UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. 1)
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
Preliminary Proxy
Statement
☐
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
☒
Definitive Proxy
Statement
☐
Definitive
Additional Materials
☐
Soliciting Material
Pursuant to § 240.14a-12
Autobytel
Inc.
(Name
of Registrant as Specified In Its Charter)
__________________________________________________________
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒
No fee
required.
☐
Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1)
Title of each class
of securities to which transaction applies:
(2)
Aggregate number of
securities to which transaction applies:
(3)
Per unit price or
other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4)
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aggregate value of transaction:
(5)
Total fee paid:
☐
Fee paid previously
with preliminary materials.
☐
Check box if any
part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
(1)
Amount previously
paid:
(2)
Form, Schedule or
Registration Statement No.:
(3)
Filing
Party:
(4)
Date Filed:
EXPLANATORY NOTE
This
definitive revised proxy statement of Autobytel Inc. (the
“Company”) for
the Annual Meeting of Stockholders amends and restates the
definitive proxy statement of the Company that was filed with the
Securities and Exchange Commission on April 28, 2017 (the
“Original
Filing”) to correct certain imaging errors that
occurred under the caption “Terms of Stockholder Agreement
– Standstill Provision” on page 12. In the Original
Filing, our service provider experienced an error in its software
which caused the omission of certain text in the transmitted
document. The service provider has acknowledged its responsibility
for these errors. The sole purpose of filing this definitive
revised proxy statement is to correct those errors. No other
changes have been made to the Original Filing. These errors
will not appear in any copy of the definitive revised proxy
statement sent to stockholders.
April
28, 2017
Dear
Fellow Stockholders,
2016
was another banner year for Autobytel, highlighted by record
revenues and our ongoing commitment to provide high-quality
products for our dealer and OEM customers. This commitment was
further reflected by our increased investment in internal-lead
generation capabilities and new traffic sources, which we expect
will result in accelerated growth of our clicks and leads products.
In 2016, we also rolled out the new beta version of our
usedcars.com site and completed the integration of the Dealix and
AutoWeb acquisitions from 2015, each of which brought us very
important strategic assets.
Our
acquisition of AutoWeb in October 2015 provided us with additional
talent, cost-effective technology and development resources. More
importantly, AutoWeb brought us a fast-growing, advertising-related
click product that has strengthened our position in the automotive
digital landscape. This high-growth product has also exposed
Autobytel to the much larger search and pay-per-click auto
market.
Our
click product continues to grow at a very strong rate, with
revenues up more than 300% in 2016. We also experienced
approximately 98% customer retention, further validating the
exceptional quality of its high-intent consumer traffic. We have
been very methodical in our rollout of this product, having only
introduced it to a small number of our customers thus far. However,
we plan to make it available to many more of our thousands of
dealer and OEM customers in 2017.
When we
acquired Dealix in May 2015, we added an extensive network of
dealers and bolstered our used car practice with Dealix'
usedcars.com consumer-facing website. This site represents the core
of our nascent used car leads and used car clicks business. In
fact, the used car industry represents less than 10% of our
revenues today even though the volume of annual used car sales in
the U.S. is generally 2 to 3 times that of new car
sales.
During
the third quarter of 2016, we launched a new beta version of
usedcars.com with fully responsive technology and mobile-friendly
application. We remain very excited about the strength of the
usedcars.com domain and expect our continued investment will make
it the premier used vehicle destination for consumers, providing an
even stronger growth path in the months and years
ahead.
In the
2016 third quarter, we also began increasing our investment in
traffic acquisition to bolster our leads business with
high-quality, in-market consumers, as well as increase the volume
of consumers to our click product. The result of this investment
was reflected by our 16% sequential increase in clicks during the
fourth quarter of 2016 despite the typical seasonal headwinds. And
because of our ongoing commitment to lead quality, we are
continuing to focus on enhanced methodologies to increase
meaningfully the mix of internally-generated leads from the current
80% level, while only utilizing volume from a small number of
trusted suppliers who share our high standard of
quality.
At the
end of the 2016 fourth quarter, we divested our specialty finance
leads product. This divestiture enables us to further dedicate time
and resources to our core vehicle leads and fast-growing click
products for both new and used vehicles.
Our
overall market presence remained strong in 2016 as we estimate that
sales from consumers submitting leads through Autobytel’s
network accounted for approximately 5% of all new light vehicle
retail sales in the U.S. and approximately 2% of all used car
sales. We also expanded our leads program with nearly every OEM on
our platform and continue to deliver leads to all major OEMs, with
the exception of one luxury brand that has yet to launch a leads
program with its dealers.
Accounting for
leads that we deliver to OEMs, we're delivering leads to
approximately 22,000 dealer franchises, which includes all of our
direct retail dealers. We believe these metrics illustrate the
breadth of our dealer footprint and our expanding influence in the
automotive industry.
We
expect 2017 to be a year of growth and continued investment for
Autobytel. Specifically, we will focus on investments in
technology, including investment in our consumer acquisition
technology, the AutoWeb ad platform, and our consumer facing
websites – which include car.com, autoweb.com, Autobytel.com
and usedcars.com. We will also maintain our keen focus on providing
our dealer and OEM customers with high-quality, high-intent car
buyers. Finally, we remain committed to helping our customers sell
more cars and trucks while simplifying the consumer’s path to
purchase – be it through new or used car leads, clicks, or
one of our many value-added product offerings.
On
behalf of our board of directors and management team, I would like
to extend our deepest appreciation to our hard-working employees
who helped make 2016 an exceptional year for Autobytel, as well as
express gratitude for the continued support of our loyal
stockholders and customers.
Sincerely,
Jeffrey
H. Coats
President and Chief
Executive Officer
This letter contains forward-looking statements. These
statements are based on Autobytel’s current expectations,
assumptions, estimates and projections about the company’s
business and industry, and involve known and unknown risks,
uncertainties and other factors that may cause the company’s
or the company’s industry’s results, levels of
activity, performance or achievement to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied in or contemplated by the
forward-looking statements. Words such as
“believe,” “anticipate,”
“expect,” “intend,” “plan,”
“will,” “may,” “should,”
“estimate,” “predict,”
“guidance,” “potential,”
“continue,” “goal,” “objective”
or the negative of those terms or other similar expressions,
identify forward-looking statements. These forward-looking
statements include, but are not limited to, (i) the company’s
expectations with respect to the usedcars.com website; and (ii) the
company’s plans and expectations with respect to 2017.
Autobytel’s actual results and the timing of events may
differ significantly from those discussed in the forward-looking
statements as a result of various factors, many of which are beyond
the company’s control, including but not limited to,
Autobytel’s ability to integrate successfully Dealix and
AutoWeb, and those factors discussed in the company’s annual
and quarterly reports filed with the Securities and Exchange
Commission under the caption “Risk Factors.”
Because of these factors, risks and uncertainties, we caution
against placing undue reliance on forward-looking
statements. Statements regarding past performance and not be
indicative of future results. Except to the extent as may be
required by law, Autobytel undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this letter.
AUTOBYTEL
INC.
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on June 22, 2017
TO
OUR STOCKHOLDERS:
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Stockholders
(“Annual
Meeting”) of Autobytel Inc., a Delaware corporation
(“Autobytel” or
“Company”), will
be held at the Company’s offices at 18872 MacArthur
Boulevard, Suite 200, Irvine, California 92612-1400, on
Thursday, June 22, 2017, at 10:00 a.m. Pacific Time, for
the following purposes:
1.
To elect three (3)
Class I Directors (“Nomination and Election of Directors
Proposal”);
2.
To approve the
issuance of shares of the Company’s common stock, $0.001 par
value per share, upon conversion of the Company’s Series B
Junior Participating Convertible Preferred Stock, $0.001 par value
per share (“Series B
Preferred Stock Conversion Proposal”);
3.
To approve the
extension of and amendments to the Autobytel Inc. Tax Benefit
Preservation Plan (“Tax
Benefit Preservation Plan Proposal”);
4.
To hold an advisory
vote on the compensation of the Company’s named executive
officers (“Say-on-Pay
Proposal”);
5.
To ratify the
appointment, by the Company’s Audit Committee, of Moss Adams
LLP as the Company’s independent registered public accounting
firm for 2017 (“Accounting
Firm Ratification Proposal”); and
6.
To transact such
other business as may properly come before the Annual Meeting and
any adjournment or postponement thereof.
At the Annual
Meeting, the Board of Directors (“Board”) intends to present Jeffrey
H. Coats, Matías de Tezanos and Jeffrey M. Stibel as nominees
for election to the Board.
The
Board has fixed the close of business on April 28, 2017 as the
record date for the determination of the holders of record of the
Company’s common stock entitled to notice of, and to vote at,
the Annual Meeting.
A list
of stockholders entitled to vote at the Annual Meeting will be open
for examination by any stockholder for any purpose germane to the
meeting during ordinary business hours for a period of 10 days
prior to the Annual Meeting at the offices of Autobytel,
18872 MacArthur Boulevard, Suite 200, Irvine, California
92612-1400, and will also be available for examination by any
stockholder present at the Annual Meeting until its
adjournment.
-1-
PLEASE
READ CAREFULLY THE ACCOMPANYING PROXY
STATEMENT. AUTOBYTEL INVITES ALL STOCKHOLDERS TO ATTEND
THE ANNUAL MEETING. TO ENSURE THAT YOUR SHARES WILL BE
VOTED AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE, AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
|
|
|
|
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By
Order of the Board of Directors
|
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Jeffrey
H. Coats
President and Chief Executive Officer
|
Irvine,
California
April
28, 2017
IMPORTANT
YOUR
VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND
THE ANNUAL MEETING, PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED
PROXY CARD AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED TO VOTE
PROCESSING, C/O BROADRIDGE, 51 MERCEDES WAY, EDGEWOOD, NEW YORK
11717, TO BE RECEIVED NO LATER THAN 11:59 P.M. EASTERN TIME ON THE
DAY BEFORE THE ANNUAL MEETING. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE TO AUTOBYTEL OF FURTHER SOLICITATION, THE
COMPANY ASKS YOUR COOPERATION IN MAILING IN YOUR PROXY CARD
PROMPTLY. PRIOR TO THE ANNUAL MEETING, STOCKHOLDERS MAY ALSO
PROVIDE VOTING INSTRUCTIONS USING THE INTERNET AT WWW.PROXYVOTE.COM
OR BY CALLING 1.800.690.6903 AS DESCRIBED IN THE PROXY STATEMENT
AND ACCOMPANYING PROXY CARD. THE CUTOFF TIME FOR PROVIDING VOTING
INSTRUCTIONS USING THE INTERNET OR BY CALLING IS 11:59 P.M. EASTERN
TIME THE DAY BEFORE THE DATE OF THE ANNUAL
MEETING.
-2-
PROXY STATEMENT
___________________________
Autobytel
Inc.
18872
MacArthur Boulevard, Suite 200
Irvine,
California 92612-1400
_____________________________
Annual Meeting
To
Be Held on June 22, 2017
______________________________
The Annual Meeting
The
enclosed proxy is solicited by and on behalf of the Board of
Directors (“Board”) of Autobytel Inc., a
Delaware corporation (“Autobytel” or “Company”), for use at
Autobytel’s 2017 Annual Meeting of Stockholders
(“Annual
Meeting”) to be held on Thursday, June 22, 2017 at
10:00 a.m. Pacific Time, at the Company’s offices
located at 18872 MacArthur Boulevard, Suite 200, Irvine,
California 92612-1400, and at any and all adjournments or
postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
This
Proxy Statement of Autobytel is being mailed on or about May 5,
2017 to each stockholder of record as of the close of business on
April 28, 2017.
Record
Date and Outstanding Shares
The
Board has fixed the close of business on April 28, 2017 as the
record date for the Annual Meeting (“Record Date”). Only holders of record of
Autobytel’s common stock, $0.001 par value per
share (“Common
Stock”), at the close
of business on the Record Date, are entitled to notice of, and to
vote at, the Annual Meeting. As of the close of business
on the Record Date, there were 11,071,584 shares of Common Stock
outstanding and entitled to vote.
Quorum
and Voting
Quorum. The holders of record of a majority in
voting power of the shares of stock of the Company issued and
outstanding and entitled to be voted, present in person or by
proxy, will constitute a quorum for the transaction of business at
the Annual Meeting or any adjournment or postponement
thereof. Shares not present in person or by proxy at the
Annual Meeting will not be counted for purposes of determining a
quorum at the Annual Meeting. In the event there are not
sufficient shares present to establish a quorum or to approve
proposals at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit further solicitation of proxies by
the Company.
Vote
Required. Holders of Common Stock are entitled to
one vote for each share held as of the Record Date on all matters
to be voted on at the Annual Meeting. The Company’s
Sixth Amended and Restated Bylaws (“Bylaws”) provide that, except as
otherwise provided in the Company’s Fifth Amended and
Restated Certificate of Incorporation, as amended
(“Certificate of
Incorporation”), the Bylaws, the rules or regulations
of any stock exchange applicable to the Company or by applicable
law or regulation, all matters will be decided by the 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 the
matter. For Proposal 1 (Nomination and Election of Directors
Proposal), the Bylaws provide that the persons receiving the
greatest number of votes, up to the number of directors then to be
elected, will be the persons elected. A majority of the
votes cast at the Annual Meeting on Proposal 2 (Series B Preferred
Stock Conversion Proposal) is required to approve Proposal
2. 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 such proposal is required to approve
Proposal 3 (Tax Benefit Preservation Plan Proposal), Proposal 4
(Say-on-Pay Proposal), and Proposal 5 (Accounting Firm
Ratification Proposal). Proposal 4 is non-binding and
advisory. None of the proposals are contingent upon the approval of
any other proposal.
-3-
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) and
Proposal 2 (Series B Preferred Stock Conversion Proposal), will
have the same effect as a vote against such proposal. As
to Proposal 1, 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. As to Proposal 2, abstentions will
not be counted as votes cast with respect to Proposal 2 and will
not affect the outcome of the proposal.
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 5 (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 as long as a nominee receives at
least one vote in favor of the nominee’s election; (ii)
affect the outcome of Proposal 2 because this proposal requires the
affirmative vote of a majority of the votes cast on Proposal 2, and
broker non-votes would not be deemed cast; or (iii) affect the
outcomes of Proposals 3, 4, or 5 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. Officers, directors, and
regular employees of Autobytel 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,
Autobytel has retained MacKenzie Partners, Inc. to act as a proxy
solicitor in conjunction with the Annual Meeting. The
estimated fees and costs for those proxy solicitation services are
$6,500 plus reasonable disbursements.
Autobytel 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”).
-4-
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 (Series B Preferred Stock Conversion Proposal);
“FOR”
Proposal 3 (Tax Benefit Preservation Plan Proposal);
“FOR” Proposal 4
(Say-on-Pay Proposal); and “FOR” Proposal 5 (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 of Directors of Autobytel recommends that Autobytel
stockholders vote “FOR” the election of Messrs.
Jeffrey H. Coats, Matías de Tezanos, and Jeffrey M. Stibel as
Class I Directors under Proposal 1 (Nomination and Election of
Directors Proposal); “FOR” Proposal 2 (Series B
Preferred Stock Conversion Proposal); “FOR” Proposal 3 (Tax Benefit
Preservation Plan Proposal); “FOR” Proposal 4 (Say-on-Pay
Proposal); and “FOR” Proposal 5 (Accounting
Firm Ratification Proposal).
TO
ASSURE 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 WWW.PROXYVOTE.COM
OR BY CALLING 1.800.690.6903 AS DESCRIBED IN THIS PROXY STATEMENT
AND ACCOMPANYING PROXY CARD.
A copy
of the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2016 accompanies this Proxy
Statement. If requested, Autobytel will furnish you with
a copy of any exhibit listed on the exhibit index to the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2016 upon payment of a reasonable copy
fee.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING TO BE HELD ON JUNE 22, 2017: Copies of the
Notice of Annual Meeting of Stockholders, Letter to Stockholders,
this Proxy Statement, the form of Proxy Card and the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2016 are available online at http://www.autobytel.com/proxymaterials. Stockholders
wishing to attend the Annual Meeting may obtain directions by
calling the Company at 949.862.1390.
-5-
PROPOSAL
1
NOMINATION
AND ELECTION OF DIRECTORS
Nominees
for Class I Directors
Mr. Jeffrey H.
Coats, Mr. Matías de Tezanos, and Mr. Jeffrey M. Stibel
are the Board’s nominees as Class I 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 I
Director will hold office until the 2020 Annual Meeting of
Stockholders and until that director’s successor is duly
qualified and elected.
Jeffrey H.
Coats. Mr. Coats has served as a
director of Autobytel since August 1996 and was appointed as the
Company’s President and Chief Executive Officer on
December 11, 2008. Since August 2001,
Mr. Coats has also been Managing Director of Maverick
Associates LLC, a financial consulting and investment
company. From July 1999 to July 2001, Mr. Coats was a
Founder and Managing Director of TH Lee Global Internet Managers,
L.P., a fund manager focused on making equity investments in
e-commerce and Internet-related companies
globally. Mr. Coats remains a limited partner of
the fund. Mr. Coats served as Managing Director of
GE Equity, Inc., a wholly-owned subsidiary of General Electric
Capital Corporation, from April 1996 to July
1999. Mr. Coats holds a B.B.A. Degree in Finance from the
University of Georgia and a M.B.A. in International Management from
the American Graduate School of International
Management. Mr. Coats’ experience in venture
and private equity, banking, executive management and capital
markets led the Board to conclude that Mr. Coats should serve as
one of the Company’s directors.
Matías de
Tezanos. Mr. de Tezanos has served as a
director of Autobytel 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 AutoWeb,
Inc., a Delaware corporation (“AutoWeb”), an internet-based,
pay-per-click advertising marketplace for the automotive industry,
prior to its acquisition by Autobytel as of October 1, 2015. Mr. de
Tezanos is a co-founder, director and the Chief Executive Officer
of People F, Inc., a British Virgin Islands business company
(“PeopleFund”),
a holding company that is focused on investments in technology,
internet and media, and a co-founder of, and currently serves as
co-managing director and chief executive officer of, PF Holding,
Inc., a British Virgin Islands business company
(“PF Holding”),
a holding company that is focused on investments in technology,
internet and media affiliated with PeopleFund. Mr. de Tezanos also
serves as president and a director of PF Auto, Inc., a British
Virgin Islands business company (“PF Auto”), an entity affiliated
with PeopleFund, and managing director, secretary and a director of
Auto Holdings Ltd., a British Virgin Islands business company
(“Auto
Holdings”), also an entity affiliated with PeopleFund.
In addition, Mr. de Tezanos currently holds positions at Ignite
Holdings Company, Inc. DBA KingoEnergy, a global company that
offers off-grid communities prepaid solar energy service in
developing countries, where he has served as a director since
December 2011; Iguama Inc., an online marketplace offering US
products in Latin America, where he has served as a director since
January 2011; and P3 Global Management Inc., a smart city
infrastructure development and advisory firm, where he has served
as a director since November 2012. Previously, Mr. de Tezanos was a
co-founder, chief executive officer and a director of BrokersWeb,
an internet-based insurance advertising and marketing company, from
September 1, 2008 to September 15, 2011, when it was acquired by
VantageMedia; chief executive officer of ClickDiario Network, an ad
network in Latin America, from January 1, 2002 to June 1, 2007 when
it was acquired by FOX International Channels in 2007; a founder of
Hoteles.com, a hotel reservations site for Spanish speaking
internet users, which was acquired by Expedia, Inc. in 2003; a
director of BlueKite, Ltd., a cross border remittance company, from
March 2006 until the company was acquired by XOOM Corporation in
2014; and Healthcare, Inc., an online search, comparison and
recommendation tool for healthcare consumers, where he served as a
director from March 2006 to October 2014.
Mr. de
Tezanos was 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
Autobytel’s acquisition of AutoWeb as of October 1, 2015. Mr.
de Tezanos serves as one of the two representatives on the Board
designated by the holders of the Company’s Series B Junior
Participating Convertible Preferred Stock. Mr. de Tezanos’
experience in founding and growing technology and online media
companies led the Board to conclude that Mr. de Tezanos should
serve as one of the Company’s directors.
Jeffrey M.
Stibel. Mr. Stibel has served as a
director of Autobytel since December 2006. Since August
2010, Mr. Stibel has been the Chairman and Chief Executive
Officer of Dun & Bradstreet Credibility Corp. From August 2005 to September
2009, Mr. Stibel was first President and Chief Executive
Officer of Web.com, Inc., a leading provider of online marketing
services for small businesses, and then President and a member of
the board of directors of Web.com Group, Inc., a successor company
to Web.com, Inc. Mr. Stibel serves on the Board of
Brown University’s Entrepreneurship Program, University of
Southern California’s Innovation Institute and Tufts
University’s Center for
Leadership. Mr. Stibel received a Bachelor’s
Degree from Tufts University, a Master’s Degree from Brown
University and studied for a Ph.D. at Brown University, where he
was a Brain and Behavior Fellow. Mr. Stibel’s
experience as an executive officer of various online marketing and
technology companies led the Board to conclude that Mr. Stibel
should serve as one of the Company’s directors.
Voting for Election of Class I
Directors
The
persons named in the enclosed proxy card will vote
“FOR” the
election of Jeffrey H. Coats, Matías de Tezanos, and Jeffrey
M. Stibel as Class I Directors unless instructed otherwise in
the proxy. Because no other nominees have been properly
and timely nominated in accordance with the Bylaws, Messrs. Coats,
de Tezanos, and Stibel will each be elected as Class I
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 Messrs. Coats, de Tezanos and
Stibel have each consented to serve as a director if elected, and
the Board has no reason to believe that any of them will be unable
to serve as a director, if Messrs. Coats, de Tezanos and
Stibel withdraws such person’s 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 I 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. COATS, MR. DE TEZANOS AND MR.
STIBEL.
-6-
PROPOSAL
2
APPROVAL
OF ISSUANCE OF COMMON STOCK UPON CONVERSION OF SERIES B PREFERRED
STOCK
Under
this Proposal 2, the Board is seeking stockholder approval for the
issuance of shares of Common Stock upon (i) the conversion of the
Company’s outstanding Series B Junior Participating
Convertible Preferred Stock, par value $0.001 per share,
(“Series B Preferred
Stock”); and (ii) the conversion of shares of Series B
Preferred Stock issued upon exercise of the AutoWeb Warrants (as
described below). The Company is seeking this approval pursuant to
Section 5635 of the Listing Rules (“Nasdaq Rules”) of The Nasdaq Stock
Market (“Nasdaq”). The shares of Series B
Preferred Stock that have already been issued and the Series B
Preferred Stock that is issuable upon exercise of the AutoWeb
Warrants, have and will be issued from shares of preferred stock
previously authorized by stockholders, and the holders of Common
Stock are not being asked to approve the issuance or sale of those
securities and do not have preemptive rights to subscribe to
additional shares if issued.
As of
the Record Date, there were 168,007
shares of Series B Preferred Stock outstanding and the AutoWeb
Warrants provide for the purchase from the Company of up to 148,240
shares of Series B Preferred Stock at an exercise price of $184.47
per share of Series B Preferred Stock. Should the stockholders
approve Proposal 2, each share of Series B Preferred Stock would
automatically convert into 10 shares of Common Stock, which will
result in the outstanding shares of Series B Preferred Stock being
converted into 1,680,070 shares of Common Stock, and the AutoWeb
Warrants would convert into warrants to acquire up to 1,482,400
shares of Common Stock at an exercise price of approximately $18.45
per share of Common Stock. The Company would not receive any
additional consideration upon the conversion of Series B Preferred
Stock.
Background and Reasons for Proposal
As previously reported in the Company’s
Current Report on Form 8-K filed with the Securities and Exchange
Commission (“SEC”) on October 6, 2015 (SEC File
Number 1-34761)
(“AutoWeb Acquisition Form
8-K”), on October 1,
2015, Autobytel entered into and consummated an Agreement and Plan
of Merger (“Merger
Agreement”), by and among
Autobytel, New Horizon Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Autobytel
(“Merger Sub”), AutoWeb, and José Vargas, in his capacity as
Stockholder Representative. Pursuant to the Merger Agreement,
Merger Sub merged with and into AutoWeb (“AutoWeb Merger”), with AutoWeb continuing as the surviving
corporation and as a wholly owned subsidiary of Autobytel. The
merger consideration consisted of: (i) 168,007 newly issued shares
of Series B Preferred Stock; (ii) warrants, which provide for the
purchase up to 148,240 shares of Series B Preferred Stock
(“AutoWeb
Warrants”); and (iii)
$279,299 in cash to cancel vested, in-the-money options to acquire
shares of AutoWeb common stock. In connection with the AutoWeb
Merger, Autobytel, Auto Holdings and the other Restricted
Stockholders (as defined below) entered into that certain Amended
and Restated Stockholder Agreement, which agreement has been
further amended and restated (the Amended and Restated Stockholder
Agreement, as subsequently amended and restated is referred to
herein as the “Stockholder
Agreement”). The
Stockholder Agreement provides for various restrictions on transfer
of securities of Autobytel held by the Restricted Stockholders and
grants to the Company an irrevocable proxy to vote any shares of
Common Stock held by the Restricted
Stockholders.
Section
5635(a)(1) of the Nasdaq Rules requires stockholder approval prior
to the issuance of common stock, or of securities convertible into
or exercisable for common stock, in connection with the acquisition
of the stock or assets of another company, if (i) the common stock
has, or will have upon issuance, voting power equal to or in excess
of 20% of the voting power of the issuing company outstanding
before the issuance of such stock or of securities convertible into
or exercisable for common stock; or (ii) the number of shares of
common stock to be issued is or will be equal to or in excess of
20% of the number of shares of common stock outstanding before the
issuance of such stock or securities. Section 5635(a)(2) of the
Nasdaq Rules requires stockholder approval prior to the issuance of
common stock, or of securities convertible into or exercisable for
common stock, in connection with the acquisition of the stock or
assets of another company, if any director, officer or Substantial
Shareholder (as defined by Section 5635(e)(3) of the Nasdaq Rules)
of the issuing company has a 5% or greater interest (or such
persons collectively have a 10% or greater interest), directly or
indirectly, in the company or assets to be acquired, and the
issuance of common stock, or of securities convertible into or
exercisable for common stock, could result in an increase in
outstanding common shares or voting power of 5% or more. In
addition, Section 5635(b) of the Nasdaq Rules requires stockholder
approval prior to any issuance of securities when the issuance will
result in a change of control of the issuing company. The Nasdaq
Rules do not define what constitutes a change of control, and
interpretations of the change of control rule by the staff of
Nasdaq have indicated that whether a transaction constitutes a
change of control is a facts-and-circumstances test. Nasdaq staff
interpretations do suggest that the Nasdaq staff may find that a
change of control has occurred when, as a result of the issuance of
securities, an investor or a group owns, or has the right to
acquire, 20% or more of the outstanding shares of an issuing
company’s common stock or voting power. For the purpose of
calculating the holdings of any person or entity, Nasdaq would take
into account, in addition to the securities received by such person
or entity in the transaction, all of the shares owned by such
person or entity unrelated to the transaction and would assume the
conversion of any convertible securities held by such person or
entity.
-7-
The
issuance of shares of Common Stock upon conversion of the
outstanding shares of Series B Preferred Stock and the shares of
Series B Preferred Stock that might be acquired upon exercise of
the AutoWeb Warrants is subject to Section 5635(a)(1) of the Nasdaq
Rules because those shares would represent more than 20% of the
Common Stock and would have voting power in excess of 20% of the
voting power of the Common Stock outstanding before the conversion
of the Series B Preferred Stock. The issuance of shares of Common
Stock upon conversion of the outstanding shares of Series B
Preferred Stock and the shares of Series B Preferred Stock that
might be acquired upon exercise of the AutoWeb Warrants is subject
to Section 5635(a)(2) because the Restricted Stockholders
constitute a Substantial Shareholder of the Company and had a 5% or
greater interest in AutoWeb prior to the AutoWeb Merger and those
shares to be issued would result in an increase in the Common Stock
and would have voting power of 5% or more of the Common Stock. The
issuance of shares of Common Stock upon conversion of the
outstanding shares of Series B Preferred Stock and the shares of
Series B Preferred Stock that might be acquired upon exercise of
the AutoWeb Warrants might be subject to Section 5635(b) because
the issuance of those shares would result in the Restricted
Stockholders owning 20% or more of the outstanding shares of the
Common Stock. In connection with the
AutoWeb Merger, the Company agreed to use all commercially
reasonable efforts to obtain approval of the conversion from the
Company’s stockholders no later than the third annual meeting
of the stockholders of the Company occurring after October 1,
2015, including (i) holding a meeting (which meeting may be
an annual meeting of the stockholders) to propose the stockholder
approval; (ii) recommending that the stockholders of the Company
vote their shares in favor of the conversion; and (iii) solicit
proxies in favor of the conversion; provided, in each case,
that the Board determines that doing so would be consistent with
the exercise of the fiduciary duties of the Board.
In
deciding to present this Proposal 2 to the stockholders at the
Annual Meeting and to recommend a vote “FOR” its approval by the
stockholders (with Messrs. Mylod, de Tezanos and Vargas recused
from the Board’s deliberations and voting on the matter), the
Board considered the following:
●
If
the Series B Preferred Stock Special Dividends (as defined below)
were to go into effect, the stockholders would incur further,
ongoing, economic dilution as long as the Series B Preferred Stock
Special Dividends continued to accrue.
●
The
proxy granted to the Board would mitigate the effect of the
dilution of the existing common stockholders’ voting rights
resulting from the conversion by taking the votes from that block
of shares away from the Restricted Stockholders and vesting them in
the Company for the exercise in the best interests of the Company
and all its stockholders. The standstill provisions in the
Stockholder Agreement would mitigate the effect of the dilution of
the existing common stockholders’ voting rights resulting
from the conversion by preventing the Restricted Stockholders from
using their significant ownership of Common Stock to control or
affect the management of the Company.
●
The
Company’s Rights Plan (as defined below) and the restrictions
in the Stockholder Agreement limit the ability of the Restricted
Stockholders to increase further their beneficial ownership and
voting power in the Company.
●
Stockholder
approval of the proposal would simplify capital structure of the
Company and eliminate the risk that the Series B Preferred Stock
Special Dividends will go into effect, making the Company’s
current and future capital structure easier for investors and other
business partners to understand.
●
Stockholder
approval of the proposal would eliminate uncertainty about the
future rights of the Restricted Stockholders.
●
The Company is obligated under the Merger
Agreement to use all commercially reasonable efforts to obtain
approval of the conversion from the Company’s stockholders no
later than the third annual meeting of the stockholders of the
Company occurring after October 1, 2015, including (i) holding a
meeting (which meeting may be an annual meeting of the
stockholders) to propose the stockholder approval; (ii)
recommending that the stockholders of the Company vote their shares
in favor of the conversion; and (iii) solicit proxies in favor of
the conversion; provided, in each case, that the Board determines that
doing so would be consistent with the exercise of the fiduciary
duties of the Board.
●
If
the stockholders do not approve the proposal, the Company could be
required to present the proposal at the 2018 annual meeting of
stockholders or at a special meeting of stockholders.
●
The
Company's calculation of its diluted net earnings per share already
anticipates the shares of Common Stock that would be issued upon
conversion of current outstanding shares of Series B Preferred
Stock.
●
The
Restricted Stockholders requested that the Board present the
proposal at the Annual Meeting rather than the 2018 annual meeting
of stockholders.
-8-
This Proposal 2 contains summary descriptions of
the Merger Agreement, the Series B Preferred Stock as established
by Certificate of Designation (as defined below) and the AutoWeb
Warrants which are not complete and are qualified in their entirety
by reference to the full text of the Merger Agreement, the
Certificate of Designation and the AutoWeb Warrants, each of which
is incorporated herein by reference and filed as Exhibits 2.1, 3.1
and 10.1, respectively, to the AutoWeb Acquisition Form 8-K. In
addition, this Proposal 2 contains a summary description of the
Stockholder Agreement which is not complete and is qualified in its
entirety by reference to the full text of the Stockholder Agreement
which is incorporated herein by reference and filed as Exhibit 10.1
to the Company’s Current Report on Form 8-K filed with the
SEC on March 2, 2017 (SEC File Number 1-34761).
Potential
Share Ownership by the Restricted Stockholders
The former stockholders of AutoWeb (or the
assignees of their Series B Preferred Stock and AutoWeb Warrants)
include PeopleFund, PF Holding, Manatee Ventures Inc., a British
Virgin Islands business company wholly owned by Mr. de Tezanos and
his wife Isabel Ruiz Estrada (“Manatee”), Galeb3 Inc., a Florida corporation
wholly owned by Mr. Vargas (“Galeb3”), Del Saler, Inc., a British Virgin
Islands business company wholly owned by Julio Gonzalez
Arrivillaga, who is a director of PeopleFund,
(“Del
Saler”), Ceiba
International Corp., a Panama company (“Ceiba”), Picua Limited, a British Virgin Islands
business company, Robert J. Mylod, Jr. (appointed to the Board upon
closing of the AutoWeb Merger and serving as such until his
resignation effective April 13, 2017), Jeffrey H. Boyd, and William
Ferriolo, Autobytel’s Executive Vice President, Chief
Operating Officer. Based solely on information made available to
the Company by AutoWeb, the Company believes that (i) PeopleFund is
ultimately controlled by Matías de Tezanos (appointed to the
Board and as the Company’s Chief Strategy Officer upon
closing of the AutoWeb Merger), José Vargas (appointed to the
Board and as the Company’s Chief Revenue Officer upon closing
of the AutoWeb Merger), Julio Gonzalez Arrivillaga, and Diego
Fernandez; (ii) PF Holdings, Inc. is a British Virgin Islands
business company ultimately controlled by Messrs. de Tezanos,
Vargas, Arrivillaga, and Fernandez; (iii) Manatee is wholly owned
by Mr. de Tezanos and his wife, Maria Isabel Ruiz Estrada; (iv)
Galeb3 is wholly owned by Mr. Vargas; (v) Del Saler, Inc. is wholly
owned and controlled by Mr. Arrivillaga, and (vi) Ceiba is a
multi-purpose private equity and venture capital investment vehicle
controlled by Inversiones y Desarrollos de Centroamérica, a
British Virgin Islands business company and investment bank and
private equity firm focused on banking, real estate development,
energy, and social responsibility.
As of the Record Date, on a consolidated basis,
Auto Holdings and its affiliates, including former stockholders of
AutoWeb and their affiliates (or the assignees of their Series B
Preferred Stock and AutoWeb Warrants), and the former stockholders
of AutoWeb and their affiliates (or the assignees of their Series B
Preferred Stock and AutoWeb Warrants) (together, the
“Restricted
Stockholders”)
hold:
●
1,633,786 shares of Common Stock;
●
168,007 shares of Series B Preferred Stock; and
●
AutoWeb Warrants to purchase 148,240 shares of Series B Preferred
Stock.
The 1,633,786 shares of Common Stock held by the
Restricted Stockholders as a group represent approximately
14.8% of the outstanding shares
of Common Stock as of the Record Date. Assuming that as of the
Record Date the issuance of shares had been approved by the
Company’s stockholders pursuant to Section 5635 of the Nasdaq
Rules, on the Record Date, the Restricted Stockholders would have
owned (i) a total of 3,313,856 shares of Common Stock, or
approximately 26.0% of the
issued and outstanding shares of Common Stock as of the Record Date
(after giving effect to the issuance of the additional 1,680,070
shares of Common Stock upon conversion of the Series B Preferred
Stock); and (ii) the AutoWeb Warrant to acquire 1,482,400 shares of
Common Stock, which, assuming the AutoWeb Warrants had been
exercised as of the Record Date and the 1,482,400 shares of Common
Stock issuable upon exercise of the AutoWeb Warrants had been
issued and were outstanding as of the Record Date would represent
an additional 10.4% of the
issued and outstanding shares of the Common Stock as of the Record
Date (noting, however, that as described below, the AutoWeb
Warrants are not exercisable before October 1, 2018 and are subject
to significant Common Stock price performance conditions before the
AutoWeb Warrants can be exercised).
-9-
As
described below, the Company amended the Stockholder Agreement and
increased the Restricted Stockholder’s Rights Plan Exemption
(as defined below) to permit (i)(1) each of Messrs. de Tezanos and
Vargas to purchase up to an additional 100,000 shares of Common
Stock (of which authorization, Mr. Vargas has purchased 7,753
shares); (2) Ceiba to purchase up to an additional 150,829 shares
of Common Stock; and (3) each of Messrs. Ferriolo, Mylod and
Arrivillaga to purchase up to an additional 25,000 shares of Common
Stock in open market transactions; and (ii) the granting of options
to acquire Common Stock or other equity-based awards to Restricted
Stockholders in connection with any such Restricted
Stockholder’s service to the Company, provided that such
grants or awards are approved by the Board pursuant to the
Company’s then-current equity incentive plans.
Description of Series B Preferred Stock
The
rights, preferences, and privileges of the Series B Preferred Stock
are set forth in a Certificate of Designations of Series B Junior
Participating Convertible Preferred Stock of Autobytel Inc.
(“Certificate of
Designations”). The Certificate of Designations is
summarized below:
Conversion. Each share of Series B
Preferred Stock is convertible at the option of the holder of such
share into 10 shares of Common Stock (subject to adjustments and
accrued dividends as set forth below);
provided that any holder may only convert such number of
shares of Series B Preferred Stock into shares of Common Stock such
that such holder (including a “person” or
“group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) that includes such holder), does not
become a beneficial owner (as defined in Rules 13d-3 and 13d-5 of
the Exchange Act, except that for purposes of this clause, any such
person or group shall be deemed to have “beneficial
ownership” of all shares that such person or group has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of greater
than 19.9% of the Common Stock or total voting power of the
Company’s voting stock outstanding immediately prior to the
date on which shares of Series B Preferred Stock were first issued
(“Effective
Date”); and
provided, further, that the aggregate number shares of
Common Stock issued upon conversion of any Series B Preferred Stock
shall not exceed 4.9% of the Common Stock or total voting power of
the Company’s voting stock outstanding immediately prior to
the Effective Date. If the stockholder approval required under
Section 5635 of the Nasdaq Rules is obtained, all shares of the
Series B Preferred Stock will automatically convert into shares of
the Common Stock. The Series B Preferred Stock has standard
anti-dilution adjustments (e.g., for stock dividends and share
splits) and a dividend payable in-kind as set forth
below.
No Redemption Rights. Series B
Preferred Stock is not redeemable either at Autobytel’s
option or at the option of the holders of Series B Preferred Stock
at any time.
Ranking. Series B Preferred Stock, with
respect to dividend rights and rights on liquidation, winding-up
and dissolution of Autobytel, ranks junior to all other preferred
stock of Autobytel, other than a class or series of preferred stock
established after the date on which the Series B Preferred Stock is
issued by Autobytel the terms of which expressly provide that such
class or series will rank on a parity with or junior to the Series
B Preferred Stock as to dividend rights and rights on liquidation,
winding-up and dissolution of Autobytel.
Dividends. If the Board declares and
Autobytel pays a dividend in the form of cash or other assets
(other than shares of Common Stock or rights or warrants to
subscribe for Common Stock) in respect of any shares of Common
Stock, the holders of Series B Preferred Stock will be entitled to
receive the same dividend on an as-converted basis as if the
stockholder approval had been obtained. In addition to the
foregoing dividends, special dividends shall commence accruing on
the Series B Preferred Stock on the day following the third annual
meeting of the stockholders of Autobytel following October 1, 2015
(“Series B Preferred Stock
Special Dividends”). The Series B Preferred Stock
Special Dividends (i) will accrue at an annual rate equal to 8% on
the Share Value (as defined in the Certificate of Designations) of
the Series B Preferred Stock in effect at the time of the dividend
(with the initial Share Value being equal to the initial Conversion
Price (as defined in the Certificate of Designations) of $12.49 per
share of Series B Preferred Stock times 10, or $124.90 per share);
(ii) will be payable quarterly in arrears; and (iii) will not be
paid in cash and will only be paid by being added to the
then-current Share Value for the Series B Preferred Stock for
purposes of determining the conversion rate for the Series B
Preferred Stock. The Share Value and Conversion Price are subject
to adjustment as set forth in the Certificate of Designations,
including adjustments which increase the Share Value by reason of
accrued Series B Preferred Stock Special Dividends.
-10-
Liquidation Preference. In the event
Autobytel voluntarily or involuntarily liquidates, dissolves or
winds up, each holder of Series B Preferred Stock at the time will
be entitled to receive for each share of Series B Preferred Stock
held by such holder liquidating distributions of the remaining
assets of Autobytel as if such share of Series B Preferred Stock
had been converted, immediately prior to such liquidating
distributions, into the number of shares of Common Stock into which
such share of Series B Preferred Stock would then be convertible if
the stockholder approval had been obtained.
Voting Rights. Except as follows or as
otherwise required by applicable law, holders of Series B Preferred
Stock do not have any voting rights on any matter. The consent of
the holders of at least a majority of the Series B Preferred Stock
then outstanding, voting together as a single class, is required
for Autobytel to take certain actions including, among other
things: (i) amending, altering or repealing any provision of the
Certificate of Incorporation, the Certificate of Designations or
the Bylaws of the Company that would alter or change the voting
powers, preference or special rights of the Series B Preferred
Stock so as to affect them adversely; or (ii) the consummation of a
binding share exchange or reclassification involving the Common
Stock or a merger or consolidation of Autobytel with another
entity.
Description of the AutoWeb Warrants
Exercisability.
The AutoWeb Warrants are exercisable on or after
October 1, 2018, provided that the following additional vesting
conditions are satisfied: (i) with respect to the first 1/3 of the
warrant shares, if at any time after the issuance date and prior to
the expiration date of the AutoWeb Warrants, the weighted average
closing price of the Common Stock on The Nasdaq Capital Market for
the preceding 30 trading days (adjusted for any stock splits, stock
dividends, reverse stock splits or combinations of the Common Stock
occurring after the issuance date) (“Weighted Average Closing
Price”) of the Common
Stock is at or above $30.00; (ii) with respect to the second 1/3 of
the warrant shares, if at any time after the issuance date and
prior to the expiration date the Weighted Average Closing Price of
the Common Stock is at or above $37.50; and (iii) with respect to
the last 1/3 of the warrant shares, if at any time after the
issuance date and prior to the expiration date the Weighted Average
Closing Price of the Common Stock is at or above $45.00. The
AutoWeb Warrants expire on October 1, 2022 to the extent not
exercised prior to such date. The Weighted Average Closing Price of
the Common Stock for the 30 trading days preceding the Record Date
is $12.40.
Exercise
Price. The AutoWeb Warrants are
exercisable at an exercise price per share of Series B Preferred
Stock of $184.47.
Terms of Stockholder Agreement
The
following is a summary of the material terms of the Stockholder
Agreement.
Board
Representation. The Stockholder
Agreement provides that the Restricted Stockholders collectively
have the right to designate for nomination (i) two members of the
Board, as long as they beneficially own 15% or more of the Common
Stock (including any capital stock that could be converted into
Common Stock) and (ii) one member of the Board, as long as they
beneficially own 5% or more (but less than 15%) of the Common Stock
(including any capital stock that could be converted into Common
Stock).
Irrevocable
Proxies. Each Restricted
Stockholder executed and delivered an irrevocable proxy with
respect to shares of Common Stock currently owned by, or acquired
in the future by, such Restricted Stockholder
(“Restricted Stockholder
Proxies”). The Restricted
Stockholder Proxies give Autobytel’s Chief Executive Officer,
Chief Financial Officer and Chief Legal Officer the right to
exercise all voting rights of the Restricted Stockholder’s at
any meeting (whether annual or special and whether or not an
adjourned or postponed 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 Restricted
Stockholder Proxies will terminate upon the later of: (i) October
1, 2017; and (ii) such time as the Restricted Stockholders
beneficially own less than 4.9% of the Common Stock (including any
amount of capital stock that could be convertible into Common
Stock). Further, if not terminated pursuant to the preceding, the
Restricted Stockholder Proxies will terminate on October 1,
2020.
-11-
Rights Plan
Exemption. In connection with
the execution of the Stockholder Agreement, the Board exercised its
discretionary authority under the Company’s Tax Benefit
Preservation Plan (“Rights Plan”) to deem the Restricted Stockholders not
to be an “Acquiring
Person” (as defined in
the Rights Plan) and to grant an exemption under the Rights Plan
(“Rights Plan
Exemption”) to permit: (i)(1) each of Messrs. de Tezanos and
Vargas to purchase up to an additional 100,000 shares of Common
Stock in open market transactions (of which authorization, Mr.
Vargas has purchased 7,753 shares); (2) Ceiba to purchase up to an
additional 150,829 shares of Common Stock in open market
transactions; and (3) each of Messrs. Ferriolo, Mylod and
Arrivillaga to purchase up to an additional 25,000 shares of Common
Stock in open market transactions; and (ii) the granting of options
to acquire Common Stock or other equity-based awards to Restricted
Stockholders in connection with any such Restricted
Stockholder’s service to the Company, provided that such
grants or awards are approved by the Board pursuant to the
Company’s then-current equity incentive plans. The foregoing
exemption is subject to and in reliance upon, the Restricted
Stockholders remaining in compliance with the terms and conditions
set forth in the Stockholder Agreement.
Standstill Provision. The
Restricted Stockholders have agreed not to:
●
acquire
or otherwise seek to acquire any securities of Autobytel or any
assets of Autobytel;
●
participate
in any business combination, extraordinary transaction or any
solicitation of proxies with respect to Autobytel;
●
form
or participate in a “group” to effect the
foregoing;
●
otherwise
act to seek to control or influence the management, Board or
policies of Autobytel;
●
nominate
any person to the Board to seek to control or influence the
management, Board or policies of Autobytel;
●
participate
in any special meeting or written consent of stockholders of
Autobytel;
●
request
any list of stockholders of Autobytel;
●
enter
into any voting agreement with respect to the Common Stock or any
other voting securities;
●
initiate
any stockholder proposals;
●
participate in any financing for
the acquisition of securities or assets of Autobytel;
●
seek
to influence any person with respect to voting of any Autobytel
securities;
●
seek
any changes in composition of the Board or management;
●
take
any actions that may impede the acquisition of control of
Autobytel;
●
cause
the Common Stock to be eligible for termination of registration
under Section 12 of the Exchange Act;
●
take
any actions that might force Autobytel to make a public
announcement regarding any of the types of matters set forth
above;
●
enter
into any discussions or arrangements with any third party regarding
the matters set forth above; or
●
request
that any of the foregoing is waived.
-12-
The
standstill provisions will terminate when the Restricted
Stockholders beneficially own less than 4.9% of the Common Stock
(including any amount of capital stock that could be converted into
Common Stock).
Restrictions on Transfers of
Shares. Prior to October 1,
2017, the Restricted Stockholders are prohibited from transferring
any capital stock of the Company except for transfers to immediate
family members. After October 1, 2017, the Restricted Stockholders
may not transfer capital stock in excess of the volume limitations
contained in Rule 144 of the Securities Act of 1933, as amended
(“Securities
Act”), nor may the
Restricted Stockholders transfer capital stock which would result
in a person owning 4.9% or more of the Common Stock (including any
amount of capital stock that could be convertible into Common
Stock). Provided that until the Restricted Stockholders
beneficially own less than 4.9% of the outstanding Common Stock
(including any amount of capital stock that could be convertible
into Common Stock), Autobytel has a right of first refusal to
purchase any such securities a Restricted Stockholder proposes to
transfer.
Registration Rights.
After October 1, 2018, the Restricted
Stockholders will have the following registration
rights:
Demand
Registration. If the Company is
eligible to use a Form S-3 registration statement and receives a
request from one or more Restricted Stockholders that the Company
file a registration statement with respect to registrable
securities having an aggregate offering price of at least
$5,000,000 (net of selling expenses), then Autobytel must as soon
as practicable (or within 90 days) file a Form S-3 registration
statement covering all restricted securities requested to be
included by the Restricted Stockholder(s). The Restricted
Stockholders are only entitled to make two such demand requests.
Autobytel may delay the requested registration for up to 90 days,
although Autobytel may not delay a registration more than once in
any 12-month period, in certain circumstances where the Board
believes in its good faith judgment that it would be materially
detrimental to Autobytel and its stockholders for such registration
statement to either become effective or remain effective because
such action would: (i) interfere with a significant acquisition,
corporate reorganization or other similar transaction involving
Autobytel; (ii) require premature disclosure of material
information that Autobytel has a bona fide business purpose for
preserving as confidential; or (iii) render Autobytel unable to
comply with requirements under the Securities Act or the Exchange
Act.
Piggyback
Registration. When Autobytel
proposes to register Common Stock in connection with a public
offering solely for cash, holders of registrable securities will
have the right to register shares of the same class as being sold
by Autobytel for sale along with Autobytel.
The
Company will not receive any proceeds from sales of shares by the
Restricted Stockholders pursuant to any such demand or piggyback
registrations.
Consequences of Approving Proposal 2
Stockholder
approval of Proposal 2 will have the following
consequences:
Concentration of Ownership and
Voting Power. The 1,633,786
shares of Common Stock held by the Restricted Stockholders as a
group represent approximately 14.8% of the outstanding shares of Common Stock as of
the Record Date. Assuming that as of the Record Date the issuance
of shares had been approved by the Company’s stockholders
pursuant to Section 5635 of the Nasdaq Rules, on the Record Date,
the Restricted Stockholders would have owned (i) a total of
3,313,856 shares of Common Stock, or approximately
26.0% of the issued and
outstanding shares of Common Stock as of the Record Date (after
giving effect to the issuance of the additional 1,680,070 shares of
Common Stock upon conversion of the Series B Preferred Stock); and
(ii) the AutoWeb Warrant to acquire 1,482,400 shares of Common
Stock, which, assuming the AutoWeb Warrants had been exercised as
of the Record Date and the 1,482,400 shares of Common Stock
issuable upon exercise of the AutoWeb Warrants had been issued and
were outstanding as of the Record Date would represent an
additional 10.4% of the issued
and outstanding shares of the Common Stock as of the Record Date
(noting, however, that as described above, the AutoWeb Warrants are
not exercisable before October 1, 2018 and are subject to
significant Common Stock price performance conditions before the
AutoWeb Warrants can be exercised).
-13-
Therefore, our existing stockholders will incur
substantial dilution to their voting interests and will own a
smaller percentage of our outstanding Common Stock if Proposal 2 is
approved. Accordingly, the holders of the Common Stock
issued upon conversion of the Series B Preferred Stock (or the
Company’s management voting such shares under Restricted
Stockholder Proxies) will have significant voting power with
respect to voting shares of the Company and will be able to exert
substantial influence over our business and affairs and to have a
significant effect on the outcome of matters brought before the
stockholders, including the approval of mergers and other business
combination transactions. The
Restricted Stockholders will for the life of the AutoWeb Warrants
have the opportunity to profit from the difference between the
exercise price of the AutoWeb Warrants and the market price. The
possibility of future sales of Common Stock by the Restricted
Stockholders could have a depressive effect on the market price of
the Common Stock. Further, the concentration of ownership could
make it difficult for a third party to acquire the Company and
could discourage a third party from attempting to acquire control
of the Company.
Concentration of Voting Power
with Management. As described
above, the Stockholder Agreement provides that any current or
future capital stock of the Company that a Restricted Stockholder
holds is subject to the Restricted Stockholder Proxies granted in
favor of Company’s management to be exercised at the
direction of the Board. These irrevocable proxies may not, subject
to certain conditions, expire until October 1, 2020. Accordingly,
if Proposal 2 is approved by the stockholders, these proxies,
combined with the voting of other shares of Common Stock held by
the Company’s management, would result in the Company’s
management having the right to vote up to 26.9% of the voting power of the Company’s
voting stock on any matter presented to stockholders for a vote.
This percentage would increase to 34.5% if the AutoWeb Warrants were exercised in full.
While the Board will direct the Restricted Stockholder Proxies to
be exercised in a manner consistent with its fiduciary duties, the
interests of management and the Board may be different than the
interests of other stockholders. Further, the concentration of
voting power with the Company’s management could make it
difficult for a third party to acquire the Company, and could
discourage a third party from attempting to acquire control of the
Company.
Potential Conflicts of
Interest. The Stockholder
Agreement provides that the Restricted Stockholders have the right
to designate two individuals for nomination to the Board
(currently, the designated directors are Matías de Tezanos and
José Vargas). In addition, Mr. Mylod, a former director of the
Company, and Mr. Ferriolo, an executive officer of the Company, are
Restricted Stockholders. Furthermore, as discussed above if
Proposal 2 is approved by the stockholders, the amount of the
voting power of the Company’s voting stock that the Board, as
a whole, will have the power to direct through the Restricted
Stockholder Proxies will increase significantly. The interests of
these persons may be different than the interests of our other
stockholders. See “Potential Share Ownership by
the Restricted Stockholders” and “CORPORATE GOVERNANCE MATTERS -
Certain Relationships and Related Party
Transactions.”
Notwithstanding the foregoing, a
designated director is not relieved of any fiduciary duty or other
duty or obligations to the Company’s
stockholders.
Delaware General Corporation
Law Section 203. The Company is
subject to Section 203 of the Delaware General Corporation Law
(“Section 203”). In general, this statute prohibits a
publicly-held Delaware corporation from engaging in a
“business combination” with an “interested
stockholder” for a period of three years after the date of
the transaction in which the person became an interested
stockholder unless: (i) the transaction that resulted in the
stockholder becoming an interested stockholder or the business
combination is approved by the board of directors of the
corporation; (ii) upon consummation of the transaction that
resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of
the corporation outstanding at the time the transaction commenced,
subject to certain exclusions of shares held by directors and
officers of the corporation from the calculation; or (iii) the
business combination is approved by the corporation’s
stockholders in a manner prescribed by Section 203. For purposes of
Section 203, a “business combination” includes a
merger, asset sale or other transaction resulting in a financial
benefit to the interested stockholder, and an “interested
stockholder” is a person who, together with affiliates and
associates, owns or did own 15% or more of the corporation’s
voting stock. The concentration of ownership of Common Stock by the
Restricted Stockholders, combined with the restrictions imposed by
Section 203, could make it difficult for a third party to
acquire the Company, and could discourage a third party from
attempting to acquire control of the Company.
-14-
Consequences of Not Approving Proposal 2
The
failure of stockholders to approve Proposal 2 will have the
following consequences:
Voting Rights.
The Series B Preferred Stock will not
be convertible into Common Stock and holders of shares of Series B
Preferred Stock will not be able to vote on matters submitted to a
vote of our stockholders. The amount of the voting power of the
Company’s voting stock subject to the Restricted Stockholder
Proxies will not increase.
Dividends. If stockholder approval to convert the Series B
Preferred Stock to Common Stock is not obtained on or before the
third annual meeting of the stockholders of the Company after
October 1, 2015, the Series B Preferred Stock will start to accrue
the Series B Preferred Stock Special Dividends. The accrual
of the foregoing dividends will have a dilutive effect on the
economic interests of the holders of Common Stock in the event of
an acquisition of the Company or if the Company were to declare any
cash or other dividends on the Company’s Common
Stock.
AutoWeb Warrants.
The AutoWeb Warrants will continue to
remain outstanding and exercisable in accordance with their terms
for Series B Preferred Stock.
Contractual
Obligations. The Company could
be required to present the proposal at the 2018 annual meeting of
stockholder or at a future special meeting of stockholders in order
to comply with its obligations under the Merger Agreement to use
all commercially reasonable efforts to obtain approval of the
conversion from the Company’s
stockholders.
Vote
Required
In
accordance with the Nasdaq Rules, the affirmative vote of a
majority of the votes cast on this proposal is required to approve
Proposal 2. The persons named in the enclosed proxy card will vote
“FOR” the
proposal unless instructed otherwise in the proxy. Abstentions and
broker non-votes will not be counted as votes cast with respect to
Proposal 2 and will not have any effect on the outcome of this
proposal. The Board has instructed the proxyholders under the
Restricted Stockholder Proxies to vote the shares of Common Stock
subject to the Restricted Stockholder Proxies “FOR” Proposal 2.
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL
2.
-15-
PROPOSAL
3
APPROVAL
OF EXTENSION OF AND AMENDMENTS TO THE AUTOBYTEL INC.
TAX
BENEFIT PRESERVATION PLAN
Background
and Reasons for Proposal
The
Company has generated substantial net operating loss
(“NOL”)
carryforwards and other tax attributes for United States federal
income tax purposes (“Tax
Benefits”) that can generally be used to offset future
taxable income and therefore reduce federal income tax
obligations. However, the Company’s ability to use the
Tax Benefits will be adversely affected if there is an
“ownership change” of the Company as defined under
Section 382 (“Section 382”) of the Internal
Revenue Code (“IRC”). In general, a
Section 382 ownership change will occur if the Company’s
“5 percent shareholders” (as defined under
Section 382) collectively increase their ownership in the
Company by more than 50% over a rolling three-year period. As
of December 31, 2016, the Company had NOL carryforwards of
approximately $106.2 million for federal and state income tax
purposes available to offset future taxable income. Until the
NOL carryforwards expire, they can generally be used to reduce any
future federal income tax and, as a result, are a very valuable
asset to the Company. The Board believes that it is in the
Company’s and its stockholders’ best interests to
prevent the imposition of limitations on the use of the
Company’s NOL carryforwards. These NOL carryforwards
expire on various dates ranging from 2017 to 2031.
After
consultation with its legal, tax, and investment banking advisors,
effective as of May 26, 2010 (“Plan Adoption Date”), the Company
entered into a Tax Benefit Preservation Plan with Computershare
Trust Company, N.A., as rights agent (“Rights Plan”). The Board
adopted the Rights Plan with the intent to protect stockholder
value by preserving the Company’s Tax Benefits. At the
time the Company adopted the Rights Plan, the Company terminated
its existing stockholders rights plan, which plan was not designed
to protect the Tax Benefits. The Rights Plan was subsequently
approved by the Company’s stockholders at the 2011 Annual
Meeting of Stockholders, as further extended and amended at the
2014 Annual Meeting of Stockholders, but will expire unless it is
re-approved by the stockholders at the Annual Meeting.
A
period of unusually high trading volume in the Company’s
stock in May 2010 prompted the Board’s initial decision to
adopt the Rights Plan. The trading highlighted concerns that
an “ownership change,” as defined under Section 382,
could occur unless action was taken to protect against such an
event. This concern was also raised by certain significant
stockholders of the Company in discussions with the Company’s
management. The Rights Plan is intended to protect stockholder
value by reducing the risk of a Section 382 ownership change,
thereby preserving the Company’s ability to use its NOL
carryforwards. The Rights Plan is intended to act as a deterrent to
any person or group acquiring 4.90% or more of the Company’s
outstanding Common Stock without the approval of the Board.
Although the Rights Plan is intended to reduce the likelihood of an
“ownership change” that could adversely affect the
Company, the Rights Plan will not prevent all transfers that could
result in such an “ownership change.”
The
Rights Plan was first extended and amended at the 2014 Annual
Meeting of Stockholders and was set to expire on May 26, 2017,
unless extended. The Board has concluded that it is still in
the Company’s and its stockholders’ best interests to
prevent the imposition of limitations on the use of the
Company’s NOL carryforwards and to protect stockholder value
by preserving the Company’s Tax Benefits. After consultation
with its legal, tax, and investment banking advisors, on April 13,
2017, the Board approved the extension of the Rights Plan and
certain amendments to the extended plan. The text of the
Rights Plan, as amended, is included as Appendix A to this Proxy
Statement. The amendments to the Rights Plan:
●
extend the
expiration date of the Rights Plan until the earliest of: (i) the
close of business on May 26, 2020; (ii) the time at which the
preferred share purchase rights are redeemed or exchanged as
provided in the Rights Plan; (iii) the end of the calendar month in
which occurs the final adjournment of the Annual Meeting, if
stockholder approval of the Rights Plan, as amended, is not
received at the Annual Meeting; (iv) the repeal of Section 382 or
any successor statute if the Board determines that the Rights Plan
is no longer necessary for the preservation of Tax Benefits; (v)
the beginning of a taxable year of the Company to which the Board
determines that no Tax Benefits may be carried forward; or (vi)
such time as the Board determines that a limitation on the use of
the Tax Benefits under Section 382 would no longer be material to
the Company;
●
in light of the
small decrease in the trading price of the Company’s Common
Stock since the last change in the “Purchase Price”
under the Rights Plan, decrease the Purchase Price from $75.00 to
$73.00; and
●
to update the
Rights Plan to (i) eliminate the provisions in the Rights Plan
exempting “Coghill”
(as defined in the Rights Plan) as an Acquiring Person (as defined
in the Rights Plan), which exemption is no longer applicable given
that Coghill is no longer the subject of an exemption under the
Rights Plan; and (ii) revise the definition of the Company's
Certificate of Incorporation to reflect amendments to the
Certificate of Incorporation since April 2009.
-16-
The
Board is asking stockholders to approve the Rights Plan, as amended
by these amendments, at the Annual Meeting. If the
stockholders do not approve the amended Rights Plan at the Annual
Meeting, it will terminate at the end of the calendar month in
which the final adjournment of the Annual Meeting
occurs.
Section
382 Ownership Changes
Generally, an
“ownership change” can occur through one or more
acquisitions of a company’s shares by which one or more
stockholders, each of whom owns or is deemed to own directly or
indirectly 5% or more in value of the company’s stock,
increase their aggregate percentage ownership by more than 50
percentage points over the lowest percentage of stock owned by such
stockholder at any time during the preceding rolling three-year
period. Calculating whether an “ownership change”
has occurred is complex and subject to inherent uncertainty.
This uncertainty results from the complexity of Section 382 as well
as limitations on the knowledge of the ownership of, and
transactions in, the securities of any publicly-traded company,
including the Common Stock. The Company has analyzed the
ownership information available to it, along with various scenarios
of possible future changes of ownership. In light of this
analysis and the Company’s current stock price and daily
trading volume, the Company believes that if the Rights Plan is not
approved and therefore is terminated, the Company may likely
undergo a Section 382 “ownership
change.”
If the
Company were to experience a Section 382 “ownership
change,” the use of its NOLs and credits to offset its
taxable income subsequent to the “ownership change”
would be materially limited. The annual limit is subject to
substantial limitations and is generally calculated by multiplying
(i) the aggregate value of the Company’s outstanding
equity, or market capitalization, immediately prior to the
“ownership change” (subject to certain reductions) by
(ii) the federal long-term tax-exempt interest rate in effect
for the month of the “ownership change.” If the
Company were to have taxable income in excess of the NOL
utilization limitations following a Section 382
“ownership change” it would not be able to offset that
excess taxable income with the NOLs. Although any loss
carryforwards not used as a result of any Section 382
limitation would remain available to offset income in future years
(again, subject to the Section 382 limitation), an
“ownership change” could significantly defer the
utilization of the loss carryforwards, accelerate payment of
federal income tax and/or cause some of the NOLs to expire
unused. Although the Company cannot accurately predict the
potential additional tax liability that may result from a
Section 382 “ownership change” and subsequent
limitation on its NOLs, the Company believes they could be material
to it. If an “ownership change” were to have
occurred at December 31, 2016, the Company would have had an
annual limitation of approximately $2.45 million of NOLs (using the
December 2016 applicable interest factor of 1.68% and the
Company’s market capitalization of $150
million).
Summary
Description of the Rights Plan
The
following description of terms of the Rights Plan, as amended, does
not purport to be complete and is qualified in its entirety by
reference to the Rights Plan, which is attached hereto as
Appendix A and is
incorporated herein by reference. You are urged to read carefully the Rights Plan
in its entirety as the discussion below is only a
summary.
Rights.
Pursuant to the Rights Plan, the Board declared a dividend of one
preferred share purchase right (each a “Right” and together the
“Rights”) for
each outstanding share of Common Stock under the terms of the
Rights Plan. The dividend was payable on June 11, 2010
(“Plan Record Date”) to the stockholders
of record as of the close of business on that date. Each
Right entitles the registered holder to purchase from the Company
..01 of a share of Series A Junior Participating Preferred Stock,
par value $0.001 per share, of the Company (“Preferred Stock”) at a price of
$73.00 per .01 of a share of Preferred Stock (“Purchase Price”), subject to
adjustment or, in circumstances described below, to instead acquire
shares of Common Stock. As a result of the Company’s
1-for-5 reverse stock split effective July 11, 2012, the number of
Rights associated with each share of the Company’s Common
Stock increased from one Right per share to five Rights per share
pursuant to the terms of the Rights Plan. In the event that any
person becomes an “Acquiring
Person” (as defined in the Rights Plan), each holder
of a Right, other than Rights owned by the Acquiring Person,
related persons or transferees (which will thereupon become null
and void), will thereafter have the right to receive upon exercise
of a Right (including payment of the Purchase Price), in lieu of
shares of Preferred Stock, that number of shares of Common Stock
(subject to any delay of exercisability approved by the Board)
having a market value of two times the Purchase Price. The
description and terms of the Rights are set forth in the Rights
Plan.
-17-
Exercisability of Rights;
Distribution Date. Until the earlier to occur of
(i) the close of business on the tenth business day following
the first date of public announcement that a person, entity or
group (each, a “person”) has become an Acquiring
Person, by acquiring ownership of 4.90% or more of the outstanding
shares of Common Stock, or that the Board has concluded that a
person has become an Acquiring Person, or (ii) the close of
business on the 10th business day (or, except in certain
circumstances, such later date as may be specified by the Board)
following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which
would result in the ownership by a person (with certain exceptions)
of 4.90% or more of the outstanding shares of Common Stock (the
earlier of such dates being called the “Distribution Date”), the Rights
will be evidenced, with respect to Common Stock certificates
outstanding as of the Plan Record Date (or any book-entry shares in
respect thereof), only by such Common Stock certificate (or
registration in book-entry form), and the Rights will be
transferable only in connection with the transfer of Common
Stock. The Rights are not exercisable until the Distribution
Date.
For
purposes of the Rights Plan, ownership is in general determined
pursuant to applicable rules and regulations of the IRC, including
Section 382, and by the definition of “beneficial
ownership” of Rule 13d-3 of the Exchange Act.
Ownership for Section 382 purposes is generally determined by
an economic test, while the SEC definition of “beneficial
ownership” focuses generally on the right to vote or control
disposition of the shares.
Term of the Tax Benefit
Preservation Plan and Expiration of Rights. If the
Rights Plan, as amended, is not approved by the Company’s
stockholders at the Annual Meeting, the Rights Plan, as amended,
will terminate, and the Rights will expire at the end of the
calendar month in which the final adjournment of the Annual Meeting
occurs. Additionally, the Rights will expire upon the
earliest of (i) the close of business on May 26, 2020 unless
that date is advanced or extended; (ii) the time at which the
Rights are redeemed or exchanged under the Rights Plan;
(iii) the repeal of Section 382 or any successor statute
if the Board determines that the Rights Plan is no longer necessary
for the preservation of the Company’s Tax Benefits;
(iv) the beginning of a taxable year of the Company to which
the Board determines that no Tax Benefits may be carried forward;
and (v) such time as the Board determines that a limitation on
the use of the Tax Benefits under Section 382 would no longer
be material to the Company. The Rights Plan requires the
Board to consider the determination under subsection (v) at
least annually.
Transferability of
Rights. The Rights Plan provides that until the
Distribution Date (or earlier expiration or redemption of the
Rights), the Rights will be attached to and will be transferred
with and only with the Common Stock. Until the Distribution
Date (or the earlier expiration or redemption of the Rights), new
shares of Common Stock issued after the Plan Record Date upon
transfer or new issuances of Common Stock will contain a notation
incorporating the Rights by reference (with respect to shares
represented by certificates) or notice thereof will be provided in
accordance with applicable law (with respect to uncertificated
shares). Until the Distribution Date (or earlier expiration
of the Rights), the surrender for transfer of any certificates
representing shares of Common Stock outstanding as of the Plan
Record Date, even without such notation, or the transfer by
book-entry of any uncertificated shares of Common Stock, will also
constitute the transfer of the Rights associated with such
shares. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights
(“Right
Certificates”) will be mailed to holders of record of
the Common Stock as of the close of business on the Distribution
Date, and the Rights will thereafter be evidenced solely by such
separate Right Certificates.
Cashless Exercise of
Rights. If any person becomes an Acquiring Person, the
Board, in its sole discretion, may permit the Rights, other than
Rights owned by the Acquiring Person, related persons or
transferees (which will thereupon become null and void), to be
exercised by the holders of the Rights without cash payment by
surrendering the Rights Certificates (as defined below) for 50% of
the shares of Common Stock that would otherwise be received upon
exercise and payment of the Purchase Price.
Exchange
Option. At any time after any person becomes an
Acquiring Person but before the acquisition by such Acquiring
Person of ownership of 50% or more of the shares of Common Stock
then outstanding, the Board, at its option, may exchange the Rights
other than Rights owned by such Acquiring Person, related persons
or transferees (which will have become null and void), in whole or
in part, for shares of Common Stock (or a series of the
Company’s preferred stock having equivalent rights,
preferences and privileges), at an exchange ratio of one share of
Common Stock, or a fractional share of preferred stock of
equivalent value, per Right (subject to adjustment).
-18-
Redemption of
Rights. At any time before the time an Acquiring
Person becomes such, the Board may redeem the Rights in whole, but
not in part, at a price of $0.001 per Right (“Redemption Price”) payable, at the
option of the Company, in cash, shares of Common Stock or such
other form of consideration as the Board shall determine. The
redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board in its sole
discretion may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate, and
the only right of the holders of Rights will be to receive the
Redemption Price as rounded to the nearest $0.01.
Stockholders Owning 4.90%
or More as of Plan Adoption Date. Stockholders who
owned 4.90% or more of the Company’s outstanding Common Stock
as of the close of business on the Plan Adoption Date will not be
deemed an Acquiring Person and will not trigger the Rights Plan so
long as they do not (i) acquire any additional shares of
Common Stock or (ii) fall under 4.90% ownership of Common
Stock and then re-acquire 4.90% or more of the Common Stock.
The Rights Plan does not exempt any future acquisitions of Common
Stock by these persons.
Exemptions.
Under the Rights Plan, the Board may, in its sole discretion,
exempt any person from being deemed an Acquiring Person for
purposes of the Rights Plan if the Board determines that such
person’s ownership of Common Stock will not be likely to
directly or indirectly limit the availability of the
Company’s Tax Benefits or is otherwise in the best interests
of the Company. The Board also has the authority under the
Rights Plan to grant exemptions for certain inadvertent
acquisitions, subject to specified conditions. The Board will
not have any obligation, implied or otherwise, to grant any such
exemptions.
Preferred
Stock. The terms of the shares of Preferred Stock
purchasable upon exercise of the Rights have been previously
authorized as set forth in the Company’s Amended Certificate
of Designation of Series A Junior Participating Preferred
Stock. Because of the nature of the Preferred Stock’s
dividend and liquidation rights, following the Company’s
1-for-5 reverse stock split effective July 11, 2012 the value of
the one one-hundredth interest in a share of Preferred Stock
purchasable upon exercise of each Right in general should
approximate the value of one-fifth of a share of Common
Stock.
Anti-Dilution.
The Purchase Price payable, and the number of shares of Preferred
Stock or Common Stock or other securities or property issuable,
upon exercise of the Rights is subject to adjustment from time to
time to prevent dilution, including, in the event of stock
dividends, distributions (excluding regular periodic cash
dividends) or the grant of subscription rights or warrants to
stockholders.
No Stockholder
Rights. Until a Right is exercised or exchanged, the
holder thereof, as such, will have no rights as a stockholder of
the Company, including, without limitation, the right to vote or to
receive dividends.
Amendment of Rights
Plan. For so long as the Rights are then redeemable,
the Company may, except with respect to the Redemption Price, amend
the Rights Plan in any manner. After the Rights are no longer
redeemable, the Company may, except with respect to the Redemption
Price, amend the Rights Plan in any manner that does not adversely
affect the interests of holders of the Rights (other than the
Acquiring Person, related persons or transferees).
Other
Considerations
As
described above in “Background and Reasons for
Proposal,” the Company has significant NOLs that may be
limited if an “ownership change” under Section 382
of the IRC were to occur. The Rights Plan is an important
tool in reducing the likelihood that such an “ownership
change” will occur and, therefore, in protecting the
Company’s ability to offset future taxable income. The
Rights Plan is designed to deter any person, entity or group from
buying the Company’s Common Stock if the acquisition would
result in a stockholder owning 4.90% or more of the Company’s
outstanding Common Stock and to deter persons, entities or groups
now owning more than 4.90% of Common Stock under Section 382 from
acquiring additional shares of the Company’s Common Stock
without the approval of the Board. In this way, the Rights
Plan works to protect against an “ownership change”
under Section 382 and is applicable to all holders of the
Company’s Common Stock. Therefore, the Board believes
it is in the Company’s and its stockholders’ best
interests to approve the Rights Plan, as amended.
-19-
Nonetheless, you
should consider the following points:
●
The Rights Plan May Not Be
Effective. The Rights Plan may not be effective in deterring
all transfers that could result in such an “ownership
change.” In particular, it will not protect against
(i) an “ownership change” that may have occurred
before the implementation of the Rights Plan about which the
Company is not aware due to delays in ownership reporting by
stockholders, or (ii) an “ownership change”
resulting from purchasers of shares who become 5% shareholders for
purposes of Section 382, notwithstanding the Rights Plan, either
because the purchaser is unaware of the Rights Plan or makes a
conscious decision to discount the potential consequences under the
Rights Plan.
●
The
Realizable Value of the Company’s NOLs Cannot Be
Determined. The amount and timing of the Company’s
future taxable income, if any, cannot be accurately predicted, and
the Company cannot estimate the exact amount of NOLs that can
ultimately be used to reduce its income tax liability. Although the
Company is unable to quantify an exact value, it believes the NOLs
are a very valuable asset, and the Board believes it is in the
stockholders’ best interests to attempt to deter the
imposition of additional limitations on their use by adopting the
Rights Plan.
●
Potential Effects on
Liquidity. The Rights Plan is expected to deter stockholders
from acquiring, directly or indirectly, additional shares of the
Company’s Common Stock in excess of the specified
limitations. Furthermore, a stockholder’s ability to dispose
of the Company’s stock may be limited by reducing the class
of potential acquirers for that stock.
●
Potential Impact on
Value. Because the Rights Plan may restrict a
stockholder’s ability to acquire the Company’s Common
Stock, the market value of the Common Stock might be affected. The
Rights Plan could discourage or prevent accumulations of
substantial blocks of shares in which the Company’s
stockholders might receive a substantial premium above market
value. However, these disadvantages are outweighed, in the
opinion of the Board, by the importance of maintaining the
availability of the Company’s Tax Benefits. The Rights
Plan is intended to reduce the risk that the Company may be unable
to fully utilize its Tax Benefits as a result of future transfers
of the Company’s Common Stock.
●
Potential Anti-Takeover
Effect. The Rights Plan could be deemed to have an
“anti-takeover” effect because, among other things, it
restricts the ability of a person, entity or group to accumulate
more than 4.90% of the Company’s outstanding Common Stock
without the approval of the Board.
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 Rights Plan,
as amended. 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
THAT YOU VOTE “FOR” PROPOSAL 3.
-20-
PROPOSAL 4
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. Autobytel’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
Autobytel’s executive officers with those of its
stockholders. The Board endorses the Company’s
executive compensation program and encourages stockholders to
review the Compensation Discussion and Analysis, tables and
disclosures included under the Section entitled
“EXECUTIVE
COMPENSATION” of this
Proxy Statement.
Section
14A of the 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
2015 annual meeting of stockholders, approximately 92% 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 Compensation Discussion and Analysis and the tabular
and narrative disclosure contained in this Proxy
Statement.
Because
the vote on this Proposal 4 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 and Recommendation of the Board of
Directors
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL
4.
-21-
PROPOSAL 5
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 2017. 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 2017 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 will reconsider whether to
retain Moss Adams if the stockholders fail to ratify the Audit
Committee’s 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 member of Moss Adams is
expected to attend the Annual Meeting to make a statement if the
member 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 5. 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
5.
-22-
BOARD
OF DIRECTORS
The
current members of the Board of Autobytel are as
follows:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Michael J. Fuchs
|
|
71
|
|
Chairman of the
Board
|
|
Michael
A. Carpenter
|
|
70
|
|
Director
|
|
Jeffrey
H. Coats
|
|
59
|
|
Director, President
and Chief Executive Officer
|
|
Matías de
Tezanos
|
|
37
|
|
Director
|
|
Mark N.
Kaplan
|
|
87
|
|
Director
|
|
Jeffrey M. Stibel
|
|
43
|
|
Director
|
|
Janet M. Thompson
|
|
67
|
|
Director
|
|
José
Vargas
|
|
38
|
|
Director, Chief
Revenue Officer
|
Michael J.
Fuchs. Mr. Fuchs
has served as a director of Autobytel 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 B.A. 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.
Michael A.
Carpenter. Mr. Carpenter has served as a director
of Autobytel 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, he 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. Mr. Carpenter received a B.S. Degree from the
University of Nottingham, England, and a M.B.A. 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. He serves on the boards of
CIT, Inc., Law Finance Group, US Retirement Partners and the New
York City Investment Fund 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’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.
-23-
Jeffrey H. Coats.
See Mr. Coats’
biographical information included under the section of this Proxy
Statement entitled “PROPOSAL
1–NOMINATION AND ELECTION OF DIRECTORS–Nominees for
Class I Directors.”
Matías de
Tezanos. See Mr. de
Tezanos’ biographical information included under the section
of this Proxy Statement entitled “PROPOSAL 1–NOMINATION AND ELECTION OF
DIRECTORS–Nominees for Class I
Directors.”
Mark N.
Kaplan. Mr. Kaplan has served as a director of Autobytel
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. Mr. Kaplan
serves as Chairman of the Board of directors of American Biltrite
Inc., a publicly-traded company (adhesive-coated,
pressure-sensitive papers and films; tile flooring). He
also 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 a number of offshore commodity
funds managed by Gresham Management Co. 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 an A.B. Degree from
Columbia College and a LL.B 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.
Jeffrey
M. Stibel. See Mr.
Stibel’s biographical information included under the section
of this Proxy Statement entitled “PROPOSAL 1–NOMINATION AND ELECTION OF
DIRECTORS–Nominees for Class I
Directors.”
Janet M.
Thompson. Ms. Thompson has served as
a director of Autobytel since March 2008. Since January
1, 2015, Ms. Thompson has been 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 B.A. Degree in business
from Western Michigan University and a M.B.A. 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.
José Vargas.
Mr. Vargas has served
as a director of Autobytel and as the Company’s Chief Revenue
Officer since October 1, 2015. From September 18, 2013 to October
1, 2015, Mr. Vargas was a director and president of AutoWeb, an
internet-based, pay-per-click advertising marketplace for the
automotive industry, prior to its acquisition by the Company as of
October 1, 2015. Mr. Vargas is a co-founder, director and the
president of Peoplefund, a holding company that is focused on
investments in technology, internet and media, and a co-founder of,
and currently serves as a co-managing director and president of PF
Holding, an entity affiliated with PeopleFund that is focused on
investments in technology, internet and media, as well as vice
president and a director of PF Auto, an entity affiliated with
PeopleFund, and co-managing director and president of Auto
Holdings, also an entity affiliated with PeopleFund. Mr. Vargas was
a co-founder of and currently serves on the board of directors of
Healthcare, Inc., an online search, comparison and recommendation
tool for healthcare consumers. Previously, Mr. Vargas
was a co-founder, president and a director of BrokersWeb, an
internet-based insurance advertising and marketing company, from
September 1, 2008 to September 15, 2011, when it was acquired by
VantageMedia, LLC. Mr. Vargas was a co-founder, president and a
director of BlueKite Ltd., a cross border remittance company, from
August 1, 2012 to January 10, 2014, when it was acquired in 2014 by
XOOM Corporation; and was founder and chief executive officer of
MailCreations.com, Inc., an opt-in email marketing, lead generation
and data mining company, from April 17, 2001 to June 4, 2004, when
it was acquired. Mr. Vargas received a B.S. Degree from Florida
International University.
Mr. Vargas was
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
Autobytel’s acquisition of AutoWeb, as of October 1, 2015.
Mr. Vargas serves as one of the two representatives on the Board
designated by the holders of the Company’s Series B Junior
Participating Convertible Preferred Stock. Mr. Vargas’
experience in founding and growing technology and online media
companies led the Board to conclude that Mr. Vargas should serve as
one of the Company’s directors.
-24-
EXECUTIVE OFFICERS
The
current executive officers of Autobytel are as
follows:
|
Name
|
|
Age
|
|
Position
|
|
Jeffrey
H. Coats
|
|
59
|
|
President
and Chief Executive Officer, Director
|
|
Kimberly S.
Boren
|
|
43
|
|
Executive Vice
President, Chief Financial Officer
|
|
William
A. Ferriolo
|
|
44
|
|
Executive Vice
President, Chief Operating Officer
|
|
Glenn
E. Fuller
|
|
62
|
|
Executive Vice
President, Chief Legal and Administrative Officer and
Secretary
|
|
José
Vargas
|
|
38
|
|
Chief
Revenue Officer, Director
|
|
John D.
Steerman
|
|
52
|
|
Executive Vice
President, Mobile, Lead Operations and Product
Development
|
|
John J.
Skocilic, Jr.
|
|
48
|
|
Executive Vice
President, Chief Information Officer
|
Jeffrey H.
Coats. See Mr. Coats’
biographical information included under the section of this Proxy
Statement entitled “PROPOSAL
1–NOMINATION AND ELECTION OF DIRECTORS–Nominees for
Class I Directors.”
Kimberly S.
Boren. Ms. Boren rejoined Autobytel as
Senior Director of Financial Planning and Analysis in April
2010. She was promoted to Vice President, Advertising
Operations and Analytics in December 2010, Senior Vice President of
Advertising Operations and Analytics in December 2011, Senior Vice
President, Business Analysis and Websites in February 2014, Senior
Vice President, Chief Financial Officer effective as of
April 1, 2015, and Executive Vice President, Chief Financial
Officer in September 2016. Prior to rejoining Autobytel,
Ms. Boren held leadership roles at Experian in the Interactive
Business Group, Honeywell in both the automotive and aerospace
businesses, and Shepherd Packaging and Container. From
July 2007 to June 2009, Ms. Boren held various positions in
the finance group at Autobytel. Ms. Boren attended
the University of California, Santa Barbara, where she received a
B.A. Degree in Communications with a focus in Business
Economics. She later received a M.B.A. in Finance from
the University of Southern California.
William A.
Ferriolo. Mr. Ferriolo joined Autobytel as
Vice President, Cyber Ventures Division in September 2010 in
connection with the Company’s acquisition of the businesses
of Cyber Ventures, Inc. and Autotropolis,
Inc. Mr. Ferriolo was appointed as Senior Vice
President, Consumer Acquisitions in December 2011 and promoted to
Executive Vice President, Consumer Acquisitions effective April 23,
2014, Executive Vice President, Chief Business Officer in January
2016, and Executive Vice President, Chief Operating Officer in
December 2016. Prior to joining Autobytel, from 2003 to
2010, Mr. Ferriolo served as President and Co-Founder of Cyber
Ventures, Inc. and Autotropolis, Inc., where he was responsible for
search engine optimization, search engine marketing, dealer
accounts and sales. From 1997 to 2003, Mr. Ferriolo
served as Service Manager and High Line Sales Associate for Dimmitt
Automotive Group, where he was responsible for the service
department and high line vehicle sales. From 1991 to
1997, Mr. Ferriolo served as a Service Advisor at the Carlisle
Automotive Group, where he was responsible for servicing of
customer vehicles.
Glenn E.
Fuller. Mr. Fuller joined Autobytel 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, and
Executive Vice President, Chief Legal and Administrative Officer
and Secretary as of January 19, 2009. Prior to
joining Autobytel, 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 a B.A. Degree from
California State University at Long Beach and a J.D. Degree from
the University of Southern California.
-25-
José Vargas.
See Mr.
Vargas’ biographical information included under the section
of this Proxy Statement entitled “BOARD OF DIRECTORS.”
John D.
Steerman. Mr. Steerman joined Autobytel as
Director of Lead Operations in May 2007 and has served in various
positions and held various titles with the Company since that
date. In December 2011, Mr. Steerman was appointed
Senior Vice President, Lead and Site Product Development and
Operations, to Senior Vice President, Mobile, Lead Operations and
Product Development in January 21, 2014 and to Executive Vice
President, Mobile, Lead Operations and Product Development
effective January 1, 2016. Prior to joining Autobytel,
Mr. Steerman was a District Sales Manager with Ford Motor
Company, from June 1992 to October 1996. In that role,
he was responsible for managing distribution, marketing and
training in several of Ford’s top volume markets, including
Houston and Fort Worth, Texas. From November 1996 to
July 2007, Mr. Steerman worked at Nissan North America where
he held numerous sales and marketing positions, including Senior
Manager eBusiness, during which time Mr. Steerman managed the
re-launch of NissanUSA.com and Infiniti.com, as well as the launch
of a lead management program for both Nissan and Infiniti
Divisions. While at Nissan, Mr. Steerman also
managed a task force that launched Nissan’s Full Size Truck
and SUV and was a member of the Infiniti Global Management team
that was responsible for the strategic and operational plan to
launch the Infiniti brand globally. Mr. Steerman
received a B.S. Degree in Finance and a M.B.A. from The
Pennsylvania State University.
John J. Skocilic,
Jr. Mr. Skocilic joined Autobytel as Dealer
Real Time Specialist in June 1998 and has served in various
capacities at Autobytel including: Manager, Systems Engineering and
Architecture; Senior Director IT Operations; and Vice President,
Technology; and was appointed as Senior Vice President, Technology
in April 2013, Executive Vice President, Technology in January 2016
and, more recently, he was promoted to Executive Vice President,
Chief Information Officer effective January 1, 2017. During his
time with Autobytel, Mr. Skocilic has been responsible for
leading the implementation of numerous technologies, including
Autobytel Data Centers, Patented Lead Engine Technologies, and the
re-launch of www.autobytel.com,
the flagship website for Autobytel. Prior to joining
Autobytel, Mr. Skocilic served as Computer Technician of
C.S.S. Laboratories, from 1997 to 1998, where he was responsible
for support of computer systems implemented by The City of New
York. Mr. Skocilic held the position of Professor
at Coastline Community College in the Computer Service and
Technology Department from 1998 to 2002.
All of
the officers named in the Executive Officer table above served as
executive officers during 2016. H. Donald Perkins, Jr.
served as the Company’s Executive Vice President, Strategic
and Business Development until December 31, 2016, at which time his
employment with the Company ceased. Mr. Perkins is
reported in this Proxy Statement as a named executive officer of
the Company for 2016.
All
executive officers of Autobytel are chosen by the Board and serve
at its discretion.
-26-
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the
calculation of beneficial ownership of Autobytel’s Common
Stock as of the Record Date, by all persons known by Autobytel to
be beneficial owners of more than 5% of the Common Stock of
Autobytel, 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 (including the named executive
officers other than Mr. Perkins, who is not a current executive
officer) as a group. 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 investing 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
Autobytel.
|
|
Shares Beneficially
Owned
|
|
|
|
Name
of Beneficial Owner:
|
Number
|
Percentage
|
|
|
Auto Holdings
Ltd.(1)
|
1,475,268
|
13.3
|
%
|
|
Matías de
Tezanos(1)
|
1,475,268
|
13.3
|
%
|
|
José
Vargas(1)(2)
|
1,483,021
|
13.4
|
%
|
|
Jeffrey H.
Coats(3)
|
451,583
|
3.9
|
%
|
|
William
Ferriolo(4)
|
334,855
|
3.0
|
%
|
|
Glenn E.
Fuller(5)
|
158,805
|
1.4
|
%
|
|
Michael J.
Fuchs(6)
|
97,680
|
*
|
|
|
Kimberly S.
Boren(7)
|
110,966
|
1.0
|
%
|
|
Mark N.
Kaplan(8)
|
52,000
|
*
|
|
|
Jeffrey M.
Stibel(9)
|
49,000
|
*
|
|
|
Janet M.
Thompson(10)
|
52,040
|
*
|
|
|
Michael A.
Carpenter(11)
|
49,000
|
*
|
|
|
All executive
officers (including named executive officers, other than Mr.
Perkins) and directors as a group (13 persons)(12)
|
1,589,373
|
12.8
|
%
|
|
*
|
Less
than 1%.
|
|
(1)
|
The
information presented in the table with respect to the beneficial
ownership of Auto Holdings and Messrs. de Tezanos and Vargas was
obtained solely from the Schedule 13D filed with the SEC on May 5,
2015, as amended on October 14, 2015 and November 23, 2015
(collectively, the “Auto
Holdings Schedule 13D”), jointly filed by the
following persons: (i) Auto Holdings; (ii) PF Auto;
(iii) Ceiba; (iv) José Vargas, a citizen of Venezuela and an
officer and director of Autobytel; (v) Galeb3; (vi) Matías de
Tezanos, a citizen of Costa Rica and a director of Autobytel; (vii)
Manatee; (viii) John Peter Klose de Ojeda, a citizen of Guatemala;
(ix) Richard Aitkenhead Castillo, a citizen of Guatemala; (x)
Investment and Development Finance Corp., a Panama company
(“IDFC”), (xi)
IDC Financial, S.A., a Panama company (“IDC Financial”); (xii) Juan
Christian Klose Pieters; and (xiii) Margarita Klose (collectively,
the “Reporting
Persons”). The Auto Holdings Schedule 13D
states that each of the Reporting Persons disclaims beneficial
ownership of the reported shares except to the extent of their
pecuniary interest therein. Pursuant to the Stockholder Agreement,
the reported shares are subject to irrevocable proxies in favor of
Autobytel’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 lists the addresses of
the Reporting Persons as follows: (i) Auto Holdings, PF Auto, Mr.
de Tezanos, Manatee, Mr. Juan Christian Klose Pieters, Ms.
Margarita Klose and IDC Financial: 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: 3250 NE 1st Avenue, Suite 915, Miami,
Florida 33137.
|
-27-
|
(2)
|
Includes 7,753
shares of Common Stock acquired by Mr. Vargas in open market
transactions on November 28, 2016. The information presented in the
table with respect to the beneficial ownership of these shares of
Common Stock was obtained solely from the Form 4/A filed November
28, 2016.
|
|
(3)
|
Includes 437,914
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(4)
|
Includes 184,090
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(5)
|
Includes 152,105
shares issuable upon exercise of options exercisable within 60 days
of the Record Date
|
|
(6)
|
Includes 45,000
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(7)
|
Includes 109,706
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(8)
|
Includes 45,000
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(9)
|
Includes 45,000
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(10)
|
Includes 50,000
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(11)
|
Includes 35,000
shares issuable upon exercise of options exercisable within 60 days
of the Record Date.
|
|
(12)
|
Includes 1,316,337
shares issuable upon exercise of options exercisable within 60 days
of the Record Date. Excludes shares subject to the proxies
described in Footnote 1 above.
|
As described under
the section of this Proxy Statement entitled “PROPOSAL 2–APPROVAL OF SERIES B PREFERRED
STOCK CONVERSION,” Autobytel acquired AutoWeb on
October 1, 2015, and in connection with the acquisition,
Autobytel issued the following securities to the former
stockholders of AutoWeb: (1) 168,007 newly issued shares of Series
B Preferred Stock; and (2) the AutoWeb Warrants to purchase up to
148,240 shares of Series B Preferred Stock. Each share of Series B
Preferred Stock outstanding and the shares of Series B Preferred
Stock that may be acquired upon exercise of the AutoWeb Warrants
are convertible into 10 shares of Common Stock upon approval of
such conversion by the Company’s stockholders. For a
description of the Series B Preferred Stock and the AutoWeb
Warrants, see “PROPOSAL 2–APPROVAL OF SERIES B PREFERRED
STOCK CONVERSION.”
-28-
|
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, Jeffrey H. Coats, Jeffrey M. Stibel, and Matías de
Tezanos, expires at the Annual Meeting; the term of the Class II
Directors, Mark N. Kaplan, Michael A. Carpenter, and José
Vargas, expires in 2018; and the term of the Class III Directors,
Michael J. Fuchs and Janet M. Thompson, expires in
2019.
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.autobytel.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 four occasions in 2016 and operates under a
charter approved by the Board. The Audit
Committee’s primary responsibilities are to:
●
oversee
Autobytel’s accounting and financial reporting policies,
processes, practices and internal controls;
●
appoint, approve
the compensation of, and oversee the Company’s independent
registered public accounting firm;
●
review the quality
and objectivity of Autobytel’s independent audit and
financial statements; and
●
act as liaison
between the Board and the independent registered public accounting
firm.
The
Audit Committee currently consists of Mark N. Kaplan (Chairman),
Janet M. Thompson, Michael J. Fuchs and Michael A.
Carpenter. 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. 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 six occasions in 2016 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 and purchase
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
Autobytel’s proxy statements or as otherwise required by
applicable laws.
-29-
The Compensation Committee currently consists of Janet M. Thompson
(Chairwoman), Michael J. Fuchs, Mark N. Kaplan and Jeffrey M.
Stibel. 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,
Jeffrey H. Coats, 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–Compensation Discussion and
Analysis.”
Corporate Governance and Nominations
Committee. The Corporate Governance and
Nominations Committee, which met on one occasion in 2016 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 Autobytel 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 Jeffrey M.
Stibel.
Attendance
at Board and Committee Meetings
During
the fiscal year ended December 31, 2016, the Board held a
total of seven meetings. Each member of the Board, other
than Mr. Vargas, attended 75% or more of the aggregate of (i) the
total number of meetings of the Board held during the period in
2016 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 2016 and during the period in which the director
served as a member of the committees. Mr. Vargas was absent from
two meetings of the Board held in 2016. 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 attended the 2016 annual meeting of stockholders, of
which seven directors attended in person and two 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 Jeffrey H. Coats, Matías de Tezanos and
José Vargas, and all committee members satisfy the definition
of independent director under the Nasdaq 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.
-30-
In
connection with Mr. Carpenter’s appointment to the Board in
September 2012, the Corporate Governance and Nominations Committee
and the Board determined that Mr. Carpenter is an
“independent director” within the meaning of the Nasdaq
Rules applicable to the Company, including the additional
independence requirements for serving on audit
committees. In addition to Mr. Carpenter’s broad
business, operational and financial experience, particularly in the
automotive sector, and other evaluation factors considered by the
Company’s Corporate Governance and Nominations Committee and
the Board, in their consideration and evaluation of Mr. Carpenter,
the Company’s Corporate Governance and Nominations Committee
and the Board considered that Mr. Jeffrey H. Coats, the
Company’s President and Chief Executive Officer and a member
of the Board, has personally known Mr. Carpenter since they were
both employed at General Electric Company or its various
subsidiaries or divisions and that Mr. Coats was a partner in
Southgate Alternative Investments,
Inc. (“Southgate”),
an investment fund founded by Mr. Carpenter to acquire
general partnership interests in hedge funds. The Corporate Governance and
Nominations Committee and the Board also considered that Mr.
Coats’ investment in Southgate was funded by loans from
Mr. Carpenter in the aggregate principal amount of
$450,000. These loans are represented by notes that
accrue interest at a rate of 8% per annum, are secured by Mr.
Coats’ interests in certain Southgate investments, and are
now payable upon demand. Although the Corporate Governance and
Nominations Committee and the Board do not consider this
arrangement between Messrs. Carpenter and Coats prevents Mr.
Carpenter from being an “independent director,” in
connection with his service on the Board or on the Audit Committee,
Mr. Carpenter will recuse himself in any decisions related to Mr.
Coats’ employment at the Company or his compensation as long
as this indebtedness remains outstanding.
Compensation
Committee Interlocks and Insider Participation
Ms. Thompson,
Mr. Fuchs, Mr. Kaplan and Mr. 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. Except for Messrs. de Tezanos and
Vargas, 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
Company’s Board or Compensation Committee. Mr. Vargas, an
executive officer and director of the Company, and Mr. de Tezanos,
an executive officer of the Company during 2016 and 2017 (until
February 13, 2017, at which time he resigned as an officer of the
Company) and a director of the Company, each serves as a board
member and executive officer of the following investment holding
companies controlled by and affiliated with Messrs. de Tezanos and
Vargas: Classifieds Corp., Gray Mountain, Healthcare.com Insurance
Services, Inc., People Fund, People Ventures, Inc., PF Auto, and PF
Healthcare, Inc. Mr. Vargas serves as an executive officer and Mr.
de Tezanos serves as a director of the following investment holding
companies controlled by and affiliated with Messrs. de Tezanos and
Vargas: AutoHoldings, Blue Mountain 30 Inc., Blue Mountain 31 Inc.
and Blue Pacific Ventures Inc.; and Mr. de Tezanos serves as an
executive officer and Mr. Vargas serves as a director of the
following investment holding companies controlled by and affiliated
with Messrs. de Tezanos and Vargas: GeoFi, Inc., PF Holding and
Healthcare, Inc.
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. Coats 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. Coats.
-31-
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
Autobytel. The Board, including through Board committees
comprised solely of independent directors, regularly reviews
various areas of significant risk to Autobytel 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 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 monitors 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 Autobytel’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
risk-taking. Incentive compensation is capped and 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 help 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 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 employees generally is delivered in the
form of equity awards that help further align the interests of
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
Autobytel’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.
-32-
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 Autobytel;
●
The prospective
nominee’s standards of integrity, commitment and independence
of thought and judgment;
●
The prospective
nominee’s ability to dedicate sufficient time, energy and
attention to the diligent performance of his or her duties;
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.
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 Secretary, Autobytel Inc., 18872 MacArthur
Boulevard, Suite 200, Irvine, California
92612-1400. The Company 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 Autobytel 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.
-33-
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.autobytel.com,
and a copy of the Code of Ethics may also be obtained, free of
charge, by writing to the Corporate Secretary, Autobytel 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.
-34-
Autobytel has
engaged Soluciones AW, S.A. (“Soluciones”) to provide office
space and related office services to AW GUA, Limitada,
Autobytel’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, 2016 to March 31,
2017, AW GUA made payments to Soluciones of
approximately $184,000. Soluciones is controlled by
PeopleFund, which in turn is controlled by Messrs. Vargas and de
Tezanos, each a director of Autobytel. Mr. Vargas was also an
officer of the Company during this period and remains an officer of
Autobytel, and Mr. de Tezanos was an officer of Autobytel during
2016 and in 2017 until February 13, 2017. 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 and waived the
potential conflict.
-35-
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, 2016, 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, 2017. Moss Adams also
served as the Company’s independent registered public
accounting firm for the years ended December 31, 2015, 2014 and
2013. 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, 2016 and 2015 were as follows:
|
|
2016
|
2015
|
|
Audit
fees
|
$515,000
|
$439,000
|
|
Audit-related
fees
|
7,750
|
231,110
|
|
All other
fees
|
8,000
|
--
|
|
Total
|
$530,750
|
$670,110
|
Audit Fees. Audit fees consist of
professional services rendered in connection with the audits of the
Company’s annual consolidated financial statements, reviews
of the Company’s internal accounting and reporting controls
under Section 404 of the Sarbanes-Oxley Act of 2002 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 2016
consist of services rendered in connection with the audit of the
Company’s Retirement Savings (401(k))
Plan. Audit-related fees for 2015 consist of services
rendered in connection with audit procedures performed related to
the acquisitions of Dealix Corporation (“Dealix”) and Autotegrity, Inc.
(“Autotegrity”)
and AutoWeb and the audit of the Company’s Retirement Savings
(401(k)) Plan.
All Other Fees. All other fees for 2016 consist
of fees related to the review of the Company’s Form S-8
Registration Statements.
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.
-36-
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 2016 and 2015, 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
Autobytel 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, 2016 with the management of the
Company. The Audit Committee has discussed with Moss
Adams the matters required to be discussed by the Statement on
Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1. AU section 380), as adopted by the Public
Company Accounting Oversight Board (“PCAOB”) in
Rule 3200T. 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, 2016.
The
members of the Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not employed by
Autobytel 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 Autobytel’s financial
statements has been carried out in accordance with auditing
standards generally accepted in the United States or that
Autobytel’s auditors are in fact
“independent.”
|
The
Audit Committee
|
|
|
|
Mark N.
Kaplan, Chairman
Michael
J. Fuchs
Janet
M. Thompson
Michael
A. Carpenter
|
-37-
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
In this
Compensation Discussion and Analysis we describe our 2016
compensation practices, philosophy and objectives for our named
executive officers. For 2016, our named executive
officers were:
●
Jeffrey H. Coats,
President and Chief Executive Officer
●
Kimberly S. Boren,
Executive Vice President, Chief Financial Officer
●
Glenn E. Fuller,
Executive Vice President, Chief Legal and Administrative Officer
and Secretary
●
William A.
Ferriolo, Executive Vice President, Chief Operating
Officer
●
H.
Donald
Perkins, Jr., former Executive Vice President, Strategic and
Business Development
Mr.
Perkins served as the Company’s Executive Vice President,
Strategic and Business Development during 2016 until December 31,
2016, at which time his employment with the Company
ceased.
The
names, ages and backgrounds of our 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 of the Company’s Board is to
determine, or recommend to the Board for determination, the
salaries and other compensation of our 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”);
●
Award agreements
for stock options granted to executive officers contain option
forfeiture provisions (see “Option Forfeiture Provisions for Accounting
Restatements” below);
●
The Autobytel Inc.
Amended and Restated 2014 Equity Incentive Plan
(“Amended and Restated 2014
Plan” ) prohibits repricing of option and stock
appreciation rights (except for certain adjustments upon changes in
capitalization or control) without stockholder approval;
and
●
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 Company 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 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 and tied to the achievement
of pre-established financial and individual performance goals;
and
●
Long-term,
stock-based incentive awards, which strengthen the mutuality of
interests between the executive officers and the Company’s
stockholders, reward executive officers for future stock price
increases and retain executive officers through continued service
requirements.
-38-
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 geographic market factors,
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
stock-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 incentive 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’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 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; and
|
|
●
|
Overall
individual performance.
|
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).
-39-
The
Compensation Committee establishes a target annual incentive
compensation award opportunity for each executive officer based on
a percentage of base annual salary. The target annual
incentive compensation award opportunity percentages currently
range between 60% and 70% of annual base salary for named executive
officers other than the Chief Executive Officer, and 100% of base
annual salary for the Chief Executive Officer in
2016. The Compensation Committee established target
award opportunities for the named executive officers after
reviewing survey data provided by the Company’s Independent
Compensation Consultant (described below), and, in the case of
named 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. Generally, if specific individual performance
goals are established, 33% or less of the incentive compensation
for each executive officer has been based upon specific individual
performance goals to make executive officers accountable for
achieving business objectives. The Company believes this
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 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
Autobytel’s Common Stock increases.
-40-
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. The options are
granted with exercise prices of not less than the fair market value
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, exercise prices of existing grants or prior
grants that are fully 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 Autobytel’s
size.
The
Company typically awards stock options to executive officers upon
first joining the Company, promotion to more senior executive
positions and annually. At the discretion of the
Compensation Committee, executive officers may also be granted
stock options 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 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
generally vest and become exercisable over a three-year period, and
the vesting of stock options 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 if 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. In the case of
stock options granted on or after March 17, 2014 to the Chief
Executive Officer, vesting of stock options also accelerate upon
the death or disability of the Chief Executive
Officer.
The
Compensation Committee approves all stock options, 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 hire with the date of hire as the
grant date.
Stockholder Approval of
Executive Compensation. At the Company’s
2015 Annual Meeting of Stockholders (“2015 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 92% of the shares present at the 2015 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 our 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. An advisory vote on the compensation paid to the
Company’s named executive officers is being presented to
stockholders for approval at the Annual Meeting.
-41-
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 2016, 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 in 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 any misconduct that resulted
in an accounting restatement due to material noncompliance with any
financial reporting requirement under applicable securities
laws.
2016 Compensation
Decisions. For 2016, the Compensation Committee
determined the compensation of the Company’s 2016 named
executive officers in accordance with the general compensation
philosophy and objectives described above.
2016 Compensation Review and Peer Group. In addition to the
foregoing general compensation philosophy and objectives, in 2016
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 (“2016
Executive Compensation Review”) to provide a
competitive reference on pay levels and performance
alignment. The 2016 Executive Compensation Review used a
peer group, proposed by the Independent Compensation Consultant and
approved by the Compensation Committee in connection with the 2014
Executive Compensation Review, which group was updated in December
2015 to remove companies that were no longer the right size,
replacing them with industry- and size-appropriate companies that
were mostly based in California to reflect local labor market and
cost of living. The peer group used for the 2016 Executive
Compensation Review (“2016
Peer Group”) consisted of the following 17 U.S. based,
publicly traded, application/internet software and services
companies with an approximate range of $52 million to $340 million
in revenue and market caps below $789 million at the time:
Angie’s List, Bazaarvoice, Demand Media, DHI Group, eGain
Communications, Jive Software, Limelight Networks, Marchex,
QuinStreet, Spark Networks, Tech Target, Telenav, Travelzoo, United
Online, 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 2016 Peer Group. At the time,
Autobytel’s estimated 2016 revenue after the acquisition of
AutoWeb in 2015 and the Company’s market capitalization value
approximated the peer group median. Further, the Company’s
trailing operating income was above the median and approaching the
75th
percentile. The Company does not target a particular benchmark
level for the pay and performance levels.
-42-
CEO Compensation Overview.
In 2016, compensation decisions for Mr. Coats, the Company’s
Chief Executive Officer, were made with the context of 2015
relative total stockholder return (“TSR”) performance and relative
revenue and operating income growth over one and three years that
was above the 75th percentile of the
2016 Peer Group companies and that was the highest of the peer
sample. This high previous performance at the time was considered
when Mr. Coats’ annual equity grant was made, which has fair
value that is slightly above the 2016 Peer Group median, and
results in disclosed total compensation for Mr. Coats that is also
slightly above the median. The slightly above-median grant value
not only reflected very high trailing performance, but also that
Mr. Coats was granted 30,000 options in 2015, which was among the
lowest grants in the 2016 Peer Group that year and did not reflect
the high performance level achieved. The disclosed total
compensation level for Mr. Coats of $2,406,234 (as reflected in the
Summary Compensation Table below) is only slightly above the median
in the 2016 Peer Group data of $2,370,000, and this reflected the
performance in 2015 that preceded the equity award.
As the
vehicle for Mr. Coats’ equity compensation awards, the
Compensation Committee granted stock options with 60% of the
options having only service-based vesting (“Coats Service-Based Options”) and
40% of the options having both service-based vesting and a
performance-based vesting component based on increases in the
trading price of the Company’s Common Stock
(“Coats Performance-Based
Options”). The Committee’s intention was to
reward only future price increases, starting from an exercise price
that was considerably higher than the trading price at the time
that the Company had made its previous option awards to Mr. Coats.
The Coats Performance-Based Options have the challenging stock
price increase conditions described below. The grant date fair
value of the Coats Service-Based Options was set below the median
of the 2016 Peer Group companies and only the highly performance
driven Coats Performance-Based Options caused the grant date fair
value of the total grant of options to Mr. Coats to be above the
median for the 2016 Peer Group.
The
2016 stock option awards to Mr. Coats were granted a little over
two months following high relative performance in 2015, which
resulted in TSR that was the highest of the 2016 Peer Group
companies over one- three- and five-years. The Coats Service-Based
Options had a grant date fair value that was below the median of
the 2016 Peer Group companies, with a value that was slightly above
the median solely as a result of the Coats Performance-Based
Options with stock price hurdles that were set requiring stock
price growth of 105%, 120%, and 163% above the $17.09 closing price
of the Common Stock on the date of grant. The total grant date fair
value of the Coats Service-Based Options and Coats
Performance-Based Options is reported in the Summary Compensation
Table below at a level that is 6.5% of the grant date fair value of
the CEOs for the 2016 Peer Group companies, but the performance
that preceded the awards to Mr. Coats was above the 75th percentile for the
TSR, revenue growth, and operating income growth measures that were
reviewed by the Compensation Committee.
The
closing stock price on April 13, 2017 was $11.82, which is below
the price at which the 2016 options were granted to Mr. Coats. As a
result, Mr. Coats’ awards, which have a total grant date fair
value of $1,362,276 (as reported in the Summary Compensation Table
below), are not currently providing any in-the-money value reward
to Mr. Coats, and the Coats Performance-Based Options, with stock
price hurdles of $35, $37.50, and $45, are not yet earned or
vested. The Company views this as pay-for-performance and believes
that the equity awards’
delivery of actual compensation, which is currently not providing
any actual compensation, is adjusting with shareholder value, which
was the intent when structuring the awards.
2016 Base Annual Salary.
The Compensation Committee did not consider any increases in the
base annual salaries of Messrs. Ferriolo, Fuller, or Perkins for
2016. In connection with its annual review of executive
compensation, and after reviewing the 2016 Executive
Compensation Review and consultation with the Independent
Compensation Consultant, the Compensation Committee approved an
increase of $55,000 in Mr. Coats’ base annual salary from
$495,000 to $550,000 and an increase in his target annual incentive
compensation award opportunity from 85% to 100% effective January
1, 2016 to recognize his continued performance in leading the
Company’s growth, profitability and total shareholder return
and his leadership in implementing and integrating the AutoWeb,
Dealix and Autotegrity acquisitions. In connection with the
promotion of Ms. Boren to Executive Vice President, Chief Financial
Officer (which was effective in September 2016) after consultation
with the Independent Compensation Consultant and based on input
from the Company’s Chief Executive Officer, the Compensation
Committee approved an increase of $35,000 in Ms. Boren’s base
annual salary from $265,000 to $300,000 and an increase in her
target annual incentive compensation award opportunity from 55% to
60% effective September 21, 2016 to recognize her
promotion.
-43-
2016 Annual Incentive Compensation Plan
Awards. The 2016
Annual Incentive Compensation Plan (“2016 Incentive Plan”) was based on
the following two Company-wide performance goals
(“2016 Company Performance
Goals”), each weighted 50%:
●
percentage
achievement of the Company’s revenue goal of $157.8 million
(“2016 Revenue
Goal”) under the Company’s 2016 operating plan
approved by the Board; and
●
percentage
achievement of the Company’s Non-GAAP EPS (defined as (i)
GAAP net income before amortization of acquired intangibles,
non-cash stock-based compensation, acquisition costs, severance
costs, gain or loss on investment or sale, litigation settlements
and income taxes divided by (ii) weighted average diluted shares
outstanding) goal of $1.44 under the 2016 operating plan approved
by the Board (“2016 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 (“2016 Award Opportunity
Scale”). Achievement of a goal at or below
67% would result in no awards for that goal, and performance
achievement over 100% was capped at 120%. The sum of the
weighted percentages derived from the 2016 Award Opportunity Scale
for the 2016 Revenue Goal and the 2016 Non-GAAP EPS Goal was
applied to each named executive officer’s target annual
incentive compensation award opportunity to determine the
officer’s 2016 award payout opportunity. The
Compensation Committee selected these two goals and assigned them
equal weighting under the 2016 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 2016. Award
payouts to the 2016 named executive officers under the 2016
Incentive Plan were paid in January 2017 and reflected the
pre-established formula without discretionary adjustment to the
results, except as disclosed below for Ms. Boren and Messrs.
Ferriolo and Fuller.
The
Compensation Committee set the 2016 target annual incentive
compensation award opportunities for Mr. Coats, Ms. Boren, Mr.
Ferriolo, Mr. Fuller, and Mr. Perkins under the 2016 Incentive Plan
at 100%, 57% (prorated to reflect the increase in her target
opportunity to 60% from 55% upon her promotion effective September
2016), 65%, 70%, and 65% of base annual salary,
respectively.
In
determining incentive compensation award payouts under the 2016
Incentive Plan, the Compensation Committee considered the
following:
●
2016 revenues of
approximately $156.7 million represented approximately a 99%
achievement of the 2016 Revenue Goal and resulted in an
approximately 97% targeted award payout for the 2016 Revenue Goal
from the 2016 Award Opportunity Scale; and 2016 Non-GAAP EPS of
approximately $1.33 represented approximately a 93% achievement of
the 2016 Non-GAAP EPS Goal and resulted in an approximately 78%
targeted award payout for the 2016 Non-GAAP EPS Goal from the 2016
Award Opportunity Scale, which combined resulted in an
approximately 87.2% combined target award payout under the 2016
Incentive Plan; and
●
The
performance and contributions of the 2016 named executive officers
to the Company in achieving another year of revenue growth and
profitability for 2016 as well as strong stockholder return;
and
●
In the case of Ms.
Boren and Messrs. Ferriolo and Fuller, recognition of their
significant efforts in connection with the disposition of the
Company’s specialty finance leads group in December 2016 and
formation of the Company’s new subsidiary in Guatemala and
transfer and integration of the former AutoWeb operations in
Guatemala to the new subsidiary.
Based on its evaluation of the foregoing items, the Compensation
Committee approved cash award payouts under the 2016 Incentive Plan
to Mr. Coats, Ms. Boren, Mr. Ferriolo, Mr. Fuller, and Mr. Perkins
of $479,600, $135,417, $207,619, $186,172, and $167,206,
respectively. Mr. Coats’ incentive compensation plan payout
reflected the application of the 87.2% Company performance
component of the incentive plan without any adjustment. The
incentive compensation plan payout for Ms. Boren, Mr. Ferriolo and
Mr. Fuller reflected the 87.2% Company performance component of the
incentive plan plus $25,000 each in supplemental incentive
compensation payments in recognition of their efforts during
2016.
-44-
2016 Long-Term Equity
Incentive Awards. The
Company made an annual grant of stock options to the named
executive officers on January 21, 2016. Of the options granted to
Mr. Coats, 40% of the options are subject to challenging stock
price performance goals combined with a time-based vesting
schedule. Further, the Company granted additional options to
certain named executive officers below the chief executive officer
in recognition of personal high performance or promotions that
occurred during 2016.
January
2016 Service-Based Grants. On January 21, 2016 stock options
were granted to Mr. Coats, Ms. Boren, Mr. Ferriolo, and Mr. Fuller.
After considering the 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 2016 Executive Compensation
Review, the Compensation Committee approved the grants of 150,000,
22,000, 25,000, and 22,000 stock options to Mr. Coats, Ms. Boren,
Mr. Ferriolo, and Mr. Fuller, respectively, at an exercise price of
$17.09 per share (the grant to Mr. Coats being the Coats
Service-Based Options referenced above). The grants of stock
options to the foregoing named executive officers were made in
connection with an annual Company-wide option grant to employees in
recognition of their efforts during 2015 in achieving revenue
growth and profitability for 2015 and initiatives undertaken by the
Company, including continued growth of autobytel.com, the
Company’s flagship website, increasing display website
advertising revenue and profit, the continued growth of the
commercial relationship with AutoWeb, increasing advertising click
revenue, and the overall growth in lead revenue. These
ongoing awards to named executive officers employed during 2015 and
granted in 2016 were below the median of the peer data provided by
the Company’s Independent Compensation Consultant. The
revenue and operating income growth achieved in 2015 was above the
75th
percentile of our 2016 Peer Group companies, as was our one-year,
three-year, and five-year TSR through the end of 2015.
Coats Performance-Based
Stock Options In addition to the Coats Service-Based Options
granted to Mr. Coats on January 21, 2016, the Compensation
Committee also approved (after its review of the 2016 Executive
Compensation Review and consultation with the Independent
Compensation Consultant) the grant to Mr. Coats of the Coats
Performance-Based Options, which provide for the purchase of
100,000 shares of Common Stock at an exercise price of $17.09. The
Coats Performance-Based Options reflected 40% of the total number
of stock options granted to Mr. Coats in 2016. The Coats
Performance-Based Options will become vested and exercisable in
accordance with the following service-based vesting schedule: (i)
33 1/3% will vest and become exercisable on the first anniversary
after the grant date; and (ii) 1/36th will vest and become
exercisable on each successive monthly anniversary thereafter for
the following 24 months ending on the third anniversary of the
grant date of these stock options; provided,
however, that in
addition to the service-based vesting schedule, the Coats
Performance-Based Options will be subject to the satisfaction of
the following additional stock price performance conditions: (i)
with respect to the first 1/3 of the Coats Performance-Based
Options, if at any time after the grant date and prior to the
expiration date of the Coats Performance-Based Options the weighted
average closing price of the Common Stock on The Nasdaq Capital
Market for the preceding 30 trading days (adjusted for any stock
splits, stock dividends, reverse stock splits or combinations of
the Common Stock occurring after the issuance date)
(“Weighted Average Closing
Price”) is at or above $30.00; (ii) with respect to
the second 1/3 of the Coats Performance-Based Options, if at any
time after the grant date and prior to the expiration date the
Weighted Average Closing Price is at or above $37.50; and (iii)
with respect to the last 1/3 of the Coats Performance-Based
Options, if at any time after the grant date and prior to the
expiration date the Weighted Average Closing Price is at or above
$45.00. The Coats Performance-Based Options expire on the seventh
anniversary of the grant date.
Special
Option Grants to Other Named Executive Officers to Reflect
Performance and Promotions. After considering the Chief
Executive Officer’s recommendation, further review and
consideration of the 2016 Executive Compensation Review and
consultation with the Independent Compensation Consultant, and
further consideration of the number of stock option awards made to
these named executive officers in January 2016, on July 15, 2016,
the Compensation Committee approved the grants of 30,000 stock
options to each of Ms. Boren, Mr. Ferriolo, and Mr. Fuller, at an
exercise price of $14.41 per share.
On
September 21, 2016, the Compensation Committee approved a grant of
12,000 stock options to Ms. Boren in connection with her promotion
to Executive Vice President, Chief Financial Officer at an exercise
price of $16.82 per share.
-45-
On
December 15, 2016, the Compensation Committee approved a grant of
25,000 stock options to Mr. Ferriolo in connection with his
promotion to Executive Vice President, Chief Operating Officer at
an exercise price of $14.10 per share.
All of
the foregoing 2016 stock option grants reflected the Compensation
Committee’s belief that equity-based compensation in the form
of stock options links 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. All equity awards granted
to the named executive officers in 2016 were stock options. As of
March 31, 2017, the exercise price of these stock options was
higher than the closing price of the Company's common stock , which
are not currently providing any actual compensation based on the
April 13, 2017 stock price of $11.82. This reflects the fall in
stock price since grant and is viewed by the Company as a
pay-for-performance outcome that is aligned with stockholder
return.
The
exercise price for all stock option grants was the closing price
for Autobytel’s common stock on The Nasdaq Capital Market as
of the applicable grant date. All of the foregoing 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, with the Coats Performance-Based Options having
the additional stock price performance conditions described above.
The vesting of stock options (i) may accelerate upon a change in
control of Autobytel in accordance with the applicable plan
pursuant to which the stock options were granted and the applicable
stock option award agreements if such change in control is coupled
with a termination of the named executive officer’s
employment with the Company by the Company without cause or by the
named executive officer 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; and (ii) will
accelerate in the event the executive officer’s employment
with the Company is terminated without cause by the Company or for
good reason by the executive officer (as such terms are defined in
the applicable executive officer’s severance benefits or
employment agreement). In addition, the vesting of stock options
granted to Mr. Coats will be accelerated upon Mr. Coats’
death or disability.
Severance and Change in
Control Terms. The Company has entered into
agreements with various key employees, including the executive
officers, which provide for severance benefits under certain
qualifying employment termination events. In addition,
certain of the agreements also provide for payments and benefits in
the event of certain qualifying employment termination in
connection with a change in control of the Company. The
agreements 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 such agreements 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.”
Under
the Coats Employment Agreement (as defined below in the section of
this Proxy Statement entitled “EXECUTIVE
COMPENSATION–Employment
Agreements”), Mr. Coats is entitled to specified
payments upon the occurrence of certain qualifying termination
events, including a qualifying termination in connection with or
following a change in control of the Company. The
Compensation Committee approved these terms in connection with its
evaluation of the Coats Employment Agreement after consultation
with the Independent Compensation Consultant. The Coats
Employment Agreement contains confidentiality and non-solicitation
provisions that extend beyond termination. See the
section below entitled “Tax
Implications–IRC Sections 280G and 4999”
regarding the Compensation Committee’s consideration of IRC
Sections 280G and 4999 in structuring Mr. Coats’ employment
and severance package. The Coats Employment Agreement
provides for a lump sum payout to Mr. Coats in the event of a
termination of Mr. Coats’ employment in connection with a
change in control of the Company equal to the sum of (i) 1.75 times
the sum of his base annual salary and his target annual incentive
compensation opportunity; and (ii) his target annual incentive
compensation opportunity at the rate of his base annual salary and
the target annual incentive compensation opportunity in effect
immediately before such termination, prorated for the amount of
time Mr. Coats was employed by the Company prior to the date of
termination during such plan year. See the section of
this Proxy Statement entitled “EXECUTIVE COMPENSATION–Potential Payments
Upon Termination or Change in Control.”
-46-
The
severance benefits agreements with Ms. Boren, Mr. Fuller, and Mr.
Ferriolo provide that these named executive officers are entitled
to lump sum payments equal to their base annual salary upon the
occurrence of certain qualifying termination events, including a
qualifying termination in connection with or following a change in
control of the Company. The severance benefits agreement
with Mr. Fuller, which has not been amended since 2012, provides
for a gross-up to offset any excise tax on excess parachute
payments to preserve the net value to Mr. Fuller of these severance
benefits so that the value of the motivational and retention
aspects of the severance compensation packages for Mr. Fuller would
not be diminished. See the section of
this Proxy Statement entitled “EXECUTIVE COMPENSATION–Potential Payments
Upon Termination or Change in Control.”
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 officers’ awards and the applicable award
payouts, if any, as of the change in control event. Unvested stock
options will be accelerated and become fully vested and exercisable
as of the change in control event unless the options are assumed by
the acquirer.
For
information concerning payments made to Mr. Perkins under his
pre-existing severance benefit agreement upon termination of his
employment with the Company in December 31, 2016, see
“EXECUTIVE
COMPENSATION–Potential Payments Upon Termination or Change in
Control.”
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 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.
Tax Implications
IRC Section 162(m)
Limitation. The Compensation Committee
has considered the potential impact of Section 162(m) of the
IRC on the compensation
paid to the Company’s executive officers. In
general, Section 162(m) disallows a tax deduction for the
compensation paid to certain executives of publicly-held companies
in excess of $1.0 million in any taxable year. 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, and provided that compensation is not
performance-based. In general, it is the Compensation
Committee’s policy to qualify executive 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 these
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 reserves the right to do so in
the future in appropriate circumstances. 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 does not 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.
-47-
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.
In
connection with the structuring of Mr. Coats’
compensation and severance package, the Compensation Committee
considered the effects of Sections 280G and
4999. In light of the estimated expense to the Company,
the Compensation Committee elected not to provide Mr. Coats
with a gross-up payment in the event any amount of severance
payments or compensation made to Mr. Coats were found to be
excess parachute payments, but did not want to diminish the value
of the motivational and retention aspects of Mr. Coats’
severance compensation package. Therefore, certain
aspects of Mr. Coats’ severance package were structured
to mitigate the applicability of Sections 280G and 4999 to
Mr. Coats’ severance compensation.
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation
S-K adopted by the SEC, and, based on that review and discussions,
recommended to the Board that the Compensation Discussion and
Analysis be included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2016 and the
Proxy Statement on Schedule 14A in connection with the
Company’s 2017 Annual Meeting of Stockholders.
|
|
Compensation
Committee
Janet
M. Thompson, Chairwoman
Michael
J. Fuchs
Mark N.
Kaplan
Jeffrey
M. Stibel
|
The above report of the Compensation Committee will not be deemed
to be “soliciting material” or to be
“filed” with the SEC, nor shall this report be
incorporated by reference in any of the Company’s filings
under the Securities Act or the Exchange Act except to the extent
that the Company specifically incorporates the same by
reference.
-48-
Summary
Compensation
The
table below and the accompanying footnotes summarize the
compensation attributed for fiscal years 2016, 2015 and 2014, as
applicable, to the Company’s executive officers who
constitute named executive officers for the fiscal year ended
December 31, 2016.
2016
Summary Compensation Table
|
Name and Principal
Position
|
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)(1)
|
Non-Equity
Incentive
Plan
Compensation
($)(2)
|
All
Other Compensation
($)
|
|
Total
($)
|
|
Jeffrey H.
Coats
|
|
2016
|
550,000
|
—
|
—
|
1,362,276
|
479,600
|
14,358
|
(3)
|
2,406,234
|
|
President and Chief
Executive Officer,
|
|
2015
|
495,000
|
—
|
—
|
139,232
|
328,185
|
13,583
|
(4)
|
976,000
|
|
Director
|
|
2014
|
492,656
|
—
|
—
|
639,759
|
553,670
|
10,487
|
(5)
|
1,696,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly S.
Boren
|
|
2016
|
274,811
|
—
|
—
|
480,580
|
135,417
|
6,534
|
(7)
|
897,342
|
|
Executive Vice
President,
|
|
2015
|
263,409
|
—
|
—
|
189,005
|
112,980
|
6,534
|
(8)
|
571,928
|
|
Chief
Financial
Officer(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William A.
Ferriolo
|
|
2016
|
366,300
|
—
|
—
|
585,698
|
207,619
|
6,303
|
(10)
|
1,165,920
|
|
Executive Vice
President,
|
|
2015
|
314,985
|
—
|
907,250
|
503,416
|
135,222
|
6,303
|
(11)
|
1,867,176
|
|
Chief Operating
Officer(9)
|
|
2014
|
273,698
|
—
|
—
|
127,952
|
199,032
|
5,348
|
(12)
|
606,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glenn E.
Fuller
|
|
2016
|
305,000
|
—
|
—
|
384,084
|
186,172
|
8,758
|
(13)
|
884,014
|
|
Executive Vice
President, Chief Legal
|
|
2015
|
305,000
|
—
|
—
|
141,552
|
166,530
|
8,758
|
(14)
|
621,840
|
|
and
Administrative
Officer and Secretary
|
|
2014
|
303,698
|
—
|
—
|
147,776
|
281,086
|
6,972
|
(15)
|
739,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Donald Perkins,
Jr.
|
|
2016
|
295,000
|
—
|
—
|
81,018
|
167,206
|
316,784
|
(17)
|
860,008
|
|
Executive Vice
President, Strategic and
|
|
2015
|
157,557
|
—
|
—
|
302,657
|
80,724
|
64,946
|
(18)
|
605,884
|
|
Business
Development(16)
|
|
|
|
|
|
|
|
|
|
|
|
(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 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, 2016, which accompanies this Proxy Statement, for
assumptions made in these valuations.
|
|
(2)
|
Represents amounts
related to level of achievement of Company performance goals under
the 2016 Incentive Plan. For information on the amounts earned in
2016, see the section of this Proxy Statement entitled
“EXECUTIVE
COMPENSATION–Compensation Discussion
and Analysis–2016
Compensation Decisions–2016
Annual Incentive Compensation Plan
Awards.”
|
-49-
|
(3)
|
Represents $6,209
for health insurance premiums for dependent, $3,000 for 401(k) plan
match and $5,149 for supplemental insurance premiums.
|
|
(4)
|
Represents $5,554
for health insurance premiums for dependent, $3,000 for 401(k) plan
match and $5,029 for supplemental insurance premiums.
|
|
(5)
|
Represents $5,458
for health insurance premiums for dependent and $5,029 for
supplemental insurance premiums.
|
|
(6)
|
Ms.
Boren was appointed Chief Financial Officer effective as of April
1, 2015.
|
|
(7)
|
Represents $3,000
for 401(k) plan match and $3,534 for supplemental insurance
premiums.
|
|
(8)
|
Represents $3,000
for 401(k) plan match and $3,534 for supplemental insurance
premiums.
|
|
(9)
|
Mr.
Ferriolo was appointed Chief Operating Officer effective as of
December 15, 2016.
|
|
(10)
|
Represents $3,000
for 401(k) plan match and $3,303 for supplemental insurance
premiums.
|
|
(11)
|
Represents $3,000
for 401(k) plan match and $3,303 for supplemental insurance
premiums.
|
|
(12)
|
Represents $3,000
for 401(k) plan match and $2,348 for supplemental insurance
premiums.
|
|
(13)
|
Represents $3,000
for 401(k) plan match and $5,758 for supplemental insurance
premiums.
|
|
(14)
|
Represents $3,000
for 401(k) plan match and $5,758 for supplemental insurance
premiums.
|
|
(15)
|
Represents $3,000
for 401(k) plan match and $3,972 for supplemental insurance
premiums.
|
|
(16)
|
Mr.
Perkins’ employment with the Company was terminated without
cause effective as of December 31, 2016.
|
|
(17)
|
Represents $3,000
for 401(k) plan match, $14,892 for vacation pay, $295,000 for
severance and $3,892 for supplemental insurance
premiums.
|
|
(18)
|
Represents $3,000
for 401(k) plan match, $1,946 for supplemental insurance premiums
and $60,000 related to consulting fees paid to Mr. Perkins in 2015
prior to his employment by the Company.
|
-50-
Grants
of Plan-Based Awards in 2016
The
following table sets forth for each of the named executive officers
information concerning plan-based awards, including stock and stock
option awards, granted during 2016. During 2016, the
Company granted stock options at exercise prices equal to the fair
market value of a share of the Common Stock as determined by the
closing price on The Nasdaq Capital Market on the date of
grant. The term of each option granted is seven years
from the date of grant. The vesting of certain option
awards accelerate if there is a change in control of the Company or
involuntary termination of employment. Option awards may
be cancelled before their expiration dates if the optionee’s
status as an employee is terminated or upon the optionee’s
death or disability.
2016 Grants of Plan-Based Awards
Table
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
All Other Stock
Awards: Number of Shares of Stock or
|
All Other Option
Awards: Number of Securities Underlying
|
Exercise or Base
Price of
|
Closing Price on
Grant
|
Grant Date Fair Value of Stock and
Option
|
|||||
|
Name
|
|
Grant
Date
|
|
Threshold
($) |
Target
($) |
Maximum
($) |
Threshold
(#) |
Target
(#) |
Maximum
(#) |
Units
(#)(1) |
Options (#)(1)
|
Awards
($/Share) |
Date
($/Share) |
Awards
($)(2) |
|
Jeffrey
H. Coats
|
|
01/21/16
|
|
5,500
|
550,000
|
880,000
|
—
|
—
|
—
|
—
|
150,000
|
17.09
|
17.09
|
1,215,276
|
|
|
|
01/21/16
|
(3)
|
—
|
—
|
—
|
—
|
100,000
|
100,000
|
—
|
—
|
17.09
|
17.09
|
147,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly
S. Boren
|
|
01/21/16
|
|
1,553
|
155,295
|
248,472
|
—
|
—
|
—
|
—
|
22,000
|
17.09
|
17.09
|
178,241
|
|
|
|
07/15/16
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
30,000
|
14.41
|
14.41
|
205,843
|
|
|
|
09/21/16
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
12,000
|
16.82
|
16.82
|
96,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Ferriolo
|
|
01/21/16
|
|
2,381
|
238,095
|
380,952
|
—
|
—
|
—
|
—
|
25,000
|
17.09
|
17.09
|
202,546
|
|
|
|
07/15/16
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
30,000
|
14.41
|
14.41
|
205,843
|
|
|
|
12/15/16
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
25,000
|
14.10
|
14.10
|
177,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glenn
E. Fuller
|
|
01/21/16
|
|
2,135
|
213,500
|
341,600
|
—
|
—
|
—
|
—
|
22,000
|
17.09
|
17.09
|
178,241
|
|
|
|
07/15/16
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
30,000
|
14.41
|
14.41
|
205,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H.
Donald Perkins, Jr.
|
|
01/21/16
|
|
1,918
|
191,750
|
306,800
|
—
|
—
|
—
|
—
|
10,000
|
17.09
|
17.09
|
81,018
|
|
(1)
|
All
options were granted from the 2014 Equity Incentive Plan and vest
one-third on the first anniversary following the date of grant,
with the remaining two-thirds vesting ratably over twenty-four
months thereafter.
|
|
(2)
|
The
dollar amount reported for option and stock awards is the aggregate
grant date fair value of awards granted during the year calculated
in accordance with FASB ASC Topic 718.
|
|
(3)
|
The
terms of these Stock Price-Based Vesting Options are described
under the section of this Proxy Statement entitled
“EXECUTIVE
COMPENSATION–Compensation Discussion and
Analysis–2016 Compensation
Decisions–2016
Long–Term Equity Incentive
Awards.”
|
-51-
Outstanding
Equity Awards at 2016 Year-End
The
following table sets forth, for each of the named executive
officers, information concerning outstanding stock option awards as
of December 31, 2016.
2016
Outstanding Equity Awards at Fiscal Year-End Table
|
|
|
|
Option
Awards
|
|
Stock Awards
|
||||||||
|
Name
|
Grant Date
|
|
Number of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Options (#)
Unearned
|
Option Exercise
Price
($)
|
|
Option Exercise Date
|
|
Number of Shares or Units of Stock That Have Not
Vested
($)
|
Market Value of Shares or Units of Stock That Have Not
Vested
($)
|
Equity
Incentive Plan Awards: Unearned Shares, Units or Other Rights That
Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey H.
Coats(1)
|
01/21/16
|
(6)
|
—
|
—
|
100,000
|
17.09
|
|
01/21/23
|
|
—
|
—
|
—
|
—
|
|
|
01/21/16
|
(4)
|
—
|
150,000
|
—
|
17.09
|
|
01/21/23
|
|
—
|
—
|
—
|
—
|
|
|
01/23/15
|
(4)
|
19,171
|
10,829
|
—
|
10.20
|
|
01/23/22
|
|
—
|
—
|
—
|
—
|
|
|
03/17/14
|
(4)
|
33,919
|
3,081
|
—
|
14.32
|
|
03/17/21
|
|
—
|
—
|
—
|
—
|
|
|
01/21/14
|
(4)
|
48,612
|
1,388
|
—
|
17.64
|
|
01/21/21
|
|
—
|
—
|
—
|
—
|
|
|
01/24/13
|
(2)
|
22,500
|
—
|
—
|
4.00
|
|
01/24/20
|
|
—
|
—
|
—
|
—
|
|
|
01/10/12
|
(3)
|
37,692
|
—
|
—
|
3.90
|
|
01/10/19
|
|
—
|
—
|
—
|
—
|
|
|
01/20/11
|
|
26,196
|
—
|
—
|
4.80
|
|
01/20/18
|
|
—
|
—
|
—
|
—
|
|
|
04/03/09
|
|
167,511
|
—
|
—
|
1.75
|
|
04/03/19
|
|
—
|
—
|
—
|
—
|
|
|
11/03/08
|
|
1,000
|
—
|
—
|
3.85
|
|
11/03/18
|
|
—
|
—
|
—
|
—
|
|
|
11/01/07
|
|
1,000
|
—
|
—
|
11.60
|
|
11/01/17
|
|
—
|
—
|
—
|
—
|
-52-
|
Kimberly
S. Boren
|
09/21/16
|
(4)
|
—
|
12,000
|
—
|
16.82
|
09/21/23
|
—
|
—
|
—
|
—
|
|
|
07/15/16
|
(4)
|
—
|
30,000
|
—
|
14.41
|
07/15/23
|
—
|
—
|
—
|
—
|
|
|
01/21/16
|
(4)
|
—
|
22,000
|
—
|
17.09
|
01/21/23
|
—
|
—
|
—
|
—
|
|
|
05/18/15
|
(4)
|
3,178
|
2,822
|
—
|
13.22
|
05/18/22
|
—
|
—
|
—
|
—
|
|
|
01/23/15
|
(4)
|
9,592
|
5,408
|
—
|
10.20
|
01/23/22
|
—
|
—
|
—
|
—
|
|
|
01/21/15
|
(4)
|
12,785
|
7,215
|
—
|
9.10
|
01/21/22
|
—
|
—
|
—
|
—
|
|
|
03/17/14
|
(4)
|
6,785
|
615
|
—
|
14.32
|
03/17/21
|
—
|
—
|
—
|
—
|
|
|
01/21/14
|
(4)
|
9,723
|
277
|
—
|
17.64
|
01/21/21
|
—
|
—
|
—
|
—
|
|
|
01/24/13
|
(2)
|
6,875
|
—
|
—
|
4.00
|
01/24/20
|
—
|
—
|
—
|
—
|
|
|
01/10/12
|
(3)
|
12,340
|
—
|
—
|
3.90
|
01/10/19
|
—
|
—
|
—
|
—
|
|
|
12/07/11
|
|
10,000
|
—
|
—
|
3.80
|
12/07/18
|
—
|
—
|
—
|
—
|
|
|
01/20/11
|
|
5,739
|
—
|
—
|
4.80
|
01/20/18
|
—
|
—
|
—
|
—
|
|
|
12/17/10
|
|
10,000
|
—
|
—
|
4.30
|
12/17/17
|
—
|
—
|
—
|
—
|
|
|
04/26/10
|
|
5,000
|
—
|
—
|
3.95
|
04/26/20
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
A. Ferriolo
|
12/15/16
|
(4)
|
—
|
25,000
|
—
|
14.10
|
12/15/23
|
—
|
—
|
—
|
—
|
|
|
07/15/16
|
(4)
|
—
|
30,000
|
—
|
14.41
|
07/15/23
|
—
|
—
|
—
|
—
|
|
|
01/21/16
|
(4)
|
—
|
25,000
|
—
|
17.09
|
01/21/23
|
—
|
—
|