SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
TIVO INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1 Title of each class of securities to which transaction applies:
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2 Aggregate number of securities to which transaction applies:
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3 Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4 Proposed maximum aggregate value of transaction:
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5 Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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TiVo Inc.
2160 Gold Street
P.O. Box 2160
Alviso, CA 95002
----------------
[LOGO OF TIVO INC.]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, JUNE 15, 2001
----------------
To The Stockholders of TiVo Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of TiVo Inc.,
a Delaware corporation, will be held on Friday, June 15, 2001, at 10:00 a.m.
local time at the offices of Latham & Watkins, 135 Commonwealth Drive, Menlo
Park, California for the following purposes:
1. To elect four directors to hold office until the 2004 Annual Meeting
of Stockholders;
2. To ratify the selection of Arthur Andersen LLP as independent
auditors of TiVo for its fiscal year ending January 31, 2002;
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors, are
more fully described in the proxy statement that is attached and made a part of
this Notice.
The Board of Directors has fixed the close of business on Friday, April 20,
2001 as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting or at any adjournment or
postponement thereof.
By Order of the Board of Directors,
/s/ Michael Ramsay
Michael Ramsay
Chairman of the Board, Chief
Executive Officer and President
Alviso, California
April 30, 2001
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER
TO ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS
POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT
PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON
IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE
HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT
THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR
NAME.
TiVo Inc.
2160 Gold Street
P.O. Box 2160
Alviso, CA 95002
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PROXY STATEMENT
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General
The enclosed proxy is solicited on behalf of the Board of Directors of TiVo
Inc., a Delaware corporation ("TiVo"), for use at the Annual Meeting of
Stockholders to be held on June 15, 2001, at 10:00 a.m. local time (the "Annual
Meeting"), or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at the offices of Latham & Watkins at 135 Commonwealth
Drive, Menlo Park, California. TiVo intends to mail this proxy statement and
accompanying proxy card on or about May 7, 2001 to all stockholders entitled to
vote at the Annual Meeting.
Shares Entitled to Vote
Only holders of record of Series A Convertible Preferred Stock and Common
Stock at the close of business on April 20, 2001 will be entitled to notice of
and to vote at the Annual Meeting. At the close of business on April 20, 2001,
TiVo had outstanding and entitled to vote 1,111,861 shares of its $.001 par
value Series A Convertible Preferred Stock (the "Preferred Stock") and
43,721,782 shares of its $.001 par value Common Stock (the "Common Stock").
The Preferred Stock shall vote together with the shares of the Common Stock
of TiVo and not as a separate class. Each holder of record of Preferred Stock
shall be entitled to such number of votes as shall be equal to the whole number
of shares of Common Stock into which such holder's aggregate number of shares
of Preferred Stock are convertible immediately after the close of business on
April 20, 2001. Each holder of record of Preferred Stock and Common Stock on
April 20, 2001 will be entitled to one vote for each share held on all matters
to be voted upon at the Annual Meeting.
Voting and Solicitation
All votes will be tabulated by the Inspector of Elections ("Inspector")
appointed for the meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. Abstentions will be counted
towards the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether a
matter has been approved. The nominees for election as directors at the Annual
Meeting will be elected by a plurality of the votes of the shares of Preferred
Stock and Common Stock PRESENT IN PERSON OR REPRESENTED BY PROXY at the
meeting. All other matters submitted to the stockholders will require the
affirmative vote of a majority of shares present in person or represented by
proxy at a duly held meeting at which a quorum is present as is required under
Delaware law for approval of proposals presented to stockholders. In general,
Delaware law also provides that a quorum consists of a majority of the shares
ENTITLED TO VOTE and present in person or represented by proxy. Any proxy which
is returned using the form of proxy enclosed and which is not marked as to a
particular item will be voted FOR the election of directors and FOR
ratification of the selection of the designated independent auditors and as the
proxy holders deem advisable on other matters that may come before the meeting,
as the case may be with respect to the item not marked. TiVo believes that the
tabulation procedures to be followed by the Inspector are consistent with the
general statutory requirements in Delaware concerning voting of shares and
determination of a quorum.
TiVo will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders.
1
Copies of solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Preferred Stock and
Common Stock beneficially owned by others to forward to such beneficial owners.
TiVo may reimburse persons representing beneficial owners of Preferred Stock
and Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be supplemented
by telephone, telegram or personal solicitation by directors, officers or other
regular employees of TiVo. No additional compensation will be paid to
directors, officers or other regular employees for such services.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of TiVo at the its principal executive office, 2160 Gold Street, P.O.
Box 2160, Alviso, CA 95002, a written notice of revocation or a duly executed
proxy bearing a later date, or it may be revoked by attending the meeting and
voting in person. Attendance at the meeting will not, by itself, revoke a
proxy.
Voting Confidentiality
Proxies, ballots and voting tabulations are handled on a confidential basis
to protect your voting privacy. Information will not be disclosed except as
required by law.
Voting Results
Final voting results will be announced at the meeting and will be published
in TiVo's Quarterly Report on Form 10-Q for the quarter ending July 31, 2002.
We file this quarterly report with the Securities and Exchange Commission
("SEC"). After the report is filed, you may obtain a copy by:
. Visiting our web site at www.tivo.com; or
. Contacting our Investor Relations department at (408) 519-9101.
2
PROPOSAL 1
ELECTION OF DIRECTORS
TiVo's Amended and Restated Certificate of Incorporation and Bylaws provide
that the Board of Directors shall be divided into three classes, each class
consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled only by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy (including a vacancy created by
an increase in the number of directors) shall serve for the remainder of the
full term of the class of directors in which the vacancy occurred and until
such director's successor is elected and qualified.
The Board of Directors is presently composed of ten members. There are four
directors in the class whose term of office expires in 2001. Each of the
nominees for election to this class is currently a director of TiVo who was
previously elected by the stockholders. If elected at the Annual Meeting, each
of the nominees would serve until the 2004 Annual Meeting and until his or her
successor has been elected and qualified, or until such director's earlier
death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the four nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such
shares will be voted for the election of such substitute nominee as management
may propose. Each person nominated for election has agreed to serve if elected,
and management has no reason to believe that any nominee will be unable to
serve.
The names of the nominees and directors, their ages as of April 20, 2001 and
certain other information about them are set forth below:
Director
Name of Nominee or Director Age Principal Occupation Since
--------------------------- --- -------------------- --------
Michael Ramsay (1).......... 51 Chairman, Chief Executive Officer 1997
and President of TiVo
Geoffrey Y. Yang (1)(2)(3).. 42 Managing Director, Redpoint 1997
Ventures
Randy Komisar (1)(3)........ 45 Strategic advisor to various 1998
privately held companies
James Barton (1)............ 43 Senior Vice President, Research 1997
and Development, and Chief
Technical Officer of TiVo
Michael J. Homer (1)(2)..... 41 Chief Executive Officer, Zodiac 1999
Networks, Inc.
Stewart Alsop (1)(3)........ 47 General Partner, New Enterprise 1997
Associates
Larry N. Chapman (2)........ 45 President, DIRECTV Global Digital 1999
Media, Inc.
Jan P. Oosterveld........... 57 Senior Director of Corporate 1999
Strategy, Royal Philips
Electronics Group of Companies
John S. Hendricks........... 47 Chairman and Chief Executive 1999
Officer, Discovery
Communications, Inc.
David M. Zaslav............. 41 President, NBC Cable 2000
--------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
There are no family relationships among any of the directors or executive
officers of TiVo.
3
Nominees for Election for a Three-Year Term Expiring at the 2004 Annual Meeting
of Stockholders
James Barton
James Barton is a co-founder of TiVo and has served as Chief Technical
Officer and director since its inception, and as Senior Vice President of
Research and Development since March 2000. From June 1996 to August 1997, Mr.
Barton was President and Chief Executive Officer of Network Age Software, Inc.,
a company that he founded to develop software products targeted at managed
electronic distribution. From November 1994 to May 1996, Mr. Barton served as
Chief Technical Officer of Interactive Digital Solutions Company, a joint
venture of Silicon Graphics, Inc. ("SGI") and AT&T Network Systems created to
develop interactive television systems. From June 1993 to November 1994, Mr.
Barton served as Vice President and General Manager of the Media Systems
Division of SGI. From January 1990 to May 1991, Mr. Barton served as Vice
President and General Manager of the Systems Software Division of SGI. Prior to
joining SGI, Mr. Barton held technical and management positions with Hewlett-
Packard and Bell Laboratories. Mr. Barton holds a B.S. degree in Electrical
Engineering and an M.S. degree in Computer Science from the University of
Colorado at Boulder.
Michael J. Homer
Michael J. Homer has served as a director of TiVo since July 1999. Mr. Homer
is Chief Executive Officer and a director of Zodiac Networks, Inc., a privately
held Internet software company. Mr. Homer was employed by Netscape
Communications Corporation, from 1994 to 1998, and has served as a Senior Vice
President of America Online, Inc. from March 1998 to 2000. From July 1997 to
March 1998, he was Executive Vice President of Sales and Marketing for
Netscape, and from October 1994 to July 1997, he served as Netscape's Vice
President of Marketing. Prior to joining Netscape, Mr. Homer served as Vice
President of Engineering for GO Corporation. Mr. Homer also serves on the board
of directors of Palm, Inc., a publicly held provider of mobile and wireless
Internet services and handheld computing; and Eazel, Inc., a privately held
developer of Internet desktop productivity software. Mr. Homer holds a B.S.
degree in Finance from the University of California at Berkeley.
Stewart Alsop
Stewart Alsop has served as a director of TiVo since October 1997. Since
1998, Mr. Alsop has served as a general partner at New Enterprise Associates, a
venture capital investment firm. Mr. Alsop was a venture partner at New
Enterprise Associates from 1996 to 1998. Mr. Alsop is also a columnist for
Fortune magazine. From June 1991 to 1996, Mr. Alsop served as Senior Vice
President and Editor-in-Chief of InfoWorld Media Group, Inc., which publishes
InfoWorld, a weekly newspaper for information-technology professionals. Mr.
Alsop also serves on the board of directors of Be Inc., a manufacturer of
computer operating systems and the board of directors of Netcentives, a
provider of online direct marketing products and services. He holds a B.A.
degree in English from Occidental College.
David M. Zaslav
David M. Zaslav has served as a director of TiVo since September 2000. Mr.
Zaslav was elected to serve on the Board as the nominee of NBC pursuant to an
agreement between TiVo and certain stockholders. Since April 1996, Mr. Zaslav
has been the President of NBC Cable, a cable television distribution company
which provides CNBC, MSNBC, and Valuevision to cable television systems and
satellite television providers across the United States, and which has equity
interests in the A&E Network, The History Channel, and Rainbow Media Group. Mr.
Zaslav has been employed with NBC since 1989. Prior to his present position,
Mr. Zaslav served in a number of capacities for NBC, including Executive Vice
President, Business Development, Senior Vice President and General Counsel, NBC
Cable. Prior to joining NBC, Mr. Zaslav was an attorney at the law firm of
LeBouef, Lamb, Leiby & MacRae, based in New York. Mr. Zaslav also serves on the
board of directors of the Arts & Entertainment Network, RespondTV, Cable in the
Classroom and the Center for Communications in New York. Since 1990, Mr. Zaslav
has been an adjunct professor at Fordham University Graduate School. He holds a
B.S. degree from SUNY Binghamton and a J.D. degree from Boston University
School of Law.
4
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE IN PROPOSAL 1
Directors Continuing in Office Until the 2002 Annual Meeting of Stockholders
Larry N. Chapman
Larry N. Chapman has served as a director of TiVo since April 1999. Mr.
Chapman was elected to serve on the Board as the nominee of DIRECTV, Inc.
("DIRECTV") pursuant to an agreement between TiVo and certain stockholders.
Since April 2000, Mr. Chapman has been the President of DIRECTV Global Digital
Media, Inc., a leading digital television service provider and a unit of Hughes
Electronics Corporation. Prior to his present position, Mr. Chapman served in a
number of capacities for DIRECTV since its inception in 1990, including
Executive Vice President of New Ventures, Advanced Products and Programming,
Senior Vice President of Special Markets and Distribution, Senior Vice
President of Programming, and Vice President of Business Affairs and
Development. Mr. Chapman holds a B.S. degree and M.S. degree in Electrical
Engineering from the University of Florida.
Jan P. Oosterveld
Jan P. Oosterveld has served as a director of TiVo since September 1999. Mr.
Oosterveld was elected to serve on the Board as the nominee of Royal Philips
Electronics ("Philips") pursuant to an agreement between TiVo and certain
stockholders. Since 1972, Mr. Oosterveld has been employed with Philips, an
electronics company. Since May 1997, he has served as Senior Director of
Corporate Strategy of Philips and a member of the Philips Group Management
Committee. Since April 1999, he also has served as a director of Philips
Venture Capital Fund B.V. Prior to 1997, Mr. Oosterveld was involved in the
management of Philips' Key Modules division. Mr. Oosterveld holds an M.B.A.
degree from the Instituto de Estudios Superiors de la Empresa in Barcelona,
Spain.
John S. Hendricks
John S. Hendricks has served as a director of TiVo since September 1999. Mr.
Hendricks was elected to serve on the Board as the nominee of Discovery
Communications, Inc. ("Discovery") pursuant to an agreement between TiVo and
certain stockholders. Mr. Hendricks is the Chairman and Chief Executive Officer
of Discovery, a privately held, diversified media company, which he founded in
1982. He is also a member of the boards of directors of Excalibur Technologies
Corporation, a software solutions company, Interactive Pictures Corporation, an
interactive photography and imaging company, the National Museum of Natural
History, Smithsonian Institution, the James Madison Council, the Library of
Congress and the National Cable Television Association. Mr. Hendricks is a
member of the advisory board of the Lowell Observatory, Chairman of the Board
of Trustees of the Walter Kaltz Foundation and co-chair of the CEO Forum on
Education and Technology. Mr. Hendricks holds a B.A. degree and an honorary
doctorate from the University of Alabama.
Directors Continuing in Office Until the 2003 Annual Meeting of Stockholders
Michael Ramsay
Michael Ramsay is a co-founder of TiVo and has served as TiVo's Chairman of
the Board of Directors, Chief Executive Officer and President since its
inception in August 1997. From April 1996 to July 1997, Mr. Ramsay was the
Senior Vice President of the Silicon Desktop Group for SGI, a manufacturer of
advanced graphics computers. From August 1994 to April 1996, Mr. Ramsay was
President of Silicon Studio, Inc., a wholly owned subsidiary of SGI focused on
enabling applications development for emerging interactive media markets. From
July 1991 to August 1994, Mr. Ramsay served as the Senior Vice President and
General Manager of SGI's Visual Systems Group. Mr. Ramsay also held the
positions of vice president and general manager for the Entry Systems Division
of SGI. Prior to 1986, Mr. Ramsay held research & development and engineering
management positions at Hewlett-Packard and Convergent Technologies. Mr. Ramsay
holds a B.S. degree in Electrical Engineering from the University of Edinburgh,
Scotland.
5
Geoffrey Y. Yang
Geoffrey Y. Yang has served as a director of TiVo since October 1997. Since
August 1999, Mr. Yang has been a general partner of Redpoint Ventures, a
venture capital firm. Prior to joining Redpoint Ventures, Mr. Yang was a
general partner of Institutional Venture Partners, a venture capital firm, from
1989 to 1999. Mr. Yang is a director of Ask Jeeves, Inc., a provider of
natural-language question answering services on the Internet, and Turnstone
Systems, Inc., a provider of products that enable DSL services. Mr. Yang holds
a B.A. degree in Economics from Princeton University, a B.S.E. degree in
Engineering and Management Systems from Princeton University and an M.B.A.
degree from Stanford University.
Randy Komisar
Randy Komisar has served as a director of TiVo since March 1998. Since 1996,
Mr. Komisar has been a strategic business advisor to various start-up
companies. Mr. Komisar was President and Chief Executive Officer of Crystal
Dynamics Inc., a video game development and publishing company, between May
1995 and June 1996. He served as President and Chief Executive Officer of
LucasArts Entertainment Company, a digital entertainment company, between
January 1994 and May 1995. Mr. Komisar holds a B.A. degree in Economics from
Brown University and a J.D. degree from Harvard Law School.
Board Committees, Members and Meetings
During the calendar year ended December 31, 2000, the Board of Directors
held four meetings. The Board has an Executive Committee, an Audit Committee
and a Compensation Committee. During the calendar year ended December 31, 2000,
each Board member, with the exception of Mr. Oosterveld, attended 75% or more
of the aggregate of the meetings of the Board and of the Committees on which he
served, held during the period for which he was a director or committee member,
respectively.
Executive Committee. The Executive Committee has broad discretionary
authority to take most actions that may be taken by the Board of Directors,
including acting upon recommendations of other committees of the Board of
Directors, declaring a dividend, authorizing the issuance of stock and
administering our stock plans. Actions the Executive Committee is not
authorized to take include: amending our Certificate of Incorporation or
Bylaws, adopting an agreement of merger or consolidation or appointing members
to other committees of our Board of Directors. The Executive Committee met ten
times during the calendar year ended December 31, 2000. The Executive Committee
consists of Messrs. Ramsay, Barton, Yang, Alsop, Homer and Komisar.
Compensation Committee. The Compensation Committee is responsible for
determining salaries and incentive compensation for our directors, officers,
employees and consultants, and administering our stock option incentive plans.
The Compensation Committee consists of Messrs. Alsop, Komisar and Yang and met
twice during the last calendar year.
Audit Committee. The Audit Committee is responsible for, among other things,
making recommendations to the Board of Directors regarding the engagement of
our independent public accountants, reviewing with the independent public
accountants the plans and results of the audit engagement, approving
professional services provided by the independent public accountants, and
reviewing the adequacy of our internal accounting controls. The Audit Committee
is composed of outside directors who are not our officers or employees. The
Audit Committee met twice the calendar year ended December 31, 2000 and
consists of Messrs. Yang, Chapman and Homer.
6
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews TiVo's financial reporting process on behalf of
the Board of Directors. The Audit Committee is composed of three independent
non-employee directors and operates under a written charter (attached as
Exhibit A to our 1999 proxy statement filed with the SEC on July 6, 2000)
adopted by the Board of Directors. No member of the Audit Committee is employed
by or has any material relationship with TiVo. Management has the primary
responsibility for preparing the financial statements and the reporting
process, including TiVo's systems of internal controls. In fulfilling its
oversight responsibilities, the Audit Committee reviewed the audited financial
statements in the Annual Report on Form 10-K for calendar year ended December
31, 2000 with management, including a discussion of the quality, not just the
acceptability, of the accounting principles, and the clarity of financial
statement disclosures. The Audit Committee reviewed with the independent
auditors, who are responsible for expressing an opinion on the conformity of
those audited financial statements with generally accepted accounting
principles, their judgments as to the quality and the acceptability of TiVo's
financial reporting and such other matters as are required to be discussed with
the Audit Committee under generally accepted auditing standards. In addition,
the Audit Committee received from and discussed with the independent auditors
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 ("Independence Discussions with Audit Committees") and
considered the compatibility of non-audit services with the auditors'
independence. The Audit Committee also reviewed and discussed with the
independent auditors any matters required to be considered by Statement on
Auditing Standards No. 61 (Communications with Audit Committees) and No. 90
(Audit Committee Communications). The Audit Committee periodically met with the
independent auditors and the operating controls group, with and without
management present, to discuss the results of their examinations, their
evaluations of TiVo's internal controls and the overall quality of TiVo's
financial reporting. In reliance on these reviews and discussions, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the calendar year
ended December 31, 2000 for filing with the Securities and Exchange Commission.
Independent Auditors Fees
In addition to retaining Arthur Andersen LLP to audit the consolidated
financial statements for 2000, TiVo retained Arthur Andersen, as well as other
consulting firms, to provide various consulting services during the calendar
year ended December 31, 2000, and expect to continue to do so in the future.
The aggregate fees billed for professional services by Arthur Andersen LLP in
the calendar year ended December 31, 2000 for these various services were:
Audit Fees. The aggregate fees billed by TiVo's principal accounting firm,
Arthur Andersen LLP for professional services rendered for the audit of the
annual financial statements and the reviews of the financial statements
included in TiVo's Quarterly Reports on Form 10-Q for the calendar year ended
December 31, 2000 totaled $127,000.
All Other Fees. Arthur Andersen LLP also billed TiVo $64,000 for tax and
consulting fees. Arthur Andersen LLP did not provide services related to
financial information systems design or implementation. Although TiVo expects
to continue to retain other firms to assist in the design and implementation of
its financial information systems, TiVo managers make all management decisions
with respect to such systems, and are responsible for evaluating the adequacy
of such systems and for establishing and maintaining TiVO's system of internal
accounting controls.
7
After careful consideration, the Audit Committee of our Board of Directors
has concluded that the provisioning of these non-audit services by Arthur
Andersen LLP is compatible with maintaining Arthur Andersen LLP 's auditor
independence.
Audit Committee
Geoffrey Y. Yang
Larry N. Chapman
Michael J. Homer
Compensation of Directors
Each non-employee director of TiVo is eligible for reimbursement for his
expenses incurred in connection with attendance at Board meetings in accordance
with TiVo's policy. Directors who are also executive officers do not receive
any additional compensation for serving as members of the Board or any other
committee of the Board.
Each non-employee director of TiVo also receives stock option grants under
the 1999 Non-Employee Directors' Stock Option Plan (the "Directors' Plan").
Only non-employee directors of TiVo or an affiliate of such directors (as
defined in the Internal Revenue Code of 1986, as amended) are eligible to
receive options under the Directors' Plan. Options granted under the Directors'
Plan are intended by TiVo not to qualify as incentive stock options under the
Code.
Option grants under the Directors' Plan are non-discretionary. Under the
Director's Plan, non-employee directors are granted a nonstatutory option to
purchase 20,000 shares of Common Stock on the date on which such person is
first elected or appointed a director. Options initially granted under the
Directors' Plan vest over a two-year period at a rate of 1/24th per month. In
addition, on the day after each of our annual meetings of stockholders,
starting with the Annual Meeting in 2001, each non-employee director will
automatically receive an option for 10,000 shares if the director has been a
non-employee director for at least the prior eighteen months. This option will
be fully vested upon its grant. The exercise price of options under the
Directors' Plan will be equal to the fair market value of the Common Stock on
the date of grant.
Options generally have an exercise price equal to 100% of the fair market
value of the Common Stock on the grant date. The option term is 10 years but it
terminates three months after the optionholder's service as a director, an
employee or a consultant to TiVo or its affiliates terminates. If such
termination is due to the optionholder's disability, the exercise period is
extended to 12 months. If such termination is due to the optionholder's death
or if the optionholder dies within three months after his or her service
terminates, the exercise period is extended to 18 months following death. The
optionholder may transfer the option by gift to immediate family or for estate-
planning purposes. The optionholder also may designate a beneficiary to
exercise the option following the optionholder's death. Otherwise, the option
exercise rights will pass by the optionholder's will or by the laws of descent
and distribution. Transactions not involving receipt of consideration by TiVo,
such as a merger, consolidation, reorganization, stock dividend or stock split,
may change the class and number of shares subject to the Directors' Plan and to
outstanding options. In that event, the Board will appropriately adjust the
Directors' Plan as to the class and the maximum number of shares subject to the
Directors' Plan and subject to future option grants. It also will adjust
outstanding options as to the class, number of shares and price per share
subject to such options. Upon a change in control of TiVo, the vesting and
exercisability of outstanding options will accelerate, and the options will
terminate unless an acquiring corporation assumes or replaces outstanding
options.
During the last calendar year, TiVo granted options covering 40,000 shares
to two non-employee directors of TiVo, at exercise prices per share ranging
from $18.44 to $18.45. As of April 12, 2001, options to purchase 21,667 options
had been exercised under the Directors' Plan.
8
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as TiVo's
independent public auditors for the fiscal year ending January 31, 2002 and has
further directed that management submit the selection of independent public
auditors for ratification by the stockholders at the Annual Meeting. Arthur
Andersen LLP has audited TiVo's financial statements since its inception in
1997. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Arthur Andersen LLP as TiVo's
independent public auditors is not required by TiVo's Bylaws or otherwise.
However, the Board is submitting the selection of Arthur Andersen LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent public auditors at any time during the
year if they determine that such a change would be in the best interests of
TiVo and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote on proposal 2 at the Annual
Meeting will be required to ratify the selection of Arthur Anderson LLP as
TiVo's independent public auditors.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of TiVo's Common Stock as of April 12, 2001 by: (i) each director; (ii) each of
the executive officers named in the Summary of Executive Compensation table;
(iii) all executive officers and directors of TiVo as a group; and (iv) all
those known by TiVo to be beneficial owners of more than five percent of TiVo's
Common Stock.
Beneficial Owner Beneficial Ownership (1)
---------------- ---------------------------------
Executive Officers and Directors Number of Shares Percent of Total
-------------------------------- ---------------- ----------------
Michael Ramsay (2).......................... 3,009,999 6.7%
James Barton (3)............................ 1,774,999 4.0%
David Courtney (4).......................... 486,285 1.1%
Geoffrey Y. Yang (5)........................ 4,250,904 9.7%
Larry N. Chapman (6)........................ 3,406,601 7.8%
Stewart Alsop (7)........................... 2,610,051 6.0%
Jan P. Oosterveld (8)....................... 1,371,351 3.1%
David Zaslav (9)............................ 1,033,513 2.4%
John S. Hendricks (10)...................... 740,461 1.7%
Randy Komisar (11).......................... 253,133 *
Michael J. Homer (12)....................... 20,000 *
5% Stockholders
---------------
America Online, Inc. (13)................... 8,218,932 17.7%
22000 AOL Way
Dulles, VA 20166-9323
Entities Affiliated with Institutional
Venture Partners (5)....................... 4,217,204 9.6%
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
DIRECTV, Inc. (6)........................... 3,386,601 7.7%
2230 East Imperial Highway
El Segundo, CA 90245
Sony Corporation of America, Inc............ 2,643,482 6.0%
550 Madison Avenue
New York, NY 10022
Entities Affiliated with New Enterprise
Associates (7)............................. 2,579,902 5.9%
2490 Sand Hill Road
Menlo Park, CA 94025
All executive officers and directors as a
group (11 persons) (14).................... 18,957,297 43.4%
--------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the SEC.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, TiVo believes that each of the
stockholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned. Applicable
percentages are based on 43,711,582 shares outstanding on April 12, 2001
adjusted as required by rules promulgated by the SEC.
(2) Includes 91,160 shares subject to repurchase by TiVo within 60 days of
April 12, 2001 and also includes 925,000 shares Mr. Ramsay has the right to
acquire pursuant to outstanding options exercisable within 60 days, 567,709
of which will not have vested.
10
(3) Includes 91,160 shares subject to repurchase by TiVo within 60 days of
April 12, 2001 and also includes 275,000 shares Mr. Barton has the right
to acquire pursuant to outstanding options exercisable within 60 days,
197,085 of which will not have vested.
(4) Includes 430,782 shares Mr. Courtney has the right to acquire pursuant to
outstanding options exercisable within 60 days of April 12, 2001, 314,856
shares of which will not have vested.
(5) Includes 4,041,747 shares of stock owned by Institutional Venture Partners
VII, L.P. ("IVP"), 83,638 shares of stock owned by Institutional Venture
Management VII, L.P. ("IVM VII") and 91,819 shares of stock owned by IVP
Founders Fund I, L.P. ("FFI"). Mr. Yang, one of TiVo's directors, was a
general partner of IVM VII, the general partner of IVP, and a general
partner of Institutional Venture Management VI, L.P., the general partner
of FFI. Mr. Yang disclaims beneficial ownership of these shares except to
the extent of his individual partnership interests, but exercises sole
voting and investment power with respect to 13,700 shares and shared
voting and investment power with respect to the remainder of these shares.
Also includes 20,000 shares subject to stock options exercisable within 60
days of April 12, 2001, 1,667 shares of which will not have vested.
(6) Includes 3,386,601 shares held by DIRECTV, Inc. Mr. Chapman is an officer
of DIRECTV and is a member of TiVo's Board of Directors. Mr. Chapman
disclaims beneficial ownership of such shares. Also includes 20,000 shares
subject to stock options exercisable within 60 days of April 12, 2001,
1,667 shares of which will not have vested.
(7) Includes 2,579,902 shares held by New Enterprise Associates VII, Limited
Partnership. Mr. Alsop, one of TiVo's directors, is a limited partner of
NEA Partners VII, Limited Partnership, which is the general partner of New
Enterprise Associates VII, Limited Partnership. Mr. Alsop disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interests therein. Also includes 20,000 shares subject to stock options
exercisable within 60 days of April 12, 2001, 1,667 shares of which will
not have vested.
(8) Includes 1,351,351 shares held by Philips Venture Capital Fund B.V. Mr.
Oosterveld is an officer of Royal Philips Electronics, of which Philips
Venture Capital Fund B.V. forms a part, and is a member of TiVO's Board of
Directors. Mr. Oosterveld disclaims beneficial ownership of such shares.
Also includes 20,000 shares subject to stock options exercisable within 60
days of April 12, 2001, 1,667 shares of which will not have vested.
(9) Includes 1,013,513 shares held by NBC Multimedia, Inc. Mr. Zaslav, a
member of TiVo's Board of Directors, is an officer of NBC Cable Networks,
an affiliate of NBC Multimedia, Inc. Mr. Zaslav disclaims beneficial
ownership of such shares. Also includes 20,000 shares subject to stock
options exercisable within 60 days of April 12, 2001, 12,500 shares of
which will not have vested, and all of which 20,000 shares Mr. Zaslav
holds as nominee for National Broadcasting Company, Inc. and disclaims
beneficial ownership thereof.
(10) Includes 720,461 shares held by Discovery Communications, Inc. Mr.
Hendricks is an officer of Discovery Communications, Inc. and is a member
of TiVo's Board of Directors. Mr. Hendricks disclaims beneficial ownership
of, and exercises shared voting and investment power with respect to,such
shares. Also includes 20,000 shares subject to stock options exercisable
within 60 days of April 12, 2001, 2,500 shares of which will not have
vested.
(11) Includes 156,250 shares Mr. Komisar, a member of TiVo's Board of
Directors, acquired pursuant to the exercise of stock options all of which
shares are fully vested. Also includes 20,000 shares subject to stock
options exercisable within 60 days of April 12, 2001, 1,667 shares of
which will not have vested.
(12) Includes 1,667 shares subject to repurchase by TiVo within 60 days of
April 12, 2001.
(13) Includes 2,603,903 shares subject to warrants exercisable within 60 days
of April 12, 2001.
(14) Includes 1,770,782 shares subject to options exercisable within 60 days of
April 12, 2001, 667,797 of which will have vested. Also includes 251,250
shares acquired pursuant to the exercise of stock options, 249,583 shares
of which will have vested within 60 days.
11
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Compensation
The following table shows for the calendar years ended December 31, 2000,
1999 and 1998 compensation awarded or paid to, or earned by, TiVo's Chief
Executive Officer and our two executive officers.
Summary of Executive Compensation
Long-Term
Annual Compensation Compensation
------------------------------- ------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options/SARs Compensation
------------------ ---- --------- -------- ------------ ------------ ------------
Michael Ramsay.......... 2000 $ 300,644 $ 22,500 $ -- 150,000 $ --
Chairman of the Board, 1999 $ 218,750 $ -- $ -- 650,000 $ --
President and Chief 1998 $ 150,000 $ -- $ -- -- $ --
Executive Officer
James Barton............ 2000 $ 250,285 $ 20,000 $ -- 100,000 $ --
Sr. Vice President of 1999 $ 195,833 $ -- $ -- 100,000 $ --
Research
and Development, Chief 1998 $ 148,000 $ -- $ -- -- $ --
Technical Officer and
Director
David H. Courtney....... 2000 $ 250,265 $ 20,000 $ -- 100,000 $ --
Sr. Vice President of
Finance and 1999 $187,500* $ 69,000 $ -- 305,782 $ --
Administration and
Chief Financial Officer 1998 $ -- $ -- $ -- -- $ --
--------
* Mr. Courtney joined TiVo in 1999. His annualized 1999 salary was $225,000.
Stock Option Grants And Exercises
TiVo grants options to its executive officers under its 1997 Equity
Incentive Plan and 1999 Equity Incentive Plan. As of March 31, 2001, options to
purchase a total of 9,434,079 shares were outstanding under the 1997 and 1999
Equity Incentive Plans and options to purchase 3,561,955 shares remained
available for grant thereunder.
The following tables show, for the calendar year ended December 31, 2000,
certain information regarding options granted to, exercised by, and held at
year-end by, the executive officers listed on the "Summary of Executive
Compensation" table above. The exercise price of each option was equal to the
fair value of TiVo's Common Stock as valued by the Board of Directors on the
date of grant. The exercise price may be paid in cash, in shares of TiVo's
Common Stock valued at fair value on the exercise date or through a cashless
exercise procedure involving same-day sale of the purchased shares.
12
The potential realizable value is calculated based on the ten-year term of
the option at the time of grant. Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the SEC and does not represent our
prediction of our stock price performance. The potential realizable values at
5% or 10% appreciation are calculated by:
. multiplying the number of shares of Common Stock subject to a given
option by the exercise price per share;
. assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table until the
expiration of the options; and
. subtracting from that result the aggregate option exercise price.
The shares listed in the following table under "Number of Securities
Underlying Options/SARs Granted" are subject to vesting. The stock options
listed in the table vest ratably over 48 months. Each of the options has a ten-
year term, subject to earlier termination if the optionee's service with us
ceases. Under certain circumstances following a change of control, the vesting
of such option grants may accelerate and become immediately exercisable. See
the section below entitled "Certain Relationships and Related Transactions" for
a description of the stock options that have been granted to Messrs. Ramsay,
Barton and Courtney.
Percentages shown under "Percent of Total Options/SARs Granted to Employees
in 2000" are based on 3,949,850 options granted to TiVo's employees during the
year ended December 31, 2000.
Option/SAR Grants During the Year Ended December 31, 2000
Individual Grants
-------------------------
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options/SARs Exercise Price Appreciation
Underlying Granted to or Base for Option Term
Options/SARs Employees in Price Expiration ---------------------
Name Granted (#) 2000 ($/Share) Date 5% ($) 10% ($)
---- ------------ ------------ --------- ---------- ---------- ----------
Michael Ramsay.......... 150,000 3.84% $21.00 6/05/10 $1,981,018 $5,020,289
James Barton............ 100,000 2.56% $21.00 6/05/10 $1,320,679 $3,346,859
David H. Courtney....... 100,000 2.56% $20.00 5/23/10 $1,257,789 $3,187,485
The following table sets forth the number and value of securities underlying
unexercised options that are held by the executive officers listed on the
"Summary of Executive Compensation" table above. Amounts shown under the column
"Value Realized" include the proceeds received from the options exercised,
which is calculated by multiplying the deemed fair value per share on the date
of exercise less the option exercise price per share times the number of shares
exercised. Amounts shown under the column "Value of Unexercised In-the-Money
Options/SARs at December 31, 2000" are based on the closing price of TiVo's
Common Stock ($5.38) on December 29, 2000, as reported on the NASDAQ NMS,
without taking into account any taxes that may be payable in connection with
the transaction, multiplied by the number of shares underlying the option, less
the exercise price payable for these shares. TiVo's stock option plans allow
for the early exercise of options granted to employees. All options exercised
early are subject to repurchase by TiVo at the original exercise price, upon
the optionholder's cessation of service prior to the vesting of the shares.
13
Aggregated Option/SAR Exercises During the Year Ended December 31, 2000,
and Option/SAR Values as of December 31, 2000
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised,
on Value Options/SARs at December In-the-Money Options/SARs
Exercise Realized 31, 2000 (#) at December 31, 2000 ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- -------- -------- ------------------------- -------------------------
Michael Ramsay.......... -- $ -- 650,000 / -- $ -- / $ --
James Barton............ -- $ -- 100,000 / -- $ -- / $ --
David H. Courtney....... -- $ -- 330,782 / -- $ -- / $ --
Employment Contracts, Employment Severance and Change of Control Agreements
TiVo does not have employment agreements with any of its executive
directors.
The Board of Directors has approved change of control provisions for stock
options granted to all employees, including TiVo's executive officers. Pursuant
to the change of control provisions, employees are entitled to acceleration of
vesting on a portion of stock options held by them in the event the employee is
terminated or his or her job is materially changed following a change of
control of the company. If change of control provisions are triggered, non-
executive officer employees are entitled to acceleration of twenty-five percent
(25%) of their unvested options and executive officer employees are entitled to
acceleration of fifty percent (50%) of their unvested options. Under stock
options granted to them, Mr. Ramsay and Mr. Barton are entitled to accelerated
vesting on all of their outstanding options if the change of control provisions
of their option grants are triggered.
Certain Relationships and Related Transactions
Since January 1, 1999, TiVo sold an aggregate of 10,645,017 shares of
preferred stock in the following rounds of private financings:
. on January 20, 1999, TiVo sold 1,358,695 shares of Series D preferred
stock at a per share price of $3.68;
. on March 19, 1999, TiVo sold 270,270 shares of Series E preferred stock
at a per share price of $7.40;
. on April 13, 1999, TiVo sold 405,405 shares of Series F preferred stock
at a per share price of $7.40;
. on April 16, 1999, TiVo sold 1,013,513 shares of Series G preferred stock
at a per share price of $7.40;
. on April 23, 1999, TiVo sold 1,351,351 shares of Series H preferred stock
at a per share price of $7.40;
. on July 21, 1999 TiVo sold 3,121,994 shares of Series I preferred stock
at a per share price of $10.41; and
. on August 10, 1999 and September 9, 1999, TiVo sold an aggregate of
3,123,789 shares of Series J preferred stock at a per share price of
$10.41.
14
Each of the foregoing private financings was made pursuant to preferred
stock purchase agreements and investor rights agreements. The terms of those
agreements (with the exception of amount and price) were substantially similar
for the Series D through Series J financings, under which we made standard
representations, warranties and covenants, and which provided the purchasers
with rights of first offer and registrations rights. All of the material terms
of the Series D through Series J agreements, with the exception of the
registration rights, terminated upon the effective date of our initial public
offering in September 1999. The table below shows the purchasers of Preferred
Stock, which was converted to Common Stock at the time of the initial public
offering , including directors, entities associated with directors, and holders
of 5% or more of the our Common Stock:
Common Common Common Common Common
equivalent equivalent equivalent equivalent equivalent
shares of shares of shares of shares of shares of
Series F Series G Series H Series I Series J
Preferred Preferred Preferred Preferred Preferred
Investor Stock Stock Stock Stock Stock
-------- ---------- ---------- ---------- ---------- ----------
DIRECTV, Inc. .......... 405,405
(Larry N. Chapman)
NBC Multimedia, Inc. ... 1,013,513
(David Zaslav)
Philips Venture Capital
Fund B.V............... 1,351,351
(Jan P. Oosterveld)
Discovery
Communications, Inc. .. 720,461
(John S. Hendricks)
Sony Corporation of
America, Inc. ......... 2,643,482
On September 13, 2000, TiVo closed the Investment Agreement with AOL for
$200 million. Under the terms of the Investment, we issued 2,711,861 shares of
redeemable Convertible Preferred Stock at $30.00 per share, 5,134,722 shares of
Common Stock at $23.11 per share, 806,889 shares of which were subject to
redemption as of December 31, 2000, two initial warrants to purchase an
aggregate of 2,603,903 shares of Common Stock and two performance warrants to
purchase an aggregate of up to 5,207,806 shares of Common Stock. The portion of
Common Stock subject to redemption is shown as redeemable Common Stock on our
consolidated financial statements. The two performance warrants are contingent
upon future performance.
On January 30, 2001, TiVo entered into the Second Amendment to the
Investment Agreement with AOL, dated as of June 9, 2000, as amended by the
First Amendment to the Investment Agreement, dated as of September 11, 2000. On
January 30, 2001, the redemption feature was removed from 1,111,861 shares of
Convertible Preferred Stock subject to redemption. These shares are now
classified as Convertible Preferred Stock. Additionally, the redemption feature
was removed from 806,889 shares of Common Stock subject to redemption. These
shares are now classified as Common Stock. According to the Second Amendment to
the Investment Agreement we issued amended warrants to AOL, which reduced the
per share exercise price of AOL's warrant to purchase 2,308,475 shares of
Common Stock from $23.11 to $7.29, and reduced the per share exercise price of
AOL's warrant to purchase 295,428 shares of Common Stock from $30.00 to $7.29.
Option Grants to Executive Officers
Mr. Courtney, TiVo's Chief Financial Officer, was granted an option to
purchase 100,000 shares of Common Stock on May 23, 2000. He had previously been
granted an option to purchase 254,818 shares of Common Stock on March 12, 1999.
These options are subject to vesting as follows: 25% of the shares vest twelve
months after the date of grant and 2.083% of the shares vest each month
thereafter. On March 12, 1999, we also granted Mr. Courtney an option to
purchase 50,964 shares of Common Stock. This option vests monthly over a four-
year period that began upon the completion of TiVo's initial public offering in
September 1999. The exercise price of both of these options is $20.00 per share
and $1.00 per share, respectively. These options will expire ten years from
their date of grant.
15
On June 5, 2000, TiVo granted an option to purchase 150,000 shares of Common
Stock to Michael Ramsay, TiVo's Chief Executive Officer, and an option to
purchase 100,000 shares of Common Stock to TiVo's Chief Technical Officer,
James Barton. They had previously been granted options to purchase 650,000 and
100,000 shares of Common Stock, respectively on June 16, 1999. These options
are subject to vesting as follows: 25% of the shares vest twelve months after
the date of grant and 2.083% of the shares vest each month thereafter. The
exercise price of the 2000 options is $21.00 and the 1999 options is $6.50 per
share. TiVo recorded $675,000 in deferred compensation expense in connection
with the 1999 options as of December 31, 2000. The deferred compensation
reflects the difference between the exercise price and the deemed fair market
value of the Common Stock on the date of grant. These options will expire ten
years from their date of grant.
Other Transactions with Executive Officers and Directors
TiVo has entered into indemnity agreements with its directors that provide,
among other things, that TiVo will indemnify these persons, under circumstances
and to the extent provided for therein, for expenses, damages, judgments, fines
and settlements he or she may be required to pay in actions or proceedings to
which he or she is or may be a party by reason of his or her position as a
director, and otherwise to the full extent permitted under Delaware law and
TiVo's Bylaws.
On April 13, 1999, in connection with the issuance and sale of Series F
Preferred Stock to DIRECTV, we issued an aggregate of 2,981,196 shares of
Common Stock to DIRECTV, at a per share purchase price of $2.50. Pursuant to
the terms of a marketing agreement with DIRECTV, $2,822,168 of the Common Stock
purchase price was paid by a promissory note maturing in 36 months, $2,981 of
the purchase price was paid in past services and $4,627,841 of the purchase
price was to be paid by future services. Of the 2,981,196 shares granted to
DIRECTV in connection with the marketing agreement, 1,128,867 shares are
subject to a right of repurchase held by TiVo. DIRECTV may repay the note
either by providing bandwidth capacity at no additional charge or by paying in
cash. At the end of the three year service period, if specified milestones are
not achieved, TiVo will have the right to repurchase some or all of these
shares at $.001 per share. Amortization of the prepaid marketing expense and
the note receivable began in calendar year 2000. For the year ended December
31, 2000, $235,000 had been amortized for providing bandwidth as repayment of
the note receivable as sales and marketing--related parties expense and
$376,000 had been amortized for prepaid marketing expense as sales and
marketing--related parties expense. The marketing agreement with DIRECTV
provides for the promotion and support of our products and the TiVo Service on
the DIRECTV satellite system. DIRECTV has agreed to give TiVo access to its
subscribers and will actively market and promote TiVo and the TiVo Service.
Specifically, DIRECTV has agreed to use its commercially reasonable efforts to
encourage retailers to distribute TiVo's products and the TiVo Service. DIRECTV
also has made broadcast time available via its DIRECTV Service infomercials and
commercials that promote the TiVo Service and TiVo's products. DIRECTV has
agreed to provide TiVo with access to DIRECTV subscribers for the purpose of
mailing promotional materials relating to the TiVo Service and products that
enable the TiVo Service. Further, DIRECTV has agreed to include advertising
relating to our products and the TiVo Service on DIRECTV's website and in
DIRECTV's On and See magazines. DIRECTV has also made available to TiVo a
specified level of bandwidth on the DIRECTV system to expand and enrich the
TiVo Service offered to DIRECTV subscribers.
During the fourth quarter of 2000, TiVo, Philips, Sony, Hughes and DIRECTV
signed nine-month marketing agreements to encourage the sales of the DIRECTV
receiver with TiVo recorder. Under the terms of these agreements, TiVo
recognizes a sales and marketing--related parties expense on each sale of a
DIRECTV receiver with TiVo recorder to a consumer from an authorized DIRECTV
dealer. All payments to dealers are made through DIRECTV. As of December 31,
2000, $1.2 million had been recognized as sales and marketing--related parties
expense.
On October 6, 2000, TiVo and DIRECTV signed a Warrant and Registration
Rights Agreement. Under the terms of this agreement, DIRECTV has the right to
purchase shares of TiVo Common Stock for each sale of the DIRECTV receiver with
TiVo recorder. The strike price is calculated as the average daily closing
price of a share of Common Stock as reported on the Nasdaq for the five trading
days of the month in which the warrants
16
were earned. As of December 31, 2001, DIRECTV had earned the right to be issued
warrants to purchase 66,425 shares of Common Stock at exercises prices ranging
from $5.58-$12.88.
On March 31, 1999, TiVo entered into an agreement with Philips Business
Electronics B.V., an affiliate of one of TiVo's stockholders, for the
manufacture, marketing and distribution of personal video recorders that enable
the TiVo Service. This agreement grants Philips the right to manufacture,
market and sell personal video recorders that enable the TiVo Service in North
America. TiVo also granted Philips the right to manufacture, market and sell
personal video recorders in North America that incorporate both DIRECTV's
satellite receiver and the TiVo Service. TiVo also granted Philips a license to
its technology for the purpose of manufacturing personal video recorders and
other devices that enable the TiVo Service. In addition, TiVo has agreed to
subsidize Philips' manufacture and sale of the personal video recorders. The
amount of the subsidy is formula-based and periodically adjusted based on
Philips' manufacturing costs and selling prices. A portion of the subsidy is
payable after shipment by Philips and the balance is payable after the
subscription is activated. In addition to the manufacturing subsidy, TiVo has
agreed to pay Philips a fixed amount per month for each Philips-branded
personal video recorder that is owned by an active TiVo Service subscriber. As
of December 31, 2000, we incurred $18.9 million sales and marketing--related
parties expense. Of this amount, TiVo paid $16.0 million of March 31, 2001.
Finally, the agreement with Philips provides that Philips will spend a
specified amount on marketing activities related to Philips branded personal
video recorders that enable the TiVo Service in order to promote, market and
sell their personal video recorders.
On April 16, 1999, in connection with the issuance and sale of Series G
Preferred Stock to NBC Multimedia, Inc., TiVo entered into an agreement with
NBC relating to the TiVo Service. Under the agreement, TiVo granted NBC
preferential "anchor" placement on the Showcase screen of the TiVo Service. In
addition, NBC programming packages and specials have been featured in
TiVolution Magazine and NBC included NBC promotions and/or featured programs on
the materials packaged with each personal video recorder. Under the agreement,
the parties will feature each other as partners on their respective Internet
websites with a link to the other's website. TiVo has also agreed to work with
NBC to produce weekly showcases and special programming packages that highlight
current and upcoming NBC programs. NBC also received the right to sell NBC
merchandise through TiVo's couch commerce service and the right to include
links to websites and other Internet content should such services be enabled on
the TiVo Service during the term of the agreement with NBC. After our couch
commerce area is launched, NBC will receive free placement in such area to sell
NBC merchandise. In the event that TiVo enables Internet connection for the
TiVo Service during the term of the NBC agreement, TiVo will ensure that any
links and/or web content incorporated within NBC signals will be passed through
to TiVo Service viewers As of December 31, 2000, TiVo has not launched the
couch commerce service.
On August 6, 1999, TiVo entered into a letter of intent with Sony for the
manufacture, marketing and distribution of personal video recorders that enable
the TiVo Service. Subject to certain limitations, this agreement grants Sony
the right to manufacture, market and sell personal video recorders that enable
the TiVo Service in North America. TiVo also granted Sony the right to
manufacture, market and sell personal video recorders in North America that
incorporates both DIRECTV's satellite receiver and the TiVo Service.
TiVo has agreed to pay Sony a subsidy on each personal video recorder that
is manufactured and sold by Sony. The amount of the subsidy is periodically
adjusted based on Sony's manufacturing costs and selling prices. The subsidy
amount paid to Sony is due when the personal video recorder is shipped. TiVo
will record the subsidy as sales and marketing--related parties expense upon
shipment of the personal video recorder by Sony. In addition to these amounts,
TiVo has agreed to pay Sony a calculated amount per month for each Sony-branded
personal video recorder that has an active subscription to the TiVo Service.
For the year ended December 31, 2000, $22.3 million had been recognized as
sales and marketing--related parties expense.
TiVo believes that each of the foregoing transactions was in its and its
stockholders' best interests. As a matter of policy, the transactions were, and
all future transactions between TiVo and any of its officers, directors or
principal stockholders, will be approved by a majority of the independent and
disinterested members of the Board of Directors, will be on terms no less
favorable to TiVo than could be obtained from unaffiliated third parties and
will be in connection with bona fide business purposes.
17
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of Messrs. Alsop, Komisar and Yang, none of whom are currently
officers or employees of TiVo. The Committee is responsible for establishing
TiVo's compensation programs for all employees, including executives. For
executive officers, the Committee evaluates performance and determines
compensation policies and levels.
Compensation Philosophy
The goals of the compensation program are to align compensation with
business objectives and performance and to enable TiVo to attract, retain and
reward executive officers and other key employees who contribute to the long-
term success of TiVo and to motivate them to enhance long-term stockholder
value. Key elements of this philosophy are:
. TiVo pays competitively with leading technology companies with which it
competes for talent. To ensure that pay is competitive, TiVo regularly
compares its pay practices with these companies and sets its pay
parameters based on this review.
. TiVo maintains annual incentive opportunities sufficient to provide
motivation to achieve specific operating goals and to generate rewards
that bring total compensation to competitive levels.
. TiVo provides significant equity-based incentives for executives and
other key employees to ensure that they are motivated over the long term
to respond to its business challenges and opportunities as owners and not
just as employees.
Base Salary. The Committee annually reviews each executive officer's base
salary. When reviewing base salaries, the Committee considers individual and
corporate performance, levels of responsibility, prior experience, breadth of
knowledge and competitive pay practices.
Annual Incentives. The annual Executive Bonus Plan is based on strategic,
operational and functional performance. The actual incentive award earned
depends on the extent to which corporate and individual performance objectives
are achieved. At the start of each year, the Committee and the full Board of
Directors review and approve the annual performance objectives for TiVo and
individual officers. TiVo's objectives consist of operating, strategic and
financial goals that are considered to be critical to its fundamental long-term
goal of building stockholder value. For calendar year 2000, these goals
included the product release and retail launch of the DIRECTV receiver with
TiVo, the launch of the BSkyB stand-alone recorder in the UK, the execution of
agreements with specific consumer electronics partners, content providers and
network partners and achievement of financial and subscriber targets.
After the end of the year, the Committee evaluates the degree to which TiVo
has met its goals and evaluates each participant's performance against the
objectives. Bonuses are awarded based on the participant's contributions during
the year. Awards are paid in cash and distributions are made in January
following the performance year.
Long-Term Incentives. TiVo's long-term incentive program consists of the
Equity Incentive Plan. The incentive stock option program utilizes vesting
periods (generally four years) to encourage key employees to continue in its
employ. Through option grants, executives receive significant equity incentives
to build long-term stockholder value. Grants are made at 100% of fair market
value on the date of grant. Employees receive value from these grants only if
the Common Stock appreciates over the long-term. The size of option grants is
determined based on competitive practices at leading companies in the
technology industry and TiVo's philosophy of significantly linking executive
compensation with stockholder interests. The Committee believes this approach
creates an appropriate focus on longer term objectives and promotes executive
retention.
18
Other Compensation. TiVo's executive officers are also eligible to
participate in compensation and benefit programs generally available to other
employees, including TiVo's Employee Stock Purchase Plan. In addition, from
time to time, executive officers have received sign-on bonuses or other bonuses
based on extraordinary effort.
Corporate Performance and Chief Executive Officer Compensation
Mr. Ramsay's base salary at the beginning of calendar year 2000 as President
and Chief Executive Officer was $300,000. The Committee set Mr. Ramsay's base
annual salary through 2001 at $325,000. This amount, in addition to annual
incentives was estimated to provide an annual cash compensation level at the
average as compared to a selected group of leading technology companies. In
setting this amount, the Committee took into account (i) its belief that Mr.
Ramsay is a Chief Executive Officer of a leading technology company who has
significant and broad-based experience in the personal television industry,
(ii) the scope of Mr. Ramsay's responsibility, and (iii) the Board's confidence
in Mr. Ramsay to lead TiVo's continued development. Considering these factors,
Mr. Ramsay was granted an option in June 2000 to purchase 150,000 shares of
Common Stock as an incentive for future performance, an amount the Committee
determined was consistent with competitive practices.
During 2000, TiVo achieved most, but not all, of its corporate objectives.
The Committee rated Mr. Ramsay's individual performance as above average
primarily reflecting his success in TiVo's achievement of most of the goals
determined at the beginning of 2000.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deductibility by
a corporation of compensation in excess of $1 million paid to its chief
executive officer and any other of its four most highly compensated executive
officers. However, compensation which qualifies as "performance-based" is
excluded from the $1 million limit if, among other requirements, the
compensation is payable only upon attainment of pre-established, objective
performance goals under a plan approved by the corporation's stockholders.
The Compensation Committee does not presently expect total cash compensation
payable for salaries to exceed the $1 million limit for any individual
executive officer of TiVo. After consideration of the requirements of Section
162(m), the Compensation Committee believes that stock option grants to date
meet the requirement that such grants be "performance-based" and are,
therefore, exempt from the limitations on deductibility. The Compensation
Committee will continue to monitor the compensation levels potentially payable
under TiVo's cash compensation programs, but intends to retain the flexibility
necessary to provide total cash compensation in line with competitive practice,
TiVo's compensation philosophy and TiVo's best interests.
Conclusion
Through the plans described above, a significant portion of TiVo's
compensation program and Mr. Ramsay's compensation are contingent on TiVo's
performance, and realization of benefits is closely linked to increases in
long-term stockholder value. TiVo remains committed to this philosophy of pay
for performance, recognizing that the competitive market for talented
executives and the volatility of TiVo's business may result in highly variable
compensation for a particular time period.
Compensation Committee
Geoffrey Y. Yang
Stewart Alsop
Randy Komisar
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Compensation Committee Interlocks and Insider Participation
The members of TiVo's Compensation Committee are Messrs. Alsop, Komisar and
Yang. None of the members of our Compensation Committee is currently or has
been, at any time since its formation, an officer or employee. Prior to the
formation of the Compensation Committee, all decisions regarding compensation
for directors, officers, employees and consultants and administration of stock
and incentive plans were made solely by the Board of Directors.
Stock Performance Measurement Comparison
The following graph shows a comparison of cumulative total stockholder
returns for TiVo's Common Stock, the Nasdaq Stock Market Index for U.S.
Companies and the Standard & Poor's 500 Index. The graph assumes the investment
of $100 on September 29, 1999, the date of TiVo's initial public offering. The
data regarding TiVo assumes an investment at the initial public offering price
of $16.00 per share of TiVo's Common Stock. All values assume reinvestment of
the full amount of all dividends and are calculated as of December 29, 2000.
The performance shown is not necessarily indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
TIVO INC., NASDAQ STOCK MARKET AND S&P 500
[PERFORMANCE GRAPH]
Cumulative Total Return
9/99 12/99 12/00
TiVo, Inc. $100.00 210.94 33.59
Nasdaq Stock Market (U.S.) $100.00 147.33 90.49
S&P 500 Index $100.00 114.88 104.09
20
OTHER INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
TiVo's directors and executive officers and persons who own more than ten
percent of a registered class of TiVo "s equity securities (collectively,
"Reporting Persons") to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
TiVo. Reporting Persons are required by SEC regulation to furnish TiVo with
copies of all Section 16(a) forms they file.
To TiVo's knowledge, based solely on a review of the copies of such reports
furnished to TiVo and written representations from certain Reporting Persons
that no other reports were required, TiVo believes that during calendar year
ended December 31, 2000 all Reporting Persons complied with all applicable
filing requirements with the exception of Mr. Ramsay, President and Chief
Executive Officer, who on one occasion inadvertently failed to timely file a
Form 4. In addition, a Form 3 was not filed for Mr. Zaslav, a member of the
Board of Directors, when he joined the Board but was subsequently filed.
Relationship with Independent Public Accountants
The firm of independent public accountants recommended by the Audit
Committee and selected by the Board of Directors for fiscal year 2002 is Arthur
Andersen LLP. The Board of Directors expects that the representatives of Arthur
Andersen LLP will be present at the meeting, will be given an opportunity to
make a statement at such meeting if they desire to do so and will be available
to respond to appropriate questions.
Incorporation by Reference
In TiVo's filings with the SEC, information is sometimes "incorporated by
reference". This means that TiVo is referring you to information that has
previously been filed with the SEC, so that information should be considered as
part of the filing that your are reading. TiVo's 2000 Annual Report is
incorporated by reference. Based on SEC regulations, the performance graph on
page 21 of this proxy statement, the "Compensation Committee Report" on page 19
and "Report of the Audit Committee" on page 7 specifically are not incorporated
by reference into any other filings with the SEC.
This proxy statement is sent to you as part of the proxy materials for the
2001 Annual Meeting of Stockholders. You may not consider this proxy statement
as material for soliciting the purchase or sale of TiVo stock.
Availability of Additional Information
Copies of the TiVo's 2000 Annual Report have been distributed to
stockholders. Additional copies and additional information, including the
Annual Report on Form 10-K filed with the SEC, are available without charge
from Investor Relations, 2160 Gold Street, P.O. Box 2160, Alviso, CA 95002. The
annual report, proxy statement and Form 10-K are also available on TiVo's web
site at http://www.tivo.com.
Stockholder Proposals for 2002 Annual Stockholders' Meeting
The deadline for submitting a stockholder proposal for inclusion in TiVo's
proxy statement and form of proxy for TiVo's 2002 Annual Meeting of
Stockholders pursuant to Rule 14a-8 under the Securities and Exchange Act of
1934 is March 2, 2002. Stockholders wishing to submit proposals or director
nominations that are not to be included in such proxy statement and proxy must
give timely notice thereof in writing to the Secretary of TiVo. To be timely, a
stockholder's proposal or nomination must be delivered to or mailed and
received at the principal executive offices of the Company no later than the
close of business on April 16, 2002 nor earlier than the close of business on
March 17, 2002, and must otherwise satisfy the requirements of
21
TiVo's Bylaws. If the date of the 2002 Annual Meeting changes by more than
thirty (30) days from the date of the 2001 Annual Meeting, such stockholder's
proposal or nomination must be delivered to or mailed and received at TiVo's
principal executive offices no later than ten (10) calendar days following the
first public announcement of the revised date of the 2002 Annual Meeting. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the 2002 Annual Meeting: (i) a brief
description of the business desired to be brought before the 2002 Annual
Meeting and the reasons for conducting such business at the 2002 Annual
Meeting, (ii) the name and address, as they appear on the corporation's books,
of the stockholder proposing such business, (iii) the class and number of
shares of TiVo stock which are beneficially owned by the stockholder, (iv) any
material interest of the stockholder in such business and (v) any other
information that is required to be provided by the stockholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, in his
capacity as a proponent to a stockholder proposal. Notwithstanding the
foregoing, in order to include information with respect to a stockholder
proposal in the proxy statement and form of proxy for a stockholders' meeting,
stockholders must provide notice as required by the regulations promulgated
under the 1934 Act. Notwithstanding anything in the TiVo's Bylaws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in TiVo's Bylaws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment. It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ Michael Ramsay
Michael Ramsay
Chairman of the Board, Chief
Executive Officer and President
Alviso, California
April 30, 2001
22
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TIVO INC.
2001 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of TiVo Inc., a Delaware corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 30, 2001, and hereby appoints
Michael Ramsay and David H. Courtney, or either of them, as proxies and
attorneys-in-fact with full power to each of substitution, on behalf and in the
name of the undersigned to represent the undersigned at the 2001 Annual Meeting
of Stockholders of TiVo Inc., to be held on June 15, 2001, at 10:00 a.m., at the
offices of Latham & Watkins at 135 Commonwealth Drive, Menlo Park, California,
and at any adjournment(s) or postponement(s) thereof, and to vote all shares of
Common Stock that the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side, and in their
discretion, upon such other matter or matters that may properly come before the
meeting and any adjournment(s) thereof.
This proxy will be voted as directed or, if no contrary direction is
indicated, will be voted as follows: (1) for the election of four directors to
hold office until the 2004 Annual Meeting of Stockholders; (2) for the
ratification of the selection of Arthur Andersen LLP as independent auditors of
the Company for its fiscal year ending January 31, 2002 and make certain other
changes; and as said proxies deem advisable on such other matters as may come
before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please mark your votes as in this example.
1 Election of Directors [_] FOR all nominees (except as indicated) [_] WITHHOLD authority to vote for all nominees
Nominees: James Barton, Michael J. Homer, Stewart Alsop and David M. Zaslav
If you wish to withhold authority to vote for any individual nominee, strike a line through that individual's name.
2. To ratify the selection of Arthur Andersen LLP as the Company's independent auditors for the fiscal year ending January 31,
2002. [_] FOR [_] AGAINST [_]ABSTAIN
Note: This Proxy should be marked, dated, signed by the stockholder(s)
exactly as his or her name appears hereon and returned in the enclosed
envelope.
SIGNATURE(S)
---------------------------------------------------------
DATE
-----------------------------------------------------------------
Please sign exactly as name(s) appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE