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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No.1
to
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2005
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 000-26659
Homestore, Inc.
(Exact Name of Registrant as Specified in its Charter)
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| Delaware
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95-4438337 |
| (State or Other Jurisdiction of
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(I.R.S. Employer |
| Incorporation or Organization)
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Identification No.) |
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| 30700 Russell Ranch Road |
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| Westlake Village, California
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91362 |
| (Address of Principal Executive Offices)
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(Zip Code) |
Registrant’s telephone number, including area code:
(805) 557-2300
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
Warrants to purchase Common Stock, par value $.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated
filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer o Accelerated Filer þ Non-Accelerated Filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
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Aggregate market value of voting common stock held by
non-affiliates of the registrant as of June 30, 2005* |
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252,750,921 |
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Number of shares of common stock outstanding as of April 1, 2006 |
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150,132,122 |
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*Based on the closing price of the common stock of $2.03 per share on that date, as reported
on The NASDAQ National Market and, for purposes of this computation only, the assumption that all
of the registrant’s directors, executive officers and beneficial owners of 10% or more of the
registrant’s common stock are affiliates.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors and Executive Officers
The following table sets forth information regarding the directors and executive officers of
Homestore, Inc. (the “Company” or “we”).
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| Name |
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Age |
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Position |
Joe F. Hanauer
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68 |
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Chairman of the Board and Director |
Fred D. Anderson
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61 |
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Director |
L. John Doerr
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54 |
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Director |
William E. Kelvie
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58 |
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Director |
Kenneth K. Klein(1)
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62 |
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Director |
W. Michael Long
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53 |
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Chief Executive Officer and Director |
Roger B. McNamee
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49 |
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Director |
V. Paul Unruh(1)(2)
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57 |
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Director |
Bruce G. Willison(1)
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57 |
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Director |
Alan Yassky
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70 |
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Director |
Jack D. Dennison
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49 |
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Chief Operating Officer |
Lewis R. Belote, III
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50 |
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Chief Financial Officer |
Allan P. Merrill
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39 |
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Executive Vice President, Strategy and Corporate Development |
Michael R. Douglas
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52 |
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Executive Vice President, General Counsel and Secretary |
Allan D. Dalton
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57 |
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President and Chief Executive Officer, REALTOR.com® |
Stephen T. Feltner
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35 |
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President, Homebuilder.com |
Maria L. Pietroforte
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48 |
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President, RentNet |
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| (1) |
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Member of audit committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended. |
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| (2) |
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The board of directors has determined that Mr. Unruh meets the requirements of an “audit
committee financial expert” as defined in Securities and Exchange Commission (“SEC”) rules
and regulations. Mr. Unruh meets the requirements for being “independent” as defined by SEC
rules and regulations. |
Our bylaws provide that the authorized number of directors may be fixed by resolution of the
board of directors from time to time, provided, however, that the number of directors shall not be
increased above eleven directors nor decreased below seven directors without stockholder approval.
Currently, the board has fixed the number of directors at ten. Our board is currently divided into
three classes as nearly equal in size as possible and generally with staggered three year terms.
The term of office for Class I, Class II and Class III directors will expire at the annual meeting
of stockholders to be held in 2006, 2007 and 2008, respectively, or upon a director’s earlier
death, resignation or removal. At our 2005 annual meeting of stockholders, the stockholders
approved our Restated Certificate of Incorporation, which became effective when it was filed with
the Secretary of State of the State of Delaware on June 23, 2005. This Restated Certificate of
Incorporation effected amendments to our Certificate of Incorporation as then in effect resulting
in the elimination of the classification of our board of directors in 2008. In particular,
pursuant to our Restated Certificate of Incorporation, the terms of the directors that were elected
at our annual meeting of stockholders in 2005, as well as those directors that are to be elected at
the annual stockholders meeting in each of 2006 and 2007, will expire in 2008, and beginning with
our 2008 annual stockholders meeting, all directors will be elected at each annual meeting for a
term of one year. The Restated Certificate of Incorporation also provides that, notwithstanding the
above, each director shall hold office until such director’s successor is elected and qualified, or
until such director’s earlier death, resignation or removal.
By virtue of its ownership of our sole outstanding share of Series A preferred stock, the
National Association of REALTORS® has the right to elect one of our directors, and the National
Association of REALTORS® has exercised that right to elect Mr. Yassky as a director.
2
Pursuant to the Certificate of Designation for our Series B Convertible Participating
Preferred Stock (the “Series B Preferred Stock”), the holders of Series B Preferred Stock, voting
as a separate class, are currently entitled to elect two directors (the “Series B Directors”) to
the Board. Thus by virtue of their ownership of the outstanding shares of our Series B Preferred
Stock, Elevation Partners, L.P. and its affiliate Elevation Employee Side Fund, LLC (together
“Elevation”) currently have the right to designate and to elect two of our directors, and Elevation
exercised that right in 2005 to elect Messrs. Anderson and McNamee as directors. If, however, the
aggregate number of shares of Series B Preferred Stock issued on the original issuance date,
November 29, 2005, that are outstanding on the record date for determining the stockholders
entitled to vote at the next annual meeting of stockholders falls below two-thirds but is at least
one-third of the shares of Series B Preferred Stock issued on November 29, 2005 (100,000 shares
were issued on that date), as adjusted for certain events, then the holders thereof will be
entitled to elect only one Series B Director as a separate class. Subject to certain limitations,
only holders of Series B Preferred Stock are entitled to remove or fill vacancies for Series B
Directors.
In addition, pursuant to the Stockholders Agreement between the Company and Elevation dated
November 29, 2005 (the “Elevation Stockholders Agreement”), following the conversion of any of the
100,000 shares of Series B Preferred Stock originally purchased by Elevation on November 29, 2005
into shares of common stock (and without duplication of the Board seats provided for in the
provisions above) for so long as Elevation holds at least a number of converted shares equal to
two-thirds of the purchased shares on an as converted basis, Elevation Partners, L.P. shall have
the right to nominate two directors for election to the Board, and for so long as Elevation holds a
number of converted shares equal to less than two-thirds but at least one-third of the purchased
shares on an as converted basis, Elevation Partners, L.P. shall have the right to nominate one
director for election to the Board. The Elevation Stockholders Agreement also provides that
Elevation is required to vote their shares in the manner recommended by the Board of Directors with
respect to the election or removal of directors, other than any of the Series B Directors.
Joe F. Hanauer has served as one of our directors since November 1996, as vice chairman of the
board from November 2001 to January 2002, chairman of the board since January 2002 and lead
independent director since December 2004; he was the National Association of REALTORS®
representative on the board through November 2000. Mr. Hanauer is a Class III director. Since 1988,
Mr. Hanauer, through Combined Investments, L.P., has directed investments in companies primarily
involved in real estate and financial services. Mr. Hanauer is a former chairman and director of
Grubb & Ellis Company and a former chairman of Coldwell Banker Residential Group, Inc. Mr. Hanauer
is a director of MAF Bancorp, Inc., a trustee of each of Calamos Investment Trust, Calamos Advisors
Trust and Calamos Convertible Opportunities and Income Fund, and a member of the National
Association of REALTORS®.
Fred D. Anderson has served as one of our directors since December 2005. Mr. Anderson is a
Class II director. Mr. Anderson co-founded and has been a managing director of Elevation Partners,
L.P., a private equity firm focused on the media and entertainment industry, since July 2004. From
March 1996 to June 2004, Mr. Anderson served as executive vice president and chief financial
officer of Apple Computer, Inc., a manufacturer of personal computers and related software. Prior
to joining Apple, Mr. Anderson was corporate vice president and chief financial officer of
Automatic Data Processing, Inc., an electronic transaction processing firm, from August 1992 to
March 1996. Mr. Anderson also serves on the board of directors of Apple Computer, Inc. and eBay,
Inc.
L. John Doerr has served as one of our directors since August 1998. Mr. Doerr is a Class III
director. Mr. Doerr has been a general partner of Kleiner Perkins Caufield & Byers, a venture
capital firm, since 1980. Prior to his tenure at Kleiner Perkins, Mr. Doerr was employed by Intel
Corporation for five years. He serves on the board of directors of Amazon.com, Inc., Google Inc.,
Intuit Inc. and Sun Microsystems, Inc.
William E. Kelvie has served as one of our directors since August 1998. Mr. Kelvie is a Class
II director. He has served as chief executive officer of Overture Corporation, an information
technology company, since July 2000. Prior to his tenure at Overture Corporation, Mr. Kelvie was
the executive vice president and chief information officer responsible for information technology
systems at the Federal National Mortgage Association (Fannie Mae), the world’s largest non-bank
financial services company, from 1992 to 2000. Mr. Kelvie joined Fannie Mae in 1990 as senior vice
president and chief information officer. Prior to his tenure at Fannie Mae, Mr. Kelvie was a
partner with Nolan, Norton & Co., a management consulting company specializing in information
technology strategies and plans. He also served in various capacities with The Dexter Corporation,
a specialized manufacturing company, and The Travelers Insurance Company, an insurance and
financial services company.
3
Kenneth K. Klein has served as one of our directors since August 1998. Mr. Klein is a Class II
director. He is president and chief executive officer of a privately held group of companies
involved in diversified residential and light commercial construction and land development,
including Kleinco Construction Services, Inc., of which Mr. Klein has served as president and chief
executive officer since 1980. Mr. Klein was national vice president of the National Association of
Home Builders during the calendar years 1999 and 2000.
W. Michael Long has served as our chief executive officer and as one of our directors since
January 2002. Mr. Long is a Class III director. From November 1999 to April 2001, Mr. Long served
as chairman of the board and as a director of Healtheon/WebMD Corporation (“Healtheon/WebMD;” now
known as Emdeon Corporation), a provider of healthcare information services and technology
solutions. From July 1997 to November 1999, Mr. Long served as chief executive officer of
Healtheon/WebMD, which was then known as Healtheon. From August 1996 to July 1997, Mr. Long served
as president and chief executive officer of CSC Continuum, Inc., a unit of Computer Sciences
Corporation. Prior to its acquisition by CSC, Mr. Long was president and chief executive officer of
The Continuum Company, Inc.
Roger B. McNamee has served as one of our directors since December 2005. Mr. McNamee is a
Class I director. Mr. McNamee co-founded and has been a managing director of Elevation Partners,
L.P., since July 2004. Prior to joining Elevation, Mr. McNamee was a co-founder of Silver Lake
Partners, a private equity firm, where he is also currently an advisory director. Mr. McNamee was a
co-founder of Integral Capital Partners, a venture capital firm, in 1991, where he is currently an
advisory director of the general partner of Integral’s most recent investment fund and continues as
a managing member of the general partner of its previous investment funds. Prior to founding
Integral, Mr. McNamee managed the T. Rowe Price Science &
Technology Fund and co-managed the T. Rowe Price New Horizons Fund.
V. Paul Unruh has served as one of our directors since May 2003. Mr. Unruh is a Class I
director. For 25 years, Mr. Unruh worked at Bechtel, a privately held global engineering and
construction services organization. Prior to his retirement in 2002, Mr. Unruh served as vice
chairman of Bechtel Group, Inc. from January 2001 to December 2002 and president of Bechtel
Enterprises, a development and financing subsidiary, from July 1997 to January 2001. His previous
responsibilities at Bechtel included both operating and financial positions, including chief
financial officer, treasurer and controller. Prior to joining Bechtel in 1978, Mr. Unruh practiced
as a certified public accountant with what is now
PricewaterhouseCoopers LLP for seven years. Mr. Unruh is currently a director of Symantec Corporation, a software company, and Heidrick and
Struggles International, Inc., a provider of senior-level executive search and leadership services.
Bruce G. Willison has served as one of our directors since December 2002. Mr. Willison is a
Class I director. Since January 2006, Mr. Willison has served as Professor of Management of the
UCLA Anderson School of Management. From 1999 to December 2005, Mr. Willison served as Dean of the
UCLA Anderson School of Management. This appointment followed a 26-year career in the banking
industry, most recently as president and chief operating officer of H.F. Ahmanson & Co., the parent
company of Home Savings of America. Prior to that, Mr. Willison held several executive positions at
First Interstate Bancorp, including chairman and chief executive officer of First Interstate’s
Oregon operations and chairman, president, and chief executive officer of First Interstate Bank of
California, as well as vice chairman of the bank’s holding company, First Interstate Bancorp. Mr.
Willison began his banking career at Bank of America Corp. in 1973. Mr. Willison is a director of
Health Net, Inc., an integrated managed care organization, and IndyMac Bancorp, Inc., the parent
company of IndyMac Bank.
Alan Yassky has served as one of our directors (as the National Association of REALTORS®
representative) since June 2005. Mr. Yassky is a Class I director. Mr. Yassky has served as the
representative of the National Association of REALTORS® on the board of directors of RealSelect,
Inc., a wholly-owned subsidiary of the Company, since December 2000. Mr. Yassky has been a Realtor
since 1964, and has served as a director of the National Association of REALTORS® since 1984. From
1997 to 2000, Mr. Yassky additionally served as treasurer for the National Association of
REALTORS®. Mr. Yassky also founded Rockland Realty in 1964, a real estate firm in New York, which
he continues to operate as co-owner.
Jack D. Dennison has served as our chief operating officer since January 2002. From July 1998
to January 2001, Mr. Dennison served as executive vice president, general counsel and secretary of
Healtheon/WebMD
4
(now known as Emdeon Corporation). From 1996 to July 1998, Mr. Dennison served as vice
president and deputy general counsel to Computer Sciences Corporation. Prior to that time, Mr.
Dennison was general counsel at The Continuum Company, Inc.
Lewis R. Belote, III has served as our chief financial officer since January 2002. From May
1998 to April 2001, Mr. Belote served as senior vice president, finance of Healtheon/WebMD (now known as Emdeon Corporation). From June 1996 to May 1998, Mr. Belote served as
senior vice president and chief financial officer for ActaMed Corporation. Prior to 1996, Mr.
Belote served for twelve years with the accounting firm of Ernst & Young LLP.
Allan P. Merrill has served as executive vice president of strategy and corporate development
since October 2001. From April 2000 to October 2001, Mr. Merrill was president of Homebuilder.com,
one of our consumer websites. Mr. Merrill joined us following a 13-year tenure, from 1987 to March
2000, with the investment banking firm Warburg Dillon Read (now UBS Investment Bank), where he was
a managing director last served as co-head of the Global Resources Group, overseeing the
construction and building materials, chemicals, forest products, mining and energy industry groups.
Mr. Merrill is a member of the Policy Advisory Board of the Joint Center for Housing Studies at
Harvard University.
Michael R. Douglas has served as our executive vice president, general counsel, and secretary
since October 2002. From 1997 to October 2002, Mr. Douglas served as a product liability
consultant. From 1987 to 1997, Mr. Douglas was senior vice president, general counsel and secretary
at Fibreboard Corporation. Mr. Douglas has also served as director of law of the Asbestos Claims
Facility, litigation counsel for Jim Walter Corporation and as an attorney in private practice.
Allan D. Dalton has served as president and chief executive officer of REALTOR.com®, one of
our consumer websites and the official Internet site of the National Association of REALTORS®,
since October 2002. From August 2002 to October 2002, Mr. Dalton served as executive vice president
of Coldwell Banker New England Metro, the largest real estate services organization in New England.
From January 1998 to August 2002, Mr. Dalton was senior vice president of NRT, a residential real
estate brokerage company and a subsidiary of Cendant Corporation. Mr. Dalton’s 20-plus year career
in the real estate industry includes 16 years as president and co-owner of an independent real
estate brokerage with more than 30 offices. He has also served as executive vice president of
Coldwell Banker Hunneman.
Stephen T. Feltner has served as president of Homebuilder.com, one of our consumer websites
and the official new homes site of the National Association of Home Builders, since December 2004.
Mr. Feltner has been with us since 1999, holding key management positions in both operations and
finance, including Vice President of Operations from February 2003 to December 2004, Assistant to
the Chief Executive Officer from June 2002 to February 2003, Vice President of Strategic Planning
from August 2001 to June 2002, Director of Strategic Planning from August 2000 to August 2001 and
Manager of Sales Operations from April 1999 to July of 2000. Prior to joining us, Mr. Feltner
served as the director of operations at Arch Wireless (formerly PageNet, Inc.), based in Los
Angeles, California. A graduate of the UCLA Anderson School of Management, Mr. Feltner holds a
Master of Business Administration degree.
Maria L. Pietroforte has served as president of RentNet, one of our consumer websites, since
September 2004. Ms. Pietroforte formerly served as president of KSI Management Corporation, one of
Greater Washington D.C.’s largest developers of rental properties from 2001 to June 2004. Prior to
that, Ms. Pietroforte was president of E&S Ring Company from 1997 to 2001, one of the largest
apartment managers in Los Angeles.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and beneficial
owners of more than 10% of our common stock (the “Reporting Persons”), to file with the SEC initial
reports of ownership and reports of changes in ownership of our common stock. Reporting Persons are
required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.
5
Based solely on our review of the copies of Section 16(a) reports received or written
representations from certain Reporting Persons, we believe that all reporting requirements under
Section 16(a) for the fiscal year ended December 31, 2005 were met in a timely manner by the
Reporting Persons.
Code of Conduct and Business Ethics
We have a strong commitment to business ethics and to complying with the laws that govern the
conduct of our businesses. We believe that a commitment to honesty and integrity is a valuable
asset that builds trust with our customers, suppliers, employees, stockholders and the communities
in which we operate. To implement our commitment, we have developed a code of conduct and business
ethics. The code applies to all of our employees, directors, officers, agents and consultants. We
have also established a compliance program that is intended to ensure that we have in place
policies and systems designed to prevent and detect violations of the code or any applicable law,
policy or regulation. A copy of the code is available at our website at
http://media.corporate-ir.net/media_files/IROL/11/111114/gov/HOMS_COC.pdf
We will post on our website, http://ir.homestore.com, any amendments to, or waivers
from, a provision of the code that applies to our principal executive officer, principal financial
officer, principal accounting officer or controller or persons performing similar functions, and
that relates to any of the following: (i) honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of interest between personal and professional
relationships; (ii) full, fair, accurate, timely, and understandable disclosure in reports and
documents that we file with, or submit to, the SEC and in other public communications made by us;
(iii) compliance with applicable governmental laws, rules and regulations; (iv) the prompt internal
reporting of violations of the code to an appropriate person or persons identified in the code; or
(v) accountability for adherence to the code.
6
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth all compensation paid for services in 2005, 2004, and 2003 to
all persons who served as our chief executive officer during 2005 and our other four most highly
compensated executive officers during 2005. We collectively refer to these persons as the “named
executive officers.”
Summary Compensation Table
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Long Term |
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Compensation |
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Annual Compensation |
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Securities |
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Other Annual |
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Underlying |
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Restricted |
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All Other |
| Name and Principal |
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Year |
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Salary($) |
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Bonus($) |
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Compensation($) |
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Options(#) |
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Shares($) |
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Compensation($) |
| Position |
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W. Michael Long |
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2005 |
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500,000 |
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775,000 |
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— |
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2,300,000 |
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— |
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— |
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Chief Executive |
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2004 |
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500,000 |
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500,000 |
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— |
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1,000,000 |
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250,000 |
(1) |
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— |
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Officer |
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2003 |
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500,000 |
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500,000 |
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— |
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— |
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300,000 |
(2) |
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— |
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Jack D. Dennison |
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2005 |
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400,000 |
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620,000 |
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— |
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500,000 |
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— |
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6,300 |
(3) |
Chief Operating |
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2004 |
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400,000 |
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400,000 |
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— |
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500,000 |
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— |
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— |
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Officer |
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2003 |
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400,000 |
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425,000 |
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— |
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— |
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— |
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6,775 |
(4) |
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Allan D. Dalton |
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2005 |
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325,000 |
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630,000 |
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— |
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350,000 |
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— |
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2,311 |
(3) |
President and CEO, |
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2004 |
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325,000 |
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406,250 |
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— |
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350,000 |
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— |
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— |
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REALTOR.com® |
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2003 |
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325,000 |
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425,000 |
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17,526 |
(5) |
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— |
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— |
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90,933 |
(6) |
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Lewis R. Belote, III |
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2005 |
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350,000 |
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540,000 |
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— |
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350,000 |
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— |
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6,300 |
(3) |
Chief Financial |
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2004 |
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350,000 |
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350,000 |
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— |
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350,000 |
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— |
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— |
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Officer |
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2003 |
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350,000 |
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350,000 |
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— |
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— |
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— |
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Allan P. Merrill |
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2005 |
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325,000 |
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550,000 |
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— |
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350,000 |
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— |
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6,300 |
(3) |
Executive Vice |
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2004 |
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325,000 |
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325,000 |
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— |
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350,000 |
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— |
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— |
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President, Strategy |
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2003 |
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325,000 |
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350,000 |
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— |
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550,001 |
(7) |
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— |
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and Corporate
Development |
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|
|
|
|
|
|
|
|
|
|
| (1) |
|
Represents 115,740 shares of restricted stock granted to Mr. Long on March 17, 2005 in
consideration for his services to us during 2004. These shares will vest in full on March 17,
2008. The aggregate number of shares of restricted stock held by Mr. Long as of December 31,
2005 was 186,662. The aggregate value of restricted stock held by Mr. Long as of December 31,
2005 was $951,977. |
| |
| (2) |
|
Represents 70,922 shares of restricted stock granted to Mr. Long on March 31, 2004 in
consideration for his services to us during 2003. These shares will vest in full on March 31,
2007. |
| |
| (3) |
|
Represents amounts contributed by us as a match of participant’s 401(k) contributions. |
| |
| (4) |
|
Represents relocation expenses paid by us. |
| |
| (5) |
|
Represents amounts reimbursed for the payment of taxes and tax gross-up amounts associated
with relocation expenses. |
| |
| (6) |
|
Represents $13,357 of expense paid by us for travel on an airplane indirectly owned by Mr.
Long, and $77,576 of relocation expenses paid by us. |
| |
| (7) |
|
50,001 of which were granted in connection with an option exchange offer in which we
offered our employees the opportunity to exchange all outstanding options granted to them (or
assumed by us) between August 5, 1999 (the date of our initial public offering) and December
31, 2001 for new options. |
7
Stock Option Grants in 2005
The following table sets forth grants of stock options to the named executive officers in
2005.
All options granted to the named executive officers in 2005 are either incentive stock options
or nonqualified stock options. The options expire ten years from the date of grant and were granted
at an exercise price equal to the fair market value of our common stock on the date of grant.
Potential realizable values are computed by (a) multiplying the number of shares of common
stock subject to a given option by the exercise price per share, (b) assuming that the aggregate
stock value derived from that calculation compounds at the annual 5% or 10% rates shown in the
table for the entire ten-year term of the option, and (c) subtracting from that result the
aggregate option exercise price. The 5% and 10% assumed annual rates of stock price appreciation
are provided in accordance with the rules of the SEC and do not represent our estimate or
projection of future common stock prices.
| |
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of |
|
Percent of |
|
|
|
|
|
|
|
|
|
Potential Realizable Value of |
| |
|
Securities |
|
Total Options |
|
|
|
|
|
|
|
|
|
Assumed Annual Rates of Stock |
| |
|
Underlying |
|
Granted to |
|
Exercise |
|
|
|
|
|
Price Appreciation for |
| |
|
Options |
|
Employees in |
|
Price |
|
Expiration |
|
Option Term ($) |
| Name |
|
Granted (#) |
|
2005 |
|
($/Sh) |
|
Date |
|
5% |
|
10% |
W. Michael Long |
|
|
2,300,000 |
(1) |
|
|
32.71 |
% |
|
|
2.16 |
|
|
|
3/17/2015 |
|
|
|
3,124,349 |
|
|
|
7,917,713 |
|
Jack D. Dennison |
|
|
500,000 |
(1) |
|
|
7.11 |
% |
|
|
2.16 |
|
|
|
3/17/2015 |
|
|
|
679,206 |
|
|
|
1,721,242 |
|
Allan D. Dalton |
|
|
350,000 |
(1) |
|
|
4.98 |
% |
|
|
2.16 |
|
|
|
3/17/2015 |
|
|
|
475,444 |
|
|
|
1,204,869 |
|
Lewis R. Belote, III |
|
|
350,000 |
(1) |
|
|
4.98 |
% |
|
|
2.16 |
|
|
|
3/17/2015 |
|
|
|
475,444 |
|
|
|
1,204,869 |
|
Allan P. Merrill |
|
|
350,000 |
(1) |
|
|
4.98 |
% |
|
|
2.16 |
|
|
|
3/17/2015 |
|
|
|
475,444 |
|
|
|
1,204,869 |
|
|
|
|
| (1) |
|
Option vests ratably on a quarterly basis over four years beginning on March 17, 2005. |
The percentage of total options granted to employees is based on options to purchase a total
of 7,031,000 shares of our common stock granted during 2005. If exercised, the options granted to
employees would represent 4.71% of the total number of shares of our common stock outstanding at
December 31, 2005.
Aggregated Option Exercises in 2005 and Option Values at December 31, 2005
The following table sets forth the number of shares of common stock subject to exercisable and
unexercisable stock options held as of December 31, 2005 by the named executive officers. No stock
options were exercised by the named executive officers in 2005. Also reported are values of
in-the-money options, which represent the positive spread between the exercise prices of
outstanding stock options and the fair market value of $5.10 per share, which was the closing price
of our common stock on December 30, 2005.
| |
|
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|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Number of |
|
|
| |
|
|
|
|
|
|
|
|
|
Securities Underlying |
|
Value of Unexercised |
| |
|
Number of |
|
|
|
|
|
Unexercised Options at |
|
In-the-Money Options at |
| |
|
Shares |
|
|
|
|
|
12/31/05 |
|
12/31/05($) |
| |
|
Acquired on |
|
Value |
|
|
|
|
|
|
|
|
| Name |
|
Exercise |
|
Realized |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
W. Michael Long |
|
|
— |
|
|
|
— |
|
|
|
5,831,250 |
|
|
|
2,668,750 |
|
|
|
18,648,563 |
|
|
|
6,491,438 |
|
Jack D. Dennison |
|
|
— |
|
|
|
— |
|
|
|
2,793,750 |
|
|
|
806,250 |
|
|
|
8,965,969 |
|
|
|
1,693,031 |
|
Allan D. Dalton |
|
|
— |
|
|
|
— |
|
|
|
916,144 |
|
|
|
733,856 |
|
|
|
3,834,665 |
|
|
|
2,022,335 |
|
Lewis R. Belote, III |
|
|
— |
|
|
|
— |
|
|
|
1,867,030 |
|
|
|
562,970 |
|
|
|
5,980,272 |
|
|
|
1,180,428 |
|
Allan P. Merrill |
|
|
— |
|
|
|
— |
|
|
|
1,596,352 |
|
|
|
803,649 |
|
|
|
4,529,885 |
|
|
|
1,630,119 |
|
8
Employment-Related Agreements
Mr. Long
We entered into an employment agreement with Mr. Long dated as of March 6, 2002 that provides
for his employment as our chief executive officer.
Mr. Long’s employment agreement provides for annual base salary of $500,000. We provided Mr.
Long a signing bonus of $500,000 that was paid in four equal quarterly installments, the last of
which was paid on January 31, 2003. Under his 2005 executive bonus plan, Mr. Long was also eligible
to receive a performance bonus of up to twice his annual base salary for 2005; he received
$775,000.
We granted Mr. Long a “Sign-On Option,” which fully vested on January 24, 2002, to purchase
1,300,000 shares of our common stock at an exercise price of $1.76 per share. We also granted Mr.
Long a “Principal Option” to purchase 3,900,000 shares of our common stock at an exercise price of
$1.76 per share. Mr. Long’s Principal Option vested ratably on a monthly basis over 48 months
beginning on February 1, 2002 and is now fully vested.
The Sign-On Option and Principal Option may be exercised after a termination of employment
(but no later than their expiration date, January 23, 2012) as follows: (i) within 90 days after
termination for cause; (ii) within one year after voluntary termination prior to a change in
control; or (iii) within three years after termination for any other reason.
We agreed to provide residential accommodations to Mr. Long within reasonable commuting
distance of our offices, with costs not to exceed $5,000 per month. We will reimburse Mr. Long the
actual and reasonable fixed operating costs and the actual and reasonable business related variable
operating costs of an airplane indirectly owned by him; Mr. Long was reimbursed approximately $1.68
million for the use of this airplane in 2005. We also will reimburse him for actual and reasonable
business expenses. If the foregoing reimbursements are subject to federal or state income taxes, we
will pay an amount necessary to place Mr. Long in the same after-tax position as he would have been
in had no such taxes been imposed.
If there is a termination of employment without cause, a termination for death or disability
or a constructive termination of employment, whether or not in connection with a change in control,
subject to his execution of a release of claims, Mr. Long will receive an amount equal to his
annual base salary and his full annual bonus for the fiscal year in which the termination occurs,
payable in equal installments over twelve months.
In the event that any portion of the amounts payable are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, we will pay Mr. Long an amount necessary to place him in
the same after-tax position as he would have been in had no such excise tax been imposed.
On May 11, 2004, we granted Mr. Long options to purchase 1,000,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 750,000 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 250,000 shares of our common stock vests in full either on (i) May 11, 2007, if the
Company meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May
11, 2009, if the Company fails to meet such performance criteria. In the event of termination
upon a change of control, or termination without cause in the absence of a change of control,
subject to his provision of transition services if requested and his execution of a release of
claims, such options will vest and become exercisable for a period of one year following such
termination.
On March 17, 2005, we granted Mr. Long options to purchase 2,300,000 shares of our common
stock at an exercise price of $2.16 per share. This option vests ratably on a quarterly basis over
four years beginning on March 17, 2005. In the event of termination upon a change of control, or
termination without cause in the absence of a change of control, subject to his provision of
transition services if requested and his execution of a release of claims, such options will vest
and become exercisable for a period of one year following such termination.
9
Mr. Dennison
We entered into an employment agreement with Mr. Dennison dated as of March 6, 2002 that
provides for his employment as our chief operating officer.
Mr. Dennison’s employment agreement provides for annual base salary of $400,000. We provided
Mr. Dennison a signing bonus of $400,000 that was paid in four equal quarterly installments, the
last of which was paid on January 31, 2003. Under his 2005 executive bonus plan, Mr. Dennison was
also eligible to receive a performance bonus of up to twice his annual base salary for 2005; he
received $620,000.
We granted Mr. Dennison a “Sign-On Option,” which fully vested on January 24, 2002, to
purchase 650,000 shares of our common stock at an exercise price of $1.76 per share. We also
granted Mr. Dennison a “Principal Option” to purchase 1,950,000 shares of our common stock at an
exercise price of $1.76 per share. Mr. Dennison’s Principal Option vested ratably on a monthly
basis over 48 months beginning on February 1, 2002 and is now fully vested.
The Sign-On Option and Principal Option may be exercised after a termination of employment
(but no later than their expiration date, January 23, 2012) as follows: (i) within 90 days after
termination for cause; (ii) within one year after voluntary termination prior to a change in
control; or (iii) within three years after termination for any other reason.
We reimburse Mr. Dennison for actual and reasonable business expenses. In addition, Mr.
Dennison was reimbursed for reasonable expenses associated with his relocation to our headquarters
as described above under “Summary Compensation Table.” If the foregoing reimbursements are subject
to federal or state income taxes, we will pay an amount necessary to place Mr. Dennison in the same
after-tax position as he would have been in had no such taxes been imposed.
If there is a termination of employment without cause, a termination for death or disability
or a constructive termination of employment, whether or not in connection with a change in control,
subject to his execution of a release of claims, Mr. Dennison will receive an amount equal to his
annual base salary and his full annual bonus for the fiscal year in which the termination occurs,
payable in equal installments over twelve months.
In the event that any portion of the amounts payable are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, we will pay Mr. Dennison an amount necessary to place
him in the same after-tax position as he would have been in had no such excise tax been imposed.
On May 11, 2004, we granted Mr. Dennison options to purchase 500,000 shares of our common
stock at an exercise price of $4.09 per share. An option to purchase 375,000 shares of our common
stock vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option
to purchase 125,000 shares of our common stock vests in full either on (i) May 11, 2007, if the
Company meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May
11, 2009, if the Company fails to meet such performance criteria. In the event of termination
upon a change of control, or termination without cause in the absence of a change of control,
subject to his provision of transition services if requested and his execution of a release of
claims, such options will vest and become exercisable for a period of one year following such
termination.
On March 17, 2005, we granted Mr. Dennison options to purchase 500,000 shares of our common
stock at an exercise price of $2.16 per share. This option vests ratably on a quarterly basis over
four years beginning on March 17, 2005. In the event of termination upon a change of control, or
termination without cause in the absence of a change of control, subject to his provision of
transition services if requested and his execution of a release of claims, such options will vest
and become exercisable for a period of one year following such termination.
Mr. Dalton
On September 30, 2002, we entered into an executive retention and severance agreement with Mr.
Dalton pursuant to which he agreed to serve as President and CEO of REALTOR.com®. Additionally, we
entered into a
10
compensation arrangement with Mr. Dalton that provides for annual base salary of $325,000.
Under his 2005 executive bonus plan, Mr. Dalton was also eligible to receive a performance bonus of
up to twice his annual base salary for 2005; he received $630,000.
We reimburse Mr. Dalton for actual and reasonable business expenses. In addition, as described
above under “Summary Compensation Table,” Mr. Dalton was reimbursed for reasonable expenses
associated with his relocation to our headquarters. This included taxes and tax gross-up amounts
associated with payments made to relocate Mr. Dalton to our headquarters. We purchased a residence
in the fourth quarter of 2002 from Mr. Dalton for $1.95 million, based on its appraised value, to
facilitate his move to our headquarters. We sold this house in 2004 for approximately $1.4 million,
net of commissions and operating costs.
Effective October 8, 2002, we granted Mr. Dalton an option to purchase 1,200,000 shares of our
common stock at an exercise price of $0.39 per share. This option vested as to 250,000 shares on
the date of grant and the remainder vests ratably on a monthly basis over 48 months beginning on
November 1, 2002.
In the event of a termination without cause, subject to his provision of transition services
if requested and his execution of a release of claims, Mr. Dalton will receive a lump sum payment
in an amount equal to his annual base salary, payment of his continued medical coverage premiums
for up to 12 months, and a payment in an amount equal to 50% of his target bonus for the year in
which his termination occurs (the “Minimum Bonus Payment”). In addition, if the termination occurs
after June 30 of any year, and before January 1 of the next year, and our financial performance
goals for the year have been achieved, we will pay Mr. Dalton a prorated portion of his target
bonus less his Minimum Bonus Payment. All equity awards Mr. Dalton was granted by us prior to
September 30, 2002 will vest and any such options will remain exercisable for a period of 12 months
following the later of his termination date or the end of any transition services period.
On May 11, 2004, we granted Mr. Dalton options to purchase 350,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 262,500 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in full either on (i) May 11, 2007, if the Company
meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May 11,
2009, if the Company fails to meet such performance criteria. In the event of termination upon a
change of control, or termination without cause in the absence of a change of control, subject to
his provision of transition services if requested and his execution of a release of claims, such
options will vest and become exercisable for a period of one year following such termination.
On March 17, 2005, we granted Mr. Dalton options to purchase 350,000 shares of our common
stock at an exercise price of $2.16 per share. This option vests ratably on a quarterly basis over
four years beginning on March 17, 2005. In the event of termination upon a change of control, or
termination without cause in the absence of a change of control, subject to his provision of
transition services if requested and his execution of a release of claims, such options will vest
and become exercisable for a period of one year following such termination.
Mr. Belote
We entered into an employment agreement with Mr. Belote dated as of March 6, 2002 that
provides for his employment as our chief financial officer.
Mr. Belote’s employment agreement provides for annual base salary of $350,000. We provided Mr.
Belote a signing bonus of $350,000 that was paid in four equal quarterly installments, the last of
which was paid on January 31, 2003. Under his 2005 executive bonus plan, Mr. Belote was also
eligible to receive a performance bonus of up to twice his annual base salary for 2005; he received
$540,000.
We granted Mr. Belote a “Sign-On Option,” which fully vested on January 24, 2002, to purchase
432,500 shares of our common stock at an exercise price of $1.76 per share. We also granted Mr.
Belote a “Principal Option” to purchase 1,297,500 shares of our common stock at an exercise price
of $1.76 per share. Mr. Belote’s Principal Option vested ratably on a monthly basis over 48 months
beginning on February 1, 2002 and is now fully vested.
11
The Sign-On Option and Principal Option may be exercised after a termination of employment
(but no later than their expiration date, January 23, 2012) as follows: (i) within 90 days after
termination for cause; (ii) within one year after voluntary termination prior to a change in
control; or (iii) within three years after termination for any other reason.
We agreed to provide residential accommodations to Mr. Belote within reasonable commuting
distance of our offices, with costs not to exceed $5,000 per month. We will reimburse Mr. Belote
for actual and reasonable business expenses. If the foregoing reimbursements are subject to federal
or state income taxes, we will pay an amount necessary to place Mr. Belote in the same after-tax
position as he would have been in had no such taxes been imposed.
If there is a termination of employment without cause, a termination for death or disability
or a constructive termination of employment, whether or not in connection with a change in control,
subject to his execution of a release of claims, Mr. Belote will receive an amount equal to his
annual base salary and his full annual bonus for the fiscal year in which the termination occurs,
payable in equal installments over twelve months.
In the event that any portion of the amounts payable are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, we will pay Mr. Belote an amount necessary to place him
in the same after-tax position as he would have been in had no such excise tax been imposed.
On May 11, 2004, we granted Mr. Belote options to purchase 350,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 262,500 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in full either on (i) May 11, 2007, if the Company
meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May 11,
2009, if the Company fails to meet such performance criteria. In the event of termination upon a
change of control, or termination without cause in the absence of a change of control, subject to
his provision of transition services if requested and his execution of a release of claims, such
options will vest and become exercisable for a period of one year following such termination.
On March 17, 2005, we granted Mr. Belote options to purchase 350,000 shares of our common
stock at an exercise price of $2.16 per share. This option vests ratably on a quarterly basis over
four years beginning on March 17, 2005. In the event of termination upon a change of control, or
termination without cause in the absence of a change of control, subject to his provision of
transition services if requested and his execution of a release of claims, such options will vest
and become exercisable for a period of one year following such termination.
Mr. Merrill
On April 24, 2002, we entered into an executive retention and severance agreement with Mr.
Merrill pursuant to which he agreed to continue to serve as executive vice president of strategy
and corporate development. Additionally, we entered into a new compensation arrangement with Mr.
Merrill that provides for annual base salary of $325,000, effective January 21, 2002. Under his
2005 executive bonus plan, Mr. Merrill was also eligible to receive a performance bonus of up to
twice his annual base salary for 2005; he received $550,000.
Effective January 17, 2002, we granted Mr. Merrill an option to purchase 450,000 shares of our
common stock at an exercise price of $2.25 per share. This option vests ratably on a monthly basis
over 48 months beginning on February 1, 2002. Additionally, effective January 24, 2002, we granted
Mr. Merrill an option to purchase 700,000 shares of our common stock at an exercise price of $1.76
per share. This option vested as to 87,500 shares on July 24, 2002 and the remainder vests ratably
on a monthly basis over 42 months beginning on August 1, 2002.
12
In the event of a termination without cause, subject to his provision of transition services
if requested and his execution of a release of claims, Mr. Merrill will receive a lump sum payment
in an amount equal to his annual base salary, payment of his continued medical coverage premiums
for up to 12 months, and a payment in an amount equal to 50% of his target bonus for the year in
which his termination occurs (the “Minimum Bonus Payment”). In addition, if the termination occurs
after June 30 of any year, and before January 1 of the next year, and our financial performance
goals for the year have been achieved, we will pay Mr. Merrill a prorated portion of his target
bonus less his Minimum Bonus Payment. All equity awards Mr. Merrill was granted by us prior to
April 24, 2002 will vest and any such options will remain exercisable for a period of 12 months
following the later of his termination date or the end of any transition services period.
On March 31, 2003, we granted Mr. Merrill an option to purchase 50,001 shares of our common
stock at an exercise price of $0.56 per share. This option vests ratably on a monthly basis over 36
months beginning on April 30, 2003. Additionally, on November 24, 2003, we granted Mr. Merrill an
option to purchase 500,000 shares of our common stock at an exercise price of $3.24 per share. This
option vested as to 125,000 shares on November 24, 2004 and the remainder vests ratably on a
monthly basis over 36 months beginning on December 24, 2004.
On May 11, 2004, we granted Mr. Merrill options to purchase 350,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 262,500 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in full either on (i) May 11, 2007, if the Company
meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May 11,
2009, if the Company fails to meet such performance criteria. In the event of termination upon a
change of control, or termination without cause in the absence of a change of control, subject to
his provision of transition services if requested and his execution of a release of claims, such
options will vest and become exercisable for a period of one year following such termination.
On March 17, 2005, we granted Mr. Merrill options to purchase 350,000 shares of our common
stock at an exercise price of $2.16 per share. This option vests ratably on a quarterly basis over
four years beginning on March 17, 2005. In the event of termination upon a change of control, or
termination without cause in the absence of a change of control, subject to his provision of
transition services if requested and his execution of a release of claims, such options will vest
and become exercisable for a period of one year following such termination.
Director Compensation
Non-employee directors receive an annual retainer of $25,000 in cash, which is paid in
quarterly installments. Each committee chair receives an additional annual retainer of $5,000 in
cash, except the chairman of the audit committee receives $10,000 in cash. Each of these directors
also receives $1,500 in cash per meeting for each board meeting attended in person (and $1,000 for
each telephonic meeting attended after April 4, 2005) that requires a significant commitment of
time. In addition, members of the committees of the board receive, depending on the committee,
either $2,000 or $1,500 for each committee meeting attended (and either $1,500 or $1,000 for each
telephonic meeting attended after April 4, 2005) that requires a significant commitment of time.
Mr. Hanauer, in his capacity as chairman of the board, receives an additional annual retainer of
$70,000 in cash, which is paid in quarterly installments.
In June 2005, each non-employee director (other than any director who is entitled to a seat on
our board of directors on a contractual basis) was granted 15,000 restricted shares of our common
stock under our 1999 Stock Incentive Plan. Mr. Hanauer, in his capacity as chairman of the board,
was granted an additional 15,450 restricted shares. No options were included as part of these 2005
grants to directors. Each restricted share will vest three years after the grant date. All
restricted stock will immediately vest if the director is not nominated for re-election, is
nominated for re-election and is not elected or must resign due to health reasons, or upon such
director’s death. Upon a director’s resignation or termination for other reasons, including but not
limited to business conflicts with us, all of the director’s unvested restricted stock will be
terminated immediately.
13
Compensation Committee Interlocks and Insider Participation
As of January 1, 2005, the management development and compensation committee was composed of three
non-employee directors, Messrs. Hanauer, Doerr and Willison, none of whom have any interlocking
relationships as defined by the SEC. In March 2005, Mr. Doerr resigned from the management
development and compensation committee. During the remainder of 2005, this committee was composed
of Messrs. Hanauer and Willison, who are the current members of this committee.
14
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information relating to beneficial ownership of our voting
securities as of April 1, 2006, by
| |
• |
|
each stockholder known by us to be the beneficial owner of 5% or more of any
class of our voting securities, |
| |
| |
• |
|
each of our directors, |
| |
| |
• |
|
each of the executive officers listed in the summary compensation table, and |
| |
| |
• |
|
all of our directors and executive officers as a group. |
Unless otherwise noted, the address for each stockholder listed is c/o Homestore, Inc., 30700
Russell Ranch Road, Westlake Village, California 91362.
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| |
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Shares of Series A |
|
Shares of Series B |
| |
|
Shares of Common Stock |
|
Preferred Stock (1) |
|
Preferred Stock (2) |
| |
|
Beneficially Owned |
|
Beneficially Owned |
|
Beneficially Owned |
| Name of Beneficial Owner |
|
Number |
|
Percent |
|
Number |
|
Percent |
|
Number |
|
Percent |
FMR Corp. |
|
|
22,154,101 |
(3) |
|
|
14.8 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
82 Devonshire Street
Boston, MA 02109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. McNamee |
|
|
24,459,493 |
(4)(5) |
|
|
14.0 |
% |
|
|
— |
|
|
|
— |
|
|
|
101,189 |
(6) |
|
|
100 |
% |
Elevation Partners, L.P. |
|
|
24,092,579 |
(5) |
|
|
13.8 |
% |
|
|
— |
|
|
|
— |
|
|
|
101,189 |
(6) |
|
|
100 |
% |
2800 Sand Hill Road
Suite 160
Menlo Park, CA 94025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred D. Anderson |
|
|
24,092,579 |
(5) |
|
|
13.8 |
% |
|
|
— |
|
|
|
— |
|
|
|
101,189 |
(6) |
|
|
100 |
% |
TCS Capital GP, LLC |
|
|
9,225,213 |
(7) |
|
|
6.1 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
888 Seventh Avenue
Suite 1504
New York, NY 10019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXA Financial, Inc. |
|
|
7,551,044 |
(8) |
|
|
5.0 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
1290 Ave. of the Americas
New York, NY 10104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Michael Long |
|
|
6,340,808 |
(9) |
|
|
4.1 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
L. John Doerr |
|
|
4,307,916 |
(10) |
|
|
2.9 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
National Association of
REALTORS® |
|
|
3,975,329 |
|
|
|
2.6 |
% |
|
|
1 |
|
|
|
100 |
% |
|
|
— |
|
|
|
— |
|
430 North Michigan Ave.
Chicago, IL 60611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Yassky |
|
|
3,975,329 |
(11) |
|
|
2.6 |
% |
|
|
1 |
(12) |
|
|
100 |
% |
|
|
— |
|
|
|
— |
|
Jack D. Dennison |
|
|
2,943,272 |
(13) |
|
|
1.9 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Lewis R. Belote, III |
|
|
1,979,101 |
(14) |
|
|
1.3 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Allan P. Merrill |
|
|
1,760,974 |
(15) |
|
|
1.2 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Allan D. Dalton |
|
|
1,081,114 |
(16) |
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Joe F. Hanauer |
|
|
889,604 |
(17) |
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Kenneth K. Klein |
|
|
153,287 |
(18) |
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Bruce G. Willison |
|
|
118,841 |
(19) |
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
V. Paul Unruh |
|
|
115,300 |
(20) |
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
William E. Kelvie |
|
|
114,487 |
(21) |
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
All 17 directors and
executive officers as a
group |
|
|
49,885,454 |
|
|
|
26.2 |
% |
|
|
1 |
|
|
|
100 |
% |
|
|
101,189 |
|
|
|
100 |
% |
|
|
|
| * |
|
Represents beneficial ownership of less than 1%. |
15
|
|
|
| (1) |
|
We have authorized the issuance of one share of Series A preferred stock, which is held by
the National Association of REALTORS®. Although the Series A preferred stockholder is
generally not entitled to notice of any stockholders’ meetings or to vote on any matters with
respect to any question upon which holders of our common stock or of any other series of our
preferred stock have the right to vote, except as may be required by law (in which case, the
Series A preferred stock would have one vote per share and would vote together with the common
stock as a single class), the holder of Series A preferred stock is entitled to elect one
member of our board of directors. |
| |
| (2) |
|
By virtue of their ownership of all of the outstanding shares of our Series B Preferred
Stock, Elevation currently has the right to elect two of our directors. In addition, the
Series B Preferred Stock votes as a single class with the common stock on any matter to come
before the stockholders of the Company, with each share of Series B Preferred Stock being
entitled to cast a number of votes equal to the number of shares of Common Stock into which it
is then convertible. Pursuant to the Elevation Stockholders Agreement, Elevation is required
to vote their shares in the manner recommended by the board of directors with respect to the
election or removal of directors, other than any directors designated by them. |
| |
| (3) |
|
The information shown is as of December 31, 2005 and is based upon information disclosed by
FMR Corp., Edward C. Johnson 3d, Fidelity Management & Research Company, and Fidelity Mid Cap
Stock Fund in an amendment to a Schedule 13G filed with the SEC on February 14, 2006. Such
persons reported that Edward C. Johnson 3d and FMR Corp., through its control of Fidelity
Management & Research Company, and other members of the filing group, have sole power to
dispose or to direct the disposition of 22,140,398 shares of our common stock. Sole power to
vote these shares resides in the respective boards of trustees of the funds that have invested
in the shares. Such persons also reported that Edward C. Johnson 3d and FMR Corp., through its
control of Fidelity Management Trust Company, have sole power to dispose or to direct the
disposition of and sole power to vote or direct the voting of 11,029 shares of our common
stock. Fidelity International Limited, Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, is the
beneficial owner of 2,674 shares of our common stock. |
| |
| (4) |
|
Includes 15,650 shares of common stock owned by the Roger and Ann McNamee Trust UTAD 3/27/96.
Mr. McNamee and his wife are trustees of this trust. Also includes 351,264 shares of common
stock held by two Integral Capital Partners investment funds of which Mr. McNamee is a manager
of the general partner. Mr. McNamee disclaims beneficial ownership of such shares except to
the extent of his pecuniary interest in his distributive share therein. |
| |
| (5) |
|
Pursuant to Rule 13d-3 under the Exchange Act, Elevation Partners, L.P. (“Elevation
Partners”) may be deemed to beneficially own 24,087,279 shares of our common stock, which is
issuable upon conversion of the Series B Preferred Stock held by Elevation Partners. Pursuant
to Rule 13d-3 under the Exchange Act, Elevation Employee Side Fund, LLC (“Side Fund”) may be
deemed to beneficially own 5,300 shares of our common stock, which is issuable upon conversion
of the Series B Preferred Stock held by Side Fund. |
| |
| |
|
Each of Mr. Anderson and Mr. McNamee, our two Series B Directors, as well as each of Marc
Bodnick, Paul Hewson, Bret Pearlman and John Riccitiello (collectively, the “Managers”) is a
manager of Elevation Associates, LLC (“Elevation LLC”), which is the sole general partner of
Elevation Associates, L.P. (“Elevation GP”). Elevation GP is the sole general partner of
Elevation Partners. Each of the Managers, including Messrs. Anderson and McNamee, is a manager
of Elevation Management, LLC (“Elevation Management”), which is the sole managing member of
Side Fund. As managers of each of Elevation LLC and Elevation Management, the Managers,
including Messrs. Anderson and McNamee, may be deemed to beneficially own any shares of our
common stock deemed to be beneficially owned by Elevation LLC or Elevation Management.
Elevation LLC may be deemed to beneficially own any shares of our common stock deemed to be
beneficially owned by Elevation GP, which may be deemed to beneficially own any shares of our
common stock deemed to be beneficially owned by Elevation Partners. Elevation Management may be
deemed to beneficially own any shares of our common stock deemed to be beneficially owned by
Side Fund. Each of Messrs. Anderson and McNamee disclaims beneficial ownership of such shares
except to the extent of his pecuniary interest in his distributive share therein. |
16
|
|
|
| |
|
Elevation Partners, Elevation GP and Elevation LLC have sole power to dispose and to direct the
disposition of and sole power to vote and direct the voting of 24,087,279 shares of our common
stock. Side Fund and Elevation Management have sole power to dispose and to direct the
disposition of and sole power to vote and direct the voting of 5,300 shares of our common
stock. Each of the Managers has shared power to dispose and to direct the disposition of and
shared power to vote and direct the voting of the 24,092,579 shares of our common stock held by
Elevation Partners and Side Fund. |
| |
| (6) |
|
Includes approximately 101,167 shares of Series B Preferred Stock held by Elevation Partners
and approximately 22 shares of Series B Preferred Stock held by Side Fund. As managers of each
of Elevation LLC and Elevation Management, the Managers, including Messrs. Anderson and
McNamee, may be deemed to beneficially own any shares of our Series B Preferred Stock deemed
to be beneficially owned by Elevation LLC or Elevation Management. Elevation LLC may be
deemed to beneficially own any shares of our Series B Preferred Stock deemed to be
beneficially owned by Elevation GP, which may be deemed to beneficially own any shares of our
Series B Preferred Stock deemed to be beneficially owned by Elevation Partners. Elevation
Management may be deemed to beneficially own any shares of our common stock deemed to be
beneficially owned by Side Fund. Each of Messrs. Anderson and McNamee disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest in his distributive
share therein. |
| |
| (7) |
|
The information shown is as of January 6, 2006 and is based upon information disclosed by TCS
Capital GP, LLC and Eric Semler in an amendment to a Schedule 13G filed with the SEC on
January 18, 2006. Such persons reported that Eric Semler has sole power to dispose or to
direct the disposition of and sole power to vote or direct the voting of 9,225,213 shares of
our common stock and that TCS Capital GP, LLC has sole power to dispose or to direct the
disposition of and sole power to vote or direct the voting of 9,185,213 of these shares. |
| |
| (8) |
|
The information shown is as of December 31, 2005 and is based upon information disclosed
by AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Courtage Assurance
Mutuelle, (collectively, the “Mutuelles AXA”), AXA and AXA Financial, Inc. in a Schedule 13G
filed with the SEC on February 14, 2006. Such persons reported that AXA Financial, Inc. and
other members of the filing group have sole power to dispose or to direct the disposition of
7,551,044 shares of our common stock and sole power to vote or direct the voting of 4,924,765
shares of our common stock. The address of the Mutuelles AXA is 26, rue Drougot, 75009 Paris,
France and the address of AXA is 25, avenue Matignon, 75008 Paris, France. |
| |
| (9) |
|
Includes 186,662 shares of restricted stock, none of which will be vested or transferable
as of May 31, 2006. Also includes 6,150,000 shares issuable upon the exercise of options that
are vested and exercisable as of May 31, 2006. |
| |
| (10) |
|
Includes 60,300 shares of restricted stock, of which 25,300 shares will not be vested or
transferable as of May 31, 2006. Also includes 64,687 shares issuable upon the exercise of
options that are held by Mr. Doerr, which are vested and exercisable as of May 31, 2006. Also
includes 3,657,895 shares held by Kleiner Perkins Caufield & Byers VIII, 210,967 shares held
by KPCB VIII Founders Fund, and 1,615 shares held by KPCB Information Sciences Zaibatsu Fund
II. Mr. Doerr is a general partner of KPCB Associates VIII, which is the general partner of
each of Kleiner Perkins Caufield & Byers VIII and KPCB VIII Founders Fund, and a general
partner of KPCB Associates VII, which is the general partner of KPCB Information Sciences
Zaibatsu Fund II. Mr. Doerr disclaims beneficial ownership of these shares except to the
extent of his pecuniary interest in these entities. Also includes 2,602 shares in the Brook H.
Byers Trust dated 1986 of which Mr. Doerr is trustee, with respect to which Mr. Doerr
disclaims beneficial ownership. The address of the Kleiner Perkins Caufield & Byers entities
is 2750 Sand Hill Road, Menlo Park, California 94025. |
| |
| (11) |
|
Includes 3,975,329 shares of common stock held by the National Association of REALTORS®, of
which Mr. Yassky currently serves as a director. Mr. Yassky disclaims beneficial ownership of
all of these shares. |
| |
| (12) |
|
Includes one share of Series A Preferred Stock held by the National Association of REALTORS®,
of which Mr. Yassky currently serves as a director. Mr. Yassky disclaims beneficial ownership
of all of these shares. |
17
|
|
|
| (13) |
|
Includes 2,912,500 shares issuable upon the exercise of options that are vested and
exercisable as of May 31, 2006. |
| |
| (14) |
|
Includes 1,948,750 shares issuable upon the exercise of options that are vested and
exercisable as of May 31, 2006. |
| |
| (15) |
|
Includes 1,731,248 shares issuable upon the exercise of options that are vested and
exercisable as of May 31, 2006. |
| |
| (16) |
|
Includes 1,069,790 shares issuable upon the exercise of options that are vested and
exercisable as of May 31, 2006. |
| |
| (17) |
|
Includes 267,788 shares of restricted stock, of which 56,200 shares will not be vested or
transferable as of May 31, 2006. Also includes 215,468 shares issuable upon the exercise of
options that are held by Mr. Hanauer that are vested and exercisable as of May 31, 2006. Also
includes 406,348 shares held by Ingleside Interests, L.P. Mr. Hanauer is a general partner of
this entity. Mr. Hanauer disclaims beneficial ownership of these shares except to the extent
of his pecuniary interest in this entity. |
| |
| (18) |
|
Includes 72,300 shares of restricted stock, of which 25,300 shares will not be vested or
transferable as of May 31, 2006. Also includes 73,187 shares issuable upon the exercise of
options that are vested and exercisable as of May 31, 2006. |
| |
| (19) |
|
Includes 85,300 shares of restricted stock, of which 25,300 shares will not be vested or
transferable as of May 31, 2006. Also includes 33,541 shares issuable upon the exercise of
options that are vested and exercisable as of May 31, 2006. |
| |
| (20) |
|
Includes 85,300 shares of restricted stock, of which 25,300 shares will not be vested or
transferable as of May 31, 2006. Also includes 30,000 shares issuable upon the exercise of
options that are vested and exercisable as of May 31, 2006. |
| |
| (21) |
|
Includes 72,300 shares of restricted stock, of which 25,300 shares will not be vested or
transferable as of May 31, 2006. Also includes 42,187 shares issuable upon the exercise of
options that are vested and exercisable as of May 31, 2006. |
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2005 regarding compensation plans
(including individual compensation arrangements) under which our equity securities are authorized
for issuance.
Equity Compensation Plan Information
| |
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|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Number of Securities |
|
| |
|
Number of Securities |
|
|
|
|
|
|
Remaining Available for |
|
| |
|
to be |
|
|
Weighted-Average |
|
|
Future Issuance Under |
|
| |
|
Issued Upon Exercise of |
|
|
Exercise Price of |
|
|
Equity Compensation |
|
| |
|
Outstanding Options, |
|
|
Outstanding Options, |
|
|
Plans (excluding securities |
|
| Plan Category |
|
Warrants and Rights |
|
|
Warrants and Rights |
|
|
reflected in column (a)) |
|
| |
|
(a) |
|
|
(b) |
|
|
(c) |
|
| |
|
(In thousands) |
|
|
|
|
|
|
(In thousands) |
|
Equity
compensation plans
approved by
security holders |
|
|
25,091 |
|
|
$ |
3.00 |
|
|
|
3,434 |
|
Equity
compensation plans
not approved by
security holders |
|
|
7,123 |
|
|
$ |
2.26 |
|
|
|
10,531 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
32,214 |
|
|
$ |
2.84 |
|
|
|
13,964 |
|
|
|
|
|
|
|
|
|
|
|
|
Each of the above plans provides that the number of shares with respect to which options may
be granted, and the number of shares of common stock subject to an outstanding option, shall be
proportionately adjusted in the
18
event of a subdivision or consolidation of shares or the payment of a stock dividend on common
stock, and the purchase price per share of outstanding options shall be proportionately revised.
Options outstanding as of December 31, 2005 pursuant to compensation plans assumed in connection
with prior acquisitions, in the aggregate, total 108,249 and the weighted average exercise price of
those option shares is $20.30.
The Homestore, Inc. 1999 Stock Incentive Plan, a security-holder approved plan, contains a
provision for an automatic increase in the number of shares available for issuance each January 1
(until January 1, 2009) by an amount equal to 4.5% of the total number of outstanding shares as of
the preceding December 31; provided that the aggregate number of shares that qualify as Incentive
Stock Options (as defined in the plan) must not exceed 20.0 million shares.
Non-Shareholder Approved Plans
Options are granted from the Homestore, Inc. 2002 Stock Incentive Plan, a plan established in
January 2002 to attract and retain qualified personnel. No more then 40% of the available
securities granted under this plan may be awarded to our directors or executive officers. Option
grants under this plan are non-qualified stock options and generally have a four-year vesting
schedule and a ten-year life.
Other non-shareholder approved plans include the following plans assumed in connection with
prior acquisitions: The 1997-1998 Stock Incentive Plan of Cendant Corporation, the Cendant
Corporation Move.com Group 1999 Stock Option Plan, as amended and restated effective as of March
21, 2000, the Move.com, Inc. 2000 Stock Incentive Plan, the HomeWrite Incorporated 2000 Equity
Incentive Plan, the ConsumerInfo.com, Inc. 1999 Stock Option Plan, the iPlace 2000 Stock Option
Plan, the eNeighborhoods, Inc. 1998 Stock Option Plan, the Qspace, Inc. 1999 Stock Option Plan, the
iPlace, Inc. 2001 Equity Incentive Plan and The Hessel Group, Inc. 2000 Stock Option Plan. Each of
these plans (i) was intended to attract, retain and motivate employees, (ii) was administered by
the Board of the Directors or by a committee of the Board of Directors of such entities, and (iii)
provided that options granted thereunder would be exercisable as determined by such Board or
committee, provided that no option would be exercisable after the expiration of 10 years after the
grant date. We did not grant options under any of these plans in 2005.
For additional information regarding our equity compensation plans, see Note 13, “Stock
Plans,” to our Consolidated Financial Statements contained in Item 8 of this Form 10-K.
19
Item 13. Certain Relationships and Related Transactions
Operating Agreement with the National Association of REALTORS®
In November 1996, we entered into an operating agreement with the National Association of
REALTORS® (the “NAR”), which governs how our subsidiary, RealSelect, Inc., operates the
REALTOR.com® web site on behalf of the NAR. For a description of the operating agreement, please
see Item 1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
Under our operating agreement as originally entered into with the NAR, we were required to
make quarterly royalty payments of up to 15% of RealSelect’s operating revenue in the aggregate to
the NAR and the entities that provide us the information for our real property listings (“data
content providers”).
In 2002, we and the NAR amended the NAR operating agreement. In accordance with the operating
agreement, as amended, we paid $1,500,000 to the NAR in 2005 and will make the following fixed
payments to the NAR:
| |
• |
|
For 2006, we must pay $1,500,000 plus or minus, as the case may be, the
percentage change in the Consumer Price Index for 2005, in four equal installments due
on the last day of each calendar quarter of 2006. |
| |
| |
• |
|
For 2007 and beyond, we must pay the amount due during the prior calendar year
plus or minus, as the case may be, the percentage change in the Consumer Price Index for
the prior calendar year, in four equal installments due on the last day of each calendar
quarter for that calendar year. |
Transactions with Elevation Partners
On November 29, 2005, pursuant to the terms and conditions of a Preferred Stock Purchase
Agreement dated as of November 6, 2005 which we entered into with Elevation Partners, we sold an
aggregate of 100,000 shares of our Series B Preferred Stock to Elevation Partners and Side Fund for
an aggregate purchase price of $100 million. For a description of the Series B Preferred Stock,
please see Note 15, “Series B Convertible Preferred Stock” to our Consolidated Financial Statements
contained in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
Pursuant to the Elevation Stockholders Agreement, we agreed that, subject to the terms and
conditions of the Elevation Stockholders Agreement, Elevation may designate or nominate up to two
of our directors. On December 8, 2005, as contemplated by the Elevation Stockholders Agreement,
Mr. Anderson and Mr. McNamee were elected as directors to fill newly-created seats on our board.
Each of Mr. Anderson and Mr. McNamee is a manager of each of Elevation LLC and Elevation
Management. Elevation LLC is the sole general partner of Elevation GP, which is the sole general
partner of Elevation Partners. Elevation Management is the sole managing member of Side Fund.
In connection with the sale of our Series B Preferred Stock to Elevation, we made the
following payments in 2005:
| |
(i) |
|
a $1,000,000 million transaction fee to Elevation Management; |
| |
| |
(ii) |
|
a $163,765 payment to Elevation Management to reimburse it for professional
fees it paid to consultants and travel expenses associated with the due diligence
investigation of us conducted on behalf of Elevation in connection with the purchase of
our Series B Preferred Stock; and |
| |
| |
(iii) |
|
direct payments in an aggregate amount of $1,157,812 to a law firm and an
accounting firm for legal and accounting fees and expenses incurred in connection with
services rendered by each of them to Elevation in connection with the purchase of our
Series B Preferred Stock. |
20
Loans to and Transactions with Executive Officers
As part of an employment agreement entered into in 2002, we reimburse Mr. Long for the actual
and reasonable fixed operating costs and the actual and reasonable business related variable
operating costs of an airplane that is owned indirectly by him. Total reimbursement for usage in
2005 was approximately $1.68 million.
Item 14. Principal Accountant Fees and Services
Ernst & Young LLP (“Ernst & Young”) served as the Company’s principal independent accountants
to audit the Company’s financial statements for the fiscal years ended December 31, 2004 and
December 31, 2005. The fees billed in the fiscal years ended December 31, 2004 and December 31,
2005 for Ernst & Young’s services to us were:
| |
|
|
|
|
|
|
|
|
| |
|
Year ended |
|
|
Year ended |
|
| |
|
December 31, 2004 |
|
|
December 31, 2005 |
|
Audit Fees (1) |
|
$ |
2,892,000 |
|
|
$ |
1,956,000 |
|
Audit-Related Fees (2) |
|
|
— |
|
|
|
— |
|
Tax Fees (3) |
|
|
94,000 |
|
|
|
253,000 |
|
All Other Fees (4) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
Total Fees |
|
$ |
2,986,000 |
|
|
$ |
2,209,000 |
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
“Audit fees” are fees billed by the independent auditors for professional services for the
audit of the consolidated financial statements included in our Form 10-K and review of
financial statements included in our Form 10-Qs, or for services that are normally provided by
the auditors in connection with statutory and regulatory filings or engagements. |
| |
| (2) |
|
“Audit-related fees” are fees billed by the independent auditors for assurance and related
services that are reasonably related to the performance of the audit or review of the
financial statements, and are not reported under audit fees. |
| |
| (3) |
|
“Tax fees” are fees billed by the independent auditors for professional services for tax
compliance, tax advice, and tax planning. |
| |
| (4) |
|
“All other fees” are fees billed by the independent auditors to the Company for any services
not included in the first three categories, and include fees for accounting services provided
to us and in connection with our response to inquires from the SEC. |
The audit committee’s policy is to approve in advance all audit and permitted non-audit
services provided by the independent accountant. In 2005, the audit committee approved in advance
any services provided by the independent auditors and the related fees. Those services only
involved accounting consultation and general corporate tax services. In addition, in December 2003,
the audit committee authorized the committee’s audit committee financial expert to pre-approve on
behalf of the audit committee permitted auditing and non-auditing services of $50,000 or less to be
provided by Ernst & Young or any other accounting services firms, with the audit committee
financial expert to report each pre-approval of services to the full committee at its next
scheduled meeting after such pre-approval.
None of the audit and non-audit services described above were approved by the audit committee
pursuant to the waiver of pre-approval provisions set forth in applicable rules of the SEC.
21
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(3) Exhibits
See “Index to Exhibits” beginning on page E-1, which is incorporated by reference herein.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereto
duly authorized, on the 27th day of April, 2006.
| |
|
|
|
|
| |
HOMESTORE, INC.
|
|
| |
By: |
/s/ LEWIS R. BELOTE, III
|
|
| |
|
Lewis R. Belote, III |
|
| |
|
Chief Financial Officer |
|
23
INDEX
| |
|
|
| Number |
|
Exhibit Title |
31.01
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
|
31.02
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
E-1