<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended.
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DOUBLECLICK INC.
------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(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>
DOUBLECLICK INC.
41 Madison Avenue, 32nd Floor
New York, NY 10010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 1999
The Annual Meeting of Stockholders (the "Annual Meeting") of DoubleClick
Inc., a Delaware corporation (the "Company"), will be held at 80 Fifth Avenue,
17th Floor, New York, New York 10011 on May 24, 1999 at 9:00 a.m. (New York
time) for the following purposes, as more fully described in the Proxy Statement
accompanying this notice:
(1) To elect two Directors to serve until the 2002 Annual Meeting of
Stockholders or until their respective successors shall have been
duly elected and qualified;
(2) To approve an amendment to the Company's 1997 Stock Incentive Plan
(the "Plan") to increase the number of shares of Common Stock
authorized for issuance over the term of the Plan by an additional
8,000,000 and limit the annual automatic share increase to 1,200,000
shares annually;
(3) To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 60,000,000 to 400,000,000;
(4) To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999;
and
(5) To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 26, 1999 will
be entitled to notice of, and to vote at, the Annual Meeting. The stock transfer
books of the Company will remain open between the record date and the date of
the meeting. 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 the corporate headquarters at the
address above.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope, which
requires no additional postage if mailed in the United States or Canada. Should
you receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to assure that all
your shares will be voted. You may revoke your proxy at any time prior to the
Annual Meeting. If you attend the meeting and vote by ballot, your proxy will be
revoked automatically and only your vote at the Annual Meeting will be counted.
By Order of the Board of Directors
/s/ Kevin J. O'Connor
KEVIN J. O'CONNOR
CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
New York, New York
April 27, 1999
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
<PAGE>
DOUBLECLICK INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 1999
This Proxy Statement is furnished to stockholders of record of DoubleClick
Inc., a Delaware corporation (the "Company"), as of March 26, 1999 in connection
with the solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors" or "Board") for use at the Annual Meeting of Stockholders
to be held on May 24, 1999 at 9:00 a.m. (New York time) (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present in person
or by proxy. All properly executed and unrevoked proxies in the accompanying
form that are received in time for the meeting will be voted at the meeting or
any adjournment thereof in accordance with instructions thereon, or if no
instructions are given, will be voted, (i) "FOR" the election of the named
nominees as Directors of the Company, (ii) "FOR" the approval of the increase in
the number of shares of Common Stock available under the Plan, (iii) "FOR" the
approval of the amendment to the Amended and Restated Certificate of
Incorporation and (iv) "FOR" the ratification of PricewaterhouseCoopers LLP,
independent public accountants, as auditors of the Company for the fiscal year
ending December 31, 1999, and will be voted in accordance with the best judgment
of the persons appointed as proxies with respect to other matters which properly
come before the Annual Meeting. Any person giving a proxy may revoke it by
written notice to the Company at any time prior to exercise of the proxy. In
addition, although mere attendance at the Annual Meeting will not revoke the
proxy, a stockholder who attends the meeting may withdraw his or her proxy and
vote in person. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Abstentions will be counted in tabulations of the votes
cast on each of the proposals presented at the Annual Meeting, whereas broker
non-votes will not be counted for purposes of determining whether a proposal has
been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials), containing the consolidated financial statements of the
Company for the fiscal year ended December 31, 1998, is being distributed
concurrently herewith to stockholders.
The mailing address of the principal executive offices of the Company is 41
Madison Avenue, 32nd Floor, New York, New York 10010. This Proxy Statement and
the accompanying form of proxy are being mailed on or about April 27, 1999 to
the stockholders of the Company entitled to vote at the Annual Meeting.
VOTING SECURITIES
The Company has one class of voting securities outstanding, its Common
Stock, $0.001 par value per share. Each holder of Common Stock is entitled to
one vote for each share held. In addition, the Company is authorized to issue up
to an aggregate of 5,000,000 shares of preferred stock, $0.001 par value (the
"Preferred Stock"), with such voting rights as may be determined by the Board of
Directors providing for such series. The Company does not have current plans to
issue any shares of Preferred Stock. At the Annual Meeting, each stockholder of
record at the close of business on March 26, 1999 will be entitled to one vote
for each share of Common Stock owned on that date as to each matter presented at
the Annual Meeting. On January 31, 1999, there were 19,643,177 shares of Common
Stock outstanding and held by 632 stockholders of record. A list of stockholders
eligible to vote at the Annual Meeting will be available for inspection at the
Annual Meeting and for a period of ten days prior to the Annual Meeting during
regular business hours at the principal executive offices of the Company at the
address specified above.
On March 11, 1999, the Company declared a 2-for-1 stock split on the Common
Stock in the form of a stock dividend for common stockholders of record as of
March 22, 1999. This dividend was paid on April 5, 1999. Except where otherwise
indicated, all share numbers in this proxy statement reflect this stock
dividend. Because the March 26, 1999 record date was prior to the payment of the
stock dividend, you will be entitled to vote the number of shares owned by you
prior to the payment of the stock dividend.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form of
proxy intend to vote at the Annual Meeting "FOR" the election of the nominees
named below as Class II Directors of the Company to serve until the 2002 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified. If any nominee is unable to be a candidate when the election takes
place, the shares represented by valid proxies will be voted in favor of the
remaining nominee. The Board of Directors does not currently anticipate that any
nominee will be unable to be a candidate for election. Each nominee is currently
a Director of the Company.
In accordance with the terms of the Company's Certificate of Incorporation,
the Board of Directors has been divided into three classes, denominated Class I,
Class II and Class III, with members of each class holding office for staggered
three-year terms. At each annual meeting of the Company's stockholders, the
successors to the Directors whose terms expire are elected to serve from the
time of their election and qualification until the third annual meeting of
stockholders following their election or until a successor has been duly elected
and qualified. The affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy and entitled to vote on the election
of directors at the Annual Meeting is required to elect the Directors.
The Board of Directors currently has seven members. Messrs. David N. Strohm
and Dwight A. Merriman are Class II Directors whose terms expire at the Annual
Meeting and each of whom is a nominee for election. Messrs. Kevin J. O'Connor,
Mark E. Nunnelly and Thomas S. Murphy are Class I Directors whose terms expire
at the 2001 Annual Meeting (in all cases subject to the election and
qualification of their successors or to their earlier death, resignation or
removal). Messrs. Donald Peppers and W. Grant Gregory are Class III Directors
whose terms expire at the 2000 Annual Meeting of Stockholders (in each case
subject to the election and qualification of their successors or to their
earlier death, resignation or removal).
INFORMATION REGARDING THE NOMINEES FOR ELECTION AS DIRECTORS (CLASS II
DIRECTORS)
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of the nominees have been furnished to the Company by such nominees.
Except as indicated, the nominees have had the same principal occupation for the
last five years.
DAVID N. STROHM, 51, has served as a Director of the Company since June
1997. Since 1980, Mr. Strohm has been an employee of Greylock Management
Corporation, a venture capital group ("Greylock"), and he is a general partner
of several venture capital funds affiliated with Greylock. Mr. Strohm currently
serves as a director of Banyan Systems, Inc., a software and computer
peripherals company, Legato Systems, a data storage management software company,
and ISS Group, Inc., an Internet security software company.
DWIGHT A. MERRIMAN, 30, has served as a Director of the Company since its
inception in January 1996. Mr. Merriman has served as the Company's Chief
Technical Officer since February 1996, and served as its Vice President,
Engineering from January 1996 until February 1996. From December 1990 until
August 1995, Mr. Merriman was a software engineer for Digital Communications
Associates, a data communications company (now Attachmate Corporation).
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF DAVID
N. STROHM AND DWIGHT A. MERRIMAN AS DIRECTORS UNTIL THE 2002 ANNUAL MEETING OF
STOCKHOLDERS.
2
<PAGE>
INFORMATION REGARDING DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AT THE ANNUAL
MEETING
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of each Director who is not a nominee for election at the Annual Meeting
has been furnished to the Company by such Director. Except as indicated each of
these Directors has had the same principal occupation for the last five years.
CLASS I DIRECTORS (TERMS EXPIRE AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS)
KEVIN J. O'CONNOR, 38, has been the Chief Executive Officer and Chairman of
the Board of Directors of the Company since its inception in January 1996. From
December 1995 until January 1996, Mr. O'Connor served as Chief Executive Officer
of Internet Advertising Network ("IAN"), an Internet advertising company which
he founded. From September 1994 to December 1995, Mr. O'Connor served as
Director of Digital Research for Digital Communications Associates, a data
communications company (now Attachmate Corporation), and from April 1992 to
September 1994, as its Chief Technical Officer and Vice President, Research.
From its inception in May 1983 until its sale in April 1992, Mr. O'Connor served
as Vice President, Research of Intercomputer Communications Corp., a software
development company. Mr. O'Connor serves as a director of ISS Security, Inc., an
Internet security development company.
MARK E. NUNNELLY, 40, has served as a Director of the Company since June
1997. Since 1990, Mr. Nunnelly has served as a Managing Director of Bain
Capital, Inc., a venture capital group. Mr. Nunnelly currently serves as a
director of Stream International Inc., a computer software and technical support
company, E-data Systems, a digital commerce company, SR Research, a credit risk
assessment technology company, The Learning Company, an educational software
company, and Dade International, a health care company.
THOMAS S. MURPHY, 73, has been a Director of the Company since March 1998.
From 1966 until 1990, Mr. Murphy served as Chief Executive Officer and Chairman
of the Board of Capital Cities ABC, Inc., a major media company. From 1990 until
1994, Mr. Murphy relinquished the title of Chief Executive Officer but resumed
this title again from 1994 until 1996. Since February 1996, Mr. Murphy has been
retired. Mr. Murphy currently serves on the Board of Directors of The Walt
Disney Company, a motion picture and television production, amusement park, land
management and consumer products company.
CLASS III DIRECTORS (TERMS EXPIRE AT THE 2000 ANNUAL MEETING OF
STOCKHOLDERS)
W. GRANT GREGORY, 58, has served as a Director of the Company since its
inception in January 1996. Since 1988, Mr. Gregory has served as Chairman of
Gregory & Hoenemeyer, Inc., a merchant banking firm. Mr. Gregory currently
serves as a director of AMBAC Financial Group, a financial services company,
HCIA, a health care information company, True North Communications, an
advertising holding company, and Inacom Corporation, a technology management
services company.
DONALD PEPPERS, 48, has served as a Director of the Company since January
1998. Since January 1992, Mr. Peppers has served as Chief Executive Officer of
Marketing 1 to 1/Peppers and Rogers Group, a marketing consulting firm.
COMMITTEES OF THE BOARD
The Audit Committee of the Board of Directors was established in July 1997
and reviews, acts on and reports to the Board of Directors with respect to
various auditing and accounting matters, including the selection of the
Company's independent accountants, the scope of the annual audit, fees to be
paid to the independent accountants, and the performance of the Company's
independent accountants. The Audit Committee currently consists of Messrs. W.
Grant Gregory, Mark E. Nunnelly and Donald Peppers.
The Compensation Committee of the Board of Directors was established in
February 1996 to administer the Company's stock option plans and to administer
certain of the Company's other benefit
3
<PAGE>
plans. The Compensation Committee also provides recommendations to the Chief
Executive Officer and the Board of Directors concerning the salaries and
incentive compensation of the executive officers of the Company and the
Company's other employees and consultants. The Compensation Committee currently
consists of Messrs. W. Grant Gregory, Thomas S. Murphy and David N. Strohm.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of Messrs. W. Grant
Gregory, Thomas S. Murphy and David N. Strohm, none of whom has been an officer
or employee of the Company at any time since the Company's inception. No
executive officer of the Company serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During 1998, the Board of Directors held four meetings and acted four times
by unanimous written consent. The Compensation Committee held one meeting during
1998, and acted one time by unanimous written consent. The Audit Committee held
one meeting during 1998.
COMPENSATION OF DIRECTORS
CASH COMPENSATION. Directors do not receive a fee for attending Board of
Directors or committee meetings, but are reimbursed for expenses incurred in
connection with performing their respective duties.
STOCK OPTION GRANT. Under the Automatic Option Grant Program under the
Plan, each individual who was serving as a non-employee member of the Board of
Directors on February 19, 1998 (the "Underwriting Date") was automatically
granted a non-statutory option to purchase 10,000 shares of Common Stock. In
addition, each individual who was first elected or appointed as a non-employee
member of the Board of Directors at any time after the Underwriting Date was
automatically granted, on the date of such initial election or appointment, a
non-statutory option to purchase 50,000 shares of Common Stock, provided that
individual had not previously been in the employ of the Company or any parent or
subsidiary of the Company. Finally, on the date of each annual meeting of
stockholders, each individual who is to continue to serve as a member of the
Board of Directors, whether or not that individual is standing for re-election
to the Board of Directors at that particular annual meeting of stockholders,
will automatically be granted a non-statutory option to purchase 10,000 shares
of Common Stock, provided such individual has served as a non-employee member of
the Board of Directors for at least six (6) months. Pursuant to these
provisions, each of Messrs. Nunnelly, Strohm, and Gregory received an option
grant on February 20, 1998 to purchase 10,000 shares of Common Stock at an
exercise price of $8.50 per share. On January 12, 1998, Mr. Peppers received an
option grant to purchase 50,000 shares of Common Stock at an exercise price of
$5.50 per share. On March 26, 1998, Mr. Murphy was granted an option to purchase
50,000 shares of Common Stock at an exercise price of $15.813 per share. The
options granted to Messrs. Nunnelly, Strohm, and Gregory vest upon the
optionee's completion of one year of service on the Board of Directors, as
measured from the grant date. The options granted to Messrs. Peppers and Murphy
vest in successive equal annual installments over first four-year period of
Board of Directors service.
Each automatic grant will have a term of 10 years, subject to earlier
termination following the optionee's cessation of service on the Board of
Directors. Each automatic option will be immediately exercisable; however, any
shares purchased upon exercise of the option will be subject to repurchase
should the optionee's service as a non-employee member of the Board of Directors
cease prior to lapse of such repurchase rights. The initial 50,000 share grant
will vest in successive equal annual installments over the optionee's initial
four-year period of Board of Directors service. Each additional 10,000 share
grant will vest upon the optionee's completion of one year of service on the
Board of Directors, as measured from the grant date. However, each outstanding
option will immediately vest upon (i) certain changes in the ownership or
control of the Company or (ii) the death or permanent disability of the optionee
while serving on the Board of Directors.
4
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
The executive officers as of January 31, 1999 were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ --- -------------------------------------------------
<S> <C> <C>
Kevin J. O'Connor................... 38 Chief Executive Officer and Chairman of the Board
of Directors
Kevin P. Ryan....................... 35 President and Chief Operating Officer
Dwight A. Merriman.................. 30 Chief Technical Officer and Director
Jeffrey E. Epstein.................. 42 Chief Financial Officer
Wenda Harris Millard................ 44 Executive Vice President, Marketing and Sales
Barry M. Salzman.................... 36 Vice President, International
Jonathan D. Shapiro................. 36 Vice President, Business Development
John Sabella........................ 36 Vice President of Engineering
Robert N. Linsky.................... 41 Vice President, MIS and Operations
</TABLE>
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
KEVIN P. RYAN has served as the Company's Chief Operating Officer since
April 1998 and as President since July 1997. From June 1996 to April 1998, Mr.
Ryan served as the Company's Chief Financial Officer. From January 1994 to June
1996, Mr. Ryan served as Senior Vice President, Business and Finance for United
Media, a licensing and syndication company representing comics, columnists and
wire services to over 2,000 newspapers around the world. From April 1991 to
December 1993, Mr. Ryan served as Senior Manager, Finance for EuroDisney, and
from August 1985 to September 1989, Mr. Ryan was an investment banker for
Prudential Investment Corporation in both the United States and the United
Kingdom.
JEFFREY E. EPSTEIN has served as the Company's Chief Financial Officer since
March 1998. From May 1997 to February 1998, Mr. Epstein served as Chief
Financial Officer of Trans National Group Inc., a consumer services company.
From January 1995 to March 1997, Mr. Epstein served as Senior Vice President of
CUC International Inc., a membership based consumer services company. From
February 1988 to December 1994, Mr. Epstein served as Chief Financial Officer of
King World Productions, Inc., a television production company.
WENDA HARRIS MILLARD has served as the Company's Executive Vice President,
Marketing and Sales since October 1997, and served as the Company's Executive
Vice President, Marketing and Programming from July 1996 to October 1997. From
August 1994 to July 1996, Ms. Harris Millard served as President and Group
Publisher of SRDS, a marketing and media information company. From July 1993 to
July 1994, Ms. Harris Millard served as Senior Vice President and Publisher of
Family Circle Magazine. From June 1992 to July 1993, Ms. Harris Millard served
as Senior Vice President and Group Publisher of Adweek Magazines, and from 1987
to June 1992, Ms. Harris Millard served as Publisher for Adweek Magazine.
BARRY M. SALZMAN has served as the Company's Vice President, International
since February 1997. From August 1994 to January 1997, Mr. Salzman served as
President of BMS Associates, Inc., a consulting firm. From June 1993 to July
1994, Mr. Salzman served as an associate for AEA Investors, Inc., a principal
investment firm. From June 1989 to June 1993, Mr. Salzman served as an
Engagement Manager for McKinsey & Company, a management consulting firm.
JONATHAN D. SHAPIRO has served as the Company's Vice President, Business
Development since February 1998. From April 1997 to February 1998, Mr. Shapiro
served as an interactive media specialist for
5
<PAGE>
McKinsey & Company, a management consulting firm. From January 1995 to April
1997, Mr. Shapiro served as Vice President of Corporate Development of United
Media, a licensing and syndication company representing comics, columnists and
wire services to over 2,000 newspapers around the world. From October 1992 to
January 1995, Mr. Shapiro served as an associate for McKinsey & Company, a
management consulting firm.
JOHN SABELLA has served as the Company's Vice President of Engineering since
April 1998. From May 1997 to April 1998, Mr. Sabella served as Vice President,
Technology for Lehman Brothers Inc., a financial services company. From October
1995 to May 1997, Mr. Sabella served as Executive Vice President of Interactive
Entertainment Technologies, Inc., an interactive media company. From May 1993 to
October 1995, Mr. Sabella served as a Partner for Open Architecture System
Integration Services Inc., a financial services consulting company.
ROBERT N. LINSKY has served as the Company's Vice President, MIS and
Operations, since February 1998. From February 1995 to January 1998, Mr. Linsky
served as Vice President, Internet Business Development, Interactive Services
Division for American Express Financial Services, a financial services company.
From December 1989 to February 1995, Mr. Linsky served as Vice President and
Division Executive of Distribution and Payments Systems for The Chase Manhattan
Bank, a financial services company.
6
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation
received in 1997 and 1998 by the Company's Chief Executive Officer and by the
other four executive officers who served as executive officers as of December
31, 1998 and whose salary exceeded $100,000 in 1998 (together, the "Named
Executive Officers"). No individual who would otherwise have been included in
the table resigned during 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
-------------------- SHARES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------------------------------- --------- --------- --------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Kevin J. O'Connor.................................. 1998 $ 175,000 $ 70,000 -- --
Chief Executive Officer 1997 126,250 -- -- $ 30,000(2)
Kevin P. Ryan...................................... 1998 175,000 70,000 -- --
President and Chief Operating Officer 1997 152,500 -- 440,000 --
Wenda Harris Millard............................... 1998 180,000 27,000 -- 93,223(4)
Executive Vice President, Marketing and Sales 1997 180,000 -- -- --
Jeffrey E. Epstein(3).............................. 1998 175,000 35,438 230,000 35,000(5)
Chief Financial Officer
Barry M. Salzman................................... 1998 150,000 100,000 -- --
Vice President, International 1997 105,136 -- 200,000 --
</TABLE>
- ------------------------
(1) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), other compensation in the form of perquisites and other
personal benefits has been omitted for each of the Named Executive Officers
because the aggregate amount of such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total of annual
salary and bonuses for each of such Named Executive Officers in 1998.
(2) Consists solely of reimbursement of certain relocation expenses.
(3) Mr. Epstein joined the Company in February 1998.
(4) Consists solely of sales commissions.
(5) Consists solely of starting bonus and reimbursement of certain relocation
expenses.
7
<PAGE>
OPTION GRANTS IN LAST YEAR
The following table sets forth certain information regarding options granted
to the Named Executive Officers during 1998. The Company has not granted any
stock appreciation rights.
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE
---------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES
SECURITIES OPTIONS OF STOCK APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(3)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ----------------------
NAME GRANTED(1) IN 1998(2) PRICE DATE 5% 10%
- ---------------------------------------------- ----------- ------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kevin J. O'Connor............................. -- -- -- -- -- --
Kevin P. Ryan................................. -- -- -- -- -- --
Wenda Harris Millard.......................... -- -- -- -- -- --
Jeffrey E. Epstein............................ 230,000 12.7% $ 5.50 2/17/08 $ 795,552 $ 2,016,084
Barry M. Salzman.............................. -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Each option represents the right to purchase one share of Common Stock. The
options shown in this table become exercisable in four equal annual
installments commencing one year after the date of grant. To the extent not
already exercisable, certain of these options may become exercisable in the
event of a merger in which the Company is not the surviving corporation or
upon the sale of substantially all of the Company's assets or a sale of
stock by the stockholders.
(2) During 1998, the Company granted employees options to purchase an aggregate
of 1,721,670 shares of Common Stock.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5% and
10% assumed annual rates of compounded stock price appreciation are mandated
by rules of the Commission and do not represent the Company's estimate or
projection of the Company's future Common Stock prices. These amounts
represent certain assumed rates of appreciation in the value of the
Company's Common Stock from the fair market value on the date of grant.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock and overall stock market conditions. The
amounts reflected in the table may not necessarily be achieved.
8
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information concerning options to
purchase Common Stock exercised by the Named Executive Officers during 1998 and
the number and value of unexercised options held by each of the Named Executive
Officers at December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998(1)
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- ------------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Kevin J. O'Connor...................... -- -- 580,324 52,576 $ 12,871,475 $ 1,170,166
Kevin P. Ryan.......................... 60,000 $ 1,320,595 90,000 410,000 1,950,300 8,925,491
Wenda Harris Millard................... -- -- 60,000 120,000 1,330,793 2,661,586
Jeffrey E. Epstein..................... -- -- -- 230,000 -- 3,852,500
Barry M. Salzman....................... 36,750 762,563 13,250 150,000 274,938 3,209,401
</TABLE>
- ------------------------
(1) These values have been calculated on the basis of the market price on that
date of $44.50 per share, less the applicable exercise price per share,
multiplied by the number of shares underlying such options. All numbers are
post-stock dividend.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers and other
individuals compensated by the Company. The Compensation Committee is also
responsible for the administration of the Company's stock option plans under
which option grants and direct stock issuances may be made to executive
officers. The Compensation Committee has reviewed and is in accord with the
compensation paid to executive officers in 1998.
GENERAL COMPENSATION POLICY. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company and their personal performance. It is the
Compensation Committee's objective to have a portion of each executive officer's
compensation contingent upon the Company's performance as well as upon such
executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of two elements: (i) base salary
and (ii) long-term stock-based incentive awards which strengthen the mutuality
of interests between the executive officers and the Company's stockholders.
FACTORS. The principal factors which the Compensation Committee considered
with respect to each executive officer's compensation package for fiscal year
1998 are summarized below. The Compensation Committee may, however, in its
discretion apply entirely different factors in advising the Chief Executive
Officer and the Board of Directors with respect to executive compensation for
future years.
- BASE SALARY. The suggested 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 deems appropriate.
- 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 the Company
from the perspective of an owner with an equity stake in the Company. Each
option generally becomes exercisable in installments over a four or five
year period, contingent upon the executive officer's continued employment
with the Company. Accordingly, the option grant will provide a return to
the executive officer only if the executive officer remains employed by
the Company 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 a meaningful opportunity for stock ownership based on the executive
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term 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 the Company's executive officers. Stock options to
purchase an aggregate of 230,000 shares of Common Stock were granted to
executive officers in 1998.
CEO COMPENSATION. The plans and policies discussed above were the basis for
the 1998 compensation of the Company's Chief Executive Officer, Mr. Kevin J.
O'Connor. In advising the Board of Directors with respect to this compensation,
the Compensation Committee seeks to achieve two objectives: (i) establish a
level of base salary competitive with that paid by companies within the industry
which are of comparable
10
<PAGE>
size to the Company and by companies outside of the industry with which the
Company competes for executive talent and (ii) make a significant percentage of
the total compensation package contingent upon the Company's performance and
stock price appreciation. In accordance with these objectives, Mr. O'Connor
received a base salary of $175,000 for fiscal year 1998. No new stock options
were granted to Mr. O'Connor in fiscal year 1998; he currently holds a total of
633,080 unexercised stock options.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive officers
which is not considered to be performance based. Compensation which does qualify
as performance-based compensation will not have to be taken into account for
purposes of this limitation. The Plan contains certain provisions which are
intended to assure that any compensation deemed paid in connection with the
exercise of stock options granted under that plan with an exercise price equal
to the market price of the option shares on the grant date will qualify as
performance-based compensation.
The Compensation Committee does not expect that the compensation to be paid
to the Company's executive officers for 1999 will exceed the $1 million limit
per officer.
THE COMPENSATION COMMITTEE
W. Grant Gregory
Thomas S. Murphy
David N. Strohm
11
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the 10-month percentage change in the
Company's cumulative total stockholder return on its Common Stock from February
20, 1998 (the date public trading of the Company's stock commenced) to the last
day of the Company's last completed fiscal year (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and (B) the excess of the Company's share price
at the end of the measurement period over the price at the beginning of the
measurement period, by (ii) the share price at the beginning of the measurement
period) with the cumulative total return so calculated of the Nasdaq Stock
Market-- U.S. Index and a Self-Constructed Peer Group Index.
COMPARISON OF 10 MONTH CUMULATIVE TOTAL RETURN*
AMONG DOUBLECLICK INC., THE NASDAQ STOCK MARKET (U.S.)
INDEX AND A PEER GROUP (1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS 2/20/98 12/31/98
<S> <C> <C>
DOUBLECLICK INC. 100 262
PEER GROUP 100 218
NASDAQ STOCK MARKET (U.S.) 100 126
</TABLE>
* ASSUMES $100 INVESTED ON 2/20/98 IN STOCK OR INDEX-INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
(1) The Peer Group consists of the following companies: (i) 24/7 Media,
Inc., (ii) Cnet. Inc., (iii) Infoseek Corp., (iv) Lycos, Inc., (v)
Netgravity, Inc., and (vi) Sportsline USA, Inc.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of January 31, 1999, by (i) each
Director and nominee for Director, (ii) each of the Named Executive Officers,
(iii) each person (or group of affiliated persons) who is known by the Company
to be a beneficial owner of 5% or more of the outstanding shares of Common
Stock, and (iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNERSHIP
- --------------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Kevin J. O'Connor (2)............................................................ 5,276,056 13.2%
Dwight A. Merriman (3)........................................................... 2,487,800 6.3
W. Grant Gregory (4)............................................................. 234,464 *
Mark E. Nunnelly (5)............................................................. 233,676 *
Wenda Harris Millard (6)......................................................... 125,000 *
David N. Strohm (7).............................................................. 115,538 *
Barry M. Salzman (8)............................................................. 84,500 *
Jeffrey E. Epstein (9)........................................................... 57,500 *
Thomas S. Murphy (10)............................................................ 12,500 *
Donald Peppers (11).............................................................. 3,000 *
Kevin P. Ryan (12)............................................................... -- *
All Directors and executive officers as a group (14 persons) (13)................ 8,662,534 21.4
</TABLE>
- --------------------------
* Less than one percent.
(1) Gives effect to the shares of Common Stock issuable within 60 days of
January 31, 1999 upon the exercise of all options and other rights
beneficially owned by the indicated stockholders on that date. Beneficial
ownership is determined in accordance with the rules of the Commission and
includes voting and investment power with respect to shares. Unless
otherwise indicated, the persons named in the table have sole voting and
sole investment control with respect to all shares beneficially owned.
(2) Includes (i) 633,080 shares of Common Stock issuable upon the exercise of
stock options (ii) 7,840 shares of Common Stock held by Nancy O'Connor, Mr.
O'Connor's wife, and (iii) 142,498 shares of Common Stock held by the KN
Trust, of which Mr. O'Connor's wife and brother are co-trustees.
(3) Includes 236,832 shares of Common Stock issuable upon the exercise of stock
options. Does not include 47,366 shares of Common Stock issuable upon the
exercise of stock options that do not vest within 60 days of January 31,
1999.
(4) Includes 10,000 shares of Common Stock issuable upon the exercise of stock
options.
(5) Consists of (i) 112,978 shares of Common Stock held by BCIP Trust
Associates, LP, a Delaware general partnership of which Mr. Nunnelly is a
general partner, and (ii) 10,000 shares of Common Stock issuable upon the
exercise of stock options. Mr. Nunnelly disclaims beneficial ownership of
the shares held by BCIP Trust Associates, LP, except to the extent of his
pecuniary interest therein.
(6) Includes 120,000 shares of Common Stock issuable upon the exercise of stock
options. Does not include 60,000 shares of Common Stock issuable upon the
exercise of stock options that do not vest within 60 days of January 31,
1999.
(7) Includes (i) 10,000 shares of common stock issuable upon the exercise of
stock options and (ii) 20,000 shares of Common Stock held in a revocable
trust of which Mr. Stohm is trustee.
(8) Includes 73,750 shares of Common Stock issuable upon the exercise of stock
options. Does not include 126,250 shares of Common Stock issuable upon the
exercise of stock options that do not vest within 60 days of January 31,
1999.
(9) Consists of 57,500 shares of Common Stock issuable upon the exercise of
stock options. Does not include 172,500 shares of Common Stock issuable upon
the exercise of stock options that do not vest within 60 days of January 31,
1999.
(10) Consists of 12,500 shares of Common Stock issuable upon the exercise of
stock options. Does not include 37,500 shares of common Stock issuable upon
the exercise of stock options that do not vest within 60 days of January 31,
1999.
(11) Does not include 37,500 shares of Common Stock issuable upon the exercise
of stock options that do not vest within 60 days of January 31, 1999.
(12) Does not include 500,000 shares of Common Stock issuable upon the exercise
of stock options that do not vest within 60 days of January 31, 1999.
(13) Includes 1,243,530 shares of Common Stock issuable upon the exercise of
stock options that vest within 60 days of January 31, 1999. See Notes 2
through 12.
13
<PAGE>
CERTAIN TRANSACTIONS
On February 17, 1998, the Company granted options to purchase an aggregate
of 230,000 shares of Common Stock to Jeffrey E. Epstein, the Company's Chief
Financial Officer, at an exercise price of $5.50 per share.
For additional information regarding the grant of stock options to executive
officers and Directors, see "Executive Compensation and Other Information".
14
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Kevin P. Ryan, President and Chief Operating Officer of the Company, was
required to file a Form 4, Statement of Changes in Beneficial Ownership (a "Form
4") for the month of October 1998 to report three cashless option exercises
during that month. Mr. Ryan filed such Form 4 with the Commission on November
18, 1999, eight days later than is required by Section 16.
In addition, Mark E. Nunnelly, a director of the Company, was required to
file a Form 4 for the month of November 1998 to report his receipt of shares of
Common Stock in a distribution by Bain Capital, Inc. during that month. Mr.
Nunnelly filed such Form 4 with the Commission on December 12, 1998, two days
later than is required by Section 16.
15
<PAGE>
CHANGE IN INDEPENDENT ACCOUNTANTS
On July 24, 1997, the Company dismissed KPMG Peat Marwick LLP and engaged
PricewaterhouseCoopers LLP (formerly Price Waterhouse LLP) as its independent
accountants to audit its financial statements as of, and for the period ended,
December 31, 1996. The decision to change independent accountants from KPMG Peat
Marwick LLP to PricewaterhouseCoopers LLP was approved by the Company's Board of
Directors.
The Company believes, and has been advised by KPMG Peat Marwick LLP that it
concurs in such belief, that, for the period from January 23, 1996 (inception)
through December 31, 1996 and for the period from January 1, 1997 through July
24, 1997, the Company and KPMG Peat Marwick LLP did not have any disagreement on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which disagreement, if not resolved to the
satisfaction of KPMG Peat Marwick LLP would have caused it to make reference in
connection with its report on the Company's financial statements to the subject
matter of the disagreement.
The report of KPMG Peat Marwick LLP on the Company's financial statements
for the period from January 23, 1996 (inception) through December 31, 1996 did
not contain an adverse opinion or a disclaimer of opinion, and was not qualified
or modified as to uncertainty, audit scope or accounting principles. During that
year there were no "reportable events" within the meaning of Item 304(a)(1)(v)
of Regulation S-K promulgated under the Securities Act of 1933, as amended.
16
<PAGE>
PROPOSAL 2
APPROVAL OF INCREASE OF SHARES OF COMMON STOCK UNDER PLAN
The Company's stockholders are being asked to approve an amendment to the
Plan, that will increase the number of shares of Common Stock available for
issuance by 8,000,000 shares and limit the annual automatic share increase to
1,200,000 shares.
The Plan became effective on November 7, 1997 upon its adoption by the Board
and was subsequently approved by the stockholders. The amendment to the Plan
that is the subject of this Proposal was adopted by the Board on April 9, 1999,
subject to stockholder approval at the 1999 Annual Meeting.
The proposed share increase will assure that a sufficient reserve of Common
Stock is available under the Plan to attract and retain the services of
employees, which is essential to the Company's long-term growth and success. The
limit on the annual share reserve increase is intended to allow the Company to
grant incentive stock options under the Federal tax rules based on the increase.
The following is a summary of the principal features of the Plan as amended.
The summary, however, does not purport to be a complete description of all the
provisions of the Plan. Any stockholder of the Company who wishes to obtain a
copy of the actual plan document may do so upon written request to the Corporate
Secretary at the Company's principal executive offices in New York City, New
York.
EQUITY INCENTIVE PROGRAMS
The Plan contains three separate equity incentive programs: (i) a
Discretionary Option Grant Program, (ii) a Stock Issuance Program and (iii) an
Automatic Option Grant Program. The Compensation Committee of the Board has the
authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to officers and directors subject to the short-swing
trading restrictions of the federal securities laws. The Plan Administrator
(which as used in this summary will mean the Compensation Committee, the
Secondary Committee or the Board to the extent such entity is administering the
Plan) will have complete discretion (subject to the provisions of the Plan) to
authorize option grants under the Plan. With respect to all other participants,
the Discretionary Option Grant and Stock Issuance Programs may be administered
by either the Compensation Committee or a special stock option committee (the
"Secondary Committee") comprised of one or more Board members appointed by the
Board or by the Board itself. However, all grants under the Automatic Option
Grant Program will be made in strict compliance with the express provisions of
that program, and no administrative discretion will be exercised by the Plan
Administrator with respect to the grants made thereunder. Stockholder approval
of the amendment to the Plan subject to this Proposal will constitute
pre-approval of all option grants subsequently made on the basis of the amended
Plan under that program and the subsequent exercise and cancellation of those
options in accordance with those terms.
SHARE RESERVE
The maximum number of shares of the Company's Common Stock available for
issuance over the term of the Plan may not exceed 15,174,076 shares, including
the pre-stock dividend 1,174,076-share automatic increase effected on January 4,
1999 and including the 8,000,000-share increase for which stockholder approval
is sought under this Proposal. The number of shares available for issuance under
the Plan will automatically increase on the first trading day of each calendar
year, beginning with the 2000 calendar by an amount equal to three percent (3%)
of the total number of shares of Common Stock outstanding on the last trading
day of the immediately preceding calendar year, provided that no such increase
will exceed 1,200,000 shares. In no event may any one participant in the Plan
receive options, separately exercisable stock appreciation rights or direct
stock issuances for more than 750,000 shares in the aggregate over the term of
the Plan.
17
<PAGE>
The shares of Common Stock issuable under the Plan may be drawn from shares
of the Company's authorized but unissued Common Stock or from shares of Common
Stock reacquired by the Company, including shares repurchased on the open
market.
Should an option expire or terminate prior to exercise in full, the shares
subject to the portion of the option not so exercised will be available for
subsequent issuance under the Plan. Shares issued under the Plan and
subsequently repurchased by the Company at the original option or issue price
paid per share will be added back to the share reserve and will accordingly be
available for subsequent issuance under the Plan. However, shares subject to any
options surrendered in connection with outstanding stock appreciation rights
under the Plan will not be available for subsequent issuance.
On April 9, 1999, the Board adopted the 1999 Non-Officer Stock Option/Stock
Issuance Plan in order to provide employees (other than officers) and
consultants with an opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest in the Company. The maximum number of shares
of the Company's Common Stock available for issuance over the term of that plan
may not exceed 750,000 shares.
CHANGES IN CAPITALIZATION
In the event any change is made to the outstanding shares of Common Stock by
reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effective
without the Company's receipt of consideration, appropriate adjustments will be
made to (i) the maximum number and class of securities issuable under the Plan,
(ii) the maximum number and class of securities for which any one participant
may be granted stock options, separately exercisable stock appreciation rights
and direct stock issuances under the Plan, (iii) the number and class of
securities for which option grants will subsequently be made under the Automatic
Option Grant Program to each newly-elected or continuing non-employee Board
member and (iv) the number and class of securities and the exercise price per
share in effect under each outstanding option under the Plan. All such
adjustments will be designed to preclude the enlargement or dilution of
participant rights and benefits under the Plan.
ELIGIBILITY
Officers and other employees of the Company and its parent or subsidiaries
(whether now existing or subsequently established), non-employee members of the
Board and the board of directors of its parent or subsidiaries and consultants
and independent advisors of the Company and its parent and subsidiaries will be
eligible to participate in the Discretionary Option Grant and Stock Issuance
Programs. Non-employee members of the Board (including members of the
Compensation Committee) will also be eligible to participate in the Automatic
Option Grant Program.
As of January 31, 1999 approximately nine executive officers, 484 other
employees and five non-employee Board members were eligible to participate in
the Plan, and five non-employee Board members were eligible to participate in
the Automatic Option Grant Program.
VALUATION
The fair market value per share of Common Stock on any relevant date under
the Plan will be the closing selling price per share on that date on the Nasdaq
National Market. On March 31, 1999 the pre-stock dividend closing selling price
per share was $182.063.
18
<PAGE>
DISCRETIONARY OPTION GRANT PROGRAM
PRICE AND EXERCISABILITY
Options may be granted under the Discretionary Option Grant Program at an
exercise price per share not less than eighty five percent (85%) of the fair
market value per share of Common Stock on the option grant date. No granted
option will have a term in excess of ten years.
TERMINATION OF SERVICE
Upon cessation of service, the optionee will have a limited period of time
in which to exercise any outstanding option to the extent such option is
exercisable for vested shares. The Plan Administrator will have complete
discretion to extend the period following the optionee's cessation of service
during which his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee's actual cessation of service.
CANCELLATION/REGRANT PROGRAM
The Plan Administrator will have the authority to effect the cancellation of
outstanding options under the Discretionary Option Grant Program which have
exercise prices in excess of the then current market price of Common Stock and
to issue replacement options with an exercise price based on the market price of
Common Stock at the time of the new grant.
STOCK ISSUANCE PROGRAM
Shares may be sold under the Stock Issuance Program at a price per share not
less than one hundred percent (100%) of fair market value per share of Common
Stock, payable in cash or through a promissory note payable to the Company.
Shares may also be issued solely as a bonus for past services.
The issued shares may either be immediately vested upon issuance or subject
to a vesting schedule tied to the performance of service or the attainment of
performance goals. The Plan Administrator will, however, have the discretionary
authority at any time to accelerate the vesting of any unvested shares.
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, each individual who first becomes
a non-employee Board member will automatically be granted at that time an option
grant for 50,000 shares of Common Stock. In addition, on the date of each annual
meeting of stockholders beginning with this Annual Meeting, each individual who
is to continue to serve as a non-employee Board member after such meeting will
automatically be granted an option to purchase 10,000 shares of Common Stock,
provided such individual has served as a non-employee Board member for at least
six months.
Each option will have an exercise price per share equal to 100% of the fair
market value per share of Common Stock on the option grant date and a maximum
term of ten years measured from the option grant date. Each option will be
immediately exercisable for all the option shares; however, any purchased shares
will be subject to repurchase by the Company, at the exercise price paid per
share, upon the optionee's cessation of Board service prior to vesting. Each
initial option grant will vest (and the Company's repurchase rights will lapse)
in a series of four (4) equal successive annual installments upon the optionee's
completion of each year of Board service over the four (4)-year period of Board
service measured from the option grant date. Each annual grant will vest (and
the Company's repurchase right will lapse) upon the optionee's completion of one
(1) year of Board service measured from the grant date.
The shares subject to each automatic option grant will immediately vest upon
the optionee's death or permanent disability or upon certain changes in the
ownership or control of the Company.
19
<PAGE>
GENERAL PROVISIONS
ACCELERATION
In the event that the Company is acquired by merger or asset sale or by
tender offer for more than 50% of the outstanding voting stock, each outstanding
option under the Discretionary Option Grant Program which is not to be assumed
by the successor corporation or replaced with a comparable option to purchase
shares of the capital stock of the successor corporation will automatically
accelerate in full, and all unvested shares under the Stock Issuance Program
will immediately vest, except to the extent the Company's repurchase rights with
respect to those shares are to be assigned to the successor corporation. The
Plan Administrator will have the discretionary authority to provide for the
acceleration of any options assumed in an acquisition and any unvested shares
which do not vest at the time of the acquisition upon the involuntary
termination of the optionee's service within 12 months following the
acquisition.
The acceleration of vesting in the event of a change in the ownership or
control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.
FINANCIAL ASSISTANCE
The Plan Administrator may permit one or more participants to pay the
exercise price of outstanding options or the purchase price of shares under the
Plan by delivering a promissory note payable in installments. The Plan
Administrator will determine the terms of any such promissory note. However, the
maximum amount of financing provided any participant may not exceed the cash
consideration payable for the purchased shares plus all applicable taxes
incurred in connection with the acquisition of the shares. Any such promissory
note may be subject to forgiveness in whole or in part, at the discretion of the
Plan Administrator, over the participant's period of service.
SPECIAL TAX ELECTION
The Plan Administrator may provide one or more holders of options or
unvested shares with the right to have the Company withhold a portion of the
shares otherwise issuable to such individuals in satisfaction of the tax
withholding liability incurred by such individuals in connection with the
exercise of those options or the vesting of those shares. Alternatively, the
Plan Administrator may allow such individuals to deliver previously acquired
shares of Common Stock in payment of such tax liability.
AMENDMENT AND TERMINATION
The Board may amend or modify the Plan in any or all respects whatsoever
subject to any required stockholder approval. The Board may terminate the Plan
at any time, and the Plan will in all events terminate on November 6, 2007.
20
<PAGE>
STOCK AWARDS
The table below shows, as to each of the Company's executive officers named
in the Summary Compensation Table and the various indicated individuals and
groups, the number of shares of Common Stock subject to options granted between
January 1, 1998 and March 31, 1999 under the Plan together with the weighted
average exercise price payable per share.
<TABLE>
<CAPTION>
OPTION AWARDS
<S> <C> <C>
WEIGHTED
NUMBER OF AVERAGE
OPTION EXERCISE
NAME SHARES PRICE
- ---------------------------------------------------------------- ------------- -----------
Executive Officers:
Kevin J. O'Connor............................................... -- --
Dwight A. Merriman.............................................. -- --
Kevin P. Ryan................................................... -- --
Jeffrey E. Epstein.............................................. 230,000 $ 5.50
Barry M. Salzman................................................ 50,000 $ 22.25
Wenda Harris Millard............................................ 50,000 $ 22.25
Jonathan D. Shapiro............................................. 130,000 $ 5.50
John Sabella.................................................... 80,000 $ 16.30
Robert Linsky................................................... 90,000 $ 9.22
All current executive officers as a group (9 persons)........... 630,000 $ 10.06
Directors:
Mark E. Nunnelly................................................ 10,000 $ 8.50
David N. Strohm................................................. 10,000 $ 8.50
W. Grant Gregory................................................ 10,000 $ 8.50
Donald Peppers.................................................. 50,000 $ 5.50
Thomas S. Murphy................................................ 50,000 $ 15.813
All non-employee directors as a group (5 persons)............... 130,000 $ 9.465
All employees, including current officers who are not executive
officers as a group (470 persons)............................. 2,048,370(1) $ 16.935
</TABLE>
- ------------------------
(1) Includes options to purchase 152,750 shares of Common Stock which were
subsequently cancelled upon the optionees' termination of service.
21
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
OPTION GRANTS
Options granted under the Plan may be either incentive stock options which
satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
INCENTIVE STOCK OPTIONS. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise disposed
of. For Federal tax purposes, dispositions are divided into two categories: (i)
qualifying and (ii) disqualifying. A qualifying disposition occurs if the sale
or other disposition is made after the optionee has held the shares for more
than two years after the option grant date and more than one year after the
exercise date. If either of these two holding periods is not satisfied, then a
disqualifying disposition will result.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the option exercise date over (ii) the exercise
price paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
NON-STATUTORY OPTIONS. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the optionee.
DIRECT STOCK ISSUANCE
The tax principles applicable to direct stock issuances under the Plan will
be substantially the same as those summarized above for the exercise of
non-statutory option grants.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying dispositions of incentive stock option shares or
exercises of non-statutory options granted with exercise prices equal to the
fair market value of the option shares on the grant date will qualify as
performance-based compensation for purposes of Code Section 162(m) and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid
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<PAGE>
to certain executive officers of the Company. Accordingly, all compensation
deemed paid with respect to those options is expected to remain deductible by
the Company without limitation under Code Section 162(m).
ACCOUNTING TREATMENT
Option grants or stock issuances with exercise or issue prices less than the
fair market value of the shares on the grant or issue date will result in a
compensation expense to the Company's earnings equal to the difference between
the exercise or issue price and the fair market value of the shares on the grant
or issue date. Such expense will be accruable by the Company over the period
that the option shares or issued shares are to vest. Option grants or stock
issuances at 100% of fair market value will not result in any charge to the
Company's earnings. However, the Company must disclose in footnotes and
pro-forma statements to the Company's financial statements, the impact those
options would have upon the Company's reported earnings were the value of those
options at the time of grant treated as a compensation expense. Whether or not
granted at a discount, the number of outstanding options may be a factor in
determining the Company's earnings per share on a fully-diluted basis.
Under a recently-proposed amendment to the current accounting principles,
option grants made to non-employee Board members or consultants after December
15, 1998 will result in a direct charge to the Company's reported earnings based
upon the fair value of the option measured on the vesting date of each
installment of the underlying option shares. Such charge will accordingly
include the appreciation in the value of the option shares over the period
between the grant date of the option (or, if later, the effective date of the
final amendment) and the vesting date of each installment of the option shares.
In addition, if the proposed amendment is adopted, any options which are
repriced after December 15, 1998 will also trigger a direct charge to Company's
reported earnings measured by the appreciation in the value of the underlying
shares over the period between the grant date of the option (or, if later, the
effective date of the final amendment) and the date the option is exercised for
those shares.
Should one or more optionees be granted stock appreciation rights which have
no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to the
Company's earnings.
NEW PLAN BENEFITS
As of March 31, 1999, no option grants have been made under the Plan on the
basis of the 8,000,000-share increase for which stockholder approval is sought
as part of this Proposal. However, on the date of the Annual Meeting, each of
Messrs. Nunnelly, Strohm, Gregory, Peppers and Murphy will receive an option
grant for 10,000 shares under the Automatic Option Grant Program at an exercise
price equal to the fair market value of the shares on that date.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the Annual Meeting is
required for approval of the amendment to the Plan. Should such stockholder
approval not be obtained, then the share reserve will not be increased and there
will be no limit on the number of shares by which the share reserve is to
increase annually. The Plan will, however, continue to remain in effect, and
option grants and stock issuances may continue to be made pursuant to the
provisions of the Plan prior to its amendment until the available reserve of
Common Stock under such plan is issued.
The Board believes that it is in the best interests of the Company to
implement a comprehensive equity incentive program for the Company which will
provide a meaningful opportunity for officers, employees and non-employee Board
members to acquire a substantial proprietary interest in the enterprise and
thereby encourage such individuals to remain in the Company's service and more
closely align their interests with those of the stockholders.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE PLAN.
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<PAGE>
PROPOSAL 3
AMENDMENT OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Board of Directors has unanimously adopted, subject to stockholder
approval, an amendment to Article IV of the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 60,000,000 shares to 400,000,000 shares. The text of the
second and third sentences of Article IV, Section A, as it is proposed to be
amended, is as follows:
The total number of shares which the Corporation is authorized to issue
is Four Hundred Five Million (405,000,000) shares. Four Hundred Million
(400,000,000) shares, par value $0.001 per share, shall be Common Stock and
Five Million (5,000,000) shares, par value $0.001 per share, shall be
Preferred Stock.
PURPOSE AND EFFECT OF THE AMENDMENT. The proposed amendment will authorize
sufficient additional shares of Common Stock to provide the Company with the
flexibility to make such issuances from time to time for any proper purpose
approved by the Board of Directors, including issuances in connection with
future stock splits or dividends and issuances to raise capital or effect
acquisitions, without the necessity of delaying such activities for further
stockholder approval except as may be required in a particular case by the
Company's charter documents, applicable law or the rules of any stock exchange
or other system on which the Company's securities may then be listed. There are
currently no arrangements, agreements or understandings for the issuance or use
of additional shares of authorized Common Stock (other than issuances permitted
or required under the Company's stock-based employee benefit plans or awards
made pursuant to those plans).
The additional Common Stock to be authorized by adoption of the proposed
amendment would have rights identical to the currently outstanding Common Stock
of the Company. Adoption of the proposed amendment and issuance of the Common
Stock would not affect the rights of the holders of currently outstanding Common
Stock, except for effects incidental to increasing the number of shares of the
Common Stock outstanding, such as dilution of earnings per share and voting
rights of current holders of Common Stock. The holders of Common Stock do not
presently have preemptive rights to subscribe for the additional Common Stock
proposed to be authorized. If the amendment is adopted, it will become effective
upon filing of a Certificate of Amendment of the Company's Amended and Restated
Certificate of Incorporation with the Secretary of State of Delaware.
The proposal could have an anti-takeover effect, although that is not its
intention. For example, if the Company were the subject of a hostile takeover
attempt, it could try to impede the takeover by issuing shares of Common Stock,
thereby diluting the voting power of the other outstanding shares and increasing
the potential cost of the takeover. The availability of this defensive strategy
to the Company could discourage unsolicited takeover attempts, thereby limiting
the opportunity for the Company's stockholders to realize a higher price for
their shares than is generally available in the public markets. The Board of
Directors is not aware of any attempt, or contemplated attempt, to acquire
control of the Company, and this proposal is not being presented with the intent
that it be utilized as a type of anti-takeover device.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
24
<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
appointed PricewaterhouseCoopers LLP, independent public accountants, as
independent accountants of the Company to serve for the year ending December 31,
1999, subject to the ratification of such appointment by the stockholders at the
Annual Meeting. A majority of the votes of the outstanding shares of Common
Stock is required to ratify the appointment of the auditors. A representative of
PricewaterhouseCoopers LLP will attend the Annual Meeting with the opportunity
to make a statement if he or she so desires and will also be available to answer
inquiries.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1999.
25
<PAGE>
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Commission, stockholder
proposals intended for presentation at the 2000 Annual Meeting of Stockholders
must be received by the Secretary of the Company no later than December 14, 1999
if such proposals are to be considered for inclusion in the Company's Proxy
Statement. A proposal, including any accompanying supporting statement, may not
exceed 500 words. In addition, the proxy solicited by the Board of Directors for
the 2000 Annual Meeting of Stockholders will confer discretionary authority to
vote on any stockholder proposal raised at the 2000 Annual Meeting of
Stockholders which is not described in the 2000 proxy statement unless the
Company has received notice of such proposal on or before February 25, 2000.
However, if the Company determines to change the date of the 2000 Annual Meeting
of Stockholders more than 30 days from May 24, 2000, the Company will provide
stockholders with a reasonable time before the Company begins to print and mail
its proxy materials for the 2000 Annual Meeting of Stockholders in order to
allow such stockholders an opportunity to make proposals in accordance with the
rules and regulations of the Commission.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
Annual Meeting other than those set forth above. If any other matters properly
come before the Annual Meeting, the persons named in the enclosed form of proxy
will vote the shares represented by proxies in accordance with their best
judgment on such matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the solicitation
will be borne by the Company.
<TABLE>
<S> <C> <C>
By Order of the Board of Directors
/s/ KEVIN J. O'CONNOR
---------------------------------------------
Kevin J. O'Connor
Chief Executive Officer and
Chairman of the Board
</TABLE>
New York, New York
April 27, 1999
26
<PAGE>
APPENDIX A
FORM OF PROXY
<PAGE>
(Form of Proxy)
DOUBLECLICK INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - May 24, 1999
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of DoubleClick Inc. hereby appoints Kevin J.
O'Connor and Kevin P. Ryan, and each of them, with full power of substitution,
proxies to vote the shares of stock which the undersigned could vote if
personally present at the Annual Meeting of Stockholders of DoubleClick Inc. to
be held at 80 Fifth Avenue, 17th Floor, New York, New York, 10011 on May 24,
1999 at 9:00 a.m. (New York time).
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
/ / FOR nominees below / / WITHHOLD AUTHORITY
(except as marked to the to vote for nominees below
contrary)
NOMINEES:
David N. Strohm
Dwight A. Merriman
INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name on the space provided below.
2. APPROVAL OF INCREASE IN NUMBER OF SHARES OF COMMON STOCK AVAILABLE
UNDER PLAN
/ / FOR / / AGAINST / / ABSTAIN WITH RESPECT TO
the proposal to approve an increase in the number of shares of Common
Stock available under the Company's 1997 Stock Incentive Plan and limit
the annual automatic share increase under the Plan to 1,200,000 shares.
3. APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
/ / FOR / / AGAINST / / ABSTAIN WITH RESPECT TO
the proposal to approve the amendment to the Company's Amended and
Restated Certificate of Incorporation.
4. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
/ / FOR / / AGAINST / / ABSTAIN WITH RESPECT TO
the proposal to ratify the selection of PricewaterhouseCoopers LLP,
independent public accountants, as auditors of the Company as described
in the Proxy Statement.
<PAGE>
5. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1,
PROPOSAL 2, PROPOSAL 3, PROPOSAL 4 AND PROPOSAL 5.
<PAGE>
Please date and sign exactly as your name appears on the envelope in
which this material was mailed. If shares are held jointly, each
stockholder should sign. Executors, administrators, trustees, etc.
should use full title and, if more than one, all should sign. If the
stockholder is a corporation, please sign full corporate name by an
authorized officer. If the stockholder is a partnership, please sign
full partnership name by an authorized person.
----------------------------------
Name(s) of Stockholder
----------------------------------
Signature(s) of Stockholder
Dated:
