<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[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))
ALLAIRE CORPORATION
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ALLAIRE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2000
Allaire hereby gives notice that it will hold its Annual Meeting of
Stockholders at the offices of Foley, Hoag & Eliot LLP, One Post Office Square,
Boston, Massachusetts 02109 on Wednesday, May 17, 2000, beginning at 10 a.m.,
local time, for the following purpose:
1. To consider and vote upon the election of seven directors of Allaire
Corporation.
The Board of Directors has fixed the close of business on April 3, 2000 as
the record date for the determination of the stockholders of Allaire entitled to
notice of, and to vote at, the Annual Meeting and any adjournment thereof. Only
stockholders of record on such date are entitled to notice of, and to vote at,
the Annual Meeting or any adjournment thereof.
By Order of the Board of Directors,
David J. Orfao
President and Chief Executive Officer
Cambridge, Massachusetts
April 17, 2000
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING.
<PAGE> 3
ALLAIRE CORPORATION
ONE ALEWIFE CENTER
CAMBRIDGE, MASSACHUSETTS
(617) 761-2000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2000
This proxy statement and the enclosed form of proxy relates to the annual
meeting of stockholders of Allaire Corporation. The annual meeting will take
place as follows:
<TABLE>
<S> <C>
Date: Wednesday, May 17, 2000
Time: 10 a.m.
Place: Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
</TABLE>
The board of directors of Allaire is soliciting proxies for the annual
meeting and adjournments of the annual meeting. If a stockholder returns a
properly executed proxy, the shares represented by the proxy will be voted in
accordance with the stockholder's directions. If a stockholder does not specify
a vote on any proposal, the shares covered by his or her proxy will be voted on
that proposal as management recommends. Allaire encourages its stockholders to
vote on all proposals.
Allaire is mailing this proxy statement and the enclosed form of proxy to
stockholders on or about April 17, 2000.
PURPOSE OF THE ANNUAL MEETING
At the annual meeting, Allaire will submit one proposal to the
stockholders:
Proposal One: To elect seven directors of Allaire Corporation.
Currently, Allaire does not intend to submit any other proposals to the
stockholders at its annual meeting. The board of directors was not aware, a
reasonable time before mailing this proxy statement to stockholders, of any
other business that may be properly presented for action at the annual meeting.
If any other business comes before the annual meeting, the persons present will
have discretionary authority to vote the shares they own or represent by proxy
in accordance with their judgment.
RECORD DATE
The board of directors of Allaire has fixed the close of business on
Monday, April 3, 2000 as the record date for the annual meeting. Only
stockholders of record on that date are entitled to receive notice of the
meeting and to vote at the meeting or any adjournment of the meeting. At the
close of business on April 3, 2000, there were issued and outstanding 27,013,638
shares of Allaire's common stock, each of which entitles its holder to cast one
vote.
QUORUM
Allaire's by-laws provide that a quorum at the annual meeting will be a
majority in interest of all stock issued, outstanding and entitled to vote at
the meeting. Allaire will treat shares of common stock represented by a properly
signed and returned proxy as present at the meeting for purposes of determining
the existence of a quorum at the meeting. In general, Allaire will count
abstentions and broker "non-votes" as present or represented for purposes of
determining the existence of a quorum. A broker "non-vote" occurs when a broker
or nominee holding shares for a beneficial owner does not vote on a proposal
because the broker or nominee
<PAGE> 4
does not have discretionary voting power and has not received instructions from
the beneficial owner with respect to that proposal.
TABULATION OF VOTES
Proposal One. The election of the directors of Allaire will require the
affirmative vote of a plurality of the shares of common stock properly cast on
the proposal. Abstentions and broker non-votes will not count as votes cast for
or against the election of the director nominees and accordingly will not affect
the outcome of the vote.
EquiServe, Allaire's transfer agent, will tabulate votes at the annual
meeting.
REVOCATION OF PROXY
A stockholder who has executed a proxy may revoke the proxy at any time
before it is exercised at the annual meeting.
SOLICITATION OF PROXIES
Allaire will pay its own costs of soliciting proxies. Allaire will
reimburse brokers, banks, fiduciaries, nominees and others for the out-of-pocket
expenses and other reasonable clerical expenses they incur in forwarding proxy
materials to beneficial owners of common stock held in their names. Certain
directors, officers and employees of Allaire may solicit proxies, without
additional remuneration, by telephone, facsimile, electronic mail, telegraph and
in person. Allaire expects that the expenses of this special solicitation will
be nominal. At present, Allaire does not expect to pay any compensation to any
person for the solicitation of proxies, although Allaire may engage a
third-party proxy solicitation firm in connection with the annual meeting.
MATTER TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL ONE
ELECTION OF THE DIRECTORS OF ALLAIRE CORPORATION
Proposal One concerns the election of the directors of Allaire.
Allaire's board currently consists of seven directors. The board of
directors has nominated the following seven individuals to serve as directors of
Allaire for the upcoming year:
1. Mr. Joseph J. Allaire, our Founder and Executive Vice-President,
Products, who has served as Chairman of the board of directors since
Allaire's inception in May 1995.
2. Mr. David J. Orfao, our President and Chief Executive Officer, who
has served as a director of Allaire since February 1997.
3. Mr. Jonathan A. Flint, who has served as a director of Allaire
since June 1996.
4. Mr. John J. Gannon, who has served a director of Allaire since
December 1996.
5. Mr. Thomas A. Herring, who has served as a director of Allaire
since June 1997.
6. Mr. Ronald G. Ward, who has served as a director of Allaire since
February 2000.
7. Dr. W. Frank King III, who has served as a director of Allaire
since April, 2000.
If the stockholders elect these individuals as directors of Allaire at the
annual meeting, each of them will hold office until the annual meeting of
stockholders in 2001 and until his successor is duly elected and qualified. Each
of these individuals has agreed to serve if elected, and Allaire has no reason
to believe that any of them will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MR.
ALLAIRE, MR. ORFAO, MR. FLINT, MR. GANNON, MR. HERRING, MR. WARD AND DR. KING AS
DIRECTORS OF ALLAIRE.
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<PAGE> 5
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Allaire, and their ages and
positions, as of April 15, 2000 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David J. Orfao......................... 40 President, Chief Executive Officer and Director
Joseph J. Allaire...................... 30 Chairman of the Board of Directors and Executive Vice
President, Products
David A. Gerth......................... 48 Vice President, Finance and Operations, Chief
Financial Officer and Treasurer
Amy E. Lewis........................... 42 Vice President, Worldwide Sales
Stephen F. Clark....................... 34 Vice President, Marketing
Jack P. Lull........................... 41 Vice President, Engineering and Development
Jeremy D. Allaire...................... 28 Chief Technology Officer
Jonathan A. Flint...................... 48 Director
John J. Gannon......................... 45 Director
Thomas A. Herring...................... 49 Director
Ronald G. Ward......................... 52 Director
W. Frank King III...................... 60 Director
</TABLE>
DAVID J. ORFAO has served as Allaire's President and Chief Executive
Officer and as a director since February 1997. From November 1995 until December
1996, Mr. Orfao served as Senior Vice President, Worldwide Sales, Marketing and
Service for SQA, Inc. From August 1993 until October 1995, he served as Senior
Vice President, Worldwide Sales, Support and Channel Marketing for Claris
Corporation. Prior to that, Mr. Orfao held a series of sales and operational
positions of increasing responsibility at Frame Technology Corporation since
1988.
JOSEPH J. ALLAIRE founded Allaire in May 1995 and served as Chairman of the
Board of Directors, Chief Executive Officer and President from inception to
January 1997. Since January 1997, Mr. Allaire has continued to serve as Chairman
of the Board of Directors and Executive Vice President, Products. Mr. Allaire
also served as Allaire's Chief Technology Officer from January 1997 until
January 2000. From September 1993 to June 1995, Mr. Allaire performed software
engineering services for several private companies.
DAVID A. GERTH has served as Allaire's Vice President, Finance and
Operations, Chief Financial Officer and Treasurer since April 1997. From
November 1995 to April 1997, Mr. Gerth served as Chief Financial Officer for
Visibility Software, Inc., a software company. From July 1995 to November 1995,
he served as Chief Financial Officer for Computron Software, Inc., a software
company. From April 1994 to July 1995, Mr. Gerth served as Director of Finance
for Powersoft Corporation, a software company. Prior to that, Mr. Gerth served
in a number of financial roles of increasing responsibility for Computervision
Corporation since 1981.
AMY E. LEWIS has served as Allaire's Vice President, Worldwide Sales since
April 1997. From June 1995 to March 1997, Ms. Lewis served as Director, North
America Field Sales for Claris Corporation. Prior to that, Ms. Lewis served as
Manager, North America Channel Sales for Apple Computer since April 1994. From
February 1987 to December 1993, she was Director of Sales for Farallon
Communications, Inc., a networking hardware and software company.
STEPHEN F. CLARK has served as Allaire's Vice President, Marketing since
September 1998. From January 1996 through September 1998, Mr. Clark held a
number of marketing positions of increasing responsibility at Sybase, Inc. a
computer software company, including Vice President, Tools and Application
Servers and Vice President and General Manager, Design Tools. From June 1993 to
December 1995, Mr. Clark was a Product Marketing Manager for Powersoft.
JACK P. LULL has served as Allaire's Vice President, Engineering and
Development since December 1996. From January 1996 to August 1996, Mr. Lull
served as Director of Development for Integrated Industrial
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<PAGE> 6
Information, Inc., a computer consulting company. From January 1993 to December
1995, Mr. Lull served as Director of Development for Powersoft.
JEREMY D. ALLAIRE has been affiliated with Allaire Corporation since June
1995, and has served as Allaire's Chief Technology Officer since January 2000.
From June 1995 until his appointment as Chief Technology Officer, Mr. Allaire
held a number of positions of increasing responsibility at Allaire, including
Vice President of Technology Strategy and Director of Technology Strategy.
JONATHAN A. FLINT has served as a director of Allaire since June 1996.
Since May 1995, Mr. Flint has been a founder and a General Partner of Polaris
Venture Partners, a management company affiliated with Polaris Venture Partners,
L.P. and Polaris Venture Partners Founders' Fund, L.P. (together, the "Polaris
Entities"). Prior to that, Mr. Flint was a General Partner of certain funds
managed by Burr, Egan, Deleage & Co., a venture capital firm and the lead
venture investor in Powersoft, a leading provider of application development
tools. Mr. Flint served as a director of Powersoft from 1991 to 1995. Mr. Flint
also serves as a director of Centra Software, Inc.
JOHN J. GANNON has served as a director of Allaire since December 1996.
Since June 1998, Mr. Gannon has served as a General Partner and Chief Financial
Officer of Polaris Venture Partners, a management company affiliated with the
Polaris entities. From June 1996 to April 1998, Mr. Gannon served as the Chief
Financial Officer for Firefly Network, Inc., an Internet software company. From
October 1992 to June 1996, Mr. Gannon worked for Powersoft, where he held
several positions including Chief Financial Officer and Vice President of
Finance and Administration.
THOMAS A. HERRING has served as a director of Allaire since June 1997. In
October 1998, Mr. Herring joined Polaris Venture Partners, a management company
affiliated with the Polaris Entities, as a Venture Partner. He was promoted to
General Partner of Polaris Venture Partners in January 2000. From December 1997
until October 1998, Mr. Herring served as Senior Vice President of Compuware
Corporation, which acquired Nu-Mega Technologies, Inc. in December 1997. From
May 1996 to December 1997, Mr. Herring was the President and Chief Executive
Officer of Nu-Mega Technologies. From July 1995 to June 1996, Mr. Herring was
Vice President of Corporate Marketing for Sybase. Prior to that, he was Vice
President, Worldwide Marketing and Business Development for Powersoft since June
1990. Mr. Herring also serves as a director of PSW Technologies, Inc., a
provider of software services.
RONALD G. WARD has served as a director of Allaire since February 2000. Mr.
Ward is currently a private investor. From November 1998 until October 1999, Mr.
Ward was Vice President of Local Portal Service for the Zip2.com operating
division of AltaVista Company, which operates an internet portal site. From
August 1996 until November 1998, Mr. Ward served as Vice President and General
Manager of the Enterprise Solutions Division of Compaq Computer Corporation, a
computer hardware company. Prior to that, he was Vice President of Product
Development and Division Officer, Systems Software, for Compaq since 1991.
W. FRANK KING III has served as a director of Allaire since April, 2000.
Dr. King is currently a private investor. From 1992 to August 1998, he was Chief
Executive Officer and a director of PSW Technologies, Inc. From 1988 until
November 1991, Dr. King was Senior Vice President of Development of Lotus
Development Corporation. Prior to joining Lotus he served in various positions
with IBM Corporation, including his last position as Vice President of
Development for the entry system division. He is also a director of Auspex
Systems, Inc., a provider of network-attached storage devices; eOn
Communications Corporation, formerly known as Cortelco Systems, Inc., a provider
of telecommunications applications; Excalibur Technologies Corporation, a
developer of document management software; Natural Microsystems, Inc. a
developer of telphony products; PSW Technologies, Inc.; and Perficient, Inc., a
provider of virtual professional services organizations to Internet software
companies.
Executive officers are elected by the board of directors and serve at the
discretion of the board or until their respective successors have been duly
elected and qualified. Joseph J. Allaire and Jeremy Allaire are brothers. There
are no other family relationships among the directors and executive officers of
Allaire.
4
<PAGE> 7
COMMITTEES AND MEETINGS OF THE BOARD
During 1999, the Board met 4 times and acted by unanimous written consent 3
times. No incumbent director attended fewer than 75% of the total number of
meetings held by the board and committees of the board on which he served.
The board of directors has a compensation committee and an audit committee.
The compensation committee, currently composed of Messrs. Flint and Gannon,
provides recommendations to the board of directors concerning salaries and
incentive compensation for employees of and consultants to Allaire. The
compensation committee took action by written consent 30 times during 1999. The
audit committee, currently composed of Messrs. Flint and Gannon, reviews the
scope and results of the audit and other services provided by Allaire's
independent public accountants. The audit committee met once during 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1999, no officer or employee of Allaire participated in deliberations of
the Compensation Committee concerning the compensation of Allaire's executive
officers. No executive officer of Allaire 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 Allaire.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Share and per share data have been restated to reflect the two-for-one
split of Allaire's common stock in March 2000.
DIRECTOR COMPENSATION
Allaire reimburses each director for expenses incurred in attending
meetings of the board of directors but does not pay any separate fees for
serving as directors.
On December 31, 1996, Allaire granted to Mr. Gannon an option to purchase
50,000 shares of common stock at an exercise price of $0.25 per share. On June
18, 1997, Allaire granted to Mr. Herring an option to purchase 50,000 shares of
common stock at an exercise price of $0.25 per share. These options will become
exercisable for shares of common stock not subject to repurchase by Allaire
according to the following schedule:
- 25% of the option shares one year from the grant date; and
- 1/36 of the remaining shares on the first of each month thereafter for 36
months.
These options have maximum terms of 10 years measured from the grant date,
subject to earlier termination following the cessation of the respective
director's service on the board of directors.
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<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning the
compensation information for Allaire's Chief Executive Officer and the four
other most highly compensated executive officers who were employed by Allaire as
of December 31, 1999 (the "Named Executive Officers"). For Mr. Orfao, the number
of securities underlying options excludes 50,000 shares of common stock
underlying a below-market option granted in 1998 in lieu of a cash bonus for
services rendered in 1997. The amount listed as Ms. Lewis' bonus for each year
represents commissions earned.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
--------------------------- ---- ------ ----- ------------ ----------
<S> <C> <C> <C> <C> <C>
David J. Orfao..................... 1999 $200,826 $155,000 $ -- 0
President, Chief Executive 1998 $167,355 $ 58,800 $ -- 0
Officer and Director 1997 $134,155 $ -- $ -- 0
Joseph J. Allaire.................. 1999 $175,770 $ 94,938 $ -- 0
Chairman of the Board of 1998 $162,124 $ 59,963 $ -- 0
Directors and Executive Vice 1997 $155,251 $ 15,500 $ -- 0
President, Products
Amy E. Lewis....................... 1999 $125,622 $137,025 $ -- 0
Vice President, Worldwide Sales 1998 $114,636 $ 84,533 $ -- 0
1997 $ 83,771 $ 59,700 $ -- 0
David A. Gerth..................... 1999 $160,853 $ 49,600 $ -- 0
Vice President, Finance and 1998 $151,159 $ 30,329 $ -- 0
Operations, Chief Financial 1997 $104,849 $ 14,500 $ -- 0
Officer & Treasurer
Stephen F. Clark................... 1999 $148,182 $ 46,500 $ -- 0
Vice President, Marketing 1998 $ 51,455 $ 10,000 $ -- 0
1997 $ -- $ -- $ -- 0
</TABLE>
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<PAGE> 9
Option Grants in Last Fiscal Year
The following table sets forth grants of stock options to each of the Named
Executive Officers during 1999. No stock appreciation rights were granted during
1999. The amounts reported as the potential realizable values for the option
grants represent hypothetical values that may be realized upon exercise of the
options immediately prior to the expiration of their term, assuming the
specified compound rates of appreciation, 5% and 10%, compounded annually over
the term of the option. These numbers are calculated based on rules promulgated
by the Securities and Exchange Commission. Actual gains, if any, on stock option
exercises and common stock holdings are dependent on the timing of such exercise
and the future performance of the common stock. There can be no assurance that
the rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the individuals.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
GRANTED FISCAL YEAR SHARE DATE 5% 10%
---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David J. Orfao............ 0 -- -- -- $ -- $ --
Joseph J. Allaire......... 0 -- -- -- $ -- $ --
Amy E. Lewis.............. 70,000 2% $24.75 8/13/09 $1,089,560 $2,761,159
David A. Gerth............ 50,000 1% $24.75 8/13/09 $ 778,257 $1,972,256
Stephen F. Clark.......... 20,000 * $24.75 8/13/09 $ 311,303 $ 788,903
</TABLE>
- ---------------
* Represents a percentage of total options granted of less than one percent.
Option Exercises and Fiscal Year-End Values
The following table sets forth certain information regarding stock options
exercised by Named Executive Officers during 1999, and exercisable and
unexercisable stock options held as of December 31, 1999 by each of the Named
Executive Officers. Although the options listed as unexercisable were in fact
exercisable at December 31, 1999, the shares of common stock issuable upon
exercise of these options would be subject to Allaire's right to repurchase at
the option exercise price. Such right of repurchase expires according to the
original option vesting schedule. The value of unexercised in-the-money options
has been calculated by determining the difference between the exercise price per
share payable upon exercise of such options and the closing price of Allaire's
common stock on December 31, 1999, which was $73.16.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END AT FISCAL YEAR-END
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David J. Orfao....... -- -- 272,500 297,500 $19,866,953 $21,689,609
Joseph J. Allaire.... -- -- -- -- -- --
Amy E. Lewis......... -- -- -- 70,000 -- $ 3,388,438
David A. Gerth....... -- -- -- 50,000 -- $ 2,420,313
Stephen F. Clark..... 28,000 $1,013,720 15,334 121,666 $ 1,037,058 $ 7,824,799
</TABLE>
SEVERANCE ARRANGEMENT; CHANGE IN CONTROL ARRANGEMENTS
Mr. Orfao, our Chief Executive Officer, is entitled to continue to receive
his base salary and benefits for 12 months in the event he is involuntarily
terminated for reasons other than cause. Additionally, Mr. Orfao is entitled to
accelerated vesting of 100% of his unvested options to purchase common stock in
the event there is a change in control, as defined in his option agreement, of
Allaire and
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<PAGE> 10
- he is terminated without cause within six months of the change in
control;
- he is not offered a position with the successor comparable to his current
position with Allaire after the change in control; or
- he is removed from a comparable position within six months of the change
in control.
Each executive officer of Allaire other than Mr. Orfao is entitled to
accelerated vesting of 50% of his or her unvested options to purchase common
stock in the event of a change in control, as defined in each such officer's
option agreement, of Allaire and
- such officer is terminated without cause within six months of the change
in control;
- such officer is not offered a position with the successor comparable to
his or her current position with Allaire after the change in control; or
- such officer is removed from a comparable position within six months of
the change in control.
Our 1997 and 1998 Stock Incentive Plans and the underlying option
agreements provide for the accelerated vesting of all unvested options and other
rights granted pursuant to the plan in the event there is a merger or
consolidation involving Allaire, unless appropriate provision shall be made for
outstanding options and other rights by the substitution of options, stock
appreciation rights and appropriate voting common stock of the corporation
surviving any such merger or consolidation (or the parent of such surviving
corporation).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee established by the board of directors is
currently composed of Mr. Jonathan A. Flint and Mr. John J. Gannon. The
compensation committee has general responsibility for Allaire's executive
compensation policies and practices, including making specific recommendations
to the board of directors concerning salaries and incentive compensation for
Allaire's executive officers. The following report is made by Messrs. Flint and
Gannon, as the members of the compensation committee during 1999, and summarizes
Allaire's executive officer compensation policies for 1999.
Compensation Objectives
Allaire's executive compensation programs are generally designed to relate
a substantial part of executive compensation to improvements in Allaire's
financial performance and corresponding increases in stockholder value.
Decisions concerning executive compensation are guided by the following
underlying principles:
- to establish incentives that will link executive officer compensation to
Allaire's financial performance and will motivate executives to attain
Allaire's quarterly and annual financial targets; and
- to provide a total compensation package which is competitive among
companies in the industry and will assist Allaire in attracting and
retaining executives who will contribute to the long-term financial
success of Allaire.
Executive Compensation Programs
Allaire's compensation package consists of three principal components: (1)
salary; (2) long-term incentive compensation in the form of stock options; and
(3) cash bonuses tied to annual performance. Allaire's executive officers are
also eligible to participate in other employee benefit plans, including health
and life insurance plans, a 401(k) retirement plan and a stock purchase plan, on
substantially the same terms as other employees who meet applicable eligibility
criteria, subject to any legal limitations on the amounts that may be
contributed or the benefits that may be payable under these plans.
Allaire's executive officer compensation policy emphasizes stock options
and bonuses which align the interests of management with the stockholders'
interest in the financial performance of Allaire for fiscal quarters, the fiscal
year and the longer term. In granting stock options, the Compensation Committee
considers in part the value of options held by the executive officers and the
extent to which the Compensation
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<PAGE> 11
Committee believes that those options will provide sufficient motivations to the
executive officers to achieve Allaire's goals.
In 1999, the Compensation Committee granted stock options under Allaire's
1998 Stock Incentive Plan to Stephen F. Clark, David A. Gerth and Amy E. Lewis.
See "Option Grants in Last Fiscal Year." Twenty-five percent of the shares
subject to each of these options will vest on the one-year anniversary of the
date of grant, with 1/36 of the remaining shares subject to the option vesting
monthly thereafter. The Compensation Committee believes that the grant of
options that vest over an extended period provides significant incentive for
executive officers to continue their efforts on behalf of Allaire and to create
long-term value for Allaire's stockholders.
In setting salaries, primary consideration was given to the executive
officers' salaries for the previous fiscal year, with adjustments for certain
officers in light of industry conditions, individual contributions and the
improved financial performance of Allaire.
Chief Executive Officer Compensation
Consistent with the overall executive officer compensation policy,
Allaire's approach to its Chief Executive Officer's compensation package in
fiscal 1999 was to be competitive with other companies in the industry. The
compensation committee believes that this approach provides additional incentive
to Allaire's Chief Executive Officer to achieve Allaire's performance goals and
enhance stockholder value.
Salary for Allaire's Chief Executive Officer was designed to give him
assurance of a base level of compensation commensurate with his position and
duration of employment with Allaire and to be competitive with salaries for
officers holding comparable positions in the industry. David J. Orfao served as
Chief Executive Officer of Allaire for all of 1999 and, together with other
executive officers of Allaire, successfully managed Allaire through its initial
public offering and a follow-on offering of Allaire's common stock during 1999.
Mr. Orfao received a significant bonus in recognition of these efforts and the
growth of Allaire in 1999 under his leadership.
Policy Regarding Section 162(m) of the Internal Revenue Code
The Securities and Exchange Commission requires that this report comment
upon the compensation committee's policy with respect to Section 162(m) of the
Internal Revenue Code, which limits Allaire's tax deduction with regard to
compensation in excess of $1 million paid to the chief executive officer and the
four most highly compensated officers (other than the chief executive officer)
at the end of any fiscal year unless the compensation qualifies as
"performance-based compensation." The compensation committee's policy with
respect to Section 162(m) is to make every reasonable effort to cause
compensation to be deductible by Allaire while simultaneously providing
executive officers of Allaire with appropriate rewards for their performance.
The aggregate base salaries and bonuses of each of Allaire's executive officers
have not historically exceeded, and are not in the forseeable future expected to
exceed, the $1.0 million limit, and options under Allaire's stock incentive
plans are intended to qualify as performance-based compensation.
The Compensation Committee
Jonathan A. Flint
John J. Gannon
9
<PAGE> 12
PERFORMANCE GRAPH
The following performance graph compares the performance of Allaire's
cumulative stockholder return with that of a broad market index, the Nasdaq
Stock Market Index for U.S. Companies, and a published industry index, the
Hambrecht & Quist Internet 100 Index. The cumulative stockholder returns for
shares of Allaire's common stock and for the market and industry indicies are
calculated assuming $100 was invested on January 22, 1999, the date on which
Allaire's common stock commenced trading on the Nasdaq National Market, and
assuming shares of Allaire's common stock were purchased at the initial public
offering price of the common stock. Allaire paid no cash dividends during the
periods shown below. The performance of the market and industry indices is shown
on a total return, or dividends reinvested, basis.
COMPARISON OF 11 MONTH CUMULATIVE TOTAL RETURN*
AMONG ALLAIRE CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE CHASE H & Q INTERNET 100 INDEX
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET
ALLAIRE CORPORATION (U.S.) CHASE H&Q INTERNET 100
------------------- ------------------- ----------------------
<S> <C> <C> <C>
01/22/99 100.00 100.00 100.00
3/99 155.43 104.92 134.02
6/99 156.00 114.81 138.03
9/99 128.00 117.59 141.88
12/99 334.43 173.25 274.65
</TABLE>
* $100 INVESTED ON 1/22/99 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING DECEMBER 31.
10
<PAGE> 13
CERTAIN TRANSACTIONS
SALES OF STOCK
In January 1999, Allaire issued and sold 7,000 shares of its common stock
to Jonathan A. Flint and 21,000 shares of its common stock to BancBoston
Ventures, which at the time was a five-percent stockholder of Allaire, at a
purchase price of $10.00 per share, in the initial public offering of Allaire's
common stock.
ISSUANCE OF WARRANTS
In March 1997 Allaire issued a warrant to Polaris Venture Partners L.P. to
purchase 11,920 shares of common stock at an exercise price of $2.00 per share,
and a warrant to Polaris Founders' Fund, L.P. to purchase 680 shares of common
stock at an exercise price of $2.00 per share. Both warrants are currently
exercisable in whole or in part, at any time or from time to time, until March
7, 2002, and both contain certain protections against dilution resulting from
stock splits, stock dividends and similar events.
ALIVE.COM, INC.
Allaire was a party to certain agreements with Alive.com, inc., which was
formerly known as Yesler Software, Inc. Initially capitalized in July 1998,
Alive.com was created to develop, market and sell a commercial software
application, originally conceived by developers at our company, and designed for
use by individuals to create multimedia web-based presentations. The principal
stockholders of Alive.com were Allaire, Weld, Brown LLC and the Polaris
entities.
We acquired our ownership interest in Alive.com under a Contribution and
Restricted Stock Purchase Agreement dated July 14, 1998, between Allaire and
Alive.com. Under this agreement, we acquired 907,591 shares of Alive.com common
stock, representing on that date approximately 34% of the outstanding shares of
capital stock of Alive.com. On the date we entered into this agreement with
Alive.com, the Polaris entities purchased preferred stock of Alive.com
representing approximately 33% of the outstanding shares of capital stock of
Alive.com for $750,000.
Also in connection with our acquisition of the Alive.com common stock, we
entered into an original equipment manufacturer agreement with Alive.com,
whereby we granted Alive.com the right to obtain, at a 95% discount, some of our
commercial software products for distribution together with the Alive.com
software as a single commercial unit.
In December 1999, Alive.com was acquired by encoding.com, Inc. In this
transaction, Allaire received shares of common stock of encoding.com in exchange
for its shares of Alive.com. Shortly thereafter, encoding.com changed its name
to Loudeye Technologies Inc.
We believe that all transactions set forth above were made on terms no less
favorable than would have been obtained from unaffiliated third parties.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Allaire's common stock as of March 20, 2000 by: (a) each person
known by Allaire to be the beneficial owner of more than 5% of its common stock;
(b) each Named Executive Officer; (c) each of Allaire's directors; and (d) all
executive officers and directors as a group. Unless otherwise noted below, the
address of each person listed on the table is c/o Allaire Corporation, One
Alewife Center, Cambridge, MA 02140.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. The following are deemed to be beneficially
owned and outstanding for purposes of calculating the number of shares and the
percentage beneficially owned by that person or entity:
- shares of common stock issuable by Allaire pursuant to options which may
be exercised within 60 days after March 20, 2000 and not subject to
repurchase by Allaire; and
11
<PAGE> 14
- shares of common stock issuable by Allaire pursuant to warrants which may
be exercised within 60 days after March 20, 2000.
However, these shares are not deemed to be beneficially owned and
outstanding for purposes of computing the percentage beneficially owned by any
other person or entity.
Except as otherwise indicated, each stockholder named in the table has sole
voting and investment power with respect to the shares set forth opposite such
stockholder's name. For purposes of calculating the percentage beneficially
owned, the number of shares deemed outstanding includes: (a) 26,916,775 shares
of common stock outstanding as of March 20, 2000; and (b) the presently
exercisable options and presently exercisable warrants held by that person.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED STOCK OUTSTANDING
------------------------ ------------------ --------------------
<S> <C> <C>
Joseph J. Allaire (1)...................................... 3,190,000 11.9%
Essex Investment Management Company (2).................. 1,339,612 5.0%
125 High Street
Boston, MA 02110
Jonathan A. Flint (3)...................................... 160,548 *
1000 Winter Street, Suite 3350
Waltham, MA 02154
David J. Orfao............................................. 403,700 1.5%
Amy E. Lewis............................................... 161,000 *
David A. Gerth............................................. 181,000 *
Stephen F. Clark........................................... 10,583 *
John J. Gannon............................................. 10,410 *
1000 Winter Street, Suite 3350
Waltham, MA 02154
Thomas A. Herring.......................................... 34,718 *
1000 Winter Street, Suite 3350
Waltham, MA 02154
Ronald G. Ward............................................. 1,000 *
16511 Southern Oaks Drive
Houston, TX 77068
W. Frank King III.......................................... 0 *
6300 Bridgepoint Parkway
Building 3, Suite 200
Austin, TX 78730
All executive officers and directors as a group (11
persons)................................................. 4,444,308 16.3%
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Includes 140,000 shares of common stock that are subject to options to
purchase held by Jeremy Allaire, Adam Berrey, and Simeon Simeonov, all of
whom are employees of Allaire.
(2) The information in this table regarding Essex Investment Management Company
is based solely upon a Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2000. Essex Investment Management Company
reported that it is an Investment Adviser registered under section 203 of
the Investment Advisers Act and that it has sole voting power with respect
to 955,280 shares of Allaire common stock and sole dispositive power with
respect to 1,339,612 shares of Allaire common stock.
(3) Shares listed as owned by Mr. Flint include shares owned beneficially by
Polaris Venture Partners L.P. and Polaris Founders' Fund L.P. However, Mr.
Flint disclaims his beneficial ownership of all such shares, except to the
extent of his pecuniary interest therein.
12
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Allaire's
executive officers and directors, as well as persons who own more than 10% of a
registered class of Allaire's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission.
Regulations of the SEC require such executive officers, directors and
stockholders to furnish Allaire with copies of all Section 16(a) forms they
file.
Based solely upon a review of the Forms 3, 4 and 5 and amendments thereto
furnished to Allaire with respect to 1999, or written representations that Form
5 was not required for 1999, Aware believes that all Section 16(a) filing
requirements applicable to its executive officers, directors and
greater-than-ten-percent stockholders were fulfilled in a timely manner.
INDEPENDENT ACCOUNTANTS
Allaire's board of directors has selected PricewaterhouseCoopers LLP as
independent accountants to audit Allaire's financial statements for the fiscal
year ending December 31, 2000.
Allaire expects that representatives of PricewaterhouseCoopers LLP will be
present at the annual meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions
from stockholders.
STOCKHOLDER PROPOSALS
If any stockholder would like to include a proposal in Allaire's proxy
materials for its next annual meeting of stockholders or special meeting in lieu
thereof, the stockholder must comply with the procedural requirements of the
rules promulgated under the Securities Exchange Act of 1934. Among other
requirements, Allaire must receive the proposal at its executive offices no
later than December 11, 2000.
In addition, Allaire's By-Laws provide that a stockholder desiring to bring
business before any meeting of the stockholders must give timely written notice
to Allaire in accordance with the procedural requirements set forth in Section
3.7 of Allaire's By-Laws. To bring an item of business before Allaire's 2001
annual meeting, a stockholder must deliver the requisite notice of such item to
Allaire no earlier than February 9, 2001 and no later than March 11, 2001.
AVAILABLE INFORMATION
Stockholders of record on April 3, 2000 will receive copies of this proxy
statement and Allaire's annual report to stockholders, which contains detailed
financial information concerning Allaire. Allaire will mail, without charge, a
copy of Allaire's Annual Report on Form 10-K (excluding exhibits) to any
stockholder whose proxy Allaire is soliciting if the stockholder requests it in
writing. Please submit any such written request to:
Allaire Corporation
One Alewife Center
Cambridge, MA 02140
Attention: Investor Relations
13
<PAGE> 16
ALLAIRE CORPORATION
ONE ALEWIFE CENTER
CAMBRIDGE, MASSACHUSETTS 02140
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2000
The undersigned hereby constitutes and appoints Joseph J. Allaire, David J.
Orfao and David A. Gerth, and each of them acting singly, as proxies of the
undersigned, each with full power to appoint his substitute, and authorizes each
of them, and each substitute so appointed, to represent and vote all shares of
Common Stock of Allaire Corporation (the "Company") held of record by the
undersigned at the close of business on April 3, 2000, at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 17, 2000, at the
offices of Foley, Hoag & Eliot LLP, One Post Office Square, Boston,
Massachusetts 02109, beginning at 10 AM, local time, and at any adjournments
thereof.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN WITH RESPECT TO THE PROPOSAL SET FORTH ON THE REVERSE SIDE,
WILL BE VOTED FOR THE PROPOSAL OR OTHERWISE IN ACCORDANCE WITH THE
RECOMMENDATION OF THE BOARD OF DIRECTORS. A stockholder wishing to vote in
accordance with the recommendation of the Board of Directors need only sign and
date this proxy and return it in the enclosed envelope.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders and of the Proxy Statement relating
thereto, and hereby revoke(s) any proxy or proxies heretofore given. This proxy
may be revoked at any time before it is exercised.
- --------------------------------------------------------------------------------
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
Please sign this proxy exactly as your name appears on the books of the Company.
Joint owners should each sign personally. Trustees, custodians, and other
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, each person must sign. If the shareholder is a corporation,
the 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> 17
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ALLAIRE CORPORATION 1. ELECTION OF DIRECTORS
NOMINEES:
[ ] [ ] [ ]
Joseph J. Allaire
Jonathan A. Flint For Withheld For all nominees
John J. Gannon except as noted below
Thomas A. Herring
W. Frank King III ----------------------
David J. Orfao
Ronald G. Ward ----------------------
RECORD DATE SHARES
-------------------------
Please be sure to sign and date this Proxy. Mark box at right if an address change or comments have [ ]
been noted on the reverse side of this card.
- ---------------------- ------------------------ ------------------------------
Shareholder sign here Co-owner sign here Date
DETACH CARD DETACH CARD
</TABLE>
ALLAIRE CORPORATION
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
The proposal which is discussed in detail in the enclosed proxy materials
requires your immediate attention and approval.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the box on the proxy card to indicate how your shares shall be
voted. Then sign 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 to be
held on May 17, 2000.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Allaire Corporation
