<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
[ ] Confidential for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
WEBVAN GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
LOGO
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2000
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Webvan
Group, Inc., a Delaware corporation (the "Company"), will be held on Thursday,
June 1, 2000 at 12:00 p.m., local time, at the San Francisco Airport Marriott,
1800 Old Bayshore Highway, Burlingame, CA 94010, for the following purposes:
1. To elect two (2) Class I directors to serve for the ensuing three
(3) years and until their successors are duly elected and qualified.
2. To ratify the appointment of Deloitte & Touche, LLP as independent
auditors for the Company for the 2000 fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing matters are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on April 17, 2000 are
entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope for that purpose. Your stock will be voted in
accordance with the instructions you have given. Any stockholder attending the
meeting may vote in person even if he or she has previously returned a proxy.
Please note, however, that if your shares are held of record by a broker, bank
or other nominee and you wish to attend and vote in person at the meeting, you
must obtain from the record holder a proxy issued in your name.
FOR THE BOARD OF DIRECTORS
/s/ JEFFREY D. SAPER
Secretary
Foster City, California
May 11, 2000
IMPORTANT: YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, YOU ARE REQUESTED TO COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN
THE ENVELOPE PROVIDED.
<PAGE> 3
WEBVAN GROUP, INC.
310 LAKESIDE DRIVE
FOSTER CITY, CALIFORNIA 94404
(650) 627-3000
------------------------
PROXY STATEMENT FOR 2000
ANNUAL MEETING OF STOCKHOLDERS
------------------------
The enclosed Proxy is solicited on behalf of the Board of Directors of
Webvan Group, Inc. (the "Company") for use at the Annual Meeting of Stockholders
to be held on Thursday, June 1, 2000 at 12:00 p.m., local time, or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the
San Francisco Airport Marriott, 1800 Old Bayshore Highway, Burlingame, CA 94010.
These proxy solicitation materials were mailed on or about May 11, 2000 to
all stockholders of record on April 17, 2000 (the "Record Date").
INFORMATION CONCERNING SOLICITATION AND VOTING
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at the above address of the Company, written notice of revocation or a
duly executed proxy bearing a later date, or by attending the meeting and voting
in person (attendance at the meeting will not, by itself, revoke a proxy).
VOTING AND SOLICITATION
Proxies properly executed, duly returned to the Company and not revoked,
will be voted in accordance with the specifications made. Where no
specifications are given, such proxies will be voted as the management of the
Company may propose. It is not expected that any matters other than those
referred to in this Proxy Statement will be brought before the Annual Meeting.
If, however, any matter not described in this Proxy Statement is properly
presented for action at the meeting, the persons named as proxies in the
enclosed form of proxy will have discretionary authority to vote according to
their best judgment.
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the meeting. The required quorum for the transaction of
business at the Annual Meeting is a majority of the votes eligible to be cast by
holders of shares of Common Stock issued and outstanding on the Record Date.
Shares that are voted "FOR," "AGAINST," "WITHHELD" OR "ABSTAIN" are treated as
being present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting (the "Votes Cast") with
respect to such matter. Abstentions will have the same effect as a vote against
a proposal. Broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but such
non-votes will not be counted for purposes of determining the number of Votes
Cast with respect to the particular proposal on which a broker has expressly not
voted. Thus, a broker non-vote will not affect the outcome of the voting on a
proposal.
The cost of soliciting proxies will be borne by the Company. The Company
may also reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and employees, without additional compensation, personally
or by telephone or telegram.
<PAGE> 4
RECORD DATE
Stockholders of record at the close of business on April 17, 2000 are
entitled to notice of the meeting and to vote at the meeting.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholders of the Company may submit proper proposals for inclusion in
the Company's proxy statement and for consideration at the next annual meeting
of its stockholders by submitting their proposals in writing to the Secretary of
the Company in a timely manner. In order to be included in the Company's proxy
materials for the annual meeting of stockholders to be held in the year 2001,
stockholder proposals must be received by the Secretary of the Company no later
than January 31, 2001, and must otherwise comply with the requirements of Rule
14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, the Company's Bylaws establish an advance notice procedure
with regard to stockholder nominations for the election of directors or other
business to be properly brought before an annual meeting. For nominations or
other business to be properly brought before the meeting by a stockholder, such
stockholder must provide written notice delivered to the Secretary of the
Company at least 90 days prior to the anniversary date of the immediately
preceding annual meeting, which notice must contain specified information
concerning the business or the nominee. Accordingly, a stockholder who intends
to present a nomination or proposal at the 2001 Annual Meeting of stockholders
without inclusion of the proposal in the Company's proxy materials must provide
written notice of the nominations or other business they wish to propose to the
Secretary no later than March 3, 2001. A copy of the full text of the Bylaw
provision discussed above may be obtained by writing to the Secretary of the
Company. All notices of proposals by stockholders, whether or not included in
the Company's proxy materials, should be sent to Webvan Group, Inc., 310
Lakeside Drive, Foster City, California 94404, Attention: Corporate Secretary.
The Company reserves the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with these
and other applicable requirements.
The attached proxy card grants the proxy holders discretionary authority to
vote on any matter raised at the Annual Meeting.
PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES
Two (2) Class I directors are to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's two (2) nominees named below, both of
whom are presently directors of the Company. If any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for the substitute 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. The term of office of each person
elected as a director at this meeting will continue until the Annual Meeting of
Stockholders held in 2003 or until the director's successor has been elected and
qualified.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The two (2) candidates receiving the highest number of "FOR" votes shall be
elected to the Company's Board of Directors. An abstention will have the same
effect as a vote withheld for the election of directors.
2
<PAGE> 5
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED BELOW:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION
- --------------- --- --------------------
<S> <C> <C>
Christos M. Cotsakos................. 51 Chief Executive Officer and Chairman of the Board of
E*TRADE Group, Inc.
Tim Koogle........................... 48 Chief Executive Officer and Chairman of the Board of
Yahoo!, Inc.
</TABLE>
Set forth below are each nominee's principal occupation during the past
five (5) years. There are no family relationships among any directors or
executive officers of the Company.
Christos M. Cotsakos has served as a member of the Company's Board since
May 1998. Mr. Cotsakos has been the Chief Executive Officer and Chairman of the
Board of E*TRADE Group, Inc. since December 1998. He joined E*TRADE in March
1996 as President and Chief Executive Officer. Prior to joining E*TRADE, he
served as President, Co-Chief Executive Officer, Chief Operating Officer and a
director of ACNielsen, Inc. from March 1992 to January 1996. From March 1973 to
March 1992, he held a number of senior executive positions at FedEx Corporation.
Mr. Cotsakos serves as a director of National Processing Company, Inc., Digital
Island, Inc., Critical Path, Inc., Fox Entertainment Group, Inc., PlanetRx.com,
Inc. and Tickets.com. Mr. Cotsakos received a B.A. from William Paterson
College, an M.B.A. from Pepperdine University and is currently pursuing a Ph.D.
in economics at the Management School, University of London.
Tim Koogle has served as a member of the Company's Board since July 1999.
Mr. Koogle has been the Chief Executive Officer of Yahoo!, Inc. and a member of
Yahoo!'s Board of Directors since August 1995. He has also been Yahoo!'s
Chairman since January 1999 and was its President from August 1995 until January
1999. Prior to joining Yahoo!, Mr. Koogle was President of Intermec Corporation,
a manufacturer of data collection and data communication products, from 1992 to
1995. During that time, he also served as a corporate Vice President of
Intermec's parent company, Western Atlas. Mr. Koogle also serves as a director
of E-LOAN, Inc. Mr. Koogle holds a B.S. degree from the University of Virginia
and an M.S. degree from Stanford University.
DIRECTORS NOT STANDING FOR ELECTION
The members of the Board of Directors who are not standing for election at
this year's Annual Meeting are set forth below.
<TABLE>
<CAPTION>
CLASS AND
YEAR IN WHICH
NAME AGE TERM EXPIRES PRINCIPAL OCCUPATION
- ---- --- --------------- --------------------
<S> <C> <C> <C>
Louis H. Borders..................... 51 Class III, 2002 Chairman of the Board of Webvan Group,
Inc.
George T. Shaheen.................... 55 Class III, 2002 President and Chief Executive Officer
of Webvan Group, Inc.
David M. Beirne...................... 36 Class II, 2001 Managing Member, Benchmark Capital
Michael Moritz....................... 45 Class II, 2001 General Partner, Sequoia Capital
</TABLE>
Louis H. Borders has served as our Chairman of the Board since founding
Webvan in December 1996. Mr. Borders served as President and Chief Executive
Officer of Webvan from December 1996 to September 1999. Mr. Borders co-founded
Synergy Software, a software consulting company, in November 1989 and served on
its board of directors from November 1989 to November 1997. Mr. Borders founded
Borders Books, a retail bookstore chain, in 1971 and served as President and
Chief Executive Officer until 1983 and as Chairman from 1983 to 1992. He also
developed the advanced information systems used by Borders Books to manage
inventory across diverse geographic and demographic regions. In addition, Mr.
Borders is chairman of Mercury Capital Management, an investment firm he founded
in 1995. Mr. Borders holds a B.A. in Mathematics from the University of
Michigan.
3
<PAGE> 6
George T. Shaheen has served as President and Chief Executive Officer and
as a member of the Board of Webvan since September 1999. Prior to joining
Webvan, he had been the managing partner and chief executive officer of Andersen
Consulting, a global consulting firm, since the firm became an independent unit
in 1989. He joined Andersen Consulting in 1967 and became a partner in 1977.
From 1980 to 1985, he oversaw the consulting practice for North and South
Carolina before heading the Northern California Consulting practice based in San
Francisco. Prior to becoming managing partner and chief executive officer of
Andersen Consulting, Mr. Shaheen was managing partner of the Southeast U.S.
Region and North American practices. In addition, he was the practice director
for Japan and the Pacific Northwest. Mr. Shaheen is also a director of Siebel
Systems, Inc., a software company. He is on the Board of Trustees at Bradley
University and is a member of the Board of Advisors for the Northwestern
University J.L. Kellogg Graduate School of Business. Mr. Shaheen received a
bachelor's degree in marketing and a master's degree in finance from Bradley
University.
David M. Beirne has served as a member of the Board since October 1997. Mr.
Beirne has been a Managing Member of Benchmark Capital, a venture capital firm,
since June 1997. Prior to joining Benchmark Capital, Mr. Beirne founded
Ramsey/Beirne Associates, an executive search firm, and served as its Chief
Executive Officer from October 1987 to June 1997. Mr. Beirne serves as a
director of Scient Corporation, Kana Communications, Inc., 1-800-FLOWERS.COM,
Inc. and PlanetRx.com, Inc. Mr. Beirne received a B.S. in Management from Bryant
College.
Michael J. Moritz has served as a member of the Board since October 1997.
Mr. Moritz has been a general partner of Sequoia Capital, a venture capital
firm, since 1988. Between 1979 and 1984, Mr. Moritz was employed in a variety of
positions by Time, Inc. Mr. Moritz also serves as a director of Yahoo!,
Flextronics International, eToys Inc., Agile Software Corporation, PlanetRx.com,
Inc. and Saba Software, Inc. Mr. Moritz holds an M.A. degree in history from
Oxford University and an M.B.A. from the Wharton Business School of the
University of Pennsylvania.
Messrs. Beirne and Moritz are currently serving on the Board as a result of
their having been elected as representatives of the Company's Series A preferred
stock of the Company, which was outstanding prior to the initial public offering
of the Company's common stock, and Mr. Cotsakos is currently serving on the
Board as a result of his having been elected as representative of the Company's
Series C preferred stock of the Company also then outstanding, in each case
pursuant to rights of holders of such preferred stock as then set forth in the
Company's Restated Certificate of Incorporation; in connection with the
Company's initial public offering all then outstanding shares of preferred stock
were converted into common stock and these rights to elect directors terminated.
COMPENSATION OF DIRECTORS
Our directors do not receive cash for services they provide as directors.
In July 1998, Mr. Cotsakos was granted an option to purchase 2,190,276 shares of
common stock at an exercise price of $0.10 per share. The option granted to Mr.
Cotsakos vests at the rate of one-sixteenth ( 1/16th) of the shares subject to
the option per quarter.
In July 1999, we issued an option to purchase 150,000 shares of common
stock to Yahoo! Inc. at a price of $3.33 per share under our 1997 Stock Plan.
While the option does not provide Mr. Koogle with any compensation, it vests at
the rate of one-sixteenth ( 1/16th) of the shares subject to the agreement per
quarter as long as Mr. Koogle remains on our Board of Directors.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held eight (8) meetings during fiscal
1999. Mr. Koogle was elected a director in August 1999 and Mr. Shaheen in
September 1999. During 1999, each Board member attended 75% or more of the
meetings held by the Board (at a time when he was a director of the Company) and
each committee member attended 75% or more of the meetings held by the
committees on which he served, with the exception of Messrs. Koogle and
Cotsakos.
4
<PAGE> 7
The Audit Committee was formed in August, 1999 and consists of three
non-employee directors: Messrs. Beirne, Koogle and Moritz. The Audit Committee
reviews the financial statements and the internal financial reporting system and
controls of the Company with the Company's management and independent auditors,
recommends resolutions for any dispute between the Company's management and its
auditors, and reviews other matters relating to the relationship of the Company
with its auditors. The Audit Committee did meet in 1999.
The Compensation Committee was formed in August, 1999 and consists of two
non-employee directors: Messrs. Cotsakos and Moritz. The Compensation Committee
makes recommendations to the Board of Directors regarding the Company's
executive compensation policies and administers the Company's stock option plans
and employee stock purchase plan. The Compensation Committee did not meet in
1999.
The Board of Directors currently has no nominating committee or committee
performing a similar function.
PROPOSAL TWO:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche, LLP, independent
auditors, to audit the financial statements of the Company for the 2000 fiscal
year. This nomination is being presented to the stockholders for ratification at
the meeting. Deloitte & Touche, LLP has audited the Company's financial
statements since the Company's inception. A representative of Deloitte & Touche,
LLP is expected to be present at the meeting, will have the opportunity to make
a statement, and is expected to be available to respond to appropriate
questions.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of a majority of the Votes Cast on the proposal at the
Annual Meeting is required to ratify the Board's selection. If the stockholders
reject the nomination, the Board will reconsider its selection.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE, LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE 2000 FISCAL YEAR.
STOCK OWNERSHIP
OWNERSHIP OF MAJOR SHAREHOLDERS
At the Record Date, 330,558,988 shares of the Company's Common Stock,
$.0001 par value per share, were issued and outstanding and no shares of the
Company's Preferred Stock, $.0001 par value per share, were issued and
outstanding. As of April 17, 2000, the following individuals and entities were
known by the Company to be the beneficial owner of more than 5% of the Company's
Common Stock:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
---------------------------------------
NAME OF 5% BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF TOTAL(2)
- --------------------------- ---------------- -------------------
<S> <C> <C>
Louis H. Borders(1)(2)..................................... 49,329,493 14.9%
SOFTBANK America Inc.(3)................................... 46,222,251 14.0
Sequoia Capital(4)......................................... 40,462,086 12.2
Michael J. Moritz
Benchmark Capital(5)....................................... 36,521,976 11.0
David M. Beirne
Hume R. Steyer, as Trustee of ISR GRAT II and the Borders
1997 Family Trust(2)(6).................................. 44,294,379 13.3
</TABLE>
5
<PAGE> 8
- ---------------
(1) Includes 36,526,647 shares held by Louis H. Borders, Trustee of the Louis H.
Borders Amended and Restated Revocable Trust dated December 4, 1987, or the
Trust; and 12,802,846 shares held by ISR Grantor Retained Annuity Trust II,
or ISR GRAT II. ISR GRAT II holds shares for the current benefit of Mr.
Borders and the contingent future benefit of a member of Mr. Borders' family
and will expire in December 2002. Mr. Borders is Chairman of Webvan. Certain
employees of Mercury Capital Management held options to purchase 160,000
shares of common stock held by the Trust, and Webvan holds an option to
purchase up to 4,250,000 shares of common stock held by the Trust at an
exercise price of $8.00 per share. The address for Mr. Borders is 310
Lakeside Drive, Foster City, California 94404. 31,483,283 shares formerly
held by ISR GRAT I, of which Mr. Borders was a beneficiary, were conveyed to
the Borders 1997 Family Trust when ISR GRAT I terminated in February 2000.
Mr. Borders has no beneficial ownership interest in the Borders 1997 Family
Trust.
(2) The 12,802,846 shares (or 3.9% of the shares outstanding on April 17, 2000)
held by ISR GRAT II is included in the number of shares beneficially owned
by each of Mr. Borders, as a beneficiary of ISR GRAT II, and Mr. Steyer, as
trustee of ISR GRAT II.
(3) Includes 9,717,243 shares held by SOFTBANK Capital Partners LP and 133,032
shares held by SOFTBANK Capital Advisors Fund LLP. The address for SOFTBANK
America Inc. is 300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801
(4) Includes 33,417,612 shares held by Sequoia Capital VII, or Sequoia Capital;
3,940,110 shares held by Sequoia Capital Franchise Fund, or Sequoia Fund and
Sequoia Capital Franchise Partners, or Sequoia Partners; 1,460,880 shares
held by Sequoia Technology Partners VII; 584,352 shares held by Sequoia
International Partners and 1,059,132 shares held by Sequoia 1997 LLC. Mr.
Moritz, one of our directors, is a general partner of Sequoia Capital,
Sequoia Fund, Sequoia Partners, Sequoia Technology, Sequoia International
and Sequoia LLC. Mr. Moritz disclaims beneficial ownership of such shares
held by Sequoia Capital, Sequoia Fund, Sequoia Partners, Sequoia Technology,
Sequoia International and Sequoia LLC, except to the extent of his pecuniary
interest therein. The address for Sequoia Capital is 3000 Sand Hill Road,
Building 4, Suite 280, Menlo Park, California 94025.
(5) Includes 32,043,432 shares held by Benchmark Capital Partners, LP, or
Benchmark Capital, and 4,478,544 shares held by Benchmark Founders' Fund,
LP, or Benchmark Founders. Mr. Beirne, one of our directors, is a Managing
Member of Benchmark Capital Management Co., LLC, the general partner of
Benchmark Capital and Benchmark Founders. Mr. Beirne disclaims beneficial
ownership of such shares held by Benchmark Capital and Benchmark Founders,
except to the extent of his pecuniary interest therein. The address for
Benchmark Capital is 2480 Sand Hill Road, Suite 200, Menlo Park, California
94025.
(6) Includes 31,438,283 shares held by Hume R. Steyer, sole Trustee of the
Borders 1997 Family Trust; 12,802,846 shares held by Hume R. Steyer, sole
Trustee of ISR GRAT II; 38,250 shares held in a trust of which Mr. Steyer is
the sole Protector, the Protector Trust; and 11,250 shares held in trusts
for the benefit of members of Mr. Steyer's family. Mr. Steyer disclaims
beneficial ownership of all shares held by the Borders 1997 Family Trust,
ISR GRAT II And the Protector Trust. The address for Mr. Steyer is c/o
Seward & Kissel LLP, One Battery Park Plaza, New York, New York, 10004.
6
<PAGE> 9
OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of April 17, 2000 (i) by each director of the Company, (ii) the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company during fiscal 1999 (such officers are
collectively referred to as the "Named Executive Officers"), and (iii) by all
directors and individuals who were executive officers of the Company as of
December 31, 1999, as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------
NAME NUMBER PERCENT(1)
- ---- ----------- ----------
<S> <C> <C>
Louis H. Borders(2)......................................... 49,329,493 14.9%
George T. Shaheen(3)........................................ 16,250,000 4.7
Robert H. Swan(4)........................................... 250,000 *
Mark X. Zaleski(5).......................................... 3,789,360 1.1
Gary B. Dahl(6)............................................. 2,830,000 *
Christian Mannella.......................................... 1,001,250 *
David Beirne(7)............................................. 36,521,976 11.0
Christos M. Cotsakos(8)..................................... 1,095,138 *
Tim Koogle(9)............................................... -- --
Mike J. Moritz(10).......................................... 40,462,086 12.2
All directors and executive officers as a group (17
persons)(12).............................................. 165,779,403 46.8
</TABLE>
- ---------------
* Less than 1%
(1) Applicable percentage ownership is based on 330,558,988 shares of common
stock outstanding as of April 17, 2000. Shares of common stock that a
person has the right to acquire within 60 days of April 17, 2000 are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such rights, but are not deemed outstanding for purposes of
computing the percentage ownership of any other person, except with respect
to the percentage ownership of all directors and executive officers as a
group.
(2) Includes 36,526,647 shares held by Louis H. Borders, Trustee of the Louis
H. Borders Amended and Restated Revocable Trust dated December 4, 1987, or
the Trust; and 12,802,846 shares held by ISR GRAT II. ISR GRAT II holds
shares for the current benefit of Mr. Borders and the contingent future
benefit of a member of Mr. Borders' family and will expire in December
2002. Mr. Borders is Chairman of Webvan. Certain employees of Mercury
Capital Management held options to purchase 160,000 shares of common stock
held by the Trust, and Webvan holds an option to purchase up to 4,250,000
shares of common stock held by the Trust at an exercise price of $8.00 per
share. Mr. Borders was Chief Executive Officer of the Company from January
through September 1999.
(3) Includes 15,000,000 shares subject to an option exercisable within 60 days
of April 17, 2000, of which 10,000,000 shares are subject to repurchase at
the original exercise price by the Company in the event of termination of
Mr. Shaheen's services, which right lapses over time in accordance with a
vesting schedule.
(4) Includes 250,00 shares subject to an option exercisable within 60 days of
April 17, 2000.
(5) Includes 3,549,360 shares subject to an option exercisable within 60 days
of April 17, 2000, of which 2,368,360 shares are subject to repurchase at
the original exercise price by the Company in the event of termination of
Mr. Zaleski's services, which right lapses over time in accordance with a
vesting schedule.
(6) Includes 187,500 shares subject to an option exercisable within 60 days of
April 17, 2000 of which 150,000 shares are subject to repurchase at the
original exercise price by the Company in the event of termination of Mr.
Dahl's services, which right lapses over time in accordance with a vesting
schedule. Also includes an additional 562,500 shares acquired upon early
exercise of an option that are subject to repurchase at the original
exercise price by the Company in the event of termination of Mr. Dahl's
7
<PAGE> 10
services, which right lapses over time in accordance with a vesting
schedule. Includes 515,000 shares held by Gary B. Dahl, Trustee of the
Double D Trust Number One and 515,000 shares held by Gary B. Dahl, Trustee
of the Double D Trust Number Two.
(7) Includes 32,043,432 shares held by Benchmark Capital Partners, LP, or
Benchmark Capital, and 4,478,544 shares held by Benchmark Founders' Fund,
LP, or Benchmark Founders. Mr. Beirne, one of our directors, is a Managing
Member of Benchmark Capital Management Co., LLC, the general partner of
Benchmark Capital and Benchmark Founders. Mr. Beirne disclaims beneficial
ownership of such shares held by Benchmark Capital and Benchmark Founders,
except to the extent of his pecuniary interest therein.
(8) Includes 684,462 shares held by Cotsakos Ventures LLC, a family limited
liability company and 410,676 shares issuable upon the exercise of options
which are exercisable within 60 days of April 17, 2000. Does not include
4,304,100 shares held by E*TRADE E-Commerce Fund LLC. Mr. Cotsakos is the
Chairman of the Board, President and Chief Executive Officer of E*TRADE
Group, Inc. and disclaims beneficial ownership of such shares.
(9) Does not include 4,304,100 shares held by Yahoo!, Inc. or 28,150 shares
subject to an option held by Yahoo!, Inc. Mr. Koogle is the Chairman of the
Board and Chief Executive Officer of Yahoo!, Inc. and disclaims beneficial
ownership of such shares.
(10) Includes 33,417,612 shares held by Sequoia Capital VII, or Sequoia Capital;
3,940,110 shares held by Sequoia Capital Franchise Fund, or Sequoia Fund
and Sequoia Capital Franchise Partners, or Sequoia Partners; 1,460,880
shares held by Sequoia Technology Partners VII; 584,352 shares held by
Sequoia International Partners and 1,059,132 shares held by Sequoia 1997
LLC. Mr. Moritz, one of our directors, is a general partner of Sequoia
Capital, Sequoia Fund, Sequoia Partners, Sequoia Technology, Sequoia
International and Sequoia LLC. Mr. Moritz disclaims beneficial ownership of
such shares held by Sequoia Capital, Sequoia Fund, Sequoia Partners,
Sequoia Technology, Sequoia International and Sequoia LLC, except to the
extent of his pecuniary interest therein.
(11) Includes an aggregate of 23,772,286 shares subject to options exercisable
within 60 days of April 17, 2000, of which 16,294,600 shares are subject to
repurchase from individuals who were executive officers of the Company at
December 31, 1999 at the original exercise price by the Company in the
event of termination of services of applicable officers, which right lapses
over time in accordance with applicable vesting schedules. Also includes
1,784,250 shares acquired upon early exercise of options that are subject
to repurchase at the original exercise price by the Company in the event of
termination of services of applicable officers, which right lapses over
time in accordance with applicable vesting schedules.
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation received for services
rendered to the Company and the Company's subsidiaries in all capacities during
the last three fiscal years by (i) the Company's Chief Executive Officer and
(ii) the Company's four (4) other Named Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
------------------------------------------------- ------------
ALL OTHER
FISCAL ANNUAL AWARDS OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS COMPENSATION(3)
- --------------------------- ------ -------- ----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Louis H. Borders(4)....... 1999 $ -- $ -- $ -- -- $ --
Chairman of the Board 1998 -- -- -- -- --
of Directors and 1997 -- -- -- -- --
Former President & Chief
Executive Officer
George T. Shaheen(5)...... 1999 134,000 13,487,500(6) -- 15,000,000 1,375
President, Chief
Executive Officer, and
Director
Robert H. Swan............ 1999 69,000 450,000 -- 1,000,000 --
Chief Financial
Officer(7)
Mark X. Zaleski(7)........ 1999 349,000 -- -- -- 2,000
Senior Vice President, 1998 13,000 -- -- 3,789,360 --
Area Operations
Christian Mannella(7)..... 1999 218,000 -- 42,000 -- 2,000
Former Vice President, 1998 13,000 -- -- 2,670,000 --
Marketing
Gary Dahl(7).............. 1999 185,000 -- -- -- 800
Vice President, 1998 178,600 8,750 -- 600,000 2,000
Distribution 1997 141,000 4,500 20,000 2,250,000 2,000
</TABLE>
- ---------------
(1) Other compensation in the form of perquisites and other personal benefits
have been omitted in those cases where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or 10% of the total annual salary and bonus for the Named Executive
Officer for such year.
(2) Represents payments made for relocation allowances.
(3) Represents 401(k) plan matching by Webvan.
(4) Mr. Borders served as President and Chief Executive Officer of Webvan from
December 1996 to September 1999.
(5) Mr. Shaheen joined Webvan in September 1999.
(6) Consists of a signing bonus in an amount equal to the purchase price of
1,250,000 shares of common stock purchased by Mr. Shaheen pursuant to his
September 1999 employment agreement.
(7) Mr. Swan joined Webvan in October 1999; Messrs. Zaleski and Mannella joined
Webvan in December 1998; and Mr. Dahl joined Webvan in April 1997.
9
<PAGE> 12
OPTION GRANTS IN FISCAL YEAR 1999
The following table sets forth information concerning grants of stock
options to each of the Named Executive Officers during the fiscal year ended
December 31, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
% OF TOTAL EXERCISE FAIR ANNUAL RATES OF STOCK PRICE APPRECIATION
OPTIONS GRANTED OR BASE VALUE FOR OPTION TERM(3)
OPTIONS TO EMPLOYEES IN PRICE PER ON DATE EXPIRY -----------------------------------------
NAME GRANTED FISCAL YEAR(2) SHARE OF GRANT DATE 0% 5% 10%
- ---- ---------- --------------- --------- -------- ------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Louis H. Borders..... -- -- -- -- -- -- -- --
George T. Shaheen.... 15,000,000 35% $ 8.00 $10.79 10/4/09 $41,850,000 $143,637,000 $399,797,000
Robert H. Swan....... 812,500 2.3% 11.00 11.00 10/4/09 -- 5,621,000 14,244,000
187,500 3.33 11.00 10/4/09 1,438,125 2,735,000 4,725,000
Mark X. Zaleski...... -- -- -- -- -- -- -- --
Christian Mannella... -- -- -- -- -- -- -- --
Gary Dahl............ -- -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) Each of these options was granted pursuant to the Company's 1997 Stock Plan
or 1999 Nonstatutory Stock Option Plan and is subject to the terms of such
plan. The option granted to Mr. Shaheen was granted with an exercise price
below fair market value and was vested as to 3,000,000 shares on his date of
hire, while the remaining 12,000,000 shares vest monthly from his date of
hire on a pro-rata basis. The option for 187,500 shares granted to Mr. Swan
were granted below fair market value and vest six months after the date of
grant, while the option for 812,500 shares granted to Mr. Swan vest six
months after the date of grant as to 62,500 shares and, as to the remaining
750,000 shares, one-twelfth (1/12th) of the number of shares per quarter
beginning one year after grant.
(2) In 1999, we granted employees and consultants options to purchase an
aggregate of 42,793,000 shares of common stock.
(3) The gains shown are "option spreads" that would exist for the respective
options granted. These gains are based on the assumed rates of annual
compound stock price appreciation of 5% and 10% from the date the option was
granted over the full option term. These assumed annual compound rates of
stock price appreciation do not represent our estimate or projection of
future common stock prices.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning options
exercised by the Named Executive Officers in fiscal 1999, and exercisable and
unexercisable stock options held by each of the Named Executive Officers as of
December 31, 1999.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
---------------------------------------------------
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR END(2) FISCAL YEAR END(3)
ACQUIRED ON VALUE ---------------------- -------------------------
NAME EXERCISE REALIZED(1) VESTED UNVESTED VESTED UNVESTED
- ---- ----------- ----------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Louis H. Borders........ -- $ -- -- -- $ -- $ --
George T. Shaheen....... -- -- 3,750,000 11,250,000 31,875,000 95,625,000
Robert H. Swan.......... -- -- -- 1,000,000 -- 6,938,000
Mark X. Zaleski......... -- -- 947,340 2,842,020 15,236,353 45,709,000
Christian Mannella...... 78,000 $809,000 589,500 2,002,500 9,481,000 32,207,000
Gary Dahl............... -- -- 375,000 1,068,750(4) 6,183,000 17,631,000
</TABLE>
- ---------------
(1) Equal to the fair market value of the purchased shares on the option
exercise date, less the exercise price paid for such shares.
(2) The options are immediately exercisable for all of the option shares (except
as to 812,500 shares under option to Mr. Swan), but any shares purchased
under those options will be subject to repurchase by
10
<PAGE> 13
Webvan at the original exercise price paid per share, if the optionee ceases
service with Webvan before vesting in those shares. The heading "Vested"
refers to shares that are no longer subject to repurchase and the heading
"Unvested" refers to shares subject to repurchase as of December 31, 1999.
(3) Based upon the Closing Price of the common stock on December 31, 1999 of
$16.50 less the exercise price per share.
(4) Includes 843,750 shares held pursuant to an early exercise of an option
which, at December 31, 1999, are unvested and therefore subject to
repurchase.
COMPENSATION ARRANGEMENTS
Mr. Shaheen is a party to an agreement with the Company effective as of
September 19, 1999. As contemplated by this agreement, Mr. Shaheen serves as
Chief Executive Officer and President and a member of our Board of Directors.
Under the agreement, the Company agreed to pay Mr. Shaheen a base salary of
$500,000, subject to annual adjustment, and a target bonus of $250,000. In
connection with this agreement, Mr. Shaheen was provided a bonus which was used
to purchase 1,250,000 shares of fully vested common stock and was granted an
option to purchase an additional 15,000,000 shares of common stock at an
exercise price of $8.00 per share. The option was immediately vested as to
3,000,000 shares on the date his employment commenced and the remaining shares
vest monthly over a four year period, subject to Mr. Shaheen's continued
service. Our Chairman, Louis Borders, also granted Webvan an option to purchase
up to 4,250,000 shares of common stock beneficially owned by Mr. Borders at an
exercise price of $8.00 per share, which option vests to the extent Mr. Shaheen
exercises the last 4,250,000 shares subject to the option granted to him. In
order to satisfy the tax obligations with respect to the signing bonus paid to
Mr. Shaheen to enable him to purchase 1,250,000 shares at the time of his hire,
we also agreed to loan Mr. Shaheen $6.7 million at an annual interest rate of
6.2%, with the loan to be repaid solely from a portion of the gain realized by
Mr. Shaheen upon the sale of shares of Webvan common stock issued to him in
connection with his signing bonus or upon exercise of his Webvan stock options.
$4.8 million of this amount was loaned in 1999 and another $1.9 million of this
amount was loaned in April 2000.
We also agreed to provide Mr. Shaheen a supplemental retirement benefit
equal to 50% of his base compensation plus target bonus upon his retirement for
any reason after June 30, 2000. In the event that Mr. Shaheen is terminated
without cause or resigns for good reason, he is entitled to severance equal to
two years of base salary plus target bonus and two years additional vesting on
his stock options. In addition, if Mr. Shaheen is terminated without cause or
resigns for good reason within 12 months following a change in control of
Webvan, he shall be entitled to severance equal to three years of base salary
plus target bonus, full vesting as to all of his unvested stock options and
payment of any excise taxes payable by Mr. Shaheen in connection with the
receipt of such compensation. In the event of Mr. Shaheen's death or permanent
disability, he shall be entitled to accelerated vesting as to 50% of his
unvested stock options and he or his estate shall have 12 months to exercise any
vested options.
Robert H. Swan, our Chief Financial Officer, is a party to an offer letter
dated October 2, 1999. Under the offer letter we agreed to pay Mr. Swan a salary
of $300,000 and a sign-on bonus of $450,000. The offer letter provides that in
the event Mr. Swan's employment is terminated for other than cause, we are
obligated to pay him a six month salary and benefits severance as well as
continued salary and benefits for up to six additional months until he obtains
subsequent employment. The offer letter further provides that if Mr. Swan is
terminated for other than cause, the unvested portion of his options will become
exercisable to the extent of an additional six months of vesting.
Mark Zaleski, our Senior Vice President, Area Operations, is a party to an
offer letter, dated December 14, 1998. Under the offer letter we agreed to pay
Mr. Zaleski a base salary of $300,000. In March 1999, Webvan loaned Mr. Zaleski
$200,000 to be used towards the purchase of a house in the San Francisco Bay
Area. This loan was made as an interest-free employee relocation bridge loan, as
contemplated by his offer letter, and on March 1, 2000 was converted into a
three year loan, with interest, at the applicable federal rate, compounding
semi-annually. The offer letter also provides that in the event that Mr.
Zaleski's employment is terminated for other than cause, we are obligated to pay
him a severance of six months of
11
<PAGE> 14
salary and benefits as well as continued salary and benefits for up to 12 months
until he obtains subsequent employment. In the event of such a termination, the
unvested portion of Mr. Zaleski's options will become exercisable to the extent
of an additional 12 months of vesting.
Mr. Dahl is a party to an offer letter, dated March 31, 1997. Under the
offer letter, we agreed to pay Mr. Dahl a base salary of $200,000, subject to
annual adjustment.
Frank Terry Bean, our Senior Vice President, Human Resources as of March
2000, is a party to an offer letter, dated February 28, 2000. Under the offer
letter we agreed to pay Mr. Bean a base salary of $300,000 and a sign-on bonus
of $50,000. We also agreed to loan Mr. Bean $500,000 to be used towards the
purchase of a house in the San Francisco Bay Area. The loan has a three year
term, with interest, at the applicable federal rate, compounding semi annually,
with the first year's interest to be forgiven, and with principal payable at the
end of the term. The offer letter also provides that in the event that Mr.
Bean's employment is terminated without cause we are obligated to pay him a
severance of six months of salary and benefits as well as continued salary and
benefits for up to 12 months until he obtains subsequent employment. In the
event of such a termination prior to his first anniversary with the Company, the
unvested portion of Mr. Bean's main option grant will become exercisable as to
25% of the shares under the option and in the event of such a termination
following his first anniversary with the Company the unvested portion of Mr.
Bean's option will become exercisable to the extent of an additional 6 months of
vesting.
REPORT OF REGARDING THE COMPENSATION OF EXECUTIVE OFFICERS BY THE BOARD OF
DIRECTORS(1)
For 1999, all members of the Board of Directors participated in
deliberations concerning executive officer compensation that occurred while such
individuals were members of the Board. The Compensation Committee of the board
of Directors, formed in August 1999, is comprised of Messrs. Cotsakos and
Moritz. Both such members are non-employee directors. The Compensation
Committee, which did not meet in 1999, reviews compensation levels of senior
management and recommends salaries and other compensation paid to senior
management to the Company's Board of Directors for approval.
Compensation Philosophy. The Company's executive pay programs are designed
to attract and retain executives who will contribute to the Company's long-term
success, to reward executives for achieving both short and long-term strategic
Company goals, to link executive and stockholder interests through equity-based
plans, and to provide a compensation package that recognizes individual
contributions and Company performance. A meaningful portion of each executive's
total compensation is intended to be variable and to relate to and be contingent
upon Company performance. The Company's compensation philosophy is that cash
compensation must be competitive with other e-Commerce companies of comparable
size in order to help motivate and retain existing staff and provide a strong
incentive to achieve specific Company goals. The Company believes that the use
of stock options as a long-term incentive links the interests of the employees
to that of the stockholders and motivates key employees to remain with the
Company to a degree that is critical to the Company's long-term success, while
rewarding individuals for the Company's performance, to the extent it is
reflected in the stock price of the Company.
Components of Executive Compensation. The two key components of the
Company's senior management compensation program in fiscal 1999 were base salary
and long-term incentives, represented by the Company's stock option program.
Stock options are generally granted when a senior manager joins the Company
and additional options may be granted from time-to-time thereafter. The options
granted to each senior manager generally vest over a four (4) year period,
although exceptions may be made when deemed necessary or appropriate. In
addition to the stock option program, senior managers are eligible to
participate in the Company's 1999 Employee
- ---------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before or
after the date hereof and irrespective of any general incorporation language
contained in such filing.
12
<PAGE> 15
Stock Purchase Plan. The Company intends to grant additional options to
executive officers and other senior managers from time-to-time based on
performance and potential.
In 1999, the Company hired two individuals who are currently executive
officers of the Company: George T. Shaheen and Robert H. Swan. The Company
awarded Mr. Swan, in connection with his commencing employment with the Company,
options for 1,000,000 shares and agreed to pay Mr. Swan a signing bonus to
encourage him to join the Company and to compensate him for relocation expenses.
In March 2000, following his assuming the role of Chief Financial Officer, Mr.
Swan was granted an additional option for 300,000 shares. Other executive
officers received in early 1999 a cost of living increase to their existing
salaries prorated based on the portion of each year worked since such
executive's last salary increase, if applicable. The Company did not utilize
salary surveys for executive officers in 1999. The Compensation Committee
expects in 2000 to take into account an industry recognized independent annual
survey of companies and to consider a number of other factors including those
specific to the market for executives in the San Francisco/Silicon Valley area
in determining whether the Company's senior management compensation is within
the competitive range.
Chief Executive Officer Compensation. Mr. Borders, due to his substantial
ownership in the Company, requested not to receive any salary while he served as
Chief Executive Officer of the Company. Mr. Shaheen, who was appointed Chief
Executive Officer in September 1999, receives an annual base salary of $500,000.
In addition, he is eligible for an annual target bonus equal to fifty percent
(50%) of his base salary upon attainment of performance goals determined by the
Board of Directors pursuant to the advice of the Committee after consultation
with Mr. Shaheen. For the portion of 1999 during which Mr. Shaheen was employed
by the Company, no performance goals were established and no bonus was paid. The
Committee is in the process of establishing performance goals for 2000. Mr.
Shaheen, pursuant to his employment agreement with the Company, was paid a
signing bonus which was used to purchase 1,250,000 shares of fully vested common
stock. In addition the Company agreed to loan Mr. Shaheen $6.7 million in order
to pay the taxes on that bonus. The Company also agreed to provide Mr. Shaheen a
supplemental retirement benefit equal to 50% of his base compensation plus
target bonus upon his retirement for any reason after June 30, 2000.
Except as described above, the Company's Chief Executive Officer receives
no other material compensation or benefits not provided to all executive
officers.
The Company had no bonus program in 1999, but is evaluating the
appropriateness of instituting a bonus program for 2000/2001 in connection with
its incentive and retention policies and its assessment of practices of
comparable companies in the industry. The only bonuses awarded to executive
officers during fiscal 1999 were signing bonuses paid to Messrs. Shaheen and
Swan as described above.
Other elements of executive compensation include participation in
Company-wide medical and dental benefits and the ability to defer compensation
pursuant to a 401(k) plan. The Company matches annual contributions under the
401(k) plan up to an amount equal to $2,000.
Ongoing Review. The Compensation Committee will be evaluating the
Company's compensation policies on an ongoing basis to determine whether they
are appropriate to attract, retain and motivate key personnel. The Compensation
Committee may determine accordingly that it is appropriate to increase salaries,
award additional stock options or grants of restricted stock, make loans or
provide other short-term or long-term compensation to senior managers, including
executive officers.
The Board of Directors and the Compensation Committee have considered the
potential impact of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the "Section"). The Section disallows a
tax deduction for any publicly-held corporation for individual compensation
exceeding $1 million in any taxable year for any of the Named Executive
Officers, unless such compensation is performance-based. Since the cash
compensation of each of the Named Executive Officers is below the $1 million
threshold and the Compensation Committee believes that any options granted under
the Company's stock plans will meet the requirements of being performance-based,
the Compensation Committee believes that the Section will not reduce the tax
deduction available to the Company. The Company's policy is
13
<PAGE> 16
to qualify, to the extent reasonable, its executive officers' compensation for
deductibility under applicable tax laws. However, the Compensation Committee
believes that its primary responsibility is to provide a compensation program
that will attract, retain and reward the executive talent necessary to the
Company's success. Consequently, the Compensation Committee recognizes that the
loss of a tax deduction could be necessary in some circumstances.
The Board of Directors
Louis H. Borders
George T. Shaheen
Christos M. Cotsakos
Michael J. Moritz
David Beirne
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Compensation Committee is comprised of two non-employee
directors: Messrs. Cotsakos and Moritz. No member of the Compensation Committee
is or was formerly an officer or an employee of the Company. No executive
officer of Webvan 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 Webvan's Board of Directors, nor has such interlocking relationship
existed in the past.
CERTAIN TRANSACTIONS
In January and April 1999, the Company issued an aggregate of 32,341,200
shares of Series C preferred stock to investors for an aggregate purchase price
of approximately $75.1 million. E*TRADE Group, Inc. and Yahoo! Inc. each
purchased 4,304,100 shares (or approximately ten million dollars) of Series C
preferred stock in such transaction. Christos M. Cotsakos, a director of Webvan,
is the President and Chief Executive Officer of E*TRADE Group, Inc., and Tim
Koogle, a director of Webvan, is the Chief Executive Officer and Chairman of
Yahoo! Inc. In connection with this issuance, the Company also entered into an
amendment to a registration rights agreement then in existence granting to the
purchasers of its Series C preferred stock certain registration rights with
respect to the shares of common stock into which such shares of preferred stock
were converted at the time of our initial public offering in November 1999.
In July 1999, we entered into an agreement to issue an aggregate of
21,670,605 shares of Series D-2 preferred stock to investors at an aggregate
purchase price of approximately $275.0 million. Entities affiliated with
SOFTBANK America Inc. purchased 9,850,275 shares of Series D-2 preferred stock
and entities affiliated with Sequoia Investors Group purchased 3,940,110 shares
of Series D-2 preferred stock transaction. In connection with this issuance, the
Company also entered into an amendment to a registration rights agreement then
in existence granting to the purchasers of its Series D-2 preferred stock
certain registration rights with respect to the shares of common stock into
which such shares of preferred stock were converted at the time of our initial
public offering in November 1999.
In connection with the Company's Americas's Second Harvest Food Donation
Program, pursuant to which entities and individuals select a dollar amount of
groceries they want to purchase and donate, the Company entered into an
agreement with E*TRADE Group, Inc. under which E*TRADE Group, Inc committed for
three years to donate one dollar under the program for each new brokerage
account it acquires, up to a maximum of one million dollars per year for three
years. Of the up to one million dollars applicable to the first year of the
agreement, E*TRADE purchased and donated $300,000 of goods in 1999. Christos M.
Cotsakos, a director of Webvan, is the President and Chief Executive Officer of
E*TRADE Group, Inc.
In connection with the recruiting of some of an executive officer the
Company engaged the services in 1999 of Ramsey/Beirne Associates, an executive
search firm. Mr. Beirne, one of our directors, is the chairman of Ramsey/Beirne
and owns more than 5% of the stock of Ramsey/Beirne. As consideration for these
services,
14
<PAGE> 17
we paid Ramsey/Beirne an aggregate of 15,000 shares of our common stock with an
average fair market value of $10.86 per share.
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following graph compares the total cumulative stockholder return on the
Company's common stock with the cumulative total return of the NASDAQ National
Market Index and the Goldman Sachs Internet Index for the period from November
5, 1999 (based on the closing price of the company's stock on the date on which
the Company's common stock began trading on the NASDAQ) through December 31,
1999. Total cumulative stockholder return assumes $100 invested at the beginning
of the period in the Common Stock of the Company, the stocks represented in the
NASDAQ National Market Index and the stocks represented in the Goldman Sachs
Internet Index, respectively and assumes reinvestment of dividends; the Company
has paid no dividends on its Common Stock. The Goldman Sachs Internet Index is a
modified capitalization weighted index of 15 stocks representing the Internet
industry, including Internet content and access providers, Internet software and
service companies and e-commerce companies. Historical stock price performance
should not be relied upon as indicative of future stock price performance:
[LINE GRAPH]
<TABLE>
<S> <C> <C> <C>
Webvan NASDAQ GIN
11/5/99 100.00 100.00 100.00
90.95 101.34 106.12
11/9/99 99.00 100.73 103.46
87.94 101.73 103.45
11/11/99 80.40 103.06 102.18
71.36 103.83 106.17
11/15/99 73.12 103.78 106.99
64.57 106.15 111.98
11/17/99 70.35 105.39 110.68
79.90 107.89 114.87
11/19/99 84.67 108.61 114.70
82.92 109.36 120.31
11/23/99 82.92 107.76 119.92
86.43 110.26 123.98
11/26/99 97.49 111.14 125.50
99.25 110.29 122.06
11/30/99 99.25 107.54 115.33
93.47 108.10 117.00
12/2/99 92.46 111.30 123.60
102.26 113.49 125.54
12/6/99 97.49 114.30 129.83
91.46 115.62 134.67
12/8/99 83.92 115.60 134.02
79.40 115.86 141.24
12/10/99 84.17 116.70 145.68
81.66 117.92 146.96
12/14/99 78.90 115.13 138.30
72.36 116.75 137.27
12/16/99 77.39 119.75 140.32
75.63 120.98 139.85
12/20/99 77.39 121.97 141.94
78.64 126.07 151.67
12/22/99 76.88 126.92 150.45
73.87 127.95 145.60
12/27/99 68.59 128.14 142.45
66.08 128.04 141.09
12/29/99 67.84 130.27 145.78
64.82 130.13 142.74
12/31/99 66.33 131.17 142.96
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of filings under Section 16(a) of the
Securities Exchange Act of 1934, as amended, received by it, or written
representations from certain reporting persons, the Company believes that during
fiscal 1999, all Section 16 filing requirements were met.
15
<PAGE> 18
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S COMBINED ANNUAL REPORT TO STOCKHOLDERS AND ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 ACCOMPANIES THIS PROXY
STATEMENT. AN ADDITIONAL COPY WILL BE FURNISHED WITHOUT CHARGE TO BENEFICIAL
STOCKHOLDERS OR STOCKHOLDERS OF RECORD UPON REQUEST TO INVESTOR RELATIONS,
WEBVAN GROUP, INC., 310 LAKESIDE DRIVE, FOSTER CITY, CA 94404.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent as the Board of Directors of the Company may recommend.
THE BOARD OF DIRECTORS
Foster City, California
May 11, 2000
16
<PAGE> 19
WEBVAN GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints George T. Shaheen and Robert H. Swan, jointly
and severally, proxies, with full power of substitution, to vote all shares of
Common Stock of Webvan Group, Inc., a Delaware corporation, which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the San Francisco Airport Marriott, 1800 Old Bayshore Highway,
Burlingame, CA 94010, on June 1, 2000, at 12:00 p.m., local time, or any
adjournment thereof. The proxies are being directed to vote as specified below
or, if no specification is made, FOR the election of directors nominated by
management, FOR the appointment of Deloitte & Touche, LLP as independent
auditors and in accordance with their discretion on such other matters that may
properly come before the meeting.
THE DIRECTORS RECOMMEND A FOR VOTE ON EACH ITEM.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- 1 -
<PAGE> 20
PROXY CARD
<TABLE>
<CAPTION>
WITHHELD
FOR AUTHORITY
<S> <C> <C>
all nominees Is vote
listed for nominees
(except as withheld) listed
1. Election of Directors
(Instruction: To withhold authority to
vote for any individual nominees, strike
that nominee's name below.)
Nominees: Christos M. Cotsakos
Tim Koogle
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Proposal to ratify the appointment of Deloitte
& Touche, LLP as Independent auditors for the
2000 fiscal year:
I plan to attend the Meeting: Yes No
</TABLE>
Signature(s) Date
(Signature(s) must be exactly as name(s) appear on this Proxy. If signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such, and, if signing for a corporation, please give your title. When shares
are in the names of more than one person, each should sign this Proxy.)
