<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Sapient Corporation
(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)(1) 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> 2
SAPIENT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
Sapient Corporation, a Delaware corporation (the "Company"), will be held on
Wednesday, May 7, 1997, at 10:00 a.m., at The Harvard Club, 374 Commonwealth
Avenue, Boston, Massachusetts (the "Meeting") for the purpose of considering and
voting upon the following matters:
1. To elect two Class I Directors for the ensuing three years;
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for the current year; and
3. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on Friday, March 21,
1997 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting and at any adjournments thereof.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1996, which contains consolidated financial statements and other
information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.
By order of the Board of Directors,
JERRY A. GREENBERG
Secretary
April 4, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE NEED BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE> 3
SAPIENT CORPORATION
ONE MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02142
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sapient Corporation (the "Company") for use
at the Annual Meeting of Stockholders to be held on Wednesday, May 7, 1997, at
10:00 a.m., at The Harvard Club, 374 Commonwealth Avenue, Boston, Massachusetts
and at any adjournments thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation to the Secretary of the Company. Attendance at the Meeting
will not itself be deemed to revoke a Proxy unless the stockholder gives
affirmative notice at the Meeting that the stockholder intends to revoke the
Proxy and vote in person.
At the close of business on March 21, 1997, the record date for the
determination of stockholders entitled to vote at the Meeting, there were
outstanding and entitled to vote an aggregate of 11,577,315 shares of Common
Stock of the Company, $.01 par value per share (the "Common Stock"). Each share
entitles the record holder to one vote on each of the matters to be voted upon
at the Meeting.
THE NOTICE OF MEETING, THIS PROXY STATEMENT, THE ENCLOSED PROXY AND THE
COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1996 ARE
BEING MAILED TO STOCKHOLDERS ON OR ABOUT APRIL 4, 1997. THE COMPANY WILL, UPON
WRITTEN REQUEST OF ANY STOCKHOLDER, FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS. PLEASE ADDRESS ALL SUCH
REQUESTS TO THE COMPANY, ATTENTION: INVESTOR RELATIONS, ONE MEMORIAL DRIVE,
CAMBRIDGE, MASSACHUSETTS 02142. EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST
AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum exists at the
Meeting.
The affirmative vote of the holders of a plurality of the shares of Common
Stock voting on the matter is required for the election of directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
voting on the matter is required to ratify the appointment of the Company's
independent auditors for the current year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be voted in favor of such matter, and will also not be counted
as shares voting on
<PAGE> 4
such matter. Accordingly, abstentions and "broker non-votes" will have no effect
on the voting on a matter that requires the affirmative vote of a plurality or a
majority of the shares voting on a matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 31, 1997
with respect to the beneficial ownership of shares of Common Stock by (i) each
person known to the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director and nominee for director of the
Company, (iii) Messrs. Greenberg and Moore, the Co-Chief Executive Officers of
the Company, and the two other executive officers listed in the Summary
Compensation Table set forth under the caption "Compensation of Executive
Officers" below (the "Named Executive Officers"), and (iv) the directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1)
------------------------------
PERCENT OF
BENEFICIAL OWNER NUMBER OF SHARES CLASS
- ------------------------------------------------------------------- ---------------- ----------
<S> <C> <C>
5% STOCKHOLDERS
Jerry A. Greenberg................................................... 3,584,000(2) 31.1%
Co-Chief Executive Officer c/o Sapient Corporation One Memorial
Drive Cambridge, Massachusetts 02142
J. Stuart Moore...................................................... 3,537,750(3) 30.7%
Co-Chief Executive Officer c/o Sapient Corporation One Memorial
Drive Cambridge, Massachusetts 02142
OTHER DIRECTORS
R. Stephen Cheheyl................................................... 2,550(4) *
Darius W. Gaskins, Jr................................................ 2,550(4) *
Bruce D. Parker...................................................... 2,550(4) *
Carl S. Sloane....................................................... 2,550(4) *
OTHER NAMED EXECUTIVE OFFICERS
Sheeroy D. Desai..................................................... 213,868(5) 1.8%
Susan D. Johnson..................................................... 8,540(6) *
All executive officers and directors, as a group (8 persons)......... 7,354,358(7) 63.5%
</TABLE>
- ---------------
* Less than 1%
(1) Beneficial ownership includes any shares as to which the individual has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after January 31, 1997
through the exercise of any stock option or other right. Unless otherwise
indicated, each stockholder listed above has sole voting power and
investment power (or shares such power with his or her spouse) with respect
to the shares listed.
(2) Includes 282,579 shares held by the Jerry A. Greenberg Three-Year Qualified
Annuity Trust-1996 and 983,608 shares held by the Jerry A. Greenberg
Eight-Year Qualified Annuity Trust-1996, of which trusts Mr. Greenberg is a
co-trustee and over which shares Mr. Greenberg shares voting and/or
investment control.
2
<PAGE> 5
(3) Includes (i) 980,182 shares held by the J. Stuart Moore Eight-Year Qualified
Annuity Trust-1996, of which Mr. Moore is the sole trustee and over which
Mr. Moore has sole voting and investment control, (ii) 265,108 shares held
by the J. Stuart Moore Two-Year Qualified Annuity Trust-1996 and 13,333
shares held by the J. Stuart Moore Remainder Trust, of which trusts Mr.
Moore is a co-trustee and over which shares Mr. Moore shares investment
control, (iii) 4,000 shares held by the J. Stuart Moore Irrevocable Trust,
of which Mr. Moore's wife is a co-trustee and over which shares Mr. Moore's
wife shares voting and/or investment control and (iv) 270,000 shares held by
the J. Stuart Moore Gift Trust of 1995, over which shares Mr. Moore does not
have voting or investment control but in which shares Mr. Moore has a
beneficial interest. Mr. Moore disclaims beneficial ownership of the shares
held by the trusts except to the extent of his proportionate pecuniary
interest therein.
(4) Includes 1,250 shares which may be acquired pursuant to stock options
exercisable within 60 days after January 31, 1997.
(5) Includes 28,150 shares which may be acquired pursuant to stock options
exercisable within 60 days after January 31, 1997.
(6) Includes 5,000 shares which may be acquired pursuant to stock options
exercisable within 60 days after January 31, 1997.
(7) Includes 38,150 shares which may be acquired pursuant to stock options
exercisable within 60 days after January 31, 1997.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. There are
currently two Class I directors, whose terms expire at this Meeting, two Class
II directors, whose terms expire in 1998, and two Class III directors, whose
terms expire in 1999 (in all cases subject to the election and qualification of
their successors or their earlier death, resignation or removal).
The persons named in the enclosed proxy will vote each proxy for the
election of Jerry A. Greenberg and Bruce D. Parker as Class I directors, unless
authority to vote for the election of either or both of the nominees is withheld
by marking the proxy to that effect. Messrs. Greenberg and Parker are both
currently directors of the Company.
Each Class I director will be elected to hold office until the Company's
annual meeting of stockholders to be held in 2000 and until his successor is
elected and qualified. Each of the nominees has indicated his willingness to
serve, if elected; however, if either nominee should be unable or unwilling to
stand for election, the person acting under the proxy may vote the proxy for a
substitute nominee designated by the Board of Directors. The Board of Directors
has no reason to believe that either of the nominees will be unable to serve if
elected.
All of the Company's directors are listed below with their principal
occupation and business experience for the past five years, the names of other
publicly held companies of which they serve as a director, age and length of
service as a director of the Company.
3
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, OTHER BUSINESS
DIRECTOR EXPERIENCE DURING PAST FIVE YEARS
NAME AGE SINCE AND OTHER DIRECTORSHIPS
- --------------------------------- --- -------- ----------------------------------------------
<S> <C> <C> <C>
NOMINEES FOR TERMS EXPIRING IN 2000 (CLASS I DIRECTORS)
Jerry A. Greenberg............... 31 1991 Mr. Greenberg co-founded the Company in 1991
and has served as Co-Chairman of the Board of
Directors and Co-Chief Executive Officer of
the Company since its inception in 1991.
Bruce D. Parker.................. 49 1995 Mr. Parker has been Senior Vice President
Technology Alliance and Chief Information
Officer of Ryder Systems, Inc., a
transportation company, since December 1996
and was Senior Vice President and Chief
Information Officer from September 1994 to
December 1996. From April 1993 until September
1994, Mr. Parker served as Vice President of
American Airlines, Inc. and as President of
its Sabre Development Services Division. Mr.
Parker served as Vice President of Sabre
Computer Services Division from 1988 until
April 1993.
DIRECTORS WHOSE TERMS EXPIRE IN 1998 (CLASS II DIRECTORS)
J. Stuart Moore.................. 35 1991 Mr. Moore co-founded the Company in 1991 and
has served as Co-Chairman of the Board of
Directors and Co-Chief Executive Officer of
the Company since its inception in 1991.
Darius W. Gaskins, Jr............ 58 1995 Mr. Gaskins is a founding partner of Carlisle,
Fagan, Gaskins & Wise, Inc., a management
consulting firm, which was formed in 1993.
Since June 1991, Mr. Gaskins has also been a
partner of High Street Associates, Inc., which
owns and manages specialty chemical companies.
Mr. Gaskins is a director of Anacomp Inc., UNR
Industries, Inc. and Northwestern Steel and
Wire Company.
DIRECTORS WHOSE TERMS EXPIRE IN 1999 (CLASS III DIRECTORS)
Carl S. Sloane................... 60 1995 Mr. Sloane is the Ernest L. Arbuckle Professor
of Business Administration at Harvard
University's Graduate School of Business
Administration, where he has been a member of
the faculty since September 1991. Mr. Sloane
is a director of Ionics, Inc. and Rayonier
Incorporated.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, OTHER BUSINESS
DIRECTOR EXPERIENCE DURING PAST FIVE YEARS
NAME AGE SINCE AND OTHER DIRECTORSHIPS
- --------------------------------- --- -------- ----------------------------------------------
<S> <C> <C> <C>
R. Stephen Cheheyl............... 51 1996 From October 1994 until he retired on December
31, 1995, Mr. Cheheyl served as Executive Vice
President, Business Operations, of Bay
Networks, Inc., a manufacturer of computer
networking products which was formed through
the merger of Wellfleet Communications, Inc.
and Synoptics Communications, Inc. From
December 1990 to October 1994, Mr. Cheheyl
served as Senior Vice President, Finance and
Administration of Wellfleet. Mr. Cheheyl is a
director of Auspex Systems, Inc., ON
Technology Corporation and Infinium Software,
Inc.
</TABLE>
For information relating to shares of Common Stock owned by each of the
directors, see "Security Ownership of Certain Beneficial Owners and Management."
BOARD AND COMMITTEE MEETINGS
The Board of Directors met five times (including by telephone conference)
during 1996. All directors attended at least 75% of the meetings of the Board of
Directors and of the committees on which they served.
In February 1996, in connection with the Company's initial public offering
of Common Stock, the Board of Directors established an Audit Committee, which is
responsible for reviewing the results and scope of the audit and other services
provided by the Company's independent public accountants. The Audit Committee
held two meetings during 1996. The Audit Committee is currently comprised of all
four of the Company's non-employee directors.
In February 1996, in connection with the Company's initial public offering
of Common Stock, the Board of Directors established a Compensation Committee,
which is responsible for reviewing the Company's overall compensation policies
and setting the compensation of the Company's executive officers. The
Compensation Committee is currently comprised of all four of the Company's
non-employee directors. The Compensation Committee did not meet during 1996.
DIRECTOR COMPENSATION
All of the non-employee directors are reimbursed for expenses incurred in
connection with their attendance at Board and committee meetings. Directors
receive no other cash compensation for serving as directors.
On January 10, 1996, each of the Company's four non-employee directors was
granted a stock option under the Company's 1992 Stock Plan to acquire 5,000
shares of Common Stock at an exercise price of $8.00 per share, which the Board
determined to be the fair market value of the Common Stock on such date. Such
options vest in four equal annual installments starting on the first anniversary
of the date of grant.
In February 1996, the Board adopted and the stockholders approved the 1996
Director Stock Option Plan (the "Director Plan"), pursuant to which each new
non-employee director elected to the Board of Directors in the future will be
granted, upon his or her initial election as a director, an option to purchase
5,000 shares of Common Stock. All options granted under the Director Plan will
have an exercise price equal to the fair market value of the Common Stock on the
date of grant, will vest over a four year period, provided the optionholder
continues to serve as a director of the Company, and will expire ten years from
the date of grant
5
<PAGE> 8
(subject to earlier termination in the event the optionee ceases to serve as a
director of the Company). No options have ever been granted under the Director
Plan, which provides for the issuance of a maximum of 30,000 shares.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation in each of the last two fiscal years of the Named Executive
Officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------------
ANNUAL NUMBER OF
COMPENSATION(1) SHARES
------------------- UNDERLYING ALL OTHER
NAME AND SALARY BONUS STOCK OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) /SARS(#)(2) ($)(3)
- --------------------------------------- ---- ------- -------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Jerry A. Greenberg..................... 1996 $50,000 $106,567 0 $ 0
Co-Chairman of the Board and Co-Chief 1995 50,000 110,500 0 0
Executive Officer
J. Stuart Moore........................ 1996 $50,000 $106,567 0 $1,250
Co-Chairman of the Board and Co-Chief 1995 50,000 110,500 0 0
Executive Officer
Sheeroy D. Desai....................... 1996 $50,000 $ 94,900 0 $1,172
Executive Vice President 1995 50,000 80,750 0 1,250
Susan D. Johnson....................... 1996 $60,000 $ 43,875 0 $1,250
Chief Financial Officer.............. 1995 60,000 26,230 15,000 $1,250
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than the lesser of $50,000 or ten percent of the total
annual salary and bonus for the Named Executive Officers for such year.
(2) The Company has never granted any stock appreciation rights.
(3) Amounts shown in this column represent the Company's matching contributions
under the Company's 401(k) Plan.
Each Named Executive Officer has executed agreements which prohibit them
from competing with the Company for a period of 12 months following termination
of their employment with the Company.
6
<PAGE> 9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes, for each of the Named Executive Officers,
the number of shares acquired on exercise of options during the fiscal year
ended December 31, 1996, the aggregate dollar value realized upon such exercise
and the number and value of unexercised options held by such officers on
December 31, 1996. The Company did not grant stock options to any of the Named
Executive Officers during the year ended December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERLYING
NUMBER UNEXERCISED VALUE OF
OF OPTIONS AT UNEXERCISED IN-THE-
SHARES FISCAL YEAR- MONEY OPTIONS AT
ACQUIRED END FISCAL YEAR-END
ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) (#) ($)(2)
- --------------------------------------- -------- -------- ------------- -------------------
<S> <C> <C> <C> <C>
Jerry A. Greenberg(3).................. -- -- -- --
J. Stuart Moore(3)..................... -- -- -- --
Sheeroy D. Desai....................... 71,500 $690,965 19,000/86,000 $784,465/3,523,100
Susan D. Johnson....................... 2,000 $104,250 2,000/24,500 $ 77,876/ 955,064
</TABLE>
- ---------------
(1) Represents the difference between the exercise price and the fair market
value of the Common Stock on the date of exercise.
(2) Represents the difference between the last reported sale price per share
($42.125) of the Common Stock on December 31, 1996, as reported on the
Nasdaq National Market System, and the exercise price.
(3) Messrs. Greenberg and Moore do not participate in the Company's stock plans.
REPORT ON EXECUTIVE COMPENSATION
Prior to February 1996 all compensation decisions, including the
compensation of the Company's executive officers for 1996, were made by Messrs.
Greenberg and Moore, the Company's Co-Chief Executive Officers. In February
1996, in connection with the Company's initial public offering of Common Stock,
the Board of Directors established a Compensation Committee responsible for
reviewing the Company's overall compensation policies and setting the
compensation of the Company's executive officers. The Compensation Committee is
currently comprised of all four of the Company's non-employee directors.
Compensation Philosophies and Goals
The Company's executive compensation program, which consists of a
combination of base salary, cash bonuses and stock options, is designed in large
part to align executive incentives with the Company's strategic goal of
achieving high levels of client satisfaction. Accordingly, more than half of the
total cash compensation of the Company's senior executives involved in the
delivery of client projects is directly linked to the Company's measurements of
client satisfaction. By tying compensation to the achievement of one of the
Company's core objectives and fundamental values, the Company believes that a
performance-oriented environment is created for its executives and other
employees.
The Company's executive compensation program is also intended to align
executive and stockholder interests by providing executives with an equity
interest in the Company through the granting of stock options. Consistent with
this purpose, because Messrs. Greenberg and Moore, the Company's founders, each
already holds a significant equity stake in the Company, they do not participate
in the Company's stock option plans.
7
<PAGE> 10
Beginning in the current fiscal year, the size of option grants will be
determined by the Compensation Committee based on its review of various factors,
including the executive's position with the Company, the executive's past and
expected contributions to the Company and the executive's current stock and
option holdings.
The Company also seeks to structure its executive compensation program in a
manner which will reward executives for the achievement of the Company's
business objectives as well as for individual performance and will enable the
Company to attract and retain key executives.
Executive Officer Compensation in Fiscal 1996
In keeping with the Company's desire to create a performance-oriented
environment through its compensation programs, the bonus component of the cash
compensation payable to the Company's executive officers is generally greater
than the base salary component. Base salaries of the executive officers for 1996
were determined by the Company's Co-Chief Executive Officers prior to the
Company's initial public offering. For 1996, the base salary of each Named
Executive Officer remained at the 1995 level.
The Company adopted an executive bonus plan for 1996 which covered the
executive officers and other senior management of the Company who are involved
in the delivery of client projects. Under the bonus plan, the Co-Chief Executive
Officers set the target amount of bonus compensation payable to each participant
for the year. Each participant's actual bonus compensation was then determined
based on the following factors:
- Client Satisfaction. Sixty percent of each participant's bonus
compensation was based on a weighted average of the Company's
measurements of client satisfaction throughout the year. These
measurements, which were based on a scale of one to ten, were collected
by the Company in writing in connection with each client project. In
order to receive all of the bonus compensation allocable to this
measurement, an overall rating of ten was required, with any rating
below a perfect ten resulting in a proportionate reduction in the bonus
compensation payable under this factor.
- Office Communications. Twenty percent of each participant's bonus
compensation was based on the participant's office communications
rating. These ratings, which were also based on a scale of one to ten,
were measured quarterly through office ratings and Company-wide employee
surveys. In order to receive all of the bonus compensation allocable to
this measurement, a perfect score of ten was required in each rating. In
addition, if a specified minimum rating was not achieved by a
participant, no portion of the bonus compensation allocable to this
measurement was payable to the participant.
- Revenues. The remaining twenty percent of each participant's bonus
compensation was based on the Company's achievement of a revenue target
established by the Co-Chief Executive Officers. If the Company failed to
meet the specified revenue target, no portion of the bonus compensation
allocable to this measurement would be payable. If the Company met the
revenue target, 100% of the bonus compensation allocable to this
measurement would be payable, and if the Company exceeded the revenue
target, the bonus compensation allocable to this measurement would be
increased on a proportional basis.
In February 1997, the Board of Directors reviewed the Company's and each
participant's performance against the objective criteria of the plan described
above. Based on this review, and in accordance with the criteria described
above, bonus payments were approved to each executive officer ranging from
approximately 82% to 95% of his or her full target bonus. As indicated in the
Summary Compensation Table on page 6, Messrs. Greenberg and Moore each received
a bonus of $106,567 in 1996.
Because the Company's Chief Financial Officer is not directly involved in
the delivery of client projects, her bonus compensation was determined with
reference to both objective and subjective factors selected by
8
<PAGE> 11
the Co-Chief Executive Officers to provide a direct link between the Chief
Financial Officer's compensation and her role in helping the Company attain
annual performance measures. For 1996, these factors were the achievement of key
financial metrics and management of internal budget controls and other
departmental objectives.
In light of the existing stock and option holdings of each of the Named
Executive Officers, no options were granted to any of the executive officers in
1996.
Compliance with Internal Revenue Code Section 162(m)
The Company does not believe that Section 162(m) of the Internal Revenue
Code, which disallows a federal income tax deduction to public companies for
certain compensation in excess of $1 million paid to a corporation's chief
executive officer or any of its four other most highly compensated executive
officers, will generally have an effect on the Company. The Compensation
Committee intends to review the potential effects of Section 162(m) periodically
and in the future may decide to structure additional portions of the Company's
compensation program in a manner designed to permit deductibility for federal
income tax purposes.
R. Stephen Cheheyl*
Darius W. Gaskins, Jr.*
Jerry A. Greenberg
J. Stuart Moore
Bruce D. Parker*
Carl S. Sloane*
- ---------------
* Member of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In February 1996, in connection with the Company's initial public offering
of Common Stock, the Board of Directors established a Compensation Committee
consisting of all four of the Company's non-employee directors. Prior to the
establishment of the Compensation Committee, compensation decisions were made by
Messrs. Greenberg and Moore, the Company's Co-Chief Executive Officers. No
executive officer of the Company has served as a director or member of the
compensation committee (or other committee serving an equivalent function) of
any other entity, whose executive officers served as a director of or member of
the Compensation Committee of the Company.
9
<PAGE> 12
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from April 3, 1996 (the date the Common Stock of the
Company was registered under the Securities Exchange Act of 1934) through
December 31, 1996 with the cumulative total return on (i) the Nasdaq Composite
Index and (ii) the GSTI Computer Services Index. The comparison assumes the
investment of $100 on April 3, 1996 in the Company's Common Stock and in each of
the indices and, in each case, assumes reinvestment of all dividends.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD SAPIENT NASDAQ COMPOSITE GSTI COMPUTER
(FISCAL YEAR COVERED) CORPORATION INDEX SERVICES INDEX
<S> <C> <C> <C>
4/3/96 100 100 100
4/30/96 166 106 104
5/31/96 157 111 107
6/28/96 133 106 105
7/31/96 123 97 100
8/30/96 136 102 104
9/30/96 140 110 113
10/31/96 146 109 104
11/29/96 124 116 107
12/31/96 133 115 102
</TABLE>
PROPOSAL 2 -- RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP as
independent auditors of the Company for the current fiscal year. KPMG Peat
Marwick LLP has served as the Company's independent auditors since 1994.
Although stockholder approval of the Board of Director's selection of KPMG Peat
Marwick LLP is not required by law, the Board of Directors believes that it is
advisable to give stockholders an opportunity to ratify this selection. If this
proposal is not approved at the Meeting, the Board of Directors will reconsider
its selection of KPMG Peat Marwick LLP.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting to respond to appropriate questions, and to make a statement if
he or she so desires.
The Board of Directors recommends that stockholders vote in favor of the
proposal to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the year ending December 31, 1997.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other matters are properly presented to the Annual
10
<PAGE> 13
Meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, telegraph,
facsimile and personal interviews. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward copies of the proxy
material to those persons for whom they hold shares and request instructions for
voting the proxies and the Company will reimburse them for their out-of-pocket
expenses in connection with this distribution.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Except as described below, and based solely
upon a review of reports submitted, and representations made, to the Company,
the Company believes that during 1996 its executive officers and directors and
holders of more than 10% of the Common Stock complied with all Section 16(a)
filing requirements.
Sheeroy Desai, Executive Vice President of the Company, amended his Initial
Statement of Beneficial Ownership of Securities on Form 3 to report his exercise
of a stock option to purchase 24,000 shares of the Company's Common Stock and
the grant of a stock option to purchase 1,500 shares of the Company's Common
Stock to his wife. Mr. Desai amended a Statement of Changes in Beneficial
Ownership of Securities on Form 4 for the month of April 1996 to report the
purchase of 250 shares of the Company's Common Stock by each of himself and his
wife.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its principal
offices, One Memorial Drive, Cambridge, Massachusetts 02142, no later than
December 5, 1997 in order to be considered for inclusion in the proxy statement
for that meeting.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
JERRY A. GREENBERG
Secretary
April 4, 1997
11
<PAGE> 14
Appendix A
SAPIENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - MAY 7, 1997
Those signing on the reverse side, revoking any prior proxies, hereby appoint(s)
Jerry A. Greenberg and J. Stuart Moore, and each of them with full power of
substitution, as proxies for those signing on the reverse side to act and vote
at the 1997 Annual Meeting of Stockholders of Sapient Corporation and at any
adjournments thereof as indicated upon all matters referred to on the reverse
side and described in the Proxy Statement for the Meeting, and in their
discretion, upon any other matters which may properly come before the Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL
VOTE "FOR" PROPOSAL NUMBERS 1 AND 2.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE
AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
Please sign this Proxy exactly as your name appears hereon. Joint owners should
each sign personally. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name appears, a majority
must sign. If a corporation or partnership, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
________________________________ ________________________________
________________________________ ________________________________
________________________________ ________________________________
<PAGE> 15
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
1. Election of Class I Directors. 2. Ratification of appointment of For Against Abstain
For both of the nominees listed at independent auditors.
right (except as indicated to [ ] [ ] [ ]
the contrary) [ ] Withhold [ ]
NOMINEES: JERRY A. GREENBERG
BRUCE D. PARKER
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.
YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE.
A VOTE FOR THE DIRECTOR NOMINEES AND FOR PROPOSAL
NUMBER 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
Mark box at right if comments or address change [ ]
have been noted on the reverse side of this card.
Shareholder sign here ---------------- --------------------------------------- Date ------------------------------
Co-owner sign here
NOTE: Please be sure to sign and date this Proxy.
</TABLE>
<PAGE> 16
DETACH CARD DETACH CARD
SAPIENT CORPORATION
Dear Stockholder:
Please take note of the important information enclosed with this Proxy. There
are issues related to the management and operation of your Company that require
your immediate attention and approval. These are discussed in detail in the
enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign and date the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders on May 7,
1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Sapient Corporation
