<PAGE> 1
SCHEDULE 14A (RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14A-11(c) or Rule 14A-12
</TABLE>
MYPOINTS.COM, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
MYPOINTS.COM, INC.
100 CALIFORNIA STREET, 11(TH) FLOOR
SAN FRANCISCO, CALIFORNIA 94111
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 2000
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
MyPoints.com, Inc., a Delaware corporation (the "Company"), will be held on
Thursday May 25, 2000 at 10:00 a.m. local time at the Park Hyatt Hotel, located
at 333 Battery Street, San Francisco, California 94111 (the telephone number at
the meeting location is (415) 392-1234) for the following purposes (as more
fully described in the Proxy Statement accompanying this Notice):
1. To elect three (3) Class I directors to serve for terms of three years
expiring upon the 2003 Annual Meeting of Stockholders or until their
successors are elected.
2. To amend the Company's 1999 Stock Plan to increase the number of shares
authorized for issuance thereunder to a new total of 7,500,000 shares
and to provide for automatic, annual increases in the number of shares
reserved for issuance under the plan.
3. To amend the Company's 1999 Employee Stock Purchase Plan to increase the
number of shares authorized for issuance thereunder to a new total of
400,000 shares and to provide for automatic, annual increases in the
number of shares reserved for issuance under the plan.
4. To ratify the appointment of PriceWaterhouseCoopers LLP as independent
auditors of the Company for the year ending December 31, 2000.
5. To transact such other business as may properly come before the meeting
or any postponement or adjournment 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 21, 2000 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a Proxy.
FOR THE BOARD OF DIRECTORS
MARIO M. ROSATI
Secretary
San Francisco, California
April 28, 2000
YOUR VOTE IS IMPORTANT
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE.
<PAGE> 3
MYPOINTS.COM, INC.
------------------------
PROXY STATEMENT FOR THE 2000
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2000
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
MyPoints.com, Inc. (the "Company" or "MyPoints") for use at the Annual Meeting
of Stockholders to be held Thursday May 25, 2000 at 10:00 a.m. local time at the
Park Hyatt Hotel, 333 Battery Street, San Francisco, California 94111, or at any
postponement or adjournment thereof (the "Annual Meeting"), for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of Stockholders.
The telephone number at the meeting location is (415) 392-1234.
These proxy solicitation materials and the Annual Report to Stockholders
for the year ended December 31, 1999, including financial statements, were first
mailed on or about April 21, 2000 to all stockholders entitled to vote at the
meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on April 21, 2000 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the Record Date, 28,958,709 shares of the Company's Common Stock were issued and
outstanding and held of record by approximately 288 stockholders.
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, or to the Inspector of Elections at the Annual Meeting a written notice
of revocation or a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held as of the
Record Date. Stockholders will not be entitled to cumulate their votes in the
election of directors.
The cost of soliciting proxies will be borne by the Company. The Company
expects to 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,
personally or by telephone or facsimile.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections (the "Inspector") appointed for the meeting and will
determine whether or not a quorum is present.
The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter.
<PAGE> 4
While there is not definitive statutory or case law authority in Delaware
as to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote against the proposal.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes should be counted for purposes of
determining the presence of absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner. Thus, a broker non-vote will not affect the outcome of the
voting on a proposal.
Any proxy which is returned using the form of proxy enclosed and which is
not marked as to a particular item will be voted for the election of the two
Class I directors, for the confirmation of the appointment of the designated
independent auditors, and as the proxy holders deem advisable on other matters
that may come before the meeting, as the case may be, with respect to the items
not marked.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented by such
stockholders at the Company's 2001 Annual Meeting must be received by the
Company no later than November 30, 2000 in order that such proposals may be
considered for possible inclusion in the proxy statement and form of proxy
relating to that meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTOR
Pursuant to the Company's Restated Certificate of Incorporation, the
Company's Board of Directors currently consists of seven persons, divided into
three classes serving staggered terms of three years. Currently, there are three
directors in Class I, two directors in Class II and two directors in Class III.
Three Class I directors are to be elected at the Annual Meeting. The Class II
and Class III directors will be elected at the Company's 2001 and 2002 Annual
Meetings of Stockholders, respectively. Each of the Class I directors elected at
the Annual Meeting will hold office until the 2003 Annual Meeting of
Stockholders or until a successor has been duly elected and qualified.
In the event that any of such persons becomes unavailable or declines to
serve as a director at the time of the Annual Meeting, the proxy holders will
vote the proxies in their discretion for any nominee who is designated by the
current Board of Directors to fill the vacancy. It is not expected that any of
the nominees will be unavailable to serve.
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<PAGE> 5
The names of the three Class I nominees for election to the Board of
Directors at the Annual Meeting, their ages as of the Record Date, and certain
information about them are set forth below. The names of the current Class II
and Class III directors with unexpired terms, their ages as of the Record Date,
and certain information about them are also stated below.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
<S> <C> <C>
NOMINEES FOR CLASS I DIRECTORS
Steven M. Markowitz................ 29 Chief Executive Officer and Chairman of
the Board of MyPoints.com
Mario M. Rosati.................... 53 Partner, Wilson Sonsini Goodrich &
Rosati, P.C.
Howard L. Morgan(2)................ 54 President, Arca Group, Inc. and General
Partner of Idealab! Corporation
CONTINUING CLASS II DIRECTORS
Robert C. Hoyler................... 49 President and Chief Operating Officer,
MyPoints.com
Lawrence E. Phillips(1)(2)......... 33 Managing Director, Primedia Ventures
CONTINUING CLASS III DIRECTORS
Thomas Newkirk(2).................. 54 Chairman, Experian Marketing Solutions
Lester Wunderman(1)................ 79 Retired; Former Chairman of Wunderman
Cato Johnson
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
There are no family relationships among any of the directors or executive
officers of the Company.
DIRECTORS TO BE ELECTED AT THE ANNUAL MEETING
Steven M. Markowitz is a founder of MyPoints.com and has served as our
Chief Executive Officer and Chairman of the Board since November 1996. Mr.
Markowitz also served as our President from November 1996 until December 1998.
From May 1995 to August 1996, Mr. Markowitz was a securities analyst with
Fidelity Management & Research (Far East), a unit of Fidelity Investments. Mr.
Markowitz is also the founder of a specialty catalog for the Japanese software
market and has acted as an advisor to that company since 1992. From 1992 to
1994, Mr. Markowitz was a Tokyo-based correspondent for Dow Jones & Co., Inc., a
business and financial news publishing company. Mr. Markowitz holds an A.B. from
the University of California at Berkeley and an M.B.A. from the Haas School of
Business, University of California at Berkeley.
Mario M. Rosati has served as one of our directors since November 1996. Mr.
Rosati has been with the Palo Alto, California law firm of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, since 1971, first as an associate
and then as a member since 1975. Mr. Rosati also serves as a director of Sanmina
Corporation, Symyx Technologies, Inc., The Management Network Group, Inc., Ross
Systems, Inc., Vivus, Inc., Genus, Inc. and Aehr Test Systems. Mr. Rosati holds
a B.A. from the University of California, Los Angeles and a J.D. from the
University of California at Berkeley, Boalt Hall School of Law.
Howard L. Morgan has served as one of our directors since November 1996.
Since 1989, Dr. Morgan has been President of the Arca Group, Inc., a consulting
and investment management firm specializing in the areas of computer and
communications technologies. Dr. Morgan has also served as a General Partner of
Idealab! Corporation, an incubator of internet and e-commerce companies, since
January 1999. In addition, Dr. Morgan served as Chief Executive Officer of
Franklin Electronic Publishers, Inc. in early 1998. Dr. Morgan was Professor of
Decision Sciences at the Wharton School of Business of the University of
Pennsylvania from 1972 through 1986. Dr. Morgan serves as director for a number
of public companies, including Cylink Corp., Franklin Electronic Publishers,
Inc., Infonautics Corporation, Segue Software, Inc.
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<PAGE> 6
and Unitronix Corp. Dr. Morgan holds a B.S. from City College of New York and a
Ph.D. from Cornell University.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE ANNUAL MEETING
Robert C. Hoyler has served as our President and Chief Operating Officer
since December 1998 and has served as one of our directors since January 1999.
Prior to joining MyPoints.com, Mr. Hoyler had served as Chief Executive Officer
of MotivationNet since July 1996. From July 1993 to March 1996, Mr. Hoyler
served as Senior Vice President of Diversified Businesses at Keebler, a leading
consumer products company, where he was responsible for sales, marketing and
manufacturing for Keebler's Diversified Businesses unit. Mr. Hoyler holds a B.A.
from Loyola University and a Master of Management from J.L. Kellogg Graduate
School of Management, Northwestern University.
Thomas Newkirk has served as one of our directors since January 1999. Mr.
Newkirk has served as the Chairman of Experian Marketing Solutions, a subsidiary
of the information services company Experian, since 1998. Mr. Newkirk founded
Direct Marketing Technology, a wholly-owned subsidiary of Experian, in 1981 and
has served as one of its directors since 1990. Mr. Newkirk holds a B.S. from
Massachusetts Institute of Technology.
Lawrence E. Phillips has served as one of our directors since December
1998. In April 1998, Mr. Phillips formed and presently serves as Managing
Director of Primedia Ventures, a venture capital fund of Primedia, a media and
publishing company, where he directs investing activities in early-stage
internet software, commerce and advertising companies. From February 1995 to
April 1998, Mr. Phillips founded and managed an internet division for Primedia's
Magazine Group, where he had general management responsibilities for the launch
and operation of several web sites. From September 1992 to February 1995, Mr.
Phillips was a Vice President at Unterberg Harris, an investment banking firm.
Mr. Phillips holds an A.B. from Cornell University and an M.B.A. from Harvard
Business School.
Lester Wunderman has served as one of our directors since January 1999 and
is also a member of our board of advisors. Through December 1998, Mr. Wunderman
served as Chairman of Wunderman Cato Johnson, a world-wide direct marketing
agency, which he founded in 1958. Mr. Wunderman is also Visiting Professor of
Direct Marketing at the School for Continuing Education of New York University.
He has served as Chairman of the Executive Committee of the Center for Direct
Marketing at New York University and is a Trustee of the Children's Television
Workshop. Mr. Wunderman serves as a director of Infonautics Corporation. Mr.
Wunderman holds an honorary doctorate from City University of New York.
VOTE REQUIRED
The two 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 Class I 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 under Delaware law.
BOARD MEETINGS, COMMITTEES AND DIRECTORS COMPENSATION
The Board of Directors of the Company held a total of 10 meetings during
the fiscal year ended December 31, 1999. All directors and nominees attended at
least 75% of the meetings held during 1999.
The Board of Directors has an Audit Committee and Compensation Committee.
It does not have a nominating committee or committee performing the functions of
a nominating committee. From time to time, the Board has created various ad hoc
committees for special purposes. No such committee is currently functioning.
The audit committee consists of Messrs. Phillips and Wunderman. The audit
committee makes recommendations to the board of directors regarding the
selection of independent auditors, reviews the scope of audit and other services
by our independent auditors, reviews the accounting principles and auditing
practices and procedures to be used for our financial statements and reviews the
results of those audits.
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<PAGE> 7
The compensation committee consists of Messrs. Morgan, Newkirk and
Phillips. The compensation committee makes recommendations to the board of
directors regarding our employee benefit plans and the compensation of officers.
None of the members of the compensation committee is currently, or has ever been
at any time since our formation, one of our officers or employees. No member of
the compensation committee serves as a member of the board of directors or
compensation committee of any entity that has one or more officers serving as a
member of our board of directors or compensation committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our compensation committee was, at any time since
our formation, an officer or employee of MyPoints.com. None of our executive
officers 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 our
board of directors or compensation committee. See "Transactions with Directors,
Executive Officers and Principal Stockholders" for a description of transactions
between MyPoints.com and entities affiliated with members of our compensation
committee.
DIRECTOR COMPENSATION
We currently pay each of our directors $2,500 per quarter for their
services as members of the board of directors and an additional $2,000 for each
meeting they attend. We also reimburse them for reasonable expenses in
connection with attending our board and committee meetings. Each year, we grant
each of our outside directors an option to purchase 7,500 shares at a per share
exercise price equal to the fair market value at the time of grant. We do not
provide additional compensation for committee participation or special
assignments of the board of directors. From time to time, we have granted our
outside directors options to purchase shares of our common stock under the 1996
stock plan or the 1999 stock plan. In January 1997, we granted Mr. Morgan an
option to purchase 133,333 shares at a per share exercise price of $0.05. In
September 1997, we granted Mr. Rosati an option to purchase 113,333 shares at a
per share exercise price of $0.10. In February 1998, we granted Mr. Rosati an
option to purchase 20,000 shares at a per share exercise price of $0.10 and Mr.
Wunderman, then in his capacity as a member of our board of advisors, an option
to purchase 10,000 shares at a per share exercise price of $0.05. In January
1999, we granted Mr. Newkirk an option to purchase 25,000 shares, Mr. Phillips
an option to purchase 25,000 shares and Mr. Wunderman an option to purchase
50,000 shares, all at a per share exercise price of $1.00. In December 1999, we
granted Mssrs. Morgan, Newkirk, Phillips, Rosati and Wunderman each an option to
purchase 7,500 shares at a per share purchase price of $38.25.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINEES SET FORTH HEREIN.
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO 1999 STOCK PLAN
Our 1999 Stock Plan (the "1999 Plan") was adopted by the Board of Directors
in November 1998. As of December 31, 1999, a total of 5,000,000 shares of
Company Common Stock were reserved for issuance under the 1999 Plan.
In April 2000, the Board approved amendments to the 1999 Plan to increase
the number of shares reserved for issuance thereunder to 7,500,000 shares and to
provide that, on the first day of each Company fiscal year beginning January 1,
2001, the number of shares reserved for issuance under the Plan would be
automatically increased by an amount equal to the lesser of
- 5,000,000 shares;
- 4.5% of the outstanding shares of Company Common Stock on such date, or
- a lesser amount determined by the Board.
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<PAGE> 8
The Board of Directors approved the amendment to the 1999 Plan to establish
a sufficient number of shares of Common Stock as a reserve under the 1999 Plan
for sale to the Company's employees. The affirmative vote of holders of a
majority of the shares of Common Stock represented at the meeting is necessary
to approve the amendment to the 1999 Plan. The Board of Directors recommends
that stockholders vote FOR approval of the amendment to the 1999 Plan. The
essential features of the 1999 Plan and certain information regarding the 1999
Plan are set forth below.
SUMMARY OF THE 1999 PLAN
General. The purpose of the 1999 Plan is to attract and retain the best
available persons for positions of substantial responsibility with the Company,
to provide additional incentive to the employees, directors and consultants of
the Company and to promote the success of the Company's business. Options
granted under the 1999 Plan may be either "incentive stock options," as defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonstatutory stock options. In addition, awards of or rights to purchase shares
of the Company's Common Stock ("Stock Rights") may be granted under the 1999
Plan.
Administration. The 1999 Plan is administered by the board of directors or
a committee thereof (the "Administrator"). Subject to the other provisions of
the 1999 Plan, the Board has the authority (i) to select the persons to whom
options and Stock Rights are to be granted; (ii) to determine the number of
shares of Common Stock to be covered by each option and Stock Right granted;
(iii) to approve forms of agreement for use under the 1999 Plan; (iv) to
determine the terms and conditions, not inconsistent with the terms of the 1999
Plan, of any option or Stock Right granted; (v) to reduce the exercise price of
any option or Stock Right to the then current fair market value if the fair
market value of the Common Stock covered by such Option or Stock Right shall
have declined since the date the option or Stock Right was granted; (vi) to
institute an option exchange program; (vii) to construe and interpret the terms
of the 1999 Plan and awards granted pursuant to the 1999 Plan; (viii) to
prescribe, amend and rescind rules and regulations relating to the 1999 Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws; (ix)
to modify or amend each option or Stock Right, subject to certain restrictions
of the 1999 Plan, including the discretionary authority to extend the
post-termination exercisability period of options longer than is otherwise
provided for in the 1999 Plan; (x) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the shares to be
issued upon exercise of an option or Stock Right that number of shares having a
fair market value equal to the amount required to be withheld; (xi) to authorize
any person to execute on behalf of the Company any instrument required to effect
the grant of an option or Stock Right previously granted by the Administrator;
and (xii) to make all other determinations deemed necessary or advisable for
administering the 1999 Plan. All decisions, interpretations and other actions of
the Administrator shall be final and binding on all holders of options and Stock
Rights and on all persons deriving their rights therefrom.
Eligibility; Limitations. Nonstatutory stock options and Stock Rights may
be granted under the 1999 Plan to employees, directors and consultants of the
Company or any parent or subsidiary of the Company. Incentive stock options may
be granted only to employees.
As discussed above, Section 162(m) of the Code places limits on the
deductibility for federal income tax purposes of compensation paid to certain
executive officers of the Company. In order to preserve the Company's ability to
deduct the compensation income associated with options granted to such persons,
the 1999 Plan provides that no employee may be granted, in any fiscal year of
the Company, options to purchase more than 1,000,000 shares of Common Stock plus
options to purchase up to an additional 1,000,000 shares of Common Stock in
connection with such employee's initial commencement of service to the Company.
Terms and Conditions of Options. Each option granted under the 1999 Plan is
evidenced by a written stock option agreement between the Company and the
optionee, and is subject to the following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise of an incentive
stock option may not be less than 100% of the fair market value of the
Common Stock on the date such option is granted; provided, however, the
exercise of
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<PAGE> 9
an incentive stock option granted to a 10% stockholder may not be less than
110% of the fair market value of the Common Stock on the date such option
is granted. The fair market value of the Common Stock is generally
determined with reference to the closing sale price for the Common Stock
(or the closing bid if no sales were reported) on the last market trading
day prior to the date the option is granted. The exercise price of a
nonstatutory stock option may be determined by the Administrator, provided
however, the exercise price of a nonstatutory stock option intended to
qualify as "performance-based compensation" within the meaning of Section
162(m) of the Code may not be less than 100% of the fair market value of
the Common Stock on the date of grant.
(b) Exercise of Option. The Administrator determines when options
become exercisable, and may in its discretion, accelerate the vesting of
any outstanding option.
(c) Form of Consideration. The means of payment for shares issued upon
exercise of an option is specified in each option agreement. The 1999 Plan
permits payment to be made by cash, check, promissory note, other shares of
Common Stock of the Company (with some restrictions), cashless exercise, a
reduction in the amount of any Company liability to the optionee, any other
form of consideration permitted by applicable law, or any combination
thereof.
(d) Term of Option. The term of an incentive stock option may be no
more than ten years from the date of grant; provided that in the case of an
incentive stock option granted to a 10% stockholder, the term of the option
may be no more than five years from the date of grant. No option may be
exercised after the expiration of its term.
(e) Termination of Employment. If an optionee's employment,
directorship or consulting relationship terminates for any reason (other
than death or disability), then all options held by the optionee under the
1999 Plan expire on the earlier of (i) the date set forth in his or her
notice of grant or stock option agreement or (ii) the expiration date of
such option. To the extent the option is exercisable at the time of such
termination, the optionee may exercise all or part of his or her option at
any time before its termination.
(f) Permanent Disability; Death. If an optionee's employment,
directorship or consulting relationship terminates as a result of permanent
and total disability (as defined in the Code) or death, then all options
held by such optionee under the 1999 Plan will generally expire on the
earlier of (i) twelve months from the date of termination of optionee's
employment or (ii) the expiration date of the option. The optionee or, if
applicable, the executor or other legal representative of the optionee's
estate may exercise all or part of the optionee's option at any time before
such expiration to the extent that such option was exercisable at the time
of termination of employment.
(g) Nontransferability of Options. Options granted under the 1999 Plan
generally are not transferable other than by will or the laws of descent
and distribution, and may be exercised during the optionee's lifetime only
by the optionee.
(h) Value Limitation. If the aggregate fair market value of all shares
of Common Stock subject to an optionee's incentive stock option which are
exercisable for the first time during any calendar year exceeds $100,000,
the excess portion of such option will be treated as a nonstatutory stock
option.
(i) Other Provisions. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the 1999 Plan as may
be determined by the Administrator.
Stock Rights. A Stock Right may award the recipient Common Stock or may
give the recipient the right to purchase Common Stock. Shares received or
purchased pursuant to a Stock Right are subject to a restricted stock agreement
between the Company and the recipient. Unless the Administrator determines
otherwise, the restricted stock agreement shall give the Company a reacquisition
option exercisable upon the voluntary or involuntary termination of the
recipient's employment or consulting relationship with the Company for any
reason (including death and disability). The acquisition price for any shares
reacquired by the Company shall be the original price paid by the recipient, if
any. The reacquisition option lapses at a rate
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<PAGE> 10
determined by the Administrator. A Stock Right and the stock acquired pursuant
thereto (while restricted) is generally nontransferable other than by will or
the laws of descent and distribution.
Adjustments Upon Changes in Capitalization. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar changes in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments will be made in the number and class of shares of stock
subject to the 1999 Plan, the number and class of shares of stock subject to any
option or Stock Right outstanding under the 1999 Plan, and the exercise price of
any such award. In the event of a liquidation or dissolution, any unexercised
options will terminate. The Administrator may, in its discretion, provide that
each optionee will fully vest in and have the right to exercise the optionee's
option or Stock Right as to all of the optioned stock, and shall release all
restrictions on any restricted stock prior to the consummation of the
liquidation or dissolution.
In the event of a merger, sale or reorganization of MyPoints.com into
another corporation that results in a change of control of the Company, options
that would have become vested within 18 months after the closing date of the
merger transaction will accelerate and become fully vested upon the closing of
the transaction. In the event of a change of control transaction, any other
outstanding options that are not accelerated would be assumed by the successor
company or an equivalent option would be substituted by the successor company.
If any of these options are not assumed or substituted, they would terminate.
Amendment and Termination of the 1999 Plan. The Board may amend, alter,
suspend or terminate the 1999 Plan, or any part thereof, at any time and for any
reason. No such action by the Board or stockholders may alter or impair any
option or Stock Right previously granted under the 1999 Plan without the written
consent of the optionee/recipient. Unless terminated earlier, the 1999 Plan will
terminate ten years from the date of its approval by the stockholders or the
Board, whichever is earlier.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who is granted an incentive stock
option does not generally recognize taxable income at the time the option is
granted or upon its exercise, although the exercise may subject the optionee to
the alternative minimum tax. Upon a disposition of the shares more than two
years after grant of the option and one year after exercise of the option, any
gain or loss is treated as long-term capital gain or loss. If these holding
periods are not satisfied, the optionee recognizes ordinary income at the time
of disposition equal to the difference between the exercise price and the lower
of (i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or short-term capital gain or loss, depending on
the holding period. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is an officer, director, or 10%
stockholder of the Company. The Company is entitled to a deduction in the same
amount as the ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally by the excess of the
then fair market value of the shares over the exercise price. Any taxable income
recognized in connection with an option exercise by an employee of the Company
is subject to tax withholding by the Company. The Company is entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Upon a disposition of such shares by the optionee, any difference between the
sale price and the optionee's exercise price, to the extent not recognized as
taxable income as provided above, is treated as long-term or short-term capital
gain or loss, depending on the holding period.
Stock Rights. Restricted stock is generally acquired pursuant to Stock
Rights. At the time of acquisition, restricted stock is subject to a
"substantial risk of forfeiture" within the meaning of Section 83 of the Code.
As a result, the recipient will not generally recognize ordinary income at the
time of acquisition. Instead, the recipient will recognize ordinary income on
the dates when the stock ceases to be subject to a substantial risk of
forfeiture. The stock will generally cease to be subject to a substantial risk
of forfeiture when it is no longer subject to the Company's right to reacquire
the stock upon the recipient's termination of employment with the
8
<PAGE> 11
Company. At such times, the recipient will recognize ordinary income measured as
the difference between the purchase price (if any) and the fair market value of
the stock on the date the stock is no longer subject to a substantial risk of
forfeiture.
The purchaser may accelerate to the date of acquisition his or her
recognition of ordinary income, if any, and the beginning of any capital gain
holding period, by timely filing an election pursuant to Section 83(b) of the
Code. In such event, the ordinary income recognized, if any, is measured as the
difference between the purchase price and the fair market value of the stock on
the date of purchase and the capital gain holding period commences on such date.
The ordinary income recognized by a purchaser who is an employee will be subject
to tax withholding by the Company. Different rules may apply if the purchaser is
also an officer, director, or 10% stockholder of the Company.
The foregoing is only a summary of the effect of federal income taxation
upon optionees and the Company with respect to the grant and exercise of
options, and upon recipients of Stock Rights, under the 1999 Plan. It does not
purport to be complete, and does not discuss the tax consequences of the
employee's, director's or consultant's death or the provisions of the income tax
laws of any municipality, state or foreign country in which the employee,
director or consultant may reside.
VOTE REQUIRED
The approval of the amendments to the 1999 Plan requires the affirmative
vote of a majority of the shares of the Company's Common Stock present and
voting at the Annual Meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
APPROVAL OF THE AMENDMENTS TO THE 1999 PLAN SET FORTH HEREIN.
PROPOSAL NO. 3
APPROVAL OF AMENDMENTS TO 1999 EMPLOYEE STOCK PURCHASE PLAN
The Company's 1999 Employee Stock Purchase Plan (the "Purchase Plan")
provides employees of the Company with an opportunity to purchase Common Stock
of the Company through accumulated payroll deductions. The Board of Directors of
the Company amended the Purchase Plan in April 2000 to increase the number of
shares of Common Stock available for sale by 200,000 from 200,000 to 400,000 and
to provide that, on the first day of each Company fiscal year beginning January
1, 2001, the number of shares reserved for issuance under the Plan would be
automatically increased by an amount equal to the lesser of
- 500,000 shares;
- 1.0% of the outstanding shares of Company Common Stock on such date, or
- a lesser amount determined by the Board.
The Board of Directors approved the amendment to the Purchase Plan to
establish a sufficient number of shares of Common Stock as a reserve under the
Purchase Plan for sale to the Company's employees. The affirmative vote of
holders of a majority of the shares of Common Stock represented at the meeting
is necessary to approve the amendment to the Purchase Plan. The Board of
Directors recommends that stockholders vote FOR approval of the amendment to the
Purchase Plan. The essential features of the Purchase Plan and certain
information regarding the Purchase Plan are set forth below.
Operation of the Purchase Plan. Under the Purchase Plan, the Company
withholds a percentage of each salary payment to participating employees over
certain offering periods. The Purchase Plan is currently implemented by six
month offering periods which commence January 1 and July 1 of each year. The
Board of Directors has the power to alter the duration of the offering periods
without stockholder approval, if such change is announced at least 15 days prior
to the scheduled beginning of the first offering period or purchase period, as
the case may be, to be effected. On the last business day of each offering
period, the funds withheld are applied to the purchase of shares of Common Stock
unless such participating employee withdraws from the offering period prior to
such purchase date. To the extent permitted by Rule 16b-3 of the Securities
9
<PAGE> 12
Exchange Act, if the fair market value of the Common Stock on the last day of
the offering period is lower than the fair market value of the Common Stock on
the first day of the offering period, then all participating employees in such
offering period shall be automatically withdrawn from such offering period
immediately after the stock purchase on the last day of the offering period and
automatically re-enrolled in the immediately following offering period.
Employees may end their participation in the offering at any time during the
offering period, and participation ends automatically on termination of
employment with the Company.
Eligibility; Administration. All Company employees are eligible to
participate in the Purchase Plan. Payroll deductions may not exceed 10% of an
employee's compensation, which under the Purchase Plan, as amended, is defined
as base straight time gross earnings plus overtime and commissions. No employee
may purchase more than $12,500 worth of stock in any purchase period. The
Purchase Plan is currently administered by the Board of Directors.
Purchase Price; Market Value. The price at which stock is purchased under
the Purchase Plan is equal to 85% of the fair market value of the Common Stock
on the first day of each offering period or the last day of each offering
period, whichever is lower.
Amendment and Termination. The Board of Directors may amend the Purchase
Plan from time to time or may terminate it or any purchase period or offering
period under it, without approval of the stockholders. However, to the extent
necessary and desirable to comply with Rule 16b-3 under the Securities Exchange
Act (or any other applicable law or regulation), the Company shall obtain
approval of the stockholders with respect to plan amendments to the extent and
in the manner required by such law or regulation. In the event of a merger or
sale of substantially all of the assets of the Company, the Board may shorten
the offering period or permit the assumption of outstanding rights to purchase
Common Stock. The Purchase Plan will terminate in March 2009 unless earlier
terminated by the Board.
Tax Consequences of Purchase Plan Transactions. The Purchase Plan, and the
right of participants to make purchases thereunder, is intended to qualify under
the provisions of Section 423 of the Code. Under these provisions, no income is
taxable to a participant until the shares purchased under the Plan are sold or
otherwise disposed of. Upon sale or other disposition of the shares, the
participant will generally be subject to tax, depending in part on how long the
shares are held by the participant. If the shares are sold or otherwise disposed
of more than two years from the first day of the offering period, the
participant will recognize ordinary income measured as the lesser of (a) the
excess of the fair market value of the shares at the time of such sale or
disposition over the purchase price, or (b) 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 were purchased by the
participant over the participant's purchase price. Any additional gain or loss
on the sale or disposition will be capital gain or loss. 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 recognized by participants
upon a sale or disposition of shares prior to the expiration of the holding
period described above.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected PriceWaterhouseCoopers LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 2000, and recommends that stockholders vote
"FOR" ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
PriceWaterhouseCoopers LLP has audited the Company's financial statements
annually since the Company's inception. Representatives of
PriceWaterhouseCoopers LLP are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions. If stockholders fail to ratify
the selection, the Audit Committee and the Board will reconsider whether or not
to retain that firm. Even if the selection is ratified, the Audit Committee
10
<PAGE> 13
and the Board in their discretion may direct the appointment of different
independent auditors at any time during the year.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth the compensation paid by us during 1998 and
1999 to our Chief Executive Officer and our next four most highly compensated
executive officers who received compensation of more than $100,000 during 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
---------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Steven M. Markowitz............... 1999 $140,000 $ -- 625,000 $ --
Chief Executive Officer and 1998 100,000 -- -- --
Chairman of the Board of
Directors
Robert C. Hoyler.................. 1999 150,440 -- 440,000 --
President and Chief Operating 1998 139,682 -- -- --
Officer
Charles H. Berman................. 1999 137,614 -- 164,905 171,760(1)
Executive Vice President, Sales 1998 76,000 -- 128,000 --
Steven E. Parker.................. 1999 129,509 -- 222,931 25,000(2)
Senior Vice President, Marketing 1998 107,312 5,000 27,069 --
Frank J. Pirri.................... 1999 156,895 -- 115,000 --
Senior Vice President, Offline 1998 109,384 -- -- --
Commerce
</TABLE>
- ---------------
(1) Represents sales commissions.
(2) Represents a relocation bonus.
Messrs. Hoyler's and Pirri's salaries in 1998 include amounts earned at
MotivationNet before its acquisition by MyPoints.com. Thomas P. Caldwell joined
MyPoints.com in April 1999 at an annual salary of $150,000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information relating to stock options
granted during 1999 to our Chief Executive Officer and our next four most highly
compensated executive officers who received salary compensation of more than
$100,000. In accordance with the rules of the Securities and Exchange
Commission, also shown below is the potential realizable value over the term of
the option (the period from the grant date to the expiration date) based on
assumed rates of stock appreciation of 5% and 10%, compounded annually. These
amounts are mandated by the Securities and Exchange Commission and do not
11
<PAGE> 14
represent our estimate of future stock price. Actual gains, if any, on stock
option exercises will depend on the future performance of our common stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED OPTION TERM
OPTIONS IN FISCAL EXERCISE EXPIRATION ------------------------------
NAME GRANTED(#) 1999 PRICE($/SH.) DATE 5%($) 10%($)
---- ---------- ------------- ------------ ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Steven M. Markowitz..... 350,000 6.2% $ 1.00 1/31/2009 $ 220,113 $ 557,810
90,000 1.6 8.00 4/12/2009 452,804 1,147,495
185,000 3.3 38.25 12/08/2009 4,450,216 11,277,720
Robert C. Hoyler........ 250,000 4.5 1.00 1/31/2009 157,224 398,436
90,000 1.6 8.00 4/12/2009 452,804 1,147,495
100,000 1.8 38.25 12/08/2009 2,405,522 6,096,065
Charles H. Berman....... 30,000 0.5 1.00 1/31/2009 18,867 47,812
60,000 1.1 8.00 4/12/2009 301,869 764,996
1,905 -- 8.00 5/12/2009 9,584 24,289
73,000 1.3 8.00 7/26/2009 367,274 930,746
Steven E. Parker........ 47,931 0.9 5.00 2/26/2009 150,718 381,948
90,000 1.6 8.00 5/12/2009 452,804 1,147,495
85,000 1.5 8.00 7/26/2009 427,648 1,083,745
Frank J. Pirri.......... 90,000 1.6 8.00 4/12/2009 452,804 1,147,495
25,000 0.4 8.00 8/19/2009 125,779 318,748
</TABLE>
In 1999, we granted options to purchase an aggregate of 5,614,630 shares of
common stock to our employees, directors and consultants. Generally, we grant
options at an exercise price equal to the fair market value of the underlying
common stock on the date of grant, as determined by our board of directors, and
the options vest over four years from the date of grant. Because we are a
publicly-held company, the fair market value of our stock equals its trading
market price.
In accordance with the rules of the Securities and Exchange Commission, the
above table sets forth the potential realizable value over the ten-year period
from the grant date to the expiration date, assuming rates of stock appreciation
of 5% and 10%, compounded annually. These amounts do not represent our estimate
of future stock price performance. Actual realizable values, if any, of stock
options will depend on the future performance of our common stock.
AGGREGATE YEAR-END OPTION VALUES
The following table sets forth information for our Chief Executive Officer
and the next four most highly compensated executive officers who received salary
compensation of more than $100,000 in 1999, relating to the number and value of
securities underlying exercisable and unexercisable options held at December 31,
1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999(#) DECEMBER 31, 1999($)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Steven M. Markowitz............. 241,458 383,542 $15,711,122 $22,392,629
Robert C. Hoyler................ 172,291 267,709 11,453,493 16,311,507
Charles H. Berman............... 167,219 120,500 12,219,623 7,953,000
Steven E. Parker................ 44,756 155,507 2,971,357 10,446,543
Frank J. Pirri.................. 27,500 87,500 1,815,000 5,775,000
</TABLE>
The value of unexercised in-the-money options at December 31, 1999 above is
based on a value of $74.00 per share, the last reported sale price of our common
stock on the Nasdaq National Market on December 31, 1999, less the per share
exercise price, multiplied by the number of shares issuable upon exercise of the
option. All options were granted under our 1996 stock plan or our 1999 stock
plan.
12
<PAGE> 15
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is provided to stockholders by the members of the
Compensation Committee of the Board of Directors:
The Compensation Committee of the Board of Directors (the "Committee"),
comprising three directors, none of whom are employees of the Company, is
responsible for the administration of the Company's compensation programs. These
programs include base salary for executive officers and both annual and long-
term incentive compensation programs. The Company's compensation programs are
designed to provide a competitive level of total compensation and include
incentive and equity ownership opportunities linked to the Company's performance
and stockholder return.
Compensation Philosophy. The Company's overall executive compensation
philosophy is based on a series of guiding principles derived from the Company's
values, business strategy, and management requirements. These principles are
summarized as follows:
- Provide competitive levels of total compensation which will enable the
Company to attract and retain the best possible executive talent;
- Motivate executives to achieve optimum performance for the Company;
- Align the financial interest of executives and stockholders through
equity-based plans;
- Provide a total compensation program that recognizes individual
contributions as well as overall business results.
Compensation Program. The Committee is responsible for reviewing and
recommending to the Board the compensation and benefits of all officers of the
Company and establishes and reviews general policies relating to compensation
and benefits of employees of the Company. The Committee is also responsible for
the administration of the Company's 1996 and 1999 Stock Plans. There are two
major components to the Company's executive compensation: base salary and
potential cash bonus, as well as potential long-term compensation in the form of
stock options. The Committee considers the total current and potential long-term
compensation of each executive officer in establishing each element of
compensation.
1. Base Salary. In setting compensation levels for executive officers, the
Committee reviews competitive information relating to compensation
levels for comparable positions at consulting firms, telecommunications
companies and other high technology companies. In addition, the
Committee may, from time to time, hire compensation and benefit
consultants to assist in developing and reviewing overall salary
strategies. Individual executive officer base compensation may vary
based on time in position, assessment of individual performance, salary
relative to internal and external equity and critical nature of the
position relative to the success of the Company.
2. Long-Term Incentives. The Company's Stock Plan provides for the issuance
of stock options to officers and employees of the Company to purchase
shares of the Company's Common Stock at an exercise price equal to the
fair market value of such stock on the date of grant. Stock options are
granted to the Company's executive officers and other employees both as
a reward for past individual and corporate performance and as an
incentive for future performance. The Committee believes that
stock-based performance compensation arrangements are essential in
aligning the interests of management and the stockholders in enhancing
the value of the Company's equity.
3. Benefits. The Company provides benefits to the named executive officers
that are generally available to all employees of the Company. The amount
of executive level benefits and perquisites, as determined in accordance
with the rules of the Securities and Exchange Commission relating to
executive compensation, did not exceed 10% of total salary and bonus for
the calendar year 1999 for any executive officer.
13
<PAGE> 16
1999 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
In determining Mr. Markowitz' salary for fiscal year 1999, the Committee
considered competitive compensation data for publicly-held internet advertising
companies and consumer-oriented e-commerce companies. The Committee also took
into account Mr. Markowitz' experience and knowledge and his performance as
Chief Executive Officer. The Committee also approved the award of a cash bonus
of $100,000 and options to purchase 625,000 shares of Company Common Stock to
Mr. Markowitz in recognition of his performance during 1999.
SECTION 162(m) OF THE INTERNAL REVENUE CODE LIMITATIONS ON EXECUTIVE
COMPENSATION
In 1993, Section 162(m) was added to the United States Internal Revenue
Code of 1986, as amended, (the "Code"). Section 162(m) may limit the Company's
ability to deduct for United States federal income tax purposes compensation in
excess of $1,000,000 paid to the Company's Chief Executive Officer and its four
other highest paid executive officers in any one fiscal year. No executive
officer of the Company received any such compensation in excess of this limit
during fiscal 1999.
It is the opinion of the Committee that the aforementioned compensation
policies and structures provide the necessary discipline to properly align the
Company's corporate economic performance and the interest of the Company's
stockholders with progressive, balanced and competitive executive total
compensation practices in an equitable manner.
The foregoing Committee Report shall not be "soliciting material" or to be
"filed" with the SEC, nor shall such information be incorporated by reference
into any future filing under this Securities Act of 1933, as amended, or the
Exchange Act, except to the extent the Company specifically incorporates it by
reference into such filing.
Respectfully submitted,
The Compensation Committee of the Board of
Directors
Howard L. Morgan
Thomas Newkirk
Lawrence E. Phillips
14
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return of the Nasdaq National
Market, U.S. index ("Nasdaq U.S. Index") for the period beginning on August 23,
1999, the date of the Company's initial public offering, and ending on December
31, 1999. This chart assumes investment of $100 on the date of the Company's
initial public offering.
<TABLE>
<CAPTION>
MYPOINTS.COM NASDAQ U.S. INDEX
------------ -----------------
<S> <C> <C>
8/23/00 100.00 100.00
12/31/99 925.00 149.63
</TABLE>
THE FOREGOING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR TO BE "FILED" WITH THE SEC, NOR SHALL SUCH INFORMATION
BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE EXCHANGE ACT, EXCEPT TO THE
EXTENT THE COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.
15
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 2000, by (i) each person or entity who is known by
the Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director of the Company, (iii) each of the executive officers
named in the Summary Compensation Table, and (iv) all directors and executive
officers of the Company as a group. Except as otherwise noted, the stockholders
named in the table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them, subject to
applicable community property laws.
Unless otherwise indicated, the address for each beneficial owner set forth
below is c/o MyPoints.com, Inc., 100 California Street, 11th floor, San
Francisco, California 94111.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
---------------------
TOTAL
BENEFICIAL OWNER NUMBER PERCENT
---------------- ---------- -------
<S> <C> <C>
5% STOCKHOLDERS:
Direct Marketing Technology, Inc. ...................... 3,674,356 12.72%
505 City Parkway West, 10th floor
Orange, CA 92868
EXECUTIVE OFFICERS AND DIRECTORS:
Steven M. Markowitz(1).................................. 1,107,468 3.79%
Robert C. Hoyler(2)..................................... 975,990 1.64%
Charles H. Berman(3).................................... 260,986 *
Steven E. Parker(4)..................................... 83,254 *
Frank J. Pirri(5)....................................... 137,602 *
Mario M. Rosati(6)...................................... 154,166 *
Wilson Sonsini Goodrich & Rosati 650 Page Mill Road
Palo Alto, CA 94304
Howard L. Morgan(7)..................................... 307,835 1.06%
Thomas Newkirk(8)....................................... 3,682,689 12.75%
Lawrence E. Phillips(9)................................. 996,517 3.45%
Lester Wunderman(10).................................... 68,326 *
All directors and executive Officers as a group (13
persons)(11).......................................... 11,271,376 39.03%
</TABLE>
- ---------------
* Less than 1% of the outstanding shares of common stock.
(1) Includes 361,456 shares issuable upon exercise of options and warrants
within 60 days of March 31, 2000.
(2) Includes 95,103 shares issuable upon exercise of options and warrants
within 60 days of March 31, 2000.
(3) Includes 242,124 shares issuable upon exercise of options and warrants
within 60 days of March 31, 2000.
(4) Includes 62,362 shares issuable upon exercise of options and warrants
within 60 days of March 31, 2000.
(5) Includes 44,063 shares issuable upon exercise of options and warrants
within 60 days of March 31, 2000.
(6) Includes 22,500 shares held by WS Investment Company 96B, 87,125 shares
held by WS Investment Company 97B and 10,124 shares held by WS Investment
Company 98A. Mr. Rosati is a general partner of each of these entities and
disclaims beneficial ownership of the shares held by those entities, except
to the extent of his proportionate partnership interest therein. Mr. Rosati
is a member of our board of directors.
16
<PAGE> 19
(7) Includes 145,469 shares issuable upon exercise of options and warrants
within 60 days of March 31, 2000.
(8) Includes 3,674,356 shares held by Direct Marketing Technology. Mr. Newkirk,
the Vice President, Secretary and Director of Direct Marketing Technology,
disclaims beneficial ownership of the shares held by that entity, except to
the extent of his proportionate pecuniary interest therein based upon his
beneficial ownership of the capital stock of Direct Marketing Technology.
Mr. Newkirk is a member of our board of directors.
(9) Includes 988,184 shares held by Primedia Ventures. Mr. Phillips, Managing
Director of Primedia, disclaims beneficial ownership of the shares held by
Primedia, except to the extent of his proportionate pecuniary interest
therein. Mr. Phillips is a member of our board of directors.
(10) Includes 5,000 shares issuable upon exercise of options and warrants within
60 days of March 31, 2000.
(11) Includes 1,059,292 shares issuable upon exercise of options and warrants
within 60 days of March 31, 2000.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, officers and beneficial
owners of more than 10% of the Company's Common Stock to file reports of
ownership and reports of changes in the ownership with the Securities and
Exchange Commission (the "SEC"). Such persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms submitted to it
during the year ended December 31, 2000 (the "Last Fiscal Year"), the Company
believes that, during the Last Fiscal Year, all officers, directors and
beneficial owners of more than 10% of the outstanding Common Stock complied with
all section 16(a) requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CORPORATE COUNSEL
Mr. Rosati, one of our directors, is also a member of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, which is our outside corporate
counsel in May 1999.
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with each of our directors
and executive officers.
EMPLOYMENT AGREEMENTS
In December 1999, our Board of Directors approved in principle the terms of
new employment agreements with Steven Markowitz, our Chairman and Chief
Executive Officer, and Robert Hoyler, our President and Chief Operating Officer.
The terms of these employment agreements include annual salaries of $200,000 for
Messrs. Markowitz and Hoyler and the establishment of cash and stock
option-based incentive compensation plans. The terms of these agreements also
provide for 18 months of severance pay in the event of termination of employment
under certain circumstances. In addition, if within 18 months of a change of
control of MyPoints.com, the employment of either individual is terminated or
either individual resigns as a result of a decrease in compensation or
work-related responsibilities, that individual will be entitled to vesting of
all then-unvested stock options as well as 18 months of severance pay.
MyPoints.com anticipates entering into these agreements during the second
quarter of 2000.
17
<PAGE> 20
POLICY REGARDING TRANSACTIONS WITH AFFILIATES
All future transactions with affiliates, including any loans we make to our
officers, directors, principal stockholders or other affiliates, will be
approved by a majority of our board of directors, including a majority of the
independent and disinterested members or, if required by law, a majority of
disinterested stockholders, and will be on terms no less favorable to us than we
could have obtained from unaffiliated third parties.
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 accompanying form of proxy to vote the shares they
represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
San Francisco, California
April 28, 2000
18
<PAGE> 21
MYPOINTS.COM, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY MAY 25, 2000
OFFICES OF MYPOINTS.COM, INC.
100 CALIFORNIA STREET, 11TH FLOOR
SAN FRANCISCO, CA 94111
MYPOINTS.COM, INC.
100 CALIFORNIA STREET, 11TH FLOOR, SAN FRANCISCO, CA 94111
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 25, 2000
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy, you revoke all prior proxies and appoint Steven M.
Markowitz and Thomas P. Caldwell, and each of them, with full power of
substitution, to vote your shares on the matters shown on the reverse side and
any other matters which may come before the Annual Meeting and all adjournments.
SEE REVERSE SIDE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
<TABLE>
<S> <C> <C>
1. Election of directors: 01 Steven M. Markowitz [ ] Vote FOR [ ] Vote WITHHELD
02 Mario M. Rosati all nominees from all nominees
03 Howard L. Morgan (except as marked)
</TABLE>
<PAGE> 22
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
2. Approval of amendments to the 1999 Stock Plan.
[ ] For [ ] Against [ ] Abstain
3. Approval of amendments to the 1999 Employee Stock Purchase Plan.
[ ] For [ ] Against [ ] Abstain
4. Ratifying the appointment of PriceWaterhouseCoopers LLP as independent
auditors of the Company for the fiscal year ending December 31, 2000.
[ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL
Address Change? Mark Box [ ]
Indicate changes below: Date
------------------------
----------------------------
Signature(s) in Box
Please sign exactly as your
name(s) appear on Proxy. If
held in joint tenancy, all
persons must sign. Trustees,
administrators, etc. should
include title and authority.
Corporations should provide
full name of corporation and
title of authorized officer
signing the proxy.
