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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
GENESISINTERMEDIA, 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: Common
Stock, par value $.0001 per share
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
GENESISINTERMEDIA, INC.
5805 SEPULVEDA BOULEVARD, 8TH FLOOR
VAN NUYS, CA 91411
818-902-4300
May 17, 2001
TO OUR STOCKHOLDERS:
On behalf of the Board of Directors of GenesisIntermedia, Inc., we
cordially invite you to attend the annual meeting of stockholders of Genesis to
be held on June 8, 2001 on the 8th floor at GenesisIntermedia, Inc.'s offices at
5805 Sepulveda Boulevard, Van Nuys, California 91411, at 10:00 a.m., Pacific
Daylight Time. A notice of annual meeting, proxy card and a proxy statement
containing information about the matters to be acted upon at the annual meeting
are enclosed.
At this year's meeting you will be asked to elect five directors and to
ratify the selection of the independent auditors. The accompanying notice of the
meeting and proxy statement describes these proposals. We encourage you to read
this information carefully.
Whether in person or by proxy, it is important that your shares be
represented at the annual meeting. To ensure your participation in the annual
meeting, regardless of whether you plan to attend in person, please complete,
sign, date and return the enclosed proxy promptly. If you attend the annual
meeting and wish to vote your proxy in person, you can revoke your previously
voted proxy at the meeting.
We look forward to seeing you at the annual meeting.
Sincerely,
Ramy El-Batrawi
Chairman of the Board of Directors
GENESISINTERMEDIA, INC.
5805 SEPULVEDA BOULEVARD, 8TH FLOOR
VAN NUYS, CA 91411
818-902-4300
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 8, 2001
10:00 A.M. PACIFIC DAYLIGHT TIME
------------------------
TO THE STOCKHOLDERS OF GENESISINTERMEDIA, INC.:
Notice is hereby given of the 2001 annual meeting of stockholders of
GenesisIntermedia, Inc., a Delaware corporation.
WHEN: Friday, June 8, 2001
10:00 a.m. Pacific Daylight Time
WHERE: Conference facility
8th Floor
5805 Sepulveda Boulevard,
Van Nuys, California 91411
PURPOSES: 1. To elect five directors to hold office until the annual
meeting of stockholders in 2002;
2. To ratify the appointment of independent auditors; and
3. To conduct other business if it is properly raised.
The items of business are more fully described in the proxy statement
accompanying this notice. Only stockholders of record on April 27, 2001 are
entitled to vote at the meeting.
Your vote is important. Please promptly complete, sign, date and return
your proxy card in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
Douglas E. Jacobson
Secretary
Van Nuys, California
May 17, 2001
GENESISINTERMEDIA, INC.
5805 SEPULVEDA BOULEVARD, 8TH FLOOR
VAN NUYS, CA 91411
818-902-4300
------------------------
PROXY STATEMENT
------------------------
Genesis' board is using this proxy statement to solicit proxies from the
holders of Genesis common stock to be used at the annual meeting of
stockholders. We are first mailing this proxy statement and the accompanying
form of proxy to those who were Genesis stockholders on or about April 27, 2001.
MATTERS RELATING TO THE ANNUAL MEETING:
TIME AND PLACE: June 8, 2001
10:00 a.m. Pacific Daylight Time
8th Floor Conference Room
5805 Sepulveda Boulevard,
Van Nuys, California 91411
RECORD DATE: April 27, 2001
OUTSTANDING SHARES HELD ON
RECORD DATE: 21,852,860 shares of common stock
SHARES ENTITLED
TO VOTE: 21,402,860 shares of common stock
QUORUM REQUIREMENT: A quorum of stockholders is necessary to hold a valid
meeting. The presence in person or by proxy at the meeting
of holders of shares representing a majority of the votes
of the common stock entitled to vote at the meeting is a
quorum.
Abstentions and broker "non-votes" count as present for
establishing a quorum. Shares held by Genesis in its
treasury do not count toward a quorum. A broker non-vote
occurs on an item when a broker is not permitted to vote on
that item without instruction from the beneficial owner of
the shares and no instruction is given.
SHARES BENEFICIALLY 9,045,469 shares of common stock, excluding options. These
OWNED BY GENESIS shares represent in total approximately 42.3% of the voting
OFFICERS, DIRECTORS, power of Genesis's common stock.
AND PRINCIPAL
STOCKHOLDERS ON Ultimate Holdings, Ltd., a principal stockholder of Genesis, owns
APRIL 27, 2001: 9,699,997 shares of common stock, representing approximately
45.3% of the voting power of Genesis' common stock.
ANNUAL REPORT: The annual report to stockholders that accompanies this
proxy statement is not proxy soliciting material. If you
would like an additional copy, please contact Genesis at
the address set forth below for Company contact.
COMPANY CONTACT: You may contact Genesis for additional information or
copies of the annual report at by mailing us at:
5805 Sepulveda Boulevard, 8th Floor
Van Nuys, CA 91411
Attn: Investor Relations
Or by phoning us at: (818) 902-4397.
THE PROPOSALS AND VOTE NECESSARY TO APPROVE THEM:
ITEM I: To elect five directors to hold office until the annual
meeting of stockholders in the year 2002.
Directors are elected by a plurality of the votes
represented by the shares of common stock present at the
meeting in person or by proxy. This means that the five
director nominees with the most affirmative votes are
elected to fill the available seats. Only the number of
votes "FOR" affect the outcome. Withheld votes and
abstentions have no effect on the vote.
ITEM II: To ratify the appointment of Singer Lewak Greenbaum &
Goldstein, LLP as Genesis' independent auditors for Genesis'
2001 fiscal year.
Ratification of the selection of Singer Lewak Greenbaum &
Goldstein, LLP as Genesis' independent auditors for the 2001
fiscal year requires a majority of the votes cast by holders
of the common stock. Abstentions have no effect
on the vote.
ITEM III: To conduct other business if it is properly raised.
Under New York Stock Exchange rules which govern most brokers, if your
broker holds your shares in its name, your broker is permitted to vote your
shares on both Item I and Item II, even if it does not receive voting
instructions from you.
The stockholders have no dissenters' or appraisal rights in connection with
either Item I or II.
PROXIES
Voting instructions are included on your proxy card. If you properly submit
your proxy in time to vote, one of the individuals named as your proxy will vote
your shares as you have directed. You may vote for or withhold authority to vote
for Genesis' director nominees. You also may vote for or against the other
proposals or abstain from voting.
If you submit your proxy but do not make specific choices, your proxy will
follow the board's recommendations and vote your shares:
* FOR the election of each of the five director nominees;
* FOR the ratification of Singer Lewak Greenbaum & Goldstein, LLP as the
independent auditors for fiscal year 2001;
* FOR any proposal by Genesis' board to adjourn the annual meeting; and, in
its discretion, as to any other business as may properly come before the
annual meeting.
How do I vote my proxy?
Two ways: by proxy or in person. Voting by proxy is recommended because
even if you attend the meeting, you could always change your vote while
attending.
Voting by proxy:
* Mark your selections
* Date your proxy and sign your name exactly as it appears on your
proxy
* Mail to Genesis in the enclosed, self-addressed, stamped envelope.
Voting in person:
* Attend the annual meeting and show proof of eligibility to vote (you
may need to present identification at the meeting and, if your
shares are held in the name of your broker, bank or nominee, an
account statement or letter indicating that you beneficially own the
shares on April 27, 2001, the record date for voting.
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* Obtain a ballot
* Mark your selection
* Date your ballot and sign your name exactly as it appears in our
transfer books
How do I revoke my proxy?
You may revoke your proxy before it is voted by
(i) submitting a new proxy with a later date,
(ii) notifying Genesis' Secretary in writing at the address provided above
before the meeting that you have revoked your proxy, or
(iii) by voting in person at the meeting.
What accommodations are there for persons with disabilities?
We can provide reasonable assistance to help you participate in the meeting
if you tell us about your disability and your plan to attend. Please call or
write Genesis' Secretary in advance of the meeting at the number or address on
the first page of this proxy statement.
Is my vote confidential?
Yes. Independent inspectors count the votes, so your individual vote is
kept confidential unless special circumstances exist. For example, a copy of
your proxy card will be sent to Genesis if you write comments on the card.
Who pays for the proxy solicitation?
Genesis pays its own costs of soliciting proxies. In addition to this
mailing, Genesis employees may solicit proxies personally.
May I propose actions for consideration at next year's annual meeting of
stockholders or nominate individuals to serve as directors?
Yes. You may submit proposals for consideration at future shareholder
meetings, including director proposals.
Proposals of stockholders of Genesis that are intended to be presented by
such stockholders at Genesis's 2002 annual meeting and that stockholders desire
to have included in our proxy materials relating to such meeting must be
received by the Secretary of Genesis at 5805 Sepulveda Blvd., 8th Fl, Van Nuys,
California 91411 no later than January 17, 2002, which is 120 calendar days
prior to the anniversary of this year's mail date, and must be in compliance
with applicable laws and regulations in order to be considered for possible
inclusion in the proxy statement and form of proxy for that meeting, including
the requirements of Rule 14a-18 under the Securities and Exchange Act
of 1934, as amended.
Under Section 2.7 of our bylaws, a stockholder may present a proposal at
our annual meeting in the year 2002 even if the stockholder fails to meet the
deadline for inclusion in the proxy, by giving notice to us at least 90 days
prior to the anniversary of this year's meeting. However, if next year's meeting
date is advanced by more than 30 days or delayed 60 days, the notice needs to be
received no earlier than 120 days and no later than the later of 60 days prior
to the meeting, and ten days after the day of the meeting is publicly announced
(the "Bylaw Deadline"). If a stockholder gives notice of such a proposal after
the Bylaw Deadline, the stockholder will not be permitted to present the
proposal to the stockholders for a vote at the meeting, including the
requirements of Rule 14a-8 under the Securities and Exchange Act of 1934, as
amended.
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OTHER BUSINESS; ADJOURNMENTS
Management is not currently aware of any other business to be acted upon at
the meeting. If, however, other matters are properly brought before the meeting,
or any adjourned meeting, your proxies will have discretion to vote or act on
those matters according to their best judgment, including adjourning the
meeting.
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. Any adjournment may be made from time to time by approval of
the holders of shares representing a majority of the votes present in person or
by proxy at the meeting, whether or not a quorum exists, without further notice
other than by an announcement made at the meeting. We do not currently intend to
seek an adjournment of the meeting.
ELECTION OF DIRECTORS
(ITEM I)
In accordance with Genesis' bylaws, the board of directors has fixed the
number of directors constituting the board at five. The board of directors
proposes the following five nominees for election to the board at the annual
meeting, to hold office until our 2002 annual meeting and until his successor is
elected and qualified:
DIRECTOR POSITIONS WITH
NAME AGE SINCE GENESIS COMMITTEES
---- --- -------- -------------- ----------
Ramy El-Batrawi................ 40 1993 Chairman of the Board and Chief
Executive Officer
Douglas E. Jacobson............ 54 1998 Director, Chief Financial Officer and Compensation
Secretary
George W. Heyworth............. 51 1998 Director Compensation,
Audit
Michael Roy Fugler............. 52 1999 Director Compensation,
Audit
Stephen A. Weber............... 52 2000 Director Audit
Unless otherwise instructed, the persons named as proxies on the
accompanying proxy card intend to vote shares represented by properly executed
proxies for the election of each of the five nominees identified above. Although
the board of directors anticipates that each of the five nominees will be
available to serve as a director, if any of them should be unwilling or unable
to serve, it is intended that the proxies will be voted for the election of a
substitute nominee or nominees that may be designated by the board of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE
INFORMATION CONCERNING THE DIRECTOR NOMINEES
Set forth below is information with respect to the individuals who are
nominees for election to the board of directors of Genesis who are standing for
election at the annual meeting.
Ramy El-Batrawi
Mr. El-Batrawi is the principal stockholder and chief executive officer of
GenesisIntermedia, Inc. He has been a director and chairman of the board of
GenesisIntermedia, Inc. since its inception in October 1993. Mr. El-Batrawi's
prior experience includes international business marketing where he facilitated
and negotiated significant transactions between global industrial companies and
world governments. Firms with which he has been involved include Lockheed
Corporation, Carnival Cruise Lines Inc., Lonrho, Inc., McDonalds Corporation and
Eastern Airlines. Additionally, he is the sole shareholder, President and
Chairman of the Board of Directors of several other companies, including
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International Futures Brokerage Company, Mars & Venus Counseling Centers, Inc.,
Genesis Aviation, Inc., Genesis Aviation II, Inc., Genesis Diversified
Investments, Inc., Sentient, Inc. and Trade Your Way To Riches, Inc.
Douglas E. Jacobson
Mr. Jacobson has been a director of GenesisIntermedia, Inc. since October
1998. Mr. Jacobson has been a certified public accountant for over 25 years and
is a graduate of The College of William and Mary in Virginia. His experience
includes working for local public accounting firms and Coopers & Lybrand where
he audited privately held and SEC-registered public corporations. After Coopers
& Lybrand, he was responsible for supervising the financial audit staff of a
major retail drug chain, and he managed the internal audit functions for a
highly diversified, closely held family conglomerate, for four years. In those
positions, he was responsible for nationwide audits and preparing reports
directly to the Chairman. From 1983 to 1997, as a sole practitioner certified
public accountant, he performed accounting, audit and tax services for key
family members and other clients, including GenesisIntermedia, Inc. As the chief
financial officer of GenesisIntermedia, Inc., Mr. Jacobson's responsibilities
include overseeing and preparing the financial analysis of the Company's
financial growth and external reporting.
George W. Heyworth
Mr. Heyworth was elected to the GenesisIntermedia, Inc. board of directors
in January 1999. He has had more than 25 years of success in building and
leading emerging companies. As co-founder & CEO, Mr. Heyworth is in the process
of re-starting Payless Drug Stores, Inc. In 1999, he co-founded lightdog.com,
Inc., a promising, filtered Internet Service Provider teamed with General Mills
to conduct a multi-million dollar launch focused on providing safe family
internet access. He has served as chief executive officer of lightdog.com, Inc.
since its formation. As a board member and consultant, he has helped venture
capital groups and Internet-focused companies (GenesisIntermedia, Inc., Mature
Mart, Inc., Banta Integrated Media) define, launch and execute e-commerce
offerings. In 1998, Mr. Heyworth served as vice president of product management
for Intersolv's PVCS Software Tools Division, a $120-million software tools
business. In 1997, as the chief technology officer and vice president of
engineering for CADIS, a start-up Internet company, Mr. Heyworth charted
technology direction and launched e-commerce catalog products that were built on
patented, advanced parametric searching technology. Prior to CADIS, Mr. Heyworth
built Perot Systems Object Technology Center, managed strategic technology
accounts, completed acquisitions, and oversaw Perot Systems International IT
conversion to PeopleSoft. Mr. Heyworth received his Masters of Science degree
from the University of Oregon and is a graduate of the United States Military
Academy, where he received a Bachelor of Science degree in Civil Engineering.
Michael Roy Fugler
Mr. Fugler was elected a Director of GenesisIntermedia, Inc. in December
1999. After receiving his Juris Doctorate from Louisiana State University in
1972, Mr. Fugler embarked on a legal career that began with litigation,
developing extensive experience with both civil and criminal law, and later
focusing on international law, corporate law and finance. Mr. Fugler developed a
multi-geographical practice, which allowed him to carry on his work from Baton
Rouge to New York to Los Angeles to Miami to Atlanta to Houston. In the past 10
years Mr. Fugler shifted his practice and developed an expertise in
international merchant and investment banking. In 1997, he became a partner and
director of I-Bankers Securities, Inc. where he manages the New York, London and
Paris operations. As Managing Director of Corporate Finance, Mr. Fugler manages
underwritings for IPOs, pre-and post-IPO private and public offerings. Mr.
Fugler currently holds Series 7, 24, and 63 securities licenses. Mr. Fugler has
been a leader and active participant in many professional associations including
The Association of Trial Lawyers of America, American Bar Association, National
Association of Criminal Defense Lawyers, International Bar Association, Lawyer
Pilots Bar Association, Aircraft Owners & Pilots Association and American
Bonanza Society.
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Stephen A Weber
Mr. Weber has a strong background in accounting, finance and marketing.
Since 1996, Mr. Weber has been an active consultant in a number of companies,
including GenesisIntermedia, Inc., in Southern California. From 1989 to 1996, he
was the President of Positive Response Television, Inc., a direct marketing and
media company that he co-founded in 1989, built and eventually took public.
Under Mr. Weber's direction, within six years, Positive Response had 80
employees and had achieved annual sales of over $30 million. Prior to the
founding of Positive Response, Mr. Weber was a practicing Certified Public
Accountant, with over 13 years of experience in public accounting. From 1981 to
1989, Mr. Weber was a senior partner in a regional accounting firm. He
supervised certified audits of many companies in diversified fields. Prior to
1981, Mr. Weber worked for local and national accounting firms, performing and
supervising audit and client engagements. Mr. Weber graduated from the
University of Southern California in 1970.
COMPENSATION OF DIRECTORS
Directors who are employees of Genesis receive no separate compensation for
their services as directors. Compensation of the outside directors is determined
by the whole board after receiving recommendations of the President. Currently,
outside directors of Genesis receive $1,000 for each board meeting they attend
in person and $500 for each meeting they attend by conference telephone call. In
addition, non-employee directors are entitled to be granted options to purchase
25,000 shares of common stock each year under the 1998 Stock Option Plan for
Non-Employee Directors that is part of our 1998 Stock Incentive Program. The
options vest quarterly over a two-year period.
All directors are reimbursed for reasonable expenses incurred in connection
with attending meetings of the board of directors. Outside directors also
receive reasonable compensation for committee work and business consulting
outside normal board meetings. During 2000, Genesis paid $18,425 for business
consulting services provided by George Heyworth and an entity owned by George
Heyworth.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Genesis' officers and directors
and persons who beneficially own more than 10% of our common stock to file
reports of ownership and changes in ownership with the SEC and Nasdaq. Reporting
persons are required by SEC regulations to furnish Genesis with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of those
forms received or written representations from persons subject to the reporting
requirements of Section 16(a), we believe that, with respect to the fiscal year
ended December 31, 2000, all reporting persons complied with all applicable
filing requirements of Section 16(a), except for: Michael R. Fugler who filed a
Form 3 late upon being appointed a director and Craig T. Dinkel, whom filed one
Form 4 late that involved one transaction.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 2000, there were 4 meetings of the board of directors and the board
acted by unanimous written consent on three occasions. All directors attended at
least 75% of the meetings of the board of directors and the committees of which
they were members held during the time they were directors.
The board of directors has established an audit committee and a
compensation committee. The board of directors has not established a nominating
or any other committees. Each of the audit and compensation committees is
responsible to the full board of directors. The functions performed by these
committees are summarized below:
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NAME OF COMMITTEE AND MEMBERS FUNCTIONS OF THE COMMITTEE MEETINGS IN 2000
----------------------------- -------------------------- ----------------
AUDIT
George W. Heyworth * Confers with independent accountants and 2
Stephen A. Weber internal auditors regarding scope of
Michael R. Fugler examination
* Review reports of independent accountants and
internal auditors
* Reviews adequacy of internal accounting,
financial and operating controls
* Reviews financial reporting compliance
procedures
* Operates under a written charter adopted by
the board of directors, a copy of which is
attached as Appendix A to this proxy
COMPENSATION
George W. Heyworth * Reviews and approves compensation of officers 4
Michael R. Fugler * Reviews and administers stock option plans
Douglas E. Jacobson for employees
* Recommends stock option rights to board of
directors
Audit Committee Report
The Audit Committee of Genesis is composed of three independent directors
and operates under a written charter adopted by the Board of Directors (Appendix
A). In fulfilling its oversight responsibilities, the Audit Committee reviewed
the audited financial statements contained in the Annual Report on Form 10-K for
Genesis's 2000 fiscal year with management, including a discussion of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality and acceptability of Genesis's accounting principles
and such other matters as are required to be discussed with the Audit Committee
under generally accepted auditing standards. In addition, the Audit Committee
discussed with the independent auditors the auditors' independence from
management and Genesis, including a written letter from the independent auditors
regarding their independence and the matters in the written disclosures required
by the Independence Standards Board, and considered the compatibility of non-
audit services with the auditors' independence.
The Audit Committee discussed with our chief financial officer and the
independent auditors the overall scope and plans for the audit by the
independent auditors. The Audit Committee meets with the independent auditors,
with and without management present, to discuss the results
of their examinations, their evaluations of our internal controls, and the
overall quality of our financial reporting.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them in the representations made by management and the independent
accountants. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal control
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
our financial statements has been carried out in accordance with generally
accepted auditing standards, that the financial statements are
7
presented in accordance with generally accepted accounting principles, or that
our auditors are, in fact, independent. Based on the reviews and discussions
referred to above, the Audit Committee recommended to the board of directors
(and the board has approved) that the audited financial statements be included
in the Annual Report on Form 10-K for the 2000 fiscal year for filing with the
Securities and Exchange Commission.
The Committee also recommended to the board of directors (and the board has
approved) the selection of our independent auditors for the 2001 fiscal year.
Submitted by the Audit Committee: Michael R. Fugler
Stephen A. Weber
George W. Heyworth
Audit Fees
Aggregate audit fees by Singer Lewak Greenbaum & Goldstein, LLP for the
audit of Genesis's annual financial statements and review of the interim
financial statements in Genesis's Forms 10-Q for the fiscal year ended December
31, 2000 was $135,000, of which an aggregate amount of $0.00 had been billed
through December 31, 2000.
COMPENSATION COMMITTEE INTERLOCKS
No interlocking relationships exist between our compensation committee and
the board of directors or compensation committee of any other company, nor has
any such interlocking relationship existed in the past. Mr. Jacobson is the
Chief Financial Officer and Secretary of Genesis, but does not participate in
the management of our stock incentive program as it relates to persons subject
to Section 16 under the Securities Exchange Act. There are no interlocking
relationships between Genesis and other entities that might affect the
determination of the compensation of our directors and executive officers.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee believes that the compensation levels of our
executive officers, who provide leadership and strategic direction for Genesis,
should consist of (i) base salaries that are commensurate with executives of
other comparable e-commerce companies and (ii) cash bonus opportunities based on
achievement of objectives set by the compensation committee with respect to the
chairman and chief executive officer and by the chief executive officer in
consultation with the compensation committee with respect to the other executive
officers of Genesis. The compensation committee also believes that it is
important to provide Genesis' executive officers with significant stock-based
incentive compensation that increases in value in direct correlation with
improvement in the performance of Genesis' common stock, thereby aligning
management's interest with that of our stockholders.
The compensation committee considers the following factors (ranked in order
of importance) when determining compensation of our executive officers:
* Genesis' performance measured by attainment of specific strategic
objectives, stock price performance and operating results;
* the individual performance of each executive officer, including the
achievement by the executive (or the executive's functional group) of
identified goals; and
* historical cash and equity compensation levels.
Cash compensation
The salaries of our executive officers are generally initially set at the
time of their initial hiring, subject to possible increases in future periods.
8
As stated above, the compensation of executive officers is also based in
part upon individual performance and comparative industry compensation levels.
Early in each year, a performance plan is established. Each plan sets forth
overall goals to be achieved by Genesis, as well as specific performance goals
to be achieved by each of our executive officers according to his or her duties
and responsibilities, for the relevant year. For fiscal year 2000, these overall
compensation goals included:
* the acquisition of technologies and businesses consistent with our
business and product goals and the successful integration of the acquired
businesses and technologies;
* the enhancement of strategic relationships;
* the meeting of cash flow, expense and other budgetary targets; and
* the achievement of appreciation in our stock price.
Equity compensation
The non-employee members of the compensation committee administer and
authorize all grants and awards made under the 1998 stock compensation program.
In some instances, awards are authorized for new employees as incentives to join
Genesis. In determining whether and in what amount to grant stock options or
other equity compensation to executive officers in fiscal year 2000, the
compensation committee considered the amount and date of vesting of currently
outstanding incentive equity compensation granted previously to each executive
officer. The compensation committee believes that continued grants of equity
compensation to key executives are necessary to retain and motivate
exceptionally talented executives who are necessary to achieve our
long-term goals, especially at a time of significant growth and competition in
the industries in which we participate.
Compensation of Ramy Y. El-Batrawi, Genesis' Chief Executive Officer and
Chairman
Ramy Y. El-Batrawi, Genesis's chief executive officer and chairman,
participates in the same programs as Genesis's other executives, and receives
compensation based on: the same factors as Genesis's other executives, his
employment agreement and a termination benefits agreement. Mr. El-Batrawi's
overall compensation reflects his degree of policy and decision-making authority
and his level of responsibility with respect to Genesis's strategic direction
and financial and operational results. Mr. El-Batrawi's compensation was
determined based on a study of the compensation of chief executive officers of
other companies which have business, financial and corporate characteristics
similar to those of Genesis. Mr. El-Batrawi's compensation components for
Genesis's fiscal year ended December 31, 2000 were as follows:
* Base Salary: Mr. El-Batrawi received a base salary of $263,824.
Federal Income Tax Consequences
Section 162(m) of the Internal Revenue Code (the "Code") limits Genesis to
a deduction for federal income tax purposes of not more than $1 million of
compensation paid to certain executive officers in a taxable year. Compensation
above $1 million may be deducted if it is "performance-based compensation"
within the meaning of the Code.
The board of directors has not established a formal policy for determining
which forms of incentive compensation awarded to executive officers shall be
designed to qualify as "performance based compensation."
Submitted by the Compensation Committee
George W. Heyworth
Michael R. Fugler
Douglas E. Jacobson
9
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid to executive
officers of Genesis for the fiscal years ended December 31, 2000, 1999 and 1998,
the compensation of the chief executive officer and the only two other executive
officers whose compensation exceeded $100,000 during 2000, 1999 or 1998. No
other executive officer received salary and bonus compensation in excess of
$100,000 in the three most recent completed fiscal years.
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------- ---------------------------------
OTHER RESTRICTED
ANNUAL STOCK STOCK
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS OTHER
PRINCIPAL POSITION YEAR ($) $ ($) ($) ($) ($)
------------------ ---- ------ ----- ------------ ---------- ------- -----
Ramy El-Batrawi 2000 263,824 22,761(2)
Chairman, President and 1999 250,000 2,000,000(1) 22,654(2) -- -- 22,654(2)
Chief Executive Officer 1998 62,500 955,000(1) -- -- -- 11,327(2)
Douglas E. Jacobson 2000 119,768 30,000 13,178(3) 150,000
Chief Financial Officer 1999 120,023 -- 12,874(3) -- 225,000 13,253(3)
and Secretary 1998 13,615 -- -- -- 450,000 2,126(3)
Craig T. Dinkel 2000 140,977 100(4) 75,000
Chief Operating Officer 1999 175,102 -- -- -- 225,000(1) --
1998 18,050 -- -- -- 300,000 --
---------------
* Amounts in this column have been adjusted to give effect to a 3-for-1 stock
split effected as a stock dividend on March 21, 2001, as if the stock split
was effective prior to the issuance of the securities.
(1) Mr. El-Batrawi received distributions of undistributed S corporation
earnings of $2,000,000 and $955,000 in 1999 and 1998, respectively.
(2) Represents depreciation expense on a company automobile used by Mr.
El-Batrawi, plus $107.00 related to life insurance premiums.
(3) Represents lease payments made for Mr. Jacobson's automobile, plus $304.00
related to life insurance premiums.
(4) Represents amounts related to life insurance premiums.
OPTIONS GRANTS IN 2000
The following table sets forth the option grants to the named executives
during 2000. Genesis did not grant any stock appreciation rights in 2000.
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED TO
UNDERLYING OPTIONS EMPLOYEES EXERCISE OR BASE
NAME GRANTED(1) IN FY 1999 PRICE ($/SHARE) EXPIRATION DATE
---- ------------------ ------------------ ---------------- ---------------
Douglas E. Jacobson............... 150,000 5.1% $8.50 (2)
Craig T. Dinkel................... 75,000 2.5% $8.50 (2)
---------------
(1) All granted options vest in three annual increments, 33.3% on each of the
first through third anniversaries of the date of grant, and expire in seven
years.
(2) Seven years from date of vesting.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding the number of
securities underlying unexercised options at December 31, 2000.
10
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT FY-END (#) OPTIONS FY-END ($)
--------------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Ramy El-Batrawi................ -- -- -- --
Douglas E. Jacobson............ 600,000 225,000 1,799,800 359,300
Craig T. Dinkel................ 432,000 150,000 1,316,856 306,200
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OWNERSHIP
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options, warrants or other rights held by that
person that are currently exercisable or become exercisable within 60 days
following April 27, 2001 are deemed outstanding. Those shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of any
other person. Unless otherwise indicated in the table, the persons and entities
named in the table have sole voting and sole investment power with respect to
the shares set forth opposite the stockholder's name. The address for all of the
executive officers and directors is 5805 Sepulveda Boulevard, 8th, Van Nuys,
California 91411.
NUMBERS OF SHARES OPTIONS INCLUDED PERCENTAGE OF
NAME AND ADDRESS BENEFICIALLY OWNED IN TOTAL CLASS
---------------- ------------------ ---------------- -------------
Ramy El-Batrawi................... 9,042,969 -- 42.3
Douglas E. Jacobson............... 600,000 600,000 2.7
Craig T. Dinkel................... 432,000 432,000 2.0
George W. Heyworth................ 150,000 150,000 *
Michael R. Fugler................. 75,000 75,000 *
Stephen A. Weber.................. 2,500 -- *
Ultimate Holdings, Ltd............ 9,699,997 * 45.3
All directors and executive
officers as a group (six
persons)........................ 10,302,469 1,257,000 45.5
---------------
(1) Denotes less than 1%.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Genesis and Ultimate Holdings, Ltd. have entered into agreements providing
for credit facilities on the dates and in the aggregate amounts indicated below:
DATE CREDIT LIMIT INTEREST REPAYMENT DATE
---- ------------ -------- --------------
April 28, 2000 $ 6,000,000 11.5% April 28, 2005
June 16, 2000 $10,000,000 11.5% June 16, 2005
August 11, 2000 $ 5,000,000 11.5% August 11, 2005
September 20, 2000 $ 5,000,000 11.5% September 20, 2005
October 16, 2000 $ 5,000,000 11.5% October 16, 2005
January 5, 2001 $ 5,000,000 11.5% January 5, 2006
April 16, 2001 $15,000,000 9% April 16, 2006
The current outstanding aggregate indebtedness to Ultimate under the above
credit facilities is approximately $38 million.
11
PERFORMANCE GRAPH: JUNE 14, 1999-2000
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
GENI, NASDAQ COMPOSITE AND PEER GROUP
The annual changes for the periods shown in the graph on this page are
based on the assumption that $100 had been invested in GENI stock, the NASDAQ
Composite and our peer group on June 14, 1999. The total cumulative dollar
returns shown on the logarithmic scale of the graph represent the value that
such investments would have had on December 31, 1999 and on December 31, 2000.
Peer group was determined based upon inclusion under the same Standard
Industrial Classification (SIC) code as GenesisIntermedia, Inc. and comparable
market capitalization levels, as advised by NASDAQ. This peer group consists of
Lamar Advertising Co., Switchboard Inc., L90 Inc., Obie Media Group, Princeton
Video Image and Mediaplex Inc. Lamar Advertising Co., Switchboard Inc. and
Mediaplex Inc. initial public offerings were 1/28/00, 3/1/00 and 11/18/99,
respectively.
Note: GenesisIntermedia, Inc.'s management consistently cautions that the stock
price performance shown in the graph below should not be considered
indicative of potential future stock price performance.
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on 6/14/99)
1/16/99 12/31/99 12/31/00
------- -------- --------
GenesisIntermedia, Inc. $100.00 $ 68.51 $201.66
Peer Group $100.00 $270.90 $ 87.70
Nasdaq Composite $100.00 $169.67 $103.01
RATIFICATION OF INDEPENDENT AUDITORS
(ITEM II)
The audit committee of the board has appointed Singer Lewak Greenbaum &
Goldstein, LLP to audit Genesis' financial statements for fiscal year 2001.
Management asks you to ratify that appointment. Singer Lewak Greenbaum &
Goldstein, LLP has been Genesis' independent accounting firm for many years, and
management believes Singer Lewak Greenbaum & Goldstein, LLP is well qualified
for the job. Although the ratification is not required by law, the board
believes that stockholders should be given this opportunity to express their
views on the subject. While not binding on the board, the failure of the
stockholders to ratify the appointment of Singer Lewak Greenbaum &
12
Goldstein, LLP as Genesis' independent auditors would be considered by the board
and the audit committee in determining whether to continue the engagement of
Singer Lewak Greenbaum & Goldstein, LLP. A Singer Lewak Greenbaum & Goldstein,
LLP representative is expected to be at the annual meeting to answer appropriate
questions and to make a statement if he or she desires.
THE BOARD RECOMMENDS YOU VOTE "FOR" THIS PROPOSAL.
ANNUAL REPORT
Our annual report on Form 10-K, including financial statements, for the
year ended December 31, 2000, is being distributed to all stockholders together
with this proxy statement, in satisfaction of the requirements of the Securities
and Exchange Commission. Additional copies of such report are available upon
request. To obtain additional copies of the annual report, please contact us at
the address of Genesis's principal executive office given under "company
contact" on page 2.
IMPORTANT
TO ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE TRANSACTION OF BUSINESS
AT THE ANNUAL MEETING, WE URGE YOU TO PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD PROMPTLY.
GENESISINTERMEDIA, INC.
May 17, 2001
13
APPENDIX A
CHARTER
OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
GENESISINTERMEDIA, INC.
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
* Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting and legal
compliance.
* Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
* Provide an avenue of communication among the independent auditors,
management, the internal auditing department and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting
or other consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the National
Marketing Exchange. The Audit Committee shall be composed of three or more
directors as determined by the Board, each of whom shall be independent
nonexecutive directors, free from any relationship that would interfere with the
exercise of his or her independent judgment. All members of the Committee shall
have a basic understanding of finance and accounting and be able to read and
understand fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board. If an Audit
Committee Chair is not designated or present, the members of the Committee may
designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or approve
an agenda in advance of each meeting. The Committee should meet privately in
executive session at least annually with management, the director of the
internal auditing department, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believe should be
discussed. In addition, the Committee, or at least its Chair, should communicate
with management and the independent auditors quarterly to review the Company's
financial statements and significant findings based upon the auditors' limited
review procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board of Directors for approval and have the document
published at least every three (3) years in accordance with Securities and
Exchange Commission ("SEC") regulations.
A-1
2. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices and judgments.
3. In consultation with management, the independent auditors and the
internal auditors, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor, control and report such expenses. Review
significant findings prepared by the independent auditors and the internal
auditing department together with management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings and/or
the Company's quarterly financial statements prior to filing or distribution.
Discuss any significant changes to the Company's accounting principles and any
items required to be communicated by the independent auditors in accordance with
SAS 61 (see item 9). The Chair of the Committee may represent the entire Audit
Committee for purposes of this review.
INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the Board
of Directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence.
8. Review the independent auditors' audit plan -- discuss scope, staffing,
locations, reliance upon management and internal audit and general audit
approach.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required to be
communicated to Audit Committees in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
INTERNAL AUDIT DEPARTMENT AND LEGAL COMPLIANCE
11. Review the budget, plan, changes in plan, activities, organizational
structure and qualifications of the internal audit department, as needed.
12. Review the appointment, performance and replacement of the senior
internal audit executive.
13. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
14. On at least an annual basis, review with the Company's counsel any
legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations and inquiries received from regulators or governmental agencies.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
15. Annually prepare a report to stockholders as required by the SEC. The
report should be included in the Company's annual proxy statement.
16. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Committee or the Board deems
necessary or appropriate.
A-2
17. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
OTHER OPTIONAL CHARTER DISCLOSURES
18. Establish, review and update periodically the Ethics Policies and
ensure that management has established a system to enforce these Policies.
19. Periodically perform self-assessment of Audit Committee performance.
20. Review financial and accounting personnel succession planning within
the Company.
21. Annually review policies and procedures as well as audit results
associated with directors' and officers' expense accounts and perquisites.
Annually review a summary of directors' and officers' related party transactions
and potential conflicts of interest.
A-3
GENESISINTERMEDIA, INC.
ANNUAL MEETING OF STOCKHOLDERS, JUNE 8, 2001
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE 2001
ANNUAL MEETING OF STOCKHOLDERS OF GENESISINTERMEDIA, INC. The undersigned hereby
appoints Ramy El-Batrawi and Douglas E. Jacobson, and each of them, as proxies,
each with the power to appoint his substitutes, and hereby authorizes them to
represent and to vote, as designated on the reverse side and in accordance with
their judgment upon any other matter properly presented, all the shares of
common stock of GenesisIntermedia, Inc. held of record by the undersigned at the
close of business on April 27, 2001, at the annual meeting of stockholders to be
held on June 8, 2001 or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES NAMED HEREIN AS A DIRECTOR OF GENESIS AND FOR RATIFICATION OF SINGER
LEWAK GREENBAUM & GOLDSTEIN, LLP AS GENESIS'S INDEPENDENT AUDITORS FOR FISCAL
YEAR 2001.
Should any nominee decline or be unable to accept his nomination to serve as a
director, an event that we do not currently anticipate, the persons named in the
enclosed proxy reserve the right, in their discretion, to vote for a substitute
nominee designated by the board of directors.
PLEASE MARK, SIGN, DATE AND RETURN THIS FORM PROMPTLY IN THE ENCLOSED ENVELOPE.
------------------------
SEE REVERSE SIDE
------------------------
/X/ PLEASE MARK YOUR VOTES AS This proxy, when properly executed, will be voted in the
INDICATED IN THIS EXAMPLE. manner directed herein by the undersigned stockholder. If no
direction is made, this proxy will be voted FOR the election
of the nominee named herein and FOR Item 2.
1. ELECTION OF DIRECTORS:
(to serve until the respective Annual Meeting of Stockholders indicated).
Nominees: To serve until 1. Ramy El-Batrawi / / FOR all nominees listed to the / / WITHHOLD AUTHORITY to vote
2002 Annual Meeting: 2. Douglas E. Jacobson left (except as specified below) for all listed below.
3. George W. Heyworth
4. Michael R. Fugler
5. Stephen A. Weber
(Instructions: To withhold authority to vote for any indicated nominee, write
the number(s) of the nominee(s) in the space provided below.)
EXCEPT, for vote withheld from the following nominee(s): --------------------
----------------------------------------------
FOR AGAINST ABSTAIN
2. The proposal to ratify the appointment of Singer Lewak / / / / / /
Greenbaum & Goldstein, LLP as Genesis's independent
auditors for fiscal year 2001.
Please indicate by a check mark whether you plan to attend the
annual meeting. / /
PLEASE SIGN YOUR NAME BELOW. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE THE FULL TITLE OR CAPACITY. IF A CORPORATION, PLEASE SIGN IN
CORPORATE NAME BY AN AUTHORIZED OFFICER AND GIVE TITLE. IF A PARTNERSHIP, PLEASE
SIGN IN PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
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PRINT NAME OF STOCKHOLDER
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SIGNATURE(S) DATE