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
(Amendment No. )
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| Soliciting material pursuant to §240.14a-12 | ||||||
| Travelzoo Inc. | ||||||
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TRAVELZOO INC.
Table Of Contents
| Page | ||||
| Information About the Annual Meeting | ||||
| Election of Directors (Proposal 1) | ||||
| Corporate Governance | ||||
| Information About Executive Officers | ||||
| Approval of Stock Options (Proposal 2) | ||||
| Advisory Vote On the Compensation of Named Executive Officers (Proposal 3) | ||||
| Compensation Discussion and Analysis | ||||
| Security Ownership of Certain Beneficiary Owners and Management | ||||
| Section 16(a) Beneficial Ownership Reporting Compliance | ||||
| Principal Accountant Fees and Services | ||||
| Audit Committee Report | ||||
| Documents Incorporated By Reference | ||||
| Additional Information | ||||
  | Travelzoo Inc. | |
| 590 Madison Avenue, 37th Floor | ||
| New York, NY 10022 | ||
March 21, 2014
Dear Stockholder:
You are cordially invited to attend the 2013 Annual Meeting of Stockholders of Travelzoo Inc. The Annual Meetingon May 9, 2014. We will be held on _________, 2013 at 10:00 a.m. local time,hold the meeting at 590 Madison Avenue, 37th Floor, New York, NY 10022 .at 10:00 a.m. local time.
In connection with the meeting, we enclose a notice of the meeting, a proxy statement and a proxy card. The expected actions to be taken at the Annual Meeting are described in the attached proxy statement and Notice of Annual Meeting of Stockholders. Our audited financial statements and detailedDetailed information relating to Travelzoo'sTravelzoo’s activities and operating performance is contained in our 20122013 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on February 11, 2013 and amended on April 30, 2013,12, 2014, which is also enclosed. We encourage you to read the Form 10-K.
Stockholders of record as of _______, 2013March 14, 2014 may vote at the Annual Meeting. This proxy statement is first being mailed or furnished to stockholders on or about _______, 2013.
March 25, 2014.
Your vote is important. Whether or not you plan to attend the Annual Meeting of Stockholders, please vote your shares via mail with the enclosed proxy card. Please note that you can attend the meeting and vote in person, even if you have previously voted by proxy. The attached proxy statement explains more about the proxy voting. Please read it carefully. If you plan to attend the meeting in person, please provide advance notice to Travelzoo by checking the box on your proxy card. In addition, you may provide notice to Travelzoo that you plan to attend in person by delivering written notice to Travelzoo'sTravelzoo’s Corporate Secretary at 800 W. El Camino Real, Suite 275, Mountain View, CA 94040.
If you hold your shares in street name through a bank, broker, or other nominee, please bring identification and proof of ownership, such as an account statement or letter from your bank or broker, for admittance to the meeting. An admission list containing the names of all of those planning to attend will be placed at the registration desk at the entrance to the meeting. You must check in to be admitted.
Travelzoo will make available an alphabetical list of stockholders entitled to vote at the meeting for examination by any stockholder during ordinary business hours at Travelzoo'sTravelzoo’s principal executive offices, located at 590 Madison Avenue, 37th Floor, New York, New York 10022, for ten days prior to the meeting. A stockholder may examine the list for any legally valid purpose related to the meeting.
On behalf of the entire Board of Directors, we look forward to seeing you at the Annual Meeting.meeting.
| Sincerely, | |
| HOLGER BARTEL | |
| Chairman of the Board of Directors | |
TRAVELZOO INC.
590 Madison Avenue
37th Floor
New York, New York 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On _______, 2013
May 9, 2014
To the Stockholders of Travelzoo Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Travelzoo Inc., a Delaware corporation, ("Travelzoo", the "Company", "we" or "us"), will be held on _____, 2013,Friday, May 9, 2014, at 10:00 a.m., local time, at 590 Madison Avenue, 37th Floor, New York, NY 10022, for the following purposes:
| Ÿ | |
| To elect five |
| Ÿ | To approve the issuance of shares of common stock on exercise of options, under a nonqualified Stock Option Agreement, granted to the Company’s Chief Executive Officer ("Proposal 2"); |
| Ÿ | To approve, on an advisory basis, the compensation of the executive officers of the Company ("Proposal 3"); |
| Ÿ | To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting. |
Only stockholders of record at 5:00 p.m. Eastern Time on _________, 2013March 14, 2014 may vote at the Annual Meeting. Your vote is important. Whether you plan to attend the Annual Meeting or not, please cast your vote by completing, dating and signing the enclosed proxy card and returning it via mail to the address indicated. If you attend the meeting and prefer to vote in person, you may do so even if you have previously voted by proxy.
| By Order of the Board of Directors, | |
| TRAVELZOO INC. | |
| GLEN CEREMONY | |
| Corporate Secretary | |
PROXY STATEMENT
FOR THE TRAVELZOO INC.
INFORMATION ABOUT THE ANNUAL MEETING
Why am I receiving these proxy materials?
Only stockholders of record of our common stock, par value $0.01 per share (the "Common Stock"), as of 5:00 p.m. Eastern Time on ______, 2013March 14, 2014 (the "record date") will be entitled to notice of, and to vote at, the Annual Meeting. As of the record date, there were ________14,746,954 shares of our Common Stock issued and outstanding.
Where and when is the Annual Meeting?
The Annual Meeting of Stockholders will take place on ____, 2013May 9, 2014 at 590 Madison Avenue, 37th Floor, New York, NY 10022. The meeting will begin at 10:00 a.m. local time.
What am I voting on?
Stockholders will vote on fourthree items:
| Ÿ | A proposal to elect five | |||
| Ÿ | To approve the issuance of shares of common stock on exercise of options, under a nonqualified Stock Option Agreement, granted to the Company’s Chief Executive Officer (Proposal 2); | |||
| Ÿ | A proposal to approve, on an advisory basis, the compensation of the executive officers of the Company ("Proposal 3"); and | |||
| Ÿ | ||||
How does the Board recommend that you vote on the proposals?
The Board recommends that you vote your shares FOR "FOR" Proposal 1, Proposal 2 and Proposal 3. The Company's Board of Directors has considered the shareholder proposal regarding the implementation of majority voting for uncontested elections of directors, and has determined to make no voting recommendation to stockholders with respect to Proposal 4.
How many votes do I have?
You have one vote for each share of our Common Stockcommon stock that you heldowned at 5:00 p.m. Eastern Timethe close of business on ____, 2013,March 14, 2014, the record date for the Annual Meeting.date. These shares include:
Shares held directly in your name as the “stockholder of record” and
Shares held for you as the beneficial owner through a broker, bank, or other nominee in “street name.”
If I am a stockholder of record, how can I vote my shares?
Stockholders can vote by proxy or in person, however, granting a proxy does not in any way affect your right to attend the Annual Meeting and vote in person.
How do I vote by proxy?
If you are a stockholder of record, you may vote your proxy by mail. If you receive a paper copy of the proxy statement, simply mark the enclosed proxy card, date and sign it, and return it in the postage paid envelope provided. If you receive the proxy statement via e-mail, please print the attached proxy card, date and sign it, and return it via mail to Computershare, P.O. Box 43126, Providence, RI 02940.Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717.
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If you vote by proxy, the persons named on the card (your "proxies") will vote your shares in the manner you indicate. You may specify whether your shares should be voted for all, some or none of the nominees for director or any other proposals properly brought before the Annual Meeting. If you sign your proxy card and do not indicate specific choices, your shares will be voted "FOR" Proposal 1, "FOR" the election of all nominees for director and "FOR" Proposal 2 and Proposal 3. If any other matter is properly brought before the meeting, your proxies will vote in accordance with their discretion. If you do not specify the manner in which your shares represented by a validly executed proxy are to be voted on Proposal 4, your shares will be counted as abstentions. At the time of submitting this proxy statement for printing, we knew of no matter that will be acted on at the Annual Meeting other than those discussed in this proxy statement.
If you wish to give a proxy to someone other than the persons named on the enclosed proxy card, you may strike out the names appearing on the card and write in the name of any other person, sign the proxy, and deliver it to the person whose name has been substituted.
May I revoke my proxy?
If you give a proxy, you may revoke it in any one of three ways:
Submit a valid, later-dated proxy before the Annual Meeting,
| Notify our Corporate Secretary in writing at Travelzoo Inc., Attention: Corporate Secretary, 800 W. El Camino Real, Suite 275, Mountain View, CA 94040 before the Annual Meeting that you have revoked your proxy, or | |||
Vote in person at the Annual Meeting. |
How do I vote in person?
If you are a stockholder of record, you may cast your vote in person by attendingat the Annual Meeting.
If I hold shares in street name, how can I vote my shares?
You can submit voting instructions to your broker or nominee. In most instances, you will be able to do this over the Internet or by mail. Please refer to the voting instruction card included in the materials provided by your broker or nominee.
What vote is required to approve each proposal?
Each share of our Common Stock is entitled to one vote with respect to each matter on which it is entitled to vote. Approval of Proposal 1 requires the affirmative vote of stockholders holding both (A) a majority of the issued and outstanding shares of Common
In order to have a valid stockholder vote, a stockholder quorum must exist at the Annual Meeting. A quorum will exist when stockholders holding a majority of the outstanding shares of Common Stock are present at the meeting, either in person or by proxy.
Azzurro Capital Inc., whose beneficial owner is Mr. Ralph Bartel, a member of our Board, holds an aggregate of 7,230,538 shares of our Common Stock, representing approximately 47.1%49.0% of the outstanding shares, as of June 27, 2013March 14, 2014. Azzurro Capital Inc. has indicatedcurrently holds a proxy given to it by Mr. Holger Bartel that provides it intends to vote its shares in favorwith a total of Proposal 1.50.4% of the voting power.
All properly executed proxies delivered pursuant to this solicitation and not revoked will be voted at the Annual Meeting as specified in such proxies. As noted above, if no voting instructions are indicated, proxies will be voted as recommended by our Board on all matters, and in the discretion of the proxy holder on any other matters that properly come before the Annual Meeting.
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What is a broker non-vote and how are broker non-votes and abstentions counted?
A broker “non-vote”"non-vote" occurs when a nominee holding shares of Common Stock for the beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. Brokers that have not received voting instructions from their clients cannot vote on their clients' behalf on "non-routine" proposals. The vote on Proposals 1, 2, 3 and 43 are considered "non-routine". Broker non-votes will not have any effect with respect to Proposals 1, 2 3 and 4,3, as shares that constitute broker non-votes are not considered entitled to vote but will be counted for the purposes of obtaining a quorum for the Annual Meeting. Since approval of Proposal 1 requires the affirmative vote of stockholders holding a majority of the issued and outstanding shares of Common Stock, broker-non votes will have the same effect as a vote against Proposal 1.
Abstentions are counted as "shares present" at the Annual Meeting for purposes of determining the presence of a quorum and with respect to any matters being voted upon at the Annual Meeting. Abstentions will have no effect on the outcome of the election of directors, but with respect to any other proposal an abstention will have the same effect as a vote against such proposal.
Where can I find the voting results of the meeting?
We intend to announce preliminary voting results at the meeting. We will publish the final results in a report on Form 8-K, which we intend to file within four business days following the Annual Meeting. You can obtain a copy of the Form 8-K by logging on to Travelzoo's investor relations website at www.travelzoo.com/ir, by calling the Securities and Exchange Commission (the "SEC") at (800) SEC-0330 for the location of the nearest public reference room, or through the EDGAR system at www.sec.gov. Information on our website does not constitute part of this proxy statement.
ELECTION OF DIRECTORS (PROPOSAL 2)
1)
Under Travelzoo's bylaws, the number of directors of Travelzoo is fixed, and may be increased or decreased from time to time, by resolution of the Board of Directors. Each director holds office for a term of one year, until the annual meeting of stockholders next succeeding the director's election and until a successor is elected and qualified or until the earlier resignation or removal of the director. The following individuals have been nominated for election to our Board of Directors, each to serve until the 20142015 Annual Meeting of Stockholders and until their successors are elected and qualified or until their earlier resignation or removal.
Following is information about each nominee, including biographical data for at least the last five years. Should one or more of these nominees become unavailable to accept nomination or election as a director, the individuals named as proxies on the enclosed proxy card will vote the shares that they represent for the election of such other persons as the Board may recommend, unless the Board reduces the number of directors. We have no reason to believe that any nominee will be unable or unwilling to serve if elected as a director.
Nominees for a One-Year Term That Will Expire in 2014:
2015:
The ages, principal occupations, directorships held and other information as of June 13, 2013March 14, 2014, with respect to our nominees are shown below.
| Name | Age | Position | ||
| Holger Bartel, Ph.D. | Chairman of the Board of Directors | |||
| Ralph Bartel, Ph.D. | Director | |||
| Director | ||||
| Donovan Neale-May (1) (3) (4) | 61 | Director | ||
| Director | ||||
| (1) | Member of the Audit Committee |
| (2) | Member of the Compensation Committee |
| (3) | Member of the Disclosure Committee |
| (4) | Member of the Nominating and Corporate Governance Committee |
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Each of the director nominees listed above, is currently a director of Travelzoo and was elected to be a director at the Company's Annual Meeting of Stockholders held on May 18, 2012.September 12, 2013. Our Board of Directors has determined that each of Mr. Ehrlich,Karg, Mr. Neale-May and Ms. UrsoReilly meet the independence requirements of the listing standards of the NASDAQ Stock Market (the "NASDAQ"). The Board of Directors determined that Mr. Ralph Bartel is not independent under the rules of NASDAQ because he is a beneficial owner of Azzurro Capital Inc., which holds approximately 47.1%49.0% of our outstanding Common Stock as of June 27, 2013,March 14, 2014, and Mr. Holger Bartel is not independent under the rules of NASDAQ because he is an employee of the Company and Ralph Bartel's brother.
Holger Bartel, Ph.D., has served as a Chairman of the Board of Directors since July 2010 after serving as a Director from June 2005 to June 2010. Mr. Bartel served as a consultant to the Company from July 2010 through September 2011 and becamewas an employee of the Company in October 2011, serving as the Head of Strategy.Strategy from October 2011 to October 2013. Mr. Bartel served as Chief Executive Officer from October 2008 to June 2010, after serving as Executive Vice President from September 1999 to November 2007. From 1995 to 1998, Mr. Bartel worked as an Engagement Manager at McKinsey & Company in Los Angeles. From 1992 to 1994, Mr. Bartel was a research fellow at Harvard Business School. Mr. Bartel holds a Ph.D. in Economics and an MBA in Finance and Accounting from the University of St. Gallen, Switzerland. He is the brother of Ralph Bartel.
Areas of Holger Bartel's relevant experience: Deep knowledge of Travelzoo's operations, Internet, strategy, management of growth companies, travel, international management.
Ralph Bartel, Ph.D., founded Travelzoo in May 1998 and has served as a Director since July 2010 after serving as Chairman of the Board of Directors from May 1998 to June 2010. From May 1998 to September 2008, Mr. Bartel served as Travelzoo's Chief Executive Officer and President. Mr. Bartel is a professionally trained journalist who also holds a Ph.D. in Communications from the University of Mainz, Germany, a Master's degree in Journalism from the University of Eichstaett, Germany, and a Ph.D. in Economics and an MBA in Finance and Accounting from the University of St. Gallen, Switzerland. He is the brother of Holger Bartel.
Areas of Ralph Bartel's relevant experience: Media, journalism, Internet, finance, start-up experience.
Michael KargDavid J. Ehrlich, has served as a Director since February 1999. Mr. Ehrlich currently serves as the CEO of Aktana, the leader in actionable analytics for sales force effectiveness. Before Aktana, Mr. Ehrlich was an Executive in Residence with Mohr Davidow Ventures. From March 2007 to January 2010, Mr. Ehrlich served asPh.D., is Chief Executive Officer of ParAccel, Inc.Razorfish International, an international interactive marketing and technology services company. Razorfish, part of Publicis Groupe, is one of the world's largest interactive agencies. From September 2010 to May 2013, Mr. Karg served in the roles as President EMEA (from September 2011) and COO International for Razorfish and Digitas International. During his tenure he built and orchestrated the Razorfish and Digitas International network capabilities, enabling delivery of break-through award-winning client work across geographies. Mr. Karg originally joined Digitas in 2000, which was acquired in 2007 by Publicis Groupe, where he served in various capacities until May 2013. Mr. Karg currently serves on the board of directors of Razorfish (Hong Kong) Company, Limited and Razorfish Consulting (Shanghai) Co., a technology company.Limited, and e-Crusade Holding Company Limited. From 2003August 2012 to 2006,July 2013 he served as the Chairman of the Board of Razorfish Germany. Mr. Ehrlich was Senior Vice President, Marketing and Chief Strategy Officer of NetIQ Corporation. From 1998 to 2002, Mr. Ehrlich was Vice President, Product Management and Strategic Partnering for Visual Networks, Inc. From 1993 to 1998, Mr. Ehrlich worked as a consultant for McKinsey & Company. Mr. EhrlichKarg holds a bachelor's degree in Sociology with honors and distinction from Stanford University, a Master's degree in Industrial EngineeringFinance and Accounting and a doctorate in Business Administration from Stanfordthe University in St. Gallen, Switzerland. Between 1999 and an MBA from2000 Mr. Karg was a visiting research fellow at Harvard Business School.University.
Areas of Mr. Ehrlich'sKarg's relevant experience: Technology, corporate development, mergers & acquisitions.experience include international management, marketing, digital media, and strategy.
Donovan Neale-May has served as a Director since February 1999. Mr. Neale-May is the president and managing partner of GlobalFluency, Inc., a global organization of independent marketing and communication firms with 70 offices in over 40 countries. He is also the managing partner and co-founder of the SABLE Accelerator (South African Business Link to Experts). Since 1987, Mr. Neale-May has been managing and running his own digital marketing and communications agency operating from Silicon Valley and New York. Previously, Mr. Neale-May held senior positions with marketing, promotions and public relations agencies, such as Ogilvy & Mather, in Silicon Valley, New York, London and Los Angeles. During his 30 years as an international marketing and brand strategist, Mr. Neale-May has consulted with over 300 leading multi-nationals, new venture starts and emerging growth companies. Mr. Neale-May is the founder and executive director of the Chief Marketing Officer (CMO) Council, a global affinity network of more than 6,000 senior marketing and branding executives controlling some $300 billion in aggregated annual marketing spend. Mr. Neale-May is a journalism graduate of Rhodes University in South Africa and serves on the University's board of governors. He also chairs the Rhodes University Trust, USA. In addition, Mr. Neal-MayNeale-May serves as an adjunct professor at Seoul National University in South Korea.
Areas of Mr. Neale-May's relevant experience: Brand strategy, public relations, marketing, international management.
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Mary ReillyKelly M. Urso has is a chartered accountant and a retired partner of Deloitte LLP, a large international accounting and consulting firm. From August 2002 to June 2013, Ms. Reilly served as a Directorpartner of Deloitte LLP in various capacities including the Products & Services division of Deloitte, working with organizations operating in a wide range of international industries, including recruitment, retail businesses, media, business services, manufacturing, professional practices and charities in the United Kingdom. Ms. Reilly headed up Deloitte's Outsourcing Unit where she was responsible for the finance function and business advisory projects for a number of U.K. and international businesses and was a leading partner in Deloitte's Charities and Not for Profit Group; she was also the Corporate Responsibility leader for the London Audit Practice of Deloitte and was a member of the firm's Diversity Leadership Team. Ms. Reilly has also held several non-executive directorships, including Chair of the Audit and Risk Committee for Department of Transport in the U.K. since June 2013, Chair of the Audit and Risk Committee for Crown Agents LTD since February 1999. Since2013, board member of London Development Agency from 2000 to 2008 and board member of London 2012 LTD, a company established to run London's Olympic bid from 2003 Ms. Urso has been a principal at K. M. Urso & Company, LLC, a firm that provides U.S. and international tax consulting and compliance services. From 2001 to 2003, Ms. Urso was a tax attorney with Reynolds & Rowella LLP. From 1997 to 2001, Ms. Urso was the leader of the expatriate tax group at General Electric International, Inc. From 1995 to 1997, Ms. Urso was an International Executive Tax Manager at KPMG Peat Marwick LLP. From 1992 to 1995, Ms. Urso was a Senior Tax Consultant International Assignment Services at Price Waterhouse LLP.2006.
Ms. UrsoReilly holds a bachelor's degree in business administration in accountinghistory from the University of CincinnatiCollege London. She did a postgraduate course at London Business School and is a Juris Doctor degree fromQualified Chartered Accountant in the Thomas M. Cooley Law School in Lansing, Michigan.
United Kingdom.
Areas of Ms. Urso'sReilly's relevant experience: Tax planning, tax compliance,Accounting, finance, international management.management and non-executive directorships.
Required Vote
Our Certificate of Incorporation, as amended, does not authorize cumulative voting. Delaware law and our bylaws provide that directors are to be elected by a plurality of the votes of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors. This means that the five (5) candidates receiving the highest number of affirmative votes at the Annual Meeting will be elected as directors. Only shares that are voted in favor of a particular nominee will be counted toward that nominee's achievement of a plurality. Shares present at the Annual Meeting that are not voted for a particular nominee or shares present by proxy where the stockholder properly withheld authority to vote for such nominee will not be counted toward that nominee's achievement of a plurality. Thus, abstentions and broker non-votes will have no effect on the election of directors. Proxies cannot be voted for a greater number of persons than the number of nominees named.
Board of Directors' Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE FIVE (5) DIRECTOR NOMINEES NAMED ABOVE.
The Board of Directors believes that each director nominee possesses the qualities and experience a member of Travelzoo's Board should possess. The Board of Directors seeks out, and the Board of Directors is comprised of, individuals whose background and experience complement those of other Board members.
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CORPORATE GOVERNANCE
Board Meetings and Committees
The Board of Directors has appointed an Audit Committee, a Compensation Committee, a Disclosure Committee and a DisclosureNominating and Corporate Governance Committee. Below is a table indicating the membership of each of the Audit Committee, Compensation Committee, and Disclosure Committee and how many times the Board of Directors and each such committee met in fiscal year 2012.2013. Each of Mr. Holger Bartel, Mr. Ralph Bartel, Mr. Ehrlich, Mr. Karg, Mr. Neale-May, Ms. Reilly and Ms. Urso attended at least 75 percent of the total number of meetings of the Board of Directors and of the committees on which he or she serves. serves during the period such persons served.
| Board | Audit | Compensation | Disclosure | Nominating and Corporate Governance | |
| Mr. Holger Bartel | Chair | ||||
| Mr. Ralph Bartel | Member | ||||
| Mr. Ehrlich (1) | Member | Chair | Member | ||
| Mr. Neale-May (3) | Member | Member | Member | Member/Chair | Chair |
| Ms. Kelly Urso (1) | Member | Member | Chair | Chair | |
| Mr. Michael Karg (2) | Member | Member | Chair | Member | Member |
| Ms. Mary Reilly (2) | Member | Chair | Member | Member | |
| Number of 2013 Meetings | 4 | 4 | 1 | 4 | — |
| Board | Audit | Compensation | Disclosure | |||||
| Mr. Holger Bartel | Chair | |||||||
| Mr. Ralph Bartel | Member | |||||||
| Mr. Ehrlich | Member | Chair | Member | |||||
| Mr. Neale-May | Member | Member | Member | |||||
| Ms. Urso | Member | Member | Chair | Chair | ||||
| Number of 2012 Meetings | 4 | 4 | 1 | 4 |
| (1) | During the fiscal year ended December 31, 2013, two members of the Board of Directors, who were determined previously by the Board to be independent, Mr. Ehrlich and Ms. Urso, served as directors and members of certain committees, until the date of the 2013 Annual Meeting held on September 12, 2013. |
| (2) | During the fiscal year ended December 31, 2013, two members of the Board of Directors, Mr. Karg and Ms. Reilly, began their service as directors and members of certain committees after the 2013 Annual Meeting held on September 12, 2013. |
| (3) | During the fiscal year ended December 31, 2013, Mr. Neale-May served as a member of the disclosure committee from January 1, 2013 through September 11, 2013 and served as chair of the Disclosure Committee from September 12, 2013 through December 31, 2013. |
The Company does not require that directors attend the Annual Meeting.
Audit Committee
The Audit Committee’sCommittee's primary responsibilities are to oversee and monitor (i) the integrity of Travelzoo’sTravelzoo's financial statements, (ii) the qualifications and independence of our independent registered public accounting firm, (iii) the performance of our independent registered public accounting firm and internal audit staff, and (iv) the compliance by Travelzoo with legal and regulatory requirements. A complete description of the committee’scommittee's responsibilities is set forth in its written charter. A copy of the written charter can be found in Appendix A of our 2008 proxy statement. The Audit Committee is responsible for appointing the independent registered public accounting firm and is directly responsible for the compensation and oversight of the work of our independent registered public accounting firm. The Audit Committee is composed solely of independent directors as defined in the listing standards of the NASDAQ. The Board has determined that Mr. Ehrlich qualifiesand Ms. Mary Reilly qualify as an audit committee financial expert within the meaning of the regulations of the Securities and Exchange Commission (“SEC”).Commission.
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Compensation Committee
The Compensation Committee reviews and approves the compensation and benefits for the Company’sCompany's executive officers and directors, and makes recommendations to the Board of Directors regarding such matters. The Compensation Committee also approves the Company’sCompany's non-equity incentive plans. The Compensation Committee further reviews and discusses with management the Compensation Discussion and Analysis section of this proxy statement. The Report of the Compensation Committee is included herein. In 2012, theThe Company wasis not required to have a Compensation Committee charter since it is a "Controlled Company"“Controlled Company” under NASDAQ rule 5615,Rule 5615(c), on account of the stock ownership by Azzurro Capital Inc. Such ownership is now less than 50%, so we will be establishing a Compensation Committee charter during 2013.and the proxy given to Azzurro Capital Inc. by Mr. Holger Bartel.
Disclosure Committee
The Disclosure Committee’sCommittee's primary responsibilities are (i) to design, establish and evaluate controls and other procedures that are designed to ensure the accuracy and timely disclosure of information to the SEC and investment community and (ii) to review and supervise preparation of all SEC filings, press releases and other broadly disseminated correspondence.
Nominating and Corporate Governance Committee
The Nominating Committee during 2013.assists the Board in identifying qualified individuals to become directors, makes recommendations to the Board concerning the size, structure and composition of the Board and its committees, monitors the process to assess the Board’s effectiveness and is primarily responsible for oversight of corporate governance. In 2012, through its share ownership, Azzurro Capital Inc. wasevaluating potential nominees to the Board, the Nominating Committee considers, among other things, independence, character, ability to exercise sound judgment, age, demonstrated leadership, skills, including financial literacy, and experience in a position to control Travelzoo and to elect our entire Boardthe context of Directors. Azzurro Capital Inc.the needs of the Board. The Nominating Committee considers candidates proposed by shareholders and evaluates them using the same criteria as for director nominees.
other candidates. The Nominating Committee recommended to the full Board each of the current nominees for election to the Board.
The Board’sBoard's Role in Risk Oversight
The full Board oversees enterprise risk as part of its role in reviewing and overseeing the implementation of the Company’sCompany's strategic plans and objectives. The risk oversight function is administered both in full Board discussions and in individual committees that are tasked by the Board with oversight of specific risks. On a regular basis, the Board and its committees receive information and reports from management on the status of the Company and the risks associated with the Company’sCompany's strategy and business plans. In addition, the Audit Committee reviews the Company’sCompany's risk assessment and risk management policies and procedures at least annually, including steps taken to monitor and control such exposures. The Board believes the continuity of Board membership, as well as the independent directors constituting a majority of the Board and separation of the roles of Chairman and Chief Executive Officer, encourage open discussion and assessment of the Company’sCompany's ability to manage its risks.
| Code of Ethics |
We have adopted a code of ethics that applies to our Chief Executive Officer and our Chief Financial Officer, who also serves as our principal accounting officer. This code of ethics is posted on our website located at corporate.travelzoo.com/governance. A copy of the code of ethics is also available in print to stockholders and interested parties without charge upon written request delivered to our Corporate Secretary at Travelzoo Inc., 800 W. El Camino Real, Suite 275, Mountain View, CA 94040.
| Communications with Directors |
The board has established a process to receive communications from stockholders. Stockholders and other interested parties may contact any member (or all members) of the board, or the non-management directors as a group, any board committee or any chair of any such committee by mail. To communicate with the Board of Directors, any individual directors or any group or committee of directors, correspondence should be addressed to the Board of Directors or any such individual directors or group or committee of directors by either name or title. All such correspondence should be sent “c/"c/o Corporate Secretary”Secretary" at Travelzoo Inc., 800 W. El Camino Real, Suite 275, Mountain View, CA 94040.
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All communications received as set forth in the preceding paragraph will be opened by the Corporate Secretary for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service, patently offensive material or matters deemed inappropriate for the Board of Directors will be forwarded promptly to the addressee. In the case of communications to the board or any group or committee of directors, the Corporate Secretary will make sufficient copies of the contents to send to each director who is a member of the group or committee to which the correspondence is addressed.
| Director Compensation |
Directors of the Company or its subsidiaries are entitled to receive certain retainers and fees. In 2012,2013, there were no adjustments to the director compensation policy.policy, except the annual board member retainer, which increased from $30,000 to $50,000. The retainers and meeting fees are as follows:
Annual board member retainer - $50,000;
Fee for attendance of a board meeting - $1,680; Fee for attendance of an Audit Committee meeting - $2,800; Fee for attendance of a Disclosure Committee meeting - $1,680; Fee for attendance of a Compensation Committee meeting - $2,800; and Fee for attendance of a strategy meeting - $4,480. |
We reimburse directors for out-of-pocket expenses incurred in connection with attending meetings.
Mr. Ralph Bartel chose not to receive any compensation for his services as a director.
The following table shows compensation information for Travelzoo’s directors for fiscal year ended December 31, 20122013.
| Name | Fees Earned or Paid in Cash ($) | Total ($) | ||||
| Mr. Holger Bartel | 45,680 | 45,680 | ||||
| Mr. Ralph Bartel | — | — | ||||
| Mr. Ehrlich | 89,680 | 89,680 | ||||
| Mr. Neale-May | 66,000 | 66,000 | ||||
| Ms. Urso | 66,400 | 66,400 | ||||
| Name | Fees Earned or Paid in Cash ($) | Total ($) | ||||
| Mr. Holger Bartel | 21,993 | 21,993 | ||||
| Mr. Ralph Bartel | — | — | ||||
| Mr. Ehrlich | 99,382 | 99,382 | ||||
| Mr. Neale-May | 78,600 | 78,600 | ||||
| Ms. Kelly Urso | 57,918 | 57,918 | ||||
| Mr. Michael Karg | 22,922 | 22,922 | ||||
| Ms. Mary Reilly | 28,742 | 28,742 | ||||
| Certain Relationships and Related Party Transactions |
The Company maintains policies and procedures to ensure that our directors, executive officers and employees avoid conflicts of interest. Our Chief Executive Officer and Chief Financial Officer are subject to our Code of Ethics and each signs the policy to ensure compliance. Our Code of Ethics requires our leadership to act with honesty and integrity, and to fully disclose to the Audit Committee any material transaction that reasonably could be expected to give rise to an actual or apparent conflict of interest. The Code of Ethics requires that our leadership obtain the prior written approval of the Audit Committee before proceeding with or engaging in any conflict of interest.
Our Audit Committee, with the assistance of legal counsel, reviews all related party transactions involving the Company and any of the Company’sCompany's principal shareholders or members of our board of directors or senior management or any immediate family
member of any of the foregoing. A general statement of this policy is set forth in our audit committee charter, which was attached as Appendix A to our proxy statement for the 2008 Annual Meeting of Stockholders which has been filed with the SEC. However, the Audit Committee does not have detailed written policies and procedures for reviewing related party transactions. Rather, all facts and circumstances surrounding each related party transaction may be considered. If the Audit Committee determines that any such related party transaction creates a conflict of interest situation or would require disclosure under Item 404 of Regulation S-K, as promulgated by the SEC, the transaction must be approved by the Audit Committee prior to the Company entering into such transaction or ratified thereafter. The chair of the Audit Committee is delegated the authority to approve such transactions on behalf of the full committee, provided that such approval is thereafter reviewed by the committee. Transactions or relationships previously approved by the Audit Committee or in existence prior to the formation of the committee do not require approval or ratification.
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Ralph Bartel, who founded Travelzoo and who is a Director of the Company is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro Capital Inc. As of December 31, 2013, Azzurro is the Company's largest stockholder, holding approximately 48.2% of the Company's outstanding shares. Azzurro Capital Inc. currently holds a proxy given to it by Mr. Holger Bartel that provides it with a total of 50.4% of the voting power.
In July 2010, the Company entered into an independent contractor agreement with Holger Bartel, the Company's HeadCompany’s former Chief Executive Officer, the Company’s Chairman and brother of StrategyRalph Bartel, who founded Travelzoo and who is a director of the Company, to provide consulting services. Fees for these services rendered during the nine months ended September 30, 2011 totaled approximately $322,500. No consulting services were rendered after September 30, 2011 as effective October 1, 2011, Holger Bartel became a full time employee of Travelzoo Inc. pursuant to an employment agreement, which ended on October 31, 2013. Holger Bartel currently serves solely as an outside director of the Company and is not employed with the Company.
In 2009, the Company sold its Asia Pacific operating segment to Travelzoo (Asia) Limited and Travelzoo Japan K.K., subsidiaries of Azzurro Capital Inc. There is a reciprocal revenue-sharing and hosting agreement among the Azzurro Capital Inc. entities operating the Travelzoo business in Asia Pacific and the Company related to cross-selling audiences and hosting and development services by the Company, which were entered into in connection with the sale of Asia Pacific business segment. The net fees generated by the Company under these agreements amounted to $704,000, $536,000 and $616,000 for the years ended December 31, 2013, 2012 and 2011, respectively. The Company’s net receivables from the Azzurro Capital Inc. entities operating the Travelzoo business in Asia Pacific under these agreements totaled $189,000 and $260,000 as of December 31, 2013 and 2012, respectively. In addition, as part of the sale of the Asia Pacific operating segment in 2009, the Company obtained an option, which expires in June 2020, to repurchase the Asia Pacific business pursuant to the terms of the option agreement.
| Family Relationships |
Holger Bartel, Chairman of the Board of Directors, and Ralph Bartel, a member of the Board of Directors, are brothers. Except for Holger Bartel and Ralph Bartel, there are no familial relationships among any of our officers and directors.
| Involvement in Certain Legal Proceedings |
To our knowledge, during the last ten years, none of our directors and executive officers has: (i) had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (ii) been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses; (iii) been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (iv) been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated; or (v) been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the named executive officers of Travelzoo as of June 13, 2013.March 14, 2014.
| Name | Age | Position | ||
| Christopher Loughlin | 40 | Chief Executive Officer | ||
| Glen Ceremony | 46 | Chief Financial Officer | ||
| Shirley Tafoya | 50 | President, North America | ||
| Richard Singer | 35 | Managing Director, Europe | ||
| Mark | K. Webb | 55 | President, Local Deals | |
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Christopher Loughlin has served as Chief Executive Officer since July 2010 after service as Executive Vice President, Europe from May 2005 to June 20112010 and Vice President of Business Development from 2001 to April 2005. From 1999 to 2001, he was Chief Operating Officer of Weekends.com. Mr. Loughlin holds a BSc(Hons) in Technology Management from Staffordshire University and an MBA from Columbia University Graduate School of Business in New York.York City.
Glen Ceremony has served as Chief Financial Officer since June 2011. From October 2004 to June 2011, Mr. Ceremony worked at Ebay, Inc. and most recently served as Corporate Controller. In 2004, Mr. Ceremony was Senior Director of Global Finance Audit at Electronic Arts Inc. From 1998 to 2004, Mr. Ceremony worked at PWC LLP and from 1990 to 1998 he was at Coopers & Lybrand LLP. Mr. Ceremony received his B.S. in Business Administration from California State University, Sacramento.
Shirley Tafoya has served as President, North America since July 2008 after service as Senior Vice President of Sales from 2001 to June 2008. From 1999 to 2001, Ms. Tafoya was the Director of Western Sales at Walt Disney Internet Group. From 1998 to 1999, Ms. Tafoya was a Sales Manager at IDG/International Data Group. Ms. Tafoya holds a bachelor’sbachelor's degree in Business Administration from Notre Dame de Namur University.
Richard Singer has served as Managing Director, Europe since July 2012 after service as Commercial Director, Europe from January 2012 to July 2012. From August 2003 to January 2012, Mr. Singer worked at Telegraph Media Group and most recently served as General Manager, Telegraph Travel. Mr. Singer holds a BSc(Hons) degree in Sports Science and Management, and an MSc in Management postgraduate degree, each from Loughborough University, United Kingdom.
Mark K. Webb has served as President, Local Deals since February 2012. From November 2009 to February 2012, Mr. Webb worked at British Airways as Senior Vice President, Head of Sales, North America. From July 2007 to October 2009, Mr. Webb worked at Citicorp Credit Services as Executive Vice President, Head of Business Development. From 1983 to 2006, Mr. Webb worked at American Express Company and most recently served as Senior Vice President, Head of Global Client Group, of American Express Corporate Services. Mr. Webb holds a bachelor's degree with distinction in Policy Studies from Dartmouth College and an MBA from Columbia University Graduate School of Business School.in New York City.
APPROVAL OF STOCK OPTIONS (PROPOSAL 2)
The Company entered into a Nonqualified Stock Option Agreement (the “Stock Option Agreement”) with Mr. Christopher Loughlin (the “Optionee”) on July 22, 2013, pursuant to which the Company granted Mr. Loughlin the option (the “Option”) to purchase 75,000 shares of the Company’s common stock. The options will begin to partly vest on July 1, 2015. Stockholders are being asked to approve the issuance of common stock which is issuable to Mr. Loughlin upon exercise of the Option. The principal terms of the Stock Option Agreement are summarized below. The following summary is qualified in its entirety by the full text of the Stock Option Agreement, which is incorporated herein by reference to Exhibit 10.14 to the Company’s report on Form 10-Q, filed October 24, 2013.
Exercisability of Option
The exercise price of the Option is $29.58 per share. The Option will become exercisable in accordance with the following schedule:
| Ÿ | 33 1/3% (25,000 shares) of the Option will vest on July 1, 2015 | ||
| Ÿ | 33 1/3% (25,000 shares) of the Option will vest on July 1, 2016 | ||
| Ÿ | 33 1/3% (25,000 shares) of the Option will vest on July 1, 2017 | ||
Mr. Loughlin must exercise the Option by July 22, 2023; after such date, the Option will expire.
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Exercise of Option
Optionee may exercise, in whole or in part, the Option by delivering to the Company not less than 30 days prior to the exercise date (or such shorter period the Company may approve) a written notice of exercise, designating the number of shares to be purchased, along with payment of the full amount of the purchase price of the shares being purchased. The purchase price may be paid in cash or, in the discretion of the Board of Directors, by tender of shares of common stock already owned by Optionee or other method.
Adjustment of Option
As is customary in stock option agreements of this nature, the number of shares subject to the Option and exercise price are subject to adjustment in the event there is any change in the number of shares of outstanding common stock of the Company by reason of a stock dividend, recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar event.
Transfer Restrictions
The Option is not transferable by Optionee other than by will or the laws of descent and distribution and may be exercised during Optionee’s lifetime only by him or his guardian or legal representative.
Effect of Termination of Employment
If Optionee’s employment with the Company is terminated, including in the event of his death or disability, any portion of the Option which is not then exercisable will immediately terminate. With respect to any portion of the Option which is then exercisable on the date of termination of employment, Optionee (or, in the event of his death, his legatee(s) under his last will, or his personal representatives or distributes) may exercise the Option for a period of three (3) months following such termination, but in no event after July 22, 2023.
Registration
The Company will register the shares of common stock made available under the Stock Option Agreement under the Securities Act of 1933, as amended.
Federal Income Tax Consequences
The Company is generally entitled to a Federal income tax deduction in an amount equal to the difference between the exercise price of the Option and the fair market value of the shares at the time of exercise, and Optionee would generally recognize taxable income in that amount.
Personal Interest
Mr. Christopher Loughlin is the Chief Executive Officer of the Company.
Vote Required
Approval of this proposal requires the affirmative vote of a majority of the shares of the Company’s Common Stock present in person or represented by proxy and entitled to vote on the proposal.
Board of Directors’ Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THIS PROPOSAL RELATING TO THE STOCK OPTION AGREEMENT.
ADVISORY VOTE ON THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS OF THE COMPANY (PROPOSAL 3)
Section 14A of the Exchange Act requires that we include in this proxy statement a non-binding stockholder vote on our executive compensation as described herein (commonly referred to as "Say-on-Pay").
We encourage stockholders to review the Compensation Discussion and Analysis included in this proxy statement. Our executive compensation program has been designed to pay for performance and align our executive compensation with business strategies focused on long termlong-term growth and creating value for stockholders while also paying competitively and focusing on the total compensation perspective. We feel this design is evidenced by the following:
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Our goal is to attract, motivate and retain key executives and to reward executives for value creation.
| We provide a significant portion of our total compensation in the form of performance-based compensation; for example, approximately 18% to 71% of our named executive officers' total compensation for 2013 was in the form of performance-based compensation based on the achievement of quarterly corporate financial measures such as revenue, operating income and audience marketing. | |||
| This is not a mechanical process, and our Board of Directors uses its judgment and experience and works with our Compensation Committee to determine the appropriate mix of compensation for each individual. | |||
The Board of Directors strongly endorses the Company's executive compensation program and unanimously recommends that stockholders vote in favor of the following resolution:
RESOLVED, that the stockholders approve the compensation of our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis and the other tabular and narrative disclosure in the Company's proxy statement for its 20132014 Annual Meeting of Stockholders.
| Required Vote |
Because the vote is advisory, it will not be binding upon the Board of Directors or the Compensation Committee and neither the Board of Directors ornor the Compensation Committee will be required to take any action as a result of the outcome of the vote on this proposal. The Compensation Committee will consider the outcome of the vote when considering future executive compensation arrangements. The affirmative vote of the majority of the shares of the Company’sCompany's Common Stock present in person or represented by proxy and entitled to vote on the proposal will be considered as the approval, by an advisory vote, of the compensation of our named executive officers.
| Board of Directors' Recommendation |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE ADVISORY RESOLUTION RELATING TO THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
COMPENSATION DISCUSSION AND ANALYSIS
We hold annual votes on executive compensation, in accordance with shareholder recommendation made at the 20122011 annual meeting. In light of last year’syear's shareholder approval of the compensation for executives, there were no significant changes in executive compensation.
| Overview of Compensation Program |
The following Compensation Discussion and Analysis, or “CD&A,”("CD&A"), describes our overall compensation philosophy and the primary components of our compensation program. Furthermore, the CD&A explains the process by which the Compensation Committee, or “Committee”"Committee", determined the 20122013 compensation for our Chief Executive Officer, Chief Financial Officer and other most highly compensated officers. We refer to these individuals collectively as the “named executives”"named executives" or the “named"named executive officers.”"
| Compensation Philosophy and Objectives |
The fundamental objectives of our executive compensation program are to attract and retain highly qualified executive officers, motivate these executive officers to materially contribute to our long-term business success, and align the interests of our executive officers and stockholders by rewarding our executives for individual and corporate performance based on targets established by the Committee.
We believe that achievement of these compensation program objectives enhances long-term profitability and stockholder value. The elements utilized to help achieve the Committee’sCommittee's objectives include the following:
Accountability for Individual Performance. Compensation should in large part depend on the named executive's individual performance in order to motivate and acknowledge the key contributors to our success.
Recognition for Business Performance. Compensation should take into consideration our overall financial performance and overall growth. | |||
Attracting and Retaining Talented Executives. Compensation should generally reflect the competitive marketplace and be designed to attract and retain superior employees in key competitive positions.
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We implement our compensation philosophy through setting base salaries for our executive officers, through the use of our executive bonus plan and through reviewing and approving other terms of employment agreements.
| Compensation Determination Process |
Compensation Committee Members.The Committee is responsible for establishing, overseeing and reviewing executive compensation policies and for approving, validating and benchmarking the compensation and benefits for named executive officers. The Committee is also responsible for determining the fees paid to our outside directors. The Committee includes Ms. Kelly M. UrsoMr. Michael Karg (Chair) and Ms. Mary Reilly. Mr. David J. Ehrlich.Karg and Ms. Urso and Mr. EhrlichReilly satisfied the independence requirements of the NASDAQ.
Role of Management. During 2012,2013, the Committee engaged in its annual review of executive compensation with the goal of ensuring the appropriate combination of fixed and variable compensation linked to individual and corporate performance. In the course of its review, the Committee considered the advice and input of the Company’sCompany's CEO and data prepared by management, including a comparison of the current compensation of the named executive officers with publicly available information. Management did rely on a service from Equilar Inc., a compensation research firm, to provide peer executive compensation data from proxies and a compensation survey for comparison purposes. However, management did not receive advice from Equilar in setting our executive compensation. The data utilized by the Committee included salary and total compensation information based on the title, job
description, and geographic location of similarly situated executives. The most significant aspects of the CEO’sCEO's role in the compensation determination process are evaluating employee performance, establishing business performance targets, goals and objectives and recommending salary and bonus levels. The CEO does not participate in discussions regarding his compensation.
The Committee compared the compensation received by the Company’sCompany's named executive officers with the levels of compensation received by similarly situated executives in the same geographic location in light of the named executives’executives' responsibilities, performance, experience and tenure, in order to arrive at the total compensation package for each of the named executive officers. In some cases, the compensation package that the Committee awarded a named executive officer was at or below the median compensation received by executives compared to third-party data, while in other instances the compensation was higher due to the executive’sexecutive's responsibilities, performance, experience and tenure.
The Committee did not engage an outside consulting firm to provide advice on executive compensation.
| Components of Executive Compensation |
The Committee has structured an executive compensation program comprised of base salary, cash bonus and non-equity incentive pay. In addition, during 2012, the Committee approved the grant of options to the Company’sCompany's Chief FinancialExecutive Officer and President, North America, each for 50,00075,000 shares of common stock as further described in our 2011 proxy statement and in the Nonqualifiedunder "Approval of Stock Option Agreements between Travelzoo Inc. and both Glen Ceremony and Shirley Tafoya, dated January 23, 2012 (incorporated by reference to our Current Report on Form 8-K (File No. 000-50171), filed March 30, 2012)Options (Proposal 2)".
Base Salary.Salary
The Committee considered two types of potential base salary increases for the named executive officers in 2012:2013: (1) “merit increases”"merit increases" based upon each named executive’sexecutive's individual performance; and/or (2) “market adjustments”"market adjustments" based upon the salary range for similarly situated executives.
In determining merit increases, the Committee considers the specific responsibilities of the executive and the executive’sexecutive's overall performance and tenure with the Company. In addition, the Committee also considers the CEO’sCEO's evaluation of each named executive officer in making the decision regarding merit increases.
The Committee determines any market adjustments based on the Committee’sCommittee's comparison of the executive’sexecutive's compensation with statistical information on average compensation for similarly situated executives that is publicly available.
The Committee did not make any changes to the salaries of Mr. Christopher Loughlin, Mr. Glen Ceremony Mr. Holger Bartel,and Ms. Shirley Tafoya in 2013. Mr. Richard Singer and Mr. Mark K.WebbK. Webb base salaries were increased as shown in 2012.on the Summary Compensation Table based upon their individual performance and salary ranges for similarly situated executives in 2013.
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Incentive Bonus Pay.Pay
In 2010,2013, 2012 and 2011, and 2012, Mr. Christopher Loughlin, Mr. Glen Ceremony, Ms. Shirley Tafoya, Mr. Richard Singer and Mr. Mark Webb also received incentive bonuses pursuant to the terms of their employment agreements.
agreements and the discretion of the Board of Directors.
Pursuant to the terms of Mr. Loughlin’s previous employment agreement dated May 16, 2005, as amended on July 12, 2006 and as amended on July 1, 2007, Mr. Loughlin was eligible to receive quarterly and annual bonuses. Mr. Loughlin’s bonuses were payable in British pounds and have been translated into U.S. dollars (at the rate of £1 = $1.54431) for the purposes of this summary. Mr. Loughlin was eligible to receive the following quarterly bonuses:
| Criteria | Quarterly Bonus Payment | |||
| Revenue goal as defined in the official budget for Europe is met | $ | 11,582 | ||
| Net income goal as defined in the official budget for Europe is met | 11,582 | |||
| Subscriber goal as defined in the official budget for Europe is met | 11,582 | |||||
| Performance evaluation by the Chairman of the Company | Up to | 11,582 | ||||
| Total maximum bonus per quarter | Up to | $ | 46,328 | |||
2013.
The quarterly Performance Bonus is calculated as follows:
| Criteria | Quarterly Bonus Payment | ||
| Worldwide revenue target for the quarter met AND there are no more than two Significant Customers AND no Significant Customer accounts for 17% or more of Worldwide consolidated revenue for the quarter | $ | 20,000 | |
| Worldwide operating income target for the quarter met | 20,000 | ||
| Worldwide subscriber target for the quarter met | 20,000 | ||
| Total maximum Performance Bonus per quarter | $ | 60,000 | |
based upon worldwide revenue, operating income and audience targets. The revenue bonus is calculated based upon a sliding scale that ranges from 95% through 105% achievement of the target resulting in a potential bonus that ranges from $16,000 to $32,000. The quarterly revenue bonus at 100% of target foris $26,667 and the maximum revenue bonus is $32,000. The revenue bonus requires that there are no more than two significant customers and that no significant customer is 17% or more than worldwide revenue. The operating income bonus is calculated based upon a sliding scale that ranges from 90% through 105% achievement of the target resulting in a potential bonus that ranges from $16,000 to $32,000. The quarterly operating income bonus at 100% of target is $26,666 and the maximum operating income bonus is $32,000. The audience bonus is calculated based upon achievement of certain audience targets resulting in a potential bonus of up to $26,667. The total maximum Performance Bonus per quarter for the revenue, operating income and audience components combined is $90,667.
Mr. Loughlin earned a quarterly bonus for revenue and worldwide subscribers were not metoperating income in the first and second quarters of 2013 and earned a quarterly bonus for 2012.the audience for each quarter of 2013. Mr. Loughlin did not receive anyreceived Performance Bonuses in 2012.totaling $184,364 during 2013. For 2013, Mr. Loughlin received 51% of the maximum Performance Bonus. The Company believes that targets set for worldwide revenue, worldwide operating income and worldwide subscribersaudience align with the Company’sCompany's desire to continue to grow the business. Since the individual targets are intended to be challenging, and since the separate targets related to different aspects of the Company’sCompany's performance, it is expected it will be difficult for all the targets to be achieved for any given year.
Mr. Loughlin is also eligible to receive a quarterly Discretionary Bonus of up to $20,000 per quarter. The Discretionary Bonus is to be determined by the Board of Directors at its sole and absolute discretion. In exercising such discretion, the Board of Directors takes into consideration Mr. Loughlin’sLoughlin's individual performance. In evaluating Mr. Loughlin’sLoughlin's individual performance during 2012,2013, the Board of Directors considered factors such as the quality of Mr. Loughlin’sLoughlin's strategic management to ensure the long-term success
of the Company, the development of the Company’sCompany's leadership talent, the quality of the content of the Company’sCompany's publications, and the development of the Travelzoo brand. Mr. Loughlin received Discretionary Bonuses totaling $17,500 for 2012.$60,000 in 2013.
Pursuant to the terms of Mr. Ceremony’sCeremony's employment agreement dated May 9, 2011, and effective June 15, 2011 and as amended January 1, 2013, Mr. Ceremony is eligible to receive a quarterly Performance Bonus and a quarterly Discretionary Bonus. Mr. Ceremony was eligible to receive a quarterly Performance Bonus and a quarterly Discretionary Bonus for each quarter during 2012.
2013.
The quarterly Performance Bonus is calculated as follows:
| Criteria | Quarterly Bonus Payment | |||
| Worldwide revenue target for the quarter met AND there are no more than two Significant Customers AND no Significant Customer accounts for 17% or more of Worldwide consolidated revenue for the quarter | $ | 12,500 | ||
| Worldwide operating income target for the quarter met | 12,500 | |||
| Worldwide subscriber target for the quarter met | 12,500 | |||
| Total maximum Performance Bonus per quarter | $ | 37,500 | ||
based upon worldwide revenue, operating income and audience targets. The revenue bonus is calculated based upon a sliding scale that ranges from 95% through 105% achievement of the target resulting in a potential bonus that ranges from $10,000 to $20,000. The quarterly performancerevenue bonus at 100% of target foris $16,667 and the maximum revenue bonus is $20,000. The revenue bonus requires that there are no more than two significant customers and that no significant customer is 17% or more than worldwide revenue. The operating income bonus is calculated based upon a sliding scale that ranges from 90% through 105% achievement of the target resulting in a potential bonus that ranges from $10,000 to $20,000. The quarterly operating income bonus at 100% of target is $16,667 and the maximum operating income bonus is $20,000. The audience bonus is calculated based upon achievement of certain audience targets resulting in a potential bonus of up to $16,666. The total maximum Performance Bonus per quarter for the revenue, operating income and audience components combined is $56,666.
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Mr. Ceremony earned a quarterly bonus for revenue and worldwide subscribers were not met for 2012 except certain targets for the fourth quarter. The quarterly Performance Bonus of $37,500 was guaranteed foroperating income in the first and second quarters of 2012 under2013 and earned a quarterly bonus for the termsaudience for each quarter of his employment agreement.2013. Mr. Ceremony received Performance Bonuses totaling $87,500$116,178 during 2012.2013. For 2012,2013, Mr. Ceremony received 58%51% of the maximum Performance Bonus. The Company believes that targets set for worldwide revenue, worldwide operating income and worldwide subscribersaudience align with the Company’sCompany's desire to continue to grow the business. Since the individual targets are intended to be challenging, and since the separate targets related to different aspects of the Company’sCompany's performance, it is expected it will be difficult for all the targets to be achieved for any given year.
Mr.��Ceremony wasis also eligible to receive quarterlya Discretionary Bonus of up to $12,500 per quarter. The Discretionary Bonus is to be determined by the Chief Executive Officer in hisand the Board of Directors at their sole and absolute discretion. In exercising such discretion, the Chief Executive Officer takesCEO and Board of Directors take into consideration Mr. Ceremony’sCeremony's individual performance. In evaluating Mr. Ceremony’sCeremony's individual performance during 2013, the Chief Financial OfficerCEO and Board of Directors considered factors such as Mr. Ceremony’sCeremony's role as an advisor to the CEO on how to improve the Company’sCompany's financial performance, his initiatives to improve the Company’sCompany's management information systems, his leadership in the areas of corporate governance and business ethics, and the quality of his management of the Company’sCompany's relationships with the investment community. Mr. Ceremony received Discretionary Bonuses totaling $50,000 for 2012.
$88,889 in 2013.
Pursuant to the terms of Mr. Holger Bartel’s employment agreement dated September 17, 2008 and effective October 1, 2008, Mr. Bartel was eligible to receive a quarterly Performance Bonus and a quarterly Discretionary Bonus for the first and second quarters of 2010 as his employment terminated on June 30, 2010 as further described in the 2011 proxy statement. Mr. Bartel does not have any Performance Bonus nor Discretionary Bonus pursuant to the terms of his employment agreement for Head of Strategy, which is effective October 1, 2011.
2013.
The quarterly Performance Bonus is calculated as follows:
| Criteria | Quarterly Bonus Payment | |||
| North America revenue target for the quarter met AND there are no more than two Significant Customers AND no Significant Customer accounts for 17% or more of North America consolidated revenue for the quarter | $ | 30,000 | ||
| North America operating income target for the quarter met | 30,000 | |||
| North America subscriber target for the quarter met | 30,000 | |||
| Total maximum Performance Bonus per quarter | $ | 90,000 | ||
Ms. Tafoya earned a quarterly bonus for revenue, operating income and audience for each of the quarters of 2012.2013. Ms. Tafoya received Performance Bonuses totaling $80,000$443,561 during 2012.2013. For 2012,2013, Ms. Tafoya received 22%82% of the maximum Performance Bonus. The Company believes that targets set for North America revenue, North America operating income and North America subscribersaudience align with the Company’sCompany's desire to continue to grow the business. Since the individual targets are intended to be challenging, and since the separate targets related to different aspects of the Company’sCompany's performance, it is expected it will be difficult for all the targets to be achieved for any given year.
Ms. Tafoya is also eligible to receive a quarterly Discretionary Bonus of up to $30,000 per quarter. The Discretionary Bonus is to be determined by the Chief Executive Officer in hisCEO and the Board of Directors at their sole and absolute discretion. Ms. Tafoya was eligible to receive quarterly Discretionary Bonuses for each quarter of 2011. In exercising such discretion, the Chief Executive Officer takesCEO and Board of Directors take into consideration Ms. Tafoya’sTafoya's individual performance. In evaluating Ms. Tafoya’sTafoya's individual performance during 2012,2013, the Chief Executive OfficerCEO and Board of Directors considered factors such as the quality of Mr. Tafoya’sMs. Tafoya's strategic management to ensure the long-term success of the Company, the development of the Company’sCompany's leadership talent, the quality of the content of the Company’sCompany's publications, and the development of the Travelzoo brand. Ms. Tafoya received Discretionary Bonuses totaling $110,000 for 2012.$30,000 in 2013.
Pursuant to the terms of Mr. Webb’sSinger's employment agreement dated October 31, 2011, effective January 19,16, 2012 and effective February 27,as amended July 1, 2012 and January 1, 2013, Mr. WebbSinger is eligible to receive a quarterly Performance Bonus and a quarterly Discretionary Bonus.for each quarter during 2013. Mr. Webb was eligible to receive a quarterlySinger's Performance Bonus is payable in British pounds and a quarterly Discretionary Bonushave been translated into US dollars (at the rate of £1 to $1.56) for partthe purposes of the first quarter, the second, third, and fourth quarters during 2012. Also under the terms of Mr. Webb's employment agreement, a sign on bonus of $20,000 was paid in the first quarter of 2012.
this summary.
The quarterly Performance Bonus is calculated as follows:
| Criteria | Quarterly Bonus Payment | |||
Quarterly worldwide Local Deals revenue target met or exceeded, per the official operating budgets | $ | 20,000 | ||
Quarterly worldwide Local Deals income target met or exceeded, per the official operating budgets, met or exceeded | 20,000 | |||
| Total maximum Performance Bonus per quarter | $ | 40,000 | ||
based upon Europe revenue, operating income and audience targets. The revenue bonus is calculated based upon a sliding scale that ranges from 95% through 105% achievement of the target resulting in a potential bonus that ranges from $18,720 to $37,440. The quarterly revenue bonus at 100% of target is $31,200 and the maximum revenue bonus is $37,440. The revenue bonus requires that there are no more than two significant customers and that no significant customer is 17% or more than Europe revenue. The operating income bonus is calculated based upon a sliding scale that ranges from 90% through 105% achievement of the target resulting in a potential bonus that ranges from $18,720 to $37,440. The quarterly operating income bonus at 100% of target is $31,200 and the maximum operating income bonus is $37,440. The audience bonus is calculated based upon achievement of certain audience targets resulting in a potential bonus of up to $15,600. The total maximum Performance Bonus were guaranteedper quarter for the firstrevenue, operating income and secondaudience components combined is $90,480.
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Mr. Singer earned a quarterly bonus for revenue, operating income and audience for each of the quarters of 2012.2013. Mr. WebbSinger received the first and second quarter Performance Bonuses as well as a sign on bonus, totaling $47,473 for 2012.$291,294 during 2013. For 20122013, Mr. WebbSinger received 36%80% of the maximum Performance Bonus. The Performance Bonuses for the first quarter of 2012 was pro-rated based upon Mr. Webb's start date. The Company believes that targets set for worldwide Local DealsEurope revenue, operating income and worldwide Local Deals incomeaudience align with the Company’sCompany's desire to continue to grow Local Dealsthe business. Since the individual targets are intended to be challenging, and since the separate targets related to different aspects of the Company’sCompany's performance, it is expected it will be difficult for all the targets to be achieved for any given year.
Mr. Singer is also eligible to receive a Discretionary Bonus to be determined by the CEO. In exercising such discretion, the CEO and Board of Directors take into consideration Mr. Singer's individual performance. In evaluating Mr. Singer's individual performance during 2013, the CEO considered factors such as the quality of Mr. Singer's strategic management to ensure the long-term success of the Company, the development of the Company's leadership talent, the quality of the content of the Company's publications, and the development of the Travelzoo brand. Mr. Singer received Discretionary Bonuses totaling $9,099 in 2013.
Pursuant to the terms of Mr. Webb's employment agreement dated January 19, 2012, effective February 27, 2012 and as amended January 1, 2013, Mr. Webb is eligible to receive a quarterly Performance Bonus and a quarterly Discretionary Bonus for each of the quarters during 2013.
The quarterly Performance Bonus is calculated based upon Local Deals revenue and operating income targets. The revenue bonus is calculated based upon a sliding scale that ranges from 90% through 105% achievement of the target resulting in a potential bonus that ranges from $18,000 to $36,000. The quarterly revenue bonus at 100% of target is $30,000 and the maximum revenue bonus is $36,000. The operating income bonus is calculated based upon a sliding scale that ranges from 80% through 110% achievement of the target resulting in a potential bonus that ranges from $18,000 to $36,000. The quarterly operating income bonus at 100% of target is $30,000 and the maximum operating income bonus is $36,000. The total maximum Performance Bonus per quarter for the revenue and operating income components combined is $72,000.
Mr. Webb earned a quarterly bonus for revenue and operating income for the first and second quarters of 2013. Mr. Webb received Performance Bonuses totaling $107,053 during 2013. For 2013, Mr. Webb received 29% of the maximum Performance Bonus. The Company believes that targets set for Local Deals revenue and operating income align with the Company's desire to continue to grow the business. Since the individual targets are intended to be challenging, and since the separate targets related to different aspects of the Company's performance, it is expected it will be difficult for all the targets to be achieved for any given year.
Mr. Webb was also eligible to receive a quarterly Discretionary Bonus of up to $20,000 per quarter. The Discretionary Bonus was to be determined by the Chief Executive OfficerCEO in his sole and absolute discretion. In exercising such discretion, the Chief Executive OfficerCEO takes into consideration Mr. Webb’sWebb's individual performance. In evaluating Mr. Webb’sWebb's individual performance during 2012,2013, the Chief Executive OfficerCEO considered factors such as Mr. Webb’sWebb's leadership role in developing Local Deals worldwide,, Mr. Webb’sWebb's strategic management to ensure the long-term success of the Company's Local Deals business, the development of the Company’sCompany's leadership talent. Mr. Webb received Discretionary Bonuses totaling $67,473$60,000 for 2012.2013.
Other Compensation-Related Matters
Stock Options. The Company grants certain executive officers stock options (which represent the right to purchase a specific number of shares of company common stock at a predetermined price, subject to vesting conditions), to align their incentives with the long-term interests of our stockholders, retain them for the long term, reward them for potential long-term contributions, and provide a total compensation opportunity commensurate with our performance.
Perquisites and Additional Benefits.Benefits. The Company seeks to maintain an open and inclusive culture in its facilities and operations among executives and other Company employees. Accordingly, the Company does not provide executives with reserved parking spaces or separate dining or other facilities, nor does the Company have programs for providing personal-benefit perquisites to executives, such as club dues or defraying the cost of personal entertainment. Named executive officers and employees may seek reimbursement for business related expenses in accordance with our business expense reimbursement policy.
Employment Agreements. The Company has entered into employment agreements with the named executive officers, some of which contain severance and change of control provisions. The terms of such employment agreements are described in more detail below in Employment Agreements and Potential Payments Upon Termination or Change-in-Control.Change-in-Control. The Committee believes these agreements are appropriate for a number of reasons, including the following:
18 | the agreements assist in attracting and retaining executives as we compete for talented employees in a marketplace where such agreements are commonly offered; | ||
the change in control provisions require terminated executives to execute a release in order to receive severance benefits; and
the change in control and severance provisions help retain key personnel during rumored or actual acquisitions or similar corporate changes.
Compensation Committee Interlocks & Insider Participation
In 2012,2013, Mr. Holger Bartel earned $577,272$425,909 in salary serving as an employee of the Company as Head of Strategy. Mr. Holger Bartel employment as the Head of Strategy ended on October 31, 2013. Mr. Holger Bartel was a consultant of the Company from July 2010 to September 2011, and became employed by the Company as Head of Strategy on October 1, 2011. In these roles, he earned $472,500 in salary and consulting fees in 2011. The current members of our compensation committee are Mr. EhrlichKarg and Ms. Urso.Reilly. In 2012,2013, none of our executive officers served as a member of the compensation committee of another entity, or as a director of another entity, one of whose executive officers served on our compensation committee.
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Summary Compensation Table
The following summary compensation table sets forth information concerning the compensation to our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers during the fiscal years ended December 31, 2013, 2012, 2011 and 2010. 2011.
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) | ||||||||||||
| Christopher Loughlin (3) | 2012 | 562,000 | 17,500 | (7 | ) | — | — | (12 | ) | 46,327 | (17 | ) | 625,827 | ||||||
| Chief Executive Officer (effective July 1, 2010) | 2011 | 556,500 | 43,500 | (7 | ) | — | 40,000 | (12 | ) | 46,555 | (17 | ) | 686,555 | ||||||
| 2010 | 435,608 | 20,000 | (7 | ) | — | 379,912 | (12 | ) | 61,886 | (17 | ) | 897,406 | |||||||
| Glen Ceremony (4) | 2012 | 450,000 | 50,000 | (8 | ) | 953,800 | 87,500 | (13 | ) | 1,500 | (18 | ) | 1,542,800 | ||||||
| Chief Financial Officer (effective June 15, 2011) | 2011 | 245,455 | 25,000 | (8 | ) | — | 150,000 | (13 | ) | 1,500 | (18 | ) | 421,955 | ||||||
| Holger Bartel (5) | 2012 | 577,272 | — | — | — | 45,680 | (19 | ) | 622,952 | ||||||||||
| Head of Strategy (effective October 1, 2011), consultant and Chairman of the Board of Directors | 2011 | 150,000 | — | — | — | 366,500 | (19 | ) | 516,500 | ||||||||||
| 2010 | 200,000 | 40,000 | (9 | ) | — | 60,000 | (14 | ) | 257,398 | (19 | ) | 557,398 | |||||||
| Shirley Tafoya | 2012 | 542,000 | 110,000 | (10 | ) | 953,800 | 80,000 | (15 | ) | 3,869 | (20 | ) | 1,689,669 | ||||||
| President, North America | 2011 | 536,500 | 120,000 | (10 | ) | — | 270,000 | (15 | ) | 1,500 | (20 | ) | 928,000 | ||||||
| 2010 | 522,906 | 200,000 | (10 | ) | — | 150,000 | (15 | ) | 3,869 | (20 | ) | 876,775 | |||||||
| Mark K. Webb (6) | 2012 | 324,800 | 67,473 | (11 | ) | — | 47,473 | (16 | ) | — | 439,746 | ||||||||
| President Local Deals (Effective February 27, 2012) | |||||||||||||||||||
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||
| Christopher Loughlin (3) | 2013 | 562,000 | 60,000 | (7 | ) | 1,415,250 | 184,364 | (12 | ) | 24,429 | (17 | ) | 2,246,043 | ||||||||||||||||
| Chief Executive Officer | 2012 | 562,000 | 17,500 | (7 | ) | — | — | (12 | ) | 46,327 | (17 | ) | 625,827 | ||||||||||||||||
| 2011 | 556,500 | 43,500 | (7 | ) | — | 40,000 | (12 | ) | 46,555 | (17 | ) | 686,555 | |||||||||||||||||
| Glen Ceremony (4) | 2013 | 450,000 | 88,889 | (8 | ) | — | 116,178 | (13 | ) | 3,903 | (18 | ) | 658,970 | ||||||||||||||||
| Chief Financial Officer (effective June 15, 2011) | 2012 | 450,000 | 50,000 | (8 | ) | 953,800 | 87,500 | (13 | ) | 1,500 | (18 | ) | 1,542,800 | ||||||||||||||||
| 2011 | 245,455 | 25,000 | (8 | ) | 150,000 | (13 | ) | 1,500 | (18 | ) | 421,955 | ||||||||||||||||||
| Shirley Tafoya | 2013 | 542,000 | 30,000 | (9 | ) | — | 443,561 | (14 | ) | 4,173 | (19 | ) | 1,019,734 | ||||||||||||||||
| President, North America | 2012 | 542,000 | 110,000 | (9 | ) | 953,800 | 80,000 | (14 | ) | 3,869 | (19 | ) | 1,689,669 | ||||||||||||||||
| 2011 | 536,500 | 120,000 | (9 | ) | — | 270,000 | (14 | ) | 1,500 | (19 | ) | 928,000 | |||||||||||||||||
| Richard Singer (5) | 2013 | 311,573 | 9,099 | (10 | ) | — | 291,295 | (15 | ) | 24,168 | (20 | ) | 636,135 | ||||||||||||||||
| Managing Director, Europe (effective July 1, 2012) | 2012 | 267,688 | 32,918 | (10 | ) | — | 49,374 | (15 | ) | 10,341 | (20 | ) | 360,321 | ||||||||||||||||
| Mark K. Webb (6) | 2013 | 437,500 | 60,000 | (11 | ) | — | 107,053 | (16 | ) | — | 604,553 | ||||||||||||||||||
| President, Local Deals (effective February 27, 2012) | 2012 | 324,800 | 67,473 | (11 | ) | — | 47,473 | (16 | ) | — | 439,746 | ||||||||||||||||||
Notes:
| (1) | Under SEC rules, the values reported reflect the aggregate grant date fair value of grants of stock options to each of the listed officers in the years shown. We calculate the grant date fair value of stock options using the Black-Scholes option pricing model. For a more detailed discussion on the valuation model and assumptions used to calculate the fair value of our options, refer to 12, 2014. |
| (2) | The amounts reflected in this column reflect the performance-based cash awards paid to the named executives pursuant to certain employment agreements, as discussed in the CD&A above. |
| (3) | Mr. Loughlin became the Chief Executive Officer on July 1, 2010. |
| (4) | Mr. Ceremony became the Chief Financial Officer on June 15, 2011. |
| (5) | Mr. Singer became Commercial Director, Europe on January 16, 2012 and become Managing Director, Europe on July 1, |
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| (6) | Mr. Webb became the President, Local Deals on February 27, 2012. |
| (7) | For 2013, 2012 |
| (8) | For 2013, 2012 | |
| (9) | For 2013, 2012 and 2011, amount consists |
| (10) | For 2013 and 2012, amount consists |
| (11) | For 2013 and 2012, amount consists of discretionary bonuses earned per the terms of Mr. Webb's employment agreement. |
| (12) | Amount represents quarterly performance bonuses earned per the terms of Mr. |
| (13) | Amount represents quarterly performance bonuses earned per the terms of Mr. |
| (14) | Amount represents quarterly performance bonuses earned per the terms of Ms. Tafoya's employment agreement. |
| (15) | Amount represents quarterly performance bonuses earned per the terms of Mr. |
| (16) | Amount represents quarterly performance bonuses earned per the terms of Mr. |
| (17) | For 2013, amount consists of housing allowance of $22,929 and $1,500 of the Company's matching contribution under the Company's 401(k) Plan. For 2012, amount consists of housing allowance of |
| (18) | For |
| (19) | For 2013, 2012 and 2011, amount consists of the Company's matching contribution of $1,500 under the Company's 401(k) Plan. In addition, for 2013 and 2012, amount includes $2,673 and $2,369 in bonus payments made to eligible employees. |
| (20) | For 2013, amount consists of the Company's contribution of $21,840 to the | |
| family. For 2012, amount consists of |
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| Grants of Plan-Based Awards in 2013 |
The following table sets forth certain information with respect to non-equity incentive plan awards granted to each of our named executive officers during the fiscal year ended December 31, 2012. 2013.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | ||||||
Threshold ($) | Target ($) | Maximum ($) | ||||
| Christopher Loughlin (1) | 128,000 | 213,336 | 362,668 | |||
| Glen Ceremony (2) | 80,000 | 133,336 | 226,664 | |||
| Shirley Tafoya (3) | 192,000 | 320,000 | 544,000 | |||
| Richard Singer (4) | 149,760 | 249,600 | 424,320 | |||
| Mark Webb (5) | 144,000 | 240,000 | 288,000 | |||
| Amount represents the potential | ||
| (2) | ||
Amount represents the potential |
| (3) | ||
Amount represents the potential |
| (4) | Amount represents the potential annual Performance Bonus payments under the terms of Mr. Singer's employment agreement for 2013. The business measurements and performance goals for determining the Performance Bonus payout are described in the CD&A. |
| (5) | Amount represents the potential annual Performance Bonus payments under the terms of Mr. Webb's employment agreement for 2013. The business measurements and performance goals for determining the Performance Bonus payout are described in the CD&A. |
Outstanding Equity Awards at December 31, 20122013
| Option Awards | ||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | ||
| Christopher Loughlin | 225,000 | 75,000(1) | 14.97 | 11/18/2019 | ||
| — | 75,000(2) | 29.58 | 7/22/2023 | |||
| Glen Ceremony | 25,000 | 25,000(3) | 28.98 | 1/23/2022 | ||
| Shirley Tafoya | 25,000 | 25,000(3) | 28.98 | 1/23/2022 | ||
| Option Awards | |||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||||
| Christopher Loughlin | 150,000 | 150,000 | (1) | 14.97 | 11/18/2019 | ||||||||
| Glen Ceremony(3) | 0 | 50,000 | (2) | 28.98 | 1/23/2022 | ||||||||
| Shirley Tafoya(4) | 0 | 50,000 | (2) | 28.98 | 1/23/2022 | ||||||||
| (1) | The options are exercisable in increments of 25% from and after July 1 of each year from 2011 through 2014, as long as Mr. |
| (2) | The options are exercisable in increments of 33.33% from and after July 1 of each year from 2015 through 2017, as long as Mr. Loughlin's employment remains in effect at such dates. |
| (3) | The options are exercisable in increments of 25% from and after January 23 of each year from 2013 through 2016, as long as Mr. |
| Option Exercises and Stock Vested |
For the year ended December 31, 2012,2013, there were no options exercised by any of our named executive officers. For the year ended December 31, 2012, 150,0002013, 75,000 shares of Mr. Loughlin's stock options were vested and with respect to stock options held by12,500 shares of Mr. Ceremony and Ms. Tafoya's no sharesstock options were vested.vested, respectively.
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| Employment Agreements and Potential Payments Upon Termination or Change-in-Control |
The Company has employment agreements with its named executive officers and certain other employees. The employment agreements as of December 31, 20122013 with the Company’sCompany's named executive officers are described below.
Mr. Loughlin entered into an employment agreement with the Company on November 18, 2009, pursuant to which he became the Company’sCompany's Chief Executive Officer on July 1, 2010. TheThis agreement was amended on effective January 1, 2013 and August 1, 2013 and has a four-year term.four year term ending on June 30, 2017. The Company may terminate the agreement, with or without cause, upon written notice to Mr. Loughlin. However, if Mr. Loughlin’sLoughlin's employment is terminated at any time without cause or if Mr. Loughlin’sLoughlin's employment is terminated at any time due to a change of control (as defined in the agreement) or if he is not offered a position of comparable pay and responsibilities in the same geographic area in which he worked immediately prior to a change of control, Mr. Loughlin will be entitled to receive his base salary and medical benefits for a twelve month period in exchange for executing a general release of claims as to the Company. Assuming that Mr. Loughlin was terminated by the Company as of December 31, 20122013 without cause, Mr. Loughlin would have been entitled to receive $562,000 and the Company would incur additional expenses for medical benefits of approximately $19,375.
Mr. Loughlin is paid a base salary and is eligible to certain annual and quarterly bonuses. In connection with the agreement, on November 18, 2009 the Company granted Mr. Loughlin options to purchase 300,000 shares of the Company’sCompany's common stock. The Company provided relocation assistance and is providing a housing allowance to Mr. Loughlin in connection with his move from London to New York City. Mr. Loughlin is also entitled to participate in or receive such benefits under the Company’sCompany's employee benefit plans and policies and such other benefits which may be in effect from time to time and as are provided to similarly situated employees of the Company.
Mr. Loughlin agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of his employment and to assign all of his interest in any and all such discoveries and work product to the Company. Furthermore, Mr. Loughlin agreed not to, directly or indirectly, perform services for, or engage in, any business competitive with the Company or solicit the Company’sCompany's customers or employees during the term of his employment and for a period of one year thereafter.
Mr. Ceremony entered into an employment agreement with the Company on June 15, 2011. Pursuant to the terms of the agreement, Mr. Ceremony is an at-will employee and the Company or Mr. Ceremony may terminate the agreement, with or without cause, with or withoutupon three months notice. However, if Mr. Ceremony’sCeremony's employment is terminated at any time without cause, Mr. Ceremony will be entitled to receive his base salary for a six month period in exchange for executing a general release of claims as to the Company. Assuming that Mr. Ceremony was terminated by the Company as of December 31, 20122013 without cause, Mr. Ceremony would have been entitled to receive $225,000. If Mr. Ceremony’sCeremony's employment is terminated at any time due to a change of control (as defined in the agreement) or if he is not offered a position of comparable pay and responsibilities in the same geographic area in which he worked immediately prior to a change of control, Mr. Ceremony will be entitled to receive his base salary and medical benefits for a six month period in exchange for executing a general release of claims as to the Company. Assuming that Mr. Ceremony was terminated by the Company as of December 31, 20122013 following a change of control of the Company, Mr. Ceremony would have been entitled to receive $225,000 and the Company would incur additional expenses for medical benefits of approximately $8,047.
Mr. Ceremony agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of his employment and to assign all of his interest in any and all such discoveries and work product to the Company. Furthermore, Mr. Ceremony agreed to not, directly or indirectly, solicit the Company’s customers or employees during the term of his employment and for a period of one year thereafter.
Ms. Tafoya entered into an employment agreement with the Company on August 4, 2010. Pursuant to the terms of the agreement, Ms. Tafoya is an at-will employee and the Company or Ms. Tafoya may terminate the agreement, with or without cause, with or without notice. However, if Ms. Tafoya’sTafoya's employment is terminated at any time without cause, Ms. Tafoya will be entitled to receive her base salary for a twelve month period in exchange for executing a general release of claims as to the Company. Assuming that Ms. Tafoya was terminated by the Company as of December 31, 20122013 without cause, Ms. Tafoya would have been entitled to receive $542,000. If Ms. Tafoya’sTafoya's employment is terminated at any time due to a change of control (as defined in the agreement) or if she is not offered a position of comparable pay and responsibilities in the same geographic area in which she worked immediately prior to a change of control, Ms. Tafoya will be entitled to receive her base salary and medical benefits for a twelve month period in exchange for executing a general release of claims as to the Company. Assuming that Ms. Tafoya was terminated by the Company as of December 31, 20122013 following a change of control of the Company, Ms. Tafoya would have been entitled to receive $542,000 and the Company would incur additional expenses for medical benefits of approximately $19,350.
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Ms. Tafoya agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of her employment and to assign all of her interest in any and all such discoveries and work product to the Company. Furthermore, Ms. Tafoya agreed to not, directly or indirectly, solicit the Company’sCompany's customers or employees during the term of her employment and for a period of one year thereafter.
Mr. Singer entered into an employment agreement with the Company on January 26, 2012 as amended on July 1, 2012. Pursuant to the terms of the agreement, Mr. Singer is an at-will employee and the Company or Mr. Singer may terminate the agreement, with or without cause upon six months, prior written notice. However, if Mr. Singer's employment is terminated at any time without cause, Mr. Singer will be entitled to receive his base salary for a six month period in exchange for executing a general release of claims as to the Company. Assuming that Mr. Singer was terminated by the Company as of December 31, 2013 without cause, Mr. Singer would have been entitled to receive $155,787.
Mr. Singer agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of his employment and to assign all of his interest in any and all such discoveries and work product to the Company. Furthermore, Mr. Singer agreed to not, directly or indirectly, solicit the Company's customers or employees during the term of his employment and for a period of one year thereafter.
Mr. Webb entered into an employment agreement with the Company on January 26, 2012 as amended on May 22, 2012. Pursuant to the terms of the agreement, Mr. Webb is an at-will employee and the Company or Mr. Webb may terminate the agreement, with or without cause upon six weeks, prior written notice. However, if Mr. Webb’sWebb's employment is terminated at any time without cause, Mr. Webb will be entitled to receive his base salary for a six month period in exchange for executing a general release of claims as to the Company. Assuming that Mr. Webb was terminated by the Company as of December 31, 20122013 without cause, Mr. Webb would have been entitled to receive $162,400. If Mr. Webb’sWebb's employment is terminated at any time due to a change of control (as defined in the agreement) or if he is not offered a position of comparable pay and responsibilities in the same geographic area in which he worked immediately prior to a change of control, Mr. Webb will be entitled to receive his base salary and medical benefits for a six month period and pro rata performance bonus in exchange for executing a general release of claims as to the Company. Assuming that Mr. Webb was terminated by the Company as of December 31, 20122013 following a change of control of the Company, Mr. Webb would have been entitled to receive $202,400$218,750 and the Company would incur additional expenses for medical benefits of approximately $5,598.
Mr. Webb agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of his employment and to assign all of his interest in any and all such discoveries and work product to the Company. Furthermore, Mr. Webb agreed to not, directly or indirectly, solicit the Company’sCompany's customers or employees during the term of his employment and for a period of one year thereafter.
| Forward-Looking Statements |
Disclosures in this Compensation Discussion & Analysis may contain certain forward-looking. Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as “anticipate,” “estimate,” “approximate,” “expect,” “intend,” “plan,” “believe”"anticipate," "estimate," "approximate," "expect," "intend," "plan," "believe" and other words of similar meaning in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this report include the matters discussed regarding the expectation of compensation plans, strategies, objectives, and growth and anticipated financial and operational performance of the Company and its subsidiaries. A variety of factors could cause the Company’sCompany's actual results to differ materially from the anticipated results or other expectations expressed in the Company’sCompany's forward-looking statements. The risks and uncertainties that may affect the operations, performance and results of the Company’sCompany's business and forward-looking statements include, but are not limited to those set forth herein. Any forward-looking statement speaks only as of the date on which such statement is made and the Company does not intend to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.
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| Compensation Committee Report |
The information contained in this report shall not be deemed to be “soliciting material”"soliciting material" or “filed”"filed" with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that Travelzoo specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.
Act.
The Company’sCompany's Compensation Committee has reviewed and discussed the CD&A with management and, based on such review and discussions, the Compensation Committee recommended to the Company’sCompany's Board of Directors that the CD&A be included in the proxy statement on Schedule 14A.
Compensation Committee
Mary Reilly
25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of our common stock beneficially owned as of June 27, 2013March 14, 2014 by (a) each director and nominee for election to the Board of Directors, (b) each named executive officer, (c) all executive officers and directors as a group, and (d) each person known by the Company, as of June 27, 2013, March 14, 2014, to beneficially own more than 5% of the outstanding shares of common stock of the Company. In general, shares “beneficially owned”"beneficially owned" include those shares a person has or shares the power to vote, or the power to dispose of.
| Beneficial Ownership | Beneficial Ownership | |||||||||||
| Beneficial Owner | Number of Shares(1) | Percent of Total(2) | Number of Shares(1) | Percent of Total(2) | ||||||||
| Directors and Named Executive Officers | ||||||||||||
| Holger Bartel | 200,000 | 1.3 | % | 200,000 | 1.36 | % | ||||||
| Ralph Bartel(3)* | 7,230,538 | 47.1 | % | 7,230,538 | 49.03 | % | ||||||
| David J. Ehrlich | — | — | — | — | ||||||||
| Glen Ceremony | 12,500 | ** | 25,000 | ** | ||||||||
| Christopher Loughlin | 225,000 | 1.5 | % | 225,000 | 1.53 | % | ||||||
| Donovan Neale-May | — | — | — | — | ||||||||
| Shirley Tafoya | 12,500 | ** | 25,000 | ** | ||||||||
| Kelly M. Urso | 525 | ** | 525 | ** | ||||||||
| Mark K. Webb | 500 | ** | 500 | ** | ||||||||
| Directors and executive officers as a group (8 persons) | 7,681,563 | 50.0 | % | |||||||||
| Michael Karg | — | — | ||||||||||
| Mary Reilly | — | — | ||||||||||
| Directors and executive officers as a group (11 persons) | 7,706,563 | 52.26 | % | |||||||||
| * Persons Owning More Than 5% of Common Stock | ||||||||||||