SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
| | Preliminary Proxy Statement |_| Confidential, For Use of the
Commission Only (as permitted
|X| Definitive Proxy Statement by Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
INDIVIDUAL INVESTOR GROUP, 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):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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|_| Fee paid previously with preliminary materials:
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|_| Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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* Set forth the amount on which the filing fee is calculated and state
how it was determined.
INDIVIDUAL INVESTOR GROUP, INC.
125 Broad Street
14th Floor
New York, New York 10004
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held June 21, 2000
--------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Individual Investor Group, Inc. ("Company") will be held at the offices of
counsel to the Company, Graubard Mollen & Miller, 600 Third Avenue, 32nd Floor,
New York, New York, on Wednesday, June 21, 2000, at 10:00 a.m. local time, for
the following purposes:
1. To elect two directors of the Company for a term of three years and
until their successors are elected and qualified;
2. To approve the 2000 Performance Equity Plan; and
3. To transact such other business as may properly come before the meeting,
or any or all postponement(s) or adjournment(s) thereof.
Only stockholders of record at the close of business on April 28, 2000,
will be entitled to notice of, and to vote at, the meeting and any
postponement(s) or adjournment(s) thereof.
You are urged to read the attached Proxy Statement, which contains
information relevant to the actions to be taken at the meeting. In order to
assure the presence of a quorum, whether or not you expect to attend the meeting
in person, please sign and date the accompanying Proxy Card and mail it promptly
in the enclosed addressed, postage prepaid envelope. You may revoke your proxy
if you so desire at any time before it is voted.
By Order of the Board of Directors
Gregory E. Barton
Secretary
New York, New York
May 17, 2000
INDIVIDUAL INVESTOR GROUP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 21, 2000
This Proxy Statement and the enclosed form of proxy are furnished in
connection with solicitation of proxies by the Board of Directors of Individual
Investor Group, Inc. ("Company") to be used at the Annual Meeting of
Stockholders of the Company to be held on June 21, 2000, and any postponements
or adjournments thereof ("Annual Meeting"). The matters to be considered at the
Annual Meeting are set forth in the attached Notice of Annual Meeting.
The proxy will be voted (or withheld from voting) in accordance with any
specifications made. Where no specifications are indicated, the proxies will
vote "FOR" the nominees for directors as described below under Proposal 1, "FOR"
the approval of the 2000 Performance Equity Plan (the "2000 Plan") as described
below under Proposal 2, and, in the discretion of the proxy holders, on any
other business properly coming before the meeting and any postponement(s) or
adjournment(s) thereof. A proxy may be revoked by giving notice to the Secretary
of the Company in person, or by written notification actually received by the
Secretary, at any time prior to its being exercised.
The Company's executive offices are located at 125 Broad Street, 14th
Floor, New York, New York 10004. This Proxy Statement and the enclosed form of
proxy are first being sent to stockholders on or about May 17, 2000.
VOTING SECURITIES
The Board of Directors has fixed the close of business on April 28, 2000,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting. Only stockholders of record at the close of
business on that date will be entitled to vote at the Annual Meeting or any and
all postponement(s) or adjournment(s) thereof. As of April 28, 2000, the Company
had issued and outstanding 10,384,602 shares of Common Stock, the Company's only
class of voting securities outstanding. Each stockholder of the Company will be
entitled to one vote for each share of Common Stock registered in his, her or
its name on the record date. The presence, in person or by proxy, of a majority
of all of the outstanding shares of Common Stock constitutes a quorum at the
Annual Meeting. Proxies that are marked "abstain" and proxies relating to
"street name" shares that are returned to the Company but marked by brokers as
"not voted" will be treated as shares present for purposes of determining the
presence of a quorum on all matters but will not be treated as shares entitled
to vote on the matter as to which authority to vote is withheld by the broker
("broker non-votes").
The election of the directors requires a plurality vote of those shares of
Common Stock voted at the Annual Meeting with respect to the election of the
directors. "Plurality" means that the individual who receives the largest number
of votes cast "FOR" is elected as a director. Consequently, any shares of Common
Stock not voted "FOR" a particular nominee (whether as a result of a direction
to withhold authority or a broker non-vote) will not be counted in such
nominee's favor.
The 2000 Plan must be approved by the affirmative vote of a majority of the
votes cast at the meeting. Abstentions from voting with respect to the amendment
to the 2000 Plan are counted as "votes cast" with respect to such proposal and,
therefore, have the same effect as a vote against the proposal. Shares deemed
present at the meeting but not entitled to vote on the 2000 Plan (because of
either shareholder withholding or broker non-vote) are not deemed "votes cast"
with respect to such proposal and therefore will have no effect on such vote.
All other matters to be voted on will be decided by the affirmative vote of
a majority of the shares of Common Stock present or represented at the Annual
Meeting and entitled to vote. On any such matter, an abstention will have the
same effect as a negative vote, but because shares of Common Stock held by
brokers will not be considered entitled to vote on matters as to which the
brokers withhold authority, a broker non-vote will have no effect on the vote.
The following table sets forth certain information as of April 28, 2000,
with respect to the Common Stock ownership of (i) those persons or groups known
to beneficially own more than 5% of the Company's voting securities, (ii) each
director and director-nominee of the Company, (iii) each current executive
officer whose compensation exceeded $100,000 in the 1999 fiscal year, and (iv)
all current directors and executive officers of the Company as a group.
Amount and Nature of Percent of Class
Name of Beneficial Owner Beneficial Ownership(1) of Voting Securities
- ------------------------ -------------------- --------------------
Jonathan L. Steinberg 3,365,143(2) 30.4%
Wise Partners, L.P. 1,781,133(3) 17.2%
Saul P. Steinberg 1,288,090(4) 12.4%
Telescan, Inc. 1,147,431(5) 11.0%
American Financial
Group, Inc. 943,396(6) 8.3%
Reliance Financial
Services Corporation 666,666(7) 6.4%
Bruce L. Sokoloff 66,000(8) *
Brette E. Popper 62,500(9) *
Henry G. Clark 60,667(10) *
Peter M. Ziemba 40,000(11) *
Gregory E. Barton 37,500(12) *
S. Christopher Meigher III 20,000(13) *
David H. Allen -0-(14) *
E. Drake Mosier -0-(15) *
All directors and executive 3,651,811(16) 32.2%
officers as a group (9 persons)
_______________________________________
* Less than 1%.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. The information concerning the
stockholders is based upon information furnished to the Company by such
stockholders. Except as otherwise indicated, all of the shares of Common
Stock are owned of record and beneficially and the persons identified have
sole voting and investment power with respect thereto.
(2) Includes 1,781,133 shares of Common Stock owned by Wise Partners, L.P., of
which Mr. Jonathan L. Steinberg is the general partner. (See Note 3.)
Includes 680,000 shares of Common Stock issuable upon options exercisable
within the next 60 days. The business address of Jonathan L. Steinberg is
125 Broad Street, 14th Floor, New York, New York 10004.
(3) Wise Partners, L.P., a New York limited partnership, of which Jonathan L.
Steinberg is the general partner and Saul P. Steinberg is the limited
partner. The business address of Wise Partners, L.P. is c/o Jonathan L.
Steinberg, 125 Broad Street, 14th Floor, New York, New York 10004.
(4) Includes 666,666 shares of Common Stock owned by Reliance Insurance
Company, an indirect wholly owned subsidiary of Reliance Group Holdings,
Inc. ("Reliance Group"). (See Note 7.) Saul P. Steinberg is the Chairman of
the Board of Reliance Group. Because of his position and his beneficial
ownership of a significant percentage of the outstanding common stock of
Reliance Group, Saul P. Steinberg may be deemed to control Reliance Group
and to beneficially own the shares of Common Stock owned by Reliance
Insurance Company. Saul P. Steinberg is the father of Jonathan Steinberg
and brother-in-law of Bruce L. Sokoloff. Excludes shares of Common Stock
owned by Wise Partners, L.P., of which Saul P. Steinberg is the limited
partner. (See Note 3.) The business address of Saul P. Steinberg is Park
Avenue Plaza, 55 East 52nd Street, New York, New York 10055.
(5) The business address of Telescan, Inc. is 5959 Corporate Drive, Suite 2000,
Houston, Texas 77036 (derived from a Schedule 13G filed with the Securities
and Exchange Commission on 10/8/99).
(6) Represents 5,000 shares of 10% Series A Preferred Stock held by each of
Great American Insurance Company and Great American Life Insurance Company
which are convertible into a total of 943,396 shares of the Company's
Common Stock. According to a jointly filed Schedule 13G filed with the
Securities and Exchange Commission on February 10, 2000, American Financial
Group, Inc. shares dispositive power over such shares with Carl H. Lindner,
Carl H. Lindner, III, S. Craig Lindner and Keith E. Lindner. The business
address of American Financial Group, Inc. is One East Fourth Street,
Cincinnati, Ohio 45202.
2
(7) Includes 666,666 shares of Common Stock owned by Reliance Insurance
Company. Reliance Financial Services Corporation is the direct parent
company of Reliance Insurance Company. Reliance Insurance Company has sole
voting power and sole investment power over the shares of Common Stock
listed. (See Note 4.) The business address of Reliance Financial Services
Corporation is Park Avenue Plaza, 55 East 52nd Street, New York, New York
10055. The foregoing information was derived from Amendment No. 10 to
Schedule 13D filed with the Securities and Exchange Commission on March 28,
2000.
(8) Includes 50,000 shares of Common Stock issuable upon the exercise of
options exercisable within the next 60 days. Does not include 10,000 shares
of Common Stock issuable upon exercise of options which are not currently
exercisable and which will not become exercisable within the next 60 days.
(9) Includes 62,500 shares of Common Stock issuable upon the exercise of
options exercisable within the next 60 days. Does not include 212,500
shares of Common Stock issuable upon exercise of options which are not
currently exercisable and which will not become exercisable within the next
60 days.
(10) Includes 1,000 shares of Common Stock held by Mr. Clark's spouse and 57,667
shares of Common Stock issuable upon the exercise of options exercisable
within the next 60 days. Does not include 62,333 shares of Common Stock
issuable upon exercise of options which are not currently exercisable and
which will not become exercisable within the next 60 days.
(11) Includes 40,000 shares of Common Stock issuable upon the exercise of
options exercisable within the next 60 days. Does not include 10,000 shares
of Common Stock issuable upon exercise of options which are not currently
exercisable and which will not become exercisable within 60 days.
(12) Includes 37,500 shares of Common Stock issuable upon the exercise of
options exercisable within the next 60 days. Does not include 137,500
shares of Common Stock issuable upon exercise of options which are not
currently exercisable and which will not become exercisable within the next
60 days.
(13) Includes 20,000 shares of Common Stock issuable upon the exercise of
options exercisable within the next 60 days. Does not include 10,000 shares
of Common Stock issuable upon exercise of options which are not currently
exercisable and which will not become exercisable within the next 60 days.
(14) Does not include 175,000 shares of Common Stock issuable upon exercise of
options which are not currently exercisable and which will not become
exercisable within the next 60 days.
(15) Does not include 30,000 shares of Common Stock issuable upon exercise of
options which are not currently exercisable and which will not become
exercisable within the next 60 days.
(16) Includes 947,667 shares of Common Stock issuable upon the exercise of
options exercisable within the next 60 days. Does not include 647,333
shares of Common Stock issuable upon exercise of options which are not
currently exercisable and which will not become exercisable within the next
60 days. Also includes 1,781,133 shares of Common Stock owned by Wise
Partners, L.P. of which Jonathan L. Steinberg is the general partner.
3
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each of which serves
for a term of three years, with only one class of directors being elected in
each year. The term of the first class of directors, consisting of Jonathan L.
Steinberg and E. Drake Mosier, will expire on the date of this year's Annual
Meeting. The term of the second class of directors, consisting of Bruce L.
Sokoloff and Peter M. Ziemba, will expire in 2001 and the term of the third
class of directors, consisting of S. Christopher Meigher III, will expire in
2002. In each case, each director serves from the date of his election until the
end of his term and until his successor is elected and qualified.
Two persons will be elected at the Annual Meeting to serve as directors for
a term of three years. The Company has nominated Jonathan L. Steinberg and E.
Drake Mosier as the candidates for election. Unless authority is withheld, the
proxies solicited by management will be voted "FOR" the election of these
nominees. In case either of the nominees becomes unavailable for election to the
Board of Directors, an event which is not anticipated, the persons named as
proxies, or their substitutes, shall have full discretion and authority to vote
or refrain from voting for any other candidate in accordance with their
judgment.
Information About Nominees
Jonathan L. Steinberg is 35 years old. Mr. Steinberg founded the Company
and has served as Chairman of the Board of Directors and Chief Executive Officer
of the Company since October 1988. In addition, Mr. Steinberg is the
Editor-in-Chief of each of the Company's publications. From August 1986 to
August 1988, Mr. Steinberg was employed as an analyst in the Mergers and
Acquisitions Department of Bear, Stearns & Co. Inc., an investment banking firm.
Mr. Steinberg is a nephew by marriage of Bruce L. Sokoloff, a director of the
Company.
E. Drake Mosier is 33 years old and has served as a director of the Company
since December 1999. In January 1995, Mr. Mosier founded 401k Forum, Inc., the
predecessor to mPower, Inc., which provides online, institutional quality
investment advice for non-high net worth retail investors. From August 1995
until November 1999, Mr. Mosier served as Chairman of the Board of Directors and
Chief Executive Officer and since November 1995 has served as Vice Chairman of
mPower, Inc. and as Chairman of the Board and Chief Executive Officer of mPower
Europe, Ltd. Prior to founding mPower, Mr. Mosier worked at Salomon Smith
Barney, Inc. designing and managing institutional 401(k) plans.
Information About Other Directors
Each of the directors named in the following table will continue in office
after the Annual Meeting and until his term expires in the year indicated and
his successor is elected and qualified:
Term Served as
Name Age Expires In Director Since Principal Occupation
- ---- --- ---------- -------------- --------------------
Bruce L. Sokoloff 51 2001 1989 Senior Vice President - Administration,
Reliance Group Holdings, Inc.
Peter M. Ziemba 42 2001 1996 Partner, Graubard Mollen & Miller
S. Christopher Meigher, III 53 2002 1998 Chief Executive Officer, Quest Media, LLC
Bruce L. Sokoloff has served as Senior Vice President - Administration of
Reliance Group Holdings, Inc., the holding company for several insurance and
financial services corporations, for more than five years and has been employed
at Reliance Group Holdings, Inc. since 1973. Mr. Sokoloff is an uncle by
marriage of Jonathan L. Steinberg.
Peter M. Ziemba is an attorney and has been a partner of the law firm
Graubard Mollen & Miller for more than five years and has been employed there
since 1982. Graubard Mollen & Miller is outside general counsel to the Company.
4
S. Christopher Meigher III is 53 years old and has served as a director of
the Company since June 1998. Mr. Meigher has served as Chairman and Chief
Executive Officer of Quest Media, LLC, a magazine publisher, since March 2000.
From November 1992 until February 2000, Mr. Meigher served as Chairman, Chief
Executive Officer and General Partner of Meigher Communications, L.P., a
magazine publisher. Prior thereto, Mr. Meigher was employed by Time Inc. for 23
years and served in numerous senior management positions, including serving as
President of Time Inc.'s New York Magazine Division from 1990 to 1992.
Other Executive Officers
Name Age Position
- ---- --- ---------
Brette E. Popper 42 President and Chief Operating Officer
David H. Allen 44 Vice President and Chief Financial Officer
Gregory E. Barton 38 Vice President - Business Development and Legal
Affairs, General Counsel and Secretary
Henry G. Clark 55 Vice President - Finance
Brette E. Popper has been President and Chief Operating Officer since
September 1998. From March 1998 until she joined the Company, Ms. Popper was
engaged as a marketing, advertising and management consultant by several
publishing companies. From January 1997 until February 1998 she served as
President of Quest Magazine and Vice President Business Development for Meigher
Communications, L.P., for whom she had performed consulting services since
September 1996. From 1985 until August 1996, Ms. Popper held various advertising
sales and management positions at USA Weekend, a division of Gannett Co., Inc.,
including serving as President and Publisher of USA Weekend from October 1990 to
August 1996.
David H. Allen has been Vice President and Chief Financial Officer since
September 1999. From January 1999 until August 1999, Mr. Allen served as Vice
President, Investor Relations and Treasurer of Infoseek Corporation, an Internet
portal company that operates Go Network (go.com). From 1989 to 1999, Mr. Allen
served as Treasurer and Senior Director - Investor Relations of Komag,
Incorporated, a manufacturer of computer hard disks.
Gregory E. Barton has been Vice President-Business Development and Legal
Affairs since November 1999, was Vice President - Business and Legal Affairs
from September 1998 to November 1999, has been General Counsel since September
1998 and Secretary since June 1999. From September 1996 until August 1998, Mr.
Barton served as Vice President-Corporate and Legal Affairs and General Counsel
of Alliance Semiconductor Corporation, a manufacturer of integrated circuits,
and from May 1995 until September 1996 served as General Counsel of Alliance.
From 1986 to 1993, Mr. Barton had been an associate in the New York office of
the law firm Gibson, Dunn & Crutcher.
Henry G. Clark has been Vice President-Finance since June 1998, was
Controller from November 1995 until June 1998, and was Secretary from June 1998
until June 1999. From January 1995 until October 1995 Mr. Clark was a
self-employed financial consultant. Mr. Clark was Chief Financial
Officer/Controller of Seventh Generation, Inc. from July 1990 to March 1992 and
then again from May 1993 to December 1994. Mr. Clark is a Certified Public
Accountant.
5
Board of Directors' Meetings and Committees
During 1999, the Board of Directors met six times. The Company has standing
audit and stock option committees of the Board of Directors. The Company does
not have a standing nominating committee.
The audit committee was established in June 1996 and is currently comprised
of Bruce L. Sokoloff, Peter M. Ziemba and S. Christopher Meigher. The function
of the audit committee is to recommend annually to the Board of Directors the
appointment of the independent auditors of the Company; review with the
independent auditors the scope of the annual audit and review their report
relating thereto; review with the independent auditors the accounting practices
and policies of the Company; review with the internal accountants and
independent auditors the overall accounting and financial controls of the
Company; be available to independent auditors during the year for consultation;
and review related party transactions by the Company on an ongoing basis and
review potential conflicts of interest situations where appropriate. The audit
committee held two meetings in 1999.
The stock option committee of the Board of Directors is responsible for
administering the Company's 1991 Stock Option Plan ("1991 Plan"), the 1993 Stock
Option Plan ("1993 Plan"), the 1996 Performance Equity Plan ("1996 Plan") and
the 2000 Performance Equity Plan ("2000 Plan"), each of which is discussed
below. The stock option committee currently consists of Jonathan L. Steinberg
and Bruce L. Sokoloff. During 1999, the stock option committee acted by
unanimous written consent on numerous occasions.
Director Compensation
Directors receive no cash compensation for their services to the Company as
directors, but are reimbursed for all reasonable costs incurred in attending
meetings of the Board of Directors. Pursuant to the 1996 Plan, directors who are
not employees of the Company receive automatic grants of stock options upon
their election or appointment as a director and upon each re-election as a
director. Each stock option is for 30,000 shares of Common Stock and vests at
the rate of 10,000 shares of Common Stock per year after an equal period of
service, and once vested, remain exercisable until the tenth anniversary of the
date of grant unless the director ceases to be a director for reason other than
death, in which case a shorter exercise period may apply. Each option is
exercisable per share at the fair market value per share on the date of grant.
Notwithstanding the foregoing, if the director eligible for an award of a stock
option is re-elected as a director and has not yet served as a director of the
Company for a term of three full years, the award of the stock option will be
modified as follows: (A) the number of shares of Common Stock that may be
acquired under the stock option will be reduced to (1) 20,000 shares of Common
Stock if the director has served as a director more than two years, but less
than three years, (2) 10,000 shares of Common Stock if the director has served
as a director more than one year, but less than two years, and (3) if the
director has served less than one year as a director, no stock option will be
awarded; and (B) the stock option will be exercisable by the director as to
10,000 shares of Common Stock on each of the second and third anniversaries of
his re-election or re-appointment as a director if the stock option represents
the right to acquire 20,000 shares of Common Stock and the stock option will be
exercisable by the director as to 10,000 shares of Common Stock on the third
anniversary of his re-election or re-appointment as a director if the stock
option represents the right to acquire 10,000 shares of Common Stock. In 1999,
the shares of Common Stock reserved under the 1996 Plan were fully utilized and
the Company continued this compensation structure outside of the 1996 Plan in
connection with the appointment of E. Drake Mosier as a director.
6
Executive Compensation
The following table sets forth the compensation for the three fiscal years
ended December 31, 1999, for the Company's Chief Executive Officer and each
other executive officer whose compensation exceeded $100,000 for the fiscal year
ended December 31, 1999.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
-------------------- ----------------------
Number of All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($)
- --------------------------- ---- --------- ---------- ----------- ---------------
Jonathan L. Steinberg, 1999 230,000 -- -- --
Chief Executive Officer 1998 230,000 -- -- --
Chief Executive Officer 1997 230,000 -- -- --
Brette E. Popper 1999 225,000 -- 25,000 --
President and Chief Operating Officer 1998 67,356(1) -- 250,000 --
1997 -- -- -- --
David H. Allen 1999 63,718(2) 50,000 175,000 --
Vice President and Chief Financial Officer 1998 -- -- -- --
1997 -- -- -- --
Gregory E. Barton 1999 200,000 -- 25,000 --
Vice President - Business and Legal 1998 64,872(3) 5,000 150,000 --
Affairs, General Counsel and Secretary 1997 -- -- -- --
Henry G. Clark 1999 128,410 -- 5,000 --
Vice President - Finance 1998 113,083 -- 75,000 --
1997 90,000 -- 10,000 --
-------------------------------------- -----------------------------------
(1) Ms. Popper's employment with the Company began on September 11, 1998 at an
annual base salary of $225,000. Pursuant to the employment agreement, Ms.
Popper was paid a total of $67,356 of salary in 1998.
(2) Mr. Allen's employment with the Company began on September 6, 1999 at an
annual base salary of $200,000. Pursuant to the employment agreement, Mr.
Allen was paid a total of $63,718 of salary and $50,000 as a sign- on bonus
in 1999.
(3) Mr. Barton's employment with the Company began on September 11, 1998 at an
annual base salary of $200,000. Pursuant to the employment agreement, Mr.
Barton was paid a total of $64,872 of salary and $5,000 as a sign-on bonus
in 1998.
7
Compensation Arrangements for Current Executive Officers
Jonathan L. Steinberg does not have a written employment agreement and
since 1997 he has received an annual base salary of $230,000.
Brette E. Popper currently receives an annual base salary of $225,000. The
Company has agreed to pay Ms. Popper a maximum annual bonus of $300,000,
portions of which are dependent upon the Company's print revenue, online revenue
and print profitability, respectively, attaining certain levels. Ms. Popper was
previously employed pursuant to a written employment agreement which expired on
December 31, 1999. In connection with her employment, on September 14, 1998, the
Company granted to Ms. Popper ten-year options to purchase 250,000 shares of the
Company's Common Stock with an exercise price of $1.1875 per share (the fair
market value of the Common Stock on the date of grant). The options vest as to
62,500 shares on September 14 in each of 1999, 2000, 2001 and 2002. The options
provide that the event of a change in control of the Company, all such options
not yet vested shall vest and become immediately exercisable.
The Company employs David H. Allen pursuant to a written employment
agreement which provides for an annual base salary of $200,000. Mr. Allen also
received a sign-on bonus of $50,000 in 1999. The Company has agreed to pay Mr.
Allen a maximum annual bonus of $200,000 which is dependent upon the Company
obtaining certain amounts of debt or equity financing and the Company's market
capitalization attaining certain levels for certain periods of time. Although
the agreement does not have a specific term of employment, if Mr. Allen is
either terminated without cause or his job responsibilities or titles are
materially diminished and he resigns, the Company will pay Mr. Allen a severance
payment equal to nine month's salary and will make monthly contributions for a
period of twelve months to Mr. Allen's COBRA medical insurance premiums in an
amount equal to the monthly contributions that the Company would have made had
Mr. Allen's employment not been terminated. Pursuant to his agreement, the
Company loaned Mr. Allen $50,000 with interest at the applicable Federal Rate.
The agreement provides that on each of September 6, 2000 and September 6, 2001,
the Company will forgive one-half of the outstanding principal balance, plus
accrued interest, based upon Mr. Allen's continued employment. If Mr. Allen
resigns or the Company terminates his employment for cause prior to September 6,
2001, Mr. Allen must repay the outstanding balance of the loan. If Mr. Allen's
payment is received within thirty days of his termination, the Company agreed to
forgive the interest accrued thereon. If the Company terminates Mr. Allen's
employment without cause, the Company agreed to forgive the loan balance and
accrued interest. Additionally, the Company agreed to reimburse certain of Mr.
Allen's relocation expenses up to an aggregate of $14,000. In connection with
his employment, on September 6, 1999, Mr. Allen was granted ten-year options to
purchase 175,000 shares of the Company's Common Stock with an exercise price of
$2.625 per share (the fair market value of the Common Stock on the date of the
grant). The options vest as to 43,750 shares on September 6, 2000 and as to the
remaining shares at the rate of one thirty-sixth of such shares each month
thereafter. The options provide that in the event of a change in control of the
Company, all options not yet vested shall vest and become immediately
exercisable.
The Company employs Gregory E. Barton pursuant to a written employment
agreement without a specific term of employment which provides for an annual
base salary of $200,000. Mr. Barton also received a sign-on bonus of $5,000 in
1998. In connection with his employment, on September 14, 1998, Mr. Barton was
granted ten-year options to purchase 150,000 shares of the Company's Common
Stock with an exercise price of $1.1875 per share (the fair market value of the
Common Stock on the date of the grant). The options vest as to 37,500 shares on
September 14 in each of 1999, 2000, 2001 and 2002. In the event of a change of
control of the Company, all such options not yet vested shall vest and become
immediately exercisable.
Henry G. Clark does not have a written employment agreement and he
presently receives an annual base salary of $131,250.
8
Option Grants
The following table sets forth the stock options granted in the last fiscal
year to the Company's executive officers identified in the Summary Compensation
Table above.
OPTIONS GRANTED IN LAST FISCAL YEAR
Potential
Realizable Value
Percent of at Assumed
Total Annual Rates of
Number of Options Stock Price
Securities Granted to Appreciation for
Underlying Employees in Exercise Option
Options Fiscal Year Price Expiration Term(1) ($)
Name of Executive Granted (#) (%) Per Share ($) Date 5% 10%
- ------------------ ----------- ------------ ------------- ---------- --- ----
Jonathan L. Steinberg -- -- -- -- -- --
Brette E. Popper 25,000 2.7 3.0625 11/15/09 48,150 122,021
David H. Allen 175,000 18.8 2.625 8/13/09 288,898 732,125
Gregory E. Barton 25,000 2.7 3.0625 11/15/09 48,150 122,021
Henry G. Clark 5,000 0.5 2.53125 8/31/09 7,959 20,171
(1) The above information concerning five percent and ten percent assumed
annual rates of compounded stock price appreciation is mandated by the
Securities and Exchange Commission. There is no assurance provided to any
executive officer or to any other optionee that there will be appreciation
of the stock price over the option term or that the optionee will realize
any gains with respect to the options.
The following table sets forth the fiscal year end option values of
outstanding options at December 31, 1999 and the dollar value of unexercised,
in-the-money options for the Company's executive officers identified in the
Summary Compensation table above.
AGGREGATED FISCAL YEAR END OPTION VALUES
Dollar Value of Unexercised
Number of Securities Underlying in-the-Money Options at Fiscal Year
Unexercised Options at Fiscal Year End: End(1)
---------------------------------------- ------------------------------------
Name Exercisable (#) Unexercisable (#) Exercisable ($) Unexercisable ($)
- ---- ---------------- ----------------- --------------- -----------------
Jonathan L. Steinberg 680,000 -- 1,445,000 --
Brette E. Popper 62,500 212,500 136,719 417,969
David H. Allen -- 175,000 -- 131,250
Gregory E. Barton 37,500 137,500 82,031 253,906
Henry G. Clark 49,417 70,583 105,011 143,583
(1) These values are based on the difference between the closing sale price of
the Common Stock on December 31, 1999 ($3.375) and the exercise prices of
the options, multiplied by the number of shares of Common Stock subject to
the options.
9
Stock Option Plans
1991 Plan
In 1991, the Company adopted the 1991 Plan covering 200,000 shares of the
Company's Common Stock pursuant to which officers, directors and key employees
of the Company are eligible to receive incentive or non- qualified stock
options. The 1991 Plan, which expires in October 2001, is administered by the
Stock Option Committee of the Board of Directors pursuant to the powers
delegated to it by the Board of Directors. To the extent permitted under the
express provisions of the 1991 Plan, the Stock Option Committee has authority to
determine the selection of participants, allotment of shares, price, and other
conditions of purchase of options and administration of the 1991 Plan in order
to attract and retain persons instrumental to the success of the Company.
1993 Plan
In 1993, the Company adopted the 1993 Plan covering 500,000 shares of the
Company's Common Stock pursuant to which officers, directors, key employees and
consultants of the Company are eligible to receive incentive or non-qualified
stock options, stock appreciation rights, restricted stock awards, deferred
stock, stock reload options and other stock based awards. The 1993 Plan will
terminate at such time as no further awards may be granted and awards granted
are no longer outstanding, provided that incentive options may only be granted
until February 16, 2003. The 1993 Plan is administered by the Stock Option
Committee pursuant to the powers delegated to it by the Board of Directors. To
the extent permitted under the provisions of the 1993 Plan, the Stock Option
Committee has authority to determine the selection of participants, allotment of
shares, price, and other conditions of purchase of awards and administration of
the 1993 Plan in order to attract and retain persons instrumental to the success
of the Company.
1996 Plan
In 1996, the Company adopted the 1996 Plan covering 1,000,000 shares of the
Company's Common Stock pursuant to which officers, directors, key employees and
consultants of the Company are eligible to receive incentive or non-qualified
stock options, stock appreciation rights, restricted stock awards, deferred
stock, stock reload options and other stock based awards. The 1996 Plan will
terminate at such time as no further awards may be granted and awards granted
are no longer outstanding, provided that incentive options may only be granted
until March 18, 2006. The 1996 Plan is administered by the Stock Option
Committee pursuant to the powers delegated to it by the Board of Directors. To
the extent permitted under the provisions of the 1996 Plan, the Stock Option
Committee has authority to determine the selection of participants, allotment of
shares, price, and other conditions of purchase of awards and administration of
the 1996 Plan in order to attract and retain persons instrumental to the success
of the Company.
1996 Management Incentive Plan
In 1996, the Company adopted the 1996 Management Incentive Plan
("Management Incentive Plan") covering 500,000 shares of the Company's Common
Stock, pursuant to which executives of the Company or its subsidiaries are
eligible to receive incentive or non-qualified stock options, stock appreciation
rights, restricted stock awards, deferred stock, stock related options and other
stock based awards. The Management Incentive Plan will terminate at such time as
no further awards may be granted and awards granted are no longer outstanding,
provided that incentive options may only be granted until November 4, 2006. The
Management Incentive Plan is administered by the Board of Directors. Pursuant to
the Management Incentive Plan, the Board of Directors has authority to determine
the selection of participants, allotment of shares, price and other conditions
of purchase of awards and administration of the Management Incentive Plan.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended (the "Securities
Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the sections below entitled "Report of the Board of Directors and
Stock Option Committee Concerning Compensation of Executive Officers" and "Stock
Price Performance Graph" shall not be incorporated by reference into any such
filings or into any future filings, and the sections below entitled "Report of
the Board of Directors and Stock Option Committee Concerning Compensation of
Executive Officers" and "Stock Price Performance Graph" shall not be deemed
soliciting material or filed under the Securities Act or Exchange Act.
10
REPORT ON EXECUTIVE COMPENSATION
Report of the Board of Directors and Stock Option Committee Concerning
Compensation of Executive Officers
The Board of Directors (the "Board") sets the base salary of the Company's
executive officers and approves individual bonuses, if any, for executive
officers. The Stock Option Committee of the Board (the "Committee") administers
the Company's 1991 Plan, 1993 Plan, 1996 Plan and 2000 Plan. The Board
administers the Management Incentive Plan. (The 1991 Plan, the 1993 Plan, the
1996 Plan, the 2000 Plan and the Management Incentive Plan shall be referred to
collectively as the "Plans.") The Company may grant, either pursuant to the
Plans or outside of the Plans, various stock and stock-based awards, including
stock options. To date, the Company has not granted stock or stock- based awards
other than stock options to its Executive officers. The following is a summary
of policies of the Board and the Committee that affect the compensation paid to
executive officers, as reflected in the tables and text set forth elsewhere in
this Proxy Statement.
GENERAL COMPENSATION POLICY. The Board's and the Committee's policy is to
offer competitive compensation opportunities for executive officers based upon
their personal performance, the financial performance of the Company and their
contribution to that performance. Each executive officer's compensation package
is comprised of two primary elements: (i) base salary that reflects individual
performance and is established so as to be competitive with salary levels in the
industry and for companies of comparable size and (ii) stock-based awards,
typically stock options, designed to provide a long-term incentive for the
executive officers that is tied to improved long-term performance of the Company
and stockholder value. In certain instances, the Company has also paid cash
bonuses. In connection with the employment of the Company's President and Chief
Operating Officer, the Company will pay her a maximum annual bonus of $300,000,
portions of which are dependent upon the Company's print revenue, online revenue
and print profitability, respectively, attaining certain levels. In connection
with the hiring of the Company's Chief Financial Officer in 1999, the Company
paid him a $50,000 sign-on bonus and agreed to pay him a maximum annual bonus of
$200,000, portions of which are dependent upon the Company raising financing and
trading at certain market capitalizations for certain periods of time. In
addition, the Company has in the past, and may in the future, award cash bonuses
to some or all of its executive officers, based upon their individual
performance, the performance of the Company and their contribution to the
Company's performance. Other than the bonuses described above, the Company did
not award or agree to award any cash bonuses to executive officers during the
past fiscal year.
FACTORS. Several factors considered in establishing the components of each
executive officer's compensation package for the 1999 fiscal year are summarized
below. Additional factors were taken into account to a lesser degree. The Board
and Committee may in their discretion apply entirely different factors, such as
different measures of financial performance, for future fiscal years. However,
it is presently contemplated that all compensation decisions will be designed to
further the overall compensation policy described above.
* Base Salary. The base salary for each executive officer is set on the
basis of personal performance, the salary levels in effect for comparable
positions in similarly situated companies within the media industry, and
internal comparability considerations. No specific weight is attached to
these factors. The Board believes that the Company's most direct
competitors for executive talent are not limited to the companies that the
Company would use in a comparison for stockholder returns. Therefore, the
compensation comparison group is not the same as the industry group index
used in the section entitled "Stock Price Performance Graph" below.
* Stock-Based Incentive Compensation. The Board and Committee approve
periodic grants of stock options to each of the Company's executive
officers and others, under the Plans and, in the case of the Board, outside
of the Plans as well. These grants are designed to provide a strong
incentive for executive officers and other employees to work for the
long-term success of the Company and to increase the Company's ability to
retain the services of its executive officers and employees. The vesting
schedules of options granted (historically three to five years from the
date of grant) encourage a long-term commitment to the Company by its
executive officers and other optionees. Each grant generally allows the
optionee to acquire shares of the Company's Common Stock at a fixed price
per share (the fair market value on the grant date) over a specified period
of time (historically, ten years from the grant date, or a shorter period
if the optionee ceases to be employed by the Company), thus providing a
11
return to the optionee if the market price of the shares appreciates over
the option term. The size of each option grant is set at a level that the
Board or Committee deems appropriate in order to create a meaningful
opportunity for stock ownership based upon the individual's current
position with the Company, but also takes into account the individual's
potential for future responsibility and promotion over the option vesting
period, and the individual's performance in recent periods. The Board and
Committee periodically review the number of shares owned by, or subject to
options held by, each executive officer, and additional awards are
considered based upon such factors and the past performance of the
executive officer.
* Cash Bonuses. Other than in connection with the hiring of the executive
officers described above, the Company did not pay a cash bonus to any
executive officer during the past year. The Company does not currently have
a formal cash bonus program for executive officers other than the specific
negotiated plans for Ms. Popper and Mr. Allen described above, but the
Board may consider the desirability of granting cash bonuses to executive
officers from time to time. The Board would consider the following factors:
the officer's personal performance, the Company's performance, the
officer's contribution to the Company's performance, and whether a bonus
would be useful in retaining the services of the officer in light of
competing employment opportunities for the officer.
CEO COMPENSATION. In setting the compensation payable during 1999 to the
Company's Chief Executive Officer, Jonathan L. Steinberg, the Board used the
same factors described above for the executive officers. Mr. Steinberg received
the same salary in 1999 as he did in 1998, he did not receive a cash bonus and
he was not issued any stock-based incentive compensation.
Submitted by the Board and the Committee:
Jonathan L. Steinberg (Chairman, Member of Stock Option Committee)
S. Christopher Meigher, III
E. Drake Mosier
Bruce L. Sokoloff (Member of Stock Option Committee)
Peter M. Ziemba
Compensation Committee Interlocks and Insider Participation
The Board does not have a standing compensation committee. The only member
of the Board who is an officer of the Company is the Chairman, Jonathan L.
Steinberg. Peter M. Ziemba is a partner of Graubard Mollen & Miller, which firm
is the Company's outside general counsel.
12
Stock Price Performance Graph
The graph below compares the cumulative total return of the Company's
Common Stock from December 31, 1994 to December 31, 1999 with the cumulative
total return of the Russell 2000 Index and the Dow Jones Publishing Index. The
graph plots the growth in value of an initial $100 investment over the indicated
time periods, with dividends reinvested. The stock price performance shown on
the graph is not necessarily indicative of future price performance.
INDIVIDUAL INV GROUP INC
Cumulative Total Return
------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
INDIVIDUAL INVESTOR
GROUP, INC. 100.00 156.92 178.46 153.85 83.08 83.08
RUSSELL 2000 100.00 127.49 154.73 203.91 190.75 187.92
DOW JONES PUBLISHING 100.00 123.14 142.53 210.13 223.36 277.59
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities ("ten- percent
stockholders") to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and ten-percent
stockholders also are required to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such forms
furnished to it, and written representations that no other reports were
required, the Company believes that during the Company's fiscal year ended
December 31, 1999, all its officers, directors and ten-percent stockholders
complied with the Section 16(a) reporting requirements.
13
PROPOSAL 2: TO APPROVE THE
2000 PERFORMANCE EQUITY PLAN
On February 10, 2000, the Board of Directors adopted the 2000 Plan subject
to shareholder approval at the Annual Meeting. The Board of Directors believes
that in order to continue to attract and retain directors, officers, employees
and consultants of the highest caliber, provide increased incentive and to
continue to promote the well-being of the Company, it is in the best interest of
the Company and its stockholders to provide directors, officers, employees and
consultants of the Company an opportunity to acquire a proprietary interest in
the Company.
Summary of the 2000 Plan
The following summary of the 2000 Plan does not purport to be complete, and
is subject to and qualified in its entirety by reference to the 2000 Plan, a
copy of which is annexed to this Proxy Statement as Appendix A.
Administration
The 2000 Plan is administered by the Board or, at its discretion, by the
Company's Stock Option Committee or such other committee as may be designated by
the Board (the "Committee"). All references herein to "Committee" shall mean the
Committee or the Board. The Committee has full authority, subject to the
provisions of the 2000 Plan, to award (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, (iv) Deferred Stock, (v) Stock Reload Options
and/or (vi) Other Stock-Based Awards (collectively, "Awards"). Subject to the
provisions of the 2000 Plan, the Committee determines, among other things, the
persons to whom from time to time Awards may be granted ("Holders" or
"Participants"), the specific type of Awards to be granted (e.g., Stock Options,
Restricted Stock), the number of shares subject to each Award, share prices, any
restrictions or limitations on such Awards (e.g., the "Deferral Period" in the
grant of Deferred Stock and the "Restriction Period" when Restricted Stock is
subject to forfeiture), and any vesting, exchange, deferral, surrender,
cancellation, acceleration, termination, exercise or forfeiture provisions
related to such Awards. The interpretation and construction by the Committee of
any provisions of, and the determination by the Committee of any questions
arising under, the 2000 Plan or any rule or regulation established by the
Committee pursuant to the 2000 Plan, shall be final and binding on all persons
interested in the 2000 Plan. Awards under the 2000 Plan are evidenced by
agreements.
Stock Subject to the 2000 Plan
The 2000 Plan authorizes the granting of Awards whose exercise would allow
up to an aggregate of 1,000,000 shares of Common Stock to be acquired by the
Holders of such Awards. In order to prevent the dilution or enlargement of the
rights of Holders under the 2000 Plan, the number of shares of Common Stock
authorized by the 2000 Plan is subject to adjustment by the Board in the event
of any increase or decrease in the number of shares of outstanding Common Stock
resulting from a merger, reorganization, consolidation, dividend (other than a
cash dividend) payable on shares of Common Stock, stock split, reverse stock
split, combination or exchange of shares, or other extraordinary or unusual
event occurring after the grant of an Award which results in a change in the
shares of Common Stock of the Company. The shares of Common Stock acquirable
pursuant to the Awards will be made available, in whole or in part, from
authorized and unissued shares of Common Stock or treasury shares of Common
Stock. If any Award granted under the 2000 Plan is forfeited or terminated, the
shares of Common Stock that were available pursuant to such Award shall again be
available for distribution in connection with Awards subsequently granted under
the 2000 Plan.
Eligibility
Subject to the provisions of the 2000 Plan, Awards may be granted to
directors, officers, employees and consultants who are deemed to have rendered
or to be able to render significant services to the Company and who are deemed
to have contributed or to have the potential to contribute to the success of the
Company. Incentive Options, as hereinafter defined, may be awarded only to
persons who, at the time of grant of such awards, are employees of the Company.
14
Types of Awards
Options. The 2000 Plan provides both for "Incentive" stock options
("Incentive Stock Options") as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and for options not qualifying as
Incentive Options ("Non-Qualified Stock Options"), both of which may be granted
with any Other Stock-Based Award, as hereinafter defined, under the 2000 Plan.
The Committee determines the exercise price per share of Common Stock
purchasable under an Incentive or Non-Qualified Stock Option (collectively,
"Stock Options"). The exercise price of Non-Qualified Options may be less than
100% of the fair market value of the Company's Common Stock on the date of the
grant. The exercise price of Incentive Stock Options may not be less than 100%
of the fair market value on the day of the grant (or, in the case of an
Incentive Stock Option granted to a person possessing more than 10% of the total
combined voting power of all classes of stock of the Company, not less than 110%
of such fair market value). In the case of an Incentive Stock Option, the
aggregate fair market value (on the date of grant of the Stock Option) with
respect to which Incentive Stock Options become exercisable for the first time
by a Holder during any calendar year shall not exceed $100,000. An Incentive
Stock Option may only be granted within a ten-year period from the date the 2000
Plan is adopted and approved and may only be exercised within ten years from the
date of the grant (or within five years in the case of an Incentive Stock Option
granted to a person who, at the time of the grant, owns Common Stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company). Subject to any limitations or conditions the Committee may impose,
Stock Options may be exercised, in whole or in part, at any time during the term
of the Stock Option by giving written notice of exercise to the Company
specifying the number of shares of Common Stock to be purchased. Such notice
must be accompanied by payment in full of the purchase price, either in cash or,
if provided in the agreement, in securities of the Company, or in combination
thereof.
Stock Options granted under the 2000 Plan are exercisable only by the
Holder (or, to the extent of legal incapacity or incompetency, the Holder's
guardian or legal representative) during his or her lifetime. Stock Options
granted under the 2000 Plan may not be transferred other than by will or by the
laws of descent and distribution.
Generally, if the Holder is an employee, no Stock Options, or any portion
thereof, granted under the 2000 Plan may be exercised by the Holder unless he or
she is employed by the Company or a subsidiary at the time of the exercise and
has been so employed continuously from the time the Stock Options were granted.
However, in the event the Holder's employment with the Company is terminated due
to disability, the Holder may still exercise his or her Stock Options for a
period of one year (or such other greater or lesser period as the Committee may
specify at the time of grant) from the date of such termination or until the
expiration of the stated term of the Stock Option, whichever period is shorter.
Similarly, should a Holder die while in the employment of the Company or a
subsidiary, his or her legal representative or legatee under his or her will may
exercise the decedent Holder's Stock Options for a period of one year from the
date of his or her death (or such other greater or lesser period as the
Committee specifies at the time of grant) or until the expiration of the stated
term of the Stock Option, whichever period is shorter. If the Holder's
employment is terminated for any reason other than death or disability, the
Stock Option shall automatically terminate, except that if the Holder's
employment is terminated by the Company without cause or due to normal
retirement (upon attaining the age of 65), then the portion of any Stock Option
that has vested on the date of termination may be exercised for the lesser of
three months after termination or the balance of the Stock Option's term (or
such other greater or lesser or period as the Committee may specify at the time
of grant).
Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights ("SARs" or singularly "SAR") to Participants who have been, or are being,
granted Stock Options under the 2000 Plan as a means of allowing such
Participants to exercise their Stock Options without the need to pay the
exercise price in cash. In conjunction with Non-Qualified Stock Options, SARs
may be granted either at or after the time of the grant of such Non-Qualified
Stock Options. In conjunction with Incentive Stock Options, SARs may be granted
only at the time of the grant of such Incentive Stock Options. An SAR entitles
the Holder thereof to surrender to the Company all or a portion of a Stock
Option in exchange for a number of shares Common Stock determined by dividing
the excess of the fair market price per share of Common Stock on the exercise
date over the exercise price per share (as specified by the related Stock
Option) by the fair market value of the Stock Option on the date the SAR is
exercised.
15
Restricted Stock. The Committee may award shares of restricted stock
("Restricted Stock") either alone or in addition to other Awards granted under
the 2000 Plan. The Committee determines the persons to whom grants of Restricted
Stock are made, the number of shares to be awarded, the price (if any) to be
paid for the Restricted Stock by the person receiving such stock from the
Company, the time or times within which awards of Restricted Stock may be
subject to forfeiture (the "Restriction Period"), the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Restricted Stock awards.
Restricted Stock awarded under the 2000 Plan may not be sold, exchanged,
assigned, transferred, pledged, encumbered or otherwise disposed of other than
to the Company during the applicable Restriction Period. Other than regular cash
dividends and other cash equivalent distributions as the Committee may
designate, pay or distribute, the Company will retain custody of all
distributions ("Retained Distributions") made or declared with respect to the
Restricted Stock during the Restriction Period. A breach of any restriction
regarding the Restricted Stock will cause a forfeiture of such Restricted Stock
and any Retained Distributions with respect thereto. Except for the foregoing
restrictions, the Holder shall, even during the Restriction Period, have all of
the rights of a shareholder, including the right to receive and retain all
regular cash dividends and other cash equivalent distributions as the Committee
may designate, pay or distribute on such Restricted Stock and the right to vote
such shares.
In order to enforce the foregoing restrictions, the 2000 Plan requires that
all shares of Restricted Stock awarded to the Holder remain in the physical
custody of the Company until the restrictions on such shares have terminated and
all vesting requirements with respect to the Restricted Stock have been
fulfilled.
Deferred Stock. The Committee may award shares of deferred stock ("Deferred
Stock") either alone or in addition to other Awards granted under the 2000 Plan.
The Committee determines the eligible persons to whom, and the time or times at
which, Deferred Stock will be awarded, the number of shares of Deferred Stock to
be awarded to any person, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the stock will be
deferred, and all the other terms and conditions of such Deferred Stock Awards.
Deferred Stock awards granted under the 2000 Plan may not be sold,
exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of
other than to the Company during the applicable Deferral Period. The Holder
shall not have any rights of a shareholder until the expiration of the
applicable Deferral Period and the issuance and delivery of the certificates
representing such Common Stock. The Holder may request to defer the receipt of a
Deferred Stock award for an additional specified period or until a specified
event. Such request must generally be made at least one year prior to the
expiration of the Deferral Period for such Deferred Stock award.
Stock Reload Options. The Committee may grant Stock Reload Options to a
Holder who tenders shares of Common Stock to pay the exercise price of a Stock
Option ("Underlying Option"), and arranges to have a portion of the shares
otherwise issuable upon exercise withheld to pay the applicable withholding
taxes. A Stock Reload Option permits a Holder, who exercises a Stock Option by
delivering stock owned by the Holder for a minimum of six months, to receive
back from the Company a new Stock Option (at the current market price) for the
same number of shares delivered to exercise the Option. The Committee determines
the terms, conditions, restrictions and limitations of the Stock Reload Options.
The exercise price of Stock Reload Options shall be the fair market value as of
the date of exercise of the Underlying Option. Unless the Committee determines
otherwise, a Stock Reload Option may be exercised commencing one year after it
is granted and expires on the expiration date of the Underlying Option.
Other Stock-Based Awards. The Committee may grant Other Stock-Based Awards,
subject to limitations under applicable law, that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or related
to, shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the 2000 Plan, including purchase rights, shares of Common Stock
awarded which are not subject to any restrictions or conditions, convertible or
exchangeable debentures or other rights convertible into shares of Common Stock
and awards valued by reference to the value of securities of or the performance
of specified subsidiaries. Subject to the terms of the 2000 Plan, the Committee
has complete discretion to determine the terms and conditions applicable to
Other Stock- Based Awards. Other Stock-Based Awards may be awarded either alone
or in addition to or in tandem with any other awards under the 2000 Plan or any
other plan of the Company.
16
Competition with the Company; Disclosure of Confidential Information
If a Holder's employment with the Company or a subsidiary is terminated for
any reason whatsoever, and within 18 months after the date thereof such Holder
either (i) accepts employment with any competitor of, or otherwise engages in
competition with, the Company or (ii) discloses to anyone outside the Company or
uses any confidential information or material of the Company in violation of the
Company's policies or any agreement between the Holder and the Company, the
Committee, in its sole discretion, may require such Holder to return to the
Company the economic value of any award that was realized or obtained by such
Holder at any time during the period beginning on that date that is six months
prior to the date such Holder's employment with the Company is terminated.
Withholding Taxes
Upon the exercise of any Award granted under the 2000 Plan, the Holder may
be required to remit to the Company an amount sufficient to satisfy all federal,
state and local withholding tax requirements prior to delivery of any
certificate or certificates for shares of Common Stock. Subject to certain
stringent limitations under the 2000 Plan and at the discretion of the Company,
the Holder may satisfy these requirements by electing to have the Company
withhold a portion of the shares to be received upon the exercise of the Award
having a value equal to the amount of the withholding tax due under applicable
federal, state and local laws.
Agreements; Transferability
Stock Options, Restricted Stock, Deferred Stock, Stock Reload Options,
Other Stock-Based Awards and SARs granted under the 2000 Plan will be evidenced
by agreements consistent with the 2000 Plan in such form as the Committee may
prescribe. Neither the 2000 Plan nor agreements thereunder confer any right to
continued employment upon any Holder of a Stock Option, Restricted Stock,
Deferred Stock, Stock Reload Options, Other Stock-Based Award or SAR. Further,
all agreements will provide that the right to exercise Stock Options, receive
Restricted Stock after the expiration of the Restriction Period or Deferred
Stock after the expiration of the Deferral Period, receive payment under Other
Stock-Based Awards, or exercise an SAR cannot be transferred except by will or
the laws of descent and distribution.
Term and Amendments
Unless terminated by the Board, the 2000 Plan shall continue to remain
effective until such time as no further Awards may be granted and all Awards
granted under the 2000 Plan are no longer outstanding. Notwithstanding the
foregoing, grants of Incentive Stock Options may be made only during the ten
year period following the date the 2000 Plan becomes effective. The Board may at
any time, and from time to time, amend the 2000 Plan, provided that no amendment
shall be made which would impair the rights of a Holder under any agreement
entered into pursuant to the 2000 Plan without the Holder's consent.
Federal Income Tax Consequences
The following discussion of the federal income tax consequences of
participation in the 2000 Plan is only a summary of the general rules applicable
to the grant and exercise of Stock Options and other Awards and does not give
specific details or cover, among other things, state, local and foreign tax
treatment of participation in the 2000 Plan. The information contained in this
section is based on present law and regulations, which are subject to being
changed prospectively or retroactively.
Incentive Stock Options
The Participant will recognize no taxable income upon the grant or exercise
of an Incentive Stock Option. The Company will not qualify for any deduction in
connection with the grant or exercise of Incentive Stock Options. Upon a
disposition of the shares after the later of two years from the date of grant or
one year after the transfer of the shares to the Participant, the Participant
will recognize the difference, if any, between the amount realized and the
exercise price as long-term capital gain or long-term capital loss (as the case
may be) if the shares are capital assets. The excess, if any, of the fair market
value of the shares on the date of exercise of an Incentive Stock Option over
17
the exercise price will be treated as an item of adjustment for a Participant's
taxable year in which the exercise occurs and may result in an alternative
minimum tax liability for the Participant.
If Common Stock acquired upon the exercise of an Incentive Stock Option is
disposed of prior to the expiration of the holding periods described above, (i)
the Participant will recognize ordinary compensation income in the taxable year
of disposition in an amount equal to the excess, if any, of the lesser of the
fair market value of the shares on the date of exercise or the amount realized
on the disposition of the shares, over the exercise price paid for such shares
and (ii) the Company will qualify for a deduction equal to any such amount
recognized, subject to the limitation that the compensation be reasonable. In
the case of a disposition of shares earlier than two years from the date of the
grant or in the same taxable year as the exercise, where the amount realized on
the disposition is less than the fair market value of the shares on the date of
exercise, there will be no adjustment since the amount treated as an item of
adjustment, for alternative minimum tax purposes, is limited to the excess of
the amount realized on such disposition over the exercise price, which is the
same amount included in regular taxable income.
Non-Qualified Stock Options
With respect to Non-Qualified Stock Options (i) upon grant of the Stock
Option, the Participant will recognize no income (provided that the exercise
price was not less than the fair market value of the Company's Common Stock on
the date of grant), (ii) upon exercise of the Stock Option (if the shares of
Common Stock are not subject to a substantial risk of forfeiture), the
Participant will recognize ordinary compensation income in an amount equal to
the excess, if any, of the fair market value of the shares on the date of
exercise over the exercise price, and the Company will qualify for a deduction
in the same amount, subject to the requirement that the compensation be
reasonable and (iii) the Company will be required to comply with applicable
federal income tax withholding requirements with respect to the amount of
ordinary compensation income recognized by the Participant. On a disposition of
the shares, the Participant will recognize gain or loss equal to the difference
between the amount realized and the sum of the exercise price and the ordinary
compensation income recognized. Such gain or loss will be treated as capital
gain or loss if the shares are capital assets and as short-term or long-term
capital gain or loss, depending upon the length of time that the Participant
held the shares.
If the shares acquired upon exercise of a Non-Qualified Stock Option are
subject to a substantial risk of forfeiture, the Participant will recognize
ordinary income at the time when the substantial risk of forfeiture is removed,
unless such Participant timely files under Code Section 83(b) to elect to be
taxed on the receipt of shares, and the Company will qualify for a corresponding
deduction at such time. The amount of ordinary income will be equal to the
excess of the fair market value of the shares at the time the income is
recognized over the amount (if any) paid for the shares.
Stock Appreciation Rights
Upon the grant of a SAR, the Participant recognizes no taxable income and
the Company receives no deduction. The Participant recognizes ordinary income
and the Company receives a deduction at the time of exercise equal to the cash
and fair market value of Common Stock payable upon such exercise.
Restricted Stock
A Participant who receives Restricted Stock will recognize no income on the
grant of the Restricted Stock and the Company will not qualify for any
deduction. At the time the Restricted Stock is no longer subject to a
substantial risk of forfeiture, a Participant will recognize ordinary
compensation income in an amount equal to the excess, if any, of the fair market
value of the Restricted Stock at the time the restriction lapses over the
consideration paid for the Restricted Stock. A Participant's shares are treated
as being subject to a substantial risk of forfeiture so long as his or her sale
of the shares at a profit could subject him or her to a suit under Section 16
(b) of the Exchange Act. The holding period to determine whether the Participant
has long-term or short-term capital gain or loss begins when the Restriction
Period expires, and the tax basis for the shares will generally be the fair
market value of the shares on such date.
18
A Participant may elect, under Section 83(b) of the Code, within 30 days of
the transfer of the Restricted Stock, to recognize ordinary compensation income
on the date of transfer in an amount equal to the excess, if any, of the fair
market value on the date of such transfer of the shares of Restricted Stock
(determined without regard to the restrictions) over the consideration paid for
the Restricted Stock. If a Participant makes such election and thereafter
forfeits the shares, no ordinary loss deduction will be allowed. Such forfeiture
will be treated as a sale or exchange upon which there is realized loss equal to
the excess, if any, of the consideration paid for the shares over the amount
realized on such forfeiture. Such loss will be a capital loss if the shares are
capital assets. If a Participant makes an election under Section 83(b), the
holding period will commence on the day after the date of transfer and the tax
basis will equal the fair market value of shares (determined without regard to
the restrictions) on the date of transfer.
On a disposition of the shares, a Participant will recognize gain or loss
equal to the difference between the amount realized and the tax basis for the
shares.
Whether or not the Participant makes an election under Section 83(b), the
Company generally will qualify for a deduction (subject to the reasonableness of
compensation limitation) equal to the amount that is taxable as ordinary income
to the Participant, in its taxable year in which such income is included in the
Participant's gross income. The income recognized by the Participant will be
subject to applicable withholding tax requirements.
Dividends paid on Restricted Stock which is subject to a substantial risk
of forfeiture generally will be treated as compensation that is taxable as
ordinary compensation income to the Participant and will be deductible by the
Company subject to the reasonableness limitation. If, however, the Participant
makes a Section 83(b) election, the dividends will be treated as dividends and
taxable as ordinary income to the Participant, but will not be deductible by the
Company.
Deferred Stock
A Participant who receives an award of Deferred Stock will recognize no
income on the grant of such award. However, he or she will recognize ordinary
compensation income on the transfer of the Deferred Stock (or the later lapse of
a substantial risk of forfeiture to which the Deferred Stock is subject, if the
Participant does not make a Section 83(b) election), in accordance with the same
rules as discussed above under the caption "Restricted Stock."
Other Stock-Based Awards
The federal income tax treatment of Other Stock-Based Awards will depend on
the nature of any such award and the restrictions applicable to such award.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THE APPROVAL OF THE PROPOSAL TO APPROVE THE 2000 PLAN
19
INDEPENDENT AUDITORS
The Company anticipates that it will select Deloitte & Touche LLP as its
independent auditors for the year ending December 31, 2000, although no formal
recommendation has been made to the Company's Board of Directors by its audit
committee as of the date of this Proxy Statement. A representative of Deloitte &
Touche LLP, the auditors of the Company for the year ended December 31, 1999, is
expected to be present at the meeting with an opportunity to make a statement if
the representative desires to do so and is expected to be available to respond
to appropriate questions from stockholders.
SOLICITATION OF PROXIES
The solicitation of proxies in the enclosed form is made on behalf of the
Company and the cost of this solicitation is being paid by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or telegraph using the services of directors, officers and regular
employees of the Company at nominal cost. Banks, brokerage firms and other
custodians, nominees and fiduciaries will be reimbursed by the Company for
expenses incurred in sending proxy material to beneficial owners of the Common
Stock.
2001 ANNUAL MEETING STOCKHOLDER PROPOSALS
In order for any stockholder proposal to be presented at the Annual Meeting
of Stockholders to be held in 2001 or to be eligible for inclusion in the
Company's Proxy Statement for such meeting, it must be received by the Company
at its principal executive offices in New York, New York, by January 17, 2001.
Pursuant to Rule 14a-4 promulgated by the Securities and Exchange Commission,
stockholders are advised that the Company's management shall be permitted to
exercise discretionary voting authority under proxies it solicits and obtains
for the Company's 2001 Annual Meeting of Stockholders with respect to any
proposal presented by a stockholder at such meeting, without any discussion of
the proposal in the Company's proxy statement for such meeting, unless the
Company receives notice of such proposal at its principal office in New York,
New York, not later than April 2, 2001.
OTHER MATTERS
The Board of Directors knows of no matter which will be presented for
consideration at the Annual Meeting other than the matters referred to in this
Proxy Statement. Should any other matter properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.
By Order of the Board of Directors
Gregory E. Barton
Secretary
New York, New York
May 17, 2000
20
Appendix A
Approved by Board of Directors on February 10, 2000
Approved by Stockholders on June , 2000
INDIVIDUAL INVESTOR GROUP, INC.
-------------------------------
2000 Performance Equity Plan
Section 1. Purpose; Definitions.
1.1 Purpose. The purpose of the Individual Investor Group, Inc. 2000
Performance Equity Plan is to enable the Company to offer to its employees,
officers, directors and consultants whose past, present and/or potential
contributions to the Company and its Subsidiaries have been, are or will be
important to the success of the Company, an opportunity to acquire a proprietary
interest in the Company. The various types of long-term incentive awards that
may be provided under the Plan will enable the Company to respond to changes in
compensation practices, tax laws, accounting regulations and the size and
diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Agreement" means the agreement between the Company and the Holder
setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" means the Stock Option Committee of the Board or any
other committee of the Board that the Board may designate to administer the
Plan or any portion thereof. If no Committee is so designated, then all
references in this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, $.01 par
value per share.
(f) "Company" means Individual Investor Group, Inc., a corporation
organized under the laws of the State of Delaware.
(g) "Deferred Stock" means Common Stock to be received, under an award
made pursuant to Section 8, below, at the end of a specified deferral period.
(h) "Disability" means physical or mental impairment as determined
under procedures established by the Committee for purposes of the Plan.
(i) "Effective Date" means the date set forth in Section 11.1, below.
(j) "Fair Market Value", unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of
any given date: (i) if the Common Stock is listed on a national securities
exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market,
the last sale price of the Common Stock in the principal trading market for
the Common Stock on the last trading day preceding the date of grant of an
award hereunder, as reported by the exchange or Nasdaq, as the case may be;
(ii) if the Common Stock is not listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but is
traded in the over-the-counter market, the closing bid price for the Common
Stock on the last trading day preceding the date of grant of an award
hereunder for which such quotations are reported by the OTC Bulletin Board
or the National Quotation Bureau, Incorporated or similar publisher of such
quotations; and (iii) if the fair market value of the Common Stock cannot
be determined pursuant to clause (i) or (ii) above, such price as the
Committee shall determine, in good faith.
(k) "Holder" means a person who has received an award under the Plan.
i
(l) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
(m) "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(n) "Normal Retirement" means retirement from active employment with
the Company or any Subsidiary on or after age 65.
(o) "Other Stock-Based Award" means an award under Section 9, below,
that is valued in whole or in part by reference to, or is otherwise based
upon, Common Stock.
(p) "Parent" means any present or future "parent corporation" of the
Company, as such term is defined in Section 424(e) of the Code.
(q) "Plan" means the Individual Investor Group, Inc. 2000 Performance
Equity Plan, as hereinafter amended from time to time.
(r) "Restricted Stock" means Common Stock, received under an award
made pursuant to Section 7, below, that is subject to restrictions under
said Section 7.
(s) "SAR Value" means the excess of the Fair Market Value (on the
exercise date) over the exercise price that the participant would have
otherwise had to pay to exercise the related Stock Option, multiplied by
the number of shares for which the Stock Appreciation Right is exercised.
(t) "Stock Appreciation Right" means the right to receive from the
Company, on surrender of all or part of the related Stock Option, without a
cash payment to the Company, a number of shares of Common Stock equal to
the SAR Value divided by the Fair Market Value (on the exercise date).
(u) "Stock Option" or "Option" means any option to purchase shares of
Common Stock which is granted pursuant to the Plan.
(v) "Stock Reload Option" means any option granted under Section 5.3
of the Plan.
(w) "Subsidiary" means any present or future "subsidiary corporation"
of the Company, as such term is defined in Section 424(f) of the Code.
Section 2. Administration.
2.1 Committee Membership. The Plan shall be administered by the Board or a
Committee. Committee members shall serve for such term as the Board may in each
case determine, and shall be subject to removal at any time by the Board.
2.2 Powers of Committee. The Committee shall have full authority to award,
pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, (iv) Deferred Stock, (v) Stock Reload Options
and/or (vi) Other Stock-Based Awards. For purposes of illustration and not of
limitation, the Committee shall have the authority (subject to the express
provisions of this Plan):
(a) to select the officers, employees, directors and consultants of
the Company or any Subsidiary to whom Stock Options, Stock Appreciation
Rights, Restricted Stock, Deferred Stock, Reload Stock Options and/or Other
Stock-Based Awards may from time to time be awarded hereunder.
(b) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, number of shares, share exercise price or types of
consideration paid upon exercise of such options, such as other securities
of the Company or other property, any restrictions or limitations, and any
vesting, exchange, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee shall determine);
(c) to determine any specified performance goals or such other factors
or criteria which need to be attained for the vesting of an award granted
hereunder;
(d) to determine the terms and conditions under which awards granted
hereunder are to operate on a tandem basis and/or in conjunction with or
apart from other equity awarded under this Plan and cash awards made by the
Company or any Subsidiary outside of this Plan;
ii
(e) to permit a Holder to elect to defer a payment under the Plan
under such rules and procedures as the Committee may establish, including
the crediting of interest on deferred amounts denominated in cash and of
dividend equivalents on deferred amounts denominated in Common Stock;
(f) to determine the extent and circumstances under which Common Stock
and other amounts payable with respect to an award hereunder shall be
deferred that may be either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously granted Stock
Options, which previously granted Stock Options have higher option exercise
prices and/or contain other less favorable terms, and (ii) new awards of
any other type for previously granted awards of the same type, which
previously granted awards are upon less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 10, below, the Committee
shall have the authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall, from time
to time, deem advisable, to interpret the terms and provisions of the Plan
and any award issued under the Plan (and to determine the form and
substance of all Agreements relating thereto), and to otherwise supervise
the administration of the Plan. Subject to Section 10, below, all decisions
made by the Committee pursuant to the provisions of the Plan shall be made
in the Committee's sole discretion and shall be final and binding upon all
persons, including the Company, its Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive
Stock Options (including but limited to Stock Reload Options or Stock
Appreciation rights granted in conjunction with an Incentive Stock Option)
or any Agreement providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Holder(s) affected,
to disqualify any Incentive Stock Option under such Section 422.
Section 3. Stock Subject to Plan.
3.1 Number of Shares. The total number of shares of Common Stock reserved
and available for issuance under the Plan shall be 1,000,000 shares. Shares of
Common Stock under the Plan may consist, in whole or in part, of authorized and
unissued shares or treasury shares. If any shares of Common Stock that have been
granted pursuant to a Stock Option cease to be subject to a Stock Option, or if
any shares of Common Stock that are subject to any Stock Appreciation Right,
Restricted Stock, Deferred Stock award, Reload Stock Option or Other Stock-Based
Award granted hereunder are forfeited or any such award otherwise terminates
without a payment being made to the Holder in the form of Common Stock, such
shares shall again be available for distribution in connection with future
grants and awards under the Plan. Only net shares issued upon a stock-for-stock
exercise (including stock used for withholding taxes) shall be counted against
the number of shares available under the Plan.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any
merger, reorganization, consolidation, dividend (other than a cash dividend)
payable on shares of Common Stock, stock split, reverse stock split, combination
or exchange of shares, or other extraordinary or unusual event occurring after
the grant of an award which results in a change in the shares of Common Stock of
the Company as a whole, the Committee shall determine, in its sole discretion,
whether such change equitably requires an adjustment in the terms of any award
or the aggregate number of shares reserved for issuance under the Plan. Any such
adjustments will be made by the Committee, whose determination will be final,
binding and conclusive.
Section 4. Eligibility.
Awards may be made or granted to employees, officers, directors and
consultants who are deemed to have rendered or to be able to render significant
services to the Company or its Subsidiaries and who are deemed to have
contributed or to have the potential to contribute to the success of the
Company. No Incentive Stock Option shall be granted to any person who is not an
employee of the Company or a Subsidiary at the time of grant.
iii
Section 5. Stock Options.
5.1 Grant and Exercise. Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Plan and the Code, as the Committee may from time to time approve. The
Committee shall have the authority to grant Incentive Stock Options or
Non-Qualified Stock Options, or both types of Stock Options which may be granted
alone or in addition to other awards granted under the Plan. To the extent that
any Stock Option intended to qualify as an Incentive Stock Option does not so
qualify, it shall constitute a separate Nonqualified Stock Option.
5.2 Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions:
(a) Option Term. The term of each Stock Option shall be fixed by the
Committee; provided, however, that an Incentive Stock Option may be granted
only within the ten-year period commencing from the Effective Date and may
only be exercised within ten years of the date of grant (or five years in
the case of an Incentive Stock Option granted to an optionee who, at the
time of grant, owns Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company ("10%
Stockholder").
(b) Exercise Price. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at
the time of grant and may be less than 100% of the Fair Market Value on the
day of grant; provided, however, that the exercise price of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value on the
day of grant and, if granted to a 10% Stockholder, shall not be less than
110% of the Fair Market Value on the day of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee. If the Committee provides, in its discretion, that any Stock
Option is exercisable only in installments, i.e., that it vests over time,
the Committee may waive such installment exercise provisions at any time at
or after the time of grant in whole or in part, based upon such factors as
the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case, Stock
Options may be exercised in whole or in part at any time during the term of
the Option, by giving written notice of exercise to the Company specifying
the number of shares of Common Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, which shall be in
cash or, if provided in the Agreement, either in shares of Common Stock
(including Restricted Stock and other contingent awards under this Plan) or
partly in cash and partly in such Common Stock, or such other means which
the Committee determines are consistent with the Plan's purpose and
applicable law. Cash payments shall be made by wire transfer, certified or
bank check or personal check, in each case payable to the order of the
Company; provided, however, that the Company shall not be required to
deliver certificates for shares of Common Stock with respect to which an
Option is exercised until the Company has confirmed the receipt of good and
available funds in payment of the purchase price thereof. Payments in the
form of Common Stock shall be valued at the Fair Market Value on the date
prior to the date of exercise. Such payments shall be made by delivery of
stock certificates in negotiable form that are effective to transfer good
and valid title thereto to the Company, free of any liens or encumbrances.
Subject to the terms of the Agreement, the Committee may, in its sole
discretion, at the request of the Holder, deliver upon the exercise of a
Nonqualified Stock Option a combination of shares of Deferred Stock and Common
Stock; provided that, notwithstanding the provisions of Section 8 of the Plan,
such Deferred Stock shall be fully vested and not subject to forfeiture. A
Holder shall have none of the rights of a Stockholder with respect to the shares
subject to the Option until such shares shall be transferred to the Holder upon
the exercise of the Option.
(e) Transferability. Except as may be set forth in the Agreement, no
Stock Option shall be transferable by the Holder other than by will or by the
laws of descent and distribution, and all Stock Options shall be exercisable,
during the Holder's lifetime, only by the Holder (or, to the extent of legal
incapacity or incompetency, the Holder's guardian or legal representative).
(f) Termination by Reason of Death. If a Holder's employment by the
Company or a Subsidiary terminates by reason of death, any Stock Option held by
such Holder, unless otherwise determined by the Committee at the time of grant
and set forth in the Agreement, shall be fully vested and may thereafter be
exercised by the legal representative of the estate or by the legatee of the
Holder under the will of the Holder, for a period of one year (or such other
greater or lesser period as the Committee may specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
iv
(g) Termination by Reason of Disability. If a Holder's employment by
the Company or any Subsidiary terminates by reason of Disability, any Stock
Option held by such Holder, unless otherwise determined by the Committee at the
time of grant and set forth in the Agreement, shall be fully vested and may
thereafter be exercised by the Holder for a period of one year (or such other
greater or lesser period as the Committee may specify at the time of grant) from
the date of such termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions of Section 12.3,
below, and unless otherwise determined by the Committee at the time of grant and
set forth in the Agreement, if a Holder is an employee of the Company or a
Subsidiary at the time of grant and if such Holder's employment by the Company
or any Subsidiary terminates for any reason other than death or Disability, the
Stock Option shall thereupon automatically terminate, except that if the
Holder's employment is terminated by the Company or a Subsidiary without cause
or due to Normal Retirement, then the portion of such Stock Option that has
vested on the date of termination of employment may be exercised for the lesser
of three months after termination of employment or the balance of such Stock
Option's term.
(i) Additional Incentive Stock Option Limitation. In the case of an
Incentive Stock Option, the aggregate Fair Market Value (on the date of grant of
the Option) with respect to which Incentive Stock Options become exercisable for
the first time by a Holder during any calendar year (under all such plans of the
Company and its Parent and Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may at any time,
in its sole discretion, offer to repurchase a Stock Option previously granted,
based upon such terms and conditions as the Committee shall establish and
communicate to the Holder at the time that such offer is made.
5.3 Stock Reload Option. If a Holder tenders shares of Common Stock to pay
the exercise price of a Stock Option ("Underlying Option"), and/or arranges to
have a portion of the shares otherwise issuable upon exercise withheld to pay
the applicable withholding taxes, the Holder may receive, at the discretion of
the Committee, a new Stock Reload Option to purchase that number of shares of
Common Stock equal to the number of shares tendered to pay the exercise price
and the withholding taxes ( but only if such shares were held by the Holder for
at least six months). Stock Reload Options may be any type of option permitted
under the Code and will be granted subject to such terms, conditions,
restrictions and limitations as may be determined by the Committee, from time to
time. Such Stock Reload Option shall have an exercise price equal to the Fair
Market Value as of the date of exercise of the Underlying Option. Unless the
Committee determines otherwise, a Stock Reload Option may be exercised
commencing one year after it is granted and shall expire on the date of
expiration of the Underlying Option to which the Reload Option is related.
Section 6. Stock Appreciation Rights.
6.1 Grant and Exercise. The Committee may grant Stock Appreciation Rights
to participants who have been, or are being granted, Stock Options under the
Plan as a means of allowing such participants to exercise their Stock Options
without the need to pay the exercise price in cash. In the case of a
Nonqualified Stock Option, a Stock Appreciation Right may be granted either at
or after the time of the grant of such Nonqualified Stock Option. In the case of
an Incentive Stock Option, a Stock Appreciation Right may be granted only at the
time of the grant of such Incentive Stock Option.
6.2 Terms and Conditions. Stock Appreciation Rights shall be subject to the
following terms and conditions:
(a) Exercisability. Stock Appreciation Rights shall be exercisable as
shall be determined by the Committee and set forth in the Agreement, subject to
the limitations, if any, imposed by the Code, with respect to related Incentive
Stock Options.
(b) Termination. A Stock Appreciation Right shall terminate and shall
no longer be exercisable upon the termination or exercise of the related
Stock Option.
(c) Method of Exercise. Stock Appreciation Rights shall be exercisable
upon such terms and conditions as shall be determined by the Committee and set
forth in the Agreement and by surrendering the applicable portion of the related
Stock Option. Upon such exercise and surrender, the Holder shall be entitled to
receive a number of shares of Common Stock equal to the SAR Value divided by the
Fair Market Value on the date the Stock Appreciation Right is exercised.
v
(d) Shares Affected Upon Plan. The granting of a Stock Appreciation
Right shall not affect the number of shares of Common Stock available under for
awards under the Plan. The number of shares available for awards under the Plan
will, however, be reduced by the number of shares of Common Stock acquirable
upon exercise of the Stock Option to which such Stock Appreciation Right
relates.
Section 7. Restricted Stock.
7.1 Grant. Shares of Restricted Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be awarded, the number of shares to be awarded, the price
(if any) to be paid by the Holder, the time or times within which such awards
may be subject to forfeiture ("Restriction Period"), the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
awards.
7.2 Terms and Conditions. Each Restricted Stock award shall be subject to
the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be represented
by a stock certificate or certificates registered in the name of the Holder to
whom such Restricted Stock shall have been awarded. During the Restriction
Period, certificates representing the Restricted Stock and any securities
constituting Retained Distributions (as defined below) shall bear a legend to
the effect that ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions that
shall be forfeited or that shall not become vested in accordance with the Plan
and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The Holder will
have the right to vote such Restricted Stock, to receive and retain all regular
cash dividends and other cash equivalent distributions as the Board may in its
sole discretion designate, pay or distribute on such Restricted Stock and to
exercise all other rights, powers and privileges of a holder of Common Stock
with respect to such Restricted Stock, with the exceptions that (i) the Holder
will not be entitled to delivery of the stock certificate or certificates
representing such Restricted Stock until the Restriction Period shall have
expired and unless all other vesting requirements with respect thereto shall
have been fulfilled; (ii) the Company will retain custody of the stock
certificate or certificates representing the Restricted Stock during the
Restriction Period; (iii) other than regular cash dividends and other cash
equivalent distributions as the Board may in its sole discretion designate, pay
or distribute, the Company will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted Stock (and such
Retained Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if ever,
as the Restricted Stock with respect to which such Retained Distributions shall
have been made, paid or declared shall have become vested and with respect to
which the Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or
otherwise established by the Committee with respect to any Restricted Stock or
Retained Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction Period
with respect to each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (i) all or part of such Restricted
Stock shall become vested in accordance with the terms of the Agreement, and
(ii) any Retained Distributions with respect to such Restricted Stock shall
become vested to the extent that the Restricted Stock related thereto shall have
become vested. Any such Restricted Stock and Retained Distributions that do not
vest shall be forfeited to the Company and the Holder shall not thereafter have
any rights with respect to such Restricted Stock and Retained Distributions that
shall have been so forfeited.
Section 8. Deferred Stock.
8.1 Grant. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom and the time or times at which grants of Deferred
Stock will be awarded, the number of shares of Deferred Stock to be awarded to
any person, the duration of the period ("Deferral Period") during which, and the
conditions under which, receipt of the shares will be deferred, and all the
other terms and conditions of the awards.
vi
8.2 Terms and Conditions. Each Deferred Stock award shall be subject to the
following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or the
Additional Deferral Period referred to in Section 8.2 (d) below, where
applicable), share certificates shall be issued and delivered to the Holder, or
his legal representative, representing the number equal to the shares covered by
the Deferred Stock award.
(b) Rights of Holder. A person entitled to receive Deferred Stock
shall not have any rights of a Stockholder by virtue of such award until the
expiration of the applicable Deferral Period and the issuance and delivery of
the certificates representing such Common Stock. The shares of Common Stock
issuable upon expiration of the Deferral Period shall not be deemed outstanding
by the Company until the expiration of such Deferral Period and the issuance and
delivery of such Common Stock to the Holder.
(c) Vesting; Forfeiture. Upon the expiration of the Deferral Period
with respect to each award of Deferred Stock and the satisfaction of any other
applicable restrictions, terms and conditions all or part of such Deferred Stock
shall become vested in accordance with the terms of the Agreement. Any such
Deferred Stock that does not vest shall be forfeited to the Company and the
Holder shall not thereafter have any rights with respect to such Deferred Stock.
(d) Additional Deferral Period. A Holder may request to, and the
Committee may at any time, defer the receipt of an award (or an installment of
an award) for an additional specified period or until a specified event
("Additional Deferral Period"). Subject to any exceptions adopted by the
Committee, such request must generally be made at least one year prior to
expiration of the Deferral Period for such Deferred Stock award (or such
installment).
Section 9. Other Stock-Based Awards.
Other Stock-Based Awards may be awarded, subject to limitations under
applicable law, that are denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, shares of Common Stock,
as deemed by the Committee to be consistent with the purposes of the Plan,
including, without limitation, purchase rights, shares of Common Stock awarded
which are not subject to any restrictions or conditions, convertible or
exchangeable debentures, or other rights convertible into shares of Common Stock
and awards valued by reference to the value of securities of or the performance
of specified Subsidiaries. Other Stock-Based Awards may be awarded either alone
or in addition to or in tandem with any other awards under this Plan or any
other plan of the Company. Each other Stock-Based Award shall be subject to such
terms and conditions as may be determined by the Committee.
Section 10. Amendment and Termination.
The Board may at any time, and from time to time, amend alter, suspend or
discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made that would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without the
Holder's consent.
Section 11. Term of Plan.
11.1 Effective Date. The Plan shall be effective as of February 10, 2000,
subject to the approval of the Plan by the Company's stockholders within one
year after the Effective Date. Any awards granted under the Plan prior to such
approval shall be effective when made (unless otherwise specified by the
Committee at the time of grant), but shall be conditioned upon, and subject to,
such approval of the Plan by the Company's stockholders and no awards shall vest
or otherwise become free of restrictions prior to such approval.
11.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time as no further awards may be granted
and all awards granted under the Plan are no longer outstanding. Notwithstanding
the foregoing, grants of Incentive Stock Options may be made only during the ten
year period following the Effective Date.
vii
Section 12. General Provisions.
12.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms, of the Agreement executed by
the Company and the Holder. The Committee may terminate any award
made under the Plan if the Agreement relating thereto is not executed and
returned to the Company within 10 days after the Agreement has been delivered to
the Holder for his or her execution.
12.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.
12.3 Employees.
(a) Engaging in Competition With the Company; Disclosure of
Confidential Information. If a Holder's employment with the Company or a
Subsidiary is terminated for any reason whatsoever, and within 18 months after
the date thereof such Holder either (i) accepts employment with any competitor
of, or otherwise engages in competition with, the Company or (ii) discloses to
anyone outside the Company or uses any confidential information or material of
the Company in violation of the Company's policies or any agreement between the
Holder and the Company, the Committee, in its sole discretion, may require such
Holder to return to the Company the economic value of any award that was
realized or obtained by such Holder at any time during the period beginning on
that date that is six months prior to the date such Holder's employment with the
Company is terminated.
(b) Termination for Cause. The Committee may, if a Holder's employment
with the Company or a Subsidiary is terminated for cause, annul any award
granted under this Plan to such employee and, in such event, the Committee, in
its sole discretion, may require such Holder to return to the Company the
economic value of any award that was realized or obtained by such Holder at any
time during the period beginning on that date that is six months prior to the
date such Holder's employment with the Company is terminated.
(c) No Right of Employment. Nothing contained in the Plan or in any
award hereunder shall be deemed to confer upon any Holder who is an employee of
the Company or any Subsidiary any right to continued employment with the Company
or any Subsidiary, nor shall it interfere in any way with the right of the
Company or any Subsidiary to terminate the employment of any Holder who is an
employee at any time.
12.4 Investment Representations; Company Policy. The Committee may require
each person acquiring shares of Common Stock pursuant to a Stock Option or other
award under the Plan to represent to and agree with the Company in writing that
the Holder is acquiring the shares for investment without a view to distribution
thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option
or other award under the Plan shall be required to abide by all policies of the
Company in effect at the time of such acquisition and thereafter with respect to
the ownership and trading of the Company's securities.
12.5 Additional Incentive Arrangements. Nothing contained in the Plan shall
prevent the Board from adopting such other or additional incentive arrangements
as it may deem desirable, including, but not limited to, the granting of Stock
Options and the awarding of Common Stock and cash otherwise than under the Plan;
and such arrangements may be either generally applicable or applicable only in
specific cases.
12.6 Withholding Taxes. Not later than the date as of which an amount must
first be included in the gross income of the Holder for Federal income tax
purposes with respect to any option or other award under the Plan, the Holder
shall pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any Federal, state and local taxes of any kind
required by law to be withheld or paid with respect to such amount. If permitted
by the Committee, tax withholding or payment obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the Company under the Plan
shall be conditioned upon such payment or arrangements and the Company or the
Holder's employer (if not the Company) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Holder from the Company or any Subsidiary.
viii
12.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of New York (without regard to choice of law provisions); provided,
however, that all matters relating to or involving corporate law shall be
governed by the laws of the State of Delaware.
12.8 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).
12.9 Non-Transferability. Except as otherwise expressly provided in the
Plan or the Agreement, no right or benefit under the Plan may be alienated,
sold, assigned, hypothecated, pledged, exchanged, transferred, encumbranced or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.
12.10 Applicable Laws. The obligations of the Company with respect to all
Stock Options and awards under the Plan shall be subject to (i) all applicable
laws, rules and regulations and such approvals by any governmental agencies as
may be required, including, without limitation, the Securities Act of 1933, as
amended, and (ii) the rules and regulations of any securities exchange on which
the Common Stock may be listed.
12.11 Conflicts. If any of the terms or provisions of the Plan or an
Agreement conflict with the requirements of Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to the extent they so conflict
with such requirements. Additionally, if this Plan or any Agreement does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein and therein with
the same force and effect as if such provision had been set out at length herein
and therein. If any of the terms or provisions of any Agreement conflict with
any terms or provisions of the Plan, then such terms or provisions shall be
deemed inoperative to the extent they so conflict with the requirements of the
Plan. Additionally, if any Agreement does not contain any provision required to
be included therein under the Plan, such provision shall be deemed to be
incorporated therein with the same force and effect as if such provision had
been set out at length therein.
12.12 Non-Registered Stock. The shares of Common Stock to be distributed
under this Plan have not been, as of the Effective Date, registered under the
Securities Act of 1933, as amended, or any applicable state or foreign
securities laws and the Company has no obligation to any Holder to register the
Common Stock or to assist the Holder in obtaining an exemption from the various
registration requirements, or to list the Common Stock on a national securities
exchange or any other trading or quotation system, including the Nasdaq National
Market and Nasdaq SmallCap Market.
ix
INDIVIDUAL INVESTOR GROUP, INC. - PROXY
Solicited by the Board of Directors
for Annual Meeting to be held on June 21, 2000
The undersigned Stockholder(s) of INDIVIDUAL INVESTOR GROUP, INC., a
Delaware corporation ("Company"), hereby appoints Jonathan L. Steinberg and
Brette E. Popper, or either of them, with full power of substitution and to
P act without the other, as the agents, attorneys and proxies of the
undersigned, to vote the shares standing in the name of the undersigned at
the Annual Meeting of Stockholders of the Company to be held on June 21,
2000 and at all adjournments thereof. This proxy will be voted in
accordance with the instructions given below. If no instructions are given,
this proxy will be voted FOR all of the following proposals.
R 1. Election of the following Directors:
FOR all nominees listed below, except WITHHOLD AUTHORITY to vote
as marked to the contrary below |_| for all nominees listed
below |_|
O
Jonathan L. Steinberg and E. Drake Mosier
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
X write that nominee's name in the space below.
__________________________________________
2. To approve the 2000 Performance Equity Plan.
Y
FOR |_| AGAINST |_| ABSTAIN |_|
3. In their discretion, the proxies are authorized to vote upon such other
business as may come before the meeting or any adjournment thereof.
|_| I plan to attend the Annual Meeting.
Date ________________________, 2000
------------------------------------
Signature
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Signature if held jointly
Please sign exactly as name appears
above. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.