<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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.
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF SIEBEL SYSTEMS, INC.]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 7, 2000
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 June 7,
2000 at 11:00 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 2003 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, 2000.
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 April 20, 2000 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
May 4, 2000
----------------
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 SIEBEL SYSTEMS, INC.]
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 7, 2000
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 June 7, 2000, at 11:00 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 May 4, 2000 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 April 20,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 20, 2000, the Company had outstanding and entitled
to vote 199,193,308 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 offices at 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 the proxy statement and proxy at the
Company's 2001 annual meeting of stockholders must provide specified
information to the Company between March 9, 2001 and April 6, 2001 (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 of
Directors may be filled only by persons elected by a majority of the remaining
directors. A director elected by the Board of Directors 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 has
qualified.
The Board of Directors is presently composed of six members. There are two
directors in the class whose term of office expires in 2000. 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 2003 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
of the Company may propose. Each person nominated for election has agreed to
serve if elected and management of the Company 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 2003 Annual Meeting
Eric E. Schmidt, Ph.D., age 44, has served as a Director of the Company
since May 1996. Since April 1997, Dr. Schmidt has been the Chairman of the
Board of Directors 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,
Inc. and ZiLOG, Inc., a developer of semiconductor technology. 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 56, has served as a Director of the Company
since October 1995. Dr. Spence currently serves as Professor of Management in
the Graduate School of Business at Stanford University. From 1990 until 1999,
Dr. Spence served as Phillip H. Knight Professor and 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 eGain Communications Corp., General Mills, Inc., Nike,
Inc., Torstar Corporation and ITI Education Corporation. 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.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR EACH NAMED NOMINEE.
2
<PAGE>
Directors Continuing in Office Until the 2001 Annual Meeting
Charles R. Schwab, age 62, has served as a Director of the Company since
October 1994. Since November 1997, Mr. Schwab has been the Chairman of the
Board of Directors 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, Inc. 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 55, has served as a Director of the Company since
October 1995. Mr. Shaheen has been President and Chief Executive Officer and a
member of the Board of Directors of Webvan Group, Inc. since September 1999.
From 1989 to September 1999, Mr. Shaheen was the Managing Partner of Andersen
Consulting. Mr. Shaheen was a partner of Andersen Consulting from 1977 to
September 1999 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.
Directors Continuing in Office Until the 2002 Annual Meeting
Thomas M. Siebel, age 47, has served as Chairman and Chief Executive Officer
of the Company since its inception in July 1993. From July 1993 until May 1999,
Mr. Siebel also served as the Company's President. 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 62, has served as a Director of the Company since
February 1994. From February 1994 to April 1998, Mr. Gaither served as
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 Cooley
Godward LLP in 1969, Mr. Gaither 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.
Board Committees and Meetings
During the fiscal year ended December 31, 1999, the Board of Directors held
five meetings. The Board of Directors 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
3
<PAGE>
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: Messrs. Gaither, Schwab
and Shaheen. The Audit Committee met five times during the fiscal year ended
December 31, 1999.
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 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 one time during the fiscal year ended December 31,
1999.
During the fiscal year ended December 31, 1999, all directors attended at
least 75% of the aggregate of the meetings of the Board of Directors 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, 2000 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 of Directors
will reconsider whether or not to retain KPMG LLP. Even if the selection is
ratified, the Audit Committee and the Board of Directors 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 March 31,
2000 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, 1999;
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)........................................ 30,378,651 14.7%
1855 South Grant Street
San Mateo, CA 94402
The TCW Group, Inc.(3)..................................... 13,447,726 6.8
865 South Figueroa Street
Los Angeles, CA 90017
Patricia A. House(4)....................................... 2,917,451 1.5
Craig D. Ramsey(5)......................................... 2,129,252 1.1
R. David Schmaier(6)....................................... 499,654 *
Paul Wahl(7)............................................... 301,787 *
James C. Gaither(8)........................................ 299,428 *
Eric E. Schmidt, Ph.D.(9).................................. 715,678 *
Charles R. Schwab(10)...................................... 2,612,335 1.3
George T. Shaheen(11)...................................... 961,010 *
A. Michael Spence, Ph.D.(12)............................... 547,800 *
All directors and executive officers as a group (13
persons)(13).............................................. 42,005,888 19.8%
</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 198,903,851 shares of Common Stock outstanding as of March 31, 2000.
(2) Includes 21,103,454 shares held as trustee under the Siebel Living Trust
u/a/d 7/27/93 and 1,174,952 shares held by Siebel Asset Management, L.P.
of which Mr. Siebel is a General Partner, 50,000 shares held by First
Virtual Capital Inc., of which Mr. Siebel is President and 245 shares
held by the Hunter Rose Siebel Irrevocable Trust, of which Mr. Siebel is
the trustee. Also includes 8,050,000 shares issuable to Mr. Siebel upon
exercise of outstanding options exercisable within 60 days of March 31,
2000.
(3) Based solely on information contained on Schedule 13G filed with the SEC.
Includes 337,497 shares that would be derived from the conversion of
$14,425,000 face amount of Rule 144A 5% Convertible Subordinated
Debentures due September 15, 2006, held indirectly by The TCW Group, Inc.
(4) Includes 1,860,713 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 2000.
(5) Includes 148,572 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 2000. Also includes 16,800 shares
held by Mr. Ramsey's wife.
(6) Includes 317,422 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 2000. Also includes 688 shares
held by Mr. Schmaier's wife.
5
<PAGE>
(7) Includes 301,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 2000.
(8) Includes 187,600 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 2000.
(9) Includes 627,678 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 2000.
(10) Includes 231,600 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 2000. Also includes 300,000
shares held by the Charles and Helen Schwab Family Foundation and Schwab
Family Partners to which Mr. Schwab disclaims beneficial ownership,
200,000 shares held by the Schwab Family Partners and 16,000 shares held
by Mr. Schwab's daughter.
(11) Includes 704,000 shares issuable upon early exercise of options subject
to vesting through February 2001, 231,600 shares issuable upon exercise
of outstanding options exercisable within 60 days of March 31, 2000 and
25,410 shares held by the Shaheen Revocable Trust.
(12) Includes 70,400 shares which are subject to a right of repurchase in
favor of the Company which expires ratably through October 2000. Also
includes 231,600 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000. Also includes 137,500 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 900 shares held by
A. Michael Spence TTEE by James Graham Spence Trust, 900 shares held by
A. Michael Spence TTEE by Cathy B. Spence Irrevocable Trust and 900
shares held by A. Michael Spence TTEE by Marya W. Spence Irrevocable
Trust.
(13) Includes 13,528,785 shares issuable upon exercise of options held by all
executive officers and directors exercisable within 60 days of March 31,
2000. See footnotes (2) and (3) through (12).
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, 1999, 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, covering the exercise of an option and the subsequent sale of shares,
was filed late by Mr. Schmaier.
6
<PAGE>
EXECUTIVE COMPENSATION
Directors' Compensation
The Company's directors do not currently receive any cash compensation for
service on the Board of Directors or any committee thereof, but Directors may
be reimbursed for certain expenses in connection with attendance at Board of
Directors and committee meetings.
Executive Compensation
The following table sets forth for the fiscal years ended December 31, 1999,
1998 and 1997, 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, 1999 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...................... 1999 $500,000 $2,588,251 4,000,000
Chairman of the Board and Chief
Executive Officer 1998 200,000 600,000 4,000,000
1997 180,000 140,000 2,800,000
Paul Wahl(1).......................... 1999 305,128 466,667 2,000,000
President and Chief Operating Officer 1998 -- -- --
1997 -- -- --
Patricia A. House Executive Vice
President and Co-Founder............. 1999 300,000 500,000 100,000
1998 175,500 500,000 1,000,000
1997 150,000 160,000 1,600,000
Craig D. Ramsey....................... 1999 250,000 503,247(2) 0
Senior Vice President, Worldwide
Operations 1998 150,000 454,195(3) 1,400,000
1997 115,000 331,000(4) 400,000
R. David Schmaier..................... 1999 250,000 500,000 100,000
Senior Vice President, Products 1998 130,000 400,000 1,200,000
1997 90,000 200,000 400,000
</TABLE>
- --------
(1) Mr. Wahl joined the Company in May 1999.
(2) Represents $500,000 commissions earned in 1999.
(3) Represents $450,000 commissions earned in 1998.
(4) Represents commissions earned in 1997.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The Company grants options to its executive officers under its 1996 Equity
Incentive Plan (the "1996 Plan"). As of December 31, 1999, options to purchase
a total of 27,993,734 shares were outstanding under the 1996 Plan and options
to purchase 42,886,883 shares remained available for grant thereunder and
options to purchase a total of 28,561,538 shares were outstanding under the
1998 Equity Incentive Plan (collectively, the "Plans") and options to purchase
10,201,142 shares remained available for grant thereunder.
The following tables show, for the fiscal year ended December 31, 1999
certain information regarding options granted to, exercised by and held at
year-end by the Named Executive Officers:
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Number of % of Total Rates of Stock Price
Securities Options Exercise Appreciation for Option
Underlying Granted to or Base Term (5)
Options Employees Price Expiration -------------------------
Granted(#) in 1999(4) ($/sh) Date 5% 10%
---------- ---------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Siebel........ 2,000,000(1) $9.8125 12/31/08 $ 12,363,750 $ 31,203,750
2,000,000(2) 15.3% 81.063 12/15/09 102,139,380 257,780,340
Paul Wahl............... 2,000,000(3) 7.6 19.219 5/20/09 24,215,940 61,116,420
Patricia A. House....... 100,000(2) 0.4 81.063 12/15/09 5,106,969 12,889,017
Craid D. Ramsey......... -- -- -- -- -- --
R. David Schmaier....... 100,000(2) 0.4 81.063 12/15/09 5,106,969 12,889,017
</TABLE>
- --------
(1) Options vest at a rate of 5% each quarter after January 1, 1999 and have a
term of 10 years.
(2) Options vest at a rate of 5% each quarter after January 1, 2000 and have a
term of 10 years.
(3) Options vest at a rate of 5% on August 21, 1999 and an additional 5% each
quarter thereafter.
(4) Based on an aggregate of 26,200,300 shares subject to options granted to
employees pursuant to the Company's Plans in the fiscal year ended
December 31, 1999, including grants to the Named Executive Officers.
(5) 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.
AGGREGATED OPTIONS EXERCISED IN 1999 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, 1999 and the number and value of securities
underlying unexercised options held by the Named Executive Officers at December
31, 1999.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised In-the-Money Options at
Shares Value Options at December 31, 1999 (#) December 31, 1999 (2)
Acquired on Received ---------------------------------- --------------------------
Name Exercise (#) (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- --------------- ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Siebel........ 1,000,000 $50,586,170 6,400,000 10,600,000 $512,300,000 $669,662,500
Paul Wahl............... -- -- 200,000 1,800,000 12,956,250 116,606,250
Patricia A. House....... -- -- 1,504,284 2,795,716 119,977,484 212,563,766
Craig D. Ramsey......... -- -- 867,142 1,732,858 70,902,649 130,844,811
R. David Schmaier....... 408,434 15,485,290 248,708 1,482,858 18,584,815 105,342,210
</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, 1999 ($84.00 per share), minus the exercise price, multiplied
by the number of shares underlying the options.
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Board of Directors of the Company has delegated to the Compensation
Committee of the Board of Directors (the "Committee") the authority to
establish and administer the Company's compensation programs. The Committee is
comprised of two non-employee directors: Drs. 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, the 1998 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.
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.
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 1999 were established based in part on an annual review
of published executive total compensation levels at software companies with
comparable
9
<PAGE>
revenues. Corporate performance goals upon which 1999 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; and the meeting of quarterly and annual
revenue, profitability and other financial goals, including an increase in
annual revenue from $410 million in 1998 to $791 million in 1999. In January
2000, the Committee reviewed the Company's 1999 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 93% to 500% of 1999 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 four years and expire ten years from the date of grant.
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
certain executive officers, including the Chief Executive Officer, would
receive option grants in fiscal 1999. All such options vest over a 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 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
Chairman and Chief Executive Officer. Mr. Siebel's base salary for 1999
increased from $200,000 in 1998 to $500,000 in 1999. During 1999, the Company
achieved all its corporate objectives. The Committee concluded that Mr. Siebel
was a very significant contributor in accomplishing these objectives. For 1999,
the Committee awarded Mr. Siebel a bonus of approximately five times his base
salary. This amount was equal to the target bonus established for him for the
year. Despite the
10
<PAGE>
bonus granted, based on a survey by the Company in October 1999, the total cash
compensation paid to Mr. Siebel in 1999 was below the average for chief
executive officers of comparable 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 1999, Mr.
Siebel received option grants to purchase (i) 2,000,000 shares of the Company's
Common Stock at an exercise price of $9.81 per share and (ii) 2,000,000 shares
of the Company's Common Stock at an exercise price of $81.06 per share. 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
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Company's Compensation Committee consists of Drs. Eric
E. Schmidt and A. Michael Spence.
See "Certain Relationships and Related Transactions" for a description of
transactions between the Company, members of the Compensation Committee and/or
entities affiliated with members of the Compensation Committee.
11
<PAGE>
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 Chase H&Q
Technology Index (the "Chase H&Q Technology Index"). All values assume
reinvestment of the full amount of all dividends.
[GRAPH APPEARS HERE]
Comparison of Cumulative Total Return Among Siebel Systems, Inc.,
Nasdaq Stock Market-U.S. Index and the Chase H&Q Technology (2)
<TABLE>
<CAPTION>
Measurement Period Nasdaq Stock Chase H&Q
(Fiscal Year Covered)(3)(4) Siebel Systems, Inc. Market-U.S. Technology
--------------------------- -------------------- ------------ ----------
<S> <C> <C> <C>
6/28/96 100.00 100.00 100.00
6/30/96 180.88 101.66 101.37
7/31/96 175.00 92.61 90.95
8/31/96 241.91 97.81 96.46
9/30/96 244.85 105.28 107.61
10/31/96 320.59 104.12 106.07
11/30/96 264.71 110.58 118.58
12/31/96 317.65 110.48 115.39
1/31/97 205.88 118.32 127.75
2/28/97 208.82 111.78 117.32
3/31/97 197.06 104.49 109.99
4/30/97 213.24 107.75 114.06
5/31/97 308.82 119.95 131.23
6/30/97 379.41 123.63 132.39
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Measurement Period Nasdaq Stock Chase H&Q
(Fiscal Year Covered) Siebel Systems, Inc. Market-U.S. Technology
--------------------- -------------------- ------------ ----------
<S> <C> <C> <C>
7/31/97 400.00 136.66 153.69
8/31/97 425.00 136.47 154.12
9/30/97 500.74 144.56 160.44
10/31/97 475.00 137.02 143.30
11/30/97 489.71 137.75 141.81
12/31/97 491.91 135.38 135.28
1/31/98 579.41 139.66 143.96
2/28/98 723.53 152.80 161.08
3/31/98 676.47 158.44 163.81
4/30/98 608.82 161.11 170.18
5/31/98 535.29 152.16 157.77
6/30/98 758.82 162.79 167.70
7/31/98 638.24 160.89 165.58
8/31/98 441.18 129.08 130.23
9/30/98 675.00 147.00 149.07
10/31/98 480.88 153.35 161.64
11/30/98 570.59 168.86 180.86
12/31/98 798.53 190.76 210.43
1/31/99 1029.41 218.51 239.21
2/28/99 1035.29 198.92 212.71
3/31/99 1117.65 213.39 229.17
4/30/99 904.41 219.39 237.82
5/31/99 1071.32 214.33 241.09
6/30/99 1560.29 233.47 271.42
7/30/99 1391.18 230.07 267.71
8/31/99 1616.18 239.19 280.74
9/30/99 1567.65 238.80 287.14
10/31/99 2583.82 256.15 317.27
11/30/99 3300.00 283.48 370.87
12/31/99 3952.94 344.64 469.95
</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 Chase H&Q Technology Index is calculated by Chase H&Q LLC.
(3) The Company's initial public offering commenced on June 28, 1996 and the
Company's 1999 fiscal year ended December 31, 1999.
(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, February 1998 and November 1999, 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 RELATIONSHIPS AND RELATED 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 $4,626,111 to
the Company in fiscal 1999.
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, makes
his aircraft available for business use by the Company for no charge. The
Company operates and maintains the aircraft or contracts with third parties to
perform those services. During fiscal 1999, Mr. Siebel reimbursed the Company
$98,492 for the Company's operating costs related to his nominal non-Company
business and personal use of the aircraft.
The Company effected a $2 million interest-bearing loan to Paul Wahl, the
Company's President and Chief Operating Officer, in connection with Mr. Wahl's
employment with the Company. The loan was intended to assist Mr. Wahl finance
his primary residence, and was secured by the value of such residence. Mr. Wahl
paid off the principal of the loan in full in February 2000, together with all
interest accrued thereon.
In November 1998, Sales.com, Inc. was formed as a wholly owned subsidiary of
the Company. In December 1999, Sales.com received an investment of
approximately $18.1 million from outside investors and an investment of
approximately $18.4 million from the Company. Of the investment by the Company,
$9 million was used by Sales.com to repay previous advances by the Company.
Thomas M. Siebel and Patricia A. House, the Company's Chairman and Chief
Executive Officer and Executive Vice President and Co-Founder, respectively,
are directors of Sales.com.
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
May 4, 2000
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as filed with the Securities and Exchange Commission,
excluding exhibits, may be obtained by stockholders without charge by written
request addressed to Investor Relations: Siebel Systems, Inc., 1855 South Grant
Street, San Mateo, California 94402.
14
<PAGE>
SIEBEL SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 7, 2000
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 the Company's principal executive offices at
1855 South Grant Street, San Mateo, CA 94402 on Wednesday, June 7, 2000 at 11:00
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
<PAGE>
Please mark [X]
your vote
as indicated
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NAMED NOMINEE.
---
PROPOSAL 1: To elect two directors to hold office until the 2003 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: Eric E. Schmidt, Ph.D. and A. Michael Spence, Ph.D.
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, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be signed on other side)
DATED ______________, 2000 ______________________________________________
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.
