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SCHEDULE 14A INFORMATION
------------------------
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Infoseek Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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 0-11.
(1) Title of each class of securities to which transaction applies: N/A
-----
(2) Aggregate number of securities to which transaction applies: N/A
-----
(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): N/A
-----
(4) Proposed maximum aggregate value of transaction: N/A
-----
(5) Total fee paid: N/A
-----
[_] 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: N/A
-----
(2) Form, Schedule or Registration Statement No.: N/A
-----
(3) Filing Party: N/A
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(4) Date Filed: N/A
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<PAGE>
INFOSEEK CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 14, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Infoseek Corporation, a Delaware corporation (the "Company"), will be held on
Friday, May 14, 1999 at 9:00 a.m., local time, at the Company's principal
executive offices located at 1399 Moffett Park Drive, Sunnyvale, California
94089, for the following purposes:
1. To elect eight (8) directors to serve for the ensuing year and until
their successors are duly elected and qualified;
2. To ratify and approve an amendment to the Company's 1996 Stock
Option/Stock Issuance Plan to provide for an increase in the number of
shares available for grant thereunder by the lesser of (i) 2,400,000
shares, (ii) 4% of the outstanding shares of Common Stock of the Company,
or (iii) such lesser number of shares as determined by the Board of
Directors to take place immediately after stockholder approval and annually
thereafter starting January 1, 2000;
3. To ratify and approve an amendment to the Company's 1996 Stock
Option/Stock Issuance Plan to provide for (i) an increase in the automatic
option grant program for non-employee directors from 15,000 to 40,000
shares upon becoming a director, (ii) a decrease in the automatic option
grant program for non-employee directors from 7,500 to 5,000 shares at the
time of each annual meeting of stockholders thereafter, and (iii) the
establishment of an additional automatic grant of 5,000 shares to non-
employee directors per committee on which such non-employee director serves
at the time of each annual meeting of stockholders thereafter;
4. To ratify and approve an amendment to the Company's Employee Stock
Purchase Plan to provide for an annual increase in the number of shares
available for issuance and sale thereunder by the lesser of (i) 800,000
shares, (ii) 1% of the outstanding shares of Common Stock of the Company,
or (iii) such lesser number of shares as determined by the Board of
Directors;
5. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending October 2, 1999; and
6. To transact such other business as may properly come before the
meeting or at any and all continuation(s) or adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 2, 1999 are
entitled to receive notice of, to attend and to vote at the meeting and any
adjournment thereof.
All stockholders are cordially invited to attend the meeting in person. Any
stockholder attending the meeting may vote in person even if such stockholder
returned a proxy.
FOR THE BOARD OF DIRECTORS
Harry M. Motro
President, Chief Executive Officer
and Director
Sunnyvale, California
April 19, 1999
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED
BE AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE>
INFOSEEK CORPORATION
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors of
Infoseek Corporation (the "Company") for use at the Company's 1999 Annual
Meeting of Stockholders (the "Annual Meeting") to be held Friday, May 14,
1999, at 9:00 a.m., local time, or at any and all continuation(s) or
adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the principal executive offices of the Company, located at 1399
Moffett Park Drive, Sunnyvale, California 94089. The Company's telephone
number at that location is (408) 543-6000.
These proxy solicitation materials were mailed on or about April 19, 1999 to
all stockholders entitled to vote at the Annual Meeting.
Explanatory Note
On November 18, 1998, Infoseek entered into a significant transaction with
The Walt Disney Company. In this transaction, Infoseek acquired Starwave
Corporation ("Starwave") from Disney and formed a holding company,
incorporated in Delaware, for purposes of holding the capital stock of
Infoseek Corporation, a California corporation, and Starwave.
In this Proxy Statement, references to Infoseek Corporation or the "Company"
on or after November 18, 1998 are references to Infoseek Corporation, a
Delaware corporation ("Infoseek Delaware") and its subsidiaries, and
references to Infoseek Corporation or the "Company" prior to November 18 are
references to Infoseek Corporation, a California corporation.
INFORMATION CONCERNING SOLICITATION AND VOTING
Purposes of the Annual Meeting
The purposes of the Annual Meeting are: (i) to elect eight (8) directors to
serve for the ensuing year and until their successors are duly elected and
qualified; (ii) to ratify and approve an amendment to the Company's 1996 Stock
Option/Stock Issuance Plan to provide for an increase in the number of shares
available for grant thereunder by the lesser of (a) 2,400,000 shares, (b) 4%
of the outstanding shares of Common Stock of the Company, or (c) such lesser
number of shares as determined by the Board of Directors to take place
immediately after stockholder approval and annually therafter starting January
1, 2000; (iii) to ratify and approve an amendment to the Company's Stock
Option/Stock Issuance Plan to provide for (a) an increase in the automatic
option grant program for non-employee directors from 15,000 to 40,000 shares
upon becoming a director, (b) a decrease in the automatic option grant program
for non-employee directors from 7,500 to 5,000 shares at the time of each
annual meeting of stockholders thereafter, and (c) the establishment of an
additional automatic grant of 5,000 shares to non-employee directors per
committee on which such non-employee director serves at the time of each
annual meeting of stockholders thereafter; (iv) to ratify and approve an
amendment to the Company's Employee Stock Purchase Plan to provide for an
annual increase in the number of shares available for issuance and sale
thereunder by the lesser of (a) 800,000 shares, (b) 1% of the outstanding
shares of Common Stock of the Company, or (c) such lesser number of shares as
determined by the Board of Directors; (v) to ratify the appointment of Ernst &
Young LLP as independent auditors of the Company for the fiscal year ending
October 2, 1999; and (vi) to transact such other business as may properly come
before the meeting or at any and all continuation(s) or adjournment(s)
thereof.
Record Date and Shares Outstanding
Stockholders of record at the close of business on April 2, 1999 (the
"Record Date") are entitled to notice of, and to vote at the Annual Meeting.
At the Record Date, 61,792,781 shares of the Company's Common Stock
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were issued and outstanding. Pursuant to a governance agreement, The Walt
Disney Company, who as of the Record Date held 26,103,992 shares or
approximately 42.12% of the Company's outstanding common stock as of the
Record Date, has agreed to vote its shares in favor of proposals (i) through
(v) above. Also pursuant to the governance agreement, Infoseek has agreed that
its directors and executive officers, who as of the Record Date together hold
6,251,193 shares or approximately 10.01% of the Company's common stock as of
the Record Date, will vote in favor of the Disney-designated nominees, Steven
M. Bornstein, Robert A. Iger and Jacob ("Jake") J. Winebaum. See "OTHER
INFORMATION--Certain Transactions." For information regarding security
ownership by management and 5% stockholders, see "OTHER INFORMATION--Security
Ownership of Certain Beneficial Owners and Management." The closing price of
the Company's Common Stock on the Nasdaq Stock Market on the last trading day
immediately prior to the Record Date was $76.50 per share.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Annual Meeting and voting in person. Attending
the Annual Meeting in and of itself will not constitute a revocation of proxy.
Voting and Solicitation
Each share of Common Stock outstanding on the Record Date will be entitled
to one (1) vote on all matters. The eight (8) candidates for election as
directors at the Annual Meeting who receive a plurality of the shares of the
Company's outstanding Common Stock present or represented at the Annual
Meeting will be elected. The amendment to the Company's 1996 Stock
Option/Stock Issuance Plan, the amendment to the Company's Employee Stock
Purchase Plan, and the ratification of the appointment of Ernst & Young LLP as
independent auditors for the fiscal year ending October 2, 1999, will require
the affirmative vote of a majority of the shares of the Company's outstanding
Common Stock present or represented at the Annual Meeting.
Shares of Common Stock represented by properly executed proxies will, unless
such proxies have been previously revoked, be voted in accordance with the
instructions indicated thereon. In the absence of specific instructions to the
contrary, properly executed proxies will be voted: (i) FOR the election of
each of the Company's nominees as a director; (ii) FOR ratification and
approval of the amendment to the Company's 1996 Stock Option/Stock Issuance
Plan; (iii) FOR ratification and approval of the amendment to the Company's
Employee Stock Purchase Plan; and (iv) FOR ratification of the appointment of
Ernst & Young LLP as independent auditors for the fiscal year ending October
2, 1999. No business other than that set forth in the accompanying Notice of
Annual Meeting of Stockholders is expected to come before the Annual Meeting.
Should any other matter requiring a vote of stockholders properly arise, the
persons named in the enclosed form of proxy will vote such proxy as the Board
of Directors may recommend.
The cost of this solicitation will be borne by the Company. The Company has
retained a proxy solicitation firm, Morrow & Company, to aid it in the
solicitation process, at a cost to the Company of approximately $5,000 plus
reimbursement of reasonable expenses. The Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation other than
reimbursement of expenses, personally or by telephone, telegram or letter.
Quorum; Abstentions; Broker Non-Votes
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock outstanding on the Record Date.
Shares that are voted "FOR" or "AGAINST" a matter are treated as being present
at the Annual Meeting for purposes of establishing a quorum and are also
treated as shares "represented and voting" at the Annual Meeting (the "Votes
Cast") with respect to such matter.
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Under the General Corporation Law of the State of Delaware, an abstaining
vote and a broker non-vote are counted as present and entitled to vote and
are, therefore, included for purposes of determining whether a quorum of
shares is present at a meeting; however, such votes are not deemed to be Votes
Cast. As a result, abstentions and broker non-votes are not included in the
tabulation of the voting results on the election of directors or issues
requiring approval of a majority of the Votes Cast and, therefore, do not have
the effect of votes in opposition in such tabulations. A broker non-vote
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner.
Interests of Certain Persons
Approval of proposal (iii) set forth above will result in any non-employee
Board member who is not affiliated, whether as a partner, principal, officer
or employee, with any entity that owns 2% or more of the shares of any class
of the Company's outstanding stock receiving an option to purchase an
additional 2,500 shares of common stock following the Annual Meeting and
following future annual meetings. Accordingly, Messrs. Krause, Stover and
Zeisler, each of whom (together with affiliates) owns less than 1% of the
outstanding common stock of the Company, will receive such an award.
Deadline for Receipt of Stockholder Proposals
Proposals of the Company's stockholders that are intended to be presented by
such stockholders at the Company's 2000 Annual Meeting of Stockholders (the
"2000 Annual Meeting") must be received by the Company at its principal
executive offices, no later than December 21, 1999 in order to be considered
for possible inclusion in the Proxy Statement and form of Proxy relating to
the 2000 Annual Meeting.
In addition, proposals of the Company's stockholders that such stockholders
intend to present at the Company's Annual Meeting, but not include in the
Company's Proxy Statement and form of Proxy relating to the Annual Meeting (a
"Non-Rule 14a-8 Proposal"), must be received by the Company at its principal
executive offices no later than February 4, 2000 and no earlier than March 17,
2000. In the event that the Company does not receive timely notice with
respect to a Non-Rule 14a-8 Proposal, management of the Company would use its
discretionary authority to vote the shares it represents as the Board of
Directors may recommend.
Fiscal Year End
On January 28, 1999, the Company changed to a fiscal year with 52 or 53 week
periods ending on the Saturday nearest September 30. Due to the change, Fiscal
1998 was a nine month period beginning January 1, 1998 and ending October 3,
1998 and is referred to herein as the "Last Fiscal Year."
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Directors
A board of eight (8) directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them for the Company's eight (8) nominees named below, all of whom are
currently directors of the Company. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. In the event that
additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them in such a manner as will ensure
the election of as many of the nominees listed below as possible. The term of
office of each person elected as a director will continue until the next
Annual Meeting of Stockholders or until his successor has been duly elected
and qualified or until his earlier death, resignation or removal. It is not
expected that any nominee will be unable or will decline to serve as a
director.
Recommendation of the Board of Directors
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF
THE NOMINEES LISTED BELOW.
Nominees for Director
<TABLE>
<CAPTION>
Name of Nominee Age Position with the Company
--------------- --- -------------------------
<C> <C> <S>
Harry M. Motro................ 38 President, Chief Executive Officer and
Director
Steven T. Kirsch.............. 42 Chairman of the Board of Directors,
Senior Vice President, Kirschworks
Steven M. Bornstein........... 46 Director
Robert A. Iger(1)............. 48 Director
L. William Krause(2).......... 56 Director
Matthew J. Stover(1).......... 43 Director
Jacob ("Jake") J. Winebaum(2). 39 Director
John E. Zeisler(2)............ 46 Director
</TABLE>
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(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Harry M. Motro joined Infoseek in April 1997 as its President and was
appointed Chief Executive Officer and a director of Infoseek in May 1997. From
1995 to April 1997, Mr. Motro served as Senior Vice President of Cable News
Network Inc. in charge of CNN Interactive and News Business Development. From
1988 to 1995, Mr. Motro served in several executive positions with Turner
Broadcasting Inc. and CNN, including Director, Special Projects and External
Reporting, Assistant Vice President, Finance, and Vice President, Business
Development and Strategic Planning. From 1982 to 1988, Mr. Motro served as
Manager, Audit Services, with Coopers & Lybrand LLP. Mr. Motro holds a B.S.
degree in Business from the University of Virginia. Mr. Motro is also a member
of the advisory committee which oversees GO Network.
Steven T. Kirsch, a founder of Infoseek, has been a director of Infoseek
since August 1993 and Chairman of the Board of Directors since December 1995.
From September 1993 to November 1995, Mr. Kirsch also served as President and
Chief Executive Officer of Infoseek and currently is Senior Vice President,
Kirschworks, Infoseek's research and development group. From January 1990 to
December 1993, Mr. Kirsch served as Vice President, New Product Development of
Frame Technology Corporation, a software engineering company which he co-
founded. Mr. Kirsch holds a B.S. degree and an M.S. degree in Electrical
Engineering and Computer Science from the Massachusetts Institute of
Technology.
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Steven M. Bornstein became a director of Infoseek in November 1998. Mr.
Bornstein is President of ABC, Inc., a subsidiary of The Walt Disney Company,
which position he has held since February 1999. Prior thereo, Mr. Bornstein
was President and Chief Executive Officer of ESPN from February 1999 to
September 1990. Mr. Bornstein is a director of ESPN. Mr. Bornstein is a
Disney-designated nominee.
Robert A. Iger became a director of Infoseek in November 1998. Mr. Iger is
President of Walt Disney International and chairman of the ABC Group, which
position he has held since February 1999. Prior thereto, Mr. Iger served as
President of ABC, Inc., from February 1996 to February 1999. Mr. Iger served
as President and Chief Operating Officer of Capital Cities/ABC, Inc. from
September 1994 to February 1996 and as President of the ABC Television Network
from January 1993 to August 1994. Mr. Iger holds a B.S. in Communications from
Ithaca College. Mr. Iger is a Disney-designated nominee.
L. William Krause has served as a director of Infoseek since July 1997.
Since November 1998, Mr. Krause has been President of LWK Ventures, a private
investment company. Mr. Krause served as President, Chief Executive Officer
and as a director of Storm Technology, Inc., a provider of computer
peripherals and software for digital imaging, from October 1991 to November
1998 when it filed for protection under federal bankruptcy laws. Prior to
that, Mr. Krause spent ten years at 3Com Corporation, a manufacturer of global
data networking systems, where he served as President and Chief Executive
Officer until he retired in September 1990. Mr. Krause continued as Chairman
of the Board for 3Com Corporation until 1993. Previously, Mr. Krause served in
various marketing and general management executive positions at Hewlett-
Packard Company. Mr. Krause currently serves as a director of Sybase, Inc. and
Aureal Semiconductor, Inc.
Matthew J. Stover has served as a director of Infoseek since March 1996.
Since December 1997, Mr. Stover has been President and Chairman of the Board
of Bell Atlantic Information Services Group, an international marketing
information services provider. Mr. Stover is also the Chairman of the Board of
Global Directory Services Company. Since January 1994, Mr. Stover has served
as President and Chief Executive Officer of Bell Atlantic Yellow Pages
Company, formerly known as NYNEX Information Resources Company. Since
January 1998, Mr. Stover has served as Chairman of the Board of Bell Atlantic
Yellow Pages. Prior to that, Mr. Stover served as President and Chief
Executive Officer of AGS Computers, Inc. from December 1992 to December 1993,
Vice President, Public Affairs and Corporate Communications of NYNEX
Corporation from May 1990 to December 1992 and Vice President, Communications
for American Express Company from 1987 to 1990. Mr. Stover holds a B.A. degree
in English Language and Literature from Yale University and a certificate from
the Executive Program of the University of Virginia, Colgate Darden Graduate
School of Business Administration.
Jacob ("Jake") J. Winebaum became a director of Infoseek in November 1998.
Mr. Winebaum is Chairman of the Buena Vista Internet Group, a subsidiary of
The Walt Disney Company, which position he has held since April 1998. Prior
thereto, Mr. Winebaum was President of the Buena Vista Internet Group from
March 1997 to March 1998; President of Disney Online from July 1995 to March
1998; President of Disney Magazine Publishing from April 1994 to June 1995;
President of Family PC from February 1994 to June 1995; and President of
Family Fun from February 1992 to June 1995. Mr. Winebaum is also a member of
the advisory committee which oversees GO Network. Mr. Winebaum is a Disney-
designated nominee.
John E. Zeisler has served as a director of Infoseek since May 1995. Mr.
Zeisler is a private investor and on the board of directors of several private
companies. From October 1996 to December, 1998 , Mr. Zeisler served as a
General Partner of InterWest Partners, a venture capital firm. From August
1995 to September 1996, he served as Senior Vice President, Marketing of
NETCOM, an internet company. From 1992 to 1995, he served as President and
Chief Executive Officer of Pensoft Corporation, a software company. From 1987
to 1992, Mr. Zeisler was a co-founder and Vice President, Marketing of Claris
Corporation, a software company. Mr. Zeisler holds a B.S. degree in
Communications from Boston University.
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Required Vote
The eight (8) nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected as directors. Votes withheld from any director are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business, but have no other legal effect in the election of
directors under Delaware law.
Board Meetings and Committees
The Board of Directors of the Company held a total of sixteen (16) meetings
during the Last Fiscal Year. No incumbent director who served as a director
during the Last Fiscal Year attended less than 75% of the aggregate of all
meetings of the Board of Directors and any committees of the Board on which he
served, if any, during the Last Fiscal Year./1/ The Board of Directors has an
Audit Committee and a Compensation Committee, but does not have a nominating
committee or a committee performing the functions of a nominating committee.
The Audit Committee of the Board of Directors currently consists of Messrs.
Iger and Stover. During the nine month period comprising the Last Fiscal Year,
the Audit Committee held two (2) meetings. The Audit Committee 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
auditors, the scope of the annual audits, fees to be paid to the auditors, the
performance of the Company's auditors and the accounting practices and
internal controls of the Company.
The Compensation Committee of the Board of Directors currently consists of
Messrs. Krause, Winebaum and Zeisler. During the nine month period comprising
the Last Fiscal Year, the Compensation Committee held one (1) meeting. The
Compensation Committee establishes salaries, incentives and other forms of
compensation for officers and other employees of the Company and administers
the incentive compensation and benefit plans of the Company.
Director Compensation
The Company's directors receive an annual retainer of $12,000, paid
quarterly, for services provided as a director plus $1,000 per meeting of the
Board of Directors attended and are reimbursed for their out-of-pocket travel
expenses associated with their attendance of Board meetings. The Company does
not pay additional compensation for committee participation or special
assignments of the Board of Directors. There are no family relationships among
any of the directors and executive officers of the Company.
Under the Automatic Option Grant Program of the Company's 1996 Stock
Option/Stock Issuance Plan, eligible non-employee Board members receive a
series of option grants over their period of Board service. However, a non-
employee Board member who is affiliated, whether as a partner, principal,
officer or employee, with any entity that owns 2% or more of the shares of any
class of the Company's outstanding stock will not be eligible to receive any
automatic option grants under such program during his or her period of Board
service. Each eligible individual who first becomes a non-employee Board
member receives a 15,000 share option grant on the date such individual joins
the Board, provided such individual has not been in the prior employ of the
Company. In addition, on the date of each Annual Stockholders Meeting, each
eligible non-employee Board member who is to continue to serve as a non-
employee Board member will automatically be granted an option to purchase
7,500 shares of Common Stock provided such individual has served on the Board
for at least six months. There is no limit on the number of such 7,500 share
option grants any one eligible non-employee Board member may receive over his
or her period of continued Board service.
- --------
/1/Messrs. Bornstein, Iger and Winebaum became directors of Infoseek in
November 1998, after the end of the Last Fiscal Year.
6
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PROPOSAL NO. 2
RATIFICATION AND APPROVAL OF THE AMENDMENT
TO THE 1996 STOCK OPTION/STOCK ISSUANCE PLAN
General
The Company's 1996 Stock Option/Stock Issuance Plan (the "1996 Plan") was
adopted by the Board of Directors on April 10, 1996 and approved by
stockholders on May 15, 1996. The 1996 Plan was assumed by Infoseek Delaware
on November 18, 1998. As of the Record Date, there are a total of 9,925,000
shares reserved for issuance under the 1996 Plan. As of the Record Date,
options to purchase approximately 7,405,206 shares were outstanding under the
1996 Plan and an aggregate of 19,035 shares were available for future grant
thereunder.
Proposal
In April 1999, the Board of Directors approved an amendment to the 1996 Plan
to provide for annual increases, to occur automatically as of the date of the
Annual Meeting and on January 1 of each year thereafter, for the duration of
the 1996 Plan, in the number of shares reserved for issuance thereunder by the
lesser of (i) 2,400,000 shares, (ii) 4% of the outstanding shares of Common
Stock of the Company or (iii) such lesser number of shares as determined by
the Board of Directors (the "Evergreen Amendment"). At the Annual Meeting, the
stockholders are being requested to approve the Evergreen Amendment. This
Evergreen Amendment is proposed in order to ensure enough options are
available, in the long term, to provide for continued growth of the Company.
The Company believes that grants of stock options motivate high levels of
performance and provide an effective means of recognizing employee
contributions to the success of the Company. At present, most newly hired
full-time employees are granted options. The Company believes that this policy
will continue to be of great value in recruiting and retaining highly
qualified technical and other key personnel. The Board of Directors believes
that the ability to grant options will be important to the future success of
the Company by allowing it to remain competitive in attracting and retaining
such key personnel.
Description of the 1996 Plan
Purpose
The purpose of the 1996 Plan is to attract and retain the best available
personnel for positions of substantial responsibility by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Company, as a means to promote the
success of the Company's business.
Plan Components
The 1996 Plan is divided into three separate components: (i) the
Discretionary Option Grant Program under which eligible individuals in the
Company's employ or service may, at the discretion of the Plan Administrator,
be granted options to purchase shares of Common Stock at an exercise price not
less than 85% of their fair market value on the grant date, (ii) the Stock
Issuance Program under which such individuals may, in the Plan Administrator's
discretion, be issued shares of Common Stock directly, through the purchase of
such shares at a price not less than 85% of their fair market value at the
time of issuance or as a bonus tied to the performance of services, and (iii)
the Automatic Option Grant Program under which option grants will
automatically be made at periodic intervals to eligible non-employee Board
members to purchase shares of Common Stock at an exercise price equal to 100%
of their fair market value on the grant date.
Administration
The 1996 Plan is administered by the Board of Directors of the Company or by
one or more committees of the Board of Directors (the "Plan Administrator").
All grants under the Discretionary Option Grant Program
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and the Stock Issuance Program are currently being administered by the Board
of Directors. All questions of interpretation of the 1996 Plan are determined
by the Plan Administrator, and such determinations are final and binding upon
all participants. Under the Discretionary Option Tract Program and the Stock
Issuance Program, the Plan Administrator will have complete discretion to
determine which eligible individuals are to receive option grants or stock
issuances, the time or times when such option grants or stock issuances are to
be made, the number of shares subject to each such grant or issuance, the
status of any granted option as either an incentive stock option or a
nonstatutory stock option under the federal tax laws, the vesting schedule to
be in effect for the option grant or stock issuance including the acceleration
thereof, and the maximum term for which any granted option is to remain
outstanding. In no event, however, may any one participant in the 1996 Plan
receive option grants or direct stock issuances for more than 1,000,000 shares
per calendar year.
Eligibility
The Discretionary Option Grant Program and the Stock Issuance Program of the
1996 Plan permit participation by employees, non-employee Board members,
consultants and other independent advisors of the Company or its majority-
owned subsidiaries. Incentive Stock Options may be granted only to employees,
including officers. Nonstatutory Stock Options may be granted to employees,
consultants or other independent advisors of the Company.
The Automatic Option Grant Program of the 1996 Plan permits participation by
non-employee Board members, other than those Board members who are affiliated,
whether as a partner, principal, officer or employee, with any entity that
owns 2% or more of the shares of any class of the Company's outstanding stock.
Stock Option and Stock Grant Terms
The terms of stock options granted and stock issued under the 1996 Plan may
be determined by the Plan Administrator, except that stock options granted
pursuant to the Automatic Option Grant Program shall be governed by the self-
executing terms of such program. Each stock option or stock grant is evidenced
by a stock option or stock issuance agreement, as the case may be, between the
Company and the person to whom such option is granted or such stock is issued,
as the case may be, and is normally subject to the following additional terms
and conditions:
(a) Vesting Provisions: The Plan Administrator determines the vesting
terms of the options granted or stock issued under the 1996 Plan. Stock
grants pursuant to the Stock Issuance Program may be fully and immediately
vested upon issuance or may vest in one or more installments over the
participant's period of service or upon the attainment of specified
performance objective. Options granted under the Discretionary Option Grant
Program generally vest and become exercisable as to 25% of the shares one
year from the date of grant and the balance in monthly increments over the
subsequent three years of service. Each automatic option granted pursuant
to the Automatic Option Grant Program will be immediately exercisable;
however, any unvested shares so purchased will be subject to repurchase
should the optionee cease service as a Board member prior to vesting in
those shares. Each automatic option grant will vest in four successive
equal annual installments over the optionee's period of Board service. An
option is exercised by giving written notice of exercise to the Company,
specifying the number of full shares of Common Stock to be purchased, and
tendering payment to the Company of the purchase price. The purchase price
of the shares purchased upon exercise of any option or upon the issuance of
stock, as the case may be, shall be paid in consideration of such form as
is determined by the Plan Administrator, and such form of consideration may
vary for each stock option or stock grant.
(b) Exercise or Purchase Price: The exercise prices of option grants
under the 1996 Plan are determined by the Plan Administrator. In the case
of an incentive stock option granted to an employee or of a stock option
granted pursuant to the Automatic Option Grant Program, the exercise price
must not be less than 100% of the fair market value of the Common Stock on
the date the option is granted, with the exception that in the case of an
option granted to a stockholder who, immediately prior to such grant, owns
stock representing more than 10% of the voting power or value of all
classes of stock of the Company, the
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<PAGE>
exercise price must not be less than 110% of such fair market value. In the
case of a nonstatutory option granted to any other eligible person or of
stock granted pursuant to the Stock Issuance Program, the per share
exercise price or purchase price, as the case may be, shall be no less than
85% of fair market value per share on the date of grant or issuance.
(c) Termination of Employment or Service: If the participant's status as
an employee, non-employee director, consultant or other independent advisor
terminates for any reason other than death or disability, options under the
1996 Plan may be exercised within such period of time after such
termination as the Plan Administrator may determine, but only to the extent
the options were exercisable on the date of termination, and in the case of
options granted pursuant to the Automatic Option Grant Program within a
period of not less than six (6) months from the date of termination of the
optionee's Board service. If any optionee's employment or service is
terminated for misconduct, then all outstanding options held by the
optionee shall terminate immediately and cease to be outstanding. Upon the
termination of any participant in the Stock Issuance Plan, all unvested
shares of stock issued shall be immediately surrendered for cancellation.
(d) Death or Permanent Disability: If an optionee should die or become
permanently disabled while employed by the Company, options may be
exercised by the optionee or the personal representative of the optionee's
estate, as the case may be, within such period of time after such death or
permanent disability as the Plan Administrator may determine, but only to
the extent such options were exercisable on such date and in no event later
than the expiration of the term of such options. The terms of the Automatic
Option Grant Program provide that if the optionee's cessation of Board
service occurs by reason of death or permanent disability, then the
optionee or the personal representative of the optionee's estate, as the
case may be, shall have twelve (12) months or six (6) months, respectively,
during which to exercise the option, but only to the extent such options
were exercisable on such date and in no event later than the expiration of
the term of such options.
(e) Termination of Options: Options granted under the 1996 Plan expire
ten (10) years from the date of grant or such shorter term as may be
provided in the notice of grant. No option may be exercised by any person
after such expiration.
(f) Nontransferability of Options: An option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner, other
than by will, pursuant to the laws of descent or distribution or pursuant
to a qualified domestic relations order, and may be exercised only by the
optionee during his lifetime or, in the event of death, by a person who
acquires the right to exercise the option by bequest or inheritance or by
reason of the death of the optionee.
(g) Other Provisions: The stock option agreement or stock issuance
agreement, as the case may be, may contain such other terms, provisions and
conditions not inconsistent with the 1996 Plan as may be determined by the
Plan Administrator.
Adjustments Upon Changes in Capitalization or Changes in Control
In the event any change is made in the Company's capitalization which
results from a stock split, stock dividend, recapitalization, combination of
shares or any other increase or decrease in the number of shares of Common
Stock effected without receipt of consideration, appropriate adjustments shall
be made with respect to shares and options available under the 1996 Plan.
In the event that the Company is acquired by merger or asset sale, each
outstanding option under the Discretionary Option Grant Program, which is not
to be assumed or replaced by 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 authority under the Discretionary Option
Grant Program and the Stock Issuance Program to grant options and to structure
repurchase rights so that the shares subject to those options or repurchase
rights will automatically vest in the event the individual's service is
terminated, whether involuntarily or through a resignation for good reason,
within 12 months following a merger or asset sale in which those options are
assumed or those repurchase rights are assigned.
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<PAGE>
The Plan Administrator will also have discretion to issue limited stock
appreciation rights under the Discretionary Option Grant Program which will
provide the holders with the right, upon the successful completion of a
hostile tender offer for more than 50% of the Company's outstanding voting
securities, to surrender their outstanding options for a cash distribution
from the Company in an amount per surrendered option share equal to the excess
of (i) the highest reported price per share paid in effecting the takeover
(ii) the option exercise price payable per share.
Amendment and Termination
The Board of Directors may at any time or from time to time amend, alter,
suspend or terminate the 1996 Plan without the approval of the stockholders;
provided, however, that (i) the Automatic Option Grant Program cannot be
amended more frequently than once every six months, and (ii) stockholder
approval is required to the extent necessary to comply with Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, or applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), or any successor
rule or provision or any other applicable law or regulation. Such stockholder
approval, if required, shall be obtained in such a manner and to such a degree
as is required by applicable law, rule or regulation. No action by the Board
of Directors or stockholders may unilaterally alter or impair any rights
previously granted under the 1996 Plan without the written consent of the
optionee. The 1996 Plan will terminate by its terms not later than April 30,
2006.
Certain Tax Information
Options granted under the 1996 Plan may be either "incentive stock options,"
as defined in Section 422 of the Code, or "nonstatutory stock options."
If an option granted under the 1996 Plan is an incentive stock option, the
optionee will recognize no income upon grant of the incentive stock option and
incur no tax liability due to the exercise unless the optionee is subject to
the alternative minimum tax. Upon the sale or exchange of the shares at least
two (2) years after grant of the option and one (1) year after receipt of the
shares by the optionee, any gain or loss will be treated as capital gain or
loss. If these holding periods are not satisfied, the optionee will recognize
ordinary income equal to the difference between the exercise price and the
lower of the fair market value of the stock at the date of the option exercise
or the sale price of the stock. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an
officer, director or 10% stockholder of the Company. The Company will be
entitled to a deduction in the same amount as the ordinary income recognized
by the optionee. Any gain or loss recognized on such a premature disposition
of the shares in excess of the amount treated as ordinary income will be
characterized as long-term, or short-term capital gain or loss, depending on
the holding period.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory stock options. An optionee will not recognize any
taxable income at the time he is granted a nonstatutory option. However, upon
its exercise, the optionee will recognize ordinary income for tax purposes
measured by the excess of the then fair market value of the shares over the
option price. In certain circumstances, where the shares are subject to a
substantial risk of forfeiture when acquired or where the optionee is an
officer, director or 10% stockholder of the Company, the date of taxation may
be deferred if the optionee files an election with the Internal Revenue
Service under Section 83(b) of the Code. The income recognized by an optionee
who is also an employee of the Company will be subject to tax withholding by
the Company by payment in cash or out of the current earnings paid to the
optionee. Upon resale of such shares by the optionee, any difference between
the sales price and the exercise price, to the extent not recognized as
ordinary income as provided above, will be treated as capital gain or loss.
The Company will be entitled to a tax deduction in the amount and at the
time that the optionee recognizes ordinary income with respect to shares
acquired upon exercise of a nonstatutory stock option.
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<PAGE>
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the 1996 Plan, does not purport to be complete, and does not
discuss the income tax laws of any municipality, state or foreign country in
which an optionee may reside.
Required Vote
The affirmative vote of the holders of a majority of the Votes Cast is
required to approve the Evergreen Amendment to the 1996 Plan.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE EVERGREEN
AMENDMENT TO THE 1996 PLAN.
PROPOSAL NO. 3
RATIFICATION AND APPROVAL OF THE AMENDMENT
TO THE 1996 STOCK OPTION/STOCK ISSUANCE PLAN
General
Under the Automatic Option Grant Program of the Company's 1996 Stock
Option/Stock Issuance Plan, eligible non-employee Board members receive a
series of option grants over their period of Board service. However, a non-
employee Board member who is affiliated, whether as a partner, principal,
officer or employee, with any entity that owns 2% or more of the shares of any
class of the Company's outstanding stock is not eligible to receive any
automatic option grants under such program during his or her period of Board
service. Presently, each eligible individual who first becomes a non-employee
Board member receives a 15,000 share option grant on the date such individual
joins the Board, provided such individual has not been in the prior employ of
the Company. In addition, on the date of each Annual Stockholders Meeting,
each eligible non-employee Board member who is to continue to serve as a non-
employee Board member is automatically granted an option to purchase 7,500
shares of Common Stock provided such individual has served on the Board for at
least six months. There is no limit on the number of such 7,500 share option
grants any one eligible non-employee Board member may receive over his or her
period of continued Board service.
Proposal
In April 1999, the Board of Directors approved an amendment to the 1996 Plan
to provide for an increase in the automatic option grant program for non-
employee directors from (i) 15,000 to 40,000 upon becoming a director, and
(ii) 7,500 to 10,000 at the time of each annual meeting of stockholders
thereafter, including this Annual Meeting. At the Annual Meeting, the
stockholders are being requested to approve this Amendment. The Company
believes that grants of stock options motivate high levels of performance from
directors and provide an effective means of recognizing directors'
contributions to the success of the Company. The Company believes that this
policy is of great value in recruiting and retaining highly qualified
individuals to serve on the Company's Board of Directors. The Board of
Directors believes that this increase will be important to the future success
of the Company by allowing it to remain competitive in attracting and
retaining such qualified individuals to serve on the Company's Board of
Directors.
Required Vote
The affirmative vote of the holders of the Votes Cast is required to approve
the foregoing Amendment to the 1996 Plan.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOREGOING
AMENDMENT TO THE 1996 PLAN.
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PROPOSAL NO. 4
RATIFICATION AND APPROVAL OF THE AMENDMENT
TO EMPLOYEE STOCK PURCHASE PLAN
General
The Company's Employee Stock Purchase Plan (the "Purchase Plan") was adopted
by the Board of Directors on April 10, 1996 and approved by stockholders on
May 15, 1996. The Purchase Plan was assumed by Infoseek Delaware on November
18, 1998. As of the Record Date, a total of 987,500 shares of Common Stock
were reserved for issuance and sale under the Purchase Plan. As of the Record
Date, options to purchase approximately 116,752 shares have been purchased
under the Purchase Plan and an aggregate of 870,748 shares were available for
future sale thereunder.
Proposal
Recent accounting pronouncements have altered the accounting treatment in
the case of a shortfall of shares reserved for issuance under an employee
stock purchase plan. As a result, if a shortfall occurs during a purchase
period, the Company may not be able to provide for an increase to address such
a shortfall without incurring a significant compensation charge. Therefore, in
April 1999, the Board of Directors approved the amendment to the Purchase Plan
which would automatically increase the shares reserved for issuance under the
Purchase Plan according to a pre-set formula and proposed that it be approved
by the stockholders at this Annual Meeting. While such an amendment minimizes
the likelihood of a shortfall and resulting compensation charge, the Purchase
Plan will require periodic monitoring to ensure that no shortfall occurs. To
minimize the risk of incurring such a compensation charge in the future, the
Board of Directors, in April 1999, approved amendment to the Purchase Plan to
provide for annual increases, to occur automatically for the duration of the
Purchase Plan on January 1 of each year, in the number of shares reserved for
issuance thereunder equal to the lesser of (i) 800,000 shares, (ii) 1% of the
outstanding shares of Common Stock of the Company or (iii) such lesser number
of shares as determined by the Board of Directors (the "Evergreen Amendment").
At the Annual Meeting, the stockholders are being requested to approve the
Evergreen Amendment to the Purchase Plan.
Description of the Purchase Plan
General. The purpose of the Purchase Plan is to provide employees with an
opportunity to purchase Common Stock of the Company through payroll
deductions.
Administration. The Purchase Plan is to be administered by a Plan
Administrator. The Plan Administrator consists of a committee of two (2) or
more members of the Board of Directors (the "Board"). All questions of
interpretation or application of the Purchase Plan are determined by the Plan
Administrator and its decisions are final, conclusive and binding upon all
participants.
Eligibility. Each employee of the Company (including officers), whose
customary employment with the Company is at least twenty (20) hours per week
and more than five (5) months in any calendar year, is eligible to participate
in an Offering Period (as defined below); provided, however, that no employee
shall be granted an option under the Purchase Plan (i) to the extent that,
immediately after the grant, such employee would own 5% of either the voting
power or value of the stock of the Company, or (ii) to the extent that his or
her rights to purchase stock under all employee stock purchase plans of the
Company accrues at a rate which exceeds twenty-five thousand dollars ($25,000)
worth of stock (determined at the fair market value of the shares at the time
such option is granted) for each calendar year. Eligible employees become
participants in the Purchase Plan by filing with the Company an enrollment
form (including a stock purchase agreement and a payroll deduction
authorization) prior to the beginning of each Offering Period unless a later
time for filing the enrollment form has been set by the Plan Administrator.
Participation in an Offering. The Purchase Plan is implemented by
consecutive overlapping offering periods lasting for two (2) years (an
"Offering Period"), with a new Offering Period commencing every
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six months. Common Stock may be purchased under the Purchase Plan every six
(6) months (a "Purchase Period"), unless the participant withdraws or
terminates employment earlier. To the extent the fair market value of the
Common Stock on any exercise date in an Offering Period is lower than the fair
market value of the Common Stock on the first day of the Offering Period, then
all participants in such Offering Period will be automatically withdrawn from
such Offering Period immediately after the exercise of their options on such
exercise date and automatically re-enrolled in the immediately following
Offering Period as of the first day thereof. The Plan Administrator may change
the duration of the Purchase Periods or the length or date of commencement of
an Offering Period prior to the relevant start date. To participate in the
Purchase Plan, each eligible employee must authorize payroll deductions
pursuant to the Purchase Plan. Such payroll deductions may not exceed 10% of a
participant's compensation. Once an employee becomes a participant in the
Purchase Plan, the employee will automatically participate in each successive
Offering Period until such time as the employee withdraws from the Purchase
Plan or the employee's employment with the Company terminates. At the
beginning of each Offering Period, each participant is automatically granted
options to purchase shares of the Company's Common Stock. The option expires
at the end of the Purchase Period or upon termination of employment, whichever
is earlier, but is exercised at the end of each Purchase Period to the extent
of the payroll deductions accumulated during such Purchase Period. The number
of shares subject to the option may not exceed 500 shares of the Company's
Common Stock on the first day of the Purchase Period.
Purchase Price, Shares Purchased. Shares of Common Stock may be purchased
under the Purchase Plan at a price not less than 85% of the lesser of the fair
market value of the Common Stock on (i) the first day of the Offering Period
or (ii) the last day of Purchase Period. The "fair market value" of the Common
Stock on any relevant date will be the closing price per share as reported on
The Nasdaq National Market (or the mean of the closing bid and asked prices,
if no sales were reported) as quoted on such exchange. The number of shares of
Common Stock a participant purchases in each Purchase Period is determined by
dividing the total amount of payroll deductions withheld from the
participant's compensation during that Purchase Period by the purchase price.
Termination of Employment. Termination of a participant's employment for any
reason, including disability or death, or the failure of the participant to
remain in the continuous scheduled employ of the Company for at least 20 hours
per week for more than five (5) months per calendar year, cancels his or her
option and participation in the Purchase Plan immediately. In such event, the
payroll deductions credited to the participant's account will be returned to
him or her or, in the case of death, to the person or persons entitled thereto
as provided in the Purchase Plan.
Adjustment Upon Change in Capitalization. In the event that the stock of the
Company is changed by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other change in the capital
structure of the Company effected without the receipt of consideration,
appropriate proportional adjustments shall be made in the number and class of
shares of stock subject to the Purchase Plan, the number and class of shares
of stock subject to options outstanding under the Purchase Plan, and the
exercise price of any such outstanding options.
Amendment and Termination of the Plan. The Board of Directors may at any
time terminate or amend the Purchase Plan. No amendment shall be effective
unless it is approved by the holders of a majority of the votes cast at a duly
held stockholders' meeting, if such amendment would materially increase the
number of shares of Common Stock issuable under the Purchase Plan or the
maximum number of shares purchasable per participant on any one purchase date,
except for permissible adjustments in the event of certain changes in the
Company's capitalization, alter the purchase price formula so as to reduce the
purchase price payable for the shares of Common Stock purchasable under the
Purchase Plan or materially increase the benefits accruing to participants or
materially modify the requirements for eligibility to participant in the
Purchase Plan. The Purchase Plan will terminate not later than the last
business day in July 2006.
Withdrawal. Generally, a participant may withdraw from an Offering Period at
any time without affecting his or her eligibility to participate in future
Offering Periods. However, once a participant withdraws from a particular
offering, that participant may not participate again in the same offering.
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Federal Tax Information for Purchase Plan. The Purchase Plan, and the right
of participants to make purchases thereunder, is intended to qualify under the
provisions of Sections 421 and 423 of the Code. Under these provisions, no
income will be taxable to a participant until the shares purchased under the
Purchase Plan are sold or otherwise disposed of. Upon sale or other
disposition of the shares, the participant will generally be subject to tax
and the amount of the tax will depend upon the holding period. If the shares
are sold or otherwise disposed of more than two (2) years from the first day
of the Offering Period or more than one (1) year from the date of transfer of
the stock to the participant, then the participant will recognize ordinary
income measured as the lesser of (i) the excess of the fair market value of
the shares at the time of such sale or disposition over the purchase price, or
(ii) an amount equal to 15% of the fair market value of the shares as of the
first day of the Offering Period. Any additional gain will be treated as long-
term capital gain. If the shares are sold or otherwise disposed of before the
expiration of this holding period, the participant will recognize ordinary
income generally measured as the excess of the fair market value of the shares
on the date the shares are purchased over the purchase price. Any additional
gain or loss on such sale or disposition will be long-term, mid-term or short-
term capital gain or loss, depending on the holding period. The Company is not
entitled to a deduction for amounts taxed as ordinary income or capital gain
to a participant except to the extent of ordinary income is recognized by
participants upon a sale or disposition of shares prior to the expiration of
the holding period(s) described above.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the shares purchased
under the Purchase Plan. Reference should be made to the applicable provisions
of the Code. In addition, the summary does not discuss the tax consequences of
a participant's death or the income tax laws of any state or foreign country
in which the participant may reside.
Required Vote
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the meeting is required to approve the Evergreen
Amendment to the Purchase Plan.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE EVERGREEN
AMENDMENT TO THE PURCHASE PLAN.
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PROPOSAL NO. 5
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for
the fiscal year ending October 2, 1999 and seeks ratification of such
appointment. In the event of a negative vote on such ratification, the Board
of Directors will reconsider its appointment.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Required Vote
The affirmative vote of the holders of a majority of the Votes Cast is
required to ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending October 2, 1999.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT
OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING OCTOBER 2, 1999.
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OTHER INFORMATION
Executive Officers
In addition to Messrs. Motro and Kirsch, the following persons were
executive officers of the Company as of the Record Date:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Barak Berkowitz........... 45 Senior Vice President, Marketing and
International
Bhagwan D. ("B.D.") Goel.. 35 Senior Vice President and General Manager,
Commerce
Beth A. Haggerty.......... 40 Senior Vice President, Worldwide Sales and
Strategic Partnerships
Patrick J. Naughton....... 34 Executive Vice President of Products
Andrew E. Newton.......... 56 Vice President, General Counsel and
Secretary
Leslie E. Wright.......... 45 Senior Vice President, Chief Administrative
Officer and Chief Financial Officer
</TABLE>
Barak Berkowitz joined Infoseek in October 1997 as Vice President, Marketing
and became Senior Vice President and General Manager, GO Network in November
1998. In January 1999, Mr. Berkowitz was appointed Senior Vice President,
Marketing and International. In August 1990, Mr. Berkowitz founded
MarketCentrix, a marketing consulting firm servicing technology-based
companies. Mr. Berkowitz acted as President of MarketCentrix from August 1990
to July 1994, and again from October 1996 until October 1997. From July 1994
to October 1996, Mr. Berkowitz was Vice President and General Manager for the
American region of Logitech, Inc., a computer peripherals company. Mr.
Berkowitz studied Psychology and Biology at the City College of New York.
Bhagwan D. ("B.D.") Goel joined Infoseek in September 1998 as Senior Vice
President and General Manager, Commerce. From 1996 to 1998, Mr. Goel served as
Vice President Products and Services of Internet Shopping Network, an internet
business infrastructure company and wholly-owned subsidiary of USA Networks,
Inc. From 1994 to 1996, Mr. Goel served as Vice President, Products
Development for Worldwide Systems Corporation, a publisher of online travel
information and a joint venture between Ameritech and Random House. From 1989
to 1994, Mr. Goel was Director of Product Development for KnowledgeSet
Corporation (now Banta Intergrated Media), a developer of alternative
electronic media applications. Mr. Goel holds a Bachelor of Technology in
Electrical Engineering from the Indian Institute of Technology in New Delhi,
India, and an M.S. degree in Electrical Engineering from the University of
Toledo and is a candidate for a Ph.D. in Computer Science from Michigan State
University.
Beth A. Haggerty joined Infoseek in August 1997 as Vice President, Worldwide
Advertising Sales and became Senior Vice President, Worldwide Sales and
Strategic Partnerships in November 1998. From 1995 to April 1997, Ms. Haggerty
served as Publishing Director of NetGuide Magazine, a CMP Media publication
("CMP"), and most recently as Publishing Director of CMPnet, the Internet
Media Group of CMP. In August 1996, Ms. Haggerty also managed the launch of
CMP's online product, NetGuide Live. From 1994 to 1995, Ms. Haggerty was a
partner and co-founder of Interactive Enterprises, a Ziff Davis venture, and a
Publisher of Inter@ctiveWeek magazine. From 1986 to 1994, Ms. Haggerty served
in various capacities with CMP, including senior-level sales and marketing
management positions for Information Week magazine, National Sales Manager for
Network Computing magazine and Publisher of CommunicationsWeek magazine. Ms.
Haggerty holds a B.S. degree in Political Science from Rutgers University.
Patrick J. Naughton joined Infoseek in November 1998 as Senior Vice
President and Chief Technical Officer and became Executive Vice President of
Products in January 1999. Prior to joining Infoseek, Mr. Naughton was
President and Chief Technology Officer of Starwave, which position he had held
since April 1997. From July 1996 to April 1997, Mr. Naughton served as
Starwave's Senior Vice President, Technology. From October 1994 to July 1996,
Mr. Naughton served as Starwave's Vice President, Technology. From January
1993 to October 1994, Mr. Naughton served as Chief Technologist of First
Person, Inc., a
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Sun Microsystems subsidiary formed to commercialize Java technologies.
Beginning in June 1988, Mr. Naughton was employed by Sun Microsystems, where
he was involved in a research project in December 1990 in the Sun Microsystems
Laboratories which conceived the Java programming language. Mr. Naughton holds
a B.S. degree in Computer Science from Clarkson University.
Andrew E. Newton, a founder of Infoseek, has served as Vice President and
General Counsel since January 1994 and Secretary since March 1994. From
February 1989 to November 1993, Mr. Newton was Vice President and General
Counsel of Frame Technology Corporation, a software engineering company.
Mr. Newton holds an A.B. degree in English from Dartmouth College and a J.D.
degree from Columbia University School of Law.
Leslie E. Wright joined Infoseek in August 1997 as Vice President, Finance
and Chief Financial Officer and was appointed Senior Vice President and Chief
Operating Officer in August 1998. In November 1998, Mr. Wright resumed the
role of Chief Financial Officer in addition to his role as Senior Vice
President and Chief Operating Officer. In January 1999, Mr. Wright became
Senior Vice President, Chief Administrative Officer and Chief Financial
Officer. From 1994 to July 1997, Mr. Wright worked with Fractal Design
Corporation, a graphics software company, where from May 1995 to July 1997 he
served as Chief Operating Officer. From 1984 to 1994, Mr. Wright worked with
The ASK Group, Inc., a software company, where from 1986 through 1994, he
served as Executive Vice President and Chief Financial Officer. Mr. Wright
holds a B.S. degree in Business from San Jose State University and is a
Certified Public Accountant in the State of California.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to file
certain reports regarding ownership of, and transactions in, the Company's
securities with the Securities and Exchange Commission and with The Nasdaq
Stock Market, Inc. Such officers, directors, and 10% stockholders are also
required to furnish the Company with copies of all Section 16(a) forms that
they file.
Based solely on its review of copies of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) and Forms 5 and amendments
thereto furnished to the Company with respect to the Last Fiscal Year, and any
written representations referred to in Item 405(b)(2)(i) of Regulation S-K
stating that no Forms 5 were required, the Company believes that, during the
Last Fiscal Year, all Section 16(a) filing requirements applicable to the
Company's officers and directors were complied with.
17
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial
ownership of Infoseek common stock as of the Record Date (except as otherwise
noted) by (i) each director of Infoseek, (ii) Infoseek's Chief Executive
Officer and each of the four other most highly compensated executive officers
of Infoseek during the nine month fiscal period ended October 3, 1998, (iii)
all directors and executive officers of Infoseek as a group, and (iv) all
those known by Infoseek to be beneficial owners of more than five percent of
outstanding shares of Infoseek common stock. This table is based on
information provided to Infoseek or filed with the Securities and Exchange
Commission by Infoseek's directors, executive officers and principal
stockholders. Unless otherwise indicated in the footnotes below, and subject
to community property laws were applicable, each of the named persons has sole
voting and investment power with respect to the shares shown as beneficially
owned.
<TABLE>
<CAPTION>
Number of Percentage of
Shares Outstanding
Beneficially Infoseek
Beneficial Owner Owned (1) Common Stock
- ---------------- ------------ -------------
<S> <C> <C>
Steven T. Kirsch(2).............................. 5,498,334 8.89%
Harry M. Motro(3)................................ 558,790 *
Matthew J. Stover(4)............................. 164,384 *
John E. Zeisler(5)............................... 74,790 *
L. William Krause(6)............................. 20,833 *
Leslie E. Wright(7).............................. 86,406 *
Beth A. Haggerty(8).............................. 83,517 *
Barak Berkowitz(9)............................... 78,521 *
Patrick J. Naughton(10).......................... 482,729 *
John Nauman(11).................................. 81,245 *
Andrew E. Newton(12)............................. 516,747 *
Steven Bornstein(13)............................. 0 0
Robert Iger(13).................................. 0 0
Jake Winebaum(13)................................ 0 0
The Walt Disney Company(14)(15).................. 26,771,358(15) 42.86%
All directors and executive officers as a group
(14 persons)(16)................................ 7,646,296 12.10%
</TABLE>
- --------
* Represents less than 1%.
(1) Based on 61,792,781 shares outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, the aggregate number
of shares of common stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of April 2, 1999 are
deemed outstanding. Shares issuable pursuant to such options are deemed
outstanding for computing the percentage of the person holding such
options but are not deemed outstanding for computing the percentage of
any other person. To Infoseek's knowledge, except as set forth in the
footnote to this table and subject to applicable community property laws,
each party named in the table has sole voting and investment power with
respect to the shares set forth opposite such party's name. The address
for each of Messrs. Kirsch, Motro, Naughton, Stover, Zeisler, Krause,
Wright, Berkowitz, Nauman, Newton and Ms. Haggerty is as follows: c/o
Infoseek Corporation, 1399 Moffett Park Drive, Sunnyvale,
California 94089. The address for each of Messrs. Bornstein, Iger and
Winebaum is as follows: c/o The Walt Disney Company, 500 South Buena
Vista Street, Burbank, California 91521.
(2) Represents 5,488,855 shares held in the name of trusts for the benefit of
Mr. Kirsch and his family members. Includes 9479 shares issuable pursuant
to stock options that may be exercised within 60 days after April 2,
1999.
(3) Includes 557,290 shares issuable pursuant to stock options that may be
exercised within 60 days after April 2, 1999.
(4) Includes 15,000 shares issuable pursuant to stock options held in the
name of Mr. Stover for the benefit of Bell Atlantic Corporation which may
be exercised within 60 days after April 2, 1999, of which
18
<PAGE>
10,313 shares would be subject to Infoseek's right of repurchase. Also
includes 149,384 shares held by Bell Atlantic Electronic Commerce
Services, Inc., 35 Village Road, Middleton, Massachusetts 01949.
Mr. Stover disclaims beneficial ownership of such shares.
(5) Includes 62,291 shares issuable pursuant to stock options that may be
exercised within 60 days after April 2, 1999, of which 12,188 shares
would be subject to Infoseek's right of repurchase.
(6) Includes 20,833 shares issuable pursuant to stock options that may be
exercised within 60 days after April 2, 1999, of which 13,125 shares
would be subject to Infoseek's right of repurchase.
(7) Includes 86,406 shares issuable pursuant to stock options that may be
exercised within 60 days after April 2, 1999.
(8) Represents 1,122 shares held in the name of Ms. Haggerty's spouse.
Includes 82,395 shares issuable pursuant to stock options that may be
exercised within 60 days after April 2, 1999.
(9) Includes 77,342 shares issuable pursuant to stock options that may be
exercised within 60 days after April 2, 1999.
(10) Includes 424,704 shares which are issuable pursuant to stock options
which may be exercised within 60 days of April 2, 1999.
(11) Includes 19,155 shares which are issuable pursuant to stock options which
may be exercised within 60 days after April 2, 1999.
(12) Includes 40,208 shares which are issuable pursuant to stock options which
may be exercised within 60 days after April 2, 1999.
(13) Based on his employment as an officer of Disney or its affiliates, such
director may be deemed the owner of the shares held by Disney as
indicated in the chart above. However, each such director disclaims
beneficial ownership of Disney's shares.
(14) Includes both The Walt Disney Company and its wholly owned subsidiary,
Disney Enterprises, Inc. For federal securities law purposes, The Walt
Disney Company is deemed to have investment and voting power over shares
of Infoseek common stock held by itself as well as by Disney Enterprises,
Inc. In connection with the governance agreement between Infoseek and
Disney, Disney has the right to purchase shares of Infoseek common stock
sufficient to maintain an approximately 43.0% ownership interest in
Infoseek as well as a warrant to purchase additional shares of Infoseek
common stock in certain circumstances. In connection with this right,
Disney has the right to purchase 299,182 shares of common stock and an
immediately exercisable warrant to purchase 104,366 shares of common
stock in connection with the issuance of shares in the acquisition of
Quando, and the right to purchase an immediately exercisable warrant to
purchase 263,845 shares of common stock resulting from option issuances
by Infoseek from June 18 to December 18, 1998. All of such shares are
included for beneficial ownership purposes.
(15) Does not include 16,019,182 shares that Disney may purchase pursuant to a
warrant Disney holds which is not exercisable within 60 days unless
certain contingencies principally outside Disney's control occur.
(16) Includes 1,395,103 shares issuable pursuant to stock options that may be
exercised within 60 days after February 5, 1999, including those options
identified in footnotes (2) through (13).
19
<PAGE>
Executive Compensation
The following summary compensation table sets forth certain information
concerning compensation paid by Infoseek for the nine month fiscal year ended
October 3, 1998 and the fiscal years ended December 31, 1997 and 1996 to the
individuals who served as Infoseek's Chief Executive Officer during the nine
month period ended October 3, 1998 and the four other most highly compensated
executive officers of Infoseek who were serving as such at the end of the nine
month fiscal year ended October 3, 1998.
<TABLE>
<CAPTION>
Name and Principal Fiscal Securities All Other
Position(1) Year Salary Bonus(2) Underlying Options Compensation
- ------------------ ------ -------- ------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Harry M. Motro(3)....... 1998 $187,000 -- 125,000 --
President and Chief 1997 $169,551 $69,230 1,000,000 $150,000(4)
Executive Officer 1996 -- -- -- --
Patrick Naughton(5)..... 1998 $183,617 -- -- --
Executive Vice 1997 $220,552 -- 264,957(6) --
President of Products 1996 $163,164 -- 270,256(6) --
Leslie E. Wright........ 1998 $131,250 -- 90,000 --
Senior Vice President, 1997 $ 60,289 $20,000 137,500 --
Chief Administrative 1996 -- -- -- --
Officer and Chief
Financial Officer
Andrew E. Newton........ 1998 $135,000 -- 20,000 --
Vice President, General 1997 $160,000 $65,000 75,000 --
Counsel and Secretary 1996 $140,000 $80,000 -- --
Barak Berkowitz......... 1998 $135,000 -- 41,250 --
Senior Vice President, 1997 $ 39,993 $11,700 165,000 --
Marketing and 1996 -- -- -- --
International
Beth A. Haggerty........ 1998 $131,250 -- 35,000 --
Senior Vice President, 1997 $ 72,250 $50,480 165,000 $ 50,000(7)
Worldwide Sales and 1996 -- -- -- --
Strategic Partnerships
John Nauman............. 1998 $131,250 -- 41,250 --
Vice President, 1997 $175,000 $75,000 -- --
Engineering of Portal 1996 $140,961 $25,000 200,000 --
Products
</TABLE>
- --------
(1) From January 1, 1998 to October 3, 1998, Michael B. Slade and Curt D.
Blake were the Chief Executive Officer and Chief Operating Officer,
respectively, of Starwave and received aggregate salary, bonus and other
compensation of $228,236 and $157,684, respectively. Because each of
Messrs. Slade and Blake terminated their employment with Starwave upon
Infoseek's acquisition of Starwave and thus did not become employees of
Infoseek, Messrs. Slade and Blake are not included in this table. In
addition, because Messrs. Wright and Nauman and Ms. Haggerty received the
same amount of compensation for the nine month fiscal year ended October
3, 1998, each is indicated in this table.
(2) Infoseek did not pay bonuses during the nine month fiscal year ended
October 3, 1998. Bonuses were paid on December 31, 1998, and will be
reflected in Infoseek's proxy statement for the 2000 Annual Meeting.
(3) Mr. Motro became President and Chief Executive Officer of Infoseek in the
second quarter of 1997 at an annual salary of $250,000.
(4) Represents a one-time relocation payment to Mr. Motro.
(5) Mr. Naughton was President and Chief Technical Officer of Starwave prior
to Infoseek's acquisition of Starwave on November 18, 1998. Upon such
acquisition, Mr. Naughton became Senior Vice President and Chief Technical
Officer of Infoseek, and he has since been appointed Executive Vice
President of Products.
(6) Options were granted pursuant to Starwave's stock option plans which were
assumed by Infoseek on November 18, 1998. Number reflects conversion from
options for shares of Starwave common stock to options for shares of
Infoseek common stock.
(7) Represents a one-time relocation payment to Ms. Haggerty.
20
<PAGE>
Option Grants in Last Fiscal Year
The following table contains information concerning stock option grants made
during the nine month period ended October 3, 1998 to Infoseek's Chief
Executive Officer and the four other most highly compensated executive
officers who were serving as such at the end of the nine month period ended
October 3, 1998. No stock appreciation rights were granted to these
individuals during such year.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities % of Total Price Appreciation
Underlying Options Granted For Option Term(4)
Options to Employees in Exercise Expiration ---------------------
Name Granted(#)(1) Fiscal Year(2) Price Date 5% ($) 10% ($)
- ---- ------------- --------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Harry M. Motro.......... 125,000 5.19 $19.8125 03/13/08 $1,557,497 $3,947,003
Leslie E. Wright........ 90,000 3.74 $19.8125 03/13/08 $1,121,398 $2,841,842
Patrick J. Naughton -- -- -- -- -- --
Andrew E. Newton........ 20,000 0.83 $19.8125 03/13/08 $ 249,200 $ 631,520
Barak Berkowitz......... 41,250 1.71 $19.8125 03/13/08 $ 513,973 $1,302,511
Beth A. Haggerty........ 35,000 1.45 $19.8125 03/13/08 $ 436,099 $1,105,161
John Nauman............. 41,250 1.71 $19.8125 03/13/08 $ 513,974 $1,302,511
</TABLE>
- --------
(1) These options were granted under the Infoseek's 1996 Stock Option/Stock
Issuance Plan. The grant dates are for these options as follows: Mr.
Motro: March 13, 1998; Mr. Wright: March 13, 1998; Mr. Newton: March 13,
1998; Mr. Berkowitz: March 13, 1998; Ms. Haggerty: March 13, 1998; Mr.
Nauman: March 13, 1998. Each option has a maximum term of 10 years
measured from the grant date, subject to earlier termination upon the
optionee's cessation of service with Infoseek.
(2) Infoseek granted options to purchase 2,451,230 shares of common stock
during the last fiscal year ended October 3, 1998.
(3) The exercise price may be paid in cash or in shares of Infoseek's common
stock valued at fair market value on the exercise date. Infoseek may also
finance the option exercise by loaning the optionee sufficient funds to
pay the exercise price for the purchased shares, together with any federal
and state income tax liability incurred by the optionee in connection with
such exercise.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the commission. There is no assurance that the
actual stock price appreciation over the 10-year option term will be at
the assumed 5% and 10% levels or at any other defined level. Unless the
market price of the common stock appreciates over the option term, no
value will be realized from the option grants made to the executive
officers.
21
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth information concerning option exercises and
option holdings during the nine month period ended October 3, 1998 with
respect to Infoseek's Chief Executive Officer and its four other most highly
compensated executive officers who were serving as such at the end of the
period ended October 3, 1998.
<TABLE>
<CAPTION>
Potential Realizable
Number of Securities Value At Assumed Annual
Underlying Unexercised Rates of Stock Price
Options At Appreciation For Option
Fiscal year End(#) Term($)(1)
Shares Acquired Value ------------------------- -------------------------
Name Upon Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harry M. Motro.......... -- -- 354,165 770,835 $6,596,323 $12,505,239
Leslie E. Wright........ -- -- 37,239 190,261 $ 693,576 $ 2,210,486
Patrick J. Naughton..... 36,434 $311,802 332,190 219,583 $6,925,044 $ 3,753,697
Andrew E. Newton........ -- -- 23,437 71,563 $ 436,514 $ 1,036,611
Barak Berkowitz......... -- -- -- 206,250 -- $ 2,384,766
Beth A. Haggerty........ -- -- 44,687 155,313 $ 832,295 $ 2,374,267
John Nauman............. -- -- 23,958 67,292 $ 347,391 $ 534,875
</TABLE>
- --------
(1) The value of an "in-the-money" stock option represents the difference
between the aggregate estimated fair market value of the underlying
securities, based on the closing price of $23.6250 per share of Infoseek's
common stock on the Nasdaq Stock Market on October 2, 1998, and the
aggregate exercise price of the subject stock option.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of Infoseek's Board of Directors was formed in
April 1996 and is currently comprised of Messrs. Krause, Zeisler and Winebaum.
None of these individuals were at any time during the nine month fiscal period
ended October 3, 1998, or at any other time, an officer or employee of
Infoseek. No member of the Compensation Committee of Infoseek 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 Infoseek's Board of
Directors or Compensation Committee.
Certain Transactions
Disney
As result of Infoseek's transaction with Disney, Disney and its affiliates
hold approximately 43% of Infoseek's outstanding common stock. In addition,
Disney and its affiliates have the right to acquire, through the warrant,
which becomes exercisable over time, an additional 15,720,000 shares of
Infoseek common stock. If Disney exercises the warrant, Disney and its
affiliates will hold on an aggregate basis together with the shares owned by
Disney, approximately 50.1% of the outstanding Infoseek common stock on a
fully-diluted basis assuming exercise of all outstanding options to maintain
its initial percentage of stock and warrant ownership through direct purchases
from Infoseek in the event of dilutive issuances.
Infoseek and Disney have also entered into a governance agreement with
respect to a number of matters. Under the governance agreement, for a period
of three years following the date of the agreement, subject to earlier
termination under certain circumstances, Disney agreed, among other things, to
standstill provisions to not acquire over 49.9% of Infoseek's outstanding
voting stock, to not solicit proxies or act with another party for purposes of
voting or acquiring shares of Infoseek voting stock, and to not to transfer
its Infoseek shares except under certain circumstances. The governance
agreement also provides, among other things, for supermajority Board approval
with respect to certain matters and, together with Infoseek's certificate of
incorporation, during the standstill period, restricts Disney's ability to
proceed with a tender offer for or merger with Infoseek in certain cases
without the approval of members of the Infoseek Board not designated by
Disney. During and following the standstill period any Disney tender offer for
Infoseek is required to be conditioned upon a majority of disinterested
Infoseek stockholders tendering their shares. Disney also agreed during the
standstill period to votes
22
<PAGE>
its shares for nominees to the Board in accordance with the joint
recommendations of management of Infoseek and the a majority of the Infoseek
directors not affiliated with Disney, in favor of amendment to stock option
and employee stock purchase plans approved by Infoseek's Board of Directors,
and in favor of all matters approved by directors affiliated with Disney.
Infoseek agreed to include a certain number of directors designated by Disney
its slate of nominees based on Disney's ownership, so long as Disney owns at
least 10% of the outstanding voting power of Infoseek. Based on Disney's
current ownership, Disney is entitled to designate three nominees. Infoseek
also agreed that its management and Board of Directors will vote in favor of
the Disney-designated nominees.
Infoseek and Disney are also parties to a number of licensing and commercial
agreements regarding GO Network, one of Infoseek's internet services. GO
Network is based, in part, upon certain intellectual property owned by Disney
licensed to Infoseek pursuant to the terms of a royalty-bearing license
agreement. The license agreement may terminate if certain events occur, such
as if another party acquires 25% or more of Infoseek's stock, Infoseek fails
to spend a certain amount of money to promote GO Network, or Infoseek files
for bankruptcy. While owned and operated by Infoseek, GO Network also is
subject to an advisory committee which consists of one Infoseek representative
and one Disney representative for oversight of activities relating to the
service. In connection with GO Network, Disney's wholly-owned subsidiary, ABC,
Inc., agreed to provide and Infoseek agreed to purchase, $165 million in
promotional support and activities over five years. As part of such promotion,
Disney agreed to cobrand all ABCNEWS.com and ESPN.com owned non-traditional
media promotion with promotions for GO Network. Disney has also agreed to
integrate Infoseek's search and directory technology into its own Internet-
based services.
Infoseek's subsidiary, Starwave, has entered into several transactions with
Disney. Starwave is a general partner in two joint ventures with Disney
subsidiaries (the "Joint Ventures"). The operations of the ESPN Joint Venture
currently include ESPN.com, NBA.com, NFL.com, NASCAR Online and Outside
Online. The operations of the ABCNews Joint Venture currently include
ABCNEWS.com, Mr. Showbiz, Wall of Sound, Celebsite and MoneyScope.
The agreements relating to the Joint Ventures have terms of ten years
following Infoseek's acquisition of Starwave and are mutually exclusive with
regard to U.S. based online sports and general news services, respectively.
Required funding under the Joint Ventures is split 60/40 between the Starwave
and Disney entities that are parties to the Joint Ventures in negative cash
flow years and 50/50 in years when the respective Joint Ventures achieve
positive cash flow. Under the Joint Ventures:
. Starwave provides a variety of services, including hosting, technology
development, usage tracking, infrastructure, production support, software
tools and engines.
. ESPN provides access to all ESPN television and radio creative and
editorial content, advertising and promotion on ESPN cable television and
radio networks and access to the "ESPN" brand, properties and
personalities.
. Disney provides access to all ABC News creative and editorial content,
advertising and promotion on ABC News programs, access to the "ABC News"
brand, properties and personalities and ABC News Broadcast Newsroom
infrastructure.
ESPN and ABC have editorial, creative and overall marketing control of the
services. Upon termination of the Joint Ventures, ESPN and ABC will own all
URLs containing "ESPN," "ESPNET" and "ABC" as well as all editorial and
creative assets. Starwave will own all other assets.
Under Representation Agreements with ESPN and ABC, Infoseek (through
Starwave) has agreed to act as the representative of the Joint Ventures. As
such representative, Infoseek sells advertising and related services for the
Joint Ventures, and has agreed to make quarterly payments to the Joint
Ventures. These payments are the greater of a predetermined minimum amount or
revenues actually billed to third parties (even if not collected) in the
performance of such advertising and related services, less the costs of
providing the services and a predetermined profit margin.
23
<PAGE>
Netscape
Since March 1995, Infoseek's service has been listed as a navigational
service on the Netscape Web page accessible via the "NetSearch" button.
Through April 30, 1998, Infoseek's agreement with Netscape provided for
payments up to $10,000,000 in cash and $2,500,000 in reciprocal advertising to
be one of four non-exclusive premiere providers of navigational services along
with Excite, Lycos, and Yahoo. The Netscape arrangement was subsequently
extended through May 31, 1998.
As of June 1, 1998, Infoseek entered into a one-year agreement with Netscape
with terms that provide for Infoseek to pay, based on impressions delivered,
up to an aggregate of $12,500,000 in cash to be one of the six non-exclusive
premier providers of navigational services along with Excite, Netscape, Lycos,
Alta Vista, and LookSmart. Under the terms of the agreement, Infoseek will
receive 15% of premiere provider rotations--the pages served to visitors who
have not selected a preferred provider. The payments to Netscape are being
recognized ratably over the term of the agreement. In November 1998, Infoseek
and Netscape renegotiated the terms of the June agreement to provide for the
purchase of 5% of Netscape's available search traffic beginning January 11,
1999 and through the duration of the agreement which terminates May 31, 1999.
Pages sourced from Netscape have declined from 30% a year ago to 13% in June
1998 and 12% in September 1998. A loss of Netscape sourced pages could have an
adverse impact on Infoseek's business, results of operations and financial
condition and prospects. As of September 30, 1998, Infoseek has a cash
commitment ranging from a minimum of $4,150,000 to a maximum of $12,500,000
depending on the level of traffic delivered by Netscape in connection with
this agreement. Mr. Zeisler's wife, Jennifer Bailey, is a Senior Vice
President of Netscape.
Other
Infoseek has granted options to certain of its directors and executive
officers. See "Executive Compensation--Option Grants in Last Fiscal Year" and
"Security Ownership of Certain Beneficial Owners and Management."
Infoseek has entered into indemnification agreements with its executive
officers, directors and certain significant employees. Infoseek's
indemnification agreements will require Infoseek, among other things, to
indemnify such persons against certain liabilities that may arise by reason of
their status or service as directors, executive officers or significant
employees and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified.
At the present time, there is no pending litigation or proceeding involving
a director, officer, employee or other agent of Infoseek in which
indemnification would be required or permitted. Infoseek is aware of
threatened litigation against it and three of its executive officers by a
former employer of one of its current executive officers. Although Infoseek
believes that it and its officers have valid defenses against any such
litigation which may be brought, if such defenses were unsuccessful such
litigation may give rise to claims for indemnification under the
indemnification agreements. Infoseek is not aware of any other threatened
litigation or proceeding which may result in a claim for such indemnification.
Infoseek believes that all of the transactions set forth above were made on
terms no less favorable to Infoseek and its affiliates than could have been
obtained from unaffiliated third parties. Any future transactions, including
loans, between Infoseek and any of its officers, directors, affiliates and
principal stockholders will be on terms no less favorable to Infoseek than can
be obtained from unaffiliated third parties. Any such transactions will be
subject to approval of a majority of the Infoseek board of directors,
including a majority of the independent, disinterested directors.
24
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors works with the
Company's management to establish compensation policies for the Company. The
Committee also sets the compensation of the Chief Executive Officer, reviews
and approves the compensation of other key executives, and approves stock
option grant awards for all executive officers. The Committee is composed of
all non-employee directors.
Compensation Philosophy
The Company operates in the competitive and rapidly changing high technology
industry. Therefore, the Committee works to build compensation programs and
practices for executive officers that will attract, motivate, and retain
talented executives responsible for the success of the Company. Within this
overall context, the Committee's objectives are to: (1) offer a total
compensation program that takes into consideration the compensation practices
of peer companies with which the Company competes in the recruitment and
retention of executive talent; (2) provide annual incentive awards that take
into account the Company's overall performance vis a vis designated Company
objectives as well as individual contribution to the achievement of Company-
wide results; and (3) align the financial interests of executive officers with
those of stockholders by providing significant equity-based incentives.
Executive Compensation Practices
Cash Compensation. The Company targets base salary consistent with market
median as defined by comparable positions in a broad peer group. The peer
group includes companies of similar size and business focus that represent the
Company's competitive market for recruitment and retention of executive
talent. Targets are based on salary data from independent salary surveys. The
salary of each executive is set relative to established targets based on
individual experience, capabilities, and demonstrated contribution.
To reinforce a focus on and the attainment of Company goals, the Company
establishes an annual cash incentive for each executive officer. Incentive
targets for each executive officer are established so that when the Company
meets its goals, individuals will receive base salary plus incentive at levels
that are consistent with market median of comparable positions in a broad peer
group of companies; when the Company exceeds it goals, total cash compensation
will attain levels at or above peer group norms. Incentive targets are stated
in terms of a percentage of the officer's base salary for the year. Target
incentive levels are based on cash incentive data from independent salary
surveys.
The annual incentive paid to each executive officer is determined on the
basis of the Company's achievement of financial and operational performance
goals established at the beginning of the fiscal year. The incentive plan sets
threshold levels of performance for each financial and operational performance
goal that must be reached before any incentive for an individual goal is
awarded. Once the annual threshold is reached for each metric, specific
formulas are in place to calculate the actual incentive payment for each
officer. The total incentive earned is based on the total of the incentive
earned for each individual performance goal.
In calendar year 1998, the Company generally exceeded threshold levels but
did not meet target levels in all cases. Bonuses paid to executive officers in
1998 reflect these mixed results. Although the Company changed from a fiscal
year ending December 31 to a fiscal year with 52 or 53 week periods ending on
the Saturday nearest September 30, bonuses were paid on December 31, 1998 for
the 12-month period from January 1, 1998 to December 31, 1998.
Equity-Based Compensation. Equity-based compensation is viewed as an
important component of the Company's performance-based compensation
philosophy. The goal of equity compensation is to align the interests of each
executive officer with the interests of the stockholders generally. As the
Committee believes that executive officers are the individuals who can most
significantly impact the long term growth and profitability of the Company,
the Committee believes that significant compensation in the form of stock
options will motivate executive officers to manage the Company in a manner
that will benefit stockholders.
25
<PAGE>
In determining the size of each individual's equity-based incentive, the
Committee takes into consideration a number of factors, including: the
individual's position in the Company; the individual's ability to influence
long-term growth and profitability; the individual's recent performance;
comparable awards made to individuals in similar positions in the broad peer
group of companies that represent the Company's market for executive talent;
and the number of unvested options held at the time of the new grant. The
relative weight given to each of these factors may vary among individuals at
the Committee's discretion; however, performance and ability to contribute to
the future growth of the Company are considered the most important factors in
determining award size and frequency.
In the nine month period ending October 3, 1998, each of Harry Motro, Les
Wright, Andrew Newton, Barak Berkowitz, Beth Haggerty and John Nauman received
option grants under the Company's 1996 Stock Option/Stock Issuance Plan. Each
grant allows the officer to acquire shares of the Company's stock at a fixed
price per share (the market price on the date of grant). The options vest over
a four-year period contingent on the executive's continued employment with the
Company. Therefore, the options become valuable and exercisable only if the
executive continues his/her service to the Company and the price of the
Company's stock subsequently increases over the option term.
CEO Compensation
In calendar year 1998, Mr. Motro's annual base salary was set to reflect
salary levels paid to chief executive officers in peer companies and his
individual performance. Mr. Motro's annual salary for fiscal year 1998 was
$250,000; in the nine-month period ending October 3, 1998, Mr. Motro was paid
$187,000. Consistent with the bonus and stock option award criteria outlined
above, Mr. Motro accrued a cash incentive paid on December 31, 1998 and was
granted a stock option of 125,000 shares during the nine month period ending
October 3, 1998 based on his individual performance and leadership of the
Company in achieving fiscal year financial and operational results.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code disallows a Federal income tax
deduction to publicly held companies for compensation paid to certain of their
executive officers to the extent that compensation exceeds $1 million dollars
per covered officer in any fiscal year. This limitation applies only to
compensation that is not considered to be performance based.
Targeted cash compensation of named executive officers is below the $1
million threshold. Further, the Committee believes the options granted under
the 1996 Stock Option/Stock Issuance Plan will meet the requirement of being
performance-based under the provisions of Section 162(m). Therefore, Section
162(m) should not reduce the tax deductions available to the Company and no
changes to the Company's compensation program were needed in this regard.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
L. William Krause
Jacob J. Winebaum
John E. Zeisler
26
<PAGE>
PERFORMANCE GRAPH (1)
The following graph shows a comparison of cumulative total stockholder
return, calculated on a dividend reinvested basis, from the effective date of
the initial public offering of the Company's Common Stock (June 11, 1996)
through December 31, 1998 for the Company, the Nasdaq Stock Market--U.S. Index
(the "Nasdaq Index") and the Hambrecht & Quist Internet Index (the "Internet
Index"). The graph assumes that $100 was invested in the Company's Common
Stock, the Nasdaq Index and the Internet Index on June 11, 1996. Note that
historic stock price performance is not necessarily indicative of future stock
price performance.
Comparison of Cumulative Total Returns
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG INFORSEEK CORP., S&P 500 INDEX AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
NASDAQ HAMBRECHT
INFOSEEK STOCK & QUIST
CORPORATION MARKET (U.S.) INTERNET
----------- ------------- ----------
Cumulative Total Return
<S> <C> <C> <C>
6/11/96 $100 $100 $100
6/96 71 96 92
9/96 65 100 85
12/96 55 105 78
3/97 51 99 62
6/97 37 117 77
9/97 66 137 102
12/97 77 128 105
3/98 129 150 141
6/98 256 154 177
9/98 176 140 142
12/98 353 181 245
</TABLE>
- --------
(1) The material under this caption is not "soliciting material," is not deemed
filed with SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in such
filing.
27
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are, therefore, urged to execute
and return the accompanying proxy in the envelope which has been enclosed, at
your earliest convenience.
FOR THE BOARD OF DIRECTORS
Harry M. Motro,
President, Chief Executive Officer
and Director
Dated: April 19, 1999
28
<PAGE>
1532-PS-99
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
[X] Please mark
votes as in
this example.
1. Election of Directors
Nominees: Harry M. Motro, Steven T. Kirsch, Steven M. Bornstein, Robert A.
Iger, L. William Krause, Matthew J. Stover, Jacob ("Jake") J. Winebaum,
John E. Zeisler
FOR WITHHELD
ALL FROM ALL
NOMINEES [_] [_] NOMINEES
MARK HERE
FOR ADDRESS
CHANGE AND
[_] ________________________________________________ NOTE BELOW [_]
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Amendment to 1996 Stock Option/Stock Issuance Plan [_] [_] [_]
(share increases)
3. Amendment to 1996 Stock Option/Stock Issuance Plan [_] [_] [_]
(non-employee directors)
4. Amendment to Employee Stock Purchase Plan [_] [_] [_]
5. Ratification of Ernst & Young LLP as independent [_] [_] [_]
auditors
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If the
signer is a corporation, please give the full corporate name and have a duly
authorized officer sign stating such officers' title. If the signer is a
partnership, please sign in the partnership name by an authorized person.
Signature:__________________ Date:_____ Signature:___________________ Date:_____
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
INFOSEEK CORPORATION
1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF INFOSEEK CORPORATION ("INFOSEEK")
The undersigned hereby appoints Harry M. Motro, Leslie E. Wright and Andrew E.
Newton, and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to vote all of the shares of Infoseek's common
stock which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Infoseek to be held at Infoseek's executive offices located at
1399 Moffett Park Drive, Sunnyvale, California 94089, on Friday, May 14, 1999
at 9:00 a.m. local time, and at any and all adjournments or postponements
thereof, with all of the powers the undersigned would possess if personally
present, upon and in respect of the following proposals and in accordance with
the following instructions. The proposals referred to herein are described in
detail in the accompanying proxy statement.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS SPECIFIED ON THE REVERSE SIDE. IF A SPECIFIC DIRECTION IS INDICATED,
THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
