def14a
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
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Soliciting Material Pursuant to §240.14a-12 |
GLU MOBILE 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):
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GLU
MOBILE INC.
2207
Bridgepointe Parkway, Suite 250
San Mateo, California 94404
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders of
Glu Mobile Inc., a Delaware corporation (Glu or the
Company), will be held on May 29, 2009, at
10:00 a.m. Pacific Time, at 2207 Bridgepointe
Parkway, San Mateo, California (the Annual
Meeting). At the Annual Meeting, our stockholders will be
asked to consider and vote upon:
1. The election of two Class II directors to serve on
our Board, each to serve until the Companys annual meeting
of stockholders to be held in 2012 and until his or her
successor is elected and qualified, or until his or her death,
resignation or removal.
2. Ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for the fiscal year ending
December 31, 2009.
3. Transaction of such other business as may properly come
before the Annual Meeting or before any adjournments or
postponements thereof.
Items 1 and 2 are more fully described in the attached
proxy statement. We have not received notice of other matters
that may be properly presented at the Annual Meeting.
Only stockholders of record of our common stock at the close of
business on April 8, 2009 are entitled to notice of, and to
vote at, the Annual Meeting or any adjournments or postponements
thereof.
Your vote is important. Whether or not you plan to attend the
Annual Meeting, please cast your vote, as instructed in the
enclosed Proxy Statement as promptly as possible. You are
encouraged to vote via the Internet or by telephone. It is
convenient and saves the Company significant postage and
processing costs.
By Order of the Board,
Kevin S. Chou
Vice President, General Counsel and Secretary
San Mateo, California
April 22, 2009
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY
MATERIALS:
The Companys combined Proxy Statement for the 2009
Annual Meeting of Stockholders and the Annual Report to
Stockholders for the fiscal year ended December 31, 2008
are also available online at www.glu.com/proxy.
GLU
MOBILE INC.
PROXY
STATEMENT FOR THE 2009 ANNUAL MEETING OF STOCKHOLDERS
Table of
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i
The information contained in the Compensation Committee
Report and the Audit Committee Report of this proxy statement
shall not be deemed to be soliciting material, to be
filed with the SEC, or to be subject to
Regulation 14A or Regulation 14C (other than as
provided in Item 407 of
Regulation S-K)
or to the liabilities of Section 18 of the Securities
Exchange Act of 1934, and shall not be deemed to be incorporated
by reference in future filings with the SEC except to the extent
that the Company specifically incorporates it by reference into
a document filed under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
ii
GLU
MOBILE INC.
2207 Bridgepointe Parkway,
Suite 250
San Mateo, California 94404
PROXY
STATEMENT FOR THE
2009 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION
ABOUT THE MEETING, MEETING MATERIALS, VOTING AND
PROXIES
Date,
Time and Place of Meeting
The Board of Glu Mobile Inc., a Delaware corporation
(Glu, Company, we,
our and similar terms) is asking for your proxy for
use at the 2009 Annual Meeting of Stockholders (the Annual
Meeting) and at any adjournments or postponements thereof.
We are holding the meeting on Friday, May 29, 2009, at
10:00 a.m. Pacific Time, at our offices at 2207
Bridgepointe Parkway, San Mateo, California. This proxy
statement and the accompanying proxy card are first being mailed
to stockholders on or about April 22, 2009. The address of
our principal executive offices is 2207 Bridgepointe Parkway,
Suite 250, San Mateo, California 94404.
Internet
Availability of Proxy Materials
As we did last year, we are mailing printed proxy materials to
our stockholders. In addition, this year you may access the
proxy materials online at www.glu.com/proxy.
Record
Date; Outstanding Shares; Quorum
Only holders of record of our common stock at the close of
business on April 8, 2009 (the Record Date)
will be entitled to notice of and to vote at the Annual Meeting.
As of the close of business on the Record Date, there were
29,620,779 shares of our common stock outstanding and
entitled to vote, held of record by 135 stockholders and held
beneficially by approximately 1,546 stockholders.
Pursuant to our Bylaws, a majority of the outstanding shares of
common stock, present in person or by proxy, will constitute a
quorum for the transaction of business. We must have a quorum to
transact business at the Annual Meeting. Each of our
stockholders is entitled to one vote for each share of common
stock held as of the Record Date. For ten days before the Annual
Meeting, a complete list of stockholders entitled to vote at the
Annual Meeting will be available for examination by any
stockholder, for any purpose germane to the meeting, during
ordinary business hours at our principal executive office at
2207 Bridgepointe Parkway, Suite 250, San Mateo,
California 94404.
Voting of
Proxies; Revocation of Proxies; Votes Required
Stockholders are requested to complete, date, sign and return
the accompanying Proxy Card in the enclosed postage-paid
envelope. All properly executed, returned and unrevoked proxies
will be voted in accordance with the instructions indicated
thereon. Signed but unmarked proxies will be voted FOR each
director nominee listed on the Proxy Card and FOR the
ratification of our independent registered public accounting
firm for the fiscal year ending December 31, 2009. The
Board does not know of, and does not intend to bring, any
business before the Annual Meeting other than that referred to
in this Proxy Statement and specified in the Notice of Annual
Meeting. As to any other business that may properly come before
the Annual Meeting, including any motion made for adjournment of
the Annual Meeting (including for purposes of soliciting
additional votes), signing and returning the Proxy Card will
confer discretionary authority on the proxies (L. Gregory
Ballard and Eric R. Ludwig, who have been designated by the
Board) to vote all shares covered by the Proxy Card in their
discretion. Any stockholder who has given a proxy may revoke it
at any time before it is exercised at the Annual Meeting by
(1) filing a written notice of revocation with, or
delivering a duly executed proxy bearing a later date to, the
Secretary of Glu, 2207 Bridgepointe Parkway, Suite 250,
San Mateo, California 94404 or (2) attending the
Annual Meeting and voting in person (although attendance at the
Annual Meeting will not, by itself, revoke a proxy).
Director elections are determined by a plurality of shares of
common stock represented in person or by proxy and voting at the
Annual Meeting (Proposal No. 1). Approval of the
proposal to ratify the selection of PricewaterhouseCoopers LLP
as our independent registered public accounting firm for 2009
(Proposal No. 2)
1
requires the affirmative vote of a majority of the shares of
common stock, represented in person or by proxy at the Annual
Meeting and entitled to vote on the matter.
Effect of
Abstentions
If an executed proxy is returned and the stockholder has
specifically abstained from voting on any matter, the shares
represented by such proxy will be considered present at the
Annual Meeting for purposes of determining a quorum and for
purposes of calculating the vote, but will not be considered to
have been voted in favor of such matter. As such, an abstention
will have the effect of a vote against ratification of our
independent registered public accounting firm
(Proposal No. 2).
Effect of
Broker Non-Votes
If an executed proxy is returned by a broker, bank or other
agent holding shares in street name that indicates that the
broker does not have discretionary authority as to certain
shares to vote on a proposal (broker non-votes),
such shares will be considered present at the Annual Meeting for
purposes of determining a quorum on all proposals, but will not
be considered to be entitled to vote on and thus will have no
effect on the outcome of such proposal.
Voting
Electronically via the Internet or by Telephone
General
Information for all Shares Voted Via the Internet or by
Telephone
Stockholders whose shares are registered in their own name may
choose to grant a proxy to vote their shares either via the
Internet or by telephone. The laws of Delaware, under which we
are incorporated, specifically permits electronically
transmitted proxies, provided that each such proxy contains or
is submitted with information from which the inspector of
elections can determine that such proxy was authorized by the
stockholder.
The Internet and telephone voting procedures set forth below, as
well as on the enclosed Proxy Card, are designed to authenticate
stockholders identities, to allow stockholders to grant a
proxy to vote their shares and to confirm that
stockholders voting instructions have been properly
recorded. Stockholders granting a proxy to vote via the Internet
should understand that there may be costs associated with
electronic access, such as usage charges from Internet access
providers and telephone companies, which must be borne by the
stockholder.
For
Shares Registered in Your Name
Stockholders of record may go to
http://www.voteproxy.com
to grant a proxy to vote their shares via the Internet. They
will be required to provide the control number contained on
their proxy cards. The voter will then be asked to complete an
electronic proxy card. Any stockholder using a touch-tone
telephone may also grant a proxy to vote shares by calling
1-800-776-9437
from within the United States (1-718-921-8500 from outside of
the United States) and following the recorded instructions.
You may use the Internet or your touch-tone telephone to vote
your proxy 24 hours a day, seven days a week, until
11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on
May 28, 2009. Submitting your proxy via the Internet or by
telephone will not affect your right to vote in person should
you decide to attend the Annual Meeting.
For
Shares Registered in the Name of a Broker or
Bank
Most beneficial owners whose shares are held in street name
receive voting instruction forms from their banks, brokers or
other agents, rather than Glus proxy card.
If on the record date, your shares were held, not in your name,
but rather in an account at a brokerage firm, bank or other
agent, then you are the beneficial owner of shares held in
street name and these proxy materials have been
forwarded to you by your broker, bank or other agent. The
broker, bank or other agent holding your account is considered
the stockholder of record for purposes of voting at the Annual
Meeting.
As a beneficial owner, you have the right to direct your broker,
bank or other agent on how to vote the shares in your account.
You are also invited to attend the Annual Meeting. However,
since you are not the stockholder of
2
record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy issued in your name
from your broker, bank or other agent.
Solicitation
of Proxies and Expenses
We will bear the cost of the solicitation of proxies from our
stockholders in the enclosed form. Our directors, officers and
employees, without additional compensation, may solicit proxies
by mail, telephone, letter, facsimile, electronically or in
person. Following the original mailing of the proxies and other
soliciting materials, we will request that brokers, custodians,
nominees and other record holders forward copies of the proxy
and other soliciting materials to persons for whom they hold
shares of common stock and request authority for the exercise of
proxies. In such cases, we will reimburse such record holders
for their reasonable expenses incurred for forwarding such
materials.
Voting
Results
The preliminary voting results will be announced at the Annual
Meeting. The final voting results will be tallied by our
Inspector of Elections and published in our quarterly report on
Form 10-Q
for the quarter ending June 30, 2009.
Delivery
of Voting Materials to Stockholders Sharing an Address
To reduce the expense of delivering duplicate materials to
stockholders sharing the same address, the Company has adopted a
procedure approved by the U.S. Securities and Exchange
Commission (the SEC) called
householding. Under this procedure, certain
stockholders of record who have the same address and last name
will receive only one copy of the proxy materials sent to
stockholders until such time as one or more of these
stockholders notifies us that they wish to continue receiving
individual copies. This procedure will reduce duplicate mailings
and save printing costs and postage fees, as well as natural
resources.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
householding of their communications should contact
their broker.
How to
Obtain a Separate Set of Voting Materials
If you received a householded mailing this year, and you would
like to have additional copies of the proxy materials mailed to
you, please submit your request to Investor Relations, Glu
Mobile Inc., 2207 Bridgepointe Parkway, Suite 250,
San Mateo, California 94404, or call
(650) 532-2400.
You may also contact us at the address or phone number above if
you received multiple copies of the Annual Meeting materials and
would prefer to receive a single copy in the future. If you
would like to opt out of householding for future mailings, call
(800) 542-1061
or send a written request to Investor Relations at the above
address.
Annual
Report on
Form 10-K
A copy of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, including the
financial statements, list of exhibits and any exhibit
specifically requested, filed with the SEC is available without
charge upon written request to: Corporate Secretary, Glu Mobile
Inc., 2207 Bridgepointe Parkway, Suite 250, San Mateo,
California 94404.
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
Our Board currently consists of eight directors. Our Amended and
Restated Certificate of Incorporation and Bylaws provide for a
classified Board, divided into three classes. At each annual
meeting of stockholders, successors to the class of directors
whose term expires at that annual meeting will be elected for a
term to expire at the third succeeding annual meeting. The
individuals so elected will serve until their successors are
elected and qualified.
3
This year the terms of our Class II directors, consisting
of Ann Mather and Daniel L. Skaff, will expire at the Annual
Meeting. At the Annual Meeting, holders of common stock will be
asked to vote on the election of two directors as Class II
directors, whose current term will expire at our 2009 Annual
Meeting.
The Board has nominated Ann Mather and Daniel L. Skaff to serve
as Class II directors for a three-year term that is
expected to expire at Glus annual meeting in 2012, or
until their earlier resignation or removal (the
Boards Nominees). You can find the principal
occupation and other information about the Boards
Nominees, as well as other Board members, below.
Three of the continuing directors are Class III directors,
whose terms will expire at our 2010 annual meeting, and three of
the continuing directors are Class I directors, whose terms
will expire at our 2011 annual meeting.
The election of Class II directors will be determined by
the two nominees receiving the greatest number of votes from
shares eligible to vote. Unless a stockholder signing a proxy
withholds authority to vote for one or more of the Boards
Nominees in the manner described on the proxy, each proxy
received will be voted for the election of each of the
Boards Nominees. In the event that any nominee is unable
or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for the nominee or nominees
who shall be designated by the present Board to fill the
vacancy. We are not aware that any of the nominees will be
unable or will decline to serve as a director.
There are no family relationships between any of our directors,
nominees or executive officers. There are also no arrangements
or understandings between any director, nominee or executive
officer and any other person pursuant to which he or she has
been or will be selected as a director
and/or
executive officer.
The Board
recommends that stockholders vote FOR the election
of
Ann Mather and Daniel L. Skaff as Class II
Directors.
Nominees
for Class II Directors (whose terms expire at the Annual
Meeting)
Ann
Mather (Age 48)
Independent Director of and Advisor to Technology and Media
Companies
Ms Mather has served on our Board since September 2005. From May
2004 to the present, Ms. Mather serves as an advisor to
technology and media companies. From September 1999 to May 2004,
Ms. Mather was Executive Vice President and Chief Financial
Officer for Pixar Animation Studios Inc. From 1992 to July 1999,
she held various executive positions at The Walt Disney Company,
including Senior Vice President of Finance and Administration
for its Buena Vista International Theatrical Division. Prior to
then, she served in various roles with Alico, a division of AIG,
Inc., Polo Ralph Lauren Europes retail operations,
Paramount Pictures Corporation and KPMG in London.
Ms. Mather also serves on the boards of directors of Google
Inc., where she is a member of its audit committee, Central
European Media Enterprises Ltd., where she is on its audit and
related party committees, Ariat International, Inc. and
Zappos.com, Inc. She also served as a director of Shopping.com
from May 2004 until it was acquired by eBay in August 2005,
where she was chair of its audit committee and a member of its
corporate governance and nominating committee. Ms. Mather
holds an M.A. from Cambridge University in England.
On April 23, 2008, Ms. Mather was advised by the staff
of the Los Angeles office of the SEC that it intends to
recommend that the SEC initiate a civil proceeding against her,
alleging violation of various federal securities laws and
regulations related to certain employee stock option
transactions involving her former employer, Pixar Animation
Studios. The staffs recommendation arises out of
Ms. Mathers prior employment as Chief Financial
Officer of Pixar, and not her service as a director or chair of
the Audit Committee of Glu.
Daniel L.
Skaff (Age 49)
Managing Partner, Sienna Ventures
Mr. Skaff has served on our Board since December 2001 and
has served as our lead independent director since June 2005.
Mr. Skaff is the founder of Sienna Ventures, a private
equity firm, and has served as its Managing Partner
4
since its inception in June 2000. He also co-founded Pon North
America Inc., a distribution company, and served as its Chairman
from May 1998 to May 2001. Mr. Skaff also is a founding
investor and lead director of Protocol Communications Inc., a
call center and integrated marketing services business, where he
served as a director from June 1998 to December 1999.
Mr. Skaff also serves on the boards of directors of EBT
Mobile China, Plc, Farmacia Remedios, Potenco, Inc. and Vivaro,
Inc. He is currently on the investment committees of the Marin
Community Foundation, a large charitable organization, and the
Investment Advisory Committee of the Sierra Club Foundation, and
is a founding advisory board member of Northstar Capital LLC, a
subordinated debt fund based in Minneapolis. Mr. Skaff
holds an A.B. in economics with honors from Harvard University
and an M.B.A. from the Wharton School, University of
Pennsylvania, where he was a Wharton Fellow.
Continuing
Class III Directors (whose terms expire at the 2010 annual
meeting)
L.
Gregory Ballard (Age 55)
President, Chief Executive Officer and Director, Glu Mobile
Inc.
Mr. Ballard has served as our President, Chief Executive
Officer and director since September 2003. Prior to joining us,
Mr. Ballard consulted for Virgin USA, Inc. from April 2003
to September 2003. Prior to then, he served as Chief Executive
Officer at SONICblue Incorporated, a manufacturer of ReplayTV
digital video recorders and Rio digital music players, from
August 2002 to April 2003, and as Executive Vice President of
Marketing and Product Management at SONICblue from April 2002 to
August 2002. Between July 2001 and April 2002, Mr. Ballard
worked as a consultant. Mr. Ballard served as Chief
Executive Officer of MyFamily.com, Inc., a subscription-based
Internet service, from January 2000 to July 2001. Previously, he
served as Chief Executive Officer or in another senior executive
capacity with 3dfx Interactive, Inc., an advanced graphics chip
manufacturer, Warner Custom Music Corp., a division of Time
Warner, Inc., Capcom Entertainment, Inc., a developer and
publisher of video games, and Digital Pictures, Inc., a video
game developer and publisher. Mr. Ballard serves as a
director of DTS, Inc., a provider of branded entertainment
technologies. Mr. Ballard also serves as an advisor to
LaunchBox Digital. Mr. Ballard holds a B.A. degree in
political science from the University of Redlands and a J.D.
from Harvard Law School.
William
J. Miller (Age 63)
Independent Director of and Advisor to Technology
Companies
Mr. Miller has served on our Board since January 2007.
Mr. Miller has acted as an independent director and adviser
to a number of technology companies since November 1999. From
April 1996 until his retirement in November 1999,
Mr. Miller served as Chairman of the Board and Chief
Executive Officer of Avid Corporation, a provider of digital
tools for multimedia companies, where he also served as
President from September 1996 to January 1999. Prior to then, he
served as Chief Executive Officer and Chairman of the Board of
Quantum Corporation, a data storage manufacturer, and in various
positions at Control Data Corporation, a computer and data
services company, most recently as Executive Vice President and
President, Information Services. Mr. Miller serves as a
director of NVIDIA Corporation, Waters Corporation, Digimarc
Corporation and Overland Storage, Inc. Mr. Miller holds a
B.A. in speech communications and a J.D. from the University of
Minnesota.
A. Brooke
Seawell (Age 61)
Venture Partner, New Enterprise Associates
Mr. Seawell has served on our Board since June 2006. Since
January 2005, Mr. Seawell has served as a Venture Partner
at New Enterprise Associates, focusing on software and
semiconductor investments. From February 2000 to December 2004,
he served as a Partner at Technology Crossover Ventures. Prior
to joining TCV, Mr. Seawell worked in senior executive
positions with NetDynamics, Inc., an application server software
company, and Synopsys Inc., an electronic design automation
software company. Mr. Seawell also serves on the boards of
directors of NVIDIA Corporation, Informatica Corporation,
SiliconBlue Technologies Corporation, SiTime Corporation and
Telegent Systems. In addition, Mr. Seawell is an observer
on the board of directors of Tabula Inc. Mr. Seawell also
serves on the Management Board of the Stanford Graduate School
of Business. Mr. Seawell holds a B.A. in economics from
Stanford University and an M.B.A. from the Stanford Graduate
School of Business.
5
Continuing
Class I Directors (whose terms expire at the 2011 annual
meeting)
Richard
A. Moran (Age 58)
Partner, Venrock Associates
Mr. Moran has served on our Board since May 2002. He has
served as a Partner of Venrock Associates since January 2007. He
served as Chairman of the Board of Portal Software, Inc. from
February 2003 until Portal was sold to Oracle Corporation in
July 2006. Also, since January 2002, he has served as Chief
Executive Officer of Moran Manor and Vineyards LLC. From April
1996 to May 2002, Mr. Moran served as a Partner at
Accenture Inc. (formerly Anderson Consulting LLP), focusing on
media and entertainment. He also serves on the boards of
directors of PodTech Network, Inc., TwoFish, Inc., TurnHere Inc.
and the National Association of Corporate Directors, Northern
California Chapter. Mr. Moran is the author of several
books on business and management. Mr. Moran holds a B.A. in
English from Rutgers College, an M.A. in personnel
administration from Indiana University and a Ph.D. in
organizational behavior/higher education from Miami University
(Ohio).
Hany M.
Nada (Age 40)
Managing Director, GGV Capital
Mr. Nada has served on our Board since April 2005.
Mr. Nada co-founded GGV Capital (formerly Granite Global
Ventures) in 2000 and has served as a Managing Director since
its inception. He has also served as Managing Director and
Senior Research Analyst at Piper Jaffray & Co.,
specializing in Internet software and
e-infrastructure.
Mr. Nada also serves on the boards of directors of OneWave
Technologies, Inc., Accruent, Inc., Vocera Communications, Inc.,
WildTangent, Inc., Blue Casa Communications and Endeca
Technologies, Inc. Mr. Nada holds a B.S. in economics and a
B.A. in political science from the University of Minnesota.
Ellen F.
Siminoff (Age 41)
Chief Executive Officer, Shmoop University, Inc.
Ms. Siminoff has served on our Board since June 2008. Since
March 2008, Ms. Siminoff has served as Chief Executive
Officer of Shmoop University, Inc., an education-based web
publishing company. From March 2004 to March 2008,
Ms. Siminoff served as the Chief Executive Officer of
Efficient Frontier, a provider of paid search engine marketing
solutions. From 1996 to 2002, Ms. Siminoff served in
various capacities at Yahoo!, including as Senior Vice President
of Entertainment and Small Business and Senior Vice President of
Corporate Development. Ms. Siminoff also serves on the
Board of Journal Broadcasting and U.S. Autoparts, and
privately held companies, including Efficient Frontier, Inc.
Ms. Siminoff holds an A.B. degree in economics from
Princeton University and an M.B.A. from Stanford University.
CORPORATE
GOVERNANCE
Our Board has adopted Corporate Governance Principles that are
designed to assist the Board in observing practices and
procedures that serve the best interests of Glu and our
stockholders. The Nominating and Governance Committee is
responsible for overseeing these Corporate Governance Principles
and periodically making recommendations to the Board regarding
any changes. These Corporate Governance Principles address,
among other things, our policy on succession planning and senior
leadership development, retirement, Board performance
evaluations, committee structure and stock ownership
requirements.
We maintain a corporate governance page on our company website
that includes key information about corporate governance
matters, including copies of our Corporate Governance
Principles, our Code of Conduct and Business Ethics for all
employees, including the Companys senior executive and
financial officers, and the charter for each Board committee.
The link to this corporate governance page can be found at
www.glu.com/about_glu/investors/corporate_gov.
Board
Responsibilities and Structure
The Board oversees managements performance on behalf of
Glus stockholders. The Boards primary
responsibilities are (1) to select, oversee and determine
compensation for the Chief Executive Officer who, with
6
senior management, runs Glu on a
day-to-day
basis, (2) to monitor managements performance to
assess whether Glu is operating in an effective, efficient and
ethical manner to create value for Glus stockholders and
(3) to periodically review Glus long-range plan,
business initiatives, capital projects and budget matters.
The Board and its committees meet throughout the year on a set
schedule, and also hold special meetings and act by written
consent from time to time as appropriate. The Board held 14
meetings during fiscal 2008. The independent directors meet
without management present at regularly scheduled executive
sessions at each quarterly Board meeting and some special Board
meetings. During 2008, the independent directors held at least
six executive sessions. With respect to independent director
sessions, the independent directors may from time to time
designate an independent director to serve as presiding director
to chair these sessions. In addition, the presiding director may
advise the Chairman of the Board with respect to agendas and
information to be provided to the Board and may perform such
other duties as the Board may from time to time delegate to
assist it in fulfilling its responsibilities. The Board has
delegated certain responsibilities and authority to the
committees described below. Committees report regularly to the
full Board on their activities and actions.
Lead
Independent Director
The Board has designated Mr. Skaff as its lead independent
director. The lead independent director presides at all meetings
of the Board, including executive sessions of non-management or
independent directors. This director also calls meetings of the
independent or non-management directors and provides agendas for
such meetings. In addition, he serves as liaison between the
Chief Executive Officer and the independent and non-management
directors and provides input regarding information sent to the
Board. He also provides input regarding meeting agendas for the
Board, consults with the committee chairs regarding agendas of
committee meetings, provides advice with respect to the
selection of committee chairs, interviews Board candidates and
makes recommendations to the Nominating and Governance
Committee. Mr. Skaff also is a key participant in
establishing performance objectives and overseeing the process
for the annual evaluation of our Chief Executive Officers
performance. Together with the Chair of our Nominating and
Governance Committee, our lead independent director oversees the
annual Board and committee evaluations. He may also perform
other duties as the Board may from time to time delegate to
assist the Board in the fulfillment of its responsibilities.
Director
Independence
Our Board currently includes seven independent directors, two of
whom are standing for election. To be considered independent
under NASDAQ rules, a director may not be employed by the
Company or engage in certain types of business dealings with
Glu. In addition, as required by NASDAQ rules, the Board has
made a determination as to each independent director that no
relationship exists which, in the opinion of the Board, would
interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. In making these
determinations, the Board reviewed and discussed information
provided by the directors and by the Company with regard to each
directors business and personal activities as they relate
to Glu and Glus management. In assessing director
independence under NASDAQ rules, the Nominating and Governance
Committee and the full Board reviewed relevant transactions,
relationships and arrangements that may affect the independence
of our Board members, including that (1) Ms. Mather
was during 2008, and currently is, a director of Google Inc., a
company with which Glu conducts business in the ordinary course
and (2) Mr. Seawells step-daughter is an
employee of PricewaterhouseCoopers LLP, the Companys
independent registered public accounting firm, although she has
not worked on the Companys audit. Following review of
these transactions and other relevant standards, the Board has
determined that Ms. Mather, Mr. Miller,
Mr. Moran, Mr. Nada, Mr. Seawell,
Ms. Siminoff and Mr. Skaff are independent directors.
Attendance
at Board, Committee and Annual Stockholders Meetings
The Board expects that each director will prepare for, attend
and participate in all Board and applicable committee meetings
and that each Board member will see that other commitments do
not materially interfere with his or her service on the Board.
Our Corporate Governance Principles provide that non-employee
directors may not serve on the boards of more than five public
companies, and our Chief Executive Officer may not serve on the
boards of more than three public companies, in each case
including the Company.
7
No director attended fewer than 75% of the aggregate number of
meetings of the Board and the committees on which he or she
served. Four directors attended the 2008 Annual Meeting of
Stockholders. Under our Corporate Governance Principles, all
directors are encouraged to attend the annual meetings of
Glus stockholders.
Board
Committees and Charters
The Board currently has a standing Audit Committee, Compensation
Committee and Nominating and Governance Committee. The members
of each committee are appointed by the Board based on
recommendations of the Nominating and Governance Committee. Each
member of these committees is an independent director as
determined by the Board in accordance with NASDAQ listing
standards. Each committee has a charter and annually reviews its
charter and makes recommendations to our Board for revision to
reflect changes in laws and regulations and evolving best
practices. Copies of each charter can be found on our website at
http://www.glu.com/corp/pages/investors.aspx.
Current committee members are as follows:
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Nominating and
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Compensation
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Governance
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Director
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Audit Committee
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Committee
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Committee
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Ann Mather
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Chair
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William J. Miller
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Chair
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Richard A. Moran
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Member
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Hany M. Nada
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Member
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Daniel L. Skaff
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Member
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A. Brooke Seawell
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Chair
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Ellen F. Siminoff
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Member
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Member
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Audit
Committee
The Audit Committee currently consists of three of our outside
directors, Ms. Mather, who is the Committee chair, and
Messrs. Nada and Skaff. Mr. Seawell was a member of
the committee until the end of March 2008, when Mr. Skaff
replaced him on the committee. The composition of our Audit
Committee meets the requirements for independence under the
current NASDAQ Stock Market and SEC rules and regulations,
including their transitional rules. Each member of our Audit
Committee is financially literate. Our Board has determined that
Ms. Mather and Mr. Skaff are audit committee
financial experts as defined in Item 407(d) of
Regulation S-K.
The Audit Committee met ten times during 2008, including holding
an executive session with our independent registered public
accounting firm at each meeting. The responsibilities and
activities of the Audit Committee are described in greater
detail in the section titled Audit Committee Report
in this proxy statement and the committees charter, which
was most recently revised in January 2009, posted on our website.
Compensation
Committee
The Compensation Committee currently consists of three of our
outside directors, Mr. Miller, who is the committee chair,
Mr. Moran and Ms. Siminoff. Sharon Wienbar, a former
Board member, served as a member of the committee until
June 3, 2008, when Ms. Siminoff was elected to our
Board and joined the committee. The composition of the
Compensation Committee meets the requirements for independence
under the current NASDAQ Stock Market and SEC and the rules and
regulations of the Internal Revenue Code (the Code).
The Compensation Committee, which met ten times during 2008,
discharges the responsibilities of our Board relating to
compensation of our executive officers and oversees our
company-wide cash and equity compensation programs. The
responsibilities and activities of the Compensation Committee
are described in greater detail in the section titled
Compensation Discussion and Analysis in this proxy
statement and the committees charter posted on our website.
Nominating
and Governance Committee
The Nominating and Governance Committee currently consists of
two of our outside directors, Mr. Seawell, who is the
committee chair, and Ms. Siminoff. Ms. Wienbar served
as a member of the committee until June 3, 2008,
8
when Ms. Siminoff was elected to our Board and joined the
committee. The composition of our Nominating and Governance
Committee meets the requirements for independence under the
current NASDAQ Stock Market and SEC rules and regulations. Our
Nominating and Governance Committee, which met three times
during 2008, makes recommendations to the Board regarding Board
and committee composition and appropriate corporate governance
standards, reviews related party transactions and administers
our Code of Business Conduct and Ethics, among other things.
Compensation
Committee Interlocks and Insider Participation
During 2008, Messrs. Miller and Moran and Mms. Siminoff and
Wienbar each served on the Compensation Committee. None of these
individuals is or has been an officer or employee of Glu or any
of its subsidiaries, and there are no other relationships
between committee members and Glu or any other company that are
required to be disclosed under this caption by SEC regulations.
DIRECTOR
COMPENSATION
Overview
The Compensation Committee and the Nominating and Governance
Committee evaluate the appropriate level and form of
compensation for non-employee directors and recommend changes to
the Board when appropriate. The Board adopted the following
policy with respect to the 2008 compensation of non-employee
directors:
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Non-employee directors receive an annual cash retainer of
$20,000;
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The lead independent director receives additional annual cash
compensation of $15,000;
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The chair of the Audit Committee receives additional annual cash
compensation of $15,000;
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The chair of the Compensation Committee receives additional
annual cash compensation of $15,000;
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The chair of the Nominating and Governance Committee receives
additional annual cash compensation of $5,000; and
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Each non-employee director receives additional annual
compensation of $5,000 for service on each of the Audit
Committee, Compensation Committee or Nominating and Governance
Committee, other than as chair.
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All cash compensation to directors is paid in arrears in
quarterly installments upon continuing service. We also
reimburse our directors for reasonable expenses in connection
with attendance at Board and committee meetings.
During 2008, at about the time of our annual meeting of
stockholders, each non-employee director was eligible to receive
an additional equity award of, at that directors
discretion, either a grant of a number of shares of restricted
stock with a then fair market value equal to $50,000 or an
option to purchase three times as many shares of our common
stock, in either case vesting pro rata monthly over one year (an
Annual Award). In addition, each new non-employee
director was eligible to receive an initial equity award of, at
that directors discretion, either a grant of a number of
shares of restricted stock with a then fair market value equal
to $150,000 or an option to purchase three times as many shares
of our common stock, in either case vesting as to
162/3%
of the shares after six months and thereafter vesting pro rata
monthly over the next 30 months (an Initial
Award).
Each of our incumbent non-employee directors
Ms. Mather, Mr. Miller, Mr. Moran, Mr. Nada,
Mr. Skaff and Mr. Seawell elected to
receive a stock option grant as his or her Annual Award. Each
director received an option to purchase 31,185 shares of
our common stock with an exercise price of $4.81 per share. Our
newest director Ms. Siminoff also
elected to receive a stock option grant as her Initial Award.
She received an option to purchase 93,555 shares an at
exercise price of $4.81 per share. These 2008 grants are
reported in the Director Summary Compensation Table
below.
On January 29, 2009, our non-employee director compensation
program was amended to provide that each non-employee director
will receive an Annual Grant, at that directors
discretion, of either (1) a grant of a number of
9
shares of Glu restricted stock with a then fair market value
equal to $50,000, or 6,700 shares, whichever is less or
(2) an option to purchase three times as many shares of our
common stock, calculated based on such lesser amount. The amount
of the Initial Grant was changed to provide that, at that
directors discretion, he or shall will receive either
(1) a grant of a number of shares of Glu restricted stock
with a then fair market value equal to $150,000, or
20,000 shares, whichever is less or (2) an option to
purchase three times as many shares of our common stock,
calculated based on such lesser amount. The vesting schedule for
the Annual Grant and the Initial Grant was not changed.
We do not provide additional compensation to Mr. Ballard
for his service on our Board because he is an officer of the
Company. See Executive Compensation below for a
description of Mr. Ballards 2008 compensation.
Director
Summary Compensation Table
The following table sets forth certain information with respect
to compensation awarded to, earned by or paid to each person who
served as a non-employee director during 2008.
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Fees Earned or Paid
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Stock Awards
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Option Awards
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Name
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in Cash ($)
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(1)(3) ($)
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(1)(2)(3) ($)
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Total ($)
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Ann Mather
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$
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35,000
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$
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9,403
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$
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50,018
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$
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94,421
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William J. Miller
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32,500
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109,414
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141,914
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Richard A. Moran
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27,500
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59,053
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86,553
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Hany M. Nada
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16,500
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109,414
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125,914
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A. Brooke Seawell
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17,750
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109,414
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127,164
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Ellen F. Siminoff(4)
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16,750
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33,025
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49,775
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Daniel L. Skaff
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30,250
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109,414
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139,664
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Sharon L. Wienbar(4)
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4,750
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31,833
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36,583
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(1) |
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The amounts were computed in accordance with SFAS 123R
(excluding risk of forfeiture) and reflect the dollar amount
recognized as compensation expense during each year reported.
These amounts reflect our accounting expense for these equity
awards, without reflecting the estimate for forfeitures related
to serviced based vesting, and do not correspond to the actual
value that may be recognized by the director. See
Note 11 Stock Option and Other Benefit
Plans in the notes to consolidated financial
statements contained in our annual report on
Form 10-K
for the year ended December 31, 2008 for a description of
the SFAS 123R methodology and assumptions. |
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(2) |
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The grant date fair values under SFAS 123R of options
granted to our non-employee directors during 2008 were $57,415
for each of Ms. Mather and Messrs. Miller, Moran,
Nada, Seawell and Skaff, and $172,244 for Ms. Siminoff. |
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(3) |
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The aggregate number of outstanding stock options held by each
of our non-employee directors at the end of 2008 was:
Ms. Mather: 106,185; Mr. Miller: 64,518;
Mr. Moran: 57,185; Mr. Nada: 64,518; Mr. Seawell:
47,852; Ms. Siminoff: 93,555; Mr. Skaff: 64,518 and
Ms. Wienbar: 0. None of our non-employee directors held
unvested restricted stock awards at the end of 2008. |
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(4) |
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On June 3, 2008, our stockholders elected Ms. Siminoff
to our Board and Ms. Wienbar ceased serving on our Board. |
STOCKHOLDER
MATTERS
Stockholder
Communications with Directors
Stockholders may communicate with the Board by sending an email
to bod@glu.com, or by sending written correspondence to: Board,
c/o Corporate
Secretary, Glu Mobile Inc., 2207 Bridgepointe Parkway,
Suite 250, San Mateo, California 94404. Communications
are distributed to the Board, or to any individual directors as
appropriate, depending on the facts and circumstances outlined
in the communication. The Board has instructed the Corporate
Secretary to review all correspondence and to determine, in his
or her discretion, whether matters
10
submitted are appropriate for Board consideration. In
particular, the Board has directed that communications such as
product or commercial inquiries or complaints, resume and other
job inquiries, surveys and general business solicitations or
advertisements should not be forwarded to the Board. In
addition, material that is unduly hostile, threatening, illegal,
patently offensive or similarly inappropriate or unsuitable will
be excluded, with the provision that any communication that is
filtered out must be made available to any non-management
director upon request. The Corporate Secretary may forward
certain communications elsewhere in the company for review and
possible response.
Stockholder
Recommendations of Director Candidates
The Nominating and Governance Committee will consider nominees
recommended by stockholders for election as directors. If a
stockholder would like to recommend a director candidate for the
2010 annual meeting, the stockholder must deliver the
recommendation in writing to the Corporate Secretary, Glu Mobile
Inc., 2207 Bridgepointe Parkway, Suite 250,
San Mateo, California 94404. Evaluations of candidates
generally involve a review of background materials, internal
discussions and interviews with selected identified candidates
as appropriate. In conducting its review and evaluation, the
Nominating and Governance Committee may solicit the views of
management, other members of the Board and other individuals it
believes may have insight into a candidates qualifications
and the needs of the Board and its committees. Candidates for
the Board are generally selected based on desired skills and
experience in the context of the existing composition of the
Board and needs of the Board and its committees at that time,
including the requirements of applicable SEC and NASDAQ rules.
The Nominating and Governance Committee will consider these
needs and further evaluate each candidates qualifications
based on their independence, integrity, collegiality, diversity,
skills, financial, technical, operational and other expertise
and experience, breadth of experience, practical wisdom,
judgment, knowledge about our business or industry, personal and
professional ethics, availability and commitment to representing
and enhancing the long-term interests of our stockholders. From
time to time, the Nominating and Governance Committee may also
identify and consider other factors that reflect our environment
as it evolves or that it believes will otherwise contribute to
the Boards overall effectiveness and our success. The
Nominating and Governance Committee does not assign specific
weights to particular criteria, and no particular criterion is
necessarily applicable to all candidates, and will choose
candidates to recommend for nomination based on the specific
needs of the Board and Glu at that time. Although the Nominating
and Governance Committee uses these and other criteria as
appropriate to evaluate candidates, the Nominating and
Governance Committee has no stated minimum criteria for
candidates. Final approval of nominees to be presented for
election is determined by the full Board.
Stockholder
Proposals for the 2010 Annual Meeting of Stockholders
Any stockholder who intends to present a proposal for inclusion
in Glus 2010 proxy statement and form of proxy must submit
the proposal, in writing, so that the Corporate Secretary
receives it at our principal executive offices by
December 23, 2009. Any stockholder who wishes to bring a
proposal or nominate a person for election to the Board at the
2010 Annual Meeting of Stockholders must provide written notice
of the proposal or nomination to Glus Corporate Secretary,
at our principal executive offices, between February 13,
2010 and March 15, 2010. In addition, our stockholders must
comply with the procedural requirements in our bylaws, which
stockholders can obtain from us upon request. Our bylaws are
also on file with the SEC.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
ownership of our common stock as of April 1, 2009 by:
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Each Named Executive Officer (defined in Compensation
Discussion and Analysis below);
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Each of our directors;
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All current executive officers and directors as a group; and
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All persons known to us to beneficially own 5% or more of our
common stock.
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11
We calculated the Percent of Class based on
29,620,779 shares of common stock outstanding on
April 1, 2009. In accordance with SEC regulations, we also
include shares subject to options that are currently exercisable
or will become exercisable within 60 days of April 1,
2009. Those shares are deemed to be outstanding and beneficially
owned by the person holding such option for the purpose of
computing the percentage ownership of that person, but they are
not treated as outstanding for the purpose of computing the
percentage ownership of any other person. Unless otherwise
indicated, the address of each of the persons in this table is
as:
c/o Glu
Mobile Inc., 2207 Bridgepointe Parkway, Suite 250,
San Mateo, California 94404.
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Amount and
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Nature of
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Beneficial
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Percent of
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Name of Beneficial Owner
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Ownership
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Class
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5% Stockholders:
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New Enterprise Associates 10, L.P.(1)
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4,794,443
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16.2
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%
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Stephens Investment Management, LLC and affiliated persons(2)
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2,909,242
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9.8
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%
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T. Rowe Price Associates(3)
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2,705,864
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9.1
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%
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Bank of America Corporation(4)
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2,403,250
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8.1
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%
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BAVP, L.P.(5)
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2,400,819
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8.1
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%
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Directors and Named Executive Officers:
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L. Gregory Ballard(6)
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898,013
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3.0
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%
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Eric R. Ludwig(7)
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190,824
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*
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Jill S. Braff(8)
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150,139
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*
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Kevin S. Chou(9)
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71,941
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*
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Alessandro Galvagni(10)
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149,266
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*
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Albert A. Rocky Pimentel(11)
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191,960
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*
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Ann Mather(12)
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109,851
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*
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William J. Miller(13)
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74,518
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*
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Richard A. Moran(14)
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119,851
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*
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Hany M. Nada(15)
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1,153,695
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3.9
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%
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A. Brooke Seawell(16)
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57,852
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*
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Ellen F. Siminoff(17)
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93,555
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*
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Daniel L. Skaff(18)
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855,380
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2.9
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%
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All current directors and executive officers as a group
(13 persons)(19)
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3,924,885
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12.6
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%
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* |
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Represents beneficial ownership of less than 1% of the
outstanding shares of our common stock. |
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(1) |
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All shares are held by New Enterprise Associates, 10 L.P.
(NEA 10). NEA Partners 10, L.P, which is the sole
general partner of NEA 10, has seven individual general
partners, which collectively determine the voting and
disposition of the shares. The information provided with respect
to this stockholder is based upon a Schedule 13G filed by
such stockholder with the SEC on February 13, 2008. The
address for New Enterprise Associates 10, L.P. is 1119 St. Paul
Street, Baltimore, Maryland 21202. See footnote
(16) regarding the relationship between this stockholder
and Mr. Seawell. |
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(2) |
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The information provided with respect to this stockholder is
based solely upon a Schedules 13G/A dated November 5, 2008
and a Form 4 dated March 19, 2009, filed by the
stockholders with the SEC. The shares are held directly by
certain investment limited partnerships (the
Partnerships) for which Stephens Investment
Management, LLC (SIM) is the general partner and
investment manager. Paul H. Stephens, P. Bartlett Stephens and
W. Bradford Stephens are each managing members and owners of SIM
and each also holds limited partnership interests in certain of
the Partnerships. Each of SIM, Paul H. Stephens, P. Bartlett
Stephens, W. Bradford Stephens and the Partnerships expressly
disclaims beneficial ownership in these securities, except to
the extent of their respective pecuniary interests therein. SIM
and the other reporting persons may be deemed to beneficially
own the securities owned by the Partnerships insofar as they may
be deemed to have |
12
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the power to direct the voting or disposition of such
securities. The address for these persons is One Ferry Building,
Suite 255, San Francisco, California 94111. |
|
(3) |
|
The information provided with respect to this stockholder is
based solely upon a Schedule 13G/A filed by such
stockholder with the SEC on February 11, 2009. The
stockholder has sole voting power with respect to 192,364 of the
shares and sole dispositive power with respect to all of the
shares. The Company has not done any independent investigation
with respect to the beneficial ownership of this stockholder.
The address for T. Rowe Price Associates is
100 E. Pratt Street, Baltimore, Maryland 21202. |
|
(4) |
|
The information provided with respect to this stockholder is
based solely upon a Schedule 13F HR filed with the
SEC on February 9, 2009 by Bank of America Corporation,
Columbia Wanger Asset Management, LP, Bank of America Investment
Advisors, Inc., Bank of America, N.A., Columbia Management
Advisors, LLC, Bank of America Securities LLC, NMS Services
(Cayman) Inc., Banc of America Investment Services, Inc., NMS
Services, Inc., U.S. Trust Company of Delaware and Banc of
America Capital Investor SBIC, L.P. Bank of America Corporation
has voting and investment power over 2,400,819 of the shares and
Banc of America Securities LLC has voting and investment power
over 2,431 of the shares. The address for Bank of America
Corporation is 100 North Tryon Street, Charlotte, North Carolina
28255. |
|
(5) |
|
The information provided with respect to this stockholder is
based upon a Schedule 13G/A filed by such stockholder with
the SEC on February 10, 2009. The voting and disposition of
our shares held by BAVP, L.P. are determined by the four
managing members of Scale Venture Management I, LLC
(formerly BA Venture Partners VI, LLC), the ultimate general
partner of BAVP, L.P. The address of BAVP, L.P. is 950 Tower
Lane, Suite 700, Foster City, California 94404. |
|
(6) |
|
Represents 485,759 shares subject to options that are
exercisable within 60 days of April 1, 2009;
26,668 shares held by Mr. Ballards minor
children, 310,586 shares held in The L. Gregory Ballard and
Lucy H Ballard Revocable Trust UAD and 75,000 shares
held in The L. Gregory Ballard & Lucy H. Ballard
Trustees for the Ballard Family GRAT. |
|
(7) |
|
Includes 133,824 shares subject to options that are
exercisable within 60 days of April 1, 2009. |
|
(8) |
|
Includes 128,328 shares subject to options that are
exercisable within 60 days of April 1, 2009. |
|
(9) |
|
Includes 68,608 shares subject to options that are
exercisable within 60 days of April 1, 2009. |
|
(10) |
|
Includes 121,454 shares subject to options that are
exercisable within 60 days of April 1, 2009. |
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(11) |
|
Includes 7,864 shares held by Mr. Pimentel as
custodian for two of his children under the California Uniform
Transfer to Minors Act. |
|
(12) |
|
Includes 106,185 shares subject to options that are
exercisable within 60 days of April 1, 2009, of which
2,599 shares, if these options were exercised in full,
would be subject to vesting and right of repurchase in our favor
upon the individuals cessation of service prior to vesting. |
|
(13) |
|
Includes 64,518 shares subject to options that are
exercisable within 60 days of April 1, 2009, of which
2,599 shares, if these options were exercised in full,
would be subject to vesting and right of repurchase in our favor
upon the individuals cessation of service prior to vesting. |
|
(14) |
|
Represents 62,666 shares held by the Moran Family 2003
Revocable Trust and 57,185 shares subject to options that
are exercisable within 60 days of April 1, 2009, of
which 2,599 shares, if these options were exercised in
full, would be subject to vesting and right of repurchase in our
favor upon the individuals cessation of service prior to
vesting. |
|
(15) |
|
Represents 1,067,939 shares held by Granite Global
Ventures II L.P. and 21,238 shares held by GGV II
Entrepreneurs Fund L.P. Mr. Nada is a managing
director of the general partner of the foregoing entities, which
has seven individual managing directors, and shares voting and
investment power with respect to the shares held by these
entities with the other managing directors of the general
partner. Mr. Nada disclaims beneficial ownership of these
shares except to the extent of his individual pecuniary
interests in these entities. Also represents 64,518 shares
subject to options that are exercisable within 60 days of
April 1, 2009, of which 11,859 shares, if these
options were exercised in full, would be subject to vesting and
right of repurchase in our favor upon the individuals
cessation of service prior to vesting. |
13
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(16) |
|
Represents 10,000 shares held by The Rosemary and A. Brooke
Seawell Revocable Trust and 47,852 shares subject to
options that are exercisable within 60 days of
April 1, 2009, of which 7,229 shares, if these options
were exercised in full, would be subject to vesting and right of
repurchase in our favor upon the individuals cessation of
service prior to vesting. Excludes 4,794,443 shares held by
NEA 10. Mr. Seawell is a venture partner of NEA Development
Corp., an entity that provides administrative services to the
foregoing entities. Mr. Seawell does not have voting or
dispositive power with respect to any of the shares held by NEA
10, and disclaims beneficial ownership of any securities held by
them, except to the extent of his respective proportionate
pecuniary interests in these entities. |
|
(17) |
|
Represents 93,555 shares subject to options that are
exercisable within 60 days of April 1, 2009, of which
64,970 shares, if these options were exercised in full,
would be subject to vesting and right of repurchase in our favor
upon the individuals cessation of service prior to vesting. |
|
(18) |
|
Includes 27,252 shares held by the Daniel &
Michelle Skaff Trust and 64,518 shares subject to options
that are exercisable within 60 days of April 1, 2009,
of which 11,859 shares, if these options were exercised in
full, would be subject to vesting and right of repurchase in our
favor upon the individuals cessation of service prior to
vesting. Mr. Skaff is the managing member of Sienna
Associates III, L.L.C., the general partner of Sienna Limited
Partnership III, L.P. Mr. Skaff, Robert Conrads and Gilbert
Amelio share voting and dispositive power over these shares and
disclaim beneficial ownership of these shares except to the
extent of their respective individual pecuniary interests in
this entity. The address of Sienna Limited Partnership III, L.P.
and Mr. Skaff is 2330 Marinship Way, Suite 130,
Sausalito, California 94965. |
|
(19) |
|
Includes 1,436,304 shares subject to options that are
exercisable within 60 days of April 1, 2009, of which
112,974 shares, if these options were exercised in full,
would be subject to vesting and right of repurchase in our favor
upon the individuals cessation of service prior to
vesting. Excludes the shares indicated to be excluded in
footnotes (16) and (18). |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16 of the Exchange Act requires our directors and
certain of our officers, and persons who own more than 10% of
our common stock, to file initial reports of ownership and
reports of changes in ownership with the SEC. Such persons are
required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. Based solely on our review
of the copies of such forms furnished to us and written
representations from these officers and directors, we believe
that all Section 16(a) filing requirements were met during
2008.
COMPENSATION
DISCUSSION AND ANALYSIS
The following discussion and analysis of compensation
arrangements of our executive officers should be read together
with the compensation tables and related disclosures set forth
below. This discussion contains forward-looking statements that
are based on our current plans, considerations, expectations and
determinations regarding future compensation programs. The
actual amount and form of compensation and the compensation
programs that we adopt may differ materially from currently
planned programs as summarized in this discussion.
The Compensation Committee, comprised of three non-employee
members of our Board, oversees our compensation plans and
policies, approves the compensation of our executive officers
and administers our stock compensation plans. The Compensation
Committees basic responsibilities are to review the
performance of our management in achieving corporate goals and
objectives and to ensure that our executive officers are
compensated effectively in a manner consistent with our strategy
and competitive practices. This Compensation Discussion and
Analysis (CD&A) contains a discussion and
analysis of the compensation approved by the Compensation
Committee and earned by or paid to the executive officers named
below (the Named Executive Officers), in 2008 who
are included in the Summary Compensation Table below:
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L. Gregory Ballard, President and Chief Executive Officer
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Eric R. Ludwig, Senior Vice President and Chief Financial Officer
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Jill S. Braff, Senior Vice President, Global Publishing
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14
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Kevin S. Chou, Vice President and General Counsel
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Alessandro Galvagni, Senior Vice President, Global Product
Development and Chief Technology Officer
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Albert A. Rocky Pimentel, former Executive Vice
President and Chief Financial Officer
|
Mr. Pimentel announced his resignation from the Company in
April 2008 and shortly thereafter Mr. Ludwig was appointed
as Senior Vice President, Finance and Interim Chief Financial
Officer and designated as an executive officer. Mr. Ludwig
was subsequently appointed Chief Financial Officer following
completion of a search effort and evaluation of alternatives.
Mr. Chou served as our Vice President and General Counsel
during all of 2008 and was designated an executive officer in
October 2008. The effects of these decisions on our executive
compensation are discussed in this CD&A.
Compensation
Philosophy and Objectives
The Compensation Committee has established a compensation
program for executive officers designed to attract individuals
with the skills necessary for us to achieve our business plan,
to motivate those individuals, to reward those individuals
fairly over time and to retain those individuals who continue to
perform at or above the levels that we expect. It is also
designed to reinforce a sense of ownership, urgency and overall
entrepreneurial spirit and to link rewards to measurable
corporate and, where appropriate, individual performance. We
believe that the most effective executive compensation program
is one that is designed to reward the achievement of specific
long-term and strategic goals, and which aligns executive
officers interests with those of the stockholders by
rewarding performance of established goals, with the ultimate
objective of creating stockholder value. The Compensation
Committee evaluates compensation to ensure that Glu maintains
the ability to attract and retain talented employees in key
positions and that compensation provided to key employees
remains competitive relative to the compensation paid to
similarly situated executive officers of our peer companies. To
that end, the Compensation Committee believes that executive
compensation packages provided by Glu to its executive officers
should include both cash and stock-based compensation that
reward performance against established goals.
The Compensation Committee works within the framework of a
pay-for-performance
philosophy to determine each component of an executive
officers compensation package based on numerous factors,
including:
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the individuals particular background and circumstances,
including training and prior relevant work experience;
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the individuals role with us and the compensation paid to
similar persons in the companies represented in the compensation
data that we review;
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the demand for individuals with the individuals specific
expertise and experience at the time of hire or review;
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performance goals and other expectations for the position where
appropriate;
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comparison to other executives within our company having similar
levels of expertise and experience; and
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compensation data of peer companies for similar positions.
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The Compensation Committee performs at least annually a
strategic review of our executive officers compensation
levels to determine whether they provide adequate incentives and
motivation and whether they appropriately compensate our
executive officers relative to comparable executive officers in
other companies with which we compete for executives.
In making compensation decisions for 2008 performance, the
Compensation Committee gave significant weight to the
Companys financial performance for the year, and in
setting compensation for 2009, the Compensation Committee
considered the Companys operating plan approved by the
Board with respect to cash and equity compensation and the
existing equity awards held by our executive officers with
respect to equity compensation.
15
Components
of Executive Compensation
In 2008, our executive officers were compensated through the
following compensation elements, each designed to achieve one or
more of our overall compensation objectives:
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Target versus Peer
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Component
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How Determined
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Objective
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Companies
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Base Salary
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Market data and scope of executives responsibilities
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Attract and retain experienced executives
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60th percentile (together with cash bonus compensation)
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Non-Equity Incentive (Cash) Bonus Plan
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Market data and scope of executives responsibility and
based on achieving pre-established corporate financial
objectives and, where appropriate, individual performance
objectives
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Motivate executives to achieve the Companys 2008 financial
plan and to achieve strategic goals
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60th percentile (together with base salary compensation)
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Long-Term Equity Incentive Awards
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Market data, scope of executives responsibility and value
of existing equity awards
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Align interests of our executives with our stockholders
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75th percentile
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The Compensation Committee views these components of
compensation as related but distinct. Although the Compensation
Committee reviews total compensation, it does not believe that
significant compensation derived from one component of
compensation should negate or reduce compensation from other
components. The Compensation Committee determines the
appropriate level for each compensation component based on our
compensation philosophy discussed above. Except as described in
this CD&A, the Compensation Committee has not adopted any
formal or informal policies or guidelines for allocating
compensation between long-term and currently paid out
compensation, between cash and non-cash compensation, or among
different forms of non-cash compensation. However, our Named
Executive Officers have the ability to directly influence
overall Company performance, so a greater portion of their pay
is tied to short and long-term incentive programs than is the
case for most other Glu employees. In addition, the Compensation
Committees philosophy is to make a greater percentage of
an employees compensation performance-based as he or she
becomes more senior and to keep cash compensation to the minimum
competitive level while providing the opportunity to be well
rewarded through equity if we perform well over time, consistent
with our
pay-for-performance
culture.
For 2008 compensation, the Compensation Committee believed that
the 60th percentile for base salaries and total cash
compensation was the minimum cash compensation level that would
allow us to attract and retain talented executive officers and
motivate them to achieve the Companys annual financial
plan and individual strategic goals. However, because the
Compensation Committee fixed salaries near the median of
comparable executive officers salaries, it chose to make
equity grants at or near the level of the 75th percentile.
Benchmarking
For its October 2007 and November 2007 meetings, Compensia
prepared a peer analysis based on data from the following
sources for the Compensation Committees consideration in
determining the 2008 cash and stock-based compensation for all
of our executive officers:
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comparable position compensation data for the following peer
companies: Actuate, Aruba Networks, Autobytel, BigBand Networks,
Chordiant Software, CommVault Systems, CyberSource, Digimarc,
DivX, DTS, Omniture, Opsware, Riverbed Technology and Sonic
Solutions;
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the Radford April 2007 High-Tech Executive Survey of a subset of
the complete peer companies list (Actuate, BigBand Networks,
Chordiant Software, CommVault Systems, CyberSource, Digimarc,
Omniture and Opsware) plus Real Networks; and
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16
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the Radford April 2007 High-Tech Executive Survey of primarily
public and some private software companies, limited to companies
with revenues between $50 million and $200 million.
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In April 2007, Radford and the Compensation Committee considered
a set of peer companies in connection with a Radford assessment
of our equity compensation program for our employees in general.
Radford conferred with our management to develop a proposed
group of peer companies of companies similar to us based on
industry, financial and organizational comparability. Radford
and management presented the proposed group of peer companies to
Compensia and the Compensation Committee for consideration and,
based on input from Compensia and the committee, the group of
peer companies was modified slightly to reflect their view of
better aligned comparators, including consideration of similar
growth characteristics for example, resulting in the final group
of peer companies which Compensia and the Compensation Committee
considered at the committees October 2007 and November
2007 meetings. Compensia and the Compensation Committee used a
different set of peer companies for benchmarking at the
Compensation Committees October 2008 meeting than the set
used at the October 2007 and November 2007 meetings. At the
Compensation Committees July 2008 meeting, Compensia
presented to the Compensation Committee for the committees
input a new group of peer companies of companies similar to Glu,
again based on industry, financial and organizational
comparability, along with a new set of surveys and market data
for the new peer group that Compensia would be using in 2008 for
the benchmarking. The new group of peer companies included most
of the group of peer companies used by Compensia and the
Compensation Committee for benchmarking in 2007, but also
included Compensias recommendations for certain additions
and deletions. The Compensation Committee accepted
Compensias recommended revisions to the peer group
companies, since it believed that this peer group is
representative of companies in our revenue range and industry
that are a fair representation of the employment market in which
Glu competes. The Compensation Committees considered this
revised peer group and associated surveys and data at its
October 2008 and November 2008 meetings at which it approved
equity awards, set 2009 annual base salaries and began
considering 2009 total cash compensation, including target
bonus-plan awards.
The Compensation Committees judgments regarding market
levels of base compensation and aggregate equity holdings were
based, in part, on a report prepared by Compensia at the
Compensation Committees request; the report compared our
executive compensation with the executive compensation at a
number of recently public companies and a number of similarly
situated private companies, analyzing various factors including
employee headcount and revenues. The Compensation
Committees choice of the percentiles in the table above to
apply to the data in the report reflected consideration of our
stockholders interests in paying what was necessary, but
not significantly more than necessary, to achieve our corporate
goals, while conserving cash and equity as much as practicable.
We believe that, given the industry in which we operate and the
corporate culture that we have created, base compensation and
options at levels we have established are generally sufficient
to retain our existing executive officers and to hire new
executive officers when and as required.
Base
Salary
The Compensation Committee fixes executive officer base
compensation at a level it believes enables the Company to hire
and retain individuals in a competitive environment and to
reward satisfactory individual performance and a satisfactory
level of contribution to our overall business goals. The
Compensation Committee also takes into account the base
compensation payable by companies believed to be our competitors
and by other companies it believed to be those with which we
generally compete for executive officer talent. The base
salaries of executive officers are determined at the time of
hiring by evaluating the responsibilities of the position held
and the experience and performance of the individual. The
Compensation Committee reviews executive salaries annually,
typically in the fourth quarter, and adjusts them as appropriate
to reflect changes in the peer companies, individual performance
and responsibility, prior experience and salary history. In
instances where an executive officer is uniquely key to our
success or has a role that does not exactly match the
benchmarking data, the Compensation Committee takes these
factors into consideration. In the event of a promotion during
the year, base salaries may be increased at mid-year to reflect
increased responsibilities.
17
At its November 2007 meeting, the Compensation Committee
approved salary increases for Named Executive Officers,
effective beginning December 15, 2007, as set forth in the
following table. The 2008 salary of each of Messrs. Ludwig
and Chous salary was subsequently increased as described
in the narrative following the table.
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Named Executive Officer
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2007 Salary
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2008 Salary
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L. Gregory Ballard
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$
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300,000
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$
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375,000
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Eric R. Ludwig
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190,000
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225,000
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Jill S. Braff
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240,000
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270,000
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Kevin S. Chou
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190,000
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205,000
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Alessandro Galvagni
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240,000
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270,000
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Albert A. Rocky Pimentel
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250,000
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280,000
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These base salary increases were approved based on
recommendations from the Chief Executive Officer (and, in the
case of the Chief Executive Officer, input from the Board), an
evaluation of each executive officers performance that was
conducted in consultation with the Chief Executive Officer, and
consideration of the benchmarking data. The 2008 base salary of
Messrs. Ballard and Chou were below the guideline levels
established by the Compensation Committee, and the base salaries
of Messrs. Ludwig, Galvagni and Pimentel and Ms. Braff
were above the guideline levels established by the Compensation
Committee. Mr. Ballards base salary was below the
60th percentile guideline by approximately 6% and
Mr. Chous base salary was below the guideline by
approximately 19%. The Compensation Committee believed that
Ms. Braffs broader role, including worldwide sales
and marketing, Mr. Galvagnis broader role, including
product development and engineering, Mr. Ludwigs
broader role, including administration and investor relations,
and Mr. Pimentels broader role, including
administration and corporate development, and his lengthy career
in the industry, and the fact that each of these positions
entails broader responsibilities than the comparable executives
in the benchmark comparisons, warranted in each case a base
salary higher than the guidelines established by the
Compensation Committee. Mr. Pimentels base salary
exceeded the 60th percentile guideline by approximately 8%,
Ms. Braffs base salary exceeded the guideline by
approximately 12%, Mr. Ludwigs base salary exceeded
the guideline by approximately 6% and Mr. Galvagnis
base salary exceeded the guideline by approximately 11%. The
Compensation Committees choice of the foregoing salaries
reflected consideration of our stockholders interests in
paying what was necessary, but not significantly more than
necessary, to achieve our corporate goals, while conserving cash
as much as practicable.
In April 2008, in connection with Mr. Ludwigs
promotion to Senior Vice President, Finance and Interim Chief
Financial Officer when Mr. Pimentel tendered his
resignation as our Chief Financial Officer, the Compensation
Committee approved an increase in Mr. Ludwigs base
annual salary to $250,000 from $225,000. In making this
compensation change, the Compensation Committee considered the
2007 peer analysis data for the Chief Financial Officer position
prepared by Compensia that the Compensation Committee had
considered when it determined the 2008 compensation for
Mr. Pimentel. The Compensation Committee believed that
Mr. Ludwigs promotion to Senior Vice President and
the need to retain Mr. Ludwig, given that he was the
Companys most senior finance officer, justified an
increase in his base salary (and target bonus), but that the
interim nature of his role as Chief Financial Officer and the
fact that this position would be his first as the chief
financial officer or interim chief financial officer of a
publicly traded company justified a base salary below the 60th
percentile guideline for a chief financial officer and
appropriately below that paid to Mr. Pimentel. Following
this change, Mr. Ludwigs base salary was below the
60th percentile guideline by approximately 4%. The
Compensation Committee also decided that it would review
Mr. Ludwigs compensation (including base salary,
target bonus and equity compensation) should Mr. Ludwig be
appointed the Companys Chief Financial Officer, at its
next review of the compensation of all of the Companys
executive officers.
In October 2008, the Compensation Committee approved an increase
in Mr. Chous base salary to $225,000, effective
November 1, 2008, in connection with his designation as an
executive officer of the Company.
Cash
Bonuses Under Our Non-Equity Incentive Plan
The Compensation Committee designs our executive bonus plan to
focus management on achieving key corporate financial
objectives, to motivate certain desired individual behaviors and
to reward substantial achievement of these corporate financial
objectives and individual goals. The Compensation Committee
utilizes cash
18
bonuses to reward performance achievements with a time horizon
of one year or less, while utilizing salary as the base amount
necessary to match the Companys competitors for executive
talent.
Our 2008 executive bonus plan was adopted by the Compensation
Committee in April 2008 to reward all executive officers, vice
presidents and certain senior director-level employees. It
contemplates the payment to a participant of a maximum annual
bonus equal to a percentage of the participants current
annual salary approved by the Compensation Committee in the case
of our executive officers, and in the case of non-executive
officers, our Chief Executive Officer and Chief Financial
Officer. The 2008 targets and actual bonuses earned for our
Named Executive Officers are set forth below.
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2008 Target
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2008 Target
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Named Executive Officer
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Percentage
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Annual Bonus
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2008 Bonus Earned
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L. Gregory Ballard
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75
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%
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$
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281,250
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$
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67,500
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Eric R. Ludwig
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35/50
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%
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108,654
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31,771
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Jill S. Braff
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50
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%
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135,000
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47,250
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Kevin S. Chou
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30
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%
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62,500
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21,525
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Alessandro Galvagni
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50
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%
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135,000
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47,250
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Albert A. Rocky Pimentel
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50
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%
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140,000
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35,000
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Combined with each executive officers base salary, the
total target cash compensation of Messrs. Ballard and Chou
were below the guideline of the 60th percentile of our peer
group established by the Compensation Committee and the total
target cash compensation of Ms. Braff and
Messrs. Ludwig, Galvagni and Pimentel were higher than the
guideline. Mr. Ballards total target cash
compensation was below the 60th percentile guideline by
approximately 10%, Mr. Chous total target cash
compensation was below the guideline by approximately 23%,
Ms. Braffs total target cash compensation exceeded
the guidelines by approximately 3%, Mr. Ludwigs total
target cash compensation exceeded the guideline by approximately
26%, Mr. Galvagnis total target cash compensation
exceeded the guideline by approximately 22% and
Mr. Pimentels total target cash compensation exceeded
the guideline by approximately 8%, all in light of the factors
discussed in Base Salary above.
In April 2008, the Compensation Committee approved an increase
in Mr. Ludwigs target bonus to 50% of his base
salary, up from 35% of his base salary, when he was promoted to
Senior Vice President, Finance and interim Chief Financial
Officer, after Mr. Pimentel tendered his resignation as our
Chief Financial Officer. See the discussion related to
Mr. Ludwig in Base Salary above.
Except for Mr. Ballard, we paid 2008 bonuses quarterly with
the maximum potential bonus in a given quarter equal to 25% of
the maximum annual bonus. We elected to award bonuses quarterly
because the Compensation Committee believed a short-term
orientation was appropriate given the uncertainty and
unpredictability of operations in a small company.
Mr. Ballards maximum potential bonus in a given
quarter is equal to 20% of his maximum annual bonus, with the
final 20% being paid after our Boards assessment of his
annual performance. The Compensation Committee added this
component to Mr. Ballards bonus because it wanted his
bonus to be largely aligned with those of the other executive
officers but also to include a strategic component that went
beyond the short-term quarterly financial metrics. The
individual performance objectives for our Chief Executive
Officer are determined by our lead independent director and one
or more members of the Compensation Committee, after input from
the other members of our Board.
In 2008, we based quarterly bonuses on three
components revenues, non-GAAP earnings and
individual contributions. The Compensation Committee felt that
the largest portion of each bonus should be based on our
executive officers success as a team and thus based on
corporate financial goals, but that there should be some ability
to reward individual contributions. Each component of the bonus
is independent of the other components, and we paid the
applicable percentage of the bonus if an objective is attained,
regardless of whether any or all of the other objectives were
attained. The Compensation Committee chose revenues and non-GAAP
earnings because it believed that, as a growth company, we
should reward revenue growth, but only if that revenue growth is
achieved cost effectively, and that a profitable company with
little or no growth was not acceptable. The Compensation
Committee decided to replace the corporate operational EBITDA
objective used in 2007 with the non-GAAP earnings objective used
in 2008 because non-GAAP earnings more closely aligned with the
Companys 2008
19
operating plan approved by the Board, was the measure that
management used to evaluate the Companys performance, and
that the Compensation Committee believed was a better measure of
our financial performance to our stockholders. The targets were
based on our annual operating plan, as approved by the Board.
The individual performance objectives were determined by the
executive officer to whom the potential bonus recipient reports
or, in the case of our Chief Executive Officer, by our lead
independent director and one or more members of the Compensation
Committee, after receiving input from the other members of our
Board. The basis for Mr. Ballards bonus included such
objectives as developing our executive team, successfully
integrating acquisitions, ensuring the creation of a sufficient
number of games, developing improved content strategy or
developing strategic opportunities.
The actual amount of the quarterly and annual bonus payments in
2008 depended on whether we achieved our revenues and non-GAAP
earnings targets, and, for each individual executive officer,
whether he or she achieved his or her individual goals. Each
executive officer, other than Mr. Ballard, was eligible to
receive up to 37.5% of his or her bonus opportunity based on our
revenues, 37.5% of their bonus opportunity based on our non-GAAP
earnings and 25% of his or her bonus opportunity based on the
executive officers individual goals. Mr. Ballard was
eligible to receive up to 40% of his bonus opportunity based on
our revenues, 40% of his bonus opportunity based on our non-GAAP
earnings and 20% of his bonus opportunity based on his
individual annual goals. In each case, payment for the financial
targets components of the bonuses was contingent on achieving
90% of the applicable target, with 40% of the maximum amount for
that portion of the bonus being paid if we achieved at least 90%
but less than 95% of the applicable target, 70% of the maximum
amount for that portion of the bonus being paid if we achieved
at least 95% but less than 100% of the applicable target, and
100% of the maximum amount for that portion of the bonus being
paid if we achieved at least 100% of the applicable target.
Executive bonus plan participants were eligible to earn a bonus
above 100% of target, at the Compensation Committees
discretion and in such amount as may be determined by the
committee, based on outstanding Company and individual
achievement, assuming the target bonus for the measurement
period had been earned. At the end of each quarter, we reviewed
the Companys financial statements for the quarter relative
to the financial measures, evaluated the individuals
performance against his or her personal objectives and
determined each participants quarterly bonus amount.
The Compensation Committee established the 2008 target financial
measures in April 2008 when it adopted the 2008 executive bonus
plan. The target financial measures are based on a revised 2008
annual operating plan approved by the Board following our MIG
and Superscape acquisitions. The 2008 target and actual
financial measures for purposes of our 2008 executive bonus plan
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
2008 Financial Measures
|
|
Target
|
|
|
Actual
|
|
|
Q1-2008 Revenues
|
|
$
|
19,648
|
|
|
$
|
20,592
|
|
Q1-2008 Non-GAAP Earnings
|
|
|
(794
|
)
|
|
|
(42
|
)
|
Q2-2008 Revenues
|
|
|
24,184
|
|
|
|
23,704
|
|
Q2-2008 Non-GAAP Earnings
|
|
|
367
|
|
|
|
278
|
|
Q3-2008 Revenues
|
|
|
28,417
|
|
|
|
23,895
|
|
Q3-2008 Non-GAAP Earnings
|
|
|
3,265
|
|
|
|
(3,030
|
)
|
Q4-2008 Revenues
|
|
|
30,558
|
|
|
|
21,577
|
|
Q4-2008 Non-GAAP Earnings
|
|
|
4,349
|
|
|
|
(4,269
|
)
|
Appendix A to this proxy statement includes a
reconciliation of these non-GAAP earnings amounts to the most
comparable GAAP measure.
During 2008, first quarter bonuses were earned and paid at 100%
of target because the Company met both its revenues and its
non-GAAP earnings targets and each Named Executive Officer met
his or her individual performance goals at 100%. Second quarter
bonuses were earned and paid at 40% of target because the
Company achieved at least 90% but less than 95% of the revenues
target and each Named Executive Officer met his or her
individual performance goals at 100%, but the Company did not
achieve the minimum 90% of the non-GAAP earnings target required
for any bonus for that component. Mr. Pimentel was
ineligible for a bonus beginning the second quarter because he
was no longer employed by Glu. The Compensation Committee did
not award third and fourth quarter bonuses to our Named
Executive Officers because the Company did not meet at least 90%
of either of
20
the financial targets and the Companys Chief Executive
Officer informed the Compensation Committee that, since the
Companys financial performance was below plan, none of the
other Named Executive Officers had achieved his or her
individual performance goals. In addition, the Chief Executive
Officer informed the Compensation Committee that he had elected
to forego the annual portion of his bonus (20%) in light of the
Companys 2008 financial performance.
Equity
Compensation
We utilize initial and refresh stock options to reward long-term
performance, with strong corporate performance and extended
executive officer tenure producing potentially significant value
for the executive officer. Generally, a significant stock option
grant is made in the year when an executive officer commences
employment with us. This grant is made within our written
guidelines for new hire grants, consistent with the executive
officers position and considering also the benchmarks. The
size of each grant is generally set at a level that the
Compensation Committee deems appropriate to create a meaningful
opportunity for significant equity compensation and is based
upon the grant guidelines, the individuals position with
us and the individuals potential for future responsibility
and promotion. The relative weight given to each of these
factors varies from individual to individual at the Compensation
Committees discretion. Adjustments may be made as the
Compensation Committee deems reasonable to attract candidates.
These initial grants vest over four years and no shares vest
before the one year anniversary of the executives
employment. The Compensation Committee spreads the vesting of
our options over four years to compensate executive officers for
their contribution over a period of time.
In October 2008, the Compensation Committee awarded options to
purchase 370,000 shares of common stock to
Mr. Ballard, 90,000 shares to each of Ms. Braff,
Mr. Ludwig and Mr. Galvagni and 55,000 shares to
Mr. Chou. These options for executive officers represented
approximately 31.6% of the total number of options that we
awarded to all employees in 2008. The exercise price for these
options is $0.89. The Compensation Committee approved these
grants after considering the 2008 peer analysis data prepared by
Compensia. In addition, in April 2008, the Compensation
Committee awarded options to purchase 40,000 shares of
common stock to Mr. Ludwig, at an exercise price of $4.39
per share, when he was promoted to Senior Vice President,
Finance and Interim Chief Financial Officer when
Mr. Pimentel tendered his resignation. See the discussion
related to Mr. Ludwig in Base
Salary above. All of these grants, which have a six-year
term, have an exercise price equal to the closing price of our
common stock on the date of approval by the Compensation
Committee. The grants vest over four years, and no shares vest
before the one year anniversary of the option grant, which is
the same vesting schedule as refresh grants to our other
employees. The value of these grants for financial statement
reporting purposes is reflected in the Grants of
Plan-Based Awards in 2008 table below.
To date, we have not awarded shares of restricted stock to our
executive officers. Since we have been in a growth phase of our
business and our stock has only recently become publicly traded,
the Compensation Committee believes that stock options currently
provide a more powerful incentive for our executive officers.
However, the Compensation Committee may approve restricted stock
awards in the future.
Interim
Chief Financial Officer Retention Agreement with
Mr. Ludwig
In April 2008, the Compensation Committee approved an Interim
CFO Retention Agreement with Mr. Ludwig to retain him
during our search for a permanent Chief Financial Officer, in
which he was a candidate. That agreement provided for (1) a
pro-rated $30,000 bonus based on the number of days served by
him as our interim Chief Financial Officer and (2) certain
severance terms if the Board had appointed another individual to
serve as our chief financial officer and Mr. Ludwig was
terminated within six months following the appointment. In
making its decision to approve this agreement, the Compensation
Committee considered the need to retain Mr. Ludwig, given
that the Company did not have a chief financial officer and he
was the Companys most senior finance officer, the benefits
to the Company of ensuring that Mr. Ludwig remained with
the Company for a transition period following the hiring of an
outside candidate as chief financial officer and the benefits to
the Company in its recruiting efforts for a new chief financial
officer. The agreement expired when Mr. Ludwig was
appointed as our Chief Financial Officer. For a description of
this agreement, see Interim Chief Financial Officer
Retention Agreement below.
21
Severance
and Change of Control Payments
Each of our executive officers has an agreement with us that
provides for payments and benefits if the individual is
terminated under certain circumstances within 12 months
following a change of control of the Company. For a description
of these agreements and quantification of these severance and
change of control benefits, please see the discussion under
Payments Upon Termination or Change in Control
below. Absent a change of control event, no executive officer is
entitled upon termination to either equity vesting acceleration
or cash severance payments.
Our Board decided to provide these arrangements to mitigate some
of the risk that exists for executives working in a small public
company, an environment where there is a meaningful likelihood
that we may be acquired. These arrangements are intended to
attract and retain qualified executives that have employment
alternatives available to them that may appear to them to be
less risky absent these arrangements and to mitigate a potential
disincentive to consideration and execution of such an
acquisition where the services of these executive officers may
not be required by the acquirer.
Other
Benefits
Executive officers are eligible to participate in all of our
employee benefit plans, such as medical, dental, vision, group
life, disability, and accidental death and dismemberment
insurance and our 401(k) plan, in each case on the same basis as
other employees. We matched employee contributions under our
401(k) plan from April 1, 2008 to December 31, 2008.
As part of our cost-reduction efforts, in February 2009 we
elected to indefinitely suspend our 401(k) match for
U.S. employees, which includes all of our current executive
officers. We also provide vacation and other paid holidays to
all employees, including our executive officers, which are
comparable to those provided at peer companies. There were no
special benefits or perquisites provided to any executive
officer in 2008.
Financial
Restatements
The Compensation Committee has not adopted a policy with respect
to whether we will make retroactive adjustments to any cash- or
equity-based incentive compensation paid to executive officers
(or others) where the payment was predicated upon the
achievement of financial results that were subsequently the
subject of a restatement. The Compensation Committee believes
that this issue is best addressed when and if the need actually
arises, after all of the facts regarding the restatement are
known.
Role of
Executive Officers in Compensation Decisions
For compensation decisions relating to executive officers other
than Mr. Ballard, Mr. Ballard, as the manager of the
members of the executive team, assesses each individuals
contributions to their respective goals and makes a
recommendation to the Compensation Committee regarding any
merit-based adjustment to salary, the amount of cash bonus and
bonus level for the coming year and replenishment stock option
or other equity compensation grant. The Compensation Committee
evaluates, discusses and modifies or approves these
recommendations and conducts a similar evaluation of
Mr. Ballards contributions to corporate goals and
achievement of individual goals. Consistent with our
compensation philosophy, each employees evaluation begins
with a written self-assessment, the supervisors own
evaluation of the employees performance and input from
others within Glu. Mr. Ballard bases his recommendations in
part upon annual performance reviews of our executive officers,
including a review of self-evaluations prepared by such
executive officers. The Compensation Committee may exercise its
discretion in modifying any recommended compensation adjustments
or awards to executive officers. Compensation Committee meetings
during 2008 typically included, for all or a portion of each
meeting, not only the Compensation Committee members but also
our chief executive officer, our vice president of global human
resources and our general counsel. Any executive officers
attending a Compensation Committee meeting excused himself or
herself for those portions of the meeting in which his or her
own compensation was discussed or considered.
Equity
Granting Policy
Equity awards may be granted by either the Compensation
Committee or our Stock Option Administration Committee, which is
comprised of the Chief Executive Officer, Chief Financial
Officer, Senior Vice President of
22
Global Publishing and Senior Vice President of Product
Development and Chief Technology Officer. The Compensation
Committee has delegated authority to our Stock Option
Administration Committee to grant equity awards to employees who
are not executive officers and do not report to the Chief
Executive Officer, up to a certain number of shares per
individual, as specified by the Compensation Committee. In order
for the Stock Option Administration Committee to act, our Chief
Executive Officer and at least one other member of that
committee must vote. The Stock Option Administration Committee
reports to the Compensation Committee awards approved by the
Stock Option Administration Committee promptly after any such
approvals. Equity grants made to individuals who report to our
Chief Executive Officer or to individuals who receive amounts
above the stated share limit per individual must be approved by
the Compensation Committee.
Equity awards are typically granted on regularly scheduled Stock
Option Administration Committee meetings held on the second
Tuesday of each month. The only exception is for new hire or
promotion grants that require Compensation Committee approval,
which grants are generally approved at or around the time the
individual is hired or promoted. The Stock Option Administration
Committee does not have discretion to set other grant dates for
awards made pursuant to its delegated authority. Our annual
performance-related awards for our executive officers are
currently made at the Compensation Committee meeting held during
our fourth quarter, typically in late October or early November,
at which the Compensation Committee reviews executive
compensation for the upcoming year.
Other than as described in this CD&A and under the sections
in this proxy statement titled Director Compensation
above and the Option Exchange Program below, we do
not have any program, plan or obligation that requires us to
grant equity compensation on specified dates.
The exercise price of a newly granted option (i.e., not an
option assumed or substituted in connection with a corporate
transaction) is the closing price of our common stock on the
date of grant.
Tax and
Accounting Treatment of Compensation
In designing our compensation programs, the Compensation
Committee considers the financial accounting and tax
consequences to the Company, as well as the tax consequences to
our employees. We account for equity compensation paid to our
employees under the rules of SFAS 123R, which requires us
to estimate and record an expense for each award of equity
compensation over the service period of the award. Accounting
rules also require us to record cash compensation as an expense
at the time the obligation is accrued. Management considers the
SFAS 123R cost of outstanding equity awards as part of our
equity grant recommendations to the Compensation Committee.
Section 162(m) of the Code places a limit of
$1 million on the amount of compensation that we may deduct
in any one year with respect to our chief executive officer, our
chief financial officer and each of our three most highly paid
executive officers. There is an exception to the $1 million
limitation for performance-based compensation meeting certain
requirements. To qualify for the exemption, we asked our
stockholders to approve a limit under our 2007 Equity Incentive
Plan (the 2007 Plan) on the maximum number of shares
for which a participant may be granted stock options in any
calendar year. Because this limit was adopted, any compensation
deemed paid to an executive officer when he or she exercises an
option with an exercise price that is at least equal to the fair
market value of the option shares on the grant date should
qualify as performance-based compensation and should not be
subject to the $1 million deduction limitation. To maintain
flexibility in compensating executive officers in a manner
designed to promote varying corporate goals, the Compensation
Committee has not adopted a policy requiring all compensation to
be deductible. However, to date we have not exceeded the
$1 million limit for any executive officer. Moreover,
exceeding that limitation may not result in the current payment
of increased federal income taxes due to our significant net
operating loss carryforward and the fact that we have not
achieved sustained profitability.
We currently intend that all cash compensation paid will be tax
deductible for us. However, with respect to equity compensation
awards, while any gain recognized by an employee from a
nonqualified option should be deductible, if an option is an
incentive stock option, we will not be able to deduct any gain
recognized by the employee unless there is a disqualifying
disposition by the employee.
23
We also consider the tax impact to employees in designing our
compensation programs, particularly our equity compensation
programs. For example, employees generally control the timing of
taxation with respect to stock options. We structure cash bonus
compensation so that it is taxable to our employees at the time
it becomes available to them.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed this
Compensation Disclosure and Analysis set forth above with our
management. Based on its review and discussions, the
Compensation Committee recommended to our Board that the
Compensation Disclosure and Analysis be included in this proxy
statement.
William Miller (Chair)
Richard Moran
Ellen F. Siminoff
24
EXECUTIVE
COMPENSATION
Please see Item 10 Directors, Executive Officers and
Corporate Governance in our annual report on
Form 10-K
for 2008, which accompanies these proxy materials regarding the
identity of our executive officers and their respective business
experience.
Summary
Compensation Table
The following table shows compensation earned during 2008 by our
Named Executive Officers. For information about employment
contracts, termination of employment and
change-of-control
arrangements between Glu and the Named Executive Officers, see
Potential Payments Upon Termination or Change in
Control below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Incentive Plan
|
|
|
|
|
Name and
|
|
Fiscal
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
All Other
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($) (1)
|
|
($) (2)
|
|
Compensation(3)
|
|
($)
|
L. Gregory Ballard
|
|
|
2008
|
|
|
$
|
375,000
|
|
|
|
|
|
|
$
|
272,536
|
|
|
$
|
67,500
|
|
|
$
|
3,599
|
|
|
$
|
718,635
|
|
President and Chief Executive Officer
|
|
|
2007
|
|
|
|
301,442
|
|
|
|
|
|
|
|
486,001
|
|
|
|
73,500
|
|
|
|
|
|
|
|
860,943
|
|
|
|
|
2006
|
|
|
|
280,769
|
|
|
|
|
|
|
|
526,126
|
|
|
|
73,125
|
|
|
|
|
|
|
|
880,020
|
|
Eric R. Ludwig(4)
|
|
|
2008
|
|
|
|
241,164
|
|
|
$
|
6,904
|
(5)
|
|
|
123,347
|
|
|
|
31,771
|
|
|
|
|
|
|
|
403,186
|
|
Senior Vice President and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jill S. Braff
|
|
|
2008
|
|
|
|
270,000
|
|
|
|
|
|
|
|
173,993
|
|
|
|
47,250
|
|
|
|
4,128
|
|
|
|
495,371
|
|
Senior Vice President of Global Publishing
|
|
|
2007
|
|
|
|
240,577
|
|
|
|
|
|
|
|
132,249
|
|
|
|
29,062
|
|
|
|
|
|
|
|
401,888
|
|
|
|
|
2006
|
|
|
|
216,923
|
|
|
|
12,500
|
(6)
|
|
|
43,668
|
|
|
|
30,425
|
|
|
|
|
|
|
|
303,516
|
|
Kevin S. Chou(7)
|
|
|
2008
|
|
|
|
208,333
|
|
|
|
35,000
|
(8)
|
|
|
96,451
|
|
|
|
21,525
|
|
|
|
4,855
|
|
|
|
366,165
|
|
Vice President and General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alessandro Galvagni
|
|
|
2008
|
|
|
|
270,000
|
|
|
|
|
|
|
|
174,280
|
|
|
|
47,250
|
|
|
|
|
|
|
|
491,530
|
|
Senior Vice President of Product
|
|
|
2007
|
|
|
|
240,576
|
|
|
|
|
|
|
|
132,561
|
|
|
|
29,062
|
|
|
|
|
|
|
|
402,199
|
|
Development and Chief Technology Officer
|
|
|
2006
|
|
|
|
197,692
|
|
|
|
12,500
|
(6)
|
|
|
39,899
|
|
|
|
27,113
|
|
|
|
|
|
|
|
277,204
|
|
Albert A. Rocky Pimentel(9)
|
|
|
2008
|
|
|
|
98,959
|
|
|
|
|
|
|
|
33,304
|
|
|
|
35,000
|
|
|
|
|
|
|
|
167,263
|
|
Former Executive Vice President
|
|
|
2007
|
|
|
|
250,576
|
|
|
|
|
|
|
|
278,701
|
|
|
|
33,281
|
|
|
|
|
|
|
|
562,558
|
|
and Chief Financial Officer
|
|
|
2006
|
|
|
|
223,076
|
|
|
|
|
|
|
|
277,195
|
|
|
|
31,365
|
|
|
|
|
|
|
|
531,636
|
|
|
|
|
(1) |
|
The amounts were computed in accordance with SFAS 123R
(excluding risk of forfeiture) and reflect the dollar amount
recognized as compensation expense during each year reported.
These amounts reflect our accounting expense for these options,
without reflecting the estimate for forfeitures related to
serviced based vesting, and do not correspond to the actual
value that may be recognized by the executive. See
Note 11 Stock Option and Other Benefit
Plans in the notes to consolidated financial
statements contained in our annual report on
Form 10-K
for the year ended December 31, 2008 for a description of
the SFAS 123R methodology and assumptions. The number of
stock options granted in 2008 to our Named Executive Officers is
shown in the Grants of Plan-Based Awards in 2008
table included below. |
|
(2) |
|
The amounts represent total performance-based bonuses that were
earned during the given year, and paid in the quarter following
which the bonus was earned, under our executive bonus plan. The
amounts for 2008 reflect the cash awards earned under our 2008
executive bonus plan, as further described in the
Compensation Discussion and Analysis section of this
proxy statement and the Grants of Plan-Based Awards in
2008 table included below. |
|
(3) |
|
Represents matching contributions under our 401(k) plan. |
|
(4) |
|
Mr. Ludwig joined us in January 2005 and was designated an
executive officer on in April 2008 when he was promoted to
Senior Vice President, Finance. Mr. Ludwig became our Chief
Financial Officer on July 31, 2008. |
|
(5) |
|
Represents a bonus earned in connection with
Mr. Ludwigs service as our Interim Chief Financial
Officer. |
|
(6) |
|
The amounts in this column represent discretionary bonuses paid
to the executive for strong department performance and for
retention purposes. |
|
(7) |
|
Mr. Chou joined us in July 2006 and was designated an
executive officer on October 31, 2008. |
25
|
|
|
(8) |
|
Represents a $10,000 bonus earned in connection with
Mr. Chous efforts on one of our acquisitions and a
$25,000 bonus for Mr. Chous service as our Interim
Vice President of Human Resources from May 2008 to August 2008. |
|
(9) |
|
Mr. Pimentel resigned from Glu effective as of May 9,
2008. On such date, Mr. Pimentel held 149,714 unvested
stock options with exercise prices ranging between $4.50 and
$10.53, all of which were cancelled on Mr. Pimentels
last day with us. In addition, Mr. Pimentel held 116,910
vested stock options with exercise prices ranging between $4.50
and $10.53, all of which were cancelled on August 9, 2008,
the last day following his termination on which he was entitled
to exercise these options. |
Grants of
Plan-Based Awards in 2008
The following table provides information about equity awards
granted under our 2007 Plan to the Named Executive Officers
during 2008 and cash bonus awards for which the Named Executive
Officers were eligible in 2008 under our executive bonus plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under Non-
|
|
|
Securities
|
|
|
Exercise
|
|
|
Grant Date
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Underlying
|
|
|
Price of
|
|
|
Fair Value
|
|
|
|
Grant
|
|
|
Plan Awards(1)
|
|
|
Options
|
|
|
Option
|
|
|
of Option
|
|
Name
|
|
Date
|
|
|
Threshold
|
|
|
Target/Maximum
|
|
|
Awards(2)
|
|
|
Awards
|
|
|
Awards(3)
|
|
|
L. Gregory Ballard
|
|
|
04/09/08
|
|
|
$
|
42,188
|
|
|
$
|
281,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
|
|
|
|
370,000
|
|
|
|
0.89
|
|
|
$
|
116,476
|
|
Eric R. Ludwig
|
|
|
04/09/08
|
|
|
|
14,776
|
|
|
|
108,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/28/08
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
4.39
|
|
|
|
67,216
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
0.89
|
|
|
|
28,332
|
|
Jill S. Braff
|
|
|
04/09/08
|
|
|
|
25,313
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
0.89
|
|
|
|
28,332
|
|
Kevin S. Chou
|
|
|
04/09/08
|
|
|
|
11,531
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
|
|
|
|
55,000
|
|
|
|
0.89
|
|
|
|
17,314
|
|
Alessandro Galvagni
|
|
|
04/09/08
|
|
|
|
25,313
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
0.89
|
|
|
|
28,332
|
|
Albert A. Rocky Pimentel
|
|
|
04/09/08
|
|
|
|
26,250
|
|
|
|
140,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For 2008, all of the Named Executive Officers were eligible to
earn a bonus under our Executive Bonus Plan, based on the
Company achieving certain revenue and operational EBITDA
objectives and the individual achieving certain individual
performance objectives. The Threshold column
represents the smallest total bonus that would have been earned
if, in the first quarter of the year, we had achieved the
minimum operational revenue and operational EBITDA targets
required for the payment of any bonus but that the executive did
not meet his or her individual objectives. The
Target/Maximum column represents the target cash
that could have been earned by each executive if all corporate
financial and individual objectives were met during each
applicable 2008 measurement period. In addition, each Named
Executive Officer was eligible to earn a bonus above 100% of
target, at the Compensation Committees discretion and in
such amount as may be determined by the committee, based on
outstanding Company and individual achievement, assuming the
target bonus for the measurement period had been earned. For
more details on our Executive Bonus Plan, see Compensation
Discussion and Analysis above. |
|
(2) |
|
For administrative purposes, each award was divided into two
separate option agreements, with one option agreement covering
shares designated as an incentive stock option and the other
option agreement covering the remaining shares designated as a
nonqualified stock option. Each option vests as to 1/4 of the
shares of common stock underlying it on the first anniversary of
the grant date and as to 1/48 of the underlying shares monthly
thereafter. These options are subject to accelerated vesting
upon certain events following a change of control event, as
discussed in Severance and Change of Control
Agreements below. |
26
|
|
|
(3) |
|
The amounts in this column represent the grant date fair value,
computed in accordance with SFAS 123R. Our compensation
cost for these option grants is similarly based on the grant
date fair value but is recognized over the period, typically
four years, in which the executive must provide services to earn
the award. |
Outstanding
Equity Awards at the End of 2008
The following table provides information with respect to
outstanding stock options held by our Named Executive Officers
as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
Option
|
|
|
Option
|
|
|
|
Grant
|
|
|
Underlying Options(1)(2)
|
|
|
Exercise
|
|
|
Expiration
|
|
Name
|
|
Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price($)(3)
|
|
|
Date
|
|
|
L. Gregory Ballard
|
|
|
11/03/04
|
|
|
|
166,666
|
|
|
|
|
|
|
$
|
0.75
|
|
|
|
11/03/09
|
|
|
|
|
07/20/06
|
|
|
|
183,333
|
|
|
|
|
|
|
|
3.90
|
|
|
|
07/20/16
|
|
|
|
|
09/07/06
|
|
|
|
74,997
|
|
|
|
58,335
|
|
|
|
10.53
|
|
|
|
09/07/16
|
|
|
|
|
11/29/07
|
|
|
|
33,854
|
|
|
|
91,146
|
|
|
|
5.95
|
|
|
|
11/29/13
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
370,000
|
|
|
|
0.89
|
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
458,850
|
|
|
|
519,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric R. Ludwig
|
|
|
04/28/05
|
|
|
|
15,277
|
|
|
|
1,389
|
|
|
|
4.50
|
|
|
|
04/28/10
|
|
|
|
|
07/20/06
|
|
|
|
48,411
|
|
|
|
1,042
|
|
|
|
3.90
|
|
|
|
07/20/16
|
|
|
|
|
09/07/06
|
|
|
|
28,124
|
|
|
|
21,875
|
|
|
|
10.53
|
|
|
|
09/07/16
|
|
|
|
|
11/29/07
|
|
|
|
17,604
|
|
|
|
47,396
|
|
|
|
5.95
|
|
|
|
11/29/13
|
|
|
|
|
04/28/08
|
|
|
|
|
|
|
|
40,000
|
|
|
|
4.39
|
|
|
|
04/28/14
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
90,000
|
|
|
|
0.89
|
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
109,416
|
|
|
|
201,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jill S. Braff
|
|
|
05/06/04
|
|
|
|
21,811
|
|
|
|
|
|
|
|
0.30
|
|
|
|
05/06/09
|
|
|
|
|
06/30/04
|
|
|
|
16,666
|
|
|
|
|
|
|
|
0.75
|
|
|
|
06/30/09
|
|
|
|
|
04/28/05
|
|
|
|
22,916
|
|
|
|
2,084
|
|
|
|
4.50
|
|
|
|
04/28/10
|
|
|
|
|
12/15/05
|
|
|
|
7,500
|
|
|
|
2,500
|
|
|
|
3.54
|
|
|
|
12/15/15
|
|
|
|
|
09/07/06
|
|
|
|
42,185
|
|
|
|
32,814
|
|
|
|
10.53
|
|
|
|
09/07/16
|
|
|
|
|
11/29/07
|
|
|
|
20,312
|
|
|
|
54,688
|
|
|
|
5.95
|
|
|
|
11/29/13
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
90,000
|
|
|
|
0.89
|
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
131,390
|
|
|
|
182,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin S. Chou
|
|
|
07/20/06
|
|
|
|
36,944
|
|
|
|
26,389
|
|
|
|
3.90
|
|
|
|
07/20/16
|
|
|
|
|
01/25/07
|
|
|
|
7,985
|
|
|
|
8,681
|
|
|
|
10.65
|
|
|
|
01/25/17
|
|
|
|
|
11/29/07
|
|
|
|
10,833
|
|
|
|
29,167
|
|
|
|
5.95
|
|
|
|
11/29/13
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
55,000
|
|
|
|
0.89
|
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
55,762
|
|
|
|
119,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alessandro Galvagni
|
|
|
04/28/05
|
|
|
|
39,721
|
|
|
|
3,612
|
|
|
|
4.50
|
|
|
|
04/28/10
|
|
|
|
|
09/07/06
|
|
|
|
42,185
|
|
|
|
32,814
|
|
|
|
10.53
|
|
|
|
09/07/16
|
|
|
|
|
11/29/07
|
|
|
|
20,312
|
|
|
|
54,688
|
|
|
|
5.95
|
|
|
|
11/29/13
|
|
|
|
|
10/31/08
|
|
|
|
|
|
|
|
90,000
|
|
|
|
0.89
|
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
102,218
|
|
|
|
181,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert A. Rocky Pimentel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
(1) |
|
Except as otherwise described in these footnotes, each option
that is not fully vested vests as to 1/4 of the shares of common
stock underlying it on the first anniversary of the grant date
and as to 1/48 of the shares of common stock underlying it
monthly thereafter. |
|
(2) |
|
We have entered into the severance agreement described under
Potential Payments upon Termination or Change
in Control below, which provide for accelerating of
vesting of certain equity awards made or to be made to each of
our Named Executive Officers if certain events occur following a
change of control of the Company. |
|
(3) |
|
Represents the fair market value of a share of our common stock
on the options grant date, as determined by our Board, or
if the grant date was after our initial public offering, the
closing price of our common stock on the grant date. |
Option
Exercises in 2008
The following table shows information about stock option
exercises for each of the Named Executive Officers during 2008,
including the value realized upon exercise.
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
Name
|
|
On Exercise
|
|
|
On Exercise($)(1)
|
|
|
L. Gregory Ballard
|
|
|
50,000
|
|
|
|
196,000
|
|
|
|
|
55,556
|
|
|
|
152,779
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
105,556
|
|
|
|
348,779
|
|
|
|
|
|
|
|
|
|
|
Eric R. Ludwig
|
|
|
|
|
|
|
|
|
Jill S. Braff
|
|
|
2,084
|
|
|
|
10,253
|
|
|
|
|
2,916
|
|
|
|
14,347
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
5,000
|
|
|
|
24,600
|
|
|
|
|
|
|
|
|
|
|
Kevin S. Chou
|
|
|
|
|
|
|
|
|
Alessandro Galvagni
|
|
|
10,000
|
|
|
|
48,300
|
|
|
|
|
6,666
|
|
|
|
31,362
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
16,666
|
|
|
|
79,662
|
|
|
|
|
|
|
|
|
|
|
Albert A. Rocky Pimentel
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The aggregate dollar amount realized upon the exercise of an
option represents the difference between the aggregate market
price of the shares of our common stock underlying that option
on the date of exercise. |
Pension
Benefits and Nonqualified Deferred Compensation
We do not provide any pension benefits or a nonqualified
deferred compensation plan to the Named Executive Officers.
Interim
Chief Financial Officer Retention Agreement
In connection with Mr. Ludwigs appointment to serve
as our Senior Vice President, Finance and Interim Chief
Financial Officer, following the resignation of
Mr. Pimentel as our Chief Financial Officer, effective
May 9, 2008 we entered into an Interim Chief Financial
Officer Retention Agreement with Mr. Ludwig. Following is a
summary of the key provisions of that agreement, which expired
in July 2008 when Mr. Ludwig was appointed as our permanent
Chief Financial Officer:
|
|
|
|
|
provided that Mr. Ludwig continues service with us through
the hiring and commencement of service of a Chief Financial
Officer in an
other-than-interim
capacity (a Permanent CFO), Mr. Ludwig will
receive a special bonus equal to $30,000 multiplied by a
fraction equal to the portion of a year that Mr. Ludwig has
|
28
|
|
|
|
|
served as Interim Chief Financial Officer (i.e., if
Mr. Ludwig serves as Interim Chief Financial Officer for
122 days, he will receive a bonus of approximately $10,000).
|
In addition, in order to induce Mr. Ludwig to serve as
Interim Chief Financial Officer and to continue to serve with us
for at least six months following the appointment of an
individual other than Mr. Ludwig to serve as the Permanent
CFO (such six-month period, the Post-Appointment
Period), the Compensation Committee approved a severance
arrangement whereby (a) Mr. Ludwig will receive
severance equal to six months of his annual base salary (i.e.,
approximately $125,000) plus health benefits for such period and
(b) in addition to any vesting to which Mr. Ludwig is
otherwise entitled under the normal vesting provisions of any
then outstanding stock options held by him, each such option
shall be vested and exercisable with respect to a number of
shares equal to one year of vesting in accordance with the
regular vesting schedule (up to the maximum number of shares
subject to such option) in the event that either:
|
|
|
|
|
Mr. Ludwig is involuntarily terminated other than for cause
prior to the end of the Post-Appointment Period; or
|
|
|
|
Mr. Ludwig has (a) continued his service as a Glu
employee through the end of the Post-Appointment Period and
(b) prior to the expiration of the Post-Appointment Period,
Mr. Ludwig has given us at least 30 days advance
written notice of his intent to terminate his service as an
employee.
|
However, if, during the period beginning on April 28, 2008
and ending on the last day of the Post-Appointment Period, we
undergo a change of control transaction pursuant to which
Mr. Ludwigs existing change of control benefits
(described below) would become payable (i.e., a change of
control has occurred and Mr. Ludwig has terminated his
employment for good reason or was terminated, other
than for cause), then Mr. Ludwig is not
entitled to the above-described severance and health benefits or
acceleration of vesting related to his service as Interim Chief
Financial Officer. He will instead receive the severance,
acceleration of vesting and other benefits as provided in his
change of control severance agreement described under
Potential Payments upon Termination or Change
in Control below.
Under these arrangements, Mr. Ludwig earned $6,904 of bonus
compensation and will not receive any further compensation.
Potential
Payments upon Termination or Change in Control
Messrs. Ballard
and Pimentel
In January 2007, the Compensation Committee approved a severance
agreement with each of Messrs. Ballard and Pimentel. The
agreement provides that, should either executive terminate his
employment for good reason or be terminated, other
than for cause or disability, within 12 months
after a change in control transaction, he would
continue for 12 months to receive his then-current base
salary and benefits (other than any prospective bonus) he might
have been eligible to receive. The executive will also be
eligible to receive a partial bonus prorated for the portion of
the relevant period served by the executive prior to the
termination. Additionally, all of his unvested options or
outstanding shares of common stock subject to our lapsing right
of repurchase would become fully vested.
Mr. Pimentels agreement expired when his employment
with us terminated in May 2008. The Compensation Committee
approved an amendment to Mr. Ballards agreement in
October 2008 related to compliance with Section 409A of the
Code.
In December 2008, the Compensation Committee, at
Mr. Ballards request, approved a reduction in
Mr. Ballards annual base salary from $375,000 to
$281,250, effective as of January 1, 2009. Mr. Ballard
requested this salary reduction in light of the Companys
2008 financial performance, which was below plan, and to assist
in our ongoing cost-reduction efforts. However, for purposes of
our change of control severance agreement with Mr. Ballard,
his annual base salary will be deemed to be $375,000 (or such
higher salary as may then be in effect), which the Compensation
Committee believed was appropriate since Mr. Ballard
voluntarily elected to reduce his base salary. For purposes of
the table below, we have assumed that Mr. Ballards
base salary was $375,000.
29
Ms. Braff
and Messrs. Chou, Galvagni and Ludwig
In January 2007, the Compensation Committee approved severance
arrangements with Ms. Braff, Mr. Chou,
Mr. Galvagni and Mr. Ludwig, under which, should the
executive terminate his or her employment for good
reason or be terminated, other than for cause
or disability, within 12 months after a change in
control transaction, the executive would continue for six
months to receive his or her then-current base salary and
benefits (other than any prospective bonus) the executive might
have been eligible to receive. Each such executive will also be
eligible to receive a partial bonus prorated for the portion of
the relevant period served by the executive prior to the
termination. Additionally, each of these executives
outstanding unvested options or outstanding shares of common
stock subject to our lapsing right of repurchase would become
vested as to an additional 50% of the shares originally subject
to that option or lapsing repurchase right. The Compensation
Committee approved amendments to each of these agreements in
October 2008 related to compliance with Section 409A of the
Code.
The following are the definitions generally used in the
severance agreements described above:
A change in control transaction is defined to mean
the closing of (1) a merger or consolidation in one
transaction or a series of related transactions, in which our
securities held by our stockholders before the merger or
consolidation represent less than 50% of the outstanding voting
equity securities of the surviving corporation after the
transaction or series of related transactions, (2) a sale
or other transfer of all or substantially all of our assets as a
going concern, in one transaction or a series of related
transactions, followed by the distribution to our stockholders
of any proceeds remaining after payment of creditors or
(3) a transfer of more than 50% of our outstanding voting
equity securities by our stockholders to one or more related
persons or entities other than our company in one transaction or
a series of related transactions.
Good reason is defined to mean the executives
resignation of employment from the Company expressly based on
the occurrence of any of the following conditions, without the
executives informed written consent, provided, however,
that with respect to each of the following conditions, the
executive must (a) within 90 days following its
occurrence, deliver to us a written notice explaining the
specific basis for the executives belief that the
executive is entitled to terminate the executives
employment due to an Involuntary Termination and (b) give
us an opportunity to cure any of the following within
30 days following delivery of such notice and explanation:
(1) a material reduction in his or her duties, position or
responsibilities, or his or her removal from these duties,
position and responsibilities, unless he or she is provided with
a position of substantially equal or greater organizational
level, duties, authority and compensation; provided, however,
that a change of title, in and of itself, or a reduction of
duties, position or responsibilities solely by virtue of our
being acquired and made part of a larger entity will not
constitute an Involuntary Termination, (2) a
greater than 15% reduction in his or her then current annual
base compensation that is not applicable to our other executive
officers or (3) without his or her express written consent,
a relocation to a facility or a location more than 30 miles
from his or her then current location of employment. Involuntary
Termination does not include a termination of employment for
death or permanent disability.
Cause is defined to mean (1) the
executives committing an act of gross negligence, gross
misconduct or dishonesty, or other willful act, including
misappropriation, embezzlement or fraud, that materially
adversely affects us or any of our customers, suppliers or
partners, (2) his or her personal dishonesty, willful
misconduct in the performance of services for us, or breach of
fiduciary duty involving personal profit, (3) his or her
being convicted of, or pleading no contest to, any felony or
misdemeanor involving fraud, breach of trust or misappropriation
or any other act that our Board reasonably believes in good
faith has materially adversely affected, or upon disclosure will
materially adversely affect, us, including our public
reputation, (4) any material breach of any agreement with
us by him or her that remains uncured for 30 days after
written notice by us to him or her, unless that breach is
incapable of cure, or any other material unauthorized use or
disclosure of our confidential information or trade secrets
involving personal benefit or (5) his or her failure to
follow the lawful directions of our Board or, if he or she is
not the chief executive officer, the lawful directions of the
chief executive officer, in the scope of his or her employment
unless he or she reasonably believes in good faith that these
directions are not lawful and notifies our Board or chief
executive officer, as the case may be, of the reasons for his or
her belief.
30
The following table below estimates the potential payments to
each Named Executive Officer upon involuntary termination or his
or her terminating his or her employment for good reason within
12 months following a change in our control as of
December 31, 2008 upon the terms of the agreements set
forth above. None of our Named Executive Officers have
agreements with us that provide for potential payments upon
termination absent a change of control or upon death or
disability, other than arrangements generally available to all
of our employees (such as payout of accrued but unused paid time
off).
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Equity Acceleration(1)
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Benefits &
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Name
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Salary
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|
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Shares
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|
|
Value
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|
|
Perquisites
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|
L. Gregory Ballard
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$
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375,000
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519,481
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|
|
|
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$
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15,135
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Eric R. Ludwig
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125,000
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|
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180,333
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|
|
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|
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7,567
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Jill S. Braff
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135,000
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187,832
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|
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7,567
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Kevin S. Chou
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112,500
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89,166
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7,951
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Alessandro Galvagni
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135,000
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191,665
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2,538
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Albert A. Rocky Pimentel
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(1) |
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Assumes that the change in control and termination took place on
December 31, 2008 and is based on the closing price of our
common stock as of that date ($0.50). Under these circumstances,
no Value would be realized because all outstanding
unvested equity awards held by our Named Executive Officers had
an exercise price above $0.50. The Shares reflects
100% acceleration of vesting of equity awards in the case of
Mr. Ballard and reflects 50% acceleration of vesting of
equity awards for the other Named Executive Officers. |
EQUITY
COMPENSATION PLAN INFORMATION
Equity
Compensation Plan Table
The following table sets forth certain information, as of
December 31, 2008, concerning securities authorized for
issuance under all of our equity compensation plans: our 2001
Second Amended and Restated Stock Option Plan (the 2001
Plan), which plan terminated upon the adoption of the 2007
Plan, 2007 Employee Stock Purchase Plan (the ESPP)
and 2008 Equity Inducement Plan (the Inducement
Plan). Each of the 2007 Plan and ESPP contains an
evergreen provision, pursuant to which on
January 1st of each year we automatically add 3% and
1%, respectively, of our shares of common stock outstanding on
the preceding December 31st to the shares reserved for
issuance under each plan. In addition, pursuant to a pour
over provision in our 2007 Plan, options that are
cancelled, expired or terminated under the 2001 Plan are added
to the number of shares reserved for issuance under our 2007
Plan.
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Number of
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Securities
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Remaining Available
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Number of
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for Future Issuance
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Securities to be
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Under Equity
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Issued Upon
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Weighted-Average
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Compensation Plans
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Exercise of
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Exercise Price of
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(Excluding
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Outstanding
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Outstanding
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Securities
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Options, Warrants
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Options, Warrants
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Reflected in Column
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Plan Category
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and Rights
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and Rights
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(a))
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders
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4,867,383
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$
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7.7912
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1,313,647
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(1)
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Equity compensation plans not approved by security holders
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262,400
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(2)
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4.4247
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337,600
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(3)
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|
|
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Total:
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5,129,783
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5.1797
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1,651,2470
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(4)
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(1) |
|
Represents 597,238 shares available for issuance under our
the 2007 Plan, which plan permits the grant of incentive and
non-qualified stock options, stock appreciation rights,
restricted stock, stock awards and |
31
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|
restricted stock units; and 716,409 shares available for
issuance under the ESPP. In addition, 525,575 shares
subject to outstanding options under the 2001 Plan may be
re-issued under the 2007 Plan pursuant to the pour over
provision described above. |
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(2) |
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Represents outstanding options under the Inducement Plan. |
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(3) |
|
Represents shares available for issuance under the Inducement
Plan, which plan permits the grant of non-qualified stock
options. |
|
(4) |
|
Excludes 887,524 shares available for issuance under the
2007 Plan and 295,841 shares available for issuance under
the ESPP, which in each case were added to the respective share
reserve on January 1, 2009 pursuant to the evergreen
provisions described above. |
Equity
Compensation Plans Not Approved by Security Holders
In March 2008, our Board of Directors adopted the Inducement
Plan to augment the shares available under its existing 2007
Plan. The Inducement Plan, which has a ten-year term, did not
require the approval of the Companys stockholders. The
Company initially reserved 600,000 shares of its common
stock for grant and issuance under the Inducement Plan, and as
of December 31, 2008, there were 337,600 shares
available for future grants under the Inducement Plan. We may
only grant non-qualified stock options (NSOs) under
the Inducement Plan and grants under the Inducement Plan may
only be made to persons not previously an employee or director
of Glu, or following a bona fide period of non-employment, as an
inducement material to such individuals entering into
employment with us and to provide incentives for such persons to
exert maximum efforts for our success. We may grant NSOs under
the Inducement Plan at prices less than 100% of the fair value
of the shares on the date of grant, at the discretion of our
Board of Directors. The fair value of our common stock is
determined by the last sale price of our stock on The NASDAQ
Global Market on the date of determination. If any option
granted under the 2008 Plan expires or terminates for any reason
without being exercised in full, the unexercised shares will be
available for grant by us under the Inducement Plan. All
outstanding NSOs are subject to adjustment for any future stock
dividends, splits, combinations, or other changes in
capitalization as described in the Inducement Plan. If we were
acquired and the acquiring corporation did not assume or replace
the NSOs granted under the Inducement Plan, or if we were to
liquidate or dissolve, all outstanding awards will expire on
such terms as our Board of Directors determines.
Option
Exchange Program
In March 2009, we announced that we planned to implement a stock
option exchange program for our U.S. and U.K. employees who
hold options with exercise prices at or above $1.25 (the
Exchange Program). Our executive officers and
non-employee directors are not eligible to participate in the
Exchange Program. As currently contemplated, under the Exchange
Program, employees who elect to tender an eligible option will
receive a new non-qualified stock option, granted under the 2007
Plan, for a certain number of shares, depending on the exercise
price of the underlying option (the New Options).
These New Options will vest over three years, in equal monthly
installments (i.e., with no initial cliff), and have
a six-year term. The grant date of the New Options will be the
first trading day following the closing of the Exchange Program,
which we expect to be in May 2009. The Compensation Committee
approved the Exchange Program (1) to provide our eligible
U.S. and U.K. employees with the opportunity to own options
that over time may have a greater potential to increase in
value, which we hope will create better performance incentives
for those employees and will maximize the value of our common
stock for our current stockholders, (2) to decrease the
number of outstanding options with little retentive effect and
(3) to increase the number of shares available for future
awards under the 2007 Plan (the options cancelled pursuant to
the Exchange Program will be available for future issuances
pursuant to the terms of that plan).
Option
Grants to Executive Officers
In April 2009, the Compensation Committee approved the award of
options to purchase an aggregate of 170,000 shares of our
common stock under the 2007 Plan to five of our executive
officers: 40,000 shares to each of Ms. Braff and
Messrs. Galvagni and Ludwig and 25,000 shares to each
of Messrs. Chou and Perrault. These option grants will be
non-qualified stock options, have a six-year term and vest over
four years, with 25% of the shares of common stock underlying
the option vesting on the first anniversary of the grant date
(i.e., with an initial cliff) and
32
the remaining 75% vesting in equal monthly installments
thereafter. The grant date for the New Options will be the
earlier of (1) the date on which we grant stock options
pursuant to the Exchange Program and (2) the date on which
we grant 2009 equity awards to our non-employee directors, which
is currently expected to be May 29, 2009, the date of the
Annual Meeting. The Compensation Committee approved these awards
in order to build long term retentive value for our most
critical employees in light of, among other things, the fact
that (1) none of our executive officers, except
Mr. Chou, received a salary increase for the 2009 fiscal
year, (2) executive officers would not receive any cash
bonus payment during the 2009 fiscal year due to changes in the
structure of our planned executive bonus program, (3) none
of the executive officers is eligible to participate in the
Exchange Program and (4) the importance of retaining these
executives in the current environment.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Review,
Approval or Ratification of Transactions with Persons
Our Nominating and Governance Committee has adopted a written
related-person transactions policy. The Nominating and
Governance Committee reviews transactions that may be
related-person transactions, which are transactions
between Glu and related persons in which the aggregate amount
involved exceeds or may be expected to exceed $120,000 and in
which a related person has or will have a direct or indirect
material interest. For purposes of the policy, a related person
is a director, executive officer, nominee for director, or a
greater than 5% beneficial owner of Glus common stock, in
each case the beginning of our last fiscal year, and their
immediate family members.
This policy provides that, barring special facts or
circumstances, a related person does not have a direct or
indirect material interest in the following categories of
transactions:
|
|
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|
|
employment-related compensation to executive officers that is
approved by the Compensation Committee;
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|
|
|
compensation to non-employee directors that is reported in
Glus proxy statement;
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|
|
any transaction with another company to which the related
partys only relationship is as a director, beneficial
owner of less than 10% of that companys shares, or
employee (other than an executive officer), if the aggregate
amount involved does not exceed the greater of $500,000 or 2% of
that companys total annual revenues;
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|
any transaction where the related partys interest arises
solely from the ownership of the Companys common stock and
all holders of the Companys common stock receive the same
benefit on a pro rata basis (e.g., a dividend); and
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ordinary course business travel and expenses, advances and
reimbursements.
|
In determining whether to approve or ratify a related-person
transaction, the Nominating and Governance Committee will take
into account, among other factors it deems appropriate, whether
the transaction is on terms no less favorable than terms
generally available to an unaffiliated third party under the
same or similar circumstances, the extent of the related
partys interest in the transaction, the benefits to Glu of
the transaction, the potential impact on a directors
independence and whether the transaction would impair the
judgment of a director or executive officer to act in the best
interests of Glu and its stockholders.
Certain
Transactions with Related Persons
Other than the compensation arrangements that are described
above in Director Compensation, Compensation
Discussion and Analysis and Executive Compensation
and Related Information, and the indemnification
agreements described below, since January 1, 2008, we have
not been a party to any transaction or series of similar
transactions in which the amount involved exceeded or will
exceed $120,000 and in which any director, nominee for director,
executive officer, holder of more than 5% of our common stock or
certain persons or entities affiliated with them had or will
have a material interest.
33
Our Board and stockholders have approved, and we have entered
into, indemnity agreements with each of our directors and
executive officers that may be broader than the specific
indemnification provisions contained in the Delaware General
Corporation Law. These indemnity agreements may require us,
among other things, to indemnify our directors and executive
officers against liabilities that may arise by reason of their
status or service. These indemnity agreements may also require
us to advance all expenses incurred by the directors and
executive officers in investigating or defending any such
action, suit or proceeding. We believe that these agreements are
necessary to attract and retain qualified individuals to serve
as directors and executive officers. We have obtained insurance
policies under which, subject to the limitations of the
policies, coverage is provided to our directors and officers
against loss arising from claims made by reason of breach of
fiduciary duty or other wrongful acts as a director or officer,
including claims relating to public securities matters, and to
us with respect to payments that may be made by us to these
officers and directors pursuant to our indemnification
obligations or otherwise as a matter of law.
See also Corporate Governance Director
Independence for information the Board considered in
determining the independence of two of our directors
Ann Mather and A. Brooke Seawell.
34
AUDIT
COMMITTEE REPORT
The Audit Committee of the Board is composed of Ms. Mather
and Messrs. Nada and Skaff, each of whom is an independent
director, as independence for audit committee members is defined
in The NASDAQ Stock Markets listing standards. At the
beginning of 2008, the Audit Committee consisted of
Ms. Mather and Messrs. Nada and Seawell; however,
Mr. Skaff was appointed to the Audit Committee as
Mr. Seawells replacement in March 2008.
As members of the Audit Committee, we assist the Board in
fulfilling its responsibilities relating to the oversight of the
accounting, financial reporting, internal controls, financial
practices and audit activities of Glu and its subsidiaries.
In fulfilling its oversight role, the Audit Committee has
reviewed and discussed with management and the independent
registered public accounting firm Glus audited financial
statements. The Audit Committee met ten times during 2008,
including meetings with our independent registered public
accounting firm, PricewaterhouseCoopers LLP, to review our
quarterly and annual results. It is not the duty of the Audit
Committee to plan or conduct audits or to determine that the
financial statements are complete and accurate and conform to
generally accepted accounting principles. Management is
responsible for the preparation, presentation and integrity of
Glus financial statements, accounting and financial
reporting principles, internal controls and procedures designed
to ensure compliance with accounting standards, applicable laws
and regulations. PricewaterhouseCoopers is responsible for
expressing an opinion on the conformity of Glus audited
financial statements to generally accepted accounting principles.
The Audit Committee discussed with our independent registered
public accounting firm the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended
(Communication with Audit Committees). The Audit Committee has
received from the independent registered public accounting firm
the written disclosures and the letter required by the
applicable requirements of the Public Company Accounting
Oversight Board regarding the independent registered public
accounting firms communications with the Audit Committee
concerning independence and has discussed with the independent
registered public accounting firm that firms independence.
Based upon the Audit Committees review and discussions
referred to above, the Audit Committee recommended to the Board
that our audited consolidated financial statements be included
in our Annual Report on
Form 10-K
for the year ended December 31, 2008, filed with the SEC on
March 13, 2009.
Submitted by the Audit Committee of the Board,
Ann Mather (Chair)
Hany M. Nada
Daniel L. Skaff
35
PROPOSAL NO. 2
RATIFICATION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM,
PRICEWATERHOUSECOOPERS LLP, FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2009
Our Audit Committee has selected, and is submitting for
ratification by the stockholders its selection of, of
PricewaterhouseCoopers LLP (PwC) to serve as our
independent registered public accounting firm for 2009. Although
stockholder approval of this proposal is not required by law,
the Audit Committee has determined that it is desirable to
request that stockholders ratify this selection. Notwithstanding
the selection, the Audit Committee, in its discretion, may
appoint a different independent registered public accounting
firm at any time, if the Audit Committee feels that such a
change would be in the best interests of Glu and its
stockholders. If our stockholders do not approve this
Proposal No. 2, the Audit Committee will reconsider
the selection of PwC as our independent registered public
accounting firm for 2009.
The following table sets forth the aggregate fees and related
expenses for which we were billed by PwC for professional
services provided by them during 2008 and 2007. The Audit
Committee considered the provision of the services corresponding
to these fees, and the Audit Committee believes that the
provision of these services is compatible with PwC maintaining
its independence. The Audit Committees pre-approval
policies and procedures require prior approval by the Audit
Committee of each engagement of PwC to perform services. All of
the professional services listed below were approved in
accordance with these policies.
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|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit fees
|
|
$
|
1,407,000
|
|
|
$
|
1,241,000
|
|
Audit-related fees
|
|
|
33,000
|
|
|
|
140,000
|
|
Tax fees
|
|
|
313,000
|
|
|
|
157,000
|
|
All other
|
|
|
2,000
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,755,000
|
|
|
$
|
1,542,000
|
|
|
|
|
|
|
|
|
|
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Audit
Fees
These fees consist of amounts for professional services rendered
in connection with the audit of our financial statements,
reviews of the interim financial statements included in our
quarterly reports on
Form 10-Q,
and statutory and regulatory filings or engagements. In 2008,
these fees included the audit of our internal control over
financial reporting. In 2007, these fees included review of
financial and related information in SEC registration statements.
Audit-Related
Fees
These fees consist of amounts for assurance and related services
that are reasonably related to the performance of the audit or
review of our financial statements that are not reported under
Audit Fees. In 2007, these fees include due
diligence in connection with our acquisitions; other accounting
consultations in connection with transactions; and consultations
concerning financial accounting and reporting standards and
internal control over financial reporting. In 2008, these fees
included a royalty audit.
Tax
Fees
These fees consist of professional services rendered for tax
advice, planning and compliance (domestic and international).
These services include the preparation and review of income tax
returns and international returns and assistance regarding
transfer pricing; federal, state and international tax
compliance; acquisitions; and general international tax planning.
All Other
Fees
In both years, these fees consist of amounts paid for an annual
subscription to PwCs online accounting and auditing
research tool.
36
For more information about PwC, please see the Audit
Committee Report above.
Representatives of PwC are expected to attend the Annual
Meeting. These representatives will be given the opportunity to
make a statement if they desire to do so, and they will be
available to respond to appropriate questions.
The Board
recommends that stockholders vote FOR the
ratification of PricewaterhouseCoopers LLP as our independent
registered
public accounting firm for the fiscal year ending
December 31, 2009.
TRANSACTION
OF OTHER BUSINESS
At the date of this proxy statement, the Board knows of no other
business that will be conducted at the 2009 Annual Meeting of
Stockholders other than as described in this proxy statement. If
any other matter or matters are properly brought before the
Annual Meeting, or any adjournment or postponement of the Annual
Meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SECs rules allow us to incorporate by reference into
this proxy statement the information we file with the SEC. This
means that we can disclose important information to you by
referring you to another document without restating that
information in this document. Any information incorporated by
reference into this proxy statement is considered to be part of
this proxy statement from the date the Company files that
document. Any reports filed by us with the SEC after the date of
this proxy statement will automatically update and, where
applicable, supersede any information contained in this proxy
statement or incorporated by reference in this proxy statement.
The Company incorporates by reference the information involving
the Executive Officers contained in Item 10 of our
Form 10-K,
as filed with the SEC on March 13, 2009 which accompanies
these proxy materials.
37
APPENDIX A
NON-GAAP RECONCILIATION
GLU
MOBILE INC.
Supplemental
Information for the Compensation Discussion and Analysis in
the
Proxy
Statement for the 2009 Annual Meeting of Stockholders
INFORMATION
REGARDING NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP MEASURES
The Compensation Discussion and Analysis (CD&A)
of this proxy statement contains non-GAAP financial
measures non-GAAP earnings (target and actual) for
the quarters ended March 31, 2008, June 30, 2008,
September 30, 2008 and December 31, 2008. Table 1 on
page A-2
of this proxy statement reconciles these non-GAAP financial
measures to the most directly comparable financial measure
prepared in accordance with Generally Accepted Accounting
Principles (GAAP).
The non-GAAP financial measures are provided in the CD&A
solely because they are used as performance metrics for
executive compensation purposes. The presentation this non-GAAP
financial measure is not intended to be considered in isolation
from, as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP, and
may be different from non-GAAP financial measures used by other
companies. In addition, non-GAAP measures have limitations in
that they do not reflect all of the amounts associated with our
results of operations as determined in accordance with GAAP. Our
Compensation Committee believes that the use of these financial
measures is appropriate for the compensation purposes for which
they are used, and we are required to disclose these measures in
the CD&A pursuant to Securities and Exchange Commission
regulations.
Non-GAAP earnings excludes the following items from
our consolidated statements of operations:
|
|
|
|
|
Acquired in-process research and development
|
|
|
|
Amortization of intangible assets
|
|
|
|
Stock-based compensation expense
|
|
|
|
Impairment of goodwill
|
|
|
|
Gain/impairment of auction-rate securities
|
|
|
|
Restructuring charge
|
|
|
|
MIG earnout expenses
|
|
|
|
Transitional expenses
|
|
|
|
Minority interest
|
|
|
|
Foreign currency exchange gains and losses primarily related to
the revaluation of assets and liabilities
|
A-1
TABLE
1
GLU
MOBILE INC.
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES
TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
|
(Unaudited, in thousands)
|
|
|
Target GAAP Earnings
|
|
|
(7,414
|
)
|
|
|
(4,714
|
)
|
|
|
(1,484
|
)
|
|
|
(531
|
)
|
Acquired in-process research and development
|
|
|
2,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
1,390
|
|
|
|
1,628
|
|
|
|
1,628
|
|
|
|
1,628
|
|
Stock-based compensation expense
|
|
|
2,093
|
|
|
|
2,324
|
|
|
|
2,382
|
|
|
|
2,585
|
|
Impairment of goodwill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/impairment of auction-rate securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charge
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MIG earnout expenses
|
|
|
622
|
|
|
|
622
|
|
|
|
622
|
|
|
|
622
|
|
Transitional expenses
|
|
|
259
|
|
|
|
577
|
|
|
|
118
|
|
|
|
45
|
|
Minority Interest
|
|
|
(438
|
)
|
|
|
(70
|
)
|
|
|
|
|
|
|
|
|
Foreign currency exchange gains and losses*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Non-GAAP Earnings
|
|
|
(794
|
)
|
|
|
367
|
|
|
|
3,265
|
|
|
|
4,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
|
(Unaudited, in thousands)
|
|
|
Actual GAAP Earnings
|
|
|
(6,002
|
)
|
|
|
(6,601
|
)
|
|
|
(56,866
|
)
|
|
|
(37,222
|
)
|
Acquired in-process research and development
|
|
|
1,039
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
1,776
|
|
|
|
3,204
|
|
|
|
3,314
|
|
|
|
3,277
|
|
Stock-based compensation expense
|
|
|
1,972
|
|
|
|
2,030
|
|
|
|
2,127
|
|
|
|
1,855
|
|
Impairment of Goodwill
|
|
|
|
|
|
|
|
|
|
|
46,618
|
|
|
|
22,880
|
|
Gain/impairment of auction-rate securities
|
|
|
235
|
|
|
|
235
|
|
|
|
682
|
|
|
|
(1,958
|
)
|
Restructuring charge
|
|
|
75
|
|
|
|
86
|
|
|
|
126
|
|
|
|
1,458
|
|
MIG earnout expenses
|
|
|
622
|
|
|
|
622
|
|
|
|
622
|
|
|
|
3,409
|
|
Transitional expenses
|
|
|
241
|
|
|
|
631
|
|
|
|
347
|
|
|
|
48
|
|
Minority Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange gains and losses*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,984
|
|
Actual Non-GAAP Earnings
|
|
|
(42
|
)
|
|
|
278
|
|
|
|
(3,030
|
)
|
|
|
(4,269
|
)
|
|
|
|
* |
|
Primarily related to the revaluation of assets and liabilities.
We began excluding this item in the quarter ended
December 31, 2008. |
A-2
ANNUAL MEETING OF STOCKHOLDERS OF
GLU MOBILE INC.
May 29, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS: The Notice and Proxy Statement and Annual
Report on Form 10-K are available at www.glu.com/proxy
Please sign, date and mail your proxy card in the envelope provided as soon as possible.
Please detach along perforated line and mail in the envelope provided.
20230000000000000000 0 052909
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND
FOR PROPOSAL NO. 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE x
1. The election of two Class II directors to serve on our
Board of Directors, each to serve until the Companys
annual meeting of stockholders to be held in 2012 and
until his or her successor is elected and qualified, or
until his or her death, resignation or removal.
o FOR ALL NOMINEES
o WITHHOLD AUTHORITY FOR ALL NOMINEES
o FOR ALL EXCEPT (See instructions below)
NOMINEES:
O Ann Mather
O Daniel L. Skaff
FOR AGAINST ABSTAIN
2. Ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys
independent registered public accounting firm for
the fiscal year ending December 31, 2009.
3. Transaction of such other business as may properly come before
the Annual Meeting or before any adjournments or postponements
thereof.
Only stockholders of record of our common stock at the close of
business on April 8, 2009 are entitled to notice of and to vote at
the Annual Meeting or any adjournments or postponements thereof.
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, YOU
ARE URGED TO SUBMIT YOUR PROXY OVER THE INTERNET, BY TELEPHONE OR BY
COMPLETING, DATING AND SIGNING THE ENCLOSED PROXY CARD AND MAILING IT
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING IN PERSON. YOU CAN WITHDRAW YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED.
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in the
circle next to each nominee you wish to withhold, as shown
here:
To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method. o
Signature of Stockholder Date: Signature of Stockholder Date:
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
ANNUAL MEETING OF STOCKHOLDERS OF
GLU MOBILE INC.
May 29, 2009
PROXY VOTING INSTRUCTIONS
INTERNET Access www.voteproxy.com and follow the on-screen
instructions. Have your proxy card available when you access
the web page, and use the Company Number and Account Number
shown on your proxy card.
TELEPHONE Call toll-free 1-800-PROXIES (1-800-776-9437) in
the United States or 1-718-921-8500 from foreign countries
from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call and use the
Company Number and Account Number shown on your proxy card.
Vote online/phone until 11:59 PM EST the day before the meeting.
MAIL Sign, date and mail your proxy card in the envelope
provided as soon as possible.
IN PERSON You may vote your shares in person by attending
the Annual Meeting.
COMPANY NUMBER
ACCOUNT NUMBER
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS: The Notice and Proxy Statement and Annual
Report on Form 10-K are available at www.glu.com/proxy
Please detach along perforated line and mail in the envelope provided IF you are not voting via
telephone or the Internet.
20230000000000000000 0 052909
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSAL NO. 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE þ
1. The election of two Class II directors to serve on our
Board of Directors, each to serve until the Companys
annual meeting of stockholders to be held in 2012 and
until his or her successor is elected and qualified, or
until his or her death, resignation or removal.
NOMINEES:
FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT (See instructions below)
O Ann Mather
O Daniel L. Skaff
FOR AGAINST ABSTAIN
2. Ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys
independent registered public accounting firm for
the fiscal year ending December 31, 2009.
3. Transaction of such other business as may properly come before
the Annual Meeting or before any adjournments or postponements
thereof.
Only stockholders of record of our common stock at the close of
business on April 8, 2009 are entitled to notice of and to vote at
the Annual Meeting or any adjournments or postponements thereof.
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, YOU
ARE URGED TO SUBMIT YOUR PROXY OVER THE INTERNET, BY TELEPHONE OR BY
COMPLETING, DATING AND SIGNING THE ENCLOSED PROXY CARD AND MAILING IT
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING IN PERSON. YOU CAN WITHDRAW YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED.
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in the
circle next to each nominee you wish to withhold, as shown
here:
To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method.
Signature of Stockholder Date: Signature of Stockholder Date:
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
GLU MOBILE INC.
PROXY FOR 2009 ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 2009
The undersigned hereby appoints L. Gregory Ballard and Eric R. Ludwig, or either of them as
proxies, each with full power of substitution, to represent the undersigned at the Annual
Meeting of Stockholders of Glu Mobile Inc. to be held at 10:00 a.m. Pacific Time on May 29,
2009, at 2207 Bridgepointe Parkway, San Mateo, California, and at any adjournments or
postponements thereof, and to vote the number of shares the undersigned would be entitled to
vote if personally present at the meeting on the matters listed on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GLU MOBILE INC. THIS PROXY
WILL BE VOTED AS DIRECTED IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE
NOMINEES FOR ELECTION AND FOR PROPOSAL NO. 2. In their discretion, the proxy holders are
authorized to vote upon such other business as may properly come before the meeting, and at
any adjournments or postponements thereof, to the extent authorized by Rule 14a-4(c)
promulgated by the Securities and Exchange Commission, and by applicable state laws
(including matters that the proxy holders do not know, a reasonable time before this
solicitation, are to be presented).
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN ENVELOPE SO THAT THE SHARES MAY BE
REPRESENTED AT THE MEETING.
(Continued, and to be marked, dated and signed, on the other side)