UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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RENTRAK CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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RENTRAK CORPORATION
One Airport Center
7700 N.E. Ambassador Place
Portland, Oregon 97220
July 23, 2004
To Our Shareholders:
Our 2004 Annual Meeting of Shareholders will be held on Tuesday, August
24, 2004, at 10:00 a.m., Pacific Daylight Time, at our executive offices,
located at One Airport Center, 7700 N.E. Ambassador Place, Portland, Oregon
97220. On the following pages you will find the formal Notice of Annual Meeting
and Proxy Statement. Our 2004 Annual Report is also enclosed.
Two members of our board of directors, Joon Moon and Jim Petcoff, are not
standing for re-election this year. They have each served as a director since
September of 2000. We wish to extend our good wishes and thank them for sharing
their expertise and wisdom during their years of service to Rentrak and its
shareholders.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted at the meeting. ACCORDINGLY, PLEASE
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. If you attend the
meeting, and the Board of Directors joins me in hoping that you will, there will
be an opportunity to revoke your proxy and to vote in person if you prefer.
Sincerely yours,
PAUL A. ROSENBAUM
Chairman and Chief Executive Officer
RENTRAK CORPORATION
One Airport Center
7700 N.E. Ambassador Place
Portland, Oregon 97220
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 24, 2004
To the Shareholders of
Rentrak Corporation:
The Annual Meeting of Shareholders of Rentrak Corporation ("Rentrak") will
be held on Tuesday, August 24, 2004, at 10:00 a.m., Pacific Daylight Time, at
Rentrak's executive offices, located at One Airport Center, 7700 N.E. Ambassador
Place, Portland, Oregon, 97220, for the following purposes:
1. To elect a Board of Directors consisting of six members, each to serve
until the next annual meeting of shareholders and until his or her
successor is duly elected and qualified;
2. To hear reports from various officers of Rentrak; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on June 25, 2004 as
the record date for determining shareholders entitled to notice of, and to vote
at, the meeting and any adjournments or postponements thereof. The proxy
statement, proxy card and 2004 Annual Report to Shareholders accompany this
Notice.
Whether or not you plan to attend the Annual Meeting, please fill out,
sign, date and promptly return the enclosed proxy in the enclosed postage paid
envelope. You may revoke your proxy in writing or at the Annual Meeting if you
wish to vote in person.
By Order of the Board of Directors:
F. KIM COX
President and Secretary
Portland, Oregon
July 23, 2004
RENTRAK CORPORATION
One Airport Center
7700 N.E. Ambassador Place
Portland, Oregon 97220
--------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 24, 2004
--------------------------------
Date, Time and Place of Meeting
The board of directors of Rentrak Corporation ("Rentrak") is furnishing
this proxy statement and the accompanying 2004 Annual Report to Shareholders,
notice of annual meeting, and the enclosed proxy card in connection with the
board's solicitation of proxies for use at Rentrak's 2004 Annual Meeting of
Shareholders (the "Annual Meeting"). The Annual Meeting will be held Tuesday,
August 24, 2004, at 10:00 a.m. Pacific Daylight Time, at Rentrak's executive
offices, located on the fourth floor at One Airport Center, 7700 N.E. Ambassador
Place, Portland, Oregon 97220.
Solicitation and Revocation of Proxies
Shares represented by a proxy card that is properly dated, executed and
returned will be voted as directed on the proxy. If no direction is given,
proxies will be voted FOR each of the director nominees selected by the board of
directors. If other matters properly come before the Annual Meeting, the persons
named in the accompanying proxy will vote in accordance with their best judgment
with respect to such matters. Any proxy given by a shareholder may be revoked at
any time prior to its use by execution of a later-dated proxy delivered to
Rentrak's Secretary, by vote in person at the Annual Meeting, or by written
notice of revocation delivered to Rentrak's Secretary.
Rentrak's board of directors has selected the two persons named on the
enclosed proxy card to serve as proxies in connection with the Annual Meeting.
These proxy materials and the accompanying Rentrak 2004 Annual Report to
Shareholders are being mailed on or about July 23, 2004 to shareholders of
record on June 25, 2004.
Purposes of the Annual Meeting
The Annual Meeting has been called for the following purposes:
o To elect a board of directors consisting of six members, each to
serve until the next annual meeting of shareholders and until his or
her successor is duly elected and qualified;
o To hear reports from various officers of Rentrak; and
o To transact such other business as may properly come before the
meeting or any adjournments thereof.
Section 2.3.1 of Rentrak's 1995 Restated Bylaws, as amended, sets forth
procedures to be followed for introducing business at a shareholders meeting.
Rentrak has no knowledge of any other matters that may be properly presented at
the Annual Meeting. If other matters do properly come before the Annual Meeting
in accordance with the 1995 Restated Bylaws, the persons named in the proxy card
will vote your proxy in accordance with their judgment on such matters in the
exercise of their sole discretion.
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Record Date and Shares Outstanding
Only shareholders of record at the close of business on June 25, 2004,
(the "Record Date"), are entitled to notice of, and to vote at, the Annual
Meeting. At the close of business on the Record Date, 9,802,655 shares of
Rentrak common stock were outstanding. For information regarding the ownership
of Rentrak common stock by holders of more than five percent of the outstanding
shares and by Rentrak's directors and executive officers, see "Security
Ownership of Certain Beneficial Owners and Management."
Voting; Quorum; Vote Required
Each share of common stock outstanding on the Record Date is entitled to
one vote per share at the Annual Meeting. Shareholders are not entitled to
cumulate their votes. The presence, in person or by proxy, of the holders of a
majority of Rentrak's outstanding shares of common stock is necessary to
constitute a quorum at the Annual Meeting. Assuming the existence of a quorum,
the affirmative vote of a plurality of the votes cast at the Annual Meeting, in
person or by proxy, will be required to elect persons nominated to be directors.
Effect of Abstentions
If you abstain from voting, your shares will be deemed present at the
Annual Meeting for purposes of determining whether a quorum is present. However,
only votes cast in favor of a nominee for director will have an effect on the
outcome of the election of directors.
Effect of Broker Non-Votes
If a broker holds your shares in street name, you should instruct your
broker how to vote. A broker non-vote occurs when a nominee holding shares for a
beneficial owner returns a duly executed proxy but does not vote on a proposal
because the nominee does not have discretionary voting power with respect to the
matter being considered and did not receive voting instructions from the
beneficial owner. Broker non-votes are deemed present at the Annual Meeting for
purposes of determining whether a quorum is present, but will have no effect on
the outcome of the election of directors.
2005 Shareholder Proposals
The deadline for shareholders to submit proposals to be considered for
inclusion in the proxy statement for the 2005 Annual Meeting of Shareholders is
March 25, 2005. To be considered at the 2005 Annual Meeting of Shareholders,
Section 2.3.1 of Rentrak's 1995 Bylaws, as amended, requires shareholders to
deliver notice of all proposals, nominations for director and other business to
Rentrak's principal executive office no later than 60 calendar days (or by June
25, 2005) and no earlier than 90 calendar days prior to the first anniversary of
the date of the 2004 Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Rentrak's 1995 Restated Bylaws, as amended, provide that its board of
directors shall consist of six members. The board of directors has nominated the
individuals named below to fill the six positions. If for any reason any of the
nominees named below should become unavailable for election (an event that the
board does not anticipate), proxies will be voted for the election of such
substitute nominee as the board in its discretion may recommend. Proxies cannot
be voted for more than six nominees. If a vacancy occurs after the Annual
Meeting, the board of directors may elect a replacement to serve for the
remainder of the unexpired term.
Four of our current directors, Cecil Andrus, George Kuper, Paul Rosenbaum,
and Stanford Stoddard, have been nominated to stand for re-election as
directors. In addition, Judith Allen and Ralph Shaw have been nominated to fill
the vacancies on the Board that will be created as of the date of the Annual
Meeting due to the decision by Joon Moon and Jim Petcoff not to stand for
re-election. Directors are re-elected annually to serve until the next annual
meeting of shareholders and until their successors are duly elected and
qualified.
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The board of directors has determined that each of the nominees for
director named below, other than Messrs. Kuper and Rosenbaum, will be an
"independent director" under Rule 4200(a)(15) of the Nasdaq listing standards
upon election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
FOLLOWING NOMINEES FOR DIRECTOR:
JUDITH G. ALLEN (age 47). Ms. Allen has been president of Allen
Strategies, a business consulting firm located in Englewood, Colorado, since
August 2000. She also served for seven months as senior vice president of sales
and marketing for Narex Inc., an information technology company focused on
analytic solutions for collections and recovery, prior to its acquisition by
Fair Isaac Corporation in July 2003. Previously, Ms. Allen was involved in the
cable television industry for eight years, including as senior vice president of
MediaOne Group, Inc., one of the world's largest broadband communications
companies, from March 1998 until its acquisition by AT&T Corp. in 2000. She was
named one of the twelve most powerful women in cable by Cablevision Magazine in
1999. She received an A.B. in history from Brown University and an M.B.A. from
Harvard Business School. Ms. Allen has been nominated by the board of directors,
at the recommendation of the Nominating and Governance Committee, for initial
election as a Rentrak director at the Annual Meeting. She was initially
contacted for an interview by Mr. Rosenbaum at the recommendation of one of
Rentrak's executive officers.
CECIL D. ANDRUS (age 72). Beginning in 1995, Mr. Andrus founded and
continues to serve as the chairman of the Andrus Center for Public Policy at
Boise State University. Mr. Andrus has also been of counsel to the Gallatin
Group, a public policy consulting firm in Boise, Idaho, since 1995. He was
elected governor of the State of Idaho for four terms (beginning in 1970, 1974,
1986, and 1990). Mr. Andrus also was the U.S. Secretary of the Interior from
1977 to 1981. Mr. Andrus has served as a director of Rentrak since 2000 and is
also a director of Coeur d'Alene Mines Corporation and PCS Edventures!.com, INC.
GEORGE H. KUPER (age 63). Mr. Kuper is an independent consultant in the
areas of public policy, environmental and energy issues and provides advice to
small and start-up companies in the chemical, electronics, and software
industries. Mr. Kuper has also served as president, chief executive officer, and
a director of the Council of Great Lake Industries ("CGLI") located in Ann
Arbor, Michigan, since 1993. CGLI is affiliated with the World Business Council
for Sustainable Development located in Geneva, Switzerland, and is a
not-for-profit association consisting of more than two dozen U.S. and Canadian
companies. Mr. Kuper has also served as the chairman of the Office of the
Secretary of Defense Working Group on Dual-Use Technology Policy since 1994. Mr.
Kuper received a B.A. in political science from The Johns Hopkins University and
an M.B.A. from the Harvard Business School. Mr. Kuper has been a director of
Rentrak since 2000 and served as Chief Operating Officer of Rentrak's former
subsidiary 3PF.COM, Inc., through December 2001, on a part-time consulting
basis.
PAUL A. ROSENBAUM (age 61). Mr. Rosenbaum has served Rentrak as its
Chairman and Chief Executive Officer since his election as a director of Rentrak
in September 2000. Prior to joining Rentrak, Mr. Rosenbaum founded SWR
Corporation in 1994 and continues to serve as its chief executive officer. SWR
Corporation designs, tests, and markets industrial chemicals. Mr. Rosenbaum also
was engaged in the private practice of law through his own firm specializing in
corporate and administrative law since 1978. He received a B.S. in American
studies from Springfield College and a J.D. from The George Washington
University Law School.
RALPH R. SHAW (age 65). Mr. Shaw has been president of Shaw Management
Company, an investment counseling firm located in Portland, Oregon, since 1980,
and general partner of a succession of four venture capital funds beginning in
1983. Mr. Shaw received a B.A. in public accounting from Hofstra University and
a J.D. from New York University's School of Law. Mr. Shaw is a trustee of the
Tax-Free Trust of Oregon. He is also a director of Schnitzer Steel Industries,
Inc., and chairs its audit committee. Mr. Shaw has been nominated by the board
of directors, at the recommendation of the Nominating and Governance Committee,
for initial election as a director of Rentrak at the Annual Meeting. He
previously served as an outside director of Rentrak's former subsidiary 3PF.COM,
Inc., from 2000 through 2003. He has served as an informal adviser to the
Rentrak board since 2001 without compensation and became known to Rentrak's
non-management directors as a result of that relationship.
STANFORD C. "BUD" STODDARD (age 73). Mr. Stoddard has been chairman of
LaGrande Capital, L.L.C., a financial consulting firm with offices in
Southfield, Michigan, since his retirement more than five years
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ago. During his 30-year banking career, Mr. Stoddard was President of Michigan
National Bank of Detroit, Chairman of the out state Michigan National Bank, and
Founder, President and Chairman of Michigan National Corporation, the parent
bank holding company of the banks. He is currently chairman of MTC Capital
Corporation, the holding company for Michigan Trust Bank. He graduated from the
University of Michigan with a B.A. in business administration. Mr. Stoddard has
served as a director of Rentrak since 2001.
COMMITTEES AND MEETINGS OF THE BOARD
The board of directors has established several standing committees,
including an Audit Committee, a Compensation Committee, a Finance Committee, and
a Nominating and Governance Committee. During the fiscal year ended March 31,
2004, the board of directors held five meetings. Each director attended at least
75% of the total number of meetings held by the board of directors and the board
committees on which he or she served during fiscal 2004.
In June 2004, the board of directors adopted corporate governance
guidelines, which state that directors are expected to attend all meetings of
the board of directors, including our annual meetings of shareholders. All
directors attended the annual meeting held in August 2003.
Audit Committee
The Audit Committee's activities are governed by a formal written charter
revised by the board of directors on June 25, 2004. A copy of the Audit
Committee charter is attached to this proxy statement as Appendix A and is
available on Rentrak's website under "Investor Relations" at www.rentrak.com.
The Audit Committee held five meetings during the fiscal year ended March 31,
2004.
The Audit Committee is currently comprised of Mr. Andrus (Chair), Mr.
Petcoff and Mr. Stoddard, each of whom meets the financial literacy and
independence requirements for audit committee membership specified in the Nasdaq
listing standards. If Ralph Shaw is elected as a director at the Annual Meeting,
the board of directors intends to appoint him to the Audit Committee to replace
Mr. Petcoff, and has determined that Mr. Shaw is qualified to be an "audit
committee financial expert" as defined in the rules of the Securities and
Exchange Commission (the "SEC") and will meet the independence requirements for
audit committee membership specified in the Nasdaq listing standards.
The Audit Committee makes decisions regarding the engagement or discharge
of Rentrak's independent auditors, reviews and pre-approves audit and
legally-permitted non-audit services provided by the independent auditors, and
oversees the integrity of Rentrak's financial statements and other financial
information, its systems of internal accounting and financial controls, and the
independence and performance of Rentrak's independent auditors. The Audit
Committee is also responsible for establishing procedures for the receipt and
handling of complaints about accounting and auditing matters and for reviewing
potential conflicts of interest and reports of ethical violations regarding
Rentrak's directors, officers and employees.
Compensation Committee
Since March 31, 2002, the Compensation Committee has been comprised of Mr.
Petcoff (Chair) and Mr. Andrus. The Compensation Committee is responsible for
approving and evaluating Rentrak's director and officer compensation plans,
policies and programs, evaluating the performance of Rentrak's management, and
making compensation decisions regarding Rentrak's executive employees. During
the fiscal year ended March 31, 2004, the Compensation Committee held one
meeting.
Nominating and Governance Committee
The board of directors approved the formation of the Nominating and
Governance Committee (the "Nominating Committee") in February 2004 and appointed
Mr. Petcoff as Chair and Messrs. Andrus and Kuper as its two other members. The
board of directors has determined that Messrs. Andrus and Petcoff are
independent directors as defined in Rule 4200(a)(15) of the Nasdaq listing
standards; Mr. Kuper does not currently meet those independence requirements.
The Nominating Committee is governed by a written charter approved by the board
of
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directors on June 25, 2004. The charter is available on Rentrak's website under
"Investor Relations" at www.rentrak.com. The Nominating Committee did not meet
during the fiscal year ended March 31, 2004.
The Nominating Committee is responsible for identifying individuals
qualified to become directors of Rentrak and recommending to the board of
directors candidates for election and for recommending individuals to serve on
each board committee. It is also responsible for developing for board approval a
set of corporate governance guidelines addressing board organizational issues,
committee structure and membership, and succession planning for Rentrak's chief
executive officer position.
The Nominating Committee has not adopted any specific, minimum
qualifications for director candidates. In evaluating potential director
nominees, the Nominating Committee will take into account all factors that it
considers appropriate, including strength of character, maturity of judgment,
career specialization, relevant technical skills or financial acumen, diversity
of viewpoints, industry knowledge, and the highest personal and professional
ethics, integrity and sound business judgment.
In determining whether to recommend nomination of current directors for
re-election, the Nominating Committee will perform periodic evaluations of
individual directors. Non-employee directors are generally expected to retire
upon reaching age 75 or completing ten years of service, whichever is later.
Directors who are also employees will generally be expected to resign upon
termination of employment, although the board of directors may make an exception
to this policy for a former chief executive officer if it believes it to be in
the best interests of Rentrak.
When the Nominating Committee is required to identify new director
candidates, because of a vacancy or a desire to expand the board, the Nominating
Committee will poll current directors for suggested candidates. The Nominating
Committee has not hired a third-party search firm to date, but has the authority
to do so if it deems such action to be appropriate. Once potential candidates
are identified, the Nominating Committee will conduct interviews with the
candidates and perform such investigations into the candidates' background as
the Nominating Committee deems appropriate.
The Nominating Committee will consider director candidates suggested by
shareholders for nomination by the board of directors. Shareholders wishing to
suggest a candidate to the Nominating Committee should do so by sending the
candidate's name, biographical information, and qualifications to: Chair of
Nominating Committee, in care of F. Kim Cox, Secretary, Rentrak Corporation,
P.O. Box 18888, Portland, Oregon 97218-0888. Candidates suggested by
shareholders will be evaluated by the same criteria and process as candidates
from other sources.
Finance Committee
The Finance Committee is comprised of Dr. Moon (Chair) and Messrs. Kuper
and Rosenbaum. It is responsible for evaluating strategic financial issues
facing Rentrak. During the fiscal year ended March 31, 2004, the Finance
Committee met twice.
CODE OF ETHICS
Rentrak has adopted a Code of Ethics for Senior Financial Officers ("Code
of Ethics"), which is applicable to its chief executive officer, president,
principal financial officer, and principal accounting officer. The Code of
Ethics focuses on honest and ethical conduct, the adequacy of disclosure in
Rentrak's financial reports, and compliance with applicable laws and
regulations. The Code of Ethics is included as part of our Code of Business
Conduct approved by the board of directors, which is generally applicable to all
directors, officers, and employees of Rentrak. The Code of Business Conduct and
Code of Ethics are available on Rentrak's website under "Investor Relations" at
www.rentrak.com and are administered by the Audit Committee.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
Communications by shareholders to the board of directors should be sent to
the attention of the Chair of the Nominating and Governance Committee, in care
of F. Kim Cox, Secretary, Rentrak Corporation, P.O. Box 18888, Portland, Oregon
97218-0888. Such communications will be forwarded unopened to the individual
occupying that
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position. The Chair of the Nominating Committee will be responsible for
responding to or forwarding such communications as appropriate, including
communications directed to individual directors or board committees.
Communications will not be forwarded if the Chair of the Nominating and
Governance Committee determines that they do not appear to be within the scope
of the board's (or such other intended recipient's) responsibilities or are
otherwise inappropriate or frivolous.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 25, 2004, certain information
regarding the beneficial ownership of Rentrak common stock by (i) each person
known to be the beneficial owner of 5% or more of Rentrak's outstanding shares
of common stock, (ii) each director and nominee for election as a director of
Rentrak, (iii) Rentrak's Chief Executive Officer and the next four most highly
compensated executive officers who were employed by Rentrak at March 31, 2004
(the "Named Executive Officers"), and (iv) the present directors and executive
officers of Rentrak as a group.
Shares Beneficially Owned
--------------------------------- ----------------------------------------------
Name Number (1) Percentage (1)
Judith Allen -- --
Cecil Andrus 33,500 *
F. Kim Cox 380,488 3.8%
Ron Giambra 15,000 *
George Kuper 41,500 *
Joon Moon 13,500 *
Kenneth Papagan 18,750 *
James Petcoff 25,000 *
Paul Rosenbaum 659,720 6.4%
One Airport Center
7700 N.E. Ambassador Place
Portland, Oregon 97220
Ralph Shaw -- --
Stanford Stoddard 79,650 *
Mark Thoenes 35,000 *
All Officers and Directors as a group (16
persons) 1,709,114 15.3%
Neil Gagnon 825,138(2) 8.4%
1370 Avenue of the Americas, Suite 2002
New York, New York 10019
Royce & Associates, LLC 518,000(3) 5.3%
1414 Avenue of the Americas
New York, New York 10019
* Less than one percent
(1) Unless otherwise indicated, each person has sole voting and dispositive
power over the shares listed opposite his name. All percentages have been
calculated assuming that 9,802,655 shares of Rentrak's common stock are
issued and outstanding as of June 25, 2004. In accordance with SEC
regulations, the number of shares and percentage calculation with respect
to each shareholder assumes the exercise of all outstanding options such
shareholder holds and that can be exercised within 60 days after June 25,
2004, as follows: Cecil Andrus, 32,500 shares; F. Kim Cox, 328,307 shares;
Ron Giambra, 15,000 shares; George Kuper, 37,500
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shares; Joon Moon, 12,500 shares; Kenneth Papagan, 18,750 shares; James
Petcoff, 25,000 shares; Paul Rosenbaum, 450,000 shares; Mark Thoenes,
35,000 shares; and all executive officers and directors as a group,
1,344,480 shares.
(2) Neil Gagnon filed a Schedule 13G reporting as of December 31, 2003, sole
voting power as to 284,376 shares, shared voting power as to 174,405
shares, sole dispositive power as to 257,271 shares, and shared
dispositive power as to 567,867 shares.
(3) Royce & Associates, LLC, a registered investment advisor, filed a Schedule
13G reporting as of December 31, 2003, sole voting and dispositive power
as to 518,000 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Rentrak's
directors and officers and persons who beneficially own more than 10% of the
outstanding shares of Rentrak's common stock ("10% shareholders") to file with
the SEC initial reports of beneficial ownership (Form 3s) and reports of changes
in beneficial ownership (Forms 4 and 5) of such shares. To Rentrak's knowledge,
based solely upon a review of the copies of Forms 3, 4, and 5 (and amendments
thereto) furnished to Rentrak or otherwise in its files or publicly available,
all of Rentrak's officers, directors, and 10% shareholders complied in a timely
manner with all applicable Section 16(a) filing requirements during fiscal 2004
and the first three months of fiscal 2005, except as follows: Cecil Andrus,
director, one late filing on Form 4 reporting one option grant; Craig Berardi,
officer, one late filing on Form 4 reporting one option exercise and one stock
sale and one late filing on Form 3; Timothy Erwin, officer, two late filings on
Form 4 reporting six option exercises and four stock sales; George Georgiadis,
officer, one late filing on Form 3; Ron Giambra, officer, one late filing on
Form 4 reporting one option grant; Thomas Guilford, officer, one late filing on
Form 3; Cathy Hetzel, officer, one late filing on Form 4 reporting one option
grant and one late filing on Form 3; George Kuper, director, one late filing on
Form 4 reporting one option grant; Kenneth Papagan, officer, one late filing on
Form 4 reporting one option grant; Paul Rosenbaum, officer and director, one
late filing on Form 4 reporting one option grant; Stanford Stoddard, director,
three late filings on Form 4 reporting six stock sales and one option grant; and
Mark Thoenes, officer, one late filing on Form 4 reporting one option exercise
and one stock sale.
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EXECUTIVE OFFICERS
The names, ages, positions and backgrounds of Rentrak's present executive
officers in addition to Paul Rosenbaum are as follows:
Position
Name Age Held Since Current Position(s) with Rentrak and Background
Craig Berardi 46 1998 Vice President, Product Services. Mr. Berardi
joined Rentrak in 1994. From 1994 to 1998, he
held a variety of operational positions with
Rentrak. Beginning in 1998, he served as Vice
President, International and was promoted to
his current position in June 2003. Prior to
joining Rentrak, Mr. Berardi served from 1985
to 1993 as Director of Finance for the Film &
Video Services Division at Warner Bros. Studio.
F. Kim Cox 52 2000 President and Secretary. From 1999 until 2000,
Mr. Cox served as Executive Vice President,
Secretary and Treasurer. From 1995 until 1999,
Mr. Cox served as Executive Vice President,
Chief Financial Officer, Secretary and
Treasurer.
Timothy Erwin 35 2000 Vice President, Customer Relations. Mr. Erwin
has been with Rentrak for 15 years and, prior
to his promotion in June 2000, held positions
including Manager of Customer Services and Key
Accounts and Director of Customer Relations.
Ron Giambra 42 2003 Senior Vice President, Theatrical. Mr. Giambra
joined Rentrak in 2001 as Vice President,
Theatrical and now serves as Senior Vice
President, Theatrical, since his promotion in
early 2003. Prior to joining Rentrak, Mr.
Giambra held various management positions with
motion picture distribution companies,
including Tribune Media from 2000 to 2001,
Destination Films in 1999 and 2000, Polygram
Film Entertainment from 1997 to 1999, and Orion
Films from 1983 to 1997.
Marty Graham 46 2002 Senior Vice President, Studio Relations. Mr.
Graham has served in his current position since
May 2002. Previously, he served Rentrak as Vice
President, Product Development beginning in
1991. Mr. Graham joined Rentrak in October 1988
as Director of Product Development. Prior to
joining Rentrak, Mr. Graham served as General
Manager and Secretary/Treasurer of Pacific
Western Video Corporation.
Cathy Hetzel 53 2004 Senior Vice President, Video On Demand. Ms.
Hetzel joined Rentrak in March 2004, following
a one-year consulting relationship with
Rentrak. Previously, she was senior vice
president, business development at Concero, an
interactive television, VOD and electronic
commerce services company, beginning in March
2000. Prior to that, she was senior vice
president of Digital Cable Radio Associates, a
partnership of several music recording
companies and cable operators.
Kenneth Papagan 52 2002 Executive Vice President, Business Development
& Strategic Planning. Prior to joining Rentrak
in November 2002, Mr. Papagan held positions as
President for Delmar Media.Net, a consulting
services firm focused on media, broadband and
telecommunications companies, from 2001 to
2002, as Senior Vice President and General
Manager from 1997 to 2001 at Digital Media and
Broadband Solutions, iXL Inc., a global
strategic internet consulting firm, and as
Principal of Delmar Media, a media services
consulting firm, from 1991 to 1997. Mr. Papagan
began his career working for a variety of media
organizations, including the JCPenney Shopping
Channel, the Fashion Channel, the consulting
firm PRO, Oak Media and ON-TV.
-8-
Christopher 36 2003 Senior Vice President, Sales & Marketing. Mr.
Roberts Roberts was promoted to his present position in
June 2003. Prior to becoming Vice President,
Sales in 1994, which position he held until
2003, Mr. Roberts was Rentrak's National
Director of Sales, a position he held beginning
in September 1992. Previously, Mr. Roberts
worked as an account executive for Rentrak.
Mark Thoenes 51 2003 Senior Vice President and Chief Financial
Officer. From July 1, 2000, to December 31,
2000, Mr. Thoenes was engaged as an outside
consultant to serve as Rentrak's Chief
Financial Officer. He became Chief Financial
Officer of Rentrak on January 1, 2001 and was
promoted to his present position in June 2003.
Prior to joining Rentrak, Mr. Thoenes worked in
the healthcare industry for 14 years in various
financial and operational management positions,
most recently as Chief Operating Officer for
Physician Partners, Inc. and as Chief Financial
Officer for PhyCor of Vancouver, Inc., both
health care companies, beginning in 1996. Mr.
Thoenes began his career serving as a CPA with
the accounting firm Ernst & Young LLP.
Amir Yazdani 44 2001 Executive Vice President, Information
Technology and Chief Information Officer. Mr.
Yazdani was promoted to his present position in
July 2001. Previously, Mr. Yazdani was Vice
President, Management Information Systems of
Rentrak's former subsidiary 3PF.COM, Inc., from
1999 to June 2001 and Vice President,
Management Information Systems of Rentrak from
1993 to 1999.
-9-
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by Rentrak to the
Named Executive Officers during the fiscal years ended March 31, 2004, 2003 and
2002.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
---------------------------------------- ------------
Awards
------------
Securities
Fiscal Year Other Annual Underlying All Other
Ended Salary Bonus Compensation Options/SARs Compensation
Name and Principal Position (1) March 31, ($) ($) ($)(2) (#) ($)(3)
------------------------------- --------------------------------------------------------------------------
Paul Rosenbaum 2004 $459,038 $0 $ -- 50,000 $1,500
Chairman and Chief 2003 450,000 50,000 -- 100,000 1,500
Executive Officer 2002 391,186 100,000 55,095 200,000 1,500
F. Kim Cox 2004 252,733 0 -- 0 5,303
President and Secretary 2003 257,361 0 -- 0 5,187
2002 209,601 28,815 -- 0 6,198
Ron Giambra 2004 223,852 0 -- 20,000 0
Senior Vice President, 2003 144,833 7,500 -- 10,000 0
Theatrical 2002 67,708 0 -- 0 0
Kenneth Papagan 2004 175,314 60,000 -- 50,000 0
Executive Vice 2003 75,000 0 -- 75,000 0
President,
Business Development &
Strategic Planning
Mark Thoenes 2004 221,551 50,000 -- 7,500 1,500
Senior Vice President 2003 205,477 0 -- 50,000 1,500
and Chief Financial Officer 2002 191,606 20,000 -- 15,000 1,500
(1) Reflects principal position as of March 31, 2004.
(2) The amount shown for Mr. Rosenbaum in fiscal 2002 includes monthly
automobile lease and maintenance payments of $11,692, payments to Mr.
Rosenbaum for housing in Portland, Oregon, of $37,931; and miscellaneous
payments of $5,472. Other amounts of personal benefits have been excluded
as being below the minimum thresholds included in the SEC's proxy
disclosure rules.
(3) Amounts disclosed in this column reflect matching contributions during
fiscal 2004 in the amount of $1,500 to each of Messrs. Rosenbaum, Cox and
Thoenes under Rentrak's 401(k) plan. Rentrak also paid $3,803 with respect
to a supplemental life insurance and long-term disability plan for Mr. Cox
during fiscal 2004.
-10-
Stock Option Grants
The following table sets forth information concerning stock option grants
to each of the Named Executive Officers during the fiscal year ended March 31,
2004. Rentrak did not grant any stock appreciation rights to executive officers
during the fiscal year.
Option Grants in Last Fiscal Year
Potential realizable value
at assumed annual rates
of stock price appreciation
Individual grants (1) for option term (2)
---------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price Date 5% ($) 10% ($)
---------------------------------------------------------------------------------------------
Paul Rosenbaum 50,000 (3) 25.32% $ 6.89 (6) 8/20/2013 $88,798 $207,268
F. Kim Cox - - - - - -
Ron Giambra 20,000 (4) 10.13% $ 6.89 (6) 8/20/2013 37,519 82,907
Kenneth Papagan 50,000 (5) 25.32% $ 9.23 (7) 3/03/2014 127,504 281,750
Mark Thoenes 7,500 (4) 3.80% $ 7.97 (7) 11/26/2013 16,515 36,493
(1) Options granted include both incentive stock options and nonqualified
stock options.
(2) These calculations are based on certain assumed annual rates of
appreciation as required by SEC rules governing the disclosure of
executive compensation. Under these rules, an assumption is made that the
market price of the shares underlying the stock options shown in this
table could appreciate at rates of 5% and 10% per annum on a compounded
basis over the five or ten-year term of the stock options. Actual gains,
if any, on stock option exercises are dependent on the future performance
of the common stock of Rentrak and overall market conditions. There can be
no assurance that the gains reflected in this table will be achieved.
(3) Option vests in full on August 20, 2004.
(4) Option vests in four equal annual installments.
(5) Option vests in full on March 31, 2005.
(6) The closing sales price of Rentrak's common stock on the date of grant was
$6.79 per share.
(7) The exercise price per share is equal to the closing sales price on the
date of grant.
-11-
Stock Option Exercises
The following table sets forth certain information concerning stock option
exercises by each of the Named Executive Officers during the fiscal year ended
March 31, 2004, and the value of in-the-money options (e.g., options as to which
the market value of Rentrak common stock exceeds the exercise price of the
options) held by such individuals on March 31, 2004. The value of in-the-money
options is based on the difference between the exercise price of such options
and the closing price of Rentrak common stock on March 31, 2004, which was $8.77
per share. Unless otherwise indicated, the options listed below are for Rentrak
common stock.
Aggregated Option Exercises in Fiscal 2004
and Fiscal Year-End Option Values
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at Fiscal
Options at Fiscal Year End (#) Year End ($)
------------------------------- ----------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---------- ------------ ------------ ----------- ------------- ----------- -------------
Paul Rosenbaum 0 $ 0 400,000 50,000 $ 2,026,000 $ 94,000
F. Kim Cox 10,714 19,820 332,496 6,525 1,295,999 26,230
Ron Giambra 0 0 10,000 20,000 30,400 37,600
Kenneth Papagan 0 0 18,750 106,250 70,687 212,062
Mark Thoenes 5,000 34,060 22,500 50,000 102,945 150,285
Equity Compensation Plan Information
The following table sets forth additional information as of March 31,
2004, about shares of Rentrak common stock that may be issued upon the exercise
of options, warrants, and other rights under existing equity compensation plans
and arrangements, divided between plans approved by Rentrak's shareholders and
plans or arrangements not submitted to the shareholders for approval. The
information includes the number of shares covered by, and the weighted average
exercise price of, outstanding options, warrants, and other rights and the
number of shares remaining available for future grants excluding the shares to
be issued upon exercise of outstanding options, warrants, and other rights.
-12-
Number of Securities
Remaining Available for
Number of Securities to be Weighted-Average Future Issuance Under
Issued Upon Exercise of Exercise Price of Equity Compensation
Outstanding Options, Outstanding Options, Plans (excluding securities
Plan Category Warrants, and Rights Warrants, and Rights reflected in column (a))
------------- -------------------------- --------------------- ---------------------------
(a) (b) (c)
Equity compensation plans 1,760,437 $4.92 304,988
approved by shareholders (1)
Equity compensation plans 185,345 $4.74 350,847
or arrangements not --------- ----- -------
approved by shareholders (2)
Total 1,945,782 $4.90 655,835
========= ===== =======
(1) Equity compensation plans approved by shareholders include the 1986 Second
Amended and Restated Stock Option Plan, as amended, and the 1997 Equity
Participation Plan, as amended.
(2) Equity compensation plans or arrangements approved by Rentrak's board of
directors but not submitted for shareholder approval include (a) the 1997
Non-Officer Employee Stock Option Plan and (b) warrants to purchase 30,000
shares of Common Stock with a purchase price of $7.50 per share and an
expiration date of May 16, 2009, issued to an investment banking firm as
partial consideration for financial advisory services in connection with
strategic opportunities or financing transactions of potential interest to
Rentrak.
The 1997 Non-officer Employee Stock Option Plan, as amended, provides for
the issuance of up to 800,000 shares of Common Stock pursuant to nonstatutory
options granted to employees or consultants of Rentrak who are not officers or
directors of Rentrak. The Compensation Committee determines the terms of each
option grant, including the numbers of shares covered, the exercise price, the
expiration date, and provisions regarding vesting and exercisability following
termination of employment.
Compensation of Directors
Rentrak compensates its non-employee directors for their services by
payment of $500 for each board meeting they attend in person or by telephone
conference call. Each director who serves on a board committee receives payment
of $500 for attending each in-person or telephone conference committee meeting.
In addition, during fiscal 2004, three non-employee directors were each paid a
retainer of $22,500 (including $2,500 for service on the Audit Committee) and
the other two non-employee directors were each paid a retainer of $20,000.
Rentrak also reimburses directors for their travel expenses for each meeting
attended in person.
Each non-employee director receives an automatic grant, at the beginning
of each fiscal year, of a ten-year option to purchase 10,000 shares of Rentrak
common stock, with a grant of an option for an additional 2,500 shares to each
chair of a board committee. Accordingly, on April 1, 2003, Messrs. Andrus and
Petcoff and Dr. Moon each received an option for 12,500 shares; and Messrs.
Kuper and Stoddard each received an option for 10,000 shares; each at an
exercise price of $5.20 per share and exercisable in full one year after the
date of grant. All grants to non-employee directors are made under Rentrak's
1997 Equity Participation Plan.
-13-
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
PAUL ROSENBAUM. Rentrak entered into an employment agreement effective
October 1, 2001, with Mr. Rosenbaum relating to his employment as Chairman and
Chief Executive Officer. The agreement has been extended pursuant to annual
renewal provisions to September 30, 2005. In the event of a change in control of
Rentrak, the term of the agreement will be automatically extended to December 31
of the third calendar year following the year in which the change in control
occurs. A change in control includes (1) the acquisition by a person or group of
beneficial ownership of 25% or more of the combined voting power of Rentrak's
then outstanding capital stock, (2) the election of directors a majority of whom
are not individuals nominated by Rentrak's then incumbent directors, and (3) the
approval by Rentrak's shareholders of a plan of complete liquidation, a sale of
substantially all of Rentrak's assets, or a merger or similar transaction other
than a transaction in which Rentrak's shareholders continue to hold at least 75%
of the combined voting power of the voting securities of the surviving entity
immediately following the transaction, in each case unless the event otherwise
constituting a change in control has been approved by two-thirds of Rentrak's
directors then in office. The agreement with Mr. Rosenbaum provides for an
annual base salary of $450,000, subject to annual review by the board of
directors in its sole discretion as to whether to increase (but not decrease)
his base salary level. The agreement also provides for the lease of an
automobile for use by Mr. Rosenbaum and for employee benefits available to
officers and other management employees generally. Upon termination of Mr.
Rosenbaum's employment by reason of death, his estate will be entitled to a lump
sum payment of $500,000 less any amounts payable under any life insurance
policies purchased by Rentrak for the benefit of Mr. Rosenbaum's dependents.
Upon termination of Mr. Rosenbaum's employment by Rentrak without cause or by
Mr. Rosenbaum with good reason before a change in control of Rentrak occurs, Mr.
Rosenbaum will be entitled to an additional 12 months' salary and benefits as
long as Mr. Rosenbaum does not compete with Rentrak during that 12-month period.
Cause is defined as a material breach of the agreement by Mr. Rosenbaum, his
failure to comply with Rentrak's general policies or standards or to perform any
job duties, a felony conviction or plea of no contest, or any act by Mr.
Rosenbaum constituting fraud, dishonesty involving Rentrak, or in competition
with or materially detrimental to Rentrak. Good reason is defined as Rentrak's
failure to comply with the agreement or an act or failure to act by Rentrak that
constitutes a substantial adverse change in Mr. Rosenbaum's position or
responsibilities or a reduction in his base salary. Upon termination without
cause or for good reason following a change in control and during the term of
the agreement, Mr. Rosenbaum will be entitled to a lump sum payment equal to
three times his annual base salary plus continuation of benefits for three
years, subject to reduction to the extent that Mr. Rosenbaum's after-tax benefit
would be larger as a result of the excise tax on excess parachute payments. No
severance benefits are payable if Mr. Rosenbaum's employment is terminated by
Rentrak for cause or voluntarily by Mr. Rosenbaum other than for good reason.
F. KIM COX. Mr. Cox entered into an amended and restated employment
agreement with Rentrak as of April 1, 2004, providing for his continued
employment as President. The agreement has an initial term expiring March 31,
2007, subject to automatic extension for an additional year unless Rentrak gives
notice of nonrenewal by September 30, 2006. If a change in control of Rentrak
occurs during the term of the agreement, it will automatically be extended to
December 31 of the third calendar year following the year in which the change in
control occurs. A change in control is defined as described above with respect
to Mr. Rosenbaum's employment agreement, except that the exception for events
approved by Rentrak's board of directors does not apply. Mr. Cox's agreement
provides for an annual base salary of $300,000, subject to review for increase
(but not decrease) each fiscal year by the Compensation Committee. Beginning
with calendar 2005, Mr. Cox will also be entitled to an incentive bonus in a
target amount equal to 50% of base salary upon the attainment of performance
goals to be mutually agreed upon by Rentrak and Mr. Cox by the end of 2004. If
Mr. Cox dies or becomes disabled (as defined), he or his estate will be entitled
to accrued salary and other earned compensation through the date of termination,
a lump sum payment equal to 50% of his annual base salary plus a pro rated
portion of his target bonus amount, and other employee benefits then in effect.
If Mr. Cox's employment is terminated before a change in control of Rentrak
occurs, by Rentrak without cause or by Mr. Cox for good reason, in addition to
the compensation payable as described in the preceding sentence, Mr. Cox will be
entitled to severance payments equal to his monthly base salary for six months
plus an additional number of months equal to the number of months remaining in
the original term or the renewal term, if applicable. Severance payments are
conditioned upon Mr. Cox's execution of a general release of claims against
Rentrak and will terminate if Mr. Cox breaches noncompete provisions in the
agreement. Severance payable to Mr. Cox will also be reduced by amounts received
from a new employer during the severance period. The definition of cause in Mr.
Cox's agreement is similar to the definition in Mr. Rosenbaum's agreement. The
circumstances constituting good reason are also similar, with the addition of
the failure by Mr. Rosenbaum to continue to be
-14-
Rentrak's Chief Executive Officer and the relocation of Rentrak's executive
offices by more than 35 miles. If Mr. Cox's employment is terminated at any time
before the end of the third calendar year after a change in control of Rentrak
occurs, either without cause or for good reason, Mr. Cox will be entitled to a
lump sum payment equal to three times his annual base salary plus two times his
total bonus compensation for the most recent fiscal year ended prior to the
change in control, together with continuation of benefits for three years,
subject to reduction to the extent that his after-tax benefit would be larger as
a result of the excise tax on excess parachute payments. No severance benefits
are payable if Mr. Cox's employment is terminated by Rentrak for cause or
voluntarily by Mr. Cox other than for good reason.
RON GIAMBRA. In July 2002, Rentrak entered into an employment agreement
with Mr. Giambra that provides for his employment as Senior Vice President,
Theatrical. As amended effective June 1, 2003, the agreement will expire June
30, 2006. If a change in control of Rentrak occurs during the term of the
agreement, the term will be extended to two years following the change in
control. A change in control is defined as described above with respect to Mr.
Rosenbaum's employment agreement, except that the exception for events approved
by Rentrak's board of directors does not apply, the beneficial ownership
threshold is 50% rather than 25%, and the sale of Rentrak's theatrical division
to a third party also constitutes a change in control, while a change in a
majority of Rentrak's directors does not. Mr. Giambra's agreement provides for
an initial annual base salary of $135,000, subject to review for increase each
fiscal year by the Compensation Committee. If Mr. Giambra dies, becomes
disabled, or terminates his employment voluntarily other than for good reason
(as defined), he or his estate will be entitled to accrued salary and other
earned compensation through the date of termination and other employee benefits
then in effect, plus, in the case of death or disability, accrued bonus for the
prior fiscal year to the extent not paid. If his employment is terminated before
a change in control of Rentrak occurs, by Rentrak without cause or by Mr.
Giambra for good reason, in addition to the compensation payable as described in
the preceding sentence upon death or disability, he will be entitled to
severance payments equal to his monthly base salary for either 24 months payable
in installments or 18 months' base salary payable in a lump sum, at Mr.
Giambra's election. Severance payments are conditioned upon Mr. Giambra's
execution of a general release of claims against Rentrak. Cause is defined as
the commission of an act of fraud, embezzlement, or theft constituting a felony
or commission of an act (or failure to act) that is intentionally against
Rentrak's interests and causes Rentrak material injury, in each case as
determined by the board of directors after 60 days' prior written notice to Mr.
Giambra of the circumstances believed to constitute cause and an opportunity to
make a presentation on his behalf to the board accompanied by legal counsel.
Good reason is defined as any reduction in base salary, benefits, severance
compensation, the circumstances under which severance would be payable, or Mr.
Giambra's right to participate in Rentrak's bonus programs or stock-based
compensation plans, or any diminution in his title, position or
responsibilities. If Mr. Giambra's employment is terminated at any time within
two years after a change in control of Rentrak occurs, either without cause or
for good reason, he will be entitled to a lump sum payment equal to 2.99 times
his annual base salary, subject to reduction at Mr. Giambra's election to the
extent that his after-tax benefit would be larger as a result of the excise tax
on excess parachute payments.
KENNETH PAPAGAN. Mr. Papagan entered into an amended and restated
employment agreement with Rentrak as of January 1, 2004, providing for his
continued employment as Executive Vice President. The agreement has an initial
term expiring December 31, 2006, subject to automatic extension for two
additional years unless Rentrak gives notice of nonrenewal by June 30, 2006. Mr.
Papagan's agreement provides for an annual base salary of $250,000, subject to
review for increase (but not decrease) each fiscal year by the Compensation
Committee. Mr. Papagan is also entitled to incentive bonuses upon the attainment
of specified performance goals for each of the first two calendar quarters of
2004 and in a discretionary amount as determined by the Compensation Committee
for the last six months of 2004, but not less than $30,000. For calendar 2005,
Mr. Papagan will be entitled to an incentive bonus based upon mutually agreed
performance measures in a targeted amount equal to 45% of his base salary. If
Mr. Papagan dies or becomes disabled (as defined), he or his estate will be
entitled to accrued salary and other earned compensation through the date of
termination, a lump sum payment equal to 50% of his annual base salary plus a
pro rated portion of his target bonus amount, and other employee benefits then
in effect. If Mr. Papagan's employment is terminated before a change in control
of Rentrak occurs, by Rentrak without cause or by Mr. Papagan for good reason,
in addition to the compensation payable as described in the preceding sentence,
he will be entitled to severance payments equal to his monthly base salary for
six months plus an additional number of months equal to the number of months
remaining in the original term or the renewal term, if applicable. Severance
payments are conditioned upon Mr. Papagan's execution of a general release of
claims against Rentrak and will terminate if he breaches noncompete provisions
in the agreement. Severance payable to Mr. Papagan will also be
-15-
reduced by amounts received from a new employer during the severance period. The
definition of cause in Mr. Papagan's agreement is similar to the definition in
Mr. Rosenbaum's agreement. The circumstances constituting good reason are also
similar, with the addition of the failure by Mr. Rosenbaum to continue to be
Rentrak's Chief Executive Officer and the relocation of Rentrak's executive
offices by more than 35 miles. If Mr. Papagan's employment is terminated during
the term of the agreement and after a change in control of Rentrak occurs,
either without cause or for good reason, he will be entitled to a lump sum
payment equal to three times his annual base salary plus two times his total
bonus compensation for the most recent fiscal year ended prior to the change in
control, together with continuation of benefits for three years, subject to
reduction to the extent that his after-tax benefit would be larger as a result
of the excise tax on excess parachute payments. A change in control is defined
as described above with respect to Mr. Rosenbaum's employment agreement, except
that the exception for events approved by Rentrak's board of directors does not
apply. No severance benefits are payable if Mr. Papagan's employment is
terminated by Rentrak for cause or voluntarily by Mr. Papagan other than for
good reason.
MARK THOENES. Effective January 1, 2001, Rentrak entered into an
employment agreement expiring December 31, 2005, with Mr. Thoenes providing for
his employment as Rentrak's Chief Financial Officer. The agreement provides for
an annual base salary of $168,000, subject to a minimum annual increase of 5%
and other employee benefits provided from time to time to Rentrak's executives.
The agreement also provided for an initial option grant with respect to 20,000
shares of Rentrak common stock and for option grants as to an additional 7,500
shares each year. Upon termination of Mr. Thoenes's employment by reason of
death or disability, he or his estate will be entitled to a lump sum severance
payment equal to six months' salary. If Mr. Thoenes's employment is terminated
by Rentrak other than for cause within two years after a change in control of
Rentrak, or by Mr. Thoenes for good reason, he will be entitled to receive a
lump sum severance payment equal to one year's base salary or all base salary
payable during the remaining term of the agreement, whichever is less. If his
employment is terminated by Rentrak prior to a change in control or more than
two years after a change of control for reasons other than death, disability or
cause, he will be entitled to a lump sum severance payment equal to one year's
base salary. Upon termination for any reason other than cause, Mr. Thoenes's
options will vest in full to the extent not otherwise vested.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The "Report of the Compensation Committee on Executive Compensation" shall
not be deemed incorporated by reference by any general statement incorporating
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that Rentrak
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The Compensation Committee of Rentrak is charged with determining the
compensation of all executive officers of Rentrak. These decisions are based on
Rentrak's executive compensation philosophy. This compensation philosophy has
four primary principles: (i) linking executive compensation to the creation of
sustainable increases in shareholder value; (ii) providing executive
compensation rewards contingent upon organizational performance; (iii)
differentiating compensation based on individual contribution; and (iv)
encouraging the retention of an experienced management team.
To implement this philosophy, executive compensation has been comprised of
three primary components - annual salary, performance bonuses and a long-term
incentive program consisting of stock option grants. Ownership of shares of
Rentrak's common stock by executives is encouraged and forms a significant
component of the total executive compensation package. In addition, competitive
factors are considered in determining executive compensation.
Annual Salary
Rentrak has entered into employment agreements with its executive
officers, including all of the officers named in the Summary Compensation Table
above, which typically establish a base annual salary rate and may provide for
annual increases in salary during the term of the agreement. Base salary rates
reflect the level of duties and responsibilities of each executive officer, the
executive officer's experience and prior performance, and competitive factors in
Rentrak's industry.
-16-
Performance Bonuses
Rentrak has a discretionary bonus program pursuant to which performance
bonuses are considered following the end of each fiscal year. No performance
bonuses were awarded to executive officers under this program for services
during fiscal 2004. Kenneth Papagan, executive vice president, received a
$60,000 bonus under the terms of his employment agreement in effect until
December 31, 2003. Mark Thoenes, Rentrak's chief financial officer, was awarded
a $50,000 bonus in connection with his services relating to the asset sale and
termination of operations of Rentrak's former subsidiary 3PF.COM, Inc.
Long-Term Incentive Program
Stock option grants are used to motivate employees to focus on Rentrak's
long-term performance, and Rentrak has long maintained stock option plans for
key employees, including all executive officers. In some instances, stock
options are granted as required by the terms of an officer's employment
agreement. The size of each option grant is based upon such factors as the
employee's duties, responsibilities, performance, experience and anticipated
contribution to Rentrak.
Stock options are typically awarded to executive officers on an annual
basis. Additional grants may be made in the event of an executive officer's
promotion. In fiscal 2004, Rentrak granted options to purchase a total of
162,500 shares of common stock to its executive officers, including the grants
shown in the table under "Stock Option Grants" above.
Compensation of Paul A. Rosenbaum, Chairman and Chief Executive Officer
Effective October 2001, Rentrak entered into an employment agreement with
Paul Rosenbaum, Chairman and Chief Executive Officer, which, as extended
annually, has a current expiration of September 30, 2005. The agreement with Mr.
Rosenbaum provided for an initial annual base salary of $450,000. The
Compensation Committee approved a 2% increase in Mr. Rosenbaum's salary for
fiscal 2004. The salary level was established based on Mr. Rosenbaum's prior
work experience and expectations and compensation levels at companies of similar
size and scope.
In August 2003, the Compensation Committee approved the grant to Mr.
Rosenbaum of a stock option for 50,000 shares with a ten-year term, vesting in
full one year after the date of grant, and an exercise price of $6.89 per share.
The fair market value of Rentrak's common stock on the date of grant was $6.79.
The Compensation Committee approved the option grant to Mr. Rosenbaum in
furtherance of its objective of aligning the economic interests of Rentrak's
executive officers with the interests of shareholders.
Submitted by the Compensation Committee of the Board of Directors:
James Petcoff (Committee Chair) Cecil Andrus
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF RENTRAK
CORPORATION, NASDAQ MARKET INDEX, AND PEER GROUP
The chart on the next page compares the five year cumulative total return
on Rentrak's common stock with that of the NASDAQ Market index, and a group of
peer companies selected by Rentrak. The chart assumes $100 was invested on April
1, 1996 in Rentrak's common stock, the NASDAQ Market index, and the peer group,
and that any dividends were reinvested. The peer group is composed of the
companies within the video distribution business as follows: Hastings
Entertainment, Inc., Blockbuster, Inc., Hollywood Entertainment Corp., and Movie
Gallery, Inc. Three companies included in the peer group used to prepare the
stock performance chart included in Rentrak's proxy statement for its 2003
annual meeting have been excluded from this year's peer group for the following
reasons: Big Star Entertainment, Inc., because it has ceased operations; Valley
Media, Inc., because it has been the subject of bankruptcy proceedings since
November 2001 and its stock is trading for less than $.01 per share; and PFSWeb,
Inc., because it provides logistics, fulfillment and related services that
Rentrak ceased to provide when its subsidiary 3PF.COM, Inc. ceased operations in
July 2003.
-17-
The following chart shall not be deemed incorporated by reference by any
general statement incorporating this proxy statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that Rentrak specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
March 2004
[GRAPHIC OMITTED]
Measurement Period NASDAQ Rentrak-Selected
(Fiscal Year Covered) Rentrak Corp. Market Index Peer Group
Measurement PT - 3/29/99 $100.00 $100.00 $100.00
3/31/00 $195.56 $186.24 $ 60.50
3/31/01 $131.11 $ 75.12 $ 78.44
3/31/02 $248.90 $ 75.58 $151.01
3/31/03 $182.76 $ 55.20 $119.17
3/30/04 $311.83 $ 82.57 $119.88
-18-
REPORT OF THE AUDIT COMMITTEE
The "Report of the Audit Committee" shall not be deemed incorporated by
reference by any general statement incorporating this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that Rentrak specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
In discharging its responsibilities, the Audit Committee and its
individual members have met with management and Rentrak's independent auditors,
KPMG LLP, to review Rentrak's accounting functions and the audit process. The
Audit Committee discussed and reviewed with Rentrak's independent auditors the
audited financial statements for fiscal 2004 and all other matters that the
independent auditors were required to communicate and discuss with the Audit
Committee under applicable auditing standards, including those described in
Statement on Auditing Standards No. 61, as amended, regarding communications
with audit committees. Audit Committee members also discussed and reviewed the
results of the independent auditors' examination of the financial statements,
issues relating to the quality and adequacy of the Company's internal controls,
and issues relating to auditor independence. The Audit Committee has received
the written disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and has discussed with the independent auditors their independence.
Based on its review and discussions with management and the independent
auditors, the Audit Committee recommended to the board of directors that the
audited financial statements for the fiscal year ended March 31, 2004, be
included in Rentrak's Annual Report on Form 10-K for filing with the Securities
and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:
Cecil Andrus (Committee Chair) James Petcoff Stanford Stoddard
SELECTION OF INDEPENDENT AUDITORS
Until May 9, 2002, Rentrak's independent public accountants for several
years were Arthur Andersen LLP. On May 9, 2002, based upon a recommendation of
the Audit Committee, the board of directors approved the dismissal of Arthur
Andersen LLP as its independent public accountants. Arthur Andersen LLP's
reports on the consolidated financial statements of Rentrak and subsidiaries for
the fiscal years ended March 31, 2000, and March 31, 2001, did not contain an
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles or practices, financial
statement disclosure or auditing scope or procedure, or any reportable events as
defined under Item 304(a)(1)(v) of Regulation S-K promulgated by the Securities
and Exchange Commission. A copy of a letter addressed to the Securities and
Exchange Commission from Arthur Andersen LLP stating that it agrees with the
above statements was attached as Exhibit 16 to Form 8-K filed by Rentrak with
the Securities and Exchange Commission on May 10, 2002.
Also on May 9, 2002, based upon a recommendation of the Audit Committee
and approval of the board of directors, the firm of KPMG LLP was engaged to be
Rentrak's independent auditors. From March 31, 1999 until May 9, 2002, Rentrak
had not consulted KPMG LLP with respect to the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on Rentrak's financial statements, or
concerning any disagreement or reportable event with Arthur Andersen LLP.
Rentrak's independent auditors for the fiscal year ended March 31, 2004,
were KPMG LLP. A representative of KPMG LLP is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if he or she
desires to do so. Such representative is also expected to be available to
respond to appropriate questions.
As of the date of this proxy statement, the Audit Committee had not yet
selected independent auditors to examine the financial statements of Rentrak for
the fiscal year ending March 31, 2005, because the Audit Committee determined to
defer its consideration of this issue until the audit of Rentrak's fiscal 2004
financial statements was
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completed, which did not occur until July 9, 2004. No approval or ratification
of the choice of independent auditors by the shareholders is required by
applicable law or regulation or Rentrak's governing documents.
MATTERS RELATING TO OUR AUDITORS
Fees Paid to Principal Independent Auditors
The following fees were billed by KPMG LLP for professional services
rendered to Rentrak in fiscal 2003 and 2004:
2003 2004
---- ----
Audit Fees(1) $213,078 $365,400
Audit Related Fees(2) -- --
Tax Fees(3) 101,449 100,685
All Other Fees(4) 57,711 13,500
(1) Consists of fees for professional services rendered for the audit of
Rentrak's annual financial statements for fiscal 2003 and 2004 and for
review of financial statements included in quarterly reports on Form 10-Q
for those fiscal years.
(2) Refers to assurance and related services that are reasonably related to
the audit or review of Rentrak's financial statements or internal control
over financial reporting and that are not included in audit fees.
(3) Consists of services rendered in connection with income tax consulting,
planning, and return preparation.
(4) Consists of consulting services relating to Rentrak's executive
compensation program.
Amounts for fiscal 2003 have been adjusted to include amounts that were billed
after the date of the proxy statement for the 2003 annual meeting and to conform
to the revised categories required by the SEC's disclosure rules in effect for
fiscal 2004.
Pre-Approval Policy
The Audit Committee has adopted a policy requiring pre-approval of all
fees and services of Rentrak's independent auditors, including all audit,
audit-related, tax, and other legally-permitted services. Under the policy, a
detailed description of each proposed service is submitted to the Audit
Committee, together with a statement by the independent auditors and Rentrak's
chief financial officer or controller that such services are consistent with
applicable rules on auditor independence. The policy permits the Audit Committee
to pre-approve lists of audit, audit-related, tax, and other legally-permitted
services after reviewing detailed back-up documentation regarding the specific
services to be provided. The term of any pre-approval is 12 months, unless the
Audit Committee specifically provides for a shorter period. Additional
pre-approval is required for services not included in the pre-approved lists and
for services exceeding pre-approved fee levels. The policy allows the Audit
Committee to delegate its pre-approval authority to one or more of its members
provided that a full report of any pre-approval decision is provided to the
Audit Committee at its next scheduled meeting. All audit and permissible
non-audit services provided by KPMG LLP during fiscal 2004 were pre-approved by
the Audit Committee.
FINANCIAL INFORMATION
A copy of Rentrak's 2004 Annual Report on Form 10-K, including audited
financial statements, is being sent to shareholders with this proxy statement.
-20-
INFORMATION CONCERNING THE SOLICITATION
Rentrak will bear all costs and expenses associated with this
solicitation. In addition to solicitation by mail, directors, officers, and
employees of Rentrak may solicit proxies from shareholders, personally or by
telephone, facsimile, or e-mail transmission, without receiving any additional
remuneration. Rentrak has asked brokerage houses, nominees and other agents and
fiduciaries to forward soliciting materials to beneficial owners of Rentrak
common stock and will reimburse all such persons for their expenses.
By Order of the Board of Directors,
F. Kim Cox
President and Secretary
Portland, Oregon
July 23, 2004
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APPENDIX A
RENTRAK CORPORATION
AUDIT COMMITTEE CHARTER
(as amended June 25, 2004)
Purpose of the Audit Committee
The Audit Committee is appointed by the Board of Directors (the "Board")
of Rentrak Corporation (the "Company") to assist the Board in fulfilling its
responsibility to oversee management's conduct of the Company's accounting and
financial reporting processes, including oversight of (a) the integrity of the
financial statements and other financial information the Company provides to any
governmental or regulatory body, the public or other users thereof, (b) the
Company's systems of internal accounting and financial controls, and (c) the
independence and the performance of the Company's independent accountants in
regard to the annual independent audit of the Company's financial statements.
Authority of the Audit Committee
In discharging its oversight role, the Audit Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose.
The Board and the Audit Committee are in place to represent the Company's
shareholders; accordingly, the outside auditors are ultimately accountable to
the Board and the Audit Committee.
The Audit Committee shall review the adequacy of this Charter on an annual
basis.
Committee Membership and Qualifications
Each member of the Audit Committee shall meet the independence
requirements adopted by the Company for independent directors. Members of the
Audit Committee shall also meet the independence, financial literacy, and other
requirements set forth in Rule 4350(d)(2)(A)(i)-(iv) of the listing standards
for companies quoted on The Nasdaq Stock Market. At least one Audit Committee
member shall meet the requirements of an "audit committee financial expert" as
defined in the Securities and Exchange Commission's (SEC's") rules.
Appointment and Removal of Committee Members
The Audit Committee shall be comprised of at least three members of the
Board, appointed annually or as necessary to fill vacancies, by a majority vote
of all the directors then in office on the recommendation of the Nominating and
Governance Committee. Each member shall serve until his or her successor is duly
elected and qualified or until such member's earlier resignation or removal. Any
member of the Audit Committee may be removed, with or without cause, by a
majority vote of all the directors then in office.
Chair
The Board shall appoint the Chair of the Audit Committee on the
recommendation of the Nominating and Governance Committee. The Chair will chair
all meetings of the Audit Committee and, in consultation with the Chairman of
the Board other than for executive sessions, set the agendas for Audit Committee
meetings.
Funding
The Audit Committee shall have the authority to determine and receive from
the Company the amount of funding required for (1) compensation to any
registered public accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review, or attestation
services for the Company, (2) compensation to independent and other advisers
retained by the Audit Committee, and (3) ordinary administrative expenses for
the Audit Committee in carrying out its responsibilities.
A-1
Key Responsibilities
The Audit Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditors are responsible for auditing those
financial statements. Additionally, the Audit Committee recognizes that the
Company's financial management, as well as the outside auditors, have more time,
knowledge and more detailed information about the Company than do Committee
members. Consequently, in carrying out its oversight responsibilities, the Audit
Committee is not providing any expert or special assurance as to the Company's
financial statements or any professional certification as to the outside
auditors' work.
The following functions shall be the common recurring activities of the
Audit Committee in carrying out its oversight functions. These functions are set
forth as a guide with the understanding that the Audit Committee may diverge
from this guide as appropriate given the circumstances. The Audit Committee
shall:
1. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
2. Be directly responsible for the appointment, compensation, retention,
and oversight of the work of the Company's outside auditors and other
registered public accounting firms engaged for the purposes of
performing any audit, review, or attestation services for the Company.
All firms retained by the Audit Committee must report directly to the
Audit Committee.
3. Approve all fees and services (including audit and permissible
non-audit services) of the Company's outside auditors and any other
public accounting firm engaged by the Audit Committee. All such
services should be approved in advance of their performance pursuant
to policies established by the Audit Committee. The Audit Committee
may delegate authority to grant pre-approvals to one of its members,
provided that full details of such pre-approval are presented to the
full Audit Committee at its next meeting.
4. Establish procedures for (a) the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal
controls, or auditing matters, and (b) the confidential, anonymous
submission by employees of the Company of concerns regarding
questionable accounting or auditing matters and administer the
Company's Financial Integrity and Nonretaliation Policy.
5. Review and discuss with management and outside auditors the annual
audited financial statements, including major issues regarding or
changes in accounting and auditing principles, standards and
practices, as well as the adequacy of internal controls that could
significantly affect the Company's financial statements.
6. Review analyses prepared by management and the outside auditors of
significant financial reporting issues and judgments made in
connection with the preparation of the Company's financial statements.
7. Review and discuss with management and the outside auditors, as
appropriate, earnings press releases and other financial information
that the Company proposes to disclose publicly.
8. Review and discuss with management and the outside auditors the
Company's quarterly and annual financial reports, including
specifically the "MD&A" section, prior to the filing of the Quarterly
Reports on Form 10-Q and the Annual Report on Form 10-K.
9. Review and discuss with management and the outside auditors, as
appropriate, the Company's system of internal controls and the results
of both internal and external audits of such controls.
10. Meet periodically with management to review the Company's major
financial risk exposures and the plans management has in place to
monitor and control such exposures.
A-2
11. Receive written statements from the outside auditors regarding their
independence consistent with Independence Standards Board Standard 1.
Discuss the contents of such statements, including any relationships
or services that may impact the objectivity or independence of the
auditors, with the auditors, and if determined necessary by the Audit
Committee, take actions or make recommendations that the full Board
take appropriate action to oversee the independence of the auditors.
12. Evaluate, together with the Board, the performance of the outside
auditors and, if determined necessary by the Audit Committee,
recommend that the Board replace the outside auditors.
13. Obtain assurance from the outside auditors that no action or
disclosure is required with respect to the Company's financial
statements under Section 10A of the Securities Exchange Act of 1934.
14. Discuss with the outside auditors the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of
the audit.
15. Review with the outside auditors any problems or difficulties the
auditors may have encountered and any management letter provided by
the outside auditors and the Company's response to such letter.
16. Approve and submit the audit committee report required by the SEC's
rules to be included in the Company's annual proxy statement.
17. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations relating to
the Company's status as a public company.
18. Review with the Company's outside legal counsel, legal matters that
may have a material impact on the Company's financial statements, the
Company's compliance policies and any material reports or inquiries
received from regulators or government agencies.
19. Meet at least annually with the Chief Financial Officer, the
Controller, any internal auditing staff and the outside auditors in
separate sessions.
20. Review for potential conflicts of interest and determine whether or
not to approve any transaction by the Company with a director, officer
or shareholder (including transactions with family members or
associates of such persons) that would be required to be disclosed in
the Company's annual proxy statement by the SEC's disclosure rules.
21. Modify, interpret, apply and administer the Company's Code of Business
Conduct, including the Code of Ethics for Senior Financial Officers.
Review requests for waivers and reports of violations of the Company's
Code of Business Conduct or Code of Ethics for Senior Financial
Officers presented to the Audit Committee in accordance with those
documents.
A-3
RENTRAK CORPORATION
2004 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RENTRAK
CORPORATION ("RENTRAK").
The undersigned hereby appoints each of Paul A. Rosenbaum and F. Kim Cox
as proxies, with full power of substitution, and hereby authorizes them to
represent and to vote as designated below, all the shares of Rentrak common
stock held of record by the undersigned on June 25, 2004, at the annual meeting
of the shareholders to be held at Rentrak's executive offices, One Airport
Center, 7700 N.E. Ambassador Place, Portland, Oregon 97220, on August 24, 2004,
at 10 a.m., Pacific Daylight Time, or any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS PROVIDED, THE PROXIES NAMED
ABOVE WILL VOTE FOR EACH DIRECTOR NOMINEE NAMED IN PROPOSAL 1.
--------------------------------------------------------------------------------
Proposal 1: Election of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
NAMED BELOW.
Nominees: Judith G. Allen, Cecil D. ___ FOR election ___ WITHHOLD
Andrus, George H. Kuper, Paul A. of all director vote from all
Rosenbaum, Ralph R. Shaw, Stanford C. nominees (except nominees
Stoddard as noted below)
To withhold authority to vote for any individual nominee, identify the nominee
in the space below:
Exceptions:____________________________________________________________________
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please date and sign exactly as name appears hereon. When shares are held
as joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: _____________________, 2004
Signature____________________ Signature if held jointly___________________
Please mark, sign, date and return the proxy using the enclosed envelope.