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
		Check the appropriate box:

	o		Preliminary Proxy Statement
	o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
	þ		Definitive Proxy Statement
	o		Definitive Additional Materials
	o		Soliciting Material Pursuant to § 240.14a-12

infoGROUP Inc.

Payment of Filing Fee (Check the appropriate box):

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	o		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)		Title of each class of securities to which transaction applies:
	(2)		Aggregate number of securities to which transactions applies:
	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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	o		Fee paid previously with preliminary materials.
	o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

	(1)		Amount Previously Paid:
	(2)		Form, Schedule or Registration Statement No.:
	(3)		Filing Party:
	(4)		Date Filed:

 

infoGROUP INC.

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 23, 2008

 

TO THE STOCKHOLDERS:

 

NOTICE IS HEREBY GIVEN that the 2008 Annual Meeting of Stockholders (the “Annual Meeting”) of infoGROUP Inc., a Delaware corporation (the “Company”), will be held on October 23, 2008, at 3:00 p.m. local time, at the Company’s facility located at 951 Mariners Island Blvd., Suite #300, San Mateo, CA 94404, for the following purposes, as more fully described in the Proxy Statement accompanying this Notice:

 

1. To elect three directors to the Board of Directors for a term of three years;

 

2. To approve an amendment to the infoUSA Inc. 2007 Omnibus Incentive Plan to clarify the number of shares of the Company common stock reserved for issuance thereunder; and

 

3. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

 

Only stockholders of record at the close of business on September 19, 2008 are entitled to receive notice of and to vote at the Annual Meeting.

 

All stockholders are cordially invited to attend the Annual Meeting in person. However, to assure your representation at the Annual Meeting, you are urged to mark, sign, date and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope included for that purpose. Stockholders attending the Annual Meeting may vote in person even if they have previously returned a proxy.

 

Sincerely,

 

John H. Longwell

Secretary

 

Omaha, Nebraska

September 23, 2008

 

 

TABLE OF CONTENTS

 

 

 

infoGROUP INC.

 

 

 

 

PROXY STATEMENT

 

 

 

 

 

General

 

The enclosed proxy is solicited on behalf of infoGROUP Inc., a Delaware corporation (“we” or the “Company”), for use at its 2008 Annual Meeting of Stockholders to be held on October 23, 2008, at 3:00 p.m., local time, or at any adjournments or postponements thereof (the “Annual Meeting”), for the purposes set forth in this Proxy Statement and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the Company’s facility located at 951 Mariners Island Blvd., Suite #300, San Mateo, CA 94404. The Company’s telephone number is (402) 593-4500.

 

These proxy solicitation materials are being mailed on or about September 30, 2008, to all stockholders entitled to vote at the Annual Meeting. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, including audited financial statements (the “2007 Form 10-K”), is being mailed to stockholders concurrently with this Proxy Statement.

 

Record Date; Outstanding Shares

 

Stockholders of record at the close of business on September 19, 2008 (the “Record Date”) are entitled to receive notice of and vote at the Annual Meeting. On the Record Date, 56,875,262 shares of the Company’s common stock, $.0025 par value per share, were issued and outstanding. For information regarding beneficial ownership of the Company’s common stock by directors, executive officers and holders of more than five percent of the outstanding common stock, see the “Security Ownership” section of this Proxy Statement.

 

Proxies; Revocability of Proxies

 

The persons named as the proxy holders, Fred Vakili and Stormy L. Dean (the “proxy holders”), were selected by the Company’s Board of Directors (the “Board of Directors”) and are officers of the Company. All properly executed proxies returned in time to be counted at the Annual Meeting will be voted. All proxies will be voted in accordance with the stockholders’ instructions, and if no choice is specified, the proxy holders will vote the proxies received by them (i) in favor of the nominees named in this Proxy Statement and (ii) in favor of the amendment to the infoUSA Inc. 2007 Omnibus Incentive Plan. The proxy holders are authorized to vote, in their discretion, with respect to such other matters as may be properly brought before the Annual Meeting or any adjournment thereof.

 

Proxies given pursuant to this solicitation may be revoked at any time before they are voted at the Annual Meeting or any adjournment thereof by delivering written notice of revocation to the Secretary of the Company or by executing a later dated proxy. Stockholders also may revoke such proxies by attending the Annual Meeting and voting in person, although attendance at the Annual Meeting will not, in and of itself, constitute revocation of a proxy. See also the “How to Vote” section of this Proxy Statement.

 

Voting and Solicitation

 

The presence in person or by proxy of holders of a majority of the outstanding shares of stock entitled to vote at the Annual Meeting constitutes a quorum for the transaction of business. Every holder of record of common stock on the Record Date is entitled, for each share held, to one vote on each proposal or item that comes before the Annual Meeting. In the election of directors, each stockholder will be entitled to vote for three nominees and, if a quorum is present at the Annual Meeting, the three nominees with the greatest number of votes will be elected. If a quorum is present at the Annual Meeting, an affirmative vote of a majority of the shares represented at the Annual Meeting in person or by proxy and entitled to vote would be required for the approval of the amendment to the infoUSA Inc. 2007 Omnibus Incentive Plan.

The election inspectors will treat abstentions as shares that are present and entitled to vote for the purposes of determining whether a quorum is present. With respect to the election of directors (elected by a plurality of the votes), abstentions will not be taken into account in determining the outcome of the election. With respect to other matters being considered, abstentions will have the same effect as negative votes. If a broker indicates on the proxy card that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter and will not be taken into account in determining the outcome of the votes on that matter.

 

This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors. Original solicitation of proxies by mail may be supplemented by telephone or personal solicitation by directors, officers, or other regular employees of the Company. No additional compensation will be paid to directors, officers or other regular employees for their services. The Company will bear the entire cost of solicitation of proxies, including the fees and expenses payable to its professional proxy solicitor, which are described below, and the preparation, assembly, printing and mailing of this Proxy Statement, the Notice of the Annual Meeting, the enclosed proxy card and any additional information furnished to stockholders.

 

The Company has engaged the services of Morrow & Co. to solicit proxies and to assist in the distribution of proxy materials. In connection with its retention by the Company, Morrow & Co. has agreed to provide consulting and analytic services and to assist in the solicitation of proxies. The Company has agreed to pay Morrow & Co. for its services a fee of $8,500 plus reimbursement of reasonable out-of-pocket expenses.

 

Copies of solicitation materials will also be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of the Company’s common stock beneficially owned by others to forward to such beneficial owners. The Company may reimburse persons representing beneficial owners of the Company’s common stock for their costs of forwarding solicitation materials to the beneficial owners.

 

Deadlines for Receipt of Stockholder Proposals

 

The proxy rules of the Securities and Exchange Commission (the “SEC”) permit stockholders, after timely notice to a company, to present proposals for stockholder action in a company’s proxy statement where such proposals are consistent with applicable law, pertain to matters appropriate for stockholder action and are not properly omitted in accordance with the proxy rules. Stockholder proposals that are intended to be presented at the Annual Meeting must have been received by the Company no later than September 3, 2008 to be included in the proxy statement and form of proxy for the Annual Meeting. No stockholder proposals pursuant to the SEC proxy rules were received by the Company by the September 3, 2008 deadline. Any such proposal received after that date will be considered untimely and may be excluded from the Company’s proxy materials.

 

Stockholder proposals that are intended to be presented at the Company’s 2009 Annual Meeting must be received by the Company no later than June 2, 2009 to be considered for inclusion in the proxy statement and form of proxy for the 2009 Annual Meeting. However, in the event that the date of the 2009 Annual Meeting is changed by more than 30 days from the anniversary date of this year’s Annual Meeting, the deadline for providing the Company notice under the SEC rules will be a reasonable time before the Company begins to print and mail its proxy soliciting materials. It is currently expected that the 2009 Annual Meeting will be held in the spring of 2009.

 

The Company’s Bylaws provide that certain requirements be met for business to properly come before the stockholders at the Annual Meeting. Among other things, stockholders intending to bring business before the Annual Meeting must provide written notice of such intent to the Secretary of the Company. Such notice must be received by the Company no later than the close of business on the 10th day following the day on which notice of the date of the Annual Meeting was mailed or public disclosure of the same was made. The chairman of the Annual Meeting will declare that any business introduced at the Annual Meeting that did not comply with the advance notice requirement described in the preceding sentence was not properly brought before the Annual Meeting and shall not be transacted. Stockholders desiring to bring matters for action at an annual meeting should contact the Company’s Secretary for a copy of the relevant requirements.

 

Additionally, any stockholder intending to nominate candidates for membership on the Board of Directors must send written notice of such nomination to the Secretary of the Company at least 30, but no more than 60, days

prior to the Annual Meeting, with the submitting stockholder’s name, address and stockholdings and pertinent information about the proposed nominee similar to that set forth for nominees named herein. If notice or public disclosure of the date of the Annual Meeting is given or made less than 40 days prior to such date, such stockholder notice must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.

 

How to Vote

 

Even if you plan to attend the Annual Meeting you are encouraged to vote by proxy. You may vote by proxy in one of the following ways:

 

 

If you vote by the Internet or telephone, your electronic vote authorizes the proxy holders in the same manner as if you signed, dated and returned your proxy card. If you vote by the Internet or telephone, do not return your proxy card.

 

You may change your vote at any time before the proxy is exercised. If you voted by mail, you may revoke your proxy at any time before it is voted by executing and delivering a timely and valid later-dated proxy, by voting by ballot at the Annual Meeting or by giving written notice of revocation to the Secretary. If you voted by the Internet or telephone you may also change your vote with a timely and valid later Internet or telephone vote, as the case may be, or by voting by ballot at the Annual Meeting. Attendance at the Annual Meeting will not have the effect of revoking a proxy unless you give proper written notice of revocation to the Secretary before the proxy is exercised or you vote by written ballot at the Annual Meeting.

 

General

 

The Board of Directors presently consists of ten directors and is divided into three classes with the term of office of one class expiring each year. The Company presently has two classes of three directors each and one class of four directors. The terms of office of Bernard W. Reznicek, John N. Staples III and Clifton T. Weatherford expire at this year’s Annual Meeting. The terms of Vinod Gupta, Dr. George F. Haddix and Dr. Vasant H. Raval expire at the 2009 Annual Meeting. The terms of Robin S. Chandra, Bill L. Fairfield, Elliot S. Kaplan and George Krauss expire at the 2010 Annual Meeting.

 

As part of a Stipulation of Settlement, dated August 20, 2008 (the “Stipulation of Settlement”), entered into by the parties in the consolidated complaint In re infoUSA, Inc. Shareholders Litigation, Consol. Civil Action No. 1956-CC (Del. Ch.) (the “Derivative Litigation”) filed in the Court of Chancery for the State of Delaware in and for New Castle County (the “Court”), Drs. Haddix and Raval submitted to the Company their resignations from the Board. Their resignations are subject to and will become effective on the date on which the Court’s order approving the Stipulation of Settlement (if such approval occurs) and dismissing with prejudice the Derivative Litigation becomes final. Also, as part of the Stipulation of Settlement, Mr. Kaplan has agreed to step down from the Board of Directors on the date of the 2009 Annual Meeting or June 30, 2009, whichever occurs first. For more information on the Derivative Litigation, please refer to the 2007 Form 10-K. For more information on the Stipulation of Settlement, please refer to the Form 8-K/A filed by the Company with the SEC on August 22, 2008 (the “Form 8-K/A”).

 

The Company is proposing that the stockholders re-elect the three directors whose terms expire this year (Bernard W. Reznicek, John N. Staples III and Clifton T. Weatherford), for terms expiring at the 2011 Annual Meeting.

 

Vote Required

 

The three nominees receiving the highest number of affirmative votes of the shares represented at the Annual Meeting in person or by proxy and entitled to vote will be elected to the Board of Directors. Proxies cannot be voted for a greater number of persons than the number of directors to be elected.

 

Unless otherwise instructed, the proxy holders will vote the proxies received for the election of the Company’s three nominees named below. If any nominee of the Company is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who is designated by the Board of Directors to fill the vacancy. It is not expected that any nominee will be unable or will decline to serve as a director.

THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” EACH NOMINEE LISTED BELOW

 

Nominees for Election at the Annual Meeting

 

The names of the Company’s nominees, and certain information about them, are set forth below. The directors’ ages are as of August 31, 2008:

 

 

 

 

Bernard W. Reznicek has served as a director of the Company since March 2006 and as Chairman of the Board since August 20, 2008. Mr. Reznicek is currently President and Chief Executive Officer of Premier Enterprises Inc., a consulting, investment and real estate development company. Mr. Reznicek was National Director-Special Markets of Central States Indemnity Company, a specialty insurance company that is a member of the Berkshire Hathaway Insurance Group, from January 1997 until January 2003. He served as Dean of the College of Business of Creighton University in Omaha, Nebraska from July 1994 until January 1997 and served as Chairman and Chief Executive Officer of Boston Edison, a utility company, from September 1987 to July 1994. He serves as the Chairman of the Board of Directors of CSG Systems International, Inc. and is a director of Pulte Homes, Inc. Mr. Reznicek holds a B.S. in Business Administration from Creighton University and an M.B.A. from the University of Nebraska.

 

John N. Staples III has served as a director of the Company since November 2007. He is an attorney practicing in San Francisco, California. Mr. Staples is a former director of Valley National Bank, of Salinas, California, a subsidiary of Household International Inc., and of Household Bank, FSB, also a subsidiary of Household International, Inc. He is a graduate of Trinity College and Pepperdine University School of Law. Mr. Staples was a helicopter pilot in the United States Marine Corps, serving in Vietnam in 1970-1971. He is a retired Lieutenant Colonel in the United States Air Force Reserves.

 

Clifton T. Weatherford has served as a director of the Company since December 2007, when he was appointed to the Board of Directors in connection with the formation of the Special Litigation Committee. Mr. Weatherford retired in January 2003 as Executive Vice President and Chief Financial Officer of Business Objects S.A. With over 37 years of experience in the global technology industry, Mr. Weatherford has held senior financial positions at NETCOM On-Line Communication Services, Logitech, Texas Instruments, Schlumberger and Tandem Computers in the U.S., Europe and Japan. He currently serves on the boards of Tesco Corporation, Advanced Analogic Technologies, SMART Modular Technologies, Mellanox Technologies and several private companies. In 2003, Mr. Weatherford was instrumental in leading Peregrine Software to emerge from Chapter 11. He has also served as a panelist for The National Association of Corporate Directors, The National Investor Relations Institute, Pillsbury

Winthrop/Ernst & Young and the KPMG Audit Committee Institute. In July 2007, Mr. Weatherford was named by SEC Chairman Christopher Cox to the newly created Federal Advisory Committee on Improvements to Financial Reporting.

 

Incumbent Directors Whose Terms of Office Continue after the Annual Meeting

 

The names and certain other information about the directors whose terms of office continue after the Annual Meeting are set forth below. The directors’ ages are as of August 31, 2008:

 

 

 

 

Bill L. Fairfield was appointed Chief Executive Officer of the Company on August 20, 2008 and served as Chairman of the Board from July 16, 2008 to August 20, 2008. He has served as a director of the Company since November 2005. Mr. Fairfield is also currently the Chairman of DreamField Inc., a company focused on economic development of the Mid-Plains region through management services and venture capital assistance. He currently serves on the Board of Directors of The Buckle, Inc., a retailer of casual apparel, footwear and accessories for young men and women based in Kearney, Nebraska. From 2002 to 2004, Mr. Fairfield was the Executive Vice President of Sitel Corporation, a global provider of outsourced customer support services based in Omaha, Nebraska, and from 1991 to 2000, Mr. Fairfield was President and Chief Executive Officer of Inacom Corp., an Omaha-based technology management services company. Prior to 1991 Mr. Fairfield was Chief Executive Officer of Valcom, the predecessor company to Inacom Corp. Mr. Fairfield holds a B.S. in Industrial Engineering from Bradley University and an M.B.A. from the Harvard Graduate School of Business.

 

Robin S. Chandra has served as a director of the Company since December 2007, when he was appointed to the Board of Directors in connection with the formation of the Special Litigation Committee. Mr. Chandra is a Partner at Bessemer Venture Partners, a global investment group with offices in Silicon Valley, Boston, New York, Israel, Mumbai and Shanghai. Since entering the venture capital industry in 1996, Mr. Chandra has been involved in 19 early-stage investments that have gone public or have been acquired by public companies. Prior to joining Bessemer, Mr. Chandra served at Commonwealth Capital Ventures, McKinsey & Company, Accenture, IBM and Lucky Stores. Mr. Chandra holds an M.B.A. from the Harvard Graduate School of Business and a B.A. from the University of California at Berkeley.

Vinod Gupta founded the Company in February 1972 and served as Chairman of the Board of Directors from its incorporation until July 16, 2008. Mr. Gupta served as Chief Executive Officer of the Company from the time of its incorporation until September 1997 and from August 1998 until August 20, 2008. Mr. Gupta holds a B.S. in Engineering from the Indian Institute of Technology, Kharagpur, India, and an M.S. in Engineering and an M.B.A. from the University of Nebraska. Mr. Gupta also was awarded an Honorary Doctorate from the Monterey Institute of International Studies, an Honorary Doctorate from the University of Nebraska and an Honorary Doctorate from the Indian Institute of Technology. Mr. Gupta was nominated and confirmed to be the United States Consul General to Bermuda. Then President Clinton nominated him to be the United States Ambassador to Fiji. Due to business commitments, he withdrew his name from consideration. He was appointed by President Clinton to serve as a Trustee of the Kennedy Center for the Performing Arts in Washington, D.C. Mr. Gupta is also a director of a mutual fund in the Everest mutual fund family.

 

Dr. George F. Haddix has served as a director of the Company since March 1995. As described above, Dr. Haddix has submitted a letter of resignation from the Board to the Company, which resignation is subject to and will become effective on the date on which the Court’s order approving the Stipulation of Settlement (if such approval occurs) and dismissing with prejudice the Derivative Litigation becomes final. Dr. Haddix is Chairman and Chief Executive Officer of PKW Holdings, Inc. and PKWARE, Inc., computer software companies headquartered in Milwaukee, Wisconsin. From November 1994 to December 1997, he served as President of CSG Holdings, Inc. and CSG Systems International, Inc., companies providing software and information services to the communications industry. Dr. Haddix holds a B.A. from the University of Nebraska, an M.A. from Creighton University and a Ph.D. from Iowa State University, all in Mathematics.

 

Elliot S. Kaplan has served as a director of the Company since May 1988. As described above, Mr. Kaplan has agreed to step down from the Board on the date of the 2009 Annual Meeting or June 30, 2009, whichever occurs first. He is a named partner and former Chairman of the Executive Board of the law firm of Robins, Kaplan, Miller & Ciresi L.L.P. and has practiced law continuously with that firm since 1961. He is also a director and officer of Best Buy Co., Inc. Mr. Kaplan is Chairman of the University of Minnesota Foundation, Chairman of the Board of Directors of the Bank of Naples and a director of the Minnesota Historical Society. Mr. Kaplan holds a B.A. in Business Administration and a J.D. from the University of Minnesota.

 

George Krauss has served as a director of the Company since December 2007, when he was appointed to the Board of Directors in connection with the formation of the Special Litigation Committee. Mr. Krauss has been a consultant to The Burlington Capital Group LLC (formerly known as America First Companies, L.L.C.) (“Burlington”) since 1997. From 1972 to 1997, Mr. Krauss practiced law with Kutak Rock LLP in Omaha, Nebraska, serving as such firm’s managing partner from 1983 to 1993 and continues to be Of Counsel to such firm. Mr. Krauss has extensive experience in corporate, mergers and acquisition and regulatory matters. In addition to his legal education, Mr. Krauss has an M.B.A. and is a registered Professional Engineer. Mr. Krauss currently serves as a member of the board of directors of MFA Mortgage Investments, Inc., which is listed on the NYSE, and as a member of the board of managers of Burlington, which is the general partner of America First Tax Exempt Investors LP, which is listed on the NASDAQ.

 

Dr. Vasant H. Raval has served as a director of the Company since October 2002. As described above, Dr. Raval has submitted a letter of resignation from the Board to the Company, which resignation is subject to and will become effective on the date on which the Court’s order approving the Stipulation of Settlement (if such approval occurs) and dismissing with prejudice the Derivative Litigation becomes final. Dr. Raval is a Professor in the Department of Accounting at Creighton University and was the Chair of the department from July 2001 to June 2006. He joined the Creighton University faculty in 1981 and has served as Professor of Accounting and Associate Dean and Director of Graduate Programs at the College of Business Administration. Dr. Raval is a director of Syntel Inc., an electronic business solutions provider based in Troy, Michigan. Dr. Raval holds a Bachelor of Commerce degree from the University of Bombay, an M.B.A. from Indiana State University and a Doctor of Business Administration degree from Indiana University.

Board Meetings and Committees

 

The Board of Directors met fourteen times during 2007, including seven telephonic meetings. In addition, the Board of Directors acted three times by written consent during 2007. Our independent directors have the opportunity to meet in an executive session following each regularly scheduled Board meeting. During 2007, our independent directors held seven executive sessions in which only the independent directors participated.

 

The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The duties of each committee are described below. The Board of Directors has determined that the following members of the Board and nominees for election to the Board are independent as defined by the rules of the Financial Industry Regulatory Authority (“FINRA”) for companies listed on the NASDAQ Global Select Market: Robin S. Chandra, Dr. George F. Haddix, George Krauss, Dr. Vasant H. Raval, Bernard W. Reznicek and Clifton T. Weatherford.

 

The Audit Committee currently consists of Clifton T. Weatherford (Chair), Bernard W. Reznicek and George Krauss. During 2007, the Audit Committee, which consisted of Dr. Vasant H. Raval (Chair), Bill L. Fairfield, Anshoo S. Gupta and Bernard W. Reznicek, met eight times, including three telephonic meetings. Among other duties, the Audit Committee selects the Company’s independent auditors, reviews and evaluates significant matters relating to the audit and internal controls of the Company, reviews the scope and results of audits by, and the recommendations of, the Company’s independent auditors, and pre-approves all audit and permissible non-audit services provided by the auditors. Before the Company’s independent auditors are engaged by the Company to render audit or non-audit services, the engagement is approved by the Audit Committee. The Audit Committee Charter is posted on the Company’s website at www.infogroup.com under the caption “Investor Relations.” A report of the Audit Committee is also contained in this Proxy Statement. Each member of the Audit Committee is independent, as independence for audit committee members is defined by FINRA rules, and otherwise satisfies FINRA’s requirements for audit committee membership. The Audit Committee has determined that Bernard W. Reznicek and Clifton T. Weatherford are “audit committee financial experts” as that term is defined in Item 407(d)(5)(ii) of Regulation S-K.

 

The Compensation Committee currently consists of directors Bernard W. Reznicek (Chair), Robin S. Chandra and Clifton T. Weatherford. During 2007, the Compensation Committee, which consisted of Bernard W. Reznicek (Chair), Anshoo S. Gupta and Dennis P. Walker, met seven times, including two telephonic meetings. The Compensation Committee has been delegated the duties of establishing the compensation of the Company’s executive officers and administering existing and future stock and option plans of the Company, including the infoUSA Inc. 2007 Omnibus Incentive Plan. The details of determining the compensation of its executive officers are described in the “Compensation Discussion and Analysis” section of this Proxy Statement. The Compensation Committee Charter is posted on the Company’s website at www.infogroup.com under the caption “Investor Relations.” Each member of the Compensation Committee is independent, as defined by FINRA rules.

 

The Nominating and Corporate Governance Committee currently consists of George Krauss (Chair), Robin S. Chandra and Clifton T. Weatherford. During 2007, the Nominating and Corporate Governance Committee, which consisted of Bill L. Fairfield (Chair), Dr. George F. Haddix and Bernard W. Reznicek, met six times, including one telephonic meeting. The Nominating and Corporate Governance Committee identifies and recommends to the Board of Directors qualified director candidates, makes recommendations to the Board of Directors regarding board committee membership, establishes, implements, and monitors practices and processes regarding corporate governance matters, and makes recommendations regarding management succession planning. The Nominating and Corporate Governance Committee Charter is posted on the Company’s website at www.infogroup.com under the caption “Investor Relations.” Each member of the Nominating and Corporate Governance Committee is independent, as defined by FINRA rules.

 

The Nominating and Corporate Governance Committee identifies director candidates primarily by considering recommendations made by directors, management and stockholders. The Nominating and Corporate Governance Committee also has the authority to retain third parties to identify and evaluate director candidates and to approve any associated fees or expenses. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The criteria applied by the Nominating and Corporate Governance Committee in the selection of director candidates are the same whether the candidate was recommended by a Board

member, an executive officer, a stockholder, or a third party, and accordingly, the Board has not deemed it necessary to adopt a formal policy regarding consideration of candidates recommended by stockholders. Director candidates are evaluated on the basis of a number of factors, including the candidate’s background, skills, judgment, diversity, industry experience applicable to the Company’s business, experience with companies of comparable complexity and size, the interplay of the candidate’s experience with the experience of other Board members, the candidate’s independence or lack of independence, and the candidate’s qualifications for committee membership. The Nominating and Corporate Governance Committee does not assign any particular weighting or priority to any of these factors, and considers each director candidate in the context of the current needs of the Board as a whole. Upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has selected Bernard W. Reznicek, John N. Staples III and Clifton T. Weatherford as nominees for election as directors at the Annual Meeting. Messrs. Reznicek, Staples and Weatherford are incumbent directors.

 

Attendance at Board Meetings and Annual Meeting

 

All of the directors of the Company attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board of Directors on which they served at that time. Two directors attended the 2007 Annual Meeting of Stockholders.

 

Board Contact Information

 

If you would like to contact the Board of Directors or any committee of the Board of Directors, you can write to the Company, c/o Secretary, 5711 South 86th Circle, Omaha, Nebraska 68127. All communications will be compiled by the Secretary of the Company and submitted to the Board or the applicable committee or director on a periodic basis.

 

Code of Business Conduct and Ethics

 

The Company has adopted a Code of Business Conduct and Ethics that applies to all of its directors, officers and employees, including its principal executive officer, principal financial officer, and principal accounting officer. The Code of Business Conduct and Ethics is posted on the Company’s website at www.infogroup.com under the caption “Investor Relations.”

 

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis (“CD&A”) should be read in conjunction with the “Summary Compensation Table” and related discussion provided below. This CD&A has been updated since the filing of the 2007 Form 10-K that contained our initial CD&A. The term Named Executive Officers (“NEOs”) refers to the executive officers listed in the “Summary Compensation Table.” Our CD&A addresses the following items:

 

 

Overview of Executive Compensation

 

The Compensation Committee of our Board of Directors (the “Committee”) is responsible for establishing, implementing and monitoring the administration of our executive compensation programs in accordance with the

Company’s compensation philosophy and strategy, and for approving executive compensation and equity plan awards. The Committee seeks to reward the Company’s executive officers in a fair, reasonable and competitive manner. The compensation program consists of base salary, annual short-term incentives (both performance-based and discretionary), long-term equity-based incentive compensation (used from time to time), and personal benefits and perquisites.

 

During fiscal year 2007, the members of the Committee who determined the compensation of our executive officers for 2007 were Bernard W. Reznicek (Chair), Anshoo S. Gupta and Dennis P. Walker. In December 2007, Mr. Gupta passed away, and in January 2008, Mr. Walker resigned from the Board of Directors. Effective January 25, 2008, George F. Haddix and Robin S. Chandra were appointed to the Committee. Effective August 20, 2008, Dr. Haddix no longer serves as a member of the Committee. Effective September 12, 2008, Clifton T. Weatherford was appointed to the Committee.

 

How We Determine Executive Compensation

 

The Role of the Committee.  Executive compensation is determined by the Committee, which meets at least quarterly to consider issues relating to executive compensation. It draws on internal and external resources to provide necessary information and recommendations, as appropriate. In 2007, the Committee met six times (in February, April, June, July, September and October). Each year, the Committee reviews its Charter to ensure that it remains consistent with stockholder interests and good corporate governance principles. In 2007, the Committee engaged in the following activities related to executive compensation to ensure it carried out its responsibilities as outlined in the Charter:

 

 

In addition, each member of the Committee is a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act’) and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code.

 

For the benefit of our stockholders, the Compensation Committee Charter is posted on the Company’s website at www.infogroup.com under the caption “Investor Relations.”

 

The Role of Executive Officers.  In 2007, our former CEO reviewed the performance of each of the other NEOs. Based on this review, the former chief executive officer made compensation recommendations to the Committee, including recommendations for salary adjustments and annual cash incentives. Although the Committee considered these recommendations, it retained full discretion to set all compensation for the NEOs. The Committee has the discretion to invite the CEO to be present during the Committee’s deliberations on the compensation of the NEOs.

 

The Committee, in carrying out the responsibilities as outlined in its Charter, is wholly responsible for determining the compensation paid to our CEO. The CEO is not present during Committee deliberations on the compensation of the CEO.

 

The Role of the Compensation Consultant.  Under the Committee’s Charter, the Committee has the authority to retain consultants to aid in its duties from time to time. Pursuant to this authority, in 2007, the Committee retained

Pearl Meyer & Partners (“PM&P”), an outside executive compensation consulting firm. PM&P assists the Committee with the collection and interpretation of competitive market data and prevalence information with regard to executive compensation levels and executive compensation plan design. PM&P is engaged by, and reports directly to, the Committee. PM&P works with the Committee, in conjunction with management, to structure the Company’s compensation programs. In addition, PM&P periodically provides the Committee and management with market data on a variety of compensation-related topics. PM&P also participates in the executive session of Committee meetings where no members of Company management are present.

 

In 2007, PM&P provided the Committee with objective, independent counsel concerning the types and levels of compensation to be paid to the CEO and the other senior executives, including each of the NEOs. PM&P assisted the Committee by providing market compensation data (e.g., industry compensation surveys and benchmarking data) on base pay, as well as annual and long-term incentives.

 

As previously disclosed, the Special Litigation Committee adopted a number of remedial measures, which are described in greater detail in the Form 8-K/A. As part of the Special Litigation Committee’s remedial measures, the Committee will retain an independent compensation consultant to provide advice with respect to executive officer and director compensation.

 

Employment Agreements.  During 2008, the Committee plans to negotiate and approve employment agreements with the executive officers of the Company, including compensation terms commensurate with those of executive officers of similarly-situated companies.

 

Compensation Benchmarking.  It is crucial to our long-term performance that we are able to attract and retain a strong leadership team. To facilitate retention of executive officers, it is critical that we are able to offer compensation opportunities competitive with those available to them in equivalent positions in our industry or at other publicly-traded or similarly-situated companies. The Committee considers publicly-available information concerning executive compensation levels paid by other companies in our industry and in relevant labor markets as one factor in determining appropriate compensation levels.

 

Peer Group.  The Company primarily competes for talent in the information collection and distribution industry and benchmarks executive compensation levels against publicly-traded companies in this industry. In 2007, the Committee referred to the following peer group of publicly-traded companies in the information collection and distribution industry for benchmarking executive compensation.

 

 

This peer group was developed to reflect the size and growth profile of the Company. Data is generally size-adjusted as appropriate to account for the size of the companies in the peer group relative to the Company.

 

Other Market Comparisons.  PM&P also provides the Committee with competitive data from compensation surveys conducted by other compensation consulting firms. These surveys collect compensation information from hundreds of companies for different positions in a variety of industries. These compensation surveys were queried to analyze the types and levels of compensation paid to executive officers (with responsibilities similar to those of our executive officers) of companies comparable in size and growth profile to the Company.

 

The Committee considers the competitive data from the peer group and from the compensation surveys but does not rely on it exclusively in making decisions with regard to executive compensation levels. Because the Company does not rely on compensation surveys exclusively, the specific compensation survey participants were not material to our decisions regarding executive compensation. Finally, the Committee was not aware of any individual participant in these surveys.

Our Philosophy Regarding Executive Compensation

 

We believe that it is in the best interest of the Company and its stockholders to employ talented, committed, high-performing leaders who can sustain and improve the Company’s performance. We believe that executive compensation must serve to:

 

 

The Committee does not necessarily target a specific position within the external market (i.e., the 50th percentile) but rather evaluates total compensation within the context of a number of factors described in greater detail below.

 

Objectives of Executive Compensation Elements

 

Each NEO’s annual total compensation is composed of a mix of fixed and variable compensation elements, consisting of:

 

 

We expect that this mix can and should change from time to time as our business needs and objectives evolve, and as external business and market circumstances change. The Committee reviews the combined value of all of the elements of compensation awarded in previous years, both targeted and actual, when considering proposed compensation for the current year.

 

We believe that it is appropriate to take a holistic view of each executive officer’s total compensation opportunity and review it annually on a prospective basis. The Company believes the value of an executive’s performance cannot be measured solely by reference to objective performance indicators or based on a simple formulaic approach; compensation should be awarded based on consideration of both objective and subjective factors. Therefore, we retain discretion to adjust different compensation elements based on particular facts and circumstances and consider other subjective factors which are addressed in this CD&A under the heading “— Executive Compensation Decisions for Fiscal Year 2007.”

 

Base Salary.  The objectives of the Company’s base salary element are to allow the Company to attract and retain qualified executives and to recognize and reward individual performance. The following items are considered when determining actual base salaries and making adjustments to base salaries:

 

 

Annual Cash Incentive Plan.  The objectives of our Annual Cash Incentive Plan, which consists of annual performance-based cash incentives and discretionary bonuses, are to:

 

 

 

For performance-based cash incentives, target award opportunities are established at the beginning of each year. Actual awards of performance-based cash incentives are predicated on:

 

 

Each year the Committee selects performance measures and goals for the performance-based cash incentive portion of the Annual Cash Incentive Plan. The Company believes the performance measures and goals support stockholder value creation and align the interests of executives and stockholders.

 

With limited exceptions, all executive officers are measured against the same financial performance goals, which reinforces a sense of teamwork. For business unit heads, performance goals are often based on business unit-specific performance goals to reward executives when their business unit meets financial and strategic business goals and objectives.

 

The Committee considers a number of factors in determining who will receive a discretionary bonus award and the size of the award. Historically, discretionary cash bonuses have been made to recognize extraordinary efforts in the context of:

 

 

The Committee believes it is important that it retain the authority to consider the strategic importance of items with respect to the payment of discretionary bonuses, as these items are not necessarily part of any business or strategic plan developed at the beginning of the year.

 

Long-term Equity Incentives.  Although stock options and other equity awards have been granted in prior years, more recently the Committee has focused on cash compensation for our executive officers. In 2007, no stock option grants or other equity awards were made. During 2008, the Committee plans to review its prior focus on cash compensation with a view to adding an equity-based component. The equity-based component would be designed to provide significant incentives directly linked to the long-term performance of the Company. As part of the Special Litigation Committee’s remedial measures, which are described in greater detail in the Form 8-K/A, all future equity grants will be approved by a majority vote of the disinterested Independent Directors (as such term is defined in the Stipulation of Settlement).

 

Benefits and Perquisites.  We offer a variety of health, welfare and qualified retirement programs to all employees, including our NEOs. The health, welfare and retirement programs available to our NEOs are the same as those offered to all employees. The Company believes that offering a competitive benefits program is necessary to attract high-caliber executive talent. The Company does not offer any supplemental benefit programs, such as a supplemental executive retirement plan (SERP), to any NEO.

 

As part of the total compensation program, the Company also has offered certain perquisites which are generally restricted to NEOs. Please see the “All Other Compensation” column in the “Summary Compensation Table” and the related discussion in the footnotes thereto provided below for more detailed information on the perquisites and personal benefits received by the NEOs during fiscal years 2006 and 2007.

 

As part of its investigation, the Special Litigation Committee reviewed, among other things, certain expense reimbursements (including those for lodging, flights, meals, private club memberships, the use of the former chief executive officer’s residences, and legal fees incurred by the former chief executive officer) and certain other corporate expenditures (including for the usage of aircraft, a yacht and automobiles, premiums for life insurance

policies, salaries of several employees and grants of stock options). Based on its review, the Special Litigation Committee found that various expense reimbursements and corporate expenditures were excessive and approved a series of remedial measures relating to perquisites and personal benefits, including the following, which are designed to continue in effect at least until December 31, 2013:

 

 

For more information on the final remedial measures adopted by the Special Litigation Committee, please refer to the Form 8-K/A.

 

Executive Compensation Decisions for Fiscal Year 2007

 

For the fiscal year ended December 31, 2007, the principal components of compensation for the NEOs were: base salary; annual incentive plan consisting of performance-based cash incentive awards; discretionary cash bonuses; and other personal benefits and perquisites.

 

Base Salary.  On an annual basis (and/or at the time of promotion), the Committee reviews individual base salaries of the NEOs. Salary increases are based on the Company’s overall performance and the executive’s attainment of individual objectives during the preceding year in the context of competitive market data.

 

The Committee does not assign relative weights or rankings to the different factors described under the heading “Objectives of Executive Compensation Elements — Base Salary,” but instead makes a determination based upon the consideration of all of these factors.

At its meeting in February 2007, the Committee considered base salary levels for the NEOs. Effective for fiscal year 2007, the Committee approved changes to NEO salaries as follows:

 

 

 

 

In determining Mr. Gupta’s salary adjustment, the Committee decided to shift a larger portion of Mr. Gupta’s compensation to performance-based incentives and away from base salary.

 

Annual Cash Incentive Plan.  The 2007 Annual Cash Incentive Plan was designed to motivate and reward the NEOs for achievement of high levels of operating performance and to motivate executives to perform at their highest potential. NEOs were eligible for performance-based cash incentives under the plan based primarily upon achievement, both by the individual officer and the Company, of performance goals established for each year, as well as on the Committee’s assessment of individual performance.

 

The Committee set minimum (threshold), target and maximum levels for each performance measure. With the exception of Mr. Mallin, the 2007 financial performance metric was growth in pre-tax income. For Mr. Mallin, the 2007 financial performance goal was operational performance relative to a pre-established group of key accounts.

 

As a general rule, we believe that performance goals should be set at levels that reflect excellent performance, superior to the results of median-performing companies in our industry. Achieving performance goals requires significant effort on the part of the NEOs and the Company. At the same time, performance goals should be realistically achievable to provide the appropriate degree of motivation. To achieve this objective, in making the annual determination of the minimum, target and maximum performance goals, the Committee considers:

 

 

The minimum performance goal reflects the Committee’s minimum level of acceptable performance. If the Company does not achieve the minimum performance goal, performance-based cash incentive awards will not be made. The maximum performance goal reflects a level of performance that would significantly exceed the Committee’s and the Company’s expectations of performance.

 

At the end of each fiscal year, the Committee also completes an assessment of individual performance relative to the goals that were set at the beginning of each year. These individual performance goals motivate and reward strong Company performance in relation to key metrics such as EBITDA, revenue and earnings per share. Specifically, the Committee compared the actual performance to the benchmarks set, and interpolated the amount of bonus to be paid to each individual based on actual Company performance.

 

For 2007, the Committee determined that Mr. Gupta earned a performance-based cash incentive award of $995,625. The metrics were slightly different than those for other individuals; specifically, the Committee focused

on EBITDA and free cash flow. The interpolation process used by the Committee to determine the final amount was the same for the CEO and all NEOs.

 

The exhibit below shows the threshold, target, maximum performance-based cash incentive opportunity and actual performance-based cash award for each executive (after interpolation).

 

 

As previously discussed, the Committee also retains the authority to provide discretionary cash bonuses to NEOs based on several factors, including actual performance not warranting an incentive award because of changing business conditions and the completion of special projects (such as a business acquisition) or strategic initiatives, among others. For fiscal year 2007, the Committee awarded discretionary cash bonuses to each NEO, other than Mr. Gupta and Mr. Mallin. Messrs. Dean, Longwell and Vakili received $100,000, $25,000 and $100,000, respectively for their performance related to the Naviant Settlement. Mr. Longwell also was awarded a cash bonus of $7,500 because he was unable to participate in the Company’s 401(k) program when he first joined our Company. In addition, Mr. Longwell also received a cash award of $75,000 as part of his employment arrangement with the Company.

 

 

Long-term Equity Incentives.  As discussed above, no stock option grants or other equity awards were made in fiscal year 2007. During 2008, the Committee plans to review its prior focus on cash compensation with a view to adding an equity-based component. The equity-based component would be designed to provide significant incentives directly linked to the long-term performance of the Company.

 

Other Personal Benefits and Perquisites.  Our NEOs are entitled to participate in the same health, welfare and retirement programs offered to all employees. These programs include tax-qualified 401(k), medical, dental and vision coverage and wellness programs, use of our employee assistance program, short and long-term disability, and paid time off in accordance with company policies. For programs to which employees contribute premiums, executives are subject to the same premium structure as other exempt employees.

 

In addition to the benefits programs described above, we also provide our executives with certain perquisites of a more personal nature, to the extent they serve a legitimate business function. However, the Special Litigation Committee’s review, described in greater detail under “— Objectives of Executive Compensation Elements — Benefits and Perquisites,” has found that various expense reimbursements and corporate expenditures were excessive. Based on its review, the Special Litigation Committee has approved a series of remedial measures relating to perquisites and personal benefits, including a new review and approval process. We are in the process of implementing these remedial measures. For information on the perquisites and personal benefits received by the NEOs during fiscal years 2006 and 2007, please see the “All Other Compensation” column in the “Summary Compensation Table” and related discussions in the footnotes thereto provided below. Please refer to (i) Item 9A of the 2007 Form 10-K for more information on the Special Litigation Committee’s findings and (ii) the Form 8-K/A for the final remedial measures adopted in connection with the Stipulation of Settlement.

Severance and Change in Control Considerations

 

Each NEO, other than Messrs. Gupta and Longwell, entered into a severance agreement with the Company in February 2006 that provides for certain payments upon termination of employment and/or change in control. In November 2006, when Mr. Longwell accepted an offer of employment with the Company, Mr. Longwell and the Company agreed upon a severance arrangement that provides for certain payments upon termination of his employment.

 

When the Company entered into these severance arrangements, it was determined that such arrangements were appropriate based on their prevalence within the information collection and distribution industry, as well as for public companies in general, and the dynamic nature of mergers and acquisitions activity within the industry. Given the nature of the responsibilities of the NEOs, we also recognize that they could be involved in critical decisions relating to potential change in control transactions and responsible for the successful implementation of such transactions, while being at risk of losing their jobs if a change in control occurs. The severance arrangements are intended to provide sufficient protection for the NEOs to permit them to consider potential transactions that are in the best interest of our stockholders without being unduly influenced by the possible effects of the transaction on their personal employment situation and individual compensation.

 

During 2008, the Committee plans to negotiate and approve employment agreements with the executive officers of the Company, including compensation terms commensurate with those of executive officers of similarly-situated companies.

 

As previously reported, on August 20, 2008, the Company announced that Mr. Gupta resigned as the CEO of the Company effective as of that date. In connection with Mr. Gupta’s resignation, the Company and Mr. Gupta entered into a separation agreement and general release, dated as of August 20, 2008. The Company and Mr. Gupta amended the separation agreement and general release on September 4, 2008 to clarify the terms that govern Mr. Gupta’s entitlement to healthcare benefits.

 

The severance arrangements and Mr. Gupta’s separation agreement and general release are described in greater detail below under the heading “Other Potential Post-Employment Payments.”

 

Tax and Accounting Considerations

 

The Committee considers the tax impact and accounting considerations of our compensation programs on the Company as well as on the NEOs from a personal perspective. For example, the Committee has considered the impact of tax provisions such as Section 162(m) of the Internal Revenue Code in structuring our executive compensation program and, to the extent reasonably possible, in consideration of compensation goals and objectives, the compensation paid to the NEOs has been structured so as to qualify as performance-based and deductible for federal income tax purposes under Section 162(m). However, in consideration of the competitive nature of the market for executive talent, the Committee believes it is more important to deliver situation-appropriate and competitive compensation to drive shareholder value than to use a particular compensation practice or structure solely to ensure tax deductibility. Tax and accounting considerations are one of the many key elements of the Committee’s decision-making process.

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

Respectfully submitted by the
Compensation Committee*:

 

Bernard W. Reznicek (Chair)

 

The information contained in the Compensation Committee Report in this Proxy Statement is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.

   * Mr. Robin S. Chandra became a member of the Company’s Board of Directors in December 2007 and a member of the Compensation Committee effective January 25, 2008, and Mr. Clifton T. Weatherford became a member of the Company’s Board of Directors in December 2007 and a member of the Compensation Committee effective September 12, 2008. As a result, they did not participate in, or oversee as a member of the Board of Directors, the decisions of the Compensation Committee with respect to the compensation of the Company’s executive officers during fiscal year 2007.

 

Dr. George F. Haddix served as a member of the Compensation Committee from January 25, 2008 to August 20, 2008.

 

The following table sets forth the compensation paid by the Company for fiscal year 2007 and 2006 to the Company’s Chief Executive Officer, Chief Financial Officer and each of the Company’s three most highly compensated executive officers who were serving as executive officers as of December 31, 2007 and whose total compensation exceeded $100,000 for fiscal year 2007 (collectively, the “Named Executive Officers” or “NEOs”):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Arrangements

 

In February 2006, the Company entered into severance agreements with Edward C. Mallin, Fred Vakili and Stormy L. Dean. Each of the severance agreements provides that if the executive’s employment is terminated either (i) by the Company for any reason other than Cause (as defined in the severance agreement), or (ii) by the executive for Good Reason (as defined in the severance agreement), the Company will make payments to the executive at a rate equal to the executive’s Total Compensation (as defined below) for a period from 6 months to 24 months, depending on the length of service completed by the executive. In addition, if the executive elects to continue health and/or dental insurance coverage under COBRA, the Company will pay the employer portion of the monthly premium until the executive obtains substantially equivalent insurance coverage, but, in any event, for not more than 12 months. “Total Compensation” means the executive’s base salary as in effect at the time of termination, plus the average of the executive’s annual bonus amount for the three calendar years preceding the year in which the executive’s employment terminates. If the Company becomes subject to a Change in Control (as defined below) and within twelve (12) months after such Change in Control, the executive’s employment is terminated either (i) by the Company for any reason other than Cause, or (ii) by the executive for Good Reason, the Company shall pay to the executive a lump sum based on the executive’s Total Compensation. The amount of the lump sum will be from one time up to three times the executive’s Total Compensation, depending on the length of service completed by the executive, together with additional payments sufficient to compensate for certain federal excise taxes. In addition, if the executive elects to continue health and/or dental insurance coverage under COBRA, the Company will pay the employer portion of the monthly premium until the executive obtains substantially equivalent insurance coverage, but, in any event, for not more than 12 months. Also, all shares of capital stock, stock options, performance units, stock appreciation rights or other derivative securities of the Company held by the executive at the time of termination will become fully vested and exercisable. If the executive’s employment terminates as a result of the executive’s death or Disability (as defined in the severance agreement), the Company shall pay the executive’s accrued compensation through the termination date, and a pro rata portion of the executive’s target bonus for the year in which termination occurs. To receive any severance benefits, the executive must execute a general release of all claims against the Company and must refrain from competing with the Company and from soliciting the Company’s employees for a period of up to 12 months after the date of termination. If it is determined that any payment or distribution will be subject to the excise tax imposed under Internal Revenue Code Section 280G, then the executive will be entitled to receive an additional payment or “gross up” to ensure that severance payments are not diminished.

 

For purposes of the severance agreements, a “Change in Control” includes (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; (ii) the sale, transfer or other disposition of all or substantially all

of the Company’s assets; (iii) a change in the majority of the board of directors without the approval of the incumbent board; (iv) any incumbent director who beneficially owns more than twenty percent (20%) of the total voting power represented by the Company’s then outstanding voting securities involuntarily ceasing to be a director; or (v) any transaction as a result of which any person first becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 15% of the total voting power represented by the Company’s then outstanding voting securities.

 

In November 2006, when Mr. Longwell accepted an offer of employment with the Company, Mr. Longwell and the Company agreed upon a severance arrangement that provides for certain payments upon termination of his employment. The severance arrangement provides that if the Company terminates Mr. Longwell without cause, the Company will continue to pay Mr. Longwell his annual salary at regular pay intervals for 12 months following the termination or until Mr. Longwell finds gainful employment, whichever occurs first. In the event that Mr. Longwell is employed by another employer during the 12 months following his termination at an annual salary that is less than $350,000, the Company will pay Mr. Longwell the difference for the duration of the 12 month period. The severance provision does not apply if Mr. Longwell voluntarily separates from the Company or is terminated for just cause. For purposes of the severance arrangement, “cause” is defined as misfeasance, nonfeasance, theft or violation of the terms of his employment; failure to follow a lawful order of the Chairman of the Board and the Chief Executive Officer which is reasonably related to Mr. Longwell’s job duties; insubordination; or conduct or performance that is detrimental to the Company or its interests.

 

Separation Agreement with Vinod Gupta

 

As previously reported, on August 20, 2008, the Company announced that Mr. Gupta resigned as the Chief Executive Officer of the Company effective as of that date. In connection with Mr. Gupta’s resignation, the Company and Mr. Gupta entered into a separation agreement and general release, dated as of August 20, 2008. The Company and Mr. Gupta amended the separation agreement on September 4, 2008 to clarify the terms that govern Mr. Gupta’s entitlement to healthcare benefits (the separation agreement and general release, as amended, the “Separation Agreement”). The Separation Agreement provides for the following, among other things:

 

 

 

The Separation Agreement also includes provisions relating to confidentiality, mutual non-disparagement and return of Company property.

 

The following table sets forth the payments that Mr. Gupta is entitled to under the Separation Agreement as a result of his resignation as Chief Executive Officer of the Company as of August 20, 2008:

 

Potential Payments to Vinod Gupta as a Result of the Separation Agreement

 

 

Potential Payments under the Severance Arrangements

 

The following tables set forth the payments the NEOs, other than Mr. Gupta, whose payments pursuant the Separation Agreement are described above, and Mr. Longwell, whose payments pursuant to his severance

arrangement with the Company are described below, would receive if they were terminated as of December 31, 2007.

 

Potential Payments to Stormy L. Dean upon the Occurrence of Certain Events

 

 

Potential Payments to Edward C. Mallin upon the Occurrence of Certain Events

 

 

 

 

Potential Payments to Fred Vakili upon the Occurrence of Certain Events

 

 

 

 

The following table sets forth the payments Mr. Longwell would receive if he were terminated as of December 31, 2007:

 

Potential Payments to John H. Longwell upon the Occurrence of Certain Events

 

 

Effective October 1, 2007, non-employee directors receive an annual cash retainer of $120,000, payable in monthly installments of $10,000 each. For the period from January 1, 2007 through September 30, 2007, non-employee directors received an annual cash retainer of $48,000, payable in monthly installments of $4,000 each. Mr. Vinod Gupta did not receive compensation for his service on the Board of Directors during 2007.

 

Currently, the chair of each standing Board committee, in addition to other compensation he receives for services as a director, receives an annual cash retainer of $20,000, payable in monthly installments of $1,667 each. The Chairman of the Board of Directors receives, in addition to other compensation he receives for services as a director, an additional annual cash retainer of $50,000, payable in monthly installments of $4,167 each. Members of certain non-standing Board committees each receive a cash retainer of $50,000 and an additional per meeting fee of $4,000 if travel is required or $2,000 if travel is not required.

The following table sets forth the compensation paid to the directors for fiscal year 2007:

 

 

 

 

 

 

 

Currently, the following individuals serve as members of the Compensation Committee: Bernard W. Reznicek (Chair), Robin S. Chandra and Clifton T. Weatherford. Prior members of the Compensation Committee in 2007 included Anshoo Gupta, George F. Haddix, Bill L. Fairfield and Dennis P. Walker. No member of the Compensation Committee is, or has ever has been (with the exception of Mr. Fairfield who became the Chief Executive Officer of the Company in August 2008), an executive officer or employee of the Company (or any of its subsidiaries), and no “compensation committee interlocks” existed during fiscal year 2007.

 

The following table sets forth the beneficial ownership of the Company’s common stock as of the Record Date (i) by each of the executive officers named in the “Summary Compensation Table,” (ii) by each director, (iii) by all current directors and executive officers as a group and (iv) by all persons known to the Company to be the beneficial owners of more than 5% of the Company’s common stock:

 

 

 

 

Laurel Gupta, the spouse of Vinod Gupta, was until August 2008 an employee of the Company and received $129,996 in salary and compensation for fiscal year 2007. Prior to joining the Company, Ms. Gupta was employed by Cameron Associates in New York as an Investor Relations Executive and worked in institutional equity sales with Morgan Stanley. Ms. Gupta holds an M.B.A. in Finance from Stern School of Business at NYU.

 

The Company has retained the law firm of Robins, Kaplan, Miller & Ciresi L.L.P. to provide certain legal services. Elliot S. Kaplan, a director of the Company, is a named partner and former Chairman of the Executive Board of Robins, Kaplan, Miller & Ciresi L.L.P. The Company paid a total of $1,679,484 to this law firm during 2007, which included $634,750 for its representation, on a contingent fee basis, of the Company in the Naviant litigation (which is described in further detail in the 2007 Form 10-K), the settlement of which resulted in net proceeds of $9.9 million to the Company.

 

The Company paid $48,000 for rent, and $11,000 for association dues during 2007 for a condominium owned by Jess Gupta, and used by the Company. Jess Gupta is the son of Vinod Gupta.

 

The Company has adopted a written policy that the Audit Committee pre-approve all transactions between the Company and our officers, directors, principal stockholders and their affiliates with a value equal to or greater than $120,000. Any transactions between the Company and our officers, directors, principal stockholders and their affiliates with a value of less than $120,000 are reviewed by the Audit Committee but may be approved by the Executive Vice President for Business Conduct and General Counsel (or, in appropriate circumstances, his delegate).

 

As described in greater detail under Item 9A of the 2007 Form 10-K, the Special Litigation Committee reviewed, among other things, certain related party transactions. Based on its review, the Special Litigation Committee determined that various related party transactions were excessive and approved a series of remedial measures relating to related party transactions. Please refer to (i) Item 9A of the 2007 Form 10-K for more information on the Special Litigation Committee’s findings and (ii) the Form 8-K/A for more information on the final remedial measures adopted in connection with the Stipulation of Settlement.

 

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors and 10% stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons, the Company believes that, during the fiscal year ended December 31, 2007, all Section 16(a) filing requirements applicable to its officers, directors and 10% stockholders were timely complied with, except that the following reports were filed late: three Form 3’s reporting the equity ownership of newly named executive officers Gerard Miodus, Dr. Greg Mahnke and John H. Longwell; two Form 4’s reporting the acquisition of shares of stock for Greg Mahnke and Bill L. Fairfield; two Form 4’s reporting the gift of shares of stock for Vinod Gupta and Fred Vakili and one Form 5 for Clifton T. Weatherford for the year ended December 31, 2007.

PROPOSAL TWO

 

APPROVAL OF THE AMENDMENT TO THE infoUSA INC. 2007 OMNIBUS INCENTIVE PLAN

 

This section provides a summary of the terms of the infoUSA Inc. 2007 Omnibus Incentive Plan (the “2007 Omnibus Incentive Plan”) and the proposal to approve an amendment to the 2007 Omnibus Incentive Plan.

 

The Board of Directors approved the 2007 Omnibus Incentive Plan on April 20, 2007 and the stockholders approved the 2007 Omnibus Incentive Plan at the 2007 Annual Meeting of stockholders. In connection with the Stipulation of Settlement (as described below), we are asking our stockholders to approve an amendment to our 2007 Omnibus Incentive Plan to clarify the number of shares of our common stock reserved for issuance thereunder.

 

As previous disclosed, we entered into the Stipulation of Settlement with the parties named in the Derivative Litigation. As part of the Stipulation of Settlement, we agreed to amend and clarify the number of shares of our common stock available to be granted pursuant to the 2007 Omnibus Incentive Plan and to submit such amendment to a stockholder vote for ratification. The purpose of this amendment is not to change the number of shares of our common stock reserved for issuance under the 2007 Omnibus Incentive Plan, but simply to clarify the exact number of shares reserved thereunder. For more information on the Stipulation of Settlement, please refer to the Form 8-K/A.

 

If our stockholders approve the amendment to the 2007 Omnibus Incentive Plan, the maximum number of shares of our common stock reserved for issuance under the 2007 Omnibus Incentive Plan will be 5,033,536, which will be comprised of (i) 4,463,536, the number of shares available for issuance under the 2007 Omnibus Incentive Plan as of September 22, 2008 (which is the date on which the Board of Directors approved this amendment to the 2007 Omnibus Incentive Plan), plus (ii) 570,000, the number of shares of common stock that are subject to outstanding awards granted under our 1997 Stock Option Plan (the “1997 Plan”) and the 2007 Omnibus Incentive Plan as of September 22, 2008, but only to the extent that such awards are forfeited, canceled or settled for cash or expire pursuant to their terms after September 22, 2008 without delivery of shares of common stock. We have not issued any equity awards under the 2007 Omnibus Incentive Plan since June 9, 2008, and we do not plan to issue any equity awards under the 2007 Omnibus Incentive Plan until this amendment is approved by the stockholders at the Annual Meeting. Since our stockholder approval of the 2007 Omnibus Incentive Plan at the 2007 Annual Meeting of stockholders, we suspended granting awards under the 1997 Plan and no further awards will be made pursuant to the 1997 Plan. If our stockholders approve the amendment to clarify the number of shares of our common stock reserved for issuance under the 2007 Omnibus Incentive Plan, the 2007 Omnibus Incentive Plan will be restated in its entirety and renamed “infoGROUP Inc. Amended and Restated 2007 Omnibus Incentive Plan.” All other terms of the 2007 Omnibus Incentive Plan will remain the same. A copy of the 2007 Omnibus Incentive Plan, as amended and restated, is attached as Appendix A to this Proxy Statement.

 

The purpose of the 2007 Omnibus Incentive Plan is to attract and retain highly qualified officers, directors, key employees and other key individuals, and to motivate these individuals to serve our company and to expend maximum effort to improve our business results and earnings by providing these individuals an opportunity to acquire or increase a direct proprietary interest in our operations and future success. In the judgment of the Board of Directors, an initial or increased grant under the 2007 Omnibus Incentive Plan will be a valuable incentive and will serve to the ultimate benefit of stockholders by aligning more closely the interests of 2007 Omnibus Incentive Plan participants with those of our stockholders.

 

On the Record Date, the closing price of the Company’s common stock was $7.12 per share.

 

Because participation and the types of awards under the 2007 Omnibus Incentive Plan are subject to the discretion of the Compensation Committee, the benefits or amounts that will be received by any participant or group of participants if the amendment to the 2007 Omnibus Incentive Plan is approved are not currently determinable. On the Record Date, there were approximately 8 executive officers, 5,103 employees and 9 non-employee directors of the Company and its subsidiaries who were eligible to participate in the 2007 Omnibus Incentive Plan.

 

Unless otherwise instructed, the proxy holders will vote the proxies received in favor of the proposal to approve the amendment to the 2007 Omnibus Incentive Plan.

THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE
infoUSA INC. 2007 OMNIBUS INCENTIVE PLAN

 

Equity Compensation Plan Information

 

All of our outstanding options have been granted under the 1997 Plan and the 2007 Omnibus Incentive Plan, which were approved by our stockholders. We do not have any warrants or stock appreciation rights outstanding. The following table summarizes information about our equity compensation plans at December 31, 2007 and as of September 22, 2008, the date on which the Board of Directors approved this amendment to the 2007 Omnibus Incentive Plan:

 

 

Description of the 2007 Omnibus Incentive Plan

 

A description of the provisions of the 2007 Omnibus Incentive Plan, as amended and restated, is set forth below. This summary is qualified in its entirety by the detailed provisions of the infoGROUP Inc. Amended and Restated 2007 Omnibus Incentive Plan, a copy of which is attached as Appendix A to this Proxy Statement.

 

Administration.  The 2007 Omnibus Incentive Plan is administered by the Compensation Committee of the Board of Directors. Subject to the terms of the plan, the Compensation Committee may select participants to receive awards, determine the types of awards and terms and conditions of awards, and interpret provisions of the plan. Members of the Compensation Committee are appointed by the Board of Directors. The Stipulation of Settlement provides that, until December 31, 2013, all future equity grants must be approved by a majority of the disinterested Independent Directors (as such term is defined in the Stipulation of Settlement). Therefore, until December 31, 2013, all awards granted under the 2007 Omnibus Incentive Plan also must be approved by a majority of such disinterested Independent Directors.

 

Common Stock Reserved for Issuance under the Plan.  Our common stock issued or to be issued under the 2007 Omnibus Incentive Plan consists of authorized but unissued shares and treasury shares. If any shares covered by an award are not purchased or are forfeited, or if an award otherwise terminates without delivery of any common stock, then the number of shares of common stock counted against the aggregate number of shares available under the plan with respect to the award will, to the extent of any such forfeiture or termination, again be available for making awards under the 2007 Omnibus Incentive Plan.

 

Eligibility.  Awards may be made under the 2007 Omnibus Incentive Plan to employees of or consultants to the Company or any of our affiliates, including any such employee who is an officer or director of the Company or of any affiliate, and to any other individual whose participation in the plan is determined to be in the best interests of the Company by the Board of Directors.

 

Amendment or Termination of the Plan.  The Board of Directors may terminate or amend the 2007 Omnibus Incentive Plan at any time and for any reason. The 2007 Omnibus Incentive Plan shall terminate, in any event, ten years after its original effective date of June 7, 2007. Amendments will be submitted for stockholder approval to the extent required by the Internal Revenue Code or other applicable laws, rules or regulations.

 

Options.  The 2007 Omnibus Incentive Plan permits the granting of options to purchase shares of our common stock intended to qualify as incentive stock options under the Internal Revenue Code and stock options that do not qualify as incentive stock options.

 

The exercise price of each stock option may not be less than 100% of the fair market value of our common stock on the date of grant. The fair market value is generally determined as the closing price of the common stock on the date of grant. In the case of certain 10% stockholders who receive incentive stock options, the exercise price may

not be less than 110% of the fair market value of the common stock on the date of grant. An exception to these requirements is made for options that we grant in substitution for options held by employees of companies that we acquire. In such a case the exercise price is adjusted to preserve the economic value of the employee’s stock option from his or her former employer.

 

The term of each stock option is fixed by the Compensation Committee and may not exceed 10 years from the date of grant. The Compensation Committee determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options may be made exercisable in installments. The exercisability of options may be accelerated by the Compensation Committee.

 

In general, an optionee may pay the exercise price of an option by cash, certified check, by tendering shares of Company’s common stock, or by means of a broker-assisted cashless exercise.

 

No amendment or modification may be made to an outstanding stock option or stock appreciation right that would be treated as a repricing under the rules of the stock exchange on which the shares of common stock are listed (currently the NASDAQ Global Select Market), without the approval of our stockholders.

 

Stock options and stock appreciation rights granted under the 2007 Omnibus Incentive Plan may not be sold, transferred, pledged or assigned other than by will or under applicable laws of descent and distribution. However, we may permit limited transfers of non-qualified options for the benefit of immediate family members of grantees to help with estate planning concerns.

 

Other Awards.  The Compensation Committee may also award:

 

 

Effect of Certain Corporate Transactions.  Certain change of control transactions involving the Company, such as a sale of the Company, may cause awards granted under the 2007 Omnibus Incentive Plan to vest, unless the awards are continued or substituted for in connection with the change of control transaction.

Adjustments for Stock Dividends and Similar Events.  The Compensation Committee will make appropriate adjustments in outstanding awards and the number of shares available for issuance under the 2007 Omnibus Incentive Plan, including the individual limitations on awards, to reflect stock splits and other similar events.

 

Section 162(m) of the Internal Revenue Code.  Section 162(m) of the Internal Revenue Code limits publicly-held companies such as the Company to an annual deduction for federal income tax purposes of $1 million for compensation paid to their covered employees. However, performance-based compensation is excluded from this limitation. The 2007 Omnibus Incentive Plan is designed to permit the Compensation Committee to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m).

 

To qualify as performance-based:

 

(i) the compensation must be paid solely on account of the attainment of one or more pre-established, objective performance goals;

 

(ii) the performance goal under which compensation is paid must be established by a compensation committee comprised solely of two or more directors who qualify as outside directors for purposes of the exception;

 

(iii) the material terms under which the compensation is to be paid must be disclosed to and subsequently approved by stockholders of the corporation before payment is made in a separate vote; and

 

(iv) the compensation committee must certify in writing before payment of the compensation that the performance goals and any other material terms were in fact satisfied.

 

In the case of compensation attributable to stock options, the performance goal requirement (summarized in (i) above) is deemed satisfied, and the certification requirement (summarized in (iv) above) is inapplicable, if the grant or award is made by the compensation committee; the plan under which the option is granted states the maximum number of shares with respect to which options may be granted during a specified period to an employee; and under the terms of the option, the amount of compensation is based solely on an increase in the value of the common stock after the date of grant.

 

Under the 2007 Omnibus Incentive Plan, one or more of the following business criteria, on a consolidated basis, and/or with respect to specified subsidiaries or business units (except with respect to the total stockholder return and earnings per share criteria), are used exclusively by the Compensation Committee in establishing performance goals:

 

 

 

Business criteria may be measured on an absolute or relative basis and on a GAAP or non-GAAP basis.

 

Under the Internal Revenue Code, a director is an “outside director” of the Company if he or she is not a current employee of the Company; is not a former employee who receives compensation for prior services (other than under a qualified retirement plan); has not been an officer of the Company; and does not receive, directly or indirectly (including amounts paid to an entity that employs the director or in which the director has at least a five percent ownership interest), remuneration from the Company in any capacity other than as a director.

 

The maximum number of shares of our common stock subject to options or stock appreciation rights that can be awarded under the 2007 Omnibus Incentive Plan to any person is 1,000,000 per year. The maximum number of shares of common stock that can be awarded under the 2007 Omnibus Incentive Plan to any person, other than pursuant to an option or stock appreciation right, is 1,000,000 per year. The maximum amount that may be earned as an annual incentive award or other cash award in any fiscal year by any one person is $1,500,000, and the maximum amount that may be earned as a performance award or other cash award in respect of a performance period by any one person is $4,500,000.

 

Federal Income Tax Consequences

 

Incentive Stock Options.  The grant of an option will not be a taxable event for the grantee or for the Company. A grantee will not recognize taxable income upon exercise of an incentive stock option (except that the alternative minimum tax may apply), and any gain realized upon a disposition of our common stock received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain if the grantee holds the shares of common stock for at least two years after the date of grant and for one year after the date of exercise (the “holding period requirement”). We will not be entitled to any business expense deduction with respect to the exercise of an incentive stock option, except as discussed below.

 

For the exercise of an option to qualify for the foregoing tax treatment, the grantee generally must be our employee or an employee of our subsidiary from the date the option is granted through a date within three months before the date of exercise of the option.

 

If all of the foregoing requirements are met except the holding period requirement mentioned above, the grantee will recognize ordinary income upon the disposition of the common stock in an amount generally equal to the excess of the fair market value of the common stock at the time the option was exercised over the option exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be capital gain. We will be allowed a business expense deduction to the extent the grantee recognizes ordinary income, subject to our compliance with Section 162(m) of the Internal Revenue Code and to certain reporting requirements.

 

Non-Qualified Options.  The grant of an option will not be a taxable event for the grantee or the Company. Upon exercising a non-qualified option, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a non-qualified option, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the shares of common stock (generally, the amount paid for the shares plus the amount treated as ordinary income at the time the option was exercised).

 

If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

A grantee who has transferred a non-qualified stock option to a family member by gift will realize taxable income at the time the non-qualified stock option is exercised by the family member. The grantee will be subject to withholding of income and employment taxes at that time. The family member’s tax basis in the shares of our common stock will be the fair market value of the shares of common stock on the date the option is exercised. The transfer of vested non-qualified stock options will be treated as a completed gift for gift and estate tax purposes. Once the gift is completed, neither the transferred options nor the shares acquired on exercise of the transferred options will be includable in the grantee’s estate for estate tax purposes.

 

In the event a grantee transfers a non-qualified stock option to his or her ex-spouse incident to the grantee’s divorce, neither the grantee nor the ex-spouse will recognize any taxable income at the time of the transfer. In general, a transfer is made “incident to divorce” if the transfer occurs within one year after the marriage ends or if it is related to the end of the marriage (for example, if the transfer is made pursuant to a divorce order or settlement agreement). Upon the subsequent exercise of such option by the ex-spouse, the ex-spouse will recognize taxable income in an amount equal to the difference between the exercise price and the fair market value of the shares of common stock at the time of exercise. Any distribution to the ex-spouse as a result of the exercise of the option will be subject to employment and income tax withholding at this time.

 

Restricted Stock.  A grantee who is awarded restricted stock will not recognize any taxable income for federal income tax purposes in the year of the award, provided that the shares of common stock are subject to restrictions (that is, the restricted stock is nontransferable and subject to a substantial risk of forfeiture). However, the grantee may elect under Section 83(b) of the Internal Revenue Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the common stock on the date of the award (less the purchase price, if any), determined without regard to the restrictions. If the grantee does not make such a Section 83(b) election, the fair market value of the common stock on the date the restrictions lapse (less the purchase price, if any) will be treated as compensation income to the grantee and will be taxable in the year the restrictions lapse and dividends paid while the common stock is subject to restrictions will be subject to withholding taxes. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

 

Stock Units.  There are no immediate tax consequences of receiving an award of stock units under the 2007 Omnibus Incentive Plan. A grantee who is awarded stock units will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such grantee at the end of the restriction period or, if later, the payment date. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

 

Dividend Equivalent Rights.  Participants who receive dividend equivalent rights will be required to recognize ordinary income in an amount distributed to the grantee pursuant to the award. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

 

Stock Appreciation Rights.  There are no immediate tax consequences of receiving an award of stock appreciation rights under the 2007 Omnibus Incentive Plan. Upon exercising a stock appreciation right, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

 

Performance and Annual Incentive Awards.  The award of a performance or annual incentive award will have no federal income tax consequences for us or for the grantee. The payment of the award is taxable to a grantee as ordinary income. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

Unrestricted Common Stock.  Participants who are awarded unrestricted common stock will be required to recognize ordinary income in an amount equal to the fair market value of the shares of common stock on the date of the award, reduced by the amount, if any, paid for such shares. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

 

Section 280(G).  To the extent payments which are contingent on a change in control are determined to exceed certain Code limitations, they may be subject to a 20% nondeductible excise tax and the Company’s deduction with respect to the associated compensation expense may be disallowed in whole or in part.

 

Section 409A.  We intend for awards granted under the 2007 Omnibus Incentive Plan to comply with Section 409A of the Code. To the extent a grantee would be subject to the additional 20% excise tax imposed on certain nonqualified deferred compensation plans as a result of a provision of an award under the plan, the provision will be deemed amended to the minimum extent necessary to avoid application of the 20% excise tax.

 

KPMG LLP (“KPMG”) served as our independent auditors for the fiscal year ended December 31, 2007, and has been selected by the Audit Committee as our independent auditors for the fiscal year ending December 31, 2008. A representative of KPMG is expected to be present at the Annual Meeting, will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

 

Audit Fees

 

The following table presents the aggregate fees billed to us for professional services rendered by KPMG for the audit of our fiscal year 2007 and 2006 annual financial statements and for other professional services rendered by KPMG in fiscal year 2007 and 2006.

 

 

 

 

The above amounts include out-of-pocket expenses incurred by KPMG. The Audit Committee pre-approved all non-audit services described above. A copy of the Audit Committee’s pre-approval policy with respect to non-audit services is attached as Appendix B to this Proxy Statement. The Audit Committee has considered whether the provision of the services described above was and is compatible with maintaining the independence of KPMG.

 

The Audit Committee of the Board of Directors of the Company oversees the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company. The Committee operates under a written charter adopted by the Board of Directors, which is posted on the Company’s website at www.infogroup.com under the caption “Investor Relations.” The charter provides that the Audit Committee shall consist of at least three directors who are independent, as independence for audit committee members is defined by FINRA rules. Management is responsible for the Company’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The Committee’s responsibility is to monitor and oversee these processes.

 

In this context, the Committee met and held discussions with management and the independent auditors. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Committee reviewed and discussed the consolidated financial statements with management and the independent auditors. The Committee also discussed with management, the internal auditors and the independent auditors the quality and adequacy of the Company’s internal controls and the internal audit department’s organization, responsibilities, budget and staffing. The Committee reviewed both with the independent auditors and internal auditors their audit plans, audit scope and identification of audit risks. The Committee discussed with the independent auditors matters required to be discussed by Statement on Auditing Standards No. 61, as amended. The Company’s independent auditors also provided to the Committee the written disclosures required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and the Committee discussed with the independent auditors that firm’s independence.

 

Based upon the Committee’s discussion with management and the independent auditors and the Committee’s review of the representations of management and the report of the independent auditors, the Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 filed with the SEC.

 

Audit Committee*

 

Clifton T. Weatherford (Chair)
Bernard W. Reznicek

 

The information contained in the Audit Committee Report in this Proxy Statement is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.

 

 

* Mr. George Krauss became a member of the Company’s Board of Directors in December 2007 and a member of the Audit Committee effective September 12, 2008. As a result, he did not participate in the discussions of the Audit Committee with respect to the matters described in the Audit Committee Report.

 

Dr. Vasant H. Raval served as the Chair of the Audit Committee during 2007 and served as a member of the Audit Committee until August 20, 2008. As a member of the Audit Committee and until his resignation, Dr. Raval participated in the discussions of the Audit Committee with respect to the matters described in the Audit Committee Report.

 

Except as described in this Proxy Statement, we know of no other matters to be considered at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the proxy holders to vote the shares they represent in their discretion.

 

BY ORDER OF THE BOARD OF DIRECTORS

 

Omaha, Nebraska

September 23, 2008

 

 

 

infoGROUP INC.

 

AMENDED AND RESTATED 2007 OMNIBUS INCENTIVE PLAN

 

 

 

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