Unassociated Document
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:
x
|
Preliminary
Proxy Statement
|
|
|
o
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
|
|
|
Definitive
Proxy Statement
|
|
|
|
Definitive
Additional Materials
|
|
|
|
Soliciting
Material under 14a-12
|
(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):
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:
|
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.:
|
[LOGO
OF
STAMPS.COM INC.]
12959
Coral Tree Place
Los
Angeles, CA 90066-7020
(310)
482-5800
Dear
Stockholder:
You
are
cordially invited to attend the 2008 Annual Meeting of Stockholders of
Stamps.com Inc. to be held at 10:00 a.m. Pacific Daylight Savings Time on
Thursday, May 22, 2008, 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, (ii) approve an amendment to our Amended and
Restated Certificate of Incorporation to preserve the tax treatment of our
tax
net operating losses and (iii) ratify the selection of our auditors for 2008.
The accompanying Notice of 2008 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 18, 2008
to
stockholders entitled to vote at the Annual Meeting.
Our
board
of directors unanimously recommends that stockholders vote in favor of the
election of the nominated director, the amendment to our Amended and Restated
Certificate of Incorporation 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
March
20,
2008
[LOGO
OF
STAMPS.COM INC.]
12959
Coral Tree Place
Los
Angeles, CA 90066-7020
(310)
482-5800
NOTICE
OF
2008 ANNUAL MEETING OF STOCKHOLDERS
TO
BE
HELD MAY 22, 2008
TO
THE
STOCKHOLDERS OF STAMPS.COM INC.:
NOTICE
IS
HEREBY GIVEN that the 2008 Annual Meeting of Stockholders of Stamps.com Inc.,
a
Delaware corporation, will be held on May 22, 2008, 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
2011
or until his successor is duly elected and
qualified;
|
|
2. |
To
approve an amendment to our Amended and Restated Certificate of
Incorporation to effect certain restrictions upon transfers in order
to
preserve tax treatment of our tax net operating losses (our “NOL
Protective Amendment”); and
|
|
3. |
To
ratify the appointment of Ernst & Young LLP as our independent
auditors for 2008.
|
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 11, 2008 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 of our stockholders, 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
March
20,
2008
[LOGO
OF
STAMPS.COM INC.]
12959
Coral Tree Place
Los
Angeles, CA 90066-7020
PROXY
STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 22, 2008
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 22, 2008.
The Annual Meeting will 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
February 29, 2008, 19,857,285 shares of our common stock were issued and
outstanding. As of that date we had no outstanding preferred stock. Each share
of our common stock is entitled to one vote at the Annual Meeting.
The
nominee for election to our board of directors who receives the greatest number
of votes cast for the election of a director by the shares present at the Annual
Meeting, in person or by proxy, will be elected director. You may not cumulate
votes in the election of directors. The adoption of the proposal to approve
an
amendment to our Amended and Restated Certificate of Incorporation requires
the
affirmative vote of a majority of the outstanding shares of our common stock.
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 directors 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 our NOL Protective Amendment
and 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
2009 annual meeting must be received no later than January 7, 2009 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
2009 annual meeting will confer discretionary authority to vote on any
stockholder proposal presented at that meeting, unless we had received notice
of
the proposal in accordance with our bylaws not later than March 9,
2009.
MATTERS
TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL
ONE: ELECTION OF DIRECTORS
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.
Class
III, 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 2011 annual meeting of stockholders or
until his successor has been duly elected and qualified. The nominee listed
below is currently one of our directors.
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.
Directors
and Executive Officers
The
current directors of Stamps.com are as follows:
Name
|
|
Age
|
|
Position
|
Mohan
P. Ananda(2)(3)
|
|
62
|
|
Director
|
Kevin
G. Douglas(1)(2)
|
|
45
|
|
Director
|
G.
Bradford Jones(1)(2)
|
|
53
|
|
Director
|
Kenneth
McBride
|
|
40
|
|
Chief
Executive Officer, Director
|
Lloyd
I. Miller(1)(2)(3)
|
|
53
|
|
Director
|
(1)
Member of the Audit Committee
(2)
Member of the Nominating Committee
(3)
Member of the Compensation Committee
Nominee
for Term Ending Upon the 2011 Annual Meeting
Kenneth
McBride,
has
been one of our directors and has served as our President and Chief Executive
Officer since 2001 and also served as our Chief Financial Officer from 2000
to
2004. Previously, Mr. McBride served as our Senior Director of Finance from
1999
to 2000. Before joining us, 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 Terms Expire in 2009
G.
Bradford Jones,
has
been one of our directors since 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 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,
has been
one of our directors since 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 American Banknote Corporation, a global supplier of secure documents,
services and systems; Pharmos Corporation, a biopharmaceutical company; and
Synergy Brands, Inc, a distributor of groceries, and health and beauty aid
products. He is a member of 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 Terms Expire in 2010
Mohan
P. Ananda,
has
been one of our directors since 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, and
has served there for more than five years. From 1997 to 1998, Mr. Ananda
served as our chief executive officer. From 1986 to 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,
has
been
one of our directors since 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 five meetings and did not act by unanimous written consent
during 2007. 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 2007. Our board members are not required
to
attend our annual meeting and no directors attended our annual meeting in 2007.
Our board of directors has an audit committee established in accordance with
section 3(a)(58)(A) of the Securities Exchange Act of 1934, a compensation
committee and a nominating committee.
Audit
Committee.
The
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. Mr. Jones serves as
the
chairman of the audit committee. The audit committee acts pursuant to a written
charter adopted by the board which is available on our website at http://investor.stamps.com
and is
attached as Annex B to this proxy statement. All members of the audit committee
are non-employee directors and are “independent” pursuant to the rules of The
NASDAQ Stock Market. In addition, our board of directors has determined that
Messrs. Jones and Miller are "audit committee financial experts" as defined
by
applicable SEC rules. Our audit committee held five meetings during 2007.
Compensation
Committee.
The
compensation committee currently consists of two directors, Messrs. Ananda
and
Miller. The 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. The compensation committee held two
meetings and acted by unanimous written consent on 12 separate occasions during
2007.
Nominating
Committee.
The
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 NASDAQ Stock
Market. The nominating committee acts pursuant to a written charter adopted
by
the board which is available on our website at http://investor.stamps.com.
The
nominating committee held one meeting during 2007.
The
nominating committee consists of a minimum of two members of our board of
directors, all of whom shall be independent directors. The responsibilities
of
the nominating committee include (i) screening and recommending to the Board
qualified candidates for election or appointment to our board of directors;
(ii)
recommending the number of members that shall serve on the board of directors;
(iii) evaluating and reviewing the independence of existing and prospective
directors; and (iv) reviewing and reporting on additional corporate governance
matters as directed by the Board of Directors.
We
expect
that candidates for independent directors will typically be found through
recommendations from current directors. Our stockholders may also recommend
candidates by sending the candidate’s name, age, resume, amount of stock of
Stamps.com beneficially owned and other information required in solicitations
of
proxies for the election of directors, to the nominating committee under the
provisions set forth below for communication with our board of directors. To
be
timely, a recommendation must be delivered to or mailed and received not less
than one-hundred twenty (120) days prior to our annual meeting at which
directors are to be elected. No such suggestions from our stockholders were
received in time for the 2008 Annual Meeting.
The
nominating committee has no predefined minimum criteria for selecting director
nominees, although it believes that all independent directors should share
qualities such as experience, decision-making ability, good judgment and
integrity. In any given search, the nominating committee may also define
particular characteristics for candidates to balance the overall skills and
characteristics of our board of directors and our perceived needs. However,
during any search, the nominating committee reserves the right to modify its
stated search criteria for exceptional candidates.
Compensation
Committee Interlocks and Insider Participation.
The
compensation committee currently consists of two directors, Messrs. Ananda
and
Miller. Neither of these individuals was one of our officers or employees during
2007 or had any relationship with us 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, as well as other members
as
appropriate, of our board of directors 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 independent because he serves as our chief executive
officer.
Director
Compensation
Cash
Compensation.
For
2007, each of our non-employee directors received an annual retainer of $18,000,
$1,100 for each board meeting attended and $700 for each board committee meeting
attended. Additional annual retainers were paid for service on our audit or
compensation committees as follows: the chairman of the audit committee received
an additional $9,000; other members of the audit committee received an
additional $4,000; the chairman of the compensation committee received an
additional $5,000; and other members of the compensation committee received
an
additional $2,500. 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 joins our board as a non-employee director 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, 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 non-employee directors received automatic option grants
on June 6, 2007 for 5,000 shares each of our common stock at an exercise price
per share of $13.81, the fair market value per share of our common stock on
the
grant date.
The
following table contains information with respect to the compensation of our
non-employee directors for 2007:
Director
Compensation Table
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
Option
Awards
($)
|
|
Total
($)
|
|
Mohan
Ananda
|
|
|
26,300
|
|
|
33,356
|
|
|
59,656
|
|
Bradford
Jones
|
|
|
36,000
|
|
|
33,356
|
|
|
69,356
|
|
Kevin
Douglas
|
|
|
28,500
|
|
|
33,356
|
|
|
61,856
|
|
Lloyd
Miller
|
|
|
37,400
|
|
|
33,356
|
|
|
70,756
|
|
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.
AMENDMENT
TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO
PRESERVE
VALUE OF OUR TAX NET OPERATING LOSSES
General
At
the
Annual Meeting, you will consider and vote on an amendment (the "NOL
Protective Amendment")
to our
amended and restated certificate of incorporation to impose certain restrictions
on the transfer of our common stock. The NOL Protective Amendment attempts
to
prevent certain future transfers of our capital stock which could otherwise
adversely affect our ability to use our tax net operating loss carryforwards
(“NOLs”)
for
federal and state income tax purposes and certain income tax credits.
The
NOL
Protective Amendment is contained in a proposed new Article IX to our amended
and restated certificate of incorporation which is attached as Annex A to this
proxy statement and is incorporated by reference herein (the existing Article
IX
of our amended and restated certificate of incorporation will not be changed
but
will be renumbered as Article X). We urge you to read the NOL Protective
Amendment in its entirety, as the discussion in this proxy statement is only
a
summary and does not contain all of the language in the NOL Protective
Amendment. The NOL Protective Amendment will only become effective if our
stockholders approve it.
The
Problem: Potential Limitations on Our NOLs.
The
Value of our NOLs.
We
estimate that our NOLs could save us as much as $95 million in taxes over the
next 15 years. We estimate that we had approximately $252 million of (pre-tax)
federal NOLs and $149 million of (pre-tax) state NOLs as of December 31, 2007.
Furthermore, our federal NOLs do not expire until the years 2019 to 2024, and
our state NOLs do not expire until the years 2012 to 2014. To the extent we
have
future taxable income, and until the NOLs expire, they can be used to eliminate
any future ordinary tax on our income (we may still pay minor alternative
minimum taxes). Because the amount and timing of our future taxable income,
if
any, cannot be accurately predicted, we cannot estimate the exact amount of
our
NOLs that we can ultimately use to reduce our income tax liability. Although
we
are unable to quantify an exact value, we believe our NOLs are a very valuable
asset.
The
Section 382 Limit on Use.
Unfortunately, ordinary transfers of our stock between shareholders could result
in our undergoing an "ownership change" as defined in Section 382 of the
Internal Revenue Code of 1986, as amended, and the related Treasury Regulations
("Section
382").
If
that were to happen, we would only be allowed to use a limited amount of our
then existing NOLs and credits to offset our taxable income subsequent to the
“ownership change.” The annual limit is obtained by multiplying (i) the
aggregate value of our outstanding capital stock immediately prior to the
"ownership change" (reduced by certain capital contributions made during the
immediately preceding two years and certain other items) by (ii) the federal
long-term tax-exempt interest rate in effect for the month of the "ownership
change." In calculating this annual limit, numerous special rules and
limitations apply, including provisions dealing with “built-in gains and
losses.” If we were to experience an “ownership change” at our current stock
price levels, we believe we would be subject to an annual NOL limitation which
would result in a material amount of our NOLs expiring unused, resulting in
a
significant impairment to our NOL assets.
Following
a Section 382 “Ownership Change”. If
we
were to have taxable income in excess of the NOL limitations following a Section
382 “ownership change”, we would not be able to avoid tax on the excess income
by using our NOLs. Consequently, we would incur corporate income tax on any
taxable income during a given year for income earned in excess of the
limitation. While any loss carryforwards not used as a result of any Section
382
limitation would remain available to offset income in future years (again,
subject to the Section 382 limitation) until the NOLs expire, any “ownership
change” could significantly defer the utilization of the loss carryforwards,
accelerate payment of federal income tax and could cause some of the NOLs to
expire unused. Because the aggregate value of our outstanding stock and the
federal long-term tax-exempt interest rate fluctuate, it is impossible to
predict with any accuracy the annual limitation upon the amount of our taxable
income that could be offset by such loss carryforwards and credits were an
"ownership change" to occur in the future, but it could be material.
Section
382 Ownership Shift Calculations.
Generally, an "ownership change" occurs under Section 382 if one or more
"5-percent shareholders" (which in general includes stockholders who own five
percent or more in value of a company's capital stock) collectively increase
their aggregate percentage ownership by more than 50 percentage points over
the
lowest percentage of our stock owned by such stockholders during the preceding
three-year period. For example, if a single stockholder acquires more than
50%
of our common stock within a three-year period, an “ownership change” would
occur. Similarly, if ten persons, none of whom own any shares of our common
stock, each acquire at least 5% of our common stock within a three-year period
(so that such ten persons own, in the aggregate, more than 50%), an “ownership
change” would occur under Section 382.
In
determining an “ownership change”, Section 382 is very complex, and all of its
nuances are beyond the scope of this discussion. Some of the factors that must
be considered in making a Section 382 “ownership change” calculation include the
following:
· |
All
holders who each own less than five percent of a company's capital
stock
are generally (but not always) treated as a single "5-percent
shareholder." Transactions in the public markets among stockholders
who
are not "5-percent shareholders" are generally not included in the
calculation (but not always).
|
· |
There
are several rules regarding the aggregation and segregation of
stockholders who otherwise do not qualify as "5-percent shareholders."
Ownership of stock is generally attributed to its ultimate beneficial
owner without regard to ownership by nominees, trusts, corporations,
partnerships or other entities.
|
· |
Acquisitions
by a person which cause that person to become a "5-percent shareholder"
generally result in a five percentage (or more) point change in ownership,
regardless of the size of the final purchase(s) that caused the threshold
to be exceeded.
|
· |
The
redemption or buyback of shares by an issuer will increase the ownership
of any "5-percent shareholders" (including groups of shareholders
who are
not themselves "5-percent shareholders") and can contribute to an
“ownership change.” In addition, it is possible that a redemption or
buyback of shares could cause a holder of less than 5% to become
a
"5-percent shareholder”, resulting in a five percentage (or more) point
change in ownership.
|
Current
Ownership Shift. As
of
December 31, 2007, we estimate that we were at an approximately 34% level of
ownership shift, compared with the 50% level that would trigger an "ownership
change." Because the shift is calculated based on a rolling preceding three
year
period, it is possible to project how much of the shift will “roll-off” of the
shift calculation over the future three year period assuming no other changes
in
ownership. Based on this “roll-off” projection, we believe that the current 34%
shift will not materially decrease until 2010. Although we have had similar
levels of ownership shifts in the past, in those cases the likelihood of an
“ownership change” was substantially reduced because a material portion of the
change was expected to “roll off” within a shorter period of time than in our
current circumstances.
Reasons
for the NOL Protective Amendment
Our
$252
million federal NOL and $149 million state NOL are a significant asset that
could save us up to almost $95 million in taxes over the next 15 years. At
our
current stock price, the value of our NOLs could be significantly impaired
unless we avoid potential transfers that, individually or in the aggregate,
could trigger an “ownership change” under Section 382. Because our federal NOLs
do not start expiring until 2019 and our state NOLs do not start expiring until
2012, we will have to continually manage our Section 382 risk for a significant
period of time. Our board of directors believes that the provisions of the
NOL
Protective Amendment will be an important tool in avoiding potential adverse
impacts from Section 382 limitations.
We
estimate that our ownership shift has increased from approximately 26% as of
March 31, 2007 to approximately 34% as of December 31, 2007. Despite our efforts
at voluntary compliance, we estimate that we had approximately 20 percentage
points of shift in ownership under Section 382 as a result of transactions
that
occurred during 2007. Because the ownership shifts from these 2007 transactions
will not "roll off" until various dates throughout 2010, if we were to
experience additional ownership shifts in 2008 and 2009 similar to the 2007
level, we would expect to experience an “ownership change”. Accordingly, our
board of directors believes that it is important to adopt the NOL Protective
Amendment at this time.
Currently,
when we become aware of any new significant shareholders with the potential
to
become a “5-percent shareholder”, we attempt to contact that person to
coordinate any additional purchases in a way that mitigates the Section 382
impact. However, we are not always successful and new “5-percent shareholders”
have been created despite our best efforts, resulting in our current high level
of Section 382 ownership shift. Although we have been able to avoid an
“ownership change” in the past, recent ownership shifts have raised concerns
about our ability to continue to manage our Section 382 risk in the same manner
as in the past.
Currently,
if a shareholder makes a transfer that creates, or increases the ownership
of, a
“5-percent shareholder”, there is nothing we can do to reverse the impact on the
ownership shift that results. In contrast, the NOL Protective Amendment would
provide a mechanism with the potential to reverse the impact of the transfer
on
the ownership shift while allowing the purchaser to receive their money from
the
purchase back.
Our
board
of directors also believes that adopting the NOL Protective Amendment will
offer
increased flexibility to continue share buyback programs that benefit existing
stockholders. Share buyback programs can impact the Section 382 calculation
by
reducing our overall stock capitalization and thereby increasing the stock
ownership percentage of our existing stockholders. Our board of directors will
continue to consider the benefits of future share buyback programs against
the
risk of increasing the Section 382 ownership levels.
Description
and Effect of NOL Protective Amendment
The
following is a brief summary of the proposed transfer restrictions. You are
urged to read the NOL Protective Amendment in its entirety as set forth in
Annex
A, as its terms (and not this summary) will govern our legal rights and those
of
our shareholders.
The
NOL
Protective Amendment generally restricts any person or entity from attempting
to
transfer (which includes sales, transfers, dispositions, purchases and
acquisitions) any of our stock (or options, warrants or other rights to acquire
our stock, or securities convertible or exchangeable into our stock), to the
extent that transfer would (i) create or result in an individual or entity
(which the NOL Protective Amendment refers to as a "Prohibited Person") becoming
either a "5-percent shareholder" of our stock as defined under Section 382
or
the beneficial owner (as defined under the Securities Exchange Act of 1934)
of
five percent (5%) or more of our common stock or (ii) increase the stock
ownership percentage of any existing Prohibited Person. The NOL Protective
Amendment does not restrict transfers that are sales
by a
Prohibited Person, although it would restrict any purchasers to the extent
that
the purchaser is or would become a Prohibited Person.
Some
persons who are beneficial owners (as defined under the Securities Exchange
Act
of 1934) of five percent (5%) or more of our common stock are not “5-percent
shareholders” (as defined under Section 382) and hence would not affect our
ownership shift for purposes of Section 382. We have included these persons
in
the definition of Prohibited Person because most investors report ownership
positions based on the Securities Exchange Act of 1934 definition and including
them as Prohibited Person allows us to identify that investor, verify whether
they are a “5-percent shareholder” under the Section 382 definition and make a
determination as to how to proceed. We expect our board of directors to grant
waivers, if requested, to allow purchases by any Prohibited Person who is not
a
“5-percent shareholder” under the Section 382 definition.
The
NOL
Protective Amendment provides that any Transfer that violates the NOL Protective
Amendment shall be null and void
ab
initio
and
shall not be effective to transfer any record, legal, beneficial or any other
ownership of the number of shares which result in the violation of the NOL
Protective Amendment (which are referred to as “Excess
Shares”).
The
purported acquirer shall not be entitled to any rights as our stockholder with
respect to the Excess Shares. Instead, the Excess Shares will be automatically
transferred to an agent designated by us for the limited purpose of consummating
an orderly arms-length sale of such shares. The net proceeds of the sale will
be
distributed to the purported transferee to the extent of the price it paid,
and
any additional amount will go to charity. The NOL Protective Amendment also
provides us with various remedies to prevent or respond to a purported transfer
which violates its provisions. In particular, the NOL Protective Amendment
provides that any person who knowingly violates the NOL Protective Amendment,
together with any persons in the same control group with such person, are
jointly and severally liable to us for such amounts as will put us in the same
financial position as we would have been in had such violation not occurred.
Waiver
of the NOL Protective Amendment
Our
board
of directors would have the discretion to approve a transfer of stock that
would
otherwise violate the NOL Protective Amendment. In deciding whether to grant
a
waiver, our board of directors may seek the advice of counsel and tax experts
with respect to the preservation of our federal and state tax attributes
pursuant to Section 382. In addition, our board of directors may request
relevant information from the Prohibited Person in order to determine compliance
with the NOL Protective Amendment or the status of our federal and state income
tax benefits. In considering a waiver, we expect our board of directors to
consider such factors as:
· |
whether
the Prohibited Person is or would become a "5-percent shareholder"
under
Section 382 as a result of the proposed transfer;
|
· |
the
impact of the proposed transfer on our Section 382 shift in ownership
percentage;
|
· |
the
then existing level of our Section 382 shift in ownership percentage;
|
· |
the
timing of the expected “roll-off” of our existing ownership
shift;
|
· |
the
economic impact of any Section 382 limitation that might result,
taking
into account factors such as our market capitalization and cash
position;
|
· |
the
impact on possible future issuances or purchases of our common stock
by
us;
|
· |
any
changes or expected changes in applicable tax
law.
|
If
our
board of directors decides to grant a waiver, it may impose conditions on the
acquirer or selling party. If the NOL Protective Amendment is adopted, we expect
that proposed waivers could be submitted in writing to the Company, who will
submit the matter to our board of directors.
Submissions
should be sent to:
Stamps.com
12959
Coral Tree Pl
Los
Angeles, CA 90066
Attention:
Chief Financial Officer
Re:
NOL
Protective Amendment
Implementation
and Suspension of the NOL Protective Amendment
If
the
NOL Protective Amendment is approved by our stockholders at our 2008 annual
meeting, we intend to enforce the restrictions to preserve future use of our
NOL
assets immediately thereafter. If no additional ownership shift happens in
the
next two years, we would expect that our board of directors would suspend
enforcement of the NOL Protective Amendment in 2010, when our Section 382
ownership shift level is expected to materially decrease.
We
believe allowing our board of directors to suspend enforcement of the NOL
Protective Amendment, when appropriate, is a more effective alternative to
setting a pre-determined termination date for the NOL Protective Amendment.
Any
automatic termination of the NOL Protective Amendment could expose our NOL
assets to future risk. Although we expect our ownership shift to materially
decrease in 2010, we could subsequently experience a rapid ownership shift
in a
short period of time that could put our NOL assets at risk again before our
stockholders would have an opportunity to reenact a new NOL protective measure.
For example, during 2007, we experienced a Section 382 ownership shift of
approximately 17% during a one month period of time.
Effectiveness
and Enforceability of NOL Protective Amendment
Although
the NOL Protective Amendment is intended to reduce the likelihood of an
“ownership change”, we cannot eliminate the possibility that an “ownership
change” will occur even if we adopt it:
· |
The
NOL Protective Amendment will not prevent all transfers that might
result
in an "ownership change." For example, it will not prevent existing
Prohibited Persons from selling stock to persons other than Prohibited
Persons.
|
· |
The
NOL Protective Amendment does not limit certain changes in relationships
and other events which could cause us to undergo an "ownership change."
|
· |
Section
382 is an extremely complex provision with respect to which there
are many
uncertainties. We have not requested a ruling from the IRS regarding
the
effectiveness of the NOL Protective Amendment and we cannot assure
you
that the IRS will agree that the NOL Protective Amendment is effective
for
purposes of Section 382.
|
· |
Our
board of directors can permit a Transfer to a Prohibited Person that
results or contributes to an "ownership change" if it determines
that such
Transfer is in our best interests.
|
· |
A
court could find that some or all of the NOL Protective Amendment
is not
enforceable, either in general or as to a particular fact situation.
Under
the laws of the State of Delaware, our jurisdiction of incorporation,
a
corporation may provide in its certificate of incorporation or bylaws
for
restrictions on the transfer of securities for the purpose of maintaining
any tax advantage. Delaware law provides that transfer restrictions
are
effective (i) against shareholders holding shares of our common stock
that
were voted in favor of this proposal, (ii) against purported transferees
if the transfer restriction is conspicuously noted on the certificate(s)
representing the shares and (iii) against purported transferees with
actual knowledge of the restriction (even absent such conspicuous
notation). Under Delaware law, the restrictions on stock transfer
are
generally not binding with respect to shares issued prior to the
adoption
of the restrictions unless the holder of the shares voted in favor
of the
restrictions or acquired them from someone who did. For the purpose
of
determining whether a stockholder is subject to the NOL Protective
Amendment, we intend to take the position that all shares in a purported
transfer were voted in favor of the NOL Protective Amendment unless
the
contrary is established to our satisfaction. We also intend in certain
circumstances to assert the position that stockholders have waived
the
right to challenge or are estopped from challenging the enforceability
of
the NOL Protective Amendment, regardless of whether they voted in
favor of
the NOL Protective Amendment. Nonetheless, a court could find that
the
provision is unenforceable, either in general or as applied to a
particular shareholder or fact situation.
|
As
a
result of these and other factors, the NOL Protective Amendment serves to
reduce, but does not eliminate, the risk that we will undergo an "ownership
change." We cannot assure you that upon audit, the IRS would agree that all
of
our NOLs are allowable.
Other
Considerations
Our
board
of directors believes that attempting to safeguard our tax benefits as described
above is in our best interests. Nonetheless, the NOL Protective Amendment,
if
adopted, could have certain potentially negative consequences:
Anti-Takeover
Impact.
Because
some corporate takeovers occur through the acquirer's purchase, in the public
market or otherwise, of sufficient stock to give it control of a company, any
provision that restricts the transferability of shares can have the effect
of
preventing such a takeover. The NOL Protective Amendment, if adopted, could
be
deemed to have an "anti-takeover" effect because, among other things, it will
restrict the ability of a person, entity or group to accumulate more than five
percent of our common stock and the ability of persons, entities or groups
now
owning more than five percent of our common stock from acquiring additional
shares of our common stock without the approval of our board of directors.
As a
result, our board of directors may be able to prevent any future takeover
attempt. Therefore, the NOL Protective Amendment could discourage or prevent
accumulations of substantial blocks of shares in which our stockholders might
receive a substantial premium above market value and might tend to insulate
management against the possibility of removal. However, these disadvantages
are
outweighed, in our opinion, by the fundamental importance of maintaining the
availability of our tax benefits. The "anti-takeover" effect of the proposed
NOL
Protective Amendment is not the reason for the NOL Protective Amendment. We
are
proposing the NOL Protective Amendment in an effort to reduce the risk that
we
may be unable to fully utilize the tax benefits described above as a result
of
future transfers of our common stock, and to increase our flexibility to
repurchase our stock. Our board of directors is not aware of any efforts of
others to take control of us and has no present intent to propose any other
provisions designed to inhibit a change of control.
Potential
Effects on Liquidity.
The NOL
Protective Amendment will restrict a stockholder's ability to acquire, directly
or indirectly, additional shares of our common stock in excess of the specified
limitations. Furthermore, a stockholder's ability to dispose of our stock may
be
limited by reducing the class of potential acquirers for such stock and a
stockholder's ownership of our stock may become subject to the NOL Protective
Amendment upon actions taken by persons related to, or affiliated with, them.
Potential
Impact on Value.
If the
NOL Protective Amendment is approved, our board of directors intends to impose
a
legend reflecting the NOL Protective Amendment on certificates representing
newly issued or transferred shares. Because certain buyers, including persons
who wish to acquire more than 5% of our stock and certain institutional holders
who may not be comfortable holding stock with restrictive legends, may not
purchase our stock, the NOL Protective Amendment could depress the value of
our
stock in an amount that might more than offset any value conserved as a result
of the preservation of our NOLs and other tax benefits.
SOME
QUESTIONS AND ANSWERS ABOUT THE NOL PROTECTIVE AMENDMENT
What
is Section 382?
|
A:
|
Section
382 is a provision of the Internal Revenue Code of 1986 which imposes
limitations on the future use of our NOLs if we undergo an "ownership
change" as defined in Section 382.
|
What
happens if there is an “ownership change” under Section
382?
|
A:
|
If
there is an “ownership change,” we would only be allowed to use a limited
amount of our then existing NOLs and credits to offset our taxable
income
in any future year. The annual limit is obtained by multiplying (i)
the
aggregate value of our outstanding capital stock immediately prior
to the
"ownership change" (reduced by certain capital contributions made
during
the immediately preceding two years and certain other items) by (ii)
the
federal long-term tax-exempt interest rate in effect for the month
of the
"ownership change." In calculating this annual limit, numerous special
rules and limitations apply, including provisions dealing with “built-in
gains and losses.”
|
How
important are our NOLs?
|
A:
|
Our
approximately $252 million federal NOLS and $149 million state NOLs
are a
significant asset that could save us up to almost $95 million in
taxes
over the next 15 years. Because the amount and timing of our future
taxable income, if any, cannot be accurately predicted, we cannot
estimate
the amount, if any, of our NOLs that we can ultimately use to reduce
our
income tax liability or the time period in which these restrictions
will
continue to be necessary. Although we are unable to quantify an exact
value of our NOLs due to the above factors, we believe the value
of our
NOL assets is significant.
|
How
close are we to triggering an “ownership change” under Section
382?
|
A:
|
As
of December 31, 2007, we estimate that we were at an approximately
34%
level of ownership shift, compared with the 50% level that would
trigger
an "ownership change." We estimate that our ownership shift has increased
from approximately 25% as of March 31, 2007 to approximately 34%
as of
December 31, 2007. In addition, we estimate that approximately 22%
of the
current 34% shift will not “roll-off” until 2010.
|
Do
all investors who file a 13-G / D count in the shift
calculation?
|
A:
|
No,
some investors who file a 13-G or 13-D are not “5-percent shareholders”
under the Section 382 definition and hence would not affect our ownership
shift for purposes of Section 382. We have included those persons
in the
definition of Prohibited Person because most investors file 13-G
or 13-Ds
based on the Securities Exchange Act of 1934 definition and including
them
as Prohibited Persons allows us to identify that investor, verify
whether
they are a “5-percent shareholder” under the Section 382 definition and
make a determination as to how to proceed. We expect our board of
directors to grant waivers, if requested, to allow purchases by any
Prohibited Person who is not a “5-percent shareholder” under the Section
382 definition.
|
What
is the process to obtain a waiver?
|
A:
|
If
the NOL Protective Amendment is adopted, we expect that proposed
waivers
could be submitted in writing to the Company who will submit the
matter to
our board of directors. You may be asked to supply certain information
so
that our board of directors can access whether the proposed waiver
is in
the best interests of our
stockholders.
|
Submissions
should be sent to:
Stamps.com
12959
Coral Tree Pl
Los
Angeles, CA 90066
Attention:
Chief Financial Officer
Re:
NOL
Protective Amendment
Do
I still have to obtain a waiver if I don’t count in shift
calculation?
|
A:
|
Yes,
if you meet the definition of Prohibited
Person.
|
How
does this affect me if I am or become a 5% shareholder?
|
A:
|
The
NOL Protective Amendment would not restrict sales
by
you, although it would restrict any purchaser from purchasing additional
shares to the extent that the purchaser is or would become a Prohibited
Person.
|
How
long will these restrictions be in place?
|
A:
|
The
NOL Protective Provision would expire on the earliest of (x) the
date
designated by our board of directors, if it determines that the
restrictions are no longer necessary after any repeal of Section
382, (y)
the beginning of a taxable year if our board of directors determines
that
no tax benefits may be carried forward, or (z) as otherwise determined
by
our board of directors. If no additional ownership shift happens
in the
next two years, we would expect that the board of directions would
suspend
enforcement of the NOL Protective Amendment in 2010, when its Section
382
ownership shift level is expected to materially decrease.
|
Why
should I vote in favor?
|
A:
|
Our
approximately $252 million federal NOLS and $149 million state NOLs
are a
significant asset that could save us up to almost $95 million in
taxes
over the next 15 years. At our current stock price, the value of
our NOLs
could be significantly impaired unless we avoid potential transfers
that
could trigger an “ownership change” under Section 382. Because our federal
NOLs do not start expiring until 2019 and our state NOLs do not start
expiring until 2012, we will have to continually manage our Section
382
risk for a significant period of time. Our board of directors believes
that the provisions of the NOL Protective Amendment will be an important
tool in avoiding adverse impacts from Section 382 limitations.
|
What
are some of the negative factors I should consider?
|
A:
|
The
NOL Protective Amendment could reduce the possibility of a takeover
of our
company, and could adversely impact the liquidity and value in our
stock
if certain buyers decide not to purchase our stock.
|
Why
are you doing this now? Why not continue the policy of coordinating with
shareholders on an individual basis as you have done
historically?
|
A:
|
Currently,
when we become aware of any new significant shareholders with the
potential to become a “5-percent shareholder”, we attempt to contact that
person to coordinate any additional purchases in a way that mitigates
the
Section 382 impact. However, we are not always successful and new
“5-percent shareholders” have been created despite our best efforts,
resulting in our current high level of Section 382 ownership shift.
Currently, if a shareholder makes a transfer that results in a “5-percent
shareholder”, there is nothing we can do to reverse the impact on the
ownership shift that results. In contrast, the NOL Protective Amendment
would provide a mechanism with the potential to reverse the impact
of the
transfer on the ownership shift while allowing the purchaser to receive
their money from the purchase back. Although we have been able to
avoid an
“ownership change” in the past, recent ownership shifts have raised
concerns about our ability to continue to manage our Section 382
risk in
the same manner as in the past. We estimate that our ownership shift
has
increased from approximately 25% as of March 31, 2007 to approximately
34%
as of December 31, 2007. In addition, we estimate that approximately
22%
of the current 34% shift will not “roll-off” until 2010. As a result, we
currently face an increased risk that we could experience an “ownership
change” between now and 2010 unless shareholders adopt the NOL Protective
Amendment.
|
Why
not set a pre-determined termination date for the NOL Protective
Amendment?
|
A:
|
We
believe allowing our board of directors to suspend enforcement of
the NOL
Protective Amendment, when appropriate, is a more effective alternative
to
setting a pre-determined termination date for the NOL Protective
Amendment. Any automatic termination of the NOL Protective Amendment
could
expose our NOL assets to future risk. Although we expect our ownership
shift to materially decrease in 2010, we could subsequently experience
a
rapid ownership shift in a short period of time that could put our
NOL
assets at risk again before our stockholders would have an opportunity
to
reenact a new NOL protective measure. For example, during 2007, we
experienced a Section 382 ownership shift of approximately 17% during
a
one month period of time.
|
What
happens if I vote “No” on this proposal? Am I still subject to the transfer
restriction?
|
A:
|
Delaware
law provides that transfer restrictions are effective (i) against
shareholders holding shares of our common stock that were voted in
favor
of this proposal, (ii) against purported transferees if the transfer
restriction is conspicuously noted on the certificate(s) representing
the
shares and (iii) against purported transferees with actual knowledge
of
the restriction (even absent such conspicuous notation). Under Delaware
law, the restrictions on stock transfer are generally not binding
with
respect to shares issued prior to the adoption of the restrictions
unless
the holder of the shares voted in favor of the restrictions or acquired
them from someone who did. For the purpose of determining whether
a
stockholder is subject to the NOL Protective Amendment, we intend
to take
the position that all shares in a purported transfer were voted in
favor
of the NOL Protective Amendment unless the contrary is established
to our
satisfaction. We also intend in certain circumstances to assert the
position that stockholders have waived the right to challenge or
are
estopped from challenging the enforceability of the NOL Protective
Amendment, regardless of whether they voted in favor of the NOL Protective
Amendment. A court could find, however, that the NOL Protective Amendment
is unenforceable, either in general or as applied to a particular
shareholder or particular fact situation.
|
Who
can help answer any further questions?
|
A: |
If
you have more questions about the NOL Protective Amendment, you should
contact:
|
Stamps.com
12959
Coral Tree Pl
Los
Angeles, CA 90066
Attention:
Chief Financial Officer
Re:
NOL
Protective Amendment
(310)
482-5800
Vote
Needed for Approval
The
affirmative vote by the holders of at least a majority of our outstanding common
stock is required for approval and adoption of the proposed NOL Protective
Amendment. The NOL Protective Amendment, if approved, would become effective
upon the filing of a Certificate of Amendment with the Secretary of State of
the
State of Delaware, which we expect to accomplish as soon as practicable after
the approval is obtained.
Recommendation
of our Board of Directors
OUR
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS OF STAMPS.COM VOTE "FOR"
THE
PROPOSED AMENDMENT.
PROPOSAL
THREE: RATIFICATION OF INDEPENDENT AUDITORS
General
Our
board
of directors has appointed the firm of Ernst & Young LLP, our independent
auditors during 2007, to serve in the same capacity for 2008, 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, the 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 our best
interests.
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 by Ernst & Young LLP during 2007
During
2007, Ernst & Young LLP provided various audit, audit related and non-audit
services to us 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 quarterly reports on Form 10-Q, totaled approximately
$345,000 and $333,500 during 2007 and 2006, respectively. In
2007,
audit fees included $135,000 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.
Audit-Related
Fees
We
were
not billed any fees for audit-related services in 2007 or 2006.
Tax
Fees
Fees
billed to us by Ernst & Young LLP for tax services rendered to us during
2007 and 2006 totaled approximately $17,500 and $10,000, respectively.
These tax services relate to the analysis of our net operating loss
carryforwards pursuant to Section 382 of the Internal Revenue Code of 1986,
as
amended, and the related Treasury Regulations.
All
Other Fees
We
had no
other fees billed to us by Ernst & Young LLP for other non-audit and non-tax
professional services during 2007 or 2006.
Pre-Approval
Policy
The
Audit
Committee pre-approves all audit and permissible non-audit services provided
to
us 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 us by Ernst & Young LLP during 2007 were pre-approved by the
Audit Committee in accordance with this policy.
Determination
of Independence
Our
audit
committee and our 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 2008 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 independent auditors
for 2008.
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
as of February 29, 2008:
Name
|
|
Age
|
|
Position
|
Kenneth
McBride
|
|
40
|
|
Chief
Executive Officer, Director
|
Kyle
Huebner
|
|
37
|
|
Chief
Financial Officer
|
James
Bortnak
|
|
38
|
|
Chief
Marketing Officer
|
John
Clem
|
|
36
|
|
Vice
President, Product and Service Operations
|
Michael
Biswas
|
|
31
|
|
Vice
President, Development
|
Mr.
McBride’s biography is set forth above under the heading
“Directors”.
Kyle
Huebner.
Mr.
Huebner has been our Chief Financial Officer since 2004. Mr. Huebner was our
Vice President of Marketing from 2001 to 2004, our Vice President of Corporate
Strategy from 2000 to 2001, and our Senior Director of Corporate Strategy from
1999 to 2000. Prior to joining us, 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.
James
Bortnak.
James
Bortnak was named Vice President, Sales & Marketing, in 2004 and is
currently our Chief Marketing Officer. Previously, Mr. Bortnak served as Vice
President, Business Development from 2002 to 2004, and as a senior member of
the
Business Development group since joining us in 1999. Prior to joining us, 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.
John
Clem.
Mr. Clem
has been Vice President of Product and Service Operations since 2006. Mr. Clem
was our Director of Strategy from 2005 to 2006. Mr. Clem was also our Director
of Marketing from 2004 to 2005 and our Director of Corporate Strategy from
2003
to 2004. Prior to joining us, Mr. Clem was a management consultant at Booz
Allen
& Hamilton from 2000 to 2003. Mr. Clem received his B.S. in Mechanical
Engineering from California State Polytechnic University at Pomona and his
M.B.A. from the Ross School of Business at The University of
Michigan.
Michael
Biswas.
Mr.
Biswas has been our Vice President of Development since February 2007. Mr.
Biswas has also been our Vice President of Information Technology from 2005
to
2007, Vice President of Operations from 2005 to 2005 and our Director of
Customer Support from 2003 to 2005. Prior to joining us, from 1996 to 1999,
Mr.
Biswas served as Operations Manager for TeleTech Telecommunications, as Director
of Operations for Allbusiness.com from 1999 to 2001, and as Director of
Operations for Provicent Corp. from 2001 to 2003.
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 2007 and 2006, respectively, by our chief executive
officer, chief financial officer and each of our other three highest compensated
executive officers whose total compensation exceeded $100,000 during 2007.
The
listed individuals are referred to in this proxy statement as the named
executive officers.
Summary
Compensation Table
Name
and Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus(2)
|
|
Option
Awards
|
|
Non-Equity
Incentive Plan Compensation (2)
|
|
All
Other Compensation (1)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ken
McBride
|
|
|
2007
|
|
$
|
365,667
|
|
|
$30,099
|
|
$
|
250,258
|
|
|
$163,901
|
|
|
$4,400
|
|
$
|
814,325
|
|
Chief
Executive Officer
|
|
|
2006
|
|
$
|
341,667
|
|
|
$0
|
|
$
|
44,153
|
|
|
$200,000
|
|
|
$4,400
|
|
$
|
590,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kyle
Huebner
|
|
|
2007
|
|
$
|
246,250
|
|
|
$14,119
|
|
$
|
72,190
|
|
|
$76,881
|
|
|
$4,400
|
|
$
|
413,840
|
|
Chief
Financial Officer
|
|
|
2006
|
|
$
|
238,333
|
|
|
$0
|
|
$
|
4,089
|
|
|
$95,000
|
|
|
$4,400
|
|
$
|
341,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Bortnak
|
|
|
2007
|
|
$
|
228,333
|
|
|
$14,895
|
|
$
|
144,379
|
|
|
$81,105
|
|
|
$4,400
|
|
$
|
473,112
|
|
Chief
Marketing Officer
|
|
|
2006
|
|
$
|
217,833
|
|
|
$0
|
|
$
|
75,643
|
|
|
$100,000
|
|
|
$4,237
|
|
$
|
397,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Clem (2)
|
|
|
2007
|
|
$
|
173,599
|
|
|
$11,171
|
|
$
|
257,376
|
|
|
$60,829
|
|
|
$3,907
|
|
$
|
506,882
|
|
Vice
President, Product and
|
|
|
2006
|
|
$
|
162,193
|
|
|
$0
|
|
$
|
148,808
|
|
|
$60,000
|
|
|
$3,244
|
|
$
|
374,245
|
|
Service
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Biswas
|
|
|
2007
|
|
$
|
192,836
|
|
|
$10,861
|
|
$
|
197,504
|
|
|
$59,139
|
|
|
$4,400
|
|
$
|
464,740
|
|
Vice
President, Development
|
|
|
2006
|
|
$
|
158,851
|
|
|
$0
|
|
$
|
335,968
|
|
|
$73,000
|
|
|
$3,177
|
|
$
|
570,996
|
|
(1) |
Includes
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.
|
(2) |
In
2006, 100% of total cash bonus paid to all executive management was
covered under our non-equity incentive plan. In 2007, approximately
84% of
total cash bonuses paid to all executive management was covered under
our
non-equity incentive plan and the remainders were discretionary bonuses.
|
Grants
of Plan-Based Awards Table
The
following table provides information with respect to grants of plan-based awards
made during fiscal year 2007 to the named executive officers. The options have
an exercise price equal to the closing price of our common stock on The NASDAQ
Stock Market on the grant date, have a ten-year life, and vest in equal
installments over four years beginning one month after grant date, subject
to
acceleration in certain circumstances.
|
|
|
|
Estimated
Future Payouts Under
Non-Equity Incentive Plan Awards
(1)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
|
|
Exercise or
Base
Price
of
Option
|
|
Grant
Date
Fair
Value
of
Stock
|
|
Name
|
|
Grant Date
|
|
Threshold
($)(2)
|
|
Target ($)(3)
|
|
Maximum
($)(4)
|
|
Options
(#)
|
|
Awards
($ / Sh)
|
|
and Option Awards
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ken McBride
|
|
|
03/02/07
|
|
|
165,952
|
|
|
202,381
|
|
|
299,524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
05/21/07
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
260,000
|
|
|
13.76
|
|
|
1,716,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kyle Huebner
|
|
|
03/02/07
|
|
|
78,827
|
|
|
96,131
|
|
|
142,274
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
05/21/07
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
13.76
|
|
|
495,000
|
|
|
|
|
12/03/07
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
12.52
|
|
|
141,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Bortnak
|
|
|
03/02/07
|
|
|
82,976
|
|
|
101,190
|
|
|
149,762
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
05/21/07
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
|
|
13.76
|
|
|
990,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Clem
|
|
|
03/02/07
|
|
|
49,786
|
|
|
60,714
|
|
|
89,857
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
05/21/07
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75,000
|
|
|
13.76
|
|
|
495,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Biswas
|
|
|
03/02/07
|
|
|
60,573
|
|
|
73,869
|
|
|
109,326
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
05/21/07
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
|
13.76
|
|
|
660,000
|
|
(1) |
On
March 2, 2007, the Compensation Committee approved a non-equity incentive
plan for 2007 (the “2007 Plan”) under which our executive management was
eligible for cash bonus awards as described below under “Compensation
Discussion and Analysis.” The Compensation Committee set a single common
bonus pool under the 2007 Bonus Plan for all of our executive management,
including the CEO and CFO. The 2007 Plan set a base level aggregate
bonus
pool (the “2007 Base Pool”), which was to be adjusted based on our
performance relative to targets for 2007 revenue and 2007 earnings
per
share excluding stock-based compensation expenses. Depending on our
actual
2007 performance in these areas, the final bonus pool could have
ranged
from a reduction of 18%, to an increase of 48%, applied to the 2007
Base
Pool.
|
(2) |
The
amounts in this column assume (i) the minimum aggregate bonus pool
(equal
to 82% of the 2007 Base Pool) and (ii) that each executive received
the
same percentage share of the bonus pool which he received in 2006.
However, no individual executive is guaranteed any minimum amount,
so the
amount could in fact be zero.
|
(3) |
The
amounts in this column assume (i) that the actual bonus pool is equal
to
the 2007 Base Pool and (ii) that each executive received the same
percentage share of the bonus pool which he received in 2006.
|
(4) |
The
amounts in this column assume the maximum possible bonus pool (148%
of the
2007 Base Pool) and that each executive received the percentage share
of
the bonus pool which he received in 2006. However, in the unlikely
event
that no other executive received any bonus, and the compensation
committee
did not adjust the bonus pool as a result, any individual executive
could
in theory receive the total amount of the bonus pool.
|
Discussion
of Summary Compensation and Grants of Plan-Based Awards Tables
Our
executive compensation policies and practices, pursuant to which the
compensation set forth in the Summary Compensation
Table
and the Grants of Plan-Based Awards table was paid or awarded, are described
below under “Compensation Discussion and Analysis.”
Outstanding
Equity Awards At Fiscal Year-End
The
following table provides information on the holdings of stock options by the
named executive officers at December 31, 2007:
|
|
Option
Awards
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ken
McBride
|
|
|
6,000
|
|
|
—
|
|
|
—
|
|
|
23.38
|
|
|
4/26/2010
|
|
Ken
McBride
|
|
|
198,157
|
|
|
—
|
|
|
—
|
|
|
7.08
|
|
|
5/02/2012
|
|
Ken
McBride
|
|
|
26,667
|
|
|
—
|
|
|
—
|
|
|
9.82
|
|
|
10/27/2013
|
|
Ken
McBride
|
|
|
75,000
|
|
|
—
|
|
|
—
|
|
|
17.50
|
|
|
11/3/2014
|
|
Ken
McBride
|
|
|
30649
|
|
|
193016
|
|
|
|
|
|
13.76
|
|
|
5/21/2017
|
|
Ken
McBride
|
|
|
7267
|
|
|
29068
|
|
|
|
|
|
13.76
|
|
|
5/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kyle
Huebner
|
|
|
7,499
|
|
|
—
|
|
|
—
|
|
|
4.26
|
|
|
10/20/2010
|
|
Kyle
Huebner
|
|
|
91,265
|
|
|
—
|
|
|
—
|
|
|
7.08
|
|
|
5/2/2012
|
|
Kyle
Huebner
|
|
|
9,446
|
|
|
—
|
|
|
—
|
|
|
9.82
|
|
|
10/27/2003
|
|
Kyle
Huebner
|
|
|
38,762
|
|
|
—
|
|
|
—
|
|
|
17.50
|
|
|
11/3/2014
|
|
Kyle
Huebner
|
|
|
3670
|
|
|
34995
|
|
|
|
|
|
13.76
|
|
|
5/21/2017
|
|
Kyle
Huebner
|
|
|
7267
|
|
|
29068
|
|
|
|
|
|
13.76
|
|
|
5/21/2017
|
|
Kyle
Huebner
|
|
|
0
|
|
|
25000
|
|
|
|
|
|
12.52
|
|
|
12/3/2017
|
|
James
Bortnak
|
|
|
7,501
|
|
|
—
|
|
|
—
|
|
|
62.00
|
|
|
10/11/2009
|
|
James
Bortnak
|
|
|
8,750
|
|
|
—
|
|
|
—
|
|
|
23.38
|
|
|
4/26/2010
|
|
James
Bortnak
|
|
|
9168
|
|
|
—
|
|
|
—
|
|
|
9.82
|
|
|
10/27/2013
|
|
James
Bortnak
|
|
|
2,888
|
|
|
0
|
|
|
—
|
|
|
17.5
|
|
|
11/3/2014
|
|
James
Bortnak
|
|
|
14,607
|
|
|
99,058
|
|
|
—
|
|
|
13.76
|
|
|
5/21/2017
|
|
James
Bortnak
|
|
|
7,267
|
|
|
29,068
|
|
|
—
|
|
|
13.76
|
|
|
5/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Clem
|
|
|
14,999
|
|
|
15,001
|
|
|
|
|
|
23.5
|
|
|
12/1/2005
|
|
John
Clem
|
|
|
11,666
|
|
|
8,334
|
|
|
|
|
|
32.52
|
|
|
3/1/2006
|
|
John
Clem
|
|
|
10,937
|
|
|
49,529
|
|
|
|
|
|
13.76
|
|
|
5/21/2007
|
|
John
Clem
|
|
|
0
|
|
|
14,534
|
|
|
—
|
|
|
13.76
|
|
|
5/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Biswas
|
|
|
2,000
|
|
|
0
|
|
|
—
|
|
|
6.7
|
|
|
5/1/2013
|
|
Michael
Biswas
|
|
|
2,000
|
|
|
0
|
|
|
—
|
|
|
11.68
|
|
|
3/1/2014
|
|
Michael
Biswas
|
|
|
122
|
|
|
0
|
|
|
—
|
|
|
17.5
|
|
|
11/3/2014
|
|
Michael
Biswas
|
|
|
15,878
|
|
|
0
|
|
|
—
|
|
|
17.5
|
|
|
11/3/2014
|
|
Michael
Biswas
|
|
|
9,482
|
|
|
4,173
|
|
|
—
|
|
|
20.57
|
|
|
11/1/2015
|
|
Michael
Biswas
|
|
|
11,350
|
|
|
4,995
|
|
|
—
|
|
|
20.57
|
|
|
11/1/2015
|
|
Michael
Biswas
|
|
|
14,583
|
|
|
62,587
|
|
|
|
|
|
13.76
|
|
|
5/21/2017
|
|
Michael
Biswas
|
|
|
0
|
|
|
22,830
|
|
|
|
|
|
13.76
|
|
|
5/21/2017
|
|
Option
Exercises and Stock Vested
There
were no option exercises in 2007 by our named executive officers. None of our
named executive officers hold restricted stock of Stamps.com.
Potential
Payments upon Termination or Change-in-Control
Messrs.
McBride, Huebner and Bortnak have entered into separation agreements with our
Company such that in the event of (i) an involuntary termination without cause
or (ii) a resignation or termination following a change of control, these
officers shall receive six months' salary and benefits. The change of control
payment will occur upon (y) any involuntary termination of employment following
the change of control or (z) resignation within two to nine months following
the
change of control by these named executive officers. Except in the event of
a
change of control, no amounts would be due to any of our named executive
officers in the event of a resignation or termination with cause. The
information below reflects the estimated value of the compensation to be paid
by
the Company to each of these officers in the event of an involuntary termination
without cause or a termination or resignation following a change in control.
The
amounts shown below assume that the involuntary termination without cause or
change in control was effective as of December 31, 2007. The actual amounts
that would be paid can only be determined at the time of the actual triggering
event.
|
|
Payment Upon
Termination without
Cause or Change in
Control
Benefit (1)
|
|
Ken
McBride
|
|
|
$192,854
|
|
Kyle
Huebner
|
|
|
$131,604
|
|
James
Bortnak
|
|
|
$122,854
|
|
|
(1)
|
Assumes
a monthly value of $1,309 for continued
benefits.
|
In
addition, our stock option plans provide that any optionee, including our named
executive officers, whose service is “involuntarily terminated” within 18 months
following a “change in control”, any unvested options which were assumed by the
successor corporation will become fully exercisable. A “change in control” 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 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.
Assuming
a change of control was triggered as of December 31, 2007, no amounts would
be
due pursuant to our stock option plan provision because all unvested options
held by our named executive officers contained exercise prices above our closing
stock price of $12.18 on December 31, 2007.
COMPENSATION
DISCUSSION AND ANALYSIS
This
Compensation Discussion and Analysis provides qualitative information and
context for the information presented in the Summary Compensation table and
other tables and narrative that follow. The goals of our executive management
compensation program are to attract executives who have the skills and
experience necessary to achieve our corporate goals, align management’s
interests with those of long-term stockholders, and to attract and retain
executive management talent by providing overall compensation that is comparable
to what is available through other employment opportunities for those
individuals.
Overall
Methodology of Setting Compensation
The
Compensation Committee sets all compensation and awards to our chief executive
and all executive management. This group typically includes our chief financial
officer, our general counsel, our chief marketing officer, our vice president
of
development, our vice president of product and operations, and our vice
president of postal affairs. The Compensation Committee reviews the performance
and compensation of our chief executive officer and, following discussions
with
our chief executive officer, establishes his compensation level. For the
remaining executive management, our chief executive officer makes
recommendations to the Compensation Committee and the Compensation Committee
may
or may not make adjustments to the recommendations of our chief executive
officer before setting the final executive officer compensation. With respect
to
equity compensation, the Compensation Committee grants stock options to
executive management from time to time, generally based upon the recommendation
of our chief executive officer.
To
establish overall compensation peer groups for our executive management for
2007
and 2008, our chief executive officer and the Compensation Committee utilized
reports and data from Culpepper & Associates (“Culpepper”), a nationally
recognized firm that conducts worldwide salary surveys and provides benchmark
data for compensation and employee benefit programs. The Culpepper database
includes compensation data for approximately 1800 IT services, software,
hardware and life sciences companies, including over 950 U.S. public companies.
Starting in May 2007, our chief executive officer and the Compensation Committee
also began to utilize reports and data from Eqular, Inc. (“Equilar”), a NASDAQ
partner company which provides standardized data based on U.S. proxy data from
all publicly traded companies. During the March 2007 meeting of the Compensation
Committee, Culpepper data was used to benchmark executive management base
salaries and 2006 total compensation. During the May 2007 meeting of the
Compensation Committee, Equilar data was used to benchmark executive management
ownership levels in consideration of the stock option grants made at that
meeting. During the March 2008 meeting of the Compensation Committee, Equilar
data was used for benchmarking the 2007 total compensation. In addition, at
the
March 2008 meeting Culpepper data was used to benchmark 2007 total compensation
as a secondary check to the Equilar data. In all during 2007 and 2008 our
Compensation Committee utilized five different methodologies for creating peer
group benchmarks utilizing the Equilar and Culpepper data as set forth in the
following table.
Peer
Group
Benchmark
|
Data
Source
|
Methodology
|
Culpepper
Weighted
Average
Benchmark
|
Culpepper
|
A
weighted average of three groupings within the Culpepper database:
(a) all
companies of similar size based on revenue (50% weighting); (b) all
companies located in Southern California or in areas with similar
cost-of-living levels if the number of companies in Southern California
is
not a sufficiently large enough sample (25% weighting); and (c) all
companies that are traded publicly in U.S. public markets (25% weighting).
|
Culpepper
Peer
Group
One
|
Culpepper
|
An
average of compensation at 28 publicly traded technology industry
companies based in California with a range of $30 to $100 million
in
revenue, as listed in Annex C. We benchmarked compensation of our
chief
executive officer, chief financial officer and General Counsel using
this
peer group (we did not have enough data for a meaningful comparison
in the
case of the other executive management positions).
|
Culpepper
Peer
Group
Two
|
Culpepper
|
An
average of compensation at 42 publicly traded technology industry
companies based in California with a range of $30 to $300 million
in
revenue and with fewer than 500 employees, as listed in Annex C.
This
benchmark was created in order to increase the size of the data sample
versus Culpepper Peer Group One. We benchmarked compensation of our
chief
executive officer, chief financial officer, General Counsel, and
Chief
Marketing Officer using this peer group (we did not have enough data
for a
meaningful comparison in the case of the other executive management
positions).
|
Equilar
Equity
Peer
Group
|
Equilar
|
For
each member of executive management a benchmark group was created
of
individuals with similar titles and responsibilities at other publicly
traded, California-based technology companies with revenue between
$50 and
$150 million, and that had filed their last proxy filing January
1, 2006
or later. In analyzing the data, any individuals that were founders
of
their respective company, or that were no longer current officers
as of
their proxy date, were excluded from the analysis.
|
Equilar
Total
Compensation
Peer
Group
|
Equilar
|
For
each member of executive management a benchmark group was created
of
individual with similar titles and responsibilities at companies
(i) with
$50 to $150 million in revenue; (ii) having market capitalization
of $100
million or more; (iii) located in higher cost-of living states (including,
CA, CA, CT, DE, FL, GA, IL, MD, MA, MN, NH, NY, PA, VA, WA); and
(iv) in
industries that include Internet Commerce & Content, Internet
Infrastructure, Internet Service, or Software (for executive managers
other than the chief executive officer and chief financial officer,
the
industry group was broadened to include all technology companies
because
the narrower industry definition did not result in enough data for
a
meaningful analysis). Individuals at other companies who were founders,
who were interim, who had resigned, or that had received no cash
bonus
during the last fiscal year as of the date of the proxy were excluded
from
the analysis. Only proxies filed after January 1, 2007 or later were
included, and compensation was adjusted to today’s levels based on time
elapsed since each company’s proxy filing date and assuming 4% annual
increases. Some example peer groups are included in Annex C.
|
Each
Element of Compensation, Why We Pay It, and How We Determine
Amounts
We
currently compensate our executive management through three main elements:
base
salary, incentive pay, and equity participation. Certain members of our
executive management also have post-termination compensation arrangements.
·
|
Base
Salary.
We pay a base salary to each of our senior managers in order to allow
them
to cover their living expenses and in order to correspond with the
standard practice of other employers. We establish base salaries
for each
individual on an annual basis based on a comparison to the benchmarks
discussed above. We typically seek to set individual base salaries
in a
range of 40th
to
60th
percentile versus the individual’s Culpepper Weighted Average Benchmark;
for 2007, each individual’s base salary ended up between the
43rd
and 57th
percentile. In particular, our chief executive officer and our chief
financial officer received base salaries for 2007 which were at
approximately the 45th
percentile and 49th
percentile, respectively, versus the Culpepper Weighted Average Benchmark
for chief executive officers and chief financial officers. In addition,
compared to Culpepper Peer Group One, our chief executive officer’s, our
chief financial officer’s and our general counsel’s 2007 base salaries
were at the 47th, 59th
and 71st
percentile, respectively. Finally, compared to Culpepper Peer Group
Two,
our chief executive officer’s, our chief financial officer’s, our general
counsel’s, and our chief marketing officer’s base salaries were at the
33rd,
47th,
57th,
and 41st
percentiles, respectively.
|
·
|
Non-Equity
Incentive Plan Compensation.
We pay non-equity incentive plan compensation to each of our executive
managers in order to provide incentives for them to drive the business
toward annual goals that are set by the Compensation Committee. Our
incentive-based compensation is based on a group bonus pool. The
total
bonus pool begins with a base pool amount which may then be adjusted
based
on our actual performance relative to certain financial targets for
the
year. Once the final group bonus pool is set after year end, it is
allocated to individual executive management based on (i) individual
performance and contributions during the year and (ii) individual
total
compensation relative to the compensation peer groups. No individual
member of management is guaranteed to receive a bonus.
|
On
March
3, 2007, the Compensation Committee of our Board of Directors approved a
non-equity incentive plan for 2007 (the “2007 Plan”). The 2007 Plan set a base
level aggregate bonus pool (the “2007 Base Pool”), which was to be adjusted
based on our actual performance relative to targets for 2007 revenue and 2007
earnings per share excluding stock-based compensation expenses. Depending on
our
actual 2007 performance in these areas, the final bonus pool could have ranged
from a reduction of 18%, to an increase of 48%, applied to the 2007 Base Pool.
Once the final bonus pool was determined after year end, it was be allocated
to
individual employees by the Compensation Committee based on its assessment
of
that employee’s individual performance. No individual executive manager has an
individual bonus guarantee under the 2007 Plan, so any individual manager could
have received a bonus of zero. The Compensation Committee set the amount of
the
2007 Base Pool so that at that level of bonus pool executive management as
a
group would receive a total cash compensation for 2007 at approximately the
48th
percentile versus the Culpepper Weighted Average Benchmark.
On
March
5, 2008 the Compensation Committee set the final bonus pool at 97% of the 2007
Base Pool. The Compensation Committee determined that at this level the
executive management as a group would receive a total cash compensation for
2007
at approximately the 45th percentile versus the Equilar Total Compensation
Peer
Group, and at approximately the 38th percentile versus the Culpepper Weighted
Average Benchmark. Compared to individual Equilar Total Compensation Peer
Groups, our chief executive officer, our chief financial officer, and our chief
marketing officer ended up at the 41st,
50th
and 58th
percentiles, respectively.
On
March
5, 2008, the Compensation Committee approved a non-equity incentive plan for
2008 (the “2008 Plan”) under which our executive management is eligible for cash
bonus awards. The 2008 Plan set a base level aggregate bonus pool (the “Base
Pool”), which may be adjusted based on our actual performance relative to
targets for 2008 revenue, 2008 EBITDA, and 2008 customer acquisition. Depending
on our actual 2008 performance in these areas, the final bonus pool could range
from zero to twice the Base Pool. Once the final bonus pool is determined after
year end, it will be allocated to individual employees by the Compensation
Committee based on its assessment of that employee’s individual performance. No
individual executive manager has an individual bonus guarantee under the 2008
Plan, so any individual manager could receive a bonus of zero. The Compensation
Committee set the amount of the Base Pool so that executive management as a
group would receive a total cash compensation for 2008 at approximately the
median level (50th percentile) versus the projected Equilar Total Compensation
Peer Groups. The final bonus awards could be higher or lower that those
prescribed by the 2008 Plan at the discretion of the Compensation
Committee.
·
|
Equity
Incentives.
We grant equity participation to each of our executive managers in
order
to provide incentives for them to guide the business toward our long-term
goal of increasing shareholder value. Historically, the primary form
of
equity participation that we have awarded our executive management
consisted of incentive stock options (ISOs) and non-qualified stock
options. We selected this form of equity participation because of
the
favorable accounting and tax treatments (particularly in past years),
and
the near universal expectation by executive management employed in
software and technology that they would receive stock options. When
we
grant stock options, our practice is for our chief executive officer
to
meet with the Compensation Committee to discuss appropriate levels
of
stock option grants for each executive manager. Timing of stock option
grants typically relates to (i) new employee hires, (ii) promotions
of
existing employees, (iii) year end performance reviews of employees,
or
(iv) company-wide option grants as deemed appropriate by the Compensation
Committee.
|
In
determining the number of options to be granted to executive officers, the
Compensation Committee takes into account such factors as the individual’s
position and scope of responsibility; the vesting period (and thus, retention
value) remaining on the executive’s existing options, the executive’s ability to
affect profitability and stockholder value; the individual’s historic and recent
job performance; equity compensation for similar positions at comparable
companies, and the value of stock options in relation to other elements of
total
compensation.
On
May
21, 2007, the Compensation Committee granted options to executive management.
For these equity grants, the Compensation Committee considered several factors
such as: the fact that the last significant grant of options to executive
managers took place in November 2004; the fact that most executive officers
were
fully vested in their existing options; the ordinary practices of granting
options in other comparable companies; and the resulting expected impact on
our
financial results. In determining the appropriate level of incentive stock
option grants for each individual executive officer, the Compenation Committee
used the Equilar Equity Peer Groups. Following the May 21, 2007 incentive stock
options grants, our chief executive officer, our chief financial officer, our
general counsel and our chief marketing officer held stock and options that
represented potential ownership of our common stock at the 43rd,
73rd,
93rd,
and
42nd
percentile, respectively, relative to the Equilar Equity Peer
Groups.
·
|
Post-Termination
Compensation Arrangements.
We provide post-termination compensation arrangements to certain
members
of our executive management as we believe that it is important to
give
them some limited protection in the event they are terminated without
cause or terminated following a change in control. Further, it is
our
belief that the interests of stockholders will be best served if
the
interests of our executive management are aligned with them, and
providing
change in control benefits should eliminate, or at least reduce,
the
reluctance of executive management to pursue potential change in
control
transactions that may be in the best interests of stockholders. The
cash
components of all of our executive management post-termination
compensation arrangements, if any, range from three to six months
of base
salary, and typically also include continuing health benefits during
the
same period. For example, our chief executive officer and our chief
financial officer each receive six months of base salary following
their
termination without cause or termination following a change in control.
In
addition, all of our unvested options vest on a termination following
a
change of control.
|
Other
Benefits
As
reflected in the Summary Compensation Table, we do generally not provide special
perquisites to our executive management. Executive management participates
in
our standard benefit plans on the same terms as other employees. These plans
include medical and dental insurance, 401(k), life insurance, charitable gift
matching (limited to 50% matching of up to $200 per employee per year) and
our
employee stock purchase plan. Relocation benefits for executive officers may
also be reimbursed but are individually negotiated when they occur.
Tax
and Accounting Considerations.
We
record
cash compensation as an expense at the time the obligation is accrued.
Historically, all cash compensation we have paid has been tax deductible for
us.
Under Section 162(m) of the Internal Revenue Code, compensation in excess
of $1,000,000 per year to named executive officers is not tax deductible to
us unless certain requirements are met. The deductibility of compensation to
the
named executive officers in 2007 was not affected by the limitations of
Section 162(m), and we expect the same for 2008. However, since corporate
objectives may not always be consistent with the requirements for full
deductibility, it is conceivable that, in the future, we may enter into
compensation arrangements for which payments are not deductible under
Section 162(m).
We
account for equity compensation paid to our executives and employees under
the
rules of SFAS No. 123R, which requires us to estimate and record a
non-cash expense over the term of the equity compensation award. Any gain
recognized by employees from nonqualified stock options is tax-deductible for
us. However, gain recognized by an employee with respect to an incentive stock
option will not be deductible unless there is a “disqualifying disposition” of
the shares by the employee. A disqualifying disposition occurs when an employee
sells or disposes
of
incentive stock option shares within two years after the grant date or within
one year after the exercise date. The employee is taxed on the gain at ordinary
income tax rates. In addition, if in the future we grant restricted stock or
restricted stock unit awards that are not subject to performance vesting, they
may not be fully deductible by us at the time the award is otherwise taxable
to
the employee.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the “Compensation Discussion
and Analysis” section of this proxy statement with management, including our
chief executive officer. Based on this review and discussion, the Compensation
Committee recommended to the Board of Directors that the “Compensation
Discussion and Analysis” section be included in our 2007 Annual Report and in
this proxy statement.
Submitted
by the Compensation Committee:
Mohan
P.
Ananda
Lloyd
I.
Miller, III
BENEFICIAL
OWNERSHIP OF SECURITIES
The
following table sets forth certain information known to us with respect to
the
beneficial ownership of our common stock as of February 29, 2008, 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. We have relied upon information provided to us by our directors and
executive officers and copies of documents sent to us that have been filed
with
the Securities and Exchange Commission by others for purposes of determining
the
number of shares each person beneficially owns. 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. The percentage of ownership is based on 19,857,285 shares of
our
common stock issued and outstanding on February 29, 2008. Shares of our common
stock subject to stock options which are currently exercisable or will become
exercisable within 60 days after February 29, 2008 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)
|
|
|
466,621
|
|
|
2.3
|
%
|
Kyle
Huebner (2)
|
|
|
227,872
|
|
|
1.1
|
%
|
James
Bortnak (3)
|
|
|
111,241
|
|
|
*
|
|
John
Clem (4)
|
|
|
51,515
|
|
|
*
|
|
Michael
Biswas (5)
|
|
|
80,681
|
|
|
*
|
|
Mohan
Ananda (6)
|
|
|
679,875
|
|
|
3.4
|
%
|
Kevin
Douglas (7)
|
|
|
1,728,450
|
|
|
8.7
|
%
|
G.
Bradford Jones (8)
|
|
|
125,822
|
|
|
*
|
|
Lloyd
Miller (9)
|
|
|
1,481,776
|
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
Other
5% Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Putnam,
LLC d/b/a Putnam Investments
|
|
|
1,356,080
|
|
|
6.8
|
%
|
82
Devonshire Street
|
|
|
|
|
|
|
|
Boston,
MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive offers as a group (9 people)
|
|
|
4,953,853
|
|
|
24.9
|
%
|
* |
Represents
beneficial ownership of less than 1% of the outstanding shares of
common
stock.
|
(1) |
Includes
365,410 shares subject to options, all of which are presently exercisable
or will become exercisable within 60 days of February 29,
2008.
|
(2) |
Includes
166,243 shares subject to options, all of which are presently exercisable
or will become exercisable within 60 days of February 29,
2008.
|
(3) |
Includes
62,685 shares subject to options, all of which are presently exercisable
or will become exercisable within 60 days of February 29,
2008.
|
(4) |
Includes
48,574 shares subject to options, all of which are presently exercisable
or will become exercisable within 60 days of February 29,
2008.
|
(5)
|
Includes
67,081 shares subject to options, all of which are presently exercisable
or will become exercisable within 60 days of February 29,
2008.
|
(6) |
Includes
480,048 shares held directly by Mohan Ananda; 21,250 shares subject
to
options; 750 shares held by Mr. Ananda's spouse and son, 20,000 shares
held by the Ananda Foundation and 157,827 shares held in trust for
the
benefit of Mr. Ananda's family.
|
(7) |
Includes
20,000 shares subject to options and includes 604,492 shares held
in the
Kevin & Michelle Douglas Trust. 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
21,250 shares subject to options.
|
(9) |
Includes
350,403 shares held directly by Lloyd I. Miller; 20,000 shares subject
to
options; 259,344 shares held by Trust A-4; 121,439 shares held by
Trust C;
55,000 of such shares are held by Milfam I, L.P.; 456,630 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; 65,827 of such shares are held by Trust Milgrat
I;
and 150,633 of such shares are managed by Marli
Miller.
|
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 the Exchange Act.
The
following is the report of the Audit Committee with respect to our audited
financial statements for the fiscal year ended December 31, 2007 included in
our
Annual Report on Form 10-K for that year.
Review
with Management
The
Audit
Committee has reviewed and discussed these audited financial statements with
our
management.
Review
and Discussions with Independent Auditors
The
Audit
Committee has discussed with our 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 our 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 our board of directors that the audited financial statements
be
included in our Annual Report on Form 10-K for the year ended December 31,
2007,
for filing with the Securities and Exchange Commission.
|
of
the Board of Directors
|
|
Kevin
Douglas
|
G.
Bradford Jones
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Procedures
for Review and Ratification of Related Party Transactions
We
submit
related party transactions for review and approval to our audit committee
members not involved in the transaction. After review, the audit committee
will
only approve or ratify the transactions that are in, or are not inconsistent
with, the best interests of our company and our stockholders, as the committee
determines in good faith.
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 our 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 ten percent 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, we believe that all reporting requirements
under Section 16(a) for 2007 were met in a timely manner by our directors,
executive officers and greater than ten percent beneficial owners.
OTHER
MATTERS
Annual
Report
A
copy of
our annual report for 2007 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 for 2007 with the SEC on March 14, 2008. 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 website at http://investor.stamps.com/edgar.cfm.
Annex
A
(Amendment
to Certificate of Incorporation)
ARTICLE
IX
(A)
DEFINITIONS. For purposes of this Article IX:
(1)
"Excess
Shares"
means
any Stock, or any rights in Stock , the Transfer or ownership of which would
result in a Prohibited Ownership Percentage or a violation of Section (B) of
this Article IX;
(2)
“Expiration
Date”
means
the earlier of (x) the repeal of Section 382 of the Internal Revenue Code of
1986, as amended from time to time, or any successor statute (collectively,
the
"Code")
if the
Board of Directors determines that the restrictions in this Article IX are
no
longer necessary for the preservation of the Tax Benefits, (y) the beginning
of
a taxable year of the Corporation to which the Board of Directors determines
that no Tax Benefits may be carried forward, or (z) such date as the Board
of
Directors shall fix in accordance with Section (G) of this Article IX;
(3)
"Option"
shall
have the meaning set forth in Section 1.382-4 of the Treasury Regulations,
as
amended from time to time, promulgated under the Code ("Treasury
Regulations");
(4)
a
"Person"
shall
mean any individual, corporation, estate, trust (including a trust qualified
under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust
permanently set aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation within the
meaning of Section 509(a) of the Code, company, limited liability company,
partnership, joint venture, or similar organization (including the Corporation
if appropriate in the context) and also includes a group as that term is used
for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, or any other entity described in Treasury Regulation Section
1.382-3(a)(1)(i);
(5)
“Prohibited
Distributions”
means
any and all dividends or other distributions paid by the Corporation with
respect to any Excess Shares received by a Purported Acquiror;
(6)
a
"Public
Group"
shall
have the meaning contained in Treasury Regulation Section 1.382-2T(f)(13),
excluding any "direct public group" with respect to the Corporation, as that
term is used in Treasury Regulation Section 1.382-2T(j)(2)(ii);
(7)
a
"Prohibited
Ownership Percentage"
shall
mean (i) any Stock ownership that would cause a Person to beneficially own
(as
defined under Section 13(d) of the Securities Exchange Act of 1934) five percent
(5%) or more in value of the aggregate of the outstanding shares of capital
stock of the Corporation, or (ii) any Stock ownership that would cause a Person
or Public Group to be a "5-percent shareholder" of the Corporation within the
meaning of Treasury Regulation Section 1.382-2T(g)(1)(i); for this purpose,
whether a Person or Public Group would be a "5-percent shareholder" shall be
determined (i) without giving effect to the following provisions: Treasury
Regulation Sections 1.382-2T(g)(2), 1.382-2T(g)(3), 1.382-2T(h)(2)(iii) and
1.382-2T(h)(6)(iii), (ii) by treating every Person or Public Group which owns
Stock, whether directly or by attribution, as directly owning such Stock
notwithstanding any further attribution of such Stock to other Persons and
notwithstanding Treasury Regulation Section 1.382-2T(h)(2)(i)(A), (iii) by
substituting the term "Person" in place of "individual" in Treasury Regulation
Section 1.382-2T(g)(1), (iv) by taking into account ownership of Stock at any
time during the "testing period" as defined in Treasury Regulation Section
1.382-2T(d)(1), and (v) by treating each day during the testing period as if
it
were a "testing date" as defined in Treasury Regulation Section
1.382-2T(a)(4)(i); in addition, for the purpose of determining whether any
Person or Public Group has a Prohibited Ownership Percentage as of any date,
the
definition of Stock set forth in Section (A)(10) shall be applied in lieu of
the
definition in Treasury Regulation Section 1.382-2T(f)(18), except that any
Option shall be treated as Stock only to the extent treating it as Stock would
cause an increase in ownership of Stock by such Person and such Option would
be
deemed exercised pursuant to Treasury Regulations in effect from time to time
(disregarding whether treating such Option as exercised would cause an ownership
change);
(8)
“Prohibited
Person”
shall
mean any Person who has or would have, if a Transfer or purported Transfer
were
completed, a Prohibited Ownership Percentage;
(9)
"Purported
Acquiror"
means
any Person that purports to acquire record, beneficial, legal or any other
ownership of Excess Shares. If there is more than one Purported Acquiror with
respect to certain Excess Shares (for example, if the Purported Acquiror of
record ownership of such Excess Shares is not the Purported Acquiror of
beneficial ownership of such Excess Shares), then references to "Purported
Acquiror" shall include any or all of such Purported Acquirors, as
appropriate;
(10)
"Stock"
refers
to all classes or series of stock of the Corporation , all Options to acquire
stock of the Corporation and all other interests that would be treated as stock
in the Corporation pursuant to Treasury Regulation Section 1.382-2T(f)(18)(iii),
other than (i) stock described in Section 1504(a)(4) of the Code and (ii) stock
that would be described in such Section 1504(a)(4) but is not so described
solely because it is entitled to vote as a result of dividend
arrearages;
(11)
"Transfer"
shall
mean any conveyance, issuance, sale, transfer, gift, assignment, devise or
other
disposition, by any means, of legal, record or beneficial ownership (direct
or
indirect) of Stock, whether such means are direct or indirect, voluntary or
involuntary, by operation of law or otherwise, or any agreement to take any
such
action or cause any such events, including, without limitation, the transfer
of
any ownership interest in any entity that owns (directly or indirectly) Stock
(and any reference in this Article IX to a Transfer of Stock shall include
any
Transfer of any interest in any such entity and references to the Persons to
whom Stock is Transferred shall include Persons to whom any interest in any
such
entity shall have been Transferred); and
(12)
"Transferee"
means
any Person to whom Stock is Transferred.
(B)
TRANSFER AND OWNERSHIP RESTRICTIONS. In order to preserve the net operating
loss
carryforwards (including any "net unrealized built-in loss," as defined under
applicable law), capital loss carryforwards, general business credit
carryforwards, alternative minimum tax credit carryforwards and other tax
benefits (collectively, the "Tax
Benefits")
to
which the Corporation or any member of the Corporation's "affiliated group,"
as
that term is used in Section 1504 of the Code, is or becomes entitled pursuant
to the Code and the Treasury Regulations or any applicable state statute, from
and after the effective time of this Article IX until the Expiration
Date,
no
Transfer of any Stock may be made to the extent that such Transfer, if effected:
(a) would cause the Transferee or any Person or Public Group to have a
Prohibited Ownership Percentage; or (b) would increase the Stock ownership
percentage (determined in accordance with Section 382 of the Code and the
Treasury Regulations thereunder) of any Transferee or any Person or Public
Group
having a Prohibited Ownership Percentage.
(C)
WAIVER OF RESTRICTIONS. Notwithstanding anything herein to the contrary, the
Board of Directors may waive the application of any of the restrictions
contained in Section (B) of this Article IX, including any Transfer of Stock
that would otherwise be prohibited, in any instance in which the Board of
Directors determines that a waiver would be in the best interests of the
Corporation, notwithstanding the effect of such waiver on the Tax Benefits.
The
Board of Directors may impose any conditions that it deems reasonable and
appropriate in connection with such a waiver, including without limitation,
restrictions on the ability of any Transferee to Transfer Stock acquired through
a Transfer. A waiver of the Board of Directors hereunder may be given
prospectively or retroactively.
(D)
PURPORTED TRANSFER IN VIOLATION OF TRANSFER RESTRICTION. Unless a waiver of
the
Board of Directors is obtained as provided in Section (C) of this Article IX,
any purported Transfer of Excess Shares (other than a Transfer as provided
in
Section (D)(2) of this Article IX or an automatic transfer as provided below)
shall be null and void ab
initio
and
shall not be effective to Transfer any record, legal, beneficial or any other
ownership of such Excess Shares to the Purported Acquiror, who shall not be
entitled to any rights as a stockholder of the Corporation with respect to
such
Excess Shares, and such Excess Shares shall be automatically transferred
pursuant to Delaware General Corporations Law Section 202(c)(4) to an agent
designated by the Corporation (the “Agent”).
Any
future dividends or distributions payable on any Excess Shares shall be paid
to
the Agent until the Excess Shares are sold by it. A Transfer that is null and
void under this Section (D) shall not adversely affect the validity of any
other
Transfer of any Stock in the same or any other related transaction.
(1)
Demand
by Corporation.
Unless
a waiver of the Board of Directors is obtained as provided in Section (C) of
this Article IX, within 30 days of a determination by the Board of Directors
that there has been or is threatened a purported Transfer of Excess Shares
to a
Purported Acquiror, or that a Person proposes to take any action in violation
of
this Article IX (whether or not such action is intentional), the Corporation
shall make a demand on the Purported Acquiror to transfer or cause the transfer
of any certificate or other evidence of purported ownership of the Excess Shares
within the Purported Acquiror's possession or control, along with the Prohibited
Distributions, to the Agent. Any failure by the Purported Acquiror to transfer
or cause the transfer of any certificate or other evidence of purported
ownership of the Excess Shares to the Agent shall not negate the automatic
transfer of such Excess Shares to the Agent.
(2)
Transfer
of Excess Shares and Prohibited Distributions to Agent.
Upon
demand by the Corporation, the Purported Acquiror shall transfer or cause the
transfer of any certificate or other evidence of purported ownership of the
Excess Shares within the Purported Acquiror's possession or control, along
with
the Prohibited Distributions, to the Agent. The Agent shall sell in an
arms-length transaction (through the NASDAQ Stock Market, if possible, but
in
any event consistent with applicable law) any Excess Shares provided, however,
that the Agent shall, in its reasonable discretion, effect such sale or sales
in
an orderly fashion and shall not be required to effect any such sale within
any
specific time frame if, in the Agent’s reasonable discretion, such sale or sales
would disrupt the market for the Common Stock or other securities of the
Corporation or would otherwise substantially adversely affect the value of
the
Common Stock or such other securities. The proceeds of such sale shall be
referred to as "Sales
Proceeds."
If,
after purportedly acquiring the Excess Shares, the Purported Acquiror has
purported to sell some or all of them to an unrelated party in an arms-length
transaction, the Purported Acquiror shall be deemed to have sold such Excess
Shares on behalf of the Agent, and in lieu of transferring the Prohibited
Distributions to the Agent, the Purported Acquiror shall transfer to the Agent
the Prohibited Distributions and the proceeds of such sale (the "Resale
Proceeds"),
except to the extent that the Agent grants written permission to the Purported
Acquiror to retain a portion of the Resale Proceeds not exceeding the amount
that would have been payable by the Agent to the Purported Acquiror pursuant
to
Section (D)(3) of this Article IX if the Excess Shares had been sold by the
Agent rather than by the Purported Acquiror.
Any
purported Transfer of the Excess Shares by the Purported Acquiror other than
a
transfer which (a) is described in the preceding sentences of this Section
(D)(2) or occurs automatically to the Agent and (b) does not itself violate
the
provisions of this Article IX shall be null and void ab
initio
and
shall not be effective to transfer any ownership of the Excess
Shares.
(3)
Allocation
of Sale Proceeds, Resale Proceeds and Prohibited Distributions.
The
Sales Proceeds, the Resale Proceeds if applicable, and Prohibited Distributions
if applicable shall be allocated as follows: (1) first to the Agent in an amount
equal to the expenses incurred in selling such Excess Shares; then (2) second,
to the Purported Acquiror up to the following amount: (a) the purported purchase
price paid or value of consideration surrendered by the Purported Acquiror
for
the Excess Shares, or (b) where the purported Transfer of the Excess Shares
to
the Purported Acquiror was by gift, inheritance, or any similar purported
Transfer, the fair market value of the Excess Shares at the time of such
purported Transfer; and then (3) third any remaining amounts to an entity
designated by the Corporation that is described in Section 501(c)(3) of the
Code, contributions to which must be eligible for deduction under each of
Sections 170(b)(1)(A), 2055 and 2522 of the Code. In no event shall any Excess
Shares, Sales Proceeds, Resale Proceeds or Prohibited Distributions inure to
the
benefit of the Corporation or the Agent, except to the extent used to cover
expenses incurred by the Agent in performing its duties hereunder.
(4)
Remedies.
Without
limiting any other remedies available to the Corporation, if a Purported
Acquiror shall fail to comply with Section (D)(2) of this Article IX within
thirty (30) days of the Corporation’s demand, and unless a waiver of the Board
of Directors is obtained as provided in Section (C) of this Article IX, the
Corporation shall promptly take all cost effective actions which it believes
appropriate to compel the Purported Acquiror to surrender to the Agent the
certificates representing any purported ownership of Excess Shares, the Resale
Proceeds, and/or the Prohibited Distributions or to enjoin or rescind any such
purported Transfer. The Board of Directors may authorize such additional actions
as it deems advisable to give effect to the provisions of this Article IX,
including, without limitation, refusing to give effect on the books of the
Corporation to any such purported Transfer. The Corporation is authorized
specifically to seek equitable relief, including injunctive relief, to enforce
or prevent a violation of the provisions of this Article IX.
(5)
Liability.
If any
Person shall knowingly violate, or knowingly cause any other Person under the
control of such Person ("Controlled
Person")
to
violate, Section (B) of this Article IX, then that Person and any Controlled
Person shall be jointly and severally liable for, and shall pay to the
Corporation, such amount as will, after taking account of all taxes imposed
with
respect to the receipt or accrual of such amount and all costs incurred by
the
Corporation as a result of such violation, put the Corporation in the same
financial position as it would have been in had such violation not occurred.
(E)
OBLIGATION TO PROVIDE INFORMATION. At the request of the Corporation or as
a
condition to the registration of the Transfer of any Stock, any Person who
is a
beneficial, legal or record holder of Stock, and any proposed Transferee and
any
Person controlling, controlled by or under common control with the proposed
Transferee, shall provide such information as the Corporation may request from
time to time in order to determine compliance with this Article IX or the status
of the Corporation’s Tax Benefits.
(F)
LEGENDS. The Board of Directors may require that any certificates issued by
the
Corporation evidencing ownership of shares of Stock that are subject either
to
the restrictions on transfer and ownership contained in this Article IX or
to
conditions imposed by the Board of Directors under Section (C) of this Article
IX bear a conspicuous legend referencing the applicable
restrictions.
(G)
AUTHORITY OF BOARD OF DIRECTORS. Nothing contained in this Article IX shall
limit the authority of the Board of Directors to take such other action to
the
extent permitted by law as it deems necessary or advisable to protect the
Corporation in preserving the Tax Benefits. Without limiting the generality
of
the foregoing, in the event of a change in law (including applicable
regulations) making one or more of the following actions necessary or desirable
or in the event that the Board of Directors believes one or more of such actions
is in the best interest of the Corporation, the Board of Directors may
accelerate or extend the Expiration Date; provided that the Board of Directors
shall determine in writing that such acceleration or extension is reasonably
necessary or desirable to preserve the Tax Benefits or that the continuation
of
these restrictions is no longer reasonably necessary for the preservation of
the
Tax Benefits, as the case may be. In addition, the Board of Directors may,
to
the extent permitted by law, from time to time establish, modify, amend or
rescind Bylaws, regulations and procedures of the Corporation not inconsistent
with the express provisions of this Article IX for purposes of determining
whether any Transfer of Stock would jeopardize the Corporation's ability to
preserve or use the Tax Benefits, or for the orderly application, administration
and implementation of the provisions of this Article IX. The Board of Directors
shall have the exclusive power and authority to administer this Article IX
and
to exercise all rights and powers specifically granted to the Board of
Directors, or as may be necessary or advisable in the administration of this
Article IX, including without limitation, the right and power to (1) interpret
the provisions of this Article IX, (2) make all calculations and determinations
deemed necessary or advisable for the administration of this Article IX and
(3)
determine value in good faith, which determination shall be conclusive. In
the
case of an ambiguity in the application of any of the provisions of this Article
IX, including any definition used herein, the Board of Directors shall have
the
power to determine the application of such provisions with respect to any
situation based on its reasonable belief, understanding or knowledge of the
circumstances. In the event this Article IX requires an action by the Board
of
Directors but fails to provide specific guidance with respect to such action,
the Board of Directors shall have the power to determine the action to be taken
so long as such action is not contrary to the provisions of this Article IX.
All
such actions, calculations, interpretations and determinations which are done
or
made by the Board of Directors in good faith shall be final, conclusive and
binding on the Corporation, the Agent, and all other parties; provided, however,
the Board of Directors may delegate all or any portion of its duties and powers
under this Article IX to a committee of independent members of the Board of
Directors as it deems necessary or advisable.
(H)
BENEFITS OF THIS ARTICLE IX. Nothing in this Article IX shall be construed
to
give to any Person other than the Corporation or the Agent any legal or
equitable right, remedy or claim under this Article IX. This Article IX shall
be
for the sole and exclusive benefit of the Corporation and the
Agent.
(I)
SEVERABILITY. If any provision of this Article IX or the application of any
such
provision to any Person or under any circumstance shall be held invalid,
illegal, or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Article IX.
(J)
WAIVER. With regard to any power, remedy or right provided herein or otherwise
available to the Corporation or the Agent under this Article IX, (i) no waiver
will be effective unless expressly contained in a writing signed by the waiving
party; and (ii) no alteration, modification or impairment will be implied by
reason of any previous waiver, extension of time, delay or omission in exercise,
or other indulgence.
Annex
B
(Audit
Committee Charter)
AUDIT
COMMITTEE CHARTER
The
primary function of the Audit Committee is to assist the Board of Directors
in
fulfilling its oversight responsibilities by reviewing the financial information
which will be provided to the stockholders and others, the systems of internal
controls which management and the Board of Directors have established, and
the
Corporation's audit and financial reporting process.
The
Audit
Committee shall be directly responsible for the appointment, compensation,
retention and oversight of the work of any registered public accounting firm
engaged (including resolution of disagreements between management and the
auditor regarding financial reporting) for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services for the
Corporation, and each such registered public accounting firm shall report
directly to the Audit Committee.
The
Audit
Committee shall primarily fulfill these responsibilities by carrying out the
activities enumerated in Section IV of this Charter.
COMPOSITION
The
Audit
Committee shall be comprised of three or more independent directors. All members
of the Audit Committee shall have a working familiarity with basic finance
and
accounting practices, and at least one member of the Audit Committee shall
have
accounting or related financial management expertise.
MEETINGS
The
Committee shall meet on a regular basis and shall hold special meetings as
circumstances require.
RESPONSIBILITIES
AND DUTIES
To
fulfill its responsibilities and duties the Audit Committee shall:
|
A.
|
Review
this Charter at least annually and recommend any changes to the Board
of
Directors.
|
|
B.
|
Review
the Corporation's annual financial statements and any other relevant
reports or other financial information.
|
|
C.
|
Review
the regular internal financial reports prepared by management.
|
|
D.
|
Select
the independent accountants and approve the fees and other compensation
to
be paid to the independent accountants.
|
|
E.
|
Pre-approve
all audit and permitted non-audit services to be performed by the
independent accountants.
|
|
F.
|
Review
and ensure the independence of the independent accountants. This
review
shall cover and include services, fees, quality control procedures
and a
formal written statement from the independent auditors regarding
relationships between the independent auditors and the Corporation,
consistent with Independence Standard Board Standard No. 1.
|
|
G.
|
Review
the performance of the independent accountants and discharge the
independent accountants if and when circumstances warrant.
|
|
H.
|
Following
completion of the annual audit, review separately with the independent
accountants and management any problems or difficulties encountered
during
the course of the audit.
|
|
I.
|
Establish
procedures for the receipt, retention, and treatment of complaints
received by the Corporation regarding accounting, internal accounting
controls, or auditing matters.
|
|
J.
|
Establish
procedures for the confidential, anonymous submission by employees
of the
Corporation of concerns regarding questionable accounting or auditing
matters.
|
|
K.
|
Perform
any other activities consistent with this Charter, the Corporation's
Bylaws and governing law, as the Audit Committee or the Board deems
necessary or appropriate.
|
RESOURCES
AND AUTHORITY
The
Audit
Committee shall have the resources and authority to discharge its
responsibilities, including the authority, to the extent it deems necessary
or
appropriate, to retain independent legal, accounting or other advisors. The
Corporation shall provide funding, as determined by the Audit Committee, for
payment of compensation to the independent auditors, as well as for any
independent advisers or administrative support employed by the Audit
Committee.
Annex
C
(Selected
Compensation Peer Groups)
The
following list of companies are a sample of those included among the Company’s
compensation peer groups during 2007 and 2008.
·
|
Culpepper
Peer Group One (for
our executive management as set on March 2, 2007): Accelrys, Inc.;
AMICAS,
Inc. (VitalWorks); BroadVision; Centillium Communications, Inc.;
Echelon
Corporation; Electronic Clearing House, Inc.; Embarcadero Technologies,
Inc.; ILOG, Inc.; Intellisync Corp.; j2 Global Communications; LGE
MobileComm USA; LookSmart; Maxwell Technologies, Inc.; NetManage
Inc.;
Network Equipment Technologies; Occam Networks, Inc.; Overland Storage,
Inc.; PalmSource, Inc.; Phoenix Technologies, Ltd.; Saba Software,
Inc.;
SCM Microsystems, Inc.; Secure Computing Corp.; SSA Global Technologies;
SumTotal Systems; Tumbleweed Communications Corp.; VA Software Corp.;
Vitria Technology, Inc.; and ZiLOG.
|
·
|
Culpepper
Peer Group Two
(for our executive management as set on March 2, 2007): Actuate Corp.;
Agile Software Corp.; BroadVision; Centillium Communications, Inc.;
Cogent, Inc.; Directed Electronics, Inc.; Ditech Communications Corp.;
Dot
Hill Systems Corp.; DSP Group, Inc.; Echelon Corporation; Electronic
Clearing House, Inc.; Embarcadero Technologies, Inc.; Genesis Microchip;
ILOG, Inc.; Intellisync Corp.; j2 Global Communications; LGE MobileComm
USA; LookSmart; Maxwell Technologies, Inc.; MTI Technology Corporation;
NETGEAR, Inc.; NetManage Inc.; Network Equipment Technologies; Occam
Networks, Inc.; OmniVision Technologies, Inc.; Overland Storage,
Inc.;
Pac-West Telecomm, Inc.; PalmSource, Inc.; Power Integrations, Inc.;
Rambus, Inc.; SCM Microsystems, Inc.; Secure Computing Corp.; SimpleTech,
Inc.; SonicWALL, Inc.; SSA Global Technologies; Synaptics, Inc.;
Tivo,
Inc.; Tumbleweed Communications Corp.; VA Software Corp.; Vitria
Technology, Inc.; and Websense,
Inc.
|
·
|
Equilar
Total Compensation Peer Group (for
our CEO as set on March 5, 2008): Actuate Corp; Applix Inc; Art Technology
Group Inc; Bankrate Inc; Bottomlilne Technologies Inc; Callidus Software
Inc; Chordiant Software Inc; Concur Technologies Inc; eCollege.com;
Keynote Systems Inc; Moldflow Corp; Netlogic Microsystems Inc; Netratings
Inc; Netsmart Technologies Inc; OpenTV Corp; Phase Forward Inc; Quovadx
Inc; Shutterfly Inc; Sumtotal Systems Inc; Synplicity Inc; Taleo
Corp;
TheStreet.com; Ultimate Software Group Inc; Vasco Data Security
International Inc; Website Pros Inc..
|
·
|
Equilar
Total Compensation Peer Group (for
our CFO as set on March 5, 2008): Actividentity Corp; Applix Inc;
Art
Technology group Inc; Autobytel Inc; Bottomline Technologies Inc;
Chordiant Software Inc; Cogent, Inc; Concur Technologies Inc; Divx
Inc;
eCollege.com; Embarcadero Technologies Inc; Internet Capital Group
Inc;
Keynote Systems Inc; Knot Inc; Netlogic Microsystems Inc; Netratings
Inc;
Netsmart Technologies Inc; Online Resources Corp; Opentv Corp; Opnet
Technologies Inc; Opsware Inc; Phase Forward Inc; Quovadx Inc; Shutterfly
Inc; Smith Micro Software Inc; Spark Networks Plc; Sumtotal Systems
Inc;
Synchronoss Technologies Inc; Synplicity Inc; Ultimate Software Group
Inc;
Unica Corp; Vasco Data Security International Inc; Web.com, Inc;.
Website
Pros Inc.
|
STAMPS.COM
INC.
PROXY
Annual
Meeting of Stockholders, May 22, 2008
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 Thursday, May 22, 2008 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 2007 Annual
Meeting of Stockholders to be held at the Ritz Carlton Marina del Rey, 4375
Admiralty Way, Marina del Rey, California, 90292 on May 22, 2008 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 2011 or until his successor is duly elected and
qualified;
|
|
|
|
|
FOR
|
|
WITHHOLD
AUTHORITY TO VOTE
|
|
|
Kenneth
McBride
|
|
|
|
|
2.
|
To
approve an amendment to the Company's Amended and Restated Certificate
of
Incorporation which shall effect, upon filing, certain restrictions
upon
certain persons seeking to become five percent stockholders in
order to
preserve tax treatment of the Company’s tax net operating
losses.
|
|
FOR
o
|
|
AGAINST
|
|
ABSTAIN
|
|
|
3.
|
To
ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for 2008.
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
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
directors listed above, FOR the amendment of the Amended
and Restated Certificate of Incorporation
and FOR the ratification of Ernst & Young. If no specification is made for
the amendment proposal, the Proxy will not be voted automatically for the
proposal.
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))
|
|
|
|