<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Hyperion Solutions Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement 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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<PAGE> 2
LOGO
October 7, 1999
TO THE STOCKHOLDERS OF HYPERION SOLUTIONS CORPORATION
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Hyperion Solutions Corporation (the "Company"), which will
be held at the Sheraton Four Points Hotel, 1100 N. Mathilda Avenue, Sunnyvale,
California, on Wednesday, November 10, 1999, at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given in
the attached Proxy Statement and Notice of Annual Meeting of Stockholders.
It is important that your shares be represented and voted at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. Returning the proxy does NOT deprive you of your right to attend the
Annual Meeting. If you decide to attend the Annual Meeting and wish to change
your proxy vote, you may do so automatically by voting in person at the meeting.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Stephen Imber
Stephen V. Imbler
President and Chief Executive
Officer
<PAGE> 3
HYPERION SOLUTIONS CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CA 94089
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 10, 1999
The Annual Meeting of Stockholders (the "Annual Meeting") of Hyperion
Solutions Corporation (the "Company") will be held at the Sheraton Four Points
Hotel, 1100 N. Mathilda Avenue, Sunnyvale, California, on Wednesday, November
10, 1999, at 10:00 a.m. For the following purposes:
1. To elect a member of the Board of Directors to serve for a
three-year term as a Class I director;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year ending June
30, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the attached
Proxy Statement.
Only stockholders of record at the close of business on September 29, 1999
are entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. A list of such stockholders will be
available for inspection at the Company's headquarters located at 1344 Crossman
Avenue, Sunnyvale, California, during ordinary business hours for the ten-day
period prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Larry Braverman
LARRY J. BRAVERMAN
Secretary
Sunnyvale, California
October 7, 1999
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF
YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU
MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
<PAGE> 4
HYPERION SOLUTIONS CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 10, 1999
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of Hyperion Solutions Corporation, a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Sheraton Four Points Hotel, 1100 N. Mathilda Avenue,
Sunnyvale, California, on Wednesday, November 10, 1999, at 10:00 a.m., and at
any adjournment or postponement of the Annual Meeting. These proxy materials
were first mailed to stockholders on or about October 7, 1999.
The Company's principal executive offices are located at 1344 Crossman
Avenue, Sunnyvale, California 94089. The telephone number at that address is
(408) 744-9500.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders. Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Company's Common Stock is the only type of security entitled to vote at
the Annual Meeting. On September 29, 1999, the record date for determination of
stockholders entitled to vote at the Annual Meeting, there were 30,898,432
shares of Common Stock outstanding. Each stockholder of record on September 29,
1999 is entitled to one vote for each share of Common Stock held by such
stockholder on that date. Shares of Common Stock may not be voted cumulatively.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions, and broker non-votes.
QUORUM REQUIRED
The Company's Bylaws provide that the holders of a majority of the
Company's Common Stock issued and outstanding and entitled to vote at the Annual
Meeting, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes will be counted as present for the purpose of determining the presence
of a quorum; abstentions have the same effect as negative votes, while broker
non-votes are not counted as having been voted on the proposal.
VOTES REQUIRED
Proposal 1. Directors are elected by a plurality of the affirmative votes
cast by those shares present in person or represented by proxy and entitled to
vote at the Annual Meeting. The nominee for director receiving the highest
number of affirmative votes will be elected.
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Proposal 2. Ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent public accountants for the fiscal year ending June
30, 2000 requires the affirmative vote of a majority of those shares present in
person, or represented by proxy.
PROXIES
Whether or not you are able to attend the Company's Annual Meeting, you are
urged to complete and return the enclosed proxy, which is solicited by the
Company's Board of Directors and which will be voted as you direct on your proxy
when properly completed. In the event no directions are specified, such proxies
will be voted FOR Proposals No. 1 and No. 2 and, as to other matters that may
properly come before the Annual Meeting, in the discretion of the proxy holders.
You may also revoke or change your proxy at any time before the Annual Meeting.
To do this, send a written notice of revocation or another signed proxy with a
later date to the Secretary of the Company at the Company's principal executive
offices before the beginning of the Annual Meeting. You may also automatically
revoke your proxy by attending the Annual Meeting and voting in person. All
shares represented by a valid proxy received prior to the Annual Meeting will be
voted.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made of
some stockholders in person or by mail, telephone or telegraph following the
original solicitation. The Company may retain a proxy solicitation firm to
assist in the solicitation of proxies in connection with the Meeting. If the
Company retains a proxy solicitation firm, it expects to pay such firm customary
fees of approximately $15,000, plus expenses.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to the Company's Amended Certificate of Incorporation (the
"Certificate of Incorporation"), the Company's Board of Directors is divided
into three classes -- Class I, II and III Directors. Each director is elected
for a three year term of office, with one class of directors being elected at
each annual meeting of stockholders. Each director holds office until his
successor is elected and qualified or until his earlier death, resignation or
removal.
The nominee for Class I Director, Mr. Greenfield, is presently serving as a
director of the Company. Shares represented by all proxies received by the Board
of Directors and not so marked as to withhold authority to vote for Mr.
Greenfield (by writing Mr. Greenfield's name where indicated on the proxy) will
be voted FOR the election of the nominee for Class I Director; the Board of
Directors knows of no reason why Mr. Greenfield would be unable or unwilling to
serve, but in such case, proxies may be voted for the election of another
nominee of the Board.
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The information below sets forth the current members of the Board of
Directors, including the nominee for Class I Director:
NOMINEE TO SERVE AS A DIRECTOR FOR A TERM EXPIRING AT THE 2002 ANNUAL MEETING OF
STOCKHOLDERS (CLASS I DIRECTOR):
Gary G. Greenfield
Mr. Greenfield, age 44, was elected to the Board in August 1998; he is a
member of the Audit Committee. He currently serves as President, Chief Executive
Officer and a director of MERANT, Plc., a publicly held company which is a
leader in enterprise application development solutions. Mr. Greenfield joined
Sage Software (which merged with INDEX Technology in 1991 to form INTERSOLV
Inc., which subsequently merged with Micro Focus, forming MERANT in the fall of
1998) in 1987 as Vice President of Marketing. Prior to that he served as
President of Frey Associates Inc., a provider of artificial intelligence
software and services.
Note: Mark W. Perry, a Class I director on the date hereof, has decided
not to stand for reelection to the Board of Directors at the expiration of his
Class I director term.
DIRECTORS SERVING FOR A TERM EXPIRING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
(CLASS II DIRECTORS):
Harry S. Gruner
Mr. Gruner, age 40, was elected to the Board in August 1998; he is a member
of the Compensation Committee. He has been a general partner of JMI Equity Fund,
L.P., a private equity investment partnership, since 1992. From 1986 to 1992,
Mr. Gruner was at Alex. Brown & Sons Incorporated, most recently as a Principal.
Mr. Gruner is also a director of the META Group, Inc., a syndicated information
technology research company; Optika Imaging Systems, Inc., a developer and
marketer of ecommerce software; and a number of privately held companies.
Aldo Papone
Aldo Papone, age 67, was elected to the Board in August, 1998; he is a
member of the Compensation Committee. He is a Senior Advisor, American Express
Company, 1991 to present. Mr. Papone served as Chairman and Chief Executive
Officer from 1989 to 1990, and as President and Chief Operating Officer from
1985 to 1989, of American Express Travel Related Services Company, Inc. Mr.
Papone served as a Director of American Express Company from 1990 to 1998.
Currently he is a Director of Springs Industries, Inc.
Jeffrey R. Rodek
Mr. Rodek, age 46, has been a director since January 1998; he is a member
of the Compensation Committee. Mr. Rodek has served as President and Chief
Operating Officer of Ingram Micro Inc. since January 1995 and was promoted to
President and Chief Operating Officer Worldwide in May 1996. Prior to joining
Ingram Micro Inc., Mr. Rodek spent 16 years at Federal Express in several key
executive positions, including Senior Vice President of Operations, the
Americas, Senior Vice President, Central Support Services, and Vice President
Financial Planning.
DIRECTOR SERVING FOR A TERM EXPIRING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS
(CLASS III DIRECTOR):
James A. Perakis
Mr. Perakis, age 55, was elected as Chairman of the Board in August 1998.
Mr. Perakis served as Chief Executive Officer and as a director of Hyperion
Software Corporation from September 1985 to August 1998
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and as President from December 1987 to May 1996. From 1983 to September 1985,
Mr. Perakis served as Senior Vice President and General Manager of Chase
Decision Systems, a developer and marketer of mainframe software for planning
and financial applications. From 1979 to 1983, Mr. Perakis was Chief Financial
Officer of Interactive Data Corporation, a supplier of data and software to
financial and corporate markets. Mr. Perakis is also a director of MapInfo
Corporation, a publicly held company which develops, markets and supports
desktop mapping software, mapping application development tools and geographic
and demographic information products.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended June 30, 1999, the Board of Directors held
seven meetings and acted by written consent on three occasions. For the fiscal
year, each of the current directors attended at least 75% of the aggregate of
(i) the total number of meetings of the Board of Directors and (ii) the total
number of meetings held by all Committees of the Board of Directors on which
each such director served. The Board of Directors has two standing committees:
the Audit Committee and the Compensation Committee.
During the fiscal year ended June 30, 1999, the Audit Committee met four
times. The Audit Committee reviews, acts on and reports to the Board of
Directors with respect to various auditing and accounting matters, including the
selection of the Company's auditors, the scope of the annual audits, fees to be
paid to the Company's auditors, the performance of the Company's auditors and
the accounting practices of the Company. The members of the Audit Committee are
Mr. Greenfield and Mr. Perry.
During the fiscal year ended June 30, 1999, the Compensation Committee of
the Board of Directors held five meetings and acted by written consent on two
occasions. The Compensation Committee reviews the performance and sets the
compensation of the Chief Executive Officer of the Company, and approves the
compensation of the executive officers of the Company and reviews the
compensation programs for other key employees, including salary and cash bonus
levels, as set by the Chief Executive Officer. The Compensation Committee also
administers the Company's 1995 Stock Option/Stock Issuance Plan with respect to
the Company's executive officers. The members of the Compensation Committee are
Mr. Gruner, Mr. Papone and Mr. Rodek.
DIRECTOR COMPENSATION
Non-employee Board members receive retainers of $15,000 per year and fees
of $1,500 for each meeting of the full Board. The Company pays $750 for
Committee meetings that occur on days separate from full board meetings and in
all instances, $500 for participation by telephone.
Non-employee members of the Board are eligible for option grants pursuant
to the provisions of the Automatic and Discretionary Option Grant Programs under
the Company's 1995 Option Plan. Each individual who becomes a non-employee
member of the Board is granted an option to purchase 20,000 shares on the date
such individual joins the Board. In addition, each individual who continues to
serve as a non-employee Board member receives an option grant to purchase 7,000
shares of Common Stock on each twelve month anniversary of being elected to the
Board.
In fiscal year 1999, Mr. Perakis, the Chairman of the Board and senior
adviser to the President of the Company, earned $218,496 in base salary and a
bonus of $50,000. In January 1999, the Company entered into an agreement with
Mr. Perakis under which he is compensated an annual rate of $145,000 through
September 30, 1999 as a senior advisor to the President of the Company and is
eligible for a performance bonus of up to 50% of his base compensation under the
agreement. In addition, the agreement provides that the Company will continue to
provide Mr. Perakis and his family with certain fringe benefits, including
health and life insurance, until he reaches the age of 65.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED HEREIN.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending June 30, 2000. In the event the stockholders fail to ratify
the appointment, the Board of Directors will reconsider its selection. Even if
the appointment is ratified, the Board of Directors, in its discretion, may
direct the appointment of a different independent accounting firm at any time
during the year if the Board of Directors feels that such a change would be in
the Company's and its stockholders' best interests. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting,
will have the opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP TO SERVE AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than 10% of the Company's outstanding Common
Stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, which require them to file reports
with respect to their ownership of the Company's Common Stock and their
transactions in such Common Stock. Based upon (i) the copies of Section 16(a)
reports that the Company received from such persons for their fiscal year 1999
transactions in the Common Stock and their Common Stock holdings and (ii) the
written representations received from one or more of such persons that no annual
Form 5 reports were required to be filed by them for fiscal year 1999, the
Company believes that all reporting requirements under Section 16(a) for such
fiscal year were met in a timely manner by its executive officers, Board members
and greater than 10% stockholders.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals that are intended to be presented at the 2000 Annual
Meeting that are eligible for inclusion in the Company's proxy statement and
related proxy materials for that meeting under the applicable rules of the
Securities and Exchange Commission must be received by the Company not later
than June 8, 2000 in order to be included. Such stockholder proposals should be
addressed to Hyperion Solutions Corporation, 1344 Crossman Avenue, Sunnyvale,
California 94089, Attn: Investor Relations.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 29, 1999 certain information
with respect to shares beneficially owned by (i) each person who is known by the
Company to be the beneficial owner of more than 5% of the Company's outstanding
shares of Common Stock, (ii) each of the Company's directors and the executive
officers named in the Summary Compensation Table and (iii) all current directors
and executive officers as a group. Beneficial ownership has been determined in
accordance with Rule 13d-3 under the Exchange Act. In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire shares (for example, upon exercise of an option or warrant) within 60
days of the date as of which the information is provided. In computing the
percentage ownership of any person, the amount of shares is deemed to include
the amount of shares beneficially owned by such person (and only such person) by
reason of such acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not necessarily
reflect the person's actual voting power at any particular date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1)(2) CLASS
- ---------------- ----------------- ----------
<S> <C> <C>
Nevis Capital Management, Inc.
1119 St. Paul St
Baltimore, Maryland 21202(3).............................. 1,730,700 5.6
James A. Perakis(4)......................................... 459,766 1.5
Gary G. Greenfield(5)....................................... 16,400 *
Harry S. Gruner(6).......................................... 52,500 *
Aldo Papone(7).............................................. 43,000 *
Mark W. Perry(8)............................................ 34,953 *
Jeffrey R. Rodek(5)......................................... 25,000 *
Stephen V. Imbler(9)........................................ 246,009 *
Mark J. Bilger(10).......................................... 52,666 *
All current directors and executive officers as a group (8
persons)(11).............................................. 930,294 2.9
Former executive officers
William D. Clark(5)......................................... 8,311 *
William B. Binch............................................ 9,224 *
John M. Dillon(12).......................................... 293,498 *
</TABLE>
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* Less than 1% of the outstanding shares of Common Stock.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock. To the Company's knowledge, the entities named in the table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) The number of shares of Common Stock deemed outstanding includes shares
issuable pursuant to stock options that may be exercised within 60 days
after September 29, 1999.
(3) As reported on a Schedule 13G filed with the Securities and Exchange
Commission on February 2, 1999.
(4) Includes options exercisable into 142,500 shares of Common Stock.
(5) Consists of options to purchase Common Stock.
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(6) Includes options exercisable into 35,400 shares of Common Stock.
(7) Includes options exercisable into 39,200 shares of Common Stock.
(8) Includes options exercisable into 20,156 shares of Common Stock.
(9) Includes options exercisable into 194,540 shares of Common Stock.
(10) Includes options exercisable into 52,582 shares of Common Stock.
(11) Includes options exercisable into 525,778 shares of Common Stock.
(12) Includes options exercisable into 200,000 shares of Common Stock.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
In June 1999, the Company entered into a separation agreement with William
Binch, its former Senior Vice President, under which Mr. Binch received
approximately $235,000. In addition, all options to purchase Common Stock which
were granted to Mr. Binch prior to August 24, 1998 became immediately
exercisable pursuant to provisions of the Company's 1995 Stock Option/Stock
Issuance Plan.
Also in June 1999, the Company entered into a separation agreement with
John Dillon, the Company's former President and Chief Executive officer, under
which Mr. Dillon received approximately $505,000. Option rights to purchase up
to 50,000 shares of Common Stock which Mr. Dillon held as of the effective date
of the agreement became immediately exercisable pursuant to the agreement. In
addition, the exercise period with respect to all of the vested and exercisable
options held by Mr. Dillon as of the effective date of the agreement was
extended to August 15, 2000, from May 2, 2000, pursuant to the agreement.
In February 1999, the Company entered into a 23-month employment agreement
with Steven Imbler, its interim President and Chief Executive Officer, and Chief
Financial Officer pursuant to which Mr. Imbler receives an annual base salary of
not less than $250,000 and an annual incentive bonus with a target of $150,000.
In addition, the agreement provides for twelve months of severance payment in
the event of early termination without cause or, under certain circumstances,
voluntary termination within twelve months of a change in control of the
Company.
The Company and Mark Bilger, its Senior Vice President, entered into a
three-year employment agreement in May 1997 pursuant to which Mr. Bilger
receives an annual base salary of $150,000, subject to increase in the Board's
discretion. The agreement also provides for an annual performance bonus targeted
at 40% of Mr. Bilger's base salary and twelve months of severance pay upon Mr.
Bilger's termination without cause or, under certain circumstances, voluntary
termination within twelve months of a change in control of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") has
the authority to establish the level of base salary payable to the Company's
Chief Executive Officer ("CEO") and to administer the Company's 1995 Stock
Option/Stock Issuance Plan (the "1995 Plan") and Employee Stock Purchase Plan.
In addition, the Committee has the responsibility for approving the individual
bonus program to be in effect for the CEO. The CEO has the authority to
establish the level of base salary payable to all other employees of the
Company, including all executive officers, subject to the approval of the
Committee. In addition, the CEO has the responsibility for approving the bonus
programs to be in effect for all other executive officers and other key
employees each fiscal year, subject to the approval of the Committee.
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For fiscal year 1999, the process utilized by the CEO in determining
executive officer compensation levels took into account both qualitative and
quantitative factors. Among the factors considered by the CEO were formal and
informal surveys conducted by Company personnel among comparable software
companies. However, the CEO made the compensation decisions concerning such
officers, subject to Committee review.
General Compensation Policy. The CEO's fundamental policy is to offer the
Company's executive officers competitive compensation opportunities based upon
overall the Company performance, their individual contribution to the financial
success of the Company and their personal performance. It is the CEO's objective
to have a substantial portion of each officer's compensation contingent upon the
Company's performance, as well as upon his or her own level of performance.
Accordingly, each executive officer's compensation package consists of: (i) base
salary, (ii) cash bonus awards and (iii) long-term stock-based incentive awards.
Base Salary. The base salary for each executive officer is set on the
basis of personal performance and the salary level in effect for comparable
positions at companies that compete with the Company for executive talent on the
basis of formal and informal surveys conducted by the Company.
Annual Cash Bonuses. Each executive officer has an established bonus
target each fiscal year. The annual pool of bonuses for executive officers is
determined on the basis of the Company's achievement of the financial
performance targets established at the start of the fiscal year and a range for
the executive's contribution. Actual bonuses paid reflect an individual's
accomplishment of both corporate and functional objectives, with greater weight
being given to achievement of corporate rather than functional objectives.
Long-Term Incentive Compensation. During fiscal year 1999, the Committee
made option grants to William B. Binch, John M. Dillon, Stephen V. Imbler, Mark
J. Bilger and William D. Clark under the 1995 Plan. Generally, a significant
grant is made in the year that an officer commences employment and the size of
each grant is set at a level that the Committee deems appropriate to create a
meaningful opportunity for stock ownership based upon the individual's position
with the Company, the individual's potential for future responsibility and
promotion, the individual's performance in the recent period and the number of
unvested options held by the individual at the time of the new grant. The
relative weight given to each of these factors will vary from individual to
individual at the Committee's discretion.
Each grant allows the officer to acquire shares of the Company's Common
Stock at a fixed price per share (the market price on the grant date) over a
specified period of time. The option vests in periodic installments generally
over a four-year period, contingent upon the executive officer's continued
employment with the Company. Accordingly, the option will provide a return to
the executive officer only if he or she remains in the Company's employ, and
then only if the market price of the Company's Common Stock appreciates over the
option term.
CEO Compensation. The annual base salary for Mr. Dillon, the Company's CEO
until May 1999, was established by the Committee in November 1998. The
Committee's decision was made primarily on the basis of Mr. Dillon's performance
of his duties. The remaining components of the CEO's fiscal year 1999 incentive
compensation were entirely dependent upon the Company's financial performance
and provided no dollar guarantees. The bonus paid to the CEO for fiscal year
1999 was based on the same incentive plan as for all other officers who receive
bonuses. Specifically, a target incentive was established at the beginning of
the fiscal year using an agreed-upon formula based on the Company revenue and
profit before interest and taxes. Each fiscal year, the annual incentive plan is
reevaluated with a new achievement threshold and new targets for revenue and
profit before interest.
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Mr. Imbler was appointed interim CEO in May 1999, at which time Mr. Imbler
received an option to purchase 100,000 shares of Common Stock at an exercise
price of $14.50 per share. The Committee's decision with respect to Mr. Imbler's
salary and incentive compensation was based on the same considerations as those
applied with respect to Mr. Dillon.
Tax Limitation. As a result of Federal tax legislation enacted in 1993, a
publicly held company such as the Company will not be allowed a Federal income
tax deduction for compensation paid to certain executive officers to the extent
that compensation exceeds $1 million per officer in any year. The stockholders
approved the Company 1995 Plan, which includes a provision that limits the
maximum number of shares of Common Stock for which any one participant may be
granted stock options per calendar year. Accordingly, any compensation deemed
paid to an executive officer when he or she exercises an option under the 1995
Plan with an exercise price equal to the fair market value of the option shares
on the grant date will generally qualify as performance-based compensation that
will not be subject to the $1 million limitation. Since it is not expected that
the cash compensation to be paid to the Company's executive officers for fiscal
year 1999 will exceed the $1 million limit per officer, the Committee will defer
any decision on whether to limit the dollar amount of the cash compensation
payable to the Company's executive officers to the $1 million cap.
Compensation Committee
Jeffrey R. Rodek
Aldo Papone
Harry S. Gruner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed
in August 1998, and the members of the Compensation Committee are Messrs.
Gruner, Papone and Rodek. None of these individuals was at any time during
fiscal year 1999, or at any other time, an officer or employee of the Company.
No executive officer of the Company serves as a member of the board of directors
or compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
9
<PAGE> 13
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return
on the Company's Common Stock between November 7, 1995 (the date the Company's
Common Stock commenced public trading) and June 30, 1999 with the cumulative
total return of (i) The Nasdaq Stock Market Total Return Index (U.S. Companies)
(the "Nasdaq Stock Market-U.S. Index") and (ii) the Hambrecht & Quist Software
Sector Index (the "H&Q Software Sector Index"), over the same period. This graph
assumes the investment of $100.00 on November 7, 1995 in the Company's Common
Stock, The Nasdaq Stock Market-U.S. Index and the H&Q Software Sector Index, and
assumes the reinvestment of dividends, if any.
The comparisons shown in the graph below are based upon historical data and
the Company cautions that the stock price performance shown in the graph below
is not indicative of, nor intended to forecast, the potential future performance
of the Company's Common Stock. Information used in the graph was obtained from
Research Data Group, a source believed to be reliable, but the Company is not
responsible for any errors or omissions in such information.
HYPERION SOLUTIONS CORPORATION
H&Q SOFTWARE SECTOR INDEX
NASDAQ STOCK MARKET-U.S. INDEX
<TABLE>
<CAPTION>
HYPERION SOLUTIONS NASDAQ STOCK MARKET-U.S. H&Q SOFTWARE SECTOR
------------------ ------------------------ -------------------
<S> <C> <C> <C>
11/7/95 $100.00 $100.00 $100.00
6/30/96 152.00 114.00 117.00
6/30/97 90.00 139.00 130.00
6/30/98 80.00 183.00 195.00
6/30/99 45.00 262.00 216.00
</TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
HYPERION SOLUTIONS CORPORATION, THE NASDAQ STOCK
MARKET-U.S. INDEX AND THE H&Q SOFTWARE SECTOR INDEX
The Company effected its initial public offering on November 6, 1995 at a
per share price of $17.00. The graph above, however, commences with the closing
price of $39.25 per share on November 7, 1995, the date the Company's Common
Stock commenced public trading.
10
<PAGE> 14
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate this Proxy
Statement or future filings made by the Company under those statutes, the
Compensation Committee Report and Stock Performance Graph are not deemed filed
with the Securities and Exchange Commission and shall not be deemed incorporated
by reference into any of those prior filings or into any future filings made by
the Company under those statutes.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table sets forth information concerning the compensation for
services in all capacities to the Company, for the fiscal years ended June 30,
1999, 1998 and 1997, of (i) each person who served as Chief Executive Officer
during fiscal year 1999; (ii) each of the other executive officers of the
Company who earned more than $100,000 in salary and bonus in fiscal year 1999
and were serving as executive officers as of June 30, 1999; and (iii) two
additional individuals who would have been one of the four most highly
compensated executive officers of the Company, but for the fact that the
individual was not serving as an executive officer of the Company at the end of
fiscal year 1999 (collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------------ ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($)(2) OPTIONS(#)
--------------------------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Stephen V. Imbler.............................. 1999 250,000 275,000 175,000
President, Chief Executive Officer and 1998 200,000 142,000 0
Chief Financial Officer 1997 175,000 62,500 50,000
Mark J. Bilger(3)(4)........................... 1999 194,200 120,000 100,000
Senior Vice President 1998 161,250 175,000 28,500
1997 0 0 23,750
William D. Clark(3)(5)......................... 1999 200,000 76,000 81,000
Former Senior Vice President 1998 143,000 80,000 28,500
1997 59,367 45,000 0
William B. Binch(6)............................ 1999 197,348 208,895 66,000
Former Senior Vice President 1998 143,750 222,972 80,000
1997 0 0 0
John M. Dillon(7).............................. 1999 250,000 62,500 250,000
Former Chief Executive Officer and President 1998 250,000 215,000 50,000(8)
1997 200,000 72,383 200,000
</TABLE>
- ---------------
(1) Except where specifically noted, excludes perquisites and other personal
benefits, the aggregate annual amount of which for each officer was less
than the lesser of $50,000 or ten per cent of the total of annual salary and
bonus reported.
(2) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(3) Includes compensation received from Hyperion Software Corporation prior to
its merger with the Company on August 24, 1998.
(4) Mr. Bilger joined the company in May 1997.
11
<PAGE> 15
(5) In fiscal 1999, the company paid Mr. Clark $120,096 for relocation expenses
and loaned him $200,000 in connection with his relocation, which loan is now
due and payable. Mr. Clark joined the company in January 1997.
(6) Mr. Binch joined the company in July 1997. In accordance with his employment
agreement, the company paid Mr. Binch $235,167 in separation benefits.
(7) In accordance with his separation agreement, the company paid Mr. Dillon
$505,414 in separation benefits.
(8) These options, with an exercise price of $46.125, were granted to Mr. Dillon
in March 1998 and were canceled in February 1999.
The following table contains information concerning the stock option grants
made to each of the Named Officers during fiscal year 1999. No stock
appreciation rights were granted to these individuals during such fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL EXERCISE STOCK PRICE
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO PER FOR OPTION TERM(2)
OPTIONS EMPLOYEES SHARE EXPIRATION ---------------------
NAME GRANTED(#)(1) IN FISCAL ($/SH) DATE 5%($) 10%($)
---- ------------- ---------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen V. Imbler.... 75,000 2.11 26.63 9/8/08 1,255,824 3,182,504
100,000(3) 2.81 14.50 5/10/09 911,582 2,309,945
Mark J. Bilger....... 50,000 1.41 26.63 9/8/08 837,216 2,121,670
50,000 1.41 14.50 5/10/09 455,791 1,154,972
William D. Clark..... 31,000 0.87 26.63 9/8/08 519,074 1,315,435
50,000 1.41 14.50 5/10/09 455,791 1,154,972
William B. Binch..... 50,000 1.41 26.63 9/8/08 837,216 2,121,670
16,000 0.45 26.63 2/23/09 267,909 175,748
John M. Dillon....... 250,000 7.03 26.63 9/8/08 4,186,080 10,608,348
</TABLE>
- ---------------
(1) Except where noted otherwise, each option becomes exercisable as to 25% of
the option shares on the first anniversary of the option grant date and as
to the balance of the shares ratably upon optionee's completion of the next
36 months of service thereafter. The exercise price for the option may be
paid in cash, in shares of Common Stock valued at fair market value on the
exercise date or through a cashless exercise procedure involving a same-day
sale of the purchased shares. The Company may also finance the option
exercise by loaning the optionee sufficient funds to pay the exercise price
for the purchased shares, together with any federal and state income tax
liability incurred by the optionee in connection with such exercise. The
plan administrator has the discretionary authority to reprice the option
through the cancellation of that option and the grant of a replacement
option with an exercise price based on the fair market value of the option
shares on the regrant date. The option has a maximum term of ten years
measured from the option grant date, subject to earlier termination in the
event of the optionee's cessation of service with the Company. Under the
option, the option will vest upon an acquisition of the Company by merger or
asset sale, unless the option is assumed by the acquiring entity.
(2) There can be no assurances provided to the executive officer, including an
assurance of continued employment, or to any other holder of the Company's
securities that the actual stock price appreciation over the ten year option
term will be at the assumed 5% and 10% levels or at any other defined level.
12
<PAGE> 16
Unless the market price of the Common Stock appreciates over the option
term, no value will be realized from the option grant made to the executive
officer.
(3) Option becomes exercisable as to 50% of the option shares six months after
the option grant date and the balance of the shares on the first anniversary
of the option grant date.
The following table sets forth information concerning option exercises in
fiscal year 1999 and option holdings as of the end of fiscal year 1999 with
respect to each of the Named Officers. No stock appreciation rights were
exercised during that fiscal year or outstanding at the end of that fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END(#)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen V. Imbler.......... 13,000 142,648 117,457 188,543 1,173,083 331,250
Mark J. Bilger............. -- 0 30,874 121,376 0 165,625
William D. Clark........... -- 0 7,124 102,376 0 165,625
William B. Binch........... -- 0 80,000 -- 0 0
John M. Dillon............. -- 0 200,000 -- 0 0
</TABLE>
- ---------------
(1) Upon exercise of the options, an option holder did not necessarily receive
the amount reported above under the column "Value Realized." The amounts
reported above under the column "Value Realized" merely reflect the amount
by which the fair market value of the Common Stock of the Company on the
date the option was exercised exceeded the exercise price of the option. The
option holder does not realize any cash until the shares of Common Stock
issued upon exercise of the options are sold.
(2) Based on the closing price of the Common Stock of the Company as reported on
The Nasdaq National Market System at June 30, 1999, the last day of trading
of the Company's Common Stock during fiscal year 1999, of $17.81 per share,
less the exercise price payable for such shares.
13
<PAGE> 17
OTHER MATTERS
The Board knows of no other matters to be presented for stockholder action
at the Annual Meeting. However, if other matters do properly come before the
Annual Meeting or any adjournments or postponements thereof, the Board intends
that the persons named in the proxies will vote upon such matters in accordance
with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
LARRY J. BRAVERMAN
Secretary
Sunnyvale, California
October 7, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE- PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF
YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU
MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
14
<PAGE> 18
4540-PS-99
<PAGE> 19
DETACH HERE
PROXY PROXY
HYPERION SOLUTIONS CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 10, 1999
The undersigned hereby appoints STEPHEN IMBLER and LARRY BRAVERMAN, or
either of them, each with power of substitution, to represent the undersigned
at the Annual Meeting of Stockholders of Hyperion Solutions Corporation (the
"Company") to be held at the Sheraton Four Points Hotel, 1100 N. Mathilda
Avenue, Sunnyvale, California 94089 on Wednesday, November 10, 1999, at 10:00
a.m. P.D.T., and at any adjournment or postponement thereof, and to vote the
number of shares the undersigned would be entitled to vote if personally
present at the meeting on the following matters set forth on the reverse side.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
<TABLE>
<S> <C>
1. To elect a member of the Board of Directors to serve 2. To ratify the appointment of FOR AGAINST ABSTAIN
for a three-year term as a Class I Director. PricewaterhouseCoopers LLP as the [ ] [ ] [ ]
NOMINEE: Gary G. Greenfield Company's independent public
accountants for the fiscal year
FOR WITHHELD ending June 30, 2000.
[ ] [ ]
3. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name(s) appear(s) hereon. All holders
must sign. When signing in a fiduciary capacity, please indicate
full title as such. If a corporation or partnership, please sign
in full corporate or partnership name by authorized person.
Signature: ______________________________ Date: _________________ Signature: ______________________________ Date: _________________
</TABLE>
