<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
<TABLE>
<S> <C>
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
CHECK THE APPROPRIATE BOX:
/ / PRELIMINARY PROXY STATEMENT.
/X/ DEFINITIVE PROXY STATEMENT.
/ / DEFINITIVE ADDITIONAL MATERIALS.
/ / SOLICITING MATERIAL PURSUANT TO RULE 14A-11(C) OR RULE
14A-12.
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2)).
</TABLE>
NBC INTERNET, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
</TABLE>
<PAGE>
[LOGO]
NBC INTERNET, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 2000
TO THE STOCKHOLDERS OF NBC INTERNET, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NBC
Internet, Inc., a Delaware corporation ("NBCi"), will be held on Thursday,
June 22, 2000 at 10:00 a.m., local time, at the Sheraton Palace Hotel, 2 New
Montgomery Street, San Francisco, California for the following purposes:
1. To elect Class A directors to serve until the 2001 Annual Meeting of
Stockholders or until their successors are elected and qualified;
2. To elect one independent director to serve until the 2001 Annual
Meeting of Stockholders or until such director's successor is elected and
qualified;
3. To elect Class B directors to serve until the 2001 Annual Meeting of
Stockholders or until their successors are elected and qualified;
4. To approve an amendment to our 1999 Stock Incentive Plan to increase
the number of shares of our Class A Common Stock authorized for issuance
over the term of the 1999 Stock Incentive Plan by 4,500,000 shares from
13,500,000 shares to 18,000,000 shares;
5. To ratify the appointment of Ernst & Young LLP as NBCi's independent
accountants for the fiscal year ending December 31, 2000; and
6. To transact such other business as may properly come before the
meeting or any 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 27, 2000 are
entitled to notice of and to vote at this meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed proxy card as promptly as possible in the enclosed
self-addressed envelope. Any stockholder attending the meeting may vote in
person even if he or she returned a proxy. However, if a stockholder's shares
are held of record by a broker, bank or other nominee and the stockholder wishes
to vote at the meeting, the stockholder must obtain from the record holder a
proxy issued in his or her name.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN HARBOTTLE
John Harbottle
Chief Financial Officer, Executive
Vice President, Finance, Secretary and
Treasurer
San Francisco, California
May 1, 2000
<PAGE>
NBC INTERNET, INC.
225 Bush Street
San Francisco, California 94104
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
The enclosed proxy is solicited on behalf of the board of directors of NBC
Internet, Inc., a Delaware corporation ("NBCi"), for use at NBCi's Annual
Meeting of Stockholders to be held on Thursday, June 22, 2000 at 10:00 a.m.,
local time, at the Sheraton Palace Hotel, 2 New Montgomery Street, San
Francisco, California, or at any adjournment thereof, for the purposes set forth
in this proxy statement and in the accompanying Notice of Annual Meeting of
Stockholders. NBCi's principal executive offices are located at 225 Bush Street,
San Francisco, California 94104. NBCi's telephone number at that location is
(415) 288-2500.
NBCi intends to mail this proxy statement and accompanying proxy card on or
about May 26, 2000 to all stockholders entitled to vote at the meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE AND SHARE OWNERSHIP
Stockholders of record at the close of business on April 27, 2000 (the
"Record Date") are entitled to notice of and to vote at the annual meeting. At
the Record Date, 61,014,499 shares of NBCi's Common Stock ("Common Stock") were
issued and outstanding and held of record by approximately 428 stockholders.
REVOCABILITY OF PROXIES
You may revoke any proxy you give pursuant to this solicitation at any time
before its use by delivering to NBCi (attention: Jack G. Levin, Executive Vice
President, Director of Legal Affairs) a written notice of revocation or a duly
executed proxy bearing a later date or by attending the annual meeting and
voting in person.
VOTING AND SOLICITATION
Each share of Common Stock outstanding on the Record Date is entitled to one
vote. 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. For purposes of determining the
presence of a quorum, abstentions and broker non-votes will be counted by NBCi
as present at the meeting. Abstentions will also be counted by NBCi in
determining the total number of votes cast with respect to a proposal (other
than the election of directors). Broker non-votes will not be counted in
determining the number of votes cast with respect to a proposal. Class A
directors and the independent director are elected by a plurality of votes cast
by holders of Class A Common Stock. Class B directors are elected by a plurality
of votes cast by holders of Class B Common Stock, the sole holder of which is
National Broadcasting Company, Inc. ("NBC"). In determining whether a proposal
has been approved, abstentions are counted as votes against the proposal and
broker non-votes are not counted as votes for or against the proposal. If no
specific instructions are given with respect to matters to be acted upon at the
annual meeting, shares of Common Stock represented by a properly executed proxy
will be voted FOR (i) the election of management's nominees for Class A
directors listed in Proposal No. 1, (ii) the election of management's nominee
for independent director listed in Proposal No. 2, (iii) the election of
management's nominees for Class B directors listed in Proposal No. 3, (iv) the
approval of the amendment of the 1999 Stock Incentive Plan to increase the
number of shares authorized for issuance over the term of the 1999 Stock
Incentive Plan from 13,500,000 shares to 18,000,000 shares, and (v) the
ratification of the selection of Ernst & Young LLP as NBCi's independent
accountants for fiscal 2000.
The cost of soliciting proxies will be borne by NBCi. Proxies may be
solicited by certain of NBCi's directors, officers and regular employees,
without additional compensation, in person or by telephone or facsimile. In
addition, NBCi may retain the services of one or more firms to assist in the
solicitation of proxies, for an estimated fee of $6,000 plus reimbursement of
expenses. In addition, NBCi may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation materials to such beneficial owners.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to NBCi with
respect to beneficial ownership of our Class A Common Stock and Class B Common
Stock as of April 27, 2000 by (A) each person or entity known by us to own
beneficially more than five percent (5%) of our Class A Common Stock, (B) each
director or director nominee of NBCi, (C) each executive officer of NBCi for
whom information is given in the Summary Compensation Table in this proxy
statement and (D) all of our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of March 31, 2000 are deemed
outstanding. Unless otherwise indicated, each person or entity named in the
table has sole voting power and investment power, or shares voting and
investment power with his or her spouse, with respect to all shares of capital
stock listed as owned by such person. Percentage of ownership is calculated
based on 61,014,499 shares of our Class A Common Stock and Class B Common Stock
outstanding as of April 27, 2000.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY HELD PERCENTAGE
---------------------------------------- ----------
<S> <C> <C>
NBC(1).................................. 24,550,708 40.2 %
CNET Investments II, Inc.(2)............ 6,497,584 10.7
William J. Lansing(3)................... 269,037 *
Chris Kitze(4).......................... 3,050,680 5.0
Edmond Sanctis(5)....................... 212,784 *
John McMenamin.......................... -- --
Alan Braverman.......................... 4,500 *
James J. Heffernan(6)................... 141,530 *
Jeffrey Ballowe(7)...................... 45,536 *
Robert C. Harris, Jr.(8)................ 43,989 *
Philip Schlein(9)....................... 38,180 *
L. Lowry Mays(10)....................... 4,861 *
Mark W. Begor........................... -- --
Gary M. Reiner.......................... -- --
Scott M. Sassa.......................... -- --
John F. Welch, Jr....................... -- --
Robert C. Wright........................ 30,000 *
Martin J. Yudkovitz..................... -- --
All executive officers and directors as 4,026,994
a group(19 persons)(11)............... 6.6 %
</TABLE>
- ------------------------
* Less than 1%.
(1) Represents ownership of Class B Common Stock. NBC holds 100% of the
outstanding Class B Common Stock. The address of NBC is 30 Rockefeller
Plaza, New York, New York 10012.
(2) The address of CNET Investments II, Inc. is 150 Chestnut Street, San
Francisco, California 94111.
(3) Includes 268,937 shares of our Class A Common Stock issued pursuant to a
restricted share agreement all of which vest over time and such unvested
shares are subject to repurchase by NBCi.
(4) Includes 3,050,680 shares of NBCi Class A Common Stock held by Flying Disc
Investments Limited Partnership, of which Mr. Kitze is a general partner.
Mr. Kitze may be deemed to be the beneficial owner of the shares held by
Flying Disc.
2
<PAGE>
(5) Includes options to purchase 212,784 shares of our Class A Common Stock.
(6) Includes options to purchase 12,500 shares of NBCi Class A Common Stock.
Also includes 129,030 shares of Class A Common Stock held by the Heffernan
Family Trust. Mr. Heffernan may be deemed to be the beneficial owner of the
shares and warrants to purchase shares of Class A Common Stock held by the
Heffernan LLC and the Heffernan Family Trust.
(7) Includes options to purchase 1,389 shares of our Class A Common Stock.
(8) Includes options to purchase 6,250 shares of our Class A Common Stock.
(9) Includes options to purchase 6,250 shares of our Class A Common Stock.
(10) Includes options to purchase 4,861 shares of our Class A Common Stock.
(11) Includes options to purchase 411,541 shares of our Class A Common Stock.
3
<PAGE>
PROPOSAL NO. 1:
ELECTION OF CLASS A DIRECTORS
Our certificate of incorporation provides that as long as shares of Class B
Common Stock remain outstanding, the authorized number of directors shall be
thirteen. Our certificate of incorporation also provides that the holders of the
Class A Common Stock and the holders of the Class B Common Stock are entitled to
elect a designated number of directors dependent upon the percentage of the
outstanding Common Stock of NBCi each class owns. Currently, (i) the holders of
the Class A Common Stock, voting separately as a class, have the right to elect
six members to the board of directors (the "Class A directors") and one
unaffiliated director nominated by at least seven (7) members of the board of
directors (the "independent director") and (ii) the holders of the Class B
Common Stock, voting separately as a class, have the right to elect six members
to the board of directors (the "Class B directors").
As provided in our Bylaws, nominees for Class A director are made by our
Class A nominating committee, which is comprised solely of Class A directors.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the nominees named below, all of whom are presently Class A directors
of NBCi. If any nominee is unable or declines to serve as a Class A 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. It is not
expected that any nominee will be unable or will decline to serve as a director.
If stockholders properly nominate persons other than NBCi's nominees for
election as Class A directors, the proxy holders will vote all proxies received
by them to assure the election of as many of NBCi's nominees as possible, with
the proxy holder making any required selection of specific nominees to be voted
for. The term of office of each person elected as a Class A director will
continue until the next annual meeting of stockholders or until his or her
earlier death, resignation or removal. There are no family relationships among
any of NBCi's directors or executive officers.
Certain information regarding the nominees is set forth below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------- -------- ------------------------------------ --------------
<S> <C> <C> <C>
William J. Lansing.................. 42 Chief Executive Officer of NBCi 2000
Chris Kitze......................... 40 Vice Chairman of the Board 1999
Chairman of deja.com and retired
President of Interactive Media and
Jeffrey Ballowe..................... 44 Development Group of Ziff-Davis 1999
Senior Managing Director of Bear,
Robert C. Harris, Jr................ 53 Stearns & Co. Inc. 1999
James Heffernan..................... 58 Independent investor 1999
General Partner of US Venture
Philip Schlein...................... 64 Partners 1999
</TABLE>
WILLIAM J. LANSING has served as our Chief Executive Officer and as a
Class A director since March 2000. From May 1998 to March 2000, Mr. Lansing was
Chief Executive Officer of Fingerhut Companies, Inc., a direct marketing company
and online retailer. From October 1996 to May 1998, Mr. Lansing was the Vice
President of Business Development for General Electric Company. From
January 1996 to October 1996, Mr. Lansing was the Chief Operating Officer for
Prodigy Communications Corporation. From August 1986 to December 1995,
Mr. Lansing was associated with the consulting firm McKinsey & Company, most
recently as a partner. Mr. Lansing is a member of the board of directors of
Digital River, Inc., Net Perceptions, Inc., Select Comfort Corp., BigStar
Entertainment and Freeshop.com, Inc. Mr. Lansing received his B.A. from Wesleyan
University and his J.D. from Georgetown University.
4
<PAGE>
CHRIS KITZE has been a member of our board of directors since May 1999,
including as a Class A director since November 1999, and has served as our
Executive Vice Chairman since March 2000. Mr. Kitze served as our Chief
Executive Officer from November 1999 to March 2000. From May 1999 to
November 1999, Mr. Kitze served as our President. Mr. Kitze co-founded
Xoom.com, Inc., a direct e-commerce company that was publicly held until it
became one of our wholly-owned subsidiaries in the transaction that formed us in
November 1999, and has served as its Chairman of the Board since that time and
Secretary since that time until April 1999. Since December 1996, Mr. Kitze has
been an independent investor. From April 1996 until December 1996, Mr. Kitze
also served as Xoom.com's President and Chief Executive Officer. In June 1995,
Mr. Kitze co-founded Point Communications Corporation, a Web directory company,
which was acquired by Lycos in October 1995, after which Mr. Kitze served as
Lycos' Vice President of Marketing until June 1996. From June 1994 until
June 1995, Mr. Kitze served as Publisher at Softkey International, now The
Learning Company. In September 1991, Mr. Kitze co-founded Aris Entertainment, a
CD-ROM publishing company and served as its President until June 1994.
Mr. Kitze holds a B.S. in Chemical Engineering from the University of Colorado.
JEFFREY BALLOWE has served as a Class A director since November 1999. He has
also served as a director of Xoom.com since July 1998. Mr. Ballowe retired at
the end of 1997 from Ziff-Davis, where during his 11 years at the company he was
instrumental in transforming Ziff-Davis from a U.S. magazine publisher to an
international, integrated media company. After serving in magazine publishing
roles including Publisher of PC Magazine, Mr. Ballowe held a number of corporate
posts in which he was responsible for establishing Ziff-Davis European
operations, managing Ziff-Davis' largest magazine group, launching the company's
Internet publications, creating ZDNet, and launching ZDTV. At his retirement he
was President, Interactive Media and Development Group, in charge of Ziff-Davis
Internet publications, ZDNet, ZDTV, and all development at the company. His
development activities included spearheading Ziff-Davis and Softbank's
investments in Yahoo!, USWeb Corporation, where he served as a founding
director, Gamespot, and Herring Communications. Mr. Ballowe is currently the
President of the not-for-profit Electronic Literature Organization. Currently
Mr. Ballowe is Chairman of deja.com, Inc. and serves on the boards of
drkoop.com, Jupiter Communications, Inc., Onvia.com Inc., VerticalNet and ZDTV.
He received a bachelor's degree from Lawrence University, a master's degree in
French from the University of Wisconsin-Madison, and an M.B.A. from the
University of Chicago.
ROBERT C. HARRIS, JR. has served as a Class A director since
November 1999. He has also served as a director of Xoom.com since August 1998.
Mr. Harris is a Senior Managing Director at Bear, Stearns & Co. Inc. From 1989
to October 1997, he was a co-founder and Managing Director of Unterberg Harris.
From 1984 to 1989, he was a General Partner, Managing Director and Director of
Alex. Brown & Sons Inc. Mr. Harris is also a director of MDSI Mobile Data
Solutions, Inc. and SoftNet Systems, Inc. Mr. Harris holds a B.S. and M.B.A.
from the University of California at Berkeley.
JAMES HEFFERNAN has served as a Class A director since November 1999. He has
also served as a director of Xoom.com since June 1998. Mr. Heffernan co-founded
USWeb Corporation, an Internet professional services company, in December 1995
and served as its Executive Vice President, Chief Financial Officer, Secretary
and as a director until May 1998. Since May 1998, Mr. Heffernan has been an
independent investor. From May 1993 to July 1994, he worked as an independent
consultant and then joined Interlink Computer Sciences, Inc. in July 1994 as
Chief Financial Officer, where he served until December 1995. From March 1992 to
May 1993, Mr. Heffernan served as Chief Financial Officer and Chief Operating
Officer of Serius. Mr. Heffernan has also served as an officer of several other
technology companies, including Software Publishing Corp., Zital Inc. and
Measurex Corp. Mr. Heffernan has a B.S. in Business and an M.B.A. from Santa
Clara University.
5
<PAGE>
PHILIP SCHLEIN has served as a Class A director since November 1999. He has
also served as a director of Xoom.com since July 1998. Since April 1985,
Mr. Schlein has been a partner of U.S. Venture Partners, a venture capital firm
specializing in retail and consumer products companies. From January 1974 to
January 1985, Mr. Schlein served as President and Chief Executive Officer of
Macy's California, a division of R. H. Macy & Co., Inc., a department store
chain. Mr. Schlein also serves on the board of directors of Ross Stores, Inc.,
BEBE, QRS Corporation and Burnham Pacific Properties, Inc. Mr. Schlein holds a
B.S. in Economics from the University of Pennsylvania.
VOTE REQUIRED
Class A directors are elected by a plurality of the votes cast by holders of
our Class A Common Stock present in person or represented by proxy and entitled
to vote.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION
OF EACH OF THE NOMINEES FOR CLASS A DIRECTOR LISTED ABOVE.
6
<PAGE>
PROPOSAL NO. 2:
ELECTION OF INDEPENDENT DIRECTOR
As discussed above in "Proposal No. 1: Election of Class A Directors," the
holders of the Class A Common Stock, voting separately as a class, have the
right to elect one independent director. Our certificate of incorporation
provides that the nominee for independent director be approved by at least seven
members of our board of directors. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the nominee named below, who
is presently the independent director of NBCi and was unanimously nominated by
the board of directors to continue his service. If the nominee is unable or
declines to serve as an independent director at the time of the annual meeting,
the proxies will be voted for a nominee designated by the present board of
directors to fill the vacancy. It is not expected that the nominee will be
unable or will decline to serve as a director. If stockholders properly nominate
a person other than NBCi's nominee for election as the independent director, the
proxy holders will vote all proxies received by them in favor of NBCi's nominee
for independent director. The term of office of the independent director will
continue until the next annual meeting of stockholders or until his earlier
death, resignation or removal.
Certain information regarding the nominee is set forth below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------- -------- ------------------------------------ --------------
<S> <C> <C> <C>
Chairman and Chief Executive Officer
L. Lowry Mays....................... 64 of Clear Channel Communications 1999
</TABLE>
L. LOWRY MAYS has served as a member of our board of directors since
November 1999. He has served as a director of Xoom.com since October 1999. In
1972, Mr. Mays founded Clear Channel Communications, a diversified media
company, and has served as its Chairman, Chief Executive Officer and a director
since 1972. From 1972 to February 1997 Mr. Mays served as the President of Clear
Channel Communications. Mr. Mays has a B.S. in Petroleum Engineering from Texas
A&M University and an M.B.A. from Harvard Business School.
VOTE REQUIRED
The independent director is elected by a plurality of the votes cast by
holders of our Class A Common Stock present in person or represented by proxy
and entitled to vote.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION
OF THE NOMINEE FOR INDEPENDENT DIRECTOR LISTED ABOVE.
7
<PAGE>
PROPOSAL NO. 3:
ELECTION OF CLASS B DIRECTORS
As discussed above in "Proposal No. 1: Election of Class A Directors," the
holders of the Class B Common Stock, voting separately as a class, have the
right to elect six Class B directors. As provided in our Bylaws, nominees for
Class B director are made by our Class B nominating committee, which is
comprised solely of Class B directors. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the nominees named below, all
of whom are presently Class B directors of NBCi. If any nominee is unable or
declines to serve as a Class B 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. It is not expected that any nominee will be
unable or will decline to serve as a director. If stockholders properly nominate
persons other than NBCi's nominees for election as Class B directors, the proxy
holders will vote all proxies received by them to assure the election of as many
of NBCi's nominees as possible, with the proxy holder making any required
selection of specific nominees to be voted for. The term of office of each
person elected as a Class B director will continue until the next annual meeting
of stockholders or until his or her earlier death, resignation or removal.
Certain information regarding the nominees is set forth below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------- -------- ------------------------------------ --------------
<S> <C> <C> <C>
President and Chief Executive
Robert C. Wright.................... 56 Officer of NBC 1999
Executive Vice President and Chief
Mark W. Begor....................... 41 Financial Officer of NBC 1999
Senior Vice President and Chief
Information Officer of General
Gary M. Reiner...................... 45 Electric 1999
Scott M. Sassa...................... 40 President, NBC West Coast 1999
Chairman and Chief Executive Officer
John F. Welch, Jr................... 64 of General Electric 1999
Martin J. Yudkovitz................. 45 President of NBC Interactive Media 1999
</TABLE>
ROBERT C. WRIGHT has served as our Chairman of the Board and as a member of
our board of directors since November 1999. Mr. Wright has been the President
and Chief Executive Officer of NBC since September 1986. Prior to joining NBC,
Mr. Wright was President of General Electric Financial Services from April 1984
to August 1986, head of GE's housewares and audio division from May 1983 to
April 1984, and President of Cox Cable Communications from January 1980 to
April 1983. Mr. Wright serves on the board of directors of the Motion Picture
and Television Fund Corporation and the board of trustees of the Museum of
Television and Radio and the American Film Institute, and is an honorary trustee
of the Foundation of American Women in Radio and Television. Mr. Wright received
his A.B. from the College of the Holy Cross and his L.L.B. from the University
of Virginia School of Law.
MARK W. BEGOR has served as a member of our board of directors since
November 1999 and has been Executive Vice President and Chief Financial Officer
of NBC since April 1998, responsible for NBC's global finance, accounting, tax
and information technology activities. Mr. Begor began his career with GE in
1980, holding various financial positions in GE and GE Plastics, including
Manager-Finance and Business Development for GE Plastics Pacific in Singapore,
before being named General Manager of GE Plastics' Global Sourcing and
Petrochemicals operations in October 1993. From August 1995 to March 1998,
Mr. Begor served as GE's Manager of Investor Communications and was appointed a
corporate officer of GE in December 1996. Mr. Begor is a member of the board of
managers of Snap LLC, which became one of our wholly-owned subsidiaries in the
transaction that formed us in November 1999. Mr. Begor received his B.S. from
Syracuse University and his M.B.A. from Rennselaer Polytechnic Institute.
8
<PAGE>
GARY M. REINER has served as a member of our board of directors since
November 1999 and is Senior Vice President and Chief Information Officer of GE.
Mr. Reiner joined GE in 1991 as Vice President-Corporate Business Development,
and assumed his current position in April 1996. Mr. Reiner leads GE's
information technology efforts. Mr. Reiner received his B.A. from Harvard and
earned an M.B.A. from Harvard Business School.
SCOTT M. SASSA has served as a member of our board of directors since
November 1999 and has been President, NBC West Coast, since May 1999. Mr. Sassa
joined NBC in September 1997 as President of its Television Stations Division,
and was promoted to President of NBC Entertainment in October 1998. From
November 1996 to August 1997, Mr. Sassa was President and Chief Operating
Officer of Andrews Group, a unit of MacAndrews & Forbes Holding Co., and was
also Chief Executive Officer of Marvel Entertainment. Prior to joining Andrews
Group, Mr. Sassa was President of Turner Entertainment Group, a division of
Turner Broadcasting System, from September 1990 to November 1996. Mr. Sassa is a
member of the board of managers of Snap.
JOHN F. WELCH, JR. has served as a member of our board of directors since
November 1999 and has been Chairman of the Board and Chief Executive Officer of
GE since 1981. A 1957 graduate of the University of Massachusetts with M.S. and
Ph.D. degrees from the University of Illinois, Mr. Welch joined GE in 1960.
Following managerial assignments in GE's plastics, chemical and metallurgical
businesses, he was elected a Vice President in 1972. In 1973, he was named Vice
President and Group Executive of the Components and Materials Group. He became
Senior Vice President and Sector Executive of the Consumer Products and Services
Sector in 1977, and was elected a vice chairman and named an executive officer
of GE in 1979.
MARTIN J. YUDKOVITZ has served as a member of our board of directors since
November 1999 and has been President of NBC Interactive Media since
December 1995. Mr. Yudkovitz is responsible for developing NBC's new media
strategy and managing NBC's interactive operations. From December 1993 to
December 1995, Mr. Yudkovitz served as Senior Vice President of NBC Multimedia,
and in addition was appointed Senior Vice President of Strategic Development of
NBC in March 1993. He has also served as General Counsel and Vice President for
Business Affairs of CNBC. Mr. Yudkovitz joined NBC in 1984. Mr. Yudkovitz is a
director of iVillage, Inc. and Talk City, Inc., and a member of the board of
managers of Snap. Mr. Yudkovitz holds a B.A. from Rutgers University and
received his J.D. from Columbia Law School.
VOTE REQUIRED
Class B directors are elected by a plurality of the votes cast by holders of
our Class B Common Stock present in person or represented by proxy and entitled
to vote.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION
OF EACH OF THE NOMINEES FOR CLASS B DIRECTOR LISTED ABOVE.
INFORMATION REGARDING THE BOARD OF DIRECTORS
BOARD MEETINGS AND COMMITTEES
The board of directors held no meetings during the fiscal year ending
December 31, 1999 and acted 16 times by unanimous written consent.
The board of directors has established an audit committee, a compensation
committee, an investment committee, a Class A nominating committee and a
Class B nominating committee. These committees were established either in
November 1999 or January 2000.
9
<PAGE>
The audit committee, consisting of James Heffernan, Philip Schlein and Mark
W. Begor, recommends the selection of independent public accountants to the
board of directors, reviews the scope and results of the audit and other
services provided by our independent accountants, and reviews our accounting
practices and systems of internal accounting controls. The audit committee held
no meetings during the last fiscal year. The board of directors has adopted a
charter for the audit committee, which is attached as Appendix A to this Proxy
Statement. Prior to June 14, 2000, the board of directors intends to amend this
charter to comply with newly adopted rules of the Nasdaq Stock Market that will
apply to NBCi on and after such date. All members of the audit committee are
"independent" under rules of the Nasdaq Stock Market currently applicable to
NBCi. By virtue of his employment with NBC, Mr. Begor would not be considered
"independent" under rules of the Nasdaq Stock Market applicable to NBCi
beginning June 14, 2001. The board of directors intends to appoint another
director to replace Mr. Begor prior to that time.
The compensation committee, consisting of James Heffernan and Mark W. Begor,
reviews and approves the salaries, bonuses and other compensation payable to our
executive officers and administers and makes recommendations concerning our
employee benefit plans. The compensation committee held no meetings during the
last fiscal year.
The investment committee, consisting of Mark W. Begor, Robert C. Harris,
Jr., James Heffernan, Chris Kitze, William C. Lansing and Martin J. Yudkovitz,
has authority to approve strategic acquisitions of NBCi up to $50.0 million and
material investments of NBCi up to $10.0 million. The investment committee held
no meetings during the last fiscal year.
The Class A nominating committee, consisting of William J. Lansing, Chris
Kitze, Robert C. Harris, Jr., James Heffernan, Jeffrey Ballowe and Philip
Schlein, has authority to nominate persons to serve as Class A directors and to
appoint persons to fill vacancies on, or newly created directorships of, the
board of directors designated for Class A directors. The Class A nominating
committee held no meetings during the last fiscal year. The Class A nominating
committee received no recommendations for Class A director nominees for the
annual meeting. The Class A nominating committee will consider such
recommendations for the 2001 annual meeting if properly submitted as set forth
below under "Deadline for Receipt of Stockholder Proposals."
The Class B nominating committee, consisting of Robert C. Wright, John F.
Welch, Jr., Gary M. Reiner, Martin J. Yudkovitz, Mark W. Begor and Scott M.
Sassa, has authority to nominate persons to serve as Class B directors and to
appoint persons to fill vacancies on, or newly created directorships of, the
board of directors designated for Class B directors. The Class B nominating
committee held no meetings during the last fiscal year. The Class B nominating
committee received no recommendations for Class B director nominees for the
annual meeting. The Class B nominating committee will consider such
recommendations for the 2001 annual meeting if properly submitted as set forth
below under "Deadline for Receipt of Stockholder Proposals."
DIRECTOR COMPENSATION
Upon initial appointment to our board of directors, each non-employee
Class A director receives options to purchase 25,000 shares of our Class A
Common Stock, at an exercise price equal to the fair market value of the
Class A Common Stock on the date of grant. The options vest on a monthly basis
over a period of three years. In addition, each non-employee Class A director
receives (i) a fee of $5,000 per quarter, (ii) a fee of $750 per board or
committee meeting attended and (iii) reasonable travel expenses for attending
board or committee meetings.
Some of our directors had additional compensation arrangements with Xoom.com
that were in effect prior to the closing of the transactions that formed us in
November 1999. These arrangements are described below in "Certain Transactions."
10
<PAGE>
PROPOSAL NO. 4:
APPROVAL OF AMENDMENT TO 1999 STOCK INCENTIVE PLAN
NBCi's stockholders are being asked to approve an amendment to NBCi's 1999
Stock Incentive Plan that will increase the maximum number of shares of Class A
Common Stock authorized for issuance over the term of the stock incentive plan
by an additional 4,500,000 shares from 13,500,000 shares to 18,000,000 shares.
The stock incentive plan was adopted by the board of directors and approved
by the stockholders in November 1999. The amendment to the stock incentive plan
for which stockholder approval is sought under this Proposal No. 4 was adopted
by the board in April 2000, subject to stockholder approval at the annual
meeting.
The proposed share increase will assure that a sufficient reserve of
Class A Common Stock is available under the stock incentive plan to attract and
retain the services of key individuals, essential to NBCi's long-term growth and
success.
1999 STOCK INCENTIVE PLAN
The following is a summary of the principal features of the stock incentive
plan. However, the summary does not purport to be a complete description of all
the provisions of the stock incentive plan. Any stockholder of NBCi who wishes
to obtain a copy of the actual plan document may do so upon written request to
NBCi's Chief Financial Officer at NBCi's principal executive offices in San
Francisco, California.
PURPOSES
The purposes of the stock incentive plan are to promote the interests of
NBCi and its stockholders by:
- attracting and retaining exceptional officers, directors and other key
employees and consultants of NBCi and its subsidiaries;
- motivating those individuals with performance-related incentives to
achieve longer-range performance goals; and
- enabling those individuals to participate in the long-term growth and
financial success of NBCi.
ADMINISTRATION/ELIGIBLE PARTICIPANTS
The stock incentive plan is administered by an administrator, defined as the
board of directors of NBCi or one or more committees designated by the board of
directors. The current administrator of the stock incentive plan is the
compensation committee. The compensation committee currently consists of
committee members intended to be "non-employee directors," within the meaning of
Rule 16b-3 promulgated under the Securities Exchange Act, to the extent
Rule 16b-3 is applicable to NBCi and the stock incentive plan, and intended to
be "outside directors," within the meaning of Section 162(m) of the Internal
Revenue Code. The mere fact that a committee member fails to qualify as a
non-employee director or outside director, however, will not invalidate any
award made by the committee which award is otherwise validly made under the
stock incentive plan.
Any officer or other employee, director or consultant to NBCi or any of its
subsidiaries will be eligible to be designated a participant under the stock
incentive plan.
The committee has the authority to determine the participants to whom awards
shall be granted under the stock incentive plan. However, the board of directors
of NBCi may delegate to one or more officers of NBCi the authority to grant
awards to participants who are not officers or directors of NBCi
11
<PAGE>
subject to Section 16 of the Securities Exchange Act or "covered employees"
within the meaning of Section 162(m).
NUMBER OF SHARES AUTHORIZED UNDER THE STOCK INCENTIVE PLAN
The stock incentive plan currently authorizes the grant of awards for up to
13,500,000 shares of NBCi's Class A Common Stock. If Proposal No. 4 is approved
by NBCi's stockholders, the number of shares available for grant will increase
to 18,000,000. In addition, on the first business day of each calendar year
beginning 2001, the maximum number of shares issuable under the stock incentive
plan will be increased to that number that, when added to the number of unissued
shares under outstanding awards, equals 30% of the number of outstanding shares
of NBCi Common Stock on a fully diluted basis as of December 31 of the
immediately preceding calendar year. The maximum number of shares available for
grant of incentive stock options will be 18,000,000, which amount is subject to
annual adjustment. The number of shares reserved for issuance under the stock
incentive plan is subject to adjustment to avoid dilution or enlargement of
intended benefits in the event of certain significant corporate events.
Awards may be made in the form of:
- nonqualified stock options;
- stock options intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code;
- stock appreciation rights;
- restricted stock;
- performance awards and/or performance units;
- dividend equivalent rights; or
- other stock based awards.
The maximum number of shares of Class A Common Stock with respect to which
stock options and stock appreciation rights may be granted to any participant in
the stock incentive plan in any calendar year may not exceed 1,000,000 shares.
If, after the effective date of the stock incentive plan, any shares of Class A
Common Stock covered by an award granted under the stock incentive plan, or to
which such an award relates, are forfeited, or if an award has expired,
terminated or been cancelled for any reason, other than by reason of exercise or
vesting, or if any unissued shares are retained by NBCi upon exercise of an
award to satisfy the exercise price or any withholding taxes, then the shares of
Class A Common Stock covered by such award shall again be, or shall become,
shares of Class A Common Stock with respect to which awards may be granted under
the stock incentive plan.
SUBSTITUTE AWARDS
Awards may be made under the stock incentive plan in assumption of, or in
substitution for, outstanding awards previously granted by NBCi or its
affiliates or a company acquired by NBCi or its affiliates with which NBCi or
its affiliates combines. The number of shares underlying any such assumed or
substitute awards will be counted towards the aggregate number of shares of
Class A Common Stock which are available for grant under awards made under the
stock incentive plan.
TERMS AND CONDITIONS OF AWARDS UNDER THE STOCK INCENTIVE PLAN
Awards made under the stock incentive plan will be subject to the terms and
conditions, vesting requirements, form and timing of exercise or settlement, as
applicable, as may be determined by the administrator and specified in the
applicable award agreement or thereafter; provided that (1) stock
12
<PAGE>
options intended to qualify as incentive stock options will be subject to terms
and conditions that comply with the rules applicable to incentive stock options
and (2) the exercise price per share of any stock option granted under the stock
incentive plan may not be less than 85% of the fair market value per share on
the date of grant.
Payment in respect of the exercise of an option granted under the stock
incentive plan may be made:
- in cash or its equivalent;
- through the delivery of a promissory note with such recourse, interest,
security and redemption provisions as the administrator deems appropriate;
- by exchanging shares of Class A Common Stock;
- subject to such rules as may be established by the administrator, through
delivery of irrevocable instructions to a broker to sell the shares being
acquired upon exercise of the option and to deliver to NBCi an amount
equal to the aggregate exercise price; or
- by any combination of the foregoing, provided that the combined value of
the consideration received is at least equal to the aggregate exercise
price of the option.
The administrator may designate stock options and stock appreciation rights
intended to qualify as "performance-based compensation" under Section 162(m),
provided that the exercise price is established by the administrator to be at
least equal to the fair market value per share as of the date of grant. This
form of award enables the administrator to treat certain other awards under the
stock incentive plan as "performance-based compensation" and thus preserve
deductibility by NBCi for federal income tax purposes of such awards which are
made to individuals who are "covered employees" as defined in Section 162(m).
Under Section 162(m), no deduction is allowed in any taxable year of NBCi
for compensation in excess of $1 million paid to its chief executive officer and
each of its four most highly paid other executive officers who are serving in
such capacities as of the last day of such taxable year. An exception to this
rule applies to compensation that is paid pursuant to a stock incentive plan
approved by stockholders and that specifies, among other things, the maximum
number of shares with respect to which options and stock appreciation rights may
be granted to eligible employees under such plan during a specified period.
Compensation paid pursuant to options and stock appreciation rights granted
under such a plan and with an exercise price equal to the fair market value of
NBCi's stock on the date of grant is deemed to be inherently performance-based,
since such awards provide value to employees only if the stock price
appreciates.
TRANSFERABILITY
Incentive stock options may only be exercised by the optionee during the
optionee's lifetime and may not be transferred or encumbered by the optionee
except by will or by the laws of descent and distribution. Any such purported
transfer or encumbrance shall be void and unenforceable against NBCi or any
affiliate. The designation of a beneficiary is not considered a transfer or
encumbrance. The administrator has the discretion under the stock incentive plan
to provide that other awards granted under the stock incentive plan may be
transferred without consideration to certain family members or trusts,
partnerships or limited liability companies in which the original grantee and/or
his or her family members own a 50% beneficial interest or a 50% voting
interest.
CHANGE IN CONTROL
In the event of a change in control, as defined below, each currently
outstanding award under the stock incentive plan automatically will have its
vesting accelerated by 12 months on the effective date of
13
<PAGE>
the corporate transaction. Upon consummation of the corporate transaction, all
outstanding awards will terminate unless such award is assumed or replaced with
a comparable award or cash incentive program by the successor corporation or its
affiliates or such award is purchased for cash. If within 12 months of a change
in control, a participant is subsequently terminated or leaves for good reason,
each outstanding award of the participant shall become fully vested and
exercisable.
Under the stock incentive plan a "change in control" is defined as any
merger, consolidation or other form of business combination in which the
stockholders of NBCi do not own at least 50% of the combined voting power in the
surviving entity, the acquisition of 50% of the total combined voting power of
NBCi's outstanding securities or a change in a majority of the board of
directors over a period of three years by reason of one or more contested
elections, except that any increase in securities ownership by NBC or its
successors does not constitute a change in control.
The stock incentive plan also provides for the accelerated vesting of
outstanding awards held by participants primarily in the service of an
affiliated entity of NBCi, upon the sale, merger, consolidation or sale of
substantially all of the assets of such entity.
AMENDMENT TO STOCK INCENTIVE PLAN
The board of directors of NBCi may amend, suspend or terminate the stock
incentive plan; provided that no amendment or termination will be made without
stockholder approval if such approval is necessary to comply with any tax or
regulatory requirement applicable to the stock incentive plan. In addition, no
action that would adversely affect the rights of any participant to awards
previously granted under the stock incentive plan will be effective without the
participant's consent.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO STOCK OPTIONS
The following summary of the federal income tax consequences of the grant
and exercise of nonqualified and incentive stock options awarded under the stock
incentive plan, and the disposition of shares of Class A Common Stock purchased
pursuant to the exercise of such stock options, is intended to reflect the
current provisions of the Internal Revenue Code and the regulations thereunder.
This summary is not intended to be a complete statement of applicable law,
nor does it address state and local tax considerations.
No income will be realized by an optionee when a nonqualified stock option
is granted. Upon exercise of a nonqualified stock option, the optionee will
recognize ordinary compensation income in an amount equal to the excess, if any,
of the fair market value of the underlying stock over the option exercise price
at the time of exercise, referred to as the "spread". The spread will be
deductible by NBCi for federal income tax purposes subject to the possible
limitations on deductibility, including those under Sections 280G and 162(m) of
the Internal Revenue Code, of compensation paid to specified executives. The
optionee's tax basis in the underlying shares acquired by exercise of a
nonqualified stock option will equal the exercise price plus the amount taxable
as compensation to the optionee. Upon sale of the shares received by the
optionee upon exercise of the nonqualified stock option, any gain or loss is
generally long-term or short-term capital gain or loss, depending on the holding
period. The optionee's holding period for shares acquired pursuant to the
exercise of a nonqualified stock option will begin on the date of exercise of
such option.
Pursuant to rules under Section 16(b) of the Securities Exchange Act, the
grant of an option, and not its exercise, to a person who is subject to the
reporting and short-swing profit provisions under Section 16 of the Securities
Exchange Act begins the six-month period of potential short-swing liability. The
taxable event for the exercise of an option that has been outstanding at least
six months ordinarily will be the date of exercise. If an option is exercised by
a person subject to Section 16 within six months after the date of grant,
however, taxation ordinarily will be deferred until the date which is six
14
<PAGE>
months after the date of grant, unless the person has filed a timely election
pursuant to Section 83(b) of the Internal Revenue Code to be taxed on the date
of exercise. The six month period of potential short-swing liability may be
eliminated if the option grant (1) is approved in advance by NBCi's board of
directors, or a committee composed solely of two or more non-employee directors,
or (2) approved in advance, or subsequently ratified by NBCi's shareholders no
later than the next annual meeting of shareholders. Consequently, the taxable
event for the exercise of an option that satisfies either of the conditions
described in clauses (1) or (2) above will be the date of exercise.
The payment by an optionee of the exercise price, in full or in part, with
previously acquired shares of NBCi Common Stock will not affect the tax
treatment of the exercise described above. No gain or loss generally will be
recognized by the optionee upon the surrender of the previously acquired shares
to NBCi, and shares received by the optionee, equal in number to the previously
surrendered shares of NBCi Common Stock, will have the same tax basis as the
shares surrendered to NBCi and will have a holding period that includes the
holding period of the shares surrendered. The value of the shares of NBCi Common
Stock received by the optionee in excess of the number of shares surrendered to
NBCi will be taxable to the optionee. Such additional shares of NBCi Common
Stock will have a tax basis equal to the fair market value of such additional
shares as of the date ordinary income is recognized, and will have a holding
period that begins on the date ordinary income is recognized.
The Internal Revenue Code requires that, for incentive stock option
treatment, shares of Class A Common Stock acquired through exercise of an
incentive stock option cannot be disposed of before two years from the date of
grant and one year from the date of exercise. Incentive stock option holders
will generally incur no federal income tax liability at the time of grant or
upon exercise of such options. However, the spread will be an "item of
adjustment" which may give rise to "alternative minimum tax" liability at the
time of exercise. If the optionee does not dispose of the shares of NBCi Common
Stock before two years from the date of grant and one year from the date of
exercise, the difference between the exercise price and the amount realized upon
disposition of the shares of NBCi Common Stock will constitute long-term capital
gain or loss, as the case may be. Assuming both the holding periods are
satisfied, no deduction will be allowable to NBCi for federal income tax
purposes in connection with the grant or exercise of the option. If, within two
years of the date of grant or within one year from the date of exercise, the
holder of shares of NBCi Common Stock acquired through the exercise of an
incentive stock option disposes of the shares, the optionee will generally
realize ordinary taxable compensation at the time of the disposition equal to
the difference between the exercise price and the lesser of the fair market
value of the stock on the date of initial exercise or the amount realized on the
subsequent disposition, and this amount will generally be deductible by NBCi for
federal income tax purposes, subject to limitations on deductibility including
those in Sections 280G and 162(m) for compensation paid to executives designated
in those sections.
ANTICIPATED AWARDS
As of the date of this Proxy Statement, no director, executive officer or
nominee for director has been granted options subject to stockholder approval of
the proposed amendment. The benefits to be received pursuant to the stock
incentive plan amendment by NBCi's directors, executive officers and employees
are not determinable at this time.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding voting shares of NBCi
present in person or represented by proxy and entitled to vote present or
represented and entitled to vote at the annual meeting is required for approval
of the amendment to the stock incentive plan. Should such stockholder approval
not be obtained, then the 4,500,000-share increase to the share reserve will not
be implemented. The stock incentive plan will, however, continue to remain in
effect, and option grants and direct stock issuances may continue to be made
pursuant to the provisions of the stock incentive
15
<PAGE>
plan in effect prior to the amendments summarized in this Proposal No. 4, until
the available reserve of Common Stock as last approved by the stockholders has
been issued pursuant to option grants and direct stock issuances made under the
stock incentive plan.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO AMEND NBCI'S STOCK INCENTIVE PLAN THAT WILL INCREASE THE MAXIMUM
NUMBER OF SHARES OF CLASS A COMMON STOCK AUTHORIZED FOR ISSUANCE OVER THE TERM
OF THE STOCK INCENTIVE PLAN BY AN ADDITIONAL 4,500,000 SHARES FROM 13,500,000
SHARES TO 18,000,000 SHARES.
16
<PAGE>
PROPOSAL NO. 5:
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS
The board of directors, which appointed the firm of Ernst & Young LLP,
NBCi's independent public accountants during fiscal 1999, and for
Xoom.com, Inc. during fiscal 1998, has appointed that firm to serve in the same
capacity for fiscal 2000, and is asking the stockholders to ratify this
appointment.
In the event the stockholders fail to ratify the appointment, the board of
directors will reconsider its selection. Even if the selection is ratified, the
board of directors in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the board of
directors believes that such a change would be in the best interests of NBCi and
its stockholders.
A representative of Ernst & Young LLP is expected to be present at the
annual meeting, will have the opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
VOTE REQUIRED
The ratification of the appointment of Ernst & Young LLP as our independent
accountant will require the affirmative vote of the holders of a majority of the
outstanding shares of our Common Stock.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP TO SERVE AS NBCI'S INDEPENDENT ACCOUNTANTS FOR
FISCAL 2000.
17
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of NBCi:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ------------------------------------------
<S> <C> <C>
Chief Executive Officer and Class A
William J. Lansing........................ 42 Director
Executive Vice Chairman of the Board and
Chris Kitze............................... 40 Class A Director
Edmond P. Sanctis......................... 37 President and Chief Operating Officer
Executive Vice President, Finance and
John Harbottle............................ 45 Chief Financial Officer
Alan Braverman............................ 38 President, Business to Business
Executive Vice President, Director of
Jack G. Levin............................. 52 Legal Affairs
Executive Vice President, Product and
Shawn Hardin.............................. 37 Executive Producer
Executive Vice President, Sales and
John McMenamin............................ 45 Marketing
</TABLE>
Biographical information for Mr. Lansing and Mr. Kitze is set forth under
"Proposal No. 1: Election of Class A Directors."
JOHN HARBOTTLE has served as our Executive Vice President, Finance, Chief
Financial Officer, Secretary and Treasurer since August 1999 and as Xoom.com's
Vice President, Finance and Chief Financial Officer since August 1998 and as
Xoom.com's Secretary since April 1999. From February 1996 to February 1998,
Mr. Harbottle was the Vice President of Finance and Chief Financial Officer of
Mastering Computers, Inc., an information technology training and CBT software
development and manufacturing company, and then worked as an independent
consultant for Mastering Computers, Inc. from February 1998 to July 1998. From
October 1994 to February 1996, Mr. Harbottle was the Vice President of Finance
and Chief Financial Officer of Zenger-Miller, an international
management/leadership training, consulting and education company. From
January 1992 to October 1994, Mr. Harbottle was the Vice President of Finance
and Chief Financial Officer of IFS, an international consumer products and
direct marketing company. Mr. Harbottle holds a B.S. in Business Administration
from the University of California, Berkeley.
EDMOND P. SANCTIS has served as our President and Chief Operating Officer
since November 1999 and has served as Chief Operating Officer of Snap since
July 1998. From 1996 to July 1998, Mr. Sanctis was Senior Vice President and
General Manager of NBC Multimedia, Inc., a wholly owned subsidiary responsible
for NBC's Internet and new technology operations. From 1993 to 1996,
Mr. Sanctis held various management positions at NBC, including General Manager
of NBC Digital Productions and Manager of Cable and Business Development.
Mr. Sanctis has also been a Communications Associate for Sony USA and previously
worked as a television news reporter. Mr. Sanctis has served as a director of
Telocity, Inc., a provider of high-speed residential Internet services and
content, since December 1999. Mr. Sanctis holds a B.S. in Journalism from the
University of Maryland and an M.B.A. from Columbia University.
ALAN BRAVERMAN has served as our President, Business to Business since
December 1999. From April 1999 to December 1999, Mr. Braverman worked at Banc of
America Securities and held the position of Senior Managing Director and Head of
Internet Research. From July 1998 to April 1999, Mr. Braverman was Managing
Director and Head of Internet Research at Deutsche Bank Securities, the
investment banking arm of Deutsche Bank Group. From July 1996 to July 1998, he
was the senior Internet analyst at Credit Suisse First Boston. From 1995 to
July 1996, Mr. Braverman was Vice President, Internet Analysis at Haniser
Imhoff. From 1991 to 1995, Mr. Braverman served as a senior executive at U.S.
West as well as General Manager for CityKey Online, where he oversaw the
18
<PAGE>
national roll-out for the company's online business. Mr. Braverman earned a
B.B.A. in finance and strategy from The Wharton School of the University of
Pennsylvania and a M.B.A. in finance, strategy and marketing from Northwestern
University's Kellogg Graduate School of Management.
JACK G. LEVIN has served as our Executive Vice President, Director of Legal
Affairs since February 2000. From April 1999 to January 2000, Mr. Levin was an
independent consultant. From October 1997 to April 1999, Mr. Levin was the
Managing Director, Legal, for NationsBanc Montgomery Securities. From
January 1983 to October 1997, Mr. Levin was Director of Legal Affairs and a
partner at Montgomery Securities. Mr. Levin received his B.A. from Amherst
College and his J.D. from Columbia University.
SHAWN HARDIN has served as our Executive Vice President, Product and
Executive Producer since November 1999 and has served as Senior Vice President
of Snap since July 1998. Beginning in July 1996 until June 1998, Mr. Hardin
served as the Vice President and Executive Producer of NBC Multimedia, Inc., a
wholly owned subsidiary responsible for NBC's Internet and new technology
operations. Prior to this, from July 1995 to June 1996, he served as Creative
Director of NBC Multimedia, Inc. From July 1994 to June 1995, Mr. Hardin was the
Supervising Producer and Creative Director of a technology and programming
division at NBC known as NBC-2000. Prior to joining NBC, Mr. Hardin operated his
own business where he worked on more than seventy productions including
features, shorts, commercials, music videos and a variety of Interactive Media
projects. Mr. Hardin has a B.A. from the University of Southern California,
School of Cinema/ Television.
JOHN MCMENAMIN has served as our Executive Vice President, Sales and
Marketing since December 1999. From June 1999 to December 1999, Mr. McMenamin
served as Vice President General Manager of Sponsorship for iVillage.com. From
December 1997 to August 1998, Mr. McMenamin served as President and Chief
Executive Officer of C3 Communications, Inc., an interactive media company. From
1991 through 1997, Mr. McMenamin served in various positions at Time
Warner/Turner and most recently held the position of President of Turner Private
Networks. Mr. McMenamin holds an M.B.A. and certificate degree in business law
from the Stillman Graduate School of Business Administration at Seton Hall
University and a B.A. from St. Anselm's College.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information in summary form concerning the
compensation paid to our chief executive officer and each of our most highly
compensated executive officers whose total salary, bonus and other compensation
exceeded $100,000 during the fiscal year ended December 31, 1999. Our fiscal
year ended December 31, 1999 started in November 1999, the date upon the closing
of the transaction that formed us. In accordance with the rules of the SEC, the
compensation described in this table does not include perquisites and other
personal benefits received by the executive officers named in the table below
that do not exceed the lesser of $50,000 or 10% of the total salary and bonus
19
<PAGE>
reported for these officers. None of the officers received compensation for the
years ended December 31, 1997 and 1998, as we were formed in 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- ------------------------------------------------------ -------- --------- -------- ------------
<S> <C> <C> <C> <C>
Chris Kitze........................................... 1999 -- -- --
Chief Executive Officer
Edmond P. Sanctis..................................... 1999 30,770 244,000 500,000
President and Chief Operating Officer
John McMenamin........................................ 1999 13,462 175,000 300,000
Executive Vice President, Sales and Marketing
Alan Braverman........................................ 1999 20,833 147,500 1,000,000
President, Business to Business
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning grants of stock
options to each of the executive officers named in the table above during the
fiscal year ended December 31, 1999. All options granted to these executive
officers in the last fiscal year were granted under our 1999 Stock Incentive
Plan. The percentage of total options set forth below is based on an aggregate
of 2,746,286 options granted to employees during the fiscal year ended
December 31, 1999. All options were granted at the fair market value of our
Class A Common Stock on the date of grant. The exercise price may in some cases
be paid by delivery of other shares or by offset of the shares subject to
options. The deemed value for the date of grant has been adjusted solely for
financial accounting purposes. Potential realizable values are net of exercise
price, but before taxes associated with exercise. Amounts represent hypothetical
gains that could be achieved for the options if exercised at the end of the
option term. The assumed 5% and 10% rates of stock price appreciation are
provided in accordance with the rules of the SEC and do not represent our
estimate or projection of the future Class A Common Stock price.
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES IN PRICE OPTION TERM
OPTIONS FISCAL YEAR PER -----------------------------
NAME GRANTED 1999 SHARE EXPIRATION DATE 5%($) 10%($)
- --------------------------- --------------- ------------- -------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Chris Kitze................ -- -- -- -- -- --
Edmond P. Sanctis.......... 500,000 18.2% $52.50 12/07/09 $26,945,196 $56,102,897
John McMenamin............. 300,000 10.9% $60.44 12/07/09 $11,403,117 $28,897,738
Alan Braverman............. 800,000 29.1% $55.88 11/12/09 $28,114,105 $71,246,663
200,000 7.3% $72.06 11/22/09 $ 9,063,629 $22,969,016
</TABLE>
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1999 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning exercisable and
unexercisable stock options held by each of the executive officers named in the
summary compensation table at December 31, 1999. The value of unexercised
in-the-money options is based on the fair market value of our Class A
20
<PAGE>
Common Stock on December 31, 1999 of $77.25 per share minus the actual exercise
price. All options were granted under our 1999 Stock Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED IN-THE-MONEY
FISCAL YEAR END(#) OPTIONS AT FISCAL YEAR END(#)
SHARES ACQUIRED ------------------------- ---------------------------------
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------ --------------- ------------------ ------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Chris Kitze............. -- -- --/-- --/--
Edmond P. Sanctis....... 25,000 $1,686,050 130,741/650,541 $8,110,543.36/$21,875,922.22
John McMenamin.......... -- -- --/300,000 --/$5,043,000
Alan Braverman.......... -- -- --/1,000,000 --/$18,134,000
</TABLE>
EMPLOYMENT AGREEMENTS
On October 21, 1999, Edmond P. Sanctis, then the chief operating officer of
Snap, entered into a letter agreement under which he agreed to become our
employee and to serve as our president and chief operating officer upon the
closing of the transactions forming us. Upon entering into the letter agreement,
Mr. Sanctis received a bonus payment of $200,000. As our president and chief
operating officer, Mr. Sanctis will receive an annual salary of $400,000, and he
will be entitled to receive a quarterly bonus of up to $100,000 and an annual
bonus of up to $100,000 upon the achievement of certain performance goals. In
December 1999, Mr. Sanctis received an option to purchase 500,000 shares of our
Class A Common Stock at an exercise price of $52.50 per share. The options vest
monthly over a three-year period.
On November 17, 1999, John McMenamin, NBCi's Executive Vice President, Sales
and Marketing, entered into an employment agreement with NBCi. The employment
agreement provides for an annual salary of $350,000. Mr. McMenamin is also
eligible for up to $350,000 in commissions if NBCi achieves certain target sales
goals. Mr. McMenamin received a signing bonus of $175,000 on his thirtieth day
of employment. Should we terminate Mr. McMenamin without cause in the first
12 months of his employment, Mr. McMenamin will receive 25,000 shares of our
Class A Common Stock. Mr. McMenamin was also granted options to purchase up to
300,000 shares of Class A Common Stock at a per share exercise price of $60.44.
The options vest at a rate of 25% after 12 months and one forty-eighth of the
total grant per month over the next 36 months.
On November 12, 1999, Alan Braverman, NBCi's President, Business to
Business, entered into an employment agreement with NBCi. The employment
agreement provides for an annual salary of $250,000. Mr. Braverman was also
granted an option to purchase up to 800,000 shares of our Class A Common Stock
at a per share exercise price of $55.88. The options vest at a rate of 25% after
12 months, and one forty-eighth of the total grant per month over the next
36 months. On November 22, 1999, we granted Mr. Braverman options to purchase up
to 200,000 shares of our Class A Common Stock at a per share exercise price of
$72.06. The options vest on a monthly basis over 36 months. In addition,
effective November 15, 1999, Mr. Braverman received a grant of 2,500 shares of
our Class A Common Stock.
On March 23, 2000, William J. Lansing, NBCi's Chief Executive Officer,
entered into an employment agreement with NBCi. The employment agreement
provides for an annual salary of $800,000. Mr. Lansing will be entitled to
receive an annual bonus of up to $1.2 million, $900,000 of which is guaranteed
and to be paid quarterly and $300,000 of which shall be paid annually based upon
achievement of certain performance goals. Mr. Lansing was also granted an option
to purchase up to 1,000,000 shares of our Class A Common Stock at a per share
exercise price of $44.63. The options vest at a rate of 33 1/3% after
12 months, and one thirty-sixth of the total grant per month over the next
24 months. In addition, Mr. Lansing was granted the number of restricted stock
shares of our Class A common stock valued at a total of $12 million based upon
our closing price on March 24, 2000, which vest 50% at the end of the 24 month
period and 50% at the end of an additional 12 months. Further, we loaned
Mr. Lansing $4 million, without interest, for the purchase of a primary
residence in the San Francisco
21
<PAGE>
Bay Area. Such loan shall be secured by a second mortgage on such primary
residence, to be held by NBCi. Upon the third anniversary of Mr. Lansing's
employment the loan will be forgiven in full, resulting in ordinary income to
Mr. Lansing.
AUDIT COMMITTEE REPORT
The following is the report of the audit committee with respect to NBCi's
audited financial statements for the fiscal year ended December 31, 1999, which
include the consolidated balance sheets of NBCi as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for each of the three years in the period ended
December 31, 1999, and the notes thereto. The information contained in this
report shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act of 1933, as
amended, or the 1934 Securities Exchange Act, as amended, except to the extent
that NBCi specifically incorporates it by reference in such filing.
REVIEW WITH MANAGEMENT
The committee has reviewed and discussed NBCi's audited financial statements
with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS
The committee has discussed with Ernst & Young LLP, NBCi's independent
accountants, the matters required to be discussed by SAS 61 (Codification of
Statements on Accounting Standards) which includes, among other items, matters
related to the conduct of the audit of NBCi's financial statements.
The committee has also received written disclosures and the letter from
Ernst & Young LLP required by Independence Standards Board Standard No. 1 (which
relates to the accountant's independence from NBCi and its related entities) and
has discussed with Ernst & Young LLP their independence from NBCi.
CONCLUSION
Based on the review and discussions referred to above, the committee
recommended to NBCi's board of directors that NBCi's audited financial
statements be included in NBCi's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Mark W. Begor
James Heffernan
Philip Schlein
COMPENSATION COMMITTEE REPORT
The compensation committee of the board of directors currently consists of
Mark Begor and James Heffernan, both of whom are outside directors of NBCi. The
committee reviews and recommends to the board of directors the compensation and
benefits of all officers of NBCi and establishes and reviews general policies
relating to compensation and benefits of employees of NBCi. The following is the
report of the committee describing compensation policies and rationale
applicable to NBCi's executive officers with respect to the compensation paid to
such executive officers for the fiscal year ended December 31, 1999. The
information contained in this report shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
the Securities Act of 1933, as amended, or the 1934 Securities Exchange Act, as
amended, except to the extent that NBCi specifically incorporates it by
reference in such filing.
22
<PAGE>
COMPENSATION PHILOSOPHY AND REVIEW
NBCi's executive compensation program is generally designed to align the
interests of executives with the interests of stockholders and to reward
executives for achieving corporate and individual objectives. The executive
compensation program is also designed to attract and retain the services of
qualified executives in the highly competitive Internet and computer networking
marketplaces. Executive compensation currently consists of a base salary,
quarterly incentive plan, long-term equity incentives and other compensation and
benefit programs generally available to other employees.
The committee has considered the potential impact of Section 162(m) on the
compensation paid to NBCi's executive officers. Section 162(m) disallows a tax
deduction for any publicly-held corporation for individual compensation
exceeding $1.0 million in any taxable year for any of the executive officers,
unless compensation is performance-based. In general, it is the committee's
policy to qualify, to the maximum extent possible, its executives' compensation
for deductibility under applicable tax laws.
BASE SALARIES
Base salary levels for the Chief Executive Officer (the "CEO") and other
executive officers are intended to compensate executives competitively within
the high-technology marketplace. Base salaries are determined on an individual
basis by evaluating each executive's scope of responsibility, past performance,
prior experience and data on prevailing compensation levels in relevant markets
for executive talent. Regarding the latter measure, certain companies included
in the peer group index of the stock performance graph are also included in
surveys reviewed by the committee in determining salary levels for the CEO and
other executive officers of NBCi. Base salaries for executives are reviewed
annually by the committee.
QUARTERLY INCENTIVE PLAN
NBCi provides quarterly incentive bonuses for its executive officers as well
as other key management employees. The quarterly incentive plan is intended to
provide a direct link between management compensation and the achievement of
corporate and individual objectives. The level of bonus is determined on an
individual basis by evaluating each executive's scope of responsibility. At the
beginning of each quarter, NBCi sets certain corporate objectives (including
financial performance goals) and each individual manager sets his or her own
personal objectives to support the achievement of the corporate objectives. At
the end of the quarter, performance is assessed and the level of bonus payable,
if any, is determined. Achievement of corporate objectives is given more weight
than achievement of individual objectives for purposes of determining the
quarterly bonus.
LONG-TERM EQUITY INCENTIVES
NBCi provides long-term equity incentives to its executive officers and to
all other employees through the grant of stock options under its stock option
plans. The purpose of granting stock options is to create a direct link between
compensation and the long-term performance of NBCi. Stock options are generally
granted at an exercise price equal to 100% of the fair market on the date of
grant, have a ten year term and generally vest in installments over 48 months.
Because the receipt of value by an executive officer under a stock option is
dependent upon an increase in the price of NBCi's Common Stock, this portion of
the executives' compensation is directly aligned with an increase in stockholder
value. The primary stock options granted to executive officers are generally in
conjunction with the executive officer's acceptance of employment with NBCi.
When determining the number of stock options to be awarded to an executive
officer, the committee considers the executive's current contribution to NBCi's
performance, the executive officer's anticipated contribution in meeting NBCi's
long-term strategic performance goals, and comparisons to formal and informal
surveys of executive stock option grants made by other Internet and computer
networking companies. The committee also reviews stock option levels for
executive officers at the beginning of each fiscal year in light of long-term
strategic and performance objectives and each executive's current and
anticipated contributions to NBCi's future performance.
23
<PAGE>
OTHER COMPENSATION
NBCi's executive officers are also eligible to participate in compensation
and benefit programs generally available to other employees, including NBCi's
Employee Stock Purchase Plan. In addition, from time to time, executive officers
have received sign-on bonuses or other bonuses based on extraordinary effort.
CEO COMPENSATION
Chris Kitze served as Chief Executive Officer of NBCi in fiscal 1999, but
did not receive any compensation for his services because he waived his right to
receive any such compensation. The committee intends to review Mr. Lansing's
future compensation as Chief Executive Officer annually using the same criteria
and policies as are employed for other executive officers. Mr. Lansing's
compensation will initially be determined in part by the terms of an employment
agreement entered into in March 2000. However, the committee retains the
discretion to increase Mr. Lansing's compensation to levels above those provided
in the employment agreement.
SUBMITTED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
Mark W. Begor
James Heffernan
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Except for James Heffernan, no member of our compensation committee 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. During the last fiscal year, Mr. Heffernan
also served as a member of the compensation committee of Xoom.com of which
Mr. Kitze, our former chief executive officer and currently our Vice Chairman
and a Class A director, served as chairman of the board. Mr. Kitze did not
receive any compensation from Xoom.com or NBCi during the last fiscal year.
CERTAIN TRANSACTIONS
Some of NBCi's directors, executive officers and affiliates have entered
into transactions with NBCi or its constituent entities, as set forth below.
Shares of Xoom.com Common Stock and options to purchase shares of Xoom.com
Common Stock received pursuant to these transactions were automatically
converted on a one-for-one basis into shares of our Class A Common Stock and
options to purchase our Class A Common Stock, respectively, in the transaction
that formed us.
Xoom.com entered into a consulting agreement, dated May 15, 1998, with James
Heffernan, one of our and Xoom.com's outside directors, which agreement
terminated on November 15, 1999. The agreement provided for Mr. Heffernan to
receive options to buy 16,667 shares of Common Stock of Xoom.com at an exercise
price of $3.33 per share and monthly compensation of $10,000, paid in the form
of Common Stock. Mr. Heffernan was granted stock options to buy an additional
16,667 shares of Common Stock of Xoom.com at an exercise price of $3.33 per
share upon completion of Xoom.com's initial public offering in December 1998. In
addition, Mr. Heffernan was entitled to a finder's fee, payable in shares of
Common Stock of Xoom.com, of 5% of any investment he secured on Xoom.com's
behalf between May 15, 1998 and June 30, 1998. Under this arrangement,
Mr. Heffernan received 50,203 shares of Common Stock of Xoom.com.
On July 28, 1998, Jeffrey Ballowe, one of our and Xoom.com's outside
directors, entered into a letter agreement with Xoom.com, which was amended as
of December 2, 1998. Under this letter agreement, as amended, Mr. Ballowe agreed
to serve as a member of the board of directors of
24
<PAGE>
Xoom.com. The letter agreement provided for compensation in the form of options
to buy 23,334 shares of Common Stock of Xoom.com at an exercise price of $6.75
per share, which vest monthly over a two year period or immediately upon a sale
of Xoom.com. Mr. Ballowe also received a monthly fee of $10,000 as compensation
for his service as a director of Xoom.com. This fee was payable in shares of
Common Stock based upon the stock's closing price on the last trading day of the
month. Mr. Ballowe also received compensation equal to 5% of all funds he raises
for Xoom.com, payable in Common Stock. Mr. Ballowe's agreement terminated in
November 1999.
On July 28, 1998, Philip Schlein, one of our and Xoom.com's outside
directors, entered into a letter agreement with Xoom.com, which was amended as
of December 2, 1998. Under this letter agreement, as amended, Mr. Schlein agreed
to serve as a member of the board of directors of Xoom.com. The letter agreement
provided for compensation in the form of options to buy 23,333 shares of Common
Stock of Xoom.com at an exercise price of $6.75 per share, which vest monthly
over a two year period or immediately upon a sale of Xoom.com. Mr. Schlein also
received a monthly fee of $10,000 payable in cash or in Common Stock of
Xoom.com, at Mr. Schlein's option, as compensation for his service as a director
of Xoom.com. Mr. Schlein's agreement terminated in November 1999.
On July 28, 1998, Robert C. Harris, Jr., one of our and Xoom.com's outside
directors, entered into a letter agreement with Xoom.com, which was amended as
of December 2, 1998. Under this letter agreement, as amended, Mr. Harris agreed
to serve as a member of the board of directors of Xoom.com. The letter agreement
provided for compensation in the form of options to buy 23,334 shares of Common
Stock of Xoom.com at an exercise price of $6.75 per share, which vest monthly
over a two year period or immediately upon a sale of Xoom.com. Mr. Harris also
received a monthly fee of $10,000 payable in cash or in Common Stock of
Xoom.com, at Mr. Harris' option, as compensation for his service as a director
of Xoom.com. Mr. Harris' agreement terminated in November 1999.
On August 4, 1998, John Harbottle, Xoom.com's Chief Financial Officer,
entered into an employment agreement with Xoom.com. The employment agreement
provides for an annual salary of $144,000. Mr. Harbottle is also eligible for a
discretionary quarterly bonus of up to $10,000. Should Xoom.com terminate
Mr. Harbottle without cause, as defined in the agreement, Xoom.com must provide
Mr. Harbottle 180 days' advance written notice. Xoom.com may, in its discretion,
terminate Mr. Harbottle's employment at any time prior to the end of this notice
period, provided Xoom.com pays Mr. Harbottle an amount equal to his base
compensation plus any benefits Mr. Harbottle would have earned through the
balance of the notice period. If Xoom.com exercises its right to terminate
Mr. Harbottle without cause, Mr. Harbottle shall be immediately entitled to
exercise 100% of any stock options Xoom.com has granted to him that had not
previously vested. Mr. Harbottle may exercise his vested stock options for a
four month period from the date Xoom.com notifies him of its intention to
terminate his employment.
Should Xoom.com terminate Mr. Harbottle for cause, Xoom.com must pay
Mr. Harbottle all compensation due on the date of termination. In the event of a
change in control or corporate transaction, as defined in the agreement, as a
result of which Mr. Harbottle's employment with Xoom.com is involuntarily
terminated, with or without cause, Mr. Harbottle will be entitled to payment of
an amount equal to 6 months' base compensation plus benefits, and all stock
options Xoom.com previously granted to Mr. Harbottle will immediately become
fully vested and exercisable.
Under the terms of his agreement, Mr. Harbottle may terminate his employment
with Xoom.com at any time for any reason by providing Xoom.com with thirty days'
advance written notice. Should Mr. Harbottle's employment with Xoom.com
terminate for any reason, the agreement further provides that Mr. Harbottle:
(A) will not use any of Xoom.com's proprietary information without Xoom.com's
prior written consent; (B) will not use any confidential information to compete
against Xoom.com or any of Xoom.com's employees; and (C) will not, for one year
following termination, solicit any of Xoom.com's customers or employees.
25
<PAGE>
In May 1999, Xoom.com granted Mr. Harbottle options to purchase up to 31,792
shares of Common Stock at a per share exercise price of $45.50. In
September 1999, Xoom.com granted Mr. Harbottle options to purchase up to 90,000
shares of Common Stock at a per share exercise price of $35.9375 per share.
Mr. Kitze and Flying Disc, of which Mr. Kitze serves as general partner,
entered into a voting agreement dated May 9, 1999 with NBC and CNET. Under the
terms of the voting agreement, Mr. Kitze and Flying Disc agreed to vote all
3,350,680 shares of Xoom.com Common Stock they beneficially own in favor of the
transactions that formed us.
In August 1999, Mr. Ballowe, Mr. Schlein, Mr. Harris and Mr. Heffernan each
received options to purchase up to 25,000 shares of Common Stock of Xoom.com at
a per share exercise price of $30.19. The options vest at a rate of
one-thirty-sixth per month over 36 months.
In August 1999, Mr. Sanctis received options to purchase an aggregate amount
of 77,821 units of Snap at an exercise price of $38.79 per unit. The options
vest at a rate of one thirty-sixth per month over 36 months. These options were
automatically converted into options to purchase 100,000 shares of our Class A
Common Stock at an exercise price of $30.19 per share in the transactions that
formed us.
In August 1999, Shawn Hardin, NBCi's Executive Vice President, Product and
Executive Producer, and Kenneth S. Norton, NBCi's then Chief Technology Officer,
each received options to purchase up to 58,366 units of Snap at an exercise
price of $38.79 per unit. The options vest at a rate of one thirty-sixth per
month over 36 months. These options were automatically converted into options to
purchase 75,000 shares of our Class A Common Stock at an exercise price of
$30.19 per share in the transactions that formed us. In December 1999,
Mr. Hardin and Mr. Norton each received options to purchase up to 30,000 shares
of our Class A Common Stock at a per share exercise price of $60.44. The options
vest at a rate of one thirty-sixth per month over 36 months.
On September 13, 1999, Xoom.com and Snap entered into a strategic alliance
with ValueVision, a company in which an affiliate of NBC owns a 38.1% ownership
interest. The terms of the strategic alliance were negotiated at arms length.
On October 18, 1999, as consideration for agreeing to serve on Xoom.com's
board of directors, L. Lowry Mays was granted an option to purchase 25,000
shares of Common Stock of Xoom.com at an exercise price of $54.875 per share.
The options vest monthly over a three year period. In June 1999, Xoom.com
entered into an agreement with Clear Channel Broadcasting, Inc., a subsidiary of
Clear Channel Communications. Mr. Mays is the chief executive officer, chairman
of the board and a director of Clear Channel Communications. Mr. Mays was not
affiliated with Xoom.com at the time the agreement was entered into.
In November 1999, Michael M. Lynton, one of our outside directors, received
options to purchase up to 25,000 shares of our Class A Common Stock at a per
share exercise price of $63.19. The options vest at a rate of one thirty-sixth
per month over 36 months. The unvested portion of the options terminated upon
Mr. Lynton's resignation from our board of directors on February 28, 2000.
We intend to enter into indemnification agreements with each of our
directors and officers. These indemnification agreements will require us to
indemnify these individuals to the fullest extent permitted by Delaware law.
We also have entered into various employment agreements with some of our
officers. See "Management--Employment Agreements" for a more detailed
description.
We believe that all of the transactions set forth above were made on terms
no less favorable to us than could have been obtained from unaffiliated third
parties. We intend that all future transactions, including loans, between us and
our officers, directors, principal stockholders and their affiliates will be
26
<PAGE>
approved by a majority of the board of directors, including a majority of the
independent and disinterested outside directors on the board of directors, and
will be on terms no less favorable to us than could be obtained from
unaffiliated third parties.
STOCK PRICE PERFORMANCE
The following graph shows a comparison of cumulative total stockholder
returns for NBCi's Class A Common Stock, the Nasdaq Stock Market Index for U.S.
Companies, and the Hambrecht & Quist Internet Index. The graph assumes the
investment of $100 from November 30, 1999, the first trading date of NBCi's
Class A Common Stock, through December 31, 1999. The data regarding NBCi assumes
an investment at the initial trading price of $76.00 per share of NBCi's
Class A Common Stock. The performance shown is not necessarily indicative of
future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NBCI NASDAQ INDEX HAMBRECHT & QUIST INTERNET INDEX
<S> <C> <C> <C>
11/30/99 $100 $100 $100
12/31/99 $101.64 $121.58 $138.91
</TABLE>
27
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires NBCi's
officers and directors, and persons who own more than 10% of a registered class
of NBCi's equity securities, to file certain reports regarding ownership of, and
transactions in, NBCi's securities with the Securities and Exchange Commission.
Such officers, directors and 10% stockholders are also required by Securities
and Exchange Commission rules to furnish NBCi with copies of all Section 16(a)
forms that they file. Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons, NBCi
believes that for the year ended December 31, 1999, all reporting persons
complied with Section 16(a) filing requirements except as follows: John
Harbottle, Kenneth Norton and Edmond Sanctis filed reports on Form 4 for
December 1999 after the January 10, 2000 due date.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of NBCi, including proposals for nominees for
Class A director to be considered by the Class A nominating committee, which are
intended to be presented by such stockholders at NBCi's 2001 Annual Meeting of
Stockholders must be received by NBCi no later than December 30, 2000 to be
included in the proxy statement and form of proxy relating to that meeting. The
deadline for submitting proposals of stockholders, including proposals for
nominees for Class A director to be considered by the Class A nominating
committee, that will not be included in the proxy statement and form of proxy
for NBCi's 2001 Annual Meeting of Stockholders but nonetheless will be eligible
for consideration is March 24, 2001; in addition, such proposals also may not be
made earlier than February 21, 2001. Proposals for nominees for Class A director
may be made only by holders of Class A Common Stock. The above deadlines do not
apply to proposals for nominees for Class B director to be considered by the
Class B nominating committee, which may be made only by holders of a majority of
the Class B Common Stock at any time up to and including the date of the annual
meeting.
OTHER MATTERS
NBCi knows of no other matters that will be presented for consideration at
the annual meeting. If any other matters properly come before the annual
meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the shares they represent as the board of directors may recommend.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN HARBOTTLE
John Harbottle
Chief Financial Officer, Executive
Vice President,
Finance, Secretary and Treasurer
San Francisco, California
May 1, 2000
28
<PAGE>
APPENDIX A
AUDIT COMMITTEE CHARTER
The Audit Committee of the Board of Directors of NBC Internet (the
"Corporation") shall consist of three (3) members of the Board of Directors, a
majority of which shall be outside members, and shall be charged with the
following functions:
1. To take any and all actions which may be taken by the Board of Directors
of the Corporation to review and supervise the financial controls of the
Corporation, including selecting the Corporation's auditors, reviewing the books
and accounts of the Corporation, meeting with the officers of the Corporation
regarding the Corporation's financial controls, acting upon recommendations of
the auditors and taking such further actions as the Committee deems necessary to
complete an audit of the books and accounts of the Corporation.
2. To perform such other functions and have such other powers as may be
necessary or convenient to the efficient discharge of the foregoing.
3. To report to the Board of Directors from time to time, or whenever it
shall be called upon to do so.
A-1
<PAGE>
PROXY
NBC INTERNET, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 22, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William Lansing and Jack Levin and each
of them as Proxies of the undersigned, with full power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of Common Stock of NBC Internet, Inc. ("NBCi"), held of record by the
undersigned on April 27, 2000 at the Annual Meeting of Stockholders of NBC
Internet, Inc. to be held on June 22, 2000, or at any adjournment or
postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NOS. 1, 2, 3, 4
AND 5. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED ON THE
REVERSE SIDE. THIS PROXY WILL BE VOTED FOR PROPOSAL NOS. 1, 2 , 3, 4 AND 5 IF NO
SPECIFICATION IS MADE. Only holders of Class A Common Stock are eligible to vote
on Proposal Nos. 1 and 2. Only holders of Class B Common Stock are eligible to
vote on Proposal No. 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
The board of directors recommends a vote FOR Proposal Nos. 1, 2 , 3, 4
and 5. This Proxy will be voted FOR Proposal Nos. 1, 2, 3, 4 and 5 if no
specification is made.
1. To elect Class A directors to serve until the 2001 Annual Meeting of
Stockholders or until their successors are elected and qualified. Only holders
of Class A Common Stock are eligible to vote on this proposal.
NOMINEES: WILLIAM J. LANSING, CHRIS KITZE, JEFFREY BALLOWE, ROBERT C.
HARRIS, JR., JAMES J. HEFFERNAN AND PHILIP SCHLEIN
2. To elect one independent director to serve until the 2001 Annual
Meeting of Stockholders or until his successor is elected and qualified. Only
holders of Class A Common Stock are eligible to vote on this proposal.
NOMINEE: L. LOWRY MAYS
3. To elect Class B directors to serve until the 2001 Annual Meeting of
Stockholders or until their successors are elected and qualified. Only holders
of Class B Common Stock are eligible to vote on this proposal.
NOMINEES: ROBERT C. WRIGHT, MARK W. BEGOR, GARY M. REINER, SCOTT M.
SASSA, JOHN F. WELCH, JR. AND MARTIN J. YUDKOVITZ
4. To approve an amendment to NBCi's 1999 Stock Incentive Plan to
increase the number of shares of Class A Common Stock authorized for issuance
over the term of the 1999 Stock Incentive Plan by an additional 4,500,000
shares.
5. To ratify the appointment of Ernst & Young LLP as NBCi's independent
accountants for the fiscal year ending December 31, 2000.
6. In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the meeting, including the election of
any director if any of the above nominees is unable to serve or for good cause
will not serve.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE
Please sign exactly as your name(s) is (are) shown on the shares
certificate to which the Proxy applies. When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Signature:_________ Date: _________ Signature:__________ Date:______________
