Related Party Transactions

12 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Related Party Transactions

13. Related Party Transactions

Katrina Boydon, the sister of Bronwyn Syiek, the Company’s President, served as the Company’s Vice President of Content and Compliance until August 15, 2013. In fiscal years 2013, 2012 and 2011, Ms. Boydon received a base salary of $230,000, $214,000 and $203,000 per year and a bonus payout of $40,000, $60,000 and $69,000. In fiscal years 2013 and 2012, Ms. Boydon was granted options to purchase an aggregate of 22,500 shares and 40,000 shares of the Company’s common stock. From July 1, 2013 through August 15, 2013 Ms. Boydon received compensation of $61,000 for her services.

From March 2009 through January 2012, Rian Valenti, the son of Doug Valenti, the Company’s Chief Executive Officer and Chairman, served as a client strategy and development senior manager. In fiscal years 2012 and 2011, Mr. Rian Valenti received a base salary of $41,000 and $62,000 per year and a commission payout of $28,000 and $32,000. In fiscal year 2012 and 2011, Mr. Rian Valenti was granted 1,250 restricted stock units and 750 restricted stock units of the Company’s common stock.

In fiscal year 2012, the Company’s president, Bronwyn Syiek, informed QuinStreet that she desired to start a company using her own resources that would develop and offer websites serving local community groups. The Company had previously explored a similar business opportunity and had concluded that the opportunity was not consistent with its business direction and did not address a sufficiently large market to justify further investment. Accordingly, the Company had discontinued its investment in this business opportunity in fiscal year 2011. During the time that the Company considered this business opportunity and tested the market with a product offering, Ms. Syiek, within the scope of her employment by QuinStreet, gained certain know-how about the community-based website business. In January 2012, Ms. Syiek’s proposal to pursue the business opportunity herself was presented to the Company’s Board of Directors for their consideration under the Company’s Related Person Transactions Policy. The Board of Directors, with Mr. Valenti and Ms. Syiek abstaining, concluded that Ms. Syiek’s proposal did not present a conflict of interest and directed management to negotiate agreements to document the arrangement. On August 23, 2012, the Company, Ms. Syiek and TownB Corporation, a company founded and substantially owned by Ms. Syiek, entered into a License and Investment Agreement pursuant to which QuinStreet provided TownB with a license to Ms. Syiek’s community-based website business know-how and QuinStreet received a 15% ownership interest in TownB, preemptive rights to maintain its ownership level and a right of first refusal in the event that Ms. Syiek chooses to sell her shares or TownB should be sold. Other than the know-how held by Ms. Syiek, no other Company intellectual property has been licensed to TownB or Ms. Syiek. The Company believes that both the know-how licensed, and the minority interest and associated rights in TownB that the Company received, have nominal fair market value.

On April 22, 2013, the Company entered into an agreement (the “Transition Agreement”) with Bronwyn Syiek, the Company’s President, which provides for the transition and conclusion of Ms. Syiek’s employment with the Company. Pursuant to the Transition Agreement, Ms. Syiek will continue to work full time as the Company’s President at her current base salary through September 30, 2013. Ms. Syiek was eligible for, and received, a bonus for fiscal year 2013. From October 1, 2013 until April 1, 2014, Ms. Syiek will continue to serve as the Company’s President and work part time at her current base salary but will not be eligible for a bonus for fiscal year 2014. Ms. Syiek or the Company may terminate her employment at any time, for any reason, subject to a maximum severance payment of two months of base salary. The terms of the Transition Agreement are contingent on Ms. Syiek signing a release agreement. If Ms. Syiek’s employment is not terminated before April 1, 2014, and provided that Ms. Syiek signs a release agreement, Ms. Syiek may enter into a 12-month consulting agreement with the Company, in consideration for which her “Continuous Service” (as defined in the Company’s 2010 Equity Incentive Plan) would continue for certain of her equity awards. Ms. Syiek or the Company could terminate the consulting agreement at any time and for any reason during the consulting period. Ms. Syiek would not receive cash compensation under the consulting agreement.