PREM14A 1 a16-14187_1prem14a.htm PREM14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

 

Filed by the Registrant  x

 

Filed by a Party other than the Registrant  o

 

Check the appropriate box:

x

Preliminary Proxy Statement

o

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material under §240.14a-12

 

LINKEDIN CORPORATION

(Name of Registrant as Specified In Its Charter)

 

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

o

No fee required.

x

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:

 

 

Class A common stock, par value $0.0001 per share, and Class B common stock, par value $0.0001 per share, of LinkedIn Corporation (together, “common stock”)

 

(2)

Aggregate number of securities to which transaction applies:

 

 

As of June 15, 2016, there were outstanding: (1) 134,714,008 shares of common stock; (2) 1,808,100 shares of common stock issuable upon the exercise of stock options with an exercise price below $196.00; and (3) 7,559,462 shares of common stock underlying restricted stock units.

 

(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):

 

 

The maximum aggregate value was determined based upon the sum of: (1) 134,714,008 shares of common stock multiplied by $196.00 per share; (2) stock options to purchase 1,808,100 shares of common stock with an exercise price per share below $196.00 multiplied by $134.69 per share (the difference between $196.00 and the weighted average exercise price of $61.31 per share); and (3) 7,559,462 shares of common stock underlying restricted stock units multiplied by $196.00 per share. In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying the sum calculated in the preceding sentence by 0.0001007.

 

(4)

Proposed maximum aggregate value of transaction:

 

 

$28,129,133,109.00

 

(5)

Total fee paid:

 

 

$2,832,603.70

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:

 

 

 

 



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PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION

 

GRAPHIC

 

LinkedIn Corporation

2029 Stierlin Court

Mountain View, CA 94043

 

[·], 2016

 

Dear LinkedIn Stockholder:

 

You are cordially invited to attend a special meeting of stockholders, which we refer to as the “special meeting,” of LinkedIn Corporation to be held on [·], 2016, at the Computer History Museum, 1401 N. Shoreline Blvd., Mountain View, CA 94043, at [·], Pacific time.

 

At the special meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of June 11, 2016, as it may be amended from time to time, which we refer to as the “merger agreement,” by and among LinkedIn, Microsoft Corporation, which we refer to as “Microsoft,” and Liberty Merger Sub Inc.  We refer to the acquisition of LinkedIn by Microsoft as the “merger.”  At the special meeting, you will also be asked to consider and vote on a non-binding, advisory proposal to approve compensation that will or may become payable by LinkedIn to its named executive officers in connection with the merger.

 

If the merger is completed, you will be entitled to receive $196.00 in cash, without interest and subject to any applicable withholding taxes, for each share of Class A common stock and Class B common stock, which we refer to collectively as the “common stock,” that you own (unless you have properly exercised your appraisal rights), which represents a premium of approximately 49.5% over the closing price of LinkedIn’s Class A common stock on June 10, 2016, the last trading day prior to the public announcement of the merger agreement.

 

LinkedIn’s Board of Directors, after considering the factors more fully described in the enclosed proxy statement, has unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement, on and subject to the conditions set forth therein, are fair to, advisable and in the best interests of LinkedIn and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement in all respects.

 

LinkedIn’s Board of Directors unanimously recommends that you vote (1) “FOR” the adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger, which we refer to collectively as the “proposals.”

 

The enclosed proxy statement provides detailed information about the special meeting, the merger agreement and the merger.  A copy of the merger agreement is attached as Annex A to this proxy statement.

 

This proxy statement also describes the actions and determinations of LinkedIn’s Board of Directors in connection with its evaluation of the merger agreement and the merger.  We encourage you to read this proxy statement and its annexes, including the merger agreement, carefully and in their entirety, as they contain important information.

 



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Whether or not you plan to attend the special meeting in person, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone.  If you attend the special meeting and vote in person by ballot, your vote will revoke any proxy that you have previously submitted.

 

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.  Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the merger agreement, without your instructions.

 

If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

 

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders May Call:

(877) 825-8621 (Toll-Free From the U.S. and Canada)

or

(412) 232-3651 (From Other Locations)

 

On behalf of the Board of Directors, thank you for your support.

 

Sincerely,

 

GRAPHIC

GRAPHIC

GRAPHIC

 

 

 

Reid Hoffman
Chair of the Board of Directors

A. George “Skip” Battle
Lead Independent Director

Jeffrey Weiner
Chief Executive Officer

 

The accompanying proxy statement is dated [·], 2016 and, together with the enclosed form of proxy card, is first being mailed on or about [·], 2016.

 



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PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION

 

GRAPHIC

 

LinkedIn Corporation

2029 Stierlin Court

Mountain View, CA 94043

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [·], 2016

 

Notice is hereby given that a special meeting of stockholders of LinkedIn Corporation, a Delaware corporation, referred to as LinkedIn, will be held on [·], 2016, at the Computer History Museum, 1401 N. Shoreline Blvd., Mountain View, CA 94043, at [·], Pacific time, for the following purposes:

 

1.     To consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated as of June 11, 2016, as it may be amended from time to time, referred to as the merger agreement, by and among LinkedIn, Microsoft Corporation and Liberty Merger Sub Inc.;

 

2.     To consider and vote on any proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting;

 

3.     To consider and vote on the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to its named executive officers in connection with the merger contemplated by the merger agreement; and

 

4.     To transact any other business that may properly come before the special meeting or any adjournment, postponement or other delay of the special meeting.

 

Only stockholders as of the close of business on [·], 2016, are entitled to notice of the special meeting and to vote at the special meeting or any adjournment, postponement or other delay thereof.

 

LinkedIn’s Board of Directors unanimously recommends that you vote (1) “FOR” the adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by LinkedIn to its named executive officers in connection with the merger, which we refer to collectively as the “proposals.”

 

LinkedIn stockholders who do not vote in favor of the proposal to adopt the merger agreement will have the right to seek appraisal of the fair value of their shares of common stock, as determined in accordance with Section 262 of the General Corporation Law of the State of Delaware, which we refer to as the “DGCL.” if they deliver a demand for appraisal before the vote is taken on the merger agreement and comply with all of the requirements of Delaware law, including Section 262 of the DGCL, which are summarized in the accompanying proxy statement. Section 262 of the DGCL is reproduced in its entirety in Annex C to the accompanying proxy statement and is incorporated therein by reference.

 

Whether or not you plan to attend the special meeting in person, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone.  If you attend the special meeting and vote in person by ballot, your vote will revoke any proxy that you have previously submitted.  If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.  Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the merger agreement, without your instructions.

 

 

By Order of the Board of Directors,

 

 

 

GRAPHIC

 

 

 

Michael J. Callahan

 

Senior Vice President, General Counsel & Secretary

 

 

Dated: [·], 2016

 

 



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IMPORTANT INFORMATION

 

Whether or not you plan to attend the special meeting in person, we encourage you to submit your proxy as promptly as possible (1) over the internet; (2) by telephone; or (3) by signing and dating the enclosed proxy card and returning it in the accompanying prepaid reply envelope.  You may revoke your proxy or change your vote at any time before it is voted at the special meeting.

 

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.  Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the merger agreement, without your instructions.

 

If you are a stockholder of record, voting in person by ballot at the special meeting will revoke any proxy that you previously submitted.  If you hold your shares through a bank, broker or other nominee, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your shares in order to vote in person at the special meeting.

 

We encourage you to read the accompanying proxy statement and its annexes, including all documents incorporated by reference into the accompanying proxy statement, carefully and in their entirety.  If you have any questions concerning the merger, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement, or need help voting your shares of common stock, please contact our proxy solicitor:

 

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders May Call:

(877) 825-8621 (Toll-Free From the U.S. and Canada)

or

(412) 232-3651 (From Other Locations)

 



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Page

 

 

SUMMARY

1

Parties Involved in the Merger

1

Effect of the Merger

2

Effect on LinkedIn if the Merger is Not Completed

2

Merger Consideration

2

The Special Meeting

2

Recommendation of the LinkedIn Board and Reasons for the Merger

4

Fairness Opinion of Qatalyst Partners

4

Treatment of Equity Awards in the Merger

5

Employee Benefits

6

Interests of LinkedIn’s Directors and Executive Officers in the Merger

7

Appraisal Rights

8

Material U.S. Federal Income Tax Consequences of the Merger

8

Regulatory Approvals Required for the Merger

9

No Solicitation of Other Offers

9

Change in the LinkedIn Board’s Recommendation

10

Conditions to the Closing of the Merger

10

Termination of the Merger Agreement

11

Termination Fee

12

QUESTIONS AND ANSWERS

13

FORWARD-LOOKING STATEMENTS

22

THE SPECIAL MEETING

24

Date, Time and Place

24

Purpose of the Special Meeting

24

Record Date; Shares Entitled to Vote; Quorum

24

Vote Required; Abstentions and Broker Non-Votes

24

Shares Held by LinkedIn’s Directors and Executive Officers

25

Voting of Proxies

25

Revocability of Proxies

26

The LinkedIn Board’s Recommendation

26

Adjournment

27

Solicitation of Proxies

27

Anticipated Date of Completion of the Merger

27

Appraisal Rights

27

Other Matters

27

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on [·], 2016

28

Householding of Special Meeting Materials

28

Questions and Additional Information

28

THE MERGER

29

Parties Involved in the Merger

29

Effect of the Merger

29

Effect on LinkedIn if the Merger is Not Completed

30

Merger Consideration

30

Background of the Merger

31

Recommendation of the LinkedIn Board and Reasons for the Merger

46

Fairness Opinion of Qatalyst Partners

49

 

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(Continued)

 

 

Page

 

 

Financial Forecasts

55

Interests of LinkedIn’s Directors and Executive Officers in the Merger

58

Closing and Effective Time of the Merger

72

Appraisal Rights

73

Accounting Treatment

77

Material U.S. Federal Income Tax Consequences of the Merger

77

Regulatory Approvals Required for the Merger

80

PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

82

PROPOSAL 2: ADJOURNMENT OF THE SPECIAL MEETING

83

PROPOSAL 3: ADVISORY, NON-BINDING VOTE TO APPROVE CERTAIN MERGER-RELATED EXECUTIVE COMPENSATION ARRANGEMENTS

84

THE MERGER AGREEMENT

85

Closing and Effective Time of the Merger

85

Effects of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

85

Conversion of Shares

86

Exchange and Payment Procedures

88

Representations and Warranties

88

Conduct of Business Pending the Merger

92

No Solicitation of Other Offers

93

The LinkedIn Board’s Recommendation; Company Board Recommendation Change

95

Stockholder Meeting

97

Employee Benefits

97

Efforts to Close the Merger

98

Indemnification and Insurance

98

Transaction Litigation

99

Conditions to the Closing of the Merger

99

Termination of the Merger Agreement

101

Termination Fee

102

Specific Performance

103

Fees and Expenses

103

Amendment

103

Governing Law; Venue

103

MARKET PRICES AND DIVIDEND DATA

104

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

105

FUTURE STOCKHOLDER PROPOSALS

108

WHERE YOU CAN FIND MORE INFORMATION

109

MISCELLANEOUS

111

 

ANNEXES

 

Annex A — Agreement and Plan of Merger

Annex B — Opinion of Qatalyst Partners

Annex C — Section 262 of the General Corporation Law of the State of Delaware

 

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SUMMARY

 

This summary highlights selected information from this proxy statement related to the merger of Liberty Merger Sub Inc. (a wholly owned subsidiary of Microsoft Corporation) with and into LinkedIn Corporation, which we refer to as the “merger,” and may not contain all of the information that is important to you.  To understand the merger more fully and for a more complete description of the legal terms of the merger, you should carefully read this entire proxy statement, the annexes to this proxy statement and the documents that we refer to in this proxy statement.  You may obtain the documents we file with the Securities and Exchange Commission, which we refer to as the “SEC,” without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.”  The merger agreement is attached as Annex A to this proxy statement.  We encourage you to read the merger agreement, which is the legal document that governs the merger, carefully and in its entirety.

 

Except as otherwise specifically noted in this proxy statement, “LinkedIn,” “we,” “our,” “us” and similar words refer to LinkedIn Corporation, including, in certain cases, our subsidiaries.  Throughout this proxy statement, we refer to Microsoft Corporation as “Microsoft” and Liberty Merger Sub Inc. as “Merger Sub.”  In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger, dated as of June 11, 2016, as it may be amended from time to time, by and among LinkedIn, Microsoft and Merger Sub as the “merger agreement.”

 

Parties Involved in the Merger

 

LinkedIn Corporation

 

LinkedIn is the world’s largest professional network on the internet with over 433 million members in over 200 countries and territories as of the date of this proxy statement. Members use our platform to stay connected and informed, advance their career and work smarter.

 

LinkedIn’s Class A common stock is listed on the New York Stock Exchange, which we refer to as the “NYSE,” under the symbol “LNKD.” LinkedIn’s principal executive offices are located at 2029 Stierlin Court, Mountain View, CA 94043, and its telephone number is (650) 687-3600.

 

Microsoft Corporation

 

Microsoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more. Its strategy is to build best-in-class platforms and productivity services for a mobile-first, cloud-first world.  Founded in 1975, Microsoft operates worldwide and has offices in more than 100 countries. Microsoft develops, licenses, and supports a wide range of software products, services, and devices that deliver new opportunities, greater convenience, and enhanced value to people’s lives. Microsoft offers an array of services, including cloud-based services, to consumers and businesses. Microsoft designs, manufactures, and sells devices that integrate with its cloud-based services, and Microsoft delivers relevant online advertising to a global audience.

 

Microsoft’s common stock is listed on the NASDAQ Stock Market, which we refer to as “Nasdaq,” under the symbol “MSFT.” Microsoft’s principal executive offices are located at One Microsoft Way, Redmond, WA 98052, and its telephone number is (425) 882-8080.

 

Liberty Merger Sub Inc.

 

Merger Sub is a wholly owned direct subsidiary of Microsoft and was formed on June 10, 2016, solely for the purpose of engaging in the transactions contemplated by the merger agreement and has not engaged in any business activities other than in connection with the transactions contemplated by the merger agreement.  Merger Sub’s principal executive offices are located at One Microsoft Way, Redmond, WA 98052 and its telephone number is (425) 882-8080.

 

 

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Effect of the Merger

 

Upon the terms and subject to the conditions of the merger agreement, Merger Sub will merge with and into LinkedIn, with LinkedIn continuing as the surviving corporation and as a wholly owned subsidiary of Microsoft.  Throughout this proxy statement, we use the term “surviving corporation” to refer to LinkedIn as the surviving corporation following the merger.  As a result of the merger, LinkedIn will cease to be a publicly traded company.  If the merger is completed, you will not own any shares of the capital stock of the surviving corporation.

 

The time at which the merger becomes effective, which we refer to as the “effective time of the merger,” will occur upon the filing of a certificate of merger with and acceptance of such certificate by the Secretary of State of the State of Delaware (or at such later time as LinkedIn, Microsoft and Merger Sub may agree and specify in such certificate of merger).

 

Effect on LinkedIn if the Merger is Not Completed

 

If the merger agreement is not adopted by LinkedIn stockholders or if the merger is not completed for any other reason, LinkedIn stockholders will not receive any payment for their shares of Class A common stock and Class B common stock, which we refer to collectively as the “common stock.”  Instead, LinkedIn will remain an independent public company, our Class A common stock will continue to be listed and traded on the NYSE and registered under the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act,” and we will continue to file periodic reports with the SEC.  Under specified circumstances, LinkedIn will be required to pay Microsoft a termination fee upon the termination of the merger agreement.  For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination Fee.”

 

Merger Consideration

 

In the merger, each outstanding share of common stock (other than shares held by (1) LinkedIn as treasury stock; (2) Microsoft, Merger Sub or their respective subsidiaries; and (3) LinkedIn stockholders who have properly and validly exercised and perfected their appraisal rights under Delaware law with respect to such shares) will be cancelled and converted into the right to receive $196.00 in cash, without interest and less any applicable withholding taxes, which amount we refer to as the “per share merger consideration.”  At or promptly following the effective time of the merger, Microsoft will deposit sufficient funds to pay the aggregate per share merger consideration with a designated paying agent.  Once a stockholder has provided the paying agent with his, her or its stock certificates (or customary agent’s message with respect to book-entry shares), letter of transmittal and the other items specified by the paying agent, the paying agent will promptly pay the stockholder the per share merger consideration.  For more information, see the section of this proxy statement captioned “The Merger Agreement—Exchange and Payment Procedures.”

 

After the merger is completed, you will have the right to receive the per share merger consideration, but you will no longer have any rights as a stockholder (except that LinkedIn stockholders who properly and validly exercise and perfect, and do not validly withdraw or subsequently lose, their appraisal rights will have the right to receive a payment for the “fair value” of their shares as determined pursuant to an appraisal proceeding as contemplated by Delaware law, as described below under the section of this proxy statement captioned “The Merger—Appraisal Rights”).

 

The Special Meeting

 

Date, Time and Place

 

A special meeting of stockholders will be held on [·], 2016, at the Computer History Museum, 1401 N. Shoreline Blvd., Mountain View, CA 94043, at [·], Pacific time.  We refer to the special meeting, and any adjournment, postponement or other delay of the special meeting, as the “special meeting.”

 

 

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Purpose

 

At the special meeting, we will ask stockholders to vote on proposals to (1) adopt the merger agreement; (2) adjourn the special meeting to a later date or dates to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Record Date; Shares Entitled to Vote

 

You are entitled to vote at the special meeting if you owned shares of common stock at the close of business on [·], 2016, which we refer to as the “record date.”  You will have one vote at the special meeting for each share of Class A common stock that you owned as of the close of business on the record date, and you will have 10 votes at the special meeting for each share of Class B common stock that you owned as of the close of business on the record date.  The Class A common stock and Class B common stock are voting as a single class on the proposals to be considered at the special meeting.

 

Quorum

 

As of the record date, there were [·] shares of Class A common stock and [·] shares of Class B common stock outstanding and entitled to vote at the special meeting.  The presence in person or by proxy of the holders of a majority of the aggregate voting power of all outstanding shares of common stock entitled to vote at the special meeting will constitute a quorum at the special meeting.

 

Required Vote

 

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of common stock entitled to vote on the proposal.  Approval of the proposal to adjourn the special meeting, whether or not a quorum is present, requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.  Approval, by non-binding, advisory vote, of compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

 

Share Ownership of Our Directors and Executive Officers

 

As of the record date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [·] shares of common stock, representing approximately [·]% of the shares of common stock, and approximately [·]% of the total voting power of the shares of common stock, outstanding on the record date.  Our co-founder and Chair of the Board of Directors, Reid Hoffman, beneficially owned and was entitled to vote, in the aggregate, [·] shares of Class B common stock, representing approximately [·]% of the shares of common stock, and approximately [·]% of the total voting power of the shares of common stock, outstanding on the record date.  Our directors and executive officers have informed us that they intend to vote all of their shares of common stock (1) FOR” the adoption of the merger agreement; (2) FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Voting and Proxies

 

Any stockholder of record entitled to vote may submit a proxy by returning a signed and dated proxy card in the accompanying prepaid reply envelope or granting a proxy electronically over the internet or by telephone.  A stockholder of record may also vote in person by appearing at the special meeting and voting by ballot.  If you are a beneficial owner

 

 

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and hold your shares of common stock in “street name” through a bank, broker or other nominee, you should instruct your bank, broker or other nominee on how you wish to vote your shares of common stock using the instructions provided by your bank, broker or other nominee.  Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote on routine matters.  The proposals to be considered at the special meeting are non-routine matters, and banks, brokers and other nominees cannot vote on these proposals without your instructions.  Therefore, it is important that you cast your vote or instruct your bank, broker or nominee on how you wish to vote your shares.

 

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by (1) signing another proxy card with a later date and returning it prior to the special meeting; (2) submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy; (3) delivering a written notice of revocation to our Corporate Secretary; or (4) attending the special meeting and voting in person by ballot.

 

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote.  You may also vote in person by ballot at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Recommendation of the LinkedIn Board of Directors and Reasons for the Merger

 

LinkedIn’s Board of Directors, which we refer to as the “LinkedIn Board,” after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the LinkedIn Board and Reasons for the Merger,” has unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of LinkedIn and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. The LinkedIn Board unanimously recommends that you vote (1) FOR” the adoption of the merger agreement; (2) FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Fairness Opinion of Qatalyst Partners

 

In connection with our consideration of strategic alternatives, we engaged Qatalyst Partners LP, which we refer to as “Qatalyst Partners,” to provide financial advice based on Qatalyst Partners’ qualifications, expertise, reputation and knowledge of our business and the industry in which we operate. At the meeting of the LinkedIn Board on June 11, 2016, Qatalyst Partners rendered its oral opinion, subsequently confirmed in writing, that as of June 11, 2016, and based upon and subject to the various assumptions, considerations, limitations and other matters set forth in the written opinion, the $196.00 per share merger consideration to be received by the holders of our Class A common stock pursuant to the merger agreement, other than Microsoft or any affiliates of Microsoft, in their capacity as holders of our Class A common stock, which we refer to as the “Class A holders,” was fair, from a financial point of view, to such holders.

 

The full text of the written opinion of Qatalyst Partners to the LinkedIn Board, dated June 11, 2016, is attached to this proxy statement as Annex B and is incorporated into this proxy statement by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the LinkedIn Board and addressed only, as of the date of the opinion, the fairness from a financial point of view of the $196.00 per share merger consideration to be received by the holders of our Class A common stock, other than Microsoft or any affiliates of Microsoft, pursuant to the merger agreement, in their capacity as Class A holders. It does not address any other aspect of the merger and does not constitute a recommendation as to how any of our stockholders should vote with respect to the merger or any other matter and does not in any manner address the prices at which our Class A common stock will trade at any time.

 

 

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For a more complete description, see the section of this proxy statement captioned “The Merger—Fairness Opinion of Qatalyst Partners.”

 

Treatment of Equity Awards in the Merger

 

The merger agreement provides that LinkedIn’s equity awards that are outstanding immediately prior to the effective time of the merger will be treated as follows in the merger:

 

Company Options

 

Each outstanding option to purchase shares of LinkedIn common stock granted pursuant to any LinkedIn stock plan (including awards assumed in prior transactions), which we refer to as “company options,” outstanding as of immediately prior to the effective time of the merger and that is then vested, or will vest as a result of the merger, which we refer to together as “surrendered company options,” will, as of the effective time of the merger, be cancelled and converted into the right to receive the per share merger consideration of $196.00 for each share of LinkedIn common stock that would have been issuable upon exercise of such surrendered company option prior to the effective time of the merger less the applicable exercise price for each such share of LinkedIn common stock under such surrendered company option and less any applicable withholding taxes.  If the per share exercise price of any surrendered company option is equal to or greater than $196.00, such surrendered company option will be cancelled as of the effective time of the merger for no payment and will have no further effect.

 

Each company option that is outstanding as of immediately prior to the effective time of the merger, has an exercise price per share that is less than $196.00 and is not a surrendered company option,  which we refer to together as an “assumed company option,” will, as of the effective time of the merger, be, as determined by Microsoft, (1) assumed by Microsoft and converted into an option to acquire; or (2) converted into an option granted pursuant to Microsoft’s 2001 Stock Plan, as amended and restated, which we refer to as the “Microsoft stock plan,” to acquire, in each case, on the same material terms and conditions as were applicable to such assumed company option immediately prior to the effective time of the merger, a number of shares of Microsoft common stock equal to the product (rounded down to the nearest whole share) of (1) the number of shares of LinkedIn common stock subject to such assumed company option as of immediately prior to the effective time of the merger  multiplied by (2) the stock award exchange ratio (as described in more detail under the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger”).  The per share exercise price for assumed company options will equal the quotient (rounded up to the nearest whole cent) determined by dividing (1) the per share exercise price for the LinkedIn common stock subject to such assumed company option as of immediately prior to the effective time of the merger by (2) the stock award exchange ratio.  Each company option that is outstanding as of immediately prior to the effective time of the merger, has an exercise price per share that is equal to or greater than $196.00, and is not a surrendered company option will be cancelled as of the effective time of the merger for no payment and will have no further effect.

 

Prior to the closing date of the merger, Microsoft may elect to treat some or all company options that would otherwise be assumed company options as vested surrendered company options, which will become fully vested and then cancelled and treated as a surrendered company option.

 

Company Stock-Based Awards

 

Each right to receive or retain shares of LinkedIn common stock or receive a cash payment equivalent granted pursuant to any LinkedIn stock plan (including awards assumed in prior transactions), other than a company option, including restricted stock and restricted stock unit awards, which we refer to as “company stock-based awards,” outstanding as of immediately prior to the effective time of the merger that are vested as of immediately prior to the effective time of the merger, or will vest as a result of the merger, which we refer to as “surrendered company stock-based awards,” will, as of the effective time of the merger, be cancelled and converted into the right to receive the per share merger consideration of $196.00 with respect to each share of LinkedIn common stock subject to the surrendered company-stock based award, less any applicable withholding taxes.

 

 

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Each company stock-based award that is outstanding as of immediately prior to the effective time of the merger and is not a surrendered company stock-based award,  which we refer to together as an “assumed company stock-based award,” will, as of the effective time of the merger, be, as determined by Microsoft, (1) assumed by Microsoft and converted into a stock-based award; or (2) converted into a stock-based award granted pursuant to the Microsoft stock plan, in each case, with the same material terms and conditions as were applicable to such assumed company stock-based award immediately prior to the effective time of the merger, in respect of a number of shares of Microsoft common stock equal to the product (rounded down to the nearest whole share) of (1) the number of shares of LinkedIn common stock subject to such assumed company stock-based award as of immediately prior to the effective time of the merger multiplied by (2) the stock award exchange ratio.

 

Prior to the closing date of the merger, Microsoft may elect to treat some or all company stock-based awards that would otherwise be assumed company stock-based awards as vested surrendered company stock-based awards, which will become fully vested and then cancelled and treated as a surrendered company stock-based award.

 

Employee Stock Purchase Plan

 

LinkedIn’s executive officers will determine a date that is no later than one business day prior to the date on which the effective time of the merger occurs as the final “exercise date” for purposes of LinkedIn’s 2011 Employee Stock Purchase Plan, which we refer to as the “ESPP.”  On such exercise date, LinkedIn will apply the funds credited as of such date pursuant to the ESPP within each participant’s payroll withholding account to the purchase of whole shares of LinkedIn common stock in accordance with the terms of the ESPP.  Subject to the consummation of the merger, the ESPP will terminate immediately prior to and effective as of the effective time of the merger.

 

Pursuant to the terms of the merger agreement, the LinkedIn Board has adopted resolutions providing that each individual participating in the ESPP now will not be permitted to increase his or her payroll contribution rate pursuant to the ESPP from the rate in effect when that offering period commenced, and that each individual participating in the ESPP now or in any future offering period will not be permitted to make separate non-payroll contributions to the ESPP on or following the date of the merger agreement, except as may be required by applicable law.  Prior to the effective time of the merger, LinkedIn will take all actions that may be necessary to, effective upon the consummation of the merger, (1) cause any offering period that would otherwise be outstanding at the effective time of the merger to be terminated no later than one business day prior to the date on which the effective time of the merger occurs; (2) make any pro rata adjustments that may be necessary to reflect the shortened offering period while treating the shortened offering period as a fully effective and completed offering period for all purposes of the ESPP; (3) cause the exercise (as of no later than one business day prior to the date on which the effective time of the merger occurs) of each outstanding purchase right pursuant to the ESPP; and (4) provide that no further offering period or purchase period will commence pursuant to the ESPP after the effective time of the merger.

 

Employee Benefits

 

From and after the effective time of the merger, the surviving corporation will (and Microsoft will cause the surviving corporation to) honor all of LinkedIn’s benefit plans and compensation and severance arrangements in accordance with their terms as in effect immediately prior to the effective time of the merger. The surviving corporation will (and Microsoft will cause the surviving corporation or one of its subsidiaries to) continue the employment of all employees of LinkedIn and its subsidiaries as of the effective time of the merger by taking such actions, if any, as are required by applicable law. For a period of one year following the effective time of the merger, the surviving corporation and its subsidiaries will (and Microsoft will cause the surviving corporation and its subsidiaries to) provide continuing employees with compensation, benefits, and severance payments and benefits (other than equity-based compensation and individual employment agreements, except as provided in the first sentence of this paragraph) at levels that, taken as a whole, are no less favorable in the aggregate than the compensation, benefits, and severance payments and benefits (other than equity-based compensation and individual employment agreements) provided to continuing employees immediately prior to the effective time of the merger, either through (1) LinkedIn’s benefit plans and arrangements in existence immediately prior to the effective time of the merger, (2) comparable plans, or some combination of (1) and (2).  In each case, base compensation and target incentive compensation opportunity will not be decreased for a period of one year

 

 

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following the effective time of the merger for any continuing employee employed during that period except in the ordinary course of business consistent with LinkedIn’s past practice.  Additionally, for continuing employees who terminate employment during the one year period following the effective time of the merger, the surviving corporation will (and Microsoft will cause the surviving corporation to) provide severance payments and benefits to eligible employees in accordance with LinkedIn’s severance plans, guidelines and practices as in effect on the date of the merger agreement.

 

To the extent that a LinkedIn benefit plan or comparable plan is made available to a continuing employee after the effective time of the merger (other than with respect to certain exceptions), the surviving corporation and its subsidiaries will (and Microsoft will cause the surviving corporation or one of its subsidiaries to) grant continuing employees credit for all service with LinkedIn and its subsidiaries prior to the effective time of the merger for purposes of eligibility to participate, vesting and entitlement to benefits where length of service is relevant (including for purposes of vacation accrual and severance pay entitlement, but excluding for purposes of benefit accruals under any defined benefit pension plan or post-employment welfare plan), except that such service need not be credited to the extent that it would result in duplication of benefits.  In addition, (1) each continuing employee will be immediately eligible to participate, without any waiting period, in any and all employee benefit plans sponsored by the surviving corporation and its subsidiaries to the extent that coverage pursuant to any such new benefit plan replaces coverage pursuant to a comparable LinkedIn benefit plan or arrangement that the continuing employee participates in immediately before the effective time of the merger; (2) for purposes of each new benefit plan providing health and welfare benefits to a continuing employee, the surviving corporation will cause all waiting periods, pre-existing condition exclusions, evidence of insurability requirements and actively-at-work or similar requirements of such new benefit plans to be waived for such continuing employee and his or her covered dependents, to the extent waived under the corresponding LinkedIn benefit plan or arrangement, and the surviving corporation will cause any eligible expenses incurred by such continuing employee and his or her covered dependents during the portion of the plan year of the LinkedIn benefit plan or arrangement ending on the date that such continuing employee’s participation in the corresponding new benefit plan begins to be given full credit pursuant to such new benefit plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such continuing employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such new benefit plan, to the extent credited under the LinkedIn benefit plan or arrangement; and (3) credit the accounts of such continuing employees pursuant to any new benefit plan that is a flexible spending plan with any unused balance in the account of such continuing employee.  Any vacation or paid time off accrued but unused by a continuing employee as of immediately prior to the effective time of the merger will be credited to such continuing employee following the effective time of the merger in accordance with LinkedIn’s vacation or paid time off policies in effect immediately prior to the effective time of the merger.

 

For more information, see the section of this proxy statement captioned “The Merger Agreement—Employee Benefits.”

 

Interests of LinkedIn’s Directors and Executive Officers in the Merger

 

When considering the recommendation of the LinkedIn Board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, your interests as a stockholder. In (1) evaluating and negotiating the merger agreement; (2) approving the merger agreement and the merger; and (3) recommending that the merger agreement be adopted by LinkedIn stockholders, the LinkedIn Board was aware of and considered these interests to the extent that they existed at the time, among other matters. These interests include the following:

 

·                  accelerated vesting, upon the effective time of the merger, of the restricted stock units, which we refer to as “RSUs,” held by certain non-continuing directors, pursuant to the LinkedIn 2011 Equity Incentive Plan and as described in more detail below under the section of this proxy statement captioned “The Merger—Interests of LinkedIn Directors and Executive Officers in the Merger—Treatment of Equity-Based Awards—Treatment of Company Stock-Based Awards;” and

 

·                  the entitlement of each executive officer to receive payments and benefits pursuant to arrangements entered into prior to the commencement of discussions or negotiations regarding the merger, including cash severance benefits and immediate vesting of 100% or 50%, as applicable, of his or her outstanding company options or company stock-based awards, under his or her existing offer letter or change of control agreement if, within 12 months

 

 

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following the merger, there is an involuntary termination of employment without cause, or a constructive termination, as described in more detail below under the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Payments Upon Termination Following Change of  Control.”

 

In addition, Mr. Weiner has entered into an offer letter with Microsoft providing for his future employment following the completion of the merger, as described in more detail below under the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Employment Arrangements Following the Merger.”

 

If the proposal to adopt the merger agreement is approved, the common stock held by our directors and executive officers will be treated in the same manner as the common stock held by all other stockholders. For more information, see the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger.”

 

Appraisal Rights

 

If the merger is consummated, LinkedIn stockholders who do not vote in favor of the adoption of the merger agreement, who continuously hold such shares through the effective time of the merger, and who properly perfect appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the General Corporation Law of the State of Delaware, which we refer to as the “DGCL.”  This means that such stockholders are entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest to be paid on the amount determined to be fair value, if any, as determined by the court.  Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

 

Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.

 

To exercise appraisal rights, the stockholder of record must (1) submit a written demand for appraisal to LinkedIn before the vote is taken on the proposal to adopt the merger agreement; (2) not submit a proxy or otherwise vote in favor of the proposal to adopt the merger agreement; and (3) continue to hold the subject shares of common stock of record through the effective time of the merger. The failure to follow exactly the procedures specified under the DGCL will result in the loss of appraisal rights.  The DGCL requirements for exercising appraisal rights are described in further detail in this proxy statement, and the relevant section of the DGCL regarding appraisal rights is attached as Annex C to this proxy statement.  If you hold your shares of common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.

 

Material U.S. Federal Income Tax Consequences of the Merger

 

For U.S. federal income tax purposes, the receipt of cash by a U.S. Holder (as defined under the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) in exchange for such U.S. Holder’s shares of common stock in the merger generally will result in the recognition of gain or loss in an amount measured by the difference, if any, between the amount of cash that such U.S. Holder receives in the merger and such U.S. Holder’s adjusted tax basis in the shares of common stock surrendered in the merger.

 

A Non-U.S. Holder (as defined under the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to

 

 

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the exchange of common stock for cash in the merger unless such Non-U.S. Holder has certain connections to the United States.

 

For more information, see the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.”  Stockholders should consult their own tax advisors concerning the U.S. federal income tax consequences relating to the merger in light of their particular circumstances and any consequences arising under U.S. federal income tax laws or the laws of any state, local or non-U.S. taxing jurisdiction.

 

Regulatory Approvals Required for the Merger

 

Under the merger agreement, the merger cannot be completed until (1) the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the “HSR Act,” has expired or been terminated; and (2) the approval or clearance of the merger has been granted by relevant antitrust authorities in the European Union and Canada.

 

No Solicitation of Other Offers

 

Under the merger agreement, from the date of the merger agreement until the effective time of the merger (or the earlier termination of the merger agreement), LinkedIn has agreed to cease and cause to be terminated any discussions or negotiations with and terminate any data room or other diligence access of any person, its affiliates and its representatives (as defined below) relating to an acquisition transaction  (as defined under the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Offers”) and to request any person who executed a confidentiality agreement in connection with its consideration of acquiring LinkedIn to promptly return or destroy any non-public information furnished by or on behalf of LinkedIn prior to the date of the merger agreement.

 

Under the merger agreement, from the date of the merger agreement until the effective time of the merger (or the earlier termination of the merger agreement), LinkedIn has agreed not to, and to cause or direct, as the case may be, its subsidiaries and its and their respective affiliates, directors, officers, employees, consultants, agents, representatives and advisors, whom we collectively refer to as “representatives,” not to, among other things: (1) solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any proposal that constitutes, or is reasonably expected to lead to, an acquisition proposal (as defined under the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Offers”); (2) furnish or otherwise provide access to any non-public information regarding, or to the business, properties, assets, books, records or personnel of, LinkedIn or its subsidiaries to any person in connection with or with the intent to induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, an acquisition proposal or any inquiries or the making of any proposal that would reasonably be expected to lead to an acquisition proposal; (3) participate or engage in discussions or negotiations with any person with respect to an acquisition proposal or with respect to any inquiries from third parties relating to making a potential acquisition proposal; (4) approve, endorse or recommend any proposal that constitutes, or is reasonably expected to lead to, an acquisition proposal; (5) enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an acquisition transaction (as defined under the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Offers”); or (6) authorize or commit to do any of the foregoing.

 

Notwithstanding these restrictions, under certain circumstances prior to the adoption of the merger agreement by LinkedIn stockholders, LinkedIn may furnish information to, and enter into negotiations or discussions with, a person regarding a bona fide written acquisition proposal if the LinkedIn Board determines in good faith after consultation with its financial advisor and its outside legal counsel that (1) such proposal constitutes or is reasonably likely to lead to a superior proposal (as defined under the section of this proxy statement captioned “The Merger Agreement—No Solicitation of

 

 

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Other Offers”); and (2) failure to do so would be inconsistent with its fiduciary duties pursuant to applicable law.  For more information, see the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Offers.”

 

LinkedIn is not entitled to terminate the merger agreement to enter into an agreement for a superior proposal unless it complies with certain procedures in the merger agreement, including engaging in good faith negotiations with Microsoft during a specified period.  If LinkedIn terminates the merger agreement in order to accept a superior proposal, it must pay a $725 million termination fee to Microsoft.  For more information, see the section of this proxy statement captioned “The Merger Agreement—The LinkedIn Board’s Recommendation; Company Board Recommendation Change.”

 

Change in the LinkedIn Board’s Recommendation

 

The LinkedIn Board may not withdraw its recommendation that LinkedIn stockholders adopt the merger agreement or take certain similar actions other than, under certain circumstances, if it determines in good faith, after consultation with its financial advisor and outside legal counsel, that failure to do so would be inconsistent with the LinkedIn Board’s fiduciary duties pursuant to applicable law and complies with the provisions of the merger agreement.

 

However, the LinkedIn Board cannot withdraw its recommendation that LinkedIn stockholders adopt the merger agreement or take certain similar actions unless it complies with certain procedures in the merger agreement, including engaging in good faith negotiations with Microsoft during a specified period.  If Microsoft terminates the merger agreement because the LinkedIn Board withdraws its recommendation that LinkedIn stockholders adopt the merger agreement or takes certain similar actions, then LinkedIn must pay a $725 million termination fee to Microsoft.  For more information, see the section of this proxy statement captioned “The Merger Agreement—The LinkedIn Board’s Recommendation; Company Board Recommendation Change.”

 

Conditions to the Closing of the Merger

 

The obligations of LinkedIn, Microsoft and Merger Sub, as applicable, to consummate the merger are subject to the satisfaction or waiver of certain conditions, including (among other conditions), the following:

 

·                  the adoption of the merger agreement by the requisite affirmative vote of LinkedIn stockholders;

 

·                  the expiration or termination of the applicable waiting period under, or obtaining all requisite consents pursuant to, the HSR Act and the antitrust laws of the European Union and Canada;

 

·                  the consummation of the merger not being restrained, enjoined, rendered illegal or otherwise prohibited by any law or order of any governmental authority;

 

·                  the absence of any Company Material Adverse Effect (as such term is defined in the section of this proxy statement captioned “The Merger Agreement—Representations and Warranties”) or a material adverse effect with respect to Microsoft and its subsidiaries (as such term is defined in the merger agreement) having occurred after the date of merger agreement that is continuing as of the effective time of the merger;

 

·                  the accuracy of the representations and warranties of Microsoft and Merger Sub in the merger agreement, subject to materiality qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made;

 

·                  the accuracy of the representations and warranties of LinkedIn in the merger agreement, subject to materiality qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made; and

 

 

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·                  the performance and compliance in all material respects by LinkedIn, Microsoft and Merger Sub of and with their respective covenants and obligations required to be performed and complied with by them under the merger agreement at or prior to the effective time of the merger.

 

Termination of the Merger Agreement

 

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the adoption of the merger agreement by LinkedIn stockholders, in the following ways:

 

·                  by mutual written agreement of LinkedIn and Microsoft;

 

·                  by either LinkedIn or Microsoft if:

 

·                  (1) a permanent injunction or similar order issued by a court or other legal restraint prohibiting consummation of the merger is in effect, or any action taken by a governmental authority prohibiting the merger has become final and non-appealable; or (2) any statute, regulation or order prohibiting the merger has been enacted (except that a party may not terminate the merger agreement pursuant to this provision if such party has failed to use its reasonable best efforts to resist, appeal, obtain consent pursuant to, resolve or lift, as applicable, such injunction, law or order);

 

·                  the merger has not been consummated before January 11, 2017, which we refer to as the “termination date,” except that if all conditions have been satisfied (other than those conditions to be satisfied at the closing of the merger) or waived (to the extent permitted by applicable law) by that date but on that date any of the antitrust or competition-related conditions or the conditions related to prohibitive laws or orders set forth in the merger agreement have not been satisfied, then either LinkedIn or Microsoft may elect to extend the termination date to June 11, 2017, but:

 

·                  a party may not terminate the merger agreement if such party’s action or failure to act constitutes a breach of the merger agreement and is the primary cause of the failure to consummate the merger by the termination date; and

 

·                  LinkedIn may not terminate the merger agreement if it has not taken a stockholder vote on the adoption of the merger agreement at the special meeting;

 

·                  the LinkedIn stockholders do not adopt the merger agreement at the special meeting (except that a party may not terminate the merger agreement if such party’s action or failure to act constitutes a breach of the merger agreement and is the primary cause of the failure to obtain the approval of the LinkedIn stockholders at the special meeting);

 

·                  by LinkedIn if:

 

·                  after a cure period, Microsoft or Merger Sub has breached or failed to perform in any material respect any of its respective representations, warranties, covenants or other agreements in the merger agreement, such that the related closing condition would not be satisfied;

 

·                  prior to the adoption of the merger agreement by LinkedIn stockholders, (1) LinkedIn has received a superior proposal; (2) the LinkedIn Board has authorized LinkedIn to enter into an agreement to consummate the transaction contemplated by such superior proposal, (3) LinkedIn pays Microsoft a $725 million termination fee; and (4) LinkedIn has complied with its non-solicitation obligations under the merger agreement;

 

·                  by Microsoft if:

 

 

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·                  after a cure period, LinkedIn has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements in the merger agreement, such that the related closing condition would not be satisfied; or

 

·                  the LinkedIn Board (1) withholds, withdraws, amends, qualifies or modifies, or publicly proposes to withhold, withdraw, amend, qualify or modify, the LinkedIn Board’s recommendation in a manner adverse to Microsoft; (2) adopts, approves, or recommends an acquisition proposal; (3) fails to publicly reaffirm the LinkedIn Board’s recommendation within 10 business days of the occurrence of a material event or development and after Microsoft so requests in writing (or if the special meeting is scheduled to be held within 10 business days, then within one business day after Microsoft so requests); (4) takes or fails to take any formal action or makes or fails to make any recommendation in connection with a tender or exchange offer, other than a recommendation against such offer or a “stop, look and listen” communication by the LinkedIn Board (or a committee thereof) to LinkedIn’s stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any substantially similar communication); or (5) fails to include the LinkedIn Board’s recommendation in this proxy statement.

 

Termination Fee

 

LinkedIn will be required to pay to Microsoft a termination fee of $725 million if the merger agreement is terminated in specified circumstances.  For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination Fee.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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QUESTIONS AND ANSWERS

 

The following questions and answers address some commonly asked questions regarding the merger, the merger agreement and the special meeting.  These questions and answers may not address all questions that are important to you.  We encourage you to carefully read the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents we refer to in this proxy statement.  You may obtain the documents we file with the SEC without charge by following the instructions under the section of this proxy statement captioned “Where You Can Find More Information.”

 

Q:                                  Why am I receiving these materials?

 

A:                                   On June 11, 2016, LinkedIn entered into the merger agreement providing for the merger of Merger Sub with and into LinkedIn, pursuant to which LinkedIn will survive the merger as a wholly owned subsidiary of Microsoft. A copy of the merger agreement is attached to this proxy statement as Annex A and is incorporated by reference herein. In order to complete the merger, LinkedIn stockholders must vote to adopt the merger agreement at the special meeting. The approval of this proposal by our stockholders is a condition to the consummation of the merger. See the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger.”  The LinkedIn Board is furnishing this proxy statement and form of proxy card to the holders of shares of common stock in connection with the solicitation of proxies to be voted at the special meeting.

 

Q:                                  What am I being asked to vote on at the special meeting?

 

A:                                   You are being asked to vote on the following proposals:

 

·                  to adopt the merger agreement pursuant to which Merger Sub will merge with and into LinkedIn, and LinkedIn will become a wholly owned subsidiary of Microsoft;

 

·                  to approve the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and

 

·                  to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Q:                                  When and where is the special meeting?

 

A:                                   The special meeting will take place on [·], 2016, at the Computer History Museum, 1401 N. Shoreline Blvd., Mountain View, CA 94043, at [·], Pacific time.

 

Q:                                  Who is entitled to vote at the special meeting?

 

A:                                   LinkedIn stockholders as of the close of business on [·], 2016, which is the record date for the special meeting, are entitled to notice of the special meeting and to vote at the special meeting. As of the close of business on the record date, there were [·] shares of Class A common stock and [·] shares of Class B common stock outstanding and entitled to vote at the special meeting. Each share of Class A common stock is entitled to one vote per share on each matter properly brought before the special meeting and each share of Class B common stock is entitled to 10 votes per share on each matter properly brought before the special meeting.  The Class A common stock and Class B common stock are voting as a single class on the proposals to be considered at the special meeting.

 

Q:                                  May I attend the special meeting and vote in person?

 

A:                                   Yes.  Subject to the requirements described in this proxy statement, all LinkedIn stockholders as of the record date may attend the special meeting and vote in person.  Seating will be limited.  Stockholders will need to present proof of

 

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ownership of shares of common stock, such as a bank or brokerage account statement, and a form of personal identification to be admitted to the special meeting.  No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the special meeting.

 

Even if you plan to attend the special meeting in person, to ensure that your shares will be represented at the special meeting we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone.  If you attend the special meeting and vote in person by ballot, your vote will revoke any proxy previously submitted.

 

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.  Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the merger agreement, without your instructions.  If you hold your shares in “street name,” you may not vote your shares in person at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Q:                                  What is the proposed merger and what effects will it have on LinkedIn?

 

A:                                   The proposed merger is the acquisition of LinkedIn by Microsoft.  If the proposal to adopt the merger agreement is approved by LinkedIn stockholders and the other closing conditions under the merger agreement are satisfied or waived, Merger Sub will merge with and into LinkedIn, with LinkedIn continuing as the surviving corporation.  As a result of the merger, LinkedIn will become a wholly owned subsidiary of Microsoft, and our Class A common stock will no longer be publicly traded and will be delisted from the NYSE.  In addition, our Class A common stock will be deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC.

 

Q:                                  What will I receive if the merger is completed?

 

A:                                   Upon completion of the merger, you will be entitled to receive the per share merger consideration of $196.00 in cash, without interest and less any applicable withholding taxes, for each share of common stock that you own, unless you have properly exercised and not validly withdrawn or subsequently lost your appraisal rights under the DGCL.  For example, if you own 100 shares of common stock, you will receive $19,600.00 in cash in exchange for your shares of common stock, less any applicable withholding taxes.

 

Q:                                  How does the per share merger consideration compare to the market price of the Class A common stock prior to the public announcement of the merger agreement?

 

A:                                   The per share merger consideration represents a premium of approximately 49.5% over the closing price of the Class A common stock on June 10, 2016, the last trading day prior to the public announcement of the merger agreement.

 

Q:                                  What do I need to do now?

 

A:                                   We encourage you to read this proxy statement, the annexes to this proxy statement and the documents that we refer to in this proxy statement carefully and consider how the merger affects you.  Then, even if you expect to attend the special meeting, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope, or grant your proxy electronically over the internet or by telephone, so that your shares can be voted at the special meeting.  If you hold your shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your shares.  Please do not send your stock certificates with your proxy card.

 

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Q:                                  Should I send in my stock certificates now?

 

A:                                   No.  After the merger is completed, you will receive a letter of transmittal containing instructions for how to send your stock certificates or surrender your book-entry shares to the paying agent in order to receive the appropriate cash payment for the shares of common stock represented by your stock certificates.  You should use the letter of transmittal to exchange your stock certificates or book-entry shares for the cash payment to which you are entitled.  Please do not send your stock certificates with your proxy card.

 

Q:                                  What happens if I sell or otherwise transfer my shares of common stock after the record date but before the special meeting?

 

A:                                   The record date for the special meeting is earlier than the date of the special meeting and the date the merger is expected to be completed.  If you sell or transfer your shares of common stock after the record date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies LinkedIn in writing of such special arrangements, you will transfer the right to receive the per share merger consideration, if the merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the special meeting. Even if you sell or otherwise transfer your shares of common stock after the record date, we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone.

 

Q:                                  How does the LinkedIn Board recommend that I vote?

 

A:                                   The LinkedIn Board unanimously recommends that you vote (1) “FOR” the adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Q:                                  Why am I being asked to cast a non-binding, advisory vote to approve compensation that will or may become payable by LinkedIn to its named executive officers in connection with the merger?

 

A:                                   SEC rules require LinkedIn to seek a non-binding, advisory vote to approve compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Q:                                  What is the compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger for purposes of this advisory vote?

 

A:                                   The compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger is certain compensation that is tied to or based on the merger and payable to certain of LinkedIn’s named executive officers pursuant to underlying plans and arrangements that are contractual in nature.  Compensation that will or may become payable by Microsoft to our named executive officers in connection with the merger is not subject to this advisory vote.  For further detail, see the section of this proxy statement captioned “Proposal 3: Advisory, Non-Binding Vote to Approve Certain Merger-Related Executive Compensation Arrangements.”

 

Q:                                  What will happen if LinkedIn stockholders do not approve the compensation that will or may become payable by LinkedIn to its named executive officers in connection with the merger?

 

A:                                   Approval of the compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger is not a condition to completion of the merger.  The vote to approve the compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger is an advisory vote and will not be binding on LinkedIn or Microsoft.  Accordingly, if the merger agreement is adopted by LinkedIn stockholders

 

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and the merger is completed, the compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger will or may be paid to LinkedIn’s named executive officers even if LinkedIn stockholders do not approve such compensation.

 

Q:                                  What happens if the merger is not completed?

 

A:                                   If the merger agreement is not adopted by LinkedIn stockholders or if the merger is not completed for any other reason, LinkedIn stockholders will not receive any payment for their shares of common stock.  Instead, (1) LinkedIn will remain an independent public company; (2) our Class A common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC.

 

Under specified circumstances, LinkedIn will be required to pay Microsoft a termination fee of $725 million upon the termination of the merger agreement, as described in the section of this proxy statement captioned “The Merger Agreement—Termination Fee.”

 

Q:                                  What vote is required to adopt the merger agreement?

 

A:                                   The affirmative vote of the holders of a majority of the voting power of the outstanding shares of common stock entitled to vote on the proposal is required to adopt the merger agreement.

 

The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote in person by ballot at the special meeting will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.  If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.  Abstentions will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

As a result of his ownership of approximately [·]% of the voting power of the outstanding shares of common stock as of the record date, Reid Hoffman, our co-founder and Chair of the LinkedIn Board, will have the power to approve the adoption of the proposals without the vote of any other stockholder.  Accordingly, if Mr. Hoffman votes his shares in favor of the proposals, the approval of the proposals is assured without the vote of any other stockholder.  Mr. Hoffman has informed us that he intends to vote all of his shares of common stock “FOR” each of the proposals.

 

Q:                                  What vote is required to approve any proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting and to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to its named executive officers in connection with the merger?

 

A:                                   Approval of the proposal to adjourn the special meeting, whether or not a quorum is present, requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.  Approval, by non-binding, advisory vote, of compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

 

The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote in person by ballot at the special meeting will not have any effect on the adjournment proposal or the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.  If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will not have any effect on the adjournment proposal or the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.  In all cases, abstentions will have the same effect as a vote

 

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“AGAINST” the adjournment proposal and the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

As a result of his ownership of approximately [·]% of the voting power of the outstanding shares of common stock as of the record date, Reid Hoffman, our co-founder and Chair of the LinkedIn Board, will have the power to approve the adoption of the proposals without the vote of any other stockholder.  Accordingly, if Mr. Hoffman votes his shares in favor of the proposals, the approval of the proposals is assured without the vote of any other stockholder.  Mr. Hoffman has informed us that he intends to vote all of his shares of common stock “FOR” each of the proposals.

 

Q:                                  What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:                                   If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, to be the “stockholder of record.”  In this case, this proxy statement and your proxy card have been sent directly to you by or on behalf of LinkedIn.

 

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of common stock held in “street name.”  In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record.  As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting.  You are also invited to attend the special meeting.  However, because you are not the stockholder of record, you may not vote your shares in person by ballot at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Q:                                  How may I vote?

 

A:                                   If you are a stockholder of record (that is, if your shares of common stock are registered in your name with Computershare Trust Company, N.A., our transfer agent), there are four ways to vote:

 

·                  by signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope;

 

·                  by visiting the internet address on your proxy card;

 

·                  by calling the toll-free (within the U.S. or Canada) phone number on your proxy card; or

 

·                  by attending the special meeting and voting in person by ballot.

 

A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of common stock and to confirm that your voting instructions have been properly recorded when voting electronically over the internet or by telephone.  Although there is no charge for voting your shares, if you vote electronically over the internet or by telephone, you may incur costs such as internet access and telephone charges for which you will be responsible.

 

Even if you plan to attend the special meeting in person, you are strongly encouraged to vote your shares of common stock by proxy.  If you are a record holder or if you obtain a “legal proxy” to vote shares that you beneficially own, you may still vote your shares of common stock in person by ballot at the special meeting even if you have previously voted by proxy.  If you are present at the special meeting and vote in person by ballot, your previous vote by proxy will not be counted.

 

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee, or, if such a service is provided by your bank, broker or other nominee, electronically over the internet or by telephone.  To vote over the internet or by telephone through your bank, broker or other nominee, you should follow the

 

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instructions on the voting instruction form provided by your bank, broker or nominee.  However, because you are not the stockholder of record, you may not vote your shares in person by ballot at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Q:                                  What is a proxy?

 

A:                                   A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of common stock.  The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.”  The document used to designate a proxy to vote your shares of common stock is called a “proxy card.”  Michael Callahan, our Senior Vice President, General Counsel and Secretary, and Steven Sordello, our Senior Vice President and Chief Financial Officer, with full powers of substitution and resubstitution, are the proxy holders for the special meeting.

 

Q:                                  If my broker holds my shares in “street name,” will my broker vote my shares for me?

 

A:                                   No.  Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the special meeting only if you instruct your bank, broker or other nominee how to vote.  You should follow the procedures provided by your bank, broker or other nominee to vote your shares.  Without instructions, your shares will not be voted on such proposals, which will have the same effect as if you voted “AGAINST” adoption of the merger agreement, but will have no effect on the adjournment proposal or the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Q:                                  May I change my vote after I have mailed my signed and dated proxy card?

 

A:                                   Yes.  If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:

 

·                  signing another proxy card with a later date and returning it to us prior to the special meeting;

 

·                  submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy;

 

·                  delivering a written notice of revocation to our Corporate Secretary; or

 

·                  attending the special meeting and voting in person by ballot.

 

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote.  You may also vote in person at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Q:                                  If a stockholder gives a proxy, how are the shares voted?

 

A:                                   Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares in the way that you direct.

 

If you sign and date your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted (1) FOR” the adoption of the merger agreement; (2) FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

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Q:                                  What should I do if I receive more than one set of voting materials?

 

A:                                   Please sign, date and return (or grant your proxy electronically over the internet or by telephone) each proxy card and voting instruction form that you receive.

 

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards.  For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares.  If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card.  Please vote all voting materials that you receive.

 

Q:                                  Where can I find the voting results of the special meeting?

 

A:                                   If available, LinkedIn may announce preliminary voting results at the conclusion of the special meeting.  LinkedIn intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the special meeting.  All reports that LinkedIn files with the SEC are publicly available when filed.  See the section of this proxy statement captioned “Where You Can Find More Information.”

 

Q:                                  Will I be subject to U.S. federal income tax upon the exchange of common stock for cash pursuant to the merger?

 

A:                                   If you are a U.S. Holder (as defined under the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”), the exchange of common stock for cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes, which generally will require a U.S. Holder to recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by such U.S. Holder in the merger and such U.S. Holder’s adjusted tax basis in the shares of common stock surrendered in the merger.

 

A Non-U.S. Holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of common stock for cash in the merger unless such Non-U.S. Holder has certain connections to the United States.

 

Because particular circumstances may differ, we recommend that you consult your own tax advisor to determine the U.S. federal income tax consequences relating to the merger in light of your own particular circumstances and any consequences arising under U.S. federal non-income tax laws or the laws of any state, local or foreign taxing jurisdiction.  A more complete description of material U.S. federal income tax consequences of the merger is provided in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.”

 

Q:                                  What will the holders of company options and company stock-based awards receive in the merger?

 

A:                                   Generally, at the effective time of the merger, each company option and company stock-based award that is outstanding immediately prior to the effective time of the merger that is unvested will be assumed or substituted for by Microsoft and automatically converted into a corresponding equity award representing the right to acquire, on the same material terms and conditions, an adjusted number of shares of Microsoft common stock, subject to certain exceptions.  The number of shares of Microsoft common stock subject to the new equity awards will be determined by a stock award exchange ratio based on the relative value of the per share merger consideration ($196.00) and the volume weighted average price per share of Microsoft common stock for the five consecutive trading days ending with the complete trading day ending immediately prior to the closing date of the merger, with a corresponding adjustment to be made to the exercise prices of company options.  Any outstanding company options or company stock-based awards that are vested, will become vested in connection with the merger, or that are designated by Microsoft as cancelled awards instead will be cancelled and converted into the right to receive an amount in cash (less any amounts required to be deducted or withheld by law) determined by multiplying $196.00 by the number of outstanding shares of LinkedIn common stock subject to the award (and in the case of company options, less applicable exercise prices).

 

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Also, each executive officer is eligible to receive immediate vesting of 100% or 50%, as applicable, of his or her outstanding company options or company stock-based awards under his or her offer letter or change of control agreement if, within 12 months following the merger, there is an involuntary termination of employment without cause, or a constructive termination as defined in the applicable offer letter or change of control agreement and as described more fully below.

 

Q:                                  What will happen to the ESPP?

 

A:                                   LinkedIn’s executive officers will determine the final exercise date for purposes of the ESPP.  On such exercise date, LinkedIn will apply the funds credited as of such date pursuant to the ESPP within each participant’s payroll withholding account to the purchase of whole shares of LinkedIn common stock in accordance with the terms of the ESPP.  Subject to the consummation of the merger, the ESPP will terminate immediately prior to and effective as of the effective time of the merger.

 

Pursuant to the terms of the merger agreement, the LinkedIn Board has adopted resolutions providing that each individual participating in the ESPP now will not be permitted to increase his or her payroll contribution rate pursuant to the ESPP from the rate in effect when that offering period commenced and that each individual participating in the ESPP now or in any future offering period will not be permitted to make separate non-payroll contributions to the ESPP on or following the date of the merger agreement, except as may be required by applicable law.  Prior to the effective time of the merger, LinkedIn will take all actions that may be necessary to, effective upon the consummation of the merger, (1) cause any offering period that would otherwise be outstanding at the effective time of the merger to be terminated no later than one business day prior to the date on which the effective time of the merger occurs; (2) make any pro rata adjustments that may be necessary to reflect the shortened offering period while treating the shortened offering period as a fully effective and completed offering period for all purposes of the ESPP; (3) cause the exercise (as of no later than one business day prior to the date on which the effective time of the merger occurs) of each outstanding purchase right pursuant to the ESPP; and (4) provide that no further offering period or purchase period will commence pursuant to the ESPP after the effective time of the merger.

 

Q:                                  When do you expect the merger to be completed?

 

A:                                   We currently expect to complete the merger this calendar year.  However, the exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control.

 

Q:                                  Am I entitled to appraisal rights under the DGCL?

 

A:                                   If the merger is consummated, stockholders who do not vote in favor of the adoption of the merger agreement and who properly perfect appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL.  This means that holders of shares of common stock are entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares of common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest to be paid on the amount determined to be fair value, if any, as determined by the court.  Stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process.  The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement, and the relevant section of the DGCL regarding appraisal rights is attached as Annex C to this proxy statement.

 

Q:                                  Do any of LinkedIn’s directors or officers have interests in the merger that may differ from those of LinkedIn stockholders generally?

 

A:                                   Yes.  In considering the recommendation of the LinkedIn Board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of LinkedIn stockholders generally.  In (1) evaluating and negotiating the merger agreement; (2) approving the merger agreement and the merger; and (3) unanimously recommending that the merger agreement be adopted by LinkedIn stockholders, the LinkedIn Board was aware of and considered these interests to the

 

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extent that they existed at the time, among other matters.  For more information, see the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger.”

 

Q:                                  Who can help answer my questions?

 

A:                                   If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:

 

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders May Call:

(877) 825-8621 (Toll-Free From the U.S. and Canada)

or

(412) 232-3651 (From Other Locations)

 

If your broker, bank or other nominee holds your shares, you may call your broker, bank or other nominee for additional information.

 

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FORWARD-LOOKING STATEMENTS

 

This proxy statement, the documents to which we refer you in this proxy statement and information included in oral statements or other written statements made or to be made by us or on our behalf contain “forward-looking statements” that do not directly or exclusively relate to historical facts.  You can typically identify forward-looking statements by the use of forward-looking words, such as “may,” “should,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast” and other words of similar import.  Stockholders are cautioned that any forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements.  These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent filings on Forms 10-K and 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

 

·                  the inability to complete the merger due to the failure of LinkedIn stockholders to adopt the merger agreement or failure to satisfy the other conditions to the completion of the merger, including receipt of required regulatory approvals;

 

·                  the risk that the merger agreement may be terminated in circumstances that require us to pay Microsoft a termination fee of $725 million;

 

·                  the outcome of any legal proceedings that may be instituted against us and others related to the merger agreement;

 

·                  risks that the merger affects our ability to retain or recruit employees;

 

·                  the fact that receipt of the all-cash merger consideration would be taxable to LinkedIn stockholders that are treated as U.S. holders for U.S. federal income tax purposes;

 

·                  the fact that, if the merger is completed, LinkedIn stockholders will forego the opportunity to realize the potential long-term value of the successful execution of LinkedIn’s current strategy as an independent company;

 

·                  the possibility that Microsoft could, at a later date, engage in unspecified transactions, including restructuring efforts, special dividends or the sale of some or all of LinkedIn’s assets to one or more as yet unknown purchasers, that could conceivably produce a higher aggregate value than that available to LinkedIn stockholders in the merger;

 

·                  the fact that under the terms of the merger agreement, LinkedIn is unable to solicit other acquisition proposals during the pendency of the merger;

 

·                  the effect of the announcement or pendency of the merger on our business relationships, operating results and business generally, including risks related to the diversion of the attention of LinkedIn management or employees during the pendency of the merger;

 

·                  the amount of the costs, fees, expenses and charges related to the merger agreement or the merger;

 

·                  the risk that our stock price may decline significantly if the merger is not completed; and

 

·                  risks related to obtaining the requisite consents to the merger, including the timing and receipt of regulatory approvals from various domestic and foreign governmental bodies (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental bodies may deny approval.

 

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Consequently, all of the forward-looking statements that we make in this proxy statement are qualified by the information contained or incorporated by reference in this proxy statement, including the information contained under this caption.  No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.

 

Except as required by applicable law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.  Stockholders are advised to consult any future disclosures that we make on related subjects as may be detailed in our other filings made from time to time with the SEC.

 

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THE SPECIAL MEETING

 

The enclosed proxy is solicited on behalf of the LinkedIn Board for use at the special meeting.

 

Date, Time and Place

 

We will hold the special meeting on [·], 2016, at the Computer History Museum, 1401 N. Shoreline Blvd., Mountain View, CA 94043, at [·], Pacific time.

 

Purpose of the Special Meeting

 

At the special meeting, we will ask stockholders to vote on proposals to (1) adopt the merger agreement; (2) adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Record Date; Shares Entitled to Vote; Quorum

 

Only LinkedIn stockholders as of the close of business on the record date are entitled to notice of, and to vote at, the special meeting.  A list of stockholders entitled to vote at the special meeting will be available at our principal executive offices located at 2029 Stierlin Court, Mountain View, CA 94043, during regular business hours for a period of no less than 10 days before the special meeting and at the place of the special meeting during the meeting.

 

As of the record date, there were [·] shares of Class A common stock and [·] shares of Class B common stock outstanding and entitled to vote at the special meeting.  Each share of Class A common stock is entitled to one vote per share on each matter properly brought before the special meeting and each share of Class B common stock is entitled to 10 votes per share on each matter properly brought before the special meeting.  The Class A common stock and Class B common stock are voting as a single class on the proposals to be considered at the special meeting.

 

The presence in person or by proxy of the holders of shares of common stock having a majority of the votes which could be cast by the holders of all outstanding shares of common stock entitled to vote at the special meeting will constitute a quorum at the special meeting.  In the event that a quorum is not present at the special meeting, it is expected that the meeting will be adjourned to solicit additional proxies.

 

Vote Required; Abstentions and Broker Non-Votes

 

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of common stock entitled to vote on the proposal.  Adoption of the merger agreement by LinkedIn’s stockholders is a condition to the closing of the merger.

 

Approval of the proposal to adjourn the special meeting, whether or not a quorum is present, requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.  Approval, by non-binding, advisory vote, of compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

 

If a stockholder abstains from voting, that abstention will have the same effect as if the stockholder voted “AGAINST” the proposal to adopt the merger agreement.  For stockholders who attend the meeting or are represented by proxy and vote to abstain, the abstention will have the same effect as if the stockholder voted “AGAINST” any proposal to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the merger

 

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agreement at the time of the special meeting and “AGAINST” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

A “broker non-vote” generally occurs when a bank, broker or other nominee holding shares on your behalf does not vote on a proposal because the bank, broker or other nominee has not received your voting instructions and lacks discretionary power to vote the shares.  We do not expect any “broker non-votes,” at the special meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present.  If there are broker non-votes, each broker non-vote will count as a vote “AGAINST” the proposal to adopt the merger agreement, but will have no effect on (1) any proposal to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; or (2) the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

As a result of his ownership of approximately [·]% of the voting power of the outstanding shares of common stock as of the record date, Reid Hoffman, our co-founder and Chair of the LinkedIn Board, will have the power to approve the adoption of the proposals without the vote of any other stockholder.  Accordingly, if Mr. Hoffman votes his shares in favor of the proposals, the approval of the proposals is assured without the vote of any other stockholder.  Mr. Hoffman has informed us that he intends to vote all of his shares of common stock “FOR” each of the proposals.

 

Shares Held by LinkedIn’s Directors and Executive Officers

 

As of the record date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [·] shares of common stock, representing approximately [·]% of the shares of common stock, and approximately [·]% of the total voting power of the shares of common stock, outstanding on the record date.  Our co-founder and Chair of the Board of Directors, Reid Hoffman, beneficially owned and was entitled to vote, in the aggregate, [·] shares of common stock, representing approximately [·]% of the shares of common stock, and approximately [·]% of the total voting power of the shares of common stock, outstanding on the record date.  Our directors and executive officers have informed us that they intend to vote all of their shares of common stock (1) FOR” the adoption of the merger agreement; (2) FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Voting of Proxies

 

If your shares are registered in your name with our transfer agent, Computershare Trust Company, N.A., you may cause your shares to be voted by returning a signed and dated proxy card in the accompanying prepaid reply envelope, or you may vote in person by ballot at the special meeting.  Additionally, you may grant a proxy electronically over the internet or by telephone by following the instructions on your proxy card.  You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the internet or by telephone.  Based on your proxy cards or internet and telephone proxies, the proxy holders will vote your shares according to your directions.

 

If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting.  Stockholders will need to present proof of ownership of shares of common stock, such as a bank or brokerage account statement, and a form of personal identification to be admitted to the special meeting.  If your shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the special meeting in person.  If you attend the special meeting and vote in person by ballot, your vote will revoke any previously submitted proxy.

 

All shares represented by properly signed and dated proxies received in time for the special meeting will be voted at the special meeting in accordance with the instructions of the stockholder.  Properly signed and dated proxies that do not contain voting instructions will be voted (1) FOR” adoption of the merger agreement; (2) FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient

 

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votes to adopt the merger agreement at the time of the special meeting; and (3) FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee or attending the special meeting and voting in person with a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.  If available, you may vote over the internet or telephone through your bank, broker or other nominee by following the instructions on the voting instruction form provided by your bank, broker or other nominee.  If you do not return your bank’s, broker’s or other nominee’s voting instruction form, do not vote over the internet or by telephone through your bank, broker or other nominee, if possible, or do not attend the special meeting and vote in person with a “legal proxy” from your bank, broker or other nominee, it will have the same effect as if you voted “AGAINST” the proposal to adopt the merger agreement but will not have any effect on the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting or the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Revocability of Proxies

 

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:

 

·                  signing another proxy card with a later date and returning it to us prior to the special meeting;

 

·                  submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy;

 

·                  delivering a written notice of revocation to our Corporate Secretary; or

 

·                  attending the special meeting and voting in person by ballot.

 

If you have submitted a proxy, your appearance at the special meeting, in the absence of voting in person or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

 

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote.  You may also vote in person at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Any adjournment, postponement or other delay of the special meeting, including for the purpose of soliciting additional proxies, will allow LinkedIn stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned, postponed or delayed.

 

The LinkedIn Board’s Recommendation

 

The LinkedIn Board, after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the LinkedIn Board and Reasons for the Merger,” has unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement, on and subject to the conditions set forth therein, are fair to, advisable and in the best interests of LinkedIn and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement in all respects. The LinkedIn Board unanimously recommends that you vote (1) FOR” the adoption of the merger agreement; (2) FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) FOR” the proposal to approve, by non-binding,

 

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advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Adjournment

 

In addition to the proposal to adopt the merger agreement and the proposal to approve, by non-binding advisory vote, compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger, LinkedIn stockholders are also being asked to approve the proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting. This will enable the adjournment of the special meeting for the purpose of, among other things, soliciting additional votes in favor of the merger proposal if there are not sufficient votes at the time of the special meeting to approve the merger proposal. If a quorum is not present, the chair of the special meeting may adjourn the special meeting. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals.

 

Solicitation of Proxies

 

The expense of soliciting proxies will be borne by LinkedIn.  We have retained Innisfree M&A Incorporated, a professional proxy solicitation firm, to solicit proxies in connection with the special meeting at a cost of approximately $20,000 plus expenses.  We will also indemnify Innisfree M&A Incorporated against losses arising out of its provisions of these services on our behalf.  In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners.  Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax or over the internet.  No additional compensation will be paid for such services.

 

Anticipated Date of Completion of the Merger

 

We currently expect to complete the merger this calendar year.  However, the exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control.

 

Appraisal Rights

 

If the merger is consummated, LinkedIn stockholders who do not vote in favor of the adoption of the merger agreement and who properly perfect appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL.  This means that such holders of shares of common stock are entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest to be paid on the amount determined to be fair value, if any, as determined by the court, so long as they comply with the procedures established by Section 262 of the DGCL. Due to the complexity of the appraisal process, LinkedIn stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

 

Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.

 

To exercise appraisal rights, the stockholder of record must (1) submit a written demand for appraisal to LinkedIn before the vote is taken on the adoption of the merger agreement; (2) not submit a proxy or otherwise vote in favor of the proposal to adopt the merger agreement; and (3) continue to hold the subject shares of record through the effective time of the merger.  The failure to follow exactly the procedures specified under the DGCL will result in the loss of appraisal rights.  The DGCL requirements for exercising appraisal rights are described in further detail in this proxy statement, and the relevant section of the DGCL regarding appraisal rights is reproduced and attached as Annex C to this proxy statement.  If you hold your shares of common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such bank, brokerage firm or nominee.

 

Other Matters

 

At this time, we know of no other matters to be voted on at the special meeting.  If any other matters properly come before the special meeting, your shares of common stock will be voted in accordance with the discretion of the appointed proxy holders.

 

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Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on [·], 2016

 

This proxy statement is available at https://investors.linkedin.com/results-and-financials/

 

Householding of Special Meeting Materials

 

We have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders who have the same address and last name will receive only one copy of this proxy statement unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces printing costs, postage fees and the use of natural resources. Each stockholder who participates in householding will continue to be able to access or receive a separate proxy card.

 

If you wish to receive a separate set of our disclosure documents at this time, contact Broadridge Financial Solutions, Inc. by telephone at 866-540-7095 (inside or outside of the U.S.). If you wish to receive a separate set of our disclosure documents in the future, you may contact Investor Relations, LinkedIn Corporation, 2029 Stierlin Court, Mountain View, CA 94043. You may also send a message to our Investor Relations department by email at investors@linkedin.com or on our website at investors.linkedin.com under “Contact Us” (https: //investors.linkedin.com/contact-us/default.aspx).

 

If you are a stockholder who has multiple accounts in your name or you share an address with other stockholders and would like to receive a single set of our disclosure documents for your household, you may notify your broker, if your shares are held in a brokerage account, or if you hold registered shares, by notifying either LinkedIn Investor Relations or Broadridge using the contact methods above.

 

Questions and Additional Information

 

If you have any questions concerning the merger, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:

 

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders May Call:

(877) 825-8621 (Toll-Free From the U.S. and Canada)

or

(412) 232-3651 (From Other Locations)

 

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THE MERGER

 

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached as Annex A to this proxy statement and incorporated into this proxy statement by reference.  You should read the entire merger agreement carefully as it is the legal document that governs the merger.

 

Parties Involved in the Merger

 

LinkedIn Corporation

2029 Stierlin Court

Mountain View, CA 94043

(650) 687-3600

 

LinkedIn is the world’s largest professional network on the Internet with over 433 million members in over 200 countries and territories as of the date of this proxy statement. Members use our platform to stay connected and informed, advance their career and work smarter.

 

LinkedIn’s Class A common stock is listed on the NYSE under the symbol “LNKD.”

 

Microsoft Corporation

One Microsoft Way

Redmond, WA 95054

(425) 882-8080

 

Microsoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more. Its strategy is to build best-in-class platforms and productivity services for a mobile-first, cloud-first world. Founded in 1975, Microsoft operates worldwide and has offices in more than 100 countries. Microsoft develops, licenses, and supports a wide range of software products, services, and devices that deliver new opportunities, greater convenience, and enhanced value to people’s lives. Microsoft offers an array of services, including cloud-based services, to consumers and businesses. Microsoft designs, manufactures, and sells devices that integrate with its cloud-based services, and Microsoft delivers relevant online advertising to a global audience.

 

Microsoft’s common stock is listed on Nasdaq under the symbol “MSFT.”

 

Liberty Merger Sub Inc.

c/o Microsoft Corporation

One Microsoft Way

Redmond, WA 95054

(425) 882-8080

 

Merger Sub is a wholly owned direct subsidiary of Microsoft and was formed on June 10, 2016, solely for the purpose of engaging in the transactions contemplated by the merger agreement and has not engaged in any business activities other than in connection with the transactions contemplated by the merger agreement.

 

Effect of the Merger

 

Upon the terms and subject to the conditions of the merger agreement, Merger Sub will merge with and into LinkedIn, with LinkedIn continuing as the surviving corporation.  As a result of the merger, LinkedIn will become a wholly owned subsidiary of Microsoft, and our Class A common stock will no longer be publicly traded and will be delisted from the NYSE.  In addition, our Class A common stock will be deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC.  If the merger is completed, you will not own any shares of the capital stock of the surviving corporation.

 

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The effective time of the merger will occur upon the filing of a certificate of merger with and acceptance of such certificate by the Secretary of State of the State of Delaware (or at such later time as we, Microsoft and Merger Sub may agree and specify in such certificate of merger).

 

Effect on LinkedIn if the Merger is Not Completed

 

If the merger agreement is not adopted by LinkedIn stockholders or if the merger is not completed for any other reason, LinkedIn stockholders will not receive any payment for their shares of common stock.  Instead, LinkedIn will remain an independent public company, our Class A common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act and we will continue to file periodic reports with the SEC.  In addition, if the merger is not completed, we expect that our management will operate the business in a manner similar to that in which it is being operated today and that LinkedIn stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which LinkedIn operates and adverse economic conditions.

 

Furthermore, if the merger is not completed, and depending on the circumstances that caused the merger not to be completed, the price of our Class A common stock may decline significantly.  If that were to occur, it is uncertain when, if ever, the price of our Class A common stock would return to the price at which it trades as of the date of this proxy statement.

 

Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of common stock.  If the merger is not completed, the LinkedIn Board will continue to evaluate and review, among other things, LinkedIn’s business, operations, strategic direction and capitalization, and will make whatever changes it deems appropriate.  If the merger agreement is not adopted by LinkedIn stockholders or if the merger is not completed for any other reason, LinkedIn’s business, prospects or results of operation may be adversely impacted.

 

Under specified circumstances, LinkedIn will be required to pay Microsoft a termination fee of $725 million upon the termination of the merger agreement.  For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination Fee.”

 

Merger Consideration

 

In the merger, each outstanding share of common stock (other than shares held by (1) LinkedIn as treasury stock; (2) Microsoft, Merger Sub or their respective subsidiaries; and (3) LinkedIn stockholders who have properly and validly exercised and perfected their appraisal rights under Delaware law with respect to such shares) will be cancelled and converted into the right to receive the per share merger consideration.

 

After the merger is completed, you will have the right to receive the per share merger consideration, as described in the section of this proxy statement captioned “The Merger Agreement—Conversion of Shares,” but you will no longer have any rights as a stockholder (except that LinkedIn stockholders who properly exercise and do not validly withdraw or subsequently lose their appraisal rights will have the right to receive a payment for the “fair value” of their shares as determined pursuant to an appraisal proceeding as contemplated by Delaware law, as described in the section of this proxy statement captioned “—Appraisal Rights”).

 

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Background of the Merger

 

LinkedIn is the world’s largest professional network on the internet and its members use LinkedIn’s platform to stay connected and informed, advance their career and work smarter. Reid Hoffman, the Chair of the LinkedIn Board and a co-founder of LinkedIn, has had a long-term vision for LinkedIn — to create economic opportunity for every professional in the world — since its founding in 2002.  In connection with its initial public offering in 2011, LinkedIn created a dual class common stock structure, which provided LinkedIn’s founders, pre-initial public offering investors, executives and employees with influence over matters requiring stockholder approval.

 

The LinkedIn Board regularly evaluates LinkedIn’s strategic direction and ongoing business plans with a view toward executing on LinkedIn’s vision and mission, strengthening its core businesses and enhancing stockholder value. As part of this evaluation, the LinkedIn Board has from time to time considered a variety of strategic alternatives, including (1) the continuation of LinkedIn’s current business plan as a standalone entity; (2) modifications to LinkedIn’s business plan and strategy; and (3) potential expansion opportunities into new business lines through acquisitions and combinations of LinkedIn with other businesses.

 

On February 16, 2016, Jeff Weiner, LinkedIn’s chief executive officer, met with Satya Nadella, Microsoft’s chief executive officer, to discuss the ongoing commercial relationship between the companies and ways to enhance it. At this meeting, Messrs. Weiner and Nadella discussed ways in which the two companies could work together more closely and, in the context of that discussion, among other things, the concept of a business combination was raised.

 

On March 10, 2016, Mr. Weiner met with an executive of a company, which we refer to as “Party A,” at the executive’s request. During the meeting, the executive of Party A stated to Mr. Weiner that he and the chief executive officer of Party A had previously discussed ways in which Party A could enhance its business relationship with LinkedIn, as well as a potential acquisition of LinkedIn by Party A.

 

On March 14, 2016, at a function attended by both Mr. Weiner and the chief executive officer of Party A, Mr. Weiner spoke with the chief executive officer of Party A, who requested that the two speak further about potential strategic opportunities for LinkedIn and Party A.

 

Also on March 14, 2016, Mr. Hoffman held a previously scheduled meeting with a senior executive of a company, which we refer to as “Party B.”  Later on March 14, 2016, the senior executive of Party B contacted each of Messrs. Hoffman and Weiner separately to set up an additional meeting in the near future to explore a potential business combination transaction.

 

On March 15, 2016, Mr. Weiner called Mr. Nadella to inquire as to whether Microsoft was interested in discussing further a potential acquisition of LinkedIn, and explained that, although

 

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LinkedIn was not for sale, others had expressed interest in an acquisition. Mr. Nadella responded that he would discuss the matter further with Microsoft’s board of directors.

 

On March 16, 2016, at the request of the chief executive officer of Party A, Mr. Weiner met with the chief executive officer of Party A, who informed Mr. Weiner that Party A had engaged a financial advisor for purposes of analyzing a potential acquisition of LinkedIn by Party A and that Party A was interested in pursuing an acquisition. The chief executive officer of Party A also discussed with Mr. Weiner the current business of Party A and the potential benefits of a combination of Party A and LinkedIn.

 

Also on March 16, 2016, Mr. Nadella spoke with Mr. Weiner, at which time Mr. Nadella confirmed that Microsoft was interested in pursuing an acquisition of LinkedIn and that Microsoft had begun work on the project.

 

On March 18, 2016, the LinkedIn Board met, with representatives of LinkedIn management and Wilson Sonsini Goodrich & Rosati, Professional Corporation, outside legal counsel to LinkedIn, which we refer to as “Wilson Sonsini,” in attendance. The members of the LinkedIn Board discussed the recent indications of interest with respect to a potential acquisition of LinkedIn from Party A, Party B and Microsoft. The members of the LinkedIn Board also discussed contacting other companies that may have an interest in acquiring LinkedIn. The representatives of Wilson Sonsini discussed with the members of the LinkedIn Board their fiduciary duties in the context of a potential sale of LinkedIn. The representatives of Wilson Sonsini also discussed with the members of the LinkedIn Board the fiduciary and other considerations related to the fact that Mr. Hoffman, through his ownership of Class B common stock, controlled more than a majority of the outstanding voting power of LinkedIn and therefore would be able to approve or prevent any potential transaction. Mr. Hoffman informed the other members of the LinkedIn Board that, should such a transaction proceed, he expected to be treated the same as the other stockholders of LinkedIn and would not expect to receive, or seek to receive, any special or different consideration. In light of the potentially significant workload involved in exploring strategic alternatives and the possibility that in connection with such exploration LinkedIn management might need feedback and direction on relatively short notice, the LinkedIn Board created a transactions committee, which we refer to as the “Transactions Committee.” The Transactions Committee was authorized to advise and direct LinkedIn management with respect to the exploration, consideration and negotiation of strategic alternative transactions, to facilitate negotiation, and to report to the LinkedIn Board on a regular basis. The LinkedIn Board retained authority to approve any transaction. The LinkedIn Board appointed A. George “Skip” Battle, Michael Moritz and Stanley Meresman to the Transactions Committee. The LinkedIn Board also authorized the Company to engage Qatalyst Partners, on terms acceptable to the Transactions Committee, to assist LinkedIn with respect to its exploration of strategic alternative transactions.

 

Later on March 18, 2016, Mr. Weiner attended a meeting previously scheduled by Qatalyst Partners. During the meeting, Mr. Weiner spoke with a representative of Qatalyst Partners about potentially engaging Qatalyst Partners to act as LinkedIn’s financial advisor for purposes of assisting with the exploration of strategic alternative transactions.

 

On March 21, 2016, the chief executive officer of Party A emailed Mr. Weiner to inquire about meeting to further discuss a potential acquisition.

 

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On March 22, 2016, Mr. Weiner emailed the chief executive officer of Party A and said, in response to Party A’s inquiry, that LinkedIn would be willing to meet to further discuss a potential acquisition. Mr. Weiner also emailed with an executive of Party B regarding the possibility of a transaction with LinkedIn and to set up further meetings on the topic.  Additionally, Mr. Weiner emailed Mr. Nadella to set up a call to further discuss a potential acquisition.

 

Later on March 22, 2016, the Transactions Committee held its first meeting, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners and Wilson Sonsini, respectively, in attendance. The Transactions Committee discussed the current status of discussions with third parties regarding a potential acquisition of LinkedIn. The Transactions Committee also reviewed other parties that might have an interest in a transaction with LinkedIn, based on the Transactions Committee’s assessment of the likelihood these parties would be interested in making a compelling offer for LinkedIn that was capable of being completed, and, among other things, authorized Mr. Weiner and Qatalyst Partners to contact a company, which we refer to as “Party C,” regarding a potential acquisition of LinkedIn. The Transactions Committee approved the engagement by LinkedIn of Qatalyst Partners as a financial advisor. Later that day, Mr. Weiner spoke with Mr. Nadella about a meeting to discuss a potential acquisition.

 

On March 25, 2016, Mr. Weiner spoke to the chief executive officer of Party C regarding a potential acquisition of LinkedIn.

 

Also on March 25, 2016, Messrs. Hoffman and Weiner met with the chief executive officer of Party A and discussed aspects of a potential transaction with LinkedIn, including potential benefits of an acquisition. The chief executive officer of Party A stated that Party A would like Mr. Weiner to play a role at the combined company if Party A acquired LinkedIn. The chief executive officer of Party A and Mr. Hoffman also briefly discussed Mr. Hoffman’s potential involvement with the business following a transaction, including, among other things, his possibly serving on Party A’s board of directors.

 

On March 29, 2016, representatives of Qatalyst Partners discussed a potential transaction with a representative of the corporate development department and another senior executive of Party C.

 

Also on March 29, 2016, Messrs. Hoffman and Weiner met with the chief executive officer and another senior executive of Party B to discuss, among other things, potential benefits of an acquisition.

 

On March 31, 2016, Messrs. Hoffman and Weiner and Steve Sordello, LinkedIn’s senior vice president and chief financial officer, met with Mr. Nadella and other executives of Microsoft to discuss, among other things, potential benefits of an acquisition.

 

On April 1, 2016, the Transactions Committee met, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners and Wilson Sonsini, respectively, in attendance. Mr. Weiner updated the Transactions Committee regarding the status of the recent discussions concerning a potential acquisition of LinkedIn, as well as other parties who might have interest in an acquisition of LinkedIn. At this meeting, Mr. Hoffman informed the Transactions Committee that he had a meeting scheduled with the chief executive officer of another company, which we refer to as “Party D,” who

 

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might have an interest in a transaction with LinkedIn in the near future. The Transactions Committee authorized Mr. Hoffman to gauge Party D’s interest in a transaction.

 

Later on April 1, 2016, representatives of Wilson Sonsini provided Party A with a draft of a confidentiality agreement. The confidentiality agreement was signed on April 6, 2016.

 

On April 2, 2016, representatives of the corporate development department of Party C contacted representatives of Qatalyst Partners and informed them that Party C was not interested in pursuing an acquisition of LinkedIn, but remained interested in potential alternative transactions or a commercial partnership with LinkedIn.

 

On April 4, 2016, a senior executive of Party B contacted Mr. Weiner and indicated that Party B was interested in exploring a potential acquisition of LinkedIn, and that representatives from their corporate development team would contact Qatalyst Partners.

 

On April 5, 2016, representatives of Wilson Sonsini provided Party B with a draft of a confidentiality agreement. The confidentiality agreement was signed on April 11, 2016.

 

On April 6, 2016, Messrs. Weiner and Sordello and representatives of Qatalyst Partners held a due diligence meeting with members of the management team of Party A and their advisors, including the chief executive officer and chief financial officer of Party A.

 

Also on April 6, 2016, representatives of Wilson Sonsini provided Microsoft with a draft of a confidentiality agreement. The confidentiality agreement was signed on April 11, 2016.

 

On April 7, 2016, Mr. Hoffman attended a previously scheduled meeting with the chief executive officer of Party D. During the course of this meeting, Mr. Hoffman described that LinkedIn had received interest in a potential acquisition. The chief executive officer of Party D informed Mr. Hoffman that Party D was not interested in exploring a business combination transaction with LinkedIn at that time.

 

On April 11, 2016, LinkedIn management, including, among others, Mr. Sordello and Mike Callahan, LinkedIn’s senior vice president, general counsel and secretary, and representatives of Qatalyst Partners held a due diligence call with representatives of Microsoft’s management, corporate development and legal teams and representatives of Simpson Thacher & Bartlett LLP, outside legal counsel to Microsoft, which we refer to as “Simpson Thacher.”

 

On April 12, 2016, LinkedIn management, including Mr. Sordello, and representatives of Qatalyst Partners held a due diligence call with representatives of Party A management and its advisors.

 

On April 13, 2016, LinkedIn management, including Messrs. Weiner, Sordello and Callahan, and representatives of Qatalyst Partners, held a due diligence video call with representatives of Microsoft, including Mr. Nadella, and representatives of Simpson Thacher and Morgan Stanley & Co. LLC, financial advisor to Microsoft, which we refer to as “Morgan Stanley.”

 

On April 14, 2016, representatives of LinkedIn management, including Messrs. Weiner, Sordello and Callahan, and representatives of Qatalyst Partners held a due diligence meeting with executives, representatives and advisors of Party B.

 

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On April 18, 2016, the Transactions Committee met, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners and Wilson Sonsini, respectively, in attendance. Mr. Weiner updated the Transactions Committee on the status of discussions. The representatives of Qatalyst Partners informed the members of the Transactions Committee that Party C had informed Qatalyst Partners that Party C was not interested in pursuing an acquisition of LinkedIn at that time and had proposed an alternative transaction. Mr. Hoffman informed the members of the Transactions Committee that Party D was not interested in pursuing an acquisition of LinkedIn at that time. The members of the Transactions Committee then discussed the potential engagement of Allen & Company LLC, which we refer to as “Allen,” to serve as an additional financial advisor to LinkedIn based on Allen’s relevant industry experience, contacts and familiarity with LinkedIn and its business. After discussion, the Transactions Committee authorized LinkedIn management to proceed with the engagement of Allen, on the terms discussed with the Transactions Committee.

 

On April 19, 2016, Mr. Sordello and representatives of Qatalyst Partners conducted a due diligence call with representatives of Microsoft and Morgan Stanley.

 

On April 20, 2016, a senior representative of Party B contacted Mr. Hoffman to discuss the status of Party B’s interest in an acquisition of LinkedIn and the potential benefits for Party B associated with an acquisition of LinkedIn.

 

On April 25, 2016, Messrs. Hoffman and Weiner each had a conversation with the chief executive officer of Party A regarding Party A’s interest in a transaction. The chief executive officer of Party A stated that Party A was preparing a proposal to acquire LinkedIn.

 

Later on April 25, 2016, Party A submitted a non-binding indication of interest to acquire LinkedIn for a price between $160 to $165 per share of LinkedIn common stock, with such consideration to be a mix of cash and Party A common stock, with up to 50% of such consideration being in cash. Party A’s indication of interest also requested that LinkedIn enter into an exclusivity agreement.

 

On April 26, 2016, the Transactions Committee met, with representatives of LinkedIn management, Qatalyst Partners and Wilson Sonsini, respectively, in attendance. The Transactions Committee discussed the proposal from Party A, as well as the status of discussions with Microsoft and Party B.  The Transactions Committee discussed the process for obtaining additional indications of interest.

 

On April 27, 2016, representatives of Qatalyst Partners had a conversation with representatives of Party B regarding the status of Party B’s interest in an acquisition of LinkedIn.

 

On April 29, 2016, Mr. Weiner spoke with Mr. Nadella and reviewed the status of discussions with Microsoft regarding an acquisition of LinkedIn.

 

On May 3, 2016, representatives of LinkedIn management, including Mr. Weiner, spoke with representatives of Party B management regarding a potential transaction. Later that day, Party B

 

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informed LinkedIn that it was no longer interested in pursuing an acquisition of LinkedIn, but remained interested in partnering with LinkedIn.

 

On May 4, 2016, Microsoft submitted a non-binding indication of interest to acquire LinkedIn at a price of $160 in cash per share of LinkedIn common stock. Microsoft also stated that it was willing to consider including Microsoft common stock as part of such consideration. Microsoft’s indication of interest also requested that LinkedIn enter into an exclusivity agreement.

 

On May 6, 2016, the LinkedIn Board met, with representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. LinkedIn management informed the LinkedIn Board that Party B, Party C and Party D were not interested in pursuing a transaction, but that Party B remained interested in pursuing a commercial partnership.  The members of the LinkedIn Board then discussed the terms of the proposals that had been submitted by Microsoft and Party A.  The representatives of Qatalyst Partners reviewed with the members of the LinkedIn Board a financial presentation, which (1) addressed various perspectives on LinkedIn’s valuation on a standalone basis; and (2) analyzed a potential acquisition of LinkedIn. The representatives of Wilson Sonsini discussed the fiduciary duties of the LinkedIn Board.  The members of the LinkedIn Board then authorized the Transactions Committee to continue to oversee the process of analyzing possible strategic alternative transactions, including the proposals submitted by Microsoft and Party A.

 

Immediately following the meeting of the LinkedIn Board on May 6, 2016, the Transactions Committee met, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. Following further discussion of the proposals that had been submitted by Microsoft and Party A, the Transactions Committee instructed the representatives of Qatalyst Partners to communicate to each of Microsoft and Party A that LinkedIn was prepared to enter exclusive negotiations at a price of $200 per share of LinkedIn common stock. Later that day, the representatives of Qatalyst Partners communicated this position to each of Microsoft and Party A. Neither Microsoft nor Party A chose to pursue exclusivity at that price.

 

On May 9, 2016, Mr. Hoffman and Bill Gates, the co-founder of Microsoft and member of its board of directors, held a meeting, which had been scheduled before a potential transaction between the parties had begun to be discussed.  At their meeting, they discussed their perspectives regarding industry trends and the strategy of LinkedIn.  The parties also discussed the business rationale and potential benefits to Microsoft of potentially acquiring LinkedIn. Mr. Gates and Mr. Hoffman briefly discussed Mr. Hoffman’s potential involvement with the business following a transaction, including, among other things, his possibly serving on Microsoft’s board of directors, but the parties did not pursue that conversation, instead focusing on their respective visions for a combined company.

 

Later on May 9, 2016, Mr. Hoffman then met with Mr. Nadella, and they as well discussed the business rationale and potential benefits to Microsoft of potentially acquiring LinkedIn.  They also briefly discussed Mr. Hoffman’s potential involvement with the business following a transaction but chiefly focused on their shared vision for the combination of the two companies.

 

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Also on May 9, 2016, Party A submitted a revised proposal to LinkedIn providing for an acquisition of LinkedIn for $171 per share of LinkedIn common stock, with half of the consideration in cash and half in Party A common stock.

 

On May 10, 2016, representatives of Qatalyst Partners spoke with representatives of Party A regarding the proposal received on May 9, 2016.

 

On May 11, 2016, Microsoft submitted a revised proposal to acquire LinkedIn, which provided for an acquisition of LinkedIn for $172 in cash per share of LinkedIn common stock. Microsoft noted that it remained flexible with respect to the possibility of including Microsoft common stock in the consideration, if requested by LinkedIn.  The proposal again requested that LinkedIn enter into an exclusivity agreement.

 

Later on May 11, 2016, the Transactions Committee met, with representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. The Transactions Committee discussed with the representatives of Qatalyst Partners, Allen and Wilson Sonsini the revised proposals that had been submitted by Microsoft and Party A and the next steps with regard to further discussions with each. The Transactions Committee and representatives of Qatalyst Partners and Allen also noted that, based on prior conversations with Mr. Hoffman, Mr. Hoffman’s preference would likely be for consideration that consisted of a mix of cash and stock in a transaction intended to qualify as a tax-free reorganization, in light of the value of the deferral of taxes on the stock portion of the consideration. The Transactions Committee authorized representatives of Qatalyst Partners to respond to Party A and Microsoft with requests for increased offers.

 

The representatives of Qatalyst Partners contacted each of Party A and Microsoft, consistent with the Transactions Committee’s instructions.

 

On May 12, 2016, the Transactions Committee met, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. The Transactions Committee discussed with the representatives of Qatalyst Partners and Allen the process to date with respect to discussions with Microsoft and Party A. The representatives of Qatalyst Partners noted that Party A had indicated that although Party A preferred a negotiation to an auction, if there were to be an auction, Party A expected that all parties’ bids would be considered at once.  With respect to Microsoft, the representatives of Qatalyst Partners indicated that Microsoft expressed a similar concern relating to continued incremental bidding and was seeking guidance with respect to an acceptable price. The members of the Transactions Committee then discussed with the representatives of Qatalyst Partners and instructed the representatives of Qatalyst Partners to request best and final bids from each of Party A and Microsoft, and indicate to each of the bidders that following receipt and consideration of the bids, in the event LinkedIn chose to move forward, LinkedIn intended to choose only one party with whom to pursue exclusive negotiations. The Transactions Committee concluded that this would alleviate concerns regarding the potential for a bid to be shopped and make a more aggressive offer more

 

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likely. The Transactions Committee also considered the length of the process to date and the depth of interactions with each of the parties as well as the fact that prolonged continuation of the process would likely be an increasing distraction for management of the Company and have potential for leaks in the media that could be damaging to the Company’s business. In light of these considerations, the Transactions Committee instructed the representatives of Qatalyst Partners to inform both Microsoft and Party A that they were to submit best and final offers to acquire LinkedIn prior to the LinkedIn Board meeting scheduled for the afternoon of May 13, 2016.  Mr. Hoffman informed the Transactions Committee that he wished to call Mr. Nadella and indicate that he would personally support a transaction with Microsoft at $185 per share or greater if the LinkedIn Board chose Microsoft as the winning bidder after the receipt of best and final offers.

 

Later on May 12, 2016, and on May 13, 2016, Mr. Hoffman conveyed to Mr. Nadella the message he discussed with the Transactions Committee. Also on May 12, 2016, representatives of Qatalyst Partners spoke with (1) representatives of Party A and their financial advisor and (2) representatives of Microsoft and Morgan Stanley and conveyed to the respective parties the messages instructed by the Transactions Committee.

 

On May 13, 2016, Microsoft submitted a revised proposal in response to the request for best and final offers for an acquisition of LinkedIn at a price of $182 in cash per share of LinkedIn common stock, with the flexibility to include Microsoft common stock as part of the mix of consideration if requested by LinkedIn.  Later that afternoon, Party A submitted a revised proposal in response to the request for best and final offers for an acquisition of LinkedIn for $182 per share of LinkedIn common stock, consisting of $85 in cash and the remainder in Party A common stock.  Both proposals requested that LinkedIn negotiate on an exclusive basis.

 

Later on May 13, 2016, the LinkedIn Board met, with representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. The members of the LinkedIn Board reviewed and discussed the process to date, and the terms of the proposals submitted by Microsoft and Party A in response to the request for best and final offers. The members of the LinkedIn Board and representatives of Qatalyst Partners and Allen discussed various considerations raised by the two proposals, including, among other things, (1) the value certainty of the respective proposals; (2) the historical volatility of the stock price of each of Microsoft and Party A; (3) the execution risks of the respective proposals; (4) certainty of closing, including the need for the approval of Party A’s stockholders; and (5) the relative financing needs of each of Microsoft and Party A. The LinkedIn Board considered, in light of LinkedIn’s request for best and final offers and messaging regarding the process previously delivered to each bidder, the potential effects of calling one or both parties to seek an increased proposal and the risk to the process of potentially alienating one or both parties by doing so.  The representatives of Wilson Sonsini then reviewed with the members of the LinkedIn Board their fiduciary obligations.  The representatives of Wilson Sonsini discussed with the LinkedIn Board that a definitive agreement for a transaction would be expected to permit LinkedIn to respond to unsolicited acquisition proposals and accept a superior proposal, subject to payment of a termination fee.  The LinkedIn Board discussed the two proposals and unanimously concluded to proceed with exclusivity with Microsoft. The LinkedIn Board discussed negotiating with Microsoft to explore structuring the transaction to include Microsoft stock, and have the stock component of the merger consideration be tax-deferred to stockholders, something for

 

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which Mr. Hoffman expressed his preference. In this regard, the LinkedIn Board also discussed proposing a mechanism whereby Microsoft would provide some level of “price certainty” for shares issued in the transaction. The LinkedIn Board authorized LinkedIn to enter into an exclusivity agreement with Microsoft.

 

Immediately following the meeting of the LinkedIn Board on May 13, 2016, the Transactions Committee met, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. The members of the Transactions Committee discussed the communication of the LinkedIn Board’s decision to each of Microsoft and Party A.

 

Later, on May 13, 2016, representatives of Qatalyst Partners, on behalf of LinkedIn, informed Party A that LinkedIn was proceeding to enter into an exclusivity agreement with another party.

 

On May 14, 2016, LinkedIn signed an exclusivity agreement with Microsoft that expired on June 12, 2016.  The exclusivity agreement, among other things, prohibited LinkedIn from soliciting alternative acquisition proposals or engaging in negotiations with other parties regarding an alternative acquisition.

 

Beginning May 14, 2016, and continuing until the signing of the merger agreement, Microsoft continued its due diligence review of LinkedIn through in person meetings, telephone calls and access to an electronic data room made available by LinkedIn. Beginning at the same time and ending June 6, 2016, the parties engaged in discussions regarding the terms of a collar in order to introduce a degree of price certainty for the stock component of the consideration being discussed.

 

On May 16, 2016, Wilson Sonsini, on behalf of LinkedIn, provided Simpson Thacher with a draft of the merger agreement, which, among other things, (1) provided LinkedIn with the right to terminate the merger agreement to accept a superior proposal; and (2) proposed consideration that consisted of a mix of cash and stock in a transaction intended to qualify as a tax-free reorganization.

 

On May 20, 2016, Simpson Thacher, on behalf of Microsoft, provided Wilson Sonsini with a revised draft of the merger agreement. Among other things, the revised draft of the merger agreement: (1) provided for a support agreement to be entered into by Mr. Hoffman, a draft of which was also provided by Simpson Thacher; (2) reserved for future comments on the form of merger consideration and antitrust matters; (3) indicated that LinkedIn’s proposal that it have the right to terminate the merger agreement to accept a superior proposal was subject to additional discussions between the parties; and (4) included revisions to the circumstances in which a termination fee would be payable by LinkedIn.

 

Later on May 20, 2016, LinkedIn received a revised proposal from Party A for an acquisition of LinkedIn for $85 in cash and a fixed number of shares of Party A common stock which, based on the closing price of Party A’s common stock on May 19, 2016, represented a proposal with a notional value at that time of approximately $188 per share of LinkedIn common stock.

 

On May 21, 2016, the Transactions Committee met, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. The

 

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members of the Transactions Committee discussed with representatives of Qatalyst Partners, Allen and Wilson Sonsini, respectively, next steps with respect to the receipt of the revised proposal from Party A in light of the terms of the exclusivity agreement with Microsoft and the confidentiality agreement with Party A. The Transactions Committee noted that the revised proposal was in fact quite similar economically to the implied value of the proposal sent by Party A on May 13, 2016, at the time it was sent, insofar as the implied floating stock exchange ratio of the May 13, 2016 proposal, using Party A’s trading price on May 13, 2016, was the same as the fixed stock exchange ratio in the revised proposal of May 20, 2016; the increase in the notional value of Party A’s proposal was attributable to the increase in Party A’s trading price between May 13, 2016, and May 20, 2016. The Transactions Committee also discussed factors that could be affecting Party A’s trading price. The Transactions Committee then discussed the appropriate manner in which to address the revised Party A proposal in light of the LinkedIn Board’s fiduciary and contractual obligations. The Transactions Committee concluded it could not respond to Party A in light of LinkedIn’s exclusivity agreement with Microsoft.  The Transactions Committee further concluded that LinkedIn would continue negotiations with Microsoft and evaluate the situation further closer to the expiration of the exclusivity period with Microsoft, and after Microsoft’s due diligence was substantially completed. In this regard, those present discussed the need to preserve flexibility in the negotiations with Microsoft in the event that Party A remained interested in acquiring LinkedIn closer to the expiration of the exclusivity period.

 

On May 25, 2016, the chief executive officer of Party A emailed Messrs. Hoffman and Weiner to indicate that Party A’s stock performance since Party A’s revised proposal was sent on May 20, 2016, had increased the notional value of its revised proposal.

 

Later on May 25, 2016, Wilson Sonsini, on behalf of LinkedIn, provided Simpson Thacher with a revised draft of the merger agreement. Among other things, the revised draft of the merger agreement: (1) noted that the support agreement proposed to be entered into by Mr. Hoffman was under review by Mr. Hoffman; (2) indicated that the form of merger consideration and antitrust matters remained under review by the parties; (3) provided for LinkedIn’s right to terminate the agreement in the event of a superior proposal; and (4) indicated that the amount of a termination fee that would be payable by LinkedIn remained under review by the parties.

 

On May 26, 2016, the LinkedIn Board met, with representatives of LinkedIn management and Wilson Sonsini in attendance. The LinkedIn Board discussed the current state of due diligence and negotiations with Microsoft and again reviewed the LinkedIn long-term management plan.

 

On June 1, 2016, Simpson Thacher, on behalf of Microsoft, provided Wilson Sonsini with a revised draft of the merger agreement. The revised draft of the merger agreement provided, among other things, (1) for limitations with respect to Microsoft’s obligations in connection with antitrust matters; and (2) a termination fee of 3.85% of the fully diluted equity value of LinkedIn, which would represent approximately $1 billion, that would be payable in certain circumstances by LinkedIn.

 

Later on June 1, 2016, Mr. Hoffman informed the Company that he would not be prepared to enter into the support agreement with Microsoft in light of the potential risk that doing so could,

 

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under LinkedIn’s certificate of incorporation, potentially result in the automatic conversion of his Class B common stock to Class A common stock.

 

On June 3, 2016, representatives of Wilson Sonsini, Weil Gotshal & Manges, counsel to Mr. Hoffman, Simpson Thacher and Richards, Layton & Finger, Delaware counsel to Microsoft, held a conference call to discuss the support agreement and issues relating to the automatic conversion feature in LinkedIn’s certificate of incorporation.  Following this call, representatives of Simpson Thacher indicated to Wilson Sonsini that if Microsoft would not receive a support agreement from Mr. Hoffman, it would seek additional provisions in the merger agreement to address the additional conditionality that it would introduce to the deal.

 

On June 4, 2016, Wilson Sonsini, on behalf of LinkedIn, provided Simpson Thacher with a revised draft of the merger agreement and a draft of the disclosure letter to the merger agreement. Among other things, the revised draft of the merger agreement:(1) provided that Mr. Hoffman would not enter into a support agreement; (2) included additional covenants with respect to Microsoft’s obligations in connection with antitrust matters; and (3) provided for a termination fee of 1.75% of the fully diluted equity value of LinkedIn, which would represent approximately $450 million, that would be payable in certain circumstances by LinkedIn.

 

On June 5, 2016, LinkedIn received a further revised proposal from Party A for an acquisition of LinkedIn at a price per share of LinkedIn common stock of $85 in cash and a fixed number of shares of Party A common stock, which fixed number of Party A shares was increased from Party A’s May 20, 2016 proposal. Based on the closing price of Party A’s common stock on June 3, 2016, the last trading day prior to receipt of the proposal, this proposal represented a notional value of approximately $200 per share of LinkedIn common stock at that time.

 

Also on June 5, 2016, Mr. Nadella and Mr. Weiner spoke and discussed operating principles and a governance framework for the LinkedIn business following the acquisition.

 

On June 6, 2016, the Transactions Committee met, with Mr. Hoffman and representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. The respective representatives of Qatalyst Partners, Allen and Wilson Sonsini discussed with the members of the Transactions Committee the process with respect to the receipt of the revised proposal from Party A in light of the terms of the exclusivity agreement with Microsoft and the confidentiality agreement with Party A. The Transactions Committee noted that the material difference in the revised proposal relative to the revised proposal from Party A of May 20, 2016, was that the fixed stock exchange ratio had been increased. The Transactions Committee then discussed the appropriate manner in which to address the further revised proposal in light of the LinkedIn Board’s fiduciary and contractual obligations. The Transactions Committee determined, in light of the prohibition in LinkedIn’s exclusivity agreement with Microsoft on discussions with other parties, not to respond to Party A and to continue negotiations with Microsoft and to indicate to Microsoft that Microsoft’s current proposal of $182 in cash per share of LinkedIn common stock was no longer supportable and encourage Microsoft to offer $200 per share. Mr. Weiner informed the members of the Transactions Committee that he had spoken to Mr. Hoffman and Mr. Hoffman was now also supportive of the consideration in an acquisition of LinkedIn being entirely in the form of cash, in addition to remaining comfortable with a cash and stock transaction. Representatives of Qatalyst Partners discussed with the Transactions Committee that an acquisition entirely for cash would be more attractive to Microsoft.

 

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Also on June 6, 2016, representatives of Qatalyst Partners spoke to representatives of Morgan Stanley and, in the context of the expected timing of entry into a merger agreement prior to the expiration of exclusivity, conveyed that Microsoft’s proposal of $182 in cash per share of LinkedIn common stock was no longer supportable, Microsoft should consider an offer of $200 per share and Mr. Hoffman was now supportive of the consideration being entirely in the form of cash as part of an increase to Microsoft’s offer.

 

On June 7, 2016, and June 8, 2016, during conversations concerning the status of the transaction, Messrs. Hoffman and Weiner separately communicated to Mr. Nadella that a transaction at $182 per share of LinkedIn common stock was no longer supportable and encouraged Mr. Nadella to offer $200 per share. In the course of these conversations, Mr. Hoffman indicated that he was willing to consider an all-cash transaction with Microsoft as part of an increase in Microsoft’s offer. Mr. Nadella also indicated to Mr. Weiner that a discussion of cost synergies in the transaction would be necessary in connection with any potential price increase from Microsoft.  Also on June 8, 2016, Brad Smith, Microsoft’s president and chief legal officer, separately spoke with Mr. Battle and met with Mr. Callahan and conveyed to each that any potential increase in Microsoft’s offer would necessitate a discussion of cost synergies.

 

On June 9, 2016, the Transactions Committee met, with representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. Representatives of LinkedIn management, Qatalyst Partners and Allen discussed with the members of the Transactions Committee the strategy for obtaining a higher offer from Microsoft in light of the two revised proposals from Party A. Mr. Weiner noted that Mr. Nadella had informed him that Microsoft would need to identify cost synergies in connection with any increase in its offer. The representatives of Qatalyst Partners reviewed with the members of the Transactions Committee the key differences between the latest revised proposal from Party A and the current proposal from Microsoft. The representatives of Wilson Sonsini discussed with the members of the Transactions Committee their fiduciary duties in light of the Microsoft proposal and the receipt of the revised proposal from Party A.

 

Also on June 9, 2016, Simpson Thacher, on behalf of Microsoft, provided Wilson Sonsini with a revised draft of the disclosure letter to the merger agreement.

 

Later on June 9, 2016, Mr. Nadella met with Mr. Weiner to discuss integration planning and potential cost synergies arising from the combination and the status of the transaction generally. At that meeting, Mr. Weiner reiterated that $182 was no longer supportable.

 

On June 10, 2016, Mr. Sordello sent Amy Hood, Microsoft’s chief financial officer, an analysis of potential cost synergies arising from the combination. Later that day, Mr. Sordello and Ms. Hood discussed various potential cost synergies arising from the combination. Later that day, Microsoft delivered a revised proposal to LinkedIn that provided for an acquisition of LinkedIn for $190 in cash per share of LinkedIn common stock.  Messrs. Nadella and Smith also called Messrs. Weiner and Callahan, respectively, to convey the proposal verbally.

 

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Also on June 10, 2016, Simpson Thacher, on behalf of Microsoft, provided Wilson Sonsini, on behalf of LinkedIn, with a revised draft of the merger agreement. Among other things, the revised draft of the merger agreement: (1) provided for Messrs. Hoffman and Weiner to each enter into a support agreement whereby each would, among other things, agree not to enter into any voting agreement with a third party; (2) indicated that the form of merger consideration would be all cash; (3) included changes to covenants with respect to Microsoft’s obligations in connection with antitrust matters; and (4) provided for a termination fee of 3.75% of the fully diluted equity value of LinkedIn, which would represent approximately $1 billion, that would be payable in certain circumstances by LinkedIn.

 

Later on June 10, 2016, representatives of Wilson Sonsini, on behalf of LinkedIn, negotiated the merger agreement with representatives of Simpson Thacher, on behalf of Microsoft.  As a part of this conversation, it was conveyed that Messrs. Hoffman and Weiner would not enter into any type of support agreement with Microsoft. In addition, there remained open issues regarding antitrust matters, the amount of the termination fee and the circumstances under which it would be payable.

 

Later on June 10, 2016, the Transactions Committee met, with representatives of LinkedIn management, Qatalyst Partners, Allen and Wilson Sonsini, respectively, in attendance. Mr. Weiner updated the members of the Transactions Committee on his conversation the prior evening with Mr. Nadella. The members of the Transactions Committee discussed the revised offer for $190 in cash per share of LinkedIn common stock that had been delivered earlier that day. The representatives of Wilson Sonsini provided an update on the status of the negotiation of the merger agreement, noting that, in addition to price, the antitrust provisions, the amount of the termination fee payable and the circumstances under which it would be payable were the other remaining material points to negotiate. The Transactions Committee then authorized Mr. Weiner to continue discussions with Mr. Nadella for the purpose of (1) emphasizing that Microsoft needed to offer the highest price possible; (2) emphasizing the risks inherent to Microsoft in allowing the exclusivity period to lapse without entering into a merger agreement; and (3) conveying that there was some support for a transaction with Microsoft at $196 per share in cash (but that any transaction would require full board approval).

 

Later on June 10, 2016, Mr. Weiner spoke with Mr. Nadella  and relayed the discussion items authorized by the Transactions Committee.

 

Early in the morning of June 11, 2016, Wilson Sonsini, on behalf of LinkedIn, provided Simpson Thacher, on behalf of Microsoft, with a revised draft of the merger agreement and a revised draft of the disclosure letter to the merger agreement. The revised draft of the merger agreement provided, among other things, (1) there would not be any support agreement; (2) additional covenants with respect to Microsoft’s obligations in connection with antitrust matters; and (3) a termination fee of $700 million, that would be payable in certain circumstances by LinkedIn, with a reduced termination fee payable in the event of a termination of the merger agreement due to a failure to obtain LinkedIn stockholder approval.

 

Also in the morning of June 11, 2016, Mr. Nadella informed Mr. Weiner that Microsoft’s board of directors had approved a revised proposal for an acquisition of LinkedIn at a price of $196 in cash per share of LinkedIn common stock and that Microsoft wanted to finalize and execute the

 

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merger agreement later that day. Shortly thereafter, Microsoft sent Mr. Weiner a revised proposal for an acquisition of LinkedIn for $196 in cash per share of LinkedIn common stock.

 

Later in the morning of June 11, 2016, Wilson Sonsini, on behalf of LinkedIn, and Simpson Thacher, on behalf of Microsoft, negotiated the final versions of the merger agreement and the disclosure letter to the merger agreement. As part of these negotiations, the parties agreed on the scope of antitrust provisions and agreed on a termination fee of $725 million.  Simpson Thacher stated that Microsoft required as a condition to proceeding with a transaction that the full termination fee be payable in the event of a termination of the merger agreement due to a failure to obtain LinkedIn stockholder approval.

 

In the afternoon of June 11, 2016, the LinkedIn Board met, with the respective representatives of LinkedIn management, Qatalyst Partners, Allen, Wilson Sonsini and Gibson Dunn & Crutcher, outside antitrust counsel to LinkedIn, which we refer to as “Gibson Dunn,” in attendance. During the meeting, representatives of Qatalyst Partners, Allen and Wilson Sonsini reviewed the terms of the merger agreement and Microsoft’s proposal for an acquisition of LinkedIn at $196 per share in cash as well as the terms of the most recent proposal from Party A. The representatives of Wilson Sonsini reviewed with the members of the LinkedIn Board their fiduciary duties, including the relevant judicial standards of review and the process associated with a decision by the LinkedIn Board to engage in the proposed transaction. The representatives of Wilson Sonsini discussed the process to date, including the proposals that had been made by Microsoft and Party A both prior to entering into exclusivity with Microsoft, and thereafter. The representatives of Wilson Sonsini also reported on negotiations with Microsoft with respect to the terms of the merger agreement. A representative of Gibson Dunn reviewed with the members of the LinkedIn Board antitrust matters applicable to the merger agreement. The representatives of Qatalyst Partners reviewed with the members of the LinkedIn Board Qatalyst Partners’ financial analysis of the $196 per share cash consideration to be offered to LinkedIn stockholders in the proposed merger. The representatives of Wilson Sonsini described the principal terms of the proposed merger agreement between LinkedIn and Microsoft. The LinkedIn Board then discussed potential reasons for, and risks inherent in, entering into an agreement for an acquisition with Microsoft, including, among other things, (1) the fact that the merger agreement permits the LinkedIn Board to consider, negotiate and accept an unsolicited superior proposal from Party A or other potential third parties and terminate the Company’s agreement with Microsoft, subject to payment of the termination fee; (2) the potential of Party A’s willingness to continue to make acquisition proposals; (3) the need for Party A to obtain approval from its stockholders to consummate a transaction; (4) the value of and the certainty of value in the cash consideration offered by Microsoft and the cash and stock consideration proposed by Party A; (5) the current and prospective future state of credit markets; (6) the execution risks involved in negotiating and finalizing a merger agreement with Party A (versus the already negotiated merger agreement with Microsoft); and (7) the risks that Microsoft might not continue to pursue an acquisition of the Company after the expiration of the exclusivity period if a merger agreement were not executed by that time. Each of the members of the Transactions Committee discussed with the other members of the LinkedIn Board his views regarding the proposals and the process to date. Each of the members of the Transactions Committee noted that he was in favor of proceeding with Microsoft’s proposal before the lapse of exclusivity, particularly in light of (1) the value of Microsoft’s all-cash proposal; and (2) the execution risks and value of Party A’s proposal. Mr. Hoffman then stated that he believed that the proposed transaction with Microsoft

 

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would be in the best interests of LinkedIn’s stockholders and that, as a stockholder, he would vote in favor of the transaction with Microsoft, subject to the LinkedIn Board’s continued recommendation in favor of the transaction pursuant to the terms of the merger agreement. The representatives of Qatalyst Partners then rendered Qatalyst Partners’ oral opinion to the LinkedIn Board, subsequently confirmed by delivery of a written opinion dated June 11, 2016, that, as of June 11, 2016, and based upon and subject to the various assumptions, considerations, limitations and other matters set forth therein, the per share merger consideration to be received by the holders of shares of LinkedIn Class A common stock pursuant to the merger agreement (other than Microsoft or any affiliate of Microsoft), in their capacity as holders of LinkedIn Class A common stock, was fair from a financial point of view to such holders. For more information about Qatalyst Partners’ opinion, see the section of this proxy statement captioned “—Fairness Opinion of Qatalyst Partners.”  After further discussion, the LinkedIn Board unanimously (1) determined that it was in the best interests of LinkedIn and its stockholders, and declared it advisable, to enter into the merger agreement and consummate the merger upon the terms and subject to the conditions set forth therein; (2) approved the execution and delivery of the merger agreement by LinkedIn, the performance by LinkedIn of its covenants and other obligations thereunder, and the consummation of the merger upon the terms and conditions set forth therein; (3) directed that the adoption of the merger agreement be submitted to a vote at a meeting of the stockholders of LinkedIn; and (4) resolved to recommend that LinkedIn stockholders vote in favor of adoption of the merger agreement. Mr. Weiner then informed the members of the LinkedIn Board that Microsoft had indicated a desire to begin discussion and negotiation of an employment arrangement with him prior to announcement of a transaction and the LinkedIn Board acquiesced to such discussions taking place.

 

Later on June 11, 2016, LinkedIn informed Microsoft that the LinkedIn Board had approved the acquisition, and the merger agreement was signed.

 

On June 13, 2016, prior to the opening of trading of the Class A common stock on the NYSE, LinkedIn and Microsoft issued a joint press release announcing the entry into the merger agreement.

 

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Recommendation of the LinkedIn Board and Reasons for the Merger

 

Recommendation of the LinkedIn Board

 

The LinkedIn Board has unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement, on and subject to the conditions set forth therein, are fair to, advisable and in the best interests of LinkedIn and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement in all respects.

 

The LinkedIn Board unanimously recommends that you vote (1) “FOR” the adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.

 

Reasons for the Merger

 

In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement, the LinkedIn Board consulted with LinkedIn management, its financial advisors and its outside legal counsel.  In recommending that LinkedIn stockholders vote for the adoption of the merger agreement, the LinkedIn Board considered a number of factors, including the following (which factors are not necessarily presented in order of relative importance):

 

·                  LinkedIn’s business operations and management.

 

·                  LinkedIn’s historical and projected financial performance, results and condition, including the risks associated with achieving the Forecasts, which we define below.

 

·                  LinkedIn’s competitive positioning and prospects as a stand-alone company.

 

·                  The fact that the all-cash merger consideration will provide certainty of value to LinkedIn stockholders, while eliminating the effect of long-term business and execution risk.

 

·                  The oral opinion delivered by Qatalyst Partners to the LinkedIn Board on June 11, 2016, and subsequently confirmed in writing, that as of June 11, 2016, and based upon and subject to the various assumptions, considerations, limitations and other matters set forth therein, the $196.00 per share merger consideration to be received by the Class A holders pursuant to the merger agreement, in their capacity as Class A holders, was fair, from a financial point of view, to such Class A holders, as more fully described in the section of this proxy statement captioned “The Merger—Fairness Opinion of Qatalyst Partners”

 

·                  The relationship of the $196.00 per share merger consideration to the trading price of the common stock, including that the $196.00 per share merger consideration constituted a premium of approximately 49.5% to the closing price of the common stock on June 10, 2016, the last trading day prior to the date on which LinkedIn entered into the merger agreement.

 

·                  The reports of the Transactions Committee received by the LinkedIn Board regarding the process conducted by the Transactions Committee.

 

·                  Based on its review of the process conducted by the Transactions Committee, the LinkedIn Board’s belief that $196.00 per share in cash and the terms of the merger agreement offer the best value reasonably attainable for LinkedIn stockholders.

 

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·                  The LinkedIn Board’s view that the merger agreement was the product of arm’s-length negotiation and contained customary terms and conditions.

 

·                  The terms of the merger agreement, including:

 

·                  LinkedIn’s ability, under certain circumstances, to furnish information to, and conduct negotiations with, third parties regarding unsolicited acquisition proposals;

 

·                  The LinkedIn Board’s view that the terms of the merger agreement would be unlikely to deter third parties from making a superior proposal, including the merger agreement’s terms and conditions as they relate to company board recommendation changes (see the sections of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Offers” and “The Merger Agreement—The LinkedIn Board’s Recommendation; Company Board Recommendation Change”);

 

·                  LinkedIn’s ability to terminate the merger agreement in order to accept an unsolicited superior proposal, subject to paying Microsoft a termination fee of $725 million and the other conditions of the merger agreement;

 

·                  The fact that the LinkedIn Board believed that the termination fee of $725 million, which is approximately 2.58% of LinkedIn’s implied equity value in the merger, is reasonable, consistent with or below fees in comparable transactions, and not preclusive of other offers;

 

·                  LinkedIn’s entitlement to specific performance to prevent breaches of the merger agreement; and

 

·                  That the consummation of the merger is not subject to any financing condition.

 

·                  Potential acquirors of LinkedIn and various considerations associated with each such acquiror.

 

·                  The perceived risk of continuing as a stand-alone public company or pursuing other strategic alternatives.

 

·                  The fact that the Transactions Committee unanimously recommended the merger to the LinkedIn Board.

 

·                  Mr. Hoffman’s support of the merger as being in the best interests of LinkedIn stockholders and that, as such, he intended to vote in favor of the merger in his capacity as a stockholder (subject to the LinkedIn Board’s continuing recommendation of the merger).

 

·                  The LinkedIn Board’s fiduciary duties in light of the foregoing.

 

The LinkedIn Board also considered a number of uncertainties and risks concerning the merger, including the following (which factors are not necessarily presented in order of relative importance):

 

·                  The fact that the announcement and pendency of the merger, or the failure to complete the merger, may cause substantial harm to LinkedIn’s relationships with its employees (including making it more difficult to attract and retain key personnel and the possible loss of key management, technical, sales and other personnel), vendors and customers, and may divert employees’ attention away from LinkedIn’s day-to-day business operations.

 

·                  The fact that LinkedIn stockholders will not participate in any future earnings or growth of LinkedIn and will not benefit from any appreciations in value of LinkedIn, including any appreciation in value that could be realized as a result of the combination of LinkedIn with Microsoft.

 

·                  The fact that, without the support of Mr. Hoffman, the merger could not be approved by LinkedIn stockholders.

 

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·                  The requirement that LinkedIn pay Microsoft a termination fee of $725 million under certain circumstances following termination of the merger agreement, including if (1) the LinkedIn Board terminates the merger agreement to accept an unsolicited superior proposal or (2) if the merger agreement is not adopted by LinkedIn stockholders.

 

·                  The restrictions on the conduct of LinkedIn’s business prior to the consummation of the merger, including the requirement that LinkedIn conduct its business in the ordinary course, subject to specific limitations, which may delay or prevent LinkedIn from undertaking business opportunities that may arise before the completion of the merger and that, absent the merger agreement, LinkedIn might have pursued.

 

·                  The fact that an all-cash transaction would be taxable to LinkedIn stockholders that are U.S. persons for U.S. federal income tax purposes.

 

·                  The fact that under the terms of the merger agreement, LinkedIn is unable to solicit other acquisition proposals during the pendency of the merger.

 

·                  The significant costs involved in connection with entering into the merger agreement and completing the merger, and the substantial time and effort of LinkedIn management required to complete the merger, which may disrupt LinkedIn’s business operations.

 

·                  The fact that LinkedIn’s business, sales operations and financial results could suffer in the event that the merger is not consummated.

 

·                  The risk that the merger might not be completed and the effect of the resulting public announcement of the termination of the merger agreement on the trading price of the Class A common stock.

 

·                  The fact that the completion of the merger will require antitrust clearance in the United States and regulatory approval from the European Union and Canada.

 

·                  The fact that LinkedIn’s directors and officers may have interests in the merger that may be different from, or in addition to, those of other LinkedIn stockholders (see the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger”).

 

The foregoing discussion is not meant to be exhaustive, but summarizes the material factors considered by the LinkedIn Board in its consideration of the merger.  After considering these and other factors, the LinkedIn Board concluded that the potential benefits of the merger outweighed the uncertainties and risks.  In view of the variety of factors considered by the LinkedIn Board and the complexity of these factors, the LinkedIn Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the foregoing factors in reaching its determination and recommendations.  Moreover, each member of the LinkedIn Board applied his or her own personal business judgment to the process and may have assigned different weights to different factors.  The LinkedIn Board unanimously adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommends that LinkedIn stockholders adopt the merger agreement based upon the totality of the information presented to and considered by the LinkedIn Board.

 

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Fairness Opinion of Qatalyst Partners

 

LinkedIn retained Qatalyst Partners to act as its financial advisor to the LinkedIn Board in connection with a potential transaction such as the merger and to evaluate whether the per share merger consideration to be received by the holders of shares of Class A common stock, in their capacity as Class A holders, pursuant to the merger agreement was fair, from a financial point of view, to the Class A holders. LinkedIn selected Qatalyst Partners to act as its financial advisor based on Qatalyst Partners’ qualifications, expertise, reputation and knowledge of the business of LinkedIn and the industry in which it operates. Qatalyst Partners has provided its written consent to the reproduction of the Qatalyst Partners’ opinion in this proxy statement. At the meeting of the LinkedIn Board on June 11, 2016, Qatalyst Partners rendered its oral opinion, subsequently confirmed in writing, that, as of such date and based upon and subject to the various assumptions, considerations, limitations and other matters set forth therein, the per share merger consideration to be received by the Class A holders pursuant to the merger agreement, in their capacity as Class A holders, was fair, from a financial point of view, to the Class A holders. Qatalyst Partners delivered its written opinion, dated June 11, 2016, to the LinkedIn Board following the meeting of the LinkedIn Board.

 

The full text of Qatalyst Partners’ written opinion to the LinkedIn Board, dated June 11, 2016, is attached to this proxy statement as Annex B and is incorporated into this proxy statement by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully and in its entirety. Qatalyst Partners’ opinion was provided to the LinkedIn Board and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the per share merger consideration to be received by the Class A holders pursuant to the merger agreement, in their capacity as Class A holders, and it does not address any other aspect of the merger. It does not constitute a recommendation as to how any holder of Class A common stock should vote with respect to the merger or any other matter and does not in any manner address the prices at which the Class A common stock will trade at any time. The summary of Qatalyst Partners’ opinion is qualified in its entirety by reference to the full text of the opinion.

 

In arriving at its opinion, Qatalyst Partners reviewed the merger agreement, certain related documents, and certain publicly available financial statements and other business and financial information of LinkedIn. Qatalyst Partners also reviewed certain forward-looking information relating to LinkedIn prepared by the management of LinkedIn, including financial projections and operating data prepared by the management of LinkedIn, which we refer to as the “LinkedIn Projections,” which are described in more detail below in the section of this proxy statement captioned “The Merger — Financial Forecasts.” Additionally, Qatalyst Partners discussed the past and current operations and financial condition and the prospects of LinkedIn with senior executives of LinkedIn. Qatalyst Partners also reviewed the historical market prices and trading activity for the Class A common stock and compared the financial performance of LinkedIn and the prices and trading activity of the Class A common stock with that of certain other selected publicly-traded companies and their securities. In addition, Qatalyst Partners reviewed the financial terms, to the extent publicly available, of selected acquisition transactions and performed such other analyses, reviewed such other information and considered such other factors as Qatalyst Partners deemed appropriate.

 

In arriving at its opinion, Qatalyst Partners assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, Qatalyst Partners by LinkedIn. With respect to the LinkedIn Projections, Qatalyst Partners was advised by the management of LinkedIn, and Qatalyst Partners assumed, that the LinkedIn Projections had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of LinkedIn of the future financial performance of LinkedIn and other matters covered thereby. Qatalyst Partners assumed that the merger will be consummated in accordance with the terms set forth in the merger agreement, without any modification, waiver or delay. In addition, Qatalyst Partners assumed that in connection with the receipt of all the necessary approvals of the merger, no delays, limitations, conditions or restrictions will be imposed that could have an adverse effect on LinkedIn or the contemplated benefits expected to be derived in the merger. Qatalyst Partners did not make any independent evaluation or

 

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appraisal of the assets or liabilities (contingent or otherwise) of LinkedIn, nor was Qatalyst Partners furnished with any such evaluation or appraisal. In addition, Qatalyst Partners relied, without independent verification, upon the assessment of LinkedIn management as to the existing and future technology and products of LinkedIn and the risks associated with such technology and products. Qatalyst Partners’ opinion has been approved by Qatalyst Partners’ opinion committee in accordance with its customary practice.

 

Qatalyst Partners’ opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, June 11, 2016. Events occurring after such date may affect Qatalyst Partners’ opinion and the assumptions used in preparing the opinion, and Qatalyst Partners does not assume any obligation to update, revise or reaffirm the opinion. Qatalyst Partners’ opinion does not address the underlying business decision of LinkedIn to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to LinkedIn. Qatalyst Partners’ opinion is limited to the fairness, from a financial point of view, of the per share merger consideration to be received by the Class A holders pursuant to the merger agreement, in their capacity as Class A holders, and Qatalyst Partners expresses no opinion with respect to the fairness of the amount or nature of the compensation to any of LinkedIn’s officers, directors or employees, or any class of such persons, relative to such consideration. Qatalyst Partners also expresses no opinion regarding the consideration to be received by any holder of Class B common stock under the merger agreement in such holder’s capacity as a holder of Class B common stock.

 

The following is a brief summary of the material analyses performed by Qatalyst Partners in connection with its opinion dated June 11, 2016. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst Partners’ opinion. For purposes of its analyses, Qatalyst Partners utilized both the consensus of third-party research analysts’ projections for LinkedIn, which we refer to as the “Analyst Projections,” as well as the LinkedIn Projections. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by Qatalyst Partners, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Qatalyst Partners’ financial analyses.

 

Illustrative Discounted Cash Flow Analysis

 

Qatalyst Partners performed an illustrative discounted cash flow analysis, which is designed to imply a potential, present value of share values for the Class A common stock as of March 31, 2016 by:

 

·                  adding:

 

·                  the implied net present value of the estimated future unlevered free cash flows of LinkedIn, based on the LinkedIn Projections, for the second through fourth quarters of calendar year 2016, and for calendar year 2017 through calendar year 2019 (which implied present value was calculated by using a range of discount rates of 10.0% to 13.0%, based on an estimated weighted average cost of capital for LinkedIn);

 

·                  the implied net present value of a corresponding terminal value of LinkedIn, calculated by multiplying the estimated Adjusted EBITDA (as described in the section of this proxy statement captioned “The Merger—Financial Forecasts”), less any capitalized software and website development costs (excluding capitalized stock-based compensation), which we refer to as the estimated “Modified EBITDA,” in calendar year 2020, based on the LinkedIn Projections, by a range of multiples of fully-diluted enterprise value to next-twelve-months estimated Modified EBITDA of 12.0x to 18.0x and discounted to present value using the same range of discount rates used in the first bullet above;

 

·                  the implied net present value of LinkedIn’s forecasted tax attributes outstanding at the end of calendar year 2020, based on the LinkedIn Projections (which implied present value was calculated by using the same range of discount rates used in the first bullet above); and

 

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·                  LinkedIn’s cash net of the face value of outstanding convertible notes and book value of minority interests, as provided by LinkedIn management as of March 31, 2016;

 

·                  applying a dilution factor of approximately 12%, as projected by LinkedIn management, to reflect the dilution to current stockholders over the projection period due to the effect of future equity compensation grants; and

 

·                  dividing the resulting amount by the number of fully-diluted shares of common stock outstanding as of March 31, 2016, adjusted for restricted stock units and stock options outstanding as of March 31, 2016, as provided by LinkedIn management.

 

Based on the calculations set forth above, this analysis implied a range of values for the shares of common stock of $156.43 to $238.39 per share.

 

Selected Companies Analysis

 

Qatalyst Partners compared selected financial information and public market multiples for LinkedIn with publicly available information and public market multiples for selected companies. The companies used in this comparison were the companies listed below and were selected because they are publicly traded companies in LinkedIn’s industry.

 

Selected Consumer Internet Companies

Alphabet, Inc.

Amazon.com, Inc.

Facebook, Inc.

Twitter Inc.

 

Selected SaaS Companies

Cornerstone OnDemand Inc.

NetSuite Inc.

Salesforce.com, Inc.

ServiceNow, Inc.

Ultimate Software Group, Inc.

Workday, Inc.

 

Based upon research analyst consensus estimates for calendar year 2017, and using the closing prices as of June 10, 2016, for shares of the selected companies, Qatalyst Partners calculated, among other things, the implied fully

 

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diluted enterprise value divided by the estimated consensus Modified EBITDA for calendar year 2017, which we refer to as the “CY17E Modified EBITDA Multiples,” for each of the selected consumer internet companies. The median CY17E Modified EBITDA Multiple for the selected consumer internet companies analyzed was 13.4x.

 

Based on an analysis of the CY17E Modified EBITDA Multiples for each of the selected consumer internet companies, Qatalyst Partners selected a representative range of 12.0x to 18.0x and applied this range to LinkedIn’s calendar year 2017 estimated Modified EBITDA based on each of the Analyst Projections and the LinkedIn Projections. Based on the calculations set forth above and the number of fully-diluted shares of common stock outstanding as of May 31, 2016, as provided by LinkedIn management, adjusted for restricted stock units and stock options outstanding as of May 31, 2016, as provided by LinkedIn management, this analysis implied a range of values for the shares of common stock of approximately $122.35 to $176.71 per share based on the LinkedIn Projections, and approximately $110.46 to $158.89 per share based on the Analyst Projections.

 

Based upon research analyst consensus estimates for calendar year 2017, and using the closing prices as of June 10, 2016, for shares of the selected companies, Qatalyst Partners calculated, among other things, the implied fully diluted enterprise value divided by estimated consensus revenue for calendar year 2017, which we refer to as the “CY17E Revenue Multiples,” for each of the selected SaaS companies. The median CY17E Revenue Multiple for the selected software as a service, or SaaS, companies analyzed was 6.2x.

 

Based on an analysis of the CY17E Revenue Multiples for each of the selected SaaS companies, Qatalyst Partners selected a representative range of 4.0x to 7.0x and applied this range to LinkedIn’s calendar year 2017 estimated revenue based on each of the Analyst Projections and the LinkedIn Projections. Based on the calculations set forth above and the number of fully-diluted shares of common stock outstanding as of May 31, 2016, as provided by LinkedIn management, adjusted for restricted stock units and stock options outstanding as of May 31, 2016, as provided by LinkedIn management, this analysis implied a range of values for the shares of common stock of approximately $142.17 to $238.26 per share based on the LinkedIn Projections, and approximately $137.75 to $230.58 per share based on the Analyst Projections.

 

No company included in the selected companies analysis is identical to LinkedIn. In evaluating the selected companies, Qatalyst Partners made judgments and assumptions with regard to (1) industry performance; (2) general business, economic, market and financial conditions; and (3) other matters. Many of these matters are beyond the control of LinkedIn, such as (1) the impact of competition on the business of LinkedIn and the industry in general; (2) industry growth; and (3) the absence of any material adverse change in the financial condition and prospects of LinkedIn or the industry or in the financial markets in general. Mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected company data.

 

Selected Transactions Analysis

 

Selected Consumer Internet Transactions

 

Qatalyst Partners compared 11 selected consumer internet transactions greater than $1 billion in value announced since 2009. These transactions are listed below:

 

Announcement Date

 

Target

 

Acquiror

November 04, 2015

 

HomeAway, Inc.

 

Expedia, Inc.

August 17, 2015

 

Zulily, Inc.

 

Liberty Media Corporation

July 01, 2015

 

Xoom Corporation

 

PayPal Holdings, Inc.

May 12, 2015

 

AOL Inc.

 

Verizon Communications

February 12, 2015

 

Orbitz Worldwide, Inc.

 

Expedia, Inc.

September 11, 2014

 

Conversant, Inc.

 

Alliance Data Systems Corporation

 

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September 30, 2014

 

Move, Inc.

 

News Corporation

July 28, 2014

 

Trulia, Inc.

 

Zillow Group, Inc.

June 13, 2014

 

OpenTable, Inc.

 

The Priceline Group

November 08, 2012

 

KAYAK Software Corporation

 

The Priceline Group

May 10, 2011

 

Skype Technologies

 

Microsoft Corporation

 

For each of the consumer internet transactions listed above, Qatalyst Partners reviewed, among other things, the implied fully-diluted enterprise value of the target company as a multiple of analyst estimates of the next-twelve-months Adjusted EBITDA of the target company, which we refer to as the “NTM Adjusted EBITDA Multiple,” as reflected in certain publicly available financial statements, research analyst reports and press releases.

 

Based on the analysis of the NTM Adjusted EBITDA Multiples for the transactions noted above, Qatalyst Partners applied an NTM Adjusted EBITDA Multiple range of 17.0x to 27.0x to LinkedIn’s estimated next-twelve-months Adjusted EBITDA based on Analyst Projections and calculated for the 12 month period ending on March 31, 2017. This analysis implied a range of values for the shares of common stock of approximately $139.36 to $213.39.

 

Selected SaaS Transactions

 

Qatalyst Partners compared 20 selected SaaS transactions greater than $1 billion in value announced since 2009. These transactions are listed below:

 

Announcement Date

 

Target

 

Acquiror

June 01, 2016

 

Demandware, Inc.

 

Salesforce.com, Inc.

May 31, 2016

 

Marketo Inc.

 

Vista Equity Partners

April 18, 2016

 

Cvent, Inc.

 

Vista Equity Partners

November 02, 2015

 

Constant Contact, Inc.

 

Endurance International Group, Inc.

September 18, 2014

 

Concur Technologies, Inc.

 

SAP SE

March 26, 2014

 

Fieldglass Inc.

 

SAP SE

March 14, 2014

 

Skillsoft Corporation

 

Charterhouse Capital Partners

March 13, 2014

 

Renaissance Learning Inc.

 

Hellman & Friedman LLC

December 20, 2013

 

Responsys Inc.

 

Oracle Corporation

June 05, 2013

 

hybris AG

 

SAP SE

June 04, 2013

 

ExactTarget, Inc.

 

Salesforce.com, Inc.

August 27, 2012

 

Kenexa Corp.

 

International Business Machines Corporation

May 22, 2012

 

Ariba Inc.

 

SAP SE

February 09, 2012

 

Taleo Corporation

 

Oracle Corporation

December 03, 2011

 

SuccessFactors, Inc.

 

SAP SE

October 24, 2011

 

RightNow Technologies

 

Oracle Corporation

July 01, 2011

 

Blackboard, Inc.

 

Providence Equity Partners LLC

 

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March 31, 2010

 

Skillsoft Corporation

 

Investor Group

November 02, 2010

 

Art Technology Group

 

Oracle Corporation

September 15, 2009

 

Omniture, Inc.

 

Adobe Systems Incorporation

 

For each of the SaaS transactions listed above, Qatalyst Partners reviewed, among other things, the implied fully-diluted enterprise value of the target company as a multiple of analyst estimates of the next-twelve-months revenue of the target company, which we refer to as the “NTM Revenue Multiples,” as reflected in certain publicly available financial statements, research analyst reports and press releases.

 

Based on the analysis of the NTM Revenue Multiples for the transactions noted above, Qatalyst Partners applied an NTM Revenue Multiple range of 5.0x to 9.0x to LinkedIn’s estimated next-twelve-months revenue based on Analyst Projections and calculated for the 12 month period ending on March 31, 2017. This analysis implied a range of values for the Shares of approximately $149.41 to $257.96.

 

No company or transaction utilized in the selected transactions analysis is identical to LinkedIn or the merger. In evaluating the selected transactions, Qatalyst Partners made judgments and assumptions with regard to general business, market and financial conditions and other matters, many of which are beyond the control of LinkedIn, such as (1) the impact of competition on the business of LinkedIn or the industry generally; (2) industry growth; and (3) the absence of any material adverse change in the financial condition of LinkedIn or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared. Because of the unique circumstances of each of these transactions and the merger, Qatalyst Partners cautions against placing undue reliance on this information.

 

Miscellaneous

 

In connection with the review of the merger by the LinkedIn Board, Qatalyst Partners performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, Qatalyst Partners considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor that it considered. Qatalyst Partners believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst Partners may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst Partners’ view of the actual value of LinkedIn. In performing its analyses, Qatalyst Partners made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of LinkedIn. Any estimates contained in Qatalyst Partners’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

 

Qatalyst Partners conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the per share merger consideration to be received by the Class A holders pursuant to the merger agreement, in their capacity as Class A holders, and in connection with the delivery of its opinion to the LinkedIn Board. These analyses do not purport to be appraisals or to reflect the price at which the shares of Class A common stock might actually trade.

 

Qatalyst Partners’ opinion and its presentation to the LinkedIn Board was one of many factors considered by the LinkedIn Board in deciding to approve the merger agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the LinkedIn Board with respect to the per share merger consideration to be received by the Class A holders pursuant to the merger agreement, in their capacity as Class A holders, or of whether the LinkedIn Board would have been willing to agree to a different consideration. The per share merger consideration was

 

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determined through arm’s-length negotiations between LinkedIn and Microsoft and was approved by the LinkedIn Board. Qatalyst Partners provided advice to LinkedIn during these negotiations. Qatalyst Partners did not, however, recommend any specific consideration to LinkedIn or that any specific consideration constituted the only appropriate consideration for the merger.

 

Qatalyst Partners provides investment banking and other services to a wide range of entities and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions, and may trade or otherwise effect transactions in debt or equity securities or loans of LinkedIn, Microsoft or certain of their respective affiliates. During the two year period prior to the date of Qatalyst Partners’ opinion, no material relationship existed between Qatalyst Partners or any of its affiliates and LinkedIn or Microsoft pursuant to which compensation was received by Qatalyst Partners or any of its affiliates. Qatalyst Partners or its affiliates may in the future provide investment banking and other financial services to LinkedIn and Microsoft and their respective affiliates for which it or they would expect to receive compensation.

 

Under the terms of its engagement letter, Qatalyst Partners provided LinkedIn with financial advisory services in connection with a contemplated sale of LinkedIn, which includes the merger, and for which it will be paid approximately $55 million, $250,000 of which was payable upon the execution of its engagement letter, $7.5 million of which became payable upon delivery of its opinion (regardless of the conclusion reached in the opinion), and the remaining portion of which will be paid upon, and subject to, consummation of the merger. LinkedIn has also agreed to reimburse Qatalyst Partners for its expenses incurred in performing its services. LinkedIn has also agreed to indemnify Qatalyst Partners and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Qatalyst Partners or any of its affiliates against certain liabilities, including liabilities under federal securities law, and certain expenses relating to or arising out of Qatalyst Partners’ engagement.

 

Financial Forecasts

 

LinkedIn does not as a matter of course make public projections as to future sales, earnings, or other results. However, LinkedIn management has prepared the prospective financial information set forth below to provide financial forecasts to both Qatalyst Partners and Microsoft in connection with Microsoft’s acquisition of LinkedIn. We refer to the forecasts for 2016 to 2020 as the “Forecasts.”

 

The accompanying prospective financial information were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of LinkedIn management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of LinkedIn management’s knowledge and belief, the expected course of action and the expected future financial performance of LinkedIn. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement are cautioned not to place undue reliance on the prospective financial information.

 

Neither LinkedIn’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

 

Readers of this proxy statement are cautioned not to place undue reliance on the specific portions of the Forecasts set forth below. Although the Forecasts are presented with numerical specificity, the Forecasts reflect numerous assumptions and estimates as to future events made by LinkedIn management that they believed were reasonable at the time the Forecasts were prepared, taking into account the relevant information available to LinkedIn management at the time. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results. Important factors that may affect actual results and cause the Forecasts not to be achieved include (1) general economic conditions; (2) the accuracy of certain accounting assumptions; (3) changes in actual or projected cash flows; (4) competitive pressures; and (5) changes in tax laws. In addition, the Forecasts do not take into account any circumstances or events occurring after the date that they were prepared and do not give effect to the merger. As a result, there can be no assurance that the Forecasts will be realized, and actual results may be materially better or worse than those contained in the Forecasts. The inclusion of this information should not be regarded as an indication that the LinkedIn Board, LinkedIn or any other recipient of this information considered, or now considers, the Forecasts to be predictive of actual future results. The Forecasts are not included in this proxy statement in order to induce any LinkedIn stockholder to vote in favor of the proposal to adopt the merger agreement or any of the other proposals to be voted on at the special meeting. LinkedIn does not intend to update or otherwise revise the Forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Forecasts are shown to be in error or no longer appropriate.

 

Forecasts

 

 

 

2016E

 

2017E

 

2018E

 

2019E

 

2020E

 

 

 

(in millions)

 

Total revenue

 

$

3,738

 

$

4,615

 

$

5,529

 

$

6,421

 

$

7,365

 

Adjusted EBITDA

 

$

1,031

 

$

1,391

 

$

1,824

 

$

2,236

 

$

2,666

 

Modified EBITDA

 

$

954

 

$

1,301

 

$

1,728

 

$

2,136

 

$

2,571

 

Levered free cash flow

 

$

458

 

$

894

 

$

1,367

 

$

1,691

 

$

2,107

 

 

Non-GAAP Financial Measures

 

Adjusted EBITDA and Modified EBITDA are non-GAAP financial measures. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. LinkedIn uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. LinkedIn

 

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believes that these non-GAAP financial measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measures included by LinkedIn in the Forecasts are defined and reconciled to GAAP financial measures below.

 

Adjusted EBITDA

 

Adjusted EBITDA is defined as net income (loss), plus: provision for income taxes; other (income) expense, net; depreciation and amortization; and stock-based compensation.

 

LinkedIn included adjusted EBITDA in the Forecasts because it is a key measure used by LinkedIn management and the LinkedIn Board to understand and evaluate LinkedIn’s core operating performance and trends, to prepare and approve LinkedIn’s annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of LinkedIn’s core business. Additionally, adjusted EBITDA is a key financial measure used by the compensation committee of the LinkedIn Board in connection with the payment of bonuses to our executive officers and employees. Accordingly, LinkedIn believes that adjusted EBITDA provides useful information in understanding and evaluating LinkedIn’s projections in the same manner as LinkedIn management and the LinkedIn Board.

 

LinkedIn’s use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under US GAAP. Some of these limitations are: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; adjusted EBITDA does not reflect changes in, or cash requirements for, LinkedIn’s working capital needs; adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation; adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and other companies, including companies in LinkedIn’s industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

 

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other US GAAP results.

 

Modified EBITDA

 

Modified EBITDA is defined as net income (loss), plus: provision for income taxes; other (income) expense, net; depreciation and amortization; stock-based compensation; and capitalized software and website costs.

 

LinkedIn included modified EBITDA in the Forecasts because it provided another measure by which to evaluate LinkedIn’s core operating performance and trends. In particular, the exclusion of certain expenses in calculating modified EBITDA can provide a useful measure for period-to-period comparisons of LinkedIn’s core business. Accordingly, LinkedIn believes that modified EBITDA provides useful information in understanding and evaluating LinkedIn’s projections in the same manner as LinkedIn management and the LinkedIn Board used it in evaluating the transaction.

 

LinkedIn’s use of modified EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under US GAAP. Some of these limitations are: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and modified EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; modified EBITDA does not reflect changes in, or cash requirements for, LinkedIn’s working capital needs; modified EBITDA does not consider the potentially dilutive impact of stock-based compensation; modified EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and other companies, including companies in LinkedIn’s industry, may calculate modified EBITDA differently, which reduces its usefulness as a comparative measure.

 

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Because of these limitations, you should consider modified EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other US GAAP results.

 

Reconciliation of Adjusted EBITDA to Net Income

 

The Forecasts include a forecast of LinkedIn’s adjusted EBITDA. The following table presents a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure. Other than in connection with the preparation of this proxy statement, LinkedIn did not provide Microsoft with this reconciliation.

 

 

 

2016E

 

2017E

 

2018E

 

2019E

 

2020E

 

 

 

(in millions)

 

Net income (loss)

 

$

(275

)

$

44

 

$

303

 

$

565

 

$

831

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

 

97

 

 

24

 

 

163

 

 

304

 

 

447

 

Other expense, net

 

 

58

 

 

63

 

 

68

 

 

65

 

 

25

 

Depreciation and amortization

 

 

570

 

 

626

 

 

621

 

 

615

 

 

630

 

Stock-based compensation

 

 

581

 

 

634

 

 

669

 

 

687

 

 

733

 

Adjusted EBITDA

 

$

1,031

 

$

1,391

 

$

1,824

 

$

2,236

 

$

2,666

 

 

Reconciliation of Modified EBITDA to Net Income

 

The Forecasts include a forecast of LinkedIn’s modified EBITDA. The following table presents a reconciliation of modified EBITDA to net income (loss), the most directly comparable GAAP financial measure. Other than in connection with the preparation of this proxy statement, LinkedIn did not provide Microsoft with this reconciliation.

 

 

 

2016E

 

2017E

 

2018E

 

2019E

 

2020E

 

 

 

(in millions)

 

Net income (loss)

 

$

(275

)

$

44

 

$

303

 

$

565

 

$

831

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

 

97

 

 

24

 

 

163

 

 

304

 

 

447

 

Other expense, net

 

 

58

 

 

63

 

 

68

 

 

65

 

 

25

 

Depreciation and amortization

 

 

570

 

 

626

 

 

621

 

 

615

 

 

630

 

Stock-based compensation

 

 

581

 

 

634

 

 

669

 

 

687

 

 

733

 

Capitalized software and website costs

 

 

(77

)

 

(90

)

 

(96

)

 

(100

)

 

(95

)

Modified EBITDA

 

$

954

 

$

1,301

 

$

1,728

 

$

2,136

 

$

2,571

 

 

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Interests of LinkedIn’s Directors and Executive Officers in the Merger

 

When considering the recommendation of the LinkedIn Board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of LinkedIn stockholders generally, as more fully described below.  The LinkedIn Board was aware of and considered these interests to the extent that they existed at the time, among other matters, in approving the merger agreement and the merger and recommending that the merger agreement be adopted by LinkedIn’s stockholders.

 

Insurance and Indemnification of Directors and Executive Officers

 

For more information, see the section of this proxy statement captioned “The Merger Agreement — Indemnification and Insurance.”

 

Treatment of Equity-Based Awards

 

Treatment of Company Options

 

As of the record date, there were [·] outstanding company options held by our directors and executive officers, of which [·] have an exercise price below $196.00 per share.

 

Each surrendered company option will, as of the effective time of the merger, be cancelled and converted into the right to receive the per share merger consideration of $196.00 for each share of LinkedIn common stock that would have

 

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been issuable upon exercise of such surrendered company option prior to the effective time of the merger less the applicable exercise price for each such share of LinkedIn common stock under such surrendered company option and less any applicable withholding taxes.  If the per share exercise price of any surrendered company option is equal to or greater than $196.00, such surrendered company option will be cancelled as of the effective time of the merger for no payment and will have no further effect.

 

Each assumed company option will, as of the effective time of the merger, be, as determined by Microsoft, (1) assumed by Microsoft and converted into an option to acquire; or (2) converted into an option granted pursuant to the Microsoft stock plan, to acquire, in each case, on the same material terms and conditions as were applicable to such assumed company option immediately prior to the effective time of the merger, a number of shares of Microsoft common stock equal to the product (rounded down to the nearest whole share) of (1) the number of shares of LinkedIn common stock subject to such assumed company option as of immediately prior to the effective time of the merger multiplied by (2) the stock award exchange ratio.  The per share exercise price for assumed company options will equal the quotient (rounded up to the nearest whole cent) determined by dividing the (1) per share exercise price for the LinkedIn common stock subject to such assumed company option as of immediately prior to the effective time of the merger by (2) the stock award exchange ratio.  Each company option that is outstanding as of immediately prior to the effective time of the merger, has an exercise price per share that is equal to or greater than $196.00 and is not a surrendered company option will be cancelled as of the effective time of the merger for no payment and will have no further effect.

 

Prior to the closing date of the merger, Microsoft may elect to treat some or all company options that would otherwise be assumed company options as vested surrendered company options, which will become fully vested and then cancelled and treated in accordance with the above.

 

In addition, each executive officer is eligible to receive immediate vesting of 100% or 50%, as applicable, of his or her outstanding company options, under his or her offer letter or change of control agreement if, within 12 months following the merger, there is an involuntary termination of employment without cause, or a constructive termination.

 

For purposes of the merger agreement, the “stock award exchange ratio” means a fraction, the numerator of which is $196.00 and the denominator of which is the volume weighted average price per share rounded to four decimal places (with amounts 0.00005 and above rounded up) of Microsoft common stock on Nasdaq for the five consecutive trading days ending with the complete trading day ending immediately prior to the closing date of the merger.

 

Treatment of Company Stock-Based Awards

 

As of the record date, there were [·] outstanding RSUs held by our directors and executive officers.  Our directors and officers do not hold any other type of company stock-based award.

 

Each surrendered company stock-based award will, as of the effective time of the merger, be cancelled and converted into the right to receive the per share merger consideration of $196.00 with respect to each share of LinkedIn common stock subject to the surrendered company-stock based award, less any applicable withholding taxes.

 

Non-employee directors of LinkedIn are not expected to continue as directors after the merger, and pursuant to the terms of the LinkedIn 2011 Equity Incentive Plan, as a result of not continuing as a director after the merger, the 3,102 RSUs each held by A. George “Skip” Battle, Leslie Kilgore and Stanley Meresman will vest in connection with the merger and such individuals will receive the cash payment for surrendered company stock-based awards described in the above paragraph with respect to the shares subject to their RSUs.

 

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Each assumed company stock-based award will, as of the effective time of the merger, be, as determined by Microsoft, (1) assumed by Microsoft and converted into a stock-based award; or (2) converted into a stock-based award granted pursuant to the Microsoft stock plan, in each case with the same material terms and conditions as were applicable to such assumed company stock-based award immediately prior to the effective time of the merger, in respect of a number of shares of Microsoft common stock equal to the product (rounded down to the nearest whole share) of (1) the number of shares of LinkedIn common stock subject to such assumed company stock-based award as of immediately prior to the effective time of the merger multiplied by (2) the stock award exchange ratio.

 

Prior to the closing date of the merger, Microsoft may elect to treat some or all company stock-based awards that would otherwise be assumed company stock-based awards as vested surrendered company stock-based awards, which will become fully vested and then cancelled and treated in accordance with the above.

 

In addition, each executive officer is eligible to receive immediate vesting of 100% or 50%, as applicable, of his or her outstanding RSUs, under his or her offer letter or change of control agreement if, within 12 months following the merger, there is an involuntary termination of employment without cause, or a constructive termination, as described more fully below.

 

Equity Interests of LinkedIn’s Executive Officers and Non-Employee Directors

 

The following table sets forth for each LinkedIn executive officer and director, as of June 15, 2016, (1) the number of shares of common stock held; (2) the number of shares of common stock subject to outstanding and vested company options with an exercise price less than $196.00 per share; (3) the number of shares of common stock subject to unvested company options with an exercise price less than $196.00 per share that will vest upon a qualifying termination of employment; and (4) the number of shares of common stock subject to underlying RSUs that will vest in connection with the merger or upon a qualifying termination of employment.  The table sets forth the values of these shares and equity awards based on the $196.00 per share merger consideration (minus the applicable exercise price for the company options).

 

In connection with the merger, LinkedIn intends to grant Jeffrey Weiner a company stock-based award in the form of RSUs with the number of RSUs determined by dividing $7,000,000 by the per share merger consideration as of the closing of the merger, which we refer to as the “Weiner Retention Grant.”  The Weiner Retention Grant will be granted immediately prior to the closing of the merger and will be subject to Mr. Weiner’s continued employment with LinkedIn through and including the date of grant.  The Weiner Retention Grant will be scheduled to vest on the earlier of (1) the one year anniversary of the closing date of the merger and (2) December 31, 2017, and will be subject to the severance provisions (including as to equity acceleration) set forth in Mr. Weiner’s offer letter, as described more fully below.  Even though the Weiner Retention Grant will not be granted until immediately prior to the closing of the merger, it is included in the table below.

 

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Equity Interests of LinkedIn’s Executive Officers and Non-Employee Directors

 

Name

 

Shares Held
(#)

 

Shares Held
($)(1)

 

Number of
Shares Subject
to Vested
Options (#)(2)

 

Value of
Number of
Shares Subject
to Vested
Options ($)(3)

 

Number of
Shares Subject
to Unvested
Options
Accelerating
upon a
Qualifying
Termination
(#)(4)

 

Value of
Number of
Shares Subject
to Unvested
Options
Accelerating
upon a
Qualifying
Termination
($)(5)

 

Number of
RSUs
Accelerating
upon the
Merger or a
Qualifying
Termination
(#)(6)

 

Value of RSUs
Accelerating
Upon a
Merger or a
Qualifying
Termination
($)(7)

 

Total ($)

 

Jeffrey Weiner (8)

 

112,211

 

21,993,356

 

740,800

 

99,647,409

 

68,601

 

1,752,070

 

75,891

 

14,874,636

 

138,267,471

 

Steven Sordello

 

172,861

 

33,880,756

 

36,726

 

937,982

 

24,064

 

614,595

 

65,144

 

12,768,224

 

48,201,557

 

Michael Callahan

 

8,143

 

1,596,028

 

 

 

 

 

51,289

 

10,052,644

 

11,648,672

 

Michael Gamson

 

111,982

 

21,948,472

 

12,339

 

616,346

 

12,560

 

320,782

 

33,481

 

6,562,276

 

29,447,876

 

Patricia Wadors

 

854

 

167,384

 

 

 

4,262

 

147,721

 

23,113

 

4,530,148

 

4,845,253

 

J. Kevin Scott

 

4,709

 

922,964

 

3,693

 

94,319

 

15,884

 

405,677

 

55,524

 

10,882,704

 

12,305,664

 

A. George “Skip” Battle

 

18,337

 

3,594,052

 

1,318

 

31,606

 

 

 

3,102

 

607,992

 

4,233,650

 

Reid Hoffman (9)

 

14,489,899

 

2,840,020,204

 

188,457

 

36,500,352

 

 

 

 

 

2,876,520,556

 

Leslie Kilgore

 

41,352

 

8,104,992

 

2,433

 

58,344

 

 

 

3,102

 

607,992

 

8,771,328

 

Stanley Meresman

 

4,854

 

951,384

 

2,433

 

58,344

 

 

 

3,102

 

607,992

 

1,617,720

 

Michael Moritz

 

671,620

 

131,637,520

 

 

 

 

 

 

 

131,637,520

 

David Sze

 

30,908

 

6,057,968

 

 

 

 

 

 

 

6,057,968

 

 


(1)             This amount is the product of the shares of common stock held by the individual, multiplied by $196.00.

(2)             This amount reflects the number of vested company options with a per share exercise price less than $196.00 held by the individual, assuming that the effective time of the merger occurs on June 15, 2016.

(3)             This amount reflects the cash payment paid to each individual as the result of his or her vested company options, and the product obtained by multiplying the aggregate number of shares of LinkedIn common stock that were issuable upon the exercise of the vested company options listed in the “Number of Shares Subject to Vested Options” column, by the excess of $196.00 over the exercise price of such vested company option.  This column assumes that Microsoft will not choose to treat any unvested company options as surrendered company options.

(4)             This amount reflects the number of unvested company options with a per share exercise price less than $196.00 held by the individual that will accelerate upon a qualifying termination, assuming that the effective time of the merger occurs on June 15, 2016.  Each executive officer is eligible to receive immediate vesting of 100% (for Messrs. Weiner, Sordello and Callahan) or 50% (for Messrs. Gamson and Scott and Ms. Wadors), as applicable, of his or her outstanding company options, under his or her offer letter or change of control agreement if, within 12 months following the merger, there is an involuntary termination of employment without cause, or a constructive termination, as described more fully below.

(5)             This amount reflects the cash payment paid to each individual as the result of his or her accelerated unvested company options, and the product obtained by multiplying the aggregate number of shares of LinkedIn common stock listed in the “Number of Shares Subject to Unvested Options Accelerating upon a Qualifying Termination” column, by the excess of $196.00 over the exercise price of such company option.  This column assumes that Microsoft will not choose to treat any unvested company options as surrendered company options.

(6)             This amount reflects the number of unvested RSUs held by the individual that will accelerate upon the merger or a qualifying termination, assuming that the effective time of the merger occurs on June 15, 2016.  Each executive officer is eligible to receive immediate vesting of 100% (for Messrs. Weiner, Sordello and Callahan) or 50% (for Messrs. Gamson and Scott and Ms. Wadors), as applicable, of his or her outstanding RSUs, under his or her offer letter or change of control agreement if, within 12 months following the merger, there is an involuntary termination of employment without cause, or a constructive termination, as described more fully below.  The RSUs held by A. George “Skip” Battle, Leslie Kilgore and Stanley Meresman, who will cease to be directors following the merger, will vest in connection with the merger pursuant to the terms of the LinkedIn 2011 Equity Incentive Plan.

(7)             This amount reflects the cash payment paid to each individual as the result of his or her accelerated RSUs, and the product obtained by multiplying the aggregate number of accelerated RSUs listed in the “Number of RSUs Accelerating upon the Merger or a Qualifying Termination” column, by $196.00.  This column assumes that Microsoft will not choose to treat any unvested RSUs as surrendered stock-based awards.

(8)             The equity interests of Mr. Weiner do not include 188,457 shares of Class B common stock issuable pursuant to a stock option originally issued to Mr. Weiner, which were transferred to the Weiner 2012 Irrevocable Trust. Mr. Hoffman is the trustee of the Weiner 2012 Irrevocable Trust.

(9)             The equity interests of Mr. Hoffman include 188,457 shares of Class B common stock issuable pursuant to a stock option originally issued to Mr. Weiner, which were transferred to the Weiner 2012 Irrevocable Trust. Mr. Hoffman is the trustee of the Weiner 2012 Irrevocable Trust. Mr. Hoffman disclaims all pecuniary and beneficial interest in such option and underlying shares.

 

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Payments Upon Termination Following Change of Control

 

Offer Letter with Jeffrey Weiner

 

LinkedIn’s offer letter agreement with Mr. Weiner, as amended, provides that if within 12 months following any “change of control,” Mr. Weiner’s employment is involuntarily terminated without “cause” or if he is “constructively terminated” following such change of control, then upon such termination Mr. Weiner will receive the following severance payments and benefits:

 

·                  a lump-sum payment payable on the 60th day following termination of employment equal to 12 months of his base salary at the rate in effect on the date of termination, or, if greater, the rate in effect immediately prior to the change of control;

 

·                  a lump-sum payment payable on the 60th day following termination of employment equal to Mr. Weiner’s annual target bonus (corporate and individual performance components at 100% of annual target) for the year of termination, or, if greater, Mr. Weiner’s annual target bonus in effect immediately prior to the change of control;

 

·                  payment of COBRA premiums for Mr. Weiner, his spouse and eligible dependents for up to 12 months; and

 

·                  immediate vesting as to 100% of Mr. Weiner’s outstanding equity awards.

 

Mr. Weiner’s offer letter further provides that in the event of a termination without cause or a constructive termination that does not occur within 12 months following a change of control, Mr. Weiner will receive the following severance payments and benefits:

 

·                  six months’ base salary continuation;

 

·                  six months’ reimbursement for COBRA; and

 

·                  three months’ continued vesting of outstanding shares.

 

The receipt of any severance payments and benefits is conditioned on Mr. Weiner signing and not revoking LinkedIn’s then current standard form of release.

 

For purposes of Mr. Weiner’s offer letter, the term “cause” means Mr. Weiner:

 

·                  engaging in knowing and intentional illegal conduct that was or is materially injurious to LinkedIn or its affiliates;

 

·                  violating a federal or state law or regulation applicable to LinkedIn’s business which violation was or is reasonably likely to be injurious to LinkedIn;

 

·                  materially breaching the terms of any confidentiality agreement or invention assignment agreement with LinkedIn;

 

·                  being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, LinkedIn or its affiliates.

 

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For purposes of Mr. Weiner’s offer letter, the term “change of control” means:

 

·                  the consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of LinkedIn’s assets, or the acquisition of assets of another corporation or entity, or other similar transaction, which we refer to as a “business combination,” unless, in each case, immediately following such business combination (1) all or substantially all of the individuals and entities who were the beneficial owners of voting stock of LinkedIn immediately prior to such business combination beneficially own, directly or indirectly, more than 55% of the combined voting power of the then outstanding shares of voting stock of the entity resulting from such business combination (including, without limitation, an entity which as a result of such transaction owns LinkedIn or all or substantially all of LinkedIn’s assets either directly or through one or more subsidiaries); and (2) at least a majority of the members of the board of directors of the entity resulting from such business combination were members of the LinkedIn Board at the time of the execution of the initial agreement or of the action of the LinkedIn Board providing for such business combination.

 

For purposes of Mr. Weiner’s offer letter, the term “constructive termination” means, without Mr. Weiner’s written consent:

 

·                  a reduction in base salary, other than a reduction in salary that is part of an expense reduction effort applied to the executive management team (defined as the Chief Executive Officer and the Chief Executive Officer’s direct reports) generally and which results in a percentage reduction of salary or bonus no greater than the greatest percentage reduction applied to at least one other member of the executive management team;

 

·                  a relocation of the principal place of work to a location more than 35 miles away from the workplace prior to the relocation; or

 

·                  the signification reduction of duties or responsibilities when compared to duties or responsibilities in effect immediately prior to such change; it is understood, however, that if, following a change of control pursuant to which LinkedIn becomes part of a larger entity but remains a separate business entity, continuing to be the general manager of such business entity (or a successor entity) and retaining responsibility for managing the day to day operations of such business entity (even if LinkedIn is a part of such larger entity and/or the individual is no longer reporting to or interacting with the board of directors of either LinkedIn or the acquiring entity or no longer retaining the title of Chief Executive Officer) will not be considered a “constructive termination” under the foregoing.

 

Offer Letter with Steven Sordello

 

LinkedIn’s offer letter with Mr. Sordello, as amended, provides that if within 12 months following a “change of control,” Mr. Sordello’s employment is involuntarily terminated without “cause” or if he is “constructively terminated,” then upon such termination Mr. Sordello will receive the following severance payments and benefits:

 

·                  a lump-sum payment payable on the 60th day following termination of employment equal to 12 months of his base salary at the rate in effect on the date of termination, or, if greater, the rate in effect immediately prior to the change of control;

 

·                  a lump-sum payment payable on the 60th day following termination of employment equal to Mr. Sordello’s annual target bonus (corporate and individual performance components at 100% of annual target) for the year of termination, or, if greater, Mr. Sordello’s annual target bonus in effect immediately prior to the change of control;

 

·                  payment of COBRA premiums for Mr. Sordello, his spouse and eligible dependents for up to 12 months; and

 

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·                  immediate vesting as to 100% of Mr. Sordello’s outstanding equity awards.

 

The receipt of any severance payments and benefits is conditioned on Mr. Sordello signing and not revoking LinkedIn’s then current standard form of release.

 

For purposes of Mr. Sordello’s offer letter, the term “cause” means Mr. Sordello:

 

·                  engaging in knowing and intentional illegal conduct that was or is materially injurious to LinkedIn or its affiliates;

 

·                  violating a federal or state law or regulation applicable to LinkedIn’s business which violation was or is reasonably likely to be injurious to LinkedIn;

 

·                  materially breaching the terms of any confidentiality agreement or invention assignment agreement with LinkedIn;

 

·                  being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, LinkedIn or its affiliates; or

 

·                  death or inability to perform duties for a period of three consecutive months.

 

For purposes of Mr. Sordello’s offer letter, the term “change of control” has the same meaning as Mr. Weiner’s offer letter.

 

For purposes of Mr. Sordello’s offer letter, the term “constructive termination” means, without Mr. Sordello’s written consent:

 

·                  a reduction in base salary, other than a reduction in salary that is part of an expense reduction effort applied to the executive management team (defined as the Chief Executive Officer’s direct reports) generally and which results in a percentage reduction of salary or bonus no greater than the greatest percentage reduction applied to at least one other member of the executive management team;

 

·                  a relocation of the principal place of work to a location more than 35 miles away from the workplace prior to the relocation; or

 

·                  the signification reduction of duties or responsibilities when compared to duties or responsibilities in effect immediately prior to such reduction.

 

Change of Control Agreements with Michael Callahan, Michael Gamson, J. Kevin Scott and Patricia Wadors

 

LinkedIn has entered into change of control agreements with each of Messrs. Callahan, Gamson and Scott and Ms. Wadors that provide that if within 12 months following a “change of control”, the individual’s employment is involuntarily terminated without “cause” or their employment is “constructively terminated” and the individual chooses to resign within a reasonable period of time following such “constructive termination”, then upon such termination each of Messrs. Callahan, Gamson and Scott and Ms. Wadors will receive the following severance payments and benefits:

 

·                  a lump-sum payment payable on the 60th day following termination of employment equal to 12 months of his or her base salary at the rate in effect on the date of termination, or, if greater, the rate in effect immediately prior to the change of control;

 

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·                  a lump-sum payment payable on the 60th day following termination of employment equal to his or her annual target bonus (corporate and individual performance components at 100% of annual target) for the year of termination, or, if greater, the individual’s annual target bonus in effect immediately prior to the change of control;

 

·                  payment of COBRA premiums for the individual, his or her spouse and eligible dependents for up to 12 months; and

 

·                  immediate vesting as to 100% (for Mr. Callahan) or 50% (for Messrs. Gamson and Scott and Ms. Wadors) of the individual’s outstanding equity awards.

 

The receipt of any severance payments and benefits is conditioned on the individual signing and not revoking LinkedIn’s then current standard form of release.

 

For the purposes of the change of control agreements, the term “cause” means such executive officer:

 

·                  engaging in knowing and intentional illegal conduct that was or is materially injurious to LinkedIn or its affiliates;

 

·                  violating a federal or state law or regulation applicable to LinkedIn’s business which violation was or is reasonably likely to be injurious to LinkedIn, provided that in the case of Mr. Callahan, such violation must be willful;

 

·                  materially breaching the terms of any confidentiality agreement or invention assignment agreement with LinkedIn;

 

·                  being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, LinkedIn or its affiliates; or

 

·                  willful and continued failure to perform the duties and responsibilities of the position (other than as a result of complete or partial incapacity due to physical or mental illness or impairment) after having been delivered a written demand for performance from LinkedIn which describes the basis for its belief that the individual has not substantially performed his or her duties or responsibilities and a failure to cure such non-performance to LinkedIn’s satisfaction within 30 days after receiving such notice.

 

For the purposes of the change of control agreements, the term “change of control” has the same meaning as Mr. Weiner’s offer letter.

 

For the purposes of the change of control agreements, the term “constructive termination” means, without such executive officer’s written consent:

 

·                  a reduction in base salary, other than a reduction in salary that is part of an expense reduction effort applied to the executive management team (defined as the Chief Executive Officer’s direct reports) generally and which results in a percentage reduction of salary or bonus no greater than the greatest percentage reduction applied to at least one other member of the executive management team;

 

·                  a relocation of the principal place of work to a location more than 35 miles away from the workplace prior to the relocation; or

 

·                  a material reduction or loss of responsibility of title, or for Mr. Callahan only: a material diminution in title, authority, duties or responsibilities, provided, however; that for the avoidance of doubt, the consummation of a

 

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change of control shall by itself constitute a material diminution in duties and responsibilities if, as a result of such change of control he does not serve as the most senior legal officer of the ultimate parent of the acquirer in such change of control.

 

The value of any triggered payments and benefits under their respective change of control and severance agreements for our named executive officers are set forth in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Golden Parachute Compensation.”  In addition, the value of any triggered payments and benefits under the change of control agreement for Ms. Wadors totals an aggregate of $4,345,356.

 

Employment Arrangements Following the Merger

 

Microsoft Offer Letter with Jeffrey Weiner

 

On June 14, 2016, Mr. Weiner and Microsoft entered into an offer letter, which we refer to as the “Microsoft Offer Letter,” which provides that upon and subject to the closing of the merger, Mr. Weiner will be employed as Chief Executive Officer of the LinkedIn Group of Microsoft and Executive Vice President-Microsoft.  The Microsoft Offer Letter provides that Mr. Weiner’s starting annual salary will be $815,000 and Mr. Weiner will receive an on-hire performance stock award, which we refer to as the “On-Hire PSA,” for shares of Microsoft common stock.  The target number of shares subject to the On-Hire PSA will be calculated by dividing $25,000,000 by the closing price of Microsoft common stock on Mr. Weiner’s start date and will be allocated among four performance periods as follows, in the percentages below:

 

·                  the closing of the merger through December 31, 2017 — 28.5% of the target number of shares;

 

·                  January 1, 2018 through June 30, 2018 — 14.5% of the target number of shares;

 

·                  Microsoft fiscal year 2019 (July 1, 2018 through June 30, 2019) — 28.5% of the target number of shares; and

 

·                  Microsoft fiscal year 2020 (July 1, 2019 through June 30, 2020) — 28.5% of the target number of shares.

 

Mr. Weiner may vest in and be issued between 0% and 250% of the target number of shares subject to the On-Hire PSA allocated to a performance period based on performance against goals set for the period.  Vesting of the award for each performance period is contingent on Mr. Weiner’s continued employment through the last day of that performance period.

 

Additionally, Mr. Weiner will be eligible to participate in Microsoft’s Executive Incentive Program, which we refer to as the “EIP,” which is comprised of the following three components:

 

·                  annual cash award target of 250% of salary earned during the fiscal year, with an actual cash award ranging from 0-200% of target, with Mr. Weiner’s first EIP cash award opportunity prorated based upon his fiscal year base salary from the later to occur of his start date or January 1, 2017;

 

·                  a stock award, on an annualized basis, equal to $4,250,000, with the number of Microsoft shares calculated by dividing the award value by the closing Microsoft stock price on August 31 of the award year (if Mr. Weiner’s start date is prior to April 1, 2017, he will receive a full award for fiscal year 2017, 25% of which will vest on August 31, 2017 and 12.5% of which will vest each six month thereafter); and

 

·                  a performance stock award, on an annualized basis, with a target equal to $4,250,000 and with the number of Microsoft shares calculated by dividing the award value by the closing Microsoft stock price on August 31 of the award year (if Mr. Weiner’s start date is prior to April 1, 2017, he will receive a full award for fiscal year 2017).  The number of shares actually awarded may be up to 400% of the target award.

 

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In addition, Mr. Weiner will continue to be eligible for 2016 incentive compensation under LinkedIn’s Executive Compensation Bonus Plan with adjustments to the performance metrics if the closing of the merger occurs before December 31, 2016. If Mr. Weiner’s start date occurs before January 1, 2017, Mr. Weiner will receive his EIP cash award target of 250% of his salary in lieu of the target set in the LinkedIn Executive Compensation Bonus Plan for the period from his start date to December 31, 2016. If, however, his start date occurs after December 31, 2016, he will remain eligible to receive a pro-rated bonus for the 2017 calendar year under the LinkedIn Executive Compensation Bonus Plan covering the period from January 1, 2017 until his start date.  Pursuant to the terms of the merger agreement, Mr. Weiner will receive Microsoft stock awards for his unvested LinkedIn stock awards, which we refer to as “assumed stock awards,” and stock options in exchange for his unvested, in-the-money LinkedIn stock options, which we refer to as the “assumed options.”

 

Effective from his start date with Microsoft, Mr. Weiner will no longer participate in any LinkedIn severance program, including the severance arrangements described in his LinkedIn offer letter.  Instead, Mr. Weiner will participate in Microsoft’s Senior Executive Severance Benefit Plan, which we refer to as the “SESBP.”  Under the SESBP, a participant will receive severance payments and benefits if the participant’s employment is terminated by Microsoft without “cause” (as such term is defined in the SESBP).  These payments and benefits consist of (1) a lump sum cash severance payment equal to one times annual base salary plus target annual cash award under the EIP, payable within 60 days after the termination date; (2) pro-rata payment of the participant’s annual cash award under the EIP which amount is payable at the time annual cash awards for the year are paid to other EIP participants; (3) vesting of the portion of stock awards that would otherwise vest in the 12 months after termination of employment; (4) vesting of a pro-rata portion of any performance stock awards (including the On-Hire PSAs) provided that at least one year of the performance period has been completed as of the termination date and the pro-rated vesting applies to the lesser of (1) the number of shares earned based on achievement of performance goals and (2) the target number of shares under the award agreement; (5) payment of COBRA premiums for up to 6 months; and (6) up to 12 months of outplacement assistance. There is no change-in-control provision in the SESBP. To receive the severance payments and benefits, Mr. Weiner is required to execute a separation agreement that includes a release of claims, confidentiality and non-disparagement provisions, and 12 month non-solicitation restrictions.

 

If within 12 months following the closing of the merger, Mr. Weiner’s employment is involuntarily terminated by Microsoft without “cause” or he resigns as a result of a “constructive termination,” then, upon either of such events, Mr. Weiner will be entitled to immediate vesting of 100% of both the assumed options and assumed stock awards that are unvested as of the date of such termination or resignation.  In addition, if, within 12 months following the closing of the merger, Mr. Weiner resigns as a result of a constructive termination, Mr. Weiner will receive a lump sum payment on the 60th day following such resignation equal to the sum of (1) 12 months of base salary at the rate in effect on the date of his resignation or, if greater, the rate in effect immediately prior to the closing of the merger; and (2) Mr. Weiner’s annual target bonus at 100% of annual target for the year of resignation or, if greater, Mr. Weiner’s annual target bonus in effect immediately prior to the closing of the merger.

 

If more than 12 months following the closing of the merger Mr. Weiner’s employment is involuntarily terminated without cause, as defined in the SESBP, then upon such termination Mr. Weiner will be entitled to continued vesting of his assumed options and assumed stock awards on the same vesting schedule that would have applied if his employment continued through the relevant vest dates.

 

For the purposes of the SESBP, the term “cause” means:

 

·                  being convicted or pleading guilty or no contest to (a) any felony or (b) a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion;

 

·                  engaging in gross misconduct;

 

·                  repeatedly failing to substantially perform duties after notice and an opportunity to cure, provided those duties are consistent with Mr. Weiner’s seniority;

 

·                  violating any securities laws, rules or regulations, or the rules and regulations of any securities exchange or association of which Microsoft or any of its affiliates is a member; or

 

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·                  violating Microsoft’s policies designed to prevent violations of law, such as, without limitation, policies pertaining to compliance with the laws prohibiting unlawful discrimination, harassment, or insider trading.

 

For the purposes of the Microsoft Offer letter, the term “cause” means Mr. Weiner:

 

·                  engaging in knowing and intentional illegal conduct that was or is materially injurious to Microsoft or its affiliates;

 

·                  violating a federal or state law or regulation applicable to Microsoft’s business which violation was or is reasonably likely to be injurious to Microsoft;

 

·                  materially breaching the terms of any confidentiality agreement or invention assignment agreement with LinkedIn or Microsoft;

 

·                  being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, Microsoft or its affiliates.

 

For the purposes of the Microsoft Offer Letter, the term “constructive termination” means, without Mr. Weiner’s written consent:

 

·                  a reduction in base salary, other than a reduction in salary that is part of an expense reduction effort applied to the executive management team (defined as Microsoft’s CEO and his executive direct reports) generally and which results in a percentage reduction of salary or bonus no greater than the greatest percentage reduction applied to at least one other member of the executive management team;

 

·                  a relocation of the principal place of work to a location more than 35 miles away from the workplace prior to the relocation; or

 

·                  a significant reduction of duties or responsibilities when compared to duties or responsibilities in effect immediately prior to the closing of the merger.  However, if Mr. Weiner (1) reports to the Microsoft CEO following the closing of the merger, (2) continues to be Chief Executive Officer of the LinkedIn business, and (3) retains responsibility for managing the day-to-day operations of the LinkedIn business (even if Mr. Weiner has the title described in the Microsoft Offer Letter and does not report to or interact with the Microsoft Board of Directors), such arrangements shall not be considered a constructive termination under the foregoing.

 

Any payments or benefits, including the accelerated vesting of Mr. Weiner’s assumed options and assumed stock awards, in connection with an involuntary termination without cause or a constructive termination (whether before or after the date that is 12 months following the closing of the merger) will be contingent on Mr. Weiner’s execution, delivery and non-revocation of a separation and release agreement in the form provided by Microsoft substantially in the form used under the SESBP.

 

Other Executives

 

Except as described above, as of the date of this proxy statement, none of LinkedIn’s other executive officers have reached an understanding on potential employment with Microsoft or other retention terms with the surviving corporation or with Microsoft, and except as described above, no LinkedIn executive officers have entered into any definitive agreements or arrangements regarding employment with Microsoft or other retention with the surviving corporation or with Microsoft following the consummation of the merger.  However, prior to the effective time of the merger, Microsoft

 

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may initiate discussions regarding employment or other retention terms and may enter into definitive agreements regarding employment or retention for certain of LinkedIn’s employees, to be effective as of the effective time of the merger.  In addition, as disclosed in the section of this proxy statement captioned “The Merger Agreement—Employee Benefits,” Microsoft has agreed to honor all of the employee plans (including the offer letters and change of control agreements with the executives) in accordance with their terms as in effect immediately prior to the effective time of the merger.

 

Golden Parachute Compensation

 

In accordance with Item 402(t) of Regulation S-K, the table below sets forth the compensation that is based on or that otherwise relates to the merger that will or may become payable to each of our named executive officers in connection with the merger.  The amounts in the table below will or may become payable to the named executive officers only in the event they are terminated within 12 months following the merger.  Please see the previous portions of this section for further information regarding this compensation.

 

LinkedIn’s “named executive officers” for purposes of the disclosure in this proxy statement are Messrs. Weiner, Sordello, Callahan, Gamson and Scott.  The following table sets forth the information required by Item 402(t) of Regulation S-K published by the SEC regarding certain compensation that each of LinkedIn’s named executive officers may receive that is based on, or that otherwise relates to, the merger.  The figures in the table are estimated based on (1) compensation and benefit levels as of June 15, 2016; (2) an assumed effective date of December 15, 2016, for the merger; and (3) the termination of the named executive officer’s employment without cause on the day immediately following such effective date for the merger.  The amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date.  Accordingly, the ultimate values to be received by a named executive officer in connection with the merger may differ from the amounts set below.

 

The values in the table below payable to Mr. Weiner by Microsoft are not subject to the non-binding, advisory vote to approve certain compensation that will or may become payable to LinkedIn’s named executive officers in connection with the merger.  LinkedIn’s executive officers will not receive pension, non-qualified deferred compensation or tax reimbursement in connection with the merger.

 

As required by applicable SEC rules, all amounts below that are determined using the per share value of LinkedIn’s common stock have been calculated based on the per share merger consideration.

 

Golden Parachute Compensation

 

Name

 

LinkedIn
Cash ($)(1)

 

Microsoft
Cash ($)(2)

 

LinkedIn
Equity
($)(3)(4)

 

Microsoft
Equity
($)(5)

 

LinkedIn
Perquisites /
Benefits
($)(6)

 

Microsoft
Perquisites /
Benefits
($)(7)

 

Total
LinkedIn
Payments
($)(8)

 

Total
Microsoft
Payments
($)(9)

Jeffrey Weiner

 

2,500,000

 

3,022,292

 

17,468,055

 

18,530,555

 

24,076

 

49,258

 

19,992,131

 

21,602,105

Steven Sordello

 

1,100,000

 

 

10,804,400

 

 

24,076

 

 

11,928,476

 

Michael Callahan

 

1,000,000

 

 

8,353,520

 

 

24,076

 

 

9,377,596

 

Michael Gamson

 

1,100,000

 

 

5,737,656

 

 

24,076

 

 

6,861,732

 

J. Kevin Scott

 

1,200,000

 

 

7,353,925

 

 

24,076

 

 

8,578,001

 

 


(1)         As described in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Payments Upon Termination Following Change of  Control,” these amounts represent the “double-trigger” cash severance payments to which each named executive officer may become entitled under his offer letter or change of control agreement with LinkedIn.  The cash severance payments, payable in a lump sum on the 60th day following termination of employment, equal 12 months of the named executive officer’s base

 

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salary at the rate in effect on the date of termination, or, if greater, the rate in effect immediately prior to the change of control, plus the named executive officer’s annual target bonus (corporate and individual performance components at 100% of annual target) for the year of termination, or, if greater, the individual’s annual target bonus in effect immediately prior to the change of control, which we refer to together as the “severance benefits.”  The severance benefits will be payable to Messrs. Weiner and Sordello if, within 12 months following a change of control (including the merger), their employment is involuntarily terminated without cause or the individual is constructively terminated.  The severance benefits will be paid to each of Messrs. Callahan, Gamson and Scott if, within 12 months following a change of control (including the merger), the individual’s employment is involuntarily terminated without cause or their employment is constructively terminated and the individual chooses to resign within a reasonable period of time following such constructive termination.  The receipt of the severance benefits is conditioned on the named executive officer signing and not revoking the then current standard form of release.

 

Name

 

Base Salary
Component of
Severance
Benefits ($)

 

Bonus
Component of
Severance
Benefits ($)

 

Jeffrey Weiner

 

1,000,000

 

1,500,000

 

Steven Sordello

 

550,000

 

550,000

 

Michael Callahan

 

500,000

 

500,000

 

Michael Gamson

 

550,000

 

550,000

 

J. Kevin Scott

 

600,000

 

600,000

 

 

As described above and following the completion of the merger, Mr. Weiner has agreed in the Microsoft Offer Letter to waive any severance payments or benefits he may be entitled to receive pursuant to his offer letter with LinkedIn.

 

(2)         As described in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Employment Arrangements Following the Merger—Offer Letter with Jeffrey Weiner,” pursuant to the terms of the Microsoft Offer Letter and following the completion of the merger, Mr. Weiner will be a participant in the SESBP, and will be eligible to receive cash severance benefits upon a termination without cause consisting of: (1) a lump-sum payment equal to one times annual base salary plus target annual cash award under the EIP payable within 60 days of the termination date; and (2) a pro-rata payment of Mr. Weiner’s annual target cash award under the EIP, which amount is payable at the time annual cash awards for the year are paid to other EIP participants.  To receive these “double-trigger” severance payments, Mr. Weiner is required to execute a separation agreement that includes a release of claims, confidentiality and non-disparagement provisions, and 12 month non-solicitation restrictions.

 

In addition, if within 12 months following the closing of the merger, Mr. Weiner resigns as a result of a “constructive termination,” Mr. Weiner will receive a lump sum payment on the 60th day following such resignation equal to the sum of (1) 12 months of base salary as the rate in effect on the date of his resignation or, if greater, the rate in effect immediately prior to the closing; and (2) Mr. Weiner’s annual target bonus at 100% of annual target for the year of resignation or, if greater, Mr. Weiner’s annual target bonus in effect immediately prior to the closing.  Payment of such “double-trigger” severance will be conditioned on Mr. Weiner executing and not revoking a release of claims substantially in the form used under the SESBP that includes a release of claims, confidentiality and non-disparagement provisions, and 12 month non-solicitation restrictions.

 

For purposes of this disclosure we have assumed Mr. Weiner’s employment is terminated without cause one day following the closing of the merger.

 

Name

 

Base Salary
Component
of Microsoft
Severance
Benefits ($)

 

Bonus
Component
of Microsoft
Severance
Benefits ($)

 

Pro-Rata
Bonus
Component
of Microsoft
Severance
Benefits (A)

 

Jeffrey Weiner

 

815,000

 

2,037,500

 

169,792

 

 

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(A)       Assumes Mr. Weiner is terminated one day following the closing of the merger and is eligible to receive 1/12 of his annual target cash award.

 

Assuming Mr. Weiner’s employment is terminated one day following the closing of the merger, he will only be entitled to receive the value of the “Microsoft Cash.” As noted above, in the Microsoft Offer Letter, Mr. Weiner agreed to waive any severance payments and benefits he may be entitled to receive pursuant to his offer letter with LinkedIn and, accordingly, would not be entitled to the value of the “LinkedIn Cash.”

 

(3)         As described in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Payments upon Termination Following Change of Control,” under the applicable offer letter or change of control agreement, 100% (in the case of Messrs. Weiner, Sordello and Callahan) or 50% (in the case of Messrs. Gamson and Scott) of the named executive officer’s outstanding equity awards will vest upon a qualifying termination of employment, which we refer to as the “equity acceleration.”  Messrs. Weiner and Sordello will receive the equity acceleration if, within 12 months following a change of control (including the merger), their employment is involuntarily terminated without cause or the individual is constructively terminated.  Each of Messrs. Callahan, Gamson and Scott will receive the equity acceleration if, within 12 months following a change of control (including the merger), the individual’s employment is involuntarily terminated without cause or their employment is constructively terminated and the individual chooses to resign within a reasonable period of time following such constructive termination.  The value of acceleration of the company options is calculated by multiplying the number of accelerated company options by the difference between the per share merger consideration and the exercise price.  The value of the RSUs is based on the number of the accelerated unvested shares, multiplied by the per share merger consideration.  The following table quantifies the value of equity awards that accelerate upon a qualifying termination of employment in connection with the merger.  All such amounts are “double-trigger” and are conditioned on the named executive officer signing and not revoking the then current standard form of release.

 

Name

 

Stock Options
($)

 

RSUs ($)

 

Jeffrey Weiner

 

700,843

 

16,767,212

 

Steven Sordello

 

420,516

 

10,383,884

 

Michael Callahan

 

 

8,353,520

 

Michael Gamson

 

264,160

 

5,473,496

 

J. Kevin Scott

 

349,081

 

7,004,844

 

 

(4)         In connection with the merger, LinkedIn intends to grant Jeffrey Weiner the Weiner Retention Grant.  The Weiner Retention Grant will be granted immediately prior to the closing of the merger, subject to Mr. Weiner’s continued employment with LinkedIn through and including the date of grant.  The Weiner Retention Grant will be scheduled to vest on the earlier of (1) the one year anniversary of the closing date of the merger and (2) December 31, 2017, and will be subject to the severance provisions (including as to equity acceleration) set forth in Mr. Weiner’s offer letter, as described more fully above.  Even though the Weiner Retention Grant will not become effective until shortly before the closing of the merger, it is included in the Golden Parachute Compensation table.

 

(5)         As described in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Employment Arrangements Following the Merger—Offer Letter with Jeffrey Weiner,” if within 12 months following the closing of the merger, Mr. Weiner’s employment is involuntarily terminated by Microsoft without cause or he resigns as a result of a constructive termination, then, upon either of such events, Mr. Weiner will be entitled to immediate vesting of 100% of the assumed options, assumed stock awards, and the Weiner Retention Grant that are unvested as of the date of such termination or resignation.  The accelerated vesting of Mr. Weiner’s assumed options and assumed stock awards, in connection with an involuntary termination without cause or a constructive termination (whether before or after the date that is 12 months following the closing of the merger) will be contingent on Mr. Weiner’s execution, delivery and non-revocation of a separation and release agreement in the form provided by Microsoft substantially in the form used under the SESBP that includes a

 

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release of claims, confidentiality and non-disparagement provisions, and 12 month non-solicitation restrictions.  For purposes of this disclosure, we are assuming (1) the value of the acceleration of the assumed options, assumed stock awards and Weiner Retention Grant, each a “double-trigger” benefit, equals the value of the awards reflected in the “LinkedIn Equity” column; (2) the On-Hire PSAs, stock award and performance stock award were all granted on the date of the closing of the merger; (3) no portion of the On-Hire PSAs or performance stock awards will vest as a result of the termination in accordance with the terms of the SESBP; and (4) only 25% of the stock awards will vest as a result of the termination in accordance with the terms of the SESBP.

 

(6)         As described in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Payments Upon Termination Following Change of Control,” these amounts equal the value of 12 months’ payment of COBRA premiums for the named executive officer, his spouse and eligible dependents, which we refer to as the “COBRA Benefits.”  The COBRA Benefits are a “double-trigger” benefit and will be payable to Messrs. Weiner and Sordello if, within 12 months following a change of control (including the merger), their employment is involuntarily terminated without cause or the individual is constructively terminated.  The COBRA Benefits will be paid to each of Messrs. Callahan, Gamson and Scott if, within 12 months following a change of control (including the merger), the individual’s employment is involuntarily terminated without cause or their employment is constructively terminated and the individual chooses to resign within a reasonable period of time following such constructive termination.  The receipt of the COBRA Benefits is conditioned on the named executive officer signing and not revoking the then current standard form of release.

 

(7)         As described in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Employment Arrangements Following the Merger—Offer Letter with Jeffrey Weiner,” pursuant to the terms of the Microsoft Offer Letter, Mr. Weiner will be a participant in the SESBP, and will be eligible to receive the following severance benefits upon a termination without cause: (1) six months of continued health care premiums under COBRA (valued at $9,258, assuming that Mr. Weiner chooses the highest level of coverage); and (2) 12 months of outplacement assistance (valued at $40,000).  To receive this “double-trigger” severance benefit, Mr. Weiner is required to execute a separation agreement that includes a release of claims, confidentiality and non-disparagement provisions, and 12 month non-solicitation restrictions.

 

Assuming Mr. Weiner’s employment is terminated one day following the closing of the merger, he will only be entitled to receive the value of the “Microsoft Perquisites / Benefits.” As noted above, in the Microsoft Offer Letter, Mr. Weiner agreed to waive any severance payments and benefits he may be entitled to receive pursuant to his offer letter with LinkedIn and accordingly, would not be entitled to the value of the “LinkedIn Perquisites / Benefits.”

 

(8)         This amount represents the sum of the amounts in the “LinkedIn Cash,” “LinkedIn Equity,” and “LinkedIn Perquisites / Benefits” columns for each named executive officer.  For each named executive officer, the amount in this column assumes that such named executive officer’s employment is involuntarily terminated without cause or the individual is constructively terminated within 12 months of a change of control (including the merger) and the named executive officers receives severance payments and benefits pursuant to their offer letter or change of control agreement with LinkedIn, although as noted above, Mr. Weiner will be entitled to receive severance payments and benefits pursuant to the Microsoft Offer Letter.  For purposes of the non-binding, advisory vote, our stockholders are being asked to approve the payments to the named executive officers shown in this column.

 

(9)         This amount represents the sum of the amounts in the “Microsoft Cash,” “Microsoft Equity,” and “Microsoft Perquisites / Benefits” columns for Mr. Weiner.  The amount in this column assumes that Mr. Weiner receives severance payments and benefits pursuant to the Microsoft Offer Letter as described above and will not be eligible to receive severance or benefits under his LinkedIn offer letter.

 

Closing and Effective Time of the Merger

 

The closing of the merger will take place no later than the second business day following the satisfaction or waiver of all conditions to closing of the merger (described in the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger”), other than conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of each of such conditions, or such other time agreed to in writing by Microsoft, LinkedIn and Merger Sub.  Concurrently with the closing of the merger, the parties will file a certificate of merger with the Secretary of State of the State of Delaware as provided under the DGCL.  The merger will

 

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become effective upon the filing of and acceptance of such certificate of merger, or at such later time agreed to in writing by the parties and specified in such certificate of merger.

 

Appraisal Rights

 

If the merger is consummated, LinkedIn stockholders who do not vote in favor of the adoption of the merger agreement, who properly demand an appraisal of their shares, who continuously hold such shares through the effective time of the merger and who otherwise comply with the procedures of Section 262 of the DGCL will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL, which we refer to as “Section 262.”  Unless the context requires otherwise, all references in Section 262 of the DGCL and in this summary to a “stockholder” are to a record holder of LinkedIn common stock.

 

The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex C and incorporated into this proxy statement by reference.  The following summary does not constitute any legal or other advice and does not constitute a recommendation that LinkedIn stockholders exercise their appraisal rights under Section 262.  Only a holder of record of shares of common stock is entitled to demand appraisal rights for the shares registered in that holder’s name.  A person having a beneficial interest in shares of common stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to demand an appraisal of such holder’s shares.  If you hold your shares of our common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee.

 

Under Section 262, holders of record of shares of common stock who (1) submit a written demand for appraisal of such stockholder’s shares to LinkedIn prior to the vote on the adoption of the merger agreement; (2) do not vote in favor of the adoption of the merger agreement; (3) continuously are the record holders of such shares through the effective time of the merger; and (4) otherwise comply with the procedures set forth in Section 262 will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares of common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid on the amount determined to be fair value as determined by the Delaware Court of Chancery. Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the effective time of the merger through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period.

 

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders of record as of the record date for notice of such meeting that appraisal rights are available and include in the notice a copy of Section 262.  This proxy statement constitutes LinkedIn’s notice to stockholders that appraisal rights are available in connection with the merger, and the full text of Section 262 is attached to this proxy statement as Annex C.  In connection with the merger, any holder of shares of common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Annex C carefully.  Failure to strictly comply with the requirements of Section 262 in a timely and proper manner will result in the loss of appraisal rights under the DGCL.  A stockholder who loses his, her or its appraisal rights will be entitled to receive the merger consideration described in the merger agreement without interest.  Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of common stock, LinkedIn believes that if a stockholder considers exercising such rights, that stockholder should seek the advice of legal counsel.

 

Stockholders wishing to exercise the right to seek an appraisal of their shares of common stock must do ALL of the following:

 

·                  the stockholder must not vote in favor of the proposal to adopt the merger agreement;

 

·                  the stockholder must deliver to LinkedIn a written demand for appraisal before the vote on the merger agreement at the special meeting;

 

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·                  the stockholder must continuously hold the shares from the date of making the demand through the effective time of the merger (a stockholder will lose appraisal rights if the stockholder transfers the shares before the effective time of the merger); and

 

·                  a stockholder (or any person who is the beneficial owner of shares of common stock held either in a voting trust or by a nominee on behalf of such person) or the surviving corporation must file a petition in the Delaware Court of Chancery demanding a determination of the value of the stock of all such stockholders within 120 days after the effective time of the merger.  The surviving corporation is under no obligation to file any petition and has no intention of doing so.

 

Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement, abstain or not vote his, her or its shares.

 

Filing Written Demand

 

A stockholder wishing to exercise appraisal rights must deliver to LinkedIn, before the vote on the adoption of the merger agreement at the special meeting at which the proposal to adopt the merger agreement will be submitted to the stockholders, a written demand for the appraisal of such stockholder’s shares, and that stockholder must not vote or submit a proxy in favor of the adoption of the merger agreement.  A stockholder exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective time of the merger.  A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal.  Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the merger agreement or abstain from voting on the adoption of the merger agreement.  Neither voting against the adoption of the merger agreement nor abstaining from voting or failing to vote on the proposal to adopt the merger agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262.  The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the merger agreement.  A proxy or vote against the adoption of the merger agreement will not constitute a demand.  A stockholder’s failure to make the written demand prior to the taking of the vote on the adoption of the merger agreement at the special meeting will constitute a waiver of appraisal rights.

 

Only a holder of record of shares of common stock is entitled to demand appraisal rights for the shares registered in that holder’s name.  A demand for appraisal in respect of shares of common stock should be executed by or on behalf of the holder of record, and must reasonably inform LinkedIn of the identity of the holder state that the stockholder intends thereby to demand an appraisal of such stockholder’s shares.  If the shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner, and if such shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners.  An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners.

 

STOCKHOLDERS WHO HOLD THEIR SHARES IN BROKERAGE OR BANK ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER OR OTHER NOMINEES, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES.  A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.

 

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All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

 

LinkedIn Corporation

2029 Stierlin Court

Mountain View, CA 94043

Attention: Corporate Secretary

 

Any holder of shares of common stock may withdraw his, her or its demand for appraisal and accept the consideration offered pursuant to the merger agreement by delivering to LinkedIn a written withdrawal of the demand for appraisal.  However, any such attempt to withdraw the demand made more than 60 days after the effective time of the merger will require written approval of the surviving corporation.  Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the merger consideration within 60 days after the effective time of the merger.

 

Notice by the Surviving Corporation

 

If the merger is completed, within 10 days after the effective time of the merger, the surviving corporation will notify each record holder of shares of common stock who has made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the merger agreement, that the merger has become effective and the effective date thereof.

 

Filing a Petition for Appraisal

 

Within 120 days after the effective time of the merger, but not thereafter, the surviving corporation or any holder of shares of common stock who has complied with Section 262 and is entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares held by all stockholders entitled to appraisal. The surviving corporation is under no obligation, and has no present intention, to file a petition, and holders should not assume that the surviving corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of common stock.  Accordingly, any holders of shares of common stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of common stock within the time and in the manner prescribed in Section 262.  The failure of a holder of common stock to file such a petition within the period specified in Section 262 could nullify the stockholder’s previous written demand for an appraisal of such stockholder’s shares.

 

Within 120 days after the effective time of the merger, any holder of shares of common stock who has complied with the requirements for an appraisal of such holder’s shares pursuant to Section 262 will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the merger agreement and with respect to which LinkedIn has received demands for appraisal, and the aggregate number of holders of such shares.  The surviving corporation must mail this statement to the requesting stockholder within 10 days after receipt of the written request for such a statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later.  A beneficial owner of shares held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition seeking appraisal or request from the surviving corporation the foregoing statements.  As noted above, however, the demand for appraisal can only be made by a stockholder of record.

 

If a petition for an appraisal is duly filed by a holder of shares of common stock and a copy thereof is served upon the surviving corporation, the surviving corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached.  After

 

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notice to the stockholders as required by the court, at the hearing on such petition, the Delaware Court of Chancery will determine the stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder.  The Delaware Court of Chancery may require the stockholders who demanded appraisal for their shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to such stockholder.

 

Determination of Fair Value

 

After the Delaware Court of Chancery determines the holders of common stock entitled to appraisal, the appraisal proceeding will be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings.  Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value.  In determining fair value, the Delaware Court of Chancery will take into account all relevant factors.  Unless the court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment.  In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.”  The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation.  Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.”  In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation.  In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

 

Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and may not in any manner address, fair value under Section 262 of the DGCL. Although LinkedIn believes that the per share merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the per share merger consideration.  Neither LinkedIn nor Microsoft anticipates offering more than the per share merger consideration to any stockholder exercising appraisal rights, and each of LinkedIn and Microsoft reserves the right to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of common stock is less than the per share merger consideration.  If a petition for appraisal is not timely filed, then the right to an appraisal will cease.  The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances.  Upon application of a stockholder, the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to an appraisal.

 

If any stockholder who demands appraisal of his, her or its shares of common stock under Section 262 fails to perfect, or loses or validly withdraws, such holder’s right to appraisal, the stockholder’s shares of common stock will be deemed to have been converted at the effective time of the merger into the right to receive the per share merger

 

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consideration as provided in the merger agreement.  A stockholder will fail to perfect, or effectively lose such holder’s right to appraisal if no petition for appraisal is filed within 120 days after the effective time of the merger or if the stockholder delivers to the surviving corporation a written withdrawal of such holder’s demand for appraisal and an acceptance of the per share merger consideration as provided in the merger agreement in accordance with Section 262.

 

From and after the effective time of the merger, no stockholder who has demanded appraisal rights will be entitled to vote such shares of common stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger): provided, however, that if no petition for an appraisal is filed within the time provided in Section 262, or if such stockholder delivers to the surviving corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger, either within 60 days after the effective date of the merger or thereafter with the written approval of the surviving corporation, then the right of such stockholder to an appraisal will cease.  Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however, that the foregoing shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation.

 

Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a stockholder’s statutory appraisal rights.  Consequently, any stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

 

Accounting Treatment

 

The merger will be accounted for as a “purchase transaction” for financial accounting purposes.

 

Material U.S. Federal Income Tax Consequences of the Merger

 

The following discussion is a summary of material U.S. federal income tax consequences of the merger that may be relevant to U.S. Holders and Non-U.S. Holders (each as defined below) of shares of common stock whose shares are converted into the right to receive cash pursuant to the merger.  This discussion is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service, which we refer to as the “IRS,” and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations, possibly with retroactive effect.  This discussion is limited to holders who hold their shares of common stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes).

 

This discussion is for general information only and does not address all of the tax consequences that may be relevant to holders in light of their particular circumstances.  For example, this discussion does not address:

 

·                  tax consequences that may be relevant to holders who may be subject to special treatment under U.S. federal income tax laws, such as financial institutions; tax-exempt organizations; S corporations, partnerships and any other entity or arrangement treated as a partnership or pass-through entity for U.S. federal income tax purposes, and shareholders, partners or investors in such entities; insurance companies; mutual funds; dealers in stocks and securities; traders in securities that elect to use the mark-to-market method of accounting for their securities; regulated investment companies; real estate investment trusts; entities subject to the U.S. anti-inversion rules; holders who hold their common stock as “qualified small business stock” for purposes of Sections 1045 and 1202 of the Code; or certain former citizens or long-term residents of the United States;

 

·                  tax consequences to holders holding the shares as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;

 

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·                  tax consequences to holders who received their shares of common stock in a compensatory transaction or pursuant to the exercise of options or warrants;

 

·                  tax consequences to U.S. Holders whose “functional currency” is not the U.S. dollar;

 

·                  tax consequences to holders who hold their common stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States;

 

·                  tax consequences to holders who are “controlled foreign corporations,” “passive foreign investment companies” or “personal holding companies” for U.S. federal income tax purposes;

 

·                  tax consequences arising from the Medicare tax on net investment income;

 

·                  the U.S. federal estate, gift or alternative minimum tax consequences, if any;

 

·                  any state, local or non-U.S. tax consequences; or

 

·                  tax consequences to holders that do not vote in favor of the merger and who properly demand appraisal of their shares under Section 262 of the DGCL.

 

If a partnership (including an entity or arrangement, domestic or foreign, treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of common stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership.  Partnerships holding shares of common stock and partners therein should consult their tax advisors regarding the consequences of the merger.

 

No ruling has been or will be obtained from the IRS regarding the U.S. federal income tax consequences of the merger described below.  If the IRS contests a conclusion set forth herein, no assurance can be given that a holder would ultimately prevail in a final determination by a court.

 

THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY HOLDER.  A HOLDER SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER FEDERAL NON-INCOME TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION.

 

U.S. Holders

 

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of common stock that is for U.S. federal income tax purposes:

 

·                  an individual who is a citizen or resident of the United States;

 

·                  a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

·                  an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

·                  a trust (1) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in section 7701(a)(30) of the Code; or (2) that has a valid election in effect under applicable Treasury regulations to be treated as a United States person.

 

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The receipt of cash by a U.S. Holder in exchange for shares of common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes.  In general, such U.S. Holder’s gain or loss will be equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the shares surrendered pursuant to the merger.  A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares.  Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the completion of the merger.  A reduced tax rate on capital gain generally will apply to long-term capital gain of a non-corporate U.S. Holder (including individuals).  The deductibility of capital losses is subject to limitations.  If a U.S. holder acquired different blocks of shares of common stock at different times and different prices, such holder must determine its adjusted tax basis and holding period separately with respect to each block of our common stock.

 

Non-U.S. Holders

 

For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of shares of common stock that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.

 

Any gain realized by a Non-U.S. Holder pursuant to the merger generally will not be subject to U.S. federal income tax unless:

 

·                  the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to the branch profits tax at a rate of 30% (or a lower rate under an applicable income tax treaty);

 

·                  such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate under an applicable income tax treaty); or

 

·                  LinkedIn is or has been a “United States real property holding corporation” as such term is defined in Section 897(c) of the Code, which we refer to as a “USRPHC,” at any time within the shorter of the five-year period preceding the merger or such Non-U.S. Holder’s holding period with respect to the applicable shares of common stock, which we refer to as the “relevant period,” and, if shares of common stock are regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code), such Non-U.S. Holder owns directly or is deemed to own pursuant to attribution rules more than 5% of our common stock at any time during the relevant period, in which case such gain will be subject to U.S. federal income tax at rates generally applicable to U.S. persons (as described in the first bullet point above), except that the branch profits tax will not apply. We believe that we are not, and have not been, a USRPHC at any time during the five-year period preceding the merger.

 

Information Reporting and Backup Withholding

 

Information reporting and backup withholding (at a current rate of 28%) may apply to the proceeds received by a holder pursuant to the merger.  Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such U.S. Holder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form); or (2) a Non-U.S. Holder that (1) provides a certification of such Non-U.S. Holder’s non-U.S. status on the appropriate series of IRS Form W-8 (or a substitute or successor form); or (2) otherwise establishes an exemption from backup withholding.  Backup withholding is not an additional tax.  Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

 

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Regulatory Approvals Required for the Merger

 

General

 

LinkedIn and Microsoft have agreed to use their reasonable best efforts to comply with all regulatory notification requirements and obtain all regulatory approvals required to consummate the merger and the other transactions contemplated by the merger agreement.  These approvals include approval under, or notifications pursuant to, the HSR Act and the competition laws of the European Union and Canada.

 

In addition, each of LinkedIn and Microsoft have agreed to (1) cooperate and coordinate with each other to make such filings; (2) use its reasonable best efforts to supply the other with any information that may be required in order to make such filings; (3) use its reasonable best efforts to supply any additional information that reasonably may be requested to obtain regulatory approvals; (4) use its reasonable best efforts to take all action necessary to obtain regulatory approvals as soon as practicable; and (5) provide notice to the other party if it plans to participate in any material meeting or substantive conversation with respect to the merger.

 

If and to the extent necessary to obtain regulatory approval of the merger, Microsoft, Merger Sub and, solely to the extent requested by Microsoft, LinkedIn will (1) offer, negotiate, commit to and effect, by consent decree, hold separate order or otherwise, (A) the sale, divestiture, license or other disposition of any and all of the capital stock or other equity or voting interest, assets (whether tangible or intangible), rights, products or businesses of LinkedIn; and (B) any other restrictions on the activities of the LinkedIn; and (2) contest, defend and appeal any legal proceedings, whether judicial or administrative, challenging the merger agreement or the consummation of the merger. Notwithstanding the foregoing, Microsoft is not obligated to  offer, negotiate, commit to, effect or otherwise take any action with respect to LinkedIn that would reasonably be expected to be materially adverse to the business, financial condition or results of operations of LinkedIn. Microsoft is not required to offer, negotiate, commit to, effect or otherwise take any action with respect to its business if taking such action would reasonably be expected to (1) have a material impact on the benefits expected to be derived from the merger by Microsoft or (2) have more than an immaterial impact on any business or product line of Microsoft and its subsidiaries.

 

HSR Act and U.S. Antitrust Matters

 

Under the HSR Act and the rules promulgated thereunder, the merger cannot be completed until LinkedIn and Microsoft file a notification and report form with the Federal Trade Commission, which we refer to as the “FTC,” and the Antitrust Division of the Department of Justice, which we refer to as the “DOJ,” under the HSR Act and the applicable waiting period has expired or been terminated.  A transaction notifiable under the HSR Act may not be completed until the expiration of a 30 calendar day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period.  The DOJ or the FTC may extend the 30 day waiting period by issuing a Request for Additional Information (also known as a Second Request).  If either agency issues a Second Request, the waiting period is extended until 30 days after the parties substantially comply with the request.

 

At any time before or after consummation of the merger, notwithstanding the termination of the waiting period under the HSR Act, the FTC or the Antitrust Division of the DOJ could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. At any time before or after the completion of the merger, and notwithstanding the termination of the waiting period under the HSR Act, any state could take such action under the antitrust laws as it deems necessary or desirable in the public interest.  Such action could include seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the parties.  Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

 

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Foreign Competition Laws

 

LinkedIn and Microsoft conduct business in Member States of the European Union.  Council Regulation (EC) No. 139/2004, as amended, and accompanying regulations require notification of and approval by the European Commission of mergers or acquisitions involving parties with worldwide sales and European Union sales exceeding given thresholds before these mergers and acquisitions can be implemented.  The parties will file a formal notification of the transaction with the European Commission as promptly as reasonably practicable and advisable.

 

Pursuant to Council Regulation (EC) No. 139/2004, the European Commission has 25 business days from the day following the date of receipt of a complete notification, which period may be extended to 35 business days under certain circumstances, in which to consider whether the merger would significantly impede effective competition in the common market (as defined by European Community regulations) or a substantial part of it, in particular as a result of the creation or strengthening of a dominant position. By the end of that period, the European Commission must issue a decision either clearing the merger, which may be conditional upon satisfaction of the parties’ undertakings, or opening an in-depth “Phase II” investigation.  A Phase II investigation may last a maximum of an additional 125 business days.  It is possible that an investigation could result in a challenge to the merger based on European Union competition law or regulations.

 

The completion of the merger is also subject to certain filing requirements and/or approvals under the competition laws of Canada.  The parties must also observe mandatory waiting periods and/or obtain the necessary approvals, clearances or consents in the required foreign jurisdictions before completing the merger.  The parties will file merger notifications with the appropriate regulators in each of the required foreign jurisdictions as promptly as practicable and work cooperatively toward expedited regulatory clearances.

 

Other Regulatory Approvals

 

One or more governmental bodies may impose a condition, restriction, qualification, requirement or limitation when it grants the necessary approvals and consents to the merger.  Third parties may also seek to intervene in the regulatory process or litigate to enjoin or overturn regulatory approvals, which actions could significantly impede or even preclude obtaining required regulatory approvals.  There is currently no way to predict how long it will take to obtain all of the required regulatory approvals or whether such approvals will ultimately be obtained, and there may be a substantial period of time between the approval by LinkedIn stockholders and the completion of the merger.

 

Although we expect that all required regulatory clearances and approvals will be obtained, we cannot assure you that these regulatory clearances and approvals will be timely obtained, obtained at all or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions on the completion of the merger or require changes to the terms of the merger agreement.  These conditions or changes could result in the conditions to the merger not being satisfied.

 

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

 

We are asking you to approve the adoption of the merger agreement.  For a summary of and detailed information regarding this proposal, see the information about the merger agreement throughout this proxy statement, including the information set forth under the sections of this proxy statement captioned “The Merger” and “The Merger Agreement.”  A copy of the merger agreement is attached as Annex A to this proxy statement.  You are urged to read the merger agreement carefully and in its entirety.

 

The LinkedIn Board unanimously recommends that you vote “FOR” this proposal.

 

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PROPOSAL 2: ADJOURNMENT OF THE SPECIAL MEETING

 

We are asking you to approve a proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.  If stockholders approve the adjournment proposal, we could adjourn the special meeting and any adjourned session of the special meeting and use the additional time to solicit additional proxies, including soliciting proxies from stockholders that have previously returned properly signed proxies voting against adoption of the merger agreement.  Among other things, approval of the adjournment proposal could mean that, even if we had received proxies representing a sufficient number of votes against adoption of the merger agreement such that the proposal to adopt the merger agreement would be defeated, we could adjourn the special meeting without a vote on the adoption of the merger agreement and seek to convince the holders of those shares to change their votes to votes in favor of adoption of the merger agreement.  Additionally, we may seek to adjourn the special meeting if a quorum is not present, and the chair of the special meeting may also adjourn the special meeting for such purpose even if the stockholders have not approved the proposal to adjourn the special meeting.

 

The LinkedIn Board unanimously recommends that you vote “FOR” this proposal.

 

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PROPOSAL 3: ADVISORY, NON-BINDING VOTE TO APPROVE CERTAIN MERGER-RELATED EXECUTIVE COMPENSATION ARRANGEMENTS

 

Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires that we provide stockholders with the opportunity to vote to approve, on an advisory, non-binding basis, the payment of certain compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger, as disclosed in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Golden Parachute Compensation.”

 

We are asking stockholders to approve the compensation that will or may become payable by LinkedIn to our named executive officers in connection with the merger.  These payments are set forth in the section of this proxy statement captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers of in the Merger—Golden Parachute Compensation” and the accompanying footnotes.  In general, the various plans and arrangements pursuant to which these compensation payments may be made have previously formed part of LinkedIn’s overall compensation program for our named executive officers and previously have been disclosed to stockholders as part of the Compensation Discussion and Analysis and related sections of our annual proxy statements.  These historical arrangements were adopted and approved by the Compensation Committee of the LinkedIn Board, which is composed solely of non-management directors, and are believed to be reasonable and in line with marketplace norms.  The compensation that may be provided to Jeffrey Weiner in connection with his new offer letter entered into with Microsoft is not subject to this advisory, non-binding vote.

 

Accordingly, we are seeking approval of the following resolution at the special meeting:

 

“RESOLVED, that the stockholders of LinkedIn Corporation approve, on an advisory, non-binding basis, the compensation that will or may become payable to LinkedIn’s named executive officers that is based on or otherwise relates to the merger as disclosed pursuant to Item 402(t) of Regulation S-K in the section captioned “The Merger—Interests of LinkedIn’s Directors and Executive Officers in the Merger—Golden Parachute Compensation” in LinkedIn’s proxy statement for the special meeting.”

 

Stockholders should note that this proposal is not a condition to completion of the merger, and, as an advisory vote, the result will not be binding on LinkedIn, the LinkedIn Board or Microsoft.  Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval.  Accordingly, regardless of the outcome of the advisory vote, if the merger is consummated our named executive officers will be eligible to receive the compensation that is based on or that otherwise relates to the merger in accordance with the terms and conditions applicable to those payments.

 

The LinkedIn Board unanimously recommends that you vote “FOR” this proposal.

 

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THE MERGER AGREEMENT

 

The following summary describes the material provisions of the merger agreement.  The descriptions of the merger agreement in this summary and elsewhere in this proxy statement are not complete and are qualified in their entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference.  We encourage you to read the merger agreement carefully and in its entirety because this summary may not contain all the information about the merger agreement that is important to you.  The rights and obligations of the parties are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement.

 

The representations, warranties, covenants and agreements described below and included in the merger agreement (1) were made only for purposes of the merger agreement and as of specific dates; (2) were made solely for the benefit of the parties to the merger agreement; (3) may be subject to important qualifications, limitations and supplemental information agreed to by LinkedIn, Microsoft and Merger Sub in connection with negotiating the terms of the merger agreement; and (4) may also be subject to a contractual standard of materiality different from those generally applicable to reports and documents filed with the SEC and in some cases were qualified by confidential matters disclosed to Microsoft and Merger Sub by LinkedIn in connection with the merger agreement. In addition, the representations and warranties may have been included in the merger agreement for the purpose of allocating contractual risk between LinkedIn, Microsoft and Merger Sub rather than to establish matters as facts, and may be subject to standards of materiality applicable to such parties that differ from those applicable to investors.  Further, the representations and warranties were negotiated with the principal purpose of establishing the circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise.  LinkedIn stockholders are not third-party beneficiaries under the merger agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of LinkedIn, Microsoft or Merger Sub or any of their respective affiliates or businesses.  Moreover, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement.  In addition, you should not rely on the covenants in the merger agreement as actual limitations on the respective businesses of LinkedIn, Microsoft and Merger Sub, because the parties may take certain actions that are either expressly permitted in the confidential disclosure letter to the merger agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public.  The merger agreement is described below, and included as Annex A, only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding LinkedIn, Microsoft, Merger Sub or their respective businesses.  Accordingly, the representations, warranties, covenants and other agreements in the merger agreement should not be read alone, and you should read the information provided elsewhere in this document and in our filings with the SEC regarding LinkedIn and our business.

 

Closing and Effective Time of the Merger

 

The closing of the merger will take place no later than the second business day following the satisfaction or waiver of all conditions to closing of the merger (described in the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger”), other than conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of each of such conditions, or such other time agreed to in writing by Microsoft, LinkedIn and Merger Sub.  Concurrently with the closing of the merger, the parties will file a certificate of merger with the Secretary of State of the State of Delaware as provided under the DGCL.  The merger will become effective upon the filing of a certificate of merger, or at such later time agreed to in writing by the parties and specified in such certificate of merger.

 

Effects of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

 

The merger agreement provides that, subject to the terms and conditions of the merger agreement, and in accordance with the DGCL, at the effective time of the merger, (1) Merger Sub will be merged with and into LinkedIn and LinkedIn will become a wholly owned subsidiary of Microsoft; and (2) the separate corporate existence of Merger Sub will

 

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cease.  From and after the effective time of the merger, all of the property, rights, privileges, powers and franchises of LinkedIn and Merger Sub will vest in the surviving corporation, and all of the debts, liabilities and duties of LinkedIn and Merger Sub will become the debts, liabilities and duties of the surviving corporation.

 

At the effective time of the merger, the certificate of incorporation of LinkedIn as the surviving corporation will be amended and restated in its entirety in the form attached to the merger agreement, and the bylaws of Merger Sub, as in effect immediately prior to the effective time of the merger, will become the bylaws of the surviving corporation, until thereafter amended.

 

The parties will take all necessary action to ensure that, effective as of, and immediately following, the effective time of the merger, the board of directors of the surviving corporation will consist of the directors of Merger Sub as of immediately prior to the effective time of the merger, to hold office in accordance with the certificate of incorporation and bylaws of the surviving corporation until their successors are duly elected or appointed and qualified. The parties will take all necessary action to ensure that at the effective time of the merger, the officers of the Company as of immediately prior to the effective time of the merger will be the officers of the surviving corporation, until their successors are duly appointed.

 

Conversion of Shares

 

Common Stock

 

At the effective time of the merger, each outstanding share of Class A and Class B common stock (collectively referred to as “common stock”) (other than shares held by (1) LinkedIn as treasury stock; (2) Microsoft, Merger Sub or their respective subsidiaries; and (3) LinkedIn stockholders who have properly and validly exercised and perfected their appraisal rights under Delaware law with respect to such shares) will be cancelled and automatically converted into the right to receive the per share merger consideration (which is $196.00 per share, without interest thereon and subject to applicable withholding taxes).

 

At the effective time of the merger, each outstanding share of common stock held by (1) LinkedIn or (2) Microsoft, Merger Sub or their respective subsidiaries shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

 

Equity Awards; ESPP

 

The merger agreement provides that LinkedIn’s equity awards that are outstanding immediately prior to the effective time of the merger will be subject to the following treatment at the effective time of the merger:

 

Stock Options

 

Each surrendered company option will, as of the effective time of the merger, be cancelled and converted into the right to receive the per share merger consideration of $196.00 for each share of LinkedIn common stock that would have been issuable upon exercise of such surrendered company option prior to the effective time of the merger less the applicable exercise price for each such share of LinkedIn common stock under such surrendered company option and less any applicable withholding taxes.  If the per share exercise price of any surrendered company option is equal to or greater than $196.00, such surrendered company option will be cancelled as of the effective time of the merger for no payment and will have no further effect.

 

Each assumed company option will, as of the effective time of the merger, be, as determined by Microsoft, (1) assumed by Microsoft and converted into an option to acquire; or (2) converted into an option granted pursuant to the Microsoft stock plan to acquire, in each case on the same material terms and conditions as were applicable to such assumed company option immediately prior to the effective time of the merger, a number of shares of Microsoft common stock equal to the product (rounded down to the nearest whole share) of (1) the number of shares of LinkedIn common stock subject to such assumed company option as of immediately prior to the effective time of the merger multiplied by (2) the

 

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stock award exchange ratio.  The per share exercise price for assumed company options will equal the quotient (rounded up to the nearest whole cent) determined by dividing (1) the per share exercise price for the LinkedIn common stock subject to such assumed company option as of immediately prior to the effective time of the merger by (2) the stock award exchange ratio.  Each company option that is outstanding as of immediately prior to the effective time of the merger and has an exercise price per share that is equal to or greater than $196.00 and is not a surrendered company option will be cancelled as of the effective time of the merger for no payment and will have no further effect.

 

Prior to the closing date of the merger, Microsoft may elect to treat some or all company options that would otherwise be assumed company options as vested surrendered company options, which will become fully vested and then cancelled and treated in accordance with the above.

 

Stock-Based Awards

 

Each surrendered company stock-based award will, as of the effective time of the merger, be cancelled and converted into the right to receive the per share merger consideration of $196.00 with respect to each share of LinkedIn common stock subject to the surrendered company stock-based award, less any applicable withholding taxes.

 

Each assumed company stock-based award will, as of the effective time of the merger, be, as determined by Microsoft, (1) assumed by Microsoft and converted into a stock-based award; or (2) converted into a stock-based award granted pursuant to the Microsoft stock plan, in each case with the same material terms and conditions as were applicable to such assumed company stock-based award immediately prior to the effective time of the merger, in respect of a number of shares of Microsoft common stock equal to the product (rounded down to the nearest whole share) of (1) the number of shares of LinkedIn common stock subject to such assumed company stock-based award as of immediately prior to the effective time of the merger multiplied by (2) the stock award exchange ratio.

 

Prior to the closing date of the merger, Microsoft may elect to treat some or all company stock-based awards that would otherwise be assumed company stock-based awards as vested surrendered company stock-based awards, which will become fully vested and then cancelled and treated as a surrendered company stock-based award.

 

ESPP

 

LinkedIn’s executive officers will determine the final exercise date for purposes of the ESPP.  On such exercise date, LinkedIn will apply the funds credited as of such date pursuant to the ESPP within each participant’s payroll withholding account to the purchase of whole shares of LinkedIn common stock in accordance with the terms of the ESPP.  Subject to the consummation of the merger, the ESPP will terminate immediately prior to and effective as of the effective time of the merger.

 

Pursuant to the terms of the merger agreement, the LinkedIn Board has adopted resolutions providing that each individual participating in the ESPP now will not be permitted to increase his or her payroll contribution rate pursuant to the ESPP from the rate in effect when that offering period commenced, and that each individual participating in the ESPP now or in any future offering period will not be permitted to make separate non-payroll contributions to the ESPP on or following the date of the merger agreement, except as may be required by applicable law.  Prior to the effective time of the merger, LinkedIn will take all actions that may be necessary to, effective upon the consummation of the merger, (1) cause any offering period that would otherwise be outstanding at the effective time of the merger to be terminated no later than one business day prior to the date on which the effective time of the merger occurs; (2) make any pro rata adjustments that may be necessary to reflect the shortened offering period while treating the shortened offering period as a fully effective and completed offering period for all purposes of the ESPP; (3) cause the exercise (as of no later than one business day prior to the date on which the effective time of the merger occurs) of each outstanding purchase right pursuant to the ESPP; and (4) provide that no further offering period or purchase period will commence pursuant to the ESPP after the effective time of the merger.

 

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Exchange and Payment Procedures

 

Prior to the closing of the merger, Microsoft will designate a bank or trust company, which we refer to as the “paying agent,” to make payments of the merger consideration to LinkedIn stockholders.  At or promptly following the effective time of the merger, Microsoft will deposit or cause to be deposited with the paying agent cash sufficient to pay the aggregate per share merger consideration to LinkedIn stockholders in accordance with the merger agreement.

 

As soon as reasonably practicable following the effective time of the merger, the paying agent will send to each holder of record of shares of common stock a letter of transmittal and instructions advising stockholders how to surrender stock certificates and book-entry shares in exchange for the per share merger consideration.  Upon receipt of (1) surrendered certificates (or an appropriate affidavit for lost, stolen or destroyed certificates, together with any required bond) or a customary “agent’s message” with respect to book-entry shares representing the shares of common stock; and (2) a signed letter of transmittal and such other documents as may be required pursuant to such instructions, the holder of such shares will be entitled to receive the per share merger consideration in exchange therefor, without interest.  The amount of any per share merger consideration paid to LinkedIn stockholders may be reduced by any applicable withholding taxes.

 

If any cash deposited with the paying agent is not claimed within one year following the effective time of the merger, such cash will be returned to Microsoft, upon demand, and any stockholders who have not complied with the exchange procedures in the merger agreement will thereafter look only to Microsoft for satisfaction of their claims for payment.  None of Microsoft, Merger Sub, LinkedIn, the surviving corporation or the paying agent will be liable to any LinkedIn stockholder with respect to any cash amounts properly delivered to any public official pursuant to any applicable abandoned property law, escheat law or similar law.

 

The letter of transmittal will include instructions if a stockholder has lost a share certificate or if such certificate has been stolen or destroyed.  In the event that any certificates have been lost, stolen or destroyed, then before such stockholder will be entitled to receive the per share merger consideration, Microsoft or the paying agent may, in its discretion and as a condition precedent to the payment of the merger consideration, require such stockholder to make an affidavit of the loss, theft or destruction, and to deliver a bond in such amount as Microsoft or the paying agent may direct as indemnity against any claim that may be made against Microsoft, the surviving corporation or the paying agent with respect to such certificate.

 

Representations and Warranties

 

The merger agreement contains representations and warranties of LinkedIn, Microsoft and Merger Sub.

 

Some of the representations and warranties in the merger agreement made by LinkedIn are qualified as to “materiality” or “Company Material Adverse Effect.”  For purposes of the merger agreement, “Company Material Adverse Effect” means, with respect to LinkedIn, any change, event, violation, inaccuracy, effect or circumstance that, individually or taken together with all other changes, events, violations, inaccuracies, effects or circumstances that have occurred prior to the date of determination of the occurrence of the Company Material Adverse Effect, has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, financial condition or results of operations of LinkedIn and its subsidiaries, taken as a whole, except that, none of the following (by itself or when aggregated) to the extent occurring after the date of the merger agreement will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when determining whether a Company Material Adverse Effect has occurred or may, would or could occur:

 

·                  changes in general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally (except to the extent that such conditions disproportionately affect LinkedIn relative to other companies operating in the industries in which LinkedIn and its subsidiaries conduct business);

 

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·                  changes in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the world, including (1) changes in interest rates or credit ratings in the United States or any other country; (2) changes in exchange rates for the currencies of any country; or (3) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market operating in the United States or any other country or region in the world (except, in each case, to the extent that such changes or conditions disproportionately affect LinkedIn relative to other companies operating in the industries in which LinkedIn and its subsidiaries conduct business);

 

·                  general changes in conditions in the industries in which LinkedIn and its subsidiaries conduct business (except to the extent that such changes disproportionately affect LinkedIn relative to other companies operating in the industries in which LinkedIn and its subsidiaries conduct business);

 

·                  changes in regulatory, legislative or political conditions in the United States or any other country or region in the world (except to the extent that such changes disproportionately affect LinkedIn relative to other companies operating in the industries in which LinkedIn and its subsidiaries conduct business);

 

·                  any geopolitical conditions, outbreak of hostilities, acts of war, sabotage, terrorism or military actions (including any escalation or general worsening of any such hostilities, acts of war, sabotage, terrorism or military actions) in the United States or any other country or region in the world (except to the extent that such conditions or events disproportionately affects LinkedIn relative to other companies operating in the industries in which LinkedIn and its subsidiaries conduct business);

 

·                  earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions and other similar force majeure events in the United States or any other country or region in the world (except to the extent that such conditions or events disproportionately affects LinkedIn relative to other companies operating in the industries in which LinkedIn and its subsidiaries conduct business);

 

·                  the public announcement or pendency of the merger agreement or the merger (other than for purposes of certain representations and warranties, and certain related terms and conditions, concerning conflicts due to the performance of the merger agreement);

 

·                  any action taken or refrained from being taken, in each case to which Microsoft has expressly approved, consented to or requested in writing following the date of the merger agreement;

 

·                  changes or proposed changes in GAAP or other accounting standards or law (or the enforcement or interpretation of any of the foregoing);

 

·                  changes in the price or trading volume of our common stock or our indebtedness, in and of itself (it being understood that any cause of such change may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred);

 

·                  any failure, in and of itself, by LinkedIn and its subsidiaries to meet (1) any public estimates or expectations of LinkedIn’s revenue, earnings or other financial performance or results of operations for any period; or (2) any internal budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that any cause of any such failure may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred); and

 

·                  any litigation related to the merger.

 

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In the merger agreement, LinkedIn has made customary representations and warranties to Microsoft and Merger Sub that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. These representations and warranties relate to, among other things:

 

·                  due organization, valid existence, good standing and authority and qualification to conduct business with respect to LinkedIn and its subsidiaries;

 

·                  LinkedIn’s corporate power and authority to enter into and perform the merger agreement, the due execution and enforceability of the merger agreement;

 

·                  the organizational documents of LinkedIn and specified subsidiaries;

 

·                  the approval and recommendation of the LinkedIn Board;

 

·                  the rendering of Qatalyst Partners’ fairness opinion to the LinkedIn Board;

 

·                  the inapplicability of anti-takeover statutes to the merger;

 

·                  the requisite vote of LinkedIn stockholders in connection with the merger agreement;

 

·                  the absence of any conflict with, violation of or default under any organizational documents, existing material contracts, applicable laws to LinkedIn or its subsidiaries or the resulting creation of any lien upon LinkedIn’s assets due to the performance of the merger agreement;

 

·                  required consents, approvals and regulatory filings in connection with the merger agreement and performance thereof;

 

·                  the capital structure of LinkedIn and its subsidiaries;

 

·                  the absence of any undisclosed exchangeable security, option, warrant or other right convertible into common stock of LinkedIn or any of LinkedIn’s subsidiaries;

 

·                  the absence of any contract relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any of LinkedIn’s securities;

 

·                  the accuracy and required filings of LinkedIn’s SEC filings and financial statements;

 

·                  LinkedIn’s disclosure controls and procedures;

 

·                  LinkedIn’s internal accounting controls and procedures;

 

·                  LinkedIn’s and its subsidiaries’ indebtedness;

 

·                  the absence of specified undisclosed liabilities;

 

·                  the conduct of the business of LinkedIn and its subsidiaries in all mater