8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 13, 2007

LookSmart, Ltd.

(Exact name of registrant as specified in its charter)

Delaware	000-26357	13-3904355
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

625 Second Street, San Francisco, California	94107
(Address of principal executive offices)	(Zip Code)

(415) 348-7000

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

¨ Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

On February 13, 2007, the Company’s Board of Directors, upon the recommendation of its Compensation Committee, approved a 4% merit-based salary increase for Mr. Michael Grubb, Senior Vice President and Chief Technical Officer to be effective February 15, 2007. With the increase, Mr. Grubb’s annual base salary is $213,200. Mr. Grubb’s annual bonus under the 2007 Executive Team Incentive Plan remains unchanged at 24% of his salary for performance at 100% of Plan target.

On February 13, 2007, the Company’s Board of Directors, upon the recommendation of its Compensation Committee, approved a 2007 Executive Team Incentive Plan for the Company’s executive officers. Under the Plan, depending upon Company and individual performance in 2007, eligible executive team members may receive cash incentive payments. Seventy percent of the target bonus will be paid out based on Company performance criteria and thirty percent based on individual performance.

On March 1, 2007, the Compensation Committee also approved an option grant to Mr. Grubb under the Company’s 1998 Stock Plan of 55,000 option shares, vesting monthly over 4 years beginning February 26, 2007 and at an exercise price of $4.32, the closing price of the Company’s stock on March 1, 2007.

On February 26, 2007, the Company’s Compensation Committee, under authority delegated to it for these purposes by the Company’s Board of Directors and in consultation with the Board of Directors, approved a 5% merit-based salary increase for Mr. David Hills, Chief Executive Officer and President to be effective February 15, 2007. With the increase, Mr. Hills’ annual base salary is $367,500. Mr. Hills’s annual bonus under the Executive Team Incentive Plan remains unchanged at 50% of his salary for performance at 100% of Plan target.

On March 1, 2007, the Compensation Committee also approved an option grant to Mr. Hills under the Company’s 1998 Stock Plan of 120,000 option shares, vesting monthly over 4 years beginning February 26, 2007 and at an exercise price of $4.32, the closing price of the Company’s stock on March 1, 2007.

On February 26, 2007, the Company’s Compensation Committee, under authority delegated to it for these purposes by the Company’s Board of Directors and in consultation with the Board of Directors, approved for Mr. John Simonelli, Senior Vice President and Chief Financial Officer, i) a merit-based salary increase of 6% and ii) a promotion-based increase of an additional 4% salary increase and a change in Mr. Simonelli’s annual bonus from 50% to 53% of his salary for performance at 100% of Plan target, with the salary increases effective February 15, 2007. With these salary increases, Mr. Simonelli’s annual base salary is $297,000. In February 2007 Mr. Simonelli assumed the additional role of Chief Operating Officer.

On March 1, 2007, the Compensation Committee also approved an option grant to Mr. Simonelli under the Company’s 1998 Stock Plan of 90,000 option shares, vesting monthly over 4 years beginning February 26, 2007 and at an exercise price of $4.32, the closing price of the Company’s stock on March 1, 2007.

On February 26, 2007, the Company’s Compensation Committee, under authority delegated to it for these purposes by the Company’s Board of Directors and in consultation with the Board of Directors, approved for Ms. Stacey Giamalis, Senior Vice President and General Counsel, i) a merit-based salary increase of 5% and ii) a promotion-based increase of an additional 3% salary increase and a change in Ms. Giamalis’ annual bonus from 35% to 40% of her salary for performance at 100% of Plan target, with the salary increases to be effective February 15, 2007. With these salary increases, Ms. Giamalis’ annual base salary is $216,000. In October 2006 Ms. Giamalis assumed the additional role of Senior Vice President, Human Resources.

On March 1, 2007, the Compensation Committee also approved an option grant to Ms. Giamalis under the Company’s 1998 Stock Plan of 45,000 option shares, vesting monthly over 4 years beginning February 26, 2007 and at an exercise price of $4.32, the closing price of the Company’s stock on March 1, 2007.

The vesting of all of the above option grants are subject to the change of control provisions of the executive’s previously-disclosed employment arrangements.

Other than as set forth above or previously publicly disclosed, the Company has not modified its 2007 employment or severance arrangements with any of the above executives. In addition, these executives continue to serve on an at-will basis.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits.

The exhibits listed below are being filed with this Form 8-K.

Exhibit No.	Description
99.1	Form of Compensation Notification Letter to Executives
99.2	2007 Executive Team Incentive Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LookSmart, Ltd.
	(Registrant)
By:	/s/ John Simonelli
	John Simonelli
	Chief Financial Officer

Date: March 2, 2007

EXHIBIT INDEX

Exhibit No.	Description
99.1	Form of Compensation Notification Letter to Executives
99.2	2007 Executive Team Incentive Plan

EX-99.1

Exhibit 99.1

[date]

[recipient]

Dear [                            ],

Congratulations!

You have been awarded a salary increase in recognition of your strong performance and significant contributions towards LookSmart’s success. This brings your salary to $[                    ]. Your increase is effective [                            ] and will be reflected in your [                            ] paycheck.

Additionally, you will continue to participate in the Executive Incentive Plan and your bonus target will remain the same, [    ]% of your base salary. A plan document will be provided to you in the next two weeks outlining details of this year’s plan.

You have also been awarded a stock option grant of [                    ] options.

The exercise price of your options is $[                    ] which is the closing price on [            ], the grant date. LookSmart’s stock administrator will contact you soon to obtain your signature on a stock option agreement. Your stock option grant will vest over 4 years of active employment, with a vesting commencement date of [                            ]. Your options will vest monthly, in increments equal to 1/48 of the grant award. The options will be reflected in your E*trade Options Link account within approximately 1 week of the grant date.

As always, you should be aware that your employment with the Company is for no specified period and constitutes “at-will” employment, meaning that just as you are free to resign at any time for any reason or no reason, similarly the Company is free to terminate its employment relationship with you at any time for any reason or no reason.

Thank you for a job well done!

Sincerely,

[                            ]

EX-99.2

Exhibit 99.2

LookSmart, Ltd. Executive Team Incentive Plan

Plan Year 2007

INTRODUCTION

Plan Objectives

Keep our total compensation package market competitive, and enhance LookSmart’s ability to attract, motivate and retain top talent

Recognize the role that our leaders have in the success of the Company

Motivate and recognize “At Target” and “Exceeds Target” performance at Company, Function/Group and individual level

Encourage cross-company collaboration and motivate behaviors that improve the company’s annual financial performance

Provide consistency (but with some flexibility/ discretion) as we adapt to changing business and operational needs

Effective Period

The Executive Team Incentive Plan is effective for the fiscal year 2007 beginning January 1, 2007, through December 31, 2007.

PLAN PROVISIONS

Eligibility

This Plan is for executive officers of LookSmart, Ltd. (the “Company”) only and does not include any subsidiary or other affiliated Company. This Plan is for 2007 only and the Plan may or may not be continued in subsequent years.

2) Target Incentives

Your target incentive is stated in your 2007 Compensation Workbook. This target can range higher or lower depending on performance criteria. For target incentives that are a percentage of base salary, if your base salary changes during 2007, the target incentive will be applied against the base salary in effect during each part of 2007. Target Incentives does not constitute a promise of attainment, earning or payment. Your actual payment may vary from your target incentive depending on Company financial performance and your group and individual performance. Target incentives may be reviewed and revised at the discretion of the Compensation Committee/Board of Directors.

3) Executive Team Incentive Plan –Determination

Assuming any applicable minimum thresholds are met, participants will be eligible to receive a payment on all elements of the Plan based on the criteria set forth in Attachment 1.

4) Company Acquisitions

In the event LookSmart acquires one or more companies in 2007, the then-existing Plan performance criteria shall not apply to the remainder of the year after the closing of such acquisition(s), and shall be reviewed and revised by the Compensation Committee/Board of Directors.

ADMINISTRATION

1) Form and Timing of Payment

Awards made under the Plan are not earned until paid. Payment will not occur until after financial results for 2007 are calculated and filed with the SEC according to generally accepted accounting principles – but no later than the end of Q1 2008. You must be employed on the payout date to earn the award.

The bonus will be payable in cash, subject to appropriate taxes and pursuant to normal payroll procedures. Payouts are considered income at the time they are received. No loans may be made under the Plan.

2) Hires or Promotions into the Plan

If an employee is hired into a job that qualifies for the Executive Team Incentive Plan on or before September 30, 2007, the employee will be included in the Plan and the target incentive amount will be prorated based on the date of hire.

(Example: If hire or promotion date is July 1, 2007, employee would be eligible for 50% of target bonus.)

If an employee is hired or promoted into the Plan after September 30, 2007, the employee will not be permitted to participate in the Executive Team Incentive Plan for 2007.

3) Transfers out of Plan

When an employee transfers during 2007 from an Executive Team Incentive Plan-eligible position to one that is not eligible, the employee may receive the Plan award based on a prorated ETIP target incentive. (Example: If transfer out of eligible position occurs on June 30, 2007, employee is eligible for 50% of target bonus.)

4) Leaves of Absence and Part-Timers

Target incentives will be prorated for participants who have been on an approved leave of absence of any length during the Plan year (inactive status), and for participants who are on a reduced work schedule.

5) Disputes and Binding Arbitration

If you believe that you have not received a payment to which you believe you are entitled, or believe that the Plan is not being operated properly, you must file a formal claim within 6 months of the date on which you first knew (or should have known) of the facts on which the claim is based. You must present such a claim to the CEO and the General Counsel in writing. The CEO or his/her designee(s) shall consider the claim and issue its determination in writing. If your claim is granted, you will be provided with the benefits or relief you seek. If your claim is wholly or partially denied, the CEO or his/her designee(s) shall provide you with written notice setting forth the reason or reasons for the denial. If the CEO or his/her designee(s) fails to respond to your claim in a timely manner, you may treat the claim as having been denied. Any claims that you do not pursue through this procedure shall be treated as having been irrevocably waived.

LookSmart hopes that any disputes involving the ETIP can be resolved through the process described above. However, in the event that such a resolution is not possible, you and the Company agree that all such disputes regarding this Plan shall be settled by binding arbitration held in San Francisco, California, under the Arbitration Rules set forth in California Code of Civil Procedure Section 1280, et seq., including Section 1283.05, (the “Rules”) and pursuant to California law. A copy of the Rules is available for your review. The Company will pay for any administrative or hearing fees charged by the arbitrator or the arbitrating body except that except that the Participant shall pay the first $125.00 of any filing fees associated with any arbitration initiated by the Participant.

Except as provided by the Rules, arbitration shall be the sole, exclusive and final remedy for any dispute between the Company and the Participant involving the Plan. Accordingly, except as provided for by the Rules, neither the Company nor the Participant will be permitted to pursue court action regarding claims that are subject to arbitration under this Plan. The Participant is not prohibited from pursuing an administrative claim with a local, state or federal administrative body.

6) Employment at Will

Neither this Plan nor any information communicated to you regarding the ETIP alters the “at will” employment relationship between LookSmart and its employees. This means that your employment with the Company is for no specified period, and just as you are free to resign at anytime for any reason or no reason, similarly the Company is free to terminate its employment relationship with you at any time, with or without cause, and with or without notice.

This Plan sets forth all the rules applicable to LookSmart’s Executive Team Incentive Plan. These rules may only be modified in a writing signed by the CEO with the approval of the Compensation Committee/Board of Directors.

I have read and understand the Plan:

Print Name:

Signature: