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 28, 2013
| ZIPREALTY, INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware | 000-51002 | 94-3319956 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
|
2000 Powell Street, Suite 300 Emeryville, CA 94608 |
|
(Address of principal executive offices) (Zip Code) |
| Registrant’s telephone number, including area code: (510) 735-2600 |
| Not Applicable | ||
| (Former name or former address, if changed since last report.) |
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 Instruction 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 Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(e) On February 28, 2013, the Compensation Committee of the Board of Directors of ZipRealty, Inc. (the “Company”) approved the following compensation arrangements for the Company’s Chief Executive Officer and Chief Financial Officer:
| · | Mr. Charles C. (Lanny) Baker, Chief Executive Officer and President, a grant of an option to purchase 500,000 shares of the Company’s common stock; and |
| · | Mr. Eric L. Mersch, Senior Vice President, Chief Financial Officer and Chief Accounting Officer, a grant of an option to purchase 50,000 shares of the Company’s common stock. |
For each grant, the option vests as to 25% of those shares on the first anniversary of the date of grant and then vests ratably on a monthly basis over the following three years. Each vesting event is subject to the officer’s continued service to the Company on that date. The options were granted at an exercise price of $3.84 per share, which was the closing price of the Company’s common stock on the NASDAQ Stock Market on the date of grant.
Also, on February 28, 2013, and following Compensation Committee approval and recommendation, the Board of Directors approved a Management Incentive Plan — Fiscal Year 2013. Eligible persons under the plan include all headquarters-based “exempt” (pursuant to federal and state wage and hour laws) employees who are employed by the Company during the period defined in the Plan (other than the President of Brokerage Operations, Regional Vice Presidents overseeing sales, and all other sales management who are covered under separate incentive arrangements). The plan has been designed to motivate these employees to achieve the Company’s financial and operational goals for fiscal year 2013. Payments under the plan are subject to the Company’s achievement of minimum revenue and Adjusted EBITDA (defined under the plan as net income (loss) less interest income plus interest expense, provision for income taxes, depreciation and amortization expense, stock-based compensation and further adjusted to eliminate the impact of certain items that we do not consider reflective of the Company’s ongoing core operating performance) thresholds for fiscal year 2013, at which point an incentive pool begins to fund. Incentives earned under the plan are structured as a single annual payment to be paid in cash. The Compensation Committee has determined that, of the incentive pool, Mr. Baker is eligble to earn 18% and Mr. Mersch is eligible to earn 9%, provided that the Compensation Committee reserves the right to modify payments under the plan for any individual based on substandard or exceptionally outstanding performance. Incentive payments under the plan are subject to other terms and conditions, as set forth more fully in the copy of the plan that is filed as an exhibit to this report.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 10.1 | Management Incentive Plan – Fiscal Year 2013 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ZIPREALTY, INC. | ||||||
| a Delaware corporation | ||||||
| Dated: | March 6, 2013 | By: | /s/ Samantha E. Harnett | |||
| Samantha E. Harnett | ||||||
| Senior Vice President of Business Development, General Counsel and Secretary | ||||||
INDEX TO EXHIBITS
| Exhibit | Description |
| 10.1 | Management Incentive Plan – Fiscal Year 2013 |
Exhibit 10.1
ZipRealty Inc. Management Incentive Plan – Fiscal Year 2013
General Purpose: This ZipRealty Inc. (“Company”) Management Incentive Plan – Fiscal Year 2013 (“Plan”) is designed to motivate and retain the Company’s Eligible Employees (as defined herein) to achieve the Company’s financial and operational goals for Fiscal Year 2013, as well as to retain such persons in the employ of the Company.
Duration: This Plan will be in effect for the Company’s fiscal year ending December 31, 2013 (“Fiscal Year 2013”), meaning that the performance period determining whether bonuses will be paid upon satisfaction of performance objectives is Fiscal Year 2013.
Plan Administrator: The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) shall administer this Plan with respect to Eligible Persons who are executive officers of the Company, and the Company’s Chief Executive Officer, in consultation with the Committee, shall administer this Plan with respect to other Eligible Persons (as applicable, the “Administrator”).
Eligible Persons: Individuals eligible to earn an incentive payment under this plan (“Eligible Persons”) include all headquarters-based “exempt” (pursuant to federal and state wage and hour laws) employees who are employed by the Company during Fiscal Year 2013, without interruption (except as set forth in the “Proration” section of this Plan), continuously through the date following completion of Fiscal Year 2013 when the Administrator completes its review of performance and calculates and approves the payment of bonuses under this Plan. “Eligible Persons” specifically excludes the President of Broker Operations, Regional Vice Presidents, including Joseph Pucillo and Jacob Stanton, and all other sales management covered pursuant to a Sales Management Incentive Plan for 2013.
Proration: In the sole discretion of the Administrator, a prorated incentive may be paid under this Plan for any person who would otherwise be an Eligible Person but who became eligible to participate in the Plan after the beginning of Fiscal Year 2013. Additionally, in the sole discretion of the Administrator, a modified incentive amount may be paid under this Plan to any Eligible Person who works a reduced work schedule.
Incentive Pool: The Committee, in consultation with the Company’s Chief Executive Officer, will establish an incentive pool of funds available for payout only if the Company achieves its plan for both Adjusted EBITDA and revenue for Fiscal Year 2013. Thereafter, the incentive pool shall be funded as follows:
| (i) | If the Company achieves its plan for Adjusted EBITDA but does not exceed that plan by at least $700,000, and the Company does not exceed its plan for revenue by at least $1 million, then eighteen percent (18%) of Adjusted EBITDA in excess of the plan; |
| (ii) | If the Company exceeds its plan for Adjusted EBITDA by at least $700,000, and the Company does not exceed its plan for revenue by at least $1 million, then eighteen percent (18%) of total Adjusted EBITDA; |
| (iii) | If the Company achieves its plan for Adjusted EBITDA but does not exceed that plan by at least $700,000, and the Company exceeds its plan for revenue by at least $1 million, then twelve percent (12%) of all revenue in excess of the Company’s plan, in all events to be capped at and not to exceed 35% of total Adjusted EBITDA; or |
| (iv) | If the Company exceeds its plan for Adjusted EBITDA by at least $700,000, and the Company exceeds its plan for revenue by at least $1 million, then both eighteen percent (18%) of total Adjusted EBITDA and twelve percent (12%) of all revenue in excess of the Company’s plan, in all events to be capped at and not to exceed 35% of total Adjusted EBITDA. |
For purposes of this Plan, “Adjusted EBITDA” shall be defined as net income (loss) less interest income plus interest expense, provision for income taxes, depreciation and amortization expense, stock-based compensation and further adjusted to eliminate the impact of certain items that the Company does not consider representative of its ongoing core operating performance.
Incentive Amount: Subject to the terms and conditions of this Plan, Eligible Persons may earn payment of “Incentive Amounts” based on a percentage of the funded incentive pool, with the Committee to determine the percentage to be paid to each Eligible Person who is an executive officer and the Chief Executive Officer to determine the percentage to be paid to other Eligible Persons. The Committee has determined the following Incentive Amount percentages for executive officers: Chief Executive Officer, 18%, Chief Financial Officer, 9%, President/General Manager of Powered by Zip, 8%, Senior Vice President of Business Development/General Counsel, 7.5%, and Senior Vice President of Technology, 7.5%. The Committee retains the right to determine Incentive Amount percentages for any additional executive officers of the Company.
The Incentive Amounts may be adjusted pursuant to the “Performance Adjustment” section below.
Performance Adjustment: The Administrator shall have discretion to adjust any Eligible Person’s Incentive Amount based on his or her job performance for Fiscal Year 2013 by reducing or increasing the Incentive Amount as the Administrator, in its sole discretion, deems appropriate, including elimination of the Incentive Award. The Administrator shall also have the discretion to determine that no Incentive Pool will be funded.
Calculation and Approval: An Eligible Person’s Incentive Amount or Adjusted Incentive Amount, as determined in the manner set forth above, is that Eligible Person’s “Actual Incentive” with respect to Fiscal Year 2013. All calculations of each Actual Incentive must be approved by the Administrator with respect to such participant and the total amount of the aggregate incentive pool to be paid hereunder to all Eligible Persons must be approved by the Committee after such consultation with the Board as it deems appropriate.
Payments: All amounts, if any, to be paid out hereunder shall be paid in accordance with the Company’s standard payroll practices, within a reasonable amount of time and in accordance with applicable law following determination by the Committee that there shall be a pool from which to make such payments with respect to Fiscal Year 2013 and calculation of applicable incentives. In all cases, amounts, if any, to be paid out hereunder shall be paid no later than March 15 of the year following the year in which the applicable amount is earned.
Future Incentive Periods: This Plan is in effect only with respect to Fiscal Year 2013. Nothing in this Plan provides for or implies the establishment or payment of any incentives with respect to future periods.
Merger or Acquisition: The Board of Directors may modify this Plan, including terminate it without making payments hereunder, with respect to Fiscal Year 2013 in its sole discretion in the event of a merger or acquisition of the Company.
Administration: The Committee has sole and exclusive discretionary authority to interpret this Plan and adopt such rules and regulations for carrying out this Plan as it deems appropriate. The Committee may, in its discretion, modify or terminate this Plan. Decisions by the Committee are final and binding on all parties to the maximum extent allowed by law.
Employment is Terminable At Will: Nothing in this Plan will interfere with or limit in any way the right of the Company or the right of any individual to alter or terminate the employment relationship at any time, with or without cause.
General Terms and Conditions: Amounts to be paid under this Plan in cash will be paid from the general funds of the Company. Nothing in this Plan will be construed to create a trust or establish any evidence of any individual’s claim of any right to payment other than as an unsecured general creditor of the Company. All payments to be made in cash will be made in the currency in which the individual is regularly paid.
Tax Withholding: All payments will be subject to the satisfaction of applicable federal, state, local or similar income withholding requirements and to any employment tax withholding requirements. The Company shall withhold all applicable amounts required by law from any payments hereunder.
Section 409A: All cash payable under this Plan is intended to be exempt from or comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and guidance thereunder (together, Section 409A) so that none of the payments and benefits to be provided under this Plan will be subject to the additional tax imposed under Section 409A, and any ambiguities herein shall be interpreted to so comply or be exempt. Each payment and benefit payable under this Plan is intended to constitute a separate payment for purposes of Section 1.409A-2(b) (2) of the Treasury Regulations. The Company may, in good faith and without the consent any Eligible Participant, make any amendments to this Plan and take such reasonable actions which it deems necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to an Eligible Participant.
Governing Law; Severability: This Plan will be construed, administered and governed in all respects in accordance with the internal laws of the State of California. In the event that any provision of this Plan is held illegal or invalid for any reason, such holding will not affect the remaining provisions of this Plan, and this Plan will be construed and enforced as if the illegal and invalid provision had not been included.
Entire Agreement: This Plan and any resolutions of the Compensation Committee amending the Plan, is the entire understanding between the Company and any participant regarding the subject matter of this Plan and supersedes all prior bonus or commission incentive plans, or employment contracts whether with any subsidiary or affiliate, or any written or verbal representations regarding the subject matter of this Plan. Participation in this Plan during the Fiscal Year 2013 will not convey any entitlement to participate in this or future plans or to the same or similar bonus benefits. Payments under this Plan are an extraordinary item of compensation that is outside the normal or expected compensation for the purpose of calculating any extra benefits, termination, severance, redundancy, end-of-service premiums, bonuses, long-service awards, overtime premiums, pension or retirement benefits or other similar payment.