Abstentions. Abstentions
will be counted for purposes of determining a quorum at the Annual
Meeting. An abstention for any proposal, other than
Proposal 1 (Nomination and Election of Directors Proposal),
will have the same effect as a vote against such
proposal. As to Proposal 1 (Nomination and Election
of Directors Proposal), because the number of nominees is equal to
the number of directors being elected at the Annual Meeting,
abstentions will not affect the election of the nominees to the
Board as long as each nominee receives at least one vote in favor
of the nominee’s election.
Broker Discretionary Voting. If your shares are
held in a brokerage account, by a bank or other nominee, you are
considered the beneficial owner of shares held in “street
name,” and the proxy materials are being sent to you by your
broker, bank, or other nominee who is considered, with respect to
those shares, the stockholder of record. As the
beneficial owner, you have the right to direct your broker, bank,
or other nominee how to vote. If you do not give
instructions to your brokerage firm or bank, it will still be able
to vote your shares with respect to “discretionary”
proposals but will not be allowed to vote your shares with respect
to “non-discretionary” proposals. The
Company expects that Proposal 4 (Accounting Firm Ratification
Proposal) will be considered to be a discretionary proposal on
which banks and brokerage firms may vote. The Company
expects that all other proposals being presented to stockholders at
the Annual Meeting will be considered to be non-discretionary items
on which banks and brokerage firms may not
vote. Therefore, if you do not instruct your broker or
bank regarding how you would like your shares to be voted, your
bank or brokerage firm will not be able to vote on your behalf with
respect to these proposals. In the case of these
non-discretionary items, the shares will be treated as
“broker non-votes.” Broker non-votes are shares that
are held in “street name” by a bank or brokerage firm
that indicates on its proxy that it does not have discretionary
authority to vote on a particular matter. Your failure
to give instructions to your bank or broker will not (i)
affect the
outcome of Proposal 1 (Nomination and
Election of Directors Proposal), as long as a nominee
receives at least one vote in favor of the nominee’s
election; nor (ii) affect the outcomes of Proposal 2
(Say-on-Pay
Proposal) or 3 (Say-on-Frequency
Proposal) because these proposals require the affirmative
vote of a majority in voting power of the shares present in person
or by proxy and entitled to vote at the Annual Meeting and on these
proposals, and broker non-votes will not be deemed “entitled
to vote on the proposal” and therefore are not counted in the
vote for these proposals.
Expenses of Proxy Solicitation
This
solicitation is being made by the Company, and officers, directors,
and regular employees of AutoWeb may solicit proxies in person or
by regular mail, electronic mail, facsimile transmission, or
personal calls. These persons will receive no additional
compensation for solicitation of proxies but may be reimbursed for
reasonable out-of-pocket expenses. In addition, AutoWeb may retain
a proxy solicitor in conjunction with the Annual Meeting. If
AutoWeb does engage a proxy solicitor, the Company would likely
engage Mackenzie Partners for such services, and AutoWeb estimates
that the fees and costs for those proxy solicitation services will
be approximately $6,500 plus reasonable disbursements.
AutoWeb
will pay all of the expenses of soliciting proxies to be voted at
the Annual Meeting. Banks, brokerage firms and other
custodians, nominees or fiduciaries will be requested to forward
soliciting material to their principals and to obtain authorization
for the execution of proxies and will be reimbursed for their
reasonable out-of-pocket expenses incurred in that
regard.
Voting of Proxies
Shares
may be voted by completing, dating, and signing the accompanying
proxy card and promptly returning it in the enclosed envelope.
Stockholders may provide voting instructions for voting of their
proxies using the Internet at www.proxyvote.com
or by calling 1.800.690.6903. Providing voting instructions using
the Internet or by calling requires stockholders to input the
Control Number located on their proxy cards. The cutoff
time for providing voting instructions via the Internet or by
calling is 11:59 p.m. Eastern Time the day before the date of
the Annual Meeting (“Voting
Instructions Cutoff Time”).
All
properly signed proxies received prior to the vote at the Annual
Meeting that are not properly revoked prior to the vote will be
voted at the Annual Meeting according to the instructions indicated
on the proxies or, if no direction is indicated, such proxies will
be voted “FOR”
Proposal 1 (Nomination and Election of Directors Proposal);
“FOR”
Proposal 2 (Say-on-Pay Proposal); “FOR” a two-year frequency period
under Proposal 3 (Say-on-Frequency Proposal); and
“FOR”
Proposal 4 (Accounting Firm Ratification
Proposal). The Board does not presently intend to
present any other matter for action at the Annual Meeting and no
stockholder has given timely notice in accordance with the Bylaws
of any matter that it intends to be brought before the
meeting. If any other matters are properly brought
before the Annual Meeting, the persons named in the proxies will
have discretion to vote on those matters in accordance with their
best judgment.
Revocability of Proxy
If you
are the holder of record for your shares, you may revoke your proxy
at any time before it is exercised at the Annual Meeting by taking
either of the following actions: (i) delivering to the
Company’s Secretary a revocation of the proxy or a proxy
relating to the same shares and bearing a later date prior to the
vote at the Annual Meeting; or (ii) attending the Annual
Meeting and voting in person, although attendance at the Annual
Meeting will not, by itself, revoke a proxy. Stockholders may also
revoke a prior proxy by providing later voting instructions for
voting of a later proxy prior to the Voting Instructions Cutoff
Time.
Recommendation of the Board of Directors
The
Board recommends that AutoWeb stockholders vote “FOR” the election of Mr. Michael
J. Fuchs and Ms. Janet M. Thompson as Class III Directors under
Proposal 1 (Nomination and Election of Directors Proposal);
“FOR”
Proposal 2 (Say-on-Pay Proposal); “FOR” a two-year frequency period
under Proposal 3 (Say-on-Frequency Proposal); and
“FOR”
Proposal 4 (Accounting Firm Ratification
Proposal).
Additional Information
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING TO BE HELD ON JUNE 20, 2019: Copies of the
Notice of Annual Meeting of Stockholders, this Proxy Statement, the
form of Proxy Card, and the Company’s Annual Report on
Form 10-K, as amended, for the fiscal year ended December 31,
2018, are available online at http://www.autoweb.com/proxymaterials. Stockholders
wishing to attend the Annual Meeting may obtain directions by
calling the Company at 949.862.1393.
A copy
of the Company’s Annual Report on Form 10-K, as amended,
for the fiscal year ended December 31, 2018, accompanies this
Proxy Statement. If requested, AutoWeb will furnish you
with a copy of any exhibit listed on the exhibit index to the
Company’s Annual Report on Form 10-K, as amended, for
the fiscal year ended December 31, 2018, upon payment of a
reasonable copy fee.
Because
the Company qualifies as a “smaller reporting company”
(as defined in applicable Securities and Exchange Commission
(“SEC”) rules), it has
elected to comply with the scaled compensation disclosure
requirements applicable to smaller reporting companies.
Accordingly, this Proxy Statement does not include certain
disclosures and tables that would otherwise be
required.
TO
ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING,
PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING. PRIOR TO THE VOTING
INSTRUCTIONS CUTOFF TIME, STOCKHOLDERS MAY ALSO PROVIDE VOTING
INSTRUCTIONS USING THE INTERNET AT PROXYVOTE.COM
OR BY CALLING 1.800.690.6903 AS DESCRIBED IN THIS PROXY STATEMENT
AND ACCOMPANYING PROXY CARD.
NOMINATION AND ELECTION OF DIRECTORS
Nominees for Class III Directors
Mr.
Michael J. Fuchs and Ms. Janet M. Thompson are the Board’s
nominees as Class III Directors for election at the Annual
Meeting. The Board made these nominations at the
recommendation of the Board’s Corporate Governance and
Nominations Committee. A Class III Director will
hold office until the 2022 Annual Meeting of Stockholders and until
that director’s successor is duly qualified and
elected.
Michael J.
Fuchs. Mr. Fuchs has served as a director of AutoWeb
since September 1996 and became Chairman in June 1998. Since May
2001, Mr. Fuchs has been engaged in private investing for his own
behalf. From November 2000 to May 2001, Mr. Fuchs was Chief
Executive Officer of MyTurn.com, Inc. and was Interim Chief
Executive Officer from April 2000 to October 2000. Mr. Fuchs was a
consultant from November 1995 to April 2000. Mr. Fuchs was Chairman
and Chief Executive Officer of Home Box Office, a division of
TimeWarner Entertainment Company, L.P., a leading pay-television
company, from October 1984 until November 1995, and Chairman and
Chief Executive Officer of Warner Music Group, a division of Time
Warner Inc., from May 1995 to November 1995. Mr. Fuchs holds a
Bachelor of Arts degree from Union College and a J.D. Degree from
the New York University School of Law. Mr. Fuchs was a significant
early investor in the Company. Mr. Fuchs’ experience as an
executive officer in various entertainment and media companies and
his broad investment and management experience led the Board to
conclude that Mr. Fuchs should serve as one of the Company’s
directors.
Janet M.
Thompson. Ms. Thompson has served as a director of
AutoWeb since March 2008. Since February 2019, Ms. Thompson has
been Senior Vice President of HAAH Automotive Holdings, exclusive
distributor for Zotye USA. From January 2015 to February 2019, Ms.
Thompson was Senior Vice President of Ipsos Automotive, a global
automotive market research company. Prior to that Ms. Thompson was
Vice President, Marketing of Advanstar Communications Inc., the
leading provider of integrated media solutions to the automotive
aftermarket, pharmaceutical, healthcare, power sports and fashion
industries from July 2011 to January 1, 2015; Vice President,
Automotive Group for The Marketing Arm, an Omnicom Group agency,
from January 2011 to June 2011; Executive Vice President of the
Diversified Agency Services Division of Omnicom Group, an
advertising firm, from November 2007 to August 2010; Vice
President, Marketing Nissan and Infiniti Divisions of Nissan North
America, from July 2004 to September 2007; and from July 1999 to
July 2004, Ms. Thompson was Chief Executive Officer and President
of The Designory, Inc., a marketing firm owned by the Omnicom
Group. Ms. Thompson held sales or marketing positions at Mazda
Motor of America, Toyota Motor Sales, U.S.A. and Chrysler
Corporation, from 1972 to 1994. Ms. Thompson received a Bachelor of
Arts degree in business from Western Michigan University and a
Master of Business Administration from University of Detroit. Ms.
Thompson has the distinction of being named one of the Top 100
Women in the Automotive Industry in both 2005 and 2010. Ms.
Thompson’s experience as an advertising and marketing
executive in the automotive industry led the Board to conclude that
Ms. Thompson should serve as one of the Company’s
directors.
Voting
for Election of Class III Directors
The
persons named in the enclosed proxy card will vote
“FOR” the
election of Michael J. Fuchs and Janet M. Thompson as
Class III Directors unless instructed otherwise in the
proxy. Because no other nominees have been properly and
timely nominated in accordance with the Bylaws, Mr. Fuchs and Ms.
Thompson will each be elected as Class III Directors as long
as they each receive at least one vote for the nominee’s
respective election. Holders of Common Stock are not
entitled to cumulate their votes in the election of
directors. Although Mr. Fuchs and Ms. Thompson have
each consented to serve as a director if elected, and the Board has
no reason to believe that either of them will be unable to serve as
a director, if Mr. Fuchs or Ms. Thompson withdraws their
nomination or otherwise becomes unavailable to serve, the persons
named as proxies will vote for any substitute nominee designated by
the Board. Abstentions and “broker
non-votes” will not have any effect on the outcome of the
voting for the election of Class III Directors as long as a
nominee receives at least one vote in favor of the nominee’s
election.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE
“FOR”
THE ELECTION OF MR. FUCHS AND MS. THOMPSON.
PROPOSAL 2
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE
OFFICERS
The Board believes that the Company’s
long-term success depends in large measure on the talents of its
employees. AutoWeb’s compensation system plays a significant
role in its ability to attract, retain and motivate the highest
quality workforce. The Board believes that the
Company’s current compensation program directly links
executive compensation to performance, aligning the interests of
AutoWeb’s executive officers with those of its stockholders.
The Board endorses the Company’s executive compensation
program and encourages stockholders to review the Named Executive
Officer Compensation Narrative, tables and disclosures included
under the Section entitled “EXECUTIVE
COMPENSATION” of this
Proxy Statement.
Section 14A of the Securities Exchange Act of
1934, as amended, (“Exchange
Act”) requires that the Company periodically
submit to the stockholder for an advisory vote a resolution to
approve the compensation of its named executive officers as
described in this Proxy Statement. At the Company’s 2013
annual meeting of stockholders, approximately 58% of the votes
present and entitled to vote on the proposal voted to approve the
holding of this advisory vote every two years. In light of this
vote, the Board determined to include a stockholder advisory vote
on the compensation of the named executive officers in the
Company’s proxy materials every two years. At the
Company’s 2017 annual meeting of stockholders,
approximately 94% of the votes present and entitled to vote on the
proposal voted for approval of this resolution.
The Board recommends that the stockholders vote
“FOR” the following
resolution:
RESOLVED, that the stockholders approve the compensation
of the Company’s named executive officers as described in
this Proxy Statement under “Executive Compensation,”
including the Named Executive Officer Compensation Narrative and
the tabular and narrative disclosure contained in this Proxy
Statement.
Because
the vote on this Proposal 2 is advisory, it will not be binding
upon the Board or the Board’s Compensation Committee, and
neither the Board nor the Compensation Committee will be required
to take any action as a result of the outcome of the vote on this
proposal. However, the Board and Compensation Committee value
the opinions that the Company’s stockholders express in their
votes and will take into account the outcome of the vote when
considering future executive compensation
arrangements.
Vote Required
The
affirmative vote of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote at the Annual
Meeting and on the proposal is required to approve the advisory
(non-binding) vote on executive compensation. The persons
named in the enclosed proxy card will vote “FOR” the proposal unless
instructed otherwise in the proxy. Abstentions will have the
same effect as votes against the proposal. “Broker
non-votes” will not have any effect on the outcome of this
proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL
2.
PROPOSAL 3
ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTES ON
COMPENSATION
OF NAMED EXECUTIVE OFFICERS
Section
14A of the Exchange Act requires that the Company include in this
Proxy Statement a non-binding stockholder vote to advise on whether
the Say-on-Pay vote should occur every one, two, or three years.
You have the option to vote for any one of the three options
or to abstain on the matter.
Accordingly, the
following resolution will be submitted to the stockholders at the
Annual Meeting:
RESOLVED, that the Company hold an
advisory vote to approve the compensation of the Company’s
named executive officers as disclosed pursuant to Item 402 of
Regulation S-K with a frequency of once every one, two, or three
year(s), with the frequency, if any, that receives the
affirmative vote of a majority of the shares present in person or
by proxy and entitled to vote at the Annual Meeting and on this
proposal being the resolution adopted by the
stockholders.
At the
Company’s 2013 annual meeting of stockholders, approximately
58% of the votes present and entitled to vote on the proposal voted
to approve the holding of this advisory vote every two years. In
light of this vote, the Board has determined that an advisory vote
on executive compensation every two years is the best approach for
the Company and recommends that stockholders vote in favor of a
two-year frequency period. The Company’s stockholders
also have the opportunity to provide additional feedback on
important matters involving executive compensation even in years
when Say-on-Pay votes do not occur. For example, the rules of The
NASDAQ Capital Market (“Nasdaq”)
require the Company to seek stockholder approval for new employee
equity compensation plans and material revisions thereto. As
discussed under the section of this Proxy Statement entitled
“CORPORATE GOVERNANCE
MATTERS— Stockholder Communications with the Board of
Directors,” the Company provides stockholders an
opportunity to communicate directly with the Board, including on
issues of executive compensation.
Because
the vote on Proposal 3 is advisory, it will not be binding upon the
Board or the Compensation Committee, and neither the Board nor the
Compensation Committee will be required to take any action as a
result of the outcome of the vote on this proposal. However,
the Board and Compensation Committee value the opinions that the
Company’s stockholders express in their votes and will take
into account the outcome of the vote when considering the frequency
with which the advisory vote on executive compensation is presented
to stockholders.
Vote Required
Stockholder approval of a recommended frequency
period (one, two, or three years) requires the affirmative vote of
a majority in the voting power of the shares present in person or
by proxy and entitled to vote at the Annual Meeting and on the
proposal. The persons named in the enclosed proxy card will
vote FOR a two-year frequency period unless
instructed otherwise in the proxy. Abstentions will have the
same effect as votes against the proposal. “Broker
non-votes” will not have any effect on the outcome of this
proposal.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO CONDUCT AN ADVISORY
VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS EVERY TWO
YEARS.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Board’s Audit Committee has appointed Moss Adams LLP
(“Moss Adams”)
as the Company’s independent registered public accounting
firm for 2019. The Audit Committee and the Board
recommend that the Company’s stockholders ratify this
appointment. In line with this recommendation, the Board
intends to introduce the following resolution at the Annual
Meeting:
RESOLVED, that the appointment of Moss
Adams LLP as the independent registered public accounting firm for
the Company for the year 2019 is ratified.
Stockholder
ratification of the Audit Committee’s selection of Moss Adams
as the Company’s independent registered public accounting
firm is not required by the Bylaws or
otherwise. Nevertheless, the Board is submitting the
selection of Moss Adams to the stockholders for ratification as a
matter of good corporate practice and the Audit Committee will
reconsider whether to retain Moss Adams if the stockholders fail to
ratify its selection. In addition, even if the
stockholders ratify the selection of Moss Adams, the Audit
Committee may in its discretion appoint a different independent
registered public accounting firm at any time during the year if
the Audit Committee determines that a change is in the best
interests of the Company. A representative of Moss Adams
is expected to attend the Annual Meeting to make a statement if the
representative desires and to respond to appropriate questions that
may be asked by stockholders.
Vote Required
The
affirmative vote of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote at the Annual
Meeting and on the proposal is required to approve Proposal 4. The
persons named in the enclosed proxy card will vote
“FOR” the
proposal unless instructed otherwise in the proxy. Abstentions will
have the same effect as votes against the proposal. “Broker
non-votes” will not have any effect on the outcome of this
proposal.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL
4.
BOARD OF DIRECTORS
The
current members of the Board of AutoWeb are as
follows:
Name
|
|
Position
|
Michael J. Fuchs
|
74
|
Chairman of the
Board
|
Michael A.
Carpenter
|
72
|
Director
|
Matias de
Tezanos
|
39
|
Director
|
Chan W.
Galbato
|
56
|
Director
|
Mark N.
Kaplan
|
89
|
Director
|
Jared R.
Rowe
|
45
|
Director, President
and Chief Executive Officer
|
Janet M.
Thompson
|
69
|
Director
|
Jose
Vargas
|
40
|
Director
|
Michael J.
Fuchs.
See Mr. Fuchs’ biographical information included under
the section of this Proxy Statement entitled “PROPOSAL 1–NOMINATION AND ELECTION OF
DIRECTORS–Nominees for Class III
Directors.”
Michael A.
Carpenter. Mr. Carpenter has served as a director
of AutoWeb since September 2012. Mr. Carpenter served as the Chief
Executive Officer and as a director of Ally Financial Inc. from
November 2009 until his retirement in February 2015. Ally Financial
is one of the nation’s largest financial services companies,
with a concentration in automotive lending. In 2007, Mr. Carpenter
founded Southgate Alternative Investments, Inc. From 2002 to 2006,
he was Chairman and Chief Executive Officer of Citigroup
Alternative Investments, overseeing proprietary capital and
customer funds globally in various alternative investment vehicles.
From 1998 to 2002, Mr. Carpenter was Chairman and Chief Executive
Officer of Citigroup’s Global Corporate & Investment Bank
with responsibility for Salomon Smith Barney Inc. and
Citibank’s corporate banking activities globally. Mr.
Carpenter was named Chairman and Chief Executive Officer of Salomon
Smith Barney Inc. in 1998, shortly after the merger that created
Citigroup. Prior to Citigroup, Mr. Carpenter was Chairman and Chief
Executive Officer of Travelers Life & Annuity and Vice Chairman
of Travelers Group Inc. responsible for strategy and business
development. From 1989 to 1994, Mr. Carpenter was Chairman of the
Board, President and Chief Executive Officer of Kidder Peabody
Group Inc., a wholly owned subsidiary of General Electric Company.
From 1986 to 1989, Mr. Carpenter was Executive Vice President of GE
Capital Corporation. He first joined GE in 1983 as Vice President
of Corporate Business Development and Planning and was responsible
for strategic planning and development as well as mergers and
acquisitions. Earlier in his career, Mr. Carpenter spent nine years
as Vice President and Director of the Boston Consulting Group and
three years with Imperial Chemical Industries of the United
Kingdom. Mr. Carpenter was elected to the board of CIT, Inc., a
publicly held financial holding company, on May 1, 2016. He also
serves on the boards of Law Finance Group, US Retirement Partners,
the New York City Investment Fund, the Rewards Network, Inc.,
Client 4 Life Management Systems, and Validity Capital, and has
been a board member of the New York Stock Exchange, General Signal,
Loews Cineplex and various other private and public companies. Mr.
Carpenter received a Bachelor of Science degree from the University
of Nottingham, England, and a Master of Business Administration
from the Harvard Business School where he was a Baker Scholar. Mr.
Carpenter also holds an honorary degree of Doctor of Laws from the
University of Nottingham. Mr. Carpenter’s experience in
investment and commercial banking, executive management and capital
markets led the Board to conclude that Mr. Carpenter should serve
as one of the Company’s directors.
Matias de
Tezanos. Mr. de Tezanos has served as a director of
AutoWeb since October 1, 2015 and as the Company’s Chief
Strategy Officer from October 1, 2015 to February 13, 2017. From
October 1, 2013 to October 1, 2015, Mr. de Tezanos was a director
and chief executive officer of a company that provided an
internet-based, pay-per-click advertising marketplace for the
automotive industry, which was acquired by the Company as of
October 1, 2015. Mr. de Tezanos is a co-founder, director and the
Chief Executive Officer of People F, Inc., a holding company that
is focused on investments in technology, internet and media
(“PeopleFund”),
and a co-founder of, and currently serves as co-managing director
and chief executive officer of PF Holding, Inc., a holding company
that is focused on investments in technology, internet and media
affiliated with PeopleFund (“PF Holding”). Mr. de Tezanos also
serves as president and a director of PF Auto, Inc., an entity
affiliated with PeopleFund (“PF Auto”) and secretary and a
director of Auto Holdings Ltd., also an entity affiliated with
PeopleFund (“Auto
Holdings”). In addition, Mr. de Tezanos is an officer
or director of a number of privately-held companies, including
Ignite Holdings Company, Inc. DBA KingoEnergy, a global company
that offers off-grid communities prepaid solar energy service in
developing countries, Iguama Inc., an online marketplace offering
US products in Latin America, P3 Global Management Inc., a smart
city infrastructure development and advisory firm, Bidtellect,
Inc., Stellar Corporation G.K., CLPF, Inc., CookUnity Inc., Global
Media, Ltd., Healthcare.com Insurance Services, LLC, Kaptyn Inc.
(prior P3GM Holdings, Inc.), Longevity Holdings, Inc., Media Assets
Management Inc., Orionis Biosciences LLC, PFO Investment, LLC,
Startups.com Holding Inc., Blue Mountain 30 Inc., Blue Mountain 31
Inc., Blue Pacific Ventures Inc., Classifieds Corp., Gray Mountain
Inc., Mapfit Inc., Moshos Inc., People Ventures, Inc., Petrol
Ventures Inc., PF Classifieds Inc., PF Healthcare Inc., PFO
Investment, Inc., PFP Investment, Inc., RDBCOM Corporation, and
Startups.com Inc. Mr. de Tezanos attended the Conservatory of Music
in Guatemala in 2000.
Chan W. Galbato.
Mr. Galbato has served as a director of AutoWeb since January
2019. Mr. Galbato is Chief Executive Officer of Cerberus Operations
and Advisory Company, LLC. Prior to joining Cerberus in 2009, he
owned and managed CWG Hillside Investments LLC, a consulting
business, from 2007 to 2009. From 2005 to 2007, he served as
President and CEO of the Controls Group of businesses for Invensys
plc and President of Services for The Home Depot. Mr. Galbato
previously served as President and Chief Executive Officer of
Armstrong Floor Products and Chief Executive Officer of Choice
Parts. He spent 14 years with General Electric Company, holding
several operating and finance leadership positions within its
various industrial divisions as well as holding the role of
President and CEO of Coregis Insurance Company, a G.E. Capital
company. Mr. Galbato currently serves as Chairman of Avon Products,
Inc., Director of Blue Bird Corporation, Director of DynCorp
International, Director of Electrical Components International,
Director of FirstKey Homes, LLC, Director of New Avon LLC, Director
of Staples Solutions B.V., and Director on the Executive Committee
of Steward Health Care, LLC. Previously, Mr. Galbato served as a
director of the publicly-traded Brady Corporation for seven years,
including as Lead Director. He also served as Chairman to North
American Bus Industries, Inc., Guilford Mills and YP Holdings LLC
until their sales in 2013, 2012 and 2017 respectively, and as
director of Tower International, Inc. until Cerberus’ exit in
2014. Before beginning his business career, he played professional
baseball with the Montreal Expos in their minor league system. Mr.
Galbato holds a master’s degree in business administration
from the University of Chicago and a Bachelor of Arts in economics
from the State University of New York. Mr. Galbato’s
experience in management, operations and finance led the Board to
conclude that Mr. Galbato should serve as one of the
Company’s directors.
Mark N. Kaplan.
Mr. Kaplan has served as a director of AutoWeb since
June 1998. Mr. Kaplan was a member of the law firm of Skadden,
Arps, Slate, Meagher & Flom LLP from 1979 through 1998 and
currently is of counsel to that firm, Chairman of the Board and
Chief Operating Officer of Engelhard Minerals & Chemicals
Corporation (mining and chemicals) from 1977 to 1979, and President
and Chief Executive Officer of Drexel Burnham Lambert (investment
banking) from 1970 to 1977. Kaplan serves as Chairman of the
compensation committee of the board of directors of American
Biltrite Inc., a publicly traded company. He is a Trustee of Bard
College, the New York Academy of Medicine, a member and former
Chairman of the New York City Audit Committee, a Trustee and
Chairman of the Audit Committee of WNET.org (provider of public
media in the New York City metropolitan area), a director of twenty
investment funds managed by Gresham Investment Management LLC, as
well as an advisor to fifteen additional private Gresham fund
properties. Mr. Kaplan has also served on the boards of Volt
Information Services, Inc., Congoleum Corp., DRS Technologies Inc.,
and other privately held entities or mutual funds. Mr. Kaplan was
formerly the Chairman of the Audit Advisory Committee of the Board
of Education of The City of New York, Vice-Chairman and Governor of
the board of directors of The American Stock Exchange, Inc., and a
director of Security Industry Automation Corporation. Mr. Kaplan
holds a Bachelor of Arts degree from Columbia College and a
Bachelor of Laws degree from Columbia Law School. Mr.
Kaplan’s experience in securities and corporate laws, mergers
and acquisitions, investment banking and business management, as
well as his qualification as an audit committee financial expert,
led the Board to conclude that Mr. Kaplan should serve as one of
the Company’s directors.
Jared R. Rowe. Mr.
Rowe was appointed President and Chief Executive Officer, and as a
director, of AutoWeb on April 12, 2018. Prior to joining
AutoWeb, Mr. Rowe served as Senior Operating Executive at Cerberus
Operations and Advisory Company, LLC from July 2017 to April 2018,
a proprietary operations affiliate of Cerberus Capital Management
L. P. which is a leading private investment firm. Prior to
his tenure at Cerberus, he was the Chief Executive Officer at YP
LLC from September 2016 to June 2017, a leading local marketing
solutions provider in the U.S. dedicated to helping local
businesses and communities grow and a Cerberus portfolio
company. From 2010 until 2016, Mr. Rowe held several senior
leadership positions within Cox Automotive, including President of
Cox Automotive’s Media Solutions Group, where he was
responsible for leading the AutoTrader, Kelley Blue Book,
Dealer.com and Haystack businesses. Mr. Rowe has a Master of
Business Administration from the Stephen M. Ross School of Business
at the University of Michigan at Ann Arbor and received his
Bachelor of Business Administration, Automotive Marketing from
Northwood University. Mr. Rowe’s management experience of
more than two decades in the automotive and digital marketing
industries led the Board to enter into an employment agreement with
Mr. Rowe that provides for his appointment as the Company’s
President and Chief Executive Officer and to serve as one of the
Company’s directors.
Janet M.
Thompson. See Ms. Thompson’s biographical
information included under the section of this Proxy Statement
entitled “PROPOSAL
1–NOMINATION AND ELECTION OF DIRECTORS–Nominees for
Class III Directors.”
Jose
Vargas. Mr. Vargas has served as a director of AutoWeb
since October 1, 2015 and as the Company’s Chief Revenue
Officer from October 1, 2015 to April 12, 2018. From September 18,
2013 to October 1, 2015, Mr. Vargas was a director and president of
a company that provided an internet-based, pay-per-click
advertising marketplace for the automotive industry, which was
acquired by the Company as of October 1, 2015. Mr. Vargas is a
co-founder, director and the president of PeopleFund, and a
co-founder of, and currently serves as a co-managing director and
president of PF Holding, as well as vice president and a director
of PF Auto, an entity affiliated with PeopleFund, and co-managing
director, president and secretary of Auto Holdings, also an entity
affiliated with PeopleFund. Mr. Vargas is also a director or
officer of a number of privately-held companies that include
Healthcare, Inc., an online search, comparison and recommendation
tool for healthcare consumers, Blue Mountain 17 Inc., Blue Mountain
18 Inc., Blue Mountain 30 Inc., Blue Mountain 31 Inc., Blue
Mountain 45 Inc., Blue Mountain 46 Inc., Blue Mountain 48 Inc.,
Blue Mountain 73 Inc., Classifieds Corp., Gray Mountain Inc.,
PeopleFund Inc., People Ventures Inc., PV SU Holding, Inc., PV SU
Investment, Limited Partnership, MapFit Inc. (prior: GeoFi, Inc.),
PF Classifieds Inc., PF Healthcare Inc., Galeb3 Inc., and
Healthcare.com Insurance Services, LLC. Mr. Vargas received a
Bachelor of Science degree from Florida International
University.
Messrs.
de Tezanos and Vargas were appointed to the Board pursuant to the
Stockholder Agreement described below under the section of this
Proxy Statement entitled “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT” upon AutoWeb’s acquisition of
Autobytel, Inc. (formerly, AutoWeb, Inc.), as of October 1, 2015.
They serve as the two representatives on the Board designated by
the former owners of Autobytel, Inc. (formerly AutoWeb, Inc.) prior
to its acquisition by the Company. Their experience in founding and
growing technology and online media companies led the Board to
conclude that they should serve as directors of the
Company.
EXECUTIVE OFFICERS
The
current executive officers of AutoWeb are as follows:
Name
|
|
Age
|
|
Position
|
Jared R.
Rowe
|
|
45
|
|
President, Chief
Executive Officer, and Director
|
Joseph P.
(“JP”) Hannan
|
|
47
|
|
Executive Vice
President, Chief Financial Officer
|
Glenn E.
Fuller
|
|
64
|
|
Executive Vice
President, Chief Legal Officer and Secretary
|
Daniel R.
Ingle
|
|
49
|
|
Executive Vice
President, Chief Operating Officer
|
Sara E.
Partin
|
|
37
|
|
Senior Vice
President, Chief People Officer
|
Timothy L.
Branham
|
|
50
|
|
Senior Vice
President, Chief Technology Officer
|
Jared R.
Rowe. See
Mr. Rowe’s biographical information included under the
section of this Proxy Statement entitled “BOARD OF DIRECTORS.”
Joseph P.
(“JP”)
Hannan. Mr.
Hannan joined AutoWeb as Executive Vice President, Chief Financial
Officer in December 2018. Prior to joining AutoWeb, Mr. Hannan
served as the Chief Financial Officer of Social Reality, Inc.
(October 2016 to December 2018). Mr. Hannan was employed by Cumulus
Media, Inc. (NASDAQ: CMLS), serving as Senior Vice President,
Treasurer and Chief Financial Officer (March 2010 to June 2016), as
Interim Chief Financial Officer (July 2009 to March 2010) and Vice
President and Controller (April 2008 to July 2009). He also served
concurrently as Chief Financial Officer of Modern Luxury Media, an
affiliate of Cumulus Media, Inc., from August 2010 to June 2016.
From May 2006 to July 2007, Mr. Hannan served as Vice President and
Chief Financial Officer of the radio division of Lincoln National
Corporation (NYSE: LNC), and from March 1995 to November 2005 he
served in a number of executive positions including Chief Operating
Officer and Chief Financial Officer of Lambert Television, Inc., a
privately held television broadcasting, production and syndication
company. Mr. Hannan has served as a director on a number of company
boards, and is currently Chairman of Barefoot Luxury, Inc., an
international hospitality company based in Atlanta, Georgia. He
previously served as a director of Regent Communications, Inc.,
International Media Group, and iBlast, Inc. Mr. Hannan received his
Bachelor of Science degree from the Marshall School of Business at
the University of Southern California.
Glenn E.
Fuller. Mr. Fuller joined AutoWeb as Vice
President, Legal Affairs in October 2006 and was promoted to Senior
Vice President, Chief Legal Officer and Secretary in
April 2008, Senior Vice President, Chief Legal and
Administrative Officer and Secretary in December 2008, Executive
Vice President, Chief Legal and Administrative Officer and
Secretary as of January 19, 2009, and Executive Vice
President, Chief Legal Officer and Secretary as of March 1,
2019. Prior to joining AutoWeb, Mr. Fuller was in
private legal practice from August 2002 to October 2006, and from
June 1996 to July 2002, he served as Senior Vice President, Chief
Legal Officer and General Counsel of Freedom Communications, Inc.
(newspapers, television stations and other media). From
April 1994 to June 1996, Mr. Fuller was of counsel to the law
firm of Gibson, Dunn & Crutcher LLP and was associated
with that firm from September 1980 to May
1987. Mr. Fuller was a partner in the law firm of
Pettis, Tester, Kruse & Krinsky from January 1988 to
December 1992 and employed as an attorney at that firm from May
1987 to December 1987 and from January 1993 to June
1993. From July 1993 to January 1994, Mr. Fuller
was Executive Vice President and General Counsel of Airline
Computerized Ticketing (airline
ticketing). Mr. Fuller received his Bachelor of
Arts degree from California State University at Long Beach and a
Juris Doctor degree from the University of Southern
California.
Daniel R. Ingle. Mr.
Ingle joined AutoWeb as Executive Vice President, Chief Operating
Officer in January 2019. Prior to joining AutoWeb, Mr. Ingle was
Vice President of International Business Development at Cox
Automotive focused on the global expansion of Kelley Blue Book. Mr.
Ingle joined Kelley Blue Book in 2006 and has held several
different leadership positions including Vice President of Vehicle
Valuations and Industry Solutions and Vice President of Analytic
Insights and Technology. Prior to Kelley Blue Book, Mr. Ingle
served as Director of Information Technology for Capital One Auto
Finance and held other positions at PeopleFirst.com, Thomson
Technology Consulting Group and Ernst and Young, in addition to
conducting his own consulting business. Mr. Ingle received his
Bachelor of Science degree in Management Information Systems from
Ohio University.
Sara E. Partin.
Ms. Partin joined AutoWeb as Senior
Vice President, Chief People Officer in October 2018. Prior to
joining AutoWeb, Sara was the Chief Human Resources Officer of The
Real Yellow Pages (YP) and held multiple senior human resources
leadership positions at Cox Automotive, including leading people
integration efforts for Autotrader, Kelley Blue Book, and
Dealer.com. Prior to her work with Cox Automotive, she was a
practicing employment attorney at the law firms of Kilpatrick
Townsend & Stockton LLP, Dow Lohnes PLLC, and Alston & Bird
LLP. Sara received her Bachelor of Arts Degree in History
from Stanford University and her Juris Doctor degree
from Harvard Law School.
Timothy L. Branham.
Mr. Timothy L. Branham joined AutoWeb as Senior Vice President,
Chief Technology Officer, in December 2018. Prior to joining
AutoWeb, Mr. Branham was a partner at Perficient, Inc., a leading
digital transformation consulting firm specializing in delivering
information technology, management consulting and creative
capabilities of the digital experience, business optimization and
industry solutions from October 2014 to December 2018. While a
partner at Perficient, Mr. Branham also served as the Acting Chief
Technology Officer at Autoweb from August 2018 to December 2018.
Prior to Perficient, Mr. Branham was Senior Vice President and
Chief Information Officer of Fujitsu Americas, Vice President and
Chief Technology Officer of Business Applications Services. Prior
to Fujitsu Americas, Mr. Branham held numerous professional and
consulting positions with technology companies. Mr. Branham
received his Bachelor of Science in Global Management degree from
the University of Phoenix and served for 5 years in the United
States Army.
All of
the officers named in the Executive Officer table above served as
executive officers during 2018, except for Mr. Ingle, who became an
executive officer in January 2019.
All
executive officers of AutoWeb are chosen by the Board and serve at
its discretion.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information regarding the
calculation of beneficial ownership of Common Stock as of the
Record Date, by all persons known by AutoWeb to be beneficial
owners of more than 5% of the Common Stock of AutoWeb, each
director and nominee, each of the named executive officers
identified in the section of this Proxy Statement entitled
“EXECUTIVE
COMPENSATION–Summary Compensation,” and all
directors and executive officers as a group (including the named
executive officers, but excluding Messrs. Coats and Skocilic, who
are not current executive officers). Shares of Common
Stock are deemed to be outstanding and to be beneficially-owned by
the persons listed below for the purpose of computing the
percentage ownership of the person, but are not treated as
outstanding for the purpose of computing the percentage ownership
of any other person, if that person has the right to acquire
beneficial ownership of such shares within 60 days of the Record
Date through the exercise of any option, warrant or other right or
the conversion of any security, or pursuant to the power to revoke,
or the automatic termination of, a trust, discretionary account or
similar arrangement. Except as otherwise noted, the
persons or entities in this table have sole voting and dispositive
power with respect to all shares of Common Stock beneficially owned
by them subject to community property laws, where
applicable. The information with respect to each person
specified is as supplied or confirmed by that person, based upon
statements filed with the SEC or based upon the actual knowledge of
AutoWeb.
Name
of Beneficial Owner (1)
|
Number
of Shares of Common Stock Beneficially Owned
|
Percent
of Common Stock Beneficially Owned
|
Investment and
Development Finance Corp. (2)(5)
|
2,902,928
|
22.4%
|
Jose Vargas
(3)(5)
|
2,882,710
|
22.2%
|
Matias de Tezanos
(4)(5)
|
2,832,928
|
21.9%
|
Auto Holdings Ltd
(5)
|
2,782,928
|
21.5%
|
1 8 999 Trust
(6)
|
1,173,445
|
9.1%
|
Piton Capital
Partners LLC (7)
|
965,000
|
7.5%
|
Jeffrey H. Coats
(8)
|
549,499
|
4.1%
|
Jared R. Rowe
(9)
|
463,664
|
3.5%
|
Glenn E. Fuller
(10)
|
231,439
|
1.8%
|
Michael J. Fuchs
(11)
|
109,847
|
*
|
Michael A.
Carpenter (12)
|
68,167
|
*
|
Mark N. Kaplan
(13)
|
64,167
|
*
|
Janet M. Thompson
(14)
|
59,207
|
*
|
John J. Skocilic
(15)
|
36,309
|
*
|
Chan W. Galbato
(16)
|
1,826
|
*
|
Joseph P.
Hannan
|
—
|
*
|
All executive
officers (including named executive officers other than Messrs.
Coats and Skocilic) and directors as a group (14 persons)
(17)
|
5,279,089
|
38.4%
|
* Less
than 1%
(1)
|
Unless
otherwise indicated, the address of all the owners is: c/o AutoWeb,
Inc., 18872 MacArthur Blvd., Suite 200, Irvine, CA
92612-1400.
|
(2)
|
In
addition to the beneficial ownership reported in Footnote 5 below,
the beneficial ownership of Investment and Development Finance
Corp., a Panama business company (“IDFC”), includes the additional
120,000 shares, in the aggregate, reported on Form 4s filed May 21,
23, and 24, 2018.
|
(3)
|
In
addition to the beneficial ownership reported in Footnote 5 below,
the beneficial ownership of Mr. Vargas includes the additional
82,029 shares reported on a Form 4 filed December 11,
2018.
|
(4)
|
In
addition to the beneficial ownership reported in Footnote 5 below,
the beneficial ownership of Mr. de Tezanos includes the additional
50,000 shares reported on a Form 4 filed December 11,
2018.
|
(5)
|
The
information presented in this line item with respect to the
beneficial ownership of Auto Holdings, IDFC, and Messrs. de Tezanos
and Vargas was obtained from the Schedule 13D/A filed April 26,
2018 (“Auto Holdings Schedule
13D/A”), jointly filed by the following persons: (i)
Auto Holdings; (ii) PF Holding; (iii) Ceiba International Corp., a
Panama business company (“Ceiba”); (iv) Jose Vargas, a
director of AutoWeb; (v) Galeb3 Inc., a Florida corporation owned
solely by Mr. Vargas (“Galeb3”); (vi) Matias de Tezanos,
a citizen of Costa Rica and director of AutoWeb; (vii) Manatee
Ventures Inc., a British Virgin Islands business company wholly
owned by Mr. de Tezanos and his wife Isabel Ruiz Estrada
(“Manatee”);
(viii) John Peter Klose de Ojeda, a citizen of Guatemala; (ix)
Richard Aitkenhead Castillo, a citizen of Guatemala; (x) IDFC; (xi)
IDC Financial, S.A., a Panama business company (“IDC Financial”); (xii) Juan
Christian Klose Pieters; (xiii) Margarita Klose; (xiv) Jorge Miguel
Fernandez Bianchi, a citizen of Guatemala; (xv) PeopleFund; and
(xvi) PF Auto (collectively, “Auto Holdings Reporting Persons”).
The Auto Holdings Schedule 13D/A states that each of the Auto
Holdings Reporting Persons disclaims beneficial ownership of the
reported shares except to the extent of their pecuniary interest
therein and discloses that Mr. Vargas has sole voting and
dispositive power with respect to 17,753 shares and that he and the
other Auto Holdings Reporting Persons share dispositive power with
respect to 2,782,928 shares. Pursuant to an Amended and Restated
Stockholder Agreement dated as of October 1, 2015, by and among
AutoWeb, Auto Holdings, IDFC, Mr. de Tezanos, Mr. Vargas, and other
parties to that agreement (as amended, “Stockholder Agreement”), the
reported shares are subject to irrevocable proxies in favor of
AutoWeb’s Chief Executive Officer, Chief Financial Officer,
and Chief Legal Officer, and each of them individually, to exercise
all voting rights of the applicable stockholders with respect to
the shares at any meeting of stockholders of the Company, and in
any action by written consent of the stockholders of the Company,
in accordance with the recommendations of or instructions provided
by the Board. The Auto Holdings Schedule 13D/A lists the addresses
of the Auto Holdings Reporting Persons as follows: (i) Auto
Holdings, PF Auto, Mr. de Tezanos, Manatee, Mr. Juan Christian
Klose Pieters, Ms. Margarita Klose IDC Financial, Jorge Miguel
Fernandez Bianchi, PF Holding, PeopleFund, Diagonal 6, 12-42 zona
10, Edificio Design Center, Torre II, Of. 1103, Guatemala City,
Guatemala 01010; (ii) Ceiba, IDFC, Mr. John Peter Klose de Ojeda
and Mr. Aitkenhead Castillo: 13 calle 2-60, zona 10, Edificio
Topacio Azul, Of. 1301, Guatemala City, Guatemala 01010; and (iii)
Mr. Vargas and Galeb3: 3401 N. Miami Avenue, Suite 205, Miami,
Florida 33127. The reported shares do not include up to 1,153,110
shares that may be acquired upon conversion of certain warrants to
purchase Common Stock that have stock price-based vesting
conditions that have not yet been met.
|
(6)
|
The
information presented in the table with respect to the beneficial
ownership of The 1 8 999 Trust was obtained from the Schedule 13D/A
filed on March 4, 2019 (“1 8
999 Trust Schedule 13D/A”), jointly by the following
persons: (i) The 1 8 999 Trust; (ii) Daniel M. Negari; (iii) The
Insight Trust; and (iv) Michael R. Ambrose, (collectively, the
“1 8 999 Reporting
Persons”). The 1 8 999 Trust Schedule 13D/A lists the
address of the 1 8 999 Trust Reporting Persons as follows: 2121 E.
Tropicana Avenue, Suite 2, Las Vegas, NV 89119. The 1 8 999 Trust
Schedule 13D/A discloses that the 1 8 999 Trust has shared voting
and dispositive power with respect to 973,112 shares; Mr. Negari
has sole voting and dispositive power with respect to 133 shares
and shared voting and dispositive power with respect to 973,245
shares; and the Insight Trust and Mr. Ambrose have shared voting
and dispositive power with respect to 200,200 shares. Pursuant to a
Tax Benefit Preservation Plan Exemption Agreement dated as of
November 30, 2018, by and among the Company and the 1 8 999 Trust
Reporting Persons (“1 8 999
Trust Exemption Agreement”), approximately 531,205
shares of the shares of Common Stock reported as beneficially owned
by the 1 8 999 Reporting Persons are subject to irrevocable proxies
in favor of AutoWeb’s Chief Executive Officer, Chief
Financial Officer and Chief Legal Officer, as each of them
individually, to exercise all voting rights of the applicable
stockholders with respect to the shares at any meeting of
stockholders of the Company, and in any action by written consent
of the stockholders of the Company, in accordance with the
recommendations of or instructions provided by the
Board.
|
(7)
|
The
information presented in the table with respect to the beneficial
ownership of Piton Capital Partners LLC (“Piton”) was obtained solely from
the Schedule 13G/A filed February 11, 2019 (“Piton Schedule 13G/A”). The Piton
Schedule 13G/A lists the address of Piton Capital Partners LLC as
follows: c/o Kokino LLC, 201 Tresser Boulevard, 3rd Floor,
Stamford, Connecticut 06901, Attention: Garrett Lynam. Pursuant to
a Tax Benefit Preservation Plan Exemption Agreement dated as of
November 15, 2017, by and between the Company and Piton
(“Piton Exemption
Agreement”), approximately 322,759 shares of the
shares of Common Stock reported as beneficially owned by Piton are
subject to irrevocable proxies in favor of AutoWeb’s Chief
Executive Officer, Chief Financial Officer and Chief Legal Officer,
as each of them individually, to exercise all voting rights of the
applicable stockholders with respect to the shares at any meeting
of stockholders of the Company, and in any action by written
consent of the stockholders of the Company, in accordance with the
recommendations of or instructions provided by the
Board.
|
(8)
|
Mr.
Coats’ employment was terminated without cause on April 12,
2018. The information provided was based on Form 4s filed by Mr.
Coats and information obtained from the Company’s third-party
equity plan administrator. Includes 389,500 shares issuable upon
exercise of options exercisable within 60 days of the Record
Date.
|
(9)
|
Includes
388,889 shares issuable upon exercise of options exercisable within
60 days of the Record Date.
|
(10)
|
Includes
26,667 shares of Restricted Stock and 197,443 shares issuable upon
exercise of options exercisable within 60 days of the Record
Date.
|
(11)
|
Includes
54,167 shares issuable upon exercise of options exercisable within
60 days of the Record Date.
|
(12)
|
Includes
54,167 shares issuable upon exercise of options exercisable within
60 days of the Record Date.
|
(13)
|
Includes
54,167 shares issuable upon exercise of options exercisable within
60 days of the Record Date.
|
(14)
|
Includes
54,167 shares issuable upon exercise of options exercisable within
60 days of the Record Date.
|
(15)
|
Mr.
Skocilic’s employment was terminated without cause on
September 12, 2018. The information provided was based on Form 4s
filed by Mr. Skocilic and information obtained from the
Company’s third-party equity plan administrator.
|
(16)
|
Includes
1,826 shares issuable upon exercise of options exercisable within
60 days of the Record Date.
|
(17)
|
Includes
796,835 shares issuable upon exercise of options exercisable within
60 days of the Record Date. Also includes shares subject to
irrevocable proxies granted to Company’s management as
provided for in the Stockholder Agreement, the 1 8 999 Trust
Exemption Agreement, and the Piton Exemption
Agreement.
|
CORPORATE GOVERNANCE MATTERS
Board Classes
The
Board is divided into three classes, with each class holding office
for staggered three-year terms. The term of the Class I
Directors, Jared R. Rowe, Matias de Tezanos, and Chan W. Galbato,
expires in 2020; the term of the Class II Directors, Michael A.
Carpenter, Mark N. Kaplan, and Jose Vargas, expires in 2021; and
the term of the Class III Directors, Michael J. Fuchs and Janet M.
Thompson, expires at the Annual Meeting.
Committees of the Board of Directors
The
Board has constituted an Audit Committee, a Compensation Committee,
and a Corporate Governance and Nominations Committee. Copies of the
charters of each of these committees are posted and available on
the Corporate Governance link of the Investor Relations section of
the Company’s website,
www.autoweb.com. Information on the Company’s
website is not incorporated by reference in this Proxy
Statement.
Audit Committee. The Audit Committee was
established by the Board in accordance with
Section 3(a)(58)(A) of the Exchange Act. The Audit
Committee met on five occasions in 2018 and operates under a
charter approved by the Board. The Audit
Committee’s primary responsibilities are to:
●
oversee
AutoWeb’s accounting and financial reporting policies,
processes, practices and internal controls; and
●
appoint, approve
the compensation of, and oversee the Company’s independent
registered public accounting firm.
The
Audit Committee currently consists of Mark N. Kaplan (Chairman),
Michael A. Carpenter, Michael J. Fuchs, and Janet M.
Thompson. The Audit Committee meets periodically with
the Company’s independent registered public accounting firm,
both with and without management present. The Board has
determined that Mr. Kaplan is an “audit committee
financial expert” within the meaning of
Item 407(d)(5)(ii) of Regulation S-K under the Securities Act
of 1933, as amended, (“Securities
Act”). The identification of
Mr. Kaplan as an “audit committee financial
expert” does not impose on him any duties, obligations or
liabilities that are greater than the duties, obligations and
liabilities imposed on him as a member of the Audit Committee in
the absence of this identification.
Compensation Committee. The Compensation
Committee, which met on seven occasions in 2018 and operates under
a charter approved by the Board, is responsible for:
●
determining or
recommending to the Board the compensation of the Chief Executive
Officer and each other executive officer or any other officer who
reports directly to the Chief Executive Officer based on the
performance of each officer;
●
making
recommendations to the Board regarding stock option plans and other
equity compensation arrangements;
●
granting equity
awards and approving any delegation of such responsibility under
certain circumstances; and
●
preparing reports
regarding executive compensation for disclosure in AutoWeb’s
proxy statements or as otherwise required by applicable
laws.
The
Compensation Committee currently consists of Janet M. Thompson
(Chairwoman), Michael J. Fuchs, Mark N. Kaplan, and Chan W.
Galbato. The Compensation Committee does not have
authority to delegate its responsibilities to a subcommittee
without approval of the Board. The Board has approved
the creation of the Non-Executive Stock Option Committee, a
committee of the Board that currently consists of one director,
Jared R. Rowe, the Company’s President and Chief Executive
Officer. The Non-Executive Stock Option Committee has
the authority to grant stock options to eligible persons who
(i) are employed by the Company or its subsidiaries and are
not subject to reporting under Section 16(a) of the Exchange
Act or (ii) are consultants or service providers to the
Company or its subsidiaries. The Non-Executive Stock
Option Committee may not grant more than 50,000 options in the
aggregate in any one fiscal year, and individual grants cannot
exceed more than 5,000 options. The processes of the Compensation
Committee and the role of the Chief Executive Officer and
compensation consultants in determining or recommending the amount
or form of executive or director compensation are discussed in the
section of this Proxy Statement entitled “EXECUTIVE COMPENSATION–Named Executive
Officers Compensation Narrative.”
Corporate Governance and Nominations
Committee. The Corporate Governance and
Nominations Committee, which met once in 2018 and operates under a
charter approved by the Board, is responsible for:
●
identifying
individuals qualified to become directors and selecting director
nominees or recommending nominees to the Board for
nomination;
●
recommending
nominees for appointment to committees of the
Board;
●
developing and
recommending charters of committees of the Board;
and
●
overseeing the
corporate governance of AutoWeb and, as deemed necessary or
desirable from time to time, developing and recommending corporate
governance policies to the Board.
The
Corporate Governance and Nominations Committee currently consists
of Michael J. Fuchs (Chairman), Mark N. Kaplan, and Chan W.
Galbato.
Attendance at Board and Committee Meetings
During
the fiscal year ended December 31, 2018, the Board held a total of
twelve meetings. Each member of the Board who served in 2018
attended 80% or more of the aggregate of (i) the total number of
meetings of the Board held during the period in 2018 for which the
director was a member; and (ii) the total number of meetings held
by all committees of which the director was a member during 2018
and during the period in which the director served as a member of
the committees. The Board and its committees typically meet in
executive session without management present during regularly
scheduled meetings of the Board and the committees.
Attendance at Annual Meeting of Stockholders
All
directors who served in 2018 attended the 2018 annual meeting of
stockholders, of which four directors attended in person and four
attended by telephone. Typically, a Board meeting is scheduled on
the date of any annual meeting of stockholders. Although
the Board has not adopted a formal policy, all directors are
expected to attend the annual meeting of stockholders.
Director Independence
All
directors, other than Messrs. de Tezanos, Rowe and Vargas, and all
members of the Audit, Compensation, and Corporate Governance and
Nomination Committees satisfy the definition of independent
director under the Nasdaq listing rules. The current members
of the Audit Committee and the Compensation Committee are
“independent” under the Nasdaq listing rules and the
SEC rules regarding audit committee and compensation committee
membership.
Compensation Committee Interlocks and Insider
Participation
Ms. Thompson
and Messrs. Fuchs, Kaplan, and Jeffrey M. Stibel served as the
members of the Compensation Committee during the Company’s
last completed fiscal year. No member of the Compensation
Committee was an officer or employee of the Company during its last
completed fiscal year. Mr. Stibel resigned from the Board, the
Compensation Committee and the Corporate Governance and Nominations
Committee on January 11, 2019. None of the Company’s
executive officers served as a member of the compensation committee
or board of any other entity that has an executive officer serving
as a member of the Board or Compensation Committee, except that Mr.
Vargas, an executive officer until April 12, 2018, and director of
the Company, served as a board member or executive officer of the
various companies controlled by or affiliated with Messrs. de
Tezanos and Vargas identified in their biographies included in the
section in this Proxy Statement entitled “BOARD OF DIRECTORS.”
Board Leadership Structure
The
Board does not have a policy on whether the roles of Chief
Executive Officer and Chairman of the Board should be separate and,
if they are to be separate, whether the Chairman of the Board
should be selected from the non-employee directors or be an
employee of the Company. The Board believes that the
Company and its stockholders benefit when the Board is free to
determine the most appropriate leadership structure in light of the
experience, skills and availability of directors and the Chief
Executive Officer as well as other
circumstances. Currently, Mr. Fuchs serves as the
Chairman of the Board, and Mr. Rowe serves as a director and Chief
Executive Officer. The Board believes this is the most
appropriate structure for the Company at this time because it makes
the best use of the experience, skills and availability of Mr.
Fuchs and Mr. Rowe.
Board’s Role in Oversight of Risk
It is
management’s responsibility to manage risk and bring to the
Board’s attention the most material risks to
AutoWeb. The Board, including through Board committees
comprised solely of independent directors, regularly reviews
various areas of significant risk to AutoWeb and advises and
directs management on the scope and implementation of policies,
strategic initiatives and other actions designed to mitigate
various types of risks. Specific examples of risks reviewed by the
Board with management include competition risks, industry risks,
economic risks, liquidity risks, business operations risks, cyber
security risks and risks related to acquisitions and
dispositions. The Audit Committee regularly reviews with
management and the independent auditors significant financial risk
exposures and the processes management has implemented to monitor,
control and report these exposures. Specific examples of
risks reviewed by the Audit Committee include risks related to the
preparation of the Company’s financial statements, disclosure
controls and procedures, internal controls and procedures required
by the Sarbanes-Oxley Act of 2002, accounting, financial and
auditing risks, treasury risks (insurance, credit and debt),
matters reported to the Audit Committee through anonymous reporting
procedures, risks posed by significant litigation matters and
compliance with applicable laws and regulations. The
Audit Committee also oversees compliance with the Company’s
Code of Conduct and Ethics for Employees, Officers and Directors
and evaluates proposed transactions with related persons for
compliance with laws and regulations and with Company policies and
contracts. The Company’s Compensation Committee reviews and
evaluates potential risks related to the attraction and retention
of talent and risks related to the design of compensation programs
established by the Compensation Committee for AutoWeb’s
executive officers. These procedures, however, cannot guaranty that
all material risks will be identified, or if identified, reasonably
and adequately mitigated. They also cannot assure that all persons
are in compliance with the Company’s policies and procedures
or that the Company and its employees are in compliance with all
applicable laws and regulations.
Executives’
base salaries are fixed in amount and thus do not encourage
excessive risk-taking. Incentive compensation in large
part is tied to overall corporate performance. A
significant portion of compensation provided to the executive
officers is in the form of equity awards subject to time vesting
that are intended to further align executives’ interests with
those of the Company’s stockholders. The
Compensation Committee believes that these awards do not encourage
unnecessary or excessive risk-taking since the ultimate value of
the awards is tied to the Company’s stock price, and since
awards are staggered and subject to long-term vesting schedules to
help ensure that executives have significant value tied to
long-term stock price performance.
The
Compensation Committee has also reviewed the Company’s
compensation programs for employees generally and has concluded
that these programs do not create risks that are reasonably likely
to have a material adverse effect on the Company. The
Compensation Committee believes that the design of the
Company’s annual cash and long-term equity incentives
provides an effective and appropriate mix of incentives to help
ensure the Company’s performance is focused on long-term
stockholder value creation and does not encourage the taking of
short-term risks at the expense of long-term results. In
general, incentive compensation opportunities for Company employees
are capped, and the Company has discretion to reduce or increase
incentive compensation payments (or pay no incentive compensation)
based on individual performance and any other factors it may
determine to be appropriate in the circumstances. As
with the compensation of the Company’s executive officers, a
portion of the compensation for other officers and some other
managerial-level employees generally is delivered in the form of
equity awards that help further align the interests of these
officers and other employees with those of
stockholders.
Board Nominee Process
The
Corporate Governance and Nominations Committee considers candidates
for nomination as directors who are suggested by the
committee’s members and other directors, as well as
management and stockholders. A stockholder who wishes to
recommend a prospective nominee for the Board should notify
AutoWeb’s Secretary or any member of the Corporate Governance
and Nominations Committee in writing with whatever supporting
material the stockholder considers appropriate. The
Corporate Governance and Nominations Committee will also consider
whether to nominate any person nominated by a stockholder pursuant
to the provisions of the Bylaws relating to stockholder nominations
as described in the section of this Proxy Statement entitled
“FUTURE STOCKHOLDER
NOMINATIONS AND PROPOSALS” below.
Generally, once the
Corporate Governance and Nominations Committee identifies a
prospective nominee, the Corporate Governance and Nominations
Committee will make an initial determination as to whether to
conduct a full evaluation of the candidate. This initial
determination will be based on the information provided to the
Corporate Governance and Nominations Committee with the
recommendation of the prospective candidate, as well as the
Corporate Governance and Nominations Committee’s own
knowledge of the prospective candidate, which may be supplemented
by inquiries to the person making the recommendation or
others. Generally, the preliminary determination will be
based primarily on the need for additional Board members to fill
vacancies or expand the size of the Board and the likelihood that
the prospective nominee can satisfy evaluation factors determined
by the Corporate Governance and Nominations Committee to be
appropriate from time to time for that evaluation. If
the Corporate Governance and Nominations Committee determines, in
consultation with the other members of the Board, as appropriate,
that additional consideration is warranted, it may request a
third-party search firm to gather additional information about the
prospective nominee’s background and experience and to report
its findings to the Corporate Governance and Nominations
Committee.
The
Corporate Governance and Nominations Committee will then evaluate
the prospective nominee against factors it considers appropriate
from time to time, which currently include:
●
The ability of the
prospective nominee to represent the interests of the stockholders
of AutoWeb;
●
The prospective
nominee’s standards of integrity, commitment and independence
of thought and judgment; and
●
The extent to which
the prospective nominee would contribute to the range of talent,
skill and expertise appropriate for the Board.
The
Corporate Governance and Nominations Committee generally intends to
nominate current members of the Board in the year in which their
respective term expires so long as they continue to exhibit the
qualities described above and are otherwise qualified to serve as
members of the Board.
The
Corporate Governance and Nominations Committee may also consider
such other relevant factors as it deems appropriate, including the
current composition of the Board, the balance of management and
independent directors, the need for Audit Committee expertise and
the evaluations of other prospective nominees. In
connection with this evaluation, the Corporate Governance and
Nominations Committee will determine whether to interview the
prospective nominee, and if warranted, one or more members of the
Corporate Governance and Nominations Committee and others, as
appropriate, will interview prospective nominees in person or by
telephone. After completing this evaluation and
interview, the Corporate Governance and Nominations Committee will
make a recommendation to the full Board as to the persons who
should be nominated by the Board, and the Board determines the
nominees after considering the recommendation and report of the
Corporate Governance and Nominations Committee.
The
Corporate Governance and Nominations Committee and the Board review
the qualities of the Board members as a group, including the
diversity of the Board’s career experiences, viewpoints,
company affiliations, expertise with respect to the various facets
of the Company’s business operations and business
experiences. The Board has not adopted a formal policy
and did not employ any particular benchmarks with respect to these
qualities but was mindful of achieving an appropriate balance of
these qualities with respect to the Board as a
whole. Moreover, the Board and Corporate Governance and
Nominations Committee considered each nominee’s overall
service to the Company during the previous term, each
nominee’s personal integrity and willingness to apply sound
and independent business judgment with respect to the
Company’s matters, as well as the individual experience of
each director noted within their biographies above. The Board
evaluated and concluded that it is in compliance
with California Senate Bill 826 requiring at least one
female director on the Board by December 31, 2019.
Stockholder Communication with the Board of Directors
Stockholders and
other parties interested in communicating directly with any
director or with the non-management directors as a group may do so
by writing to the Secretary, AutoWeb, Inc., 18872 MacArthur
Boulevard, Suite 200, Irvine, California
92612-1400. The Company has established a process for
handling correspondence received by it addressed to non-management
members of the Board. Under that process, the Secretary
reviews all such correspondence and forwards to the Board a summary
of all such correspondence and copies of all correspondence that,
in the opinion of the Secretary, deals with the functions of the
Board or committees thereof or that the Secretary otherwise
determines requires the attention of the Board. The
Board may at any time review a log of all correspondence received
by AutoWeb that is addressed to members of the Board and request
copies of any such correspondence. Concerns relating to
accounting, internal controls or auditing matters are immediately
brought to the attention of the Chairman of the Audit Committee and
handled in accordance with procedures established by the Audit
Committee with respect to those matters.
Code of Conduct and Ethics
The
Board has adopted a Code of Conduct and Ethics for Employees,
Officers and Directors (“Code
of Ethics”). The Code of Ethics is
applicable to the Company’s employees, officers and
directors, including the principal executive officer, the principal
financial officer and the principal accounting
officer. The Code of Ethics is posted and available on
the Corporate Governance link of the Investor Relations section of
the Company’s website, www.autoweb.com, and a copy of the
Code of Ethics may also be obtained, free of charge, by writing to
the Corporate Secretary, AutoWeb, Inc., 18872 MacArthur Blvd.,
Suite 200, Irvine, California 92612-1400. The Company intends
to post amendments to, or waivers from, the Code of Ethics (to the
extent applicable to the Company’s Chief Executive Officer,
Principal Financial Officer or Principal Accounting Officer or
directors) at this location on the Company’s website.
Information on the Company’s website is not incorporated by
reference in this Proxy Statement. The adoption of the Code of
Ethics and other standards of conduct is not a representation or
warranty that all persons subject to the Code of Ethics or
standards are or will be in complete compliance with the Code of
Ethics or any other standards of conduct that may be
adopted.
Certain Relationships and Related Party Transactions
The
Company’s Code of Ethics provides specific guidelines
regarding conflict of interest situations as well as a process for
reporting and approving related party
transactions.
The
Company’s written Code of Ethics defines a related party
transaction as any transaction (or series of transactions) in
excess of $120,000 since the beginning of the Company’s last
fiscal year, or any currently proposed transactions, in which the
Company is a participant and in which any member of the Management
Group (as defined below), any stockholder owning more than 5% of
the Company’s voting stock, or any immediate family member of
any of the foregoing persons has a direct or indirect material
interest. An “immediate family member” means
any child, stepchild, parent, stepparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law of such director, executive officer
or nominee for director, and any person (including domestic
partners, but excluding tenants or employees) sharing the household
of a director, director nominee, executive officer or stockholder
owning more than 5% of the Company’s voting
stock. A “transaction” includes, but is not
limited to, any commercial or financial transaction or arrangement
or relationship (including any indebtedness or guarantee of
indebtedness) or any series of similar transactions, arrangements
or relationships. The “Management Group” is
comprised of the Chief Executive Officer, Principal Financial
Officer, Principal Accounting Officer (or any person performing
similar functions), any other officer of the Company and any
director or nominee for director. Any covered person who
may be involved in a related party transaction must promptly report
that transaction to the Chairman of the Audit Committee or the
Company’s Chief Legal Officer (“CLO”), who must then report the
transaction to the Chairman of the Audit Committee upon becoming
advised of such transaction. The Audit Committee, in its
sole discretion, must approve or disapprove all related party
transactions. Conflicts of interest or potential
conflicts of interest must be reported to the CLO who will evaluate
the circumstances relating to the conflict of interest or potential
conflict of interest and report the findings of such evaluation to
the Chief Executive Officer, who in turn, if warranted under the
circumstances, must report such situation or activity to the
Chairman of the Audit Committee;
provided, however, (i) that if the conflict of interest
or potential conflict of interest involves any member of the
Management Group, the CLO must report that situation or activity to
the Chairman of the Audit Committee; and (ii) the CLO is not
precluded from reporting any conflict of interest or potential
conflict of interest involving any covered person who is not a
member of Management Group directly to the Chairman of the Audit
Committee should the CLO believe such direct reporting to the
Chairman of the Audit Committee is warranted under the
circumstances. Upon being advised of a complaint,
concern or other reporting under the Code of Ethics, the Chairman
of the Audit Committee will confer with the other members of the
Audit Committee. If appropriate under the circumstances,
the Chairman of the Audit Committee may request that the CLO issue
a written advisory to the covered person as to whether or not the
reported situation or activity constitutes a violation of the Code
of Ethics. If the CLO would not be the appropriate party
to issue a written advisory, outside counsel may be retained to
issue such written advisory unless the Audit Committee determines
that such written advisory can be issued by the Chairman of the
Audit Committee without outside counsel input.
Although the
Company’s Code of Ethics provides guidelines regarding
conflict of interest situations, it cannot and does not set forth
every possible conflict of interest scenario. Therefore,
the Code of Ethics provides that there is no substitute for sound
judgment and common sense by directors, officers or other employees
in each case based upon the particular facts
involved. The foregoing description of the
Company’s Code of Ethics is not intended to constitute a
representation as to compliance by any covered person.
AutoWeb
has engaged Soluciones AW, S.A. (“Soluciones”) to provide office
space and related office services to AW GUA, Sociedad de
Responsabilidad Limitada, AutoWeb’s wholly-owned, indirect
subsidiary in Guatemala (“AW
GUA”). Under the agreement between AW GUA and
Soluciones, AW GUA pays Soluciones 107% of the actual expenses paid
and costs incurred by Soluciones in providing the office space and
related office services. During the period from January 1,
2018 to March 31, 2019, AW GUA made payments to Soluciones of
approximately $241,000. Soluciones is controlled by
PeopleFund, which in turn is controlled by Messrs. Vargas and de
Tezanos, each a director of AutoWeb. For information concerning the
beneficial ownership of the Company’s Common Stock by Messrs.
De Tezanos and Vargas and PeopleFund, see the section of this Proxy
Statement entitled “SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.” Mr. Vargas was also an officer of the
Company during this period until April 12, 2018. The Audit
Committee and Board evaluated the arrangement with Soluciones and
the potential conflict and its potential impact on the Company. The
Audit Committee and Board considered the Company’s
significant investment in the operations in Guatemala acquired upon
the acquisition of AutoWeb and the benefit the Company derives from
its investment and these operations. The Audit Committee and the
Board concluded that the benefits to the Company resulting from the
continued engagement of Soluciones outweighed the potential
conflict that might arise from the relationship. The Audit
Committee and the Board (with Messrs. Vargas and de Tezanos
abstaining) each approved the Soluciones arrangement in accordance
with the Company’s Code of Ethics and waived the potential
conflict.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AND
AUDIT COMMITTEE REPORT
Independent
Registered Public Accounting Firm
Moss
Adams has been appointed by the Company’s Audit Committee as
the Company’s independent registered public accounting firm
to audit the Company’s consolidated financial statements for
the fiscal year ending December 31, 2019, and to perform
procedures related to the financial statements included in the
Company’s quarterly reports on Form 10-Q, beginning with
the quarter ended March 31, 2019. Moss Adams also
served as the Company’s independent registered public
accounting firm for the years ended December 31, 2018, 2017 and
2016. Representatives of Moss Adams are expected to be present at
the Annual Meeting to respond to appropriate questions and to make
such statements as they may desire.
Principal Accountant Fees and Services
Aggregate fees for
professional services rendered by Moss Adams for the years ended
December 31, 2018 and 2017 were as follows:
|
|
|
Audit
fees
|
$523,500
|
$607,000
|
Audit-related
fees
|
13,750
|
7,500
|
Tax
fees
|
9,700
|
-
|
Total
|
$546,950
|
$614,500
|
Audit Fees. Audit
fees consist of professional services rendered in connection
with the 2018 audit and 2017 integrated audit of the
Company’s annual consolidated financial statements and
reviews of interim consolidated financial statements included in
the Company’s Quarterly Reports on
Form 10-Q.
Audit-Related Fees. Audit-related fees for 2018
and 2017 consist of services rendered in connection with the audit
of the Company’s Retirement Savings 401(k) Plan and, for
2018, fees related to review of Registration Statements on Form S-8
filed by the Company with the SEC.
Tax Fees. Tax fees for 2018 consist of fees related to
various tax consulting services and evaluations of the
Company’s tax benefits, including net operating loss
carryovers, under Internal Revenue Code Section 382.
The
Audit Committee has determined that the services described above
were compatible with maintaining Moss Adams’ audit
independence.
Pre-Approval Policy for Services
Under
its charter, the Audit Committee is required to pre-approve all
audit (including the annual audit engagement letter with the
independent registered public accounting firm) and permitted
non-audit services (including the fees and terms thereof) provided
to the Company by the Company’s independent registered public
accounting firm, subject to the de minimis exception for non-audit
services as described in the Exchange Act. The Audit
Committee consults with management with respect to pre-approval,
including whether the provision of permitted non-audit services is
compatible with maintaining the registered public accounting
firm’s independence, and may not delegate these
responsibilities to management. The Audit Committee may
delegate to any member or members of the Audit Committee the power
to grant any pre-approval, provided that the pre-approval is
reported to the Audit Committee at the next scheduled Audit
Committee meeting.
Each
member of the Audit Committee has the authority to approve fees for
services by the Company’s independent registered public
accounting firm of up to $50,000. Any approved fees may
be exceeded by no more than 20% without seeking further approval
even if the total amount of those fees, including the excess,
exceeds $50,000. This authority is delegated first to
Mr. Kaplan, then in the following order to Ms. Thompson,
Mr. Fuchs and Mr. Carpenter. Any approval by a
member of the Audit Committee is required to be reported to the
Audit Committee at the next regularly scheduled meeting of the
Audit Committee. All fees for services provided by Moss
Adams during 2018 and 2017, respectively, were approved by the
Audit Committee.
From time to
time, the Audit Committee pre-approves fees and services up to a
maximum amount for future services relating to recurring tax
matters and securities filings.
Audit Committee Report
The
following Audit Committee Report is provided in accordance with the
rules and regulations of the SEC. Pursuant to those
rules and regulations, this Audit Committee Report is not to be
deemed “soliciting materials” or “filed”
with the SEC, subject to Regulation 14A or 14C of the Exchange Act
or subject to the liabilities of Section 18 of the Exchange
Act. This Audit Committee Report shall not be deemed to
be incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the
Securities Act or the Exchange Act except to the extent that
AutoWeb specifically incorporates this information by
reference.
The
Audit Committee has reviewed and discussed the Company’s
audited financial statements for the fiscal year ended December 31,
2018, with the management of the Company. The Audit
Committee has discussed with Moss Adams the matters required to be
discussed by the Auditing Standard No. 1301, Communications
with Audit Committee (AS 1301), as adopted by the Public Company
Accounting Oversight Board (“PCAOB”) The Audit
Committee has also received the written disclosures and the letter
from Moss Adams required by applicable requirements of the PCAOB
regarding the independent accountant’s communications with
the Audit Committee concerning independence, and has discussed with
Moss Adams the independent accountant’s
independence.
Based
on the foregoing review and discussions, the Audit Committee has
recommended to the Board that the audited financial statements be
included in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2018.
The
members of the Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not employed by
AutoWeb for accounting, financial management or internal control
purposes. Members of the Audit Committee relied, without
independent verification, on the information provided to them and
on the representations made by management and the independent
auditors. Accordingly, the Audit Committee’s
oversight does not provide any basis, other than the review and
discussions with management and the independent auditors referred
to above, to determine that management has maintained appropriate
accounting and financial reporting principles and policies or
internal controls over financial reporting and procedures designed
to assure compliance with accounting standards and applicable laws
and regulations. Furthermore, the Audit
Committee’s considerations and discussions referred to above
do not assure that the audit of AutoWeb’s financial
statements has been carried out in accordance with auditing
standards generally accepted in the United States or that
AutoWeb’s auditors are in fact
“independent.”
The
Audit Committee
Mark N.
Kaplan, Chairman
Michael
A. Carpenter
Michael
J. Fuchs
Janet
M. Thompson
EXECUTIVE COMPENSATION
Named Executive Officers Compensation Narrative
For
2018, the Company’s named executive officers
are:
Named Executive Officers Serving at End of 2018
●
Jared R. Rowe,
President and Chief Executive Officer (employment commenced
effective as of April 12, 2018)
●
Glenn E. Fuller,
Executive Vice President, Chief Legal Officer and
Secretary
●
J.P. Hannan,
Executive Vice President, Chief Financial Officer (employment
commenced effective as of December 17, 2018)
Named Executive Officers Not Serving at End of 2018
●
Jeffrey H. Coats,
President and Chief Executive Officer (Mr. Coats served as the
Company’s President and Chief Executive Officer until
termination of his employment effective April 12,
2018)
●
John J. Skocilic,
Jr., Executive Vice President, Chief Information Officer (Mr.
Skocilic served as the Company’s Executive Vice President,
Chief Information Officer until termination of his employment
effective September 12, 2018)
The
names, ages and backgrounds of the Company’s current
executive officers are included in the section of this Proxy
Statement entitled “EXECUTIVE
OFFICERS.”
General Compensation
Philosophy and Objectives. The role of the Compensation
Committee is to determine, or recommend to the Board for
determination, the salaries and other compensation of the
Company’s executive officers and any other officer who
reports directly to the Chief Executive Officer, and to make grants
under, and to administer, the stock option, restricted stock and
other employee equity and incentive compensation
plans.
To
promote responsible compensation practices:
●
The Compensation
Committee directly engaged an independent compensation consultant
(see “Compensation
Consultants”);
●
The Company’s
2018 Equity Incentive Plan prohibits repricing of option and stock
appreciation rights (except for certain adjustments upon changes in
capitalization or control) without stockholder
approval;
●
The Company’s
securities trading policy generally precludes executive officers
from engaging in transactions involving put or call options, short
sales and buying or holding Common Stock on margin. All trades by
executive officers must be pre-cleared with the Company’s
Chief Legal Officer.
The
Company’s compensation philosophy for executive officers is
to align compensation with corporate performance and efforts to
increase stockholder value, while providing a total compensation
opportunity that is broadly competitive and enables the Company to
attract, motivate, reward and retain key executives and employees.
The Company does not target specific compensation
percentiles. Accordingly, each executive officer’s
compensation package is typically comprised of the following three
elements:
●
Base annual salary
that is designed primarily to reflect individual responsibilities
and personal experience and to compare with similar roles at the
Company and at technology and online marketing companies that are
of comparable size to the Company and with which the Company
competes for executive personnel;
●
Annual variable
performance awards, such as incentive compensation, payable in
cash, stock options or shares of stock to reward executive officers
for the achievement of pre-established Company financial
performance goals;
●
Long-term,
equity-based incentive awards to strengthen the mutuality of
interests between the executive officers and the Company’s
stockholders, reward executive officers for increasing stockholder
value, and retain executive officers through continued service
requirements.
Additionally, the
Company’s executive officers are typically entitled to
severance payments in the event of termination of employment
without cause or by the executive officer for good reason and other
benefits and perquisites that are discussed below.
Compensation
decisions are designed to promote the Company’s business
objectives and strategy and enable the Company to attract, retain
and motivate qualified executive officers who are able to
contribute to the Company’s long-term
success. Among the factors considered by the Company in
determining executive officer compensation are the ability to
recruit individuals with the necessary talents and the need to
retain and motivate the Company’s executive
officers. The Company considers the competitive market
for executives in setting each element of compensation indicated
above. However, the Company does not attempt to set each
compensation element for each executive within a particular range
related to levels provided by comparable
companies. Rather, the Company uses market comparisons
as one factor in making compensation decisions. The
Company also considers other factors in making executive
compensation decisions, including local market forces, individual
contribution and performance, management skills, internal pay
equity, the undertaking of new roles and responsibilities,
importance of the executive’s role and responsibilities to
the Company’s future success and the executive’s
experience, including prior work experience, length of service to
the Company, leadership and growth potential.
Under
the Company’s compensation structure, the mix of base annual
salary, annual variable performance awards, and long-term,
equity-based incentive awards varies depending upon level of
responsibility and experience. In allocating
compensation among these elements, the Company believes that the
compensation of members of senior management who have the greatest
ability to influence the Company’s performance should have a
greater proportion of their compensation based on Company
performance than lower levels of management. There is,
however, no pre-established policy for the allocation between
either cash and non-cash or short-term and long-term
compensation. The mix of compensation determined by the
Company is between base annual salary compensation and incentive
compensation. Long-term, equity-based compensation is
determined separately and may not be awarded every
year.
Base Annual Salary.
The objective of base annual salary is to secure the services of
the Company’s executive officers and reflect job
responsibilities, individual performance, market competitiveness,
the value of such services to the Company’s business, and the
size of the Company’s business. Salaries for
executive officers are generally determined on an individual basis
by evaluating each executive officer’s scope of
responsibility, performance, prior experience, and salary history,
as well as, competitive market information. The
Compensation Committee also considers the recommendations of the
Chief Executive Officer (except in the case of the Chief Executive
Officer’s own compensation). The Chief Executive
Officer is not present during any voting or deliberations by the
Compensation Committee with respect to the Chief Executive
Officer’s compensation.
Annual Non-Equity-Based
Incentive Compensation, Retention and Discretionary
Awards. The Company’s compensation structure
provides for the opportunity for executive officers to be awarded
annual incentive compensation pursuant to incentive compensation
plans established each year (“Annual Incentive Compensation
Plans”). Annual Incentive Compensation
Plans are generally performance-based, and all awards are
ultimately made at the sole discretion of the Compensation
Committee. The objective of the annual incentive
compensation awards under these plans is to enhance retention and
motivate individuals to achieve specific goals established by the
Compensation Committee. These goals may consist of any
or all of the following:
●
Company-wide
performance goals;
●
Specific individual
goals that are intended to advance the Company’s business and
create long-term stockholder value;
●
Overall individual
performance; or
●
Other factors
deemed relevant to the Company’s overall financial and
operating performance, including market and competitive
factors.
The Compensation
Committee from time to time also considers various other
discretionary, retention or incentive compensation alternatives for
the Company’s executive officers, including discretionary
awards for completion of special projects (including acquisition
and disposition transactions).
The
Compensation Committee establishes a target annual incentive
compensation award opportunity for each executive officer based on
a percentage of base annual salary. The Compensation Committee
establishes target award opportunities for executive officers after
reviewing survey data provided by the Company’s Independent
Compensation Consultant (described below), and, in the case of
executive officers other than the Chief Executive Officer, input
from the Chief Executive Officer. The Company believes
this is a meaningful incentive to achieve the incentive
compensation goals and an appropriate and reasonable allocation to
performance-based annual cash incentive compensation to motivate
executive officers.
Typically, the
Compensation Committee, with the participation of the Chief
Executive Officer, sets compensation performance goals for the
Company for the year. Generally, unless specific individual
performance goals are established, the target annual incentive
compensation award opportunity for executive officers has been
based upon the attainment of Company-wide performance goals, which
reflects the Company’s belief that executive officers are
accountable for the Company’s overall operating performance.
If the Compensation Committee elects to allocate any portion of an
executive officer’s target annual incentive compensation
award opportunity to specific individual performance goals, the
Compensation Committee sets the individual performance goals for
the Chief Executive Officer, and the Chief Executive Officer, after
consultation with the Compensation Committee, sets the specific
individual performance goals for the other executive
officers. If specific individual performance goals are
established, a percentage allocation between Company-wide business
objectives and individual performance goals is determined that the
Company believes is an appropriate and reasonable allocation that
aligns the annual incentive compensation of executive officers with
individual performance. The individual performance goals
are based on, and reflect, each individual’s responsibilities
and, to the extent applicable, contribution to revenue, and may at
times include such factors as leadership, team work, growth
initiatives and other activities that are considered important to
contributing to the long-term performance of the
Company.
For
Company-wide goals, the Compensation Committee may adopt a formula
that establishes an award payout range based on the level of
performance attained, with a minimum below which no payment is made
and a maximum beyond which no additional incentive compensation is
paid. In determining the extent to which the
Company-wide performance goals are met for a given period, the
Compensation Committee exercises its judgment whether to reflect or
exclude specific circumstances that the Company experienced during
the year as well as the impact of unusual or infrequently occurring
events or other particular circumstances affecting the
Company’s business, changes in accounting principles,
acquisitions, dispositions, impairment of assets, restructuring
charges and litigation costs and successes, and may also consider
the relative risks in achieving the goals reflected in the
Company’s annual operating plan.
Long-Term, Equity-Based
Incentive Awards. Equity-based compensation in
the form of stock options or restricted stock awards are provided
to link the interests of executive officers with the long-term
interests of the Company’s stockholders, support a
pay-for-performance culture, foster employee stock ownership, focus
the management team on increasing value for the stockholders and to
encourage executive officers to remain in the Company’s
employ. In addition, stock options and restricted stock
awards help to provide a long-term balance to the overall
compensation program. While cash bonus payments are
focused on short-term performance, the multi-year vesting schedule
of stock options and the forfeiture restrictions on restricted
stock awards create incentives for increases in stockholder value
over a longer term.
The
Company grants stock options that are performance-based,
service-based or a combination of the two. Although the
Company views all stock options as performance-based because they
require the stock price to increase in order for the recipient to
realize value from the stock options, the Company has granted stock
options subject to vesting based on levels of achievement of
specified Company goals that encourage preservation and enhancement
of stockholder value. Service-based vesting also
encourages executive retention. Restricted stock that is
subject to forfeiture in the event an executive officer leaves the
Company prior to the lapse of the forfeiture restrictions provides
similar retention and long-term motivational
effects. The Company views restricted stock as providing
employment retention incentives and an incentive to increase stock
values because they become more valuable as the price of Common
Stock increases.
The
level of long-term incentive compensation is determined based on an
evaluation of competitive factors, the position and level of
responsibility of each executive officer, the Company’s
belief that stock options should be a significant part of the total
mix of executive officer compensation and the goals of the
compensation objectives described above. Options are
granted with exercise prices of not less than the closing price of
the Company’s stock on the date of
grant. Depending on the circumstances, in establishing
grant levels, the Company may consider the equity ownership levels
of the recipients and exercise prices of existing grants or prior
grants that are fully or partially vested. The Company
does not have a policy requiring executive officers or directors to
hold shares acquired following stock option exercise or restricted
stock vesting for any additional length of time, unless the shares
are specifically subject to a resale restriction, and there are no
ownership guidelines for executives or directors, as this is not
viewed as competitive for a public company of AutoWeb’s
size.
The
Company typically awards stock options or restricted stock awards
to executive officers upon first joining the Company, promotion to
more senior executive positions and annually, with approximately
mid-year supplemental annual award adjustments made in some
years. At the discretion of the Compensation Committee,
executive officers may also be granted stock options or restricted
stock awards based upon completion of special projects (including
acquisition or disposition transactions) or to provide greater
incentives to continue their employment with the Company and to
strive to increase the value of the Common Stock. The number of
shares subject to each stock option granted or restricted stock
awarded is within the discretion of the Compensation Committee and
is based on anticipated future contributions and ability to impact
the Company’s results, past performance or consistency within
the officer’s internal pay level. The Compensation
Committee considers these factors, as well as applicable
contractual requirements, the value of long-term equity incentive
grants, the compensation expense associated with awards, leverage
and stockholder dilution. Stock option grants prior to
the adoption of the Company’s 2010 Equity Incentive Plan
typically had a term of ten years, but options granted after the
adoption of the 2010 Equity Incentive Plan expire no later than
seven years from the date of grant. Stock options and
restricted stock awards generally vest and become exercisable over
a three-year period, and the vesting of stock options and lapsing
of forfeiture restrictions for restricted stock awards typically
accelerate upon (i) a termination of employment without cause by
the Company or for good reason by the executive officer; or (ii) a
change in control of the Company, which may or may not be coupled
with a termination of employment by the Company without cause or by
the executive officer for good reason, or if the acquirer does not
assume, retain or exchange the options as provided in the
applicable plan pursuant to which the options were granted or the
applicable option award agreement. Equity awards may also provide
for full or limited acceleration of vesting upon the death or
disability of the award recipient.
The
Compensation Committee approves all stock options and other
equity-based awards, subject to limited delegation to the
Non-Executive Stock Option Committee, which consists of the
Company’s Chief Executive Officer, for stock option grants to
non-executive officers. Generally, the Compensation
Committee approves stock option grants to newly hired employees who
are executive officers prior to the date of commencement of
employment, with the employment commencement date as the grant
date.
Stockholder Approval of
Executive Compensation. At the Company’s
2017 Annual Meeting of Stockholders (“2017 Annual Meeting”), the
stockholders voted on an advisory proposal regarding approval of
the compensation paid to the Company’s named executive
officers. The Compensation Committee considered that
approximately 94% of the shares present at the 2017 Annual Meeting
and entitled to vote on the proposal were voted in favor of
approval of the proposal. The Company values
stockholders’ opinions and will consider the outcome of the
Company’s say-on-pay proposals when making future executive
compensation decisions regarding the Company’s named
executive officers. In addition, at the Company’s
2013 Annual Meeting of Stockholders, the stockholders voted on an
advisory basis with respect to the frequency of future advisory
votes to approve the compensation of the Company’s named
executive officers. Approximately 58% of the votes cast
on this proposal were cast for a frequency of every two
years. In light of this vote, the Board determined that
it would include a proposal for an advisory say-on-pay proposal
every two years. Stockholders are again being asked to vote on an
advisory proposal regarding approval of the compensation paid to
the Company’s named executive officers and on the frequency
of that vote at the Annual Meeting. See Proposals
2 and 3.
Compensation
Consultants. The Compensation Committee may, from
time to time, directly retain the services of independent
consultants and other experts to assist the Compensation Committee
in connection with executive compensation matters. During 2018, the
Compensation Committee engaged the services of Frederic W.
Cook & Co., Inc., a national executive compensation
consulting firm (“Independent
Compensation Consultant”), to provide market data and
to review and provide recommendations regarding the Company’s
executive compensation programs and compensation of the
non-management members of the Board and its
committees. The Independent Compensation Consultant
performs services solely on behalf of the Compensation Committee
and has no relationship with the Company’s management except
as it may relate to the Independent Compensation Consultant’s
performance of its services for the Compensation
Committee. The Company’s executive officers did
not participate in the selection of the Independent Compensation
Consultant. Periodically, the Company’s Chief
Executive Officer seeks input from the Independent Compensation
Consultant on compensation matters relating to named executive
officers other than the Chief Executive Officer in providing
information to the Compensation Committee regarding executive
compensation matters. These inquiries relating to named
executive officer compensation occur with the advance knowledge of
the Compensation Committee chairperson. The Compensation
Committee has concluded that the Independent Compensation
Consultant is independent and that no conflict of interest exists
that would prevent the Independent Compensation Consultant from
independently advising the Compensation Committee.
Option Forfeiture Provisions for
Accounting Restatements. For stock options
granted to the named executive officers during and after 2013, the
stock option award agreements provide for forfeiture of unexercised
options and recovery of gain from exercised options if at any time
within 12 months after the named executive officer exercises the
options, or if within 12 months of the date of termination of
employment with the Company, as applicable, it is determined that
the named executive officer engaged in misconduct that resulted in
an accounting restatement due to material noncompliance with any
financial reporting requirement under applicable securities
laws.
2018 Compensation
Decisions. For 2018, the Compensation Committee
determined the compensation of the Company’s 2018 named
executive officers in accordance with the general compensation
philosophy and objectives described above.
Compensation Reviews and Peer Group. In addition to the
foregoing general compensation philosophy and objectives, in June
2017, the Compensation Committee consulted with the Independent
Compensation Consultant, which conducted an independent review of
the Company’s executive compensation program on behalf of the
Compensation Committee (“2017
Executive Compensation Review”) to provide a
competitive reference on pay levels and performance
alignment. The 2017 Executive Compensation Review used a
peer group, proposed by the Independent Compensation Consultant and
approved by the Compensation Committee in April 2017, with
industry- and size-appropriate companies that were mostly based in
high cost of living locations (e.g., Boston, New York, Seattle and
northern California) similar to the Company’s location in
Orange County, California to reflect local labor market and cost of
living. The peer group used for the 2017 Executive Compensation
Review (“2017 Peer
Group”) consisted of the following 20 U.S. based,
publicly traded, application/internet software and services
companies with an approximate range of $47 million to $447 million
in revenue and market caps below $1.617 billion at the time:
Angie’s List, ARI Network Services, Bazaarvoice, Care.com,
DHI Group, IPass, Jive Software, Leaf Group (formerly Demand
Media), Limelight Networks, LivePerson, Marchex, QuinStreet, Reis,
Rocket Fuel, Tech Target, Telenav, Travelzoo, TrueCar, XO Group and
Zix.
Market
comparisons were provided for the Company’s executive
officers covering base salaries; annual incentives (levels and plan
design); long-term incentive grant values, awards, types and mix;
and total direct compensation. The Compensation Committee reviewed
market pay and relative performance data from the 2017 Peer Group.
At the time, AutoWeb’s estimated 2017 revenue approximated
the peer group median and the Company’s market capitalization
value approximated the 25th
percentile of the peer group. Further, the Company’s GAAP
operating income was above the median and the 75th percentile for the peer group. The
Company does not target a particular benchmark level for the
pay and performance levels.
The
Compensation Committee, in consultation with the Independent
Compensation Consultant, considered the equity compensation
information contained in the 2017 Executive Compensation Review in
connection with the Committee’s decisions regarding stock
option awards to the continuing named executive officers during
2018.
2018 Base Annual Salary. The Compensation
Committee established the 2018 base annual salaries of Messrs. Rowe
and Hannan in connection with the commencement of their employment
with the Company after consideration of the 2017 Executive
Compensation Review and consultation with the Independent
Compensation Consultant. Based on the foregoing, the Compensation
Committee established the base annual salaries for 2018 for Messrs.
Rowe and Hannan at $550,000 and $350,000, respectively. The base
annual salaries reported in the Summary Compensation Table for
Messrs. Rowe and Hannan reflect prorations of their base annual
salaries for the time they were employed by the Company during
2018.
In
connection with its annual review of executive compensation, and
after consideration of the 2017 Executive Compensation Review and
consultation with the Independent Compensation Consultant, the
Compensation Committee approved an increase of $30,000 in Mr.
Fuller’s base annual salary for 2018 from $320,500 to
$350,250, with the increase to be effective April 12, 2018. The
Compensation Committee also noted that the increase in Mr.
Fuller’s compensation and the changes to his severance
arrangement discussed below under the section of this Summary Of Named Executive Officer
Compensation entitled “Severance and Change in
Control Terms,” were in recognition of Mr.
Fuller’s continued performance and contributions to the
Company and his outstanding work in managing the process and
negotiations regarding the hiring of Mr. Rowe, the exit terms,
including the terms of a post-termination of employment consulting
arrangement with Mr. Coats, the terms of a post-termination
consulting arrangement with the Company’s former chief
financial officer upon her resignation in April 2018, and the exit
of the Company’s former chief operating officer upon his
resignation on March 1, 2018.
There
were no changes in the base annual salaries for Messrs. Coats or
Skocilic for 2018 compared to their 2017 base annual
salaries.
2018 Annual Incentive Compensation Plan
Awards. The Compensation Committee set the 2018
target annual incentive compensation award opportunities for
Messrs. Rowe and. Fuller under the 2018 Annual Incentive
Compensation Plan (“2018
Incentive Plan”) at 100% and 70% of base annual
salary, respectively. Mr. Hannan’s target annual incentive
award opportunity is 55% of his base annual salary. Mr. Hannan did
not participate in the 2018 Incentive Plan given his December 17,
2018 employment commencement date and did not receive any award
payout under the 2018 Incentive Plan.
The
2018 Incentive Plan was based primarily on the following two
Company-wide performance goals, each weighted 50%:
●
Achievement of the
Company’s revenue goal of $124.9 million (“2018 Revenue Goal”) under the
Company’s 2018 operating plan approved by the Board;
and
●
Achievement of the
Company’s Non-GAAP EPS Goal (defined as (i) GAAP net income
before amortization of acquired intangibles, non-cash stock-based
compensation, severance costs, gain or loss on investment or sale,
litigation settlements, goodwill impairment, long-lived assets
impairment, and income taxes divided by (ii) weighted average
diluted shares outstanding) under the 2018 operating plan approved
by the Board (“2018 Non-GAAP
EPS Goal”).
Award
payout opportunities for each goal were based upon percentage of
achievement of the goal compared to the corresponding percentage on
a sliding scale that reduced award payout opportunities by
approximately 3% for every 1% that achievement fell below goal and
increased award payout opportunities approximately 3% for every 1%
that achievement exceeded the goal (“2018 Award Opportunity
Scale”). Achievement of a goal below 67%
revenue or non-EPS performance would result in no awards for that
goal, and performance achievement over 100% on either scale was
capped at 120%. The sum of the weighted percentages
derived from the 2018 Award Opportunity Scale for the 2018 Revenue
Goal and the 2018 Non-GAAP EPS Goal was applied to each named
executive officer’s target annual incentive compensation
award opportunity to determine the officer’s 2018 award
payout opportunity. The Compensation Committee selected
these two goals and assigned them equal weighting under the 2018
Incentive Plan because the Compensation Committee believed these
goals best reflected the criteria for measuring the Company’s
overall performance and performance of strategic initiatives for
2018.
Award
payouts under the 2018 Incentive Plan to Messrs. Rowe and Fuller
were paid in March 2019 and reflected the following factors
considered by the Compensation Committee in determining incentive
compensation award payouts under the 2018 Incentive
Plan:
●
The Company
exceeded both the 2018 Revenue Goal and the 2018 Non-GAAP EPS Goal,
which combined resulted in an approximately 130.8% combined target
award payout under the 2018 Incentive Plan;
●
The Company had
undergone significant change during a challenging 2018, with the
Company’s senior executive management largely replaced, the
implementation of new strategic initiatives to stabilize the
Company’s performance and move toward returning the Company
to growth and profitability, and the stabilization of the Company
performance in the second half of the year; and
●
Notwithstanding the
level of performance of the 2018 Revenue Goal and the 2018 Non-GAAP
EPS Goal, resulting in meeting short-term performance goals, the
Company’s financial performance for the full year 2018 still
reflected overall decreases in revenues and Non-GAAP EPS compared
to 2017, and as such, the payouts under the 2018 Incentive Plan
were viewed as an investment in the Company’s employees and
part of a multi-year turnaround effort.
Based
on its evaluation of the foregoing items, the Committee used its
discretion to reduce the base incentive compensation awards from a
formulaic payout of 130.8% down to an 80% base award payout in
recognition of the fact that exceeding 2018 goals that were lower
than 2017 performance was still a below-target performance outcome.
As a result, the Compensation Committee approved a reduced base
award payout of 80% of targeted award payouts under the 2018
Incentive Plan, which resulted in base award payouts under the 2018
Incentive Plan to Messrs. Rowe and Fuller of $318,247 and $191,353,
respectively. The base award payout to Mr. Rowe reflected a
proration of his award for the time he was employed by the Company
during 2018. In addition, in recognition of their significant
individual contributions and efforts during 2018, the Compensation
Committee approved supplemental incentive compensation award
payouts to Messrs. Rowe and Fuller of $79,562 and $47,838,
respectively, resulting in total award payouts under the 2018
Incentive Plan to Messrs. Rowe and Fuller of $397,808 and $239,191,
respectively.
In
accordance with severance provisions of Mr. Coats’ employment
agreement, Mr. Coats received an award payout of $122,959 at the
80% award payout level approved by the Compensation Committee for
payouts under the 2018 Incentive Plan. The award payout to Mr.
Coats reflected a proration of his award for the time he was
employed by the Company during 2018. Mr. Skocilic was not entitled
to receive any award payout under the 2018 Incentive Plan under his
severance benefits agreement and did not receive any such
payout.
2018 Long-Term, Equity-Based Incentive Awards. On
April 12, 2018, stock options were granted to Messrs. Fuller and
Skocilic in connection with the Company’s annual equity
awards to employees. Options were used because they require the
Company’s share price to increase after grant in order to
provide value to the executive, consistent with the transformation
effort. The Company views options as inherently performance-based
and aligned with creating value for shareholders. After considering
the Company’s then-chief executive officer’s
recommendation for grants to named executive officers other than
himself, and after consultation with the Independent Compensation
Consultant and consideration of the 2017 Executive Compensation
Review, the Compensation Committee approved the grants of 125,000
and 83,000 stock options, respectively, to Messrs. Fuller and
Skocilic, at an exercise price of $3.26 per share. The exercise
price for these stock option grants was the closing price for the
Common Stock on The Nasdaq Capital Market as of the grant date.
These stock option grants vest one-third on the first anniversary
following the grant date, with the remaining two-thirds vesting
ratably over 24 months thereafter and expire seven years from the
date of grant. The vesting of stock options will accelerate upon
the occurrence of certain events as provided in the applicable plan
pursuant to which the stock options were granted or the applicable
stock option award agreement, including (i) upon termination of the
named executive officer’s employment with the Company without
cause or by the named executive officer for good reason; and (ii)
upon a change in control of AutoWeb if such change in control is
coupled with a termination of the named executive officer’s
employment without cause or by the named executive officer for good
reason or if the acquirer does not assume, retain or exchange the
options.
After
consultation with the Independent Compensation Consultant and
consideration of the 2017 Executive Compensation Review, as an
inducement to enter into employment with the Company, the
Compensation Committee recommended to the Company’s Board,
and the Board approved, a grant of stock options to Mr. Rowe to
purchase 1,000,000 shares of Common Stock (“Rowe Inducement Options”), which
vest monthly in 36 monthly installments on the first day of each
calendar month following the April 12, 2018 grant date. This new
hire award was to attract Mr. Rowe’s employment and to
provide a stake in the Company’s success if he is able to
transform the Company. It is larger than is expected to be granted
annually. Options were used because they require the
Company’s share price to increase after grant in order to
provide value to the executive, consistent with the transformation
that Mr. Rowe is expected lead. The Company views options as
inherently performance-based and aligned with creating value for
shareholders. The Rowe Inducement Options have an exercise price of
$3.26 per share and a term of seven years from the grant date. Upon
a change in control of the Company or in the event of a termination
of Mr. Rowe’s employment by the Company without cause or by
Mr. Rowe with good reason, all Rowe Inducement Options that are
unvested will vest. In the event of a termination of Mr.
Rowe’s employment with the Company by reason of Mr.
Rowe’s death or disability, the lesser of: (i)
1/3rd of
the total number of Rowe Inducement Options; and (ii) the total
number of unvested Rowe Inducement Options will vest upon the date
of termination.
After
consultation with the Independent Compensation Consultant and
consideration of the 2017 Executive Compensation Review, as an
inducement to enter into employment with the Company, the
Compensation Committee approved a grant of stock options to Mr.
Hannan on December 17, 2018, to purchase 120,000 shares of Common
Stock (“Hannan Inducement
Options”), at an exercise price of $2.30 per share.
The exercise price for these stock option grants was the closing
price for the Common Stock on The Nasdaq Capital Market as of the
grant date. These stock option grants vest one-third on the first
anniversary following the grant date, with the remaining two-thirds
vesting ratably over 24 months thereafter and expire seven years
from the date of grant. The vesting of stock options will
accelerate upon the occurrence of certain events as provided in the
applicable plan pursuant to which the stock options were granted or
the applicable stock option award agreement, including (i) upon
termination of the named executive officer’s employment with
the Company without cause or by the named executive officer for
good reason; and (ii) upon a change in control of AutoWeb if such
change in control is coupled with a termination of the named
executive officer’s employment without cause or by the named
executive officer for good reason or if the acquirer does not
assume, retain or exchange the options.
Mr.
Coats did not receive any grants of equity-based compensation in
2018.
For
additional information concerning the change in control provisions
of the above options awards, see the section of this Proxy
Statement below entitled “EXECUTIVE COMPENSATION–Potential Payments
Upon Termination or Change in Control.”
All of
the foregoing 2018 equity grants reflected the Compensation
Committee’s belief that equity-based compensation in the form
of stock options link the interests of named executive officers
with the long-term interests of the Company’s stockholders,
supports a pay-for-performance culture, fosters stock ownership by
named executive officers, focuses the management team on increasing
value for the stockholders, and encourages named executive officers
to remain in the Company’s employ.
Employment Sign-on
Bonuses. In connection with Messrs. Rowe’s and
Hannan’s commencement of employment with the Company, the
Compensation Committee, after consideration of the 2017 Executive
Compensation Review and consultation with the Independent
Compensation Consultant, elected to pay employment sign-on bonuses
of $250,000 and $100,000 to Messrs. Rowe and Hannan, respectively,
to provide additional inducement to Messrs. Rowe and Hannan to join
the Company.
Coats Consulting
Agreement. In connection with the termination of Mr.
Coats’ employment with the Company, Mr. Coats and the Company
entered into a consulting services agreement (“Consulting Services
Agreement”) pursuant to which Mr. Coats would
provide transition services to the Company on a consulting basis
for a period of 13 months commencing April 13, 2018 (“Consulting Services Commencement
Date”). Mr. Coats was paid a monthly fee of
$22,916 for his consulting services, resulting in total payment to
Mr. Coats of approximately $206,000 for consulting services during
2018. As additional consulting consideration, any post-termination
of employment exercise periods for the stock options awarded to Mr.
Coats that did not already extend until the second anniversary of
the Consulting Services Commencement Date in accordance with the
terms of the stock option award agreements for such stock options
were extended until April 13, 2020; provided, however, that
notwithstanding the foregoing, in no event will the
post-termination exercise periods for any stock options extend
beyond the original option expiration dates of the stock
options.
Severance and Change in
Control Terms. The Company has entered into
agreements with the named executive officers that provide for
severance benefits, including continuation of monthly salary or
lump sum cash payments and continuation of health and welfare
benefits for specified periods of time, upon termination of the
named executive officer’s employment with the Company without
cause or by the named executive officer for good reason. In
addition, the vesting of stock options and restricted stock awarded
to the named executive officers may accelerate upon the occurrence
of various events, including (i) termination of the named executive
officer’s employment without cause or by the named executive
officer with good reason; and (ii) upon a change in control of
AutoWeb if such change in control is coupled with a termination of
the named executive officer’s employment without cause or by
the named executive officer for good reason or if the acquirer does
not assume, retain or exchange the options; provided, however, that
in the case of the Rowe Inducement Options, a termination of
employment in connection with a change in control is not required
for the acceleration of the vesting of any unvested Rowe Inducement
Options. The arrangements are designed as a recruiting and
retention mechanism to assist the Company in providing adequate
employment security to compete for highly qualified executive
officers and induce them to invest themselves in a career with the
Company, to assist in retention of the Company’s executive
officers during the uncertainty that might accompany any possible
change in control, and to offset any motivation executive officers
might otherwise have to resist a change in control that could
result in loss of their employment. Information
regarding applicable terms of the foregoing severance arrangement
for the Company’s named executive officers is provided below
under the section of this Proxy Statement entitled
“EXECUTIVE
COMPENSATION–Potential Payments Upon Termination or Change in
Control.”
After
consideration of the 2017 Executive Compensation Review and
consultation with the Independent Compensation Consultant,
effective April 15, 2018, the Compensation Committee approved
amendments to Mr. Fuller’s Amended and Restated Severance
Agreement dated as of September 9, 2008, as amended
(“Fuller Severance Benefits
Agreement”). The amendments to the Fuller Severance
Benefits Agreement provide that if Mr. Fuller is terminated by the
Company without cause or by Mr. Fuller with good reason, Mr.
Fuller’s severance benefits period is increased from 12
months to 18 months, which would entitle Mr. Fuller to: (i) a lump
sum payment equal to 18 months of his base annual salary; and (ii)
continuation of this health and welfare insurance benefits for 18
months. In addition, Mr. Fuller will be entitled to receive his
annual incentive compensation payout based on actual performance
for the entire performance period, prorated for the amount of time
Mr. Fuller was employed by the Company prior to the date of
termination during such performance period. In connection with the
foregoing amendments to the Fuller Severance Benefits Agreement,
the Company will no longer be obligated to make additional payments
to Mr. Fuller to compensate for his additional tax obligations if
Mr. Fuller’s compensation is deemed to be excess parachute
payments under the Internal Revenue Code.
By
reason of the termination of Mr. Coats’ employment by the
Company without cause effective as of April 12, 2018, and the
termination of Mr. Skocilic’s employment by the Company
without cause effective as of September 27, 2018, Messrs. Coats and
Skocilic became entitled to receive the severance benefits and
acceleration of the vesting of their stock options and lapsing of
the forfeiture restrictions on their restricted stock awards set
forth in their respective severance benefits arrangements and the
applicable award agreements for their stock options and restricted
stock awards.
Benefits and
Perquisites. Except
as discussed below, executive officers typically participate in
employee benefit plans that are generally available to all
employees on the same terms.
All
employees have company-provided life insurance with a death benefit
of one times the employee’s annual salary, capped at
$300,000.
All
employees above the senior manager level are provided with enhanced
supplemental short and long-term disability insurance by the
Company in addition to the Company’s standard short- and
long-term disability insurance in order to attract and retain these
employees. For these executive officers who qualify for the
coverage, the Company also provides an additional supplemental
long-term disability plan that offers a benefit of up to 75% of the
executive’s base annual salary, up to a maximum benefit of
$5,000 per month. The benefit begins 90 calendar days after the
onset of the disability and may continue up to age 65.
During
the term of Mr. Rowe’s employment agreement, Mr. Rowe
receives a monthly travel and housing accommodation in the amount
of $15,000. In the event Mr. Rowe elects to relocate to the Irvine,
California area, this monthly travel and housing accommodation will
cease and the Company will pay actual moving costs and actual sales
brokerage fees incurred for the sale of his personal residence.
This moving and relocation assistance is not to exceed $200,000 in
the aggregate. Additionally, the Company reimbursed Mr.
Rowe’s approximately $19,200 for legal fees he incurred in
connection with the negotiation and review of Mr. Rowe’s
employment agreement.
Tax Implications
IRC
Section 162(m). In general, Section 162(m)
disallows a tax deduction for the compensation paid in any tax year
in excess of $1.0 million to certain executives of
publicly-held companies. The $1.0 million
limitation applies per executive per year and only to the
compensation paid to the chief executive officer and to each of the
next three most highly compensated officers other than the chief
financial officer (for years commencing before 2018). In December
2017, Congress enacted Public Law No. 115-97, commonly referred to
as the “Tax Cuts and Jobs Act” (“TCJA”), which, among other things,
eliminated the “performance-based compensation”
exemption from Section 162(m) of the Internal Revenue Code
(“IRC”),
effective for tax years beginning after December 31, 2017, such
that compensation paid to the Company’s executives subject to
Section 162(m) in excess of $1.0 million will not be deductible
unless the compensation qualifies for transition relief applicable
to certain arrangements in place as of November 2, 2017. In
addition, the TCJA now includes the chief financial officer in the
group of officers subject to the limitation. The Company cannot
give any assurance that any incentive awards outstanding after
December 31, 2017, that the Compensation Committee intended to
satisfy the Section 162(m) “performance-based
compensation” exemption requirements will in fact do so
because of uncertainties regarding the application and
interpretation of Section 162(m) of the IRC, including the
uncertain scope of the abovementioned transition
relief.
The
Compensation Committee believes that stockholder interests are best
served by not restricting its discretion and flexibility in
crafting compensation programs even when those programs could
result in certain non-deductible compensation
expenses. Therefore, the Compensation Committee has from
time to time approved elements of compensation for certain covered
officers that may not be fully deductible. In
addition, although some
amounts recorded as compensation by the Company to certain of the
Company’s executive officers may be limited by
Section 162(m), that limitation currently is not expected to
result in the current payment of increased federal income taxes by
the Company due to the Company’s significant net operating
loss carry forwards.
IRC Sections 280G and
4999. The Compensation Committee has considered
the potential impact of Sections 280G and 4999 of the IRC in
structuring the compensation and severance packages for the
Company’s executives. Section 280G disallows
a tax deduction by the payor for “excess parachute
payments” made to executives, and Section 4999 imposes a
20% non-deductible excise tax on the executive receiving an excess
parachute payment. In general, a parachute payment to an
executive is a payment to the executive in the nature of
compensation that is contingent on a change in control of the
Company and that exceeds three times the executive’s
“base amount.” An executive’s base
amount is generally the average compensation received by the
executive from the Company during the five-year period preceding
the change in control of the Company. An excess
parachute payment is any amount over the portion of the base amount
allocated to that parachute payment.
In
general, it is the Compensation Committee’s policy to qualify
its executives’ compensation for deductibility under
applicable tax laws. The Compensation Committee
believes, however, that stockholder interests are best served by
not restricting its discretion and flexibility in crafting
compensation programs even though those programs may result in
certain non-deductible compensation expenses. Therefore,
the Compensation Committee has from time to time approved elements
of compensation for certain officers that may not be fully
deductible and that provide for the Company to “gross
up” the payment made to the executive to compensate the
executive for the 20% excise tax, and the Compensation Committee
reserves the right to do so in the future in appropriate
circumstances. Currently, none of the Company’s executives
have tax “gross up” provisions.
Summary Compensation
The
table below and the accompanying footnotes summarize the
compensation attributed for fiscal years 2018, 2017, and 2016, as
applicable, to the Company’s executive officers who
constitute named executive officers for the fiscal year ended
December 31, 2018.
2018 Summary Compensation Table
Name
and Principal Position
|
Year
|
|
|
|
|
Non-Equity Incentive Plan
Compensation
($) (2)
|
All
Other Compensation
($)
|
|
Jared
R. Rowe
|
2018
|
$394,167
|
$250,000(4)
|
$—
|
$1,815,720
|
$397,808
|
$154,456(5)
|
$3,012,151
|
President and Chief Executive Officer
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
H. Coats
|
2018
|
158,125
|
—
|
—
|
65,237
|
122,959
|
680,258(6)
|
1,026,579
|
Former President and
|
2017
|
550,000
|
—
|
606,900
|
—
|
157,300
|
11,814(7)
|
1,326,014
|
Chief Executive Officer (8)
|
2016
|
550,000
|
50,000(9)
|
—
|
1,362,276
|
479,600
|
14,358(10)
|
2,456,234
|
|
|
|
|
|
|
|
|
|
Glenn
E. Fuller
|
2018
|
341,500
|
—
|
—
|
226,965
|
239,191
|
6,383(11)
|
814,039
|
Executive
Vice President,
|
2017
|
320,250
|
—
|
285,600
|
172,845
|
85,114
|
8,758(12)
|
872,567
|
Chief
Legal Officer and Secretary
|
2016
|
305,000
|
25,000(9)
|
—
|
384,084
|
211,172
|
8,758(13)
|
934,014
|
|
|
|
|
|
|
|
|
Joseph
P. Hannan
|
2018
|
14,584
|
100,000(4)
|
—
|
148,055
|
—
|
—
|
262,639
|
Executive Vice President, Chief Financial
Officer (14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
J. Skocilic
|
2018
|
203,700
|
—
|
—
|
150,705
|
—
|
321,145(15)
|
675,550
|
Former
Executive Vice President,
|
2017
|
291,000
|
—
|
214,200
|
241,983
|
64,936
|
7,739(16)
|
819,858
|
Chief Information Officer (17)
|
|
|
|
|
|
|
|
|
(1)
|
The
dollar amounts listed do not necessarily reflect the dollar amounts
of compensation actually realized or that may be realized. The
dollar amount reported for stock awards and option awards is the
aggregate grant date fair value of awards granted during the year
calculated in accordance with FASB ASC Topic 718. See Note 10 of
the “Notes to Consolidated Financial Statements” in
Part IV, Item 15-Exhibits and Financial Statement Schedules of the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2018, which accompanies this Proxy Statement, for
assumptions made in these valuations.
|
(2)
|
Represents
amounts awarded under the Company’s Annual Non-Equity
Incentive Compensation Plan. For information on the amounts earned
in 2018, see the section of this Proxy Statement entitled
“EXECUTIVE
COMPENSATION–Named Executive Officers Compensation
Narrative–2018 Compensation Decisions–2018 Annual
Incentive Compensation Plan Awards.”
|
(3)
|
Mr.
Rowe’s employment with the Company commenced on April 12,
2018.
|
(4)
|
Represents
signing bonus paid upon commencement of employment with the
Company.
|
(5)
|
Represents
$129,500 for travel and housing accommodations, $19,293 for legal
expenses, $3,000 for 401(k) plan match, and $2,663 for supplemental
insurance premiums.
|
(6)
|
Represents
$453,045 in severance payments (including $63,461 in accrued
vacation), $7,081 for health insurance premiums for dependent,
$12,900 in healthcare extension premiums under the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”), and $1,716 for
supplemental insurance premiums. Also, represents $205,516 paid in
connection with Mr. Coats’ consulting arrangement. See
“EXECUTIVE
COMPENSATION–Named Executive Officers Compensation
Narrative–2018 Compensation Decisions–Coats Consulting
Agreement.”
|
(7)
|
Represents
$6,665 for health insurance premiums for dependent and $5,149 for
supplemental insurance premiums.
|
(8)
|
Mr.
Coats’ employment with the Company was terminated, without
cause, on April 12, 2018.
|
(9)
|
The
column entries for the year 2016 represent amounts related to
discretionary bonuses awarded in recognition of the applicable
named executive officers’ significant efforts in connection
with the acquisitions of Dealix/Autotegrity and Autobytel, Inc.
(formerly AutoWeb, Inc.) in 2015 and completion of the integrations
of these businesses in 2016.
|
(10)
|
Represents
$6,209 for health insurance premiums for dependent, $3,000 for
401(k) plan match, and $5,149 for supplemental insurance
premiums.
|
(11)
|
Represents
$3,000 for 401(k) plan match and $3,383 for supplemental insurance
premiums.
|
(12)
|
Represents
$3,000 for 401(k) plan match and $5,758 for supplemental insurance
premiums.
|
(13)
|
Represents
$3,000 for 401(k) plan match and $5,758 for supplemental insurance
premiums.
|
(14)
|
Mr.
Hannan commenced employment with the Company on December 17,
2018.
|
(15)
|
Represents
$309,048 in severance payments (including $18,048 in accrued
vacation), $3,000 for 401(k) plan match, $5,543 in COBRA healthcare
extension premiums, and $3,554 for supplemental insurance
premiums.
|
(16)
|
Represents
$3,000 for 401(k) plan match and $4,739 for supplemental insurance
premiums.
|
(17)
|
Mr.
Skocilic’s employment with the Company was terminated,
without cause, on September 12, 2018.
|
Outstanding Equity Awards at 2018 Year-End
The
following table sets forth, for each of the named executive
officers, information concerning outstanding stock option awards as
of December 31, 2018.
2018 Outstanding Equity Awards at Fiscal Year-End
Table
Name
|
|
Number of Securities Underlying Options Exercisable
(#)
|
Number of Securities Underlying Options Unexercisable
(#)
|
Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
|
Option Exercise Price ($)
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not Vested (#)
(1)
|
Equity Incentive Plan Awards:Number of Unearned Shares, Units or
Other Rights That Have Not Vested (#)
|
Equity Incentive Plan Awards:Market or Payout of Unearned Shares,
Units or Other Rights That Have Not Vested ($)
|
Jared R. Rowe
(2)
|
04/12/18
|
222,222
|
777,778
|
—
|
3.26
|
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
Jeffrey H. Coats
(3)
|
01/21/16
|
250,000
|
—
|
—
|
17.09
|
|
—
|
—
|
—
|
—
|
|
01/23/15
|
30,000
|
—
|
—
|
10.20
|
|
—
|
—
|
—
|
—
|
|
03/17/14
|
37,000
|
—
|
—
|
14.32
|
|
—
|
—
|
—
|
—
|
|
01/21/14
|
50,000
|
—
|
—
|
17.64
|
|
—
|
—
|
—
|
—
|
|
01/24/13
|
22,500
|
—
|
—
|
4.00
|
|
—
|
—
|
—
|
—
|
|
01/10/12
|
37,692
|
—
|
—
|
3.90
|
|
—
|
|
—
|
—
|
|
04/03/09
|
167,511
|
—
|
—
|
1.75
|
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
Glenn E.
Fuller
|
04/12/18(4)
|
—
|
125,000
|
—
|
3.26
|
|
—
|
—
|
—
|
—
|
|
09/12/17
|
—
|
—
|
—
|
—
|
—
|
26,667 (5)
|
$81,334
|
—
|
—
|
|
01/26/17(4)
|
15,978
|
9,022
|
—
|
13.81
|
|
—
|
—
|
—
|
—
|
|
07/15/16(4)
|
24,169
|
5,831
|
—
|
14.41
|
|
—
|
—
|
—
|
—
|
|
01/21/16(4)
|
21,389
|
611
|
—
|
17.09
|
|
—
|
—
|
—
|
—
|
|
05/18/15
|
8,000
|
—
|
—
|
13.22
|
|
—
|
—
|
—
|
—
|
|
01/23/15
|
20,000
|
—
|
—
|
10.20
|
|
—
|
—
|
—
|
—
|
|
03/17/14
|
8,000
|
—
|
—
|
14.32
|
|
—
|
—
|
—
|
—
|
|
01/21/14
|
12,000
|
—
|
—
|
17.64
|
|
—
|
—
|
—
|
—
|
|
01/24/13
|
12,250
|
—
|
—
|
4.00
|
|
—
|
—
|
—
|
—
|
|
01/10/12
|
20,024
|
—
|
—
|
3.90
|
|
—
|
—
|
—
|
—
|
|
09/22/09
|
9,971
|
—
|
—
|
3.10
|
|
—
|
—
|
—
|
—
|
|
03/03/09
|
17,500
|
—
|
—
|
1.75
|
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
Joseph P.
Hannan
|
12/17/18(4)
|
—
|
120,000
|
—
|
2.30
|
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
John J. Skocilic
(6)
|
N/A
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
The
dollar amounts in this column are calculated using the closing
price of the Company’s common stock on December 31,
2018.
|
(2)
|
Mr. Rowe was granted stock options to purchase 1,000,000 shares of
Common Stock upon the commencement of his employment with the
Company, which vest monthly in 36 monthly installments on the first
day of each calendar month beginning on May 1,
2018.
|
(3)
|
The
vesting of all of Mr. Coats’ unvested restricted stock and
option awards was accelerated upon Mr. Coats’ termination
without cause by the Company effective April 12, 2018.
Additionally, pursuant to the Consulting Services Agreement, any
post-termination of employment exercise periods for the stock
options awarded to Mr. Coats during his employment by the Company
that would not already extend until the second anniversary of the
Consulting Services Commencement Date in accordance with the
terms of the stock option award agreements for such stock options
were extended until the second anniversary of the Consulting
Services Commencement Date; provided, however, that notwithstanding
the foregoing, in no event will the post-termination exercise
periods for any stock options extend beyond the original option
expiration dates of the stock options.
|
(4)
|
One-third
of the stock options granted vest on the first anniversary
following the grant date, and the remaining two-thirds vesting
ratably over 24 months thereafter. The vesting of these stock
options will accelerate upon (i) a termination of employment
without cause by the Company or for good reason by the named
executive officer; or (ii) a change in control of the Company if
coupled with a termination of employment by the Company without
cause or by the named executive officer for good reason or if the
acquirer does not assume, retain or exchange the options as
provided in the applicable plan pursuant to which the options were
granted or the applicable option award agreement.
|
(5)
(6)
|
One-third
of the stock awards vest on each anniversary following the date of
grant.
The
vesting of all of Mr. Skocilic’s unvested restricted stock
and option awards was accelerated upon Mr. Skocilic’s
termination without cause by the Company effective September 12,
2018.
|
Employment Agreements
The
Company has entered into written employment agreements with the
named executive officers. The employment of these
executive officers is “at will” and not for a specified
term. Under the terms of their respective agreements,
each executive is entitled to all customary benefits afforded
generally to executive officers of the Company, including any
qualified or non-qualified pension, profit sharing and savings
plans, any death benefit and disability benefit plans, life
insurance coverages, any medical, dental, health and welfare plans
or insurance coverages and any stock purchase programs that are
approved in writing by the Board. The Company will pay
or reimburse each of these executives for all reasonable business
expenses incurred while employed by the Company. The
employment agreements with these executive officers also provide
for specified payments and continuation of benefits in the event of
a termination of the executive officer’s employment with the
Company by the Company without cause or by the executive officer
for good reason, including any such termination in connection with
a change in control of the Company. For a description of
these termination and change in control provisions see the section
of this Proxy Statement below entitled “Potential Payments Upon Termination or Change
in Control.” Each of these employment
agreements contains confidentiality and non-solicitation provisions
that extend beyond termination of employment.
Jared R.
Rowe. In April 2018, the Company entered into an
employment agreement with Mr. Rowe, its President and Chief
Executive Officer (“Rowe Employment
Agreement”) pursuant to
which the Company agreed to pay Mr. Rowe a one-time signing bonus
in the amount of $250,000 and a base annual salary of $550,000,
which may be increased in the discretion of the Board or the
Compensation Committee. Mr. Rowe is also eligible to receive an
annual incentive compensation opportunity targeted at 100% of his
base annual salary based upon annual performance goals and
achievement of those goals, as established and determined by the
Board or the Compensation Committee. Mr. Rowe’s incentive
compensation payout for calendar year 2018 will equal his actual
payout under the Company’s 2018 incentive compensation plan
based on actual performance for the entire year (but not less than
75% of his target incentive compensation opportunity), prorated for
the amount of time Mr. Rowe was employed by the Company in
2018.
Mr.
Rowe also receives a monthly travel and housing accommodation in
the amount of $15,000. In the event that Mr. Rowe elects to
relocate to the Irvine, California area, this monthly travel and
housing accommodation will cease, and the Company will pay actual
moving costs and actual sales brokerage fees incurred for the sale
of his personal residence. This moving and relocation assistance is
not to exceed $200,000 in the aggregate. Additionally, the Company
reimbursed Mr. Rowe for $19,293 in legal fees incurred in
connection with the negotiation and review of the Rowe Employment
Agreement. Mr. Rowe is entitled to all customary benefits afforded
generally to executive employees of the Company.
As an inducement to enter into employment with the
Company, the Company and Mr. Rowe entered into an Inducement Stock
Option Award Agreement (“Rowe Option Award
Agreement”) on April 12,
2018 (“Rowe Options Grant
Date”). Pursuant to the
Rowe Option Award Agreement, Mr. Rowe was granted stock options to
purchase 1,000,000 shares of Common Stock
(“Rowe
Employment Options”),
which vest monthly in 36 monthly installments on the first day of
each calendar month following the Rowe Options Grant Date. The Rowe
Employment Options have an exercise price of $3.26 per share and a
term of seven years from the Rowe Options Grant Date. Upon a change
in control of the Company or in the event of a termination of Mr.
Rowe’s employment by the Company without cause or by Mr. Rowe
with good reason, all Rowe Employment Options that are unvested
will vest. In the event of a termination of Mr. Rowe’s
employment with the Company by reason of Mr. Rowe’s death or
disability, the lesser of: (i) one-third of the total number
of Rowe Employment Options and (ii) the total number of unvested
Rowe Employment Options will vest upon the date of
termination.
Joseph P. Hannan.
The Company and Mr. Hannan entered into an employment agreement
dated as of December 17, 2018, in connection with his joining the
Company as the Company’s Executive Vice President, Chief
Financial Officer. In addition, the Company and Mr. Hannan have
entered into a Severance Benefits Agreement dated as of December
17, 2018. Mr. Hannan’s current base annual salary is
$350,000. Mr. Hannan is also eligible to receive an annual
incentive compensation opportunity targeted at 55% of his base
annual salary based upon annual performance goals and the
achievement of those goals, as established and determined by the
Compensation Committee.
Glenn E. Fuller. The
Company and Mr. Fuller entered into an employment agreement dated
as of October 10, 2006, in connection with his joining the Company
as the Company’s Vice President, Legal Affairs, which
agreement has been amended at various dates in connection with Mr.
Fuller’s various promotions within the Company and
compensation adjustments. In addition, the Company and Mr. Fuller
have entered into an Amended and Restated Severance Agreement dated
as of September 29, 2008, as amended. Mr. Fuller’s current
base annual salary is $350,250. Mr. Fuller is also eligible to
receive an annual incentive compensation opportunity targeted at
70% of his base annual salary based upon annual performance goals
and the achievement of those goals, as established and determined
by the Compensation Committee.
Jeffrey H.
Coats. Mr. Coats’ employment with the
Company was governed by the terms of an employment agreement. Mr.
Coats’ most recent base annual salary was $550,000. Mr. Coats
was also eligible to receive an annual incentive compensation
opportunity targeted at 100% of his base annual salary based upon
annual performance goals and the achievement of those goals, as
established and determined by the Compensation Committee. Mr.
Coats’ employment with the Company was terminated by the
Company without cause effective April 12, 2018, at which time Mr.
Coats’ became entitled to receive the severance payments and
benefits to which he was entitled under his employment agreement
with the Company.
John J. Skocilic,
Jr. The Company and
Mr. Skocilic entered into an amended and restated employment
agreement dated as of April 24, 2013, which agreement had been
amended at various dates in connection with Mr. Skocilic’s
various promotions within the Company and compensation adjustments.
In addition, the Company and Mr. Skocilic have entered into an
Amended and Restated Severance Benefits Agreement dated as of May
1, 2013, as amended. Mr. Skocilic’s base annual salary was
$291,000. Mr. Skocilic was eligible to receive an annual incentive
compensation opportunity targeted at 60% of his base annual salary
based upon annual performance goals and the achievement of those
goals, as established and determined by the Compensation Committee.
Mr. Skocilic’s employment with the Company was terminated
without cause effective September 12, 2018, at which time Mr.
Skocilic became entitled to receive the severance payments and
benefits to which he was entitled under his Amended and Restated
Severance Benefits Agreement.
Potential Payments Upon Termination or Change in
Control
Payments and other
benefits payable upon various termination and change in control
situations are set out as if the conditions for payments had
occurred and the terminations or change in control took place on
December 31, 2018. The amounts set forth in the table
below are estimates of the amounts which would have been paid out
to each named executive officer listed in the table upon
termination of employment or change in control of the Company based
on compensation and agreements in effect for the year ended
December 31, 2018. The actual amounts to be paid out can
be determined only at the time of such named executive
officer’s separation from the Company or change in control
event. In addition, it is possible that the Company and the
executive may hereafter agree to payments and other benefits that
differ materially from those described below. The table
below reflects the amount of compensation to each of the named
executive officers, other than Messrs. Coats and Skocilic (i) in
the event of termination of such executive’s employment by
the Company without cause or by the named executive officer for
good reason (in connection with and not in connection with a change
in control of the Company); and (ii) upon a change in control of
the Company not in connection with a termination of such
executive’s employment by the Company without cause or by the
named executive officer for good reason. The disclosures
below do not take into consideration any requirements under IRC
Section 409A, which could affect, among other things, the
timing of payments and distributions. Messrs. Coats and Skocilic
are not included in the table because they were not employed as of
December 31, 2018, and their actual severance and other payments to
which they were entitled under their severance benefits
arrangements were determined as of the dates that their employment
with the Company ceased by reason of their termination by the
Company without cause and not in connection with a change in
control.
Termination and Change in Control Estimated Payments
Table
|
|
Benefit Description
|
Termination without cause by Company or for good reason by
executive NOT in connection with a Change in Control($)
(1)
|
Termination
without cause by Company or for good reason by executive in
connection with a Change in Control($) (1)
|
Change
in Control NOT in connection with Termination without cause by
Company or for good reason by executive ($) (1)
|
Jared R. Rowe
(2)
|
|
24-month base
monthly salary continuation
|
1,100,000
|
|
—
|
|
|
Lump sum severance
payment
|
—
|
2,200,000
|
—
|
|
|
Pro-Rata non-equity
incentive- based compensation
|
318,247
|
397,808
|
—
|
|
|
Stock-based
awards
|
—
|
—
|
|
|
|
Continuation of
health benefits
|
41,940
|
41,940
|
—
|
|
|
|
|
|
Glenn E. Fuller
(3)
|
|
Lump sum severance
payment
|
525,375
|
525,375
|
—
|
|
|
Pro-Rata non-equity
incentive- based compensation
|
191,353
|
191,353
|
—
|
|
|
Stock-based
awards
|
81,334
|
81,334
|
81,334
|
|
|
Continuation of
health benefits
|
58,608
|
58,608
|
—
|
|
|
Outplacement
services
|
8,500
|
8,500
|
—
|
|
|
|
|
|
Joseph P. Hannan
(4)
|
|
Lump sum severance
payment
|
175,000
|
175,000
|
—
|
|
|
Stock-based
awards
|
90,000
|
90,000
|
90,000(5)
|
|
|
Continuation of
health benefits
|
13,674
|
13,674
|
—
|
|
|
Outplacement
services
|
2,833
|
2,833
|
—
|
(1)
|
For
stock options the amount represents the positive difference between
the closing price of the Company’s stock on December 31, 2018
and the exercise price of the stock option.
|
(2)
|
If Mr. Rowe’s employment is terminated by the Company without
cause or by Mr. Rowe with good reason, Mr. Rowe is entitled to: (i)
continued monthly payments of his base annual salary for 24 months
after the employment termination date; (ii) reimbursement or
payment of the premiums for continuation of the medical, dental,
and visions benefits under COBRA for a period of 18 months after
the employment termination date; and (iii) his annual incentive
compensation payout based on actual performance for the entire
performance period, prorated for the amount of time Mr. Rowe was
employed by the Company prior to the date of termination during
such performance period. If Mr. Rowe’s employment is
terminated by the Company without cause or by Mr. Rowe for good
reason upon, or within 18 months following, a change in control of
the Company, Mr. Rowe is entitled to: (i) a lump sum payment equal
to two (2) times the sum of his base annual salary plus his annual
incentive compensation opportunity target; (ii) reimbursement or
payment of the premiums for continuation of his medical, dental,
and visions insurance benefits under COBRA for a period of 18
months after employment termination; and (iii) his annual incentive
compensation payout based on his target annual incentive
compensation, prorated for the amount of time Mr. Rowe was employed
by the Company prior to the date of termination during such
performance period. The Company is not obligated to make additional
payments to Mr. Rowe to compensate for his additional tax
obligations if Mr. Rowe’s compensation is deemed to be excess
parachute payments under the Internal Revenue Code. Payment of the
severance benefits under the Rowe Employment Agreement is
conditioned on Mr. Rowe’s execution of a general release in
favor of AutoWeb.
|
(3)
|
In
accordance with his severance benefits agreement, if Mr. Fuller is
terminated by the Company without cause or if he terminates his
employment with good reason, Mr. Fuller is entitled to (i) a
lump sum payment equal to 1.5 times Mr. Fuller’s annual base
salary (determined as the highest annual base salary paid to Mr.
Fuller while employed by the Company); (ii) continuation of
AutoWeb medical, dental, vision, life and disability insurance
benefits for Mr. Fuller and Mr. Fuller’s eligible dependents
(at the time of termination) for eighteen months; (iii) Mr.
Fuller’s annual incentive compensation plan payout for the
annual incentive compensation plan year in which date of
termination occurred, based on actual performance for the entire
performance period and prorated for the amount of time Mr. Fuller
was employed by the Company prior to the date of termination during
such plan year; and (iv) outplacement services for eighteen
months.
|
(4)
|
If Mr.
Hannan’s employment is terminated by the Company without
cause or if he terminates his employment with good reason, Mr.
Hannan is entitled to (i) a lump sum payment equal to 50% Mr.
Hannan’s annual base salary (determined as the highest annual
base salary paid to Mr. Hannan while employed by the Company);
(ii) continuation of AutoWeb medical, dental, vision, life and
disability insurance benefits for Mr. Hannan and Mr. Hannan’s
eligible dependents (at the time of termination) for six months;
(iii) Mr. Hannan’s annual incentive compensation plan payout
for the annual incentive compensation plan year in which date of
termination occurred, based on actual performance for the entire
performance period and prorated for the amount of time Mr. Hannan
was employed by the Company prior to the date of termination during
such plan year; and (iv) outplacement services for six
months.
|
(5)
|
Assumes
that unvested options are not assumed by acquiring entity and
accelerate immediately prior to a change in control.
|
Under
the employment or severance benefits agreements with each of the
named executive officers, “cause” will generally be deemed to
exist when the individual has been convicted of, or pled nolo
contendere to, a felony, has engaged in willful misconduct or gross
dishonesty that has a materially injurious effect on the
Company’s business or reputation, or has materially failed to
consistently discharge the officer’s duties for thirty days
after notice, subject to a cure period in some events;
“termination without
cause” will generally be deemed to occur if AutoWeb
terminates the named executive officer’s employment for any
reason other than cause or no reason at all, or the termination by
the executive officer for good
reason. “Good
reason” will generally exist when the named executive
officer’s duties and responsibilities, compensation or
benefits have been materially decreased when the named executive
officer has been required to relocate; when the Company has
breached the Company’s agreement with the named executive
officer; or a successor company fails to assume the officer’s
agreement following a change in control. In general, a
“change in
control” of the Company is deemed to occur if:
(i) the Company sells all or substantially all of the
Company’s assets; (ii) as a result of transactions a
person or group becomes the beneficial owner of more than 50% of
the Common Stock; or (iii) a majority of the Company’s
directors in office are not nominated for election or elected to
the Board with the approval of two-thirds of the directors who are
in office just prior to the time of such nomination or
election.
Unvested stock
options may vest and the forfeiture restrictions on restricted
stock awards still subject to restrictions shall lapse upon:
(i) a termination of employment without cause by the Company
or for good reason by the named executive officer; or (ii) a
change in control if coupled with a termination of employment by
the Company without cause or by the named executive officer for
good reason or if the acquirer does not assume, retain or exchange
the options as provided in the applicable plan pursuant to which
the stock options were granted or the applicable stock option award
agreement. In the event of a change in control of the
Company prior to the determination of awards under the
Company’s then-current annual incentive compensation plan,
the Compensation Committee will determine the level of achievement
of the applicable plan for purposes of such officer’s awards
and the applicable award payouts, if any, as of the change in
control event.
Director Compensation
The
following table provides summary information concerning
compensation paid or accrued by the Company to or on behalf of the
Company’s non-employee directors who served during the year
ended December 31, 2018. Mr. Chan W. Galbato was appointed to the
Board on January 11, 2019.
2018
Director Compensation Table
|
Fees Earned or
Paid in Cash
($)
|
|
|
|
Michael J.
Fuchs
|
$109,000
|
$24,006
|
(2)
|
$133,006
|
Michael A.
Carpenter
|
53,000
|
24,006
|
(2)
|
77,006
|
Mark N.
Kaplan
|
95,000
|
24,006
|
(2)
|
119,006
|
Jeffrey M. Stibel
(3)
|
56,000
|
24,006
|
(2)
|
80,006
|
Janet M.
Thompson
|
80,000
|
24,006
|
(2)
|
104,006
|
(1)
|
The
dollar amounts listed do not necessarily reflect the dollar amounts
of compensation actually realized or that may be realized by the
Company’s directors. The option award amounts represent the
aggregate grant date fair value of the option awards, as estimated
for financial statement purposes in accordance with FASB ASC Topic
718. For additional information regarding assumptions
made in these valuations, refer to Note 9 of the “Notes
to Consolidated Financial Statements” in Part IV,
Item 15–Exhibits and Financial Statement Schedules of
the Company’s Annual Report on Form 10-K for the year
ended December 31, 2018, accompanying this Proxy
Statement.
|
(2)
|
10,000
option awards granted on June 21, 2018, at an exercise price of
$4.34 per share.
|
(3)
|
Mr.
Stibel resigned from the Board effective January 11,
2019.
|
The
Company’s outside directors currently receive cash
compensation for service on the Board or any committee or
subcommittee thereof. These directors currently receive
the following fees: (i) annual fee of $35,000 payable
quarterly and (ii) $1,000 for each Board or committee meeting
attended, whether by phone or in person, with the Chairman of the
Board or committee, as applicable, receiving $2,000 for each such
meeting rather than $1,000. The Company also reimburses
directors for expenses incurred in connection with attendance at
Board and committee or subcommittee meetings. In
addition to the foregoing annual and meeting fees, each of the
Chairman of the Board and the Chairman of the Audit Committee is
currently entitled to a $25,000 annual retainer payable quarterly;
the Chairman of the Compensation Committee is entitled to a $10,000
annual retainer payable quarterly; and the Chairman of the
Corporate Governance and Nominations Committee is entitled to a
$5,000 annual retainer payable quarterly. The retainers
were established based on market data provided by the Compensation
Committee’s Independent Compensation Consultant and an
internal assessment of the amount of time required to be devoted to
Company matters.
Annual
grants of 10,000 stock options were made to each non-employee
director. To receive these option grants, a director
must be a non-employee director at the time of grant. The option
grant dates were determined by the Board, but the Board generally
has granted options in conjunction with the Company’s annual
meeting of stockholders. Options awarded in 2018 have a
term of seven years and vest in equal monthly installments over a
twelve-month period commencing with the date of grant. The exercise
price of these options was no less than 100% of the fair market
value per share of Common Stock on the date of the grant of the
option. The annual grant of options to new non-employee
directors generally have been made upon joining the Board, with the
number of stock options granted being pro-rated for the year in
which the new director joins the Board based on the period of
service from the grant date to the date of the next annual
meeting.
Directors who are
also full-time employees or who are not otherwise deemed to be
independent outside directors do not receive stock options or other
compensation for their service as directors. Neither Mr. de Tezanos
nor Mr. Vargas, who no longer serve as officers of the Company,
received any stock options or other compensation for their service
as directors.
Equity Compensation Plans
The
following table summarizes information, as of December 31, 2018,
relating to the Company’s equity compensation plans pursuant
to which the Common Stock may be issued (or that have options
outstanding under expired or terminated plans).
|
Number of
securities
to
be issued upon
exercise of
outstanding
options
and rights
|
Weighted-average
exercise
price of
outstanding
options
and
rights
|
Number of
securities
remaining
available
for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column (a))
|
|
|
|
|
Equity compensation
plans approved by stockholders (1)
|
1,903,566
|
$10.07
|
2,666,500
|
Equity compensation
plans not approved by stockholders (2)
|
1,442,500
|
$3.36
|
—
|
Total
|
3,346,066
|
$7.18
|
2,666,500
|
(1)
|
Includes
the Company’s 2000 Stock Option Plan, Amended and Restated
2001 Restricted Stock and Option Plan, 2004 Restricted Stock and
Option Plan, 2010 Equity Incentive Plan, Amended and Restated 2014
Equity Incentive Plan, and the 2018 Equity Incentive Plan. Only the
2018 Plan is currently available for future stock option or other
equity-based awards.
|
(2)
|
Includes
the Company’s 1999 Employee and Acquisition Related Stock
Option Plan, 2006 Inducement Stock Option Plan, neither of which
are available for future stock option or other equity-based awards.
Also
includes (i) 1,000,000 inducement stock options granted to Mr.
Jared R. Rowe, the Company’s President and Chief Executive
Officer, under an Inducement Stock Option Agreement dated April 12,
2018, which options expire April 12, 2025; (ii) 50,000 inducement
stock options granted to Ms. Sara E. Partin, the Company’s
Senior Vice President, Chief People Officer, under Inducement Stock
Option Agreements dated October 22, 2018, which options expire
October 22, 2025; (iii) 100,000 inducement stock options granted to
Mr. Timothy L. Branham, the Company’s Senior Vice President,
Chief Technology Officer, under an Inducement Stock Option
Agreement dated December 17, 2018, which options expire December
17, 2025; (iv) 120,000 inducement stock options granted to Mr.
Joseph P. Hannan, the Company’s Executive Vice President,
Chief Financial Officer, under an Inducement Stock Option Agreement
dated December 17, 2018, which options expire December 17, 2025;
and (v) 35,000 inducement stock options granted to Mr. Mark Ugar,
the Company’s Vice President, Strategy and Development, under
an Inducement Stock Option Agreement dated December 28, 2018, which
options expire December 28, 2025.
|
1999
Employee and Acquisition Related Stock Option
Plan. The Company’s 1999 Employee and
Acquisition Related Stock Option Plan (“1999 Employee and Acquisition Option
Plan”) was approved by the Board in September 1999 and
was not submitted to the Company’s stockholders for
approval. The 1999 Employee and Acquisition Option Plan
expired on September 22, 2009 and is no longer available for
the granting of new options under this plan. The term of
awards granted under the 1999 Employee and Acquisition Option Plan
could not exceed 10 years. Awards under the 1999
Employee and Acquisition Option Plan may provide for the
acceleration of the vesting of awards in the event of a termination
of a participant’s employment by the Company without cause or
by the participant for good reason. The stock option
agreements for options granted under the 1999 Employee and
Acquisition Option Plan generally provide that the options must be
exercised within three months of the end of the option
holder’s status as an employee or consultant of AutoWeb, or
within twelve months after such option holder’s termination
by death or disability, but in no event later than the expiration
of the option’s term. The 1999 Employee and
Acquisition Option Plan states that, unless otherwise provided in
the relevant stock option agreement, upon (i) a sale of all or
substantially all of the assets of the Company, (ii) a merger
or consolidation in which the Company is not the surviving
corporation, or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of the Common Stock
outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of
securities, cash or otherwise, all rights of optionees with respect
to the unexercised portion of any option awarded under the 1999
Employee and Acquisition Option Plan will become immediately vested
and may be exercised immediately, except to the extent that any
agreement or undertaking of any party to any such merger,
consolidation or sale or transfer of assets makes specific
provisions for the assumption or continuation of the obligation of
the Company with respect to the 1999 Employee and Acquisition
Option Plan.
2006 Inducement Stock Option Plan. In June 2006,
the Board adopted the 2006 Inducement Stock Option Plan
(“2006 Inducement Option
Plan”). The 2006 Inducement Option Plan was
not submitted to the Company’s stockholders for
approval. No new grants or awards will be made under the
2006 Inducement Option Plan. The term of awards granted
under the 2006 Inducement Option Plan may not exceed 10
years. Awards under the 2006 Inducement Option Plan may
provide for the acceleration of the vesting of awards in the event
of a termination of a participant’s employment by the Company
without cause or by the participant for good reason. The
stock option agreements for options granted under the 2006
Inducement Option Plan generally provide that the options must be
exercised within three months of the end of the option
holder’s status as an employee or consultant of AutoWeb, or
within twelve months after such option holder’s termination
by death or disability, but in no event later than the expiration
of the option’s term. The 2006 Inducement Option
Plan states that, unless the award agreement provides differently,
the unvested portion of the awards will immediately become vested
upon any merger (other than a merger in which AutoWeb is the
surviving entity and the terms remain unchanged as compared to the
terms prior to the merger), consolidation, or sale or transfer of
the Company’s assets, except if the options are assumed by
the acquiring party. Unless the award agreement provides
differently, upon any liquidation or dissolution of AutoWeb, all
the rights to any portion of unvested awards will end, and the
awards will be canceled at the time of the liquidation or
dissolution unless the relevant dissolution or liquidation plan
provides otherwise.
2018 Inducement Stock Option Grants. The Compensation
Committee of the Board and the Board approved grants of stock
options to acquire shares of the Company’s Common Stock to
the individuals referenced in Footnote 2 to the Equity Compensation
Plans table above, at an exercise price equal to the closing price
of the Common Stock on The Nasdaq Capital Market on the day the
individual commenced employment with the Company
(“Grant Date”).
The options were granted as inducement options under Nasdaq listing
rules and have a term of seven years. One-third of the options vest
on the first anniversary of the Grant Date and one thirty-sixth of
the options shall vest on each successive monthly anniversary of
the Grant Date for the following twenty-four months, except for Mr.
Rowe’s grant which vests in 36 monthly installments on the
first day of each calendar month following the April 12, 2018 grant
date. Vesting of the options will accelerate upon the occurrence of
certain events, including upon a change in control of the Company
or upon a termination of the individual’s employment by the
Company without cause or by the individual for good reason, as set
forth in each individual’s employment or severance benefit
agreement, with the exception of Mr. Ugar who did not receive a
severance benefits agreement upon his employment with the
Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Based
solely upon the Company’s review of forms filed by directors,
officers, and beneficial owners of more than ten percent of the
Common Stock (“Section 16
Reporting Persons”) pursuant to Section 16(a) of
the Exchange Act and written representations, the Company is not
aware of any failures by the Section 16 Reporting Persons to
file on a timely basis the forms required to be filed by them
pursuant to Section 16(a) of the Exchange Act during the most
recent fiscal year.
TRANSACTION OF OTHER BUSINESS AT ANNUAL MEETING
As of
the date of this Proxy Statement, the Board does not presently
intend to present any other matter for action at the Annual Meeting
and no stockholder has given timely notice in accordance with the
Company’s Bylaws of any matter that it intends to be brought
before the meeting. Should any other matters arise
requiring the vote of stockholders, it is intended that proxies
will be voted in respect thereto in accordance with the best
judgment of the person or persons voting the proxies.
FUTURE STOCKHOLDER NOMINATIONS AND PROPOSALS
In
order to be included in AutoWeb’s proxy materials for the
2020 annual meeting of stockholders, any proposal must be received
by January 1, 2020 and otherwise comply with the requirements of
Rule 14a-8 of the Exchange Act.
In
addition, the Bylaws establish advance notice procedures with
regard to stockholder nominations for the election of directors or
other business to be properly brought before an annual
meeting. For nominations or other business to be
properly brought before the meeting by a stockholder, a stockholder
must provide written notice delivered to the Secretary of AutoWeb
no less than 90 nor more than 120 days prior to the anniversary
date of the immediately preceding annual meeting. The
notice must contain specified information and representations
concerning the stockholder (and the beneficial owner, if any, on
whose behalf the nomination or proposal is made), the nominee(s) or
other business. However, in the event that the date of
the annual meeting is more than 30 days before or more than 70 days
after such anniversary date, the stockholder must deliver the
notice not earlier than the close of business on the 120th day
prior to such annual meeting and not later than the close of
business on the later of the 90th day prior to such annual meeting
or the 10th day following the day on which public announcement of
the date of such meeting is first made by
AutoWeb. Notwithstanding compliance with the foregoing
advance notice provisions, unless required by applicable law, if
the stockholder (or a qualified representative of the stockholder)
does not appear at the annual meeting to present the nomination or
other business, the nomination will be disregarded and other
business will not be transacted, notwithstanding that proxies in
respect of the nomination or other business may have been received
by AutoWeb. All notices of nominations or proposals by
stockholders, whether or not to be included in AutoWeb’s
proxy materials, should be sent to AutoWeb, Inc., 18872 MacArthur
Boulevard, Suite 200, Irvine, California 92612-1400, Attention:
Corporate Secretary. A copy of the full text of the
provisions of the Bylaws discussed above may be obtained by writing
to the Corporate Secretary of AutoWeb.
AutoWeb
reserves the right to reject, rule out of order or take other
appropriate action with respect to any nominations or proposals
that do not comply with these and other applicable
requirements.
Because
AutoWeb did not have timely notice of any other matters to be
brought before the Annual Meeting, the enclosed proxy card confers
discretionary authority to vote on any other matters that may be
presented at the meeting.
Please
return your proxy as soon as possible. Unless a quorum
consisting of a majority of the outstanding shares entitled to vote
is represented at the meeting, no business can be
transacted. Therefore, please be sure to complete, date
and sign your proxy exactly as your name appears on your proxy, and
return it in the enclosed prepaid return envelope. Prior to the
Voting Instructions Cutoff Time, stockholders may also provide
voting instructions using the Internet at www.proxyvote.com
or by calling 1.800.690.6903 as described in this Proxy Statement
and accompanying proxy card. Please act promptly to
ensure that you will be represented at the Annual
Meeting.
|
By
Order of the Board of Directors
|
April
24, 2019
|
Glenn
E. Fuller
Executive Vice President, Chief Legal Officer
and Secretary
|