<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:
[_] Confidential, for Use of the
[_] Preliminary Proxy Statement Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Software.com, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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>
SOFTWARE.COM, INC.
525 Anacapa Street
Santa Barbara, CA 93101
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 2, 2000
----------------
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Software.com, Inc., a Delaware corporation (the "Company"), will
be held on June 2, 2000 at 9:00 a.m., local time, at The Hotel Du Pont, 11th &
Market Streets, Wilmington, Delaware 19801 (telephone: 800-441-9019), for the
following purposes:
1. To elect three Class I directors to serve for terms of three years.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice of Annual Meeting of Stockholders. Only
stockholders of record at the close of business on April 19, 2000 are entitled
to notice of, and to vote at, the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to vote using the Internet or telephone or to mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the Annual
Meeting may vote in person even if he or she has returned a proxy card.
By Order of the Board of Directors
/s/ Craig A. Shelburne
Craig A. Shelburne
Vice President, General Counsel and
Corporate Secretary
Santa Barbara, California
May 1, 2000
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE BY USING
THE INTERNET, THE TELEPHONE OR BY SIGNING, DATING, AND RETURNING THE ENCLOSED
PROXY CARD.
<PAGE>
SOFTWARE.COM, INC.
525 Anacapa Street
Santa Barbara, CA 93101
----------------
PROXY STATEMENT FOR
2000 ANNUAL MEETING OF STOCKHOLDERS
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Software.com, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on June 2, 2000, at 9:00 a.m. local
time (the "Annual Meeting"), or at any adjournment or postponement thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting. The Annual Meeting will be held at The Hotel Du Pont, 11th & Market
Streets, Wilmington, Delaware 19801 (telephone: 800-441-9019). The Company
intends to mail this proxy statement and accompanying proxy card on or about
May 1, 2000 to all stockholders entitled to vote at the Annual Meeting.
Stockholders Entitled to Vote
Stockholders of record at the close of business on April 19, 2000 are
entitled to notice of and to vote at the Annual Meeting. At the close of
business on April 19, 2000, the Company had outstanding and entitled to vote
47,411,837 shares of common stock, each of which is entitled to one vote on
each matter to be voted upon at the Annual Meeting.
Votes Required for Approval
The presence, in person or by proxy, of at least a majority of the shares
outstanding on the record date, April 19, 2000, is necessary to attain a
quorum. All votes will be tabulated by the inspector of elections appointed
for the Annual Meeting, who will separately tabulate affirmative and negative
votes, abstentions and broker non-votes. Broker non-votes occur when a
nominee, such as a financial institution, returns a proxy, but does not have
the authorization from the beneficial owner to vote the owner's shares on a
particular proposal because the nominee did not receive voting instructions
(via proxy vote) from the beneficial owner. Abstentions and broker non-votes
will be counted for the purpose of determining if a quorum is present. For
purposes of determining the number of shares voting on a particular proposal,
abstentions are counted as shares voting, whereas broker non-votes are not
counted as shares voting.
For Proposal 1, the election of directors, the three nominees receiving the
highest number of affirmative votes shall be elected. Proposal 2 must be
approved by the affirmative vote of the holders of a majority of the
outstanding shares of common stock present in person or represented by proxy
and entitled to vote on the subject matter.
2
<PAGE>
How to Vote Your Shares
YOUR VOTE IS IMPORTANT. Your shares can be voted at the Annual Meeting only
if you are present in person or represented by proxy. Whether or not you
expect to attend the meeting, please take the time to vote your proxy.
Stockholders of record or "registered stockholders" can vote:
By Mail: Mark your vote, date, sign and return the enclosed proxy in the
postage-paid return envelope provided.
By Telephone: Call the toll-free number indicated on the enclosed proxy
and follow the recorded instructions.
By Internet: Go to the website indicated on the enclosed proxy and
follow the instructions provided.
If your shares are held beneficially in "street" name through a nominee
such as a financial institution or other holder of record, your vote may also
be cast by telephone, by Internet, as well as by mail if your financial
institution offers such voting alternatives. Please follow the specific
instructions provided by your nominee on your proxy card.
Even if you have given your proxy, you still may vote in person if you
attend the meeting. Please note, however, that if your shares are held
beneficially through a broker, bank or other nominee and you wish to vote at
the meeting, you must obtain from the record holder a proxy issued in your
name.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of common stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of common stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Stockholder Proposals
Any proposal of a stockholder of the Company that is intended to be
presented by such stockholder at the Company's 2001 Annual Meeting of
Stockholders must be received by the Company no later than January 1, 2001 in
order for such proposal to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such meeting. Stockholder proposals
received by the Company after that time will be considered untimely.
In addition, the Company's Bylaws provide that stockholders intending to
nominate candidates for election as directors or to bring business before an
annual meeting of stockholders which were not included in the Company's proxy
statement must deliver the prescribed notice and information to the Secretary
of the Company no later than January 1, 2001. If a stockholder who has
notified the Company of his or her intention to present a proposal at an
annual meeting does not appear or send a qualified representative to present
his or her proposal at such meeting, the Company need not present the proposal
for a vote at such meeting.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. A proxy may be revoked by filing
with the Secretary of the Company at the Company's principal executive office,
525 Anacapa Street, Santa Barbara, California, 93101, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
3
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
The Company's Amended and Restated Certificate of Incorporation provide
that the members of the Board of Directors are divided into three classes,
whose terms shall expire at different times. The three Class I directors are
to be elected at the 2000 Annual Meeting. Unless otherwise instructed, the
proxy holders will vote the proxies received by them for the Company's three
nominees named below, all of whom are presently Class I directors of the
Company. In the event that any nominee of the Company is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. The term of office of each
person elected as a director will continue until the third annual meeting of
stockholders following election or until a successor has been duly elected and
qualified.
The name of and certain information regarding each nominee are set forth
below. There are no family relationships among directors or executive officers
of the Company.
<TABLE>
<CAPTION>
Name Age(1) Position with the Company
---- ------ -------------------------
<C> <C> <S>
John L. MacFarlane... 33 Chief Executive Officer, Founder and Director
Frank Perna.......... 61 Chairman of the Board
Neal Douglas......... 41 Director
</TABLE>
- --------
(1) As of December 31, 1999
John L. MacFarlane has been Chief Executive Officer and a director of
Software.com since its incorporation. From July 1988 to August 1989, Mr.
MacFarlane was with Harris Corporation working in the Defense Communications
division on military communications systems. From November 1989 to July 1991,
Mr. MacFarlane worked for the U.S. Navy, where he worked on optical signal
processing. Mr. MacFarlane received his B.S. in electrical engineering from
Rensselaer Polytechnic Institute and his M.S. in electrical engineering from
the University of California at Santa Barbara.
Frank Perna has been Chairman of the Board of Software.com since July 1997
and has been a director since January 1996. Since December 1998, Mr. Perna has
been Chairman of the Board and Chief Executive Officer of MacNeal-Schwendler
Corporation, a computer-aided engineering software company. From December 1994
to August 1998, Mr. Perna was the Chief Executive Officer and Chairman of the
Board of EOS Corporation, a provider of power supplies for electrical
equipment and notebook computers. From 1984 to 1993, Mr. Perna served as
President, Chief Executive Officer and Director of MagneTek, a publicly held
provider of electrical equipment and services to utilities and industrial
customers. Mr. Perna holds a B.S. in mechanical engineering from Kettering
University, an M.S. in electrical engineering from Wayne State University and
an M.S. in management from the Massachusetts Institute of Technology Sloan
School of Management.
Neal Douglas has been a director of Software.com since July 1998. Mr.
Douglas has been a Managing General Partner of Spectrum Equity Investors, a
venture capital firm, since December 1999. Since January 1993, Mr. Douglas has
been a Founding General Partner of AT&T Ventures, a venture capital firm
affiliated with AT&T Corp. From 1989 to 1993, Mr. Douglas was a partner of New
Enterprise Associates, a venture capital firm. Earlier in his career, Mr.
Douglas was a member of the technical staff of Bell Labs. Mr. Douglas
currently serves on the board of directors of Cellnet Data Systems, Inc.,
FVC.COM, TUT Systems, Netro, and several privately held companies. Mr. Douglas
received a B.S. in electrical engineering from Cornell University, an M.S. in
electrical engineering from Stanford University, and an M.B.A. from the
University of California at Los Angeles.
4
<PAGE>
Executive Officers and Directors
The following section sets forth information about our executive officers
and directors as of December 31, 1999.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
John L. MacFarlane... 33 Chief Executive Officer, Founder and Director
Valdur Koha.......... 44 President
John S. Ingalls...... 49 Senior Vice President, Chief Financial Officer
Mark A. Root......... 34 Corporate Controller
Frank Perna.......... 61 Chairman of the Board
Neal Douglas......... 41 Director
Judith Hamilton...... 55 Director
Don Listwin.......... 40 Director
Bernard Puckett...... 54 Director
Bernhard Woebker..... 49 Director
</TABLE>
John L. MacFarlane has been Chief Executive Officer and a director of
Software.com since its incorporation. From July 1988 to August 1989, Mr.
MacFarlane was with Harris Corporation working in the Defense Communications
division on military communications systems. From November 1989 to July 1991,
Mr. MacFarlane worked for the U.S. Navy, where he worked on optical signal
processing. Mr. MacFarlane received his B.S. in electrical engineering from
Rensselaer Polytechnic Institute and his M.S. in electrical engineering from
the University of California at Santa Barbara.
Valdur Koha has been President of Software.com since May 1996. From August
1994 to May 1996, Mr. Koha was Chief Executive Officer, President and Chairman
of the Board of Directors of Accordance Corporation, which was acquired by
Software.com in May 1996. From January 1991 to August 1994, Mr. Koha was
Director of Development of the Open Systems at Siemens Nixdorf, Inc., in which
position he was responsible for products in the areas of distributed
computing, multimedia, imaging and operating systems. Mr. Koha received his
degree in mathematics and computer science from the University of Bonn.
John S. Ingalls has been Chief Financial Officer and Senior Vice President
of Software.com since February 1999. From September 1998 to February 1999, Mr.
Ingalls was Chief Financial Officer and Senior Vice President of Chrystal
Software, Inc., a subsidiary of Xerox Corporation that develops high-end
document management software. From August 1996 to May 1998, Mr. Ingalls was
Vice President of Finance and Chief Financial Officer of Raptor Systems, Inc.,
a publicly-traded network security software manufacturer. From December 1989
to March 1996, Mr. Ingalls was Vice President, Corporate Finance for Clean
Harbors, Inc., a publicly-traded environmental services company. Prior to
1989, Mr. Ingalls was a managing director in the Investment Banking Department
of the Bank of Boston, after ten years as a Wall Street lawyer and partner in
the Boston law firm of Palmer & Dodge. Mr. Ingalls received his B.A. in
economics from Amherst College and his J.D. from the University of Virginia
School of Law.
Mark A. Root has been Corporate Controller of Software.com since December
1999 and was Director of Accounting from March 1999 to November 1999. From
November 1993 to February 1999, Mr. Root held various positions at QAD, Inc.,
an enterprise resource planning software developer, including Internal Audit
Manager, Assistant Director of Finance, European Region, IPO Lead, Treasury
Manager and Product Marketing Manager. From August 1990 to November 1993, Mr.
Root was an audit professional with KPMG Peat Marwick. Mr. Root received his
B.A. in business administration, accounting from California State University,
Northridge. Mr. Root is a certified public accountant in California.
5
<PAGE>
Frank Perna has been Chairman of the Board of Software.com since July 1997
and has been a director since January 1996. Since December 1998, Mr. Perna has
been Chairman of the Board and Chief Executive Officer of MacNeal-Schwendler
Corporation, a computer-aided engineering software company. From December 1994
to August 1998, Mr. Perna was the Chief Executive Officer and Chairman of the
Board of EOS Corporation, a provider of power supplies for electrical
equipment and notebook computers. From 1984 to 1993, Mr. Perna served as
President, Chief Executive Officer and Director of MagneTek, a publicly held
provider of electrical equipment and services to utilities and industrial
customers. Mr. Perna holds a B.S. in mechanical engineering from Kettering
University, an M.S. in electrical engineering from Wayne State University and
an M.S. in management from the Massachusetts Institute of Technology Sloan
School of Management.
Neal Douglas has been a director of Software.com since July 1998. Mr.
Douglas has been a Managing General Partner of Spectrum Equity Investors, a
venture capital firm, since December 1999. Since January 1993, Mr. Douglas has
been a Founding General Partner of AT&T Ventures, a venture capital firm
affiliated with AT&T Corp. From 1989 to 1993, Mr. Douglas was a partner of New
Enterprise Associates, a venture capital firm. Earlier in his career, Mr.
Douglas was a member of the technical staff of Bell Labs. Mr. Douglas
currently serves on the board of directors of Cellnet Data Systems, Inc.,
FVC.COM, TUT Systems, Netro, and several privately held companies. Mr. Douglas
received a B.S. in electrical engineering from Cornell University, an M.S. in
electrical engineering from Stanford University, and an M.B.A. from the
University of California at Los Angeles.
Judith Hamilton has been a director of Software.com since January 1996.
Since January 1999, Ms. Hamilton has been Chief Executive Officer of Classroom
Connect, a company specializing in K-12 Internet resources. From April 1996 to
July 1998, Ms. Hamilton was President and Chief Executive Officer of
FirstFloor Software, an Internet software publisher. From July 1992 to
December 1995, Ms. Hamilton was President and Chief Executive Officer of
Dataquest, Inc., an information technology market research and consulting
firm. From 1987 to 1991, Ms. Hamilton was Partner and National Director of
Market Development for Ernst & Young. Ms. Hamilton currently serves on the
boards of directors of R.R. Donnelley & Sons Company, a commercial printing
company, and several privately held companies. Ms. Hamilton received her B.A.
in history/political science from Indiana University and her certificate in
management from the Graduate School of Business of the University of
California at Los Angeles.
Donald J. Listwin has been a director of Software.com since July 1997.
Since May 1998, Mr. Listwin has been an Executive Vice President at Cisco
Systems. Prior to that, he held a variety of positions at Cisco Systems,
including from April 1997 to May 1998, Senior Vice President of Service
Provider Line of Business, from August 1996 to April 1997, Senior Vice
President of IOS Development and Marketing, from September 1995 to August
1996, Vice President and General Manager of Cisco's Access Business Unit, and
from September 1993 to September 1995, Vice President of Marketing. Mr.
Listwin also serves on the board of directors of TIBCO Software, Inc. and E-
Tek Dynamics, Inc. Mr. Listwin holds a B.S. degree in electrical engineering
from the University of Saskatchewan, Canada.
Bernard Puckett has been a director of Software.com since July 1997. From
January 1994 to January 1996, Mr. Puckett was President and CEO of Mobile
Telecommunications Technologies. From 1967 to 1994, Mr. Puckett was at IBM
Corp., where he held a variety of positions including, Senior Vice President,
Corporate Strategy and Development and Vice President and General Manager,
Applications Software. Mr. Puckett serves on the boards of directors of P-COM,
R.R. Donnelley & Sons Company, Iomega Corporation and IMS Health. Mr. Puckett
received his B.S. in mathematics from the University of Mississippi.
Bernhard Woebker has been a director of Software.com since July 1997. Since
August 1995, Mr. Woebker has been Vice President, Europe of Versant
Corporation, a database management company. From April 1992 to July 1994, Mr.
Woebker was Vice President, Europe of NeXT, Inc., a software company that has
been acquired by Apple Computer, Inc. From 1976 until 1991, Mr. Woebker held a
variety of positions in Germany and the United States with Nixdorf Computer
AG, Nixdorf Computer Engineering Corp., and Siemens Nixdorf Information
Systems, including President and CEO of Nixdorf Computer Engineering Corp.
from 1986 to 1989.
6
<PAGE>
From 1973 to 1976, Mr. Woebker was an Assistant Professor at the Institute for
Computer Science/Technical University Hanover, where he specialized in
compiler theory, artificial intelligence, and graphical data processing. Mr.
Woebker received his B.A. from the Technical University of Hanover.
Director Compensation
Directors do not currently receive any cash compensation for their service
as directors, but are reimbursed for reasonable expenses incurred in attending
meetings. Non-employee directors are eligible to receive options under our
1995 stock plan and were granted the following options in June 1999 which were
not subject to vesting and were immediately exercisable:
. Messrs. Douglas, Listwin, Puckett and Woebker each received options to
purchase 30,000 shares of the Company's common stock at an exercise
price of $11.00 per share.
. Mr. Perna and Ms. Hamilton each received options to purchase 15,000
shares of the Company's common stock at an exercise price of $11.00 per
share.
Board Meetings and Committees
The Board of Directors held a total of 11 meetings (including regularly
scheduled and special meetings) during fiscal 1999 and also took certain
actions by written consent. No incumbent director during the last fiscal year
attended fewer than 75% of the aggregate of (i) the total number of meetings
of the Board of Directors while he or she served on the board, and (ii) the
total number of meetings held by all committees on which he or she served.
The Company's Board of Directors has standing Audit, Compensation and Stock
Option Committees, which assist the Board of Directors in the discharge of its
responsibilities. In addition, the Board of Directors from time to time
establishes an Acquisition Committee for consideration of proposed
acquisitions.
The Audit Committee reports to the Company's Board of Directors regarding
the appointment of the Company's independent public auditors, the scope and
fees of prospective annual audits and the results thereof, compliance with the
Company's accounting and financial policies and management's procedures and
policies relative to the adequacy of the Company's internal accounting
controls. Members of the Audit Committee are appointed by the Board of
Directors and serve for one-year terms. The Audit Committee currently consists
of Ms. Hamilton, Mr. Perna, and Mr. Puckett. The Audit Committee held three
meetings during fiscal 1999 and took one action by written consent.
The Compensation Committee reviews and approves the annual compensation for
each executive officer consistent with the terms of any applicable employment
arrangements, reviews, approves and recommends terms and conditions for all
employee benefit plans, and, together with the Stock Option Committee,
administers the Company's stock plans. Members of the Company's Compensation
Committee are appointed by the Board of Directors and serve one-year terms.
The Compensation Committee currently consists of Mr. Douglas, Ms. Hamilton,
and Mr. Woebker. The Compensation Committee held two meetings during fiscal
1999 and took two actions by unanimous written consent.
The Stock Option Committee is authorized by the Board of Directors to grant
stock options under the Company's various option plans to new employees or
existing employees who are not directors or executive officers. Members of the
Stock Option Committee are appointed by the Board of Directors and serve for
one-year terms. The Stock Option Committee currently consists of Mr. Perna.
The Stock Option Committee held one meeting during 1999, and took action by
written consent on 15 occasions.
7
<PAGE>
Required Vote
The three nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted for them shall be
elected as Class I directors. Votes withheld from any director are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business, but have no other legal effect under Delaware law.
The proxies cannot be voted for a greater number of persons than three.
Recommendation: The Board of Directors Recommends That Stockholders Vote
"For" The Re-election of Messrs. MacFarlane, Perna, and Douglas.
8
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 2000. Ernst & Young LLP has been the Company's auditors
since July 1997. Representatives of Ernst & Young LLP are expected to attend
the Annual Meeting to make a statement and respond to appropriate questions.
Required Vote
The Board of Directors has conditioned its appointment of the Company's
independent auditors upon the receipt of the affirmative vote by the holders
of a majority of the common stock present in person or represented by proxy
and voting at the Annual Meeting. In the event that the stockholders do not
approve the selection of Ernst & Young LLP, the appointment of the independent
auditors will be reconsidered by the Board of Directors.
Recommendation: The Board of Directors Recommends That Stockholders Vote
"For" The Ratification of the Appointment of Ernst & Young LLP as the
Company's Independent Auditors.
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the common stock of the Company as of December 31,
1999, of:
. each person or entity who is known by the Company to beneficially own
five percent or more of the outstanding shares of its common stock (1);
. each director of the Company;
. the Company's Chief Executive Officer and the two other most highly
compensated executive officers of the Company who received at least
$100,000 in total compensation in fiscal 1999 (the "Named Executive
Officers"); and
. all of the Company's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of December 31, 1999 are
deemed outstanding. Such shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
Unless otherwise indicated, the address of each individual listed in the
table is Software.com, Inc., 525 Anacapa Street, Santa Barbara, CA 93101. The
percentages in the table below are based on 42,205,000 shares of the Company's
common stock outstanding as of December 31, 1999. Except as indicated in the
footnotes to this table and pursuant to applicable community property laws,
each stockholder named in the table has had sole voting and investment power
with respect to the shares set forth opposite such stockholder's name.
<TABLE>
<CAPTION>
Options Total Shares
Shares Exercisable Beneficially Percentage
Name Owned In 60 days Owned Ownership
- ---- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
John L. MacFarlane............................. 5,004,232 322,916 5,327,148 12.5%
Valdur Koha.................................... 2,967,344(2) 567,161 3,534,505 8.3%
Don Listwin.................................... 3,221,560(3) 7,500 3,229,060 7.6%
Cisco Systems, Inc. ........................... 3,119,060 -- 3,119,060 7.4%
170 W. Tasman Drive
San Jose, CA 95014
Janus Capital Corporation...................... 2,449,870(4) -- 2,449,870 5.8%
100 Fillmore Street
Denver, CO 80206-4923
Neal Douglas................................... 2,360,681(5) 60,000 2,420,681 5.7%
AT&T Ventures.................................. 2,340,681(6) -- 2,340,861 5.5%
295 N. Maple Avenue
Basking Ridge, NJ 07920
Judith Hamilton................................ 138,625 17,693 156,318 *
Frank Perna, Jr................................ 95,988 45,330 141,318 *
Bernhard Woebker............................... 86,000 30,000 116,000 *
Bernard Puckett................................ 15,000 90,000 105,000 *
John Ingalls................................... 18,923 81,818 100,741 *
All directors and executive officers as a group
(10 persons).................................. 13,907,353 1,230,751 15,138,104 34.9%
</TABLE>
10
<PAGE>
- --------
* Indicates ownership of less than 1% of the outstanding shares of the
Company's Common Stock.
(1) Subsequent to December 31, 1999, FMR Corp. beneficially owned 5,764,517
shares, as indicated in the Schedule 13G filed by FMR Corp. pursuant to
the Exchange Act on April 7, 2000.
(2) Includes 1,000,000 shares held by the Valdur Koha Qualified Annuity Trust.
(3) Includes 3,119,060 held by Cisco Systems, Inc. Mr. Listwin, a director of
the Company, is an Executive Vice President of Cisco Systems and disclaims
beneficial ownership of all shares held by Cisco Systems.
(4) As indicated in the Schedule 13G filed by Janus Capital Corporation
pursuant to the Exchange Act on February 15, 2000.
(5) Includes 1,170,341 shares held by Venture Fund I, LP and 1,170,340 shares
held by AT&T Venture Fund II, LP. Mr. Douglas, a director of the Company,
is a Founding General Partner of AT&T Ventures. Mr. Douglas disclaims
beneficial ownership of all shares except to the extent of his pecuniary
interest in the partnerships.
(6) Includes 1,170,341 shares held by Venture Fund I, LP and 1,170,340 shares
held by AT&T Venture Fund II, LP. The general partners of these funds are
Neal Douglas, Richard Bodman and Brad Burnham.
11
<PAGE>
EXECUTIVE OFFICER COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation paid
by the Company to the Named Executive Officers for services rendered to the
Company during the last two fiscal years.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual ------------
Compensation Securities
----------------- Underlying All Other
Name and Principal Positions Year Salary Bonus Options Compensation
- ---------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
John L. MacFarlane........... 1999 $140,000 $ -- -- $ --
Chief Executive Officer 1998 140,000 -- 1,000,000 --
Valdur Koha.................. 1999 135,000 -- -- $ --
President 1998 135,000 150,000 -- --
John Ingalls(1).............. 1999 163,731 7,500 400,000 150,000(2)
Senior Vice President and 1998 N/A N/A N/A N/A
Chief Financial Officer
</TABLE>
- --------
(1) Mr. Ingalls joined the Company in February 1999.
(2) Consists of reimbursement for relocation.
Option Grants in Last Fiscal Year
The following table sets forth information as to stock options granted to
the Named Executive Officers during the fiscal year ended December 31, 1999.
Unless otherwise indicated, these options were granted under the Company's
1995 Stock Option Plan, have a five-year term, and provide for vesting as to
25% of the underlying common stock one year after the date of grant and as to
an additional 1/48th of the underlying common stock each month thereafter.
Options were granted at an exercise price equal to 100% of the fair market
value of the Company's common stock on the date of grant. For options granted
prior to the Company's initial public offering in June 1999, the fair market
value of the Company's common stock on the date of grant was as determined by
the Company's Board of Directors. For options granted after the initial public
offering, the fair market value of the Company's common stock on the date of
grant was the closing sales price of the common stock on The Nasdaq National
Market on the day prior to the date of grant.
The amounts under "Potential Realizable Value at Assumed Annual Rate of
Stock Appreciation for Option Term" represent hypothetical gains on the shares
of common stock underlying the options granted based on assumed annual
compound stock appreciation rates of 5% and 10% for the full five-year or full
ten-year term of the options, as the case may be. The 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 table does not take into account any appreciation in
the price of the Company's common stock from the date of the Company's initial
public offering to the date of the proxy statement.
12
<PAGE>
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual Rate
Number of Percent Total of Stock
Securities Options Appreciation for
Underlying Granted to Exercise Option Term
Options Employees in Price Per Expiration -------------------
Name Granted Fiscal Year Share Date 5% 10%
- ---- ---------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John L. MacFarlane...... -- -- -- -- -- --
Valdur Koha............. -- -- -- -- -- --
John Ingalls............ 400,000 13.3% $5.50 2/05/04 $607,819 $1,343,122
</TABLE>
Aggregate Stock Option Exercises in Fiscal 1999 and Fiscal Year-End Values
The following table sets forth information with respect to unexercised
options held by the Named Executive Officers as of December 31, 1999. The
amounts under "Value of Unexercised In-the-Money Options" were calculated by
determining the difference between the exercise price and the closing price of
the Company's common stock on the Nasdaq National Market on of December 31,
1999, which was $96.00.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options at
Shares Acquired December 31, 1999 December 31, 1999
on Exercise of Value ------------------------- -------------------------
Name Shares (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John L. MacFarlane...... -- -- 281,250 718,750 $25,973,438 $66,376,563
Valdur Koha............. -- -- 541,381 77,340 $51,295,850 $ 7,327,965
John Ingalls............ 18,181 $16,609 65,152 316,667 $ 5,896,256 $28,658,364
</TABLE>
The Company does not have any employment agreements with any of its Named
Executive Officers. The Company has, however, entered into "change of control"
agreements with each of its Named Executive Officers and other executive
officers. These agreements provide that if an officer's employment is
terminated as a result of an "involuntary termination" during a period
beginning two months before, and ending six months after a change of control,
then one-half of the unvested portion of any stock option held by the officer
will accelerate and become exercisable, subject to certain limitations. For
purposes of the agreement, "involuntary termination" includes a change in the
nature or scope of the officer's duties that is inconsistent with the position
held by the officer immediately before the change of control, a material
reduction of benefits or perquisites, a reduction in base cash salary, a
relocation that is more than 20 miles from the officer's present location, or
any purported termination of the officer by the Company. The Company has
entered into its standard form severance agreement in the event of a change of
control with all of our executive officers, except for Mr. Ingalls.
The Company entered into a severance agreement with Mr. Ingalls, dated
March 1, 1999, which obligates the Company to provide certain benefits to Mr.
Ingalls in connection with a change of control of Software.com. Upon a change
in control, one-half of the unvested portion of any options held by Mr.
Ingalls will vest and become immediately exercisable. If Mr. Ingalls'
employment is terminated by the Company for any reason or by Mr. Ingalls as a
result of "involuntary termination" during a period beginning two months prior
to, and ending twelve months after any change in control, then Mr. Ingalls
shall be paid a lump sum equal to his annual base salary and highest possible
bonus for the fiscal year in which the termination occurs plus any "parachute
payment" excise tax and the entire unvested portion of any stock options held
by Mr. Ingalls shall vest and become immediately exercisable.
The Company's offer letter dated February 9, 1999 to John S. Ingalls,
Senior Vice President and Chief Financial Officer obligates the Company to pay
Mr. Ingalls a lump sum severance payment if the Company terminates his
employment other than for cause. The amount of the severance payment will
equal three months of his then current annual base salary plus one additional
week for each month that he has been employed by the Company, up to a maximum
of one year. In addition, the Company agreed to retain Mr. Ingalls as a
consultant for the period of time as is necessary to allow one-half of the
unvested portion of his option to purchase 400,000 shares of our common stock
to vest.
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's executive officers and directors, and persons who own more
than 10% of a registered class of the Company's equity securities, file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Executive officers, directors and greater than 10%
stockholders are required by SEC rules to furnish the Company with copies of
all forms they file. Based solely on its review of the copies of such forms
received by the Company and written representations from certain reporting
persons, the Company believes that, during fiscal 1999, all Section 16(a)
filing requirements applicable to its executive officers, directors and
10% stockholders were satisfied except that a Form 5 was filed for Bernhard
Woebker to report a stock option exercise that should have been reported on a
Form 4 in July 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, the Compensation Committee of the Company's Board of
Directors included the following directors: Neal Douglas, Judith Hamilton and
Bernhard Woebker. No member of our board of directors or our compensation
committee has served as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving as a
member of our board of directors or compensation committee.
In connection with the sale of the Series A preferred stock, we issued
warrants to funds affiliated with AT&T Ventures to purchase 529,101 shares of
our common stock at an exercise price of $5.00 per share and 269,841 shares of
our common stock at an exercise price of $7.00 per share. Effective July 1998,
in exchange for AT&T Ventures's agreement to extend the redemption date of
redemption rights with respect to the Series A preferred stock, we lowered the
exercise price on all outstanding warrants to $4.15 per share. These warrants
were exercised in November 1999. In addition, we received revenues from
companies affiliated with AT&T Corporation of $1,962,000 in 1999. Mr. Douglas,
one of our directors and a member of our compensation committee, is a Founding
General Partner of AT&T Ventures.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Company's executive compensation program is designed to align
stockholder interests with business strategy, Company values and management
initiatives. It is based on the following four principles: (i) to link the
interests of management with those of stockholders by making a substantial
portion of executive compensation dependent upon the Company's financial
performance and by encouraging stock ownership in the Company, (ii) to attract
and retain superior executives by providing them with the opportunity to earn
total compensation packages that are competitive in the industry, (iii) to
reward individual results by recognizing performance through salary and long-
term incentives and (iv) to manage compensation based on the level of skill,
knowledge, effort and responsibility needed to perform the job successfully.
The executive compensation guidelines of the Compensation Committee were
developed to combine competitive levels of compensation and rewards for
superior performance and to align relative compensation with the achievements
of essential corporate goals, satisfaction of customers, and maximization of
stockholder value. The Compensation Committee believes that stock option
grants to management are beneficial in encouraging management to remain with
the Company and in aligning management and stockholder interests, and
consequently increasing stockholder value.
Executive officers' compensation includes: annual cash compensation
(consisting of base salary) and long-term incentive awards, as well as
additional features which are available to most other employees of the
Company, including a 401(k) plan, medical, life insurance, and an employee
stock purchase plan, some of which allocate payments generally based on an
individual's level of annual cash compensation. Benefits under these general
plans are indirectly tied to the Company's performance.
14
<PAGE>
Annual Cash Compensation
Amounts paid as base salary, including merit salary increases, are
determined by the executive's performance, placement in the salary range
established for the executive's position and the salaries offered in the
industry for comparable positions as well as the executive's long-term
incentive awards. Salaries for the Company's executive officers are determined
primarily on the basis of the executive officer's responsibility, general
salary practices of peer companies and the executive's individual
qualifications and experience. The base salaries are reviewed annually and may
be adjusted by the Compensation Committee in accordance with certain criteria
which include individual performance, the functions performed by the executive
officer, the scope of the executive officer's on-going duties, general changes
in the compensation peer group in which the Company competes for executive
talent, and the Company's financial performance generally. The weight given
each such factor by the Compensation Committee may vary with each individual.
Outside independent consultants are periodically used to gather and analyze
industry comparisons of salary data to ensure that the salary ranges used in
the compensation program are competitive for comparable positions. The
Committee monitors and approves changes in base salary for senior executive
officers (including the executive officers named in the Summary Compensation
Table).
Long-Term Incentive Awards
Long-term incentive awards are made under the 1995 Stock Option Plan (the
"Plan"). The Plan, which is administered by the Committee, provides stock-
based awards to eligible employees, which include most employees as well as
the Company's executive officers.
Stock option awards are based on guidelines that provide for larger awards
commensurate with position levels that reflect competitive grant practices
within a broad peer group of companies in the software, e-commerce and
internet industries. In addition, under the 1999 Employee Stock Purchase Plan,
participants may purchase common stock through payroll deductions of up to 15%
of the participant's compensation. Because of the direct relationship between
the value of an option and the stock price, the Compensation Committee
believes that options motivate executive officers to manage the Company in a
manner that is consistent with stockholder interests. Stock option grants are
intended to focus the attention of the recipient on the Company's long-term
performance which the Company believes results in improved stockholder value,
and to retain the services of the executive officers in a competitive job
market by providing significant long-term earnings potential. To achieve this
goal, stock options granted under the Plan typically vest and become fully
exercisable over a four-year period. The principal factors considered in
granting stock options to officers of the Company are prior performance, level
of responsibility, other compensation and the executive officer's ability to
influence the Company's long-term growth and profitability. The Plan does not
provide any quantitative method for weighting these factors, and a decision to
grant an award is primarily based upon a subjective evaluation of the past as
well as future anticipated performance.
Section 162(m) of the Internal Revenue Code ("IRC") disallows a deduction
by the Company for compensation exceeding $1.0 million paid to certain
executive officers, excluding, among other things, performance-based
compensation. Because the compensation paid to the executive officers has not
approached the limitation, the Compensation Committee has not had to use any
of the available exemptions from the deduction limit. The Compensation
Committee remains aware of the IRC section 162(m) limitations, and the
available exemptions, and will address the issue of deductibility when and if
circumstances warrant the use of such exemptions.
15
<PAGE>
Chief Executive Officer Compensation for 1999
In 1999, Mr. MacFarlane was paid $140,000 in base salary for his services
as Chief Executive Officer of the Company.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Neal Douglas
Judith Hamilton
Bernhard Woebker
16
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders on
the Company's common stock with the cumulative total return of the Nasdaq Stock
Market--U.S. Index and the Chase H&Q Internet Index. The graph assumes that
$100 was invested on June 23, 1999 (the date of the Company's initial public
offering) in the Company's common stock, the Nasdaq Stock Market--U.S. Index
and the Chase H&Q Internet Index, including reinvestment of dividends. No cash
dividends have been declared or paid on the Company's common stock. Note that
historic stock price performance is not necessarily indicative of future stock
price performance.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
June 23, June 30, July 30, August 31, September 30, October 29, November 30, December 31,
1999 1999 1999 1999 1999 1999 1999 1999
-------- -------- -------- ---------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SWCM.................... $100 $128 $186 $252 $237 $373 $537 $531
Nasdaq Stock Market--
USA.................... $100 $104 $102 $106 $106 $114 $128 $156
Chase H&Q Internet
Index.................. $100 $106 $ 95 $101 $111 $123 $155 $215
</TABLE>
17
<PAGE>
Certain Transactions
Lease of 525 Anacapa. In February 1996, we entered into a contract with 525
Anacapa LLC for the lease of our offices at 525 Anacapa Street, Santa Barbara.
Pursuant to the lease, we agreed to pay 525 Anacapa LLC a flexible amount per
month such that it would recover its costs and expenses in relation to the
ownership and operation of the property, and a 9% return on the actual cash
invested in acquiring and improving the property, as set forth in the lease.
In 1999, we paid an aggregate of $193,000 to 525 Anacapa LLC pursuant to the
lease. John MacFarlane, Chief Executive Officer and a director of
Software.com, and Frank Perna, a director of Software.com, are members of 525
Anacapa LLC.
Other Matters
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgement.
By Order of the Board of Directors
/s/ Craig A. Shelburne
Craig A. Shelburne
Vice President, General Counsel and
Corporate Secretary
May 1, 2000
18
<PAGE>
COMPANY #
CONTROL #
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Named Proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy
card.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Follow the simple instructions the Voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/swcm/ -- QUICK *** EASY ***
IMMEDIATE
. Use the Internet to vote your proxy 24 hours a day, 7 days a week.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to SOFTWARE.COM c/o Shareowner Services(TM), P.O.
Box 64873, St. Paul, MN 55164-0873.
[X] Please mark vote as
in this example.
If you vote by Phone or Internet, please do not mail your Proxy Card
X Please detach here X
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
A vote FOR the following proposals is recommended by the Board of Directors.
1. To re-elect three directors, to serve until Software.com's third subsequent [_] FOR ALL [_] WITHHELD
annual meeting of stockholders or until their successors are duly elected NOMINEES FROM ALL
and qualified. Current Directors: 01 John L. MacFarlane, 02 Frank Perna, 03
Neal Douglas --------------------------------------
--------------------------------------
For all nominees except as noted above
[_] FOR [_] AGAINST [_] ABSTAIN
2. Proposal to ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 2000.
In their discretion, the Proxies are authorized to vote or otherwise represent the shares on any and all such other business which
may properly come before the meeting or any adjournment thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW. [_] Date: ____________________________
--------------------------------------
--------------------------------------
Signature(s) in Box
Please sign exactly as your name appears
on your stock certificate. If the stock
is held by joint tenants or as community
property, both should sign. Executors,
administrators, trustees, guardians,
attorneys and corporate officers should
insert their titles.
</TABLE>
<PAGE>
SOFTWARE.COM, INC.
ANNUAL MEETING OF STOCKHOLDERS
Friday, June 2, 2000,
HOTEL DuPONT
11th and Market Streets,
Wilmington, Delaware, 19801
- --------------------------------------------------------------------------------
[X] Please mark vote as
in this example.
PROXY
SOFTWARE.COM, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Software.com, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement, each dated May 1, 2000, and hereby appoints Frank Perna,
John MacFarlane and Craig Shelburne, and each of them, proxies, with full
power of substitution, to represent the undersigned and to vote as designated
on the reverse side, all shares of common stock of Software.com, Inc. that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Software.com, Inc. to be held June 2, 2000 at 9:00 a.m., local time, at the
Hotel DuPont, 11th and Market Streets, Wilmington, Delaware, 19801, and at any
adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR EACH OF THE PROPOSALS ON THE REVERSE SIDE HEREOF AND FOR SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXIES DEEM ADVISABLE.
------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
------------- -------------
