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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
StorageNetworks, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
[LOGO] Storage Networks
StorageNetworks, Inc.
225 Wyman Street
Waltham, MA 02451
To our Stockholders:
I am pleased to invite you to attend the 2002 Annual Meeting of Stockholders
of StorageNetworks, Inc. to be held on Wednesday, May 15, 2002 at 10:00 a.m. at
the Westin Hotel, 70 Third Avenue, Waltham, Massachusetts 02451.
Details regarding admission to the meeting and the business to be conducted
are more fully described in the accompanying Notice of Annual Meeting and Proxy
Statement.
Your vote is important. Whether or not you plan to attend the Annual
Meeting, I hope you will vote as soon as possible. Voting by written proxy or
through the on-line or telephone options will ensure your representation at the
Annual Meeting if you do not attend in person. Please review the instructions
on the proxy card regarding each of these voting options.
Thank you for your ongoing support of, and continued interest in,
StorageNetworks.
Sincerely,
/s/ Peter W. Bell
PETER W. BELL
Chairman, Chief Executive Officer
and President
STORAGENETWORKS, INC.
225 Wyman Street
Waltham, Massachusetts 02451
NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 15, 2002
The 2002 Annual Meeting of Stockholders (the "Annual Meeting") of
StorageNetworks, Inc. (the "Company") will be held on Wednesday, May 15, 2002,
at 10:00 a.m., Eastern Standard Time, at the Westin Hotel, 70 Third Avenue,
Waltham, Massachusetts 02451, to consider and act upon the following matters:
(1)To elect one Class II director of the Company for the ensuing three
years.
(2)To ratify the selection by the Board of Directors of Ernst & Young
LLP as the Company's independent auditors for the fiscal year ending
December 31, 2002.
(3)To transact such other business as may properly come before the
meeting or any adjournment thereof.
These items of business are more fully described in the Proxy Statement
accompanying this Notice of Annual Meeting. The Board of Directors has no
knowledge of any other business to be transacted at the Annual Meeting or at
any adjournment or postponement thereof. The Board of Directors has fixed the
close of business on March 22, 2002 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual Meeting or any
adjournment or postponement thereof. A list of such stockholders will be
available for examination by any stockholder, for any purpose germane to the
Annual Meeting, during ordinary business hours for ten days prior to the Annual
Meeting at the office of the Secretary of the Company, and at the time and
place of the Annual Meeting.
A copy of the Company's Annual Report for the year ended December 31, 2001,
which contains financial statements and other information of interest to
stockholders, accompanies this Notice of Annual Meeting and the enclosed Proxy
Statement.
All stockholders are cordially invited to attend the meeting.
By order of the Board of Directors,
/s/ Paul C. Flanagan
PAUL C. FLANAGAN
Executive Vice President, Chief
Financial
Officer and Secretary
Waltham, Massachusetts
April 8, 2002
WHETHER OF NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE
OR VOTE THROUGH THE ON-LINE OR TELEPHONE OPTIONS DESCRIBED IN THE PROXY CARD IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE ANNUAL MEETING. NO POSTAGE
NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
[LOGO] Storage Networks
STORAGENETWORKS, INC.
225 Wyman Street
Waltham, Massachusetts 02451
PROXY STATEMENT
2002 Annual Meeting Of Stockholders
To Be Held On May 15, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of StorageNetworks, Inc. for use at the 2002
Annual Meeting of Stockholders (the "Annual Meeting") to be held on May 15,
2002 at 10:00 a.m., Eastern Standard Time, at the Westin Hotel, 70 Third
Avenue, Waltham, Massachusetts 02451 and at any adjournment or postponements of
the Annual Meeting.
All proxies will be voted in accordance with the stockholders' instructions
contained therein, and if no choice is specified, the proxies will be voted in
favor of the matters set forth in the accompanying Notice of Annual Meeting.
Any proxy may be revoked by a stockholder at any time before it is exercised by
delivery of written revocation to the Secretary of StorageNetworks or by voting
in person at the Annual Meeting. Attendance at the Annual Meeting will not
itself be deemed to revoke a proxy unless the stockholder gives affirmative
notice at the Annual Meeting that the stockholder intends to revoke the proxy
and vote in person.
Voting Securities and Votes Required
On March 22, 2002, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 98,269,414 shares of our common stock,
$.01 par value per share. Each share is entitled to one vote.
Under our by-laws, the holders of a majority of the shares of common stock
issued, outstanding and entitled to vote on any matter shall constitute a
quorum with respect to that matter at the Annual Meeting. Shares of common
stock present in person or represented by proxy (including shares which abstain
or do not vote with respect to one or more of the matters presented for
stockholder approval) will be counted for purposes of determining whether a
quorum is present.
The affirmative vote of the holders of a plurality of the shares of common
stock voting on the matter is required for the election of a director. The
affirmative vote of the holders of a majority of the shares of common stock
voting on the matter is required for the ratification of the selection of Ernst
& Young LLP as our independent auditors for the fiscal year ending December 31,
2002 and the approval of each of the other matters, if any, to be voted upon.
Shares which abstain from voting as to a particular matter and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting of each
matter that requires the affirmative vote of a certain percentage of the votes
cast or shares voting on a matter.
Our Annual Report for the year ended December 31, 2001 is being mailed to
stockholders with this Notice of Annual Meeting and this Proxy Statement on or
about April 8, 2002.
A copy of our Annual Report on Form 10-K for the year ended December 31,
2001, as filed with the Securities and Exchange Commission (the "Commission"),
except for exhibits, will be furnished without charge to any stockholder upon
written request to Erica Smith, StorageNetworks, Inc., 225 Wyman Street,
Waltham, Massachusetts 02451. Exhibits will be provided upon request and
payment of an appropriate processing fee.
1
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as to the number of shares of our
common stock beneficially owned as of January 31, 2002 (or such other date as
is indicated) by the following:
. each person known by us to beneficially own more than 5% of the
outstanding shares of our common stock;
. each of our directors;
. our chief executive officer and our three other most highly compensated
current executive officers; and
. all of our current executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the
Commission, and includes any shares as to which the person has sole or shared
voting or investment power and also any shares that the stockholder has the
right to acquire within 60 days after January 31, 2002 through the exercise of
any stock option or other right. Shares of common stock that an individual or
entity has the right to acquire within 60 days after January 31, 2002 are
deemed to be outstanding for the purposes of computing the percentage ownership
of such stockholder, but are not deemed outstanding for the purposes of
computing the ownership of any other listed stockholder. Unless otherwise
indicated below, to our knowledge, all persons named in the table have sole
voting and investment power with respect to their shares of common stock,
except to the extent authority is shared by spouses under applicable law.
Unless otherwise indicated, the address of each person is: c/o StorageNetworks,
Inc., 225 Wyman Street, Waltham, Massachusetts 02451.
Number of
Shares Percentage of
Beneficially Common Stock
Name and Address of Beneficial Owner Owned Outstanding
------------------------------------ ------------ -------------
Massachusetts Financial Services Company and affiliates(1)......... 13,059,540 13.33%
500 Boylston Street
Boston, MA 02116
The Goldman Sachs Group, Inc.(2)................................... 7,905,666 8.07
85 Broad Street
New York, NY 10004
Roger M. Marino(3)................................................. 6,269,714 6.40
c/o The Duchesneau Group, Inc.
13 Riverside Road
Weston, MA 02493
William D. Miller(4)............................................... 4,279,404 4.37
Peter W. Bell(5)................................................... 3,383,566 3.45
Robert E. Davoli(6)(7)......................................... 2,969,203 3.03
c/o Sigma Partners
20 Custom House Street
Boston, MA 02110
Stephen J. Gaal(7)............................................. 423,798 *
Paul C. Flanagan(8)............................................ 270,625 *
Jeffrey P. Keohane(9).......................................... 75,000 *
Michael D. Lambert(7).......................................... 17,500 *
c/o Dell Computer Corporation
One Dell Way
Round Rock, TX 78687
All executive officers and directors as a group (7 persons)(10) 11,419,096 11.62
--------
* Percentage is less than 1% of the total number of outstanding shares of
common stock of StorageNetworks.
(1) Based on information as of December 31, 2001 contained in an amendment on
Schedule 13G/A filed by the stockholder with the Securities and Exchange
Commission (the "Commission") on February 14, 2002. The stockholder has
sole voting power with respect to 11,843,140 shares and sole dispositive
power with respect to 13,059,540 shares.
2
(2) Based on information as of May 30, 2001 contained in an amendment on
Schedule 13D filed by the stockholder with the Commission on June 5, 2001.
Goldman, Sachs & Co. ("GS") is an indirect wholly owned subsidiary of The
Goldman Sachs Group, Inc. ("GSG"). GSG and GS may be deemed to own
beneficially and indirectly an aggregate of 7,905,666 shares held through
certain investment partnerships (the "Limited Partnerships") of which
affiliates of GS and GSG are the general partner, managing general partner
or managing partner. GS is the investment manager of one or more of the
Limited Partnerships. Includes (i) 7,662,446 shares beneficially owned by
the Limited Partnerships which, pursuant to a voting trust agreement, have
been placed in a voting trust with United States Trust Company of New
York, as voting trustee (the "Voting Trustee"), pursuant to which the
Voting Trustee has been given the power to exercise the voting rights of
such shares, (ii) 4,939 shares acquired by GS or another wholly-owned
subsidiary broker or dealer subsidiary of GSG in ordinary course trading
activities, and (iii) 238,231 shares held in client accounts with respect
to which GS or its employees have voting or investment discretion, or both
("Managed Accounts"). GS and GSG each disclaim beneficial ownership of (i)
the shares beneficially owned by the Limited Partnerships to the extent of
partnership interests in the Limited Partnerships held by persons other
than GS, GSG or their affiliates, and (ii) the shares held in Managed
Accounts.
(3) Based on information contained in an amendment on Schedule 13G filed by
the Stockholder with the Commission on February 14, 2002. Includes 6,749
shares held by LAULIN Limited Partnership and 427,408 shares held by
Grampek Limited Partnership, with respect to which shares Mr Marino has
shared voting and dispositive power. Mr. Marino is a general partner of
each of these limited partnerships.
(4) Includes (i) 2,189,372 shares held by MAWAM LLLP, of which Mr. Miller is
the general partner, and with respect to which shares Mr. Miller has
shared voting and dispositive power, (ii) 325,000 shares held by BMAAM,
Inc., of which Mr. Miller is the sole stockholder, (iii) 91,854 shares
held by Mr. Miller jointly with his wife, and (iv) 175,000 held by BMAAM
Irrevocable Trust, a trust established for the benefit of Mr. Miller to
effect a trading plan pursuant to Rule 10b5-1, with respect to which
shares Mr. Miller has no voting or dispositive power. BMAAM, Inc. is the
settlor of the BMAAM Irrevocable Trust. Mr. Miller disclaims beneficial
ownership with respect to any such shares, except to the extent of his
pecuniary interest therein, if any. Also includes 25,000 shares issuable
upon the exercise of stock options exercisable within 60 days after
January 31, 2002.
(5) Includes 3,154,400 shares held by the PWB Limited Partnership, with
respect to which Mr. Bell has shared voting and dispositive power, and
166,666 shares held by the PWB Blind Trust, with respect to which Mr. Bell
has no voting or dispositive power. PWB Limited Partnership is the settlor
and sole beneficiary of PB Blind Trust. Mr. Bell is a manager and the sole
member of PWB LLC, which is the general partner of PWB Limited
Partnership. Mr. Bell disclaims beneficial ownership with respect to such
shares, except to the extent of his pecuniary interest therein, if any.
Also includes 62,500 shares issuable upon the exercise of stock options
exercisable within 60 days after January 31, 2002.
(6) Includes 1,560,402 shares held by Sigma Partners IV, L.P., 474,574 shares
held by Sigma Associates IV, L.P., 54,241 shares held by Sigma Investors
IV, L.P., 557,548 shares held by Sigma Partners V, L.P., 129,529 shares
held by Sigma Associates V, L.P., and 18,678 shares held by Sigma
Investors V, L.P. Mr. Davoli is a partner of Sigma Partners, an affiliated
entity of these limited partnerships. Mr. Davoli disclaims beneficial
ownership with respect to such shares, except to the extent of his
pecuniary interest therein, if any.
(7) Includes 10,000 shares issuable upon the exercise of stock options
exercisable within 60 days after January 31, 2002.
(8) Includes 48,000 shares held by The 2000 Paul C. Flanagan Irrevocable
Trust, with respect to which Mr. Flanagan has no voting or dispositive
power. Mr. Flanagan disclaims beneficial ownership with respect to such
shares, except to the extent of his pecuniary interest therein, if any.
Also includes 122,625 shares issuable upon the exercise of stock options
exercisable within 60 days after January 31, 2002.
(9) Includes 75,000 shares issuable upon the exercise of stock options
exercisable within 60 days after January 31, 2002.
(10) Includes 315,125 shares of common stock issuable upon the exercise of
options exercisable within 60 days after January 31, 2002.
3
ELECTION OF DIRECTOR
Our board of directors currently consists of five persons, divided into
three classes serving staggered terms of three years. Currently there are two
directors in Class I (whose terms expire at the Annual Meeting of Stockholders
in 2004), one director in Class II (whose term expires at this Annual Meeting)
and two directors in Class III (whose terms expire at the Annual Meeting of
Stockholders in 2003). One Class I director is to be elected at the Annual
Meeting. This Class I director will hold office until the Annual Meeting of
Stockholders in 2004 or until his successor has been duly elected and qualified.
The persons named in the enclosed proxy card will vote to elect Robert E.
Davoli as the Class II director, unless the proxy card is marked otherwise. Mr.
Davoli is currently a Class II director. In the event that Mr. Davoli becomes
unavailable or declines to serve as a director at the time of the Annual
Meeting, the proxy holders will vote the proxies in their discretion for any
nominee who is designated by the current board of directors to fill the
vacancy. It is not expected that Mr. Davoli will be unavailable to serve.
Set forth below is the name of each member of the board of directors
(including the nominee for election as Class II director), his age, the year in
which he became a director of StorageNetworks, his principal occupation and
business experience during the past five years and the names of other publicly
held companies of which he serves as a director. Information with respect to
the number of shares of common stock beneficially owned by each director,
directly or indirectly, as of January 31, 2002, appears above under the heading
"Security Ownership of Certain Beneficial Owners and Management." Also set
forth below are the names of our executive officers as of January 31, 2002,
their ages and principal occupations and employment during the past five years.
Nominee for Term Expiring in 2005 (Class II Director)
Robert E. Davoli, age 53, has served as a director since December 1998, as a
member of the Compensation Committee since August 1999, and as a member of the
Audit Committee since January 2002. Mr. Davoli has been a general partner of
Sigma Partners, a venture capital firm, since 1995. Prior to his association
with Sigma Partners, he was President and Chief Executive Officer of Epoch
Systems, a vendor of client-server data management software products. Mr.
Davoli also serves on the board of directors of Internet Security Systems,
Inc., Vignette Corporation and Versata, Inc.
Directors Whose Terms Expire in 2003 (Class III Directors)
Peter W. Bell, age 37, co-founded StorageNetworks and has served as a
director and as our Chief Executive Officer and President since October 1998
and as Chairman of the Board of Directors since January 2000. From July 1997 to
July 1998, Mr. Bell served as Vice President of Worldwide Sales at Andataco,
Inc., an integrator of storage technology products. From July 1996 to July
1997, Mr. Bell served as the Executive Vice President of Sales, Services and
Marketing at NetXchange, a provider of Internet telephony software. Between
November 1986 and June 1996, Mr. Bell held a variety of management positions in
marketing, operations and sales at EMC Corporation, a vendor of storage
hardware, software and services, including Director of Sales, Open Storage
Group.
William D. Miller, age 41, co-founded StorageNetworks and has served as our
Executive Vice President and Chief Technical Officer and as a director since
October 1998. From 1994 to 1998, Mr. Miller managed strategic accounts for
Andataco, Inc., an integrator of storage technology products.
Directors Whose Terms Expire in 2004 (Class I Directors)
Stephen J. Gaal, age 58, has served as a director since October 1998, as a
member of the Compensation Committee since August 1999, and as a member of the
Audit Committee since March 2000. Mr. Gaal, a private investor, was the founder
and Managing Director of Gaal & Company, Inc. from 1997 to early 2002, which
4
provided advisory services to emerging technology companies in the areas of
business and financial strategy and planning. Between 1987 and 1996, Mr. Gaal
held the positions of Principal, Partner, and Managing Director of TA
Associates, a venture capital and private equity firm.
Michael D. Lambert, age 55, has served as a director since January 2000, as
a member of the Compensation Committee since March 2000 and as a member of the
Audit Committee since November 2000. Mr. Lambert is Senior Vice President of
the Enterprise Systems Group of Dell Computer Corporation, a direct provider of
computer systems and services. In this position, his responsibilities include
the development and delivery of Internet-related consulting and hosting
services, and the oversight of engineering, product marketing and manufacturing
of servers, storage and related products. From 1993 to 1996, Mr. Lambert held
the position of Vice President of Sales and Marketing, North America, for
Compaq Computer Corporation, a developer and manufacturer of computer hardware,
software and services.
Other Executive Officers of StorageNetworks
Paul C. Flanagan, age 37, has served as our Executive Vice President since
April 2000 and as our Chief Financial Officer since March 1999. From May 1997
to February 1999, Mr. Flanagan served as Vice President of Finance for
Lasertron, Inc., a manufacturer of fiber optic components for
telecommunications. From December 1995 to May 1997, Mr. Flanagan served as Vice
President of Finance and Administration for Vitol Gas and Electric, LLC, an
energy commodity trading company. From September, 1986 to December, 1995, Mr.
Flanagan was employed by Ernst & Young LLP, a public accounting firm.
Jeffrey P. Keohane, age 39, has served as our Executive Vice President of
Worldwide Sales since February, 2002. From March, 2001 to February, 2002, Mr.
Keohane served as our Executive Vice President of Business Operations. From
February, 1993 to March, 2001, Mr. Keohane held various positions at Comdisco,
Inc., a global technology services provider, including Senior Vice President,
and was also President of Comdisco Technology Services, where he was
responsible for managing its continuity services, storage services, web
services and network services lines of business.
Each executive officer serves at the discretion of the board of directors
and holds office until his successor is elected and qualified or until his
earlier resignation or removal. There are no family relationships among any of
our directors or executive officers.
No person who has served as a director or executive officer during the year
ended December 31, 2001 has any substantial interest, direct or indirect, in
any matter to be acted upon at the Annual Meeting, other than the election of
the Class II director.
Board and Committee Meetings
The board of directors held nine meetings during the year ended December 31,
2001. No current director attended fewer than 75% of such meetings of the board
of directors and the committees on which he serves.
The board of directors has an Audit Committee and a Compensation Committee.
The board of directors has no standing nominating committee.
The Audit Committee consists of our three outside directors, Messrs. Davoli,
Gaal and Lambert. The Audit Committee held six meetings during 2001. The Audit
Committee reviews the professional services provided by our independent
auditors, the independence of such auditors from our management, our annual
financial statements and our system of internal accounting controls. The Audit
Committee also reviews such other matters with respect to our accounting,
auditing and financial reporting practices and procedures as it may find
appropriate or may be brought to its attention. For additional information
concerning the Audit Committee, see "Report of the Audit Committee of the Board
of Directors."
5
The Compensation Committee also consists of our three outside directors,
Messrs. Davoli, Gaal and Lambert. The Compensation Committee held five meetings
during 2001. The Compensation Committee reviews executive salaries, administers
bonuses, incentive compensation and stock plans, and approves the salaries and
other benefits of our executive officers. For additional information concerning
the Compensation Committee, see "Compensation Committee Report on Executive
Compensation."
Compensation of Directors
We reimburse non-employee directors for reasonable out-of-pocket expenses
incurred in attending meetings of the board of directors. On May 15, 2001, each
non-employee director automatically received a fully-vested option to purchase
10,000 shares of common stock at an exercise price of $19.99 per share under
our 2000 Non-Employee Director Option Plan. Shares issuable upon exercise of
such options are subject to a repurchase right for two years from the date of
grant.
We may, in our discretion, grant stock options and other equity awards to
our non-employee directors from time to time pursuant to our 2000 Stock Plan.
In addition, under our 2000 Non-Employee Director Option Plan, each new
non-employee director will be granted an option to purchase 25,000 shares of
common stock on the date he or she is first elected to the board and all
non-employee directors will be automatically granted an option to purchase
10,000 shares of common stock immediately following each annual meeting of
stockholders. Shares issued upon exercise of such options shall be subject to a
repurchase right for the applicable vesting period.
Executive Compensation
Summary Compensation Table.
The following table sets forth information with respect to the compensation
earned in each of the last three fiscal years by (1) our chief executive
officer, (2) our other most highly compensated executive officers who were
serving as executive officers at December 31, 2001 and whose total annual
compensation exceeded $100,000 (a total of three officers), and (3) two other
former executive officers who would have been among the four most highly paid
executive officers but who were not serving as executive officers at December
31, 2001. We refer to these individuals as our Named Executive Officers. In the
table below, columns required by the regulations of the Commission have been
omitted where no information was required to be disclosed under those columns.
Long-Term
Compensation
Annual Compensation Awards(3)
------------------------------- ------------
Number of
Securities
Other Annual Underlying
Name and Principal Position(1) Year Salary($) Bonus($) Compensation(2) Options
------------------------------ ---- --------- -------- --------------- ------------
Peter W. Bell............................. 2001 $225,000 $100,000 $51,657(4) 250,000
Chairman of the Board of Directors, 2000 179,167 100,000 53,137(4) --
Executive Officer and President 1999 175,000 -- -- --
William D. Miller......................... 2001 175,000 -- -- 100,000
Executive Vice President, Chief Technical 2000 175,000 -- -- --
Officer and Director 1999 175,000 -- -- --
Paul C. Flanagan.......................... 2001 200,000 100,000 30,071(4) 850,000
Executive Vice President, Chief Financial 2000 159,583 80,000 -- 10,000
Officer, Treasurer and Secretary 1999 112,500 80,000 -- 700,000
Jeffrey P. Keohane........................ 2001 141,193 100,000 -- 600,000
Executive Vice President, Worldwide Sales 2000 -- -- -- --
1999 -- -- -- --
6
Long-Term
Compensation
Annual Compensation Awards(3)
------------------------------------ ------------
Number of
Securities
Other Annual Underlying
Name and Principal Position(1) Year Salary($) Bonus($) Compensation(2) Options
------------------------------ ---- --------- -------- --------------- ------------
John C. Clavin................... 2001 168,750 58,008 -- 300,000
Senior Vice President, Marketing 2000 160,000 80,000 -- 200,000
1999 66,667 52,500 -- 500,000
Kenneth W. Fehrnstrom............ 2001 181,250(5) 112,000 1,500,000
Chief Operating Officer 2000 -- -- -- --
1999 -- -- -- --
--------
(1) Messrs. Bell and Miller commenced employment in October 1998, Mr. Flanagan
commenced employment in March 1999, and Mr. Keohane commenced employment in
March 2001. Mr. Clavin commenced employment in August 1999; due to changes
in his responsibilities, Mr. Clavin is no longer an executive officer. Mr.
Fehrnstrom's employment commenced in April, 2001 and terminated in
November, 2001.
(2) Other compensation in the form of perquisites and other personal benefits
has been omitted because these perquisites and other personal benefits did
not exceed the lesser of either $50,000 or 10% of the total salary and
bonus for each Named Executive Officer for that year.
(3) We do not have any long-term compensation plans that include any long-term
incentive payouts. No stock appreciation rights have been granted to or are
held by any of the Named Executive Officers.
(4) Represents after-tax amount paid by StorageNetworks on behalf of the
executive for tax consulting and related services.
(5) Includes $50,000 of salary continuation payments made after termination of
Mr. Fehrnstrom's employment. The bonus payment was also made after
termination of Mr. Fehrnstrom's employment.
Option Grants During Fiscal Year 2001
The following table sets forth each grant of stock options during 2001 to
each of our Named Executive Officers. No stock appreciation rights were granted
during 2001.
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term(2)
-------------------------------------------- -----------------------------
Percent of
Total
Number of Options Exercise
Securities Granted to or Base
Underlying Employees in Price Per
Options Fiscal Year Share ($/ Expiration
Name Granted 2001 (%) share)(1) Date 5% ($) 10% ($)
---- ---------- ------------ --------- ---------- ---------- ----------
Peter W. Bell........... 250,000 2.2% $20.125 1/10/11 $3,164,126 $8,018,517
William D. Miller....... 100,000 .9 20.125 1/10/11 1,265,650 3,207,407
Paul C. Flanagan........ 100,000 .9 20.125 1/10/11 1,265,650 3,207,407
250,000 2.2 7.80 4/10/11 1,226,345 3,107,798
500,000 4.3 4.66 8/21/11 1,465,324 3,713,420
Jeffrey P. Keohane...... 300,000 2.6 8.9062 3/13/11 1,680,318 4,258,257
300,000 2.6 4.66 8/21/11 879,195 2,228,052
John C. Clavin.......... 100,000 .9 20.125 1/10/11 1,265,650 3,207,407
200,000 1.7 4.66 8/21/11 586,130 1,485,368
Kenneth W. Fehrnstrom(3) 1,500,000 12.9 7.80 4/10/11 7,358,067 18,646,787
--------
(1) All options were granted at the fair market value of our common stock as
determined by our board of directors on the date of grant. The options vest
over four years, subject to acceleration in certain
7
circumstances, including certain circumstances involving an acquisition,
merger or change of control of StorageNetworks.
(2) The potential realizable value is calculated based on the term of the stock
option at the time of grant. Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the Securities and Exchange
Commission and does not represent our prediction of our future stock price
performance. The potential realizable values at 5% and 10% appreciation are
calculated by assuming that the exercise price on the date of grant
appreciates at the indicated rate for the entire term of the stock option
and that the stock option is exercised at the exercise price and sold on
the last day of its term at the appreciated price.
(3) These options were cancelled following the termination of Mr. Fehrnstrom's
employment in November 2001.
Options Exercised During Fiscal Year 2001 and Fiscal Year-End Option Values
The following table sets forth for each of our Named Executive Officers the
stock options exercised and the number and value of securities underlying
unexercised options that were held by our Named Executive Officers as of
December 31, 2001.
Number of Securities
Underlying Value of Unexercised In-
Shares Value Unexercised Options at the-Money Options at
Acquired on Realized December 31, 2001 December 31, 2001($)(2)
Name Exercise(#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ---------- ------------------------- -------------------------
Peter W. Bell........ -- -- --/250,000 --/--
William D. Miller.... -- -- --/100,000 --/--
Paul C. Flanagan(3).. 369,250 $2,677,222 97,000/856,250 $529,660/$760,000
Jeffrey P. Keohane... -- -- --/600,000 --/456,000
John C. Clavin....... 141,750 1,790,000 75,000/643,250 --/1,601,188
Kenneth W. Fehrnstrom -- -- --/-- --/--
--------
(1) Based on the fair market value of our common stock on the day of exercise,
less the option exercise price.
(2) Based on the closing sale price of our common stock on December 31, 2001
($6.18 per share), as reported by the Nasdaq National Market, less the
option exercise price.
(3) In August 2001, StorageNetworks entered into an agreement with Mr. Flanagan
whereby certain options granted to Mr. Flanagan in 1999 for an aggregate of
700,000 shares were accelerated and became immediately exercisable,
resulting in immediate vesting of 331,250 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on our review of copies of reports filed by all of our
executive officers and directors who are required to file reports, referred to
as reporting persons, pursuant to Section 16(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or inquiries made to certain
reporting persons, we believe that during 2001 all filings required to be made
by the reporting persons were timely made in accordance with the requirements
of the Exchange Act, other than the following: the sale of 50,000 shares of our
common stock in two transactions by Mr. Clavin which were reported on a late
Form 4 filing; one late Form 4 filing by Mr. Davoli relating to a pro rata
distribution to him of 711 shares of our common stock from a limited
partnership; and one late Form 4 filing by William Schleyer, a former director,
relating to a pro rata distribution to him of 43,988 shares of our common stock
from a limited liability corporation.
Compensation Committee Report on Executive Compensation
The Compensation Committee of our board of directors has furnished the
following report on executive compensation.
8
The Compensation Committee of StorageNetworks' board of directors, which
consists of Messrs. Davoli, Gaal and Lambert, reviews executive salaries,
administers StorageNetworks' stock plans and any executive bonus and other
executive incentive plans and approves the salaries and other benefits of its
executive officers. In addition, the Compensation Committee consults with
StorageNetworks regarding its benefit plans and is responsible for reviewing
StorageNetworks' overall compensation policies and practices.
Compensation Philosophy
Since StorageNetworks' inception in October 1998, StorageNetworks has sought
to attract, retain and reward executive officers primarily through long-term
equity incentives in the form of stock options. As such, the salary component
of the executive officers' compensation reflected base salary at a lower level
and the stock component at a higher level than that of more established
companies in similar industries. In 2001, compensation for StorageNetworks'
executive officers consisted of base salary and potential bonuses based upon
the executive officer's individual performance and the overall performance of
StorageNetworks. The executive compensation philosophy is that a significant
portion of executive compensation should be tied directly to the performance of
StorageNetworks as a whole. By linking compensation to StorageNetworks'
business objectives, StorageNetworks believes that a performance-oriented
environment is created for its executives and other employees.
StorageNetworks' executive compensation program for 2001 was also intended
to align executive and stockholder interests by providing executives with an
equity interest in StorageNetworks through the granting of stock options. In
general, the size of option grants were recommended by Peter Bell, Chairman of
the Board, Chief Executive Officer and President, to the full board or the
Compensation Committee for approval. These recommendations were reviewed on the
basis of various factors, including the executive's responsibilities, the
executive's past, present and expected contributions to StorageNetworks and
current market grants in companies of similar size, market capitalization and
industry. The option grant to Mr. Bell during 2001 was determined solely by the
Compensation Committee.
Compensation in 2001
Base Salary. Base salaries for fiscal 2001 were, and executive compensation
for the upcoming fiscal year will be (except for Mr. Bell and Mr. Miller), set
within the range of compensation of executive officers that have comparable
qualifications, experience and responsibilities at companies in similar
businesses of comparable size and success. The Committee intends to continue to
adjust compensation appropriately in order to compete for and retain executives
who operate StorageNetworks effectively and to align the interests of its
executive officers with the long-term interests of stockholders.
Incentive Bonus. During 2001, the Company's bonus plan was based upon
StorageNetworks' overall performance and upon individual performance against
individual objectives during the year. In general, fifty percent of an
individual's bonus was based on the achievement of individual performance goals
and fifty percent was based on StorageNetworks' overall performance. For 2002,
executive officers will also be eligible to receive a portion of their annual
cash compensation based upon the performance of StorageNetworks, as well as
individual performance. The Committee intends to approve an executive bonus
plan each year.
Long-Term Incentives. StorageNetworks strongly believes in granting stock
options to its executive officers to tie executive officer compensation
directly to the long-term success of StorageNetworks and increases in
stockholder value. In determining the size of each stock option grant awarded
to executive officers in the future, the executive officer's position with
StorageNetworks, the executive officer's past performance and the number and
price of unvested options then held by the executive officer will be taken into
account. Stock options granted to executive officers have an exercise price
equal to the fair market value on the date of grant and vest over a four-year
period. Vesting of the options of certain executive officers may be accelerated
upon a change in control of StorageNetworks and in other limited circumstances.
For additional information concerning such accelerated vesting, see "Certain
Relationships and Related Party Transactions--Agreements with Executive
Officers and Change of Control Provisions."
9
Chairman and Chief Executive Officer Compensation
Mr. Bell has served as StorageNetworks' Chief Executive Officer and
President since October 1998 and as its Chairman of the Board since January
2000. The Compensation Committee determines Mr. Bell's salary based on
comparative salaries of chief executive officers of similar companies in
similar industries and the overall performance of StorageNetworks. In 2000, Mr.
Bell received a salary of $179,167 and a bonus of $100,000. During 2001, Mr.
Bell received a salary of $225,000, a bonus of $100,000, and an option to
purchase 250,000 shares of common stock, based primarily upon the significant
accomplishments of StorageNetworks during 2000 and 2001, including its
successful transition to a public company, its revenue growth, and its
achievement of certain profitability metrics. Effective as of February 2002,
Mr. Bell and Mr. Miller, StorageNetworks' founders, have elected to forego
their base salary for the remainder of the year. Accordingly, they will receive
no further salary during 2002.
Policy on Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), disallows a deduction to public companies for compensation over
$1,000,000 paid to the company's chief executive officer and four most highly
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. Having
considered the requirements of Section 162(m) of the Code, the Compensation
Committee believes that grants made pursuant to StorageNetworks' Amended and
Restated 1998 Stock Incentive Plan and 2000 Stock Plan meet such requirements
and are, therefore, exempt from the limitations on deductibility. Historically,
the compensation of each executive officer has been well below the $1,000,000
limit. The Compensation Committee's present intention is to structure its stock
option grants and certain other equity-based awards in a manner that complies
with Section 162(m) of the Code unless the Compensation Committee believes that
such compliance would not be in the best interest of StorageNetworks or its
stockholders.
By the Compensation Committee of the
Board of Directors
Robert A. Davoli
Stephen J. Gaal
Michael A. Lambert
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Messrs. Davoli, Gaal
and Lambert, each of whom served on the Compensation Committee during 2001. No
member of the Compensation Committee was at any time during 2001, or formerly,
an officer or employee of StorageNetworks or any of our subsidiaries, and no
member of the Compensation Committee had any relationship with StorageNetworks
requiring disclosure under Item 404 of Regulation S-K under the Exchange Act.
None of our executive officers has served as a director or member of the
compensation committee (or other committee serving an equivalent function) of
any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee.
Report of the Audit Committee of the Board of Directors
The Audit Committee of StorageNetworks' Board of Directors is composed of
three members and acts under a written charter first adopted and approved in
March 2000. The members of the Audit Committee are independent directors, as
defined by its charter and the rules of the Nasdaq National Market. The Audit
Committee held six meetings during the fiscal year ended December 31, 2001.
10
The Audit Committee reviewed StorageNetworks' audited financial statements
for the fiscal year ended December 31, 2001 and discussed these financial
statements with StorageNetworks' management. Management is responsible for
StorageNetworks' financial reporting process, including its system of internal
controls, and for the preparation of consolidated financial statements in
accordance with generally accepted accounting principles. StorageNetworks'
independent auditors, Ernst & Young LLP, are responsible for performing an
independent audit of, and issuing a report on, those financial statements. The
Audit Committee is responsible for monitoring and overseeing these processes.
The Audit Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations.
As appropriate, the Audit Committee reviews and evaluates, and discusses
with StorageNetworks' management, internal accounting, financial and auditing
personnel and the independent auditors, the following:
. the plan for, and the independent auditors' report on, each audit of
StorageNetworks' financial statements;
. StorageNetworks' financial disclosure documents;
. management's selection, application and disclosure of critical
accounting policies;
. StorageNetworks' accounting practices, principles, controls or
methodologies;
. significant developments or changes in accounting rules applicable to
StorageNetworks; and
. the adequacy of StorageNetworks' internal controls and accounting,
financial and auditing personnel.
Management represented to the Audit Committee that StorageNetworks'
financial statements had been prepared in accordance with generally accepted
accounting principles.
The Audit Committee also reviewed and discussed the audited financial
statements and the matters required by Statement on Auditing Standards No. 61
(Communication with Audit Committees) with Ernst & Young LLP. SAS 61 requires
StorageNetworks' independent auditors to discuss with the Audit Committee,
among other things, the following:
. methods to account for significant unusual transactions;
. the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
. the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and
. disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
The Company's independent auditors also provided the Audit Committee with
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). Independence
Standards Board Standard No. 1 requires auditors annually to disclose in
writing all relationships that in the auditor's professional opinion may
reasonably be thought to bear on independence, confirm their perceived
independence and engage in a discussion of independence. In addition, the Audit
Committee discussed with the independent auditors their independence from
StorageNetworks. The Audit Committee also considered whether the independent
auditors' provision of certain other, non-audit related services to
StorageNetworks is compatible with maintaining such auditors' independence.
11
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and
the independent auditors, the Audit Committee recommended to the Company's
board of directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001. The
Audit Committee and the board of directors have also recommended, subject to
stockholder approval, the selection of StorageNetworks' independent auditors.
By the Audit Committee of the Board
of Directors
Robert E. Davoli
Stephen J. Gaal
Michael D. Lambert
Comparative Stock Performance
The following graph compares the cumulative total return to stockholders of
our common stock for the period from June 30, 2000, the date our common stock
was first traded on the Nasdaq National Market, through December 31, 2001, with
the cumulative total return over such period of (i) the Nasdaq Stock Market
(U.S.) Index and (ii) the S&P Technology Sector Index. The graph assumes the
investment of $100 in our common stock and in each of such indices (and the
reinvestment of all dividends). The performance shown is not necessarily
indicative of future performance.
[CHART]
COMPARISON OF CUMULATIVE TOTAL RETURN
STORAGENETWORKS TECHNOLOGY - SECTOR NASDAQ US
6/30/2000 100.00 100.00 100.00
12/31/2000 27.49 64.71 79.35
12/31/2001 6.85 49.34 62.96
In accordance with the rules of the Commission, cumulative total return data
for the common stock is based on the closing sale price of $90.25 per share on
June 30, 2001, rather than the initial public offering price of $27.00 per
share.
Notwithstanding anything to the contrary set forth in any of our filings
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, that might incorporate other filings with the Commission,
12
including this Proxy Statement, in whole or in part, the Compensation Committee
Report on Executive Compensation, the Report of the Audit Committee and the
above Cumulative Return graph shall not be deemed incorporated by reference
into any such filings.
Certain Relationships and Related Party Transactions
Stockholder Agreements. In connection with sales of preferred convertible
and common stock, StorageNetworks entered into a stockholder rights agreement
pursuant to which holders of such preferred stock and common stock are entitled
to registration rights with respect to their preferred and common shares. Each
of our current directors is a party to the stockholder rights agreement or is
affiliated with entities that are or were party to the agreement.
Agreements With Executive Officers and Change of Control Provisions.
In March 1999 StorageNetworks entered into an employment agreement with Paul
C. Flanagan. The employment agreement provides for an annual base salary and
bonus compensation if certain annual targets are met. If Mr. Flanagan's
employment is terminated without cause within one year subsequent to a change
of control of the Company, he will continue to receive his base salary until
the earlier of 180 days after termination of employment or his commencement of
employment with another party. He will also receive a lump sum payment of the
portion of his expected annual bonus, prorated for the portion of the calendar
year he was employed prior to termination. In August, 2001, StorageNetworks
entered into an agreement with Mr. Flanagan whereby certain options granted to
Mr. Flanagan in 1999 for an aggregate of 700,000 shares were accelerated and
became immediately exercisable, resulting in immediate vesting of 331,250
shares.
All of the stock options granted to Mr. Bell, Mr. Miller and Mr. Clavin, and
the remaining options granted to Mr. Flanagan, become exercisable over a
four-year period from the date of grant; but upon a merger, consolidation or
sale of substantially all of our assets, any then unvested portion of such
options becomes immediately exercisable. The unvested portions of the options
granted to Mr. Keohane become immediately exercisable if his employment is
terminated in certain circumstances within one year of a change of control
event.
In August, 2001, we entered into contingent compensation payment agreements
with Mr. Bell, Mr. Miller and Mr. Flanagan. Under the terms of these
agreements, we will make additional payments (sometimes referred to as gross-up
payments) to these executives in the event the executive receives any
contingent compensation payments as the result of a change of ownership or
control of StorageNetworks. The additional payments will be equal to the amount
of excise tax owed by the executive upon receipt of the contingent compensation
payment plus the amount necessary to pay all additional taxes attributable to
the receipt of the additional payment.
Other Transactions with Stockholders and Related Parties
In June 2000, we entered into a master lease agreement under which we lease
certain equipment from Dell Financial Services L.P., an affiliate of one of our
former five percent stockholders, Dell USA L.P., and an affiliate of Dell
Computer Corporation. As of December 31, 2001, Dell USA L.P. held less than
five percent of our common stock. Mr. Lambert, one of our directors, is
employed by Dell Computer Corporation. During the year ended December 31, 2001,
we leased approximately $430,111 of equipment under this lease agreement.
During the year ended 2001, StorageNetworks purchased approximately $75,286 of
computers and related equipment from Dell Computer Corporation. In May 2000,
StorageNetworks entered into an agreement for professional services with Dell
Marketing L.P., an affiliate of Dell USA L.P., under which Dell Marketing L.P.
may engage StorageNetworks to perform professional services for it or for its
customers. During 2001, Dell Marketing L.P. paid StorageNetworks an aggregate
of $81,337 under this agreement.
13
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The board of directors has selected Ernst & Young LLP, independent auditors,
to audit StorageNetworks' financial statements for the year ending December 31,
2002. Ernst & Young LLP has audited our financial statements for each fiscal
year since our inception. Although stockholder approval of the selection of
Ernst & Young LLP is not required by law, the board of directors believes that
it is advisable to give stockholders an opportunity to ratify this selection.
The affirmative vote of holders of a majority of the shares of common stock
represented at the meeting is necessary to ratify the selection of Ernst &
Young LLP as our independent auditors and the board of directors recommends
that the stockholders vote FOR ratification of such selection. In the event of
a negative vote, the board of directors will reconsider its selection.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do
so, and are expected to be available to respond to appropriate questions.
Audit Fees
Ernst & Young LLP billed us an aggregate of $130,134 for audit-related fees
rendered in connection with the audit of our financial statements for the year
ended December 31, 2001 and the reviews of the financial statements included in
each of our Quarterly Reports on Form 10-Q during 2001.
Financial Information Systems Design and Implementation Fees
Ernst & Young LLP did not perform any professional services in connection
with our financial information systems design or implementation, the operation
of our information system or the management of our local area network.
All Other Fees
Ernst & Young LLP billed us an aggregate of $104,681 in fees for other
services, primarily for tax advisory fees and fees for services in connection
with SEC registration statements rendered to us and our affiliates, for the
fiscal year ended December 31, 2001.
Board Recommendation
The board of directors believes that the selection of Ernst & Young LLP as
independent auditors for the year ending December 31, 2002 is in the best
interests of StorageNetworks and its stockholders and therefore recommends that
the stockholders vote FOR this proposal.
OTHER MATTERS
The board of directors does not know of any other matters that may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by StorageNetworks. In
addition to solicitations by mail, StorageNetworks' directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names, and StorageNetworks will reimburse them
for their reasonable out-of-pocket expenses incurred in connection with the
distribution of proxy materials.
14
Deadline for Submission of Stockholder Proposals for the 2003 Annual Meeting
Proposals of stockholders intended to be presented at the 2003 Annual
Meeting pursuant to Rule 14a-8 promulgated under the Exchange Act, must be
received by StorageNetworks no later than December 9, 2002 in order that they
may be included in the proxy statement and form of proxy relating to that
meeting.
In addition, StorageNetworks' by-laws require that StorageNetworks be given
advance notice of stockholder nominations for election to StorageNetworks'
board of directors and of other business that stockholders wish to present for
action at an annual meeting of stockholders (other than matters included in
StorageNetworks' proxy statement in accordance with Rule 14a-8). The required
notice must be delivered by the stockholder and received by the secretary at
the principal executive offices of StorageNetworks (a) no earlier than 90 days
before and no later than 70 days before the first anniversary of the preceding
year's annual meeting, or (b) if the date of the annual meeting is advanced by
more than 20 days or delayed by more than 70 days from the first anniversary
date, (i) no earlier than 90 days before the annual meeting and (ii) no later
than 70 days before the annual meeting or ten days after the day notice of the
annual meeting was mailed or publicly disclosed, whichever occurs first.
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
/s/ Paul C. Flanagan
PAUL C. FLANAGAN
Executive Vice President, Chief
Financial
Officer and Secretary
April 8, 2002
Appendix A--Proxy Card
15
STORAGENETWORKS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - May 15, 2002
Those signing on the reverse side, revoking any prior proxies, hereby
appoint(s) Paul C. Flanagan and Dean J. Breda, or each of them with full power
of substitution, as proxies for those signing on the reverse side to act and
vote at the 2002 Annual Meeting of Stockholders of StorageNetworks, Inc. and at
any adjournments thereof as indicated upon all matters referred to on the
reverse side and described in the Proxy Statement for the Meeting, and, in their
discretion, upon any other matters which may properly come before the Meeting.
This Proxy When Properly Executed Will Be Voted in the Manner Directed by
the Undersigned Stockholder(s). If No Other Indication Is Made, the Proxies
Shall Vote "For" Proposal Numbers 1 and 2.
The Board of Directors favors a vote "For" Proposals Nos. 1 and 2, and
unless instructions to the contrary are indicated in the space provided, the
proxy will be so voted.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
---------------------------------- ----------------------------------------
---------------------------------- ----------------------------------------
---------------------------------- ----------------------------------------
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE
AND RETURN PROMPLTY IN ENCLOSED ENVELOPE
1
Please date, sign and mail your
Proxy card back as soon as possible!
Annual Meeting of Stockholders
StorageNetworks, Inc.
May 15, 2002
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
---------------
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH TONE ONLY)
--------------------------------------
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
-------------------
Please access the web page at www.voteproxy.com and follow the on-screen
instructions. Have your control number available when you access the web page.
YOUR CONTROL NUMBER IS ----- ___________________________
Please Detach and Mail in the Envelope Provided
2
[X] Please mark
votes as in
this example.
A vote FOR the director nominee and FOR proposal number 2 is recommended by the
Board of Directors.
1. Election of Class II Director Nominee: 2. Approval of the selection of FOR AGAINST ABSTAIN
Ernst & Young LLP as
Robert E. Davoli independent auditors for the [ ] [ ] [ ]
fiscal year ending
December 31, 2002.
To transact
such other
business as may
properly come
before the
meeting.
FOR the WITHHELD
nominee from the
(except as nominee
indicated to
the contrary)
[ ] [ ]
MARK HERE
FOR ADDRESS CHANGE [ ]
All nominees except as noted below OR COMMENTS AND
NOTE ON REVERSE
-------------------------------
Signature:____________________ Date:________ Signature:______________ Date:
Account Number:
NOTE: Please sign this proxy exactly as your name appears hereon. Joint owners
should each sign personally. Trustees and other fiduciaries should indicate the
capacity in which they sign. If a corporation or partnership, this signature
should be that of an authorized officer who should state his or her title.
3