UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
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 o
Check the
appropriate box:
|
|
o |
Preliminary Proxy Statement |
|
|
o |
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)) |
|
|
x |
Definitive Proxy Statement |
|
|
o |
Definitive Additional
Materials |
|
|
o |
Soliciting Material Under Section
240.14a-12 |
STAMPS.COM INC. |
(Name of Registrant as Specified In Its
Charter) |
|
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant) |
|
Payment
of Filing Fee (Check the appropriate box):
|
|
|
|
x |
No fee required. |
|
|
|
|
o |
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: |
|
|
|
|
o |
Fee paid previously with
preliminary materials. |
|
|
|
|
o |
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: |
|
|
|
|
|
|
|
|
12959
Coral Tree Place
Los
Angeles, CA 90066-7020
(310)
482-5800
Dear
Stockholder:
You are
cordially invited to attend the 2005 Annual Meeting of Stockholders of
Stamps.com Inc. to be held at 10:00 a.m. Pacific Daylight Savings Time on
Friday, May 25, 2005, at the Ritz Carlton Marina del Rey, 4375 Admiralty Way,
Marina del Rey, California, 90292.
Your vote
at the Annual Meeting is important to us. At the Annual Meeting, you will be
asked to (i) elect one director and (ii) ratify the selection of our auditors
for 2005. The accompanying Notice of 2005 Annual Meeting of stockholders and
proxy statement describe the matters to be presented at the Annual Meeting.
These proxy solicitation materials will first be mailed on or about
April 25, 2005 to all stockholders entitled to vote at the Annual
Meeting.
The board
of directors unanimously recommends that stockholders vote in favor of the
election of the nominated director and the ratification of our
auditors.
Whether
or not you plan to attend the Annual Meeting, please mark, sign, date and return
your proxy card in the enclosed envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy card. You
may attend the Annual Meeting and vote in person even if you have previously
returned your proxy card.
|
|
|
|
Sincerely, |
|
|
|
|
|
/s/ KEN MCBRIDE |
|
Ken McBride |
|
Chief Executive
Officer |
|
|
Los Angeles, California |
|
April 11,
2005 |
|
12959
Coral Tree Place
Los
Angeles, CA 90066-7020
(310)
482-5800
NOTICE OF
2005 ANNUAL MEETING OF STOCKHOLDERS
TO BE
HELD ON MAY 25, 2005
TO THE
STOCKHOLDERS OF STAMPS.COM INC.:
NOTICE IS
HEREBY GIVEN that the 2005 Annual Meeting of Stockholders of Stamps.com Inc., a
Delaware corporation will be held on May 25, 2005, beginning at 10:00 a.m.
Pacific Daylight Savings Time at the Ritz
Carlton Marina del Rey, 4375 Admiralty Way, Marina del Rey, California,
90292, for the
following purposes:
1. To elect
one director to serve for a three-year term ending in the year 2008 or until his
successor is duly elected and qualified;
2. To ratify
the appointment of Ernst & Young LLP as independent auditors of our Company
for the fiscal year ending December 31, 2005; and
3. To
transact other business as may properly come before the meeting or any
adjournment or adjournments thereof.
The
foregoing matters are described in more detail in the enclosed proxy statement.
Our board of directors has fixed the close of business on April 18, 2005 as
the record date for the determination of our stockholders entitled to notice of,
and to vote at, the Annual Meeting and any postponement or adjournment of the
meeting. Only those stockholders of record as of the close of business on that
date are entitled to notice of and to vote at the Annual Meeting. Our stock
transfer books will remain open between the record date and the date of the
meeting. A list of stockholders entitled to vote at the Annual Meeting will be
available for inspection by any stockholder of our Company, for any purpose
germane to the meeting, at the Annual Meeting and during ordinary business hours
at our executive offices for a period of ten days prior to the Annual
Meeting.
All
stockholders are cordially invited to attend the meeting in person. Whether or
not you plan to attend, please sign and return the enclosed proxy as promptly as
possible in the envelope enclosed for your convenience. Should you receive more
than one proxy because your shares are registered in different names and
addresses, each proxy should be signed and returned to assure that all your
shares will be voted. You may revoke your proxy at any time before the Annual
Meeting. If you attend the Annual Meeting and vote by ballot, your proxy will be
revoked automatically and only your vote at the Annual Meeting will be
counted.
YOUR VOTE
IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE
ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
|
|
|
|
BY ORDER OF THE BOARD OF
DIRECTORS, |
|
|
|
|
|
/s/ SETH
WEISBERG |
|
Seth Weisberg |
|
General Counsel |
|
and Secretary |
|
|
Los Angeles, California |
|
April 11, 2005 |
|
12959
Coral Tree Place
Los
Angeles, CA 90066-7020
PROXY
STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 25, 2005
GENERAL
INFORMATION ABOUT VOTING
General
The
enclosed proxy is solicited on behalf of the board of directors of Stamps.com
Inc., for use at the Annual Meeting of Stockholders to be held on May 25, 2005.
The Annual Meeting will be begin at 10:00 a.m. Pacific Daylight Savings Time at
the Ritz Carlton Marina del Rey, 4375 Admiralty Way, Marina del Rey, California,
90292.
Voting
On March
31, 2005, 22,816,608 shares of our common stock were issued and outstanding. As
of that date we had no outstanding preferred stock. Each share of common stock
is entitled to one vote at the Annual Meeting.
As there
is only one nominee for election to our board of directors, the adoption of the
proposal to elect the director requires the affirmative vote of a majority of
shares present at the Annual Meeting, in person or by proxy. The adoption of the
proposal to ratify the appointment of our independent auditors requires the
affirmative vote of a majority of shares present at the Annual Meeting, in
person or by proxy.
A
majority of the outstanding shares of our common stock present in person or
represented by proxy constitutes a quorum for the transaction of business at the
Annual Meeting. All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate affirmative and negative
votes, abstentions and broker non-votes. Abstentions and broker non-votes are
counted as present for purposes of determining the presence or absence of a
quorum for the transaction of business. Abstentions will be counted towards the
tabulations of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes, whereas broker non-votes will not be
counted for purposes of determining whether a proposal has been approved. In the
election of the director, an abstention or broker non-vote will have no effect
on the outcome.
Proxies
If you
properly sign and return the enclosed form of proxy, your shares represented
will be voted at the Annual Meeting in accordance with your specified
instructions. If you do not specify how your shares are to be voted, your shares
will be voted FOR the election of the director proposed by the board unless the
authority to vote for the election of a director is withheld and, if no contrary
instructions are given, the proxy will be voted FOR the ratification of our
independent accountants. You may revoke or change your proxy at any time before
the Annual Meeting by filing with our Secretary at 12959 Coral Tree Place, Los
Angeles, CA 90066-7020, a notice of revocation or another signed proxy with a
later date. You may also revoke your proxy by attending the Annual Meeting and
voting in person.
Solicitation
We will
bear the entire cost of solicitation, including the preparation, assembly,
printing and mailing of this proxy statement, the proxy and any additional
solicitation materials furnished to our stockholders. Copies of solicitation
materials will be furnished to brokerage houses, fiduciaries and custodians
holding shares in their names that are beneficially owned by others so that they
may forward this solicitation material to such beneficial owners. In addition,
we may reimburse such persons for costs incurred in forwarding the solicitation
materials to such beneficial owners. The original solicitation of proxies by
mail may be supplemented by a solicitation by telephone, telegram or other means
by our directors, officers or employees. No additional compensation will be paid
to these individuals for soliciting. Except as described above, we do not
presently intend to solicit proxies other than by mail.
Deadline
for Receipt of Stockholder Proposals
Proposals
of stockholders that are intended to be presented by such stockholders at our
2006 annual meeting must be received no later than January 13, 2006, in
order that they may be included in the proxy statement and form of proxy
relating to that meeting. In addition, the proxy solicited by our board of
directors for the 2006 annual meeting will confer discretionary authority to
vote on any stockholder proposal presented at that meeting, unless our Company
receives notice of the proposal not later than March 10, 2006.
MATTERS
TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL
ONE: ELECTION OF DIRECTOR
General
Our
certificate of incorporation provides for a classified board of directors
consisting of three classes of directors with staggered three-year terms, with
each class consisting, as nearly as possible, of one-third of the total number
of directors. Our board currently consists of five members.
The five
member Board is currently divided into two Class I directors, two Class II
directors and one Class III director.
The class
whose term of office expires at the Annual Meeting currently consists of one
director. The director elected to this class will serve for a term of three
years, expiring at the 2008 annual meeting of stockholders or until his
successor has been duly elected and qualified. The nominee listed below is
currently a director of our Company.
The
nominee for election has agreed to serve if elected, and management has no
reason to believe that the nominee will be unavailable to serve. If the nominee
is unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for any substitute nominee who may be designated by
our board of directors to fill the vacancy.
Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the nominee named below.
Set forth
below is certain information concerning the nominee and the other incumbent
directors:
Nominee
for Term Ending Upon the 2008 Annual Meeting
Kenneth
McBride, 37, has
been a Director of our Company and has served as our President and Chief
Executive Officer since August 2001 and also served as our Chief Financial
Officer from October 2000 to January 2004. Previously, Mr. McBride served as the
Senior Director of Finance for the Company from April 1999 to October 2000.
Before joining Stamps.com, Mr. McBride was a research analyst for Salomon Smith
Barney covering several industries in the high technology area. Mr. McBride has
also worked as an engineer and manager in the semiconductor industry. Mr.
McBride holds a bachelor’s degree, with honors, and a master's degree, in
Electrical Engineering from Stanford University. Mr. McBride also holds an MBA
from the Graduate School of Business at Stanford University.
Continuing
Directors Whose Term Expires in 2006
G.
Bradford Jones, 50, has
been a Director of our Company since October 1998. Mr. Jones is currently
a General Partner at Brentwood Venture Capital, which he joined in 1981, and a
General Partner of Redpoint Ventures, a firm he co-founded in October
1999. Mr. Jones also currently serves on the board of directors of
numerous privately-held companies. Mr. Jones received his B.A. in
Chemistry from Harvard University, his M.A. in Physics from Harvard University
and his J.D./M.B.A. from Stanford University.
Lloyd
I. Miller, 50, has
been a Director of our Company since April 2002. Mr. Miller is an independent
investor and has served on numerous corporate boards including Vulcan
International, and American Controlled Industries, among others. Mr. Miller
currently serves as a director of Aldila, Inc., American Banknote Corporation,
and Dynabazaar. He is a member of the Chicago Board of Trade and the Chicago
Stock Exchange, and traded actively on the floor of the CBOT from 1978 to 1992.
He is a Registered Investment Advisor. Mr. Miller received his B.A. from Brown
University.
Continuing
Directors Whose Term Expires in 2007
Mohan
P. Ananda, 59, has
been a Director of our Company since January 1998. Mr. Ananda is a founder
and currently serves as the chief executive officer and chairman of the board of
Angels Now, Inc., an investment and management consulting
company. From January 1997 to October 1998, Mr. Ananda served as our chief
executive officer. From June 1986 to December 1996, Mr. Ananda was a
partner of Ananda & Krause, a law firm. Mr. Ananda also serves on the
board of directors of several privately-held companies. Mr. Ananda
received his B.S. in Mechanical Engineering from Coimbature Institute of
Technology in India, his M.S. in Aeronautics from the California Institute of
Technology, his Ph.D. in Astrodynamics and Control from UCLA, and his J.D. from
the University of West Los Angeles.
Kevin
G. Douglas,
42, has
been a Director of our Company since July 2003. Mr. Douglas is the founder,
Chairman and co-CEO of Douglas Telecommunications, Inc., a cellular
communications company he started in 1991. Mr. Douglas also serves on the board
of numerous private companies. Mr. Douglas received his A.B. from Stanford
University and his J.D. from U.C. Hastings College of Law.
Board
Committees and Meetings
Our board
of directors held six meetings during the fiscal year ended December 31,
2004. Each director attended or participated in 75% or more of the aggregate of
(i) the total number of meetings of our board of directors and
(ii) the total number of meetings held by all committees of our board on
which such director served during the fiscal year ended December 31, 2004.
Our board of directors has an audit committee, a compensation committee and a
nominating committee.
Audit
Committee. Our
audit committee currently consists of three directors, Messrs. Douglas, Jones
and Miller, and is primarily responsible for approving the services performed by
our independent auditors and reviewing their reports regarding our accounting
practices and systems of internal accounting controls. Our audit committee held
five meetings during the fiscal year ended December 31, 2004.
The audit
committee acts pursuant to a written charter adopted by the board which is
available on our website at http://investor.stamps.com. All members of the audit
committee are non-employee directors and are “independent” pursuant to the rules
of The Nasdaq Stock Market. In addition, the board has determined that Messrs.
Jones and Miller are "audit committee financial experts" as defined by
applicable SEC rules.
Compensation
Committee. Our
compensation committee currently consists of two directors, Messrs. Ananda and
Miller. Our compensation committee is primarily responsible for reviewing and
approving our general compensation policies and setting compensation levels for
our executive officers. Our compensation committee also has the authority to
administer our employee stock purchase plan and our stock incentive plan and to
make option grants under our stock incentive plan. All members of the
compensation committee are non-employee directors and are “independent” pursuant
to the rules of The Nasdaq Stock Market. The compensation committee acts
pursuant to a written charter adopted by the board which is available on our
website at http://investor.stamps.com. Our compensation committee held three
meetings and acted by unanimous written consent on 12 separate occasions during
the fiscal year ended December 31, 2004.
Nominating
Committee. Our
nominating committee was established in February 2004. The current members of
our nominating committee are Messrs. Ananda, Douglas, Jones and Miller, each of
whom qualifies as an independent director under the rules of the The Nasdaq
Stock Market. The nominating committee identifies, evaluates and recommends
nominees for membership on our board of directors and is also responsible for
the evaluation of the independence of existing and prospective directors and
reviewing and reporting on additional corporate governance matters as directed
by the board of directors. The nominating committee acts pursuant to a written
charter adopted by the board which is available on our website at
http://investor.stamps.com. Our nominating committee held one meeting during the
fiscal year ended December 31, 2004.
Compensation
Committee Interlocks and Insider Participation. The
compensation committee currently consists of two directors, Messrs. Ananda and
Miller. None of these individuals was one of our officers or employees at any
time during the fiscal year ended December 31, 2004 or had any relationship
with our Company requiring disclosure. None of our current executive officers
has ever served as a member of the board of directors or the compensation
committee of any other entity that has or has had one or more executive officers
serving as a member of our board of directors or compensation
committee.
Contacting
the Board of Directors
Any
stockholder who desires to contact our board of directors may do so by writing
to the following address: Board of Directors, c/o Legal Department, Stamps.com
Inc., 12959 Coral Tree Place, Los Angeles, CA 90066-7020. Communications
received are distributed to an independent member of the board of directors or
to the other members of the board as appropriate depending on the facts and
circumstances outlined in the communication received.
Director
Independence
The board
of directors has determined that, except for Mr. McBride, each of our directors
qualifies as an independent director under the rules of The Nasdaq Stock Market.
Mr. McBride is not considered independent because he serves as the chief
executive officer of Stamps.com.
Director
Compensation
Cash
Compensation. Each
non-employee director receives $1,000 for each board meeting attended and $500
for each board committee meeting attended. Directors are also reimbursed for all
reasonable expenses incurred by them in attending board and committee
meetings.
Option
Grants. Under
the automatic option grant program in effect under our stock incentive plan,
each individual who joined our board as a non-employee director at any time
after June 24, 1999, received or will receive, at the time of their initial
election or appointment, an automatic option grant to purchase 5,000 shares of
our common stock, so long as that person has not previously been one of our
employees. In addition, on the date of each annual stockholders meeting,
beginning with the 2002 annual meeting, each individual who is to continue to
serve as a non-employee board member, whether or not that individual is standing
for re-election at that particular annual meeting, will be granted an option to
purchase 5,000 shares of our common stock. Each grant under our automatic option
grant program will have an exercise price per share equal to the fair market
value per share of our common stock on the grant date, and will have a maximum
term of ten years, subject to earlier termination should the optionee cease to
serve as a director.
All
directors except for Mr. McBride received automatic option grants on April 23,
2004 for 5,000 shares each of our common stock at an exercise price per share of
$14.50, the fair market value per share of our common stock on the grant date.
Each option is immediately exercisable for all the option shares, but any shares
purchased under the option will be subject to our right to repurchase, at the
exercise price paid per share, upon the optionee’s cessation of board service
prior to vesting in those shares. Directors who are also employees are eligible
to receive options and be issued shares of our common stock directly under our
stock incentive plan.
Grants to
directors in the year ending December 31, 2004 for services provided as
directors:
Director |
|
Grant
Date |
|
Number
of Options |
|
Option
Price |
|
|
|
|
|
|
|
|
|
Mohan
Ananda |
|
|
04/23/04 |
|
|
5,000 |
|
$ |
14.50 |
|
Bradford
Jones |
|
|
04/23/04 |
|
|
5,000 |
|
$ |
14.50 |
|
Kevin
Douglas |
|
|
04/23/04 |
|
|
5,000 |
|
$ |
14.50 |
|
Lloyd
Miller |
|
|
04/23/04 |
|
|
5,000 |
|
$ |
14.50 |
|
Vote
Required
Directors
are elected by a plurality of the votes of the shares present at the Annual
Meeting in person or represented by proxy and entitled to vote on the election
of directors.
Recommendation
of our Board of Directors
Our
Board of Directors recommends that the stockholders vote “FOR” the election of
the nominee listed above.
PROPOSAL
TWO: RATIFICATION OF INDEPENDENT AUDITORS
General
Our board
of directors has appointed the firm of Ernst & Young LLP, our independent
auditors during the fiscal year ended December 31, 2004, to serve in the
same capacity for the year ending December 31, 2005, and is asking you to
ratify this appointment. Stockholder ratification of the appointment is not
required by our bylaws or by any other applicable legal requirement. However,
our board of directors is submitting the appointment of Ernst & Young LLP to
you for ratification as a matter of good corporate practice.
If you
fail to ratify the appointment, our audit committee and our board of directors
will reconsider whether or not to retain Ernst & Young LLP. Even if the
appointment is ratified, our audit committee in its discretion may direct the
appointment of a different independent auditing firm at any time during the year
if our audit committee believes that such a change would be in the best
interests of our Company and our 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.
Unless
marked to the contrary, proxies received will be voted FOR ratification of the
appointment of Ernst & Young LLP as our independent auditors for the current
year.
Fees
Billed to our Company by Ernst & Young LLP during Fiscal Year
2004
During
the fiscal year ended December 31, 2004, Ernst & Young LLP provided various
audit, audit related and non-audit services to our Company as
follows:
Audit
Fees
Aggregate
fees billed to us by Ernst & Young LLP for professional services rendered
for the audit of our annual financial statements, and review of financial
statements included in our Company’s quarterly reports on Form 10-Q, totaled
approximately $379,000 and $165,000 for the fiscal year ended December 31,
2004 and 2003, respectively. In 2004, audit fees include $187,956 in fees for
professional services rendered for the audits of (i) management’s assessment of
the effectiveness of internal controls over financial reporting and (ii) the
effectiveness of internal control over financial reporting.
Tax
Fees
Fees
billed to us by Ernst & Young LLP for tax services rendered to us for the
fiscal year ended December 31, 2004 and 2003 totaled approximately
$19,000 and $15,000, respectively.
All
Other Fees
Fees
billed to us by Ernst & Young LLP for all other non-audit and non-tax
professional services rendered to us for the fiscal year ended December
31, 2004 and 2003 totaled approximately $11,000 and $15,000,
respectively. All other fees for the fiscal year ended December 31, 2004
principally include research into the accounting treatment of certain
licensing revenue. All other fees for the fiscal year ended December 31,
2003 principally relate to other tax work relating to the Stamps.com return of
capital dividend paid on February 23, 2003 and for fees for a study regarding
our net operating losses.
Pre-Approval
Policy
The Audit
Committee pre-approves all audit and permissible non-audit services provided to
the Company by Ernst & Young LLP. Pre-approval is generally provided at a
meeting of the Audit Committee and covers a specified period of time. Any
pre-approval is detailed as to the particular service or category of services
covered and is generally subject to a specific budget. The independent auditors
and management periodically report to the Audit Committee regarding the extent
of services provided by Ernst & Young LLP in accordance with this
pre-approval, and the fees for the services performed to date. The Audit
Committee may also pre-approve other particular services on a case-by-case
basis. All services provided to the Company by Ernst & Young LLP during 2004
were pre-approved by the Audit Committee in accordance with this
policy.
Determination
of Independence
Our audit
committee and board of directors have determined that the fees received by Ernst
& Young LLP for the non-audit related professional services listed above are
compatible with maintaining Ernst & Young LLP’s independence and such fees
were approved by the audit committee.
Vote
Required
The
ratification of the appointment of Ernst & Young LLP as our independent
auditors for the fiscal year ending December 31, 2005 requires the affirmative
vote of the holders of a majority of the shares of our common stock present at
the Annual Meeting in person or by proxy and entitled to vote.
Recommendation
of our Board of Directors
Our
Board of Directors recommends that the stockholders vote “FOR” the ratification
of the appointment of Ernst & Young LLP to serve as our Company’s
independent auditors for the fiscal year ending December 31,
2005.
OTHER
MATTERS
We know
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 other matters is granted by the execution of the enclosed proxy,
unless you specifically withhold that power.
MANAGEMENT
Executive
Officers
The
following table sets forth certain information regarding our executive officers
who are not also directors of our Company as of March 31, 2005:
Name
|
|
Age
|
|
Position
|
James
Bortnak |
|
36 |
|
Vice
President, Sales and Marketing |
Kyle
Huebner |
|
34 |
|
Chief
Financial Officer |
Seth
Weisberg |
|
36 |
|
Vice
President, General Counsel and Secretary |
James
A. Harper |
|
34 |
|
Chief
Accounting Officer and Corporate Controller |
________________
James
Bortnak. James
Bortnak was named Vice President, Sales & Marketing, in January 2004.
Previously, Mr. Bortnak served as Vice President, Business Development from
March 2002 to January 2004, and as a senior member of the Business Development
group since joining our Company in October 1999. Prior to joining Stamps.com,
Mr. Bortnak practiced business law, focusing in the area of technology and
start-up companies. Mr. Bortnak holds an LLB from the University of British
Columbia, and has been a member of the California Bar since 1997.
Kyle
Huebner. Mr.
Huebner has been our Chief Financial Officer since January 2004. Mr. Huebner was
our Vice President of Marketing from October 2001 to January 2004, our Vice
President of Corporate Strategy from January 2000 to October 2001, and our
Senior Director of Corporate Strategy from January 1999 to 2000. Prior to
joining our Company, from 1997 to 1999, Mr. Huebner was a management consultant
at Bain & Company. From 1992 to 1995, Mr. Huebner served as a Research
Analyst for J.P. Morgan, Inc. Prior to 1992, Mr. Huebner held various management
positions with Melville Corporation. Mr. Huebner received his B.A. in
Mathematics from Dartmouth College and his M.B.A. from Harvard
University.
Seth
Weisberg. Mr.
Weisberg has served as General Counsel, managing our Company's legal and
government affairs since March 2001, and has served as our intellectual property
counsel since March 1998. Mr. Weisberg previously was an associate at Irell
& Manella LLP, worked as a software developer and founder at Shortcut
Software, created physical computer models at RAND Corporation and was a high
school teacher in the Mississippi Teacher Corps. Mr. Weisberg holds a law degree
from Columbia Law School, a master's degree in History from Harvard, a
bachelor's degree in Physics and Astronomy from Harvard and a General Course
Certificate from the London School of Economics.
James
A. Harper. Mr.
Harper has been Chief Accounting Officer since February 2003. Mr. Harper has
also been our Corporate Controller since April 2001, was Assistant Controller
from January 2001 to April 2001, and was Accounting Manager from April 1999 to
December 2000. Prior to joining our Company, from September 1998 to April 1999,
Mr. Harper served as Senior Financial Analyst at Paramount Pictures. From
September 1996 to September 1998, Mr. Harper served as an auditor for Arthur
Andersen LLP. Mr. Harper holds a B.S. in Accounting from California State
University at Northridge.
EXECUTIVE
COMPENSATION AND RELATED INFORMATION
Summary
of Cash and Certain Other Compensation
The
following summary compensation table indicates the cash and non-cash
compensation earned during the fiscal years ended December 31, 2004,
December 31, 2003, and December 31, 2002, respectively, by our chief
executive officer and each of our other four highest compensated executive
officers (determined on the basis of their salary and bonus for the fiscal year
ended December 31, 2004) whose total compensation exceeded $100,000 during 2004.
The listed individuals are referred to in this proxy statement as the named
executive officers.
Summary
Compensation Table
|
|
Annual Compensation
(1) |
|
|
|
Long
Term Compensation |
|
|
Name
and Principal Positions |
|
Year |
|
Salary
($) |
|
Bonus
($) |
|
Securities
Underlying Options (#)(3) |
|
All
Other Compensation ($)(2) |
|
|
|
|
|
|
|
|
|
|
|
Ken
McBride |
|
2004 |
|
298,813 |
|
138,125 |
|
75,000 |
|
565,643 |
Chief
Executive Officer |
|
2003 |
|
288,000 |
|
75,000 |
|
30,000 |
|
5,620 |
|
|
2002 |
|
263,333 |
|
— |
|
250,000
|
|
1,150
|
|
|
|
|
|
|
|
|
|
|
|
James
Bortnak |
|
2004 |
|
205,000 |
|
61,500 |
|
40,000 |
|
177,764 |
Vice
President, Sales and Marketing |
|
2003 |
|
180,000 |
|
54,500 |
|
55,000 |
|
3,308 |
|
|
2002 |
|
110,000 |
|
76,000 |
|
87,500 |
|
2,200
|
|
|
|
|
|
|
|
|
|
|
|
Kyle
Huebner |
|
2004 |
|
220,000 |
|
46,125 |
|
50,000 |
|
252,169 |
Chief
Financial Officer |
|
2003 |
|
189,333 |
|
37,500 |
|
10,000 |
|
2,880 |
|
|
2002 |
|
186,000 |
|
|
|
112,500
|
|
2,513 |
|
|
|
|
|
|
|
|
|
|
|
Craig
Ogg(4) |
|
2004 |
|
194,433 |
|
34,850 |
|
25,000 |
|
318,344 |
Former
Vice President, R&D |
|
2003 |
|
187,333 |
|
27,500 |
|
10,000 |
|
3,638 |
|
|
2002 |
|
176,333 |
|
|
|
96,250 |
|
3,527 |
|
|
|
|
|
|
|
|
|
|
|
Seth
Weisberg |
|
2004 |
|
206,667 |
|
35,875 |
|
40,000 |
|
287,422 |
Vice
President, General Counsel, and Secretary |
|
2003 |
|
199,333 |
|
52,500 |
|
20,000 |
|
3,933 |
|
|
2002 |
|
192,667 |
|
|
|
78,750 |
|
3,853 |
|
|
|
|
|
|
|
|
|
|
|
______________
(1) |
Excludes other compensation in the form of
perquisites and other personal benefits that constitute the lesser of
$50,000 or 10% of the total annual salary and bonus of each of the named
executive officers. |
(2) |
Includes (i) make-up payments from the loss
of intrinsic value in stock options following the Company's $1.75 return
of capital dividend and (ii) contributions to our 401 (k) plan that we
made on behalf of the named executive officer to match a portion of his
elective deferred contributions to such plan. |
(3) |
For years 2003 and 2002, the number of
options listed have been adjusted to give retroactive effect to the
Company's reverse stock split on May 12, 2004. |
(4) |
Mr. Ogg left the Company in January
2005. |
Option/SAR
Grants in Last Fiscal Year
(Individual
Grants)
The
following table sets forth information regarding option grants to each of our
named executive officers during the fiscal year ended December 31, 2004. All the
grants were made under our 1999 Stock Incentive Plan. During the fiscal year
ended December 31, 2004, we granted options to purchase an aggregate of
1,200,626 shares of our common stock. All options for new employees were granted
at an exercise price equal to the fair market value of our common stock as
determined by our board of directors on the date of grant that is based on the
closing price on The Nasdaq National Market of our common stock on the date of
grant. All options granted to existing employees were granted at an exercise
price equal to approximately 25% over the fair market value of our common stock
as determined by our board of directors on the date of grant that is based on
the closing price on the on The Nasdaq National Market of our common stock on
the day prior to grant. The following table indicates information regarding
options to purchase our common stock granted to our named executive officers. No
stock appreciation rights were granted to the named executive officers during
the fiscal year ended December 31, 2004.
|
|
Number
of Securities Underlying Options/SARs Granted(#)(1) |
|
%
of Total Options/SARs Granted to Employees in Fiscal
Year |
|
Exercise
or Base Price ($/Share)(2) |
|
Expiration
Date |
|
Potential
Realizable Value at Assumed Annual Rates of Stock Price Appreciation for
Option Term at ($)(3) |
Name |
|
|
|
|
|
5% |
|
10% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ken
McBride |
|
1,237 |
|
.10% |
|
17.50 |
|
11/02/14 |
|
7,287 |
|
24,426 |
|
|
73,763 |
|
6.14% |
|
17.50 |
|
11/02/14 |
|
434,532 |
|
1,456,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Bortnak |
|
1,238 |
|
.10% |
|
17.50 |
|
11/02/14 |
|
7,293 |
|
24,446 |
|
|
38,762 |
|
3.23% |
|
17.50 |
|
11/02/14 |
|
228,344 |
|
765,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kyle
Huebner |
|
1,238 |
|
.10% |
|
17.50 |
|
11/02/14 |
|
7,293 |
|
24,446 |
|
|
48,762 |
|
4.06% |
|
17.50 |
|
11/02/14 |
|
287,253 |
|
962,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
Ogg |
|
1,237 |
|
.10% |
|
17.50 |
|
11/02/14 |
|
7,287 |
|
24,426 |
|
|
23,763 |
|
1.98% |
|
17.50 |
|
11/02/14 |
|
139,986 |
|
469,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth
Weisberg |
|
1,237 |
|
.10% |
|
17.50 |
|
11/02/14 |
|
7,287 |
|
24,426 |
|
|
38,763 |
|
3.23% |
|
17.50 |
|
11/02/14 |
|
228,350 |
|
765,420 |
(1)
Option
grants for new employees will become exercisable for 25% of the shares upon the
optionee’s completion of one year of service measured from the grant date and
will become exercisable for the balance of the shares in 36 successive equal
monthly installments. These options will become exercisable on an accelerated
basis upon the optionee’s involuntary termination within 18 months following a
change in control. Certain other option grants are immediately exercisable in
full, but we can buy back any shares purchased under those options, at the
exercise price paid per share, to the extent the shares are not vested when the
optionee leaves our employment. In general, this repurchase right lapses as to
25% of the shares after one year of service and as to the remaining shares in
equal monthly installments over an additional three-year period. The repurchase
right also will lapse on an accelerated basis upon the optionee’s involuntary
termination within 18 months following a change in control.
(2)
These
shares were issued at an exercise price equal to approximately 25% over the fair
market value as determined by our board of directors on the date of grant and
are immediately exercisable. The exercise price may be paid in cash or in shares
of our common stock valued at fair market value on the exercise date.
Alternatively, the option may be exercised through a cashless exercise procedure
pursuant to which the optionee provides irrevocable instructions to a brokerage
firm to sell the purchased shares and to remit to us, out of the sale proceeds,
an amount equal to the exercise price plus all applicable withholding
taxes.
(3)
Potential
realizable values are net of exercise price, but before the payment of taxes
associated with exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option term.
The 5% and 10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the SEC and do not represent our estimate or projection of
our future common stock prices. There can be no assurance provided to any
executive officer or other holder of our Company’s securities that the actual
stock price appreciation over the ten-year option term will be at the assumed 5%
and 10% levels or at any other defined level. Unless the market price of our
common stock appreciates over the option term, no value will be realized from
those option grants that were made with an exercise price equal to the fair
market value of the option shares on the grant date.
Aggregated
Option/SAR
Exercises in Last Fiscal Year and FY-End Option/SAR Values
The
following table provides information, with respect to our named executive
officers, concerning the exercise of options during the fiscal year ended
December 31, 2004 and unexercised options held by them as of the end of
that fiscal year.
Name |
|
Shares
acquired on exercise (#) |
|
Value
Realized ($) (1) |
|
Number
of Securities Underlying Unexercised Options/SARs at FY-End (#)
Exercisable |
|
Number
of Securities Underlying Unexercised Options/SARs at FY-End (#)
Unexercisable |
|
Value
of Unexercised in-the-Money Options/SARs at FY-End ($) Exercisable
(2) |
|
Value
of Unexercised in-the-Money Options/SARs at FY-End ($) Unexercisable
(2) |
Ken
McBride |
|
20,245 |
|
173,486 |
|
348,808 |
|
54,447 |
|
2,443,882 |
|
431,388 |
James
Bortnak |
|
30,227 |
|
251,794 |
|
143,310 |
|
46,183 |
|
646,544 |
|
315,472 |
Kyle
Huebner |
|
— |
|
—
|
|
194,763 |
|
21,738 |
|
1,200,081 |
|
173,678 |
Craig
Ogg |
|
— |
|
— |
|
159,348 |
|
37,084 |
|
1,353,526 |
|
311,373 |
Seth
Weisberg |
|
— |
|
—
|
|
205,592 |
|
23,162 |
|
1,425,131 |
|
169,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Based
upon the market price of the purchased shares on the exercise date less the
option exercise price paid for those shares.
(2)
The fair
market value per share of our common stock on December 31, 2004 was $15.84, the
closing selling price per share of our common stock on The Nasdaq National
Market.
EMPLOYMENT
AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
During
2001, we also adopted a bonus plan for a number of our officers, including Mr.
McBride. These officers were not eligible for the continuous service bonus plan
we adopted in connection with our reductions in force. The plan provided the
option to elect to receive cash payments or stock options at fair market value
upon completion of certain milestones or stock options valued at fair market
value. Benefits under this plan would accrue if certain transactions were
completed and we sold assets of the postage business in a transaction that
avoided a time consuming wind-down process. A different level of benefits would
also be payable under this plan in the event that management was unable to
complete a transaction and other alternatives were pursued while we engaged in a
time consuming wind-down process. The maximum cash payment to Mr. McBride under
this plan would be $100,000.
All of
our named executive officers have executed and delivered a copy of our
confidential information and invention assignment agreement in connection with
their employment. All of our named executive officers have entered into
separation agreements with our Company such that in the event of a termination
without cause or a termination following a change of control, the named
executive officers shall receive six months salary and benefits. Mr. Ogg, our
former Vice President of R&D, received six months salary and benefits upon
his departure from Stamps.com in January 2005. Mr. Ogg also is expected to
receive an additional payment of $25,000 by July 31, 2005, for support in
transitional and other matters.
In April
1999, we amended our 1998 Stock Plan to adopt a change in control provision. As
a result of this provision, should any optionee have his or her service
involuntarily terminated within 18 months following a change in control in which
his or her options are assumed by the successor corporation and do not otherwise
accelerate at that time, then those options will accelerate and become fully
exercisable for all of the option shares as fully-vested shares of common stock
upon an involuntary termination. A “change in control” under the 1998 Stock Plan
is defined as a merger or consolidation in which securities possessing more than
50% of the total combined voting power of our outstanding securities are
transferred to a person or persons different from those who held those
securities immediately prior to the transaction, or the sale, transfer or other
disposition of all or substantially all of our assets in complete liquidation or
dissolution. “Involuntary Termination” is defined under the 1998 Stock Plan as
the optionee’s involuntary dismissal or discharge by us for reasons other than
misconduct, or the optionee’s voluntary resignation following:
i) |
a
change in his or her position with us which materially reduces his or her
responsibilities; |
ii) |
a
reduction in his or her level of compensation by more than 15%; or
|
iii) |
a
relocation of the optionee’s place of employment by more than 50 miles,
and this change, reduction or relocation is effected by us without the
optionee’s consent. |
Our 1999
Stock Incentive Plan is a successor plan to our 1998 Stock Plan, and includes
change in control provisions which may result in the accelerated vesting of
outstanding option grants and stock issuances.
BENEFICIAL
OWNERSHIP OF SECURITIES
The
following table sets forth certain information known to our Company with respect
to the beneficial ownership of our common stock as of February 28, 2005, by
(a) all persons who are beneficial owners of 5% or more of our common
stock, (ii) each director and nominee for director, (iii) our
executive officers and (iv) all current directors and executive officers as
a group. Unless otherwise indicated, each of the stockholders has sole voting
and investment power with respect to the shares beneficially owned, subject to
community property laws, where applicable. Unless otherwise indicated, the
address of each beneficial owner listed below is c/o Corporate Secretary,
Stamps.com Inc., 12959 Coral Tree Place, Los Angeles, CA 90066-7020. Percentage
of ownership is based on 22,680,159 shares of our common stock issued and
outstanding on February 28, 2005. Shares of our common stock subject to stock
options which are currently exercisable or will become exercisable within 60
days after February 28, 2005 are deemed outstanding for computing the percentage
of the person or group holding such options, but are not deemed outstanding for
computing the percentage of any other person or group.
|
Name
of Beneficial Owner |
|
Number
of Shares
Beneficially
Owned |
|
Percentages
of Shares
Beneficially
Owned |
|
|
|
Ken
McBride (1) |
438,457 |
1.93% |
James
Bortnak (2) |
170,865 |
* |
Kyle
Huebner (3) |
264,954 |
1.16% |
Craig
Ogg (4) |
181,400 |
* |
Seth
Weisberg (5) |
237,906 |
1.05% |
Mohan
Ananda (6) |
621,850 |
2.74% |
Kevin
Douglas (7) |
1,708,450 |
7.53% |
G.
Bradford Jones (8) |
85,446 |
* |
Lloyd
Miller (9) |
2,858,823 |
12.60% |
|
|
|
|
Other
5% Stockholders: |
|
|
|
|
|
|
|
Passport
Capital, LLC |
2,261,541 |
9.98% |
|
402
Jackson Street |
|
|
|
San
Francisco, CA 94111 |
|
|
|
|
|
|
|
Arbor
Capital Management |
1,270,000 |
5.60% |
|
120
South Sixth Street |
|
|
|
Minneapolis,
MN 55402 |
|
|
|
|
|
|
|
Rhombus
Capital Management, L.P. |
1,136,000 |
5.02% |
|
540
Madison Avenue, 27th Floor |
|
|
|
New
York, NY 10022 |
|
|
|
|
|
|
All
directors and executive offers as a group (9 people) |
9,422,328 |
28.96% |
_______________
* |
Represents beneficial ownership of less than
1% of the outstanding shares of common stock. |
|
|
(1) |
Includes 379,919 shares subject to options,
all of which are presently exercisable or will become exercisable within
60 days of February 28, 2005. |
|
|
(2) |
Includes 158,865 shares subject to options,
all of which are presently exercisable or will become exercisable within
60 days of February 28, 2005. |
|
|
(3) |
Includes 208,375 shares subject to options,
all of which are presently exercisable or will become exercisable within
60 days of February 28, 2005. |
|
|
(4) |
Includes 162,299 shares subject to options,
all of which are presently exercisable or will become exercisable within
60 days of February 28, 2005. |
|
|
(5) |
Includes 216,561 shares subject to options,
all of which are presently exercisable or will become exercisable within
60 days of February 28, 2005. |
|
|
(6) |
Includes 480,048 shares held directly by
Mohan Ananda, 750 shares held by Mr. Ananda's spouse and son, 20,000
shares held by the Ananda Foundation and 121,052 shares held in trust for
the benefit of Mr. Ananda's family. |
|
|
(7) |
Includes
523,417 shares held directly by the James Douglas and Jean Douglas
Irrevocable Descendants' Trust and indirectly by Kevin Douglas. Kevin
Douglas and Michelle Douglas, husband and wife, are each a co-trustee of
the James Douglas and Jean Douglas Irrevocable Descendants' Trust.
Includes 547,791 shares held directly by the Douglas Family Trust and
indirectly by Kevin Douglas. James E. Douglas, Jr. and Jean A. Douglas,
husband and wife, are each a co-trustee of the Douglas Family Trust. Also
includes 32,750 shares held directly by James E. Douglas, III and
indirectly by Kevin Douglas. |
|
|
(8) |
Includes 6,250 shares subject to options, all
of which are presently exercisable or will become exercisable within 60
days of February 28, 2005. Includes 24,250 shares held by Brentwood VIII
Management Partners. |
|
|
(9) |
Includes 673,794 shares held by Trust A-4;
55,000 of such shares are held by Milfam I, L.P.; 1,456,230 of such shares
are held by Milfam II, L.P.; 1,000 of such shares are held by Alexandra
UGMA; 500 shares are held by Kimberley S. Miller; 1,000 of such shares are
held by Lloyd IV UGMA; 111,123 of such shares are held by MILGRAT I(AAA);
137,374 of such shares are held by Trust C; and 182, 901 of such shares
are managed by Marli Miller. |
|
|
Equity
Compensation Plan Information
Plan Category |
|
Number of securities to be issued
upon exercise of outstanding options, warrants and
rights |
|
Weighted-average exercise price of
outstanding options, warrants and rights |
|
Number
of securities remaining available for
future
issuance under
equity
compensation plans |
|
|
|
|
|
|
|
Equity compensation plans approved by
security holders |
|
2,684,459(1) |
|
$14.28 |
|
9,028,295 |
|
|
|
|
|
|
|
Equity compensation plans not approved by
security holders |
|
N/A |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
Total |
|
2,684,459 |
|
$14.28 |
|
9,028,295 |
|
|
|
|
|
|
|
(1) Consists
solely of the Company's 1999 Stock Incentive Plan.
COMPENSATION
COMMITTEE REPORT ON
EXECUTIVE
COMPENSATION
The
information contained in this section shall not be deemed to be “soliciting
material” or “filed” or incorporated by reference in future filings with the
Securities and Exchange Commission, or subject to the liabilities of Section 18
of the Securities Exchange Act of 1934, except to the extent that we
specifically incorporate it by reference into a document filed under the
Securities Act of 1933, as amended, or Exchange Act.
Compensation
Committee Report
It is the
duty of the Compensation Committee to review and determine the salaries and
bonuses of executive officers of the Company, including the Chief Executive
Officer, and to establish the general compensation policies for such
individuals. The Compensation Committee also has the sole and exclusive
authority to make discretionary option grants to the Company’s executive
officers under the Company’s 1999 Stock Incentive Plan.
Compensation
Philosophy and Objectives
The
Compensation Committee believes that the compensation programs for the Company’s
executive officers should reflect the Company’s performance and the value
created for the Company’s stockholders. In addition, the compensation programs
should support the short-term and long-term strategic goals and values of the
Company and should reward individual contribution to the Company’s success. The
Company is engaged in a competitive industry, and the Company’s success depends
upon its ability to attract and retain qualified executives through the
competitive compensation packages it offers to such individuals.
Compensation
Components and Process
General
Compensation Policy. The
Compensation Committee’s policy is to provide the Company’s executive officers
with compensation opportunities which are based upon their personal performance,
the financial performance of the Company and their contribution to that
performance and which are competitive enough to attract and retain highly
skilled individuals. Each executive officer’s compensation package is comprised
of three elements: (i) base salary that is competitive with the market and
reflects individual performance, (ii) annual variable performance awards
payable in cash and tied to the Company’s achievement of annual financial and
other performance goals and (iii) long-term stock-based incentive awards
designed to strengthen the mutuality of interests between the executive officers
and the Company’s stockholders. As an officer’s level of responsibility
increases, a greater proportion of his or her total compensation will generally
be dependent upon the Company’s financial performance and stock price
appreciation rather than base salary.
The
Company utilizes information and benchmarks from an independent compensation
firm to advise the Committee as to how the Company’s executive compensation
levels compare to those of companies within and outside of the industry.
Factors. The
principal factors that were taken into account in establishing each executive
officer’s compensation package for the fiscal year ended December 31, 2004
are described below. However, the Compensation Committee may in its discretion
apply entirely different factors, such as different measures of financial
performance, for future fiscal years.
Base
Salary. In
setting base salaries, the Compensation Committee reviewed published
compensation survey data for companies of similar revenue, geographic location,
status as a U.S. public company, and other factors. The base salary for each
officer reflects the salary levels for comparable positions in the published
surveys and the comparative group of companies, as well as the individual’s
personal performance and internal alignment considerations. The relative weight
given to each factor varies with each individual in the sole discretion of the
Compensation Committee. Each executive officer’s base salary is adjusted each
year on the basis of (i) the Compensation Committee’s evaluation of the
officer’s personal performance for the year and (ii) the competitive
marketplace for persons in comparable positions. The Company’s performance and
profitability may also be a factor in determining the base salaries of executive
officers.
Annual
Incentives. Annual
incentive bonuses for executive officers will be based upon management incentive
plans. The bonuses will be based substantially on the Company’s financial
performance, including achievement of revenue and profitability goals or other
business objectives. Additional consideration may be given for individual
performance.
Long
Term Incentives.
Generally, stock option grants will be considered annually, or when appropriate,
by the Compensation Committee for each of the Company’s executive officers, as
appropriate. Each grant made is designed to align the interests of the executive
officer with those of the stockholders and provide each individual with a
significant incentive to manage the Company from the perspective of an owner
with an equity stake in the business. Each grant allows the officer to acquire
shares of the Company’s Common Stock at a fixed price per share (the market
price on the grant date) over a specified period of time (up to ten years). Each
option becomes exercisable in a series of installments over a 1 to 4-year
period, contingent upon the officer’s continued employment with the Company.
Accordingly, the option will provide a return to the executive officer only if
he or she remains employed by the Company during the vesting period, and then
only if the market price of the shares appreciates over the option term.
The size
of the option grant to each executive officer, including the Chief Executive
Officer, is set by the Compensation Committee at a level that is intended to
create a meaningful opportunity for stock ownership based upon the individual’s
current position with the Company, the individual’s personal performance in
recent periods and his or her potential for future responsibility and promotion
over the option term. The Compensation Committee also takes into account the
number of vested and unvested options held by the executive officer in order to
maintain an appropriate level of equity incentive for that individual. The
relevant weight given to each of these factors varies from individual to
individual. The Compensation Committee has established certain guidelines with
respect to the option grants made to the executive officers, but has the
flexibility to make adjustments to those guidelines at its discretion.
CEO
Compensation. In
setting the total compensation payable to the Company’s Chief Executive Officer,
the Compensation Committee sought to make that compensation competitive with the
compensation paid to the chief executive officers of companies of similar
revenue, geographic location, status as a U.S. public company, or other factors,
while at the same time assuring that a significant percentage of compensation
was tied to Company performance and stock price appreciation.
Compliance
with Internal Revenue Code Section 162(m). Section
162(m) of the Internal Revenue Code disallows a tax deduction to publicly held
companies for compensation paid to certain of their executive officers, to the
extent that compensation exceeds $1 million per covered officer in any fiscal
year. The limitation applies only to compensation which is not considered to be
performance-based. Non-performance based compensation paid to the Company’s
executive officers for the fiscal year ended December 31, 2004 did not
exceed the $1 million limit per officer, and the Compensation Committee does not
anticipate that the non-performance based compensation to be paid to the
Company’s executive officers for fiscal 2005 will exceed that limit. The
Company’s 1999 Stock Incentive Plan has been structured so that any compensation
deemed paid in connection with the exercise of option grants made under that
plan with an exercise price equal to the fair market value of the option shares
on the grant date will qualify as performance-based compensation which will not
be subject to the $1 million limitation. Because it is unlikely that the cash
compensation payable to any of the Company’s executive officers in the
foreseeable future will approach the $1 million limit, the Compensation
Committee has decided at this time not to take any action to limit or
restructure the elements of cash compensation payable to the Company’s executive
officers. The Compensation Committee will reconsider this decision should the
individual cash compensation of any executive officer ever approach the $1
million level.
It is the
opinion of the Compensation Committee that the executive compensation policies
and plans provide the necessary total remuneration program to properly align the
Company’s performance and the interests of the Company’s stockholders through
the use of competitive and equitable executive compensation in a balanced and
reasonable manner, for both the short and long-term.
Submitted
by the Compensation Committee of the Company’s board of directors:
Mohan P.
Ananda
Lloyd I.
Miller, III
AUDIT
COMMITTEE REPORT
The
information contained in this section shall not be deemed to be “soliciting
material” or “filed” or incorporated by reference in future filings with the
Securities and Exchange Commission, or subject to the liabilities of Section 18
of the Securities Exchange Act of 1934, except to the extent that we
specifically incorporate it by reference into a document filed under the
Securities Act of 1933, as amended, or Exchange Act.
The
following is the report of the audit committee with respect to our Company’s
audited financial statements for the fiscal year ended December 31, 2004,
included in our Company’s Annual Report on Form 10-K, for that
year.
Review
with Management
The audit
committee has reviewed and discussed these audited financial statements with
management of the Company.
Review
and Discussions with Independent Auditors
The audit
committee has discussed with the Company’s independent auditors, Ernst &
Young LLP, the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU Section 380), as amended, which includes,
among other items, matters related to the conduct of the audit of the Company’s
financial statements.
The audit
committee has received the written disclosures and the letter from Ernst &
Young LLP required by Independence Standards Board Standard No. 1 (“Independence
Discussions with Audit Committees”), as amended, and has discussed with Ernst
& Young LLP the independence of Ernst & Young LLP from the
Company.
Conclusion
Based on
the review and discussions referred to above in this report, the audit committee
recommended to the Company’s board of directors that the audited financial
statements be included in the Company’s Annual Report on Form 10-K, for the year
ended December 31, 2004, for filing with the Securities and Exchange
Commission.
|
|
|
|
Submitted by the Audit
Committee
of the Board of
Directors |
|
|
|
Kevin Douglas |
|
G. Bradford Jones |
|
Lloyd I. Miller, III |
|
|
|
STOCK
PERFORMANCE GRAPH
The
information contained in this section shall not be deemed to be “soliciting
material” or “filed” or incorporated by reference in future filings with the
Securities and Exchange Commission, or subject to the liabilities of Section 18
of the Securities Exchange Act of 1934, except to the extent that we
specifically incorporate it by reference into a document filed under the
Securities Act of 1933, as amended, or Exchange Act.
The
following line graph compares the cumulative total return to stockholders of our
common stock from June 25, 1999 (the date of our initial public offering)
to December 31, 2004 to the cumulative total return over such period of
(i) Nasdaq US Index and (ii) a peer issuer, Pitney Bowes, a postage
and business services provider that has a product line that competes directly
with our products. The graph assumes that $100 was invested on June 25,
1999 in our common stock at its initial public offering price of $11.00 per
share and in each of the other two indices and the reinvestment of all
dividends, if any.
The graph
is presented in accordance with SEC requirements. Stockholders are cautioned
against drawing any conclusions from this data, as past results are not
necessarily indicative of future performance.
|
|
|
|
Quarters
Ending |
Company/Index |
|
Base* June 25 1999 |
|
Dec 31 1999 |
|
Dec
31 2000 |
|
Dec
31 2001 |
|
Dec
31 2002 |
|
Dec
31 2003 |
|
Dec
31 2004 |
Stamps.com
Inc. |
|
100.00 |
|
378.41 |
|
25.28 |
|
32.55 |
|
|
|
57.78 |
|
|
Peer
Issuer |
|
100.00 |
|
76.38 |
|
52.38 |
|
59.46 |
|
51.64 |
|
73.46 |
|
86.12 |
Nasdaq |
|
100.00 |
|
159.42 |
|
96.78 |
|
76.41 |
|
52.32 |
|
78.48 |
|
84.84 |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions
with Mr. Ananda
Under our
initial agreements with Mr. Ananda, we own all of the intellectual property
developed by Mr. Ananda during the course of his employment and all of the
intellectual property he developed for us before his formal employment began.
Mr. Ananda resigned as Chief Executive Officer on January 1, 1999. In May
1999, we entered into a separation agreement and a license agreement with Mr.
Ananda to formalize his resignation and to redefine his intellectual property
rights. The new license agreement reaffirmed our ownership of the intellectual
property invented by Mr. Ananda prior to and during his employment. In addition,
the license agreement clarified and narrowed Mr. Ananda’s field of use
restrictions to limit his license to a few narrowly defined electronic commerce
applications that do not compete with our Internet postage service.
Indemnification
of Directors and Officers
In
addition to the indemnification provisions contained in our certificate of
incorporation and bylaws, we entered into separate indemnification agreements
with certain of our directors and officers. These agreements require us, among
other things, to indemnify our directors and officers against expenses
(including attorneys’ fees), judgments, fines and settlements paid by those
individuals in connection with any action, suit or proceeding arising out of
their status or service as our director or officer (other than liabilities
arising from willful misconduct or conduct that is knowingly fraudulent or
deliberately dishonest) and to advance expenses incurred in connection with any
proceeding against them with respect to which they may be entitled to
indemnification by us.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The
members of our board of directors, our executive officers and persons who hold
more than 10% of our outstanding common stock are subject to the reporting
requirements of Section 16(a) of the Exchange Act which require them to
file reports with respect to their ownership of our common stock and their
transactions in our common stock. Based upon the copies of Section 16(a)
reports which we received for fiscal year 2003 transactions in our common stock
and their common stock holdings, we believe that all reporting requirements
under Section 16(a) for that fiscal year were met in a timely manner by our
directors, executive officers and greater than ten percent beneficial owners
except as set forth below.
On
September 15, 2004, G. Bradford Jones filed a Form 4. The correct date of such
filing was February 3, 2004.
On
February 28, 2005, Lloyd Miller filed a Form 5. The correct date of such filing
was December 31, 2004.
OTHER
MATTERS
Annual
Report
A copy of
our annual report for the fiscal year ended December 31, 2004 has been
mailed concurrently with this proxy statement to all stockholders entitled to
notice of and to vote at the Annual Meeting. The annual report is not
incorporated into this proxy statement and is not considered proxy solicitation
material.
Form
10-K
We filed
an annual report on Form 10-K with the SEC on or about March 11, 2005. You may
obtain a copy of that report, without charge, by writing to Investor Relations
at Stamps.com Inc., 12959 Coral Tree Place, Los Angeles, CA 90066-7020, or you
can access copies of all our SEC filings on our Company website at
http://investor.stamps.com/edgar.cfm.
STAMPS.COM
INC.
PROXY
Annual
Meeting of Stockholders, May 25, 2005
This
Proxy is Solicited on Behalf of the Board of Directors of
STAMPS.COM
INC.
The
undersigned revokes all previous proxies, acknowledges receipt of the Notice of
the Annual Meeting of Stockholders to be held Friday, May 25, 2005 and the Proxy
Statement and appoints Kenneth McBride the Proxy of the undersigned, with full
power of substitution, to vote all shares of common stock of STAMPS.COM INC.
(the “Company”) which the undersigned is entitled to vote, either on his or her
own behalf or on behalf of any entity or entities, at the 2005 Annual Meeting of
Stockholders of the Company to be held at the Ritz Carlton Marina del Rey, 4375
Admiralty Way, Marina del Rey, California, 90292 on May 25, 2005 at 10:00 a.m.
Pacific Daylight Savings Time, and at any adjournment or postponement thereof,
with the same force and effect as the undersigned might or could do if
personally present thereat. The shares represented by this Proxy shall be voted
in the manner set forth on this proxy card.
(1) |
To
elect one director to serve for a three-year term ending in the
year 2008 or until his successor is duly elected and
qualified; |
|
|
|
|
FOR |
WITHHOLD
AUTHORITY TO VOTE |
|
|
Ken
McBride |
o |
o |
|
|
|
|
|
|
(2) |
To
ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending December 31,
2005. |
FOR
o |
AGAINST
o |
ABSTAIN
|
|
|
|
|
|
(3) |
In
accordance with the discretion of the proxy holders, to act upon all
matters incident to the conduct of the meeting and upon other matters as
may properly come before the meeting. |
FOR
|
WITHHOLD
|
|
|
|
|
|
|
The board
of directors recommends a vote FOR the director listed above and a vote FOR each
of the listed proposals. This Proxy, when properly executed, will be voted as
specified above. If
no specification is made, this Proxy will be voted FOR the election of the
director listed above and FOR the other proposals.
Please
print the name(s) appearing on each share certificate(s) over which you
have voting authority: |
|
|
(Print
name(s) on certificate) |
Please
sign your name: |
|
Date: |
|
|
(Authorized
Signature(s)) |
|
|