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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 Section 240.14a-12
Quotesmith.com, 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):
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
Quotesmith.com, Inc.
8205 South Cass Avenue
Darien, Illinois 60561
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 24, 2003
----------
The 2003 Annual Meeting of Stockholders of Quotesmith.com, Inc., a
Delaware corporation (the "Company"), will be held at the Company's corporate
offices, located at 8205 South Cass Avenue, Suite 102, Darien, Illinois, on
Thursday, April 24, 2003 at 9:00 a.m., Central Time, for the following purposes:
1. To elect two persons to the Board of Directors of the Company;
2. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the year ending December
31, 2003; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
Stockholders of record as of the close of business on March 26, 2003
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. A list of stockholders entitled to vote at
the Annual Meeting will be available for inspection by stockholders for any
purpose germane to the Annual Meeting at the offices of the Company for the ten
days immediately preceding the Annual Meeting date. The Annual Report of the
Company for the year ended December 31, 2002 is being mailed to all stockholders
of record on the Record Date and accompanies the enclosed Proxy Statement.
Whether or not you plan to attend the Annual Meeting, please complete,
sign and date the enclosed proxy card and return it promptly in the enclosed
envelope. Your proxy may be revoked in the manner described in the Proxy
Statement at any time before it has been voted at the Annual Meeting.
By Order of the Board of Directors,
Robert S. Bland
Chairman of the Board, President and
Chief Executive Officer
Darien, Illinois
April 9, 2003
----------
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR
PROXY PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND.
----------
Quotesmith.com, Inc.
8205 Cass Avenue
Darien, Illinois 60561
----------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 24, 2003
----------
GENERAL INFORMATION
This Proxy Statement is being furnished to the stockholders of
Quotesmith.com, Inc., a Delaware corporation, in connection with the
solicitation of proxies by Quotesmith.com's Board of Directors for use at the
Annual Meeting of Stockholders to be held at the Company's corporate offices,
located at 8205 South Cass Avenue, Suite 102, Darien, Illinois, on Thursday,
April 24, 2003 at 9:00 a.m., Central Time, and any adjournments thereof. A
stockholder may revoke a proxy at any time before the meeting is convened by
filing with the Secretary of Quotesmith.com an instrument of revocation or a
duly executed proxy bearing a later date. A proxy also may be revoked by
attending the Annual Meeting and voting in person, although attendance at the
Annual Meeting will not, in and of itself, constitute a revocation of proxy.
This Proxy Statement and the enclosed Notice of Annual Meeting and form of proxy
are first being sent to stockholders on or about April 9, 2003.
Stockholders are urged to sign the accompanying form of proxy and
return it as soon as possible in the envelope provided for that purpose.
Returning a proxy card does not prevent a stockholder from attending the Annual
Meeting or from changing such stockholder's vote. If the enclosed proxy is
properly executed and returned in time for voting with a choice specified
thereon, the shares represented thereby will be voted as indicated on such
proxy. If no specification is made, the proxy will be voted by the person(s)
named thereon (i) for the election of the nominees named herein as directors (or
a substitute therefor if a nominee is unable or refuses to serve), (ii) for the
ratification of Ernst & Young LLP as Quotesmith.com's independent auditors for
2003 and (iii) in the discretion of such person(s) upon such matters not
presently known or determined that properly may come before the Annual Meeting.
A stockholder who wishes to designate a person or persons to act as his or her
proxy at the Annual Meeting, other than the proxies designated by the Board of
Directors, may strike out the names appearing on the enclosed form of proxy,
insert the name of any other such person or persons, sign the proxy and transmit
it directly to such other designated person or persons for use at the Annual
Meeting.
Stockholders of record on March 26, 2003 (the "Record Date") are
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
4,909,731 shares of Common Stock were outstanding and entitled to one vote each
on all matters to be considered at the Annual Meeting. Stockholders do not have
the right to cumulate their votes in the election of directors. A majority of
the shares entitled to vote at and present, in person or by proxy, at the Annual
Meeting will constitute a quorum. If a quorum is present, the affirmative vote
of a plurality of the shares that are present, in person or by proxy, at the
Annual Meeting and entitled to vote will be sufficient to elect a director. The
affirmative vote of a majority of such shares will be sufficient to ratify the
appointment of the independent auditors. Abstentions and broker non-votes will
be treated as present at the Annual Meeting for purposes of reaching a quorum.
Abstentions shall have no effect on the election of a
1
director but shall be treated as a vote against the ratification of the
independent auditors. Broker non-votes will have no effect on the outcome of the
vote on any of the proposals.
All common share and per share information in this annual proxy
statement has been retroactively adjusted to reflect a one-for-three reverse
stock split that became effective March 7, 2001.
The cost of soliciting proxies will be borne by Quotesmith.com. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies in person or by telephone. Brokers, nominees,
fiduciaries and other custodians will be requested to forward soliciting
materials to the beneficial owners of shares of Common Stock and will be
reimbursed by us for their reasonable expenses in forwarding such materials.
PROPOSAL 1. ELECTION OF DIRECTORS
Our Board of Directors is currently comprised of six directors divided
into three classes serving staggered three-year terms. Each year, the directors
of one class will stand for election as their terms of office expire. Messrs.
Gretsch and Rueben are designated as Class I directors, with their terms of
office expiring in 2003, Admiral Denton is designated as a Class II director
with his term of office expiring in 2004, and Messrs. Bland, Shannon and Thoms
are designated as Class III directors with their terms of office expiring in
2005.
The Board has nominated Richard F. Gretsch and Bruce J. Rueben for
re-election to the Board at the Annual Meeting, each of whom has indicated his
willingness to serve if elected. In the event that a nominee should become
unwilling or unable to serve as a director, all duly executed proxies shall be
voted for the election of such other person as may be designated by the Board of
Directors. Unless authority to vote for a nominee is withheld, all votes
represented by a properly executed proxy will be cast in favor of the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR.
The following table sets forth information regarding our Board of
Directors, including the nominees to the Board:
NAME AGE POSITION
---- --- --------
Robert S. Bland ................... 49 Chairman of the Board, President,
Chief Executive Officer
William V. Thoms .................. 50 Executive Vice President, Chief
Operating Officer, Director
* Bruce J. Rueben ................... 50 Director
Timothy F. Shannon ................ 49 Director
Jeremiah A. Denton, Jr. ........... 77 Director
* Richard F. Gretsch ................ 49 Director
* Nominee for election.
2
Robert S. Bland has served as our Chairman of the Board, President and
Chief Executive Officer since he founded Quotesmith.com in 1984. Mr. Bland holds
a B.S. in marketing from the University of Colorado.
William V. Thoms has served as our Executive Vice President since 1994.
Mr. Thoms is a founding stockholder of Quotesmith.com.
Bruce J. Rueben became a director of Quotesmith.com in January 1998. He
has been president of the Minnesota Hospital and Health Care Partnership,
Minnesota's hospital association, since November 1998. From January 1994 to
November 1998, Mr. Rueben was president of the Maine Hospital Association. From
1989 to 1994, Mr. Rueben was senior vice president and assistant treasurer of
the Virginia Hospital Association. Mr. Rueben holds a B.S. from the Virginia
Commonwealth University School of Business and a M.B.A. from the University of
South Carolina.
Timothy F. Shannon became a director of Quotesmith.com in January 1998.
Since 1991, he has been President of Bradner Smith & Company, a subsidiary of
Bradner Central Company. In 1995, he was appointed to the Bradner Central
Company Board of Directors. Bradner Central Company, headquartered in Elk Grove
Village, Illinois, is a wholesale paper distribution company. Mr. Shannon holds
a B.S. in Business Administration from the University of Illinois.
Admiral Jeremiah A. Denton, Jr. became a director of Quotesmith.com in
August 1999. He currently serves as president of the National Forum Foundation.
Admiral Denton was elected as a United States Senator from Alabama in 1980, and
served from 1981 to 1987. From 1987 to 1989, Admiral Denton, after being
appointed by President Reagan, served as chairman of the presidential Commission
on Merchant Marine and Defense. Admiral Denton holds a B.S. from the United
States Naval Academy and an M.A. in international affairs from George Washington
University.
Richard F. Gretsch became a director of Quotesmith.com in August 1999.
He currently serves as global offering manager for AT&T Global Network Services
and has held this position since AT&T purchased the IBM global network. Mr.
Gretsch had been global offering manager for IBM Internet Connection Service
since 1995. Mr. Gretsch holds a B.S. in finance and accounting from the
University of Arizona and a M.B.A. from the University of Notre Dame.
BOARD COMMITTEES AND MEETINGS
Our Board of Directors met four times during 2002, pursuant to
scheduled quarterly Board meetings.
Our Board of Directors has an executive committee, an audit committee
and a compensation committee.
Our executive committee consists of Messrs. Bland, Thoms and Rueben.
The executive committee is authorized to exercise, between meetings of our Board
of Directors, all of the powers and authority of our Board of Directors in the
direction and management of our Company, except to the extent prohibited by
applicable law or our certificate of incorporation, or another committee shall
have been accorded authority over the matter.
Our audit committee consists of Messrs. Gretsch, Shannon and Rueben.
The audit committee is composed of three independent directors for which
information regarding the functions performed by the committee, its membership,
and the number of meetings held during the year, is set forth in the "Report of
the Audit Committee," included in this annual proxy statement. The audit
committee is governed by a written charter approved by the Board of Directors.
The audit committee met one time during 2002. Each member of the audit committee
satisfies the independence requirements established by Rule 4200(a)(15) of the
NASD listing standards.
3
Our compensation committee consists of Messrs. Gretsch, Shannon and
Rueben. The compensation committee makes recommendations to the Board of
Directors concerning salaries and incentive compensation for our executive
officers and administers our employee benefit plans. The compensation committee
met one time during 2002.
During 2002, all members of the Board attended at least 75% of the
Board meetings and their respective committee meetings.
DIRECTOR COMPENSATION
Directors who are also employees of Quotesmith.com receive no
compensation for serving on our Board of Directors. Non-employee directors
receive an annual stipend of $16,000 and $500 per committee meeting attended. In
addition, we reimburse non-employee directors for all reasonable travel and
other expenses incurred in connection with attending Board and committee
meetings. Non-employee directors are also eligible to receive stock option
grants under the Quotesmith.com, Inc. 1997 Stock Option Plan. No stock options
were granted to non-employee directors in 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our compensation committee members is an officer or employee of
Quotesmith.com. None of our executive officers serves as a member of the Board
of Directors or compensation committee of any entity that has one or more of its
executive officers serving on our compensation committee.
OWNERSHIP OF SECURITIES
The following table sets forth information with respect to beneficial
ownership of our common stock as of March 26, 2003:
o each stockholder that is known to us to beneficially own more
than 5% of our common stock;
o each of our directors;
o our chief executive officer and each of the executive officers
named in the summary compensation table appearing elsewhere in
this proxy statement; and
o all of our executive officers and directors as a group.
The mailing address for each of the below named individuals is c/o
Quotesmith.com, Inc., 8205 South Cass Avenue, Suite 102, Darien, Illinois 60561.
Applicable percentage ownership in the table below is based upon
4,909,731 shares of common stock outstanding as of March 26, 2003. Beneficial
ownership is determined in accordance with the rules of the SEC. Shares of
common stock subject to options presently exercisable or exercisable within 60
days as of March 26, 2003, are deemed to be outstanding for the purpose of
computing the percentage ownership of the person or entity
4
holding options, but are not treated as outstanding for the purpose of computing
the percentage ownership for any other person or entity.
SHARES BENEFICIALLY OWNED
-------------------------
NUMBER PERCENT
--------- -------
OUR CEO, NAMED EXECUTIVE OFFICERS AND DIRECTORS
Robert S. Bland(1) .................................... 2,374,666 48.34%
William V. Thoms(2) ................................... 722,722 14.71
Hao Chang(3) .......................................... 33,333 *
Timothy F. Shannon(4) ................................. 16,666 *
Bruce J. Rueben(4) .................................... 11,222 *
Admiral Jeremiah A. Denton, Jr.(4) .................... 12,222 *
Richard F. Gretsch(4) ................................. 10,555 *
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A
GROUP (7 PERSONS)(5) ................................... 3,181,387 63.76
* Less than 1%.
(1) Includes 1,153,389 shares owned by Mr. Bland as a tenant in common
with his wife, Maureen A. Bland, and 1,219,055 shares owned by
Southcote Partners, L.P., a limited partnership whose sole general
partners are Mr. and Mrs. Bland. Also includes options to purchase
2,222 shares of common stock that are exercisable within 60 days of
March 26, 2003.
(2) Includes options to purchase 2,222 shares of common stock that are
exercisable within 60 days of March 26, 2003.
(3) Includes options to purchase 33,333 shares of common stock that are
exercisable within 60 days of March 26, 2003.
(4) Includes options to purchase 10,555 shares of common stock that are
exercisable within 60 days of March 26, 2003.
(5) Includes options to purchase 79,997 shares of common stock that are
exercisable within 60 days of March 26, 2003.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
requires directors, executive officers and beneficial owners of more than ten
percent of our common stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and to provide
the Company with copies of such reports. Based solely on a review of the copies
provided to the Company and written representations from such reporting persons,
the Company believes that all applicable Section 16(a) filing requirements have
been met for such reporting persons.
5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid for services
rendered to Quotesmith.com during our last three years in all capacities by (i)
our Chief Executive Officer, and (ii) the Company's other highest paid executive
officers during 2002 with cash compensation in excess of $100,000, collectively
the "Named Executive Officers."
Long-Term
Compensation
Awards
------------
Annual Compensation Securities
--------------------- Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
--------------------------- ---- -------- -------- ------------ ------------
Robert S. Bland 2002 $300,000 $ -- -- $ --
President, Chief Executive Officer 2001 300,000 -- -- --
2000 242,308 -- 3,333 --
William V. Thoms 2002 250,000 -- -- --
Executive Vice President, Chief 2001 247,115 -- -- --
Operating Officer 2000 224,334 -- 3,333 --
Hao Chang 2002 136,558 11,932 -- --
Senior Vice President, 2001 114,231 30,000 50,000 --
Chief Information Officer 2000 -- -- -- --
Philip T. Moeller (1) 2002 166,250 -- -- --
Senior Vice President of 2001 6,731 -- 210,000 --
Content and Business Development 1999 -- -- -- --
(1) Philip T. Moeller resigned from the Company effective October 3, 2002.
OPTION GRANTS IN 2001
There were no grants of stock options to the Named Executive Officers
in 2002.
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2002 YEAR END OPTION VALUES
The following table sets forth certain information regarding the number
and value of unexercised options held by the Named Executive Officers as of
December 31, 2002. No stock options were exercised during 2002 by the Named
Executive Officers.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 2002 December 31, 2002
------------------------------ -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Robert S. Bland 2,222 1,111 $ -- $ --
William V. Thoms 2,222 1,111 -- --
Hao Chang 16,667 33,333 34,501 68,999
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
We have entered into employment agreements with Messrs. Bland, Thoms
and Chang, along with Phillip A. Perillo, Senior Vice President and Chief
Financial Officer, who was hired in May 2002. These agreements set forth each
executive's base annual compensation level, eligibility for salary increases,
bonuses and options and level of benefits.
In addition, the agreements for Messrs. Bland, Thoms and Chang provide
for separation benefits if one of these executives is terminated without cause
or if the executive terminates his employment for good reason, including, in the
cases of Messrs. Bland and Thoms, a change of control of our Company. In the
event of a termination without cause or for good reason, each of Messrs. Bland
and Thoms is entitled to receive a lump sum payment equal to two times his base
annual salary, and Mr. Chang is entitled to receive six months of base salary.
In the event of a separation payment, Messrs. Bland and Thoms are entitled to
gross up payments for any excise taxation incurred. In the event of a
termination resulting from a change of control, Mr. Perillo is entitled to
receive two years of base pay and bonus at the targeted amount.
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STOCK PERFORMANCE GRAPH
The graph below compares the annual percentage changes in
Quotesmith.com's cumulative total stockholder return from August 3, 1999 (the
date of our initial public offering) through December 31, 2002, with the
cumulative total return of the CRSP Total Return Index for the Nasdaq Stock
Market and the CRSP Total Return Index for Nasdaq Insurance Stocks for the same
period. The Insurance Stock Index includes insurance companies, brokers, agents,
and related services. The graph assumes the investment of $100 and the
reinvestment of all dividends. The stock price performance shown on the graph
below is not necessarily indicative of future stock price performance.
(PERFORMANCE GRAPH)
8/3/99 12/31/99 12/31/00 12/31/01 12/31/02
-------- -------- -------- -------- --------
Quotesmith.com, Inc. $ 100 $103.409 $ 6.536 $ 6.455 $ 12.818
Nasdaq Stock Market
(U.S. Companies) 100 157.238 95.461 75.364 51.604
Nasdaq
(Insurance Index) 100 84.426 97.653 104.584 102.663
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors determined the
compensation of our Chief Executive Officer and our other executives in 2002. To
ensure that our executive compensation program is administered in an objective
manner, the Compensation Committee is composed entirely of directors who are
neither executive officers nor employees of the Company. In addition to
determining the salary and bonus compensation for all of our executive officers,
the Compensation Committee determines the nature, timing and amount of awards
and grants under Quotesmith.com's stock option plans and makes recommendations
as to the administration of other compensation plans and programs as they relate
to executive officers.
8
This report is intended to describe the philosophy that underlies the
cash and equity-based components of our intended executive pay program in 2003.
It also describes the details of each element of the program, as well as the
rationale for compensation paid to our Chief Executive Officer and executive
officers in general in 2002.
Compensation of Executive Officers Generally
The compensation philosophy of the Company is to (i) provide a
competitive total compensation package that enables the Company to attract and
retain key executive and employee talent needed to accomplish the Company's
goals and (ii) directly link compensation to improvements in Company financial
and operational performance.
The Company's compensation program for all executive officers
emphasizes variable compensation, primarily through performance-based grants of
equity-based incentives in the form of stock options. Salaries of all executive
officers are generally targeted at median market levels.
The Committee will continue to monitor the Company's compensation
program in order to maintain the proper balance between cash compensation and
equity-based incentives and may consider further revisions in the future.
Components of Compensation
Salary. The Compensation Committee will review each executive officer's
salary annually. Objective and subjective performance goals are set each year
for each executive officer, which will vary depending upon the specific position
or role of the executive within the Company. The Compensation Committee's review
will take into consideration both the Company's performance with respect to
revenue growth and operating margins, together with the duties and performance
of each executive. The Compensation Committee also considers provisions relating
to salary set forth in employment agreements with certain of our executive
officers.
Bonus. Certain employees of the Company who perform significant
management and decision-making functions are eligible to receive a performance
bonus. Messrs. Bland and Thoms did not receive a bonus in 2002. Awards to
executives may be made by the Compensation Committee after considering the
recommendation of our Chief Executive Officer (except for awards granted to the
Chief Executive Officer) and the financial performance of Quotesmith.com as
measured by revenue growth and operating margins, or any other factors that the
Compensation Committee deems relevant. Bonuses for fiscal 2002 were awarded
based on Quotesmith.com's financial performance, as measured by the factors
listed above. The bonus component of the executive compensation package is
designed to be less than industry averages.
Stock Options. The Compensation Committee believes that the granting of
stock options is an important method of rewarding and motivating management by
aligning management's interests with those of our stockholders on a long-term
basis. In addition, the Compensation Committee recognizes that we conduct our
business in an increasingly competitive industry and that, in order for the
Company to remain highly competitive and at the same time pursue a high-growth
strategy, it must employ the best and most talented executives and managers who
possess demonstrated skills and experience. We believe that stock options can
play an important role in attracting and retaining such employees. For these
reasons, the Company previously adopted the Quotesmith.com, Inc. 1997 Stock
Option Plan (the "Plan") as a stock-based incentive program for our employees,
executive officers and directors. The Committee believes the Plan is an
important feature of our executive compensation package. Under the Plan, the
Compensation Committee may grant options to
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executive officers who are expected to contribute materially to Quotesmith.com's
future success. In determining the size of stock option grants, the Compensation
Committee will focus primarily on the Company's performance and the perceived
role of each executive in accomplishing such performance objectives, as well as
the satisfaction of individual performance objectives. The value of the stock
options is directly tied to the value of a share of our Common Stock.
Compensation of the Chief Executive Officer. Mr. Robert Bland currently
serves as Chief Executive Officer and President. Mr. Bland was compensated
during the 2002 fiscal year using the same general philosophy and criteria used
for other executive officers as described above.
Tax Considerations. The Compensation Committee has determined that it
is unlikely that the Company would pay any amounts for 2002 that would result in
a loss of the federal income tax deduction under Section 162(m) of the Internal
Revenue Code of 1986, as amended, and, accordingly, has not recommended that any
special actions be taken or that any plans or programs be revised at this time.
The foregoing report has been approved by all of the members of the
Compensation Committee.
The Compensation Committee
Richard F. Gretsch
Bruce J. Rueben
Timothy F. Shannon
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since the date of the Company's initial public offering in August 1999,
Richard F. Gretsch, Bruce J. Rueben and Timothy F. Shannon have served on the
Compensation Committee of the Board of Directors. None of these individuals have
been employees of the Company.
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL OR TO BE INCORPORATED BY REFERENCE
BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT OR ANY
PORTION HEREOF INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THE
COMPANY SPECIFICALLY INCORPORATES THIS REPORT THEREIN, AND SHALL NOT OTHERWISE
BE DEEMED FILED UNDER SUCH ACTS.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. In 2000, the Board of Directors adopted a
written charter of the Audit Committee. A copy of the Audit Committee Charter
was attached as Exhibit A to the Proxy statement for the Company's 2001 Annual
Meeting of Stockholders. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Company's Annual Report on Form 10-K,
with
10
management including a discussion of the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States, their judgments as to the quality, not just the acceptability, of the
Company's accounting principles and such other matters as are required to be
discussed with the Committee under auditing standards generally accepted in the
United States. In addition, the Committee has discussed with the independent
auditors the auditors' independence from management and the Company including
the matters in the written disclosures required by the Independence Standards
Board and considered the compatibility of nonaudit services with the auditors'
independence.
The Committee discussed with the independent auditors the overall scope
and plans for their audit. The Committee meets with the auditors, with and
without management present, to discuss the results of their examination, their
evaluation of the Company's internal controls, and the overall quality of the
Company's financial reporting. The Committee held one meeting during 2002.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2002 for filing with the Securities and
Exchange Commission. The Committee and the Board have also recommended, subject
to shareholder approval, the selection of the Company's independent auditors.
The Audit Committee
Richard F. Gretsch
Bruce J. Rueben
Timothy F. Shannon
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 25, 2001, we acquired from Intuit Ventures, Inc. 399,109
shares of Quotesmith.com, Inc. common stock for an aggregate of $718,396 or
$1.80 per share. These shares represent their entire ownership of
Quotesmith.com, Inc. common stock. The closing price of the common stock as
reflected on Nasdaq on such date was $2.625. The foregoing information has been
adjusted to reflect the 3:1 reverse stock split implemented by the Company on
March 7, 2001.
11
PROPOSAL 2. RATIFICATION OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
selected Ernst & Young LLP as independent auditors to audit the 2003 financial
statements of Quotesmith.com, and has directed that this selection be presented
to the stockholders for approval at the Annual Meeting. Ernst & Young LLP has
audited Quotesmith.com's financial statements since 1996. Fees for 2002 were:
Annual audit - $172,800, audit related services - $10,800, and all other
nonaudit services - $1,500.
It is anticipated that representatives of Ernst & Young LLP will attend
the Annual Meeting, will have the opportunity to make a statement and will be
available to respond to questions from stockholders.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the Annual Meeting
will be required to ratify the selection of Ernst & Young LLP. In the event
stockholders fail to ratify the appointment of Ernst & Young LLP, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors, in its discretion, may direct the appointment of a different
independent auditor at any time if the Board determines that such a change would
be in the best interests of Quotesmith.com and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST
& YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented at
the Annual Meeting other than those listed in the notice of the meeting. If any
other matters do come before the Annual Meeting, it is intended that the holders
of proxies solicited by the Board of Directors will vote on such other matters
in their discretion in accordance with their best judgment.
12
ADDITIONAL INFORMATION
A COPY OF OUR ANNUAL REPORT ON FORM 10-K, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED
TO THE CORPORATE SECRETARY OF QUOTESMITH.COM, INC., 8205 SOUTH CASS AVENUE,
SUITE 102, DARIEN, ILLINOIS 60561.
2004 STOCKHOLDER PROPOSALS
Stockholders of the Company may submit proposals to be voted upon at
the Annual Meeting of Stockholders or nominate persons for election to the Board
of Directors. Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
as amended, some stockholder proposals may be eligible for inclusion in the
Company's 2004 Proxy Statement. Any such stockholder proposals must be submitted
in writing to the Secretary of the Company no later than December 26, 2003.
Stockholders interested in submitting such a proposal are advised to review the
detailed requirements of applicable securities laws. The submission of a
stockholder proposal does not ensure that it will be included in the Company's
Proxy Statement.
Alternatively, under the Company's By-laws, a proposal or nomination
that the stockholder does not seek to include in the Company's 2004 Proxy
Statement pursuant to Rule 14a-8 may be submitted in writing to the Secretary of
the Company for the 2004 Annual Meeting of Stockholders not less than 120 days
prior to the date on which the Company first mails its proxy materials for the
2004 Annual Meeting, unless the date of the 2004 Annual Meeting of Stockholders
is advanced by more than 30 days or delayed by 30 days from the anniversary of
the 2003 Annual Meeting. For the Company's 2004 Annual Meeting of Stockholders,
any such proposal or nomination must be submitted no later than December 26,
2003. If the date of the 2004 Annual Meeting of Stockholders is advanced by more
than 30 days or delayed by more than 30 days from the anniversary of the 2003
Annual Meeting, the deadline for a stockholder to submit any such proposal or
nomination is a reasonable time before the Company begins to print and mail its
proxy materials. The stockholder's submission must include certain specified
information concerning the proposal or nominee, as the case may be, and
information as to the stockholder's ownership of common stock of the Company.
Proposals or nominations not meeting these requirements will not be entertained
at the 2004 Annual Meeting of Stockholders. If the stockholder does not also
comply with the requirements of Rule 14a-4 under the Securities Exchange Act of
1934, as amended, the Company may exercise discretionary voting authority under
proxies it solicits to vote in accordance with its best judgment on any such
proposal or nomination submitted by a stockholder. Stockholders should contact
the Secretary of the Company in writing at 8205 South Cass Avenue, Suite 102,
Darien, Illinois 60561 to make any submission or to obtain additional
information as to the proper form and content of submissions.
By Order of the Board of Directors
Robert S. Bland
Chairman of the Board, President and
Chief Executive Officer
Darien, Illinois
April 9, 2003
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[BAR CODE]
[BAR CODE]
[ ] Mark this box with an X if
you have made changes to
your name or address
details above.
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ANNUAL MEETING PROXY CARD
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[A] ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD
01 - Richard F. Gretsch [ ] [ ]
02 - Bruce J. Rueben [ ] [ ]
[B] ISSUES
The Board of Directors recommends a vote FOR the following proposals.
FOR AGAINST ABSTAIN
2. Proposal to ratify Ernst & Young LLP as the
Company's independent auditors for the 2003 year. [ ] [ ] [ ]
In accordance with their discretion upon such other
matters as may properly come before the meeting and
any adjournment thereof. When properly executed, this
proxy will be voted in the manner directed by the
undersigned stockholder
[C] AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
Please sign exactly as name appears on stock certificate. Where stock is
registered jointly, all owners must sign. Corporate owners should sign full
corporate name by an authorized person. Executors, administrators, trustees or
guardians, should indicate their status when signing.
Signature 1 - Please keep Signature 2 - Please keep Date (mm/dd/yyyy)
signature within the box signature within the box
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