<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
Homestore.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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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>
[LOGO OF homestore.com]
Notice of Annual Meeting of Stockholders
To Be Held April 12, 2000
----------------
To Our Stockholders:
The annual meeting of stockholders (the "Annual Meeting") of Homestore.com,
Inc., a Delaware corporation (the "Company"), will be held on April 12, 2000
at 2:00 p.m. at the City of Thousand Oaks Civic Arts Plaza located at 2100
Thousand Oaks Boulevard, Thousand Oaks, California, for the following
purposes:
1. To elect two Class I directors to serve for a term of three years and
until their successors are duly elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the year ending December 31, 2000; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on March 13, 2000 are
entitled to receive notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
stockholder attending the Annual Meeting may vote in person even if he or she
previously returned a proxy.
By Order of the Board of Directors,
/s/ John M. Giesecke, Jr.
John M. Giesecke, Jr.
Executive Vice President, Chief
Financial Officer and Secretary
Thousand Oaks, California
March 13, 2000
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE 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>
[LOGO OF homestore.com]
225 West Hillcrest Drive, Suite 100
Thousand Oaks, California 91360
----------------
PROXY STATEMENT
----------------
This proxy statement is furnished on behalf of the Board of Directors of
Homestore.com, Inc., a Delaware corporation ("Homestore" or the "Company"),
for use at Homestore's annual meeting of stockholders (the "Annual Meeting")
to be held on April 12, 2000 at 2:00 p.m., and at any postponements or
adjournments thereof. The Annual Meeting will be held at the City of Thousand
Oaks Civic Arts Plaza located at 2100 Thousand Oaks Boulevard, Thousand Oaks,
California.
These proxy solicitation materials were mailed on or about March 20, 2000
to all stockholders entitled to vote at the Annual Meeting.
ABOUT THE MEETING
What is the purpose of the Annual Meeting?
At the Company's Annual Meeting, stockholders will vote on the matters
outlined in the notice of meeting on the cover page of this proxy statement,
including election of directors and ratification of the Company's independent
accountants.
Who is entitled to vote?
Only stockholders of record at the close of business on the record date,
March 13, 2000 (the "Record Date"), are entitled to vote at the Annual
Meeting, or any postponements or adjournments of the meeting.
What are the Board's recommendations on the proposals?
The Board of Directors recommends a vote FOR each of the nominees and FOR
the ratification of PricewaterhouseCoopers LLP as independent accountants for
the year ending December 31, 2000.
How do I vote?
Sign and date each proxy card you receive and return it in the postage-
prepaid envelope enclosed with your proxy materials. If you are a registered
stockholder and attend the meeting, you may deliver your completed proxy card
in person.
If your shares are held by your broker or bank, in "street name," you will
receive a form from your broker or bank seeking instructions as to how your
shares should be voted. If you do not instruct your broker or bank how to
vote, your broker or bank will vote your shares if it has discretionary power
to vote on a particular matter.
Can I change my vote after I return my proxy card?
Yes, you have the right to revoke your proxy at any time before the Annual
Meeting by notifying the Secretary of the Company in writing, voting in person
or returning a later-dated proxy card.
Who will count the vote?
Chase Mellon Shareholder Services, L.L.C. ("ChaseMellon") will count the
votes and act as the inspector of election.
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What shares are included on the proxy card(s)?
The shares on your proxy card(s) represent ALL of your shares. If you do
not return your proxy card(s), your shares will not be voted.
What does it mean if I get more than one proxy card?
If your shares are registered differently and are in more than one account,
you will receive more than one proxy card. Sign and return all proxy cards to
ensure that all your shares are voted. We encourage you to have all accounts
registered in the same name and address (whenever possible). You can
accomplish this by contacting our transfer agent, ChaseMellon (800-356-2017),
or, if your shares are held in "street name," by contacting the broker or bank
who holds your shares.
How many shares can vote?
As of the Record Date, 76,771,218 shares of common stock, the only voting
securities of the Company, were issued and outstanding. Every stockholder is
entitled to one vote for each share of common stock held.
What is a "quorum"?
A "quorum" is a majority of the outstanding shares entitled to vote. They
may be present in person or represented by proxy. For the purposes of
determining a quorum, shares held by brokers or nominees for which the Company
receives a signed proxy will be treated as present even if the broker or
nominee does not have discretionary power to vote on a particular matter or if
instructions were never received from the beneficial owner. These shares are
called "broker non-votes." Abstentions will be counted as present for quorum
purposes.
What is required to approve each proposal?
For the election of the Class I directors, once a quorum has been
established, the nominees for director who receive the most votes will become
Class I directors of the Company. To ratify the appointment of the independent
accountants, a majority of the shares represented at the Annual Meeting,
either in person or by proxy, must be voted in favor of the proposal.
If a broker indicates on its proxy that it does not have discretionary
authority to vote on a particular matter, the affected shares will be treated
as not present and not entitled to vote with respect to that matter, even
though the same shares may be considered present for quorum purposes and may
be entitled to vote on other matters.
What happens if I abstain?
Proxies marked "abstain" will be counted as shares present for the purpose
of determining the presence of a quorum, but for purposes of determining the
outcome of a proposal, shares represented by such proxies will not be treated
as affirmative votes. For proposals requiring an affirmative vote of a
majority of the shares present, an abstention is equivalent to a "no" vote.
How will the Company solicit proxies?
ChaseMellon was retained by the Company to assist in the distribution of
proxy materials and solicitation of votes. The cost of soliciting proxies,
which will be conducted by mail, will be borne by the Company. These costs
will include the expense of preparing and mailing proxy solicitation materials
for the Annual Meeting and reimbursements paid to brokerage firms and others
for their reasonable out-of-pocket expenses for forwarding proxy solicitation
materials to stockholders. Proxies may also be solicited in person, by
telephone, or by facsimile by directors, officers and employees of the Company
without additional compensation.
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ITEM 1--ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the Company shall have at
least one and not more than nine directors, the exact number to be fixed by
resolution of the Board of Directors from time to time. The Board has fixed the
number of directors at seven. The Bylaws of the Company also provide for the
Board of Directors to be divided into three classes as nearly equal in size as
possible with staggered three-year terms. The term of office for Class I, Class
II and Class III directors will expire at the annual meeting of stockholders to
be held in 2000, 2001 and 2002, respectively: the term of office for Class I
directors elected at this Annual Meeting will expire at the annual meeting of
stockholders to be held in 2003.
Unless otherwise instructed, the proxyholders will vote the proxies received
by them for the two nominees named below. If any nominee of the Company is
unable or declines to serve as a Class I director at the time of the Annual
Meeting, the proxies will be voted for any nominee designated by the present
Board of Directors to fill the vacancy.
The nominees for election as Class I directors are:
Nigel D. T. Andrews Director since July 1999
Mr. Andrews, 52, has served as a director of Homestore since July 1999. He
is an Executive Vice President of General Electric Capital Corporation, or GE
Capital, where he has served since August 1993. Prior to his present position
with GE Capital, from August 1990 to August 1993, Mr. Andrews was Vice
President and General Manager of GE Plastics Americas. Earlier, he was Vice
President and General Manager of GE Silicones. He joined General Electric in
1987 as Vice President of Corporate Business Development and Planning after
nearly 10 years with Booz, Allen & Hamilton, a management consulting firm. He
serves on the boards of directors of Penske Corporation, Consumer Financial
Network, and Weatherford Global. Mr. Andrews received a B.S. from the
University of Sheffield, England and an M.B.A. from the London Business School.
Richard R. Janssen Director since July 1993
Mr. Janssen, 50, served as President and Chief Operating Officer of
Homestore from December 1996 through March 1999. Mr. Janssen was a founder of
InfoTouch Corporation ("InfoTouch"), which was a predecessor entity of the
Company. He served as President and Chief Executive Officer, and was a director
of InfoTouch from July 1993 until February 1999, when InfoTouch merged with
NetSelect, Inc., which was also a predecessor entity of the Company.
Previously, Mr. Janssen was President of Janssen & Associates, a consulting
firm specializing in strategic planning, and co-founded Delphi Information
Systems, Inc., an insurance software company, holding various positions,
including Chairman of the Board, Chief Executive Officer and President. Mr.
Janssen received a B.S. in mathematics and computer science and in economics
from the University of California at Los Angeles.
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
NOMINEES LISTED ABOVE.
Board Meetings and Committees
The Board of Directors of the Company held a total of 13 meetings during the
fiscal year ended December 31, 1999. During that period, no incumbent director
attended fewer than 75% of the total number of meetings of the Board of
Directors, or the total number of meetings of all committees of the Board of
Directors on which that director served. The Board of Directors has an Audit
Committee, a Compensation Committee and a Nominations Committee.
The Audit Committee consists of Nigel D. T. Andrews, William E. Kelvie and
Kenneth K. Klein. The Compensation Committee and the Nominations Committee each
consists of Michael Brooks, L. John Doerr and Joe F. Hanauer. The Audit
Committee reviews the Company's financial statements and accounting practices,
makes recommendations to the Board regarding the selection of independent
auditors and
3
<PAGE>
reviews the results and scope of the audit and other services provided by the
Company's independent auditors. The Audit Committee held five meetings during
1999. The Compensation Committee makes recommendations to the Board concerning
salaries and incentive compensation for our officers and employees, and
administers the Company's stock plans and employee benefit plans. The
Compensation Committee held 12 meetings during 1999. The Nominations Committee
makes recommendations to the Board concerning Board composition and recruiting
of new members. The Nominations Committee held six meetings during 1999. The
Nominations Committee is not presently considering nominee recommendations
from security holders.
Director Compensation
Directors do not receive cash compensation for their services as directors
but are reimbursed for their reasonable and necessary expenses in attending
Board and committee meetings.
During 1999, each non-employee director was granted an option to purchase
15,000 shares of the Company's common stock under the 1999 Stock Incentive
Plan with the exception of Messrs. Hanauer and Klein, who each received
options to purchase 40,000 shares of the Company's common stock. Immediately
following each annual meeting of stockholders, each non-employee director will
automatically be granted an additional option to purchase 7,500 shares under
that plan if the director has served continuously as a member of the Board for
a period of at least one year since the date of the director's initial grant.
The Board may, in its discretion, grant an additional number of options
depending on the level of additional services performed by any particular
member of the Board. Each option will have an exercise price equal to the fair
market value of the Company's common stock on the date of grant and will have
a ten-year term, but will terminate within a specified time, as defined in the
1999 Stock Incentive Plan, following the date the option holder ceases to be a
director or consultant. Except as otherwise provided by the Board of
Directors, each of these options will be immediately exercisable and fully
vested.
4
<PAGE>
MANAGEMENT
Executive Officers and Directors
The following table sets forth information regarding our executive officers
and our Class I nominees and Class II and III directors.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Stuart H. Wolff,
Ph.D. ................. 36 Chairman of the Board and Chief Executive Officer
Michael A Buckman....... 52 President and Chief Operating Officer
John M. Giesecke, Jr. .. 38 Executive Vice President, Chief Financial Officer and Secretary
Peter B. Tafeen......... 30 Executive Vice President, Business Development
M. Jeffrey Charney...... 40 Senior Vice President, Corporate Marketing and Communications
Catherine Kwong Giffen.. 34 Senior Vice President, Human Resources and Administration
David M. Rosenblatt..... 35 Senior Vice President, General Counsel
Joseph J. Shew.......... 34 Vice President, Finance
Nigel D.T. Andrews(1)... 52 Director
L. John Doerr(2)........ 48 Director
Joe F. Hanauer(2)....... 61 Director
Richard R. Janssen...... 50 Director
William E. Kelvie(1).... 52 Director
Kenneth K. Klein(1)..... 56 Director
</TABLE>
- --------
(1) Member of Audit Committee.
(2) Member of Compensation and Nominations Committees.
The Company's executive officers and directors are also executive officers
and directors of its subsidiary RealSelect, Inc., and Mr. Buckman is also a
director of RealSelect, Inc. Under the terms of the Company's stockholders
agreement relating to RealSelect, the National Association of REALTORS(R) (the
"NAR") has the right to appoint two members to the RealSelect board of
directors. See "Related Party Transactions." The two directors of RealSelect
appointed by the NAR are Mr. Hanauer and Mr. Terrence M. McDermott, Executive
Vice President of the NAR.
Stuart H. Wolff, Ph.D. joined Homestore in November 1996 as Chairman and
Chief Executive Officer. From September 1994 to September 1996, Dr. Wolff was
Vice President of Business Services at TCI Interactive and at AND Interactive,
subsidiaries of TCI Communications, Inc., a cable company. Prior to his tenure
at TCI Communications, Inc. Dr. Wolff was an engineer at IBM and a research
scientist at AT&T Bell Labs. In 1986 he was recognized by the Japanese
Ministry of Education and awarded the Monbushu Fellowship at the Tokyo
Institute of Technology. Dr. Wolff received a B.S. in electrical engineering
from Brown University and an M.E.E. and Ph.D. in electrical engineering from
Princeton University.
Michael A. Buckman joined Homestore in February 1999 as President and Chief
Operating Officer. Prior to joining Homestore, Mr. Buckman served as Chief
Executive Officer for Worldspan Travel Information Services, a worldwide
travel reservation and airline support services organization, since June 1995.
From January 1992 to June 1995, Mr. Buckman was Executive Vice President of
American Express Company. Prior to his tenure at American Express, he was
Chief Operating Officer of Lifeco Services Corporation, a travel services
company, and President of the Sabre Travel Information Network, a travel
distribution company. Mr. Buckman received a B.B.A. from the University of
Texas and an M.B.A. from the University of Missouri.
John M. Giesecke, Jr. joined Homestore in June 1998 as Vice President of
Finance, was appointed as Secretary in August 1998 and was promoted to
Executive Vice President and Chief Financial Officer in December 1998. From
March 1994 to March 1998, Mr. Giesecke was Vice President of Corporate
Controllership in charge of worldwide controllership activities for The Walt
Disney Company. Prior to his tenure at The Walt Disney Company, Mr. Giesecke
spent eight years as a certified public accountant with Price Waterhouse LLP,
most recently as Senior Manager. Mr. Giesecke received a B.S. in business and
public administration from the University of Arizona.
5
<PAGE>
Peter B. Tafeen joined Homestore in September 1997 as Executive Vice
President of Business Development. From June 1995 to September 1997, Mr.
Tafeen served as Director of Business Development for PointCast Incorporated,
an Internet software company. Prior to his tenure at PointCast, from March
1993 to June 1995, Mr. Tafeen served as an Area Director for the Gartner
Group, Inc., a technology consulting company. Mr. Tafeen received a B.S. in
political science from the University of Massachusetts at Amherst.
M. Jeffrey Charney joined Homestore in June 1999 as Senior Vice President
of Marketing and Communications. From June 1994 to June 1999, Mr. Charney
served as Senior Vice President of Marketing and Communications for Kaufman
and Broad Home Corporation, a real estate development company. Prior to
joining Kaufman and Broad, Mr. Charney served as Director of Advertising and
Employee Communications for Rockwell International from 1988 through 1994.
Earlier, from 1982 through 1988, he managed public relations at Raytheon
Corporation. Mr. Charney received his B.A. in Journalism (Advertising/Public
Relations) from the University of South Carolina and his M.A. in Journalism
from Ohio State University.
Catherine Kwong Giffen joined Homestore in April 1998 as Senior Vice
President of Human Resources and Administration. Prior to joining Homestore,
Ms. Giffen served from April 1994 to April 1998 as Vice President of Human
Resources and Administration of Iwerks Entertainment, Inc., an entertainment
company. Previously she has served as Vice President of Human Resources for
the Real Estate Industries Division of BankAmerica Corporation and Vice
President of Human Resources for the Securities Lending and Mortgage-Backed
Securities Division of Security Pacific National Bank. Ms. Giffen received a
B.A. in political science from the University of California at Los Angeles.
David M. Rosenblatt joined Homestore in October 1998 as Senior Vice
President, General Counsel. Prior to joining Homestore, Mr. Rosenblatt was
Senior Product Manager for Intuit Inc.'s QuickenMortgage from August 1997 to
October 1998. Prior to his tenure at Intuit, Mr. Rosenblatt founded and served
as President of CyberSports, Inc., a software company, from January 1995 to
February 1999. He practiced corporate law for Weil, Gotshal & Manges LLP and
for Chadbourne & Parke LLP from 1990 to January 1996. Mr. Rosenblatt received
an M.B.A. from the Harvard University Graduate School of Business, a J.D. from
Northwestern University School of Law and a B.A. in accounting from
Pennsylvania State University.
Joseph J. Shew joined Homestore in August 1998 as Controller and was
promoted to Vice President of Finance in January 1999. From October 1994 to
August 1998, Mr. Shew was Director of Corporate Controllership for The Walt
Disney Company. Prior to his tenure at Disney, Mr. Shew spent six years as a
certified public accountant with Price Waterhouse LLP, most recently as
Manager. Mr. Shew received a B.S. in accounting from Villanova University.
Nigel D. T. Andrews: See "Item 1--Election of Directors."
L. John Doerr has served as a director of Homestore since August 1998. He
has been a general partner of Kleiner Perkins Caufield & Byers since September
1980. Prior to his tenure at Kleiner Perkins, Mr. Doerr was employed by Intel
Corporation for five years. He serves on the boards of directors of
Amazon.com, Inc., @Home Corporation, Intuit Inc., Platinum Software
Corporation and Sun Microsystems, Inc. Mr. Doerr received a B.S.E.E and an
M.E.E from Rice University and an M.B.A. from the Harvard University Graduate
School of Business.
Joe F. Hanauer has served as a director of Homestore since November 1996.
Since 1988, Mr. Hanauer, through Combined Investments, L.P., has directed
investments in companies primarily involved in real estate and financial
services. Mr. Hanauer is former Chairman of Grubb & Ellis Company and former
Chairman of Coldwell Banker Residential Group, Inc. Mr. Hanauer is a director
of Grubb & Ellis Company, MAF Bancorp, Inc. and Regit, Inc., a national
insurance broker. Mr. Hanauer is a member of the Executive Committees of the
National Association of REALTORS. Mr. Hanauer received a B.S. in business
administration from Roosevelt University.
Richard R. Janssen: See "Item 1--Election of Directors."
6
<PAGE>
William E. Kelvie has served as a director of Homestore since August 1998.
He is Chief Information Officer responsible for information technology systems
at Fannie Mae, including its technology business and its internal systems. Mr.
Kelvie joined Fannie Mae in 1990 as Senior Vice President and Chief
Information Officer. Prior to his tenure at the Federal National Mortgage
Association, Mr. Kelvie was a partner with Nolan, Norton & Co., a management
consulting company specializing in information technology strategies and plans
and served in various capacities with The Dexter Corporation, a specialized
manufacturing company, and The Travelers Insurance Company, an insurance and
financial services company. Mr. Kelvie received a B.S. in english literature
from Tufts University and an M.S. in english literature from Trinity College.
Kenneth K. Klein has served as a director of Homestore since August 1998.
He has served as President and Chief Executive Officer of Kleinco Construction
Services, Inc., a general contracting company, since 1980. Mr. Klein is
National Vice President and a member of the Executive Committee of the
National Association of Home Builders. Mr. Klein is a past Chairman of the
Board of the Home Builders Institute, a national organization that teaches
building-craft skills. Mr. Klein received a B.S. in accounting from Oklahoma
State University.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to beneficial ownership
of the Company's common stock as of February 29, 2000, by (1) each stockholder
known by the Company to be the beneficial owner of 5% or more of the Company's
common stock, (2) each of the Company's directors, (3) each executive officer
listed in the summary compensation table and (4) all directors and executive
officers as a group.
Beneficial ownership is determined under rules of the Securities and
Exchange Commission (the "SEC") and generally includes voting or investment
power with respect to securities. The information is not necessarily
indicative of beneficial ownership for any other purpose. Unless otherwise
indicated below, to the Company's knowledge, the persons and entities named in
the table have sole investment power with respect to all shares beneficially
owned, subject to community property laws where applicable. Shares of common
stock subject to options that are currently exercisable or exercisable within
60 days of February 29, 2000 are deemed to be outstanding and to be
beneficially owned by the person holding the options for the purpose of
computing the percentage ownership of that person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. Unless otherwise noted, the address for each stockholder listed is
c/o Homestore.com, Inc., 225 West Hillcrest Drive, Suite 100, Thousand Oaks,
California 91360.
<TABLE>
<CAPTION>
Shares
Beneficially Owned
------------------
Name of Beneficial Owner
Number Percent
- ------------------------ ---------- -------
<S> <C> <C>
L. John Doerr(1).......................................... 9,691,195 12.9%
Kleiner Perkins Caufield & Byers
Michael C. Brooks(2)...................................... 4,534,171 6.0
Whitney Equity Partners, L.P.
Joe F. Hanauer(3)(4)...................................... 4,521,988 6.0
Ingleside Interests, L.P.
National Association of REALTORS(4)....................... 4,025,640 5.4
Nigel D. T. Andrews(5).................................... 3,554,300 4.7
General Electric Capital Corporation and an affiliated
entity
Stuart H. Wolff, Ph.D.(6)................................. 3,373,090 4.5
William E. Kelvie(7)...................................... 2,098,335 2.8
Fannie Mae
Richard R. Janssen(8)..................................... 1,267,030 1.7
Michael A. Buckman(9)..................................... 713,163 1.0
Kenneth K. Klein(10)...................................... 545,796 *
National Association of Home Builders
Peter B. Tafeen(11)....................................... 459,826 *
John M. Giesecke, Jr.(12)................................. 451,648 *
David M. Rosenblatt(13)................................... 275,656 *
All 15 directors and executive officers as a group(14).... 32,086,453 42.0
</TABLE>
- --------
* Represents beneficial ownership of less than 1%.
(1) Includes 8,917,630 shares held by Kleiner Perkins Caufield & Byers VIII,
516,665 shares held by KPCB VIII Founders Fund and 241,900 shares held
by KPCB Information Sciences Zaibatsu Fund II. L. John Doerr is a
general partner of the general partner of these funds. Mr. Doerr
disclaims beneficial ownership of shares held by these entities except
to the extent of his pecuniary interest in these entities. Also includes
15,000 shares subject to options that are held by Mr. Doerr that are
vested and exercisable. The address of Kleiner Perkins Caufield & Byers
is 2750 Sand Hill Road, Menlo Park, CA 94025.
(2) Includes 4,519,171 shares held by Whitney Equity Partners, L.P. Michael
C. Brooks, currently a director of the Company who will not continue as
a director after the Annual meeting, is a managing member of the general
partner of this fund. Mr. Brooks disclaims beneficial ownership of
shares held by this entity except
8
<PAGE>
to the extent of his pecuniary interest in these entities. Also includes
15,000 shares subject to options that are held by Mr. Brooks that are
vested and exercisable. The address of Whitney Equity Partners, L.P. is
177 Broad Street, Stamford, CT 06901.
(3) Includes the shares held by the NAR, of which Mr. Hanauer is a member of
the Executive Committees. Mr. Hanauer disclaims beneficial ownership of
shares held by this association. Also includes 456,348 shares held by
Ingleside Interests, L.P. Mr. Hanauer is a general partner of this
entity. Mr. Hanauer disclaims beneficial ownership of shares held by this
entity except to the extent of his pecuniary interest in this entity.
Also includes 40,000 shares subject to options that are held by
Mr. Hanauer that are vested and exercisable.
(4) The address of the NAR is 430 North Michigan Avenue, Chicago, IL 60611.
(5) Includes 3,539,300 shares held by General Electric Capital Corporation
and an affiliated entity, GE Capital Equity Investments, Inc. Mr. Andrews
is an Executive Vice President of GE Capital. Mr. Andrews disclaims
beneficial ownership of these shares. Also includes 15,000 shares subject
to options that are held by Mr. Andrews that are vested and exercisable.
The address of General Electric Capital Corporation is 260 Long Ridge
Road, Stamford, CT 06927.
(6) Includes 2,873,090 shares held by Dr. Wolff, of which 828,125 are subject
to our right to repurchase these shares. This right of repurchase lapses
with respect to 30,728 shares per month. Also includes 500,000 shares
subject to options that are exercisable as of April 29, 2000.
(7) Includes 2,083,335 shares held by Fannie Mae. Mr. Kelvie is the Chief
Information Officer of Fannie Mae. Mr. Kelvie disclaims beneficial
ownership of any shares held by Fannie Mae. Also includes 15,000 shares
subject to options that are held by Mr. Kelvie that are vested and
exercisable. The address of Fannie Mae is 3900 Wisconsin Ave. NW,
Washington, DC 20016.
(8) Includes 15,000 shares subject to options that are held by Mr. Janssen
that are vested and exercisable.
(9) Includes 713,163 shares held by Mr. Buckman, of which 562,500 are subject
to our right to repurchase these shares. This right of repurchase lapses
with respect to 15,625 shares per month.
(10) Includes 509,796 shares held by NAHB, of which Mr. Klein is a member of
the Executive Committee. Mr. Klein disclaims beneficial ownership of all
shares held by this association. Also includes 36,000 shares subject to
options that are held by Mr. Klein that are vested and exercisable.
(11) Includes 345,602 shares held by Mr. Tafeen, of which 178,126 are subject
to our right to repurchase these shares. This right of repurchase lapses
with respect to 7,811 shares per month. Also includes 114,224 shares
subject to options that are exercisable as of April 29, 2000.
(12) Includes 167,058 shares held by Mr. Giesecke, of which 93,744 are subject
to our right to repurchase these shares. This right of repurchase lapses
with respect to 3,645 shares per month. Also includes 284,590 shares
subject to options that are exercisable as of April 29, 2000.
(13) Includes 200,201 shares held by Mr. Rosenblatt, of which 137,358 are
subject to our right to repurchase these shares. This right lapses with
respect to 6,249 shares per month. Also includes 75,455 shares subject to
options that are exercisable as of April 29, 2000.
(14) Includes the shares beneficially owned by the persons and entities
described in footnotes (1)-(13). Also includes an additional 294,294
shares held by other officers and 357,473 shares subject to options held
by those other officers that are exercisable as of April 29, 1999.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation paid or accrued during 1999
and 1998 to the Company's Chief Executive Officer and the four other most
highly compensated executive officer whose salary and bonus for 1999 and 1998
was more than $100,000.
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Securities
-------------------- Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options (#)
- --------------------------- ---- ---------- --------- ------------
<S> <C> <C> <C> <C>
Stuart H. Wolff, Ph.D. ................. 1999 197,308 250,000 500,000
Chairman of the Board and Chief 1998 185,538 100,000 1,475,000
Executive Officer
Michael A. Buckman...................... 1999 127,019 250,000 750,000
President and Chief Operating Officer 1998 -- -- --
John M. Giesecke, Jr. .................. 1999 157,846 100,000 100,000
Executive Vice President, Chief 1998 71,417 29,000 375,000
Financial Officer and
Secretary
Peter B. Tafeen ........................ 1999 157,846 100,000 134,375
Executive Vice President, Business 1998 156,442 52,500 125,000
Development
David M. Rosenblatt..................... 1999 152,077 48,000 175,000
Senior Vice President, General Counsel 1998 31,124 14,000 175,000
</TABLE>
Mr. Buckman commenced his employment in February 1999. Mr. Giesecke
commenced his employment in June 1998. Mr. Rosenblatt commenced his employment
in October 1998.
Employment-Related Agreements
Dr. Wolff
In August 1998, the Company entered into a three-year employment agreement
with Stuart H. Wolff, Ph.D. Under this agreement:
Compensation. Dr. Wolff initially received a base salary equal to $200,000
per year for the first year of the agreement. His salary can be increased by
the board in subsequent years. Dr. Wolff is also eligible to receive a target
bonus of 100% of his base salary for that year. He also receives an automobile
and cellular phone allowance of up to $4,800 per year.
Acceleration of stock option vesting. If the Company is acquired or if a
change in control of Homestore occurs, 50% of his then unvested options will
immediately become vested.
Termination of employment. If Dr. Wolff's employment is terminated without
cause or if Dr. Wolff resigns for "good reason," he will be entitled to
receive an amount equal to his annual base salary and his stock options will
continue to vest for another 12 months. Good reason includes a material
reduction in his duties or responsibilities or a reduction in his salary.
"Cause" is defined as: (a) the executive's material breach of the agreement,
(b) conviction of the executive for any crime constituting a felony or moral
turpitude, or any other criminal act against Homestore, or (c) willful
misconduct which damages Homestore.
Mr. Buckman
In February 1999, the Company entered into an at-will employment agreement
with Michael A. Buckman. Under this agreement:
10
<PAGE>
Compensation. Mr. Buckman initially received a base salary equal to
$200,000 per year. Mr. Buckman may also be eligible to receive an annual bonus
in an amount up to 125% of his base salary with a guaranteed first year bonus
of $250,000. In addition, the Company granted Mr. Buckman an option to
purchase 750,000 shares of our common stock, subject to vesting requirements.
Mr. Buckman will also be entitled to receive a supplemental cash bonus based
upon the market price of our common stock during (1) the eight week period
following the anniversary of his employment agreement and (2) the year
following the anniversary of his employment agreement. The total amount of
this supplemental cash bonus will in no event exceed $450,000 for the first
year or $700,000 for the second year and is subject to downward adjustment for
the first year based on specified events occurring during the second year. Mr.
Buckman will also receive customary employee benefits and reimbursement of
relocation and travel expenses.
Termination of employment. If the Company terminates Mr. Buckman's
employment without cause prior to the first anniversary of his employment
agreement, he will be entitled to receive $250,000 and 187,500 shares of our
common stock subject to his option will immediately become vested. If the
Company terminates Mr. Buckman's employment without cause on or after the
first anniversary of his employment agreement, he will be entitled to receive
a cash bonus based upon the price of our common stock on the date of
termination that will in no event exceed $300,000.
Change in Control. In the event of a change in control of Homestore, an
additional 30% of the then unvested shares subject to Mr. Buckman's stock
option will immediately become vested.
Mr. Giesecke
In June 1998, the Company entered into an at-will employment agreement with
John M. Giesecke, Jr. Under this agreement:
Compensation. Mr. Giesecke initially received a base salary of $130,000 per
year. Mr. Giesecke's current base salary is $160,000 per year. He is also
eligible to receive a target bonus of 30% of his base salary.
Termination of employment. Upon termination other than for cause, Mr.
Giesecke will receive a severance payment equal to four months base salary.
Mr. Tafeen
In September 1997, the Company entered into an at-will employment agreement
with Peter B. Tafeen. Under this agreement:
Compensation. Mr. Tafeen initially received a base salary of $140,000 per
year. Mr. Tafeen's current base salary is $160,000 per year. He is also
eligible to receive a target bonus of 30% of his base salary.
Termination of employment. Upon termination other than for cause, death or
disability, Mr. Tafeen will receive a severance payment equal to three months
base salary.
Mr. Rosenblatt
In September 1998, the Company entered into an at-will employment agreement
with David M. Rosenblatt. Under this agreement:
Compensation. Mr. Rosenblatt initially received a base salary of $140,000
per year. Mr. Rosenblatt's current base salary is $155,000 per year. He is
also eligible to receive a target bonus of 30% of his base salary.
11
<PAGE>
Mr. Charney
In June 1999, the Company entered into an at-will employment agreement with
M. Jeffrey Charney. Under this agreement:
Compensation. Mr. Charney received a base salary of $160,000 per year. Mr.
Charney may also be eligible to receive a target bonus of 30% of his base
salary. Mr. Charney's bonus may exceed 30% of his base salary at the
discretion of the Chief Executive Officer. In addition, the Company granted
Mr. Charney an option to purchase 250,000 shares of our common stock, subject
to vesting requirements.
Termination of employment. If the Company terminates Mr. Charney's
employment without cause prior to the first anniversary of his employment
agreement, he will be entitled to receive six months severance pay, plus any
earned bonus payment and a total of one year or 20% accelerated option
vesting.
Ms. Giffen
In March 1998, the Company entered into an at-will employment agreement
with Catherine Kwong Giffen. Under this agreement:
Compensation. Ms. Giffen initially received a base salary equal to $120,000
per year. Ms. Giffen's current salary is $140,000. She is also eligible to
receive a target bonus of 30% of her base salary.
Stock Option Grants in 1999
The following table sets forth grants of stock options to our Chief
Executive Officer and our four other most highly compensated executive
officers in 1999.
All options granted to these executive officers are immediately
exercisable, to the extent they qualify as incentive stock options, and are
either incentive stock options or nonqualified stock options. Shares acquired
upon exercise of immediately exercisable options are subject to repurchase by
Homestore, at the original exercise price paid per share, if the optionee
ceases service with Homestore before those shares are vested. Some of these
options are subject to acceleration upon a change of control of Homestore or
termination of the optionee's employment. See "--Employment-Related
Agreements." The options expire ten years from the date of grant and were
granted at an exercise price equal to the fair market value of our common
stock on the date of grant, as determined by the Board of Directors.
Potential realizable values are computed by (a) multiplying the number of
shares of common stock subject to a given option by the exercise price per
share, (b) assuming that the aggregate stock value derived from that
calculation compounds at the annual 5% or 10% rates shown in the table for the
entire ten year term of the option and (c) subtracting from that result the
aggregate option exercise price. The 5% and 10% assumed annual rates of stock
price appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent our estimate or projection of future common
stock prices.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percentage Annual Rates of Stock
Number of of Total Price Appreciation
Securities Options for
Underlying Granted to Exercise Option Term
Options Employees Price Expiration ---------------------
Name Granted(#) in 1999 ($/Shr) Date 5% 10%
- ---- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stuart H. Wolff, Ph.D... 500,000 4.9% $ 9.00 7/6/09 $2,830,026 $7,171,841
Michael A. Buckman...... 750,000 7.3 2.00 2/19/09 943,342 2,390,614
John M. Giesecke, Jr.... 100,000 1.0 9.00 7/6/09 566,005 1,434,368
Peter B. Tafeen......... 134,375 1.3 8.00 4/22/09 676,062 1,713,273
David M. Rosenblatt..... 125,000 1.2 2.00 1/21/09 157,224 398,436
50,000 .5 34.50 10/21/09 1,084,843 2,749,206
</TABLE>
12
<PAGE>
The percentage of total options granted to employees is based on options to
purchase a total of 10,214,114 shares of common stock of Homestore granted
during 1999.
Dr. Wolff's option vests monthly over five years commencing on January 1,
2002. Mr. Buckman's option vests over four years with 25% vesting on the first
anniversary of the date of grant and 2.083% vesting each subsequent month. Mr.
Giesecke's option vests with respect to 50,000 shares monthly over five years
and with respect to the remaining 50,000 shares monthly over five years
commencing on January 1, 2002. Mr. Rosenblatt's January 21, 1999 option vests
monthly over four years and his October 21, 1999 option vests monthly over
five years. Mr. Tafeen's option vests monthly over five years.
Aggregated Option Exercises in 1999 and Option Values at December 31, 1999
The following table sets forth the number of shares acquired and the value
realized upon exercise of stock options during 1999, and the number of shares
of common stock subject to exercisable and unexercisable stock options held as
of December 31, 1999, by our Chief Executive Officer and each of our four most
highly compensated executive officers. Also reported are values of "in-the-
money" options, which represent the positive spread between the exercise
prices of outstanding stock options and the fair market value of $74 1/4 per
share, based on the closing price of our common stock on December 31, 1999.
The value realized equals the fair market value of the purchased shares on
the option exercise date, less the exercise price paid for those shares. The
heading "Vested" refers to shares that are no longer subject to repurchase;
the heading "Unvested" refers to shares subject to repurchase as of December
31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money Options
Shares Options at at
Acquired December 31, 1999 December 31, 1999
on Value ---------------------- --------------------
Name Exercise Realized Vested Unvested Vested Unvested
- ---- --------- ---------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stuart H. Wolff, Ph.D... 1,671,445 $3,328,634 -- 500,000 $ -- $32,625,000
Michael A. Buckman...... 750,000 -- -- -- -- --
John M. Giesecke, Jr.... 166,660 299,988 54,167 254,173 3,904,377 17,759,860
Peter B. Tafeen......... 375,000 895,350 17,917 116,458 1,186,975 7,715,368
David M. Rosenblatt..... 229,545 340,381 -- 120,455 -- 7,107,038
</TABLE>
RELATED PARTY TRANSACTIONS
Other than compensation agreements and other arrangements, which are
described as required in "Management," and the transactions described below
during 1999, there has not been, nor is there currently proposed, any
transaction or series of similar transactions to which we were or will be a
party:
. in which the amount involved exceeded or will exceed $60,000, and
. in which any director, executive officer, holder of more than 5% of our
common stock on an as-converted basis or any member of their immediate
family had or will have a direct or indirect material interest.
13
<PAGE>
Operating Agreement with the National Association of REALTORS
In November 1996, we entered into an operating agreement with the NAR which
governs how our RealSelect subsidiary operates the REALTOR.com web site on
behalf of the NAR. For a description of the operating agreement, please see
our Annual Report on Form 10-K for 1999, filed with the SEC. On May 28, 1999,
we issued 187,500 shares of common stock to the NAR in cancellation of
$600,000 of our $1.2 million outstanding obligation to the NAR pursuant to one
of the provisions of this agreement. The remaining $600,000 obligation under
that provision was repaid in August 1999.
Beginning in 1999, we are required to make quarterly payments to the NAR
based on RealSelect's operating revenues.
In 2000 and each year after 2000, RealSelect must pay the NAR annually the
lesser of:
. 5% of RealSelect's operating revenues; or
. 15% of RealSelect's operating revenues less the percentage of our
operating revenues paid to parties that provide us with real estate
listings.
This royalty payment is reduced by 2% to the extent earnings before
interest and taxes are less than 10% of revenue, for that quarter.
For 1999, we paid the NAR $99,288 in royalties based on RealSelect's
consolidated gross revenues as defined under this agreement, less sales
commissions paid to third parties related to those revenues, less any revenues
from permitted marketing of information or data.
Conversion of RealSelect Stock into Homestore.com Stock
Effective immediately prior to our initial public offering on August 4,
1999, the NAR converted all of its shares of RealSelect, except for one half
of one share of RealSelect common stock, into an aggregate of 3,917,265 shares
of our common stock. The NAR can require that we convert the remaining one
half of one share of RealSelect into an aggregate of 124,815 shares of our
common stock if we merge Homestore and RealSelect by August 4, 2000.
Acquisition of SpringStreet
In June 1999, we acquired SpringStreet. Kleiner Perkins Caufield & Byers
VIII L.P., KPCB VIII Founders Fund L.P. and KPCB Information Sciences Zaibatsu
Fund II, L.P., who are stockholders of Homestore, were also stockholders of
SpringStreet. In the merger, Kleiner Perkins Caufield & Byers VIII L.P.
received convertible preferred stock equivalent to 1,135,465 shares of our
common stock, KPCB VIII Founders Fund L.P. received convertible preferred
stock equivalent to 65,730 shares of our common stock and KPCB Information
Sciences Zaibatsu Fund II, L.P. received convertible preferred stock
equivalent to 30,795 shares of our common stock.
We were required to obtain the consent of the NAR in connection with our
SpringStreet acquisition during 1999. In agreeing to the acquisition, the NAR
imposed a number of important restrictions on how we can operate the
SpringStreet.com web site. We must pay the NAR an annual royalty equal the
lesser of (1) 5% of the rental site's operating revenues or (2) 15% of the
rental site's operating revenues multiplied by the percentage of our real
estate listings for REALTORS less the percentage of our operating revenues
paid to data content providers.
Under the consent, in addition to the SpringStreet.com web address, we must
use a REALTOR-branded rental web address. If the consent is terminated we
could be required to operate our rental properties web site at a different web
address.
14
<PAGE>
Unless the consent is terminated as a result of a breach by the NAR, the
NAR would be entitled to use the REALTOR-branded web address. As a result, we
would face competition from the NAR. Other important restrictions include:
. we cannot display advertisements from the same types of advertisers that
we are prohibited from displaying on our REALTOR.com web site;
. we are subject to the same restrictions as we are on the REALTOR.com
site as to how we display advertisements from banks, loan brokers,
mortgage brokers and other participants in the real estate industry on
pages containing listings by a REALTOR;
. the site will be owned by or through our RealSelect subsidiary;
. we must offer REALTORS preferred pricing for home pages or enhanced
advertising on the rental web site;
. we must use our best efforts to ensure that operating the rental site
will not impact the quality or timeliness of how we perform our
obligations under the operating agreement for REALTOR.com;
. without the consent of the NAR, prior to the time we are using only the
REALTOR-branded web address, we cannot provide a link on the
SpringStreet.com web site linking the REALTOR.com web site to the
SpringStreet.com web site and vice versa;
. we cannot display listings for rental of units in smaller properties
unless those units are listed with a REALTOR or listed on a REALTOR-
controlled MLS, unless the NAR agrees that in a particular market, fewer
than 50% of the listings are listed through REALTORS, in which case
these properties must be listed with other non-REALTOR real estate
professionals; and
. we cannot list properties for sale on this site for the duration of our
REALTOR.com operating agreement and for an additional two years.
Board Representation
On August 4, 1999, we issued to the NAR one share of our Series A preferred
stock. As long as the REALTOR.com operating agreement is in effect and the NAR
continues to hold at least 20% of the shares of common stock it owned prior to
our initial public offering on August 4, 1999, the NAR will be entitled to
nominate one member to our board, through its ownership of the one share of
our Series A preferred stock. Under our RealSelect stockholders agreement, so
long as our operating agreement remains in effect, the NAR will have the right
to nominate two members to RealSelect's board of directors.
Mr. Hanauer, the NAR designee to our board, is a member of the Executive
Committee of the National Association of REALTORS.
Repurchase of Mr. Janssen's InfoTouch Stock
In February 1999, we repurchased 1,054,015 shares of InfoTouch common stock
held by Mr. Janssen, for cash at a purchase price of $4.10 per share, under a
stock redemption agreement that we entered into in August 1998.
Loans to Executive Officers
In April 1999, Dr. Wolff exercised options to acquire 1,671,445 shares, Mr.
Buckman exercised options to acquire 750,000 shares, Mr. Giesecke exercised
options to acquire 166,660 shares, Mr. Rosenblatt exercised options to acquire
229,545 shares, Mr. Tafeen exercised options to acquire 375,000 shares and Ms.
Giffen exercised options to acquire 189,615 shares of our common stock. The
aggregate exercise price of these stock option exercises in April 1999 was
$1.7 million for Dr. Wolff, $199,992 for Mr. Giesecke, $348,254 for
Mr. Rosenblatt, $229,650 for Mr. Tafeen and $194,994 for Ms. Giffen. Mr.
Buckman paid $1.5 million, Mr. Giesecke paid $199,959, Mr. Rosenblatt paid
$348,208, Mr. Tafeen paid $229,575 and Ms. Giffen paid $199,956 of the
purchase price with promissory notes. Dr. Wolff issued promissory notes of
$2.8 million to us in connection with the April 1999 exercise for the purchase
price and related expenses. In July 1999, Mr. Charney exercised options to
acquire 83,333 shares and paid $749,959 of the purchase price with a
promissory note.
15
<PAGE>
The Report of the Compensation Committee and Stock Performance Graph are
required by the SEC and shall not be deemed to be incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended (the "Securities Act"), or
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed soliciting
material or filed under such acts.
REPORT OF THE COMPENSATION COMMITTEE
To The Board of Directors
Final decisions regarding compensation and stock option grants to executive
officers are made by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee is composed of three non-employee directors, none
of whom have any interlocking relationships as defined by the Securities and
Exchange Commission.
General Compensation Policy
The Committee acts on behalf of the Board to establish the general
compensation policy of the Company. The Committee reviews base salary levels
and target bonuses for the Chief Executive Officer ("CEO") and other executive
officers of the Company each year. The Committee also administers the
Company's incentive and equity plans, including the 1999 Stock Incentive Plan
and the 1999 Employee Stock Purchase Plan.
The Committee's philosophy in compensating executive officers and certain
other key employees of the Company is to relate compensation to corporate and
individual performance and increases in shareholder value, while providing a
total compensation package that is competitive and enables the Company to
attract, motivate, reward and retain key executives and employees. Consistent
with this philosophy, annual salary adjustments and the incentive component of
executive officer compensation is determined after a review of the Company's
and individual's performance for the previous year. Long-term equity
incentives for executive officers are effected through the granting of stock
options under the option plan. The Committee also utilizes salary surveys for
reference purposes, but its salary determinations are not targeted to a
specific level of comparable compensation.
1999 Executive Compensation
Executive Compensation for 1999 included base salary, cash bonuses and
stock option grants. Base salaries for the Company's executive officers are
based on the executive's contribution to Company performance, level of
responsibility, experience and breadth of knowledge. In January 2000, the
Committee approved a bonus plan for the Company's executives for 1999
performance based on the following measures: Company revenue, Company
earnings, and personal "Characteristics of Excellence." The Committee did not
assign specific weightings to these individual measures. These bonuses ranged
from approximately 15% to 60% of base salary. One executive officer received a
guaranteed first year bonus of $250,000 or 125% of base salary, as stated in
the executive's employment agreement.
In 1999, stock options were granted to all executive officers as incentives
for them to become employees or to aid in the retention of executive officers
and to align their interests with those of the stockholders. Stock options
typically have been granted to executive officers when the executive first
joined the Company, in connection with the significant change in
responsibilities and, occasionally, to achieve equity within a peer group. The
number of shares subject to each stock option granted is within the discretion
of the Committee and is based on anticipated future contribution and ability
to impact corporate and/or business unit results, past performance, and work
consistency within the executive's peer group. Generally, these options vest
and become exercisable as to 20% of the shares one year after the date of
grant and on a monthly basis for 48 months thereafter.
16
<PAGE>
1999 CEO Compensation
Dr. Stuart Wolff was hired by the Company pursuant to an employment
agreement dated August 1998 which provides for a base salary of $200,000 and a
target bonus of up to 100% of his base salary for that year. The Committee
solicited input from all of the Company's Board members concerning Dr. Wolff's
performance as part of the process of determining Dr. Wolff's compensation for
1999. Based on this input, and (1) the Company meeting its financial and
operational goals for 1999, (2) the Company's highly successful initial public
offering, (3) Dr. Wolff's leadership during a period of rapid growth, and (4)
the number of vested and unvested options held by Dr. Wolff, the Committee
awarded Dr. Wolff a bonus of $250,000 and granted him stock options to
purchase a total of 500,000 shares of the Company's common stock.
Compliance with Section 162(m) of the Internal Revenue Code of 1986
The Company intends to comply with the requirements of Section 162(m) of
the Internal Revenue Code of 1986. The 1999 Stock Incentive Plan is already in
compliance with Section 162(m) by limiting stock awards to named executive
officers. The Company does not expect cash compensation for 2000 for any
executive officer to exceed $1,000,000.
By the Compensation Committee
of the Board of Directors
Michael C. Brooks
L. John Doerr
Joe F. Hanauer
STOCK PERFORMANCE GRAPH
The following graph compares, for the period that the Company's common
stock has been registered under Section 12 of the Exchange Act (which
commenced on August 4, 1999), the cumulative total stockholder return for (i)
the Company (ii) the Composite Index for The Nasdaq Stock Market (U.S.
Companies) (the "Nasdaq Index") and (iii) the Chase H&Q Internet Index. This
graph assumes the investment of $100 on August 5, 1999 (the first trading day)
in the Company's common stock, the Nasdaq Index and the Chase H&Q Internet
Index, and further assumes no payment or reinvestment of dividends.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Nasdaq Stock Chase H&Q
DATES Homestore.com Market-U.S. Internet
- ----- ------------- ------------ ----------
<S> <C> <C> <C>
8/5/99 100.00 100.00 100.00
Aug-99 263.13 107.20 121.87
Sep-99 208.44 107.03 134.91
Oct-99 234.69 114.80 149.16
Nov-99 326.25 127.05 187.99
Dec-99 371.25 154.46 261.15
</TABLE>
17
<PAGE>
ITEM 2--RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP, the Company's independent
accountants for the year ended December 31, 1999, was recommended by the Audit
Committee, whose selection was approved by the Board of Directors to act in
such capacity for the fiscal year ending December 31, 2000, subject to
ratification by the stockholders. If the stockholders of the Company do not
ratify the selection of PricewaterhouseCoopers LLP, the Board of Directors, on
the recommendation of the Audit Committee, will appoint substitute independent
accountants.
A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting, will be given the opportunity to make a statement if he or she
so desires, and will be available to respond to appropriate questions.
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL
TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's common stock
(collectively, "Reporting Persons") to file with the SEC initial reports of
ownership and reports of changes in ownership of the Company's common stock.
Reporting Persons are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
The Company believes, based solely on its review of the copies of Section
16(a) reports received or written representations from certain Reporting
Persons, that no other reports were required to be filed with the SEC during
the fiscal year ended December 31, 1999 by its Reporting Persons.
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 2001 annual meeting must be received by the
Company no later than December 1, 2000 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
ADVANCE NOTICE PROCEDURES FOR NEXT YEAR'S ANNUAL MEETING
The Company hereby advises stockholders that, until further notice, notice
of a stockholder-sponsored proposal submitted outside of the process of Rule
14a-8 under the Securities Exchange Act of 1934 (i.e., a proposal to be
presented at the next annual meeting of stockholders but not submitted for
inclusion in the Company's proxy statement) will be considered untimely under
the Company's bylaws unless it is received between January 12 and February 11,
2001.
18
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the stockholders at
the Annual Meeting. If any other matters properly come before the stockholders
at the Annual Meeting, it is the intention of the persons named on the enclosed
proxy card to vote the shares they represent as the Board of Directors may
recommend.
Thousand Oaks, CA
March 13, 2000
By Order of the Board of Directors,
/s/ John M. Giesecke, Jr.
John M. Giesecke, Jr.
Executive Vice President, Chief
Financial Officer and Secretary
19
<PAGE>
- --------------------------------------------------------------------------------
Homestore.com, Inc.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 12, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of Homestore.com, Inc. (the "Company") common
stock hereby nominate(s), constitute(s) and appoint(s) Stuart H. Wolff and John
M. Giesecke and each of them, the attorneys, agents and proxies of the
undersigned, with full power of substitution to each, to attend and act as proxy
or proxies of the undersigned at the annual meeting of stockholders (the "Annual
Meeting") of the Company to be held at the City of Thousand Oaks Civic Arts
Plaza located at 2100 Thousand Oaks Boulevard, Thousand Oaks, CA on April 12,
2000 at 2:00 p.m., local time, or any postponements or adjournments thereof,
and to vote as specified herein the number of shares which the undersigned, if
personally present, would be entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS
NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" PROPOSAL 2. THE PROXY WHEN
PROPERLY EXECUTED SHALL BE VOTED IN ACCORDANCE AS DIRECTED. IF NO DIRECTION IS
MADE FOR A GIVEN PROPOSAL, THE PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" PROPOSAL 2.
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<PAGE>
<TABLE>
<CAPTION>
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Please mark [X]
your votes as
indicated in
this example
<S> <C> <C>
1. ELECTION OF DIRECTORS. NOMINEES: Nigel D.T. Andrews 2. RATIFICATION OF APPOINTMENT OF
and Richard R. Janssen PRICEWATERHOUSECOOPERS LLP AS
FOR all nominees WITHHOLD AUTHORITY (INSTRUCTION: To withhold authority INDEPENDENT ACCOUNTANTS.
listed to the right to vote for to vote for any individual nominee or
(except as marked all nominees nominees, write the name of that nominee FOR AGAINST ABSTAIN
to the contrary) listed to the right or nominees in the space below.) [_] [_] [_]
[_] [_] ________________________________________
</TABLE>
<TABLE>
<S> <C> <C>
3. OTHER BUSINESS. In their discretion, the Proxy I WILL ATTEND [_] The undersigned hereby ratifies and confirms
Holders are authorized to vote upon such other all that the Proxy Holders, or any of them, or
business as may properly come before the Annual Meeting their substitutes, shall lawfully do or cause
or any postponements or adjournments thereof. The Board to be done by virtue hereof, and hereby
of Directors at present knows of no other business to be revokes any and all proxies heretofore given
presented by or on behalf of the Company or the Board to the undersigned to vote at the Meeting. The
of Directors at the Annual Meeting. undersigned acknowledges receipt of the Notice
of Annual Meeting of Stockholders, the Proxy
Statement accompanying said Notice and the
audited Financial Statement delivered with or
prior to said Notice.
________
| Dated____________________________________, 2000
|
_______________________________________________
(Please Print Name)
_______________________________________________
(Signature of Holder of common stock)
(Please date this Proxy and sign above as
your name(s) appear(s) on this card. Joint
owners each should sign personally. Corporate
proxies should be signed by an authorized
officer. Executors, administrators, trustees,
etc. should give their full titles.)
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