UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 11, 2006
CMGI, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 000-23262 | 04-2921333 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
1100 Winter Street
Waltham, Massachusetts 02451
(Address of Principal Executive Offices) (Zip Code)
(781) 663-5001
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On October 11, 2006, the Human Resources and Compensation Committee (the “Compensation Committee”) of the Board of Directors of CMGI, Inc. (“CMGI”) approved the CMGI FY 2007 Executive Management Incentive Plan (the “Bonus Plan”). The Bonus Plan is designed to recognize and reward the achievement of financial, business and management goals that are essential to the success of CMGI and its subsidiaries. The Bonus Plan relates to CMGI’s fiscal year ending July 31, 2007. The Bonus Plan covers CMGI’s executive officers, including executives of ModusLink Corporation, a subsidiary of CMGI, as determined by the Compensation Committee, and is funded based on CMGI’s consolidated financial performance, measured with respect to a targeted level of Non-GAAP Operating Income established. If this target is not met, no payments under the Bonus Plan will be made.
If the Non-GAAP Operating Income target is met, cash payments under the Bonus Plan may range, subject to the terms of the Bonus Plan, from 0-200% of an individual’s target bonus based on business and individual performance and the discretion of the Compensation Committee. Target bonuses under the Bonus Plan for participating executive officers range from 50% to 60% of base salary, other than for Joseph C. Lawler, CMGI’s Chairman, President and Chief Executive Officer, whose target bonus is 125% of base salary (as set forth in Mr. Lawler’s Employment Offer Letter dated August 23, 2004).
The Compensation Committee also established a bonus plan for the issuance of performance-based restricted shares of CMGI common stock, ranging from 50,000 to 100,000 shares, to each of CMGI’s executive officers (other than Mr. Lawler, who is not a participant in the performance-based restricted stock bonus plan). The award of restricted shares of common stock under this plan are contingent upon CMGI’s achievement of a certain level of Non-GAAP Operating Income in fiscal 2007 and would be made, if at all, on the third business day following the day CMGI publicly releases its financial results for the fiscal year ending July 31, 2007. Any awards of restricted shares under this bonus plan would vest in three equal installments, on the first, second and third anniversaries of the grant date.
The foregoing descriptions are subject to, and qualified in their entirety by, the Bonus Plan and the Summary of CMGI FY2007 Performance-Based Restricted Stock Bonus Plan filed as exhibits hereto, which exhibits are incorporated herein by reference.
In addition, the Compensation Committee approved a bonus payment of $50,000 to Mark J. Kelly, President, Americas Business Unit of ModusLink, with respect to the performance of ModusLink’s Americas Business Unit for which he served as Senior Vice President, Operations, until April 17, 2006.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
The exhibits listed in the Exhibit Index immediately preceding such exhibits are filed with this report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CMGI, Inc. | ||||||
| Date: October 17, 2006 | By: | /s/ Peter L. Gray | ||||
| Peter L. Gray Executive Vice President and General Counsel | ||||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 10.1 | CMGI FY2007 Executive Management Incentive Plan | |
| 10.2 | Summary of CMGI FY2007 Performance-Based Restricted Stock Bonus Plan | |
Exhibit 10.1
CMGI
FY 2007 Executive Management Incentive Plan
| 1. | Purpose |
The objective of the FY 2007 Executive Management Incentive Plan (“2007 EMIP Plan” or “Plan”) is to recognize and reward the achievement of financial, business and management goals that are essential to the success of CMGI, Inc. and its subsidiaries (the “Company” or “CMGI”).
| 2. | Period of Effectiveness |
This Plan relates to the 2007 fiscal year, August 1, 2006 to July 31, 2007.
| 3. | Eligibility |
Certain executive employees of CMGI and its subsidiaries, as determined by the Human Resources and Compensation Committee of the Board of Directors of CMGI (the “Committee”), are eligible for participation in the 2007 EMIP Plan. (Each such designated person is called a “Participant” in this Plan.)
CMGI will issue all Participants a notice of their eligibility and their individual Plan components by providing a document in the form of Appendix B to each eligible Participant. Other eligibility requirements are listed in Section 9 below.
| 4. | Target Payout |
Participants will be assigned a target payout for the 2007 EMIP Plan, expressed as a percentage of base salary. This percentage (the “Target Payout”) represents the potential dollar award that will be earned at full achievement of goals for all Plan components. The Target Payout will vary according to the Participant’s position. Actual payout will vary based on individual performance and Company performance, as set forth below.
| 5. | Plan Components and Targets |
The Plan payout will be measured based upon achievement against “NGOI” (regional and/or corporate, depending on the Participant’s role) and Individual Performance, as further described below. A percentage of each Participant’s Target Payout will be allocated to each of the relevant components for that Participant.
| A. | Non-GAAP Operating Income (Loss) (“NGOI”) |
Non-GAAP Operating Income (Loss) (“NGOI”) is defined as Operating Income (Loss) of CMGI, Inc., excluding depreciation, amortization of intangibles, stock based compensation, long-lived asset impairment and restructuring charges, and exclusive of the effects of @Ventures operations.
Each Participant’s target payout will include a component based on corporate NGOI targets. Some Participants will also have a component based on a regional NGOI target. Each Participant will be informed of the relevant “Base Target” for corporate NGOI and, if applicable, for regional NGOI for the Participant’s region. For corporate NGOI, an “Over-Achievement Target” will also be established
| B. | Individual Performance |
Each Participant’s target payout will include a component based on achievement of individual goals and objectives. In order to be eligible for the individual performance component, all Participants must have clearly documented individual goals and objectives established in conjunction with and approved by the Chief Executive Officer (and in the case of the Chief Executive Officer, by the Committee). Achievement of these goals and objectives will be assessed by the Chief Executive Officer following the close of the fiscal year.
| 6. | Gates |
If CMGI does not achieve the Base Target for corporate NGOI, no payments whatsoever will be made under this Plan, whether for NGOI achievement (corporate or regional) or for individual performance.
No payout will be made without approval from the Committee.
| 7. | Calculation of Achievement and Overachievement Adjustments |
| A. | Corporate NGOI |
In the event that the relevant Base Target for corporate NGOI is achieved, each Participant would be eligible to receive full payment of the corporate NGOI component of his or her Target Payout. If the corporate NGOI exceeds the Base Target, the total payout made to the Participant for corporate NGOI will be based on a pro rata sliding scale running between 100% and 200% based on the spread between the Base Target and the Overachievement Target.
| B. | Regional NGOI |
If the relevant Base Target for regional NGOI is achieved, that Participant would be eligible to receive full payment of the regional NGOI component (if any) of his or her Target Payout. There is also a possibility to be paid greater than 100% of the portion of the Target Payout allocated to regional NGOI achievement, in the event of regional NGOI results in excess of the Base Target. Any overachievement payment for regional NGOI will be based entirely on the Committee’s discretion.
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| C. | Individual Performance |
For the individual performance metric, the Chief Executive Officer (and in the case of the Chief Executive Officer, the Committee) will assess each Participant’s performance against pre-established goals and assign a percentage achievement for the Individual Performance Component. In the event the Company realizes overachievement with regard to corporate NGOI, the actual payment made with respect to individual performance will be increased proportionally to the amount of overachievement paid with respect to corporate NGOI.
| 8. | Payout Calculations |
| A. | Each Participant’s EMIP payout percentage will be determined following the end of the 2007 fiscal year based upon achievement of the relevant targets applicable to the Participant. Once the percentage of total salary due to the Participant is determined, the actual amount paid will be based on that percentage of the employee’s annual salary rate as of April 30, 2007. If the employee was not eligible for EMIP for the full fiscal year, the payout will be pro-rated for the number of full months the employee was eligible in FY 2007. |
| B. | Results exceeding the maximum will be eligible for additional payouts at the discretion of the Board. |
| C. | The payments will be made in accordance with the Company’s normal payroll practices. |
| 9. | Specific Eligibility Requirements |
| A. | To be eligible for any payment under the Plan, a Participant must be an active executive of CMGI or one of its subsidiaries (subject to Section 9B below) on the date actual Plan payments are made. |
| B. | Only those employees who become eligible prior to April 30, 2007 will participate in the Plan. |
| C. | Employees who transfer into or out of an eligible position during the year and who are still employed as of the payment date, will be considered for a pro rata award under this Plan. |
| 10. | Administration of Plan; Miscellaneous Matters |
| A. | Payment on any particular occasion of any bonus amount in accordance with this Plan shall not create the presumption that any further bonus amount will be paid to the Participant thereafter under this Plan or otherwise. |
| B. | Participants who live and work in a non-United States location will have their Plan payout calculations performed (i.e., comparisons against metrics will be local currency denominated) and payouts issued in their local currency, unless a specific ex-patriate or other employment agreement specifically provides otherwise. |
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| C. | The adoption of this Plan shall not be deemed to give any employee the right to be retained in the employ of CMGI or its subsidiaries or to interfere with the right of the Company to dismiss any employee at any time, for any reason not prohibited by law nor shall it be deemed to give the Company the right to require any employee to remain in its employ. |
| D. | Payments under this Plan are not to be considered for any purpose as part of the Participant’s base salary or wages. |
| E. | The financial targets assigned and recognized as goals on any of the performance factors may be removed, revised or otherwise modified by the Committee at any time for any reason or for no reason. |
| F. | The Committee’s interpretation of the plan is final and in the sole and absolute discretion of the Committee. The Committee reserves the right to make final and binding decisions regarding the amount of incentive, if any, to be paid to any Participant. The Committee also reserves the right to amend, terminate and modify this plan at any time in its sole discretion with or without notice. Each Participant, by signing a Certificate of Acknowledgment, specifically acknowledges this right. |
| G. | No Participant or third party acting on behalf of or through a Participant shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any amounts that may be payable hereunder, nor shall any of said amounts be subject to seizure for payment of debt, judgments, alimony or separate maintenance owed by a Participant, or be transferable by operation of law in the event of a bankruptcy, or otherwise. |
| H. | This Plan is administered by, and all decisions regarding any payments hereunder shall be made from, CMGI, Inc. regardless of whether a Participant is employed by CMGI or one of its subsidiaries. |
| I. | If any term or condition of this plan is found to be in non-conformance with a given state or federal or other law, that term or condition will be non-enforceable but will not negate other terms and conditions of the plan. |
| J. | The Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. |
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Appendix A
Certificate of Acknowledgement
I, , hereby certify that I have read the CMGI FY 2007 Executive Management Incentive Plan. I understand and agree with the terms of the Plan and agree to be bound thereby.
|
Participant Signature |
Date | |
|
Printed Name |
||
|
Witness Signature |
||
|
Printed Name |
||
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Appendix B
FY 2007 Executive Management Incentive Plan
Participant Information Form
Participant Name:
Job Title:
Target Bonus Percentage:
The Target Payout is allocated as follows:
Corporate NGOI Achievement: %
Regional NGOI Achievement: %
Individual Performance: %
The relevant NGOI Targets for Participant are as follows:
Corporate NGOI
Base Achievement Target: $
Over-Achievement Target: $
Regional NGOI (if applicable)
Region:
Base Achievement Target: $
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Exhibit 10.2
CMGI, INC.
SUMMARY OF FY2007 PERFORMANCE-BASED RESTRICTED STOCK BONUS PLAN
On October 11, 2006, the Human Resources and Compensation Committee of the Board of Directors of CMGI, Inc. established a performance-based restricted stock bonus plan pursuant to which grants of restricted shares of CMGI common stock may be made to certain executive officers of CMGI (as defined by Section 16 of the Securities Exchange Act of 1934, as amended) (other than Joseph C. Lawler, CMGI’s Chairman, President and Chief Executive Officer).
Subject to the achievement of a pre-determined level of Non-GAAP Operating Income in fiscal year 2007, the executive officers would receive restricted shares of CMGI common stock as follows:
| David J. Riley | 90,000 shares | |
| Peter L. Gray | 50,000 shares | |
| Mark J. Kelly | 90,000 shares | |
| William R. McLennan | 100,000 shares |
The issuance of the restricted shares of CMGI common stock would be made, if at all, on the third business day following the day CMGI publicly releases its financial results for the fiscal year ending July 31, 2007. Any awards under this bonus plan would vest in three equal installments, on the first, second and third anniversaries of the grant date.