<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement [_Confidential,]for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SIEBEL SYSTEMS, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]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:
<PAGE>
[LOGO OF SIEBEL]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
To the Stockholders of Siebel Systems, Inc.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Siebel
Systems, Inc., a Delaware corporation (the "Company"), will be held on April
27, 1999 at 10:30 a.m. local time at the Company's principal executive office
at 1855 South Grant Street, San Mateo, CA 94402 for the following purposes:
1. To elect two directors to hold office until the 2002 Annual Meeting of
Stockholders.
2. To ratify the selection of KPMG LLP as independent auditors of the
Company for its fiscal year ending December 31, 1999.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 15, 1999 as
the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ Jeffrey T. Amann
Jeffrey T. Amann
Secretary
San Mateo, California
April 5, 1999
----------------
All stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please complete, date, sign
and return the enclosed proxy as promptly as possible in order to ensure your
representation at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for that purpose. Even if you have
given your proxy, you may still vote in person if you attend the meeting.
Please note, however, that if your shares are held of record by a broker, bank
or other nominee and you wish to vote at the meeting, you must obtain from the
record holder a proxy issued in your name.
<PAGE>
[LOGO OF SEIBEL]
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Siebel Systems, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on April 27, 1999, at 10:30 a.m.,
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Company's principal
executive offices at 1855 South Grant Street, San Mateo, CA 94402. This proxy
statement and accompanying proxy card were mailed on or about April 5, 1999 to
all stockholders entitled to vote at the Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on March 15,
1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 15, 1999 the Company had outstanding and entitled
to vote 90,527,662 shares of Common Stock. Each holder of record of Common
Stock on such date will be entitled to one vote for each share held on all
matters to be voted upon at the Annual Meeting.
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. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter
has been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1855
South Grant Street, San Mateo, California 94402, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
Stockholder Proposals
Pursuant to the Company's bylaws, a stockholder proposal or a nomination for
director that is not to be included in such proxy statement and proxy at the
Company's 2000 annual meeting of stockholders must provide specified
information to the Company between January 27, 2000 and February 26, 2000
(unless such matters are included in the Company's proxy statement pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934, as amended).
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and bylaws
provide that the Board of Directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board
may be filled only by persons elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the Board of Directors) shall serve for the
remainder of the full term of the class of directors in which the vacancy
occurred and until such director's successor is elected and qualified.
The Board of Directors is presently composed of six members. There are two
directors in the class whose term of office expires in 1999. Each of the
nominees for election to this class is currently a director of the Company and
was previously elected by the stockholders. If elected at the Annual Meeting,
each of the nominees would serve until the 2002 annual meeting and until his
successor is elected and has qualified, or until such director's earlier
death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented
by executed proxies will be voted, if authority to do so is not withheld, for
the election of the two nominees named below. In the event that any nominee
should be unavailable for election as a result of an unexpected occurrence,
such shares will be voted for the election of such substitute nominee as
management may propose. Each person nominated for election has agreed to serve
if elected and management has no reason to believe that any nominee will be
unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
Nominees for Election for a Three-year Term Expiring at the 2002 Annual
Meeting
Thomas M. Siebel, age 46, has served as Chairman, Chief Executive Officer,
and President of the Company since its inception in July 1993. From July 1991
until December 1992, he served as Chief Executive Officer of Gain Technology,
a multimedia software company which merged with Sybase in December 1992. Mr.
Siebel served as President and Chief Operating Officer of Gain Technology from
May 1991 to July 1991. From January 1984 until September 1990, Mr. Siebel
worked at Oracle Corporation where he held a number of executive management
positions including Vice President Product Line Marketing, Group Vice
President Industry Marketing, Group Vice President and General Manager Direct
Marketing Division, and most recently, Group Vice President Oracle USA. Mr.
Siebel is a graduate of the University of Illinois at Urbana-Champaign from
which he holds a B.A. in History, an M.B.A. and an M.S. in Computer Science.
James C. Gaither, age 61, has served as a Director of the Company since
February 1994. From February 1994 to April 1998, Mr. Gaither served as the
secretary of the Company. Since 1971, Mr. Gaither has been a Partner of the
law firm Cooley Godward LLP. Prior to beginning his law practice with the firm
in 1969, he served as law clerk to The Honorable Earl Warren, Chief Justice of
the United States; Special Assistant to the Assistant Attorney General in the
U.S. Department of Justice; and Staff Assistant to the President of the United
States, Lyndon Johnson. Mr. Gaither is a former president of the Board of
Trustees at Stanford University and is a member of the Board of Trustees of
the Carnegie Endowment for International Peace, RAND, The William and Flora
Hewlett Foundation, and The James Irvine Foundation. Mr. Gaither is a director
of Amylin Pharmaceuticals, Inc., Basic American, Inc., nVidia Corporation and
Levi Strauss & Company. Mr. Gaither received a B.A. in Economics from
Princeton University and a J.D. from Stanford University.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR EACH NAMED NOMINEE.
---
2
<PAGE>
Directors Continuing in Office Until the 2000 Annual Meeting
Eric E. Schmidt, Ph.D., age 43, has served as a Director of the Company
since May 1996. Since April 1997, Dr. Schmidt has been the Chairman of the
Board and the Chief Executive Officer of Novell, Inc., a software supplier for
large networks. From 1983 to 1997, Dr. Schmidt held various positions at Sun
Microsystems, Inc., including Chief Technology Officer; Corporate Executive
Officer; President, Sun Technology Enterprises; Vice President, General
Systems Group; and Vice President and General Manager, Software Products
division. Prior to joining Sun Microsystems, Inc., Dr. Schmidt was a member of
the research staff at the Computer Science Lab at Xerox Palo Alto Research
Center (PARC). He also held positions at Bell Laboratories and Zilog. Dr.
Schmidt is a director of Geoworks, a developer of application software for
consumer computing devices. Dr. Schmidt received a B.S. in Electrical
Engineering from Princeton University, an M.S. in Electrical Engineering and a
Ph.D. in Computer Science from the University of California at Berkeley.
A. Michael Spence, Ph.D., age 55, has served as a Director of the Company
since October 1995. Since 1990, Dr. Spence has served as Dean of the Graduate
School of Business at Stanford University. From 1984 to 1990, Dr. Spence
served as Dean of Faculty of Arts and Sciences at Harvard University. Dr.
Spence also serves as a director of BankAmerica Corporation, General Mills,
Inc., Nike, Inc. and Sun Microsystems, Inc. Dr. Spence received a B.A. in
Philosophy from Princeton University, a B.A. and an M.A. in Mathematics from
Oxford University and a Ph.D. in Economics from Harvard University.
Directors Continuing in Office Until the 2001 Annual Meeting
Charles R. Schwab, age 61, has served as a Director of the Company since
October 1994. Since November 1997, he has been the Chairman and Co-Chief
Executive Officer of The Charles Schwab Corporation, a brokerage firm founded
in 1971 by Mr. Schwab, and served as Chairman and Chief Executive Officer from
1987 until November 1997. Mr. Schwab also serves as a director of The Gap,
Inc., Transamerica Corporation and AirTouch Communications. Mr. Schwab is a
member of the Board of Trustees of Stanford University and a member of the
Board of Directors of the National Park Foundation. Mr. Schwab received a B.A.
in Economics from Stanford University and an M.B.A. from the Graduate School
of Business at Stanford University.
George T. Shaheen, age 54, has served as a Director of the Company since
October 1995. Since 1989, Mr. Shaheen has been the Managing Partner of
Andersen Consulting. Mr. Shaheen has been a partner of Andersen Consulting
since 1977 and held various other positions at Andersen Consulting from 1967
to 1977. Mr. Shaheen is on the Board of Trustees at Bradley University and is
a member of the Board of Advisors for the Northwestern University J.L. Kellogg
Graduate School of Business. Mr. Shaheen received a B.S. in Marketing and an
M.B.A. from Bradley University.
Board Committees and Meetings
During the fiscal year ended December 31, 1998, the Board of Directors held
eight meetings. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors, reviews the results and scope
of the audit and other services provided by the Company's independent auditors
and reviews and evaluates the Company's audit and control functions. In
performing its duties, the Audit Committee conducts quarterly meetings with
the Company's independent auditors. To ensure that the Audit Committee has an
independent and confidential view of the Company's management and internal
controls as they relate to the quality and reliability of the Company's
financial statements, these meetings are conducted independent of the
Company's management. The Audit Committee is composed of three non-employee
directors: Mr. Gaither, Mr. Schwab and Mr. Shaheen. The Audit Committee met
five times during the fiscal year ended December 31, 1998.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants
under the Company's 1996 Equity Incentive Plan and 1998
3
<PAGE>
Equity Incentive Plan and otherwise determines compensation levels and
performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee is composed of two non-employee
directors: Drs. Schmidt and Spence. The Compensation Committee met eight times
and approved an action by unanimous written consent during the fiscal year
ended December 31, 1998.
During the fiscal year ended December 31, 1998, all directors attended at
least 75% of the aggregate of the meetings of the Board and of the committees
on which they served, held during the period for which they were a director or
committee member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 1999 and has further directed
that management submit the selection of independent auditors for ratification
by the stockholders at the Annual Meeting. KPMG LLP has audited the Company's
financial statements since its inception in 1993. Representatives of KPMG LLP
are expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of KPMG LLP as the Company's
independent auditors is not required by the Company's bylaws or otherwise.
However, the Board is submitting the selection of KPMG LLP to the stockholders
for ratification as a matter of good corporate practice. If the stockholders
fail to ratify the selection, the Audit Committee and the Board will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the
Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of KPMG LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSAL 2.
---
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's outstanding Common Stock as of December
31, 1998 by: (i) each person (or group of affiliated persons) who is known by
the Company to own beneficially more than 5% of the Common Stock; (ii) each of
the Company's directors, (iii) the Company's Chief Executive Officer and each
of the four most highly compensated officers for the year ended December 31,
1998; and (iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Shares Beneficially
Owned(1)
-----------------------
Principal Stockholders, Directors and Officers Number Percent
- ---------------------------------------------- ------------ ----------
<S> <C> <C>
Thomas M. Siebel(2)...................................... 17,140,083 18.6%
1855 South Grant Street
San Mateo, CA 94402
Fidelity Investments (FMR Corp.)(3)...................... 12,821,887 14.3
82 Devonshire Street
Boston, MA 02109
Andersen Consulting LLP(4)............................... 5,615,800 6.3
1661 Page Mill Road
Palo Alto, CA 94304
Entities Affiliated with Amerindo Investment Advisors,
Inc.(5)................................................. 4,469,781 5.0
One Embarcadero Center, Suite 2300
San Francisco, CA 94111
Patricia A. House(6)..................................... 1,826,204 2.0
Howard H. Graham(7)...................................... 258,185 *
Craig D. Ramsey(8)....................................... 994,775 1.1
R. David Schmaier(9)..................................... 255,533 *
James C. Gaither(10)..................................... 182,214 *
Eric E. Schmidt, Ph.D.(11)............................... 278,676 *
Charles R. Schwab(12).................................... 1,449,800 1.6
George T. Shaheen(13).................................... 5,620,080 6.3
A. Michael Spence, Ph.D.(14)............................. 355,500 *
All directors and executive officers as a group
(10 persons)(15)........................................ 28,361,050 31.1
</TABLE>
- --------
* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes
voting or investment power with respect to securities. Except as
indicated by footnote, and subject to community property laws where
applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Percentage of beneficial ownership is based
on 89,630,092 shares of Common Stock outstanding as of December 31, 1998.
(2) Includes 13,252,607 shares held as trustee under the Siebel Living Trust
u/a/d 7/27/93 and 587,476 shares held by Siebel Asset Management, L.P. of
which Mr. Siebel is a general partner and 800,000 shares held by First
Virtual Capital Inc., of which Mr. Siebel is President. Also includes
80,000 shares held by the Thomas and Stacey Siebel Foundation to which
Mr. Siebel disclaims beneficial ownership. Also includes 2,500,000 shares
issuable to Mr. Siebel upon exercise of outstanding options exercisable
within 60 days of December 31, 1998.
(3) Based solely on information contained on Schedule 13G filed with the SEC.
(4) Mr. Shaheen, a director of the Company, is the Managing Partner of
Andersen Consulting LLP. Mr. Shaheen disclaims beneficial ownership of
such shares held by Andersen Consulting LLP except to the extent of his
partnership interest therein. Also includes 352,000 shares issuable to
Mr. Shaheen upon
5
<PAGE>
early exercise of options subject to vesting through February 2001 and
63,800 shares issuable upon exercise of outstanding options exercisable
within 60 days of December 31, 1998.
(5) Based solely on information contained on Schedule 13G filed with the SEC.
(6) Includes 488,571 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1998.
(7) Includes 257,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1998.
(8) Includes 400,000 shares issuable upon the early exercise of options
vesting through March 2000 and 77,142 shares issuable upon exercise of
outstanding options exercisable within 60 days of December 31, 1998. Also
includes 4,200 shares held by Mr. Ramsey's wife.
(9) Includes 186,856 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1998.
(10) Includes 63,800 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1998.
(11) Includes 234,676 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1998.
(12) Includes 360,000 shares which are subject to a right of repurchase in
favor of the Company which expires ratably through October 1999. Also
includes 63,800 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1998. Also includes 150,000
shares held by the Charles and Helen Schwab Family Foundation and Schwab
Family Partners to which Mr. Schwab disclaims beneficial ownership and
16,000 shares held by Mr. Schwab's children.
(13) Includes 5,200,000 shares held by Andersen Consulting LLP. Mr. Shaheen,
the Managing Partner of Andersen Consulting, disclaims beneficial
ownership of such shares, except to the extent of his partnership
interest therein. Also includes 352,000 shares issuable upon early
exercise of options subject to vesting through February 2001, 63,800
shares issuable upon exercise of outstanding options exercisable within
60 days of December 31, 1998 and 2,140 shares held by the Shaheen
Revocable Trust.
(14) Includes 176,000 shares which are subject to a right of repurchase in
favor of the Company which expires ratably through October 2000. Also
includes 63,800 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1998. Also includes 114,350 shares held by
A. Michael Spence, Trustee or Successor Trustee under The A. Michael
Spence Revocable Trust u/a/d October 26, 1996. Also includes 450 shares
held by A. Michael Spence TTEE by James Graham Spence Trust, 450 shares
held by A. Michael Spence TTEE by Cathy B. Spence Irrevocable Trust and
450 shares held by A. Michael Spence TTEE by Marya W. Spence Irrevocable
Trust.
(15) Includes 5,200,000 shares held by Andersen Consulting LLP. See footnotes
(2) and (13) above. Also includes 4,751,445 shares issuable upon exercise
of options held by all executive officers and directors exercisable
within 60 days of December 31, 1998. See footnotes (2), (3) and (6)
through (14).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that one
report on Form 4 was filed late by Mr. Schwab regarding a gift of Common Stock
and one report on Form 4 was filed late by Dr. Spence regarding a sale of
Common Stock.
6
<PAGE>
EXECUTIVE COMPENSATION
Directors' Compensation
The Company's directors do not currently receive any cash compensation for
service on the Board or any committee thereof, but directors may be reimbursed
for certain expenses in connection with attendance at Board and committee
meetings. On January 20, 1998 and October 29, 1998, Drs. Schmidt and Spence
and Messrs. Gaither, Schwab and Shaheen each received options to purchase
40,000 and 20,000 shares of the Company's Common Stock at exercise prices per
share of $22.625 and $19.625, respectively; and on each of January 20, 1998
and October 29, 1998, Mr. Siebel received an option to purchase 1,500,000
shares of the Company's Common Stock at exercise prices per share of $22.625
and $19.625, respectively.
Executive Compensation
The following table sets forth for the fiscal years ended December 31, 1996,
1997 and 1998, the compensation earned by the Company's Chief Executive
Officer and the four most highly compensated executive officers during such
periods whose salary and bonus for the fiscal year ended December 31, 1998
were in excess of $100,000 for services rendered in all capacities to the
Company for that fiscal year (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation Awards
---------------------- ------------
Securities
Underlying
Name And Principal Position Year Salary Bonus($) Options
- --------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
Thomas M. Siebel........................ 1998 $200,000 $600,000 3,000,000
Chairman and Chief Executive Officer 1997 180,000 140,000 1,400,000
1996 180,000 140,000 4,000,000
Patricia A. House....................... 1998 175,000 500,000 500,000
Executive Vice President and Co-Founder 1997 150,000 160,000 800,000
1996 142,500 140,000 800,000
Howard H. Graham(1)..................... 1998 170,000 304,195 400,000
Senior Vice President, Finance and 1997 170,000 70,000 400,000
Administration and Chief Financial
Officer 1996 -- -- 960,000
Craig T. Ramsey(2)...................... 1998 150,000 454,195(3) 700,000
Senior Vice President, Worldwide 1997 115,000 331,000(4) 200,000
Operations 1996 97,308 120,000(5) 1,280,000
R. David Schmaier....................... 1998 130,000 400,000 600,000
Senior Vice President, Products 1997 90,000 200,000 200,000
1996 90,000 80,000 180,000
</TABLE>
- --------
(1) Mr. Graham joined the Company in January 1997.
(2) Mr. Ramsey joined the Company in March 1996.
(3) Represents $450,000 commissions earned in 1998.
(4) Represents commissions earned in 1997.
(5) Represents commissions earned in 1996.
7
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1996 Equity
Incentive Plan (the "1996 Plan"). As of December 31, 1998, options to purchase
a total of 31,857,518 shares were outstanding under the 1996 Plan and options
to purchase 488,160 shares remained available for grant thereunder.
The following tables show for the fiscal year ended December 31, 1998,
certain information regarding options granted to, exercised by, and held at
year end by, the Named Executive Officers:
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Number of % of Total Rates of Stock Price
Securities Options Exercise Appreciation for
Underlying Granted to or Base Option Term (7)
Options Employees Price Expiration -----------------------
Granted(#) in 1998(6) ($/sh) Date 5% 10%
---------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Siebel........ 1,500,000(1) $22.625 01/19/08 $21,380,625 $53,960,625
1,500,000(2) 25.1% 19.625 10/28/08 18,545,625 46,805,625
Patricia A. House....... 200,000(1) 22.625 01/19/08 2,850,750 7,194,750
300,000(2) 4.2 19.625 10/28/08 3,709,125 9,361,125
Howard H. Graham........ 100,000(1) 23.25 01/09/07 1,464,750 3,696,750
100,000(3) 26.75 07/29/08 1,685,250 4,253,250
200,000(2) 3.4 19.625 10/28/08 2,472,750 6,240,750
Craig T. Ramsey......... 100,000(1) 22.625 01/19/08 1,425,375 3,597,375
600,000(4) 5.9 19.625 10/28/08 7,418,250 18,722,250
R. David Schmaier....... 200,000(1) 22.625 01/19/08 2,850,750 7,194,750
100,000(5) 22.50 05/25/08 1,417,500 3,577,500
300,000(2) 5.0 19.625 10/28/08 3,709,125 9,361,125
</TABLE>
- --------
(1) Options vest at a rate of 5% each quarter after January 19, 1998 and have
a term of 10 years.
(2) Options vest at a rate of 5% each quarter after January 1, 1999 and have
a term of 10 years.
(3) Option vests at a rate of 5% each quarter after July 30, 1998 and has a
term of 10 years.
(4) Option vests at a rate of 8.3333% each quarter after January 1, 2001 and
has a term of 10 years.
(5) Option vests at a rate of 5% each quarter after May 26, 1998 and has a
term of 10 years.
(6) Based on an aggregate of 11,934,935 shares subject to options granted to
employees pursuant to the Company's 1996 Plan in the fiscal year ended
December 31, 1998, including grants to the Named Executive Officers.
(7) The potential realizable value is calculated based on the term of the
option at the time of grant (10 years). Stock price appreciation of 5%
and 10% is assumed pursuant to rules promulgated by the Securities and
Exchange Commission and does not represent the Company's prediction of
its stock price performance.
8
<PAGE>
AGGREGATED OPTIONS EXERCISED IN 1998 AND YEAR-END OPTION VALUES
The following table sets forth for each of the Named Executive Officers the
shares acquired and the value realized on each exercise of stock options
during the year ended December 31, 1998 and the number and value of securities
underlying unexercised options held by the Named Executive Officers at
December 31, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Value Options at December 31, 1998 (#) December 31, 1998 (2)
Acquired on Received ----------------------------------- -------------------------
Name Exercise (#) (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ---------- ---------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Siebel........ 400,000 $9,800,000 2,575,000 5,825,000 $75,480,975 $124,448,225
Patricia A. House....... -- -- 430,000 1,670,000 4,801,990 25,667,750
Craig T. Ramsey......... 240,000 4,746,000 65,000 1,235,000 1,285,345 26,181,555
Howard H. Graham........ 297,000 3,958,200 179,000 1,216,000 696,521 10,308,445
R. David Schmaier....... -- -- 148,714 871,286 1,569,420 10,593,480
</TABLE>
- --------
(1) Based on the fair market value of the Company's Common Stock on the
exercise date, minus the exercise price, multiplied by the number of
shares exercised.
(2) Based on the fair market value of the Company's Common Stock as of
December 31, 1998 ($33.938 per share), minus the exercise price,
multiplied by the number of shares underlying the options.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION(1)
The Board of Directors of the Company (the "Board") has delegated to the
Compensation Committee of the Board (the "Committee") the authority to
establish and administer the Company's compensation programs. The Compensation
Committee is comprised of two non-employee directors: Eric E. Schmidt and A.
Michael Spence. The Committee is responsible for: (i) determining the most
effective total executive compensation strategy, based upon the business needs
of the Company and consistent with stockholders' interests; (ii) administering
the Company's executive compensation plans, programs and policies; (iii)
monitoring corporate performance and its relationship to compensation of
executive officers; and (iv) making appropriate recommendations concerning
matters of executive compensation.
Compensation Philosophy
The policies of the Committee with respect to executive officers, including
the Chief Executive Officer, are to provide compensation sufficient to
attract, motivate and retain executives of outstanding ability and potential.
To emphasize sustained performance of the Company's executive officers, the
Committee has adopted policies to align executive compensation with the
creation of stockholder value as measured in the equity markets. These
policies are implemented using a mix of the following key elements:
1. The Company pays base salaries that are generally competitive with
other leading computer software companies with which the Company
competes for talent. To ensure that its salaries are sufficient to
attract and retain highly qualified executives and other key employees,
the Company regularly compares its salaries with those of its
competitors and sets salary parameters based on this review;
2. The Company pays cash bonuses based on the achievement of specific
operating goals and high levels of performance; and
3. The Company provides significant equity-based incentives pursuant to
the Company's 1996 Equity Incentive Plan and Employee Stock Purchase
Plan to ensure that the Company's executive officers and key employees
are motivated to achieve the Company's long term goals.
9
<PAGE>
Base Salary
The Committee recognizes the importance of maintaining compensation
practices and levels of compensation competitive with other leading computer
software companies with which the Company competes for personnel. Base salary
represents the fixed component of the executive compensation program. The
Company's philosophy regarding base salaries is conservative, with the goal of
maintaining salaries at or below the comparable industry median. Base salary
levels are established based on an annual review of published executive salary
levels at software companies with comparable revenues and on the basis of
individual performance. The industry group index shown on the Company's
Performance Measurement Comparison Graph includes the larger software
companies included in the Company's compensation survey. Periodic increases in
base salary are the result of individual contributions evaluated against
established annual and long-term performance objectives and an annual salary
survey of software companies with comparable revenues. While base salaries for
most executives were increased during 1998, they generally remain below the
median for comparable companies surveyed./1/
Cash Bonuses
Cash bonus awards are another component of the Company's compensation
program and are designed to reward the Company's executives and other senior
managers for assisting the Company in achieving its operational goals through
exemplary individual performance. Bonuses, if any, are linked to both the
achievement of specified individual and corporate goals as well as a review of
personal performance which is determined at the discretion of the Committee.
Target bonus levels for 1998 were established based in part on an annual
review of published executive total compensation levels at software companies
with comparable revenues. Corporate performance goals upon which 1998 bonuses
were based included: the execution of license agreements with a number of
significant new customers; continuation of high customer satisfaction levels;
expansion of a worldwide sales and marketing infrastructure; the introduction
of additional products and the improvement of the Company's existing products;
completion of several strategic acquisitions including the acquisition of
Scopus Technology, Inc.; and the meeting of quarterly and annual revenue,
profitability and other financial goals, including an increase in annual
revenue from $207.6 million in 1997 to $391.5 million in 1998. In January
1999, the Committee reviewed the Company's 1998 corporate performance goals
and determined that all of the goals had been achieved. Based on such
achievement, the Committee awarded bonuses to most of its executive officers
(including all Named Executive Officers), which equaled or exceeded targeted
bonus levels. Bonuses to executive officers ranged from 76% to 208% of 1998
base compensation. Commissions totaling 200% of base compensation were paid to
the Company's Senior Vice President, Worldwide Operations, based on the
achievement of certain specified sales goals.
Equity Compensation
The 1996 Equity Incentive Plan, 1998 Equity Incentive Plan and Employee
Stock Purchase Plan offered by the Company have been established to provide
all employees of the Company, including executive officers, with an
opportunity to share, along with the stockholders of the Company, in the long-
term performance of the Company. The Committee strongly believes that a
primary goal of the compensation program should be to provide key employees
who have significant responsibility for the management, growth and future
success of the Company with an opportunity to increase their ownership of the
Company and potentially gain financially from Company stock price increases.
The interests of stockholders, executives and employees should thereby be
closely aligned. Executives are eligible to receive stock options at the
discretion of the Committee, giving them the right to purchase shares of
Common Stock of the Company in the future at a price equal to fair market
value at the date of grant. All grants must be exercised according to the
provisions of the Company's 1996 Equity Incentive Plan or 1998 Equity
Incentive Plan, as applicable. All outstanding options held by executive
officers vest over a period of not less than three years and expire ten years
from the date of grant.
- --------
/1/ This section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended (the "1933 Act") or the 1934 Act
whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
10
<PAGE>
As total cash compensation for executive officers of the Company is targeted
to be at or below the median for software companies with comparable revenues,
the Company has used stock options as the primary incentive to attract and
motivate its executive officers. The goal of the Committee is to provide
equity compensation for executive officers, including the Chief Executive
Officer, which equals levels at comparable companies. Within such range,
option amounts are based on salary grade within the Company and the
achievement of overall Company and individual performance goals as discussed
above. After considering the criteria relating to awarding stock options, the
Committee determined that all executive officers, including the Chief
Executive Officer, would receive option grants in fiscal 1998. All such
options vest over either a three- or five-year period. See "Option Grants in
Last Fiscal Year."
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may
be deducted if it is "performance-based compensation" within the meaning of
the Code. The Committee has determined to satisfy the requirements for
"performance-based compensation" with respect to compensation awarded to its
Named Executive Officers whenever possible and to the extent then practicable.
Chief Executive Officer Compensation
The Committee uses the same procedures described above in setting the annual
salary, bonus and stock option awards for Thomas M. Siebel, the Company's
Chief Executive Officer. Mr. Siebel's base salary for 1998 increased from
$180,000 in 1997 to $200,000 in 1998. During 1998, the Company achieved all
its corporate objectives. The Committee concluded that Mr. Siebel was a very
significant contributor in accomplishing these objectives. For 1998, the
Committee awarded Mr. Siebel a bonus of approximately three times his base
salary. This amount was equal to the target bonus established for him for the
year. Despite the bonus granted, based on a survey by the Company in October
1998, the total cash compensation paid to Mr. Siebel in 1998 was below the
average for chief executive officers of comparable software companies. Under
the Company's executive compensation program, the total compensation mix for
senior executives emphasizes longer term rewards in the form of stock options.
In 1998, Mr. Siebel received option grants to purchase an aggregate of
3,000,000 shares of the Company's Common Stock at the fair market value of the
Common Stock on the applicable date of grant. Such options vest over a five
year period from the applicable date of grant. In determining such grants, the
Committee reviewed the stock option positions provided to chief executive
officers of comparable software companies in connection with their employment
services. These grants were intended to continue to maintain the overall
competitiveness of Mr. Siebel's compensation package and strengthen the
alignment of Mr. Siebel's interests with those of the stockholders during a
crucial phase of the Company's development.
Summary
The Committee believes that the compensation of executives by the Company is
appropriate and competitive with the compensation programs provided by other
leading software companies with which the Company competes for executives and
employees. The Committee believes its compensation strategy, principles and
practices result in a compensation program tied to stockholder returns and
linked to the achievement of annual and longer-term financial and operational
results of the Company on behalf of the Company's stockholders.
Compensation Committee
Eric E. Schmidt
A. Michael Spence
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Company's Compensation Committee consists of Eric E.
Schmidt and A. Michael Spence.
See "Certain Transactions" for a description of transactions between the
Company, members of the Compensation Committee and/or entities affiliated with
members of the Compensation Committee.
Performance Measurement Comparison(1)
The following graph shows the total stockholder return of an investment of
$100 in cash on June 28, 1996 for (i) the Company's Common Stock, (ii) The
Nasdaq Stock Market--U.S. Index (the "Nasdaq Index") and (iii) the Hambrecht &
Quist Technology Index (the "H&Q Technology Index") All values assume
reinvestment of the full amount of all dividends.
[PERFORMANCE GRAPH APPEARS HERE]
12
<PAGE>
Comparison of Cumulative Total Return Among Siebel Systems, Nasdaq U.S. and
H&Q
<TABLE>
<CAPTION>
Measurement Period Siebel Nasdaq
(Fiscal Year Covered) Systems U.S. H&Q
--------------------- ------- ------- -------
<S> <C> <C> <C>
6/28/96(3) $100.00(4) $100.00 $100.00
6/30/96 180.88 101.66 101.37
7/31/96 175.00 92.60 90.95
8/31/96 241.91 97.79 96.46
9/30/96 244.85 105.26 107.61
10/31/96 320.59 104.10 106.07
11/30/96 264.71 110.54 118.58
12/30/96 317.65 110.44 115.39
1/31/97 205.88 118.29 127.75
2/28/97 208.82 111.74 117.32
3/31/97 197.06 104.45 109.99
4/30/97 213.24 107.71 114.06
5/31/97 308.82 119.92 131.23
6/30/97 379.41 123.59 132.39
7/31/97 400.00 136.64 153.69
8/31/97 425.00 136.43 154.12
9/30/97 500.73 144.49 160.44
10/31/97 475.00 137.01 143.30
11/30/97 489.71 137.70 141.81
12/31/97 491.91 135.49 135.29
1/31/98 579.41 139.76 143.96
2/28/98 723.53 152.88 161.08
3/31/98 676.47 158.53 163.81
4/30/98 608.82 161.22 170.18
5/31/98 535.29 152.37 157.76
6/30/98 758.82 163.12 167.70
7/31/98 638.24 161.40 165.58
8/31/98 441.18 129.75 130.23
9/30/98 675.00 147.67 149.07
10/31/98 480.88 153.71 161.64
11/30/98 570.59 168.85 180.86
12/31/98 798.53 190.46 210.43
</TABLE>
- --------
(1) This section is not soliciting material, is not deemed filed with the SEC
and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
(2) The Nasdaq Index is calculated by the Center for Research in Securities
Prices. The H&Q Technology Index is calculated by Hambrecht & Quist LLC.
(3) The Company's initial public offering commenced on June 28, 1996 and the
Company's 1998 fiscal year ended December 31, 1998.
(4) Assumes that $100.00 was invested on June 28, 1996 in the Company's
Common Stock at the Company's initial public offering price of $4.25 per
share, after giving effect to a 2-for-1 split of the Company's Common
Stock in December 1996 and February 1998 and at the closing sales price
for each index on that date and that all dividends were reinvested. No
cash dividends have been declared on the Company's Common Stock.
Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
13
<PAGE>
CERTAIN TRANSACTIONS
The Company and Andersen Consulting LLP have entered into a Master Alliance
Agreement, dated March 17, 1995, pursuant to which Andersen Consulting LLP
provides the Company related professional services to the Company's customers,
and a Software License and Services Agreement, dated January 1, 1995, pursuant
to which Andersen Consulting LLP made payments of approximately $62,000 to the
Company in fiscal 1998.
James C. Gaither, a director of the Company, is a partner of Cooley Godward
LLP, which has provided legal services to the Company since its inception.
Thomas M. Siebel, the Company's Chairman and Chief Executive Officer, leases
his aircraft to the Company for business use for $1 per year. The Company
operates and maintains the aircraft or contracts with third parties to perform
those services. During fiscal 1998, Mr. Siebel reimbursed the Company $47,280
for the Company's operating costs related to his non-Company business and
personal use of the aircraft.
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided
for therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party
be reason of his position as a director, officer or other agent of the
Company, and otherwise to the full extent permitted under Delaware law and the
Company's bylaws.
The Company believes that the foregoing transactions were on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Jeffrey T. Amann
Jeffrey T. Amann
Secretary
April 5, 1999
14
<PAGE>
SIEBEL SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
The undersigned hereby appoints Thomas M. Siebel and Howard H. Graham and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Siebel Systems, Inc., which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Siebel Systems, Inc. to be held at 1855 South Grant Street, San Mateo, CA 94402
on Tuesday, April 27, 1999 at 10:30 a.m. local time, and at any and all
postponements, continuations and adjournments thereof), with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
---
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Continued and to be signed on other side)
FOLD AND DETACH HERE
Please mark [_]
your vote
as indicated
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR PROPOSAL 1.
---
PROPOSAL 1: To elect two directors to hold office until the 2002 Annual Meeting
of Stockholders.
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote
(except as marked to the contrary for all nominees listed below.
below).
NOMINEES: Thomas M. Siebel and James C. Gaither
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE WRITE SUCH NOMINEE'S NAME BELOW:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
---
PROPOSAL 2: To ratify the selection of KPMG LLP as independent auditors of the
Company for its fiscal year ending December 31, 1999.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be signed on other side)
DATED ______________, 1999 ______________________________________________
SIGNATURE(S)
Please sign exactly as your name appears hereon. If
the stock is registered in the names of two or more
persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-
in-fact should add their titles. If signer is a
corporation, please give full corporate name and
have a duly authorized officer sign, stating title.
If signer is a partnership, please sign in
partnership name by authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
