NOTICE OF ANNUAL MEETING
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive Proxy
Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
DealerTrack Holdings, 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):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
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pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
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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.
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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May 29, 2007
Dear Stockholder:
On behalf of the board of directors and management of
DealerTrack Holdings, Inc., I invite you to attend our Annual
Meeting of Stockholders. The meeting will be held on Wednesday,
July 11, 2007, at 11:00 a.m. local time, at the Garden
City Hotel, 45 Seventh Street, Garden City, New York 10530.
The details of the business to be conducted at the Annual
Meeting are provided in the attached Notice of Annual Meeting of
Stockholders and in the attached Proxy Statement.
It is important that your stock is represented, regardless of
the number of shares you hold. After reading the enclosed Proxy
Statement, please vote your proxy in accordance with the
instructions provided.
If you have any questions about the meeting, please contact our
Investor Relations Department at
(516) 734-3758.
We look forward to seeing you at the Annual Meeting.
Sincerely,
Mark F. ONeil
Chairman of the Board,
President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
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Date: |
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Wednesday, July 11, 2007 |
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Time: |
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11:00 a.m. local time |
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Location: |
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Garden City Hotel
45 Seventh Street Garden City,
New York 10530 |
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Matters To Be Voted On: |
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(1) To elect three members to the board of directors for
three-year terms as Class II directors to serve until our
2010 Annual Meeting of Stockholders or until their successors
are elected; |
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(2) To ratify the selection of PricewaterhouseCoopers LLP
as our independent registered public accounting firm for the
fiscal year ending December 31, 2007; |
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(3) To amend and restate our 2005 Incentive Award
Plan; and |
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(4) To transact such other business as may properly come
before the Annual Meeting or any postponements or adjournment
thereof. |
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Record Date: |
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May 15, 2007 You are eligible to vote if you
were a stockholder of record on this date. |
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Voting Methods: |
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By Mail
In Person |
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Importance Of Vote: |
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Submit a proxy as soon as possible to ensure that your shares
are represented. |
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Voting promptly will insure that we have a quorum at the meeting
and will save us proxy solicitation expenses. |
By Order of the Board of Directors,
Eric D. Jacobs
Secretary
Lake Success, New York
May 29, 2007
Table of
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DEALERTRACK
HOLDINGS, INC.
1111 Marcus Ave., Suite M04
Lake Success, New York 11042
PROXY
STATEMENT
For the
Annual Meeting of Stockholders
to be held July 11, 2007
GENERAL
INFORMATION
THE
ANNUAL MEETING
Our board of directors is soliciting proxies to be used at our
Annual Meeting of Stockholders to be held on July 11, 2007.
This Proxy Statement, the accompanying Notice of Annual Meeting
and form of proxy are being made available to our stockholders
on or about May 31, 2007.
PURPOSE
OF MEETING
The specific proposals to be considered and acted upon at the
Annual Meeting are summarized in the accompanying Notice of
Annual Meeting. The proposals are described in more detail in
this Proxy Statement.
INFORMATION
CONCERNING VOTING AND SOLICITATION OF PROXIES
WHO CAN
VOTE?
Only stockholders of record at the close of business on
May 15, 2007 may vote at the Annual Meeting. As of
May 15, 2007, there were 39,651,575 shares of our
common stock outstanding.
HOW YOU
CAN VOTE
You may vote using one of the following methods:
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Mail. You may vote by mail by marking your
proxy card, dating and signing it, and returning it in the
postage-paid envelope provided.
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In Person. You may vote your shares in person
by attending the Annual Meeting.
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If a broker holds your shares in street name, the
broker is required to vote those shares in accordance with your
instructions. If you do not give instructions to the broker, the
broker may vote your shares with respect to the election of
directors and the ratification of auditors.
All shares that have been voted properly by an unrevoked proxy
will be voted at the Annual Meeting in accordance with your
instructions. If you sign your proxy card, but do not give
voting instructions, the shares represented by that proxy will
be voted as our board of directors recommends.
If any other matters are brought properly before the Annual
Meeting, the persons named as proxies in the enclosed proxy card
will have the discretion to vote on those matters for you. As of
the date of this Proxy Statement, we did not know of any other
matter to be raised at the Annual Meeting.
HOW TO
REVOKE YOUR PROXY OR CHANGE YOUR VOTE
You can revoke your proxy or change your vote before your proxy
is voted at the Annual Meeting by:
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Giving written notice of revocation to: Secretary, DealerTrack
Holdings, Inc., 1111 Marcus Ave., Suite M04, Lake Success,
NY 11042;
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Submitting another timely proxy by mail; or
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Attending the Annual Meeting and voting in person. If your
shares are held in the name of a bank, broker or other holder of
record, to vote at the Annual Meeting you must obtain a proxy
executed in your favor from the holder of record. Attendance at
the Annual Meeting will not, by itself, revoke your prior proxy.
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HOW MANY
VOTES YOU HAVE
Each stockholder has one vote for each share of common stock
that he or she owned on the record date for all matters being
voted on.
QUORUM
A quorum is constituted by the presence, in person or by proxy,
of holders of our common stock representing a majority of the
aggregate number of shares of common stock entitled to vote.
Abstentions and broker non-votes will be considered present to
determine the presence of a quorum.
VOTES
REQUIRED
Election of Directors. The three nominees for
director receiving the highest vote totals will be elected.
Abstentions and broker non-votes will have no effect on the
election of directors.
Ratification of PricewaterhouseCoopers LLP as our Independent
Registered Public Accounting Firm. To pass, this
proposal must receive a for vote of a majority of
the votes. Abstentions and broker non-votes will have no effect
on the ratification of our independent registered public
accounting firm.
Amend and Restate our 2005 Incentive Award
Plan. To pass, this proposal must receive a
for vote of a majority of the votes. Abstentions
will have the effect of a negative vote with respect to this
proposal and broker non-votes will have the effect of votes not
cast with respect to this proposal.
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PROPOSAL ONE:
ELECTION OF DIRECTORS
GENERAL
INFORMATION ABOUT OUR BOARD OF DIRECTORS
Each of our directors is elected for a three-year staggered
term. The eight members of our board of directors are divided
into three classes: Class I, Class II and
Class III. One class of directors is elected at each Annual
Meeting. The following table shows our current directors, when
each class of directors is elected and how each director is
classified:
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Class
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Directors
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Class I: Term expires 2009
and every three years thereafter
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Messrs. Power and Tischler
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Class II: Term expires 2007
and every three years thereafter
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Messrs. Dietz, Gilman and
McDonnell
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Class III: Term expires 2008
and every three years thereafter
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Ms. Cirillo-Goldberg and
Messrs. Gibson and ONeil
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NOMINEES
Of the three nominees listed below, Thomas F. Gilman and John J.
McDonnell, Jr. are currently directors and have agreed to
serve an additional term. Ann B. Lane, who was recommended to
our Nominating and Corporate Governance Committee by one of our
non-management directors, is standing for election as a director
for the first time and, if elected, will take the position
currently filled by Steven J. Dietz. If any nominee is unable or
declines unexpectedly to stand for election as a director at the
Annual Meeting, proxies will be voted for a nominee designated
by the present board of directors to fill the vacancy. Each
person elected as a director will continue to be a director
until the 2010 Annual Meeting or until a successor has been
elected.
RECOMMENDATION
OF OUR BOARD OF DIRECTORS
Our Board of Directors recommends that you vote
FOR the nominees listed below:
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Thomas F. Gilman
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Ann B. Lane
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John J. McDonnell, Jr.
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None of our directors or executive officers is related to
another director or executive officer by blood, marriage or
adoption. Mr. ONeils employment agreement
provides that he shall serve as Chairman of the board of
directors during the term of his agreement. Mr. Tischler
was initially appointed to our board of directors pursuant to a
stockholders agreement, which terminated on our initial
public offering and is no longer in effect. There are no other
arrangements between any director or nominee and any other
person pursuant to which the director or nominee was selected.
INFORMATION
ABOUT NOMINEES FOR ELECTION AS CLASS II DIRECTORS
Thomas F. Gilman, 56, has served on our board of
directors since February 2007. Mr. Gilman founded CEO
Solutions LLC, a strategic and financial consulting firm
providing advisory services on corporate strategy, acquisitions
and valuation to corporations and senior executives in
automotive and other industries. He currently serves as a senior
advisor to Cerberus Capital Management LP. Mr. Gilman spent
27 years at Chrysler Corporation and its successor,
DaimlerChrysler AG, and held financial positions in several of
its domestic and international business units.
Mr. Gilmans executive roles included managing global
dealer credit operations for Chrysler Corporation, serving as
chief financial officer of Chrysler Financial Corporation, and
leading strategy development and consolidation efforts as a
member of the Chrysler Corporation/Daimler-Benz merger
integration team. In 2001, Mr. Gilman joined Asbury
Automotive Group as senior vice president and chief financial
officer, and led its initial
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public offering in 2002. Mr. Gilman is a member of the
board of directors of Vesco Oil, a privately held oil
distribution company. Mr. Gilman holds a B.S. in Finance
from Villanova University.
Ann B. Lane, 52, is standing for election for the first
time to serve on our board of directors. From April 2000 to
January 2005, Ms. Lane was Managing Director, Co-Head of
Syndicated & Leveraged Finance and Head of Bank
Loan Capital Markets at JPMorgan Chase. From 1997 to 2007,
Ms. Lane was Managing Director and Global Co-Head of Bank
Loan Syndications at Citigroup Inc. From 1995 to 1997,
Ms. Lane was Global Industry Head, Aviation and Defense
and, from 1982 to 1995, Ms. Lane held a number of senior
level positions at Citigroup. Ms. Lane is an Advisory Board
Member to the New York City Ballet and a Board Member of Musical
Masterworks in Old Lyme, Connecticut. Ms. Lane holds a B.S.
in Economics from the University of California at Berkeley.
John J. McDonnell, Jr., 69, has served on our board
of directors since July 2005. Mr. McDonnell is the founder
of TNS, Inc., a publicly-held leading provider of data
communications services to processors of credit card, debit card
and ATM transactions worldwide. Mr. McDonnell served as
Chairman and Chief Executive Officer of TNS, Inc. from April
2001 to September 2006. Previously, he served as Chairman and
Chief Executive Officer of PaylinX Corp., a software provider
for transaction processing from November 1999 until it was sold
to CyberSource Corp. in September 2000. He remains a director of
CyberSource, a publicly-held company. Prior to that,
Mr. McDonnell was President, Chief Executive Officer and a
director of Transaction Network Services, Inc. from the time he
founded the company in 1990. Mr. McDonnell is also a
founder of the Electronic Funds Transfer Association.
Mr. McDonnell holds a BS in Electrical Engineering from
Manhattan College, an MSEE from Rensselaer Polytechnic Institute
and an Honorary Doctorate of Humane Letters from Marymount
University.
INFORMATION
ABOUT THE MEMBERS OF OUR BOARD OF DIRECTORS WHOSE TERMS OF
OFFICE DO NOT EXPIRE AT THE ANNUAL MEETING
Class I
Directors (term expires at the 2009 Annual
Meeting)
James David Power III, 75, has served on our board
of directors since June 2002. Mr. Power has spent more than
35 years at, is a founder of, and from 1996 until April
2005 served as the Chairman of the Board of J.D. Power and
Associates, a marketing information firm. Mr. Power also
serves as a director of IMPCO Technologies, Inc., a public
company, which supplies alternative fuel products to the
transportation, industrial and power generation industries. In
1992, Mr. Power was a recipient of the Automotive Hall of
Fames Distinguished Service Citation, awarded each year to
seven of the industrys most accomplished leaders.
Mr. Power holds honorary doctorate degrees from College of
the Holy Cross, California Lutheran University, California State
University, Northridge and College Misericordia. He also serves
as an adjunct professor of marketing at California State
University, Northridge. Mr. Power holds a BA from the
College of the Holy Cross and an MBA from The Wharton School of
Finance at the University of Pennsylvania.
Howard L. Tischler, 53, has served as lead director since
April 2006 and on our board of directors since March 2003. Since
September 2005, Mr. Tischler has been employed by First
Advantage Corporation, where he serves as Group President of
First Advantage Dealer Services. From 2001 until September 2005,
Mr. Tischler was President and Chief Executive Officer of
First American Credit Management Solutions, Inc., or CMSI, which
was a subsidiary of The First American Corporation, as well as
Teletrack, Inc. From 1999 until our acquisition of Credit
Online, Inc. from CMSI in 2003, Mr. Tischler was President
and Chief Executive Officer of Credit Online. Mr. Tischler
currently serves on the Engineering Advisory Board at George
Washington University. He holds a BS in Mathematics from the
University of Maryland and an MS in Engineering and Operations
Research from The George Washington University.
Class III
Directors (term expires at the 2008 Annual
Meeting)
Mary Cirillo-Goldberg, 60, has served on our board of
directors since December 2002 and as lead director from May 2005
to April 2006. Since September 2003, Ms. Cirillo-Goldberg
has served as an advisor to Hudson Ventures, a venture capital
fund. Ms. Cirillo-Goldberg served as the Chairman and Chief
Executive Officer of OPCENTER, LLC, a privately held company
that provides help desk,
e-commerce
and network operations services, from March 2000 to September
2003. From June 1997 to March 2000, she served as Executive Vice
President and
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Managing Director of Bankers Trust Corporation.
Ms. Cirillo-Goldberg currently serves as a director of
three publicly-held companies: ACE Limited, Health Care Property
Investors, Inc. and The Thomson Corporation.
Thomas R. Gibson, 64, has served on our board of
directors since June 2005. Since 2004, Mr. Gibson has
served as Chairman Emeritus of Asbury Automotive Group, one of
the nations largest automotive retailers. Mr. Gibson
served as Asburys Chairman from 1994 to 2003, Chief
Executive Officer from 1994 to 1999 and interim Chief Executive
Officer for a portion of 2001. Mr. Gibson also serves as a
senior advisor to Cerberus Capital Management LP. Prior to
joining Asbury, he served as President and Chief Operating
Officer of Subaru of America, Inc. and as Director of Marketing
Operations and General Manager of Import Operations for
Chrysler. Mr. Gibson began his career in 1967 with Ford
Motor Company and held key marketing and field management
positions in both the Lincoln-Mercury and Ford divisions.
Mr. Gibson also serves on the board of directors of IKON
Office Solutions, which is publicly-held, DealerTire LLC, a
privately held company, and Alliance Inspection Management
(A.I.M.) a privately held motor vehicle inspection company.
Mr. Gibson is a graduate of DePauw University and holds an
MBA from Harvard Business School.
Mark F. ONeil, 48, has served as our Chairman of
the Board, President and Chief Executive Officer since May 2005
and has served on our board of directors since August 2001. From
August 2001 to May 2005, Mr. ONeil served as our
Chief Executive Officer and President. From February 2001 to May
2005 and since August 2006, Mr. ONeil has served as
President, and he continues to serve as Chairman of the Board,
Chief Executive Officer and a director of DealerTrack, Inc.
Mr. ONeil began his career at Intel Corporation,
where he first developed knowledge of the technology industry.
He subsequently worked for McKinsey & Co. before
moving to the automotive industry in the late 1980s.
Mr. ONeils experience in the automotive
industry includes serving as President of Ertley MotorWorld, a
dealer group based in Pennsylvania. From this traditional retail
dealer group, Mr. ONeil went on to co-found and lead
the development and rollout of CarMax, Inc., a publicly-held
used automobile retailer. From June 2000 to January 2001,
Mr. ONeil was President and Chief Operating Officer
of Greenlight.com, an online automotive sales website.
Mr. ONeil also serves as a director of DealerTire
LLC. Mr. ONeil holds a BS in Industrial Engineering
from Worcester Polytechnic Institute and an MBA from Harvard
Business School.
BOARD
MEETINGS HELD DURING 2006
Our board of directors held seven meetings during 2006 and acted
twice by written consent. During 2006, each director attended at
least 75% of the board of directors and committee meetings held
while such director served as a director and committee member,
except Ms. Cirillo Goldberg and Mr. Powers who
attended 71% and 50%, respectively, of the board of directors
and committee meetings. At each meeting of the board of
directors, the non-management directors met in executive session
with our lead director presiding.
BOARD
INDEPENDENCE
The Nominating and Corporate Governance Committee and our board
of directors annually assess the independence of the
non-management directors by reviewing the financial and other
relationships between the directors and us. This review is
designed to determine whether these directors are independent
under the criteria established by NASDAQ for independent board
members. The Nominating and Governance Committee and our board
of directors have determined that all of our non-management
directors and our director nominee are independent under those
standards.
STOCKHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders and other interested parties may communicate with
any of our directors, including our non-management directors, by
writing to them c/o Secretary, DealerTrack Holdings, Inc.,
1111 Marcus Ave., Suite M04, Lake Success, NY 11042. Our
Secretary will forward all correspondence to the board of
directors, except for spam, junk mail, mass mailings, products
complaints or inquiries, job inquiries, surveys, business
solicitations or advertisements, or patently offensive or
otherwise inappropriate material. Our Secretary may forward
certain correspondence, such as product-related inquiries,
elsewhere within DealerTrack for review and possible response.
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DIRECTOR
ATTENDANCE AT ANNUAL MEETING
Our board of directors policy regarding director
attendance at the Annual Meeting is that they are welcome to
attend, and that we will make all appropriate arrangements for
directors who choose to attend. Mr. ONeil attended
our 2006 Annual Meeting.
CODE OF
BUSINESS CONDUCT AND ETHICS
We have adopted a code of ethics, as defined by
regulations promulgated under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended,
that applies to all of our directors and employees, including
our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons
performing similar functions. A current copy of our Code of
Business Conduct and Ethics is available on our website at
www.dealertrack.com. A copy of our Code of Business Conduct and
Ethics may also be obtained, free of charge, from us upon
request directed to: DealerTrack Holdings, Inc., 1111 Marcus
Avenue, Suite M04, Lake Success, NY 11042, Attention:
Investor Relations. We intend to disclose any amendment to or
waiver of a provision of the Code of Business Conduct and Ethics
that applies to our principal executive officer, principal
financial officer, principal accounting officer or controller,
or persons performing similar functions, by posting such
information on our website at www.dealertrack.com
and/or in
our public filings with the Securities and Exchange Commission,
or SEC.
COMMITTEES
Our board of directors has four standing
committees: Audit Committee, Compensation
Committee, Nominating and Corporate Governance Committee and
Investment Committee. All members of our Audit, Compensation and
Nominating and Corporate Governance Committees are
non-management directors who, in the opinion of our board of
directors, are independent as defined under applicable NASDAQ
standards. Our board of directors has approved a written charter
for each committee which is available at
www.dealertrack.com.
Audit Committee. Our Audit Committee currently
consists of Messrs. Dietz, Gibson, Gilman and McDonnell.
Mr. Dietz currently serves as chairperson of the Audit
Committee. As Mr. Dietz is not standing for re-election to
our board of directors, we expect that after the Annual Meeting
Mr. Gilman will be appointed to serve as chairperson of the
Audit Committee. Our board of directors has determined that each
member of the Audit Committee is independent and that
Messrs. Gilman and Dietz are each audit committee financial
experts, as defined by SEC rules, and have financial
sophistication, in accordance with the applicable NASDAQ listing
standards. During 2006, the Audit Committee held 14 meetings.
The purpose of the Audit Committee is to oversee our accounting
and financial reporting processes and the audits of our
financial statements. The Audit Committees
responsibilities include assisting our board of directors in its
oversight and evaluation of:
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the integrity of our financial statements;
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the independent registered public accounting firms
qualifications and independence; and
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the performance of our independent registered public accounting
firm.
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The Audit Committee has the sole and direct responsibility for
appointing, evaluating and retaining our independent registered
public accounting firm and for overseeing their work. All audit
and non-audit services, other than de minimis non-audit
services, to be provided to us by our independent registered
public accounting firm must be approved in advance by our Audit
Committee. The Audit Committee also reports to stockholders as
required by the SEC (please see page 10).
Compensation Committee. We have a Compensation
Committee consisting of Ms. Cirillo-Goldberg and
Messrs. Gibson and McDonnell. Ms. Cirillo-Goldberg
currently serves as chairperson of the Compensation Committee.
During 2006, the Compensation Committee held seven meetings and
acted once by written consent. The purpose of our Compensation
Committee is to discharge the responsibilities of our board of
directors relating to compensation of our executive officers.
Specific responsibilities of our Compensation Committee include:
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reviewing and recommending approval of compensation of our
executive officers;
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administering our stock incentive and employee stock purchase
plans;
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reviewing and making recommendations to our board of directors
with respect to incentive compensation and equity plans; and
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reviewing and planning for the succession of the Chief Executive
Officer and other key executives.
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Our board of directors has determined that each member of the
Compensation Committee is independent in accordance with the
applicable NASDAQ listing standards. The Compensation Committee
also reports to stockholders on executive compensation items as
required by the SEC (please see page 23).
Nominating and Corporate Governance
Committee. We have a Nominating and Corporate
Governance Committee consisting of Ms. Cirillo-Goldberg and
Messrs. Power and Tischler. Mr. Tischler currently
serves as chairperson of the Nominating and Corporate Governance
Committee. During 2006, the Nominating and Corporate Governance
Committee held three meetings and acted once by written consent.
The purposes of the Nominating and Corporate Governance
Committee include:
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identifying and recommending nominees for election to our board
of directors;
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determining committee membership and composition; and
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overseeing the evaluation of our board of directors.
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The board of directors has determined that each member of the
Nominating and Corporate Governance Committee is independent in
accordance with the applicable NASDAQ listing standards.
Candidates may come to the attention of the Nominating and
Corporate Governance Committee through current members of the
board of directors, stockholders or other persons. These
candidates are evaluated at regular or special meetings of the
Nominating and Corporate Governance Committee. Stockholders
wishing to recommend director candidates for consideration by
the committee may do so by writing to the Secretary at 1111
Marcus Avenue, Suite M04, Lake Success, NY 11042 who will
forward all recommendations to the committee. Stockholders must
submit their recommendations by or before March 13, 2008
and provide the following information:
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the name, address and telephone number of the recommending
stockholder;
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a representation that the stockholder is a record holder of our
securities, or evidence of ownership;
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The number of shares owned by the recommending stockholder and
the time period for which such shares have been held;
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a statement from the recommending stockholder as to whether the
stockholder has a good faith intention to continue to hold the
reported shares through the date of our next Annual Meeting;
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the name, age, business and residential address, educational
background, current principal occupation or employment, and
principal occupation or employment for the preceding five full
fiscal years of the proposed director candidate;
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a description of the qualifications and background of the
proposed director candidate;
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a description of all arrangements or understandings between the
recommending stockholder and the proposed director candidate;
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the consent of the proposed director candidate (i) to be
named in the proxy statement and (ii) to serve as a
director if elected; and
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any other information regarding the proposed director candidate
that is required to be included in a proxy statement filed
pursuant to SEC rules.
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The Nominating and Corporate Governance Committee may consider
the following criteria in recommending candidates for election
to the board of directors.:
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personal and professional integrity, ethics and values;
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7
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experience in corporate management, such as serving as an
officer or former officer of a publicly held company;
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experience in the companys industry and with relevant
social policy concerns;
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experience as a board member of another publicly held company;
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academic expertise in an area of the companys
operations; and
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practical and mature business judgment.
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Investment Committee. We have an Investment
Committee consisting of Messrs. Dietz, Gibson and Tischler.
Mr. Dietz currently serves as chairperson of the Investment
Committee. As Mr. Dietz is not standing for re-election to
our board of directors, we expect that after the Annual Meeting
Ms. Lane will join the Investment Committee and serve as
its chairperson. The Investment Committee was formed in January
2006. The purpose of our Investment Committee is to review
investment and acquisition opportunities, approve certain
acquisition and investment transactions and also make
recommendations to our board of directors.
NON-MANAGEMENT
DIRECTORS COMPENSATION FOR FISCAL YEAR 2006
Directors who are also employees receive no fees for their
services as directors. During 2006, all other directors received
the following compensation for their services:
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Annual Fee: |
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$25,000 per director. |
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Annual Committee Chair Retainer: |
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$5,000 for the chair of each of our Compensation and Nominating
and Corporate Governance Committees. $10,000 for the chair of
our Audit Committee. |
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Attendance Fee for Board Meetings: |
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$2,000 for each board of directors meeting attended in person,
$1,000 for telephonic attendance. We also reimburse directors
for their expenses to attend meetings. |
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Committee Member Retainer: |
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$2,000 for each committee meeting attended, with the Audit and
Compensation Committee chairs receiving $2,500 for each
committee meeting attended. |
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Initial Equity Grant: |
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Options to purchase 30,000 shares of our common stock upon
becoming a director. The grant vests in three equal annual
installments commencing on the first anniversary of the grant
date, subject to the directors continued service as a
director. |
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Annual Equity Grant: |
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3,500 shares of restricted common stock each year on the
date of our Annual Meeting. This grant vests in three equal
annual installments commencing on the first anniversary of the
grant date, subject to the directors continued service as
a director. |
Effective January 1, 2007, we eliminated our board meeting
attendance fees and committee chair and member retainers, and
increased our annual retainer for directors to $50,000.
Effective May 3, 2007, future annual equity grants will
vest on the day prior to the Annual Meeting following the date
of grant.
Directors are eligible to participate in the Directors
Deferred Compensation Plan, a non-qualified retirement plan. The
Directors Deferred Compensation Plan allows our
non-employee directors to elect to defer between zero and 100%
of the fees they would otherwise be entitled to receive in cash
for services rendered as directors. Amounts deferred under the
Directors Deferred Compensation Plan are general
liabilities of ours and are represented by bookkeeping accounts
maintained on behalf of the participants. Such accounts are
deemed to be invested in share units that track the value of our
common stock. Distributions will generally be made to a
participant either following the end of the participants
service on our board of directors, following a change of control
if so elected, or at a specified time elected by the participant
prior to the deferral. Distributions will generally be made in
the form of
8
shares of our common stock. Our Directors Deferred
Compensation Plan is intended to comply with Section 409A
of the Internal Revenue Code.
Our stock ownership and retention program requires non-employee
members of our Board of Directors to own shares equal in value
to four times their annual retainer. Directors are expected to
attain the required share ownership level within five years from
joining our Board of Directors.
The following tables sets forth our non-management
directors compensation for 2006. Mr. Gilman is not
included in the table as he was not a director during 2006.
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Fees Earned
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Stock
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Option
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Name
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or Paid in
Cash(1)
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Awards(2)
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Awards(3)
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Total
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Mary Cirillo-Goldberg
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$
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51,000
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$
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34,023
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$
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59,217
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$
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144,240
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Steven Dietz
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59,000
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34,023
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59,217
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152,240
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Thomas R. Gibson
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60,000
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34,023
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41,800
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135,823
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John J. McDonnell, Jr.
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60,000
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35,073
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9,200
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104,273
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James David Powers III
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35,000
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34,023
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59,217
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128,240
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Howard L. Tischler
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37,000
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34,023
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59,217
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130,240
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(1) |
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The following directors deferred all or a portion of their 2006
cash compensation pursuant to our Directors Deferred
Compensation Plan and received deferred stock units. Each
deferred stock unit converts into one share of common stock upon
the payment commencement date selected by the director. |
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Compensation
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Number of Deferred
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Name
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Deferred
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Stock Units
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Mary Cirillo-Goldberg
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$
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51,000
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2,177
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Steven Dietz
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59,000
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2,495
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Thomas R. Gibson
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30,000
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1,489
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James David Power III
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35,000
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1,796
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Howard L. Tischler
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37,000
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1,586
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(2) |
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This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year for the fair value of restricted common stock
granted in 2006 as well as prior fiscal years in accordance with
FAS 123(R). For restricted common stock, fair value is
calculated using the closing price of our stock on the date of
grant. For additional information, refer to note 2 of our
financial statements in our Annual Report on
Form 10-K
for the year ended December 31, 2006. These amounts reflect
our accounting expense for these awards, and do not correspond
to the actual value that will be recognized by each director.
Each director, except Mr. McDonnell, received a grant of
3,500 shares of restricted common stock on each of
May 26, 2005 and June 14, 2006 with a grant date fair
value per share of $17.10 and $22.27, respectively.
Mr. McDonnells received a grant of 3,500 shares
of restricted common stock on each of July 28, 2005 and
June 14, 2006 with a grant date fair value per share of
$18.00 and $22.27, respectively. Each director had
5,834 shares of restricted common stock outstanding as of
December 31, 2006. |
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(3) |
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This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year for the fair value of stock options granted in 2006
as well as prior fiscal years in accordance with
FAS 123(R). Pursuant to SEC rules, the amounts shown
exclude the impact of estimated forfeitures related to
service-based vesting conditions. For additional information,
refer to note 2 of our financial statements in our Annual
Report on
Form 10-K
for the year ended December 31, 2006. These amounts reflect
our accounting expense for these awards, and do not correspond
to the actual value that will be recognized by each director.
The following chart shows the details for each directors
outstanding options as of December 31, 2006, including the
grant date fair value of each option computed in accordance with
FAS 123(R). For awards granted prior to January 1,
2006, the grant date fair value column represents the intrinsic
value recorded under APB 25. |
9
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Outstanding Stock
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Option
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Number
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Exercise
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Grant Date
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Options
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Name
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Grant Date
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Granted
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Price
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Fair Value
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(Exercisable)
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Mary Cirillo-Goldberg
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1/30/2003
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6,250
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$
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2.80
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$
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6,250
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5/26/2005
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50,000
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12.92
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4.18
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30,000
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Steven Dietz
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5/26/2005
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40,000
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12.92
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4.18
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20,000
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Thomas R. Gibson
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6/29/2005
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30,000
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12.92
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4.18
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10,000
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John J. McDonnell, Jr.
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7/28/2005
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30,000
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17.08
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0.92
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10,000
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James David Powers III
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1/30/2003
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6,250
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2.80
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6,250
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5/26/2005
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50,000
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12.92
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4.18
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30,000
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Howard L. Tischler
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5/26/2005
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40,000
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12.92
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4.18
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20,000
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10
AUDIT
COMMITTEE REPORT
The Audit Committee of DealerTrack Holdings, Inc. hereby reports
as follows:
1. Management has the primary responsibility for the
consolidated financial statements and the reporting process,
including the system of internal accounting controls. The Audit
Committee, in its oversight role, has reviewed and discussed the
audited consolidated financial statements with the
companys management.
2. The Audit Committee has discussed with the
companys independent registered public accounting firm,
the overall scope of and plans for its audit. The Audit
Committee has met with the independent registered public
accounting firm, with and without management present, to discuss
the companys financial reporting process and internal
accounting controls in addition to other matters required to be
discussed by the Statement on Auditing Standards No. 61, as
amended, (Communications with Audit Committee), as may be
modified or supplemented.
3. The Audit Committee has received the written disclosures
and the letter from PricewaterhouseCoopers LLP, or PwC, required
by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) as may be
modified or supplemented, and has discussed with PwC its
independence.
4. The Audit Committee has policies and procedures that
require the pre-approval by the Audit Committee of all fees paid
to, and all services performed by, the companys
independent registered public accounting firm, unless entered
into pursuant to the pre-approval policies and procedures
established by the Audit Committee. At the beginning of each
year, the Audit Committee approves the proposed services,
including the nature, type and scope of service contemplated and
the related fees, to be rendered by the firm during the year. In
addition, Audit Committee pre-approval is also required for
those engagements that may arise during the course of the year
that are outside the scope of the initial services and fees
approved by the Audit Committee. For each category of proposed
service, the independent registered public accounting firm is
required to confirm that the provision of such services does not
impair their independence.
5. Based on the review and discussions referred to in
paragraphs (1) through (4) above, the Audit
Committee recommended to the board of directors of DealerTrack
Holdings, Inc. and the board of directors has approved, that the
audited consolidated financial statements be included in the
companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, for filing
with the Securities and Exchange Commission.
Respectfully Submitted by the Audit Committee,
Steven J. Dietz (chairperson)
Thomas R. Gibson
Thomas F. Gilman
John J. McDonnell, Jr.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The following table represents the fees billed by
PricewaterhouseCoopers LLP, or PWC, for 2006 and 2005:
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2006
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2005
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Audit
fees(1):
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$
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1,604,625
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$
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2,973,615
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Audit-related
fees(2):
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62,600
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31,669
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Tax
fees(3):
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68,650
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All other
fees(4):
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35,000
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Total:
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$
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1,702,225
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$
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3,073,934
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(1) |
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Audit fees consisted of audit work performed on our consolidated
financial statements, as well as work normally performed by the
independent registered public accounting firm in connection with
statutory and regulatory filings. Amounts for 2005 have been
adjusted to include $742,626 billed in 2006 that had been
accrued in 2005. |
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(2) |
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Audit-related fees consisted of audits of our employee benefit
plan, as well as work related to acquisitions. |
11
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(3) |
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Tax fees are fees associated with tax compliance. |
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(4) |
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All other fees related to work associated with
Regulation AB compliance. |
All of the audit-related, tax and all other services provided by
PwC to us in 2005 and 2006 were approved by the Audit Committee
by means of specific pre-approvals or pursuant to the procedures
contained in the pre-approval policies and procedures
established by the Audit Committee.
PROPOSAL TWO:
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee of our board of directors has selected,
subject to ratification by our stockholders,
PricewaterhouseCoopers LLP, or PwC, to serve as our independent
registered public accounting firm for the 2007 fiscal year.
Additional information concerning the Audit Committee and its
activities with PwC can be found in the Audit Committee
Report and the Principal Accountant Fees and
Services on page 10.
The Sarbanes-Oxley Act of 2002 and Section 10A of the
Securities Exchange Act of 1934 require that the Audit Committee
of the board of directors be directly responsible for the
appointment, compensation and oversight of the audit work of our
independent registered public accounting firm. Ratification by
the stockholders of the selection of PwC is not required by law,
our bylaws or otherwise. However, the board of directors is
submitting the selection of PwC for stockholder ratification to
ascertain stockholders views on the matter.
A representative of PwC will attend the Annual Meeting to
respond to appropriate questions and to make a statement if he
or she desires to do so.
Our board of directors recommends that you vote
FOR the Proposal to ratify the selection of PwC as
our independent registered public accounting firm for fiscal
2007.
PROPOSAL THREE:
PROPOSAL TO AMEND AND RESTATE OUR 2005 INCENTIVE AWARD
PLAN
On May 3, 2007, our board of directors voted to amend and
restate the DealerTrack Holdings, Inc. 2005 Incentive Award Plan
, or the Restated 2005 Plan, and is recommending the Restated
2005 Plan to our stockholders for approval.
There are currently 17,341 shares of common stock available
under the DealerTrack Holdings, Inc. 2005 Incentive Award Plan.
The Restated 2005 Plan increases the reserved shares of our
common stock under the plan by 1,300,000 shares, although
only 1,000,000 of the newly reserved shares may be granted in
the form of full value shares. The addition of these shares of
common stock allows the Compensation Committee to continue to
use stock-based awards to attract and retain employees and
directors, further align employee and stockholder interests,
continue to link employee compensation with Company performance
and maintain a culture of ownership. The Restated 2005 Plan also
adds market capitalization and cash net income as additional
performance criteria that can be used to structure
performance-based compensation to our executives. In addition,
the Restated 2005 Plan limits the option term of new option
grants to seven years.
The material features of the Restated 2005 Plan are:
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in connection with the Restated 2005 Plan, 1,300,000 new shares
will be authorized for issuance, although only 1,000,000 of the
newly reserved shares may be issued in the form of full value
shares;
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any shares underlying grants under the Restated 2005 Plan that
are forfeited, cancelled or are terminated (other than by
exercise) in the future are added back to the shares of common
stock available for issuance under the Restated 2005 Plan;
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shares tendered or held back for taxes will not be added to the
reserved pool under the Restated 2005 Plan;
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upon the exercise of a stock appreciation rights, or SAR, the
gross number of shares will be reduced from the reserved pool;
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we may grant non-qualified stock options, restricted common
stock, SARs, performance shares, performance stock units,
dividend equivalent awards, stock payment awards, deferred stock
awards, restricted stock units, performance-based awards payable
either in cash or in shares to our employees, directors or
consultants, and additionally, we may grant incentive stock
options to our employees;
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the option term of new stock option grants is now limited to
seven years;
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the maximum number of shares of common stock that may be awarded
under the Restated 2005 Plan to any one person during any one
year is 750,000 shares and the maximum amount payable with
respect to cash performance bonus awards to a Covered
Employee (as defined in the Internal Revenue Code of 1986,
or the Code) during any fiscal year is limited to $3,000,000;
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to ensure that certain awards granted under the Restated 2005
Plan to a Covered Employee qualify as performance-based
compensation under Section 162(m) of the Code, the
Restated 2005 Plan provides that the Compensation Committee may
require that the vesting of such awards be conditioned on the
satisfaction of performance criteria that may include any or all
of the following: earnings before interest, taxes, depreciation
and amortization, net income (loss) (either before or after
interest, taxes, depreciation
and/or
amortization), economic value-added, sales or revenue,
acquisitions or strategic transactions, operating income (loss),
cash flow (including, but not limited to, operating cash flow
and free cash flow, or cash net income), cash net income, return
on capital, return on assets, return on stockholders
equity, total stockholder return, return on sales, gross or net
profit margin, productivity, expense, margins, operating
efficiency, customer satisfactory, working capital, earnings
(loss) per share, price per share of stock, market share, number
of customers and market capitalization, any of which may be
measured in absolute terms or as compared to any incremental
increase or as compared to results of a peer group. The
Compensation Committee will select the particular performance
criteria within 90 days following the commencement of a
performance cycle; and
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The term of the Restated 2005 Plan is now extended to
May 3, 2017.
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Based solely on the closing price of our common stock as
reported by the Nasdaq Global Market on May 15, 2007, the
maximum aggregate market value of the additional 1,300,000 new
shares of common stock that could be issued under the Restated
2005 Plan is $41.8 million. The shares we issue under the
Restated 2005 Plan will be authorized but unissued shares.
Summary
of the Restated 2005 Plan
The following description of certain features of the Restated
2005 Plan is intended to be a summary only. The summary is
qualified in its entirety by the full text of the Restated 2005
Plan that is attached hereto as Exhibit I.
Administration
The Compensation Committee of the board of directors is
authorized to administer the Restated 2005 Plan. The
Compensation Committee has the power, subject to the provisions
of the Restated 2005 Plan, to determine the nature and extent of
the awards to be made to each participant; to determine the time
when awards will be made to participants; to establish the
performance goals and determine the period of time within which
performance is measured with respect to performance units; to
establish the various targets and bonus amounts which may be
earned by certain employees; to specify the relationship between
the performance goals and the targets and amounts that may be
earned by certain employees; to determine the period of time
during which shares of restricted common stock or units are
subject to restrictions; to determine the conditions for the
payment of awards; and to prescribe the forms of agreements and
documents evidencing the awards. The board of directors or the
Compensation Committee may also delegate to one or more of our
officers the power to designate which of our non-officer
employees shall receive stock awards, and the number of shares
of common stock that will be subject to each award, subject to a
maximum aggregate number of shares specified by the board of
directors or the Compensation Committee at the time the
delegation to the officers is made. However, the board of
directors may not delegate to the Compensation Committee or
otherwise, the power to grant stock awards to independent
directors.
13
Eligibility
Persons eligible to participate in the Restated 2005 Plan will
be officers, employees, non-employee directors and consultants
of the Company. Approximately 760 individuals are currently
eligible to participate in the Restated 2005 Plan.
Types of
Equity-Based Awards
Stock Options. The Compensation Committee may
grant stock options to eligible persons under the Restated 2005
Plan. Each option granted pursuant to the Restated 2005 Plan is
designated at the time of grant as either an incentive option or
as a non-qualified option. Non-qualified stock options may be
granted to all eligible persons, but incentive stock options may
be granted only to employees of the Company and its related
entities. The option term of new option grants is limited to
seven years. All options must have a per share option exercise
price that is not less than the fair market value of shares of
our common stock on the grant date.
Restricted Common Stock. Participants
rights with respect to grants of restricted common stock awarded
under the Restated 2005 Plan are subject to transferability and
forfeiture restrictions during a restricted period. While the
restrictions are in place, the participant generally has the
rights and privileges of a stockholder, including the right to
vote the restricted common stock and to receive dividends.
Restricted Stock Units and Deferred Stock
Units. Each restricted stock unit and deferred
stock unit awarded by the Compensation Committee entitles the
participant to receive one share of common stock for each unit
at the end of the vesting or deferral periods. A holder of
restricted stock units or deferred stock units has no voting
rights, right to receive cash distributions, or other rights as
a stockholder until shares of common stock are issued to the
holder in settlement of the stock units. Participants holding
restricted stock units or deferred stock units are entitled to
receive dividend equivalents with respect to any payment of cash
dividends on an equivalent number of shares of common stock. The
dividend equivalents are credited in the form of additional
stock units.
Stock Appreciation Rights. SARs are awards
that give the recipient the right to receive an amount equal to
(1) the number of shares exercised under the right,
multiplied by (2) the amount by which our stock price
exceeds the exercise price. Payment may be in shares of our
common stock with equivalent value. SARs expire under the same
rules that apply to stock options.
Performance Awards. Holders of performance
shares or units will be entitled to receive payment in shares of
our common stock if the performance goals established by the
Compensation Committee are achieved. The Compensation Committee
may also award incentive bonuses in the form of cash.
Dividend Equivalent Awards. Holders of
dividend equivalent awards will be entitled to receive payment
of dividends that they would have otherwise received if they had
actually held shares of our common stock.
Change of
Control
In connection with any change of control, except as may
otherwise be provided in any applicable award or employment
agreement, unless awards granted pursuant to the Restated 2005
Plan are converted, assumed or replaced by the successor entity,
the awards will automatically become fully vested and
exercisable and all forfeiture restrictions with respect to such
awards shall lapse prior to the consummation of the change in
control. In addition, with respect to any awards, in connection
with any change in control (or other unusual or nonrecurring
transaction affecting us or our consolidated financial
statements), the board of directors or Compensation Committee,
as applicable, in its sole discretion, may:
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provide for the termination of any award in exchange for an
amount of cash, if any, equal to the amount that would have been
attained upon the exercise of such award or realization of the
participants rights as of the date of such change in
control or other transaction;
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purchase any outstanding awards for a cash amount or replace
outstanding awards with other rights or property;
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provide that after the occurrence of the transaction, the award
cannot vest, be exercised or become payable;
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provide that only for a specified period of time after such
transaction, an award shall be exercisable or payable or fully
vested with respect to all shares covered thereby,
notwithstanding anything to the contrary in the Restated 2005
Plan or the applicable award agreement; or
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provide that each outstanding option shall be assumed or
substituted for an equivalent award, right or property by any
successor corporation.
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Any such action may be effected by the board of directors or
Compensation Committee either by the terms of the applicable
award agreement or by action of the board of directors or
Compensation Committee taken prior to the change of control.
Adjustments
for Stock Dividends, Stock Splits, Etc.
The Compensation Committee shall make appropriate adjustments to
the number of shares of common stock that are subject to the
Restated 2005 Plan and to any outstanding awards to reflect
stock dividends, stock splits, extraordinary cash dividends and
similar events.
Tax
Withholding
Participants in the Restated 2005 Plan are responsible for the
payment of any federal, state or local taxes that the Company is
required by law to withhold upon any option exercise or vesting
of other awards. Subject to approval by the Compensation
Committee, participants may elect to have the minimum tax
withholding obligations satisfied by authorizing us to withhold
shares of common stock to be issued pursuant to an option
exercise or vesting of other awards.
Amendments,
Suspension and Termination
The Compensation Committee is generally authorized to adopt,
amend and rescind rules relating to the administration of the
Restated 2005 Plan, and to amend, suspend and terminate the
Restated 2005 Plan. However, we must generally obtain approval
of our stockholders: (i) to increase the number of shares
of our common stock that may be issued under the Restated 2005
Plan; (ii) to extend the limit on the period during which
options may be granted; or (iii) to the extent required by
applicable law, rule or regulation (including any applicable
NASD rule). In addition, without stockholder approval, no option
may be amended to reduce the option exercise price either
through repricing or regranting.
15
New Plan
Benefits
If the Restated 2005 Plan is approved by our stockholders, it is
anticipated that the Compensation Committee will make the
following grants of restricted common stock and stock options as
set forth in the table below.
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Restricted Common Stock
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Stock Options
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Name and Position
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Dollar Value
($)(1)
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Number (#)
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Dollar Value
($)(2)
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Number (#)
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Mark F. ONeil
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$
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321,800
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10,000
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$
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170,200
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10,000
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Chairman and Chief Executive
Officer
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Robert J. Cox III
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160,900
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5,000
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85,100
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5,000
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Senior Vice President, Chief
Financial Officer and Treasurer
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John Blair
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160,900
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5,000
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85,100
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5,000
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Chief Executive
Officer Automotive Lease Guide (alg), Inc.
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Eric D. Jacobs
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160,900
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5,000
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85,100
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5,000
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Senior Vice President, General
Counsel and Secretary
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Raj Sundaram
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160,900
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5,000
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85,100
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5,000
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Senior Vice President, Dealer
Solutions DealerTrack, Inc.
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All current executive officers, as
a group
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1,769,900
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55,000
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936,100
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55,000
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All current directors who are not
executive officers, as a group
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675,780
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21,000
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All current employees who are not
executive officers, as a group
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997,372
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58,600
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(1) |
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The value of restricted common stock grants is calculated
assuming a per share price of $32.18, the closing price of our
common stock on May 15, 2007. |
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The value of stock options is calculated assuming a fair value
of $17.02 per share based on the closing price of our common
stock on May 15, 2007. |
Tax
Aspects Under the Code
The following is a summary of the principal federal income tax
consequences of certain transactions under the Restated 2005
Plan. It does not describe all federal tax consequences under
the Restated 2005 Plan, nor does it describe state or local tax
consequences.
Stock Options. The grant of stock options
under the Plan will not result in taxable income at the time of
the grant for either the Company or the optionee. Upon
exercising an incentive stock option, the optionee will have no
taxable income (except for the alternative minimum tax, if
applicable) and the Company will receive no deduction. Upon
exercising a non-qualified stock option, the optionee will
recognize ordinary income in the amount by which the fair market
value of the common stock at the time of exercise exceeds the
option exercise price, and the Company will be entitled to a
deduction for the same amount. The optionees income is
subject to withholding tax as wages. The tax treatment of the
optionee upon a disposition of shares of common stock acquired
through the exercise of a stock option is dependent upon the
length of time that the shares have been held and whether such
shares were acquired by exercising an incentive stock option or
a non-qualified stock option. If an employee exercises an
incentive stock option and holds the shares for two years from
the date of grant and one year after exercise, then any gain or
loss upon the sale of the underlying shares will be treated as
long-term capital gain or loss. Shares obtained upon exercise of
an incentive stock option that are sold without satisfying these
holding periods will be treated as shares received from the
exercise of a non-qualified stock option. Generally, upon the
sale of shares obtained by exercising a non-qualified stock
option, the optionee will treat the gain realized on the sale as
a short-term or long-term capital gain, depending on the length
of the holding period. Generally, there will be
16
no tax consequence to the Company in connection with the
disposition of shares of common stock acquired under an option,
except that the Company may be entitled to a deduction in the
case of a disposition of shares acquired upon exercise of an
incentive stock option before the applicable holding periods
have been satisfied.
after exercise, then any gain or loss realized based on the
exercise price of the option will be treated as long-term
capital gain or loss. Shares obtained upon exercise of an
incentive stock option that are sold without satisfying these
holding periods will be treated as shares received from the
exercise of a non-qualified stock option. Generally, upon the
sale of shares obtained by exercising a non-qualified stock
option, the optionee will treat the gain realized on the sale as
a short-term or long-term capital gain, depending on the length
of the holding period. Generally, there will be no tax
consequence to the Company in connection with the disposition of
shares of common stock acquired under an option, except that the
Company may be entitled to a deduction in the case of a
disposition of shares acquired upon exercise of an incentive
stock option before the applicable holding periods have been
satisfied.
Restricted Common Stock. An award of
restricted common stock will not result in taxable income to the
participant at the time of grant. Upon the lapse of the
restrictions, the participant will recognize ordinary income in
the amount of the fair market value of the shares of common
stock at the time that the restriction lapses. Alternatively,
within 30 days after receipt of the restricted common
stock, a participant may make an election under
Section 83(b) of the Code, which would allow the
participant to include in income in the year that the restricted
common stock is awarded an amount equal to the fair market value
of the restricted common stock on the date of such award
determined without regard to the restrictions.
The Company will be entitled to a deduction for the year in
which the participant recognizes ordinary income with respect to
the restricted common stock in an amount equal to such income.
Other Awards. The current federal income tax
consequences of other awards authorized under the Plan generally
follow certain basic patterns: SARs, restricted stock units and
deferred stock units are taxed and deductible in substantially
the same manner as non-qualified stock options, except to the
extent Section 409A of the Internal Revenue Code applies,
in which case recipients would be taxed at the time these items
cease to be subject to substantial risk of forfeiture.
Stock-based or cash-based performance awards, dividend
equivalents and other types of awards are generally subject to
tax at the time of payment. In each of the foregoing cases, the
Company will generally have a corresponding deduction at the
time the participant recognizes income.
Parachute
Payments
The vesting of any portion of an option or other award that is
accelerated due to the occurrence of a change of control may
cause a portion of the payments with respect to such accelerated
awards to be treated as parachute payments as
defined in the Code. Any such parachute payments may be
non-deductible to us, in whole or in part, and may subject the
recipient to a non-deductible 20% federal excise tax on all or a
portion of such payment (in addition to other taxes ordinarily
payable).
Limitation
on Deductions
Under Section 162(m) of the Code, our deduction for certain
awards under the Restated 2005 Plan may be limited to the extent
that the Chief Executive Officer or other executive officer
whose compensation is required to be reported in the Summary
Compensation Table receives compensation in excess of
$1 million a year (other than performance-based
compensation that otherwise meets the requirements of
Section 162(m) of the Code). The Restated 2005 Plan is
structured to allow grants to qualify as performance-based
compensation.
Vote
Required
Under our By-Laws, the affirmative vote of a majority of shares
of common stock present in person or represented by proxy at the
meeting and entitled to vote on this proposal is required for
the approval of the Restated 2005 Plan. Abstentions shall be
included in determining the number of shares present and
entitled to vote on the proposal, thus having the effect of a
vote against the proposal. Broker non-votes are not counted in
determining the number of shares present and entitled to vote
and will therefore have no effect on the outcome.
17
Recommendation
of our Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE APPROVAL OF THE AMENDED AND RESTATED DEALERTRACK
HOLDINGS, INC. 2005 INCENTIVE AWARD PLAN.
EXECUTIVE
OFFICERS
The following individuals were serving as our executive officers
as of May 15, 2007:
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Name
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Age
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Title
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Mark F. ONeil
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48
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Chairman of the Board, President
and Chief Executive Officer
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Robert J. Cox III
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41
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Senior Vice President, Chief
Financial Officer and Treasurer
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John A. Blair
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46
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Chief Executive
Officer Automotive Lease Guide (alg), Inc.
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Charles J. Giglia
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55
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Senior Vice President, and Chief
Information Officer DealerTrack, Inc.
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Ana M. Herrera
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50
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Senior Vice President, Human
Resources DealerTrack, Inc.
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Eric D. Jacobs
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40
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Senior Vice President, General
Counsel and Secretary
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Richard McLeer
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42
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Senior Vice President, Strategy
and Development DealerTrack, Inc.
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Raj Sundaram
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40
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Senior Vice President, Dealer
Solutions DealerTrack, Inc.
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David P. Trinder
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48
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Senior Vice President, Network
Solutions DealerTrack, Inc.
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Rick G. Von Pusch
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45
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Senior Vice President, Customer
Development DealerTrack, Inc.
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Mark F. ONeil has served as our Chairman of the
Board, President and Chief Executive Officer since May 2005
and has served as a member of the board of directors since
August 2001. From August 2001 to May 2005, Mr. ONeil
served as our Chief Executive Officer and President. From
February 2001 to May 2005 and since August 2006,
Mr. ONeil has served as President, and he continues
to serve as Chairman of the Board, Chief Executive Officer and a
director of DealerTrack, Inc. Mr. ONeil began his
career at Intel Corporation, where he first developed knowledge
of the technology industry. He subsequently worked for
McKinsey & Co. before moving to the automotive
industry in the late 1980s. His experience in the
automotive industry includes serving as President of Ertley
MotorWorld, a dealer group based in Pennsylvania. From this
traditional retail dealer group, Mr. ONeil went on to
co-found and lead the development and rollout of CarMax, Inc., a
publicly-held used automobile retailer. From June 2000 through
January 2001, Mr. ONeil was President and Chief
Operating Officer of Greenlight.com, an online automotive sales
website. He also serves as a director of DealerTire LLC, a
privately held company. Mr. ONeil holds a BS in
Industrial Engineering from Worcester Polytechnic Institute and
an MBA from Harvard Business School.
Robert J. Cox III has served as our Senior Vice
President, Chief Financial Officer and Treasurer since November
2004. From May 2002 to October 2004, Mr. Cox was our Vice
President of Finance and Treasurer, from January 2002 to April
2002, Mr. Cox served as our Vice President of Finance,
Treasurer and Secretary, from August 2001 to December 2001,
Mr. Cox served as our Director of Finance, Treasurer and
Secretary, and from June 2001 to July 2001, Mr. Cox served
as Director of Finance, Treasurer and Secretary for DealerTrack,
Inc. In 1998, Mr. Cox joined Triton International, Inc., a
facilities-based provider of wireless and wire-line
telecommunications products, as its Executive Vice President and
Chief Financial Officer and left in January 2001. In 1991, he
joined Green Stamp America, Inc., a real estate investment
company, as their Controller and was elevated to the position of
Chief Financial Officer in 1996. Mr. Cox began his career
at KPMG LLP in the audit practice. Mr. Cox holds a BS in
18
Accounting from St. Bonaventure University and an MBA from the
Columbia University Graduate School of Business and is a CPA.
John A. Blair has served as Chief Executive Officer of
our Automotive Lease Guide (alg), Inc. subsidiary since May
2005. Mr. Blair served as Chief Executive Officer of
Automotive Lease Guide (alg), LLC, from 1996 until its
acquisition by us in May 2005 and President of our subsidiary,
DealerTrack Data Services, Inc., from May 2005 to August 2006.
Mr. Blair also served as Chief Executive Officer of webalg,
Inc., the developer of PaymentTrack, from March 2000 to March
2002, which was acquired by us in August 2001. Prior to joining
ALG, Mr. Blair held marketing and management positions with
Xerox Corporation and IBM Corporation. Mr. Blair holds a BA
in Economics from the University of California,
Santa Barbara.
Charles J. Giglia has served as Senior Vice President and
Chief Information Officer of DealerTrack, Inc. since January
2003. From February 2001 until January 2003, Mr. Giglia
served as Vice President and Chief Information Officer of
DealerTrack, Inc. Previously, he served as a Vice President of
the Chase Manhattan Bank, responsible for Internet development
in its Diversified Consumer Services business. Prior to that,
from 1980 to 1995, he served as online delivery group project
manager with responsibility for managing multiple service
delivery applications. Mr. Giglia holds a BS in Computer
Science with a minor in Business and an MBA in Management
Information Systems, both from the New York Institute of
Technology.
Ana M. Herrera has served as Senior Vice President, Human
Resources, of DealerTrack, Inc. since February 2007. From
May 2005 to January 2007, Ms. Herrera served as Vice
President, Human Resources, of DealerTrack, Inc. From September
2002 to May 2005, Ms. Herrera was Vice President of Human
Resources at MeadWestvaco Corporation, where she led the global
human resources function for the companys Consumer
Packaging Group. Prior to this, Ms. Herrera spent two years
as a consultant, working on a wide range of human resources
assignments for a diverse group of clients. Other previous
experience includes having served as Vice President of Human
Resources for Revlon Consumer Products Corporations
International Division, and as, first, Director and later Vice
President of Human Resources for Duracell Corporation.
Ms. Herrera holds a BS in Business Administration from
California State Polytechnic University.
Eric D. Jacobs has served as our Senior Vice President,
General Counsel and Secretary since January 2004 and President
of dealerAccess Canada, Inc., our Canadian subsidiary, since
August 2006. From April 2002 to December 2003,
Mr. Jacobs served as our Vice President, General Counsel
and Secretary. Mr. Jacobs was an associate at the
international law firm of OMelveny & Myers LLP
where he specialized in general corporate and securities law
from August 1998 to April 2002. Prior to becoming an attorney,
Mr. Jacobs was an audit manager at KPMG LLP.
Mr. Jacobs holds a BS in Business Administration with a
major in Accounting, magna cum laude, from Rider University and
a JD, with honors, from the Rutgers School of Law-Newark, and is
a CPA.
Richard McLeer has served as Senior Vice President,
Strategy & Development, of DealerTrack, Inc. since
August 2006. From April 2005 to August 2006, Mr. McLeer
served as Vice President, Credit and Contract Solutions for
DealerTrack, Inc., and served as our National Lender Development
Manager from February 2001 to April 2005. From 1996 to 2001,
Mr. McLeer was Senior Vice President and National Product
Director for the Bank of America Auto Group, and previously held
a variety of marketing, sales and business development positions
at Bank of America. Prior to that, Mr. McLeer worked at
Trans Union Corporation from 1993 to 1996. Other previous
experience includes two years serving as controller of Ellesse,
U.S.A., a division of Reebok, and four years in public
accounting. Mr. McLeer holds a BS in Accounting from
Hofstra University and is a CPA.
Rajesh (Raj) Sundaram has served as Senior Vice
President, Dealer Solutions, of DealerTrack, Inc. since August
2006. Mr. Sundaram served as President of Automotive Lease
Guide (alg), Inc. and President of Automotive Lease Guide (alg),
LLC, from 2002 to until its acquisition by us in May 2005, and
continued to hold those positions from May 2005 to August 2006.
Prior to joining ALG as Vice President and General Manager in
1999, Mr. Sundaram served as Senior Manager, Strategic
Planning and Pricing at Nissan North America, Inc. from 1997 to
1999, and held various positions in financial planning including
Finance Manager, Infiniti division at Nissan North America, Inc.
from 1994 to 1997. Mr. Sundaram previously held roles in
the controllers office of the Ford division of Ford Motor
Company from 1991 to 1994. Mr. Sundaram holds a BS and MS
in Accounting from the University of Mumbai in India and an MBA
in Finance from Lehigh University.
19
David P. Trinder has served as Senior Vice President,
Network Solutions, of DealerTrack, Inc. and Chief Executive
Officer of dealerAccess Canada, Inc., our Canadian subsidiary,
since August 2006. Mr. Trinder served as President of
DealerTrack Aftermarket Services, Inc. from June 2005 to August
2006 and Chief Executive Officer and President of dealerAccess
Canada, Inc. from January 2004 to August 2006. Mr. Trinder
served as President and Chief Executive Officer of dealerAccess
Canada, Inc. from April 2002 until its acquisition by us in
January of 2004. In the years before joining dealerAccess
Canada, Inc., Mr. Trinder built and operated two businesses
in South Africa, and followed this as director of a venture
capital fund that focused on IT investments. Mr. Trinder
holds a Bachelor of Commerce and an MBA from the University of
Cape Town, South Africa, and is a South African Chartered
Accountant.
Rick G. Von Pusch has served as Senior Vice President,
Customer Development, of DealerTrack, Inc. since August 2006.
From April 2006 to August 2006, Mr. Von Pusch served as
President of Sales and Marketing at 5Square Systems, a provider
of CRM, desking and menu products. Mr. Von Pusch served as
Vice President of U.S. Retail Sales at Reynolds and
Reynolds Corporation from April 2005 to October 2005, Area Vice
President from October 2001 to April 2005 and held various
positions in sales and sales management at Reynolds and Reynolds
from 1988 to 2001. Mr. Von Pusch also was a sales
representative for NCR Corporation from
1985-1987.
Mr. Von Pusch holds a BA in Management Information Systems
from the University of South Florida.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
Our compensation philosophy is designed to support our key
objective of creating value for our stockholders by growing our
revenue and earnings before interest, taxes, depreciation and
amortization, or EBITDA, increasing our total market
capitalization and growing our share price. Our Compensation
Committee is responsible for establishing and approving our
executive officers compensation.
Our Compensation Committee has established the following
principles in determining the compensation of our executive
officers:
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to attract and retain high-performing executive talent by paying
competitive compensation;
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to provide rewards consistent with performance by tying both our
annual cash incentive program and our long-term equity incentive
program to corporate performance; and
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to provide equity-based long term incentives which align
management and stockholder interests.
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We experienced a successful first year as a public company
growing our revenue 44% year over year by connecting 104 new
lenders, growing our subscription business by 65% and launching
several new products. For 2006, 75% of our growth was considered
organic and the other 25% came from acquisitions. Our market
capitalization increased by $416 million from
January 1, 2006 through December 31, 2006.
We believe that our compensation philosophy and strategy serve
to align our team members and focus the executive team and the
whole company on our vision and the achievement of our stated
strategic objectives and goals.
Compensation
Processes and Criteria
The Compensation Committee has established a number of
processes, some of which are described below, to ensure that our
executive compensation achieves these objectives.
Peer
Group Information and Benchmarking
In connection with compensation decisions, our Compensation
Committee reviewed market compensation data of our peer group
provided by Ernst & Young, an independent compensation
consultant that is retained by and reports to the Compensation
Committee. In early 2006, the Compensation Committee selected
our peer group by initially reviewing industry peer companies
used by equity research analysts in valuing us during our
initial public
20
offering process. Companies from that list with total revenues
similar to ours were selected. For each of these companies,
analyst reports and public filings were reviewed to identify
additional companies in a related SIC code and that fell within
a certain revenue size range. Since we have limited direct
competitors that are public companies, we made an effort to
focus on companies within the software industry who develop and
market a product that facilitates some aspect of financial
service or customer service functions for businesses. The
Compensation Committee selected the following 15 companies
to serve as our peer group in 2006 for purposes of benchmarking
our compensation: Autobytel Inc., Digital Insight Corp., Digital
River, Inc., f5 Networks Inc., Motive, Inc., RMO Software, Inc.,
Network Equipment Technologies, Inc., Open Solutions Inc.,
Radiant Systems, Inc., Salesforce.com, Inc.,
Tier Technologies, Inc., Websense, Inc., Witness Systems,
Inc., Micromuse, Inc. and SeeBeyond, Inc.
We changed our peer group for 2007 for the following reasons:
Micromuse, Inc. and SeeBeyond, Inc. were removed because they
had been acquired; Network Equipment Technologies, Inc. was
removed because its revenues are much lower than ours; and
Blackbaud, Inc. and Talx Corporation were added because their
business models are similar to ours and they are viewed by the
investment community as our comparables. We use the peer group
compensation data primarily to ensure that the total direct
compensation for executive management is within the broad middle
range of comparative pay of the peer group companies while
providing an opportunity for annual cash bonus to attain the
75th percentile when we exceed our targeted performance
levels. While peer group market data provides a useful starting
point for compensation decisions, our Compensation Committee
also takes into account factors such as level of responsibility,
prior experience and individual performance in arriving at final
compensation decisions.
The elements of executive compensation include base salary,
annual and long term incentive plans, and annual grants of stock
options and restricted common stock. Our executive compensation
has a high proportion of total direct compensation delivered
through
pay-for-performance
incentive and long-term equity compensation, equating to more
compensation at risk.
Assessment
of Company and Individual Performance
Our Compensation Committee, in collaboration with senior
management, establishes on an annual basis specific revenue and
EBITDA targets that determine the size of bonus payouts under
our annual incentive bonus plan.
Individual performance directly determines total direct
compensation levels for our Chief Executive Officer and other
executive officers. Our Compensation Committee meets with the
Chief Executive Officer at the beginning of the year to
establish our Chief Executive Officers performance
objectives (both individual and company) for the year. At the
end of the year, the Compensation Committee conducts a
performance review of the Chief Executive Officer based on his
achievement of the pre-established objectives. The overall
performance of the Chief Executive Officer and the company are
considered by the Compensation Committee in setting the Chief
Executive Officers compensation.
For all other executive officers, the Compensation Committee
receives a performance assessment and compensation
recommendation from the Chief Executive Officer. The performance
evaluation of the executive officers is based on achievement of
pre-established objectives.
Total
Compensation Review
The Compensation Committee reviews each executives base
pay, bonus and equity incentives annually with the guidance of
the Compensation Committees independent consultant. In
addition to these compensation elements, the Compensation
Committee reviews the deferred compensation program and payments
that would be required under various severance and
change-in-control
scenarios.
21
Components
of Executive Compensation for 2006
Base
Salary
Base salaries are pegged at the market median and are
competitive with similar positions at our peer group companies.
The base salaries of all executive offers are reviewed annually
against market data and adjusted to reflect individual roles and
performance. Adjustments to base salary are determined based
upon market trends as well as individual performance and
experience. We may also increase the base salary of an executive
officer during the year if a change in the scope of the
officers responsibilities justifies such consideration. In
2006, we increased the base salaries of each of our named
executive officers from 2005 by approximately 3.9%.
Annual
Incentive Bonus Plan
Under our annual incentive bonus plan, our cash incentives are
targeted at the 50th percentile of our peer group. If we
exceed our targets and achieve our stretch goals, the bonus
amount is then targeted at the 75th percentile of our peer
group as we wish to provide rewards consistent with performance.
For 2006, we had selected the following performance metrics
under our annual incentive bonus plan: an EBITDA target of
$45.1 million, a corporate-wide revenue target of
$158.6 million as well as separate revenue targets for each
of our business units. As a result of acquisitions, the
Compensation Committee increased the EBITDA target to
$46.3 million and the revenue target to
$165.7 million. Under this plan, no annual bonuses would
have been paid had we not met our adjusted EBITDA threshold of
$41.7 million. We use EBITDA as our principal metric to
review and assess our operating performance and the performance
of our management team as EBITDA provides useful information
with respect to the performance of our fundamental business
activities and is also frequently used by equity research
analysts and others in the evaluation of the company. Our EBITDA
for 2006 was reported in Item 7 of our Annual Report on
Form 10-K.
For executive officers with company-wide responsibility, we give
equal weight to corporate revenue and EBITDA targets. Currently,
these executive officers include Mr. ONeil, our Chief
Executive Officer, Mr. Cox, our Chief Financial Officer,
and Mr. Jacobs, our General Counsel. For other executive
officers who are responsible for business units, depending on
position, we give different weights to corporate and business
unit revenues. In each case, we also give additional weight to
individual performance and attainment of individual goals. The
bonus target amounts, expressed as a percentage of base salary,
are established for executive officers each year, with a target
range of 40% to 75% of base salary for 2006 and a maximum range
of 60% to 150% of base salary for 2006, depending on position.
As stated above, no bonuses are payable if we do not meet the
pre-determined EBITDA threshold amount. If we exceed our EBITDA
threshold amount and the respective revenue targets, we may
increase or reduce the payouts by up to 5% depending on
performance relative to specific subscription and transaction
revenue targets. The actual reward to each executive officer is
further adjusted, up or down, depending on the Compensation
Committees assessment of the individual performance of
such officer. In making this assessment, the Compensation
Committee also considers the input of our Chief Executive
Officer with respect to all executive officers. In the case of
our Chief Executive Officer, the Compensation Committee
considers factors such as leadership, leadership development,
talent management and succession planning. The Compensation
Committee may adjust the financial metrics in appropriate
circumstances. Our revenue and EBITDA in 2006 were
$173.3 million and $48.0 million, respectively,
surpassing our targets by 4.6% and 3.7%, respectively.
Accordingly, the actual cash incentive bonuses awarded to
executive officers ranged from 60% to 134% of base salary.
Annual
Equity Grants
In order to align our executive officers interests with
those of our stockholders, the Compensation Committee makes
annual grants of stock options and restricted common stock each
year to our executive officers, with stock options targeted to
deliver approximately 50% of the total long-term incentive value
and restricted common stock targeted to deliver approximately
50% of the total long-term incentive value. These annual grants
are targeted at the median of the market, which is consistent
with our general compensation philosophy to pay total direct
compensation at the median of the market except in the case of
exceptional performance. We use a mix of restricted common stock
and nonqualified stock options in order to reduce dilution to
our stockholders, manage compensation expense and provide upside
potential. We use nonqualified stock options instead of
incentive stock options in order to preserve our compensation
tax deduction. The annual equity grants also serve as a
retention device as they are earned through service with us over
a four-year period and the options have a ten-year term. These
equity grants
22
further the long-term perspective necessary for continued
success in our business. Towards this end, we have also
implemented share ownership requirements for the executive team
equal to multiples of their base salary, which vary from six
times to one times base salary. Each executive officer is
expected to attain share ownership level within five years.
Stock options are not included in determining compliance with
the share ownership requirement. Executive officers are expected
to retain 25% of the net after-tax shares acquired pursuant to
the exercise of a stock option until they achieve the minimum
share ownership position. The Compensation Committee reviews
each executive officers compliance with the minimum share
ownership requirement once a year. As of the end of 2006, each
executive officer has met the minimum share ownership
requirement.
We typically make our annual stock option grants at the first
regularly scheduled meeting of the Compensation Committee of the
year. Option grants to new hires are generally made at the first
regularly scheduled Compensation Committee meeting that follows
the date of hire. We used to price our options at the higher of
the closing price of our common stock on the day preceding the
date of grant or the closing price of our stock on the date of
grant. On August 2, 2006, we amended our plan to use the
closing price of our stock on the date of grant.
Long-Term
Equity Incentive Program
In August 2006, we implemented a performance-based long-term
equity incentive program and made significant grants of
restricted common stock to our executive officers. These grants
are targeted to deliver total direct compensation at the
75th percentile of our peer group upon the achievement of
exceptional performance. These grants will be fully earned only
if in the next three fiscal years: (i) we achieve 22.5%
annual growth for our EBITDA and market capitalization metrics
as set forth below; and (ii) if the executive officers
remain continuously employed with us through January 31,
2010.
Performance
Goals
|
|
|
|
|
|
|
EBITDA
|
|
Market Cap
|
|
December 31, 2007
|
|
$56 million
|
|
$928 million
|
December 31, 2008
|
|
$69 million
|
|
$1,136 million
|
December 31, 2009
|
|
$85 million
|
|
$1,400 million
|
Our objective for making these restricted common stock grants is
to provide significant incentives to our executive officers to
achieve our corporate goal of doubling our size in terms of
EBITDA and market capitalization by the end of 2009.
Employment
Agreements
We have entered into employment agreements with each of our
named executive officers. These agreements provide for a certain
level of severance, generally two times base salary, pro rata
annual cash incentive and limited accelerated vesting of equity
grants (other than performance-based restricted common stock) in
the event of a termination of employment by us without cause or
by a named executive officer for good reason. In return, each
executive covenants not to compete or solicit our employees for
two years from the date of termination. Severance is stopped if
the executive violates these covenants during the two-year
severance period. Additionally, should a named executive officer
procure subsequent employment during the period during which he
or she is entitled to a severance payment, then his or her
future severance payments will be reduced to the lesser of
(i) 50% of the executives salary or (ii) 50% of
the executives base compensation received for subsequent
employment, commencing on the date the executive commences
providing services.
The employment agreements also provide change in control
benefits. In the event we were to undergo a change in control,
our employment agreements provide for 36 months of
accelerated vesting for time-based stock option and restricted
common stock grants and full vesting of such grants in the event
of termination within 12 months of the change in control.
Our performance-based restricted common stock grants provide for
full acceleration upon a change in control. We believe that it
is fair to provide for accelerated vesting because equity grants
provide such a high proportion of our total compensation. Very
often, senior management lose their jobs in connection with a
change of control. By agreeing up front to protect our executive
officers from losing their equity in the event of a change in
control, we believe we can reinforce and encourage the continued
attention and dedication of our
23
executive officers to their assigned duties without distraction
in the face of an actual or threatened change in control. This
protection also aligns the interests of our executive officers
with that of our stockholders.
Our employment agreements also provide for a tax
gross-up
payment to our named executive officers in the event they become
subject to the 20% golden parachute excise tax. We have agreed
to this payment because it is market practice and because we
believe that our named executive officers should be able to
receive what they have bargained for without being subject to
this punitive tax. Please see page 31 for more information
about our named executive officers employment agreements.
Upon his promotion in 2006 to Senior Vice President, Dealer
Solutions, Mr. Sundaram signed an employment agreement with
the same terms as are our agreements with other named executive
officers with one exception. At the time of our acquisition of
certain assets of Automotive Lease Guide (alg), LLC,
Mr. Sundarams previous employer, we agreed to honor
an existing arrangement that he had in regards to a promissory
note owed to his former employer in order to encourage
Mr. Sundaram to remain with us after the acquisition.
Additionally, Mr. Sundarams promotion required him to
move across the country to corporate headquarters in Lake
Success, New York. Accordingly, we entered into a relocation
agreement with Mr. Sundaram that provided, among other
things, reimbursement of his moving expenses, temporary housing
expenses, forfeited tuition deposits and certain expenses in
connection with the purchase and sale of his primary residence,
as well as a car allowance. All of these amounts are grossed up
for taxes.
Perquisites
We believe that cash and equity compensation are the two key
components in attracting and retaining management talent and
therefore do not generally provide any substantial perquisites
other than relocation expenses.
Deferred
Compensation Plan
We have a deferred compensation plan that allows our executive
officers to defer bonus compensation by investing it in deferred
stock units based on the fair market value of our common stock
on the date the bonuses would otherwise be paid. This plan
provides a tax effective means of allowing our executive
officers to invest in our stock and fulfills our objective of
encouraging equity ownership. The first opportunity to
participate in this plan was for the 2006 bonus which was paid
in 2007. Accordingly, no deferrals occurred in 2006.
401(k)
Plan
We maintain a 401(k) plan which covers substantially all our
employees. The 401(k) plan is an essential part of the
retirement package needed to attract and retain employees in our
industry. The 401(k) plan permits employees to contribute up to
the lesser of 20% of plan earnings or the annual dollar limit
prescribed by the tax laws. We provide a matching contribution,
the amount of which is determined at our discretion. For 2006,
our matching contribution is 50% of each employees
contribution up to 6% of eligible pay. Our matching contribution
vests incrementally over a five-year period.
24
COMPENSATION
COMMITTEE REPORT
This report is submitted by the Compensation Committee of the
board of directors. The Compensation Committee has reviewed the
Compensation Discussion and Analysis and discussed that Analysis
with management. Based on its review and discussion with
management, the Compensation Committee has recommended to our
board of directors that the Compensation Discussion and Analysis
be included in this Proxy Statement for filing with the
Securities and Exchange Commission.
No portion of this Compensation Committee Report shall be deemed
to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, through any general statement
incorporating by reference in its entirety the Proxy Statement
in which this report appears, except to the extent that the
Company specifically incorporates this report or a portion of it
by reference. In addition, this report shall not be deemed filed
under either the Securities Act or the Exchange Act.
Respectfully submitted by the Compensation Committee,
Mary Cirillo-Goldberg (chairperson)
Thomas R. Gibson
John J. McDonnell, Jr.
25
EXECUTIVE
COMPENSATION
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
Name and
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Principal Position
|
|
Year
|
|
Salary
|
|
Awards(1)
|
|
Awards(2)
|
|
Compensation(3)
|
|
Compensation(4)
|
|
Total
|
|
Mark F. ONeil
|
|
|
2006
|
|
|
$
|
495,040
|
|
|
$
|
369,913
|
|
|
$
|
695,967
|
|
|
$
|
660,000
|
|
|
$
|
9,799
|
|
|
$
|
2,230,719
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Cox III
|
|
|
2006
|
|
|
|
260,000
|
|
|
|
126,370
|
|
|
|
204,412
|
|
|
|
198,000
|
|
|
|
6,500
|
|
|
|
795,282
|
|
Senior Vice President, Chief
Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Blair
|
|
|
2006
|
|
|
|
260,000
|
|
|
|
51,569
|
|
|
|
86,098
|
|
|
|
215,000
|
|
|
|
84,997
|
|
|
|
697,664
|
|
Chief Executive Officer
Automotive Lease Guide (alg), Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric D. Jacobs
|
|
|
2006
|
|
|
|
260,000
|
|
|
|
112,433
|
|
|
|
150,595
|
|
|
|
208,000
|
|
|
|
6,600
|
|
|
|
737,628
|
|
Senior Vice President, General
Counsel and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raj Sundaram
|
|
|
2006
|
|
|
|
235,527
|
|
|
|
49,879
|
|
|
|
61,780
|
|
|
|
169,000
|
|
|
|
199,659
|
|
|
|
715,845
|
|
Senior Vice President, Dealer
Solutions DealerTrack, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vincent
Passione(5)
|
|
|
2006
|
|
|
|
255,333
|
|
|
|
310,070
|
|
|
|
4,892,344
|
|
|
|
|
|
|
|
993,789
|
|
|
|
6,451,536
|
|
President DealerTrack,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year for the fair value of restricted common stock
granted in 2006 as well as prior fiscal years in accordance with
FAS 123(R). Pursuant to SEC rules, the amounts shown
exclude the impact of estimated forfeitures related to
service-based vesting conditions. For restricted common stock,
fair value is calculated using the closing price of our stock on
the date of grant. For additional information, refer to
notes 2 and 12 of our consolidated financial statements in
our Annual Report on
Form 10-K
for the year ended December 31, 2006. See the Grants of
Plan-Based Awards Table for information on awards made during
2006. These amounts reflect the companys accounting
expense for these awards, and do not correspond to the actual
value that will be recognized by the named executives. |
|
(2) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year for the fair value of stock options granted in 2006
as well as prior fiscal years in accordance with
FAS 123(R). Pursuant to SEC rules, the amounts shown
exclude the impact of estimated forfeitures related to
service-based vesting conditions. For additional information,
refer to note 2 of our consolidated financial statements in
our Annual Report on
Form 10-K
for the year ended December 31, 2006. See the Grants of
Plan-Based Awards Table for information on options granted in
2006. These amounts reflect our accounting expense for these
awards, and do not correspond to the actual value that will be
recognized by the named executives. |
|
(3) |
|
The amounts shown include awards earned under our incentive
bonus plan in the year noted although such amounts are payable
in the subsequent year. The amounts shown exclude awards paid in
the year noted but earned in prior years. Mr. Cox elected
to defer the payment of $39,600 of his award pursuant to our
deferred compensation plan. Accordingly, on March 6, 2007,
Mr. Cox acquired 1,309.52 deferred stock units through this
deferral. Each deferred stock unit is the economic equivalent of
one share of common stock. |
|
(4) |
|
See the table below for additional information on all other
compensation. |
|
(5) |
|
Mr. Passione left the company effective August 31,
2006. In accordance with contractual obligations related to his
term of employment with us, a portion of
Mr. Passiones unvested equity awards were accelerated
and became fully exercisable, resulting in an accounting charge
of $222,082 for his restricted common stock awards and
$4,783,079 for his stock option awards. |
26
ALL OTHER
COMPENSATION TABLE
The following table describes each component of the All Other
Compensation column in the Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
|
|
|
Tax
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Match(1)
|
|
|
Gross-Up
|
|
|
Relocation
|
|
|
Other
|
|
|
Total
|
|
|
Mark F. ONeil
|
|
$
|
6,600
|
|
|
|
|
|
|
|
|
|
|
$
|
3,199
|
(4)
|
|
$
|
9,799
|
|
Robert J. Cox III
|
|
|
6,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500
|
|
John A. Blair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,997
|
(5)
|
|
|
84,997
|
|
Eric D. Jacobs
|
|
|
6,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,600
|
|
Raj Sundaram
|
|
|
5,686
|
|
|
$
|
41,715
|
(2)
|
|
$
|
68,258
|
(3)
|
|
|
84,000
|
(5)
|
|
|
199,659
|
|
Vincent Passione
|
|
|
6,383
|
|
|
|
|
|
|
|
|
|
|
|
987,406
|
(6)
|
|
|
993,789
|
|
|
|
|
(1) |
|
This column reports our matching contributions to the named
executives 401(k) savings account of 3.0% of pay up to the
limitations imposed under IRS Rules. These contributions vest
over a five year period. |
|
(2) |
|
This amount includes amounts reimbursed for the payment of taxes
on imputed income for Mr. Sundarams relocation
expenses. |
|
(3) |
|
This amount includes relocation expenses paid by the company
including $35,258 for reimbursement for temporary housing,
$20,000 as a temporary car allowance and $13,000 as
reimbursement for tuition forfeited due to his relocation. |
|
(4) |
|
This amount represents the 15% discount received on shares
purchased through our employee stock purchase plan. This
discount is available to all employees. |
|
(5) |
|
This amount includes an $84,000 payment pursuant to
Messrs. Blair and Sundarams employment agreements
that is a reimbursement for interest due on a loan from
Automotive Lease Guide (alg), LLC, their prior employer and the
company from which we purchased substantially all of the assets
of ALG. |
|
(6) |
|
This amount consists of severance paid in accordance with
contractual obligations related to Mr. Passiones
termination of employment with the company consisting of
(a) $766,000 representing two years of severance;
(b) $206,667 representing the payment of his pro-rata 2006
bonus; and (c) $14,739 for the reimbursement of health
insurance premiums payable under COBRA. |
27
GRANTS OF
PLAN-BASED AWARDS IN 2006
The following table provides information about equity and
non-equity awards granted to the named executives in 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts
|
|
Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Awards;
|
|
Awards;
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Number of
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
Estimated Future Payouts Under
|
|
Plan
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
Grant
|
|
Non-Equity Incentive Plan
Awards(1)
|
|
Awards(2)
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Option
|
Name
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Target
|
|
Units(3)
|
|
Options(4)
|
|
Awards(5)
|
|
Awards(6)
|
|
Mark F. ONeil
|
|
|
1/27/2006
|
|
|
$
|
297,024
|
|
|
$
|
371,280
|
|
|
$
|
742,560
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
$
|
20.68
|
|
|
$
|
966,501
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
723,800
|
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,247,400
|
|
Robert J. Cox III
|
|
|
1/27/2006
|
|
|
|
104,000
|
|
|
|
130,000
|
|
|
|
227,500
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
20.68
|
|
|
|
268,743
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
248,160
|
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
793,200
|
|
John A. Blair
|
|
|
1/27/2006
|
|
|
|
104,395
|
|
|
|
130,494
|
|
|
|
260,987
|
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
|
20.68
|
|
|
|
193,300
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
186,120
|
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
264,400
|
|
Eric D. Jacobs
|
|
|
1/27/2006
|
|
|
|
104,000
|
|
|
|
130,000
|
|
|
|
227,500
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
20.68
|
|
|
|
214,778
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
206,800
|
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
661,000
|
|
Raj Sundaram
|
|
|
1/27/2006
|
|
|
|
93,600
|
|
|
|
117,000
|
|
|
|
204,750
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
20.68
|
|
|
|
107,389
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
103,400
|
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
462,700
|
|
|
|
|
11/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
253,900
|
|
|
|
|
11/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
25.39
|
|
|
|
265,092
|
|
Vincent Passione
|
|
|
1/27/2006
|
|
|
|
168,520
|
|
|
|
220,000
|
|
|
|
347,573
|
|
|
|
|
|
|
|
|
|
|
|
33,300
|
|
|
|
20.68
|
|
|
|
357,605
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
310,200
|
|
|
|
|
(1) |
|
These columns show the potential value of the payout of the
annual cash incentive bonuses for 2006 performance for each
named executive officer if the minimum, target and maximum
performance levels are achieved. The potential payout is
performance based and driven by company and individual
performance. The actual amount of the annual cash incentive
bonuses paid for 2006 performance is shown in the Summary
Compensation Table under the Non-Equity Incentive Plan
Compensation column. |
|
(2) |
|
This column shows the number of performance based restricted
common stock awards granted in 2006 to each of our named
executive officers. These awards vest in full on
January 31, 2010, provided that the executive officer
remains employed on such date. The amount that will vest at such
time is subject to the achievement of certain pre-established
performance goals for fiscal years 2007, 2008 and 2009. These
performance goals are equally based on both our earnings before
interest, taxes, depreciation and amortization, as adjusted, or
EBITDA, and the market value of our common stock, in each case
as measured on the last day of the fiscal year. |
|
(3) |
|
This column shows the number of shares of restricted common
stock granted in 2006 to our named executive officers. These
awards vest in four equal annual installments from date of grant. |
|
(4) |
|
This column shows the number of stock options granted in 2006 to
the named executive officers. These options vest as follows: 25%
of the shares subject to the option vest on the one year
anniversary of the date of grant, and 1/36th of the
remaining shares subject to the option vest each month
thereafter, such that 100% of the shares subject to the option
will be fully vested four years after the date of grant. |
|
(5) |
|
This column shows the exercise price for the stock options
granted during 2006. |
|
(6) |
|
This column shows the grant date fair value of restricted common
stock computed in accordance with FAS 123(R) and the grant
date fair value of stock options computed in accordance with
FAS 123(R) granted to the named executive officers during
2006. |
28
OUTSTANDING
EQUITY AWARDS AT 2006 FISCAL YEAR END
The following table provides information on the current holdings
of stock option and stock awards by the named executives. This
table includes unexercised and unvested option awards; unvested
restricted common stock; and restricted common stock with
performance conditions that have not yet been satisfied. Each
equity grant is shown separately for each named executive. The
vesting schedule for each grant is shown following this table,
based on the option or stock award grant date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Value of
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Number
|
|
Value
|
|
Unearned
|
|
Unearned
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
of Shares
|
|
of Shares
|
|
Shares,
|
|
Shares,
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
or Units of
|
|
or Units of
|
|
Units or
|
|
Units or
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock
|
|
Stock That
|
|
Stock That
|
|
Other Rights
|
|
Other Rights
|
|
|
Option
|
|
Options
|
|
Options
|
|
Exercise
|
|
Expiration
|
|
Award
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have
|
Name
|
|
Grant Date
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date
|
|
Grant Date
|
|
Vested(1)
|
|
Vested(2)
|
|
Not
Vested(3)
|
|
Not
Vested(4)
|
|
Mark F. ONeil
|
|
|
1/16/2002
|
|
|
|
224,941
|
|
|
|
|
|
|
$
|
3.12
|
|
|
|
1/15/2012
|
|
|
|
5/26/2005
|
|
|
|
22,500
|
|
|
$
|
661,950
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2003
|
|
|
|
192,240
|
|
|
|
5,212
|
|
|
|
2.80
|
|
|
|
1/29/2003
|
|
|
|
1/27/2006
|
|
|
|
35,000
|
|
|
|
1,029,700
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2004
|
|
|
|
7,501
|
|
|
|
|
|
|
|
2.80
|
|
|
|
2/13/2011
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
170,000
|
|
|
$
|
5,001,400
|
|
|
|
|
5/3/2004
|
|
|
|
204,442
|
|
|
|
30,558
|
|
|
|
2.80
|
|
|
|
5/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/18/2004
|
|
|
|
97,415
|
|
|
|
69,585
|
|
|
|
2.80
|
|
|
|
8/17/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/26/2005
|
|
|
|
49,478
|
|
|
|
75,522
|
|
|
|
12.92
|
|
|
|
5/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
90,000
|
|
|
|
20.68
|
|
|
|
1/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Cox III
|
|
|
1/16/2002
|
|
|
|
25,781
|
|
|
|
|
|
|
|
3.12
|
|
|
|
1/15/2012
|
|
|
|
5/26/2005
|
|
|
|
7,500
|
|
|
|
220,650
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2003
|
|
|
|
18,231
|
|
|
|
389
|
|
|
|
2.80
|
|
|
|
1/29/2013
|
|
|
|
1/27/2006
|
|
|
|
12,000
|
|
|
|
353,040
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2004
|
|
|
|
11,697
|
|
|
|
0
|
|
|
|
2.80
|
|
|
|
6/26/2011
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
1,765,200
|
|
|
|
|
5/3/2004
|
|
|
|
25,520
|
|
|
|
9,480
|
|
|
|
2.80
|
|
|
|
5/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/18/2004
|
|
|
|
37,916
|
|
|
|
27,084
|
|
|
|
2.80
|
|
|
|
8/17/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/26/2005
|
|
|
|
19,791
|
|
|
|
30,209
|
|
|
|
12.92
|
|
|
|
5/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
25,000
|
|
|
|
20.68
|
|
|
|
1/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Blair
|
|
|
5/26/2005
|
|
|
|
15,833
|
|
|
|
24,167
|
|
|
|
12.92
|
|
|
|
5/25/2015
|
|
|
|
1/27/2006
|
|
|
|
9,000
|
|
|
|
264,780
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
18,000
|
|
|
|
20.68
|
|
|
|
1/26/2016
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
588,400
|
|
Eric D. Jacobs
|
|
|
5/15/2002
|
|
|
|
26,250
|
|
|
|
|
|
|
|
2.80
|
|
|
|
5/14/2012
|
|
|
|
5/26/2005
|
|
|
|
7,500
|
|
|
|
220,650
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2003
|
|
|
|
9,549
|
|
|
|
204
|
|
|
|
2.80
|
|
|
|
1/29/2013
|
|
|
|
1/27/2006
|
|
|
|
10,000
|
|
|
|
294,200
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2004
|
|
|
|
28,749
|
|
|
|
16,251
|
|
|
|
2.80
|
|
|
|
1/29/2014
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
1,471,000
|
|
|
|
|
8/18/2004
|
|
|
|
29,166
|
|
|
|
20,834
|
|
|
|
2.80
|
|
|
|
8/17/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/26/2005
|
|
|
|
19,791
|
|
|
|
30,209
|
|
|
|
12.92
|
|
|
|
5/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
20,000
|
|
|
|
20.68
|
|
|
|
1/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raj Sundaram
|
|
|
5/26/2005
|
|
|
|
9,895
|
|
|
|
15,105
|
|
|
|
12.92
|
|
|
|
5/25/2015
|
|
|
|
1/27/2006
|
|
|
|
5,000
|
|
|
|
147,100
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
10,000
|
|
|
|
20.68
|
|
|
|
1/26/2016
|
|
|
|
11/2/2006
|
|
|
|
10,000
|
|
|
|
294,200
|
|
|
|
|
|
|
|
|
|
|
|
|
11/2/2006
|
|
|
|
|
|
|
|
20,000
|
|
|
|
25.39
|
|
|
|
11/1/2016
|
|
|
|
8/2/2006
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
1,029,700
|
|
Vincent Passione
|
|
|
10/23/2003
|
|
|
|
205,715
|
|
|
|
|
|
|
|
2.80
|
|
|
|
8/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2004
|
|
|
|
15,000
|
|
|
|
|
|
|
|
2.80
|
|
|
|
8/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/18/2004
|
|
|
|
63,255
|
|
|
|
|
|
|
|
2.80
|
|
|
|
8/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These awards vest in four equal annual installments from date of
grant. |
|
(2) |
|
The market value is based on the closing price of our stock as
of December 31, 2006, which was $29.42. |
|
(3) |
|
These are performance based restricted common stock awards that
vest in full on January 31, 2010, provided that the
executive officer remains employed on such date. The amount that
will vest at such time is subject to the achievement of certain
pre-established performance goals for fiscal years 2007, 2008
and 2009. These performance goals are equally based on both our
earnings before interest, taxes, depreciation and amortization,
as adjusted, or EBITDA, and the market value of our common
stock, in each case as measured on the last day of the fiscal
year. |
|
(4) |
|
The market value is based on the closing price of our stock as
of December 31, 2006, which was $29.42, without taking any
discounts and assuming that targets are achieved (EBITDA and
market cap). |
29
Option
Vesting Schedule
Except for grant dates set forth below, the vesting schedule for
stock options is 25% of the shares subject to the option vest on
the one year anniversary of the date of grant, and
1/36th of the remaining shares subject to the option vest
each month thereafter, such that 100% of the shares subject to
the option will be fully vested four years after the date of
grant.
|
|
|
Stock Option Grant Date
|
|
Vesting Schedule
|
|
1/30/2003
|
|
The vesting commencement date was
January 1, 2003.
|
1/30/2004
|
|
10,000 options vested immediately
for Mr. Jacobs, the remaining 60,000 began vesting on
January 1, 2004.
|
5/3/2004
|
|
14,609 of Mr. Coxs
options were immediately vested. Of the remaining 41,016
options, 6,016 vested in 14 equal monthly installments ending on
June 27, 2005 and the remaining 35,000 options had a
vesting commencement date of January 1, 2004. 152,462 of
Mr. ONeils options were immediately vested. Of
the remaining 262,491, 37,491 vested in 10 equal monthly
installments ending on February 14, 2005 and the remaining
225,000 had a vesting commencement date of January 1, 2004.
|
OPTION
EXERCISES AND STOCK VESTED IN FISCAL 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
Name
|
|
Acquired on Exercise
|
|
|
On Exercise
|
|
|
Acquired on Vesting
|
|
|
Vesting
|
|
|
Mark F. ONeil
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(1)
|
|
$
|
159,000
|
|
Robert J. Cox III
|
|
|
|
|
|
|
|
|
|
|
2,500
|
(1)
|
|
|
53,000
|
|
John A. Blair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric D. Jacobs
|
|
|
|
|
|
|
|
|
|
|
2,500
|
(1)
|
|
|
53,000
|
|
Raj Sundaram
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vincent Passione
|
|
|
110,000
|
(2)
|
|
$
|
1,928,233
|
|
|
|
18,750
|
(3)
|
|
|
405,750
|
|
|
|
|
(1) |
|
These shares vested on May 26, 2006 upon the lapse of
restricted common stock. The closing price of our common stock
on that day was $21.20. |
|
(2) |
|
On December 11, 2006, Mr. Passione exercised 39,745,
48,749 and 21,506 stock options with exercise prices of $2.80,
$12.92 and $20.68, respectively. The closing price of our common
stock on that day was $28.31. |
|
(3) |
|
3,750 of these shares vested on May 26, 2006 upon the lapse
of restricted common stock. The closing price of our common
stock on that day was $21.20. On August 31, 2006, we
accelerated the vesting of 15,000 of Mr. Passiones
shares of restricted common stock due to his departure from the
company. The closing price of our common stock on that day was
$21.75. |
30
POTENTIAL
PAYMENTS UPON TERMINATION
The tables set forth below describe and quantify certain
compensation that would become payable under existing plans and
arrangements if the named executive officers employment
had terminated on December 31, 2006, based on our closing
stock price on that date. Due to the number of factors that
affect the nature and amount of any benefits provided upon the
events discussed below, any actual amounts paid or distributed
may be different. Factors that could affect these amounts
include the timing during the year of any such event and our
stock price. None of our named executive officers are entitled
to any compensation in the event of a voluntary termination or
an involuntary termination for cause.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
Base
|
|
|
Short-Term
|
|
|
Performance
|
|
|
Stock
|
|
|
Restricted Common
|
|
|
Health
|
|
|
280G Tax
|
|
|
|
|
Name
|
|
Salary(1)
|
|
|
Incentives(2)
|
|
|
Shares(3)
|
|
|
Options(4)
|
|
|
Stock(5)
|
|
|
Care
|
|
|
Gross-Up
|
|
|
Total
|
|
|
Mark F. ONeil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason Termination
|
|
$
|
990,080
|
|
|
$
|
600,000
|
|
|
|
|
|
|
$
|
4,409,176
|
|
|
$
|
956,150
|
|
|
$
|
16,315
|
|
|
|
|
|
|
$
|
6,971,721
|
|
Death or Disability
|
|
|
|
|
|
$
|
609,927
|
|
|
|
|
|
|
|
1,691,650
|
|
|
|
|
|
|
|
|
|
|
|
2,301,577
|
|
|
|
|
|
Change In Control
|
|
|
990,080
|
|
|
|
600,000
|
|
|
|
5,001,400
|
|
|
|
4,837,058
|
|
|
|
1,691,650
|
|
|
|
16,315
|
|
|
$
|
3,363,104
|
|
|
|
16,499,607
|
|
Robert J. Cox III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason Termination
|
|
|
520,000
|
|
|
|
152,000
|
|
|
|
|
|
|
|
1,555,443
|
|
|
|
323,620
|
|
|
|
14,369
|
|
|
|
|
|
|
|
2,565,432
|
|
Death or Disability
|
|
|
|
|
|
|
|
|
|
|
215,268
|
|
|
|
|
|
|
|
573,690
|
|
|
|
|
|
|
|
|
|
|
|
788,958
|
|
Change In Control
|
|
|
520,000
|
|
|
|
152,000
|
|
|
|
1,765,200
|
|
|
|
1,700,558
|
|
|
|
573,690
|
|
|
|
14,369
|
|
|
|
1,285,459
|
|
|
|
6,011,276
|
|
John A. Blair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason Termination
|
|
|
521,994
|
|
|
|
218,750
|
|
|
|
|
|
|
|
240,383
|
|
|
|
132,390
|
|
|
|
16,315
|
|
|
|
|
|
|
|
1,063,637
|
|
Death or Disability
|
|
|
|
|
|
|
|
|
|
|
71,756
|
|
|
|
|
|
|
|
264,780
|
|
|
|
|
|
|
|
|
|
|
|
336,536
|
|
Change In Control
|
|
|
521,994
|
|
|
|
218,750
|
|
|
|
588,400
|
|
|
|
556,070
|
|
|
|
264,780
|
|
|
|
16,315
|
|
|
|
|
|
|
|
2,166,309
|
|
Eric D. Jacobs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason Termination
|
|
|
520,000
|
|
|
|
180,000
|
|
|
|
|
|
|
|
1,532,526
|
|
|
|
294,200
|
|
|
|
16,315
|
|
|
|
|
|
|
|
2,543,041
|
|
Death or Disability
|
|
|
|
|
|
|
|
|
|
|
179,390
|
|
|
|
|
|
|
|
514,850
|
|
|
|
|
|
|
|
|
|
|
|
694,240
|
|
Change In Control
|
|
|
520,000
|
|
|
|
180,000
|
|
|
|
1,471,000
|
|
|
|
1,665,805
|
|
|
|
514,850
|
|
|
|
16,315
|
|
|
$
|
1,099,499
|
|
|
|
5,467,469
|
|
Raj Sundaram
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason Termination
|
|
|
520,000
|
|
|
|
154,090
|
|
|
|
|
|
|
|
311,958
|
|
|
|
220,650
|
|
|
|
16,315
|
|
|
|
|
|
|
|
1,223,013
|
|
Death or Disability
|
|
|
|
|
|
|
|
|
|
|
125,573
|
|
|
|
|
|
|
|
441,300
|
|
|
|
|
|
|
|
|
|
|
|
566,873
|
|
Change In Control
|
|
|
520,000
|
|
|
|
154,090
|
|
|
|
1,029,700
|
|
|
|
417,219
|
|
|
|
441,300
|
|
|
|
16,315
|
|
|
|
795,942
|
|
|
|
3,374,566
|
|
|
|
|
(1) |
|
24 months base salary continuation calculated based on the
salary in effect on the date of termination. Severance will
cease if the executive violates the non-compete provision of his
employment agreement. |
|
(2) |
|
A pro-rata bonus payment calculated based on the number of days
during the fiscal year through the date of termination, applied
to actual bonus payment received for the prior fiscal year. |
|
(3) |
|
The Death or Disability amounts represent accelerated vesting of
a pro-rata portion of the performance shares awarded in August
2006. The Change of Control amounts represent full vesting of
the performance shares. Value is based on $29.42, the closing
price of our common stock on December 31, 2006. |
|
(4) |
|
The Involuntary or Good Reason Termination amounts represent two
years acceleration of the vesting of the named executive
officers outstanding stock options (except for
Mr. Blair who only receives one year of acceleration). The
Change of Control amounts represent full vesting of the named
executive officers outstanding stock options. Value is
based on $29.42, the closing price of our common stock on
December 31, 2006. |
|
(5) |
|
The Involuntary or Good Reason Termination amounts represent two
years acceleration of the vesting of the named executive
officers restricted common stock (except for
Mr. Blair who only receives one year of acceleration). The
Death or Disability and Change of Control amounts represent full
vesting of the named executive officers restricted common
stock. Value is based on $29.42, the closing price of our common
stock on December 31, 2006. |
31
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2006 none of our
executive officers served as: (i) a member of the
compensation committee (or other committee of the board of
directors performing equivalent functions or, in the absence of
any such committee, the entire board of directors) of another
entity, one of whose executive officers served on our
Compensation Committee; (ii) a director of another entity,
one of whose executive officers served on our Compensation
Committee; or (iii) a member of the compensation committee
(or other committee of the board of directors performing
equivalent functions or, in the absence of any such committee,
the entire board of directors) of another entity, one of whose
executive officers served as a director on our board of
directors. No member of our Compensation Committee has ever been
an employee of DealerTrack.
EMPLOYMENT
AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
Each of our named executive officers has entered into a written
employment agreement with us or one of our subsidiaries that
governs the terms and conditions of his employment. Except as
set forth below with regards to Mr. Blair, each employment
agreement with respect to the named executive officers provides:
|
|
|
|
|
The initial term of employment is through June 30, 2007,
and will automatically be extended for additional one-year
periods unless either party notifies the other of non-extension
at least 60 days prior to the end of a term.
|
|
|
|
The annual base salary for 2007 for each of the named executive
officers is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Mark F. ONeil
|
|
$
|
510,000
|
|
|
$
|
495,040
|
|
Robert J. Cox III
|
|
$
|
280,000
|
|
|
$
|
260,000
|
|
John A. Blair
|
|
$
|
268,000
|
|
|
$
|
260,000
|
|
Eric D. Jacobs
|
|
$
|
270,000
|
|
|
$
|
260,000
|
|
Raj Sundaram
|
|
$
|
268,000
|
|
|
$
|
260,000
|
|
|
|
|
|
|
Each named executive officer is eligible to receive an annual
performance-based cash bonus. Each year, the amount of such
bonus, if any, is determined based upon our performance relative
to certain performance benchmark targets.
|
|
|
|
Each named executive officer is prohibited from competing with
us or soliciting our employees or customers during the term of
his employment and for a period of two years thereafter, and
from disclosing our confidential or proprietary information
indefinitely.
|
|
|
|
In the event that a named executive officers employment is
terminated by us without cause or by the executive
for good reason, the named executive officer will be
entitled to continue to participate in our health and welfare
benefit plans for a period of one year following termination and
to continue to be paid his base salary for a period of two years
following termination. Additionally, the named executive officer
shall be entitled to receive a pro rata annual bonus based on
the percentage of the year worked through the date of
termination. Notwithstanding the foregoing, in no event will any
named executive officer be entitled to receive any such payment
or benefits after he or she violates any non-compete,
non-disclosure or non-solicit covenant. Cause means
any of the following: (i) the executive officers
conviction for a felony, commission of fraud or embezzlement
upon us; (ii) the executive officers commission of
any willful act intended to injure our reputation, business, or
business relationships; (iii) the refusal or failure to
perform his duties with us in a competent and professional
manner (in certain cases, with a cure period of ten business
days); or (iv) the refusal or failure of the executive
officer to comply with any of his material obligations under his
employment agreement (in certain cases, with a cure period of
ten business days). Good reason means any of the
following: (i) a material breach by us of an executive
officers employment agreement or in connection with our
stock incentive plans (which has not been cured within the
allotted time); (ii) a material reduction of an executive
officers title or duties or the assignment to the officer
of any duties materially inconsistent with his or her then
current position; (iii) any material reduction in the
executive officers salary or benefits; (iv) the
failure of any successor entity to assume the terms of the
executive officers employment agreement
|
32
|
|
|
|
|
upon a change of control; (v) relocation of the
officers location a distance of at over fifty miles; or
(vi) if we do not renew the executive officers
employment agreement upon its expiration.
|
|
|
|
|
|
In the event that a named executive officers employment is
terminated by us without cause or by the executive
for good reason, the named executive officer shall
be credited with twenty-four months of accelerated vesting with
respect to any options or other equity-based awards granted
under the 2001 Stock Option Plan or 2005 Incentive Award Plan.
Upon a change of control, the named executive
officer shall automatically be credited with thirty-six months
of accelerated vesting with respect to any options or other
equity-based awards granted under the 2001 Stock Option Plan or
2005 Incentive Award Plan. Further, in the event that, within
twelve months following a change of control, a named executive
officers employment is terminated, he experiences a
material negative change in his compensation or responsibilities
or he is required to be based at a location more than
50 miles from his current work location, any remaining
unvested options or other equity-based awards granted under the
2001 Stock Option Plan or 2005 Incentive Award Plan shall become
fully vested. Change of control means any of the
following: (i) certain transactions or series of
transactions in which a third party directly or indirectly
acquires more than 50% of the total combined voting power of our
securities (other than through registered public offerings,
employee benefit plans and transactions with affiliates);
(ii) over a two year period, our directors who were
nominated by our stockholders or elected by our board cease to
constitute a majority of our board; (iii) a merger,
consolidation, reorganization, business combination, sale or
other disposition of all or substantially all of our assets or
the acquisition of assets or stock of another entity, in which
our voting securities outstanding immediately before the
transaction cease to represent at least a majority of the
combined voting power of the successor entitys outstanding
voting securities immediately after the transaction, or after
which a person or group beneficially owns voting securities
representing 50% or more of the combined voting power of the
successor entity; provided, however, that no person or
group shall be deemed to beneficially own 50% or more of
combined voting power of the successor entity solely as a result
of the voting power held in us prior to the consummation of the
transaction; or (iv) our stockholders approval of a
liquidation or dissolution. In the case of those named executive
officers who have entered into employment agreements with one of
our subsidiaries rather than with the parent company,
change of control also means the occurrence of any
of the above with respect to such subsidiary.
|
|
|
|
Each named executive officer is entitled to a
gross-up
payment that, on an after-tax basis, is equal to the taxes
imposed on the severance payment under the named executive
officers employment agreement in the event any payment or
benefit to the named executive officer is considered an
excess parachute payment and subject to an excise
tax imposed by Section 4999 of the Internal Revenue Code.
|
|
|
|
In the event that any of our named executive officers procures
subsequent employment during the period during which they are
entitled to a severance payment, then their future severance
payments shall be reduced to the lesser of (i) 50% of the
executives salary or (ii) 50% of the executives
base compensation received for subsequent employment, commencing
on the date the executive commences providing services in his
new capacity.
|
The following provisions of Mr. Blairs employment
agreement differ from those of our other named executive
officers:
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|
|
|
|
Mr. Blairs contract has a term of five years from
May 25, 2005.
|
|
|
|
In the event that Mr. Blairs employment is terminated
by us without cause or by him for good
reason, he shall be credited with twelve months of
accelerated vesting with respect to any stock options.
Additionally, the vested portion of his stock options shall
remain exercisable for nine months following the date of
termination of his employment.
|
Messrs. Blair and Sundaram have the following additional
provisions in their employment agreements:
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|
|
|
|
They each receive a monthly payment equal to
1/12
of $1,200,000 multiplied by the prime interest rate plus 1%, up
to a maximum rate of 7% until the note described in the
subsequent bullet point is issued.
|
33
|
|
|
|
|
They are each eligible to receive additional compensation
payable in the form of a note based on the fiscal performance of
certain data products. The note, when and if issued, will accrue
interest monthly and is payable in full on June 30, 2010,
although it can be prepaid at any time at our option.
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|
|
|
They each signed a separate Unfair Competition and
Nonsoliciation Agreement in which they agreed not to solicit
from or compete with our ALG business for a period of
10 years from May 25, 2005.
|
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2006 regarding the number of shares of our common stock that may
be issued under our equity compensation plans.
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Securities
|
|
|
Weighted-Average
|
|
|
for Future Issuance
|
|
|
|
to be Issued Upon
|
|
|
Exercise Price of
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
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Outstanding
|
|
|
Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Options, Warrants
|
|
|
(Excluding Securities
|
|
|
|
Warrants and Rights
|
|
|
and Rights
|
|
|
in Column a)
|
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|
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(a)
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(b)
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|
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(c)
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|
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Equity compensation plans approved
by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option
plans(1)
|
|
|
3,897,448
|
|
|
$
|
9.2395
|
|
|
|
518,293
|
|
2005 Employee Stock Purchase Plan
|
|
|
|
|
|
|
N/A
|
|
|
|
1,457,863
|
|
Equity compensation plans not
approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Total
|
|
|
3,897,448
|
|
|
|
|
|
|
|
1,976,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
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Consists of the 2001 Stock Option Plan and the 2005 Incentive
Award Plan. |
34
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Based on our review of information on file with the SEC and our
stock records, the following table provides certain information
about beneficial ownership of our common stock as of
May 15, 2007 for: (i) each person (or group of
affiliated persons) which is known by us to own beneficially
more than 5% of our common stock, (ii) each of our
directors, (iii) each named executive officer, and
(iv) all directors and current executive officers as a
group. Unless otherwise indicated, the address for those listed
below is c/o DealerTrack Holdings, Inc., 1111 Marcus Ave.,
Suite M04, Lake Success, NY 11042. Except as indicated by
footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power
with respect to all shares of common stock shown as beneficially
owned by them.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Percent
|
|
Shares
|
|
Beneficially Owned
|
|
|
Owned
|
|
|
Mark F.
ONeil(1)
|
|
|
1,317,892
|
|
|
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3.25
|
%
|
John A.
Blair(2)
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|
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187,156
|
|
|
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*
|
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Robert J.
Cox III(3)
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|
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271,927
|
|
|
|
*
|
|
Eric D.
Jacobs(4)
|
|
|
229,541
|
|
|
|
*
|
|
Vincent
Passione(5)
|
|
|
465,405
|
|
|
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1.17
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%
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Raj
Sundaram(6)
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|
|
115,518
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|
|
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*
|
|
Mary
Cirillo-Goldberg(7)
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|
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126,335
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|
|
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*
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|
Steven J.
Dietz(8)
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|
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348,286
|
|
|
|
*
|
|
Thomas R.
Gibson.(9)
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|
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35,000
|
|
|
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*
|
|
Thomas F. Gilman
|
|
|
|
|
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Ann B. Lane
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|
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|
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John J.
McDonnell, Jr.(10)
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|
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27,000
|
|
|
|
*
|
|
James David
Power III(11)
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|
|
56,250
|
|
|
|
*
|
|
Howard L.
Tischler(12)(14)
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|
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5,470,824
|
|
|
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13.79
|
%
|
All current directors and current
executive officers as a group (17
persons)(13)
|
|
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8,724,735
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|
|
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21.10
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%
|
First Advantage Corporation and
related
entities(14)
|
|
|
5,428,824
|
|
|
|
13.69
|
%
|
100 Carillon Parkway , St.
Petersburg, FL 33716
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|
|
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|
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FMR Corp.
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3,120,214
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|
|
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7.87
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%
|
Fred Alger Management,
Inc.(20)
|
|
|
2,030,000
|
|
|
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5.12
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%
|
111 Fifth Avenue, New York, NY
10003
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|
|
|
|
|
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|
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* |
|
Indicates less than 1% |
|
(1) |
|
Includes 875,160 shares which Mr. ONeil has the
right to acquire within 60 days after May 15, 2007
upon the exercise of stock options. Also includes
(i) 90,686 shares held by The Mark F. ONeil
Qualified Grantor Retained Annuity Trust, of which
Mr. ONeil is the trustee,
(ii) 50,583 shares held by Monique ONeil, the
wife of Mr. ONeil and (iii) 258,750 shares
of restricted common stock. |
|
(2) |
|
Includes 27,207 shares which Mr. Blair has the right
to acquire within 60 days after May 15, 2007 upon the
exercise of stock options and 31,250 shares of restricted
common stock. |
|
(3) |
|
Includes 170,158 shares which Mr. Cox has the right to
acquire within 60 days after May 15, 2007 upon the
exercise of stock options and 88,500 shares of restricted
common stock. |
|
(4) |
|
Includes 144,542 shares which Mr. Jacobs has the right
to acquire within 60 days after May 15, 2007 upon the
exercise of stock options. Also includes
(i) 6,134 shares held by The Eric D. Jacobs Grantor
Retained Annuity Trust, of which Mr. Jacobs is the trustee,
and (ii) 74,000 shares of restricted common stock. |
|
(5) |
|
Includes 200,000 shares which Mr. Passione has the
right to acquire within 60 days after May 15, 2007
upon the exercise of stock options. Also includes
35,336 shares held by the 2005 Vincent Passione Grantor
Retained Annuity Trust, of which Mr. Passiones wife
and sister are the trustees. |
35
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|
|
(6) |
|
Includes 16,561 shares which Mr. Sundaram has the
right to acquire within 60 days after May 15, 2007
upon the exercise of stock options. Also includes
57,750 shares of restricted common stock. |
|
(7) |
|
Includes 46,250 shares which Ms. Cirillo-Goldberg has
the right to acquire within 60 days after May 15, 2007
upon the exercise of stock options and 5,834 shares of
restricted common stock. |
|
(8) |
|
Includes 30,000 shares which Mr. Dietz has the right
to acquire within 60 days after May 15, 2007 upon the
exercise of stock options and 5,834 shares of restricted
common stock. Also includes (i) 178,741 shares held by
GRPVC, L.P., or GRPVC, and (ii) 127,545 shares held by
GRPAQ, L.P., or GRPAQ. GRP Management Services Corp., or GRPMS,
is the general partner of GRPVC. GRPAQ, Inc. is the general
partner of GRPAQ. Mr. Dietz is Chief Financial Officer of
each of GRPMS and GRPAQ, Inc. Mr. Dietz disclaims
beneficial ownership of these shares except to the extent of his
pecuniary interest in such shares. |
|
|
|
(9) |
|
Includes 20,000 shares which Mr. Gibson has the right
to acquire within 60 days after May 15, 2007 upon the
exercise of stock options and 5,834 shares of restricted
common stock. |
|
(10) |
|
Includes 10,000 shares which Mr. McDonnell has the
right to acquire within 60 days after May 15, 2007
upon the exercise of stock options and 5,834 shares of
restricted common stock. |
|
(11) |
|
Includes 46,250 shares which Mr. Power has the right
to acquire within 60 days after May 15, 2007 upon the
exercise of stock options and 5,834 shares of restricted
common stock. |
|
(12) |
|
Includes 30,000 shares which Mr. Tischler has the
right to acquire within 60 days after May 15, 2007
upon the exercise of stock options and 5,834 shares of
restricted common stock. |
|
(13) |
|
Includes 1,717,118 shares which this group has the right to
acquire within 60 days after May 15, 2007 upon the
exercise of stock options and 734,750 shares of restricted
common stock. |
|
(14) |
|
Consists of 5,428,824 shares of common stock held by First
American Credit Management Solutions, Inc., or CMSI, a direct,
wholly-owned subsidiary of First Advantage Corporation, a
publicly traded company. First Advantage Corporation may be
deemed a beneficial owner of the shares held by CMSI, however,
it disclaims beneficial ownership except to the extent of its
pecuniary interest. Mr. Howard L. Tischler is Group
President of First Advantage Dealer Services, an affiliate of
CMSI. Mr. Tischler disclaims beneficial ownership of these
shares except to the extent of his pecuniary interest therein. |
|
(15) |
|
The shares shown as beneficially owned by FMR Corp. were
reported in its Schedule 13G filed with the SEC on
February 14, 2007. |
|
(16) |
|
The shares shown as beneficially owned by Fred Alger Management,
Inc. were reported in its Schedule 13G filed with the SEC
on February 12, 2007. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers, directors and persons who
beneficially own more than 10% of either class of our common
stock to file reports of ownership and changes of ownership with
the SEC and to furnish us with copies of the reports they file.
Based solely on our review of the reports received by us, or
written representations from certain reporting persons, we
believe that during the period from January 1, 2006 through
December 31, 2006 all reports were timely filed, except for
(a) a Form 4 filing, which was subsequently amended,
to report a grant of options and restricted common stock that
was received on January 3, 2006 for each of
Messrs. Blair, Cox, Giglia, Jacobs, ONeil, Passione
and Trinder, and Ms. Herrera; and (b) a Form 4
filing for Messrs. Sundaram and Von Pusch to report a grant
of options and restricted common stock that was received on
November 2, 2006.
CERTAIN
RELATIONSHIPS AND TRANSACTIONS
In accordance with its written charter, the Audit Committee,
which is comprised of all independent directors, is responsible
for reviewing all related party transactions for potential
conflict of interest situations on an ongoing basis, and the
approval of the Audit Committee is required for all such
transactions. The term related party transactions
refers to transactions required to be disclosed in our filings
with the SEC pursuant to Item 404 of
Regulation S-K.
36
Transactions
with Five Percent Stockholders
First
American Credit Management Solutions, Inc.
Current Equity Ownership. CMSI owns an
aggregate of 5,428,824 shares, or 13.7%, of our common
stock.
Joint Marketing Agreement. We are a party with
First Advantage CREDCO, or CREDCO, formerly know as First
American CREDCO, an affiliate of CMSI, to a Joint Marketing
Agreement, dated as of March 19, 2003, and amended as of
December 1, 2004, under which automotive dealers may use
our web-based network to, among other things, electronically
access a CREDCO credit report on a prospective customer. We earn
revenue from CREDCO on a per transaction basis, each time a
report is accessed. The total revenue and accounts receivable
from CREDCO as of and for the year ended December 31, 2006
was $1.3 million (0.7% of our total revenue) and
$0.2 million, respectively.
Under the Joint Marketing Agreement, we have agreed not to
compete with CREDCO in certain circumstances in the marketing of
consumer credit reports to our automobile dealer customers.
CreditReportPlus Agreement. We are party to an
agreement with CreditReportPlus, LLC, an affiliate of CMSI,
under which our dealer customers will be provided Credit Report
Plus as our preferred provider of certain functionality related
to credit reports. For the year ended December 31, 2006,
revenue generated under this agreement was $0.8 million
(0.5% of our total revenue).
CMSI Agreements. We are party to agreements
with CMSI under which CMSI provides us with certain integration,
customer support and hosting services. Additionally, we use
CMSIs software product eValuate as a verification tool
with respect to data services and contract data. The total
amount of expense for the year ended December 31, 2006 was
approximately $27,322.
Non-Competition Agreement. As part of our
acquisition of Credit Online, Inc. from CMSI, we entered into a
non-competition agreement with CMSI and The First American
Corporation, the former parent company of CMSI, under which we
have agreed not to compete in the single financing source credit
origination
and/or
credit decisioning system business and CMSI has agreed not to
compete in the multi-financing source credit application
processing business and other related businesses defined in the
agreement.
Bar None Agreement. In February 2006, we
entered into an agreement with Bar None, Inc., an affiliate of
CMSI, under which we provide integration with respect to leads
for automotive dealers generated through Bar None. For the year
ended December 31, 2006, $0.3 million (0.2% of our
total revenue) was earned from this agreement.
Director. Howard L. Tischler, Group President
of First Advantage Dealer Services, an affiliate of CMSI, and
from 2001 until September 2005, President and Chief Executive
Officer of CMSI, has been our director since March 2003
pursuant to our stockholders agreement, which terminated
upon our initial public offering. CMSI no longer has the right
to appoint a director to our board of directors.
Mr. Tischler received 3,500 shares of restricted
common stock from us on June 14, 2006, pursuant to our 2005
Incentive Award Plan.
Registration
Rights
We are party to a Fourth Amended and Restated Registration
Rights Agreement, dated March 19, 2003, among ACF
Investment Corp., ADP, Inc., Capital One Auto Finance, Inc., DJR
US, LLC, (formerly known as Automotive Lease Guide (alg), LLC),
First American Credit Management Solutions, Inc., GRP II,
L.P., GRP II Investors, L.P., GRP II Partners, L.P.,
J.P. Morgan Partners, Wells Fargo Financial, Inc., Wells
Fargo Small Business Investment Company, Inc., WFS Web
Investments, Janet Clarke, Robert J. Cox III, Mary
Cirillo-Goldberg and Mark F. ONeil which provides for:
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|
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|
|
An unlimited number of piggyback registrations pursuant to which
we are required to register sales of a holders shares
under the Securities Act when we undertake a public offering
either on our own behalf or on behalf of another stockholder,
subject to the discretion of the managing underwriter of the
offering to decrease the amount that holders may register, with
priority given, in the case of a public offering undertaken on
our own behalf, first to the shares to be sold by us, then to
shares to be sold by the holders exercising these
|
37
|
|
|
|
|
piggyback registration rights, and then to all other shares and,
in the case of a public offering on behalf of another
stockholder, first to the shares to be sold by such stockholder,
then to shares to be sold by us, and then to all other shares;
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|
|
|
|
|
Two demand registrations pursuant to which we are required to
register sales of a holders shares under the Securities
Act that would result in aggregate net proceeds of at least
$30,000,000, subject to certain rights to delay up to
180 days the filing or effectiveness of any such
registration statements; and
|
|
|
|
One registration on
Form S-3
(or equivalent short-form registration statement) per year
pursuant to which we are required to register sales of a
holders shares under the Securities Act, subject to the
aggregate market value (at the time of a holders request)
of the shares registered by such holder being no less than
$5,000,000.
|
Generally, we have agreed to pay all expenses of any
registration pursuant to the registration rights agreement,
except that underwriters discounts and commissions shall
be borne pro rata by the parties selling shares pursuant to the
applicable registration statement.
Earn Out
Provision
In connection with our purchase of substantially all of the
assets of Automotive Lease Guide (alg) LLC, we agreed to pay to
DJR US, LLC (the former owner of the assets of Automotive Lease
Guide (alg) LLC) $750,000 on each of the first through
fifth anniversaries of the closing date of the acquisition.
Additionally, we agreed to pay additional consideration of up to
$11.3 million contingent upon certain future increases in
revenue of ALG and another of our subsidiaries through December
2009. In May 2006, we paid $750,000 to DJR as the annual payment
and in January 2007, we paid $0.2 million to DJR as
additional consideration based on 2006 revenue. John A. Blair,
our Chief Executive Officer, Automotive Lease Guide (alg), Inc.,
and Raj Sundaram, our Senior Vice President, Dealer Solutions,
DealerTrack, Inc., are both members of DJR US, LLC.
Former
Five Percent Stockholders
Prior to the completion of our follow-on offering on
October 12, 2006, the following financing source customers
held more than five percent of our outstanding shares of common
stock.
|
|
|
|
|
AmeriCredit Financial Services, Inc., through its affiliate ACF
Investment Corp.;
|
|
|
|
Capital One Auto Finance, Inc., in its own name and through Onyx
Acceptance Corporation, through its affiliate Capital One Auto
Finance, Inc.;
|
|
|
|
JPMorgan Chase Bank, N.A., which does business through Chase
Auto Finance as three financing sources, Chase Custom Finance
(previously Bank One, N.A.), Chase Prime and Subaru Motor
Finance, through its affiliate J.P. Morgan Partners;
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|
Wells Fargo & Company, through its affiliates Wells
Fargo Financial, Inc. and Wells Fargo Small Business Investment
Company, Inc., and Wells Fargo Financial, Inc.; and
|
|
|
|
WFS Financial, Inc., a subsidiary of Wachovia Corporation,
through its affiliate WFS Web Investments.
|
We have entered into agreements with each of the automotive
financing source affiliates of these entities. Each has agreed
to subscribe to and use our network to receive credit
application data and transmit credit decisions electronically.
Each agreement sets forth the responsibilities of each party
with respect to the development of the interface between our
computer system and the financing source customers credit
processing system and the terms and conditions governing our
operation of and each financing source customers
subscription to and use of our system.
Under these agreements, the automotive financing source
affiliates have most favored nation status, granting
each of them the right to no less favorable pricing terms for
our products and services than those granted by us to other
financing sources, subject to limited exceptions. The agreements
of these automotive financing source affiliates also restrict
our ability to terminate such agreements.
38
ACF
Investment Corp.
Financing Source Customer. AmeriCredit
Financial Services, Inc., an affiliate of ACF Investment Corp.,
is one of our financing source customers. For the year ended
December 31, 2006, $6.4 million (3.7% of our total
revenue) was earned from AmeriCredit Financial Services, Inc.
Capital
One Auto Finance, Inc.
Financing Source Customers. Capital One Auto
Finance, Inc. and Onyx Acceptance Corporation, an affiliate of
Capital One Auto Finance, Inc., are two of our financing source
customers. For the year ended December 31, 2006,
$8.2 million (4.7% of our total revenue) was earned from
Capital One Auto Finance, Inc. and Onyx Acceptance Corporation,
while it has been an affiliate of Capital One Auto Finance, Inc.
J.P. Morgan
Partners
Financing Source Customers. JPMorgan Chase
Bank, N.A., which does business through Chase Auto Finance as
three of our financing sources, Chase Custom Finance, Chase
Prime and Subaru Motor Finance, is an affiliate of
J.P. Morgan Partners. For the year ended December 31,
2006, $5.5 million (3.2% of our total revenue) was earned
from Chase Auto Finance. We also provide web interface hosting
services for Chase Auto Finance.
License Agreement. We license certain limited
technology from an affiliate of J.P. Morgan Partners, which
we obtained as a contributed asset during our initial
capitalization. This license is royalty-free and perpetual. The
license agreement restricts our ability to use this technology
outside of the automotive finance industry. There are no
payments or other ongoing consideration with respect to this
license agreement.
Banking and Insurance. Since February 2001,
JPMorgan Chase Bank, N.A. (successor by merger to Bank One,
N.A.) has provided us with commercial banking and investment
management services.
Credit Facilities. JPMorgan Chase Bank, N.A.
is the administrative agent and letter of credit issuing bank
and a lender under our credit facilities.
Wells
Fargo Small Business Investment Company, Inc. and Wells Fargo
Financial, Inc.
Financing Source Customers. Wells
Fargo & Company and Wells Fargo Financial, Inc., are
both financing source customers of ours. Wells Fargo &
Company, Wells Fargo Financial, Inc. and Wells Fargo SBIC are
affiliates of each other. For the year ended December 31,
2006, $7.6 million (4.4% of our total revenue) was earned
from Wells Fargo & Company and Wells Fargo Financial,
Inc. We also provide web interface hosting services for
Wells Fargo & Company.
Wachovia
Corporation
Financing Source Customer. WFS Financial, Inc,
an affiliate of WFS Web Investments, is one of our financing
source customers. For the year ended December 31, 2006
$0.4 million (0.2% of our total revenue) was earned from
WFS Financial, Inc.
Underwriting and Credit Facilities. Wachovia
Capital Markets, LLC, an affiliate of the Wachovia Corporation,
was one of the underwriters of our follow-on offering, which
closed on October 12, 2006, and received approximately
$0.2 million in fees from us in connection with such
offering. In addition, Wachovia Bank, National Association, is a
lender under our credit facilities.
39
MISCELLANEOUS
SOLICITATION
OF PROXIES
We will bear the entire cost of this solicitation of proxies,
including the preparation, assembly, printing, and mailing of
this Proxy Statement, the proxy, and any additional solicitation
material that we may provide to shareholders. Copies of
solicitation material will be provided to brokerage firms,
fiduciaries and custodians holding shares in their names that
are beneficially owned by others so that they may forward the
solicitation material to such beneficial owners. In addition, we
have retained Georgeson Shareholder Communications, Inc. to act
as a proxy solicitor in conjunction with the meeting. We have
agreed to pay that firm $7,000, plus reasonable out of pocket
expenses, for proxy solicitation services. The original
solicitation of proxies by mail may be supplemented by
solicitation by telephone, telegram and other means by our
directors, officers and employees. No additional compensation
will be paid to these individuals for any such services.
DEADLINE
FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR OUR 2008 ANNUAL
MEETING
If you want to make a proposal for consideration at next
years Annual Meeting and have it included in our proxy
materials, we must receive your proposal by March 13, 2008,
and the proposal must comply with the rules of the SEC.
If you want to make a proposal for consideration at next
years Annual Meeting without having the proposal included
in our proxy materials, we must receive your proposal at least
90 days prior to the 2008 Annual Meeting. If we give less
than 100 days notice of the 2008 Annual Meeting, we
must receive your proposal within ten days after we give the
notice.
If we do not receive your proposal by the appropriate deadline,
then it may not be brought before the 2008 Annual Meeting.
Proposals should be addressed to the Secretary, DealerTrack
Holdings, Inc., 1111 Marcus Ave., Suite M04, Lake Success,
NY 11042.
ANNUAL
REPORT
Our Annual Report for the year ended December 31, 2006 has
been mailed to our stockholders of record and is not part of
this Proxy Statement.
Upon written request of any person solicited, our Annual Report
on
Form 10-K
for the year ended December 31, 2006 as filed with the SEC
may be obtained, without charge, by writing to Investor
Relations, DealerTrack Holdings, Inc., 1111 Marcus Ave.,
Suite M04, Lake Success, NY 11042.
THE BOARD OF
DIRECTORS
DEALERTRACK HOLDINGS, INC.
Eric D.
Jacobs
Secretary
Lake Success, New York
May 29, 2007
40
EXHIBIT I
AMENDED
AND RESTATED
DEALERTRACK HOLDINGS, INC.
2005 INCENTIVE AWARD PLAN
ARTICLE 1
PURPOSE
The purpose of this Amended and Restated DealerTrack Holdings,
Inc. 2005 Incentive Award Plan (the Plan) is
to promote the success and enhance the value of DealerTrack
Holdings, Inc. (the Company) by linking the
personal interests of the members of the Board, Employees, and
Consultants to those of Company stockholders and by providing
such individuals with an incentive for outstanding performance
to generate superior returns to Company stockholders. The Plan
is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of members
of the Board, Employees, and Consultants upon whose judgment,
interest, and special effort the successful conduct of the
Companys operation is largely dependent.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly
indicates otherwise. The singular pronoun shall include the
plural where the context so indicates.
2.1 Award means an
Option, a Restricted Stock award, a Stock Appreciation Right
award, a Performance Share award, a Performance Stock Unit
award, a Dividend Equivalents award, a Stock Payment award, a
Deferred Stock award, a Restricted Stock Unit award, a
Performance Bonus Award, or a Performance-Based Award granted to
a Participant pursuant to the Plan.
2.2 Award
Agreement means any written agreement,
contract, or other instrument or document evidencing an Award,
including through electronic medium.
2.3 Board means the
Board of Directors of the Company.
2.4 Cause shall,
unless otherwise specifically provided in any applicable Award
Agreement, mean with respect to any Participant: (a) the
Participants commission of an act of fraud or embezzlement
upon the Company or any of its affiliates; (b) the
Participants commission of any willful act intended to
injure the reputation, business, or any business relationship of
the Company or any of its affiliates; (c) the Participant
is found by a court of competent jurisdiction to have committed
a felony; (d) the refusal or failure of the Participant to
perform the Participants duties with the Company or any of
its affiliates, as applicable, in a competent and professional
manner that is not cured by the Participant within ten
(10) business days after a written demand therefor is
delivered to the Participant by the Company or applicable
affiliate which specifically identifies the manner in which the
Company or applicable affiliate believes that the Participant
has not substantially performed the Participants duties;
provided, that if the Company or applicable affiliate, in good
faith, determines that the refusal or failure by the participant
is egregious in nature or is not susceptible of cure, then no
such cure period shall be required; or (e) the refusal or
failure of the Participant to comply with any of his material
obligations under any Award Agreement or any applicable
employment agreement between the Company, or an affiliate, and
the Participant that is not cured by the Participant within ten
(10) business days after a written demand therefor is
delivered to the Participant by the Company or the applicable
affiliate which specifically identifies the manner in which the
Company or the applicable affiliate believes the Participant has
materially breached the Award Agreement or employment agreement;
provided, that if the Company or the applicable affiliate, in
good faith, determines that the refusal or failure by the
Participant is egregious in nature or is not susceptible of
cure, then no such cure period shall be required.
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2.5 Change in
Control means and includes each of the
following:
(a) A transaction or series of transactions (other than an
offering of Stock to the general public through a registration
statement filed with the Securities and Exchange Commission)
whereby any person or related group of
persons (as such terms are used in
Sections 13(d) and 14(d)(2) of the Exchange Act) (other
than the Company, any of its subsidiaries, an employee benefit
plan maintained by the Company or any of its subsidiaries or a
person that, prior to such transaction, directly or
indirectly controls, is controlled by, or is under common
control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of
Rule 13d-3
under the Exchange Act) of securities of the Company possessing
more than 50% of the total combined voting power of the
Companys securities outstanding immediately after such
acquisition; or
(b) During any period of two consecutive years, individuals
who, at the beginning of such period, constitute the Board
together with any new director(s) (other than a director
designated by a person who shall have entered into an agreement
with the Company to effect a transaction described in
Section 2.5(a) or Section 2.5(c)) whose election by
the Board or nomination for election by the Companys
stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at
the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
(c) The consummation by the Company (whether directly
involving the Company or indirectly involving the Company
through one or more intermediaries) of (x) a merger,
consolidation, reorganization, or business combination or
(y) a sale or other disposition of all or substantially all
of the Companys assets in any single transaction or series
of related transactions or (z) the acquisition of assets or
stock of another entity, in each case other than a transaction:
(i) Which results in the Companys voting securities
outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the Company or the person that, as a
result of the transaction, controls, directly or indirectly, the
Company or owns, directly or indirectly, all or substantially
all of the Companys assets or otherwise succeeds to the
business of the Company (the Company or such person, the
Successor Entity)) directly or indirectly, at
least a majority of the combined voting power of the Successor
Entitys outstanding voting securities immediately after
the transaction, and
(ii) After which no person or group beneficially owns
voting securities representing 50% or more of the combined
voting power of the Successor Entity; provided, however,
that no person or group shall be treated for purposes of
this Section 2.5(c)(ii) as beneficially owning 50% or more
of combined voting power of the Successor Entity solely as a
result of the voting power held in the Company prior to the
consummation of the transaction; or
(d) The Companys stockholders approve a liquidation
or dissolution of the Company.
The Committee shall have full and final authority, which shall
be exercised in its discretion, to determine conclusively
whether a Change in Control of the Company has occurred pursuant
to the above definition, and the date of the occurrence of such
Change in Control and any incidental matters relating thereto.
2.6 Code means the
Internal Revenue Code of 1986, as amended.
2.7 Committee means
the committee of the Board described in Article 12.
2.8 Consultant means
any consultant or adviser if: (a) the consultant or adviser
renders bona fide services to the Company; (b) the services
rendered by the consultant or adviser are not in connection with
the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market
for the Companys securities; and (c) the consultant
or adviser is a natural person who has contracted directly with
the Company to render such services.
2.9 Covered
Employee means an Employee who is, or could
be, a covered employee within the meaning of
Section 162(m) of the Code.
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2.10 Deferred
Stock means a right to receive a specified
number of shares of Stock during specified time periods pursuant
to Section 8.5.
2.11 Disability means
that the Participant qualifies to receive long-term disability
payments under the Companys long-term disability insurance
program, as it may be amended from time to time.
2.12 Dividend
Equivalents means a right granted to a
Participant pursuant to Section 8.3 to receive the
equivalent value (in cash or Stock) of dividends paid on Stock.
2.13 Effective Date
shall have the meaning set forth in Section 13.1.
2.14 Eligible
Individual means any person who is an
Employee, a Consultant or a member of the Board, as determined
by the Committee.
2.15 Employee means
any officer or other employee (as defined in accordance with
Section 3401(c) of the Code) of the Company or any
Subsidiary.
2.16 Exchange
Act means the Securities Exchange Act of
1934, as amended.
2.17 Fair Market
Value means, as of any given date,
(a) if Stock is traded on an exchange, the closing price of
a share of Stock as reported in the Wall Street Journal
for such date, or if there is no closing price for the Stock
on the date in question, then the Fair Market Value shall be the
first trading date immediately prior to such date during which a
sale occurred; or (b) if Stock is not publicly traded, the
fair market value established by the Committee acting in good
faith.
2.18 Incentive Stock
Option means an Option that is intended to
meet the requirements of Section 422 of the Code or any
successor provision thereto.
2.19 Independent
Director means a member of the Board who is
not an Employee of the Company.
2.20 Non-Employee
Director means a member of the Board who
qualifies as a Non-Employee Director as defined in
Rule 16b-3(b)(3)
under the Exchange Act, or any successor definition adopted by
the Board.
2.21 Non-Qualified Stock
Option means an Option that is not intended
to be an Incentive Stock Option.
2.22 Option means a
right granted to a Participant pursuant to Article 5 of the
Plan to purchase a specified number of shares of Stock at a
specified price during specified time periods. An Option may be
either an Incentive Stock Option or a Non-Qualified Stock Option.
2.23 Participant means
any Eligible Individual who, as a member of the Board,
Consultant or Employee, has been granted an Award pursuant to
the Plan.
2.24 Performance-Based
Award means an Award granted to selected
Covered Employees pursuant to Section 8.7, but which is
subject to the terms and conditions set forth in Article 9.
All Performance-Based Awards are intended to qualify as
Qualified Performance-Based Compensation.
2.25 Performance Bonus
Award has the meaning set forth in
Section 8.7.
2.26 Performance
Criteria means the criteria that the
Committee selects for purposes of establishing the Performance
Goal or Performance Goals for a Participant for a Performance
Period. The Performance Criteria (which shall be applicable to
the organizational level specified by the Committee, including,
but not limited, to the Company or a unit, division, group,
subsidiary or plan of the Company) that will be used to
establish Performance Goals are limited to the following:
earnings before interest, taxes, depreciation and amortization,
net income (loss) (either before or after interest, taxes,
depreciation
and/or
amortization), economic value-added, sales or revenue,
acquisitions or strategic transactions, operating income (loss),
cash flow (including, but not limited to, operating cash flow
and free cash flow, or cash net income), cash net income, return
on capital, return on assets, return on stockholders
equity, stockholder returns, return on sales, gross or net
profit margin, productivity, expense, margins, operating
efficiency, customer satisfaction, working capital, earnings
(loss) per share, price per share of Stock, market share, number
of customers and market capitalization, any of which may be
measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group.
The Committee shall
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define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance
Period for such Participant.
2.27 Performance Goals
means, for a Performance Period, the goals established in
writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria
used to establish such Performance Goals, the Performance Goals
may be expressed in terms of overall Company performance or the
performance of a division, business unit, or an individual. The
Committee, in its discretion, may adjust or modify the
calculation of Performance Goals for such Performance Period in
order to prevent the dilution or enlargement of the rights of
Participants (a) in the event of, or in anticipation of,
any unusual or extraordinary corporate item, transaction, event,
or development, or (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the
Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions.
2.28 Performance
Period means the one or more periods of time,
which may be of varying and overlapping durations, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of
determining a Participants right to, and the payment of, a
Performance-Based Award.
2.29 Performance
Share means a right granted to a Participant
pursuant to Article 8, to receive Stock, the payment of
which is contingent upon achieving certain Performance Goals or
other performance-based targets established by the Committee.
2.30 Performance Stock
Unit means a right granted to a Participant
pursuant to Article 8, to receive Stock, the payment of
which is contingent upon achieving certain Performance Goals or
other performance-based targets established by the Committee.
2.31 Prior Plan means
the DealerTrack Holdings, Inc. 2001 Stock Option Plan, effective
as of August 10, 2001, as such plan may be amended from
time to time.
2.32 Plan means this
Amended and Restated DealerTrack Holdings, Inc. 2005 Incentive
Award Plan, as it may be further amended from time to time.
2.33 Public Trading
Date means the first date upon which Stock is
listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation)
upon notice of issuance as a national market security on an
interdealer quotation system.
2.34 Qualified Performance-Based
Compensation means any compensation that is
intended to qualify as qualified performance-based
compensation as described in Section 162(m)(4)(C) of
the Code.
2.35 Restricted
Stock means Stock awarded to a Participant
pursuant to Article 6 that is subject to certain
restrictions and may be subject to risk of forfeiture.
2.36 Restricted Stock
Unit means an Award granted pursuant to
Section 8.6.
2.37 Securities
Act shall mean the Securities Act of 1933, as
amended.
2.38 Stock means the
common stock of the Company, par value $0.01 per share, and such
other securities of the Company that may be substituted for
Stock pursuant to Article 11.
2.39 Stock Appreciation Right
or SAR means a right granted
pursuant to Article 7 to receive a payment equal to the
excess of the Fair Market Value of a specified number of shares
of Stock on the date the SAR is exercised over the Fair Market
Value on the date the SAR was granted as set forth in the
applicable Award Agreement.
2.40 Stock
Payment means (a) a payment in the form
of shares of Stock, or (b) an option or other right to
purchase shares of Stock, as part of any bonus, deferred
compensation or other arrangement, made in lieu of all or any
portion of the compensation, granted pursuant to
Section 8.4.
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2.41 Subsidiary means
any subsidiary corporation as defined in
Section 424(f) of the Code and any applicable regulations
promulgated thereunder or any other entity of which a majority
of the outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Company.
ARTICLE 3
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) Subject to Article 11 and Section 3.1(b), the
aggregate number of shares of Stock which may be issued or
transferred pursuant to Awards under the Plan is increased from
3,183,853 to 4,483,853; provided however, no more than
4,400,000 shares of Stock may be delivered upon the
exercise of Incentive Stock Options. Further, on and after the
date this Plan is approved by stockholders, no more than
1,000,000 shares of Stock may be granted in the form of
full value Awards.
(b) To the extent that an Award terminates, expires, or
lapses for any reason, any shares of Stock subject to the Award
shall again be available for the grant of an Award pursuant to
the Plan. Any shares of Stock tendered or withheld to satisfy
the grant or exercise price or tax withholding obligation
pursuant to any Award shall not be available for the grant of an
Award pursuant to the Plan. In addition, upon the exercise of
any SAR for shares of Stock, the gross number of shares
exercised shall be deducted from the total number of shares of
Stock available for future issuance under the Plan. To the
extent permitted by applicable law or any exchange rule, shares
of Stock issued in assumption of, or in substitution for, any
outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary shall not be
counted against shares of Stock available for grant pursuant to
this Plan. The payment of Dividend Equivalents in cash in
conjunction with any outstanding Awards shall not be counted
against the shares available for issuance under the Plan.
Notwithstanding the provisions of this Section 3.1(b), no
shares of Stock may again be optioned, granted or awarded if
such action would cause an Incentive Stock Option to fail to
qualify as an incentive stock option under Section 422 of
the Code.
3.2 Stock Distributed. Any
Stock distributed pursuant to an Award may consist, in whole or
in part, of authorized and unissued Stock, treasury Stock or
Stock purchased on the open market.
3.3 Limitation on Number of Shares Subject
to Awards. Notwithstanding any provision in
the Plan to the contrary, and subject to Article 11, the
maximum number of shares of Stock with respect to one or more
Awards that may be granted to any one Participant during any
fiscal year of the Company shall be 750,000. The maximum amount
payable with respect to Performance Bonus Awards to a Covered
Employee during any fiscal year of the Company shall be
$3,000,000.
ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. Each
Eligible Individual shall be eligible to be granted one or more
Awards pursuant to the Plan.
4.2 Participation. Subject
to the provisions of the Plan, the Committee may, from time to
time, select from among all Eligible Individuals, those to whom
Awards shall be granted and shall determine the nature and
amount of each Award. No Eligible Individual shall have any
right to be granted an Award pursuant to this Plan.
4.3 Foreign
Participants. Notwithstanding any provision
of the Plan to the contrary, in order to comply with the laws in
other countries in which the Company and its Subsidiaries
operate or have Eligible Individuals, the Committee, in its sole
discretion, shall have the power and authority to:
(i) determine which Subsidiaries shall be covered by the
Plan; (ii) determine which Eligible Individuals outside the
United States are eligible to participate in the Plan;
(iii) modify the terms and conditions of any Award granted
to Eligible Individuals outside the United States to comply
with applicable foreign laws; (iv) establish subplans and
modify exercise procedures and other terms and procedures, to
the extent such actions may be necessary or advisable (any such
subplans
and/or
modifications shall be attached to this Plan as appendices);
provided, however, that no such subplans
and/or
modifications shall increase
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the share limitations contained in Sections 3.1 and 3.3 of
the Plan; and (v) take any action, before or after an Award
is made, that it deems advisable to obtain approval or comply
with any necessary local governmental regulatory exemptions or
approvals. Notwithstanding the foregoing, the Committee may not
take any actions hereunder, and no Awards shall be granted, that
would violate the Exchange Act, the Code, any securities law or
governing statute or any other applicable law.
ARTICLE 5
STOCK OPTIONS
5.1 General. The Committee
is authorized to grant Options to Participants on the following
terms and conditions:
(a) Exercise Price. The exercise
price per share of Stock subject to an Option shall be
determined by the Committee and set forth in the Award
Agreement; provided that, subject to Section 5.2(d),
the exercise price for any Option shall not be less than 100% of
the Fair Market Value of a share of Stock on the date of grant.
(b) Time and Conditions of
Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part; provided that the term of any Option granted under
the Plan shall not exceed seven years. The Committee shall also
determine the performance or other conditions, if any, that must
be satisfied before all or part of an Option may be exercised.
(c) Payment. The Committee shall
determine the methods by which the exercise price of an Option
may be paid, the form of payment, including, without limitation:
(i) cash, (ii) except with respect to Incentive Stock
Options, shares of Stock issuable to the Option holder upon
exercise of the Option, with a Fair Market Value on the date of
the Option exercise equal to the aggregate Option exercise price
of the shares with respect to which such Option or portion
thereof is thereby exercised, (iii) shares of Stock held
for such period of time as may be required by the Committee in
order to avoid adverse accounting consequences and having a Fair
Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof, or
(iv) through the delivery of a notice that the Participant
has placed a market sell order with a broker with respect to
shares of Stock then issuable upon exercise of the Option, and
that the broker has been directed to pay a sufficient portion of
the net proceeds of the sale to the Company in satisfaction of
the Option exercise price; provided that payment of such
proceeds is then made to the Company upon settlement of such
sale. The Committee shall also determine the methods by which
shares of Stock shall be delivered or deemed to be delivered to
Participants. Notwithstanding any other provision of the Plan to
the contrary, no Participant who is a member of the Board or an
executive officer of the Company within the meaning
of Section 13(k) of the Exchange Act shall be permitted to
pay the exercise price of an Option in any method which would
violate Section 13(k) of the Exchange Act.
(d) Evidence of Grant. All Options
shall be evidenced by an Award Agreement between the Company and
the Participant. The Award Agreement shall include such
additional provisions as may be specified by the Committee.
5.2 Incentive Stock
Options. Incentive Stock Options shall be
granted only to Employees and the terms of any Incentive Stock
Options granted pursuant to the Plan, in addition to the
requirements of Section 5.1, must comply with the
provisions of this Section 5.2.
(a) Expiration. Subject to
Section 5.2(c), an Incentive Stock Option shall expire and
may not be exercised to any extent by anyone after the first to
occur of the following events:
(i) Seven years from the date it is granted, unless an
earlier time is set in the Award Agreement;
(ii) Three months after the Participants termination
of employment as an Employee; and
(iii) One year after the date of the Participants
termination of employment or service on account of Disability or
death. Upon the Participants Disability or death, any
Incentive Stock Options exercisable at the Participants
Disability or death may be exercised by the Participants
legal representative or
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representatives, by the person or persons entitled to do so
pursuant to the Participants last will and testament, or,
if the Participant fails to make testamentary disposition of
such Incentive Stock Option or dies intestate, by the person or
persons entitled to receive the Incentive Stock Option pursuant
to the applicable laws of descent and distribution.
(b) Individual Dollar
Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares
of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To
the extent that Incentive Stock Options are first exercisable by
a Participant in excess of such limitation, the excess shall be
considered Non-Qualified Stock Options.
(c) Ten Percent Owners. An
Incentive Stock Option shall be granted to any individual who,
at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of
Stock of the Company only if such Option is granted at a price
that is not less than 110% of Fair Market Value on the date of
grant and the Option is exercisable for no more than five years
from the date of grant.
(d) Transfer Restriction. The
Participant shall give the Company prompt notice of any
disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date
of grant of such Incentive Stock Option or (ii) one year
after the transfer of such shares of Stock to the Participant.
(e) Expiration of Incentive Stock
Options. No Award of an Incentive Stock
Option may be made pursuant to this Plan after the tenth
anniversary of the Effective Date.
(f) Right to Exercise. During a
Participants lifetime, an Incentive Stock Option may be
exercised only by the Participant.
(g) Failure to Meet
Requirements. Any Option (or portion thereof)
purported to be an Incentive Stock Option, which, for any
reason, fails to meet the requirements of Section 422 of
the Code shall be considered a Non-Qualified Stock Option.
5.3 Granting of Options to Independent
Directors. The Board may from time to time,
in its sole discretion, and subject to the limitations of the
Plan:
(a) Select from among the Independent Directors (including
Independent Directors who have previously been granted Options
under the Plan) such of them as in its opinion should be granted
Options;
(b) Subject to Section 3.3, determine the number of
shares of Stock that may be purchased upon exercise of the
Options granted to such selected Independent Directors; and
(c) Subject to the provisions of this Article 5,
determine the terms and conditions of such Options, consistent
with the Plan.
Options granted to Independent Directors shall be Non-Qualified
Stock Options.
ARTICLE 6
RESTRICTED STOCK AWARDS
6.1 Grant of Restricted
Stock. The Committee is authorized to make
Awards of Restricted Stock to any Participant selected by the
Committee in such amounts and subject to such terms and
conditions as determined by the Committee. All Awards of
Restricted Stock shall be evidenced by an Award Agreement.
6.2 Issuance and
Restrictions. Restricted Stock shall be
subject to such restrictions on transferability and other
restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or
the right to receive dividends on the Restricted Stock). These
restrictions may lapse separately or in combination at such
times, pursuant to such circumstances, in such installments, or
otherwise (including, without limitation, pursuant to the
satisfaction or time-vesting requirements, performance vesting
requirements, or both), as the Committee determines at the time
of the grant of the Award or thereafter.
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6.3 Forfeiture. Except as
otherwise determined by the Committee at the time of the grant
of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be
forfeited; provided, however, that, the Committee may
(a) provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and (b) in
other cases waive in whole or in part restrictions or forfeiture
conditions relating to Restricted Stock.
6.4 Certificates for Restricted
Stock. Restricted Stock granted pursuant to
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted
Stock are registered in the name of the Participant,
certificates must bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain
physical possession of the certificate until such time as all
applicable restrictions lapse.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights.
(a) A Stock Appreciation Right may be granted to any
Participant selected by the Committee. A Stock Appreciation
Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and
shall be evidenced by an Award Agreement.
(b) A Stock Appreciation Right shall entitle the
Participant (or other person entitled to exercise the Stock
Appreciation Right pursuant to the Plan) to exercise all or a
specified portion of the Stock Appreciation Right (to the extent
then exercisable pursuant to its terms) and to receive from the
Company an amount equal to the product of (i) the excess of
(A) the Fair Market Value of the Stock on the date the
Stock Appreciation Right is exercised over (B) the Fair
Market Value of the Stock on the date the Stock Appreciation
Right was granted and (ii) the number of shares of Stock
with respect to which the Stock Appreciation Right is exercised,
subject to any limitations the Committee may impose.
7.2 Payment and Limitations on
Exercise. Payment of the amounts determined
under Sections 7.1(b) above shall be in Stock (based on its
Fair Market Value as of the date the Stock Appreciation Right is
exercised) and shall be made subject to satisfaction of all
provisions of Article 5 above pertaining to Options.
ARTICLE 8
OTHER TYPES OF AWARDS
8.1 Performance Share
Awards. Any Participant selected by the
Committee may be granted one or more Performance Share awards
which shall be denominated in a number of shares of Stock and
which may be linked to any one or more of the Performance
Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date
or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall
consider (among such other factors as it deems relevant in light
of the specific type of award) the contributions,
responsibilities and other compensation of the particular
Participant.
8.2 Performance Stock
Units. Any Participant selected by the
Committee may be granted one or more Performance Stock Unit
awards which shall be denominated in unit equivalent of shares
of Stock
and/or units
of value including dollar value of shares of Stock and which may
be linked to any one or more of the Performance Criteria or
other specific performance criteria determined appropriate by
the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. In making
such determinations, the Committee shall consider (among such
other factors as it deems relevant in light of the specific type
of award) the contributions, responsibilities and other
compensation of the particular Participant.
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8.3 Dividend Equivalents.
(a) Any Participant selected by the Committee may be
granted Dividend Equivalents based on the dividends declared on
the shares of Stock that are subject to any Award, to be
credited as of dividend payment dates, during the period between
the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee.
Such Dividend Equivalents shall be converted to cash or
additional shares of Stock by such formula and at such time and
subject to such limitations as may be determined by the
Committee.
(b) Dividend Equivalents granted with respect to Options or
SARs that are intended to be Qualified Performance-Based
Compensation shall be payable, with respect to pre-exercise
periods, regardless of whether such Option or SAR is
subsequently exercised.
8.4 Stock Payments. Any
Participant selected by the Committee may receive Stock Payments
in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be
based upon the Performance Criteria or other specific
performance criteria determined appropriate by the Committee,
determined on the date such Stock Payment is made or on any date
thereafter.
8.5 Deferred Stock. Any
Participant selected by the Committee may be granted an award of
Deferred Stock in the manner determined from time to time by the
Committee. The number of shares of Deferred Stock shall be
determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be
appropriate by the Committee, in each case on a specified date
or dates or over any period or periods determined by the
Committee. Stock underlying a Deferred Stock award will not be
issued until the Deferred Stock award has vested, pursuant to a
vesting schedule or performance criteria set by the Committee.
Unless otherwise provided by the Committee, a Participant
awarded Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time
as the Deferred Stock Award has vested and the Stock underlying
the Deferred Stock Award has been issued.
8.6 Restricted Stock
Units. The Committee is authorized to make
Awards of Restricted Stock Units to any Participant selected by
the Committee in such amounts and subject to such terms and
conditions as determined by the Committee. At the time of grant,
the Committee shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and
nonforfeitable, and may specify such conditions to vesting as it
deems appropriate. At the time of grant, the Committee shall
specify the maturity date applicable to each grant of Restricted
Stock Units which shall be no earlier than the vesting date or
dates of the Award and may be determined at the election of the
grantee. On the maturity date, the Company shall, subject to
Section 10.5(b), transfer to the Participant one
unrestricted, fully transferable share of Stock for each
Restricted Stock Unit scheduled to be paid out on such date and
not previously forfeited. The Committee shall specify the
purchase price, if any, to be paid by the grantee to the Company
for such shares of Stock.
8.7 Performance Bonus
Awards. Any Participant selected by the
Committee may be granted one or more Performance-Based Awards in
the form of a cash bonus (a Performance Bonus
Award) payable upon the attainment of Performance
Goals that are established by the Committee and relate to one or
more of the Performance Criteria, in each case on a specified
date or dates or over any period or periods determined by the
Committee. Any such Performance Bonus Award paid to a Covered
Employee shall be based upon objectively determinable bonus
formulas established in accordance with Article 9.
8.8 Term. Except as
otherwise provided herein, the term of any Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock
Payments, Deferred Stock or Restricted Stock Units shall be set
by the Committee in its discretion.
8.9 Exercise or Purchase
Price. The Committee may establish the
exercise or purchase price, if any, of any Award of Performance
Shares, Performance Stock Units, Deferred Stock, Stock Payments
or Restricted Stock Units; provided, however, that such
price shall not be less than the par value of a share of Stock
on the date of grant, unless otherwise permitted by applicable
state law.
8.10 Exercise upon Termination of Employment or
Service. An Award of Performance Shares,
Performance Stock Units, Dividend Equivalents, Deferred Stock,
Stock Payments and Restricted Stock Units shall only be
exercisable or payable while the Participant is an Employee,
Consultant or a member of the Board, as applicable;
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provided, however, that the Committee in its sole and
absolute discretion may provide that an Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock
Payments, Deferred Stock or Restricted Stock Units may be
exercised or paid subsequent to a termination of employment or
service, as applicable, or following a Change in Control of the
Company, or because of the Participants retirement, death
or disability, or otherwise; provided, however, that any
such provision with respect to Performance Shares or Performance
Stock Units shall be subject to the requirements of
Section 162(m) of the Code that apply to Qualified
Performance-Based Compensation.
8.11 Form of
Payment. Payments with respect to any Awards
granted under this Article 8 shall be made in cash, in
Stock or a combination of both, as determined by the Committee.
8.12 Award Agreement. All
Awards under this Article 8 shall be subject to such
additional terms and conditions as determined by the Committee
and shall be evidenced by an Award Agreement.
ARTICLE 9
PERFORMANCE-BASED AWARDS
9.1 Purpose. The purpose of
this Article 9 is to provide the Committee the ability to
qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-Based
Compensation. If the Committee, in its discretion, decides to
grant a Performance-Based Award to a Covered Employee, the
provisions of this Article 9 shall control over any
contrary provision contained in Articles 6 or 8;
provided, however, that the Committee may in its
discretion grant Awards to Covered Employees that are based on
Performance Criteria or Performance Goals but that do not
satisfy the requirements of this Article 9.
9.2 Applicability. This
Article 9 shall apply only to those Covered Employees
selected by the Committee to receive Performance-Based Awards.
The designation of a Covered Employee as a Participant for a
Performance Period shall not in any manner entitle the
Participant to receive an Award for the period. Moreover,
designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of
such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a
Participant shall not require designation of any other Covered
Employees as a Participant in such period or in any other period.
9.3 Procedures with Respect to
Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based
Compensation requirements of Section 162(m)(4)(C) of the
Code, with respect to any Award granted under Articles 6
and 8 which may be granted to one or more Covered Employees, no
later than ninety (90) days following the commencement of
any fiscal year in question or any other designated fiscal
period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the
Committee shall, in writing, (a) designate one or more
Covered Employees, (b) select the Performance Criteria
applicable to the Performance Period, (c) establish the
Performance Goals, and amounts of such Awards, as applicable,
which may be earned for such Performance Period, and
(d) specify the relationship between Performance Criteria
and the Performance Goals and the amounts of such Awards, as
applicable, to be earned by each Covered Employee for such
Performance Period. Following the completion of each Performance
Period, the Committee shall certify in writing whether the
applicable Performance Goals have been achieved for such
Performance Period. In determining the amount earned by a
Covered Employee, the Committee shall have the right to reduce
or eliminate (but not to increase) the amount payable at a given
level of performance to take into account additional factors
that the Committee may deem relevant to the assessment of
individual or corporate performance for the Performance Period.
9.4 Payment of Performance-Based
Awards. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by
the Company or a Subsidiary on the day a Performance-Based Award
for such Performance Period is paid to the Participant.
Furthermore, a Participant shall be eligible to receive payment
pursuant to a Performance-Based Award for a Performance Period
only if the Performance Goals for such period are achieved. In
determining the amount earned under a Performance-Based Award,
the Committee may reduce or eliminate the amount of the
Performance-Based Award earned for the Performance Period, if in
its sole and absolute discretion, such reduction or elimination
is appropriate.
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9.5 Additional
Limitations. Notwithstanding any other
provision of the Plan, any Award which is granted to a Covered
Employee and is intended to constitute Qualified
Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the
Code (including any amendment to Section 162(m) of the
Code) or any regulations or rulings issued thereunder that are
requirements for qualification as qualified performance-based
compensation as described in Section 162(m)(4)(C) of the
Code, and the Plan shall be deemed amended to the extent
necessary to conform to such requirements.
ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS
10.1 Stand-Alone and Tandem
Awards. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either
alone, in addition to, or in tandem with, any other Award
granted pursuant to the Plan. Awards granted in addition to or
in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other
Awards.
10.2 Award Agreement. Awards
under the Plan shall be evidenced by Award Agreements that set
forth the terms, conditions and limitations for each Award which
may include the term of an Award, the provisions applicable in
the event the Participants employment or service
terminates, and the Companys authority to unilaterally or
bilaterally amend, modify, suspend, cancel or rescind an Award.
10.3 Limits on Transfer. No
right or interest of a Participant in any Award may be pledged,
encumbered, or hypothecated to or in favor of any party other
than the Company or a Subsidiary, or shall be subject to any
lien, obligation, or liability of such Participant to any other
party other than the Company or a Subsidiary. Except as
otherwise provided by the Committee, no Award shall be assigned,
transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The
Committee by express provision in the Award or an amendment
thereto may permit an Award (other than an Incentive Stock
Option) to be transferred to, exercised by and paid to certain
persons or entities related to the Participant, including but
not limited to members of the Participants family,
charitable institutions, or trusts or other entities whose
beneficiaries or beneficial owners are members of the
Participants family
and/or
charitable institutions, or to such other persons or entities as
may be expressly approved by the Committee, pursuant to such
conditions and procedures as the Committee may establish. Any
permitted transfer shall be subject to the condition that the
Committee receive evidence satisfactory to it that the transfer
is being made for estate
and/or tax
planning purposes (or to a blind trust in connection
with the Participants termination of employment or service
with the Company or a Subsidiary to assume a position with a
governmental, charitable, educational or similar non-profit
institution) and on a basis consistent with the Companys
lawful issue of securities.
10.4 Beneficiaries. Notwithstanding
Section 10.3, a Participant may, in the manner determined
by the Committee, designate a beneficiary to exercise the rights
of the Participant and to receive any distribution with respect
to any Award upon the Participants death. A beneficiary,
legal guardian, legal representative, or other person claiming
any rights pursuant to the Plan is subject to all terms and
conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Committee. If the Participant is
married and resides in a community property state, a designation
of a person other than the Participants spouse as his or
her beneficiary with respect to more than 50% of the
Participants interest in the Award shall not be effective
without the prior written consent of the Participants
spouse. If no beneficiary has been designated or survives the
Participant, payment shall be made to the person entitled
thereto pursuant to the Participants will or the laws of
descent and distribution. Subject to the foregoing, a
beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is
filed with the Committee.
10.5 Stock Certificates; Book Entry
Procedures.
(a) Notwithstanding anything herein to the contrary, the
Company shall not be required to issue or deliver any
certificates evidencing shares of Stock pursuant to the exercise
of any Award, unless and until the Board has determined, with
advice of counsel, that the issuance and delivery of such
certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the
requirements of any exchange on
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which the shares of Stock are listed or traded. All Stock
certificates delivered pursuant to the Plan are subject to any
stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal, state, or
foreign jurisdiction, securities or other laws, rules and
regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted,
or traded. The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock.
In addition to the terms and conditions provided herein, the
Board may require that a Participant make such reasonable
covenants, agreements, and representations as the Board, in its
discretion, deems advisable in order to comply with any such
laws, regulations, or requirements. The Committee shall have the
right to require any Participant to comply with any timing or
other restrictions with respect to the settlement or exercise of
any Award, including a window-period limitation, as may be
imposed in the discretion of the Committee.
(b) Notwithstanding any other provision of the Plan, unless
otherwise determined by the Committee or required by any
applicable law, rule or regulation, the Company shall not
deliver to any Participant certificates evidencing shares of
Stock issued in connection with any Award and instead such
shares of Stock shall be recorded in the books of the Company
(or, as applicable, its transfer agent or stock plan
administrator).
10.6 Paperless Exercise. In
the event that the Company establishes, for itself or using the
services of a third party, an automated system for the exercise
of Awards, such as a system using an internet website or
interactive voice response, then the paperless exercise of
Awards by a Participant may be permitted through the use of such
an automated system.
10.7 Limitations on Payments to Specified
Employees. In the case of any Award that
constitutes deferred compensation within the meaning of
Section 409A of the Code, including any grants of Deferred
Stock awards, Restricted Stock Unit awards, or Performance Stock
Unit awards, any payment to a specified employee
within the meaning of Section 409A of the Code on account
of separation of service of such specified employee shall be
made no earlier than six months and a day after such specified
employees separation from service or the date of such
specified employees death, if earlier.
ARTICLE 11
CHANGES IN CAPITAL STRUCTURE
11.1 Adjustments. In the
event of any stock dividend, stock split, combination or
exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other
change affecting the shares of Stock or the share price of the
Stock, the Committee shall make such proportionate adjustments,
if any, as the Committee in its discretion may deem appropriate
to reflect such change with respect to (a) the aggregate
number and kind of shares that may be issued under the Plan
(including, but not limited to, adjustments of the limitations
in Sections 3.1 and 3.3); (b) the terms and conditions of
any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect
thereto); and (c) the grant or exercise price per share for
any outstanding Awards under the Plan. Any adjustment affecting
an Award intended as Qualified Performance-Based Compensation
shall be made consistent with the requirements of
Section 162(m) of the Code.
11.2 Change in Control. In
the event of any transaction or event described in
Section 2.5(a), (c) or (d) or any unusual or
nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the
Company or any affiliate, or of changes in applicable laws,
regulations or accounting principles, the Committee, in its sole
and absolute discretion, and on such terms and conditions as it
deems appropriate, either by the terms of the Award or by action
taken prior to the occurrence of such transaction or event and
either automatically or upon the Participants request, is
hereby authorized to take any one or more of the following
actions whenever the Committee determines that such action is
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles:
(i) To provide for either (A) termination of any such
Award in exchange for an amount of cash, if any, equal to the
amount that would have been attained upon the exercise of such
Award or realization of the
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Participants rights (and, for the avoidance of doubt, if
as of the date of the occurrence of the transaction or event
described in this Section 11.2 the Committee determines in
good faith that no amount would have been attained upon the
exercise of such Award or realization of the Participants
rights, then such Award may be terminated by the Company without
payment) or (B) the replacement of such Award with other
rights or property selected by the Committee in its sole
discretion;
(ii) To provide that such Award be assumed by the successor
or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices;
(iii) To make adjustments in the number and type of shares
of Common Stock (or other securities or property) subject to
outstanding Awards, and in the number and kind of outstanding
Restricted Stock or Deferred Stock
and/or in
the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding options,
rights and awards and options, rights and awards which may be
granted in the future;
(iv) To provide that such Award shall be exercisable or
payable or fully vested with respect to all shares covered
thereby, notwithstanding anything to the contrary in the Plan or
the applicable Award Agreement; and
(v) To provide that the Award cannot vest, be exercised or
become payable after such event.
11.3 Acceleration Upon a Change in
Control. Notwithstanding Section 11.2,
and except as may otherwise be provided in any applicable Award
Agreement or other written agreement entered into between the
Company and a Participant, if a Change in Control occurs and a
Participants Awards are not converted, assumed, or
replaced by a successor entity, then immediately prior to the
Change in Control such Awards shall become fully exercisable and
all forfeiture restrictions on such Awards shall lapse. Upon, or
in anticipation of, a Change in Control, the Committee may cause
any and all Awards outstanding hereunder to terminate at a
specific time in the future, including but not limited to the
date of such Change in Control, and shall give each Participant
the right to exercise such Awards during a period of time as the
Committee, in its sole and absolute discretion, shall determine.
11.4 Outstanding Awards Certain
Mergers. Subject to any required action by
the stockholders of the Company, in the event that the Company
shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of
which the holders of shares of Stock receive securities of
another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and apply to the
securities that a holder of the number of shares of Stock
subject to such Award would have received in such merger or
consolidation.
11.5 Outstanding Awards Other
Changes. In the event of any other change in
the capitalization of the Company or corporate change other than
those specifically referred to in this Article 11, the
Committee may, in its absolute discretion, make such adjustments
in the number and kind of shares or other securities subject to
Awards outstanding on the date on which such change occurs and
in the per share grant or exercise price of each Award as the
Committee may consider appropriate to prevent dilution or
enlargement of rights.
11.6 No Other Rights. Except
as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares
of stock of any class, the payment of any dividend, any increase
or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger, or consolidation of the
Company or any other corporation. Except as expressly provided
in the Plan or pursuant to action of the Committee under the
Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Stock subject
to an Award or the grant or exercise price of any Award.
ARTICLE 12
ADMINISTRATION
12.1 Committee. Unless and
until the Board delegates administration of the Plan to a
Committee as set forth below, the Plan shall be administered by
the full Board, and for such purposes the term
Committee as used in
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this Plan shall be deemed to refer to the Board. The Board, at
its discretion or as otherwise necessary to comply with the
requirements of Section 162(m) of the Code,
Rule 16b-3
promulgated under the Exchange Act or to the extent required by
any other applicable rule or regulation, shall delegate
administration of the Plan to a Committee. The Committee shall
consist solely of two or more members of the Board each of whom
is (a) an outside director, within the meaning
of Section 162(m) of the Code, (b) a Non-Employee
Director and (c) an independent director under
the rules of NASDAQ (or other principal securities market on
which shares of Stock are traded). Notwithstanding the
foregoing: (x) the full Board, acting by a majority of its
members in office, shall conduct the general administration of
the Plan with respect to all Awards granted to Independent
Directors and for purposes of such Awards the term
Committee as used in this Plan shall be deemed to
refer to the Board and (y) the Committee may delegate its
authority hereunder to the extent permitted by
Section 12.5. Appointment of Committee members shall be
effective upon acceptance of appointment. In its sole
discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under
the Plan except with respect to matters which under
Rule 16b-3
under the Exchange Act or Section 162(m) of the Code, or
any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee. Committee
members may resign at any time by delivering written notice to
the Board. Vacancies in the Committee may only be filled by the
Board.
12.2 Action by the
Committee. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts
approved in writing by a majority of the Committee in lieu of a
meeting, shall be deemed the acts of the Committee. Each member
of the Committee is entitled to, in good faith, rely or act upon
any report or other information furnished to that member by any
officer or other employee of the Company or any Subsidiary, the
Companys independent certified public accountants, or any
executive compensation consultant or other professional retained
by the Company to assist in the administration of the Plan.
12.3 Authority of
Committee. Subject to any specific
designation in the Plan, the Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to
each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
pursuant to the Plan, including, but not limited to, the
exercise price, grant price, or purchase price, any reload
provision, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on
the exercisability of an Award, and accelerations or waivers
thereof, any provisions related to non-competition and recapture
of gain on an Award, based in each case on such considerations
as the Committee in its sole discretion determines; provided,
however, that the Committee shall not have the authority to
accelerate the vesting or waive the forfeiture of any
Performance-Based Awards;
(e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price
of an Award may be paid in, cash, Stock, other Awards, or other
property, or an Award may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(g) Decide all other matters that must be determined in
connection with an Award;
(h) Establish, adopt, or revise any rules and regulations
as it may deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant
to, the Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be
required pursuant to the Plan or as the Committee deems
necessary or advisable to administer the Plan.
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12.4 Decisions Binding. The
Committees interpretation of the Plan, any Awards granted
pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are
final, binding, and conclusive on all parties.
12.5 Delegation of
Authority. To the extent permitted by
applicable law, the Committee may from time to time delegate to
a committee of one or more members of the Board or one or more
officers of the Company the authority to grant or amend Awards
to Participants other than (a) senior executives of the
Company who are subject to Section 16 of the Exchange Act,
(b) Covered Employees, or (c) officers of the Company
(or members of the Board) to whom authority to grant or amend
Awards has been delegated hereunder. Any delegation hereunder
shall be subject to the restrictions and limits that the
Committee specifies at the time of such delegation, and the
Committee may at any time rescind the authority so delegated or
appoint a new delegatee. At all times, the delegatee appointed
under this Section 12.5 shall serve in such capacity at the
pleasure of the Committee.
ARTICLE 13
EFFECTIVE AND EXPIRATION DATE
13.1 Effective Date. The
Plan became effective as of the date the Plan was approved by
the Companys stockholders (the Effective
Date) and the amended and restated Plan will become
effective as of the date the amended and restated Plan is
approved by the Companys stockholders. The amended and
restated Plan will be deemed to be approved by the stockholders
if it receives the affirmative vote of the holders of a majority
of the shares of stock of the Company present or represented and
entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Companys Bylaws.
13.2 Expiration Date. The
amended and restated Plan will expire on, and no Award may be
granted pursuant to the Plan after the tenth anniversary of the
date the amended and restated Plan is approved by the Committee.
Any Awards that are outstanding on the tenth anniversary of such
date shall remain in force according to the terms of the Plan
and the applicable Award Agreement.
ARTICLE 14
AMENDMENT, MODIFICATION, AND TERMINATION
14.1 Amendment, Modification, and
Termination. Subject to Section 15.14,
with the approval of the Board, at any time and from time to
time, the Committee may terminate, amend or modify the Plan;
provided, however, that (a) to the extent necessary
and desirable to comply with any applicable law, regulation, or
stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a
degree as required, and (b) stockholder approval is
required for any amendment to the Plan that (i) increases
the number of shares available under the Plan (other than any
adjustment as provided by Article 11), (ii) permits the
Committee to grant Options with an exercise price that is below
Fair Market Value on the date of grant, or (iii) permits
the Committee to extend the exercise period for an Option beyond
seven years from the date of grant or (iv) results in a
material increase in benefits or a change in eligibility
requirements. Notwithstanding any provision in this Plan to the
contrary, absent approval of the stockholders of the Company, no
Option may be amended to reduce the per share exercise price of
the shares subject to such Option below the per share exercise
price as of the date the Option is granted and, except as
permitted by Article 11, no Option may be granted in
exchange for, or in connection with, the cancellation or
surrender of an Option having a higher per share exercise price.
14.2 Awards Previously
Granted. Except with respect to amendments
made pursuant to Section 15.14, no termination, amendment,
or modification of the Plan shall adversely affect in any
material way any Award previously granted pursuant to the Plan
without the prior written consent of the Participant.
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ARTICLE 15
GENERAL PROVISIONS
15.1 No Rights to Awards. No
Eligible Individual, Participant, or other person shall have any
claim to be granted any Award pursuant to the Plan, and neither
the Company nor the Committee is obligated to treat Eligible
Individuals, Participants or any other persons uniformly.
15.2 No Stockholders
Rights. Except as otherwise provided herein,
a Participant shall have none of the rights of a stockholder
with respect to shares of Stock covered by any Award until the
Participant becomes the record owner of such shares of Stock.
15.3 Withholding. The
Company or any Subsidiary shall have the authority and the right
to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local
and foreign taxes (including the Participants employment
tax obligations) required by law to be withheld with respect to
any taxable event concerning a Participant arising as a result
of this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to
elect to have the Company withhold shares of Stock otherwise
issuable under an Award (or allow the return of shares of Stock)
having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the
number of shares of Stock which may be withheld with respect to
the issuance, vesting, exercise or payment of any Award (or
which may be repurchased from the Participant of such Award
within six months (or such other period as may be determined by
the Committee) after such shares of Stock were acquired by the
Participant from the Company) in order to satisfy the
Participants federal, state, local and foreign income and
payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Award shall be limited to the number
of shares which have a Fair Market Value on the date of
withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for
federal, state, local and foreign income tax and payroll tax
purposes that are applicable to such supplemental taxable income.
15.4 No Right to Employment or
Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of
the Company or any Subsidiary to terminate any
Participants employment or services at any time, nor
confer upon any Participant any right to continue in the employ
or service of the Company or any Subsidiary.
15.5 Unfunded Status of
Awards. The Plan is intended to be an
unfunded plan for incentive compensation. With
respect to any payments not yet made to a Participant pursuant
to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater
than those of a general creditor of the Company or any
Subsidiary.
15.6 Indemnification. To the
extent allowable pursuant to applicable law, each member of the
Committee or of the Board shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts
paid by him or her in satisfaction of judgment in such action,
suit, or proceeding against him or her; provided he or
she gives the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled pursuant
to the Companys Certificate of Incorporation or Bylaws, as
a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
15.7 Relationship to other
Benefits. No payment pursuant to the Plan
shall be taken into account in determining any benefits pursuant
to any pension, retirement, savings, profit sharing, group
insurance, welfare or other benefit plan of the Company or any
Subsidiary except to the extent otherwise expressly provided in
writing in such other plan or an agreement thereunder.
15.8 Expenses. The expenses
of administering the Plan shall be borne by the Company and its
Subsidiaries.
A-16
15.9 Titles and
Headings. The titles and headings of the
Sections in the Plan are for convenience of reference only and,
in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control.
15.10 Fractional Shares. No
fractional shares of Stock shall be issued and the Committee
shall determine, in its discretion, whether cash shall be given
in lieu of fractional shares or whether such fractional shares
shall be eliminated by rounding up or down as appropriate.
15.11 Limitations Applicable to Section 16
Persons. Notwithstanding any other provision
of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set
forth in any applicable exemptive rule under Section 16 of
the Exchange Act (including any amendment to
Rule 16b-3
under the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by
applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
15.12 Government and Other
Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to
all applicable laws, rules, and regulations, and to such
approvals by government agencies as may be required. The Company
shall be under no obligation to register pursuant to the
Securities Act, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan
may in certain circumstances be exempt from registration
pursuant to the Securities Act, as amended, the Company may
restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
15.13 Governing Law. The
Plan and all Award Agreements shall be construed in accordance
with and governed by the laws of the State of Delaware.
15.14 Section 409A. To
the extent that the Committee determines that any Award granted
under the Plan is subject to Section 409A of the Code, the
Award Agreement evidencing such Award shall incorporate the
terms and conditions required by Section 409A of the Code.
To the extent applicable, the Plan and Award Agreements shall be
interpreted in accordance with Section 409A of the Code and
Department of Treasury regulations and other interpretive
guidance issued thereunder, including without limitation any
such regulations or other guidance that may be issued after the
Effective Date. Notwithstanding any provision of the Plan to the
contrary, in the event that following the Effective Date the
Committee determines that any Award may be subject to
Section 409A of the Code and related Department of Treasury
guidance (including such Department of Treasury guidance as may
be issued after the Effective Date), the Committee may adopt
such amendments to the Plan and the applicable Award Agreement
or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any
other actions, that the Committee determines are necessary or
appropriate to (a) exempt the Award from Section 409A
of the Code
and/or
preserve the intended tax treatment of the benefits provided
with respect to the Award, or (b) comply with the
requirements of Section 409A of the Code and related
Department of Treasury guidance.
A-17
PROXY
DEALERTRACK HOLDINGS, INC.
1111 Marcus Avenue, Suite M04
Lake Success, NY 11042
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JULY 11, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Cox III and Eric D. Jacobs, and each of them
individually, the proxies of the undersigned, with power of substitution to each of them, to
vote all shares of DealerTrack Holdings, Inc., a Delaware corporation (DealerTrack), which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of DealerTrack to be held
on Wednesday, July 11, 2007, at 11:00 a.m. (local time) at the Garden City Hotel, 45 Seventh
Street, Garden City, New York 10530 (the Annual Meeting).
In their discretion, the proxies are authorized to vote on such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
[Continued and to be dated and signed on reverse side.]
ANNUAL MEETING OF STOCKHOLDERS OF
DEALERTRACK HOLDINGS, INC.
July 11, 2007
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
â Please detach along perforated line and mail in the envelope provided. â
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n 20330303000000000000 7
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THE DEALERTRACK BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE PROPOSALS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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1. To elect three members to the Board of Directors for three-year terms as Class II
Directors to serve until the 2010 Annual Meeting of Stockholders and until their successors
are elected. |
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NOMINEES: |
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FOR ALL NOMINEES
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Thomas F. Gilman
Ann B. Lane
John J. McDonnell, Jr.
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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FOR ALL EXCEPT
(See instructions below) |
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INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT and fill in the circle next to each
nominee you wish to withhold, as shown here: l |
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To change the address on
your account, please check the box at
right and indicate your new address in
the address space above. Please note
that changes to the registered name(s)
on the account may not be submitted
via this method. |
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FOR
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AGAINST
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ABSTAIN |
2.
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To ratify the selection of PricewaterhouseCoopers LLP as DealerTracks independent registered
public accounting firm for the fiscal year ending December 31, 2007.
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FOR
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ABSTAIN |
3.
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To amend and restate DealerTracks 2005 Incentive Award Plan.
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FOR
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To transact such other business as may properly come before the Annual Meeting or any postponements
or adjournments thereof.
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THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED AS SPECIFIED, OR WHERE NO DIRECTION
IS GIVEN, WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD.
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor, administrator, attorney,
trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person. |