<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
ANSYS, 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:
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(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>
ANSYS, INC.
SOUTHPOINTE
275 TECHNOLOGY DRIVE
CANONSBURG, PA 15317
March 27, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
ANSYS, Inc. (the "Annual Meeting") to be held on Wednesday, May 6, 1998, at
2:00 p.m., local time, at the law offices of Buchanan Ingersoll, located at
One Oxford Centre, 301 Grant Street, Pittsburgh, Pennsylvania, for the purpose
of considering and acting on the following:
The Annual Meeting has been called for the purpose of (i) electing three
Class II Directors for three-year terms, (ii) amending the Company's 1996
Stock Option and Grant Plan to increase the number of shares of the Company's
Common Stock available for issuance thereunder and (iii) considering and
voting upon such other business as may properly come before the Annual Meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 18, 1998 as
the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors of the Company recommends that you vote "FOR" the
election of the nominees of the Board of Directors as Class II Directors of
the Company and "FOR" the amendment to the Company's 1996 Stock Option and
Grant Plan to increase the number of shares of the Company's Common Stock
available for issuance thereunder.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
Sincerely,
/s/ Peter J. Smith
Peter J. Smith
Chairman, President and
Chief Executive Officer
<PAGE>
ANSYS, INC.
SOUTHPOINTE
275 TECHNOLOGY DRIVE
CANONSBURG, PA 15317
(724) 746-3304
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 6, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ANSYS,
Inc. (the "Company") will be held on Wednesday, May 6, 1998, at 2:00 p.m.,
local time, at the law offices of Buchanan Ingersoll, One Oxford Centre, 301
Grant Street, Pittsburgh, Pennsylvania (the "Annual Meeting"), for the purpose
of considering and voting upon:
1. The election of three Class II Directors for three-year terms;
2. An amendment to the Company's 1996 Stock Option and Grant Plan to
increase the number of shares of the Company's common stock thereunder;
and
3. Such other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 18, 1998 as
the record date for determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
Only holders of Common Stock of record at the close of business on that date
will be entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
In the event there are not sufficient shares to be voted in favor of any of
the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation of proxies.
By Order of the Board of
Directors
/s/John M. Sherbin II
John M. Sherbin II
Secretary and Chief Financial
Officer
Canonsburg, Pennsylvania
March 27, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
ANSYS, INC.
SOUTHPOINTE
275 TECHNOLOGY DRIVE
CANONSBURG, PA 15317
(724) 746-3304
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 6, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ANSYS, Inc. (the "Company"), for use at
the Annual Meeting of Stockholders of the Company to be held on Wednesday, May
6, 1998 at 2:00 p.m., local time, at the law offices of Buchanan Ingersoll,
One Oxford Centre, 301 Grant Street, Pittsburgh, Pennsylvania, and any
adjournments or postponements thereof (the "Annual Meeting").
At the Annual Meeting, the stockholders of the Company will be asked to
consider and vote upon the following matters:
1. The election of three Class II Directors for three-year terms, such
terms to continue until the annual meeting of stockholders in 2001 and
until such Directors' successors are duly elected and qualified;
2. An amendment to the Company's 1996 Stock Option and Grant Plan to
increase the number of shares of the Company's Common Stock available
for issuance thereunder; and
3. Such other business as may properly come before the meeting and any
adjournments or postponements thereof.
The Notice of Annual Meeting, Proxy Statement and Proxy Card are first being
mailed to stockholders of the Company on or about March 27, 1998 in connection
with the solicitation of proxies for the Annual Meeting. The Board of
Directors has fixed the close of business on March 18, 1998 as the record date
for the determination of stockholders entitled to notice of, and to vote at,
the Annual Meeting (the "Record Date"). Only holders of record of the
Company's common stock, par value $.01 per share (the "Common Stock"), at the
close of business on the Record Date will be entitled to notice of, and to
vote at, the Annual Meeting. As of the Record Date, there were approximately
16,309,776 shares of Common Stock outstanding and entitled to vote at the
Annual Meeting and approximately 364 stockholders of record. Each holder of a
share of Common Stock outstanding as of the close of business on the Record
Date will be entitled to one vote for each share held of record with respect
to each matter submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of the total number of
outstanding shares of Common Stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting.
Shares that reflect abstentions or "broker non-votes" (i.e., shares
represented at the meeting held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote such shares and with respect to which the broker or nominee
does not have discretionary voting power to vote such shares) will be counted
for purposes of determining whether a quorum is present for the transaction of
business at the meeting.
The affirmative vote of holders of a plurality of the votes cast by holders
of shares of Common Stock present and represented by proxy and entitled to
vote on the matter is required for the election of the Class II Directors.
Abstentions and broker non-votes will not be counted as voting with respect to
the election of the Class II Directors and, therefore, will not have an effect
on the election of the Class II Directors.
<PAGE>
The affirmative vote of holders of a majority of shares of Common Stock
present or represented by proxy and entitled to vote on the matter is required
for the approval of the amendment to the 1996 Stock Option and Grant Plan (the
"1996 Stock Plan"). Broker non-votes will not be considered entitled to vote
on this matter and, therefore, will have no effect on the approval of the
amendment to the 1996 Stock Plan. Abstentions will be counted as voting
against the amendment to the 1996 Stock Plan.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE. COMMON STOCK REPRESENTED
BY PROPERLY EXECUTED PROXIES RECEIVED BY THE COMPANY AND NOT REVOKED WILL BE
VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED
THEREIN. IF INSTRUCTIONS ARE NOT GIVEN THEREIN, PROPERLY EXECUTED PROXIES WILL
BE VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN THIS PROXY
STATEMENT AND "FOR" THE AMENDMENT TO THE 1996 STOCK PLAN TO INCREASE THE
NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK AVAILABLE FOR ISSUANCE
THEREUNDER. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THE ELECTION OF
CLASS II DIRECTORS AND THE AMENDMENT TO THE 1996 STOCK PLAN WILL BE PRESENTED
AT THE ANNUAL MEETING. IF OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED
IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS.
Any properly completed proxy may be revoked at any time before it is voted
on any matter (without, however, affecting any vote taken prior to such
revocation) by giving written notice of such revocation to the Secretary of
the Company, or by signing and duly delivering a proxy bearing a later date,
or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not, by itself, revoke a proxy.
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1997 ("Fiscal 1997"), is being mailed to
stockholders of the Company concurrently with this Proxy Statement. The Annual
Report, however, is not a part of the proxy solicitation material.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven members and is
divided into three classes, with two Directors in Class I, three Directors in
Class II and two Directors in Class III. Directors serve for three-year terms
with one class of Directors being elected by the Company's stockholders at
each annual meeting.
At the Annual Meeting, three Class II Directors will be elected to serve
until the annual meeting of stockholders in 2001 and until such Directors'
successors are duly elected and qualified. The Board of Directors has
nominated Roger J. Heinen, Jr., Roger B. Kafker and Jacqueline C. Morby for
re-election as the Class II Directors. Unless otherwise specified in the
proxy, it is the intention of the persons named in the proxy to vote the
shares represented by each properly executed proxy for the re-election of
Mssrs. Heinen and Kafker and Ms. Morby as Directors. Proxies cannot be voted
for a greater number of persons than the number of nominees named. The
nominees have agreed to stand for re-election and to serve, if elected, as
Directors. However, if either person nominated by the Board of Directors fails
to stand for election or is unable to accept election, the proxies will be
voted for the election of such other person or persons as the Board of
Directors may recommend.
VOTE REQUIRED FOR APPROVAL
A quorum being present, the affirmative vote of a plurality of the votes
cast is necessary to elect the nominees as Class II Directors of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES OF THE BOARD OF DIRECTORS AS CLASS II DIRECTORS OF THE COMPANY.
2
<PAGE>
PROPOSAL 2
AMENDMENT TO 1996 STOCK PLAN
The Board of Directors has adopted, and is seeking stockholder approval of,
an amendment to the 1996 Stock Plan which would increase the number of shares
of Common Stock available for issuance under the 1996 Stock Plan from
2,250,000 to 3,250,000.
1996 Stock Option and Grant Plan. The 1996 Stock Plan was adopted by the
Board of Directors on April 19, 1996 and subsequently approved by the
Company's stockholders. The 1996 Stock Plan permits (i) the grant of Incentive
Options, (ii) the grant of Non-Qualified Options, (iii) the issuance or sale
of Common Stock with or without vesting or other restrictions ("Stock
Grants"), (iv) the grant of Common Stock upon the attainment of specified
performance goals ("Performance Share Awards") and (v) the grant of the right
to receive cash dividends with the holders of the Common Stock as if the
recipient held a specified number of shares of the Common Stock ("Dividend
Equivalent Rights"). These grants may be made to officers and other employees,
consultants and key persons of the Company and its subsidiaries. In addition,
Independent Directors are automatically eligible for certain grants under the
1996 Stock Plan, as described below. The 1996 Stock Plan provides for the
issuance of 2,250,000 shares of Common Stock, of which no more than 300,000
shares may be issued to Independent Directors. On and after the date the 1996
Stock Plan becomes subject to Section 162(m) of the Code, options with respect
to no more than 300,000 shares of Common Stock may be granted to any one
individual in any calendar year. During Fiscal 1997, options to purchase
759,324 shares of Common Stock with a weighted average exercise price of $6.65
were granted under the 1996 Stock Plan, of which 86,421 Incentive Options and
59,524 Non-Qualified Options were subsequently cancelled upon the termination
of the grantee's employment. At December 31, 1997, a total of 1,230,171 shares
were reserved for future issuance under the 1996 Stock Plan. It is proposed
that the shares reserved for issuance under the 1996 Stock Plan be increased
by 1,000,000 to 3,250,000, 2,230,171 of which would be available under future
grants. The increase in the number of shares of Common Stock available for
issuance affords the Company the flexibility to attract and retain key
personnel needed to be successful in a highly competitive industry.
The 1996 Stock Plan is administered by the Compensation Committee. Subject
to the provisions of the 1996 Stock Plan, the Compensation Committee has full
power to determine from among the persons eligible for grants under the 1996
Stock Plan (i) the individuals to whom grants will be granted, (ii) the
combination of grants to participants and (iii) the specific terms of each
grant. Incentive Options may be granted only to officers or other employees of
the Company or its subsidiaries including members of the Board of Directors
who are also employees of the Company or its subsidiaries.
The option exercise price of each option granted under the 1996 Stock Plan
is determined by the Compensation Committee but, in the case of Incentive
Options may not be less than 100% of the fair market value of the underlying
shares on the date of grant and may not be exercisable more than ten years
from the date the option is granted. If any employee of the Company or any
subsidiary owns or is deemed to own at the date of grant shares of stock
representing in excess of 10% of the combined voting power of all classes of
stock of the Company or any subsidiary, the exercise price for options granted
to such employee may not be less than 110% of the fair market value of the
underlying shares on that date and the option may not be exercisable more than
five years from the date the option is granted. No option may be exercised
subsequent to the termination of the optionee's employment or other business
relationship with the Company unless otherwise determined by the Compensation
Committee or provided in the option agreement. At the discretion of the
Compensation Committee, any option may include a "reload" feature, pursuant to
which an optionee exercising an option receives in addition to the number of
shares of Common Stock due on the exercise of such an option an additional
option with an exercise price equal to the fair market value of the Common
Stock on the date such additional option is granted. Upon the exercise of
options, the option exercise price must be paid in full either in cash or, in
the sole discretion of the Compensation Committee, by delivery of shares of
Common Stock already owned by the optionee.
3
<PAGE>
The 1996 Stock Plan also permits Stock Grants, Performance Share Awards and
grants of Dividend Equivalent Rights. Stock Grants and Performance Share
Awards may be made to persons eligible under the 1996 Stock Plan, subject to
such conditions and restrictions as the Compensation Committee may determine.
Prior to the vesting of shares, recipients of Stock Grants generally will have
all the rights of a stockholder with respect to the shares, including voting
and dividend rights, subject only to the conditions and restrictions set forth
in the 1996 Stock Plan or in any agreement. In the case of Performance Share
Awards, the issuance of shares of Common Stock will occur only after the
recipient has satisfied the conditions and restrictions set forth in the 1996
Stock Plan or in any agreement. The Compensation Committee may also make Stock
Grants to persons eligible under the 1996 Stock Plan in recognition of past
services or other valid consideration, or in lieu of cash compensation. In
addition, the Compensation Committee may grant Dividend Equivalent Rights in
conjunction with any other grant made pursuant to the 1996 Stock Plan or as a
free standing grant. Dividend Equivalent Rights may be paid currently or
deemed to be reinvested in additional shares of Common Stock, which may
thereafter accrue further dividends.
The Compensation Committee may, in its sole discretion, accelerate or extend
the date or dates on which all or any particular option or options granted
under the 1996 Stock Plan may be exercised or vest. In the event of a merger,
liquidation or sale of substantially all of the assets of the Company, the
Board of Directors has the discretion to accelerate the vesting of options
granted under the 1996 Stock Plan, except that options granted to Independent
Directors as described below automatically accelerate in such circumstances.
The 1996 Stock Plan and the options issued thereunder terminate upon the
effectiveness of any such transaction or event, unless provision is made in
connection with such transaction for the assumption of options theretofore
made.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of holders of a majority of shares of Common Stock
present or represented by proxy and entitled to vote on the matter is required
for the approval of the amendment to the 1996 Stock Plan.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE AMENDMENT TO THE 1996 STOCK PLAN.
INFORMATION REGARDING DIRECTORS
The Board of Directors of the Company held five meetings during Fiscal 1997.
During Fiscal 1997, each of the incumbent Directors attended at least 75% of
the total number of meetings of the Board and of the committees of which he or
she was a member, except for Mr. John F. Smith, who attended 60% of the
meetings of the Board. The Board of Directors has established an Audit and
Ethics Committee (the "Audit Committee") and a Compensation and Option
Committee (the "Compensation Committee"). The Audit Committee recommends the
firm to be appointed as independent accountants to audit financial statements
and to perform services related to the audit, reviews the scope and results of
the audit with the independent accountants, reviews with management and the
independent accountants the Company's annual operating results, considers the
adequacy of the internal accounting procedures, considers the effect of such
procedures on the accountants' independence and establishes policies for
business values, ethics and employee relations. The Compensation Committee
reviews and recommends the compensation arrangements for officers and other
senior level employees, reviews general compensation levels for other
employees as a group, determines the options or stock to be granted to
eligible persons under the Company's 1996 Stock Option and Grant Plan (the
"1996 Stock Plan") and takes such other action as may be required in
connection with the Company's compensation and incentive plans. The Audit
Committee consists of Roger B. Kafker, Gary B. Eichhorn and Roger J. Heinen,
Jr. and held three meetings during Fiscal 1997. The Compensation Committee
consists of Jacqueline C. Morby and John F. Smith and held three meetings
during Fiscal 1997.
Nonemployee directors other than Ms. Morby and Mr. Kafker (the "Independent
Directors") receive fees of $1,000 and $500, respectively, for each meeting of
the Board of Directors or Board committee they attend,
4
<PAGE>
and each director is reimbursed for travel and other expenses incurred in
attending meetings. Also, under the 1996 Stock Plan, each Independent Director
is entitled to receive a one-time grant and an annual grant of options to
purchase Common Stock as described under "1996 Stock Option and Grant Plan--
Independent Director Options."
Set forth below is certain information regarding the Directors of the
Company, including the Class II Directors who have been nominated for election
at the Annual Meeting, based on information furnished by them to the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- ---- --- --------
<S> <C> <C>
CLASS I--TERM EXPIRES 2000
Peter J. Smith..................................................... 53 1994
Dr. John A. Swanson................................................ 57 1994
CLASS II--TERM EXPIRES 1998
Roger J. Heinen, Jr. (1)*.......................................... 47 1996
Roger B. Kafker (1)*............................................... 35 1994
Jacqueline C. Morby (2)*........................................... 60 1994
CLASS III--TERM EXPIRES 1999
Gary B. Eichhorn (1)............................................... 43 1994
John F. Smith (2).................................................. 62 1995
</TABLE>
- --------
*Nominee for re-election.
(1) Member of Audit and Ethics Committee.
(2) Member of the Compensation and Option Committee.
The principal occupation and business experience for at least the last five
years for each Director of the Company is set forth below.
Mr. Peter J. Smith has been the President and Chief Executive Officer of the
Company since March 1994 and Chairman of the Board of Directors since July
1995. Prior to joining the Company, Mr. Smith was Vice President of European
Operations for Digital Equipment Corporation ("Digital"), a computer company,
from November 1991 to March 1994. Previously, he managed Digital's worldwide
applications development and marketing activities, including its engineering
systems group which focused on CAD and CAM graphics and general engineering
market business. Mr. Smith holds a B.S. degree in electrical engineering from
Northeastern University and an M.B.A. from the University of Notre Dame.
Dr. John A. Swanson founded Swanson Analysis Systems, Inc., the Company's
predecessor, in 1970, and served as its President and Chief Executive Officer
until March 1994, when he became Chief Technologist and a director of the
Company. Dr. Swanson holds B.S. and M.S. degrees in mechanical engineering
from Cornell University and a Ph.D. in applied mechanics from the University
of Pittsburgh. Dr. Swanson is a Fellow of the American Society of Mechanical
Engineers and a member of the Institute of American Entrepreneurs.
Roger J. Heinen, Jr. has served as a director of the Company since April
1996. Mr. Heinen was a Senior Vice President of Microsoft Corporation, a
software company, from January 1993 through March 1996. Prior to that time, he
was a Senior Vice President of Apple Computer, Inc., a computer company, from
January 1990 to January 1993.
Roger B. Kafker has served as a director of the Company since February 1994.
He has been associated with TA Associates, Inc. or its predecessor since 1989
and became a Principal of that firm in 1994 and a Managing Director in 1995.
Mr. Kafker is also a director of Affiliated Managers Group, Inc., an asset
management holding company, Boron, LePore & Associates, Inc., a company
providing outsourced services to the pharmaceutical industry and Monarch
Dental Corporation, a dental practice management company.
5
<PAGE>
Jacqueline C. Morby has served as a director of the Company since February
1994. She has been Managing Director or a partner of TA Associates, Inc. or
its predecessor since 1982. Ms. Morby is also a director of Boron, LePore &
Associates, Inc., a company providing outsourced services to the
pharmaceutical industry, Ontrack Data International, Inc., a software
protection company, and Pacific Life Insurance Co., a life insurance company.
Gary B. Eichhorn has served as a director of the Company since September
1994. Mr. Eichhorn has been the President and Chief Executive Officer and a
director of Open Market, Inc., an Internet software company, since December
1995. From September 1991 to November 1995, Mr. Eichhorn worked at Hewlett-
Packard Company, a computer company, most recently serving as Vice President
and General Manager of Hewlett Packard's Medical Systems Group. From 1975 to
1991, Mr. Eichhorn held various sales and management positions at Digital.
John F. Smith has served as a director of the Company since December 1995.
Mr. Smith has been the President of PerSeptive BioSystems, a life sciences
company, since July 1996. Mr. Smith served as Chief Operating Officer and
Senior Vice President of Digital from 1986 through 1994, when he retired. Mr.
Smith also serves on the Board of Directors of Sequoia Systems, Inc., a
software company, Instron Inc., a material testing company, Perseptive
Biosystems, Inc., and Hadco Inc., an interconnect technology company.
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company and the
principal occupation and business experience for at least the last five years
for each executive officer who is not also a director are set forth below as
of December 31, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Peter J. Smith.......... 53 Chairman of the Board, President and Chief Executive Officer
Dr. John A. Swanson..... 57 Chief Technologist and Director
James E. Cashman III.... 44 Senior Vice President, Operations
Paul A. Johnson......... 47 Senior Vice President, Product Development
John M. Sherbin II...... 47 Chief Financial Officer, Senior Vice President, Finance
and Administration, and Secretary
Leonard Zera............ 45 Vice President, North American Sales
Mark C. Imgrund......... 40 Vice President, Corporate Quality
James C. Tung........... 63 Vice President, International Operations
Paul A. Chilensky....... 40 Vice President, Customer Services
Dr. Shah M. Yunus....... 42 Corporate Fellow
David L. Conover........ 39 Manager, Product Development
</TABLE>
- --------
James E. Cashman III has been the Company's Senior Vice President,
Operations since September 1997. Prior to joining the Company, Mr. Cashman was
Vice President of International Operations/Marketing/Product Development at
PAR Technology Corporation, a computer software and hardware company involved
in transaction processing, from May 1995 to September 1997. From September
1994 to May 1995, he was Vice President, Development and Marketing at
Metaphase Technology, Inc., a product data management company. Prior to
joining Metaphase, Mr. Cashman was employed by Structural Dynamics, Inc., a
computer aided design company, from June 1976 to August 1994, in a number of
sales and technical positions.
Paul A. Johnson has been the Company's Senior Vice President of Product
Development since February 1998 and was the Company's Vice President of
Product Development from October 1996 to January 1998. Prior to joining the
Company, Mr. Johnson was Vice President of Development for SER Systems, a
software company, from April 1996 to September 1996. From November 1979 to
August 1995, he was Vice President of Development for Legent Corporation, a
software company.
6
<PAGE>
John M. Sherbin, II has been the Company's Chief Financial Officer, Senior
Vice President, Finance and Administration, and Secretary since February 1998
and was the Company's Chief Financial Officer, Vice President, Finance and
Administration, and Secretary from May 1994 to January 1998. Prior to joining
the Company, Mr. Sherbin was Chief Financial Officer and Treasurer of II-VI,
Incorporated, an infrared materials and electro-components manufacturer, from
February 1986 to May 1994. Mr. Sherbin holds a B.S. degree in management and
accounting from Pennsylvania State University and an M.B.A. from the
University of Pittsburgh.
Leonard Zera has been the Company's Vice President, North American Sales
since June 1994. Prior to joining the Company, Mr. Zera held sales, sales
management and marketing positions at Digital from January 1978 to May 1994.
Mr. Zera holds a B.A. degree in marketing from Michigan State University and
an M.B.A. from Wayne State University.
Mark C. Imgrund has been the Company's Vice President, Corporate Quality
since September 1994 and was the Company's Quality Assurance Manager from
March 1987 to September 1994. Mr. Imgrund holds a B.S. degree in civil
engineering from Cornell University and an M.S. degree in mechanical
engineering from the University of Pittsburgh.
James C. Tung has been the Company's Vice President, International Sales
since March 1995. Prior to joining the Company, Mr. Tung was Vice President of
International Operations and International Sales and Marketing for PDA
Engineering, Inc., a software company, from January 1994 to February 1995.
From December 1992 to December 1993, he was President of Pacific Ventures, a
computer application software consulting company, and from 1989 to December
1992 he was the Vice President--Asia/Pacific Operations of Infotron Systems
Corporation, a communications hardware company. Mr. Tung holds a B.S. degree
in physics from Columbia University and an M.B.A. from the University of Santa
Clara.
Paul A. Chilensky was the Company's Manager of Customer Services from
January 1995 to March 1996, when he became Vice President, Customer Services.
Prior to joining the Company, Mr. Chilensky was regional manager of
professional services for Legent Corporation, a software company, from May
1991 to December 1994.
Dr. Shah M. Yunus has been a Corporate Fellow of the Company with
responsibility for product architecture since September 1994, and prior to
that was a research engineer and senior project leader for the Company since
March 1984. Dr. Yunus holds a B.S. degree in civil engineering and an M.S.
degree in structural engineering from the Bangladesh University of Engineering
and Technology and a Ph.D. in computational mechanics from Rensselaer
Polytechnic Institute.
David L. Conover joined the Company in 1980 and has served as its Manager of
Product Development since August 1995. Mr. Conover holds B.S. and M.S. degrees
in civil engineering from Carnegie Mellon University.
Each of the officers holds his or her respective office until the regular
annual meeting of the Board of Directors following the annual meeting of
stockholders and until his or her successor is elected and qualified or until
his or her earlier resignation or removal.
7
<PAGE>
EXECUTIVE COMPENSATION
The following sections of this Proxy Statement set forth and discuss the
compensation paid or awarded during the last three years to the Company's
Chief Executive Officer and the four most highly compensated executive
officers who earned in excess of $100,000 during Fiscal 1997 (collectively,
the "Named Executive Officers").
SUMMARY COMPENSATION
Summary Compensation. The following summary compensation table sets forth
information concerning compensation for services rendered in all capacities
awarded to, earned by or paid to the Named Executive Officers during each of
the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------- -----------------------------
SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS (SHARES) ($) (1)
- --------------------------- ---- ------- ------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Peter J. Smith.............. 1997 266,000 218,410 -- 44,600(2)
Chief Executive Officer 1996 249,100 282,709 135,860 44,080(2)
1995 245,792 224,139 -- 42,940(2)
Dr. John A. Swanson......... 1997 256,200 42,273 4,000 33,660(3)
Chief Technologist 1996 244,000 48,800 10,000 32,173(3)
1995 239,000 76,825 -- 32,460(3)
Leonard Zera................ 1997 125,000 45,223 40,000 36,000(4)
Vice President, North 1996 110,000 171,510 10,000 36,000(4)
American Sales 1995 100,000 104,758 -- 36,000(4)
Paul A. Johnson (5)......... 1997 125,000 23,750 40,000 --
Senior Vice President, 1996 29,407 7,500 60,000 --
International Sales 1995 -- -- -- --
John M. Sherbin II.......... 1997 111,333 52,121 18,000 30,000
Chief Financial Officer, 1996 101,333 56,365 30,000 30,000
Senior 1995 97,084 38,368 6,000 30,000
Vice President, Finance and
Administration, and
Secretary
</TABLE>
- --------
(1) Includes $30,000 contributed by the Company to its Pension and Profit-
Sharing Plans on behalf of each of the named executive officers for each
year shown.
(2) Includes premiums on life insurance of $7,400, $6,880 and $5,740 paid by
the Company on behalf of Mr. Smith for 1997, 1996 and 1995, respectively,
and a car allowance paid at the rate of $600 per month.
(3) Includes a car allowance of $305 per month, $181 per month and $205 per
month for 1997, 1996 and 1995, respectively.
(4) Includes a car allowance of $500 per month for 1997, 1996 and 1995.
(5) Employment commenced in October 1996.
8
<PAGE>
Option Grants. The following table sets forth certain information concerning
the individual grant of options to purchase Common Stock of the Company to the
Company's Named Executive Officers of the Company who received such grants
during Fiscal 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM (1)
GRANTED IN FISCAL PRICE PER EXPIRATION ---------------------
NAME (#) (2) YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dr. John A. Swanson..... 4,000 0.6% $6.875 4/29/2002 $ 7,598 $ 16,789
Leonard Zera............ 25,000 3.5% $9.625 1/20/2007 $ 151,328 $ 383,494
15,000 2.1% $ 6.25 4/29/2007 $ 58,959 $ 149,413
Paul A. Johnson......... 40,000 5.7% $ 6.25 4/29/2007 $ 157,224 $ 398,436
John M. Sherbin II...... 18,000 2.6% $ 6.25 4/29/2007 $ 70,751 $ 179,296
</TABLE>
- --------
(1) This column shows the hypothetical gain or option spreads of the options
granted based on assumed annual compound stock appreciation rates of 5%
and 10% over the full 10-year term of the options, except for Dr. Swanson,
whose options have a 5-year term. The 5% and 10% assumed rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future Common Stock prices. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses
associated with the exercise of the option or the sale of the underlying
shares, or reflect non-transferability, vesting or termination provisions.
The actual gains, if any, on the exercises of stock options will depend on
the future performance of the Common Stock.
(2) The options set forth above become exercisable in four equal annual
installments, commencing on the first anniversary of the grant date. All
options are subject to the employee's continued employment and terminate
ten years after the grant date, except for Dr. Swanson, whose options
terminate five years after the grant date, subject to earlier termination
in accordance with the Company's 1996 Stock Option and Grant Plan (the
"1996 Stock Plan") and the applicable option agreement. All options were
granted at fair market value as determined by the Compensation Committee
of the Board of Directors of the Company on the date of the grant. See
"1996 Stock Option and Grant Plan."
Option Exercises and Option Values. The following table sets forth
information concerning the number of shares acquired and the value realized
upon exercise of stock options during 1997 and information concerning the
number and value of unexercised options to purchase Common Stock of the
Company held by the Named Executive Officers of the Company who held such
options at December 31, 1997. No options were exercised in Fiscal 1997 by the
Named Executive Officers.
9
<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 (#) (1) DECEMBER 31, 1997 ($) (1) (2)
------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- -----------------------------
<S> <C> <C> <C> <C>
Peter J. Smith (3)... -- 135,860 -- $ 658,921
Dr. John A. Swanson.. 2,500 11,500 -- $ 1,500
Leonard Zera......... 2,500 47,500 -- $ 15,000
Paul A. Johnson...... 15,000 85,000 -- $ 40,000
John M. Sherbin II... 9,000 45,000 $ 10,275$ 48,825
</TABLE>
- --------
(1) Except for Peter J. Smith's stock options, the options set forth above
become exercisable in four equal annual installments, commencing on the
first anniversary of the grant date. All options are subject to the
employee's continued employment and terminate ten years after the grant
date, except for Mr. Swanson, whose options terminate five years after the
grant date, subject to earlier termination in accordance with the
Company's 1994 and 1996 Stock Plan and the applicable option agreement.
All options were granted at fair market value as determined by the
Compensation Committee of the Board of Directors of the Company on the
date of the grant. See "1994 Stock Option and Grant Plan" and "1996 Stock
Option and Grant Plan."
(2) Based on the last reported sale price on the Nasdaq National Market on
December 31, 1997 ($7.25 per share) less the aggregate option exercise
price.
(3) Mr. Smith's stock options become exercisable in fourteen equal monthly
installments commencing on April 1, 1998, subject to earlier vesting in
the event of a sale of the Company or the attainment of specified
valuations for the Company's Common Stock.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee is responsible for the oversight of all of the
Company's compensation policies and practices including benefits and
perquisites. Compensation is defined as base salary, all forms of variable pay
and pay-for-performance, and stock options, restricted stock or any other
plans directly or indirectly related to the Company's stock. Members of the
Compensation Committee will be appointed from the Board of Directors annually
at the first meeting of the Board following the annual meeting of
stockholders. Not less than a majority of the Compensation Committee will
consist of outside directors. It is also envisioned that the composition of
the Compensation Committee will reflect the requirements of Rule 16b-3 under
the Securities Exchange Act as in effect from time to time.
Compensation Philosophy. The underlying philosophy of the Company's
compensation programs is to pay competitive amounts to obtain and retain
valuable executives and to align executive compensation with several key
objectives. The first of these objectives is to enable the Company to attain
its annual market penetration and financial targets. Another key objective is
to ensure that a major portion of each executive's cash compensation is linked
to significant improvements in the Company's financial performance. The third
key objective is to make it possible for the Company to attract, retain and
reward executives who are responsible for leading the Company in achieving or
exceeding corporate performance goals, amid a very competitive market for
technical, marketing and sales personnel.
The Company's executive compensation programs generally will consist of
three principal elements: base salary, cash bonus and stock options and
benefits including pension and 401(k) benefits. The Company's objective is to
emphasize incentive compensation in the form of bonuses and stock option
grants, rather than base salary.
Base salary determinations will reflect, among other factors deemed
relevant, competitive pay practices of comparable high technology companies,
with a focus on the skills and performance levels of individual executives and
the needs of the Company. Bonuses under the Company's incentive plans will
reflect, among
10
<PAGE>
other relevant items, the Company's financial performance and achievement of
corporate objectives established by the Board of Directors prior to the start
of each fiscal year, such as those relating to revenue and profitability.
Stock option awards will reflect, among other relevant items, the job level of
the employee, responsibilities to be assumed in the upcoming fiscal year,
responsibilities of each executive in prior years and the size of awards made
to each such officer in prior years relative to the Company's overall
performance.
In establishing the level of incentive bonuses for the Company's executives
for Fiscal 1997, the Compensation Committee considered, among other things,
competitive market issues and the Company's performance in such areas as
development, client services, product quality, market penetration,
administration, organization and financial performance, sales of particular
units and performance of the Company as a whole.
Compensation of the Chief Executive Officer. In determining Mr. Smith's
compensation for the Fiscal 1997, the Compensation Committee reviewed industry
surveys of compensation paid to chief executive officers of comparable
companies, and evaluated the achievement of corporate, individual and
organizational objectives for the fiscal year. Mr. Smith's annual base
compensation for Fiscal 1997 was $266,000, an amount that represented an
increase of 6.8% over his 1996 base salary.
In Fiscal 1997, Mr. Smith also received semi-annual bonuses determined on
the basis of the achievement of specific weighted corporate, individual and
organizational objectives from the fiscal year in such areas as financial
performance and business growth, product development, market penetration,
product and service quality, administration and corporate development. Mr.
Smith was awarded aggregate incentive bonuses of $218,410 for Fiscal 1997, or
82.1% of base salary, as compared with an incentive bonus of $282,709 for
1996, or 113.5% of base salary for 1996.
The Compensation Committee also reviewed Mr. Smith's vesting arrangements
with respect to 135,860 shares of restricted stock and 135,860 incentive stock
options awarded in February 1996. Under the original terms of these awards,
the vesting arrangements provided for these awards to vest in February 2001 or
earlier upon either a sale of the Company or the attainment of specified
valuations for the Company's Common Stock. The Compensation Committee and Mr.
Smith mutually agreed to amend these vesting arrangements in Fiscal 1997 to
replace the performance related vesting with time-based vesting pursuant to
which these awards vest in equal monthly installments through May 1999. The
Compensation Committee approved this amendment in order to provide a stronger
incentive for Mr. Smith to remain with the Company following vesting of his
1994 restricted stock award.
Deductibility of Executive Compensation. Beginning in 1994, the Internal
Revenue Code of 1986, as amended (the "Code"), limited the federal income tax
deductibility of compensation paid to the Company's Chief Executive Officer
and to each of the other four most highly compensated executive officers. For
this purpose, compensation can include, in addition to cash compensation, the
difference between the exercise price of stock options and the value of the
underlying stock on the date of exercise. The Company may deduct compensation
with respect to any of these individuals only to the extent that during any
fiscal year such compensation does not exceed $1 million or meets certain
other conditions (such as stockholder approval). Considering the Company's
current compensation plans and policy, the Company and the Committee believe
that, for the near future, there is little risk that the Company will lose any
significant tax deduction relating to executive compensation. If the
deductibility of executive compensation becomes a significant issue, the
Company's compensation plans and policy will be modified to maximize
deductibility if the Company and the Compensation Committee determine that
such action is in the best interests of the Company.
COMPENSATION COMMITTEE
Jacqueline C. Morby
John F. Smith
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since February 1994, all executive officer compensation decisions have been
made by the Compensation Committee. The Compensation Committee reviews and
makes recommendations to the Board of Directors regarding the compensation for
top management and key employees of the Company, including salaries and
bonuses. No member of the Compensation Committee was or is an officer or
employee of the Company or any of its subsidiaries.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock, based
on the market price of the Company's Common Stock, with the total return of
companies included within the Nasdaq Stock Market Index and an industry peer
group of companies selected by the Company for the period commencing June 1996
and ended December 1997. The calculation of total cumulative return assumes a
$100 investment in the Company's Common Stock, the Nasdaq Stock Market Index
and the industry peer group on June 20, 1996, the date of the Company's
initial public offering, and the reinvestment of all dividends.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ANSYS, INC., PEER GROUP AND NASDAQ MARKET INDEX
<CAPTION>
Measurement period
(Fiscal year Covered) ANSYS, INC. PEER GROUP NASDAQ MARKET
- --------------------- ---------- ---------- -------
<S> <C> <C> <C>
Measurement PT -
6/20/96 $100 $100 $100
FYE 6/28/96 $110.52 $93.09 $100
FYE 9/30/96 $97.9 $98.52 $102.76
FYE 12/31/96 $113.64 $101.24 $107.59
FYE 3/31/97 $68.43 $94.06 $102.12
FYE 6/30/97 $66.33 $96.78 $120.81
FYE 9/30/97 $89.48 $103.22 $140.86
FYE 12/31/97 $61.03 $101.51 $131.98
</TABLE>
12
<PAGE>
1994 Stock Option and Grant Plan. In February 1994, the Company's Board of
Directors adopted and the stockholders subsequently approved the 1994 Stock
Plan. The Company does not intend to make additional grants under the 1994
Stock Plan. The 1994 Stock Plan permits (i) the grant of options to purchase
shares of Common Stock intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
("Incentive Options"), (ii) the grant of options that do not so qualify ("Non-
Qualified Options"), and (iii) the issuance or sale of Common Stock with or
without restrictions ("Restricted Stock"). As of December 31, 1997, under the
1994 Stock Plan 2,360,760 shares of Restricted Stock have been issued under
the 1994 Plan, of which 960,000 have been issued pursuant to the exercise of
Incentive and Non-Qualified Options and 75,750 have been subsequently
repurchased by the company and 597,921 Incentive Options and 50,500 Non-
Qualified Options were outstanding. The weighted average exercise price of the
outstanding options is approximately $5.08 per share, and options generally
vest in equal installments over a four-year period.
The Compensation Committee may, in its sole discretion, accelerate or extend
the date or dates on which all or any particular option or options granted
under the 1994 Stock Plan may be exercised or vest. In the event of a merger,
liquidation or sale of substantially all of the assets of the Company, the
Board of Directors has the discretion to accelerate the vesting of the options
granted under the 1994 Stock Plan, except that 40,000 Non-Qualified Options
held by Independent Directors vest automatically in such circumstances. In
addition, the 1994 Stock Plan and issued thereunder terminate upon the
effectiveness of any such transaction or event, unless provision is made in
connection with such transaction for the assumption of grants therefore made.
The shares of restricted stock issued under the 1994 Plan are treated as fully
vested on any merger of the Company, liquidation or sale of substantially all
of the assets.
Independent Director Options. The 1996 Stock Plan provides for the automatic
grant of Non-Qualified Options to Independent Directors. Under such
provisions, options to purchase that number of shares of Common Stock
determined by dividing $200,000 by the Option Exercise Price (as defined
below) will be granted to each individual when he or she first becomes a
member of the Board of Directors provided that he or she is not an employee of
the Company or any subsidiary of the Company. In addition, on the date five
business days following each annual meeting of stockholders of the Company,
commencing with the meeting to be held in 1997, each Independent Director who
is then serving will be granted an option to purchase that number of shares of
Common Stock determined by dividing $75,000 by the Option Exercise Price. The
Option Exercise Price of options granted to Independent Directors under the
1996 Stock Plan will equal the lesser of (i) the last reported sale price per
share of Common Stock on the date of grant (or if no such price is reported on
such date, such price on the nearest preceding date on which such a price is
reported) or (ii) the average of the last reported sales price per share of
Common Stock as published in The Wall Street Journal for a period of ten
consecutive days prior to such date. Options granted to Independent Directors
under the foregoing provisions will vest in annual installments over four
years commencing with the date of grant and will expire ten years after grant,
subject to earlier termination if the optionee ceases to serve as a director.
The exercisability of these options will be accelerated upon the occurrence of
a merger, liquidation or sale of substantially all of the assets of the
Company. A total of 34,749 Non-Qualified Options have been issued to date to
Independent Directors under the plan.
1996 Employee Stock Purchase Plan. The Company's 1996 Employee Stock
Purchase Plan was adopted by the Board of Directors on April 19, 1996 and was
subsequently approved by the Company's stockholders. Up to 210,000 shares of
Common Stock may be issued under the Purchase Plan. The Purchase Plan is
administered by the Compensation Committee.
Offerings under the Purchase Plan will commence on each February 1 and
August 1 and have a duration of six months. Generally, all employees who are
customarily employed for more than 20 hours per week as of the first day of
the applicable offering period are eligible to participate in the Purchase
Plan. An employee who owns or is deemed to own shares of stock representing in
excess of 5% of the combined voting power of all classes of stock of the
Company may not participate in the Purchase Plan.
13
<PAGE>
During each offering, an employee may purchase shares under the Purchase
Plan by authorizing payroll deductions of up to 10% of his cash compensation
during the offering period. The maximum number of shares which may be
purchased by any participating employee during any offering period is limited
to 960 shares (as adjusted by the Compensation Committee from time to time).
Unless the employee has previously withdrawn from the offering, his
accumulated payroll deductions will be used to purchase Common Stock on the
last business day of the period at a price equal to 85% of the fair market
value of the Common Stock on the first or last day of the offering period,
whichever is lower. Under applicable tax rules, an employee may purchase no
more than $25,000 worth of Common Stock in any calendar year. A total of
51,730 shares of Common Stock have been issued to date under the Purchase
Plan.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company entered into an Employment Agreement with Dr. Swanson in
connection with the acquisition of the business in 1994 under which Dr.
Swanson serves as Chief Technologist of the Company. The Agreement has a five-
year term ending in March 1999. The Agreement provides for (i) an annual
salary of $228,000, subject to specified cost of living increases, (ii)
continuation of base salary payments until the later of March 14, 1999 or
months following termination of Dr. Swanson's employment in the event such
employment is terminated by the Company without cause (as defined) or by Dr.
Swanson in the event of a material default by the Company, and (iii) a
restriction on competitive activities for three years following any
termination of Dr. Swanson's employment with the Company. In connection with
his employment by the Company, Dr. Swanson was granted Incentive Options to
purchase 960,000 shares of Common Stock at an exercise price of $.11 a share,
or 110% of the fair market value of the Common Stock at the time of grant. Dr.
Swanson exercised these options on March 14, 1996, and the shares acquired
upon exercise are subject to repurchase by the Company at the exercise price
until they vest in March 1998 and 1999.
The Company has also entered into an Employment Agreement with Mr. Peter
Smith, its Chief Executive Officer. Mr. Smith's Employment Agreement (i)
provides that he shall serve as Chief Executive Officer, (ii) provides for an
annual base salary of at least $235,000 and participation in the Company's
executive bonus program, (iii) is for an indefinite term unless terminated by
either party, (iv) provides for severance at the annual rate of $300,000 in
the event Mr. Smith's employment is terminated by the Company without cause or
in the event of a constructive termination (as defined) until the later of one
year after termination or Mr. Smith's acceptance of other employment and (v)
restricts competitive activities by Mr. Smith for one year following
termination of his employment other than for cause or in the event of a
constructive termination. The Company provided Mr. Smith with $309,058 at the
time of his employment to purchase an annuity that will result in payments to
Mr. Smith beginning at age 62 as well as a $2.0 million term life insurance
policy.
CERTAIN TRANSACTIONS
In connection with his employment by the Company, Mr. Peter J. Smith
purchased 626,000 shares of restricted Common Stock in July 1994 for a cash
purchase price of $250,000 (approximately $0.40 per share). Mr. Smith funded
the purchase price for the shares with a loan from the Company evidenced by a
promissory note which bears interest at the annual rate of 8.23%, matures on
July 8, 2006 or earlier in the event of a sale of the underlying shares, is
secured by a pledge of the shares purchased with the proceeds of the loan and
permits recourse against Mr. Smith's other assets to the extent of one-fourth
of the principal amount of the note. The Company also agreed to pay Mr. Smith
annual bonuses in the amount of the required interest payments. The shares
purchased by Mr. Smith vest on a monthly basis over a four-year period and are
subject to repurchase prior to vesting at cost. As of December 31, 1997,
595,000 of the shares acquired by Mr. Smith in 1994 are no longer subject to
this restriction.
In connection with his employment by the Company, Mr. John M. Sherbin II
purchased 60,000 shares of restricted Common Stock in November 1994 for a cash
purchase price of $24,000 (approximately $0.40 per share). Mr. Sherbin funded
the purchase price for the shares with a loan from the Company evidenced by a
14
<PAGE>
promissory note which bears interest at the annual rate of 8.28%, matures on
November 20, 2006 or earlier in the event of a sale of the underlying shares,
is secured by a pledge of the shares purchased with the proceeds of the loan
and permits recourse against Mr. Sherbin's other assets to the extent of one-
fourth of the principal amount of the note. The Company also agreed to pay Mr.
Sherbin annual bonuses in the amount of the required interest payments. The
shares purchased by Mr. Sherbin are subject to repurchase by the Company at
the purchase price, with such restrictions lapsing on a yearly basis over a
five-year period. As of December 31, 1997, 36,000 of such shares are no longer
subject to this restriction.
The Company leased a 66,000 square foot facility from a joint venture in
which Dr. John A. Swanson holds an interest of approximately 50%. The Company
leased this facility under a lease agreement which terminated in March 1997
and incurred $138,000 in rental expense in Fiscal 1997 related to this
facility. On February 21, 1997, the Company vacated this facility and moved to
its new Southpointe facility in Canonsburg, Pennsylvania.
The Company has adopted a policy providing that all material transactions
between the Company and its officers, directors and other affiliates must (i)
be approved by a majority of the members of the Company's Board of Directors
and by a majority of the disinterested members of the Company's Board of
Directors and (ii) be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties. In addition, this policy will
require that any loans by the Company to its officers, directors or other
affiliate be for bona fide business purposes only.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than 10% of the Company's
outstanding shares of Common Stock (collectively, "Section 16 Persons") to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission and Nasdaq. Section 16 Persons are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain Section 16 Persons that no Section 16(a)
reports were required for such persons, the Company believes that during
Fiscal 1997 the Section 16 Persons complied with all Section 16(a) filing
requirements applicable to them.
15
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table presents certain information about persons or entities
known to the Company to own, directly or beneficially, more than five percent
of the Company's Common Stock on February 14, 1998. The following information
is based solely upon copies of filings of Schedule 13G received by the Company
pursuant to the rules of the SEC.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ ------------ ----------
<S> <C> <C>
TA Associates Group.............................. 6,607,319(1)(2) 40.6%
c/o TA Associates, Inc.
125 High Street
Suite 2500
Boston, MA 02110-2720
Dr. John A. Swanson.............................. 2,302,813(3) 14.1
c/o ANSYS, Inc.
Southpointe
275 Technology Drive
Canonsburg, PA 15317
J. & W. Seligman & Co., Inc...................... 1,399,300(4) 8.6
100 Park Avenue
8th Floor
New York, NY 10006
</TABLE>
- --------
(1) The information reported is based upon a Schedule 13G filed with the
Securities and Exchange Commission ("SEC") on February 13, 1997 reporting
beneficial ownership as of December 31, 1996. The Company has not received
an amendment to this Schedule 13G.
(2) Includes (i) 4,727,986 shares of Common Stock owned by Advent VII L.P.,
(ii) 960,841 shares of Common Stock owned by Advent Atlantic and Pacific
II L.P., (iii) 346,405 shares of Common Stock owned by Advent Industrial
II L.P., (iv) 472,799 shares of Common Stock owned by Advent New York L.P.
and (v) 99,288 shares of Common Stock owned by TA Venture Investors
Limited Partnership. Advent VII L.P., Advent Atlantic and Pacific II L.P.,
Advent Industrial II L.P., Advent New York L.P. and TA Venture Investors
Limited Partnership are part of an affiliated group of investment
partnerships referred to, collectively, as the TA Associates Group. The
general partner of Advent VII L.P. is TA Associates VII L.P. The general
partner of each of Advent New York L.P. and Advent Industrial II Limited
Partnership is TA Associates VI L.P. The general partner of Advent
Atlantic and Pacific II L.P. is TA Associates AAP II Partners L.P. The
general partner of each of TA Associates VII L.P., TA Associates VI L.P.
and TA Associates AAP II Partners L.P. is TA Associates, Inc. In such
capacity, TA Associates, Inc. exercises sole voting and investment power
with respect to all of the shares held of record by the named investment
partnerships, with the exception of those shares held by TA Venture
Investors Limited Partnership; individually no stockholder, director or
officer of TA Associates, Inc. is deemed to have or share such voting or
investment power. Principals and employees of TA Associates, Inc.
(including Ms. Morby and Mr. Kafker, directors of the Company) comprise
the general partners of TA Venture Investors Limited Partnership. In such
capacity, Ms. Morby and Mr. Kafker disclaim beneficial ownership of such
shares, except in the case of Mr. Kafker to the extent of the 12,829
shares as to which he holds a pecuniary interest.
(3) The information reported is based on a Schedule 13G filed with the SEC on
February 13, 1998 reporting beneficial ownership as of December 31, 1997.
The Schedule 13G also indicates that Mr. Swanson, has sole voting and
dispositive power with respect to all of the shares reported. In addition,
the Schedule 13G excludes 25,000 shares held by Janet L. Swanson, Dr.
Swanson's wife, as to which Dr. Swanson disclaims beneficial ownership.
16
<PAGE>
(4) The information reported is based on a Schedule 13G filed with the SEC on
February 12, 1998 reporting beneficial ownership as of December 31, 1997.
The Schedule 13G also indicates that J. & W. Seligman & Co., Inc., has
shared voting and shared dispositive power with respect to all of the
shares reported.
SECURITY OWNERSHIP OF MANAGEMENT
The following table presents certain information as to directors and Named
Executive Officers as of February 1, 1998, based on representations of
officers and directors of the Company. All such information was provided by
the stockholders listed and reflects their beneficial ownership as of February
1, 1998.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT (1)
- ------------------------ --------------- ---------------
<S> <C> <C>
Dr. John A. Swanson (2)......................... 2,317,813 14.2%
Peter J. Smith (3).............................. 649,814 4.0
Leonard Zera (4)................................ 112,045 *
Paul A. Johnson (5)............................. 15,931 *
John M. Sherbin II (6).......................... 72,500 *
Gary B. Eichhorn (7)............................ 32,500 *
Roger J. Heinen, Jr (8)......................... 5,000 *
Roger B. Kafker (9)............................. 12,829 *
Jacqueline C. Morby (10)........................ 5,480 *
John F. Smith (11).............................. 22,500 *
All executive officers and directors as a group
(16 persons)................................... 3,401,231 20.9
</TABLE>
- --------
*Less than 1%
(1) All percentages have been determined as of February 1, 1998 in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). For purposes of this table, a person or group of persons
is deemed to have "beneficial ownership" of any shares of Common Stock
which such person has the right to acquire within 60 days after February
1, 1998. For purposes of computing the percentage of outstanding shares of
Common Stock held by each person or group of persons named above, any
security which such person or persons has or have the right to acquire
within 60 days after February 1, 1998 is deemed to be outstanding, but is
not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. As of February 1, 1998, a total of
16,304,250 shares of Common Stock were issued and outstanding.
(2) Includes 591,840 shares which vest on March 14, 1999, respectively, under
terms giving the Company the right to purchase unvested shares at a price
of $.11 per share upon any voluntary termination or termination for cause
of Dr. Swanson's employment prior to the relevant vesting date. Also
includes 25,000 shares held by Janet L. Swanson, Dr. Swanson's wife, as to
which shares Dr. Swanson disclaims beneficial ownership. Excludes 25,000
shares held by each of Daniel S. Swanson, Andrew C. Swanson and Eric H.
Swanson, Dr. Swanson's adult children, as to which shares Dr. Swanson
disclaims beneficial ownership. Includes vested options to purchase 2,500
shares. Excludes unvested options to purchase 11,500 shares.
(3) Includes 10,120 shares of restricted stock which vest in March 1998 under
terms giving the Company the right to purchase and Mr. Smith the right to
sell to the Company unvested shares at a price of $.40 per share upon any
termination of Mr. Smith's employment prior to the relevant vesting date
and 135,860 shares of restricted stock which will vest in twenty-four
equal monthly installments commencing on April 1, 1998, subject to
acceleration in certain circumstances under terms giving the Company the
right to purchase and Mr. Smith the right to sell to the Company unvested
shares at a price of $2.40 per share upon any termination of Mr. Smith's
employment prior to the relevant vesting date. Includes vested options to
purchase 20,000 shares. Excludes unvested options to purchase 115,860
shares and 100,000 shares beneficially owned by a trust for the benefit of
Mr. Smith's adult children, as to which latter shares Mr. Smith disclaims
beneficial ownership.
17
<PAGE>
(4) Includes 40,000 shares of restricted stock held by Mr. Zera which will
become vested in equal annual installments of 20,000 shares on each of
November 15, 1998 and 1999 and are subject to repurchase at a price of
$.40 per share upon any termination of Mr. Zera's employment prior to the
relevant vesting date. Includes vested options to purchase 8,750 shares.
Excludes unvested options to purchase 41,250 shares.
(5) Includes vested options to purchase 15,000 shares. Excludes 85,000
unvested options.
(6) Includes 24,000 shares of restricted stock held by Mr. Sherbin which will
become vested in equal annual installments of 12,000 shares on each of
November 20, 1998 and 1999 and are subject to repurchase at a price of
$.40 per share upon any termination of Mr. Sherbin's employment prior to
the relevant vesting date. Includes vested options to purchase 10,500
shares. Excludes unvested options to purchase 43,500 shares.
(7) Includes 8,000 and 6,000 shares of restricted stock held by Mr. Eichhorn
which will become vested in equal annual installments of 4,000 and 2,000
shares, respectively, on each of November 15, 1998 and 1999 and each of
December 29, 1998, 1999 and 2000, respectively, and are subject to
repurchase at a price of $.01 and $.40 per share, respectively, upon any
termination of Mr. Eichhorn's service as a director prior to the relevant
vesting date. Includes vested options to purchase 2,500 shares. Excludes
unvested options to purchase 19,083 shares.
(8) Includes vested options to purchase 5,000 shares. Excludes unvested
options to purchase 26,583 shares.
(9) Includes 12,829 shares beneficially owned by Mr. Kafker through TA Venture
Investors Limited Partnership, all of which shares are included in the
6,607,319 shares described in footnote (2) under "Security Ownership of
Certain Beneficial Owners" above. Does not include any shares beneficially
owned by Advent VII L.P., Advent Atlantic and Pacific I L.P., Advent
Industrial II L.P. or Advent New York L.P., of which Mr. Kafker disclaims
beneficial ownership.
(10) Includes 5,480 shares held by Ms. Morby's husband through TA Venture
Investors Limited Partnership, all of which shares are included in the
6,607,319 shares described in footnote (2) under "Security Ownership of
Certain Beneficial Owners" above, as to which shares Ms. Morby disclaims
beneficial ownership. Excludes 5,482 shares beneficially owned through TA
Venture Investors Limited Partnership by a trust for the benefit of Ms.
Morby's adult children, as to which shares Ms. Morby disclaims beneficial
ownership, all of such shares are included in the 6,607,319 shares
described in footnote (2) under "Security Ownership of Certain Beneficial
Owners" above. Does not include any shares beneficially owned by Advent
VII L.P., Advent Atlantic and Pacific II L.P., Advent Industrial II L.P.
or Advent New York L.P., of which Ms. Morby disclaims beneficial
ownership.
(11) Includes 12,000 shares of restricted stock owned by a trust primarily for
the benefit of Mr. Smith's adult children and of which Mr. Smith's wife
is a trustee. Such shares will become vested in equal annual installments
of 4,000 shares on each of December 28, 1998, 1999 and 2000 and are
subject to repurchase at a price of $.40 per share upon any termination
of Mr. Smith's service as a director prior to the relevant vesting date.
Includes vested options to purchase 2,500 shares. Excludes unvested
options to purchase 19,083 shares held by Mr. Smith.
MARKET VALUE
On December 31, 1997, the closing price of a share of the Company's Common
Stock on the Nasdaq National Market was $7.25.
EXPENSES OF SOLICITATION
The Company will pay the entire expense of soliciting proxies for the Annual
Meeting. In addition to solicitations by mail, certain Directors, officers and
regular employees of the Company (who will receive no
18
<PAGE>
compensation for their services other than their regular compensation) may
solicit proxies by telephone, telegram or personal interview. Banks, brokerage
houses, custodians, nominees and other fiduciaries have been requested to
forward proxy materials to the beneficial owners of shares held of record by
them and such custodians will be reimbursed for their expenses.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals intended to be presented at the Company's 1999 annual
meeting of stockholders must be received by the Company on or before February
20, 1999 in order to be considered for inclusion in the Company's proxy
statement and form of proxy for that meeting. The Company's By-laws provide
that any stockholder of record wishing to have a stockholder proposal
considered at an annual meeting must provide written notice of such proposal
and appropriate supporting documentation, as set forth in the By-laws, to the
Company at its principal executive office not less than 75 days or more than
120 days prior to the first anniversary of the date of the preceding year's
annual meeting. In the event, however, that the annual meeting is scheduled to
be held more than 30 days before such anniversary date or more than 60 days
after such anniversary date, notice must be so delivered not later than on the
later of (i) the 15th day after the date of public disclosure of the date of
such meeting or (ii) the 75th day prior to the scheduled date of such meeting.
Any such proposal should be mailed to: Secretary, ANSYS, Inc., Southpointe,
275 Technology Drive, Canonsburg, PA, 15317.
INDEPENDENT ACCOUNTANTS
The Company has selected Coopers & Lybrand L.L.P. as the independent public
accountants for the Company for the fiscal year ending December 31, 1998. The
firm of Coopers & Lybrand L.L.P. has served as the Company's independent
public accountants since March 14, 1994. A representative of Coopers & Lybrand
L.L.P. will be present at the Annual Meeting and will be given the opportunity
to make a statement if he or she so desires. The representative will be
available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are duly presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
19
<PAGE>
1. ELECTION OF DIRECTORS Nominees: Roger J. Heinen, Jr., Roger B. Kafker and
Jacqueline C. Morby
FOR all nominees WITHHOLD AUTHORITY
listed above (except to vote for
as marked to the all nominees
contrary below [ ] listed above [ ]
If you wish to withhold authority to vote for any individual nominee, write that
nominee's name in the space provided below.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the election of all the nominees as
directors and FOR the Amendment to the 1996 Stock Option and Grant Plan.
2. AMENDMENT TO THE 1996 STOCK OPTION AND GRANT PLAN TO INCREASE BY 1,000,000
THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE THEREUNDER.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
PLAN TO ATTEND MEETING
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE, OR IF RETURNED EXECUTED WITH NO
DIRECTION GIVEN, WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES AS
DIRECTORS AND FOR THE AMENDMENT TO THE 1996 STOCK OPTION AND GRANT PLAN.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
THIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS HEREON.
Executors, administrators, trustees, attorneys, etc., should give full title as
such. If the signer is a corporation or partnership, please sign full corporate
or partnership name by duly authorized officer.
Signature(s) Date , 1998
-------------------------------- -------------------
/\ FOLD AND DETACH HERE /\
Annual Meeting
of
Stockholders
of
ANSYS, Inc.
May 6, 1998
at
Law Offices of Buchanan Ingersoll
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania
(Downtown)
beginning at 2:00 P.M.
<PAGE>
ANSYS, Inc.
Southpointe
275 Technology Drive
Canonsburg, Pennsylvania 15317
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF STOCKHOLDERS, MAY 6, 1998
The undersigned hereby appoints ROGER J. HEINEN, JR., ROGER B. KAFKER and
JACQUELINE C. MORBY, and each or any of them, attorneys and proxies with full
power of substitution, to represent the undersigned and to vote all shares of
stock of ANSYS, Inc. which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of ANSYS, Inc. to be held at the law offices of Buchanan
Ingersoll, One Oxford Centre, 301 Grant Street, Pittsburgh, Pennsylvania on
Wednesday, May 6, 1998, at 2:00 P.M., or at any adjournments or postponements
thereof, upon all matters as set forth in the Notice of Annual Meeting and Proxy
Statement, receipt of which is hereby acknowledged.
(Continued, and to be signed and dated, on reverse side)
/\ FOLD AND DETACH HERE /\
Admittance Pass
1998 Annual Meeting of Stockholders
ANSYS, Inc.
Wednesday, May 6, 1998
2:00 p.m.
Law Offices of Buchanan Ingersoll
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania
(Downtown)
Please Present This Admittance Pass When Entering The Meeting
