS BEGINNING ABOUT APRIL 19, 2000
<PAGE> 3
[MEDIA METRIX logo]
MEDIA METRIX, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
New York, New York
April 19, 2000
Notice is hereby given that the Annual Meeting of Stockholders of Media
Metrix, Inc. will be held on Tuesday, May 23, 2000 at 10:00 a.m. at The Ney
Center at the offices of Young & Rubicam, 285 Madison Avenue, New York, New York
10017 for the following purposes:
(1) To elect two Class I directors to serve for the ensuing three
years;
(2) To consider and vote upon a proposal to approve the adoption of
our 2000 Employee Stock Purchase Plan;
(3) To consider and vote upon a proposal to approve the adoption of
our 2000 Equity Incentive Plan; and
(4) To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
Stockholders of record at the close of business on April 4, 2000 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. A list of stockholders eligible to vote at the meeting will be
available for inspection at the meeting and for a period of ten days prior to
the meeting during regular business hours at our corporate headquarters at 250
Park Avenue South, New York, New York.
You are cordially invited to attend the meeting in person. If you are
unable to attend the meeting in person please complete and date the enclosed
form of proxy and return it promptly in the envelope provided. No postage is
required if mailed in the United States. If you attend the meeting you may
revoke your proxy and vote your shares in person.
GAIL A. BALCERZAK
Secretary
<PAGE> 4
MEDIA METRIX, INC.
250 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10003
------------------------
PROXY STATEMENT
------------------------
This proxy statement contains information related to the Annual Meeting of
Stockholders of Media Metrix, Inc. to be held on Tuesday, May 23, 2000,
beginning at 10:00 a.m., at The Ney Center at the offices of Young & Rubicam,
285 Madison Avenue, New York, New York 10017, and at any postponements or
adjournments thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE MEETING?
At Media Metrix' Annual Meeting, stockholders will act upon the matters
outlined in the notice of meeting on the cover page of this proxy statement,
including the election of Class I directors, approval of the 2000 Employee Stock
Purchase Plan and approval of the 2000 Equity Incentive Plan. In addition, the
management of Media Metrix will report on the performance of Media Metrix during
fiscal 1999 and respond to questions from stockholders.
WHO IS ENTITLED TO VOTE AT THE MEETING?
Only stockholders of record at the close of business on the record date,
April 4, 2000, are entitled to receive notice of the Annual Meeting and to vote
the shares of common stock that they held on that date at the meeting, or any
postponements or adjournments of the meeting.
WHAT ARE THE VOTING RIGHTS OF MEDIA METRIX STOCKHOLDERS?
Each outstanding share of Media Metrix common stock will be entitled to one
vote on each matter to be voted upon at the meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of the
record date, 19,812,466 shares of our common stock were outstanding. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
to Media Metrix, it will be voted as you direct. If you are a registered
stockholder and attend the meeting, you may deliver your completed proxy card in
person. "Street name" stockholders who wish to vote at the meeting will need to
obtain a proxy form from the institution that holds their shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with the Secretary of Media
Metrix either a notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although attendance at the meeting will not by
itself revoke a previously granted proxy.
<PAGE> 5
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board's recommendation is set forth together with
the description of each item in the proxy statement. In summary, the Board
recommends a vote:
- for election of the nominated Class I directors (see page 5);
- for approval of the 2000 Employee Stock Purchase Plan (see page 19); and
- for approval of the 2000 Equity Incentive Plan (see page 21).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of votes cast
at the meeting is required for the election of directors. A properly executed
proxy marked "WITHHELD" with respect to the election of one or more directors
will not be voted with respect to the director or directors indicated, although
it will be counted for purposes of determining whether or not there is a quorum
present.
OTHER ITEMS. For each other item, the affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote on
the item will be required for approval. A properly executed proxy marked
"ABSTAIN" with respect to any such matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum. Accordingly, any
abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
2
<PAGE> 6
BENEFICIAL OWNERSHIP OF COMMON STOCK
WHO ARE THE LARGEST OWNERS OF MEDIA METRIX COMMON STOCK?
As of March 31, 2000 and except as set forth below, Media Metrix does not
know of any single person or group that is the beneficial owner of more than 5%
of our common stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK(1)
- ------------------------------------ -------------------- ---------------
<S> <C> <C>
The NPD Group, Inc.
900 West Shore Road
Port Washington, NY 11050(2)............................ 4,122,759 20.8%
Gilder Gagnon Howe & Co. LLC
1775 Broadway
New York, NY 10019(3)................................... 2,013,290 10.2%
Greylock IX Limited Partnership
One Federal Street
Boston, MA 02110(4)..................................... 1,242,529 6.3%
</TABLE>
- ---------------
(1) Based on the number of shares outstanding at March 31, 2000.
(2) Consists of 4,122,759 shares of common stock owned by The NPD Group, Inc.,
of which Tod Johnson is the principal shareholder and chief executive
officer. Of the 4,122,759 shares of our common stock owned by NPD, 384,038
shares of our common stock are required to be sold to certain present or
former employees or advisors of NPD upon the exercise of options granted on
such shares pursuant to an NPD benefit plan.
(3) Gilder Gagnon Howe & Co. LLC may be deemed to beneficially own 2,013,290
shares of our common stock which are held of record by clients of Gilder
Gagnon Howe & Co. LLC. Gilder Gagnon Howe & Co. LLC has sole voting power
with respect to 16,750 shares and shared dispositive power with respect to
2,013,290 shares. Gilder Gagnon Howe & Co. LLC does not have shared voting
power or sole dispositive power with respect to any of the shares.
Information with respect to Gilder Gagnon Howe & Co. LLC has been derived
from their Schedule 13G/A dated February 14, 2000 as filed with the
Securities and Exchange Commission.
(4) Greylock IX Limited Partnership may be deemed to beneficially own 1,242,529
shares of our common stock. Greylock IX Limited Partnership has sole voting
and sole dispositive power with respect to 1,242,529 shares. William Helman,
a director of the Company, is the co-managing general partner of Greylock
IX. Information with respect to Greylock has been derived from their
Schedule 13G dated February 14, 2000 as filed with the Securities and
Exchange Commission.
3
<PAGE> 7
HOW MUCH STOCK DO THE DIRECTORS AND EXECUTIVE OFFICERS OF MEDIA METRIX OWN?
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE NUMBER OF ACQUIRABLE WITHIN COMMON
NAME SHARES BENEFICIALLY OWNED 60 DAYS(1) STOCK(2)
- ---- ------------------------- ----------------- -------------
<S> <C> <C> <C>
Tod Johnson(3)............................. 4,122,759 -- 20.8%
Mary Ann Packo............................. 84,834 82,305 *
Steve Coffey............................... 84,305 82,305 *
Thomas A. Lynch............................ 68,127 65,692 *
Douglas McFarland.......................... 16,154 12,154 *
Jeffrey C. Levy(4)......................... 273,201 -- 1.4%
Michael Brooks(5).......................... 141,194 -- *
William Helman(6).......................... 1,242,529 -- 6.3%
Stig Kry................................... 13,938 9,938 *
James Mortensen............................ 13,938 10,938 *
All directors and executive officers as a
group (12 persons)....................... 6,352,301 263,332 31.7%
</TABLE>
- ---------------
* Represents less than 1% of our outstanding common stock
(1) Reflects the number of shares that could be purchased by exercise of options
available at March 31, 2000 or within 60 days thereafter under the Media
Metrix stock option plans.
(2) Based on the number of shares outstanding at March 31, 2000.
(3) Consists of 4,122,759 shares of common stock owned by The NPD Group, Inc.,
of which Mr. Johnson is the principal shareholder and chief executive
officer. Of the 4,122,759 shares of our common stock owned by The NPD Group,
384,038 shares of our common stock are required to be sold to certain
present or former employees or advisors of NPD upon the exercise of options
granted on such shares pursuant to an NPD benefit plan.
(4) Consists of 70,000 shares of common stock owned by Mr. Levy and 203,201
shares of common stock owned by the Farm Neck Partners, L.P., a family
limited partnership with which Mr. Levy is affiliated. Mr. Levy may be
deemed the beneficial owner of the shares held by Farm Neck Partners, L.P.
Mr. Levy disclaims beneficial ownership of the shares held by Farm Neck
Partners, L.P.
(5) Consists of 133,417 shares owned by Whitney Equity Partners, L.P. Mr. Brooks
is a member of J.H. Whitney Equity Partners, LLC, the general partner of
Whitney Equity Partners, L.P. Mr. Brooks may be deemed to share voting and
dispositive power with respect to such shares. Also consists of 7,777 shares
owned by J.H. Whitney & Co. of which Mr. Brooks is a general partner. Mr.
Brooks is a managing member of Whitney General Partner, L.L.C. which is also
a general partner of J.H. Whitney & Co. Mr. Brooks may be deemed to share
voting and dispositive power with respect to such shares.
(6) Consists of 1,242,529 shares owned by Greylock IX Limited Partnership. Mr.
Helman is a co-managing general partner of Greylock IX. Mr. Helman may be
deemed to share voting and dispositive power with respect to such shares.
4
<PAGE> 8
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
DIRECTORS STANDING FOR ELECTION
The Board of Directors is currently divided into three classes, having
three-year terms that expire in successive years.
The current term of office of directors in Class I expires at the 2000
Annual Meeting. The Board of Directors proposes that the nominees described
below be elected as Class I directors for a term of three years or until their
successors are duly elected and qualified.
Each of the nominees has consented to serve a three-year term. If any of
them become unavailable to serve as a director, the Board may designate a
substitute nominee. In that case, the persons named as proxies will vote for the
substitute nominee designated by the Board.
The directors standing for election are:
CLASS I DIRECTORS (OR NOMINEES)
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
DIRECTOR AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
- -------- --- --------------- --------------------------
<S> <C> <C> <C>
James Mortensen............. 75 1997 Mr. Mortensen has been a director since March
1997. Mr. Mortensen has been a private
consultant since 1982. He was employed by Young
& Rubicam Inc. from 1957 to 1982 where he held
various positions, including Chief Financial
Officer, Vice Chairman and Chair of the
Executive Committee. Mr. Mortensen is a member
of NPD's Board of Advisors. Mr. Mortensen
attended Denver University.
Randy Pausch................ 39 -- Mr. Pausch is a nominee for the position of
director. He has been a Professor of Computer
Science, Human-Computer Interaction, and Design
at Carnegie Mellon University since 1997, and
the co-director of Carnegie Mellon University's
Entertainment Technology Center since 1998. From
1995 to 1997, Mr. Pausch was on sabbatical with
the Walt Disney Imagineering Virtual Reality
Studio, where he consulted on interactive theme
park attractions. Mr. Pausch has also been a
consultant to Xerox Palo Alto Research Center
since 1989. Mr. Pausch received a B.S. in
Computer Science from Brown University and a
Ph.D. in Computer Science from Carnegie Mellon
University.
</TABLE>
VOTE REQUIRED
The two nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote, a quorum
being present, shall be elected as our directors. Only votes cast for a nominee
will be counted, except that the accompanying proxy will be voted for all
nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1 -- ELECTION OF DIRECTORS" TO BE IN
OUR BEST INTEREST AND THE BEST INTEREST OF OUR STOCKHOLDERS AND RECOMMENDS A
VOTE "FOR" APPROVAL.
5
<PAGE> 9
DIRECTORS CONTINUING IN OFFICE
CLASS II DIRECTORS
The following Class II Directors were elected for terms expiring in 2001:
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
DIRECTOR AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
- -------- --- --------------- --------------------------
<S> <C> <C> <C>
Michael C. Brooks........... 55 1998 Mr. Brooks was a director of RelevantKnowledge
prior to its merger with us. He has been a
general partner of J.H. Whitney & Co., a venture
capital fund and one of our stockholders, since
1984. He is also a director of SunGard Data
Systems, Inc., Niku Corporation, US
Internetworking, Inc., VitaminShoppe.com and
several other private companies. Mr. Brooks
holds a B.A. from Yale College and an M.B.A.
from Harvard Business School.
Stig Kry.................... 70 1997 Mr. Kry has been employed by Kurt Salmon
Associates, Inc., a management consulting firm,
since 1958, holding various positions, including
Chief Executive from 1975 to 1987 and his
current position as Chairman Emeritus since
1993. He is a director of Guilford Mills, Inc.
and Osh Kosh B'Gosh, Inc. as well as several
private companies. Mr. Kry is a member of NPD's
Board of Advisors. Mr. Kry holds a degree in
textile engineering from NKI, Skolan, Stockholm,
Sweden.
</TABLE>
CLASS III DIRECTORS
The following Class III Directors were elected for terms expiring in 2002:
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
DIRECTOR AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
- -------- --- --------------- --------------------------
<S> <C> <C> <C>
Tod Johnson................. 55 1997 Mr. Johnson has been our Chairman of the Board
and Chief Executive Officer since March 1997 and
has been involved in managing our business since
our inception as a division of NPD and then as
PC Meter. He is the principal shareholder of NPD
and has served as the Chairman and Chief
Executive Officer of NPD since 1971. He has also
served as Chairman of the Advertising Research
Foundation and was the Founding Co-Chairman of
the Council for Marketing and Opinion Research.
Mr. Johnson earned a B.S. and an M.S. from
Carnegie Mellon University.
William W. Helman........... 41 1997 Mr. Helman has been a director since April 1997.
He has been a general partner of Greylock IX
Limited Partnership, a venture capital fund and
one of our stockholders, since 1997 and
associated with Greylock since 1984. He is also
a director of various privately held companies.
Mr. Helman holds an A.B. from Dartmouth College
and an M.B.A. from Harvard Business School.
</TABLE>
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board of Directors has established a Compensation Committee and an
Audit Committee.
6
<PAGE> 10
The Compensation Committee recommends to the Board the compensation for our
executives and administers our equity and benefit plans. The Compensation
Committee is currently composed of Messrs. Helman, Levy and Mortensen. During
1999, the Compensation Committee met one time.
The Audit Committee recommends to the Board the appointment of our
independent auditors. The Audit Committee also discusses and reviews, with our
independent auditors, the scope and results of the annual audit. The Audit
Committee is currently composed of Messrs. Brooks, Kry and Mortensen. During
1999, our Audit Committee met twice.
HOW OFTEN DID THE BOARD MEET DURING FISCAL 1999?
During the fiscal year ended December 31, 1999, our Board of Directors held
seven meetings and acted five times by unanimous written consent in lieu of a
meeting. Each director attended at least 75% of the meetings of the Board of
Directors held when he was a director.
HOW ARE DIRECTORS COMPENSATED?
During fiscal 1999, we did not have a formal plan to compensate our
non-employee directors. If the 2000 Equity Incentive Plan is approved by our
stockholders, in general, each non-employee director will receive an option to
purchase 15,000 shares of our common stock upon his or her initial election or
appointment to the Board of Directors and each non-employee director will
receive an option to purchase an additional 15,000 shares of our common stock
upon his or her re-election as a director. In addition, if the 2000 Equity
Incentive Plan is approved by our stockholders, each non-employee director who
was a member of the Board of Directors at January 1, 2000 will receive a
one-time grant of an option to purchase 20,000 shares of our common stock on the
first trading day following the Annual Meeting. These options will have an
exercise price equal to the fair market value of our common stock on the date of
grant and will have a term of ten years from the date the option is granted,
subject to earlier termination if that person is no longer a director. In
general, these options will be vested and immediately exercisable with respect
to twenty-five percent of the shares subject thereto upon the date of grant, and
will vest and become exercisable as to 1/36th of the remaining shares on a
monthly basis thereafter. In general, in the event a director ceases to be a
director for any reason, he or she may exercise his or her options, to the
extent exercisable at the time he or she ceases to be a director, within six
months (or if such termination is due to death or disability, one year) after
the date he or she ceases to be a director.
If the 2000 Equity Incentive Plan is approved by our stockholders, Michael
C. Brooks, William W. Helman, Jeffrey C. Levy, Stig Kry and James Mortensen will
each receive an option to purchase 20,000 shares of common stock. If elected,
Mr. Pausch will receive an option to purchase 15,000 shares of common stock.
7
<PAGE> 11
OUR EXECUTIVE OFFICERS
Our executive officers, and their ages and positions, are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Tod Johnson.......................... 55 Chairman of the Board, Chief Executive Officer and
Director*
Mary Ann Packo....................... 45 President and Chief Operating Officer
Steve Coffey......................... 44 Executive Vice President
Thomas A. Lynch...................... 39 Chief Financial Officer and Treasurer
Douglas McFarland.................... 50 Senior Vice President, Sales
Andrew A. Fessel..................... 46 Senior Vice President, Audience Measurement Services
Will Hodgman......................... 40 President and Chief Executive Officer of AdRelevance
</TABLE>
- ---------------
* See biography above.
MARY ANN PACKO has been our President and Chief Operating Officer since
March 1997. She has been involved in managing our business since July 1996. She
served as Executive Director of IPSOS-NFO Europe, Paris, from July 1995 to July
1996 and as Vice President of New Ventures with NFO Worldwide from July 1994 to
July 1995. Prior to July 1994, Ms. Packo was the President of the Custom
Services Division of NPD Canada. Ms. Packo co-founded and was President of
National Yellow Pages Monitor and has served on the Board of Directors of the
Internet Advertising Bureau. Ms. Packo received her B.S. from Miami University,
Oxford, Ohio.
STEVE COFFEY has been our Executive Vice President since 1997 and has been
involved in managing our business since our inception as a division of NPD and
then as PC Meter. Mr. Coffey also headed the Advanced Research and Development
team at NPD from October 1994 to January 1996, where he founded and launched PC
Meter. Mr. Coffey received an M.S. from Columbia Business School.
THOMAS A. LYNCH has been our Chief Financial Officer since March 1997 and
has been involved in managing our business since our inception as a division of
NPD and then as PC Meter. He also served as Senior Vice President and Chief
Financial Officer of NPD from May 1995 to November 1998. Prior to joining NPD,
Mr. Lynch was a partner at KPMG Corporate Finance in Tokyo, Japan, from 1992 to
May 1995. Mr. Lynch earned a Bachelors of Commerce degree from University
College, Dublin, Ireland and an M.B.A. from the London Business School, England.
DOUGLAS MCFARLAND has been our Senior Vice President, Sales, since February
1997. From July 1994 until joining us, Mr. McFarland was an Executive Vice
President with FreeMark Communications. From February 1992 until July 1994, Mr.
McFarland was Senior Vice President of Next Century Media. Prior to that time,
he held various positions at Arbitron, including Vice President-Sales and
Marketing. Mr. McFarland received his B.A. from Emory and Henry College and an
M.A. from Virginia Tech.
ANDREW A. FESSEL has been our Senior Vice President, Audience Measurement
Services, since September 1999. Prior to joining us, Mr. Fessel had been
Director of Database and Marketing for Microsoft Corp.'s MSN worldwide Web usage
and analysis team since September 1997. Prior to joining Microsoft, Mr. Fessel
had been executive in charge of research and marketing development for
Dreamworks SKG's studio operation launch team in Universal City, California
since 1995. Prior to joining Dreamworks, Mr. Fessel had been Senior Vice
President of research and marketing for Fox Broadcasting Company since 1985. Mr.
Fessel holds a Bachelor of Fine Arts degree from the New York University
Institute of Film & Television and an M.B.A. from New York University.
WILL HODGMAN has been President of AdRelevance, our wholly-owned
subsidiary, since its inception in 1998. Prior to that time, Mr. Hodgman had
been General Manager of USWEB/CKS's northwest operation from 1997 to 1998. Prior
to that, Mr. Hodgman had been a Senior Vice President of McCann-Erickson from
1994 to 1998. Mr. Hodgman holds a B.A. from Williams College.
8
<PAGE> 12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who beneficially own more than
ten percent of our common stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission and
the National Association of Securities Dealers, Inc. Based upon a review of the
filings with the Securities and Exchange Commission and written representations
from our executive officers and directors and persons who beneficially own more
than ten percent of our common stock, we believe that the reporting requirements
of Section 16 applicable to our executive officers and directors, and persons
who beneficially own more than ten percent of our common stock during fiscal
1999 were complied with on a timely basis, except that a report on Form 4 for
one transaction was not timely filed for each of Mary Ann Packo, Steve Coffey,
Thomas A. Lynch, Douglas McFarland and Jeffrey C. Levy. These Form 4s were
subsequently filed.
9
<PAGE> 13
EXECUTIVE COMPENSATION
The following table provides information concerning all cash and non-cash
compensation awarded to, earned by or paid to our Chief Executive Officer and
our next four most highly compensated executive officers for services rendered
to us.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION -------------------------
---------------------- SECURITIES
OTHER UNDERLYING ALL
ANNUAL OPTIONS/ OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS COMPENSATION
- --------------------------- ---- -------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Tod Johnson................... 1999 -- -- $180,000(1) -- --
Chief Executive Officer and 1998 -- -- 62,000(1) -- --
Chairman of the Board(1) 1997 -- -- 62,000(1) -- --
Mary Ann Packo................ 1999 $175,000 $67,000 -- 50,972 --
President and Chief
Operating 1998 157,500 59,000 -- 43,716 --
Officer 1997 153,000 35,000 -- 26,091 --
Steve Coffey.................. 1999 $170,000 $55,000 -- 50,972 --
Executive Vice President 1998 145,000 54,500 -- 43,716 --
1997 130,000 35,000 -- 26,091 --
Thomas A. Lynch............... 1999 $165,000 $64,000 -- 65,620 --
Chief Financial Officer 1998 -- -- 36,000(1) 39,366 --
and Treasurer(1) 1997 -- -- 36,000(1) 2,175 --
Doug McFarland................ 1999 $160,000 $80,000 -- 56,972 --
Senior Vice President, Sales 1998 154,500 42,000 -- 30,554 --
1997 150,000 30,000 -- 36,962 --
</TABLE>
- ---------------
(1) Compensation for Mr. Johnson's services as Chief Executive Officer and Mr.
Lynch's services as Chief Financial Officer in 1998 was paid under our
management services agreement with NPD. NPD was reimbursed $62,000 for Mr.
Johnson's services in each of the years 1997 and 1998. NPD was reimbursed
$36,000 for Mr. Lynch's services in each of the years 1997 and 1998. We pay
for Mr. Johnson's services pursuant to an amended and restated management
services agreement at the rate of $15,000 per month. Mr. Lynch's salary was
paid by NPD through December 1998. Mr. Lynch became our employee in 1999.
10
<PAGE> 14
STOCK OPTIONS
The following table sets forth certain summary information concerning
individual grants of stock options made during the year ended December 31, 1999
to each of our executive officers named in the Summary Compensation Table.
OPTIONS GRANTS IN YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS EXERCISE PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
GRANTED 1999 SHARE DATE 5% 10%
---------- ------------ --------- ------------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Tod Johnson............ -- -- -- -- -- --
Mary Ann Packo......... 21,972 $11.26 February 10, 2009 $155,592 $ 394,299
29,000 4.9% 45.31 September 17, 2009 826,407 2,094,277
Steve Coffey........... 21,972 11.26 February 10, 2009 155,592 394,299
29,000 4.9 45.31 September 17, 2009 826,407 2,094,277
Thomas A. Lynch........ 36,620 11.26 February 10, 2009 259,319 657,166
29,000 6.3 45.31 September 17, 2009 826,407 2,094,277
Douglas McFarland...... 21,972 11.26 February 10, 2009 155,592 394,299
35,000 5.4 45.31 September 17, 2009 997,388 2,527,576
</TABLE>
- ---------------
(1) These amounts represent assumed rates of appreciation in the price of our
common stock during the terms of the options in accordance with rates
specified in applicable federal securities regulations. The 5% and 10%
assumed annual rates of compounded stock price appreciation do not represent
our estimate or projection of our future common stock prices. Each option
listed in the table has a ten-year term. Actual gains, if any, on stock
option exercises will depend on the future price of the common stock. There
is no representation that the rates of appreciation reflected in this table
will be achieved.
The following table sets forth at December 31, 1999 the number of options
and the value of unexercised options held by each of the executive officers
named in the Summary Compensation Table:
AGGREGATED YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
SUBJECT TO UNEXERCISED IN-THE-MONEY OPTIONS
VALUE OPTIONS AT YEAR END AT YEAR END (1)
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Tod Johnson................ -- -- -- -- -- --
Mary Ann Packo............. -- -- 86,812 100,500 $3,070,679 $2,225,727
Steve Coffey............... -- -- 86,812 100,500 3,070,679 2,225,727
Thomas A. Lynch(2)......... 435 17,191 56,537 97,319 1,994,783 1,958,374
Douglas McFarland.......... -- -- 21,447 103,041 747,762 2,124,265
</TABLE>
- ---------------
(1) The dollar values have been calculated by determining the difference between
the fair market value of the securities underlying the options at December
31, 1999 and the exercise prices of the options.
(2) Includes 47,130 shares of our common stock issuable upon the exercise of
options granted pursuant to an NPD plan that gives Mr. Lynch an option to
purchase shares of Media Metrix common stock held by NPD.
11
<PAGE> 15
EXISTING STOCK OPTION AND EQUITY INCENTIVE PLANS
We adopted our 1998 Equity Incentive Plan in November 1998. Under the 1998
Equity Incentive Plan, we may award incentive and non-statutory stock options,
stock appreciation rights, restricted stock, performance stock units and other
stock units which are valued by reference to the value of our common stock. We
also maintain the Media Metrix Stock Option Plan which provides for the award of
up to 519,222 shares of our common stock in the form of incentive stock options
and non-statutory stock options. The 1998 Equity Incentive Plan and the Media
Metrix Stock Option Plan are collectively referred to as the Equity Plans.
In February 1999, our Board of Directors adopted an amendment to the 1998
Equity Incentive Plan to increase the number of shares of our common stock
available for awards under the 1998 Equity Incentive Plan from 732,400 to
1,318,320.
As of December 31, 1999, options to purchase an aggregate of 1,838,816
shares of our common stock were outstanding under the Equity Plans, and an
aggregate of 101,164 shares of our common stock are authorized but have not yet
been granted as awards under the Equity Plans. We do not intend to issue any
more options under the Media Metrix Stock Option Plan.
Our officers, employees, non-employee directors and consultants are
eligible to participate in the Equity Plans. The Compensation Committee
administers the Equity Plans and determines, subject to the provisions of the
Equity Plans, who shall receive awards, the types of awards to be made, and the
terms and conditions of each award.
The 1998 Equity Incentive Plan provides that all outstanding awards shall
become immediately exercisable on the day prior to the consummation of any
merger or consolidation in which we are not the surviving corporation or which
results in the acquisition of all or substantially all of our outstanding shares
by a single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially all of
our assets. The number of shares subject to each award under the Equity Plans
shall be adjusted upon the occurrence of a stock split or recapitalization of
our common stock.
The Board may amend, modify or terminate any outstanding award under the
Equity Plans with the participant's consent, except consent is not required if
the Board determines that the action will not materially and adversely affect
the participant. The Board may amend, suspend or terminate either of the Equity
Plans, or any part of such plans, at any time.
On June 22, 1999, we filed a registration statement on Form S-8 with the
Securities and Exchange Commission pursuant to which we registered 1,970,610
shares of our common stock issued or issuable upon the exercise of options
granted under the Media Metrix Stock Option Plan, the 1998 Equity Incentive Plan
and other non-plan option grants.
On November 8, 1999, we filed a registration statement on Form S-8 with the
Securities and Exchange Commission pursuant to which we registered up to 246,845
shares of our common stock issued or issuable upon the exercise of options
granted under the AdRelevance stock option plan assumed in the AdRelevance
merger.
12
<PAGE> 16
COMPENSATION COMMITTEE REPORT
The Compensation Committee of our Board of Directors advises our Chief
Executive Officer and our Board of Directors on compensation matters, determines
the compensation of the president, reviews and takes action on the
recommendation of the Chief Executive Officer as to the appropriate compensation
of other officers and key personnel and approves the grants of bonuses to
officers and key personnel. The Compensation Committee is also responsible for
the administration of the Media Metrix Stock Option Plan, the 1998 Equity
Incentive Plan and will be responsible for the administration of the proposed
2000 Equity Incentive Plan and the 2000 Employee Stock Purchase Plan if such
plans are approved by our stockholders at the Annual Meeting.
This report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that we
specifically incorporate this information by reference, and shall not otherwise
be deemed filed under such acts.
HOW IS MEDIA METRIX' CHIEF EXECUTIVE OFFICER COMPENSATED? Compensation for
Tod Johnson's services as Chief Executive Officer is paid under the terms of a
management services agreement between Media Metrix and The NPD Group, Inc., of
which Mr. Johnson is also the Chief Executive Officer. The terms of the
Management Services Agreement are described under "Certain Relationships and
Related Transactions". We also paid NPD $15,000 to cover out-of-pocket expenses
incurred by Mr. Johnson on our behalf. Mr. Johnson has declined any bonus or
long-term incentive compensation. The Compensation Committee considers the
amounts paid to Mr. Johnson for his services to Media Metrix to be reasonable
under the circumstances.
WHAT IS MEDIA METRIX' GENERAL COMPENSATION POLICY FOR EXECUTIVE OFFICERS
OTHER THAN THE CHIEF EXECUTIVE OFFICER? The fundamental policy of the
Compensation Committee is to provide our executive officers with competitive
compensation opportunities based upon their contribution to our development and
financial success and their personal performance. It is the Compensation
Committee's objective to have a portion of each executive officer's compensation
contingent upon our performance as well as upon each executive officer's own
level of performance. Therefore, the compensation package for each executive
officer is comprised of three different elements: (1) base salary which reflects
individual performance and is designed primarily to be competitive with salary
levels in the industry; (2) cash bonuses which reflect the achievement of
performance objectives and goals; and (3) long-term stock-based incentive awards
which strengthen the mutuality of interest between the executive officers and
our stockholders.
FACTORS. The principal factors that the Compensation Committee considered
with respect to each executive officer's compensation for fiscal 1999 are
summarized below. The Compensation Committee may, however, in its discretion,
apply entirely different factors for executive compensation in future years.
- BASE SALARY. The base salary for each executive officer is determined on
the basis of the following factors: experience, personal performance, the
salary levels in effect for comparable positions within and without the
industry and internal base salary comparability considerations. The
weight given to each of these factors differs from individual to
individual, as the Compensation Committee believes appropriate. Base
salaries are reviewed on an annual basis, with adjustments made in
accordance with the factors indicated above.
- BONUS. Bonus represents the variable component of the executive
compensation program that is tied to our performance and individual
achievement. Our policy is to base a significant portion of our executive
officer's cash compensation on bonus. In determining bonuses, the
Compensation Committee considers factors such as relative performance of
Media Metrix during the year and the individual's contribution to our
performance as well as the degree to which the executive officer met or
exceeded certain objectives established for him or her.
- LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided
through grants of stock options. The grants are designed to align the
interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage Media
Metrix from the perspective of an owner with an equity stake. Each option
grant allows the individual to acquire shares
13
<PAGE> 17
of our common stock at a fixed price per share over a specified period of
time up to ten years. Each option generally becomes exercisable in
installments over a four-year period, contingent upon the executive
officer's continuing employment with Media Metrix. Therefore, the option
grant will provide a return to the executive officer only if the
executive officer remains employed by Media Metrix during the vesting
period, and then only if the market price of the underlying shares
appreciates.
The number of shares subject to each option grant is set at a level
intended to create meaningful opportunity for appreciation based on the
executive officer's current position with Media Metrix, the base salary
associated with that position, the size of comparable awards made to
individuals in similar positions within the industry and the individual's
personal performance in recent periods. The Compensation Committee also
considers the number of unvested options held by the executive officer in
order to maintain an appropriate level of equity incentive for that
individual. However, the Compensation Committee does not adhere to any
specific guidelines as to the relative option holdings of our executive
officers. Options to acquire an aggregate of 278,536 of our common stock
were granted to executive officers in fiscal 1999.
HOW IS MEDIA METRIX ADDRESSING INTERNAL REVENUE CODE LIMITS ON THE
DEDUCTIBILITY OF COMPENSATION? Section 162(m) of the Internal Revenue Code of
1986, as amended, generally denies publicly-held corporations a federal income
tax deduction for compensation exceeding $1,000,000 paid to the Chief Executive
Officer or any of the four other highest paid executive officers, excluding
performance-based compensation. Through December 31, 1999, this provision has
not limited our ability to deduct executive compensation, but the Compensation
Committee will continue to monitor the potential impact of Section 162(m) on our
ability to deduct executive compensation. The proposed 2000 Equity Incentive
Plan has been designed, and is intended to be administered, in a manner that
will enable Media Metrix to deduct compensation attributable to options and
certain other awards thereunder, without regard to such deduction limitation.
The Compensation Committee believes that its compensation philosophy of
paying its executive officers well by means of competitive salaries and cash
bonus and long-term incentives, as described in this report, serves the best
interest of Media Metrix and its stockholders.
THE COMPENSATION COMMITTEE
JAMES MORTENSEN, Chairman
WILLIAM W. HELMAN
JEFFREY C. LEVY
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee consists of William W. Helman, Jeffrey C. Levy
and James Mortensen. Prior to the formation of our Compensation Committee in
February 1999, matters concerning executive officer compensation were handled by
the entire Board of Directors.
14
<PAGE> 18
AUDIT COMMITTEE REPORT
The Audit Committee of our Board of Directors reviews the financial
reporting process, the system of internal control, the audit process and our
process for monitoring compliance with laws and regulations. All of our Audit
Committee members satisfy the definition of independent director as established
in the National Association of Securities Dealers Listing Standards. Our Board
of Directors adopted a written charter for our Audit Committee on March 28, 2000
which is attached to this proxy statement as Appendix A.
Our Audit Committee reviewed our financial statements with our Board of
Directors and discussed with Ernst & Young LLP, our independent auditors, the
matters required to be discussed by Statement of Auditing Standard No. 61. Our
Audit Committee received from Ernst & Young the written disclosures required by
Independence Standards Board Standard No. 1 and discussed with them their
independence. After reviewing and discussing the financial statements our Audit
Committee recommended that they be included in our annual report on Form 10-K.
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that Media
Metrix specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
THE AUDIT COMMITTEE
JAMES MORTENSEN, Chairman
STIG KRY
MICHAEL C. BROOKS
15
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT SERVICES AGREEMENT
We entered into a management services agreement with NPD and Tod Johnson on
September 30, 1998. Mr. Johnson is the Chief Executive Officer and principal
stockholder of NPD. Services which NPD provides to us, if needed, include:
- support of the operation and administration of our panel, including
recruitment, operation and compensation of the panel;
- access to panelists in NPD's panels;
- data capture and editing of data;
- data base structuring and storage of data;
- processing of reports and client support;
- provision of systems support and development as necessary;
- provision of computer time, storage and printing as reasonably necessary
in connection with the provision of the services specified in the
preceding items;
- support in connection with client service and sales;
- office space and facilities within NPD leased facilities; and
- the provision of NPD's hardware ownership survey.
In addition to the specific services outlined above, NPD also agreed to
provide administrative and office logistical support, including payroll
management. At this time, NPD no longer provides payroll and panel support
services.
The management services agreement may be terminated by either party with 90
days' prior written notice, except that NPD may not terminate the management
services agreement prior to March 31, 2002. When the management services
agreement is terminated, NPD will provide us with a perpetual, royalty free,
non-forfeitable license of all data and documentation in its possession and
developed during the performance of the services relating to our business. We
have also agreed to provide NPD with a reciprocal license relating to data and
documentation which we generate during the performance of the services relating
to our business.
NPD and Mr. Johnson have also agreed that during the term of the management
services agreement and for a period of two years after its termination, neither
NPD nor Mr. Johnson will enter into the field of audience measurement for
digital on-line media and measurement of usage of computer software and personal
computers, except for investments in publicly traded companies not to exceed 10%
of any company's outstanding capital stock.
As compensation for the services provided by NPD, we pay NPD on a monthly
basis an amount equal to all expenses reasonably incurred by NPD in the
performance of its duties under the management services agreement, plus 105% of
the sum of (1) the amount of NPD's overhead allocable to us and (2) service
charges like computer rent, mail handling and printing and postage. NPD charged
us $2.7 million under the management services agreement in 1999, compared to
$6.0 million in 1998.
NPD was reimbursed $62,000 for Mr. Johnson's services in 1998. NPD was
reimbursed $36,000 for Mr. Lynch's services in 1998. These amounts represent all
compensation to NPD for the services provided to us by Mr. Johnson and Mr. Lynch
in 1998. Messrs. Johnson and Lynch provided services to NPD in addition to those
related to Media Metrix and were compensated for those services. Compensation
paid by NPD to Messrs. Johnson and Lynch exceeded the amounts paid by us to NPD.
The amounts charged by NPD for Mr. Johnson and Mr. Lynch's services to Media
Metrix were below the amounts provided for under the management services
agreement. NPD has waived any additional amounts to which it is entitled under
the agreement.
16
<PAGE> 20
On May 12, 1999, we amended and restated the management services agreement
to provide that NPD will be reimbursed $15,000 per month, or $180,000 per year,
for Mr. Johnson's services. We also paid NPD an additional $15,000 in 1999 for
out-of-pocket expenses incurred by Mr. Johnson on our behalf. As of January 1,
1999, Mr. Lynch became one of our employees.
Services Agreement
We entered into a services agreement with NPD as of September 30, 1998
which replaced a prior services agreement having substantially similar terms.
Pursuant to this agreement we granted NPD and its affiliates access to our
databases for any business purpose of NPD and its affiliates which is not in
direct competition with our business. We also granted NPD a non-exclusive
license to use certain computer software owned by us which is used for Internet
audience measurement. In addition, we agreed that we will not license our
software to anyone else who will use the software to compete with NPD. Under the
terms of the services agreement, we receive a monthly fee of $2,500 plus
expenses. In 1999, we received an aggregate of $30,000 in fees and no reimbursed
expenses. The services agreement is terminable by mutual consent of the parties
or on 120 days' prior written notice by either party.
License Agreement
We entered into a license agreement dated as of November 5, 1998 with NPD
which replaced a prior license agreement having substantially similar terms. NPD
granted to us an exclusive, non-transferable, perpetual, worldwide license to
use some of its computer software solely in connection with the operation of our
metering system. This software enables us to construct our databases from the
data we collect from our panelists. We pay NPD licensing fees of $11,000 per
month payable quarterly, or $132,000 per year. In 1999, we paid NPD an aggregate
of $132,000 in licensing fees. The license is terminable by NPD on our breach of
the terms of the agreement like failure to pay the license fees, or bankruptcy.
Lease Arrangements
We entered into a sublease agreement dated as of March 1, 2000 with NPD for
the sixth floor of 352 Park Avenue South, New York, New York. Under this
agreement, NPD will sublease to us the entire sixth floor of 352 Park Avenue
South. The sublease shall last for a term of ten years. Under the sublease we
will pay to NPD an annual rent of $391,000 for the first five years of the term
and $414,000 for the remainder of the term. Our annual rent is equal to the
amount paid by NPD under their lease with the owner of 325 Park Avenue South. As
consideration for NPD extending its credit to us under their lease, we have
proposed to sublease to NPD, at a discount to the current market rent, some of
our other leased properties in Manhattan. The terms of this agreement have not
yet been finalized.
Employment Agreements
We entered into an employment agreement with Jeffrey C. Levy, a director
and a Vice Chairman, in connection with our merger with RelevantKnowldge. Under
this agreement, which terminated in November 1999, Mr. Levy received an annual
base salary of $165,000. Mr. Levy is currently a non-executive Vice Chairman.
We entered into an amended and restated employment agreement with Will
Hodgman, the President of AdRelevance, Inc. on October 8, 1999, in connection
with our acquisition of AdRelevance. The agreement provides that Mr. Hodgman
will continue to be employed as the President of AdRelevance until October 23,
2001, and will receive an annual base salary of $155,000. He is also entitled to
receive an annual bonus of up to thirty percent of his base salary upon the
achievement of certain individual and performance objectives.
Loan To Stockholder
In connection with the merger with RelevantKnowledge, NPD loaned $100,000
to Jeffrey C. Levy pursuant to a secured promissory note. Mr. Levy repaid the
note in May of 1999, following the closing of our initial public offering.
17
<PAGE> 21
OUR PERFORMANCE
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent we
specifically incorporate this information by reference, and shall not otherwise
be deemed filed under such acts.
The graph compares our performance from May 7, 1999, the date that our
common stock started trading on the Nasdaq National Market, through December 31,
1999, against the performance of the Russell 2000 Index and our peer group for
the same period. The peer group represented in the graph includes the
corporations (other than Media Metrix) that are in the Business Services Group
and who make up our SIC Code Index, a published index of which our group code is
7389.
COMPARE CUMULATIVE TOTAL RETURN
AMONG MEDIA METRIX, INC.,
RUSSELL 2000 INDEX AND SIC CODE INDEX
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
MEDIA METRIX, INC. BUSINESS SERVICES, NEC RUSSELL 2000 INDEX
------------------ ---------------------- ------------------
<S> <C> <C> <C>
5/07/1999 100.00 100.00 100.00
12/31/1999 78.46 156.16 116.56
</TABLE>
18
<PAGE> 22
PROPOSAL NO. 2 -- APPROVAL OF THE MEDIA METRIX, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
On January 13, 2000, our Board of Directors unanimously adopted the 2000
Employee Stock Purchase Plan, subject to the approval of our stockholders at the
Annual Meeting. The Board of Directors believes that our continued growth and
success will depend, in large part, upon our ability to attract and retain
highly-qualified employees who, through their efforts and expertise, can make a
significant contribution to the success of our business and upon our ability to
provide significant incentives for our employees to work for our best interests
and for the best interests of our stockholders through ownership of our common
stock. We believe that the 2000 Purchase Plan will play an important role in
attracting and retaining highly-qualified employees by providing a means through
which such employees may purchase our common stock on a discounted basis through
payroll deductions.
The primary features of the 2000 Purchase Plan are summarized below. The
full text of the 2000 Purchase Plan is set forth in Appendix B to this proxy
statement and the following discussion is qualified in its entirety by reference
to the 2000 Purchase Plan.
GENERAL DESCRIPTION OF THE 2000 PURCHASE PLAN
In general, each employee of Media Metrix or its subsidiaries, including
any officer or director who is also an employee, will become eligible to
participate in the 2000 Purchase Plan commencing with the first offering period
under the 2000 Purchase Plan coincident with or next following his or her
completion of six months of employment or, if such individual was hired on or
before January 13, 2000, commencing with the first offering period under the
2000 Purchase Plan. Employees who own, directly or indirectly, 5% or more of the
voting power or value of Media Metrix' or any of its subsidiary's stock, are not
eligible to participate in the 2000 Purchase Plan (determined in accordance with
the rules of the Internal Revenue Service). For purposes of the 2000 Purchase
Plan, a subsidiary is any corporation at least 50% of the stock of which is
owned, directly or indirectly, by Media Metrix.
Participation in the 2000 Purchase Plan is completely voluntary. Eligible
employees who enroll in the 2000 Purchase Plan will be required to designate the
portion of their base cash compensation (limited to 10%) to be withheld during
each offering period under the 2000 Purchase Plan. It is anticipated that the
first offering period under the 2000 Purchase Plan will be the six-month period
commencing on July 1, 2000. Unless changed, subsequent six month offering
periods will commence on January 1st and July 1st of each year during the term
of the 2000 Purchase Plan. An employee's payroll deductions will be adjusted
downward or refunded to the extent necessary to ensure that he or she will not
purchase during any calendar year shares of our common stock that have an
aggregate fair market value in excess of $25,000 (determined in accordance with
the rules of the Internal Revenue Service).
The amount of an employee's payroll deductions under the 2000 Purchase Plan
will be credited to a bookkeeping account maintained in the employee's name. At
the end of each offering period, the amount credited to a participant's account
will be applied to the purchase of shares of our common stock at a price per
share equal to the lesser of (i) 85% of the fair market value of our common
stock on the first day of the offering period, or (ii) 85% of the fair market
value of our common stock on the last business day of the offering period.
An employee may elect to terminate his or her participation during an
offering period. An employee's participation will automatically terminate upon
the termination of his or her employment with Media Metrix and its subsidiaries.
Upon termination of participation, payroll deductions will cease and the amount
credited to the participant's account will be paid in cash to the participant
(or the participant's beneficiary). A participant who voluntarily withdraws from
the 2000 Purchase Plan during an offering period may re-enroll for any
subsequent offering period for which he or she is an eligible employee.
If the 2000 Purchase Plan is approved by our stockholders, we may sell up
to 100,000 shares of our common stock (as adjusted to reflect stock splits and
other capital changes) under the 2000 Purchase Plan. The maximum number of
shares of our common stock that any participant may purchase during any offering
19
<PAGE> 23
period is 1,000 shares. Such shares may be authorized and unissued or held in
our treasury. We may also purchase shares for resale under the 2000 Purchase
Plan. The closing price of our common stock on April 11, 2000 was $35.44.
Unless our Board of Directors determines otherwise, the 2000 Purchase Plan
will be administered by the Compensation Committee. Subject to the provisions of
the 2000 Purchase Plan, the Compensation Committee, acting in its sole and
absolute discretion, will have full power and authority to construe, interpret
and apply the terms of the 2000 Purchase Plan.
Our Board of Directors may amend or terminate the 2000 Purchase Plan at any
time. In the case of any amendment increasing the number of shares of common
stock which may be sold under the 2000 Purchase Plan, or in the case of other
sorts of amendments requiring stockholder approval in accordance with applicable
law, the amendment will be subject to the approval of our stockholders.
FEDERAL TAX CONSEQUENCES UNDER THE 2000 PURCHASE PLAN
The 2000 Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended. Amounts withheld from an employee's pay under the 2000
Purchase Plan will be taxable as ordinary income. No income is realized by an
employee upon the purchase of shares of our common stock at the end of an
offering period. A participant may, however, realize ordinary income upon a sale
or other disposition of shares of common stock acquired under the 2000 Purchase
Plan or upon his or her death while owning shares of common stock acquired under
the 2000 Purchase Plan.
In general, if the sale or other distribution of shares occurs more than
two years after the beginning of the offering period in which the shares are
acquired or if the participant dies while owning such shares, then gain, if any,
realized will be treated as ordinary income in an amount up to the lesser of (i)
the excess of the fair market value of the shares at the time of such
disposition or death over the amount paid for the shares or (ii) the excess of
the fair market value of the shares at the beginning of the offering period over
the option price at the beginning of the offering period. The balance of the
gain, if any, will be treated as long-term capital gain.
If the sale or other disposition of shares acquired under the 2000 Purchase
Plan occurs within such two-year period, then the participant will realize
ordinary income equal to the 15% purchase price discount and the amount of the
ordinary income will be added to the employee's cost basis for the purpose of
determining the capital gain or loss realized on the sale or other disposition.
We will be entitled to a deduction equal to the ordinary income realized by an
employee who sells or otherwise disposes of shares acquired under the 2000
Purchase Plan within the two year period.
The 2000 Purchase Plan is not, nor is it intended to be, qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended.
PLAN BENEFITS
It is not possible at this time to determine who may elect to participate
in the 2000 Purchase Plan since such election will be made by each eligible
participant. Tod Johnson is not eligible to participate in the 2000 Purchase
Plan.
20
<PAGE> 24
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of our
common stock present or represented at the Annual Meeting is required for the
adoption of the 2000 Purchase Plan. Broker non-votes with respect to this matter
will be treated as neither a vote "for" nor a vote "against" the matter,
although they will be counted in determining if a quorum is present. However,
abstentions will be considered in determining the number of votes required to
attain a majority of the shares present or represented at the meeting and
entitled to vote. Accordingly, an abstention from voting by a stockholder
present in person or by proxy at the meeting has the same legal effect as a vote
"against" the matter because it represents a share present or represented at the
meeting and entitled to vote, thereby increasing the number of affirmative votes
required to approve this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN OUR BEST
INTEREST AND IN THE BEST INTEREST OF OUR STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSAL NO. 3 -- APPROVAL OF THE MEDIA METRIX, INC.
2000 EQUITY INCENTIVE PLAN
On March 28, 2000 our Board of Directors unanimously adopted the 2000
Equity Incentive Plan, subject to the approval of our stockholders at the Annual
Meeting. The Board of Directors believes that approval of the 2000 Equity Plan
will serve our best interests and the best interests of our stockholders by
permitting us to establish a flexible vehicle through which we can offer
equity-based compensation incentives to eligible personnel with a view toward
promoting our long-term financial success and enhancing stockholder value. The
primary features of the 2000 Equity Plan are summarized below. The full text of
the 2000 Equity Plan is set forth in Appendix C to this proxy statement and the
following discussion is qualified in its entirety by reference to the 2000
Equity Plan.
GENERAL DESCRIPTION OF THE 2000 EQUITY PLAN
The 2000 Equity Plan authorizes the grant of stock options, stock
appreciation rights, restricted stock, performance-based awards and other
stock-based awards to any member of our Board of Directors, any of our officers,
our affiliates or other employees or any consultant or other independent
contractor who performs, or will perform services for us or our affiliates. In
addition, each of our non-employee directors will receive automatic grants of
stock options under the 2000 Equity Plan.
Available Shares. Subject to adjustment to reflect stock dividends and
other capital changes, the maximum number of shares of our common stock that may
be issued, or used for reference purposes, under the 2000 Equity Plan shall not
exceed 2,000,000 shares, provided that such maximum number of shares will be
automatically increased on the first trading day of each calendar year,
beginning with the 2001 calendar year, by an amount equal to the lesser of (i)
4% of the total number of shares of our common stock outstanding on the last
trading day of the immediately preceding calendar year or (ii) 1,000,000 shares.
In no event, however, may more than 6,000,000 shares of our common stock be
issued, or used for reference purposes, under the 2000 Equity Plan during the
2000 Equity Plan's term. Shares subject to awards under the 2000 Equity Plan
that are canceled, expired, terminated, forfeited or withheld to pay the
exercise price of options or to satisfy tax withholding obligations shall again
be available for issuance or reference under the 2000 Equity Plan. Any shares of
common stock that are issued, and any awards that are granted through the
assumption of, or in substitution for, outstanding awards previously granted by
an acquired entity shall not be counted against the shares of common stock
available for issuance or reference purposes under the 2000 Equity Plan.
Such shares may be either authorized and unissued or held by us in our
treasury. If approved by the our stockholders at the Annual Meeting, the 2000
Equity Plan will be effective as of March 28, 2000 and will, unless terminated
earlier by our Board of Directors, terminate on March 28, 2010.
Subject to adjustment to reflect stock dividends and other capital changes,
the maximum number of shares of our common stock with respect to which stock
options, stock appreciation rights or other awards may
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be granted under the 2000 Equity Plan to any employee for any calendar year
shall, in each case, be 1,000,000 shares. Not more than $1,000,000 may be paid
to any employee under the 2000 Equity Plan with respect to any cash
performance-based award (or multiple cash performance-based awards ending with
or within the same fiscal year).
Administration. Unless our Board of Directors determines otherwise, the
2000 Equity Plan will, except with respect to discretionary awards to
non-employee directors, be administered by the Compensation Committee. Subject
to the provisions of the 2000 Equity Plan, the Compensation Committee will,
except with respect to discretionary awards to non-employee directors, have the
authority to grant awards under the 2000 Equity Plan, to interpret the
provisions of the 2000 Equity Plan, to fix and interpret the provisions of
agreements governing awards made under the 2000 Equity Plan, to supervise the
administration of the 2000 Equity Plan, and to take such other actions as may be
necessary or desirable in order to carry out the provisions of the 2000 Equity
Plan. The 2000 Equity Plan will be administered by our Board of Directors with
respect to discretionary awards to non-employee directors.
Discretionary Stock Option Awards. Under the 2000 Equity Plan, the
Compensation Committee may grant stock options that are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and stock options which do not qualify as
incentive stock options, i.e., non-statutory options. Incentive stock options
may only be granted to employees of the Company or its affiliates that qualify
as "subsidiaries" (within the meaning of the Internal Revenue Service rules).
The exercise price for shares covered by an incentive stock option may not
be less than 100% of the fair market value of the common stock on the date of
grant (or, in the case of a grant to an employee who owns stock possessing more
than 10% of the combined voting power of all classes of our stock or any
subsidiary, 110% of the fair market value). The exercise price for shares
covered by non-statutory options may not be less than 85% of the fair market
value of our common stock on the date of grant, provided that the exercise price
of a non-statutory option that is intended to qualify as performance-based
compensation within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended, may not be less that the fair market value of the common
stock on the date of the grant.
All options will, unless sooner terminated, expire ten years (or, in the
case of an incentive stock option granted to a 10% stockholder, five years) from
the date of grant. The Compensation Committee has the discretion to determine
the vesting and other restrictions on the exercise of an option and/or upon the
disposition of stock acquired upon the exercise of an option.
The 2000 Equity Plan generally provides that, unless the Compensation
Committee determines otherwise, following a participant's termination of
employment or service: (i) for any reason other than death or disability, the
participant will have ninety days to exercise all options that are exercisable
on the termination date, (ii) as the result of death, the participant's
beneficiary will have one year to exercise all options that are exercisable on
the termination date, and (iii) due to disability, the participant will have six
months to exercise all options that are exercisable on the termination date,
provided that, in all instances, no option may be exercised beyond the
expiration of its stated term or subsequent to the termination of a
participant's employment or service by us or our affiliates for cause.
Payment for shares acquired upon the exercise of an option may be made (as
determined by the Compensation Committee) in cash and/or such other form of
payment as may be permitted by the Compensation Committee from time to time,
including, without limitation, previously-owned shares of our common stock,
installment payments under the optionee's promissory note, or in accordance with
a "cashless" exercise procedure.
Stock Appreciation Right Awards. The Compensation Committee may award
stock appreciation rights which entitle the holder, upon exercise, to receive an
amount, in cash or shares of common stock or a combination thereof (as
determined by the Compensation Committee) determined with reference to the
appreciation, if any, in the fair market value of our common stock during the
period beginning on the date the stock appreciation right is granted and ending
on the date the stock appreciation right is exercised. Stock appreciation rights
may be awarded in conjunction with or independent of any stock option award.
Stock
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appreciation rights granted in conjunction with a stock option award are
exercisable only at the same time and to the same extent as the related option
is exercisable and may only be exercised when the fair market value of the
common stock to which it relates exceeds the option exercise price.
The 2000 Equity Plan generally provides that, unless otherwise determined
by the Compensation Committee, following a participant's termination of
employment or service: (i) for any reason other than death or disability, the
participant will have ninety days to exercise all then exercisable stock
appreciation rights that are exercisable at the termination date, (ii) as the
result of death, the participant's beneficiary will have one year to exercise
all stock appreciation rights that are exercisable at the termination date, and
(iii) due to disability, the participant will have six months to exercise all
stock appreciation rights that are exercisable at the termination date, provided
that, in all instances, no stock appreciation right may be exercised beyond the
expiration of its stated term or subsequent to the participant's termination for
cause.
Restricted Stock Awards. The Compensation Committee may award shares of
restricted stock to all eligible personnel upon such terms and subject to
forfeiture as it deems appropriate. Any award of restricted stock must be
evidenced by a written restricted stock agreement or similar instrument. The
Compensation Committee will determine the purchase price payable for shares of
restricted stock awarded under the 2000 Equity Plan in accordance with
applicable law and will establish conditions on the grant or vesting of such
shares as it deems appropriate including, without limitation, conditions based
on continued service or the attainment of performance goals established by the
Compensation Committee or, if such restricted stock is intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue Code
of 1986, as amended, performance goals based on the performance criteria
described below.
The holder of restricted stock is entitled to dividends on such shares, may
vote such shares and, subject to the satisfaction of applicable vesting
conditions, may tender such shares. The Compensation Committee may, however,
defer the payment of dividends until, and condition such payment upon, the
satisfaction of the applicable vesting conditions.
Upon a participant's termination of employment or service for any reason
(including death or disability) or no reason, the participant will, unless
otherwise determined by the Compensation Committee, automatically forfeit all
restricted stock which has not yet become fully vested.
Performance-Based Awards. The 2000 Equity Plan allows the Compensation
Committee to condition the exercise, vesting or settlement of an award on the
achievement of specified performance goals, including those intended to generate
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Internal Revenue Code of 1986, as amended. Any performance goal
established in connection with an award under the 2000 Equity Plan must be
objective, prescribed in writing by the Compensation Committee before the
beginning of the applicable performance period and expressed in a manner that
conforms to one or more of the following business criteria: (i) the attainment
of certain target levels of, or a specified percentage increase in, revenues,
income before income taxes and extraordinary items, net income, earnings before
income tax, earnings before interest, taxes, depreciation and amortization or a
combination of any or all of the foregoing; (ii) the attainment of certain
target levels of, or a percentage increase in, after-tax or pre-tax profits;
(iii) the attainment of certain target levels of, or a specified increase in,
operational cash flow; (iv) the achievement of a certain level of, reduction of,
or other specified objectives with regard to limiting the level of increase in,
all or a portion of, our bank debt or other long-term or short-term public or
private debt or our other similar financial obligations, which may be calculated
net of such cash balances and/or other offsets and adjustments as may be
established by the Compensation Committee; (v) the attainment of a specified
percentage increase in earnings per share or earnings per share from continuing
operations; (vi) the attainment of certain target levels of, or a specified
increase in return on capital employed or return on invested capital; (vii) the
attainment of certain target levels of, or a percentage increase in, after-tax
return on stockholders' equity; (viii) the attainment of certain target levels
of, or a specified increase in, economic value added targets based on a cash
flow return on investment formula; (ix) the attainment of certain target levels
in the fair market value of the shares of common stock; and/or (x) growth in the
value of an investment in the common stock assuming the reinvestment of
dividends.
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At the expiration of the applicable performance period, the Compensation
Committee will determine the extent to which the performance goals are attained
and the percentage of each performance-based award that has been earned. The
Compensation Committee may reduce the amount that would otherwise be payable
pursuant to a performance-based award, but may not increase such amount.
Following each determination, the Compensation Committee, in its sole
discretion, may pay earned performance-based awards in the form of cash or in
shares of common stock (or in a combination thereof). Unless otherwise
determined by the Compensation Committee, payment of earned performance-based
awards shall be made in a single lump sum following the close of the applicable
performance period. Any such shares may be granted subject to any restrictions
deemed appropriate by the Compensation Committee. Participants may be entitled
to receive any dividends declared with respect to shares which have been earned
in connection with grants of performance-based awards which have been earned,
but not yet distributed.
Unless otherwise determined by the Compensation Committee, all outstanding
performance-based awards expire upon the termination of the participant's
employment or service for any reason or no reason.
Other Stock-Based Awards. Other awards of common stock and awards that are
valued in whole or in part by reference to, or are payable in or otherwise based
on, common stock may be granted either alone or in addition to or in tandem with
options, stock appreciation rights, restricted stock and performance-based
awards. The Compensation Committee may also provide for the grant of Common
Stock under such awards upon the completion of a specified performance period.
Unless otherwise determined by the Compensation Committee at the time of grant,
the recipient of a stock-based award shall be entitled to receive, currently or
on a deferred basis, dividends or dividend equivalents with respect to the
number of shares of common stock covered by the award.
Unless otherwise determined by the Compensation Committee, all stock-based
awards that have not yet vested will automatically be forfeited upon the
termination of the participant's employment or service for any reason or no
reason.
Non-Employee Director Automatic Stock Option Awards. Under the 2000 Equity
Plan, each of our non-employee directors will be automatically granted an option
to purchase 15,000 shares of common stock upon his or her commencement of
service as a non-employee director. In addition, each of our non-employee
directors will automatically be granted an option to purchase 15,000 shares of
common stock on the trading day following each Annual Meeting of Stockholders at
which he or she is re-elected to the Board of Directors (provided that such
director has been serving on the Board of Directors for at least six months).
The options will have a ten-year term and an exercise price equal to the fair
market value of the common stock on the date of grant. The options granted to
non-employee directors will be twenty-five percent vested on the date of grant
and, while the director remains in service, will vest as to 1/36th of the
remaining shares each month thereafter. In addition, each non-employee director
who was a director on January 1, 2000 will receive a one-time option grant to
purchase 20,000 shares of common stock on the first trading day following the
Annual Meeting. Provisions similar to those described above with regard to
discretionary option grants shall apply upon a director's termination of
service, except that a non-employee director will have one year to exercise then
vested options upon a termination of service due to disability (rather than six
months) and will have six months to exercise then vested options following a
termination of service for any reason other than death, disability or cause
(rather than ninety days).
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STOCK OPTIONS GRANTED OR TO BE GRANTED TO THE CHIEF EXECUTIVE
OFFICER AND THE FOUR OTHER MOST HIGHLY COMPENSATED EXECUTIVE
OFFICERS AND THE NON-EXECUTIVE DIRECTORS IF THE MEDIA METRIX 2000
EQUITY INCENTIVE PLAN IS APPROVED.
NEW PLAN BENEFITS
2000 EQUITY INCENTIVE PLAN
<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER
NAME AND POSITION PER STOCK OPTION OF OPTIONS
- ----------------- ---------------- ----------
<S> <C> <C>
Tod Johnson................................................. -- --
Chairman of the Board, Chief Executive Officer and
Director
Mary Ann Packo.............................................. -- --
President and Chief Operating Officer
Steve Coffey................................................ -- --
Executive Vice President
Thomas A. Lynch............................................. -- --
Chief Financial Officer and Treasurer
Douglas McFarland........................................... -- --
Senior Vice President, Sales
Executive Group............................................. -- --
Non-Executive Director Group................................ (1) 115,000(2)
Non-Executive Officer Employee Group........................ -- --
</TABLE>
- ---------------
(1) The exercise price of each option shall be equal to the fair market value of
the common stock on the first trading day following the Annual Meeting.
(2) Includes an aggregate of 15,000 shares to be granted to Mr. Pauch provided
he is elected to the board of directors.
Change in Control. The 2000 Equity Plan generally provides that, unless
the Compensation Committee determines otherwise at the time of grant, all
outstanding awards will become immediately vested and, if applicable,
exercisable upon or immediately prior to the consummation of any merger or
consolidation in which we are not the surviving corporation or which results in
the acquisition of all or substantially all of our outstanding shares by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially all of
our assets, provided that, in the case of options or stock appreciation rights,
such awards are not assumed or continued in full force. The number of shares
available under the 2000 Equity Plan and the number of shares subject to each
outstanding award and, if applicable, the exercise price thereof shall be
adjusted upon the occurrence of a stock split or recapitalization of our common
stock.
FEDERAL INCOME TAX CONSEQUENCES UNDER THE 2000 EQUITY PLAN
An optionee will not realize taxable income upon the grant of an option.
The holder of a non-statutory option will generally recognize ordinary income
upon the exercise of the option in an amount equal to the excess of the fair
market value of the common stock over the exercise price (i.e., the option
spread), and we will generally receive a corresponding deduction. Upon a later
sale of the common stock, the optionee will recognize capital gain or loss equal
to the difference between the selling price and the sum of the exercise price
plus the amount of ordinary income realized on the exercise.
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The holder of an incentive stock option will not realize taxable income
upon the grant or exercise of the option (although, upon exercise, the option
spread is includable as income for purposes of the alternative minimum tax). If
the common stock acquired upon exercise of an incentive stock option is sold or
otherwise disposed of within two years from the grant date or within one year
from the exercise date, then, in general, gain realized on the sale is treated
as ordinary income to the extent of the ordinary income that would have been
realized upon exercise if the option had been a non-statutory option, and we
will generally receive a corresponding deduction. Any remaining gain is treated
as capital gain.
If the common stock acquired pursuant to the exercise of an incentive stock
option is held for at least two years from the grant date and one year from the
exercise date and the optionee is employed by us (or our subsidiaries) at all
times beginning on the grant date and ending on the date three months (or, in
the case of disability, one year) prior to the exercise date, then all gain or
loss realized upon the sale will be capital gain or loss and we will not be
entitled to a deduction. A special basis adjustment applies to reduce the gain
for alternative minimum tax purposes.
In general, Section 162(m) of the Internal Revenue Code of 1986, as
amended, denies a publicly-held corporation a deduction for federal income tax
purposes for compensation paid in excess of $1,000,000 per year per person to
its chief executive officer and the four other officers whose compensation is
disclosed in its proxy statement, subject to certain exceptions. Although the
2000 Equity Plan has been designed so that certain options, stock appreciation
rights, restricted stock and performance-based awards will qualify for an
exception from the above deduction limitation, it is possible that compensation
realized under the 2000 Equity Plan will not be deductible by us by reason of
the executive compensation deduction limitation of Section 162(m) of the Code.
Accordingly, although we expect that the Compensation Committee will take into
consideration the non-deductibility of compensation attributable to a particular
award under the 2000 Equity Plan, no assurance can be given that all or part of
any such compensation will be deductible by us.
The 2000 Equity Plan is not, nor is it intended to be, qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of our
common stock present or represented at the meeting is required for the adoption
of the 2000 Equity Plan. Broker non-votes with respect to this matter will be
treated as neither a vote "for" or a vote "against" the matter, although they
will be counted in determining if a quorum is present. However, abstentions will
be considered in determining the number of votes requires to attain a majority
of the shares present or represented at the meeting and entitled to vote.
Accordingly, an abstention from voting by a stockholder present in person or by
proxy at the meeting has the same legal effect as a vote "against" the matter
because it represents a share present or represented at the meeting and entitled
to vote, thereby increasing the number of affirmative votes required to approve
this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN OUR BEST
INTEREST AND THE BEST INTEREST OF OUR STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young, LLP have been our independent auditors since our
incorporation in 1997 and will serve in that capacity for the 2000 fiscal year.
A representative of Ernst & Young will be present (either in person or by
telephone) at the meeting and will have an opportunity to make a statement if he
desires to do so, and will respond to appropriate questions from stockholders.
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<PAGE> 30
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at our 2001
Annual Meeting of Stockholders must be received by us no later than December 22,
2000 for inclusion in the Board of Directors' proxy statement and form of proxy
relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting, it is
the intention of the persons named in the enclosed proxy to vote on such matters
in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
GAIL A. BALCERZAK
Secretary
Dated: April 19, 2000
A COPY OF OUR ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT CHARGE TO ANY
STOCKHOLDER REQUESTING IT IN WRITING FROM: MEDIA METRIX, INC., ATTENTION: GAIL
A. BALCERZAK, ESQ., 250 PARK AVE. SOUTH, NEW YORK, NEW YORK 10003.
27
<PAGE> 31
APPENDIX A
AUDIT COMMITTEE CHARTER
MISSION STATEMENT
The audit committee will assist the Board of Directors in fulfilling its
oversight responsibilities. The audit committee will review the financial
reporting process, the system of internal control, the audit process and the
company's process for monitoring compliance with laws, regulations and the
company's code of conduct. In performing its duties, the committee will maintain
effective working relationships with the Board of Directors, management, and the
internal and external auditors.
ORGANIZATION
The audit committee will be organized consistent with the following
significant parameters:
Size Of The Committee: The audit committee will have no less than
three and no more than five members.
Qualifications: Committee members must be "Independent Directors" of
the company. (Members of the audit committee will be considered independent
if they have no relationship to the corporation that may interfere with the
exercise of their independence from management and the corporation.) In
addition, each committee member must be "Financially Literate" or must
achieve this status through training within six months of being appointed
to the committee (for these purposes, "Financial Literacy" is the ability
to read and understand fundamental financial statements, including the
balance sheet, income statement and cash flow statement).
Frequency Of Meetings: The committee will have four regularly
scheduled meetings each fiscal year, in February, April, July and October.
In addition, the committee will meet at other times if deemed necessary to
completely discharge its duties and responsibilities as outlined in this
charter.
Appointment Of Members And Chairperson: Each committee member will be
selected by the Chairman of the Board of Directors and will serve a term of
one year. Committee members can serve successive one-year terms without
limitation. The Chairperson of the Audit Committee will be selected by the
Chairman of the Board of Directors and will serve in that capacity for one
year. The Chairperson can serve successive terms in such capacity without
limitation. At least one member of the audit committee must have academic
training in finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background which resulted
in such member's financial sophistication, including current or past
experience in positions of senior financial management (for example,
currently or previously held the position of Chief Financial Officer, Chief
Executive Officer or Chairman of a corporation, or other senior officer
with oversight responsibilities).
Notwithstanding the above, one director who is not an Independent Director,
and is not a current employee or an immediate family member of such employee,
may be appointed to the audit committee if the Board, under exceptional and
limited circumstances, determines that membership on the committee by the
individual is required by the best interests of the corporation and its
shareholders, and the Board discloses, in the next annual proxy statement
subsequent to such determination, the nature of the relationship and the reasons
for that determination.
ROLES AND RESPONSIBILITIES
A broad outline of the roles and responsibilities of the audit committee is
presented below.
Internal Control:
1. Evaluate whether senior management has established and
appropriately reinforced the importance of internal control within the
organization;
<PAGE> 32
2. Evaluate the scope, effectiveness and significant findings of the
self-audit process;
3. Review the internal auditor's report and significant findings for
the company's international operations; and
4. Evaluate whether recommendations for improved internal control are
effectively implemented by management.
Financial Reporting:
1. Annually review the significant risks the company is exposed to and
evaluate management's plan to manage these uncertainties;
2. Review and evaluate management's interpretation and implementation
of mandated changes to accounting and reporting requirements;
3. Review the annual financial statements for accuracy and
completeness;
4. Evaluate the accounting treatment of unusual or non-recurring
transactions such as restructuring charges and acquisitions;
5. Evaluate significant income statement and balance sheet items which
require management judgment; and
6. Review and approve the process for preparing interim, unaudited
(quarterly) financial statements.
Compliance With Laws, Regulations And Company Policies:
1. Review the effectiveness of the system for monitoring compliance
with laws and regulations; and
2. Ensure that the company's compliance manual, code of conduct and
corporate policy statements are kept up-to-date and are accessible to and
usable by the entire organization.
Relationship With External Auditor:
1. Recommend the external auditor appointment to the Board of
Directors;
2. Review and approve the scope of the external audit to be performed
each fiscal year;
3. Confirm the independence of the external auditor;
4. Ensure the receipt from the external auditor of a formal written
statement delineating all relationships between the auditor and the
corporation, consistent with Independence Standards Board Standard I, and
bear the responsibility for actively engaging in a dialogue with the
auditor with respect to any disclosed relationships or services that may
impact the objectivity and independence of the auditor; and for taking, or
recommending that the full board take, appropriate action to ensure the
independence of the external auditor;
5. Meet with the external auditor to review the accuracy, completeness
and overall quality of the annual financial statements; and
6. Confirm the external auditor's ultimate accountability to the Board
of Directors and the audit committee, as representatives of shareholders,
and these shareholder representatives' ultimate authority and
responsibility to select, evaluate, and, where appropriate, replace the
external auditor (or to nominate the external auditor to be proposed for
shareholder approval in any proxy statement).
REPORTING REQUIREMENTS
The audit committee Chairperson will update the full Board of Directors
regarding the significant items of discussion at each committee meeting.
Additional reports on matters of special interest will be submitted to
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<PAGE> 33
the Board of Directors as appropriate. In addition to Board of Directors
communication, the following information will be reported to the shareholders in
the annual proxy statement: (1) confirmation that the company has a formal,
documented audit committee charter, (2) confirmation that the audit committee
satisfied its obligations under the charter in the prior year, and (3) the full
text of the audit committee charter at least once every three years and after
any significant modification is approved by the Board of Directors.
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<PAGE> 34
APPENDIX B
MEDIA METRIX INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide eligible employees of
the Company and its Subsidiaries with a means to acquire shares of the Company's
Common Stock at a discount through payroll deductions. The Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Code and
the Plan will be interpreted and construed accordingly.
2. Definitions. Wherever used herein, the following terms have the
following meanings unless a different meaning is clearly required by the
context.
(a) "Account" shall mean the bookkeeping account established in the
name of each Participant to reflect the payroll deductions made on behalf
of the Participant.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the administrative committee appointed by
the Board to administer the Plan.
(e) "Common Stock" shall mean the common stock of the Company, $.01
par value per share.
(f) "Company" shall mean Media Metrix Inc., a Delaware corporation,
and any successor corporation.
(g) "Compensation" shall mean the base cash compensation paid by the
Company or a Subsidiary to a Participant which is required to be reported
as wages on the Participant's Form W-2, including such additional amounts
which are not includable in gross income by reason of Sections 125, 402(e)
or 402(h)(1)(B) of the Code, and excluding any bonuses, overtime pay,
expense allowances and other irregular payments (except commissions).
(h) "Employee" shall mean an individual who performs services for the
Company or a Subsidiary in a common law employer-employee relationship.
(i) "Enrollment Date" shall mean the first day of an Offering Period.
(j) "Exercise Date" shall mean the last business day of an Offering
Period.
(k) "Fair Market Value" shall mean the closing sale price per share of
the Common Stock as published by a national securities exchange on which
the Common Stock is traded on such date or, if there is no sale on such
date, on the next preceding date, or if the shares are not listed on a
national securities exchange on such date, the average of the bid and asked
prices in the over the counter market at the close of trading on such date.
(l) "Offering Period" shall mean the six-month period commencing July
1, 2000 or such later date as established by the Committee, and each
six-month period thereafter; provided, however, that the Committee shall
have the power to change the duration of Offering Periods and the
commencement dates thereof without stockholder approval if such change is
announced to Employees at least five days prior to the scheduled beginning
of the first Offering Period resulting from such change.
(m) "Participant" shall mean any Employee for whom an Account is
maintained under the Plan.
(n) "Plan" shall mean this Media Metrix Inc. 2000 Employee Stock
Purchase Plan, as amended from time to time.
(o) "Subsidiary" shall mean any "subsidiary" corporation within the
meaning of Section 424(f) of the Code that is designated by the Committee
as a Subsidiary from time to time.
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3. Stock subject to the Plan. Subject to the provisions of Section 11
hereof, the Company may issue and sell a total of 100,000 shares of its Common
Stock pursuant to the Plan. Such shares may be either authorized and unissued or
held by the Company in its treasury. The Committee may cause the Company to
purchase previously-issued and outstanding shares of Common Stock in order to
enable the Company to satisfy its obligations hereunder. The maximum number of
shares a Participant may purchase during any Offering Period shall not exceed
1,000 shares.
4. Administration. The Plan will be administered by a committee consisting
of at least two directors appointed by and serving at the pleasure of the Board.
Subject to the provisions of the Plan, the Committee, acting in its sole and
absolute discretion, will have full power and authority to interpret the
provisions of the Plan, to change the time covered by an Offering Period, to
supervise the administration of the Plan, and to take such other action as may
be necessary or desirable in order to carry out the provisions of the Plan. A
majority of the members of the Committee will constitute a quorum. The Committee
may act by the vote of a majority of its members present at a meeting at which
there is a quorum or by unanimous written consent. The decision of the
Committee, including questions of construction, interpretation and
administration, will be final, binding and conclusive on all persons. The
Committee will keep a record of its proceedings and acts and will keep or cause
to be kept such books and records as may be necessary in connection with the
proper administration of the Plan. The Company shall indemnify and hold harmless
each member of the Committee and any employee or director of the Company or of a
Subsidiary to whom any duty or power relating to the administration or
interpretation of the Plan is delegated from and against any loss, cost,
liability (including any sum paid in settlement of a claim with the approval of
the Board), damage and expense (including legal and other expenses incident
thereto) arising out of or incurred in connection with the Plan, unless and
except to the extent attributable to such person's fraud or wilful misconduct.
5. Eligibility and Enrollment. Each Employee employed by the Company or
any Subsidiary on January 13, 2000, the date of the Plan's adoption by the
Board, will be eligible to become a Participant in the Plan on the first
Enrollment Date. Each other Employee will be eligible to become a Participant in
the Plan on the Enrollment Date coincident with or next following the date he or
she completes six months of employment with the Company or a Subsidiary. An
eligible Employee will become a Participant for an Offering Period by completing
a Plan enrollment form authorizing payroll deductions and filing it with the
Company prior to the Offering Period. Payroll deductions for a Participant shall
commence with the first payroll and shall end with the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the Participant in accordance with the provisions hereof.
Notwithstanding any provisions of the Plan to the contrary, no Employee may be
granted the right to purchase Common Stock under the Plan if and to the extent
that:
(a) immediately after the grant, such Employee would directly or
indirectly own stock and/or hold outstanding options to purchase stock,
possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company (determined in accordance with Section
424(d) of the Code); or
(b) the Employee's right to purchase stock under all employee stock
purchase plans (within the meaning of Section 423 of the Code) of the
Company or a Subsidiary would accrue at a rate which exceeds $25,000 in
fair market value (determined at the time of grant) for each calendar year
in which such right is outstanding.
6. Payroll Deduction. At the time a Participant enrolls in the Plan, he or
she must elect the amount to be deducted from each paycheck during the Offering
Period(s) covered by the election; provided, however, that no more than 10% of a
Participant's Compensation may be withheld under the Plan on any pay date, and
provided further that the Committee, acting in its discretion and in a uniform
and nondiscriminatory manner, may establish a minimum required amount or
percentage of Compensation which must be withheld during an Offering Period. All
payroll deductions made for a Participant shall be credited to the Participant's
Account. Interest shall not accrue on any amounts credited to a Participant's
Account. The rate of a Participant's contribution, once established, shall
remain in effect for all subsequent Offering Periods unless changed by the
Participant in writing at such time and in such manner as the Committee may
prescribe.
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7. Purchase of Shares. On each Exercise Date, the amount credited to a
Participant's Account shall be used to purchase a number of shares of Common
Stock, the number of which will be determined by dividing the amount credited to
the Participant's Account by the purchase price per share. Any amount remaining
in the Participant's Account will be credited to the Participant's Account as of
the beginning of the next Offering Period. Subject to Section 11 hereof, the
purchase price per share will be equal to the lesser of 85% of the Fair Market
Value of a share of Common Stock on (i) the Exercise Date or (ii) the Enrollment
Date. If the total number of shares of Common Stock to be purchased as of an
Exercise Date, when aggregated with shares of Common Stock previously-purchased
for all Employees under the Plan, exceeds the number of shares then authorized
under the Plan, a pro-rata allocation of the available shares will be made among
the Participants based upon the amounts in their respective Accounts as of the
Exercise Date.
8. Discontinuance or Withdrawal; Withholding Changes
(a) Discontinuance or Withdrawal. At any time during an Offering Period, a
Participant may notify the Company that he or she wishes to discontinue
contributions under the Plan. This notice shall be in writing and shall become
effective as soon as practicable following its receipt by the Company. A
Participant may elect to withdraw all, but not less than all, of the amount of
his or her Account at any time during an Offering Period except on the Exercise
Date with respect to that Offering Period. If a withdrawal is made during an
Offering Period, no further contributions will be permitted during that Offering
Period by the withdrawing Participant.
(b) Withholding Changes. At any time during an Offering Period, a
Participant may increase or decrease the rate of his or her payroll deductions
by completing or filing with the Company a new enrollment form authorizing a
change in payroll deduction rate. The Committee may, in its discretion, limit
the number of payroll deduction rate changes during any Offering Period. The
change in rate shall be effective as soon as practicable following the Company's
receipt of the new enrollment form.
9. Termination of Employment. Any Participant whose employment with the
Company and its Subsidiaries is terminated for any reason before an Exercise
Date shall thereupon cease being a Participant. The total amount credited to the
Participant's Account during the Offering Period will be returned to the
Participant or, in the case of a deceased Participant, to the Participant's
beneficiary, as soon as practicable after the Participant's termination of
employment.
10. Rights as a Stockholder. No shares of Common Stock will be issued
under the Plan until full payment therefor has been made. A Participant will
have no rights as a stockholder with respect to any shares until the date a
stock certificate for such shares is issued to him or her. Except as otherwise
specifically provided herein, no adjustments shall be made for dividends or
distributions of other rights for which the record date is prior to the date
such stock certificate is issued.
11. Capital Changes; Reorganization; Sale.
(a) Adjustments Upon Changes in Capitalization. The number and class of
shares of Common Stock which may be issued under the Plan, as well as the number
and class of shares of Common Stock and the price per share covered by each
right outstanding under the Plan which has not yet been exercised, shall be
adjusted proportionately or as otherwise appropriate to reflect any increase or
decrease in the number of issued shares of Common Stock resulting from a
split-up or consolidation of shares or any like capital adjustment, or the
payment of a stock dividend, and/or to reflect a change in the character or
class of shares covered by the Plan arising from a readjustment or
recapitalization.
(b) Cash, Stock or Other Property for Stock. Except as otherwise provided
in this Section, in the event of an Exchange Transaction (as defined below),
each Participant will be permitted to purchase Common Stock with the balance of
his or her Account immediately prior to such Exchange Transaction, and any
amount credited to a Participant's Account which is not used to purchase Common
Stock before the Exchange Transaction will be distributed to the Participant.
Notwithstanding the preceding sentence, (i) if, as part of the Exchange
Transaction, the stockholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock
(whether or not such Exchange Stock is the sole consideration), and if the
Board, in its sole discretion, so directs, then the rights of
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<PAGE> 37
all Participants to purchase shares of Common Stock will be converted into
rights to purchase shares of Exchange Stock on an economically equivalent basis;
and (ii) the Board, acting in its discretion, may suspend operation of the Plan
as of any date that occurs after a contract is made which, if consummated, would
result in an Exchange Transaction and before the Exchange Transaction is
consummated.
(c) Definition of Exchange Transaction. For purposes hereof, the term
"Exchange Transaction" means a merger (other than a merger of the Company in
which the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation,
reorganization (other than a mere reincorporation or the creation of a holding
company), liquidation of the Company or any other similar transaction or event
so designated by the Board in its sole discretion, as a result of which the
stockholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock.
(d) Determination of Board to be Final. All adjustments under this Section
11 shall be made by the Board, and its determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding and conclusive.
12. Amendment and Termination. The Board may amend or terminate the Plan
at any time; provided, however, that, except as otherwise provided in Section 11
hereof, any amendment which would increase the aggregate number of shares of
Common Stock which may be issued under the Plan or otherwise require stockholder
approval under applicable law shall be subject to the approval of the Company's
stockholders.
13. Transferability. The rights of a Participant to purchase Common Stock
under the Plan are not assignable or transferable and may only be exercised
during the Participant's lifetime by the Participant. A Participant may file a
written designation of a beneficiary who is to receive the amount credited to
the Participant's Account in the event of the Participant's death during an
Offering Period. A Participant's beneficiary designation may be changed by the
Participant at any time by written notice. In the event of the death of a
Participant and in the absence of a validly designated beneficiary who is living
at the time of the Participant's death, the Participant's estate will be deemed
to be his or her designated beneficiary.
14. No Rights Conferred. Nothing contained in the Plan shall be deemed to
give any individual any right to be retained in the service or employ of the
Company and its Subsidiaries or to interfere with the right of the Company and
its Subsidiaries to discharge him or her at any time.
15. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
16. Legal Requirements. The Committee may impose such other conditions
with respect to the purchase of Common Stock hereunder, including, without
limitation, any conditions relating to the application of federal or state
securities laws and/or any exchange or listing requirements as it may deem
necessary or advisable.
17. Governing Law. The Plan and each option agreement shall be governed by
the laws of the State of Delaware without regard to its conflict of laws
provisions.
18. Decisions and Determinations. Any decision or determination made by
the Board pursuant to the provisions hereof and, except to the extent rights or
powers under the Plan are reserved specifically to the discretion of the Board,
all decisions and determinations of the Committee are final, binding and
conclusive.
19. Stockholder Approval. The Plan shall be effective upon its adoption by
the Board, subject to approval by the stockholders of the Company within twelve
months from the date of adoption by the Board.
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<PAGE> 38
APPENDIX C
MEDIA METRIX, INC.
2000 EQUITY INCENTIVE PLAN
1. Purpose. The purpose of the Media Metrix Inc. 2000 Equity Incentive
Plan is to establish a flexible vehicle through which Media Metrix Inc. can
offer equity-based compensation incentives to eligible recipients with a view
toward promoting the long-term financial success of Media Metrix Inc. and
enhancing stockholder value. Awards under the Plan may be in the form of one or
more of the following: (a) Options to purchase shares of Common Stock, including
Incentive Stock Options and Non-Qualified Stock Options, (b) Stock Appreciation
Rights, (c) Restricted Stock, (d) Performance-Based Awards, and (e) Other
Stock-Based Awards. In addition, Non-Employee Directors shall receive automatic
grants of Non-Qualified Stock Options under the Plan.
2. Definitions. For purposes of the Plan, the following terms shall have
the following meanings:
(a) "Affiliate" shall mean an affiliate within the meaning of Rule
12b-2 under the Exchange Act.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean, except as otherwise provided by the Committee
at the time of grant: (i) in a case where there is no employment or
consulting agreement between the recipient and the Company or its
Affiliates or where such an agreement exists but does not define "cause"
(or words of like import), a termination classified by the Company or its
Affiliates as a termination due to an individual's dishonesty, fraud,
insubordination, willful misconduct or refusal to perform services, or (ii)
in a case where there is an employment or consulting agreement between the
recipient and the Company or its Affiliates, a termination that is or would
be deemed for "cause" (or words of like import) under such agreement.
Notwithstanding the foregoing, in the case of a director of the Company,
Cause shall mean an act or failure to act that constitutes "cause" for
removal of a director under applicable Delaware law.
(d) "Change in Control" shall mean, except as otherwise determined by
the Committee at the time of grant: (i) a merger in which the Company is
not the surviving corporation or which results in the acquisition of all or
substantially all of the Company's outstanding shares of Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or (ii) the sale or other disposition of all or substantially all
of the Company's assets.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the administrative committee under the Plan
as duly constituted from time to time in accordance with Section 3 of the
Plan.
(g) "Common Stock" shall mean the Company's common stock, par value
$0.01.
(h) "Company" shall mean Media Metrix Inc., a Delaware corporation,
and its successors.
(i) "Disability" shall mean, except as otherwise provided by the
Committee at the time of grant, the inability of a participant to perform
the customary duties of his or her employment or other service for the
Company or its Affiliates by reason of a physical or mental incapacity
which is expected to result in death or be of indefinite duration.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Fair Market Value" shall mean, as of any date, the closing price
per share of Common Stock as published by the principal national securities
exchange on which the Common Stock is traded on such date or, if there is
no sale of Common Stock on such date, the average of the bid and asked
prices on such exchange at the close of trading on such date, or if shares
of the Common Stock are not listed on a national securities exchange on
such date, the closing price or, if none, the average of the bid and asked
prices in the over the counter market at the close of trading on such date,
of if the Common Stock is not
<PAGE> 39
traded on a national securities exchange or the over the counter market
value of a share of the Common Stock on such date as determined in good
faith by the Committee.
(l) "Incentive Stock Option" or "ISO" shall mean any Option that is
intended to be an "incentive stock option" within the meaning of Section
422 of the Code.
(m) "Non-Employee Director" shall mean any member of the Board who is
not employed by or a consultant to the Company of any of its Affiliates.
(n) "Non-Qualified Stock Option" or "NQSO" shall mean any Option that
is not an Incentive Stock Option.
(o) "Option" shall mean an option to purchase shares of Common Stock
awarded under the Plan.
(p) "Other Stock-Based Award" shall mean any stock-based award awarded
under the Plan.
(q) "Parent" shall mean any "parent corporation" of the Company within
the meaning of Section 424(e) of the Code.
(r) "Performance-Based Award" shall mean any performance-based award
awarded under the Plan.
(s) "Plan" shall mean this Media Metrix Inc. 2000 Equity Incentive
Plan, as amended from time to time.
(t) "Restricted Stock" shall mean any restricted share of Common Stock
awarded under the Plan.
(u) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(v) "Stock Appreciation Right" or "SAR" shall mean any stock
appreciation right awarded under the Plan.
(w) "Subsidiary" shall mean any "subsidiary corporation" of the
Company within the meaning of Section 424(f) of the Code.
(x) "Ten Percent Stockholder" shall mean a person owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or its Subsidiaries or Parents.
3. Administration.
(a) Committee. The Plan will be administered by Committee of two (2) or
more members by the Board. The members of the Committee will be appointed by,
and serve at the pleasure of, the Board. Unless the Board determines otherwise,
each member of the Committee will be a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange and an "outside director" within the
meaning of Section 162(m) of the Code. If for any reason the appointed Committee
does not comply with the requirements of Rule 16b-3 or Section 162(m) of the
Code, such non-compliance will not affect the validity of any awards, grants,
interpretations or other actions of the Committee. The Plan will be administered
by the Board with respect to discretionary grants made to Non-Employee
Directors. Notwithstanding anything herein to the contrary, the Board may, in
its sole discretion, at any time and from time to time, grant awards under the
Plan or administer the Plan. In such event, the Board shall have all of the
authority and responsibility granted to the Committee herein.
(b) Authority of Committee. Subject to the limitations of the Plan, the
Committee, acting in its sole and absolute discretion, will have full power and
authority to: (i) select the persons to whom awards will be granted under the
Plan, (ii) grant awards to such persons and prescribe the terms and conditions
of such awards (including, but not limited to, the exercise or purchase price
(if any), and any vesting or forfeiture conditions applicable to such awards),
(iii) interpret and apply the provisions of the Plan and of any agreement or
other document evidencing an award made under the Plan, (iv) carry out any
responsibility or duty specifically reserved to the Committee under the Plan,
and (v) make any and all determinations and interpretations and take such other
actions as may be necessary or desirable in order to carry out the
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provisions, intent and purposes of the Plan. A majority of the members of the
Committee will constitute a quorum. The Committee may act by the vote of a
majority of its members present at a meeting at which there is a quorum or by
unanimous written consent. The decisions of the Committee, including with regard
to questions of construction, interpretation and administration, will be final,
binding and conclusive on all persons.
(c) Indemnification. The Company will indemnify and hold harmless each
member of the Committee and the Board and any employee of the Company or its
Affiliates who provides assistance with the administration of the Plan from and
against any loss, cost, liability (including any sum paid in settlement of a
claim with the approval of the Board), damage and expense (including legal and
other expenses incident thereto) arising out of or incurred in connection with
the Plan, unless and except to the extent attributable to such person's fraud or
wilful misconduct.
4. Eligibility. Awards may be granted under the Plan to any member of the
Board (whether or not an employee of the Company or its Affiliates), to any
officer or other employee of the Company or its Affiliates and to any consultant
or other independent contractor who performs or will perform services for the
Company or its Affiliates. In addition, Non-Employee Directors shall receive
automatic grants of Non-Qualified Options under the Plan.
5. Available Shares.
(a) Aggregate Number of Shares. Subject to adjustment as provided in
Section 14, the maximum number of shares of Common Stock that may be issued, or
used for reference purposes, under the Plan shall not exceed 2,000,000 shares.
Notwithstanding the foregoing, the maximum number of shares that may be issued,
or used for reference purposes, under the Plan will automatically increase on
the first trading day of each calendar year, beginning with the 2001 calendar
year, by an amount equal to the lesser of (i) four percent (4%) of the total
number of shares of Common Stock outstanding on the last trading day of the
immediately preceding calendar year or (ii) 1,000,000 shares (as adjusted
pursuant to Section 14), provided that in no event shall such maximum number of
shares exceed 6,000,000 shares (as adjusted pursuant to Section 14) during the
term of the Plan. In determining the number of shares that remain available for
issuance or reference purposes under the Plan at any time, the following shares
will be deemed not to have been issued, or used for reference purposes, under
the Plan: (i) shares underlying an Option or Stock Appreciation Right that
terminates, expires or is canceled without having been exercised in full, (ii)
shares of Restricted Stock and shares covered by a Performance-Based Award or
Other Stock-Based Award that are forfeited in accordance with the terms of the
applicable award, and (iii) shares that are withheld in order to pay the
exercise price of Options or to satisfy the minimum tax withholding obligations
associated with Options or other awards. The number of shares of Common Stock
issued in connection with the exercise of an Option will be determined net of
any previously-owned shares tendered by the holder of the Option in payment of
the exercise price or of any applicable withholding taxes. Any shares of Common
Stock that are issued by the Company, and any awards that are granted through
the assumption of, or in substitution for, outstanding awards previously granted
by an acquired entity shall not be counted against the shares of Common Stock
available for issuance or reference purposes under the Plan. Shares of Common
Stock available for issuance under the Plan may be either authorized and
unissued or held by the Company in its treasury. No fractional shares of Common
Stock may be issued under the Plan.
(b) Employee Award Limitations. The maximum number of shares of Common
Stock with respect to which Options or SARs may be granted under the Plan to any
employee in any calendar year shall be 1,000,000. The aggregate maximum number
of shares of Common Stock subject to awards, other than Options or SARs, that
may be granted under the Plan to any employee in any calendar year shall be
1,000,000. Subject to these limitations, each person eligible to participate in
the Plan will be eligible in any year to receive awards covering up to the full
number of shares of Common Stock then available for awards under the Plan. No
more than $1,000,000 may be paid to any employee with respect to any cash
Performance-Based Award covered by Section 9. In applying this limitation,
multiple Performance-Based Awards to the same employee will be subject to a
single $1,000,000 limit if they are either (i) determined by reference to
performance
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<PAGE> 41
periods of one year or less ending with or within the same fiscal year of the
Company, or (ii) determined by reference to one or more multi-year performance
periods ending in the same fiscal year of the Company.
6. Stock Options.
(a) ISOs and NQSOs. Subject to the provisions hereof, the Committee may
grant ISOs and NQSOs to eligible personnel to purchase shares of Common Stock
upon such terms and conditions as the Committee deems appropriate, provided that
the Committee may only grant ISOs to employees of the Company or its
Subsidiaries or Parents.
(b) Option Term. Unless sooner terminated, all Options granted pursuant to
this Section 6 will expire ten (10) years after the date the Option is granted
(or, in the case of an ISO granted to a Ten Percent Stockholder, five (5)
years).
(c) Exercise Price. The exercise price per share of Common Stock covered
by an Option granted pursuant to this Section 6 will be determined by the
Committee when the Option is granted. The exercise price per share of Common
Stock covered by a NQSO must be at least equal to 85% of the Fair Market Value
of the Common Stock on the date the Option is granted, provided that the
exercise price per share of Common Stock covered by a NQSO which is intended to
qualify for the "performance-based compensation" exception under Section
162(m)(4)(C) of the Code may not be less than the Fair Market Value of the
Common Stock on the date the Option is granted. The exercise price per share of
Common Stock covered by an ISO may not be less than 100% of the Fair Market
Value of the Common Stock on the date the ISO is granted (or, in the case of Ten
Percent Stockholder, 110% of the Fair Market Value of the Common Stock on the
date the ISO is granted).
(d) Vesting Conditions. The Committee may establish such vesting and other
restrictions on the exercise of an Option and/or upon the disposition of the
shares of Common Stock acquired upon the exercise of an Option as it deems
appropriate. If the Committee provides, in its discretion, that any Option is
exercisable upon the attainment of certain vesting conditions (including,
without limitation, that it is exercisable only in installments based upon the
attainment of specified time and/or performance criteria), the Committee may
waive or accelerate such conditions on the exercisability at any time after
grant in whole or in part.
(e) Exercise of Options. An Option may be exercised by transmitting to the
Company: (i) a notice specifying the number of shares to be purchased, and (ii)
payment of the exercise price, together with the amount, if any, deemed
necessary by the Committee to enable the Company to satisfy its minimum federal,
foreign or other tax withholding obligations with respect to such exercise
(unless other arrangements acceptable to the Committee are made with respect to
the satisfaction of such withholding obligations). The Committee may establish
such rules and procedures as it deems appropriate for the exercise of Options.
The exercise price of shares of Common Stock acquired pursuant to the exercise
of an Option may be paid in cash and/or such other form of payment as may be
permitted by the Committee from time to time, including, without limitation,
shares of Common Stock which have been owned by the holder for at least six (6)
months (free and clear of any liens and encumbrances), installment payments
pursuant to promissory note or in accordance with a "cashless exercise"
procedure established by the Committee.
(f) Rights as a Stockholder. No shares of Common Stock will be issued in
respect of the exercise of an Option until full payment therefor has been made
(and/or provided for where all or a portion of the exercise price is being paid
in installments), and the applicable income tax withholding obligation has been
satisfied or provided for. The holder of an Option will have no rights as a
stockholder with respect to any shares covered by an Option until the date a
stock certificate for such shares is issued to him or her. Except as otherwise
provided herein, no adjustments shall be made for dividend distributions or
other rights for which the record date is prior to the date such stock
certificate is issued.
(g) Other Provisions. The Committee may impose such other conditions with
respect to the exercise of Options, including, without limitation, any
conditions relating to the application of federal or state securities laws or
exchange requirements, as it may deem necessary or advisable.
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7. Stock Appreciation Rights.
(a) General. Subject to the provisions hereof, the Committee may award
SARs to eligible personnel upon such terms and conditions as it deems
appropriate. A SAR is an award entitling the holder, upon exercise, to receive
an amount, in cash or shares of Common Stock or a combination thereof, as
determined by the Committee in its sole discretion, determined with reference to
the appreciation, if any, in the Fair Market Value of Common Stock during the
period beginning on the date the SAR is granted and ending on the date the SAR
is exercised.
(b) Types of SARs. SARs may be awarded under the Plan in conjunction with
an Option ("Tandem SARs") or independent of Options. Tandem SARs awarded in
conjunction with a NQSO may be awarded either at or after the time the NQSO is
granted. Tandem SARs awarded in conjunction with an ISO may only be awarded at
the time the ISO is granted.
(c) Exercisability of SARs. Except as otherwise provided herein, a Tandem
SAR will be exercisable only at the same time and to the same extent and subject
to the same conditions as the related Option is exercisable. The exercise of a
Tandem SAR will cancel the related Option to the extent of the shares of Common
Stock with respect to which the SAR is exercised, and vice versa. Tandem SARs
may be exercised only when the Fair Market Value of the Common Stock to which it
relates exceeds the exercise price. The Committee may impose such additional
service or performance-based vesting conditions upon the exercise of a SAR as it
deems appropriate.
(d) Exercise of SARs. A SAR may be exercised by giving written notice to
the Company identifying the SAR that is being exercised, specifying the number
of shares covered by the exercise and containing such other information or
statements as the Committee may require. The Committee may establish such rules
and procedures as it deems appropriate for the exercise of SARs under the Plan.
Upon the exercise of a SAR, the holder will be entitled to receive an amount (in
cash and/or shares of Common Stock as determined by the Committee) equal to the
product of (i) the number of shares with respect to which the SAR is being
exercised and (ii) the difference between the Fair Market Value of a share of
Common Stock on the date the SAR is exercised and the exercise price per share
of the SAR. As a condition of exercise, the holder must pay to the Company or
make arrangements satisfactory to the Company for the payment of applicable
withholding taxes.
(e) Deferral of Payment. The Committee may at any time and from time to
time provide for the deferral of delivery of any shares and/or cash for which an
SAR may be exercisable until such date or dates and upon such other terms and
conditions as the Committee may determine.
8. Restricted Stock.
(a) General. Subject to the provisions of the Plan, the Committee may
award shares of Restricted Stock to eligible personnel upon such terms and
subject to such forfeiture and other conditions as the Committee deems
appropriate. The terms and conditions of any Restricted Stock award will be
evidenced by a written agreement or other instrument approved for this purpose
by the Committee.
(b) Stock Certificates for Restricted Stock. Unless the Committee elects
to use a different method (such as, for example, the issuance and delivery of
stock certificates) shares of Restricted Stock will be evidenced by book entries
on the Company's stock transfer records pending the expiration of restrictions
thereon. If a stock certificate for Restricted Stock is issued in the name of
the grantee, it will bear an appropriate legend to reflect the nature of the
restrictions applicable to the shares represented by the certificate, and the
Committee may require that such stock certificates be held in custody by the
Company until the restrictions on such shares have lapsed. The Committee may
establish such other conditions as it deems appropriate in connection with the
issuance of stock certificates for shares of Restricted Stock, including,
without limitation, a requirement that the grantee deliver a duly signed stock
power, endorsed in blank, for the shares covered by the award.
(c) Purchase Price. The purchase price payable for shares of Restricted
Stock will be determined by the Committee. To the extent permitted by applicable
law, the purchase price may be as low as zero and, to
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<PAGE> 43
the extent required by the applicable law, the purchase price will be no less
than the par value of the shares covered by the award.
(d) Restrictions and Vesting. The Committee will establish such conditions
as it deems appropriate on the grant or vesting of Restricted Stock. Such
conditions may be based upon continued service, the attainment of performance
goals (which, in the case of grants of Restricted Stock intended to qualify for
the performance-based compensation exception under Section 162(m)(4)(C) of the
Code, satisfy the requirements of Section 9 below) and/or such other relevant
factors or criteria designated by the Committee. The holder of Restricted Stock
will not be permitted to transfer shares before the time the applicable vesting
conditions are satisfied.
(e) Rights as a Stockholder. Except as provided herein and as otherwise
determined by the Committee, the recipient of Restricted Stock shall have, with
respect to his or her Restricted Stock, all of the rights of a holder of shares
of Common Stock, including, without limitation, the right to receive any
dividends, the right to vote such shares and, subject to satisfaction of the
applicable vesting conditions, the right to tender such shares. The Committee
may, in its sole discretion, determine at the time of grant that the payment of
dividends will be deferred until, and conditioned upon, the satisfaction of the
applicable vesting conditions.
(f) Lapse of Restrictions. If and when the vesting conditions are
satisfied with respect to a Restricted Stock award, a certificate for the shares
covered by the award, to the extent vested, will be delivered to the grantee.
All legends shall be removed from said certificates at the time of delivery
except as otherwise required by applicable law.
9. Performance-Based Awards.
(a) General. Subject to the provisions of the Plan, the Committee may
award Performance-Based Awards to eligible personnel upon, or subject to, the
attainment of such performance goals and such terms and conditions as the
Committee deems appropriate. The Committee may condition the exercise, vesting
or settlement of a Performance-Based Award on the achievement of specified
performance goals. The provisions of this Section 9 will apply in the case of a
Performance-Based Award.
(b) Objective Performance Goals. A performance goal established in
connection with a Performance-Based Award that is intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code must be (1) objective, so that a third party having knowledge of the
relevant facts could determine whether the goal is attained, (2) prescribed in
writing by the Committee before the beginning of the applicable performance
period or at such later date (when fulfillment is substantially uncertain) as
may be permitted under Section 162(m) of the Code, and (3) based on one or more
of the following business criteria:
(i) the attainment of certain target levels of, or a specified
percentage increase in, revenues, income before income taxes and
extraordinary items, net income, earnings before income tax, earnings
before interest, taxes, depreciation and amortization or a combination of
any or all of the foregoing;
(ii) the attainment of certain target levels of, or a percentage
increase in, after-tax or pre-tax profits;
(iii) the attainment of certain target levels of, or a specified
increase in, operational cash flow;
(iv) the attainment of a certain level of, reduction of, or other
specified objectives with regard to limiting the level of increase in, all
or a portion of, the Company's bank debt or other long-term or short-term
public or private debt or other similar financial obligations of the
Company, which may be calculated net of such cash balances and/or other
offsets and adjustments as may be established by the Committee;
(v) the attainment of a specified percentage increase in earnings per
share or earnings per share from continuing operations;
(vi) the attainment of certain target levels of, or a specified
increase in return on capital employed or return on invested capital;
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<PAGE> 44
(vii) the attainment of certain target levels of, or a percentage
increase in, after-tax return on stockholders' equity;
(viii) the attainment of certain target levels of, or a specified
increase in, economic value added targets based on a cash flow return on
investment formula;
(ix) the attainment of certain target levels in the Fair Market Value
of the Common Stock; and/or
(x) growth in the value of an investment in Common Stock assuming the
reinvestment of dividends.
If and to the extent permitted under Section 162(m) of the Code, such
performance goals may be determined without regard to (or adjusted for) changes
in accounting methods, corporate transactions (including, without limitation,
dispositions and acquisitions), extraordinary items, non-recurring items and
other similar events or circumstances occurring during the applicable
performance period.
(c) Calculation. At the expiration of the applicable performance period,
the Committee will determine the extent to which the performance goals
established pursuant to this Section 9 are attained and the percentage of each
Performance-Based Award that has been earned. The Committee may reduce the
amount that would otherwise be payable pursuant to a Performance-Based Award,
but may not exercise its discretion to increase such amount.
(d) Payment. Following the Committee's determination in accordance with
Section 9(c), the Committee, in its sole discretion, may pay earned
Performance-Based Awards in the form of cash or in shares of Common Stock (or in
a combination thereof) which have an aggregate Fair Market Value equal to the
value of the earned Performance-Based Awards at the close of the applicable
performance period. Unless otherwise determined by the Committee, payment of
earned Performance-Based Awards shall be made in a single lump sum following the
close of the applicable performance period. Any such shares may be granted
subject to any restrictions deemed appropriate by the Committee. At the
discretion of the Committee, participants may be entitled to receive any
dividends declared with respect to shares which have been earned in connection
with grants of Performance-Based Awards which have been earned, but not yet
distributed to participants.
10. Other Stock-Based Awards.
(a) General. Other awards of Common Stock and awards that are valued in
whole or in part by reference to, or are payable in or otherwise based on,
Common Stock ("Other Stock-Based Awards") may be granted either alone or in
addition to or in tandem with Options, Stock Appreciation Rights, Restricted
Stock and Performance Based-Awards. Subject to the provisions of the Plan, the
Committee shall, in its sole discretion, determine the eligible personnel to
whom and the time or times at which such awards shall be made, the number of
shares of Common Stock to be awarded pursuant to such awards, the ability of
participants to defer the receipt of Common Stock pursuant to such awards and
all other conditions of the awards. The Committee may also provide for the grant
of Common Stock under such awards upon the completion of a specified performance
period.
(b) Terms and Conditions. Other Stock-Based Awards made pursuant to this
Section 10 shall be subject to the following terms and conditions:
(i) Unless otherwise determined by the Committee at the time of grant,
subject to the provisions of the award agreement and the Plan, the
recipient of an award under this Section 10 shall be entitled to receive,
currently or on a deferred basis, dividends or dividend equivalents with
respect to the number of shares of Common Stock covered by the award.
(ii) Any award under this Section 10 and any Common Stock covered by
any such award shall vest or be forfeited to the extent so provided in the
award agreement, as determined by the Committee, in its sole discretion.
The Committee may, in its sole discretion, waive in whole or in part any or
all of the limitations imposed hereunder (if any) with respect to any or
all of an award under this Section 10.
(iii) Common Stock issued on a bonus basis under this Section 10 may
be issued for no cash consideration. Common Stock purchased pursuant to a
purchase right awarded under this Section 10 shall be priced as determined
by the Committee. The purchase price of shares of Common Stock may be
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<PAGE> 45
zero to the extent permitted by applicable law, and, to the extent not so
permitted, such purchase price may not be less than par value.
11. Non-Employee Director Stock Options.
(a) Automatic Grants. Without further action by the Board or the
stockholders of the Company, (i) each director who is a Non-Employee Director on
January 1, 2000 shall be granted an Option to purchase 20,000 shares of Common
Stock on the first trading day following the 2000 Annual Meeting of
Stockholders, (ii) each director who first becomes a Non-Employee Director on or
after the date of the 2000 Annual Meeting of Stockholders shall be granted an
Option to purchase 15,000 shares of Common Stock on the first trading day
following the date he or she commences service as a Non-Employee Director and
(iii) each Non-Employee Director shall be granted an Option to purchase 15,000
shares of Common Stock on the first trading day following each Annual Meeting of
Stockholders at which such director is re-elected to the Board, provided that
such Non-Employee Director did not receive an Option pursuant to Section
11(a)(ii) during the one hundred eighty (180) day period ending on such Annual
Meeting of Stockholders.
(b) Exercise Price. The exercise price per share covered by an Option
granted pursuant to this Section 11 shall be equal to the Fair Market Value of
the Common Stock on the date of grant.
(c) Vesting Conditions. Each Option granted pursuant to this Section 11
will be immediately exercisable with respect to twenty-five percent (25%) of the
shares covered thereby and will become exercisable with respect to an additional
2.083% of the shares covered thereby on the last day of each month for the first
thirty-six (36) months commencing on or after the date of grant, provided that
the optionee remains in continuous service as a director of the Company through
each applicable vesting date.
(d) Effect of Termination of Service. If a director's service on the Board
is terminated due to his or her death or Disability, then: (i) any Option
granted pursuant to this Section 11 that is not exercisable on the date of
termination shall immediately terminate, and (ii) any Option granted pursuant to
this Section 11 that is exercisable on the date of termination shall remain
exercisable, to the extent exercisable on the date of termination, by the
director (or his or her beneficiary) during the one year period following the
date of termination or, if sooner, until the expiration of the stated term
thereof, and, to the extent not exercised during such period, shall thereupon
terminate. If a director's service on the Board is terminated by the Company for
Cause or if, at the time of his or her termination, grounds for a termination
for Cause exist, then any Option granted pursuant to this Section 11 (whether or
not then exercisable) shall immediately terminate and cease to be exercisable.
If a director's service on the Board for any reason, other than death,
Disability or Cause or at a time when Cause exists) or no reason, then: (1) any
Option granted pursuant to this Section 11 that is not exercisable on the date
of termination shall immediately terminate, and (2) any Option granted pursuant
to this Section 11 that is exercisable on the date of termination shall remain
exercisable, to the extent exercisable on the date of termination, during the
one hundred eighty (180) day period following the date of termination or, if
sooner, until the expiration of its stated term and, to the extent not exercised
during such period, shall thereupon terminate.
(e) Capital Transactions; Change in Control. The provisions of Section 14
shall apply to Options granted pursuant to this Section 11.
(f) Expiration. Except as otherwise provided herein, if not previously
exercised, each Option granted pursuant to this Section 11 will expire on the
tenth anniversary of the date of grant.
12. Non-Transferability of Awards. No Options, SARs, Performance-Based
Awards or Other Stock-Based Awards shall be transferable by the recipient other
than upon the recipient's death to a beneficiary designated by the recipient,
or, if no designated beneficiary shall survive the recipient, pursuant to the
recipient's will or by the laws of descent and distribution. All Options and
SARs shall be exercisable during the recipient's lifetime only by the recipient.
Tandem SARs shall be transferable, to the extent permitted above, only with the
underlying Option. Shares of Restricted Stock may not be transferred prior to
the date on which shares are issued, or, if later, the date on which such shares
have vested and are free of any applicable restriction imposed thereon. Except
as otherwise specifically provided by law or the provisions hereof, no award
received under the Plan may be transferred in any manner, and any attempt to
transfer any such award
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<PAGE> 46
shall be void, and no such award shall in any manner be liable for or subject to
the debts, contracts, liabilities, engagements or torts of any person who shall
be entitled to such award, nor shall it be subject to attachment or legal
process for or against such person. Notwithstanding the foregoing, the Committee
may determine at the time of grant or thereafter that a NQSO is transferable in
whole or part to such persons, under such circumstances, and subject to such
conditions as the Committee may prescribe.
13. Effect of Termination of Employment or Service. Except as otherwise
provided herein or determined by the Committee at grant or, if no rights of the
participant are thereby reduced, thereafter, and subject to earlier termination
in accordance with the provisions hereof, the following rules shall apply with
regard to awards (other than Options granted pursuant to Section 11) held by a
participant at the time of his or her termination of employment or other service
with the Company and its Affiliates:
(a) Rules Applicable to Stock Options and SARs.
(i) Termination due to Death. If a participant's employment or
service terminates due to his or her death, then: (A) any Option or SAR
held by the participant that is not exercisable on the date of termination
shall immediately terminate, and (B) any Option or SAR that is exercisable
on the date of termination shall remain exercisable, to the extent
exercisable on the date of termination, by the deceased participant's
beneficiary during the one year period following the date of termination
or, if sooner, until the expiration of the stated term thereof, and, to the
extent not exercised during such period, shall thereupon terminate.
(ii) Termination due to Disability. If a participant's employment or
service terminates due to his or her Disability, then: (A) any Option or
SAR held by the participant that is not exercisable on the date of
termination shall immediately terminate, and (B) any Option or SAR held by
the participant that is exercisable on the date of termination shall remain
exercisable, to the extent exercisable on the date of termination, during
the one hundred eighty (180) day period following the date of termination
or, if sooner, until the expiration of its stated term and, to the extent
not exercised during such period, shall thereupon terminate.
(iii) Termination for Cause. If a participant's employment or service
is terminated by the Company or an affiliate for Cause or if, at the time
of his or her termination, grounds for a termination for Cause exist, then
any Option or SAR held by the participant (whether or not then exercisable)
shall immediately terminate and cease to be exercisable.
(iv) Other Termination. If a participant's employment or service
terminates for any reason(other than death, Disability or Cause or at a
time when Cause exists) or no reason, then: (A) any Option or SAR held by
the participant that is not exercisable on the date of termination shall
immediately terminate, and (B) any Option or SAR held by the participant
that is exercisable on the date of termination shall remain exercisable, to
the extent exercisable on the date of termination, during the ninety (90)
day period following the date of termination or, if sooner, until the
expiration of its stated term and, to the extent not exercised during such
period, shall thereupon terminate.
(b) Rules Applicable to Restricted Stock. Upon the termination of a
participant's employment or service for any reason (including death or
Disability) or no reason, Restricted Stock which has not yet become fully vested
will, unless otherwise determined by the Committee, automatically be forfeited
by the participant (or the participant's successors) and any certificate
therefor or book entry with respect thereto or other evidence thereof will be
canceled.
(c) Rules Applicable to Performance-Based Awards. Upon termination of a
participant's employment or service for any reason (including death or
Disability) or no reason, then the participant's outstanding Performance-Based
Awards will, unless otherwise determined by the Committee, thereupon expire and
the participant (or his or her beneficiary, as the case may be) will not be
entitled to receive any amount in respect of the performance period within which
the participant's employment or service is terminated.
(d) Rules Applicable to Other Stock-Based Awards. Upon the termination of
a participant's employment or service for any reason (including death or
Disability) or no reason, Other Stock-Based Awards which
9
<PAGE> 47
have not yet become fully vested will, unless otherwise determined by the
Committee, automatically be forfeited by the participant (or the participant's
successors) and any certificate therefor or book entry with respect thereto or
other evidence thereof will be canceled.
14. Capital Changes; Change in Control.
(a) Adjustments upon Changes in Capitalization. If any change is made to
the Common Stock by reason of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the Company's
receipt of consideration, appropriate adjustments shall be made to: (i) the
maximum number and/or class of securities issuable and available for reference
purposes under the Plan, (ii) the number and/or class of securities with respect
to which any one employee may be granted awards under the Plan per calendar
year, (iii) the number and/or class of securities for which automatic grants are
made to Non-Employee Directors pursuant to Section 11 of the Plan, and (iv) the
number and/or class of securities and, if applicable, the exercise price per
share in effect under each outstanding award under the Plan. Such adjustments to
the outstanding awards are to be effected in a manner which shall preclude the
enlargement or dilution of rights and benefits under such awards.
(b) Change in Control. Unless the Committee determines otherwise at the
time of grant, each Option and SAR outstanding at the time of a Change in
Control that is not otherwise fully exercisable shall automatically accelerate
so that each such Option and SAR shall, immediately prior to the effective date
of the Change in Control, become fully exercisable, provided that no
acceleration of exercisability shall occur with respect to an outstanding Option
or SAR if and to the extent such Option or SAR is, in connection with the Change
in Control, to be assumed or otherwise continued in full force or effect by the
successor corporation (or parent thereof) pursuant to the terms of the Change in
Control transaction. Unless the Committee determines otherwise at the time of
grant, upon the consummation of the Change in Control, all outstanding Options
and SARs shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) or otherwise expressly
continued in full force and effect pursuant to the terms of the Change in
Control transaction. Each Option and SAR which is assumed (or is otherwise to
continue in effect) in connection with a Change in Control shall be
appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable or, in the
case of a SAR, payable (if settled in shares) to the participant upon
consummation of such Change in Control had the Option or SAR been exercised
immediately prior to such Change in Control, provided the aggregate exercise
price of an Option payable for such securities shall remain the same. Unless the
Committee determines otherwise at the time of grant, the restrictions to which
any shares of Restricted Stock, Performance-Based Awards and Other Stock-Based
Awards granted prior to a Change in Control are subject shall lapse as if the
applicable restriction period had ended upon the Change in Control. If, in
connection with a Change in Control, new, additional or different shares or
securities ("New Securities") are issued in exchange for Restricted Stock,
non-cash Performance-Based Awards or Other Stock-Based Awards, such New
Securities shall, unless the Committee determines otherwise at the time of
grant, be subject to all of the conditions and restrictions applicable to the
awards with respect to which such New Securities were exchanged.
(c) Fractional Shares. In the event of any adjustment in the number of
shares covered by any award pursuant to the provisions hereof, any fractional
shares resulting from such adjustment will be settled in cash, and each such
award will cover only the number of full shares resulting from the adjustment.
(d) Determination of Board to be Final. All adjustments under this Section
14 shall be made by the Board, and its determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding and conclusive.
15. Tax Withholding. As a condition to the exercise of any award or the
delivery of any shares of Common Stock pursuant to any award or the lapse of
restrictions on any award, or in connection with any other event that gives rise
to a federal or other governmental tax withholding obligation on the part of the
Company or its subsidiaries relating to an award: (a) the Company may deduct or
withhold (or cause to be deducted or withheld) from any payment or distribution
to a grantee whether or not pursuant to the Plan, and
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<PAGE> 48
(b) the Company shall be entitled to require that the grantee remit cash to the
Company (through payroll deduction or otherwise), in each case in an amount
sufficient in the opinion of the Company to satisfy such withholding obligation.
If the event giving rise to the withholding obligation involves a transfer of
shares of Common Stock, then, unless the applicable award agreement provides
otherwise, at the discretion of the Committee, the grantee may satisfy the
withholding obligation described under this Section 15 by electing to have the
Company withhold shares of Common Stock (which withholding will be at a rate not
in excess of the statutory minimum rate) or by tendering previously-owned shares
of Common Stock, in each case having a Fair Market Value equal to the amount of
tax to be withheld (or by any other mechanism as may be required or appropriate
to conform with local tax and other rules).
16. Amendment and Termination. The Board may amend or terminate the Plan
at any time, provided that no such action may adversely affect the rights of the
holder of any outstanding award without his or her consent. Except as otherwise
provided in Section 14, any amendment which would increase the aggregate number
of shares of Common Stock which may be issued or used for reference purposes
under the Plan or with respect to which awards may be granted to any employee
during any calendar year or modify the class of employees eligible to receive
Options under the Plan shall, to the extent required by applicable law, be
subject to the approval of the Company's stockholders. The Committee may amend
the terms of any agreement or certificate made or issued hereunder at any time
and from time to time provided that any amendment which would adversely affect
the rights of the holder may not be made without his or her consent.
17. Term of the Plan. The Plan shall be effective on the date of its
adoption by the Board, subject to the approval of the stockholders of the
Company within one year from the date of adoption by the Board. The Plan will
terminate on the tenth anniversary of the date of its adoption by the Board,
unless sooner terminated by the Board. The rights of any person with respect to
an award made under the Plan that is outstanding at the time of the termination
of the Plan shall not be affected solely by reason of the termination of the
Plan and shall continue in accordance with the terms of the award (as then in
effect or thereafter amended) and the Plan.
18. Miscellaneous.
(a) Documentation of Awards. Each award made under the Plan will be
evidenced by a written agreement or other written instrument the terms of which
will be established by the Committee. To the extent not inconsistent with the
provisions of the Plan, the written agreement or other instrument evidencing an
award will govern the rights and obligations of the participant (and any person
claiming through the participant) with respect to the award.
(b) No Rights Conferred. Nothing contained herein will be deemed to give
any individual any right to receive an award under the Plan or to be retained in
the employ or service of the Company or its Affiliates.
(c) Governing Law. The Plan shall be governed by the laws of the State of
Delaware, without regard to its principles of conflicts of law.
(d) Decisions and Determinations. All decisions or determinations made by
the Board pursuant to the provisions hereof and, except to the extent rights or
powers under the Plan are reserved specifically to the discretion of the Board,
all decisions and determinations of the Committee are final, binding and
conclusive.
(e) Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
(f) Requirements of Law. The grant of awards and issuance of shares under
the Plan shall be subject to compliance with all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as the Committee deems necessary or desirable.
(g) Listing and Other Conditions. As long as the Common Stock is listed on
a national securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to an award shall
be conditioned upon such shares being listed on such exchange or system. If at
any time counsel to the Company shall be of the opinion that any sale or
delivery of shares of Common Stock
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<PAGE> 49
pursuant to an award is or may in the circumstances be unlawful or result in the
imposition of excise taxes on the Company under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no obligation
to make such sale or delivery, or to make any application or to effect or to
maintain any qualification or registration under the Securities Act or otherwise
with respect to shares of Common Stock or awards, and the right to exercise any
Option shall be suspended until, in the opinion of said counsel, such sale or
delivery shall be lawful or will not result in the imposition of excise taxes on
the Company.
(h) Beneficiary Designation. Each Participant under the Plan may, from
time to time, designate any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective
only when filed by the Participant in writing with the Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
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<PAGE> 50
COMMON STOCK
MEDIA METRIX, INC.
PROXY SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON TUESDAY, MAY 23, 2000
The undersigned hereby appoints Tod Johnson and Thomas A. Lynch, or either
of them, each with full power of substitution, as proxies, to vote all shares of
the Common Stock of Media Metrix, Inc. which the undersigned may be entitled to
vote at the Annual Meeting of Stockholders to be held at The Ney Center at the
offices of Young & Rubicam, 285 Madison Avenue, New York, New York on Tuesday,
May 23, 2000 at 10:00 A.M., local time, and at any adjournments thereof.
ALL SHARES OF COMMON STOCK WILL BE VOTED ON THE PROPOSALS SET FORTH IN THE
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT AS SPECIFIED ON THIS CARD. SAID
PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION AS TO THESE PROPOSALS AND ANY
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THIS MEETING, IF NO DIRECTION IS
SPECIFIED, SAID PROXIES WILL VOTE IN FAVOR OF PROPOSALS 1, 2 AND 3.
Proposal No. 1: Election of Class I Directors--Nominees are: James Mortensen,
Randy Pausch
[ ] FOR [ ] WITHHELD
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
Proposal No. 2 Approval of the adoption of the Media Metrix 2000 Employee Stock
Purchase Plan
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
Proposal No. 3 Approval of the adoption of the Media Metrix 2000 Equity
Incentive Plan
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(continued and to be signed on reverse)
<PAGE> 51
PLEASE MARK, SIGN BELOW, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
DATE
-------------------------------------
-------------------------------------
SIGNATURE
-------------------------------------
SIGNATURE (IF JOINTLY HELD)
THE ABOVE-SIGNED ACKNOWLEDGES RECEIPT OF THE
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND
THE PROXY STATEMENT FURNISHED THEREWITH.
