UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
GAIAM INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[GAIAM LOGO]
Gaiam, Inc.
360 Interlocken Boulevard, Suite 300
Broomfield, Colorado 80021
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, JUNE 7, 2001
To our shareholders:
The 2001 annual meeting of shareholders of Gaiam, Inc., a Colorado
corporation, will be held on Thursday, June 7, 2001, at 9:30 a.m. M.D.T., at
Hotel Boulderado, 2115 13th Street, Boulder, Colorado 80302, for the following
purposes:
1. to elect all six directors of Gaiam to serve until the next annual
meeting of shareholders or until their successors are duly elected and
qualified; and
2. to transact such other business as may properly come before the annual
meeting, or any adjournment(s) or postponement(s) thereof.
Gaiam's board of directors has fixed the close of business on Friday, May 4,
2001, as the record date for determining the shareholders entitled to notice
of, and to vote at, the annual meeting. A complete list of shareholders
entitled to vote at the annual meeting will be available, upon written
request, for inspection during normal business hours by any shareholder of
Gaiam prior to the annual meeting, for a proper purpose, at Gaiam's
Broomfield, Colorado office. Only shareholders of record on the May 4, 2001
record date are entitled to notice of, and to vote at, the annual meeting and
any adjournments or postponements thereof.
A copy of Gaiam's Annual Report to Shareholders for the fiscal year ended
December 31, 2000, a proxy statement and a proxy card accompany this notice.
These materials are first being sent to shareholders on or about May 7, 2001.
Shareholders are cordially invited to attend the annual meeting in person.
To assure your representation at the annual meeting, please complete and sign
the enclosed proxy card and return it promptly. If you choose, you may still
vote in person at the annual meeting even though you previously submitted a
proxy card.
By Order of the Board of Directors,
/s/ Lynn Powers
Lynn Powers, Secretary
Broomfield, Colorado
May 5, 2001
YOUR VOTE IS IMPORTANT. WE URGE YOU TO DATE, SIGN AND PROMPTLY RETURN YOUR
PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL HELP GAIAM REDUCE THE
EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF YOUR PROXY DOES NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
[GAIAM LOGO]
Gaiam, Inc.
360 Interlocken Boulevard, Suite 300
Broomfield, Colorado 80021
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 7, 2001
This proxy statement and the accompanying proxy card are being furnished to
the shareholders of Gaiam, Inc. in connection with the solicitation of proxies
by and on behalf of the board of directors of Gaiam for use at its 2001 annual
meeting of shareholders to be held on Thursday, June 7, 2001, starting at 9:30
a.m. M.S.T., at Hotel Boulderado, 2115 13th Street, Boulder, Colorado 80302,
and at any adjournment(s) or postponement(s) thereof. This proxy statement and
the accompanying proxy card are being mailed to shareholders on or about May
7, 2001.
PURPOSE OF ANNUAL MEETING
At the annual meeting, shareholders will be asked: (i) to elect all six
directors of Gaiam to serve until the next annual meeting of shareholders or
until their successors are duly elected and qualified; and (ii) to transact
such other business as may properly be brought before the annual meeting. Our
board recommends a vote "FOR" the election of the six nominees for directors
of Gaiam listed below.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
outstanding votes eligible to be cast with respect to Class A and Class B
Common Stock is necessary to constitute a quorum at the annual meeting. Only
shareholders of record at the close of business on the record date, Friday,
May 4, 2001, will be entitled to notice of, and to vote at, the annual
meeting. As of the record date, there were 5,960,728 shares of Class A Common
Stock, par value $.0001, and 5,400,000 shares of Class B Common Stock, par
value $.0001, outstanding and entitled to vote. Holders of Class A Common
Stock as of the record date are entitled to one vote for each share held and
holders of Class B Common Stock as of the record date are entitled to ten
votes for each share held. The holders of the Class A and Class B Common Stock
will vote together. If a quorum is present, the affirmative vote of a majority
of the votes eligible to be cast on the subject matter shall be the act of the
shareholders.
Mr. Jirka Rysavy, our Chairman and Chief Executive Officer, holds all
5,400,000 outstanding shares of Class B Common Stock and 2,686,200 shares of
Class A Common Stock (or approximately 45.1% of the outstanding shares of
Class A Common Stock). These shares are sufficient to elect all Gaiam
directors, and Mr. Rysavy has indicated that he plans to vote in favor of the
directors nominated by the Gaiam Board of Directors.
Pursuant to a voting agreement between Mr. Rysavy and Gaiam, Mr. Rysavy has
agreed to limit the number of shares of Class B Common Stock that he votes to
49% of the combined votes of the Class B Common Stock and Class A Common
Stock. His remaining shares of Class B Common Stock are voted in proportion to
the votes of the Class A Common Stock. Under the voting agreement, Mr. Rysavy
will vote 572,697 shares of Class B Common Stock and the remaining 4,827,303
shares of Class B Common Stock will be voted in proportion to the votes of the
Class A Common Stock.
1
All shares of Common Stock represented by properly executed proxies will,
unless the proxies have previously been revoked, be voted in accordance with
the instructions indicated in the proxies. Directors will be elected by a
plurality of the votes cast. If no instructions are indicated, the shares will
be voted "FOR" the election of the six nominees for director of Gaiam listed
under "Election of Directors." Abstentions and broker non-votes will have no
effect on the result of the vote, although they will count towards the
presence of a quorum. Any shareholder executing a proxy has the power to
revoke the proxy at any time prior to its exercise. A proxy may be revoked
prior to exercise by (a) filing with Gaiam a written revocation of the proxy,
(b) appearing at the annual meeting and voting in person, or (c) submitting to
Gaiam a duly executed proxy bearing a later date.
The cost of preparing, printing, assembling and mailing this Proxy Statement
and other material furnished to shareholders in connection with the
solicitation of proxies will be borne by Gaiam. In addition to the
solicitation of proxies by use of the mails, officers, directors and regular
employees of Gaiam may solicit proxies by written communication, telephone or
telegraph. These persons are to receive no special compensation for any
solicitation activities.
IT IS THE INTENTION OF THE AGENTS DESIGNATED IN THE ENCLOSED PROXY CARD TO
VOTE "FOR" THE ELECTION OF ALL SIX NOMINEES FOR DIRECTOR IDENTIFIED BELOW
UNLESS AUTHORITY IS WITHHELD BY THE SHAREHOLDER GRANTING THE PROXY. IF ANY
NOMINEE BECOMES UNAVAILABLE TO SERVE FOR ANY REASON, THE PROXY WILL BE VOTED
FOR A SUBSTITUTE NOMINEE OR NOMINEES TO BE SELECTED BY GAIAM'S BOARD, UNLESS
THE SHAREHOLDER WITHHOLDS AUTHORITY TO VOTE FOR THE ELECTION OF DIRECTORS.
JIRKA RYSAVY, WHO HOLDS 45.1% OF THE OUTSTANDING SHARES CLASS A COMMON STOCK
AND 100% OF THE OUTSTANDING SHARES OF CLASS B COMMON STOCK, HAS INFORMED GAIAM
THAT HE INTENDS TO VOTE HIS SHARES IN FAVOR OF THE NOMINEES SET FORTH IN THIS
PROXY STATEMENT.
ELECTION OF DIRECTORS
Nominees for Election as Directors
Our board currently consists of six members: Jirka Rysavy, Lynn Powers,
Barnet M. Feinblum, John Mackey, Barbara Mowry, and Paul H. Ray who are listed
below. The board proposes that the six current directors be elected as
directors of Gaiam to hold office until the next annual meeting of
shareholders or until their successors are duly elected and qualified. Unless
contrary instructions are given, the proxies will be voted for the nominees
listed below. Each nominee has agreed to serve if elected, and management has
no reason to believe that any of the nominees will be unavailable for service.
If for any unforeseen reason any of them should decline or be unable to serve,
the proxies will be voted to fill any vacancy so arising in accordance with
the discretionary authority of the persons named in the proxy, unless contrary
instructions are given.
The names of the nominees, their ages, the years in which they began serving
as directors, and positions are set forth below.
JIRKA RYSAVY--age 47--Founder, Chairman and Chief Executive Officer of
Gaiam. He has been Chairman since Gaiam's inception and became the full-time
Chief Executive Officer in December 1998. In 1986, Mr. Rysavy founded
Corporate Express, Inc., which, under his leadership, grew to become a Fortune
500 company supplying office and computer products and services. He was its
Chairman and Chief Executive Officer until September 1998. Mr. Rysavy also
founded and served as Chairman and Chief Executive Officer of Crystal Market,
Inc., a health foods market, which was sold in 1987 and became the first Wild
Oats Markets store. Mr. Rysavy is also a director of Whole Foods Market.
LYNN POWERS--age 52--President, Chief Operating Officer and a director of
Gaiam since February 1996. From 1992 to 1996, she was Chief Executive Officer
of La Scelta, an importer of natural fiber clothing
2
products. Before that, Ms. Powers was Senior Vice President
Marketing/Strategic Development and Vice President Merchandising of Miller's
Outpost, a specialty retailer.
BARNET M. FEINBLUM--age 53--Director since October 1999. Mr. Feinblum is a
director and served as the President and Chief Executive Officer of Horizon
Organic Dairy from May 1995 until January 2000. From July 1993 through March
1995, Mr. Feinblum was the President of Natural Venture Partners, a private
investment company. From August 1976 until August 1993, Mr. Feinblum held
various positions at Celestial Seasonings, Inc., including President, Chief
Executive Officer, and Chairman of the Board. He is also a director of Seventh
Generation, Inc.
JOHN MACKEY--age 47--Director since September 2000. Mr. Mackey has been the
Chairman and Chief Executive Officer of Whole Foods Markets, Inc. the world's
largest natural food retailer, since he co-founded the company 20 years ago.
Mr. Mackey is also a director of Jamba Juice.
BARBARA MOWRY--age 53--Director since October 1999. From November 1997 until
February 2001, Ms. Mowry was the President and Chief Executive Office of
Requisite Technology, a business-to-business e-commerce company specializing
in the creation and management of electronic content and catalogs. Prior to
joining Requisite Technology, Ms. Mowry was an officer of two Fortune 500
companies, Telecommunications, Inc. (cable television) from 1995 to 1997, and
UAL, Inc. (airline) from 1983 to 1990. In 1990, Ms. Mowry founded, and until
1995 served as Chief Executive Officer of The Mowry Company, a relationship
marketing firm focusing on the development of customer relations for
businesses.
PAUL H. RAY--age 61--Director since October 1999. Mr. Ray is a senior
partner in Integral Partnership, a consulting firm specializing in Cultural
Creative topics. From November 1986 until December 2000, he was Executive Vice
President of American LIVES, Inc., a market research and opinion-polling firm.
Prior to joining American LIVES, Mr. Ray was Chief of Policy Research on
Energy Conservation at the Department of Energy, Mines and Resources of the
Government of Canada from 1981 to 1983. From 1973 to 1981, Mr. Ray was
Associate Professor of Urban Planning at the University of Michigan. He is the
author of "The Integral Culture Survey," which first identified the Cultural
Creatives subculture.
Each director serves for a one-year term. Each officer serves at the
discretion of our board. There are no family relationships among any of the
directors or officers of Gaiam.
Committees and Meetings of the Board of Directors
During fiscal 2000, our board held six meetings, including regularly
scheduled and special meetings. Each director attended over 75% of the
aggregate number of meetings of our board and of the committees of our board
on which the directors served during 2000.
Our board has standing audit and compensation committees. We have adopted
written charters for both committees. Our audit committee charter is attached
to this proxy statement as Exhibit A.
Audit Committee. During 2000, the audit committee consisted of Messrs.
Feinblum and Ray and Ms. Mowry, and each member of the committee is
independent within the meaning of rules of the National Association of
Securities Dealers. Barbara Mowry serves as chairperson of the audit
committee. The audit committee oversees (a) management's maintenance of the
reliability and integrity of our accounting policies and financial reporting
and disclosure practices; (b) management's establishment and maintenance of
processes to assure that an adequate system of internal control is
functioning; and (c) management's establishment and maintenance of processes
to assure our compliance with all laws, regulations and company policies
relating to financial reporting. The audit committee held one meeting during
fiscal 2000.
3
Compensation Committee. The compensation committee consisted of Messrs.
Feinblum and Ray and Ms. Mowry during 2000. Barnet Feinblum serves as
chairperson of the compensation committee. The compensation committee
establishes compensation amounts and policies applicable to executive officers
and establishes salaries, bonuses and other compensation plans and matters for
executive officers of Gaiam and administers Gaiam's stock option plans and
employee stock purchase plan. The compensation committee held four meetings
during fiscal 2000.
We do not have a nominating committee, and nominations for directors are
made by our board. Our bylaws set forth certain procedures that are required
to be followed by shareholders in nominating persons for election to our
board. Generally, written notice of a proposed nomination must be received by
the Secretary of the Corporation not later than the 45th day nor earlier than
the 70th day prior to the anniversary of the mailing of the preceding year's
proxy materials.
Director Compensation
Directors who are not employees of Gaiam or its affiliates are paid a fee of
$3,000 for each meeting of our board that they attend, and a fee of $1,000 for
each telephonic meeting attended. In addition, non-employee directors are paid
a fee of $500 for attendance at each committee meeting and non-employee
chairpersons of each standing committee are to receive an annual fee of
$1,000. All directors have elected to receive their compensation in Gaiam
common stock.
EXECUTIVE OFFICERS OF GAIAM
Set forth below is certain information regarding Gaiam's executive officers.
Biographical information with respect to Mr. Rysavy and Ms. Powers is set
forth above under "Election of Directors."
Name Age Position
---- --- --------
Jirka Rysavy.... 47 Founder, Chairman of the Board and Chief Executive Officer
Lynn Powers..... 52 President, Chief Operating Officer and Director
Pavel Bouska.... 47 Executive Vice President and Chief Information Officer
PAVEL BOUSKA--Executive Vice President and Chief Information Officer since
March 1999. He served as a director of Gaiam from 1991 until August 1999.
Prior to joining Gaiam, from June 1988 to March 1999, Mr. Bouska was an
officer and one of the founding members of Corporate Express, serving in
various positions, including Chief Information Officer and Vice President
Information Systems, responsible for system development, information
technology, operations, systems conversions and business consolidations. Prior
to joining Corporate Express, he was project leader for Software Design &
Management, a German software company subsequently acquired by Ernst & Young.
4
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the May 4, 2001 record date, certain
information with respect to the beneficial ownership of Common Stock for (i)
each person (or group of affiliated persons) who, insofar as Gaiam has been
able to ascertain, beneficially owned more than 5% of the outstanding shares
of Class A or Class B Common Stock of Gaiam, (ii) each director and nominee
for director, (iii) each named executive officer, and (iv) all current
directors and executive officers as a group. Gaiam has relied on information
received from each of the shareholders as to beneficial ownership, including
information contained on Schedules 13G and Forms 3, 4 and 5.
Amount and
Nature
of Beneficial
Class of Common Stock Name and Address of Beneficial Owner Ownership(1) Percent of Class
--------------------- ------------------------------------ ------------- ----------------
Class A................. Jirka Rysavy 8,146,200(2)(3) 71.43%
Lynn Powers 139,000(3) 1.32%
Pavel Bouska 117,920(3)(4) 1.97%
John Mackey 85,300 1.44%
Barnet Feinblum 13,304(3)(5) 0.22%
Barbara Mowry 7,304(3) 0.12%
Paul Ray 7,168(3) 0.12%
All directors and officers as a group (7 persons) 8,516,196 77.62%
Class B................. Jirka Rysavy 5,400,000 100.0%
All directors and officers as a group (7 persons) 5,400,000 100.0%
--------
(1) All beneficial ownership is direct.
(2) Includes 5,400,000 shares of Class A Common Stock obtainable upon
conversion of Class B Common Stock.
(3) Includes the following shares issuable upon the exercise of stock options
which can be exercised within sixty days of May 4, 2001: Mr. Rysavy,
60,000; Ms. Powers, 48,000; Mr. Bouska, 24,000; Mr. Feinblum, 5,000; Ms.
Mowry, 5,000; and Mr. Ray, 5,000.
(4) Includes 1,100 shares of Class A Common Stock held by Mr. Bouska's wife
and 2,720 shares issuable upon the exercise of her stock options which can
be exercised within sixty days of May 4, 2001.
(5) Includes 1,000 shares of Class A Common Stock held by Mr. Feinblum's wife,
as to which Mr. Feinblum disclaims beneficial ownership.
5
SUMMARY COMPENSATION TABLE
The following table sets forth individual compensation (cash and non-cash,
plan and non-plan) paid to the Chief Executive Officer and to certain other
officers (other than the Chief Executive Officer) of Gaiam (the "named
officers") for all services rendered in all capacities to Gaiam and its
subsidiaries for 2000 and 1999:
Long Term
Compensation
Annual Compensation Awards
------------------------- ------------
Securities
Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options (#)
--------------------------- ---- ---------- --------- ------------
Jirka Rysavy............................ 2000 140,385 -- --
Chairman and Chief 1999 125,000 -- 200,000
Executive Officer
Lynn Powers............................. 2000 140,385 100,000 90,000
President and Chief 1999 125,000 -- 160,000
Operating Officer
Pavel Bouska............................ 2000 134,231 20,000 --
Executive Vice President 1999 100,632 -- 80,000
and Chief Information Officer
Mark Lipien............................. 2000 91,539 20,000 --
Vice President--Operations 1999 75,801 -- 22,000
Linda West.............................. 2000 96,154 15,000 --
Vice President--Merchandising 1999 88,077 -- 20,000
Stock Option Grants
The following table provides information with respect to the individual
stock option grants to the named officers under the 1999 Long-Term Incentive
Plan during 2000. Options under the plan vest at 2% per month during the 11th
through 60th month after the grant.
OPTION GRANTS IN LAST FISCAL YEAR
Percent Potential
of Total Realizable
Number of Options Value at Assumed
Securities Granted Rates of Stock
Underlying to Exercise Appreciation for
Options Employees or Base Option Term(1)
Granted in Fiscal Price -----------------
Name (#) Year ($/Share) Expiration Date 5% ($) 10% ($)
---- ---------- --------- --------- ---------------- ------- ---------
Lynn Powers.. 90,000 30.8% $15.25 December 6, 2007 558,745 1,302,114
--------
(1) The 5% and 10% assumed annual rates of compound stock price appreciation
over the term of the options are computed in accordance with the rules and
regulations of the Securities and Exchange Commission and do not represent
Gaiam's estimate of stock price appreciation or a projection by Gaiam of
future stock prices.
6
Stock Option Exercises and Holdings
The following table provides information, with respect to the named
officers, concerning the value of unexercised stock options exercisable for
Gaiam Class A Common Stock held as of December 31, 2000. In 2000, no named
officer exercised any stock options.
DECEMBER 31, 2000 OPTION VALUES
Number of Shares
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
December 31, 2000 (#) at December 31, 2000 (1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Jirka Rysavy............. 32,000 168,000 354,000 1,858,500
Lynn Powers.............. 25,600 224,400 283,200 1,503,675
Pavel Bouska............. 12,800 67,200 141,600 743,400
Mark Lipien.............. 2,320 19,680 25,415 211,710
Linda West............... 2,000 18,000 21,875 193,125
--------
(1) The aggregate amount is based on the difference between the exercise price
of the individual stock options and the closing price of $15 7/16 as
reported on the NASDAQ exchange on December 31, 2000.
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
Gaiam does not have any employment agreements with any of its executive
officers and does not typically enter into written employment agreements with
any employees. However, Gaiam's directors, officers and managers are required
to sign a confidentiality agreement and, upon receiving a stock option grant,
a two-year non-compete agreement commencing with the date they leave Gaiam.
7
INDEPENDENT AUDITOR MATTERS
Independent Auditors. Ernst & Young LLP served as our independent auditor
for the year ended December 31, 2000. Representatives of Ernst & Young LLP are
not expected to attend the annual meeting.
Audit Committee Report. Gaiam's management is responsible for preparing
Gaiam's consolidated financial statements in accordance with generally
accepted accounting principles in the United States. Gaiam's independent
auditor is responsible for auditing our consolidated financial statements in
accordance with generally accepted auditing standards in the United States. In
June 2000, the audit committee reviewed and discussed Gaiam's audited
consolidated financial statements for fiscal year 1999 with the company's
management and independent auditor, discussed with the independent auditor the
matters required by Statement on Auditing Standards No. 61 ("Communication
with Audit Committees"), received written disclosures from the independent
auditor required by Independence Standards Board Standard No. 1 ("Independence
Discussions with Audit Committees") and discussed with the independent auditor
its independence. The audit committee also considered whether the independent
auditor's provision of non-audit services to Gaiam and its subsidiaries is
compatible with the auditor's independence. Additionally, the audit committee
discussed with Gaiam's management and the independent auditor other matters as
the committee deemed appropriate. In June 2001, the audit committee plans to
discuss these matters with Gaiam's independent auditors with respect to the
audited consolidated financial statements for fiscal year 2000. Based on the
audit committee's review of Gaiam's audited consolidated financial statements
and the audit committee's discussions with Gaiam's management, the audit
committee recommended to the board that Gaiam's audited consolidated financial
statements for 2000 be included in Gaiam's Annual Report on Form 10-K for
2000, which has been filed with the Securities and Exchange Commission.
Audit Committee
Barnet Feinblum
Barbara Mowry
Paul Ray
Audit and Other Fees. The aggregate fees Ernst & Young LLP has billed or is
expected to bill us for services rendered for 2000 for audit fees is $158,838
and for all other fees is $80,708. No fees were billed or expected to be
billed for services performed in 2000 for financial information systems design
and implementation.
The amount for audit fees includes (a) fees for the audit of our
consolidated financial statements for the year ended December 31, 2000, (b)
reviews of the unaudited quarterly consolidated financial statements appearing
in our Form 10-Q for each of the first three quarters of 2000, and (c) the
estimated out-of-pocket costs Ernst & Young LLP incurred in those audits and
reviews (for which we reimburse Ernst & Young LLP).
This report of the audit committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, or under the
Securities Exchange Act of 1934, except to the extent that Gaiam specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the Securities Act and the Exchange Act and shall not be deemed to
be soliciting material.
8
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the Board of Directors consists of Messrs.
Feinblum and Ray and Ms. Mowry, each of whom qualifies as a non-employee
director under Rule 16b-3 under the Exchange Act. The compensation committee
sets compensation policies applicable to executive officers, has the authority
to approve salaries and bonuses and other compensation matters for these
executive officers and administers Gaiam's stock option plan.
Executive Compensation Philosophy
Gaiam's executive compensation policy is designed with the goals of ensuring
that an appropriate relationship exists between executive pay and corporate
performance, while at the same time motivating and retaining highly qualified
executive officers, and providing total compensation that is competitive with
companies in comparable industries or other companies of comparable size,
growth and performance. Gaiam's policies emphasize compensation through long-
term equity participation.
Executive Compensation Components
The key components of Gaiam's compensation program are base salary,
eligibility for annual incentive bonus awards and equity participation in the
form of stock options. Executive officers are also entitled to customary
benefits generally available to all employees of Gaiam, including group
medical, dental and life and disability insurance and 401(k) and employee
stock purchase plans.
Chief Executive Officer Compensation
During 2000, Mr. Rysavy's annual salary increased from $125,000 to $150,000,
which the Board of Directors believed to be a modest salary level given the
importance of Mr. Rysavy to the future of Gaiam.
Compensation Committee
Barnet Feinblum
Barbara Mowry
Paul Ray
This report of the compensation committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, or under the
Securities Exchange Act of 1934, except to the extent that Gaiam specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the Securities Act and the Exchange Act and shall not be deemed to
be soliciting material.
9
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
shareholder return on the Common Stock since October 28, 1999, the date of
Gaiam's initial public offering, with the cumulative total return on the
NASDAQ Composite Index and in a Peer Group index. The comparison assumes $100
was invested on October 29, 1999 in Common Stock at the initial public
offering price and in each of the indices and assumes reinvestment of
dividends, if any, since that date. Gaiam has not paid cash dividends on the
Common Stock. Historic stock price is not indicative of future stock price
performance.
Comparative Stock Performance
As required by applicable rules of the Securities and Exchange Commission,
set forth below is a performance graph prepared based upon the following
assumptions:
1. $100 was invested on October 29, 1999 in the initial public offering, in
the Company's Common Stock and a peer group of other lifestyle companies,
selected in good faith, comprised of Harley-Davidson, Inc.; Martha Stewart
Living Omnimedia, Inc.; and Starbucks Corporation.
2. Reinvestment of dividends, if any.
[PERFORMANCE GRAPH APPEARS HERE]
10
Cumulative Total Return
--------------------------
10/29/99 12/31/99 12/31/00
-------- -------- --------
Gaiam,Inc..................................... $ 100.00 $ 317.50 $ 308.76
Peer Group.................................... $ 100.00 $ 136.83 $ 82.26
Nasdaq Stock Market (U.S.).................... $ 100.00 $ 100.08 $ 141.18
This Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act or under the Exchange Act, except to the
extent that Gaiam specifically incorporates this information by reference, and
shall not otherwise be deemed filed under the Securities Act or the Exchange
Act and are not to be deemed to be soliciting material.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1999, Gaiam engaged the services of ccplanet.com, Inc. (a related party
under common ownership with Mr. Rysavy) to develop and implement a new website
design utilizing the latest technology for its direct to consumer operations.
Gaiam paid ccplanet a total of $4.5 million for work performed on said project
during 1999 and 2000, and the new Gaiam.com website was placed into service in
March 2000. Gaiam has made its customer database and certain visual media
available to ccplanet in exchange for fees totaling $600,000 during 1999, and
$1.4 million in 2000.
In 2000, Mr. Rysavy advanced funds to purchase a 70% interest in an organic
clothing manufacturer. These advances, plus applicable interest, were repaid
in December 2000. Additionally, Gaiam purchased approximately $300,000 in
inventory from Earthlings, Inc. (a related party under common ownership with
Mr. Rysavy) at Earthlings' cost. On January 5, 2001, Gaiam purchased
Earthlings for $47,509.
On December 29, 2000, Self Care Holdings, Inc., a corporation owned by Mr.
Rysavy, purchased certain inventory and other assets of Medical SelfCare, Inc.
in an auction conducted in connection with an assignment for the benefit of
creditors of Medical SelfCare. The inventory and assets related to Medical
SelfCare's Self Care catalog and selfcare.com website. On February 1, 2001,
Gaiam acquired substantially all of this inventory and assets from Self Care
Holdings by acquiring Self Care Inc., a wholly-owned subsidiary of Self Care
Holdings, for $3.9 million, an amount equal to Self Care Holdings' purchase
price for the purchased inventory and assets plus related transaction costs.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Gaiam's directors, officers
(including a person performing a principal policy-making function) and persons
who own more than 10% of a registered class of Gaiam's equity securities to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Class A Common Stock and other equity
securities of Gaiam. Directors, officers and 10% holders are required by
Securities and Exchange Commission regulations to furnish Gaiam with copies of
all of the Section 16(a) reports they file. Based solely upon a review of the
copies of the forms furnished to Gaiam and the representations made by the
reporting persons to Gaiam, Gaiam believes that during 2000 its directors,
officers and 10% holders complied with all filing requirements under Section
16(a) of the Exchange Act, except that Mr. Bouska inadvertently omitted
information with respect to shares and options held by his wife, and Mr.
Feinblum and Ms. Mowry each inadvertently omitted information with respect to
their receipt of shares in lieu of compensation in December 2000.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action at Gaiam's annual meetings consistent with regulations adopted by the
Securities and Exchange Commission. For shareholder
11
proposals to be considered for inclusion in Gaiam's proxy statement and form
of proxy relating to the 2002 annual meeting of shareholders, they must be
received by Gaiam not later than January 5, 2002, unless the date of the 2002
meeting of shareholders is changed by more than 30 days from June 7, 2002.
In addition, under the terms of Gaiam's Bylaws, unless the date of the 2002
meeting of shareholders is changed by more than 30 days from June 7, 2002,
shareholders who intend to present an item of business or nomination at the
2002 annual meeting of shareholders (other than a proposal submitted for
inclusion in Gaiam's proxy material(s)) must provide notice in writing of such
business or nomination to Gaiam no earlier than February 25, 2002 and no later
than March 21, 2002.
Such written notice must contain specified information, including, among
other things, information as would be required to be included in a proxy
statement under Securities and Exchange Commission rules, as set forth more
fully in our Bylaws. All proposals or other notices should be addressed to
Gaiam at 360 Interlocken Boulevard, Suite 300, Broomfield, Colorado 80021,
Attention: Secretary.
OTHER MATTERS
Management does not intend to present, and has no information as of the date
of preparation of this proxy statement that others will present, any business
at the annual meeting, other than business pertaining to matters required to
be set forth in the Notice of annual meeting and proxy statement. However, if
other matters requiring the vote of the shareholders properly come before the
annual meeting, it is the intention of the persons named in the enclosed proxy
to vote the proxies held by them in accordance with their best judgment on
such matters.
YOUR VOTE IS IMPORTANT
WE URGE YOU TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES
MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM MAY
BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF THE NUMBER
OF SHARES YOU HOLD, WILL AID GAIAM IN REDUCING THE EXPENSE OF ADDITIONAL PROXY
SOLICITATION. THE GIVING OF YOUR PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING.
12
EXHIBIT A
GAIAM, INC.
AUDIT COMMITTEE CHARTER
RESOLVED, that the purpose of the Audit Committee of the Board of Directors
of Gaiam, Inc. (the "Committee") shall be to oversee:
A. Management's maintenance of the reliability and integrity of the
accounting policies and financial reporting and disclosure practices of
Gaiam;
B. Management's establishment and maintenance of processes to assure that
an adequate system of internal control is functioning within Gaiam; and
C. Management's establishment and maintenance of processes to assure
compliance by Gaiam with all laws, regulations and Gaiam policies relating
to financial reporting.
RESOLVED, that to achieve its purposes, the Committee shall have the
following specific powers and duties:
1. Holding such regular meetings as may be necessary and such special
meetings as may be called by the Chairman of the Committee or at the
request of Gaiam's internal audit staff, attorneys or independent
accountants;
2. Creating annual plans and objectives for the Committee;
3. Reviewing the performance of Gaiam's independent accountants and making
recommendations to the Board of Directors regarding the appointment or
termination of the independent accountants;
4. Conferring with Gaiam's independent accountants concerning the scope of
their examinations of the books and records of Gaiam and its
subsidiaries;
5. Reviewing and approving the independent accountants' annual engagement
letter; directing the special attention of the auditors to specific
matters or areas deemed by the Committee or the auditors to be of
special significance; and authorizing the auditors to perform such
supplemental reviews or audits as the Committee may deem desirable;
6. Reviewing with Gaiam's management and independent accountants any
significant financial risks and exposures, audit activities and
significant audit findings;
7. Reviewing the scope and cost of audit and non-audit services performed
by the independent accountants;
8. Reviewing Gaiam's audited annual financial statements and the
independent accountants' opinion rendered with respect to such
financial statements, including reviewing the nature and extent of any
significant changes in accounting principles or the application
therein;
9. Reviewing the adequacy of Gaiam's system of internal controls;
10. Obtaining from the independent accountants their recommendations
regarding internal controls and other matters relating to the
accounting procedures and the books and records of Gaiam and its
subsidiaries and reviewing the correction of controls deemed to be
deficient;
11. Providing an independent, direct communication between the Board of
Directors and independent accountants;
12. Reviewing the adequacy of internal controls and procedures related to
executive travel and entertainment expenses;
13. Reviewing the programs and policies of Gaiam designed to ensure
compliance with applicable laws and regulations relating to financial
reporting and monitoring the results of these compliance efforts;
A-1
14. Reviewing the procedures established by Gaiam that monitor the
compliance by Gaiam with its loan and indenture covenants and
restrictions;
15. Reporting through its Chairman to the Board of Directors following the
meetings of the Committee;
16. Maintaining minutes or other records of meetings and activities of the
Committee;
17. Reviewing the powers of the Committee annually and reporting and making
recommendations to the Board of Directors on these responsibilities, as
appropriate;
18. Conducting or authorizing investigations into any matters within the
Committee's purpose and powers. The Committee shall be empowered to
retain independent counsel, accountants, or others to assist it in the
conduct of any investigation;
19. Considering such other matters in relation to the financial affairs of
Gaiam, its books and records, and its internal and external audits as
the Committee may, in its discretion, determine to be advisable.
A-2
GAIAM, INC.
Proxy for Annual Meeting of Shareholders
June 7, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GAIAM, INC.
The undersigned hereby appoints Jirka Rysavy, Lynn Powers and Pavel Bouska as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and vote, as designated below, all the shares of Class A
Common Stock of Gaiam, Inc. held of record by the undersigned on May 4, 2001,
at the annual meeting of shareholders of Gaiam, Inc. and any adjournment or
postponement thereof, as follows:
1. ELECTION OF DIRECTORS
[_]FOR all nominees listed below, except as marked to the contrary below
[_]WITHHOLD AUTHORITY to vote for nominees as instructed below
Jirka Rysavy
Lynn Powers
Barnet M. Feinblum
John Mackey
Barbara Mowry
Paul H. Ray
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME ABOVE.
In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting. Management is not presently
aware of any such matters to be presented for action.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS INDICATED.
The undersigned has received Notice of Meeting, the proxy statement relating
to the annual meeting of shareholders to be held June 7, 2001, and Gaiam's
Annual Report for its fiscal year ended December 31, 2000, and hereby ratifies
and confirms all that the Proxies shall lawfully do or cause to be done by
virtue hereof and hereby revokes all proxies heretofore given to vote such
shares.
PLEASE SIGN AND RETURN PROMPTLY.
______________________________
Signature
______________________________
Signature, if held jointly
Dated: _________________, 2001
(Please sign this proxy)
(Please sign exactly as your
name or names appear to the
left. When shares are held
by joint tenants, both
should sign. When signing as
executor, administrator,
attorney, trustee or
guardian, please give full
title as such, and where
more than one executor,
etc., is named, a majority
must sign. If a corporation,
please sign full corporate
name by president or other
authorized officer. If a
partnership, please sign
full partnership name by an
authorized person).