UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Schedule
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
| o |
Preliminary
Proxy Statement
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| o |
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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| x |
Definitive
Proxy Statement
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| o |
Definitive
Additional Materials
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| o |
Soliciting
Material Pursuant to § 240.14a-12
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ANSWERS
CORPORATION
(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
|
| o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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| (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 (set
forth the amount on which the filing fee is calculated and state
how it
was determined):
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| (4) |
Proposed
maximum aggregate value of transaction:
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| (5) |
Total
fee paid:
|
| o |
Fee
paid previously with preliminary
materials.
|
| o |
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its
filing.
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| (1) |
Amount
Previously Paid:
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| (2) |
Form,
Schedule or Registration Statement No.:
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| (3) |
Filing
Party:
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| (4) |
Date
Filed:
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NOTICE
OF ANNUAL MEETING
OF
STOCKHOLDERS
TO
BE HELD JUNE 21, 2006
May
8,
2006
Dear
Stockholders of Answers Corporation:
Notice
is
hereby given that the 2006 annual meeting of stockholders of Answers Corporation
(“Answers”, or the “Company”) will be held on June 21, 2006, at 12:30
EDT,
at The
New Yorker Hotel, 481 Eighth Avenue, New York, New York 10001, for the following
important purposes:
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(1)
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To
elect two Class II directors to hold office for a three-year term
or until
their respective successors are elected and
qualified;
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(2)
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To
consider and vote on a proposal to
approve an amendment to the Company's 2005 Incentive Compensation
Plan to
increase the number of shares available for grant under such plan
from
850,000 shares to 1,100,000 shares;
and
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(3)
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To
consider and act on any other matters that properly may be presented
at
the annual meeting or any adjournment or postponement of the annual
meeting.
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These
items of business are described in the attached proxy statement, which is being
mailed on or about May 8, 2006. Stockholders of record at the close of business
on May 1, 2006 are entitled to notice of, and to vote at, the annual meeting
and
any adjournment or postponement thereof. As of that date, there were 7,728,174
shares of the Company’s common stock outstanding and entitled to vote at the
annual meeting. Each share of Answers’ common stock is entitled to one vote on
each matter properly brought before the annual meeting. For ten days prior
to
the meeting, a complete list of stockholders entitled to vote at the annual
meeting will be available for examination by any stockholder, for any purpose
relating to the annual meeting, during ordinary business hours at the offices
of
the Company, 237 West 35th
Street,
Suite 1101, New York, New York 10001.
Also
enclosed herewith is Answers’ 2005 Annual Report to Stockholders, containing its
financial statements for the year ended December 31, 2005. The Annual Report
does not constitute proxy soliciting material.
Your
vote
is important, regardless of the number of shares you own. Please vote as soon
as
possible to make sure that your shares are represented at the annual meeting.
To
vote your shares, you may complete and return the enclosed proxy card in the
envelope provided or you may be able to submit your proxy or voting instructions
by telephone or the Internet. If you are a holder of record, you may also cast
your vote in person at the annual meeting. If your shares are held in “street
name” (that is, held for your account by a broker or other nominee), you will
receive instructions from your broker or nominee on how to vote your
shares.
We
look
forward to meeting those of you who will be able to attend the annual meeting,
and we appreciate your continued support of Answers.
By
Order
of the Board of Directors,
/s/
Steven
Steinberg
Steven
Steinberg
Secretary
Jerusalem,
Israel
May
8,
2006
IMPORTANT:
Please fill in, date, sign and promptly mail the enclosed proxy card in the
accompanying postage-paid envelope to ensure that your shares are represented
at
the annual meeting. If you attend the annual meeting, you may choose to vote
in
person even if you have previously sent in your proxy card.
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| Director Compensation |
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2006
ANNUAL MEETING
OF
ANSWERS
CORPORATION (THE “COMPANY”)
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Q:
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When
and where will the annual meeting be
held?
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A:
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The
annual meeting will be held at The New Yorker Hotel, 481 Eighth Avenue,
New York, New York 10001, beginning at 12:30 p.m., EDT,
on June 21, 2006.
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Q:
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Who
is making this proxy
solicitation?
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A:
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This
proxy statement is furnished to holders of the Company’s common stock as
of the close of business on May 1, 2006, the record date for the
annual
meeting (the “Record Date”), as part of the solicitation of proxies by the
Company’s board of directors for use at the annual meeting and any
adjournments or postponements of the annual meeting.
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Q:
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What
am I being asked to vote on at the annual
meeting?
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A:
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At
the annual meeting, you will be asked to consider and vote
on:
|
|
·
|
a
proposal to elect two Class II directors to hold office for a three-year
term or until their respective successors are elected and qualified;
and
|
|
·
|
a
proposal to approve
an amendment to the Company's 2005 Incentive Compensation Plan to
increase
the number of shares available for grant under such plan from 850,000
shares to 1,100,000 shares.
|
At
present, we know of no other matters to be presented for stockholder action
at
the annual meeting.
| Q: |
How
does the Company’s board of directors recommend that I
vote?
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|
A:
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Our
board of directors recommends that you vote your shares “FOR”
the election of each of the two nominees named herein to the board
of
directors of Answers and “FOR”
approval of the amendment to the Company’s 2005 Incentive Compensation
Plan.
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| Q: |
What
vote is required to approve each
proposal?
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A:
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In
the election of directors, the two persons receiving the highest
number of
“FOR”
votes will be elected. The proposal regarding the approval
of the amendment of the Company’s 2005 Incentive Compensation
Plan
requires the affirmative “FOR”
vote of a majority of those shares of the Company’s common stock present
in person or represented by properly executed proxies and entitled
to vote
at the annual meeting.
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Q.
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What
is the quorum requirement with respect to the annual
meeting?
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A:
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The
presence, in person or by properly executed proxy, of the holders
of a
majority of the shares of the Company’s common stock entitled to vote at
the annual meeting will constitute a
quorum.
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Q:
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Under
what circumstances will the annual meeting be
adjourned?
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A:
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Although
it is not expected, the annual meeting may be adjourned in the absence
of
a quorum for the purpose of obtaining a quorum. Any adjournment may
be
made without notice, other than by an announcement made at the annual
meeting, by the affirmative vote of a majority of the shares of the
Company’s common stock present in person or by properly executed proxy at
the annual meeting.
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Q:
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What
shares can be voted at the annual
meeting?
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A:
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All
shares of the Company’s common stock that you own as of the Record Date
may be voted by you. You may cast one vote per share of the Company’s
common stock that you held on the Record Date. These shares include
shares
that are: (1) held directly in your name as the stockholder of record
and
(2) held for you as the beneficial owner through a stockbroker, bank
or
other nominee.
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Q:
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What
is the difference between a holder of record and a beneficial owner
of the
Company’s common stock?
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A:
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Most
of our stockholders hold their shares through a stockbroker, bank
or other
nominee, rather than directly in their own name. As summarized below,
there are some distinctions between shares held as a holder of record
and
those beneficially owned.
|
Holders
of Record
If
your
shares of the Company’s common stock are registered directly in your name with
our transfer agent, American Stock Transfer & Trust Company, you are
considered, with respect to those shares, the holder of record, and these proxy
materials are being sent directly to you by the Company. As the holder of
record, you have the right to grant your voting proxy directly to the Company
or
to vote in person at the annual meeting. We have enclosed a proxy card with
this
proxy statement for you to use.
Beneficial
Owners
If
your
shares of the Company’s common stock are held in a stock brokerage account or by
a bank or other nominee, you are considered the beneficial owner of shares
held
in “street name”, and these proxy materials are being forwarded to you by your
broker or nominee who is considered, with respect to those shares, the holder
of
record. As the beneficial owner, you have the right to direct your broker or
nominee how to vote and are also invited to attend the annual meeting. However,
since you are not the holder of record, you may not vote these shares in person
at the annual meeting. Your broker or nominee has enclosed a voting instruction
card with this proxy statement for you to use in directing the broker or nominee
how to vote your shares. You may also vote by telephone as described below
under
“How can I vote my shares without attending the annual meeting?” If you are a
beneficial owner and do not provide the holder of record with voting
instructions, your shares may constitute broker non-votes, as described in
the
section titled “The 2006 Annual Meeting of Stockholders—Voting of Proxies;
Abstentions; and Broker Non-Votes.”
| Q: |
How
can I vote my shares in person at the annual
meeting?
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A:
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Shares
of the Company’s common stock held directly in your name as the holder of
record may be voted in person at the annual meeting. If you choose
to do
so, please bring the enclosed proxy card or proof of identification.
Even
if you plan to attend the annual meeting, we recommend that you vote
your
shares in advance as described below so that your vote will be counted
if
you later decide not to attend the annual meeting. Shares held in
street
name may be voted in person by you only if you obtain a signed proxy
from
the record holder giving you the right to vote the
shares.
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Q:
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How
can I vote my shares without attending the annual
meeting?
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A:
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Whether
you hold shares directly as the holder of record or beneficially
in street
name, you may direct your vote without attending the annual meeting
by
telephone or by completing and mailing your proxy card or voting
instruction card in the enclosed postage pre-paid envelope. You may
also
be able to direct your vote via the Internet. Please refer to the
enclosed
materials for details.
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Q:
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Can
I change my vote after I have voted by
proxy?
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A:
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Yes.
You can change your vote at any time before your proxy is voted at
the
annual meeting by revoking your
proxy.
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If
you
are a holder of record of the Company’s common stock, you may revoke your proxy
by:
|
·
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attending
the annual meeting and voting your shares in person at the annual
meeting.
Your attendance at the annual meeting alone will not revoke your
proxy --
you must also vote at the annual
meeting;
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|
·
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filing
an instrument in writing with the Secretary of the Company stating
that
you would like to revoke your proxy;
or
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·
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filing
another duly executed proxy bearing a later date with the Secretary
of the
Company so that it arrives prior to the annual
meeting.
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You
should send your revocation or new proxy card to the Company’s Secretary at
Answers Corporation, 237 West 35th
Street,
Suite 1101, New York, NY 10001.
If
you
are a beneficial owner of the Company’s common stock and you instructed a broker
or other nominee to vote your shares, you must follow your broker’s directions
for changing those instructions.
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Q:
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What
does it mean if I receive more than one proxy card or voting instruction
card?
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A:
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It
means your shares are registered differently or are in more than
one
account. Please provide voting instructions for each proxy and voting
instruction card your receive.
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Q:
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Where
can I find the voting results of the annual
meeting?
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A:
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We
will announce preliminary voting results at the annual meeting and
publish
final results in our Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 2006.
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If
you
have any questions about any of the proposals to be presented at the annual
meeting or how to submit your proxy card, or if you need additional copies
of
this proxy statement or the enclosed proxy card or voting instructions, you
should contact:
Answers
Corporation
237
West
35th
Street
Suite
1101
New
York,
New York 10001
Telephone:
646-502-4777
Attention:
Bruce D. Smith, VP Investor Relations
We
are
furnishing this proxy statement to our stockholders in connection with the
solicitation of proxies by the Company’s board of directors for use at the 2006
annual meeting of stockholders to be held on June 21, 2006, and at any
adjournment, postponement or continuation thereof. This proxy statement is
first
being furnished to stockholders of the Company on or about May 8, 2006.
The
annual meeting of stockholders will be held on June 21, 2006, at 12:30 p.m.,
EDT, at The New Yorker Hotel, 481 Eighth Avenue, New York, New York
10001.
At
the
annual meeting, you will be asked to consider and vote on:
|
·
|
a
proposal to elect two Class II directors to hold office for a three-year
term or until their respective successors are elected and qualified;
and
|
|
·
|
a
proposal to approve an
amendment to the Company’s 2005 Incentive Compensation Plan to increase
the number of shares available for grant under such plan from 850,000
shares to 1,100,000 shares.
|
At
present, we know of no other matters to be presented for stockholder action
at
the annual meeting.
We
have
fixed the close of business on May 1, 2006 as the Record Date for determination
of stockholders entitled to notice of and to attend and vote at the annual
meeting.
As
of the
close of business on the Record Date, there were 7,728,174 shares of the
Company’s common stock outstanding and entitled to vote at the annual meeting. A
quorum of stockholders is necessary to hold a valid meeting. The
presence, in person or by properly executed proxy, of the holders of a majority
of the shares of the
Company’s
common
stock entitled to vote at the annual meeting will constitute a quorum.
If
a
quorum is not present at the annual meeting, we expect that the meeting will
be
adjourned or postponed to solicit additional proxies. Votes for and against,
abstentions and “broker non-votes” will each count as being present to establish
a quorum. A “broker non-vote” occurs when a broker holding shares in street name
has not received voting instructions from the customer on certain “non-routine”
matters, such as approval of the amendment to the Company’s 2005 Incentive
Compensation Plan, and therefore is barred by the rules of the applicable
securities exchange from exercising discretionary authority to vote those
securities on such proposal.
In
the
election of directors, the two persons receiving the highest number of votes
cast “FOR”
will
be
elected. The approval of the amendment to the Company’s 2005 Incentive
Compensation Plan requires the affirmative “FOR”
vote
of
holders of shares representing a majority of the shares of the Company’s common
stock represented in person or by properly executed proxy and entitled to vote
at the annual meeting.
The
annual
meeting shall be presided over by the Chairman of the Board and the
Company’s
Secretary shall act as secretary of the annual meeting. Inspectors of election
appointed for the annual meeting will tabulate the votes cast by proxy or in
person at the meeting. The inspectors of election will determine whether or
not
a quorum is present.
In
the
election of directors, you may vote “FOR”
each
of
the nominees or your vote may be “WITHHELD”
with
respect to one or both of the nominees. You may vote “FOR,”
“AGAINST”
or
“ABSTAIN”
for
the
other proposal. All
shares of the Company’s common stock represented by properly executed proxies
received before or at the annual meeting will, unless the proxies are revoked,
be voted in accordance with the instructions indicated on those proxies. If
no
instructions are indicated on a properly executed proxy card, the shares will
be
voted “FOR”
the
election of management’s two nominees for membership on the Company’s board of
directors and “FOR”
approval of an amendment to the Company's 2005 Incentive Compensation Plan
to
increase the number of shares available for grant under such plan from 850,000
shares to 1,100,000 shares. You are urged to mark the box on the card to
indicate how to vote your shares.
If
your
shares are held in an account at a brokerage firm or bank, that brokerage firm
or bank will not be permitted to vote your shares with respect to certain
“non-routine” proposals, such
as
approval of the amendment to the Company's 2005 Incentive Compensation
Plan,
unless
you provide instructions as to how to vote your shares. If an executed proxy
card is returned by a broker or bank holding shares which indicates that the
broker or bank has not received voting instructions and does not have
discretionary authority to vote on a certain proposal to be presented at the
annual meeting, the shares will be considered present at the annual meeting
for
purposes of determining the presence of a quorum, but will not be considered
entitled to vote on such proposal. Brokers may, however, vote their clients’
shares on routine matters, such as the election of directors. Please note that
if your shares are held of record by a broker, bank or nominee and you wish
to
vote at the meeting, you will not be permitted to vote in person unless you
first obtain a proxy issued in your name from the record holder.
A
properly executed proxy marked “ABSTAIN”,
although
counted for purposes of determining whether there is a quorum and for purposes
of determining the aggregate voting power and number of shares represented
and
entitled to vote at the annual meeting, will not be voted.
The
grant
of a proxy on the enclosed proxy card does not preclude a holder of record
of
the Company’s common stock from voting in person at the annual meeting. If you
are a holder of record of the Company’s common stock, you may revoke a proxy at
any time prior to your proxy being voted at the annual meeting by:
|
·
|
attending
the annual meeting and voting your shares in person at the annual
meeting.
Your attendance at the annual meeting alone will not revoke your
proxy --
you must also vote at the annual
meeting;
|
|
·
|
filing
an instrument in writing with the Secretary of the Company at Answers
Corporation, 237 West 35th
Street, Suite 1001, New York, New York 10001, stating that you would
like
to revoke your proxy; or
|
|
·
|
filing
another duly executed proxy bearing a later date with the Secretary
of the
Company at Answers Corporation, 237 West 35th
Street, Suite 1001, New York, New York 10001, stating that you would
like
to revoke your proxy, so that it arrives prior to the annual
meeting.
|
If
you
revoke your proxy in writing you must indicate the certificate number and the
number of shares to which such revocation relates and the aggregate number
of
shares represented by such certificate(s). The written notification revoking
your proxy or a later-dated signed proxy card changing your vote must arrive
before the annual meeting takes place in order to be acknowledged and reflected
in the vote.
If
you
are a beneficial owner of the Company’s common stock and you instructed a broker
or other nominee to vote your shares, you must follow your broker’s directions
for changing those instructions.
If
an
adjournment occurs, it will have no effect on the ability of stockholders as
of
the Record Date to exercise their voting rights or to revoke any previously
delivered proxies. The Company does not expect to adjourn the annual meeting
for
a period of time long enough to require the setting of a new record date for
such meeting.
Although
it is not expected, the annual meeting may be adjourned in the absence of a
quorum for the purpose of obtaining a quorum. Any adjournment may be made
without notice, other than by an announcement made at the annual meeting. Any
adjournment or postponement of the annual meeting for the purpose of soliciting
additional proxies will allow the Company’s stockholders who have already sent
in their proxies to revoke them at any time prior to their use.
If
you
hold your shares directly registered in your name with American Stock
Transfer & Trust Company, you may vote by telephone or via the
Internet. To vote by telephone, call 1-800-PROXIES and follow the automated
instructions. Instructions for voting via the Internet are set forth on the
enclosed proxy card if you hold your shares directly registered in your name
with American Stock Transfer & Trust Company. Many banks and brokerage
firms have a process for their beneficial owners to provide instructions over
the telephone or via the Internet. Your voting form from your broker or bank
will contain instructions for voting.
Votes
submitted by telephone or via the Internet must be received by 11:59 p.m.,
Eastern Daylight Time, on June 20, 2006. Submitting your proxy by telephone
or
via the Internet will not affect your right to vote in person should you decide
to attend the annual meeting.
The
Company generally will bear the cost of the solicitation of proxies in the
enclosed form from our stockholders. In addition to solicitation by mail, our
directors, officers and employees may solicit proxies from stockholders by
telephone, telegram, letter, facsimile or in person. Following the original
mailing of the proxies and other soliciting materials, we will request that
brokerage houses and other custodians, nominees and fiduciaries forward copies
of the proxy and other soliciting materials to the beneficial owners of stock
held of record by such persons and request authority for the exercise of
proxies. In those cases, we will reimburse such company’s custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses in connection with
doing so.
ELECTION
OF DIRECTORS
The
Company’s Amended and Restated Certificate of Incorporation provides that the
Company’s board of directors shall consist of not less than five and not more
than nine directors. The Company’s board of directors is currently composed of
seven directors and is divided into three classes serving staggered terms:
Class
I, whose term will expire at the 2008 annual meeting of stockholders,
Class II, whose term expires at the upcoming annual meeting of stockholders
to be held on June 21, 2006 and Class III, whose term will expire at the
annual meeting of stockholders to be held in 2007. At each annual meeting of
stockholders, the successors to directors whose term will then expire will
be
elected to serve from the time of election and qualification until the third
annual meeting following their election. The terms of two of the present
directors expire this year and each of them has been nominated for reelection.
The two nominees identified in the table below are nominated to be elected
at
the 2006 annual meeting for the term expiring at the 2009 annual meeting of
the
stockholders.
At
the
annual meeting, Edward G. Sim and Jerry Colonna will stand for reelection to
serve as Class II directors for a three-year term expiring at the annual meeting
of stockholders in 2009 or until their respective successors are elected and
qualified.
If
a
proxy is properly executed but does not contain voting instructions, it will
be
voted “FOR”
the
election of each of the nominees named below as a director of the Company.
Proxies cannot be voted for a greater number of persons than two. Management
has
no reason to believe that any of the nominees named below will not be a
candidate or will be unable to serve as a director. However, in the event that
any of the nominees should become unable or unwilling to serve as a director,
the proxies may be voted for such substitute nominees as the Company’s board of
directors may designate.
Set
forth
below are the names, ages and descriptions of the backgrounds, as of May 1,
2006, of each of the Company’s current directors, including the two nominees for
Class II directors to be elected at this annual meeting.
|
Name
|
Age
|
|
Position
|
|
Class
I directors whose
terms expire at the 2008 annual meeting of
stockholders:
|
|||
|
Mark
A. Tebbe (2)(3)
|
45
|
|
Director
|
|
Lawrence
S. Kramer (4)(5)
|
56
|
|
Director
|
|
Class
II directors nominated
for election at this annual meeting of
stockholders
|
|||
|
Edward
G. Sim (1)(2)(3)
|
35
|
|
Director
|
|
Jerry
Colonna (1)(3)(4)
|
42
|
|
Director
|
|
Class
III directors whose
terms expire at the 2007 annual meeting of
stockholders:
|
|||
|
Robert
S. Rosenschein
|
52
|
|
Chairman
of the Board
|
|
Yehuda
Sternlicht (2)(5)
|
51
|
|
Director
|
|
Mark
B. Segall (4)(5)
|
43
|
Director
|
|
| (1) |
Director
Nominee - Term to expire in 2008
|
| (2) |
Member
of Audit Committee
|
| (3) |
Member
of Compensation Committee
|
| (4) |
Member
of Nominations / Corporate Governance
Committee
|
| (5) |
Member
of the Financing Committee
|
Nominees
for election for a three-year term expiring at the 2009 annual meeting of
stockholders.
Edward
G. Sim has
served as a director since August 1999. He currently serves as the chairman
of
our Compensation Committee and as a member of our Audit Committee.
Mr. Sim
is a
member and Managing Director of the Dawntreader Group and Dawntreader Funds,
which he co-founded in 1998. From April 1996 to April 1998, Mr. Sim worked
with
Prospect Street Ventures, a New York-based venture capital firm, where he worked
on software and technology investments like 24/7 Media. From June 1994 to April
1996, Mr. Sim worked with J.P. Morgan’s Structured Derivatives Group on the
development of a real-time trading application for global asset allocation.
Mr.
Sim currently serves as a director of DeepNines Technologies, netForensics,
Inc., Greenplum, and Moreover Technologies. Mr. Sim served as a director of
LivePerson from October 2000 to July 2001, Flashbase from June 1999 to June
2000, and Expertcity/GoToMyPC from August 1999 to March 2004. Mr. Sim graduated
with an A.B. in Economics from Harvard College.
Jerry
Colonna
has
served as a director since June 2004. He currently serves as the chairman of
our
Nominating / Corporate Governance Committee and as a member of our Compensation
Committee. From January 2002 until December 2002, Mr. Colonna was a partner
with
JP Morgan Partners, LLC, the private equity arm of JP Morgan Chase & Co.
Since August 1996, Mr. Colonna has been a partner with Flatiron Partners, an
investment company which he co-founded. Mr. Colonna is a member of the board
of
directors of a number of private companies including PlanetOut Inc., as well
as
a number of non-profit organizations including PENCIL—Public Education Needs
Civic Involvement in Learning and NYPower NY. Mr. Colonna holds a B.A. in
English Literature from Queens College at the City University of New
York.
Directors
continuing in office until the 2007 annual meeting of
stockholders.
Robert
S. Rosenschein has
been
Chairman of our board and President since he founded Answers Corporation in
December 1998. From December 1998 to April 2000 and since May 2001, Mr.
Rosenschein has served as our Chief Executive Officer. From May 2000 to April
2001, Mr. Rosenschein served as our Chairman. From 1988 to 1997, Mr. Rosenschein
was Chief Executive Officer of Accent Software International Ltd. (formerly
Kivun), a company that developed multi-lingual software tools, and from 1997
to
1998, Mr. Rosenschein was Chief Technical Officer of Accent Software
International Ltd. Mr. Rosenschein graduated with a B.Sc. in Computer Science
from the Massachusetts Institute of Technology and received the Prime Minister
of Israel’s Award for Software Achievement in 1997.
Yehuda
Sternlicht
has
served as a director since June 2004. He currently serves as the chairman of
our
Audit Committee and as a member of our Financing Committee. Since November
2003,
Mr. Sternlicht has been an independent financial consultant and from January
2004 he also serves as Chief Financial Officer of NanoVibronix Inc. From July
1992 until November 2003, Mr. Sternlicht was employed by Savient
Pharmaceuticals, Inc. (“Savient”) and from January 1993 to December 2002 he
served as Savient’s Chief Financial Officer. Prior to his years of employment
with Savient, Mr. Sternlicht served in several financial and accounting
positions in public and private companies and in a large CPA firm. Mr.
Sternlicht is qualified as a Certified Public Accountant in the State of Israel
and has a BA degree in Accounting and Economy from The Hebrew University,
Israel.
Mark
B. Segall has
served as a director since December 2004. He currently serves as the chairman
of
our Financing Committee and as a member of our Nominating / Corporate Governance
Committee. Mr. Segall is the founder and Senior Managing Director of Kidron
Corporate Advisors, LLC, a New York based mergers and acquisitions corporate
advisory boutique serving emerging growth companies primarily in the technology
and financial services sectors. From 2001 to 2003, Mr. Segall was the Chief
Executive Officer of Investec, Inc., the U.S. investment banking operations
of
the Investec Group, a U.K. and African based specialist bank. Previously he
was
a partner at the law firm of Kramer, Levin and Naftalis LLP, specializing in
cross-border mergers and acquisitions and capital markets activities. Mr. Segall
currently serves as a director of the Escala Group, the Comtech Group and
Integrated Asset Management. Mr. Segall received his B.A. from Colombia
University and a J.D. from New York University Law School. Mr. Segall is a
designee of Maxim Group LLC, in accordance with our underwriting agreement
with
Maxim Group LLC.
Directors
continuing in office until the 2008 annual meeting of
stockholders.
Mark
A. Tebbe has
served as a director since December 1998. He currently serves as a member of
our
Audit Committee and Compensation Committee. Since February 2002, Mr. Tebbe
has
been Chairman of Techra Networks LLC, a technology-oriented consulting firm.
From August 1984 to January 2002, Mr. Tebbe founded and served as Chairman
of
Lante Corporation, a technology consulting firm. Besides several non-profit
and
civic organizations, Mr. Tebbe is a board member of SBI Group, Elexos Corp.
and
Selective Search. Mr. Tebbe is a former director of Octus Inc. and Accent
Software International Ltd. Mr. Tebbe graduated with a B.S. in Computer Science
from the University of Illinois at Urbana/Champaign.
Lawrence
S. Kramer
has
served as a director since May 2005. He currently serves as a member of our
Financing Committee and of our Nominating / Corporate Governance Committee.
Since April 2005, Mr. Kramer serves as President of CBS Digital Media,
overseeing content and sales of the network's disparate Web properties,
including CBS.com, CBSNews.com, SportsLine.com and UPN.com. Formerly, Mr. Kramer
was the founder, Chairman and CEO of MarketWatch, Inc., acquired in 2005 by
Dow
Jones & Company. He has served on the Board of Directors of MarketWatch
since the company was founded in 1997 and served as its Chairman of the Board
between 1999 and March 2005. Prior to this, between 1994 and 1997, Mr. Kramer
served as Vice President of News, Sports and Marketing at Data Broadcasting
Corporation. At DBC he created a Sports and News Division, including DBC News,
the predecessor company to MarketWatch, Inc. From 1991 to 1994, Mr. Kramer
held
the position of founder, President & Executive Editor of DataSport Inc.
Prior to founding DataSport he spent more than 20 years in journalism as a
reporter and editor. During his distinguished career in the newspaper business,
he has won a National Press Club Award, Gerald E. Loeb Award and Associated
Press Awards for reporting. A past Guest Lecturer at the Harvard Business School
for 10 years, Mr. Kramer holds an MBA degree from Harvard and a Bachelor of
Science degree in Journalism and Political Science from Syracuse
University.
Our
board
of directors has determined that all of the Company’s directors, except Robert
S. Rosenschein, are currently “independent” in accordance with the applicable
listing standards of the NASDAQ Stock Market as currently in
effect.
During
the year ended December 31, 2005, the Company’s board of directors held eight
meetings. The board of directors has an Audit Committee, a Compensation
Committee, a Nominations / Corporate Governance Committee and a Financing
Committee. During the year ended December 31, 2005, each committee held the
following number of meetings:
|
·
|
Audit
Committee - six meetings
|
|
·
|
Compensation
Committee - three meetings
|
|
·
|
Nominations
/ Corporate Governance Committee - three
meetings
|
|
·
|
Financing
Committee - two meetings
|
During
the year ended December 31, 2005, no director attended fewer than 75% of the
aggregate of the total number of meetings of the Company’s board of directors
(held during the period for which he was a director) and the total number of
meetings held by all committees of the Company’s board of directors on which he
served (held during the period that he served).
Code
of Ethics.
Our
board
of directors has adopted a Code of Ethics and Business Conduct (the “Code”) that
outlines the principles of legal and ethical business conduct under which the
Company does business. The Code, which is applicable to all directors, employees
and officers of the Company, is available at the Company’s Website at
www.answers.com.
Any
substantive amendment or waiver of the Code may be made only by the Company’s
board of directors or a committee of the board, and will be promptly disclosed
to the Company’s stockholders on our website. In addition, disclosure of any
waiver of the Code will also be made by the filing of a Current Report on Form
8-K with the SEC.
Audit
Committee.
The
Company’s board of directors has also adopted a written charter for each of the
Audit Committee, Compensation Committee and Nominations and Governance
Committee. Each charter is available on the Company’s
Website.
The
Audit
Committee was established in May 2004 and serves at the pleasure of the
Company’s board of directors. The Audit Committee monitors the integrity of the
Company’s financial statements, reviews the qualifications and independence of
the Company’s auditors, monitors the performance of the Company’s internal audit
function and independent registered public accounting firm, and ensures
compliance of all applicable legal and regulatory requirements. The Audit
Committee has the sole authority to appoint or replace the independent
registered public accounting firm and is directly responsible for the
compensation and oversight of the work of the independent registered public
accounting firm. The Audit Committee also pre-approves all auditing services
and
permitted non-audit services (including the fees and terms thereof) to be
performed for the Company by its independent registered public accounting
firm.
The
members of the Audit Committee during the year ended December 31, 2005 were
Messrs. Yehuda Sternlicht, Mark A. Tebbe and Edward G. Sim. The Company’s board
of directors has determined that each member of the Audit Committee currently
meets the independence criteria set forth in the applicable rules of the NASDAQ
Stock Market and the SEC for audit committee membership. The board has also
determined that all members of the Audit Committee possess the level of
financial literacy required by applicable NASDAQ Stock Market and SEC rules.
The
Company’s board of directors has determined that Mr. Sternlicht is qualified as
an “audit committee financial expert” as defined by the SEC. For additional
information about the Audit Committee, see “Report of the Audit Committee”
below.
Compensation
Committee.
The
Compensation Committee was established in May 2004 and serves at the pleasure
of
the Company’s board of directors. The Compensation Committee reviews and
approves the Company’s salary and benefits policies, including compensation of
the Chief Executive Officer or any severance or similar termination payments
to
be made to current or former executive officers or members of senior management.
It is also within the charter of the Compensation Committee to administer our
incentive compensation plans and equity-based compensation plans, and recommend
and approve grants of stock options under such plans. The members of the
Compensation Committee between January 1, 2005 and July 13, 2005 were Messrs.
Mark A. Tebbe, Edward G. Sim and former director, Michael Eisenberg and between
July 14, 2005 and December 31, 2005, Messrs. Edward G. Sim, Mark A. Tebbe and
Jerry Colonna. As of July 14, 2005, Mr. Sim serves as the chairman of the
Compensation Committee. The Company’s board of directors has determined that
each of the directors who comprise the Compensation Committee is currently
independent for purposes of the applicable NASDAQ Stock Market
rules.
Nominations
/ Corporate Governance Committee.
The
Nominations / Corporate Governance Committee was established in May 2004, and
serves at the pleasure of the Company’s board of directors. The
purpose of the Nominations / Corporate Governance Committee is to identify
individuals believed to be qualified to become board members and to recommend
that the board of directors select the director nominees to stand for election
at the annual meeting of stockholders or, if applicable, at a special meeting
of
stockholders. It is also within the charter of the Nominations / Corporate
Governance Committee to develop and recommend to the board of directors a set
of
corporate governance principles applicable to the Company, standards to be
applied in making determinations as to the absence of material relationships
between the Company and a director and to oversee the selection and composition
of committees of the board of directors and, as applicable, oversee management
continuity planning processes. The members of the Nominations / Corporate
Governance Committee between January 1, 2005 and July 13, 2005 were Messrs.
Mark
A. Tebbe, Edward G. Sim and Jerry Colonna and between July 14, 2005 and December
31, 2005, Messrs. Jerry Colonna, Mark Segall and Lawrence S. Kramer. As of
July
14, 2005, Mr. Colonna serves as the chairman of the Nominations / Corporate
Governance Committee. The Company’s board of directors has determined that each
of the directors who comprise the Nominations / Corporate Governance Committee
is currently independent for purposes of the applicable NASDAQ Stock Market
rules.
Financing
Committee.
The
Financing Committee
was
established in July 2005, and serves at the pleasure of the Company’s board of
directors. The purpose of the Financing Committee is to review and discuss
with
management financing opportunities that the Company may consider from time
to
time, to evaluate the business merits of any potential mergers and acquisitions
and to provide the board of directors with a recommendation as to the terms
and
conditions of any potential extraordinary transactions, in consultation with
the
management team, legal advisors and financial consultants of the Company. The
members of the Financing Committee during the year ended December 31, 2005
were
Messrs. Mark B. Segall, Yehuda Sternlicht and Lawrence S. Kramer. Mr. Segall
serves as the Chairman of the Financing Committee.
The
Nominations / Corporate Governance Committee is responsible for, among other
things, the selection, or the recommendation to the Company’s board of directors
for selection, of nominees for election as directors. The Nominations /
Corporate Governance Committee shall make director nominations as a committee
or
make recommendations to the board with respect to director nominations. Towards
the end the Company’s 2005 fiscal year, the Nominations / Corporate Governance
Committee recommended that the board of directors adopt, and the board of
directors subsequently adopted, Procedures for the Recommendation by
Stockholders of Director Candidates (“Nomination Procedures”). The Nomination
Procedures are attached to this proxy statement as Annex
A.
Under
the Nomination Procedures, the Nominations / Corporate Governance Committee
will
only consider nominations properly submitted by stockholders in accordance
the
rules stated therein.
If
the
Nominations / Corporate Governance Committee believes that the Company’s board
of directors requires additional candidates for nomination, it may engage,
as
appropriate, a third party search firm to assist in identifying qualified
candidates. The process may also include interviews and all necessary and
appropriate inquiries into the background and qualifications of possible
candidates.
Until
July 31, 2005, non-employee directors received an annual fee of $15,000, plus
$500 for attendance at each meeting of our board of directors and reimbursement
for reasonable travel expenses. In addition to such base fees, members of the
board’s Audit Committee were paid an annual fee of $5,000 plus reimbursement for
reasonable travel expenses, and the chairman of the Audit Committee was paid
an
annual fee of $10,000 plus reimbursement for reasonable travel
expenses.
Commencing
August 1, 2005, non-employee directors receive an annual base fee of $20,000
and
reimbursement for reasonable travel expenses, with no additional fee rendered
for attendance at board meetings. In addition to their base fees, directors
receive annual fees for membership on our committees, pursuant to the fee
schedule set forth below:
|
|
Director
fee base
$
|
Audit
membership
$
|
Compensation
membership
$
|
Governance
membership
$
|
Financing
membership
$
|
Audit
Chair
$
|
Other
Chair
$
|
Total
$
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Mr.
Colonna
|
20,000
|
—
|
2,500
|
2,500
|
—
|
—
|
|
2,500
|
27,500
|
||||||||||||||||
|
Mr.
Kramer
|
20,000
|
—
|
—
|
2,500
|
2,500
|
—
|
—
|
25,000
|
|||||||||||||||||
|
Mr.
Segall
|
20,000
|
—
|
—
|
2,500
|
2,500
|
—
|
2,500
|
27,500
|
|||||||||||||||||
|
Mr.
Sim
|
20,000
|
5,000
|
2,500
|
—
|
—
|
—
|
2,500
|
30,000
|
|||||||||||||||||
|
Mr.
Sternlicht
|
20,000
|
5,000
|
—
|
—
|
2,500
|
7,500
|
—
|
35,000
|
|||||||||||||||||
|
Mr.
Tebbe
|
20,000
|
5,000
|
2,500
|
—
|
—
|
—
|
27,500
|
||||||||||||||||||
|
Total
|
120,000
|
15,000
|
7,500
|
7,500
|
7,500
|
7,500
|
7,500
|
172,500
|
|||||||||||||||||
The
Company encourages stockholder communications with the Company’s board of
directors and/or individual directors. Stockholders who wish to communicate
with
Company directors should send their communications to the care of Steven
Steinberg, Chief Financial Officer and Secretary, Answers Corporation, at
Jerusalem Technology Park, Building 98, Jerusalem 91481 Israel; Fax: +972 2
649-5001, or at 237 West 35th
Street,
Suite 1001, New York, New York 10001; Fax: 646-502-4778. Communications
regarding financial or accounting policies should be sent to the attention
of
the Chairman of the Audit Committee. Mr. Steinberg will maintain a log of such
communications and will transmit as soon as practicable such communications
to
the Chairman of the Audit Committee or to the identified individual director(s),
although communications that are abusive, in bad taste or that present safety
or
security concerns may be handled differently, as determined by Mr.
Steinberg.
The
Company will make every effort to schedule its annual meeting of stockholders
at
a time and date to accommodate attendance by directors taking into account
the
directors’ schedules. All directors are encouraged to attend the Company’s
annual meeting of stockholders. The
Company does not have a formal policy regarding director attendance at our
stockholder annual meetings, and three of our seven directors attended the
2005
Annual Meeting of Stockholders.
The
terms
of two of the Company’s incumbent Class II directors will expire on the date of
the upcoming annual meeting. Accordingly, two persons are to be elected to
serve
as Class II directors of our board of directors at the annual meeting.
Management’s nominees for election by the Company’s stockholders to those two
positions are Edward G. Sim and Jerry Colonna. Please see “Director Nominees”
above for information concerning each of the nominees.
If
a
quorum is present at the annual meeting, the two nominees for Class II directors
receiving the highest number of votes cast “FOR”
will
be
elected as directors, each to serve until the Company’s 2009 annual meeting of
stockholders or until their respective successors are elected and qualified.
Abstentions and broker non-votes will have no effect on the outcome of the
election of directors.
The
Company’s board of directors unanimously recommends that you vote “FOR” the
election of each of the nominees named above.
THE
PROPOSED AMENDMENT TO THE COMPANY’S
2005
INCENTIVE COMPENSATION PLAN
At
the
Company’s previous annual meeting of stockholders held on July 12, 2005, Company
stockholders approved the adoption of the Answers Corporation 2005 Incentive
Compensation Plan, which we refer to as the 2005 Plan. The terms of the 2005
Plan provide for grants of stock options, stock appreciation rights or SARs,
restricted stock, deferred stock, other stock-related awards and performance
awards that may be settled in cash, stock or other property.
The
main
purpose of the 2005 Plan is to provide a means for the Company and its
subsidiaries, which we refer to as Related Entities, to attract key personnel
to
provide services to the Company and the Related Entities, as well as, to provide
a means whereby those key persons can acquire and maintain stock ownership,
thereby strengthening their commitment to the welfare of the Company and
promoting the mutuality of interests between participants and the Company’s
stockholders. A further purpose of the 2005 Plan is to provide participants
with
additional incentive and reward opportunities designed to enhance the profitable
growth of the Company and its Related Entities, and provide participants with
annual and long term performance incentives to expend their maximum efforts
in
the creation of stockholder value. The persons eligible to receive awards under
the 2005 Plan are the officers, directors, employees, consultants and other
persons who provide services to the Company and the Related Entities.
The
total
number of shares of the Company’s common stock reserved and available for
delivery under the 2005 Plan is currently 850,000. The effective date of the
2005 Plan was July 18, 2005. As of May 1, 2006, 462,300 stock options have
been
granted under the 2005 Plan.
Stockholders
are hereby requested to approve an amendment to the 2005 Plan to add an
additional 250,000 shares to the number of shares of Common Stock issuable
under the 2005 Plan.
The
purpose of the amendment is to ensure that the Company will have a sufficient
reserve of common stock available under the 2005 Plan to provide eligible
employees and potential future hires of the Company and Related Entities with
the opportunity to purchase shares of Common Stock. The Board of Directors
believes that the number of shares currently available for issuance under the
2005 Plan is insufficient to continue providing our employees and future hires
with the opportunity to acquire a proprietary interest in the Company and
thereby attract, motivate, and retain the best available talent suitable for
our
success.
The
affirmative vote of holders of shares representing a majority of the shares
of
the Company’s common stock represented in person or by properly executed proxy
and entitled to vote at the annual meeting is required to approve the amendment
to the 2005 Plan. Because such amendment is considered a non-routine proposal
under applicable NASDAQ Stock Market rules, a brokerage firm or bank will not
be
permitted to vote your shares with respect to this proposal unless you provide
instructions as to how to vote your shares. If an executed proxy card is
returned by a broker or bank holding shares which indicates that the broker
or
bank has not received voting instructions regarding this proposal, your shares
will be considered present at the annual meeting for purposes of determining
the
presence of a quorum, but will not be considered entitled to vote on this
proposal. Abstentions will be counted as present for purposes of determining
if
a quorum is present, but will have the effect of votes against this
proposal.
The
Company’s board of directors unanimously recommends a vote “FOR” Proposal No.
2.
The
table
and accompanying footnotes set forth certain information as of May 1, 2006
with
respect to the ownership of our common stock by:
|
·
|
each
person or group who is known to us to beneficially own more than
5% of our
outstanding common stock;
|
|
·
|
each
of our directors;
|
|
·
|
our
chief executive officer and other executive officers whose total
compensation exceeded $100,000 during the year ended December 31,
2005;
and
|
|
·
|
all
of our directors and executive officers as a
group.
|
A
person
is deemed to be the beneficial owner of securities that can be acquired within
60 days from the Record Date, as a result of the exercise of options and
warrants or the conversion of convertible securities. Accordingly, common stock
issuable upon exercise of options and warrants that are currently exercisable
or
exercisable within 60 days of the Record Date have been included in the table
with respect to the beneficial ownership of the person or entity owning the
options and warrants, but not with respect to any other persons or entities.
Applicable
percentage of ownership for each holder is based on 7,728,174 shares of common
stock outstanding on the Record Date, plus any presently exercisable stock
options and warrants held by each such holder, and options, warrants and bridge
notes held by each such holder that will become exercisable or convertible
within 60 days after the Record Date. Unless otherwise indicated, we believe
that all persons named in the table have sole voting and investment power with
respect to all shares of common stock beneficially owned by them.
|
Name
and Address of Beneficial Owner (1)
|
|
Shares
Beneficially
Owned
|
|
Percentage
of
Common
Stock
|
||
|
Executive
Officers and Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
S. Rosenschein
c/o
Answers Corporation, Jerusalem Technology Park, The Tower, Jerusalem
91481
Israel
|
|
467,646
|
(2)
|
|
6.1
|
|
|
Steven
Steinberg
c/o
Answers Corporation, Jerusalem Technology Park, The Tower, Jerusalem
91481
Israel
|
|
56,904
|
(3)
|
|
*
|
|
|
Jeff
Schneiderman
c/o
Answers Corporation, Jerusalem Technology Park, The Tower, Jerusalem
91481
Israel
|
|
71,179
|
(4)
|
|
*
|
|
|
Jeffrey
S. Cutler
|
|
62,500
|
(5)
|
|
*
|
|
|
Bruce
D. Smith
|
|
5,000
|
(6)
|
|
*
|
|
|
Jerry
Colonna
|
|
14,350
|
(7)
|
|
*
|
|
|
Lawrence
S. Kramer
|
|
7,772
|
(8)
|
|
*
|
|
|
Mark
B. Segall
|
|
10,762
|
(9)
|
|
*
|
|
|
Edward
G. Sim
|
|
18,238
|
(10)
|
|
*
|
|
|
Yehuda
Sternlicht
|
|
14,350
|
(7)
|
|
*
|
|
|
Mark
A. Tebbe
|
|
42,660
|
(11)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers
|
|
|
|
|
|
|
|
As
a group (11 individuals):
|
|
771,361
|
|
|
10.0
|
|
|
|
|
|
|
|
|
|
|
5%
or greater stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brainboost
Partnership
c/o
Assaf Rozenblatt
60
West 68th
Street, Apt. 10G, New York, NY 10023
|
|
439,000
|
(12)
|
|
5.7
|
|
|
Trellus
Management Company, LLC
350
Madison Avenue, 9th Floor
New
York, New York 10017
|
|
475,000
|
(13)
|
|
6.2
|
|
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(1)
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Unless
otherwise indicated, the business address of each of the following
is c/o
Answers Corporation, 237 West 35th
Street, Suite 1101, New York, NY 10001.
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(2)
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Consists
of 321,460 shares of common stock and 146,186 shares of common stock
issuable upon exercise of options.
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(3)
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Consists
of 56,904 shares of common stock issuable upon exercise of
options.
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(4)
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Consists
of 71,179 shares of common stock issuable upon exercise of
options.
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(5)
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Consists
of 62,500 shares of common stock issuable upon exercise of
options.
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(6)
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Includes
5,000 shares of common stock.
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(7)
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Consists
of 14,350 shares of common stock issuable upon exercise of
options.
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(8)
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Consists
of 7,772 shares of common stock issuable upon exercise of
options.
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(9)
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Consists
of 10,762 shares of common stock issuable upon exercise of
options.
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10)
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Consists
of 916 shares of common stock and 17,322 shares of common stock issuable
upon exercise of options.
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11)
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Consists
of 21,721 shares of common stock and 20,939 shares of common stock
issuable upon exercise of options.
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12)
|
Based
on information included on Form 13-G filed with the SEC on December
23,
2005.
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13)
|
Based
on information included on Form 13-G filed with the SEC on February
15,
2006
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| * |
less
than 1%
|
Set
forth
below are the names, ages and descriptions of the backgrounds, as of May 1,
2006, of each of the current executive officers of the Company.
|
Name
|
Age
|
|
Position
|
|
|
Robert
S. Rosenschein
|
52
|
|
Chief
Executive Officer, President and Chairman of the Board
|
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Steven
Steinberg
|
45
|
|
Chief
Financial Officer and Secretary
|
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Jeff
Schneiderman
|
42
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Chief
Technical Officer
|
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Jeffrey
S. Cutler
|
43
|
|
Chief
Revenue Officer
|
|
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Bruce
D. Smith
|
45
|
|
Vice-President,
Investor Relations and Strategic
Development
|
Robert
S. Rosenschein has
been
Chairman of our board and President since he founded Answers Corporation in
December 1998. From December 1998 to April 2000 and since May 2001, Mr.
Rosenschein has served as our Chief Executive Officer. From May 2000 to April
2001, Mr. Rosenschein served as our Chairman. From 1988 to 1997, Mr. Rosenschein
was Chief Executive Officer of Accent Software International Ltd. (formerly
Kivun), a company that developed multi-lingual software tools, and from 1997
to
1998, Mr. Rosenschein was Chief Technical Officer of Accent Software
International Ltd. Mr. Rosenschein graduated with a B.Sc. in Computer Science
from the Massachusetts Institute of Technology and received the Prime Minister
of Israel’s Award for Software Achievement in 1997.
Steven
Steinberg joined
Answers Corporation in December 2002 as Vice President of Finance and became
our
Chief Financial Officer and Secretary in January 2004. From January 2001 to
November 2002, he was Vice President of Finance at Percite Information
Technologies, Ltd., a supply-chain software company. From November 1998 to
December 2000, Mr. Steinberg was Controller of Albar Financial Services Ltd.,
an
automobile finance and leasing company. Previously, he was the Chief Financial
Officer of the New York Operations of Health Partners, Inc., and worked for
ten
years at the New York offices of the accounting firm Coopers and Lybrand where
he was an audit manager. Mr. Steinberg graduated with a B.B.A. from Florida
International University.
Jeff
Schneiderman has
been
our Chief Technical Officer since March 2003. From January 1999 until February
2003, Mr. Schneiderman was our Vice President of Research and Development.
From
November 1991 to November 1998, Mr. Schneiderman was employed at Accent Software
International Ltd., where he served as Vice President of Engineering from
October 1996 to March 1998 and as Vice President of Product Development from
March 1998 to November 1998. Mr. Schneiderman also has held development
positions at AT&T Bell Labs and the Whitewater Group. Mr. Schneiderman
graduated with a B.S. in Computer Science from the University of Illinois at
Urbana/Champaign and a M.S. in Computer Science from Illinois Institute of
Technology.
Jeffrey
S. Cutler
has been
our Chief Revenue Officer since March 15, 2005. From July 2003 to March 2005
he
served as General Manager of the Software Information and Industry Association’s
Content Division. Prior to that, between October 2001 and January 2003, Mr.
Cutler served as President and Chief Executive Officer for Inlumen, Inc. From
April 1999 to October 2001 Mr. Cutler was Senior Vice President, General Manager
and Chief Operating Officer of Office.com, a leading online business service
co-owned by Winstar Communications and CBS/Viacom, where he also served as
Vice
President Business Development between March 1998 and April 1999. Prior to
that,
between March 1997 and March 1998 he was Vice President of Sales and Marketing
for Winstar Telebase, a leading channel for premium business content. Between
September 1996 and March 1997, he served as Director of Sales for N2K Telebase,
prior to its acquisition by Winstar. Mr. Cutler also spent two years as Director
of Trading Services at Thomson Financial Services' CDA/Spectrum between December
1994 and August 1996, and worked at CompuServe from March 1986 to July 1994,
managing the distribution of information, network and email/intranet services
to
the financial services industry. Mr. Cutler graduated with a BA in Computer
Science and Finance from Rutgers College, Rutgers University in May
1985.
Bruce
D. Smith
has been
our Vice President of Investor Relations and Strategic Development since July
2005. From 1999 to July 2005, Mr. Smith was a Managing Director of Archery
Capital, a New York based investment firm. Between June 1998 and July 1999,
Mr.
Smith was the Senior Internet Analyst at Jefferies & Company, where he was
responsible for coverage of the industry as well as individual companies. He
also maintained coverage of the Internet industry at Merrill Lynch & Co
prior to Jefferies. In addition, Mr. Smith was a Senior Technology Analyst
at
Morgan Stanley Asset Management (a division of Morgan Stanley & Co.). Mr.
Smith has a Bachelor of Business Administration (BBA), Magna Cum Laude, from
Bernard M. Baruch College of the City University of New York. He is a Chartered
Financial Analyst (CFA) and member of the New York Society of Security
Analysts.
Executive
Compensation
The
table
below summarizes the compensation earned for services rendered to us in all
capacities for the fiscal year ended December 31, 2005 by our Chief Executive
Officer and any other officer whose 2005 compensation exceeded $100,000. No
other individuals employed by us received a salary and bonus in excess of
$100,000 during 2005.
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|||||||||||||||
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Annual
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|
Long-term
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||||||||||||||||
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|
Compensation
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|
Compensation
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||||||||||||||||
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|||||||||||||||
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Awards
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Payouts
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|||||||||||||||
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Securities
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|
All
Other
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|||||||||||||||
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|
|
Underlying
|
LTIP
|
Salaried
|
|||||||||||||||
|
Name
and Principal
|
Fiscal
|
Salary
|
Bonus
|
Options/
|
Payouts
|
Compensation(1)
|
|||||||||||||||
|
Position
|
Year
|
($)
|
($)
|
SARs
(#)
|
($)
|
($)
|
|||||||||||||||
|
Robert
Rosenschein
|
2005
|
189,924
|
—
|
—
|
—
|
58,442
|
(1 | ) | |||||||||||||
|
Chief
Executive Officer,
|
|||||||||||||||||||||
|
President
and Chairman
|
|||||||||||||||||||||
|
of
the Board
|
|||||||||||||||||||||
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|
|||||||||||||||||||||
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Steven
Steinberg
|
2005
|
125,317
|
—
|
—
|
—
|
26,958
|
(1 | ) | |||||||||||||
|
Chief
Financial Officer
|
|||||||||||||||||||||
|
|
|||||||||||||||||||||
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Jeff
Schneiderman
|
2005
|
107,342
|
—
|
—
|
—
|
25,568
|
(1 | ) | |||||||||||||
|
Chief
Technical Officer
|
|||||||||||||||||||||
|
|
|||||||||||||||||||||
|
Jeffrey
S. Cutler (2)
|
2005
|
178,990
|
30,000
|
—
|
—
|
26,370
|
(4 | ) | |||||||||||||
|
Chief
Revenue Officer
|
|||||||||||||||||||||
|
|
|||||||||||||||||||||
|
Bruce
D. Smith (3)
|
2005
|
74,936
|
—
|
—
|
—
|
14,760
|
(4
|
)
|
|||||||||||||
|
VP
Investor Relations
and
Strategic Development
|
|||||||||||||||||||||
|
(1)
|
Includes
payments made for the Israeli equivalent of social security, pension
and
disability insurance premiums, payments made in lieu of statutory
severance, payments to continuing education plans, payouts for accrued
unused vacation and company vehicle benefits.
|
|
(2)
|
Commenced
employment on March 15, 2005.
|
|
(3)
|
Commenced
employment on July 27, 2005.
|
|
(4)
|
Includes
payments made for health benefits, 401(k) Plan contributions,
employee-related taxes and other
benefits.
|
Our
named
officers routinely receive other benefits from us that are customary to
similarly situated companies. We have concluded, after reasonable inquiry,
that
the aggregate amount of these benefits in each of the years indicated did not
exceed the lesser of $50,000 or 10% of the compensation of any named
officer.
We
provide for direct grants or sales of common stock, and common stock options
to
employees and non-employees through stock option plans. Unless specifically
approved by the board of directors in special cases, the exercise price of
an
employee incentive stock option shall not be less than 100% of the fair market
value of a share on the date of grant. The exercise price of a nonstatutory
stock option shall not be less than 85% of the fair market value of a share
on
the date of grant. Our stock options generally vest over four years with 25%
vesting after the first year and the remaining 75% vesting in equal monthly
amounts over the following thirty-six month period. Stock options under all
plans, with the exclusion of our 2005 Incentive Compensation Plan, have a term
of ten years. Stock options granted pursuant to our 2005 Incentive Compensation
Plan have a term of six years.
We
granted a total of 545,650 stock options to employees and 20,000 stock options
to non-employees, during the fiscal year ended December 31, 2005, of which
11,944 were cancelled. The following table sets forth the number of stock
options granted to the named executive officers in fiscal year 2005.
|
Name
|
Number
of
Shares
Underlying
Options
Granted
|
Date
of
Option
Grant
|
%
of Total
Options
Granted
to
Employees
in
Fiscal
Year
|
Exercise
Price
|
Expiration
Date
|
|||||||||||
|
Jeffrey
S. Cutler
|
200,000
|
3/15/2005
|
36.7%
|
|
$
|
20.35
|
3/15/2015
|
|||||||||
|
Bruce
D. Smith
|
75,000
|
7/27/2005
|
13.7%
|
|
$
|
15.35
|
7/27/2015
|
|||||||||
The
following table sets forth the value of unexercised “in-the-money” options held
that represents the positive difference between the exercise price and the
market price of $11.48 at December 31, 2005. No named executive officer
exercised any options during 2005.
|
Number
of Securities Underlying Unexercised in-the-money
Options
|
Value
of in-the-money
|
||||||
| Name |
Exercisable/
Unexercisable
|
Options
Exercisable/ Unexercisable
|
|||||
|
Robert
Rosenschein
|
115,941
/ 126,023
|
$
|
743,831
/ 808,513
|
||||
|
Jeff
Schneiderman
|
59,630
/ 16,681
|
$
|
563,018
/ 103,923
|
||||
|
Steven
Steinberg
|
38,360
/ 35,779
|
$
|
356,028
/ 278,732
|
Mr.
Rosenschein
is
employed as our President and Chief Executive Officer pursuant to a five-year
employment agreement that commenced on January 1, 2002 and was amended and
restated as of January 8, 2004. Mr. Rosenschein’s annual base salary was set at
$198,000 during 2005 and adjusted to $217,000 as of January 1, 2006, in
accordance with his amended employment agreement. According to his amended
agreement, Mr. Rosenschein’s annual base salary is subject to a 10% annual
increase and an annual bonus to be determined at the discretion of our board
of
directors. If we terminate Mr. Rosenschein for any reason other than cause,
we
are required to pay him a lump sum of $150,000 regardless of how much time
remains in the term of his employment agreement less the severance pay portion
of his Manager’s Insurance Policy (the “Policy”). If the Policy is greater than
$150,000, then Mr. Rosenschein will be entitled to the entire amount payable
under the Policy. At the time Mr. Rosenschein’s employment agreement was amended
and restated, 241,964 options were granted to Mr. Rosenschein under the 2003
Stock Option Plan. In the event of a change in control, we will accelerate
the
vesting of 50% of any options granted to Mr. Rosenschein that have not vested
as
of the effective date of the change of control. If, within twelve (12) months
after such change in control, Mr. Rosenschein is terminated without cause,
any
unvested options that were granted to Mr. Rosenschein will vest immediately
upon
the effective date of the termination. Mr. Rosenschein has agreed to refrain
from competing with us for a period of two (2) years following the termination
of his employment.
Mr.
Steinberg
is employed
as our Chief Financial Officer pursuant to an employment agreement that
commenced on April 1, 2004. Mr. Steinberg’s annual base salary was set at
$130,800 between January 1, 2005 and mid-September 2005, and adjusted to
$140,000 commencing September 20, 2005. Mr. Steinberg or we may terminate the
employment agreement by providing three months written notice. If we terminate
Mr. Steinberg without cause, we shall extend the period during which Mr.
Steinberg may exercise his options granted after the date of his employment
agreement by one (1) year from the effective date of Mr. Steinberg’s
termination. In the event of a change in control, we will accelerate the vesting
of 50% of any options granted to Mr. Steinberg that have not vested as of the
effective date of the change of control. If, within twelve (12) months after
such change in control, Mr. Steinberg is terminated without cause, Mr. Steinberg
is entitled to four (4) months written notice and any unvested options that
were
granted to Mr. Steinberg will vest immediately upon the effective date of the
termination. Mr. Steinberg has agreed to refrain from competing with us for
a
period of twelve (12) months following the termination of his employment.
Mr.
Schneiderman
is
employed as our Chief Technical Officer pursuant to an employment agreement
that
commenced on April 1, 2004. Mr. Schneiderman’s annual base salary was set at
$117,480 between January 1, 2005 and mid-September 2005, and adjusted to
$140,000 commencing September 20, 2005. Mr. Schneiderman or we may terminate
the
employment agreement by providing three months written notice. If we terminate
Mr. Schneiderman without cause, we shall extend the period during which Mr.
Schneiderman may exercise his options granted after the date of his employment
agreement by one (1) year from the effective date of Mr. Schneiderman’s
termination. In the event of a change in control, we will accelerate the vesting
of 50% of any options granted to Mr. Schneiderman subsequent to his employment
agreement that have not vested as of the effective date of the change of
control. If, within twelve (12) months after such change in control, Mr.
Schneiderman is terminated without cause, Mr. Schneiderman is entitled to four
(4) months written notice and any unvested options that were granted to Mr.
Schneiderman subsequent to the date of his employment agreement will vest
immediately upon the effective date of the termination. Mr. Schneiderman has
agreed to refrain from competing with us for a period of twelve (12) months
following the termination of his employment.
Mr.
Cutler
is
employed as our Chief Revenue Officer pursuant to an employment agreement that
commenced on March 15, 2005. The agreement provides for a base annual salary
of
$225,000. Mr. Cutler or we may terminate the employment agreement by providing
thirty days written notice. If we terminate Mr. Cutler without cause, or if
Mr.
Cutler resigns for certain “good reasons” enumerated in the employment
agreement, we shall extend the period during which Mr. Cutler may exercise
his
options granted after the date of his employment agreement by one year from
the
effective date of Mr. Cutler’s termination and pay to Mr. Cutler a lump-sum cash
payment equal to between six (6) and twelve (12) months of his base salary,
depending upon his length of service at the time of such termination. In the
event of a change in control, we will accelerate the vesting of 50% of any
options granted to Mr. Cutler subsequent to his employment agreement that have
not vested as of the effective date of the change of control. If the Company
terminates Mr. Cutler’s employment without Cause (or if Mr. Cutler resigns for
certain “good reasons” enumerated in the employment agreement) at any time
during the twelve (12) months subsequent to a change of control, then, 100%
of
any options granted to Mr. Cutler that have not vested will immediately vest
and
the Company will pay to Mr. Cutler a lump-sum cash payment equal to his annual
base salary at the time of the change in control. If upon a change of control
the market closing price of the Company’s common stock is less than 120% of
the Company’s market closing price on the employment commencement date, then Mr.
Cutler shall have the option to forfeit 200,000 of his options and he shall
receive a stock award of 50,000 shares of the Company’s common stock. Mr. Cutler
may be eligible to a bonus of up to 75% of his base annual salary, contingent
upon meeting certain performance goals. Mr. Cutler has agreed to refrain from
competing with us following the termination of his employment for a period
of
between six (6) to twelve (12) months, depending on certain conditions
enumerated in the employment agreement.
Mr.
Smith
is
employed as our Vice President - Investor Relations and Strategic Development
pursuant to an employment agreement that commenced on July 27, 2005. The
agreement provides for a base annual salary of $175,000. Mr. Smith or we may
terminate the employment agreement by providing three (3) months written notice.
In the event of a change in control, we will accelerate the vesting of 50%
of
any options granted to Mr. Smith subsequent to his employment agreement that
have not vested as of the effective date of the change of control. If the
Company terminates Mr. Smith’s employment without Cause at any time during the
twelve (12) months subsequent to a change of control, then, Mr. Smith will
be
entitled to three (3) months written notice and 100% of any options granted
to
Mr. Smith that have not vested will immediately vest. Mr. Smith has agreed
to
refrain from competing with us following the termination of his employment
for a
period of twelve (12) months.
Non-employee
directors receive annual fees as set forth under the section captioned “Director
Compensation” on page 11 above.
In
January 2005, the Company’s board of directors authorized all future initial
grants of stock options to new directors to be fixed at 28,700 and set the
recurring annual grant to directors at 7,175.
The
Company’s Amended and Restated Certificate of Incorporation provides that all
directors, officers, employees and agents of the Company shall be entitled
to be
indemnified by the Company to the fullest extent permitted by Section 145 of
the
Delaware General Corporation Law. The Company’s Amended and Restated Certificate
of Incorporation includes a provision eliminating the personal liability of
directors and officers to the Company for damages to the maximum extent
permitted by Delaware law, including exculpation for acts or omissions in
violation of directors' fiduciary duties of care.
The
members of the Compensation Committee between January 1, 2005 and July 13,
2005
were Messrs. Mark A. Tebbe, Edward G. Sim and former director, Mr. Michael
Eisenberg and between July 14, 2005 and December 31, 2005, Messrs. Edward G.
Sim, Mark A. Tebbe and Jerry Colonna. During 2005, none of our executive
officers served as a director or member of a compensation committee (or other
committee serving an equivalent function) of any other entity, whose executive
officers served as a director or member of our Compensation
Committee.
Except
as
detailed immediately below, there have been no transactions during the last
two
years, or proposed transactions, to which we were or will be a party, in which
any director, executive officer, beneficial owner of more than 5% of our common
stock or any member of the immediate family (including spouse, parents,
children, siblings and in-laws) of any of these persons, had or is to have
a
direct or indirect material interest.
In
May
2005, we entered into an agreement with Shopping.com, Inc. (“Shopping.com”)
pursuant to which we obtain e-commerce information from the Shopping.com
database in order to make such information available to Answers.com end-users.
In a unanimous written consent of the disinterested members of our board of
directors dated May 2, 2005, approving this agreement, the board acknowledged
that Mr. Michael Eisenberg, at the time a director of Answers Corporation,
also
serves on the board of directors of Shopping.com, and as such was deemed to
be
an interested director with respect to the subject matter of the Shopping.com
agreement. Mr. Eisenberg had no pecuniary interest in the Shopping.com
agreement, and did not take part in approving said transaction.
Any
future transactions with officers, directors or 5% stockholders will be on
terms
no less favorable to us than could be obtained from independent parties. Any
affiliated transactions must be approved by a majority of our independent and
disinterested directors who have access to our counsel or independent legal
counsel at our expense.
Section
16(a) of the Exchange Act requires our directors, officers and persons who
own
more than 10% of our outstanding common stock to file with the SEC initial
reports of ownership and changes in ownership of our common stock. Such
individuals are also required to furnish us with copies of all such ownership
reports they file.
Based
solely on information furnished to us and contained in reports filed with the
SEC, as well as any written representations that no other reports were required,
the Company believes that during 2005, all Securities and Exchange Commission
filings of its directors and executive officers complied with the requirements
of Section 16 of the Securities Exchange Act.
The
following table sets forth certain information at December 31, 2005 with respect
to our equity compensation plans that provide for the issuance of options,
warrants or rights to purchase our securities.
|
|
No.
of Securities to be issued upon exercise of outstanding options,
warrants
and rights
(a)
|
Weighted-average
exercise price of outstanding options, warrants and
rights
(b)
|
No.
of securities
remaining
available
for
future issuance
under
equity
compensation
plans
(excluding
securities
reflected
in column
(a))
(c)
|
|||||||
|
Equity
compensation plans
|
|
|
|
|||||||
|
approved
by security holders
|
1,393,870
|
$
|
9.14
|
807,252
|
||||||
|
Equity
compensation plans not
|
||||||||||
|
approved
by security holders
|
1,193,414
|
$
|
15.79
|
—
|
||||||
|
Total
|
2,587,284
|
807,252
|
||||||||
ON
EXECUTIVE COMPENSATION
Answers
Corporation strives to apply a uniform philosophy regarding compensation for
all
of its employees, including the members of its senior management. This
philosophy is based upon the premise that the achievements of the Company result
from the combined and coordinated efforts of all employees working toward common
goals and objectives in a competitive, evolving market place.
The
goals
of the Company’s compensation program are to align remuneration with business
objectives and performance, and to enable the Company to retain and
competitively reward executive officers who contribute to the long-term success
of Answers. The Company attempts to pay its executive officers competitively
in
order that it will be able to retain the most capable people in the industry.
In
making executive compensation decisions, the Compensation Committee considered
achievement of certain criteria, some of which relate to the Company’s
performance and others of which relate to the performance of the individual
employee. Awards to executive officers are based on achievement of company
and
individual performance criteria.
The
Compensation Committee will evaluate the Company’s compensation policies on an
ongoing basis to determine whether they enable the Company to attract, retain
and motivate key personnel. To meet these objectives, the Compensation Committee
may from time to time increase salaries, award additional stock options or
provide other short and long-term incentive compensation to executive
officers.
We
provide our executive officers with a compensation package consisting of base
salary and participation in benefit plans generally available to other
employees. In setting total compensation, the Compensation Committee considers
individual and company performance, as well as market information regarding
compensation paid by other companies in our industry.
Base
Salary.
Salaries
for our executive officers are initially set based on negotiation with
individual executive officers at the time of recruitment and with reference
to
salaries for comparable positions in the industry for individuals of similar
education and background to the executive officers being recruited. We also
consider the individual’s experience, reputation in his or her industry and
expected contributions to the Company.
Bonuses.
A
component of each officer’s potential annual compensation may take the form of a
performance-based bonus. Bonus payments to officers other than the Chief
Executive Officer are determined by the Compensation Committee, in consultation
with the Chief Executive Officer, based on the Company’s financial performance
and the achievement of the officer’s individual performance objectives. The
Chief Executive Officer’s bonus is determined by the Compensation Committee,
without participation by the Chief Executive Officer, based on the same
factors.
Long-Term
Incentives.
Longer-term incentives are provided through stock options, which reward
executives and other employees through the growth in value of our stock. The
Compensation Committee believes that employee equity ownership provides a major
incentive for employees to build stockholder value and serves to align the
interests of employees with those of the Company’s stockholders. Grants of stock
options to executive officers are based upon each officer’s relative position,
responsibilities and contributions to Answers, with primary weight given to
the
executive officers’ relative rank and responsibilities. Initial stock option
grants designed to recruit an executive officer to join Answers may be based
on
negotiations with the officer and with reference to historical option grants
to
existing officers. Stock options are generally granted at an exercise price
equal to the market price of our common stock on the date of grant and will
provide value to the executive officers only when the price of our common stock
increases over the exercise price.
Employment
and Severance Agreements.
The
Company has entered into employment agreements with its executive officers
and
certain key employees. Except for Robert S. Rosenschein, our Chief Executive
Officer, our employment agreements with our officers and key employees are
terminable by either party upon 30-90 days notice. The employment agreements
of
Messrs. Rosenschein and Cutler provide for a severance payment in the event
the
Company terminates their employment without cause, and in the case of Mr.
Cutler’s, should Mr. Cutler leave with ‘good reason’ as defined in his
employment agreement.
Compliance
with Internal Revenue Code Section 162(m).
Section 162(m) of the Internal Revenue Code of 1986, as amended, restricts
deductibility of executive compensation paid to our Chief Executive Officer
and
each of the four other most highly compensated executive officers holding office
at the end of any year to the extent such compensation exceeds $1,000,000 for
any of such officers in any year and does not qualify for an exception under
Section 162(m) or related regulations. The Compensation Committee’s policy
is to qualify its executive compensation for deductibility under applicable
tax
laws to the extent practicable. Income related to stock options granted under
the Company’s 1999
Stock Option Plan, the 2000 Stock Plan, the 2003 Stock Plan, the 2004 Stock
Plan
and the 2005 Incentive Compensation Plan generally
qualify for an exemption from these restrictions imposed by Section 162(m).
In the future, the Compensation Committee will continue to evaluate the
advisability of qualifying its executive compensation for full
deductibility.
Compensation
for the individuals who served as Chief Executive Officer of the Company and
other executive officers for fiscal 2005 was set according to the established
compensation policy described above.
Robert
S.
Rosenschein serves as the Company’s Chief Executive Officer, President and
Chairman of the Board. In the fiscal year ended December 31, 2005, Mr.
Rosenschein received $189,924 in base salary, $0 in bonuses and $58,442 in
other
compensation for his service as an executive officer of the Company. In 2005,
the Company did not grant Mr. Rosenschein any options to purchase shares of
the
Company’s common stock. Mr. Rosenschein’s compensation for the 2005 fiscal year
was based on qualitative managerial efforts and business ingenuity.
COMPENSATION
COMMITTEE:
Edward
G.
Sim (Chairman)
Mark
A.
Tebbe
Jerry
Colonna
The
Audit
Committee currently consists of three directors, each of whom, in the judgment
of the Company’s board of directors, is “independent” as defined in the
applicable listing standards of the NASDAQ Stock Market. The members of the
Audit Committee are Yehuda Sternlicht (Chairman), Mark A. Tebbe and Edward
G.
Sim. The Audit Committee acts pursuant to a written charter that has been
adopted by the Company’s board of directors.
The
following is the report of the Audit Committee with respect to the Company’s
audited financial statements for its fiscal year ended December 31, 2005. The
information contained in this report shall not be deemed to be soliciting
material or to be filed with the SEC, nor shall such information be incorporated
by reference into any future filing under the Exchange Act, except to the extent
that the Company specifically incorporates it by reference in such
filing.
In
connection with the preparation and filing of the Company’s Annual Report on
Form 10-KSB for its fiscal year ended December 31, 2005:
(1) The
Audit
Committee reviewed and discussed the audited financial statements with
management;
(2) The
Audit
Committee discussed with Somekh Chaikin, a
member
of KPMG International, the Company’s independent
registered public accounting firm, the material required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees,
(as
may be modified or supplemented); and
(3) The
Audit
Committee received the written disclosures and the letter from Somekh Chaikin
required by the Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as may be modified or supplemented, and
discussed with the independent registered public accounting firm any
relationships that may impact their objectivity and independence and satisfied
itself as to the independence of the independent registered public accounting
firm.
Based
on
the review and discussion referred to above, the Audit Committee recommended
to
the Company’s board of directors that the audited financial statements be
included in the Company’s Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2005, to be filed with the SEC.
AUDIT
COMMITTEE:
Yehuda
Sternlicht (Chairman)
Mark
A.
Tebbe
Edward
G.
Sim
The
following graph shows a comparison from January 1, 2005, through December 31,
2005 of the cumulative total return for the Company’s common stock compared with
(i) the NASDAQ Stock Market Composite Index and (ii) the Goldman-Sachs
Internet Index. Such returns are based on historical results and are not
intended to suggest future performance. The graph assumes that the value of
the
investment in Company’s common stock, the NASDAQ Stock Market Composite Index
and the Goldman-Sachs Internet Index each was $100 on January 1, 2005 and that
all dividends were reinvested. The Company has never paid dividends on its
common stock and has no present plans to do so.
COMPARISON
OF 52 WEEKS CUMULATIVE TOTAL RETURN
AMONG
ANSWERS CORPORATION, THE NASDAQ COMPOSITE INDEX AND THE GOLDMAN-SACHS INTERNET
INDEX
|
January
1, 2005
|
December
31, 2005
|
||||||
|
Company/Market/Index
|
$
|
$
|
|||||
|
Answers
Corporation
|
100
|
129
|
|||||
|
Nasdaq
Composite Index
|
100
|
102
|
|||||
|
Goldman-Sachs
Internet Index
|
100
|
116
|
|||||
A
copy of
the Company’s 2005 Annual Report to Stockholders is being mailed to stockholders
with this proxy statement.
FOR
THE 2007 ANNUAL MEETING OF THE COMPANY’S STOCKHOLDERS
We
have
an advance notice provision under our bylaws for stockholder business to be
presented at annual meetings of stockholders. Such provision states that in
order for stockholder business to be brought before an annual meeting by a
stockholder, such stockholder must have given timely notice thereof in writing
to our Secretary. To be timely, a stockholder’s notice must be delivered to or
mailed and received at our principal executive offices not less than 75 days
nor
more than 90 days prior to the date of the annual meeting; provided, however,
that if less than 75 days’ prior notice or prior public disclosure of the date
of the annual meeting is given or made to stockholders, notice by the
stockholder to be timely must be so delivered or received not later than the
close of business on the 10th
day
following the earlier of (1) the day on which such notice of meeting was mailed
or (2) the day on which such public disclosure was made.
The
Company’s stockholders may submit for inclusion in the Company’s proxy statement
for the 2007 annual meeting of stockholders proposals on matters appropriate
for
stockholder action at the 2007 annual meeting of stockholders consistent with
Rule 14a-8 promulgated under the Exchange Act. In addition, with respect to
director nominations, stockholders must adhere to the Company’s Procedures for
the Recommendation by Stockholders of Director Candidates (see Annex A attached
to this Proxy Statement). Answers must receive proposals that stockholders
seek
to include in the proxy statement for the Company’s 2007 annual meeting by no
later than January 31, 2007. If next year’s annual meeting is held on a date
more than 30 calendar days prior to June 21, 2007, a stockholder proposal must
be received by a reasonable time before the Company begins to print and mail
its
proxy solicitation materials for such annual meeting. Any stockholder proposals
will be subject to the requirements of the proxy rules adopted by the
SEC.
No
director or executive officer of the Company at any time since the beginning
of
the last fiscal year, nor any individual nominated to be a director of the
Company, nor any associate or affiliate of any of the foregoing, has any
material interest, directly or indirectly, by way of beneficial ownership of
securities or otherwise, in any matter to be acted upon at the annual
meeting.
Our
board
of directors does not intend to bring any matters before the annual meeting
other than those specifically set forth in the notice of the annual meeting
and,
as of the date of this proxy statement, does not know of any matters to be
brought before the annual meeting by others. If any other matters properly
come
before the annual meeting, or any adjournment or postponement of the annual
meeting, it is the intention of the persons named in the accompanying proxy
to
vote those proxies on such matters in accordance with their best
judgment.
The
Company’s consolidated audited balance sheets as of December 31, 2005 and 2004,
and the related consolidated statements of and cash flows for each of the two
years in the period ended December 31, 2005 and 2004, have been audited by
Somekh Chaikin, a
member
of KPMG International, independent
registered public accounting firm and have been included herein in reliance
upon
said firm as experts in auditing and accounting. Somekh Chaikin, a
member
of KPMG International has
been
our independent registered public accounting firm since 1999.
Audit
Fees
The
aggregate fees billed for professional services and paid for the annual audit
and for the review of the Company’s financial statements included in the
Company’s Annual Report on Form 10-KSB, as amended by Form 10-KSB/A, for the
years ended December 31, 2005 and 2004 and the Company’s Forms 10-QSB for the
quarters ended December 31, 2005 and 2004 were approximately $86,000 and
$228,000, respectively. The audit fees for 2004 include the costs associated
with the Company’s initial public offering.
Audit-Related
Fees
The
aggregate audit-related fees billed for all respective services for the years
ended December 31, 2005 and 2004, were $0 and $0, respectively.
Tax
Fees
The
aggregate tax fees billed for all respective services for the years ended
December 31, 2005 and 2004, were approximately $16,000 and $0,
respectively.
All
Other Fees
The
aggregate fees billed for all other non-audit services rendered by the principal
accountant for the years ended December 31, 2005 and 2004, were $33,400 and
$0,
respectively.
The
Audit
Committee of the board of directors maintains a pre-approval policy with respect
to audit and non-audit services to be performed by the Company’s independent
registered public accounting firm, in order to assure that the provision of
such
services does not impair the auditor’s independence. Before engaging the
independent registered public accounting firm to render a service, the
engagement must be either specifically approved by the Audit Committee, or
entered into pursuant to the pre-approval policy. Unless the Audit Committee
specifically provides for a different period, the term of any pre-approval
is 12
months from the date of the pre-approval. Pre-approval authority may be
delegated to one or more members of the Audit Committee, who must report any
pre-approval decisions to the Audit Committee at its next scheduled meeting;
however, the Audit Committee may not delegate pre-approval authority to Company
management.
Pursuant
to the pre-approval policy, the Audit Committee must specifically pre-approve
the terms of the annual audit services engagement, and any changes in terms
resulting from changes in audit scope, the Company’s structure or other
matters.
Answers
Corporation is subject to the informational requirements of the Securities
Exchange Act and files reports and other information with the SEC. Such reports
and other information filed by the Company may be inspected and copied at the
SEC’s Public Reference Room at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, as well as in the SEC’s public reference rooms in New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for
further information on the operation of the SEC’s public reference rooms. The
SEC also maintains an Internet site that contains reports, proxy statements
and
other information about issuers, like us, who file electronically with the
SEC.
The address of the SEC’s web site is http://www.sec.gov.
ANSWERS
CORPORATION
237
West 35th
Street
Suite
1101
New
York, NY 10001
Telephone:
646-502-4777
This
Proxy is Solicited by the Board of Directors
of
Answers Corporation
for
the 2006 Annual Meeting of Stockholders to be held
on
June 21, 2006
The
undersigned hereby appoints Robert S. Rosenschein and Steven Steinberg and
each
or either of them, as proxies, with full power of substitution, with the powers
the undersigned would possess if personally present, to vote all of the shares
of common stock, $0.001 par value, of Answers Corporation (“Answers”) held of
record by the undersigned on May 1, 2006, at the 2006 Annual Meeting of
Stockholders to be held on June 21, 2006, at The New Yorker Hotel, 481 Eighth
Avenue, New York, New York 10001, commencing at 12:30 p.m., EDT, and at any
adjournments or postponements thereof (the “Annual Meeting”), hereby revoking
all proxies heretofore given with respect to such shares, and the undersigned
instructs said proxies to vote at the Annual Meeting in accordance with the
instructions below.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
“FOR” THE NOMINEES FOR DIRECTOR NAMED IN PROPOSAL NO. 1 AND “FOR” PROPOSAL NO.
2.
(Continued
and to be signed on the reverse side)
2006
ANNUAL MEETING OF STOCKHOLDERS OF ANSWERS CORPORATION
JUNE
21, 2006
PROXY
VOTING INSTRUCTIONS
MAIL:
Date,
sign and mail your proxy card in the envelope provided as soon as
possible.
TELEPHONE:
Call
toll-free 1-800-PROXIES (1-800-776-9437) from any touch tone telephone and
follow the instructions. Have your proxy card available when you
call.
INTERNET:
Access
www.voteproxy.com and follow on-screen instructions. Have your proxy card
available when accessing the web page.
COMPANY
NUMBER: _______________
ACCOUNT
NUMBER: _______________
You
may
enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up until
11:59 p.m., New York City time, on June 20, 2006.
THE
BOARD
OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE
ELECTION OF THE NOMINEES FOR DIRECTORS
NAMED
IN
PROPOSAL NO. 1 AND “FOR”
PROPOSAL
NO. 2. EACH PROPOSAL IS INDEPENDENT AND THE
APPROVAL
OF NO PROPOSAL IS CONDITIONED UPON THE APPROVAL OF ANY OTHER
PROPOSAL.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE
IN
BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE x
1. To
elect
two Class II directors of Answers’ board of directors, each to serve until the
annual meeting of stockholders of Answers in 2009 or until their respective
successors are elected and qualified.
FOR
BOTH NOMINEES (except
as marked to the contrary) NOMINEES
WITHHOLD
AUTHORITY (to
withhold authority to vote Edward
G.
Sim
for
any
of the nominees, strike a line through the nominee’s name. Jerry
Colonna
| 2. |
To
approve an amendment to the Company's
|
2005
Incentive Compensation Plan
to
increase the number of shares available for grant under
such
plan
from 850,000 shares to 1,100,000 shares.
|
FOR
|
AGAINST
|
ABSTAIN
|
|
o
|
o
|
o
|
| 3. |
In
their discretion, the proxies are authorized to
vote
|
upon
any
other business that may properly come before
the
Annual Meeting.
The
undersigned hereby acknowledges receipt of (i) the Notice of the Annual Meeting
of Stockholders, (ii) the accompanying proxy statement and attached annexes;
(iii) this proxy card; and (iv) the 2005 Annual Report to Stockholders of
Answers.
DATE:
________________________________________
SIGNATURE:
__________________________________
SIGNATURE
(If held jointly): ______________________
|
Note:
|
Please
sign exactly as your name appears hereon and mail it promptly even
though
you may plan to attend the Annual Meeting. When joint tenants hold
shares,
both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If you are signing
as
a representative of the named stockholders (e.g., as a trustee, corporate
officer or other agent on behalf of a trust, corporation, partnership
or
other entity) you should indicate your title or the capacity in which
you
sign.
|
ANSWERS
CORPORATION
Procedures
for the Recommendation by Stockholders of Director
Candidates
The
Nominating / Corporate Governance Committee (the “Committee”)
of
Answers Corporation (the “Company”)
will
consider director candidates recommended by any stockholder provided such
recommendations are submitted in accordance with the procedures set forth below.
|
1.
|
The
Committee will only consider director candidates recommended by any
stockholder who has continuously held at least 1% of the Company’s voting
securities (either directly or as part of a group) for at least one
year
prior to the date such stockholder’s written recommendation was submitted
to the Company.
|
|
2.
|
The
Committee will only consider recommendations it receives by no later
than
January 31st of any given
year.
|
|
3.
|
In
order to provide for an orderly and informed review and selection
process
for director candidates, the Board of Directors of the Company (the
“Board”) has determined that stockholders who wish to recommend director
candidates for consideration by the Committee must comply with the
following:
|
|
a.
|
The
recommendation must be made in writing to the Company’s corporate
secretary, Answers Corporation, Jerusalem Technology Park, the Tower,
Jerusalem, Israel 91481; or Answers Corporation, 237 West 35th
Street, Suite 1101, New York, New York
10001;
|
|
b.
|
The
recommendation must include the candidate’s name, home and business
contact information, detailed biographical data and qualifications,
information regarding any relationships between the candidate and
the
Company within the last three years and appropriate evidence of the
recommending stockholder’s requisite ownership of the Company’s common
stock;
|
|
c.
|
The
recommendation shall also contain a statement from the recommending
stockholder in support of the candidate; professional references,
particularly within the context of those relevant to board membership,
including issues of character, judgment, diversity, age, independence,
expertise, corporate experience, length of service, other commitments
and
the like, and personal references;
|
|
d.
|
The
recommendation shall also contain a statement as to whether, in the
view
of the recommending stockholder, the candidate, if elected, would
represent all stockholders and not serve for the purpose of advancing
or
favoring any particular stockholder or other constituency of the
Company;
and
|
|
e.
|
A
statement from the recommended candidate indicating that such person
(i)
is interested in being a Board candidate, (ii) is not prevented for
any
reason whatsoever form serving on the Board and (iii) could be considered
"independent" under the Rules and Regulations of Nasdaq and the Securities
and Exchange Commission, as in effect at that
time.
|
|
4.
|
The
Committee, according to the criteria discussed above and in the same
manner as with all other director candidates, will evaluate all candidates
submitted by stockholders. The Committee will advise the recommending
stockholder of its final decision.
|