<PAGE>
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 [_] Confidential, for Use of the
Commission Only
(as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SEACHANGE INTERNATIONAL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
The Board of Directors of SeaChange International, Inc.
(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>
SEACHANGE INTERNATIONAL, INC.
124 ACTON STREET
MAYNARD, MASSACHUSETTS 01754
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1998
The Annual Meeting of Stockholders of SeaChange International, Inc. (the
"Company") will be held at the offices of Testa, Hurwitz & Thibeault, LLP,
High Street Tower, 125 High Street, Boston, Massachusetts 02110, on Thursday,
May 21, 1998 at 9:30 a.m., local time, to consider and act upon each of the
following matters:
1. To elect two (2) members to the Board of Directors, each to serve for a
three-year term as a Class II Director.
2. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Stockholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on April 9, 1998, the record date fixed
by the Board of Directors for such purpose.
By Order of the Board of Directors
Edward J. McGrath
Secretary
Maynard, Massachusetts
April 21, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
SEACHANGE INTERNATIONAL, INC.
124 ACTON STREET
MAYNARD, MASSACHUSETTS 01754
----------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1998
----------------
APRIL 21, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SeaChange International, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held at the
offices of Testa, Hurwitz & Thibeault, LLP, High Street Tower, 125 High
Street, Boston, Massachusetts 02110 on Thursday, May 21, 1998 at 9:30 a.m. and
at any adjournments thereof (the "Annual Meeting"). ALL PROXIES WILL BE VOTED
IN ACCORDANCE WITH THE STOCKHOLDERS' INSTRUCTIONS, AND IF NO CHOICE IS
SPECIFIED, THE ENCLOSED PROXY CARD (OR ANY SIGNED AND DATED COPY THEREOF) WILL
BE VOTED IN FAVOR OF THE MATTERS SET FORTH IN THE ACCOMPANYING NOTICE OF
MEETING. Any proxy may be revoked by a stockholder at any time before its
exercise by: (i) delivering written revocation or a later dated proxy to the
President or Secretary of the Company; or (ii) attending the Annual Meeting
and voting in person.
Only stockholders of record as of the close of business on April 9, 1998,
the record date fixed by the Board of Directors, will be entitled to vote at
the Annual Meeting and at any adjournments thereof. As of April 9, 1998, there
were an aggregate of 13,595,019 shares of common stock, par value $.01 per
share (the "Common Stock"), of the Company outstanding and entitled to vote.
Each share is entitled to one vote.
The persons named as proxies, William C. Styslinger, III and Edward J.
McGrath, were selected by the Board of Directors and are officers of the
Company. All properly executed proxies returned in time to be counted at the
Annual Meeting will be voted as stated below under "Voting Procedures." Any
stockholder giving a proxy has a right to withhold authority to vote for any
individual nominee to the Board of Directors by so marking the proxy in the
space provided therein.
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter upon which a vote may properly be taken
should be presented at the Annual Meeting, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
The Company's Annual Report containing financial statements for the fiscal
year ended December 31, 1997 is being mailed together with this Proxy
Statement to all stockholders entitled to vote. It is anticipated that this
proxy statement and the accompanying proxy will be first mailed to
stockholders on or about April 21, 1998.
PROPOSAL I
ELECTION OF DIRECTORS
Pursuant to the Company's Amended and Restated By-Laws, as amended, the
Board of Directors of the Company is divided into three classes. There is one
director currently serving in Class I and two directors currently serving in
each of Class II and Class III. Each director serves for a three-year term,
with one class of directors being elected at each Annual Meeting. The Class II
Directors' terms will expire at this Annual Meeting. All directors will hold
office until their successors have been duly elected and qualified. Prior to
the Annual Meeting, William C. Styslinger, III was the Class I Director;
Martin R. Hoffmann and Edward J. McGrath were the Class II Directors; and Paul
H. Saunders and Carmine Vona were the Class III Directors. The nominees for
the Class II Directors are Martin R. Hoffmann and Edward J. McGrath, both of
whom are currently serving as
<PAGE>
the Class II Directors of the Company. Shares represented by all proxies
received by the Board of Directors and not so marked as to withhold authority
to vote for these nominees will be voted for their election. The Board of
Directors knows of no reason why either of these nominees should be unable or
unwilling to serve, but if that should be the case, proxies will be voted for
the election of some other person, or for fixing the number of directors at a
lesser number.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE NOMINEES LISTED BELOW
The following table sets forth, for the nominees to be elected at the
meeting and for each director whose term of office will extend beyond the
meeting, the year each such nominee or director was first elected a director,
the positions currently held by each nominee or director with the Corporation,
the year each nominee's or director's term will expire and the class of
director of each nominee or director.
<TABLE>
<CAPTION>
NOMINEE'S OR DIRECTOR'S
NAME AND YEAR
NOMINEE OR DIRECTOR YEAR TERM CLASS OF
FIRST BECAME DIRECTOR POSITION(S) HELD WILL EXPIRE DIRECTOR
----------------------- ---------------- ----------- --------
<C> <S> <C> <C>
NOMINEES:
Martin R. Hoffmann (1995).......... Director 2001(1) II
Edward J. McGrath (1993)........... Vice President, 2001(1) II
Engineering, Chief
Technical Officer,
Secretary and Director
CONTINUING DIRECTORS:
Paul H. Saunders (1995)............ Director 1999 III
Carmine Vona (1995)................ Director 1999 III
William C. Styslinger, III (1993).. President, Chief 2000 I
Executive Officer,
Chairman
of the Board and
Director
</TABLE>
- --------
(1) Assumes election of each of the Class II Directors at the Annual Meeting.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors of the Company held three (3) meetings and acted by
unanimous written consent four (4) times during the fiscal year ended December
31, 1997. Each of the directors attended at least 75% of the aggregate of all
meetings of the Board of Directors and of all committees of the Board of
Directors on which he then served held during fiscal 1997.
The Company has a standing Compensation and Option Committee and an Audit
Committee. The Compensation and Option Committee, of which Messrs. Hoffmann,
Saunders and Vona are members, determines the compensation, including stock
options, of the Company's management and key employees and administers and
makes recommendations concerning the Company's stock option plans. The
Compensation and Option Committee held six (6) meetings and acted by unanimous
written consent nine (9) times during fiscal 1997. The Audit Committee of
which Messrs. Hoffmann, Saunders and Vona are members, oversees financial
results and internal controls of the Company, including matters relating to
the appointment and activities of the Company's independent accountants. The
Audit Committee held five (5) meetings during fiscal 1997.
2
<PAGE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth for each Class I Director, each Class II
Director, each Class III Director and the executive officers of the Company,
their ages and the positions currently held by each such person with the
Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
William C. Styslinger, III.. 52 President, Chief Executive Officer, Chairman
of the Board and Director
Edward J. McGrath........... 46 Vice President, Engineering, Chief Technical
Officer, Secretary and Director
Jeffrey M. Boone............ 34 Vice President, Software Engineering
Edward J. Delaney, Jr....... 38 Vice President, Marketing
Thomas Franeta.............. 43 Vice President, Business Development
Ira Goldfarb................ 40 Vice President, North American Sales
Bruce E. Mann............... 50 Vice President, Network Storage Engineering
Richard Poulsen............. 63 Vice President, Operations
Robert W. Puffer............ 57 Vice President
Christopher E. Scanlan...... 39 Vice President, Advertising Management and
Distribution
Martin R. Hoffmann (1)(2)... 66 Director
Paul H. Saunders (1)(2)..... 43 Director
Carmine Vona (1)(2)......... 60 Director
</TABLE>
- --------
(1)Member of Compensation and Option Committee.
(2)Member of Audit Committee.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
Martin R. Hoffmann has served as Director of the Company since January 1995.
Mr. Hoffmann has served as Of Counsel to the Washington D.C. office of
Skadden, Arps, Slate, Meagher & Flom LLP since January 1996. From April 1995
to January 1996, Mr. Hoffmann maintained a law practice and business
consulting practice. He was a Visiting Senior Fellow at the Center for Policy,
Industry and Industrial Development at Massachusetts Institute of Technology
from May 1993 to April 1995, prior to which, from April 1989, he served as
Vice President and General Counsel for Digital Equipment Corporation. Mr.
Hoffmann is a member of the Boards of Directors of Castle Energy Corporation,
an oil and gas refining and exploration company and Mitretek Systems, a non-
profit technology and services company.
Edward J. McGrath, a founder of the Company, has served as Secretary since
the Company's inception in July 1993, and as Vice President, Engineering,
Chief Technical Officer and a Director since August 1993. Mr. McGrath served
as the Treasurer of the Company from its inception to June 1996 and since the
resignation of Joseph S. Tibbetts, Jr. as Vice President, Finance and
Administration, Chief Financial Officer and Treasurer, Mr. McGrath has been
serving as Acting Chief Financial Officer and Treasurer, pending the
appointment of a successor to Mr. Tibbetts. Prior to forming the Company in
1993, Mr. McGrath was employed in various positions at Digital Equipment
Corporation since November 1976, most recently as Director of Engineering of
the Cable Television Business Unit from March 1992 to May 1993, and prior to
that, from March 1989 to March 1992, as Group Manager--Silicon Systems
Engineering.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE MEETING
Paul H. Saunders has served as a Director of the Company since July 1995.
Mr. Saunders has been the Chairman and Chief Executive Officer of James River
Capital Corporation, a money management firm, from January 1995 to the
present. Prior to that, Mr. Saunders was Managing Director of the Managed
Futures Department at Kidder Peabody & Co. Incorporated from April 1983 to
January 1995. Mr. Saunders is a director of Cyber Marketing, a company
involved in marketing and advertising through interactive systems for the
entertainment industry.
3
<PAGE>
Carmine Vona has served as a Director of the Company since January 1995. Mr.
Vona has been President and Chief Executive Officer of Vona Information
Systems, Inc., a consulting firm, since June 1996. Prior to that Mr. Vona was
Executive Vice President and Senior Managing Director for worldwide technology
at Bankers Trust Co. from November 1969 to June 1996. From August 1986 to June
1996 Mr. Vona was Chairman of BT-FSIS, a software development company and a
wholly owned subsidiary of Bankers Trust Co.
William C. Styslinger, III, a founder of the Company, has served as the
President, Chief Executive Officer and a Director since the Company's
inception in July 1993 and as Chairman of the Board since January 1995. Prior
to forming the Company in 1993, Mr. Styslinger was employed at Digital
Equipment Corporation since March 1978, most recently as manager of the Cable
Television Business Unit from October 1991 to May 1993. Mr. Styslinger is a
member of the Board of Directors of Omtool, Inc., a provider of enterprise
client/server facsimile software solutions.
EXECUTIVE OFFICERS
Jeffrey M. Boone has served as Vice President, Software Engineering since
January 1998. Prior to that, Mr. Boone served as Engineering Manager from June
1996 to December 1997, and as a member of the Company's technical staff from
September 1995 to June 1996. Prior to joining the Company, Mr. Boone was a
Systems Architect at Logica North American, a software consulting company,
from June 1994 to September 1995.
Edward J. Delaney, Jr. joined the Company in February 1994 as Vice
President, Sales and Marketing and Mr. Delaney has served as Vice President,
Marketing since January 1998. Prior to joining the Company, Mr. Delaney spent
12 years with Digital Equipment Corporation in a variety of positions,
including Marketing and Operations Manager for Digital's Cable Television
Business Unit, marketing manager of media products for the Asia/Pacific
region, executive assistant to the Vice President of United States Sales, and
sales manager.
Thomas Franeta has served as Vice President, Business Development of the
Company since June 1996 and is also a board member of GuestServe Networks,
Inc. Mr. Franeta is also the President and a Director of GuestServe Networks,
Inc. Prior to that, Mr. Franeta served as Vice President--Eastern Region Sales
from March 1994 to June 1996. Before joining the Company, from November 1981
to February 1994, Mr. Franeta held several sales and management positions at
Digital Equipment Corporation.
Ira Goldfarb has served as Vice President, North American Sales since
January 1998. Prior to that, Mr. Goldfarb served as Vice President, U.S.
Systems Sales from August 1997 to January 1998, as Vice President, Eastern
Region from January 1997 to August 1997, and as Vice President, Central
Region, from August 1994 to January 1997. Prior to joining the Company, Mr.
Goldfarb held several sales management positions at Digital Equipment
Corporation from September 1983 to July 1994.
Bruce E. Mann joined the Company in September 1994 as Vice President,
Network Storage Engineering. Mr. Mann is also President of SeaChange Systems,
Inc., a subsidiary of the Company which develops and manufactures video
server-based products. Prior to joining the Company, Mr. Mann served as
Director of Engineering at Ungermann-Bass, Inc., a subsidiary of Tandem
Computers Inc., from March 1993 to September 1994. Prior to that, from
September 1976 to March 1993, Mr. Mann was an engineer at Digital Equipment
Corporation, most recently as Senior Consulting Engineer.
Richard Poulsen joined the Company in March 1997 as Vice President,
Operations. Prior to joining the Company in his present capacity, from October
1996 to March 1997, he was a consultant to the Company and from October 1994
to October 1996, Mr. Poulsen was a retired executive. From June 1985 to
September 1994, Mr. Poulsen was a Vice President of Digital Equipment
Corporation and President, Digital Equipment Corporation, International. From
July 1979 to June 1985, he was Vice President, Field Services at Digital
Equipment Corporation.
4
<PAGE>
Robert W. Puffer joined the Company in January 1997 as Vice President. Mr.
Puffer is also the Vice President of SeaChange Systems, Inc., a subsidiary of
the Company which develops and manufactures video server-based products. Prior
to joining the Company, Mr. Puffer was Vice President, Manufacturing at Avid
Technology, Inc., a software development company, from December 1993 to
December 1996. From August 1991 to October 1993, Mr. Puffer was Vice
President, Manufacturing at XRE Corporation, an x-ray systems development
company.
Christopher E. Scanlan has served as Vice President, Advertising Management
and Distribution since July 1997. Prior to that, Mr. Scanlan served as
Director of the Systems Integration Services and Product Management Group of
the Company from December 1994 to July 1997. Prior to joining the Company, Mr.
Scanlan was a Consulting Manager at Digital Equipment Corporation from March
1984 to November 1994.
Executive officers of the Company are appointed by, and serve at the
discretion of, the Board of Directors, and serve until their successors have
been duly elected and qualified. There are no family relationships among any
of the executive officers or directors of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy that all transactions between the Company
and its officers, directors, principal stockholders and affiliates will be
approved by a majority of the Board of Directors, including a majority of the
independent and disinterested outside directors on the Board of Directors, and
will be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
5
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 9, 1998 (unless otherwise
indicated), certain information regarding beneficial ownership of the
Company's Common Stock (i) by each person who is known to beneficially own 5%
of the outstanding Common Stock, (ii) by each director of the Company, (iii)
by each executive officer named in the Summary Compensation Table on page 8,
and (iv) by all directors and executive officers of the Company as a group.
The address of each person listed below is c/o SeaChange International, Inc.,
124 Acton Street, Maynard, Massachusetts 01754.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF COMMON
BENEFICIAL STOCK
NAME OWNERSHIP(1) OUTSTANDING
- ---- ------------ -----------
<S> <C> <C>
William C. Styslinger, III(2)......................... 1,737,390 12.8
Edward J. Delaney, Jr.(3)............................. 1,287,767 9.5
Edward J. McGrath(4).................................. 1,000,917 7.4
Mark Sanders(5)....................................... 733,313 5.4
Paul H. Saunders(6)................................... 758,718 5.6
Robert W. Puffer(7)................................... 3,667 *
Carmine Vona(8)....................................... 162,956 1.2
Bruce E. Mann(9)...................................... 286,517 2.1
Martin R. Hoffmann(10)................................ 161,361 1.2
Joseph S. Tibbetts, Jr. (11).......................... 78,188 *
Scudder Kemper Investments, Inc.(12).................. 955,900 7.0
All executive officers and directors as a group
(10 persons)(13)..................................... 7,166,694 52.2
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise indicated below, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect
to their shares of Common Stock, except to the extent authority is shared
by spouses under applicable law. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options currently exercisable or exercisable
within 60 days of April 9, 1998 are deemed outstanding for computing the
percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person.
(2) Includes 150,000 shares of Common Stock owned by Merrill Lynch, Trustee
f/b/o William C. Styslinger, III, IRA, 64,286 shares of Common Stock
owned by Thomas and Emily Franeta as Trustees of The Styslinger Family
Trust, 3,798 shares of Common Stock held by Thomas Franeta as Custodian
for Kimberly J. Styslinger, 50,000 shares of Common Stock owned by his
wife, Joyce Styslinger and 14,767 shares of Common Stock issuable upon
the exercise of stock options, which options are exercisable within 60
days of April 9, 1998. Mr. Styslinger disclaims beneficial ownership of
the shares held by The Styslinger Family Trust, by Thomas Franeta as
Custodian for Kimberly J. Styslinger and by his wife, Joyce Styslinger.
(3) Includes 145,000 shares of Common Stock owned by Merrill Lynch, Trustee
f/b/o Kathryn H. Delaney, IRA, 360,000 shares of Common Stock held by The
Delaney Family Limited Partnership of which Mr. Delaney is both a general
and a limited partner, and 8,767 shares of Common Stock issuable upon the
exercise of stock options, which options are exercisable within 60 days
of April 9, 1998. Mr. Delaney disclaims beneficial ownership of the
shares held by his wife's IRA.
(4) Includes 300,000 shares of Common Stock held by The McGrath Family
Limited Partnership of which Mr. McGrath is both a general and a limited
partner, and 9,367 shares of Common Stock issuable upon the exercise of
stock options, which options are exercisable within 60 days of April 9,
1998.
(5) Includes 1,612 shares of Common Stock issuable upon the exercise of stock
options, which options are exercisable within 60 days of April 9, 1998.
6
<PAGE>
(6) Includes 64,286 shares of Common Stock owned by Richard R. Saunders, Jr.
as Trustee for The Paul H. Saunders Irrevocable Trust Agreement No. 1 For
The Benefit Of J. Brock Saunders, 64,286 shares of Common Stock owned by
Richard R. Saunders, Jr. as Trustee for The Paul H. Saunders Irrevocable
Trust Agreement No. 1 For The Benefit Of Paul H. Saunders, 2,142 shares
of Common Stock owned by Craig E. Chason as Trustee for The Paul H.
Saunders Irrevocable Trust Agreement No. 2 For The Benefit Of J. Brock
Saunders, 2,142 shares of Common Stock owned by Craig E. Chason as
Trustee of The Paul H. Saunders Irrevocable Trust Agreement No. 2 For The
Benefit Of Paul H. Saunders, and 3,093 shares of Common Stock issuable
upon the exercise of stock options, which options are exercisable within
60 days of April 9, 1998. Mr. Saunders disclaims beneficial ownership of
the shares held by the various trusts noted above.
(7) Includes 3,167 shares of Common Stock issuable upon the exercise of stock
options, which options are exercisable within 60 days of April 9, 1998.
(8) Includes 3,093 shares of Common Stock issuable upon the exercise of stock
options, which options are exercisable within 60 days of April 9, 1998,
and 148,612 shares of Common Stock held by his son Joseph C. Vona. Mr.
Vona disclaims beneficial ownership of those shares held by his son.
(9) Includes 1,267 shares of Common Stock issuable upon the exercise of stock
options, which options are exercisable within 60 days of April 9, 1998,
and an aggregate of 7,750 shares of Common Stock held by Mr. Mann's three
children. Mr. Mann disclaims beneficial ownership of those shares held by
his children.
(10) Includes 3,093 shares of Common Stock issuable upon the exercise of stock
options, which options are exercisable within 60 days of April 9, 1998.
(11) Includes 78,188 shares of Common Stock issuable upon the exercise of
stock options, which options are exercisable within 60 days of April 9,
1998.
(12) Information from a Form 13G filed February 13, 1998. The address of
Scudder Kemper Investments, Inc. is 345 Park Avenue, New York, New York
10154.
(13) Includes 126,414 shares of Common Stock issuable upon the exercise of
stock options, which options are exercisable within 60 days of April 9,
1998.
7
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION SUMMARY
The following table sets forth the annual and long-term compensation for
each of the past three fiscal years of each of (i) the Company's Chief
Executive Officer and (ii) each of the Company's four other most highly
compensated executive officers who were serving as of December 31, 1997
(collectively, with the Chief Executive Officer, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(2)(3)
COMPENSATION(1) AWARDS
--------------- ------------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS(#)
--------------------------- --------------- ------------------
<S> <C> <C> <C>
William C. Styslinger, III.................. 1997 $ 169,200 5,333
President and Chief Executive Officer 1996 156,600 --
1995 145,000 27,000
Edward J. McGrath........................... 1997 145,800 5,333
Vice President, Engineering and Chief
Technology Officer 1996 135,000 --
1995 124,978 17,100
Bruce E. Mann............................... 1997 148,068 5,333
Vice President, Network Storage Engineering 1996 132,141 --
1995 121,348 --
Robert W. Puffer(4)......................... 1997 143,269 13,333
Vice President
Joseph S. Tibbetts, Jr.(5).................. 1997 206,625 5,333
Vice President, Finance and Administration, 1996 100,000 179,325
Chief Financial Officer and Treasurer
</TABLE>
- --------
(1) The compensation described in this table does not include medical and
group life insurance or other benefits received by the Named Officers
which are available generally to all salaried employees of the Company and
certain perquisites and other personal benefits, securities or property
received by the Named Officers which do not exceed the lesser of $50,000
or 10% of any such officer's salary disclosed in this table.
(2) Represents stock options granted under the Company's Amended and Restated
1995 Stock Option Plan. The Company did not grant any restricted stock
awards or stock appreciation rights or make any long-term incentive plan
payouts during fiscal years 1997, 1996 and 1995.
(3) The Company has sold stock subject to restrictions on vesting to certain
of the Named Officers at a purchase price equal to the then fair market
value of such stock. The number and value of all unvested stock holdings
by each of the Named Officers as of the year ended December 31, 1997 are
as set forth below. The values of the unvested shares have been calculated
on the basis of the fair market value of the Company's Common Stock as of
December 31, 1997. Mr. Styslinger--240,000 shares, $1,710,000; Mr.
McGrath--240,000 shares, $1,710,000; and Mr. Mann--150,000 shares,
$1,068,750.
(4) Mr. Puffer joined the Company in January 1997.
(5) Mr. Tibbetts did not join the Company until June 1996. Mr. Tibbetts
resigned as the Company's Vice President, Finance and Administration,
Chief Financial Officer and Treasurer on March 31, 1998.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES OF
NO. OF TOTAL STOCK PRICE APPRECIATION
SECURITIES OPTIONS EXERCISE FOR OPTION
UNDERLYING GRANTED TO OR BASE MARKET TERM(3)
OPTIONS EMPLOYEES PRICE PER PRICE PER EXPIRATION ---------------------------
NAME GRANTED(1) IN YEAR(2) SHARE SHARE DATE 0% 5% 10%
---- ---------- ---------- --------- --------- ---------- -- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William C. Styslinger,
III.................... 4,000 0.6831 $31.625 $28.75 1/24/07 -- $ 60,822.88 $171,780.38
1,333 0.2277 $21.18 $19.25 4/24/07 -- $ 13,564.90 $ 38,323.14
Edward J. McGrath....... 4,000 0.6831 $28.75 $28.75 1/24/07 -- $ 72,322.88 $183,280.38
1,333 0.2277 $19.25 $19.25 4/24/07 -- $ 16,137.59 $ 40,895.83
Bruce E. Mann........... 4,000 0.6831 $28.75 $28.75 1/24/07 -- $ 72,322.88 $183,280.38
1,333 0.2277 $19.25 $19.25 4/24/07 -- $ 16,137.59 $ 40,895.83
Robert W. Puffer........ 10,000 1.7078 $28.75 $28.75 1/24/07 -- $180,807.21 $458,200.96
3,333 0.5692 $19.25 $19.25 4/24/07 -- $ 40,350.04 $102,254.91
Joseph S. Tibbetts,
Jr. ................... 4,000 0.6831 $28.75 $28.75 1/24/07 -- $ 72,322.88 $183,280.38
1,333 0.2277 $19.25 $19.25 4/24/07 -- $ 16,137.59 $ 40,895.83
</TABLE>
- --------
(1) The options granted to the Named Officers were granted pursuant to the
Corporation's Amended and Restated 1995 Stock Option Plan; 20% of the
options shall vest on the first anniversary of the date of grant and 5%
shall vest each quarter thereafter.
(2) A total of 585,536 options were granted to employees in the year ended
December 31, 1997 pursuant to the Corporation's Amended and Restated 1995
Stock Option Plan.
(3) These potential realizable values are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth. 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 Company's Common
Stock. There can be no assurance that the rates of appreciation assumed
herein can be achieved or that the amounts reflected will be received by
the Named Officers.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Company's Common Stock to the Named Officers who are listed in
the Summary Compensation Table above, including (i) the number of shares of
Common Stock purchased upon exercise of options in the fiscal year ended
December 31, 1997; (ii) the net value realized upon such exercise; (iii) the
number of unexercised options outstanding at December 31, 1997; and (iv) the
value of such unexercised options at December 31, 1997:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE DECEMBER 31, 1997 AT DECEMBER 31, 1997(1)
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
William C. Styslinger,
III.................... -- -- 10,880/21,533 $62,723/$124,138
Edward J. McGrath....... -- -- 6,300/16,133 $36,320/$ 93,007
Bruce E. Mann........... -- -- --/5,333 $ -- /$ --
Robert W. Puffer........ -- -- --/13,333 $ -- /$ --
Joseph S. Tibbetts,
Jr. ................... 7,500 $81,275 69,547/115,111 $ -- /$ --
</TABLE>
- --------
(1) Value is based on the difference between the option exercise price and the
fair market value of the Company's Common Stock at December 31, 1997, the
fiscal year-end ($7.125 per share as quoted on the Nasdaq National
Market), multiplied by the number of shares underlying the option.
9
<PAGE>
COMPENSATION AND OPTION COMMITTEE REPORT
To Our Stockholders:
The Company's executive compensation program is administered by the
Compensation and Option Committee of the Board of Directors, which is
comprised entirely of non-employee directors. Pursuant to authority delegated
by the Board of Directors, the Compensation and Option Committee is
responsible for reviewing and administering the Company's stock ownership
plans and reviewing and approving compensation for the executive officers of
the Company.
The Company's executive compensation program is designed to provide levels
of compensation that assist the Company in attracting, motivating and
retaining qualified executive officers and aligning the financial interests of
the Company's executive officers and other employees with those of its
stockholders by providing a competitive compensation package based on
corporate and individual performance. Compensation under the executive
compensation program is comprised of cash compensation in the form of base
salary and long-term incentive awards in the form of stock option grants. The
Company has not historically awarded annual cash incentive bonuses. The
compensation program is also comprised of various benefits, including medical
and insurance plans, and the Company's 1996 Employee Stock Purchase Plan and
401(k) profit sharing plan, which plans are generally available to all
employees of the Company.
Base Salary
Base salary compensation levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within the
range of base salaries that the Compensation and Option Committee believes are
paid to executive officers with comparable qualifications, experience and
responsibilities at comparable companies. In setting compensation levels, the
Compensation and Option Committee generally takes into account such factors as
(i) the Company's past operating and financial performance and future
expectations, (ii) individual performance and experience and (iii) past salary
levels. The Compensation and Option Committee does not assign relative weights
or rankings to these factors, but instead makes determinations based upon the
consideration of all of these factors as well as the progress made with
respect to the Company's long-term goals and strategies.
Incentive Compensation
The Company has not historically awarded annual cash bonuses to its
executive officers, although it may do so in the future.
Stock Options
Stock options are the principal vehicle used by the Company to provide long-
term incentive-based compensation to improve the Company's operating and
financial performance and to support the recruitment, motivation and retention
of key professional and managerial personnel. The Company's stock option plans
are administered by the Compensation and Option Committee. To date, the
Compensation and Option Committee has not granted stock options at less than
fair market value.
Stock options are granted from time to time to eligible employees based upon
the Company's overall financial performance and their contribution thereto.
Stock options are designed to align the interests of the Company's executive
officers and other employees with those of its stockholders by encouraging
them to enhance the value of the Company, the price of the Common Stock and,
hence, the stockholders' return. In addition, the vesting of stock options
over a period of time is designed to defer the receipt of compensation by the
option holder, thus creating an incentive for the individual to remain with
the Company. The Company periodically grants new options to provide continuing
incentives for future performance.
10
<PAGE>
During the fiscal year ended December 31, 1997, options to purchase an
aggregate of 110,498 shares of Common Stock were granted to the Company's
executive officers, including the chief executive officer. Additionally, in
January 1998, options to purchase an aggregate of 44,200 shares of Common
Stock were granted to the Company's executive officers, including the chief
executive officer. Such grants were made in recognition of the executive
officers' contributions to fiscal year 1997 Company performance and as an
incentive for future performance.
Other Benefits
The Company also has various broad-based employee benefit plans. Executive
officers participate in these plans on the same terms as eligible, non-
executive employees, subject to any legal limits on the amounts that may be
contributed or paid to executive officers under these plans. The Company
offers a stock purchase plan, under which employees may purchase Common Stock
at a discount, and a 401(k) profit sharing plan, which permits employees to
invest in a choice of mutual funds on a pre-tax basis. The Company also
maintains medical, disability and life insurance plans and other benefit plans
for its employees.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
tax deduction to $1 million for compensation paid to any of the executive
officers unless certain requirements are met. The Compensation and Option
Committee has considered these requirements. It is the Compensation and Option
Committee's present intention that, so long as it is consistent with its
overall compensation objectives, not to exceed the deduction limitations of
Section 162(m).
The Compensation and Option
Committee:
Martin R. Hoffmann
Paul H. Saunders
Carmine Vona
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to January 1995, the Company had no separate compensation or stock
option committee or other board committee performing equivalent functions, and
these functions were performed by the Company's Board of Directors. No stock
options were granted prior to the formation of the Compensation and Option
Committee of the Board of Directors. The Compensation and Option Committee
consists of Messrs. Hoffmann, Saunders and Vona. No person who served as a
member of the Compensation and Option Committee was, during the past fiscal
year, an officer or employee of the Company or any of its subsidiaries, was
formerly an officer of the Company or any of its subsidiaries, or had any
relationship requiring disclosure herein. No executive officer of the Company
served as a member of the compensation committee of another entity (or other
committee of the Board of Directors performing equivalent functions or, in the
absence of any such committee, the entire Board of Directors), one of whose
executive officers served as a director of the Company.
COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 1997, directors who were employees
of the Company received no cash compensation for their services as directors,
except for reimbursement of expenses incurred in connection with attending
meetings. In fiscal 1997, the Company paid directors who are not employees of
the Company a fee of $1,000 for each meeting of the Board of Directors that
they attended in person and such directors were reimbursed for their
reasonable out-of-pocket expenses incurred in attending such meetings. Messrs.
Hoffmann and Vona were each paid $2000 in fiscal 1997; Mr. Saunders was paid
$1000 in fiscal 1997. Each non-employee director is also entitled to
participate in the Company's 1996 Non-Employee Director Stock Option Plan.
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the change in the cumulative total stockholder
return on the Company's Common Stock during the period from the Company's
initial public offering through December 31, 1997, with the cumulative total
return on the Center for Research in Securities Prices ("CRSP") Index for the
Nasdaq Stock Market (U.S. Companies) and a SIC Code Index based on the
Company's SIC Code. The comparison assumes $100 was invested on November 5,
1996 in the Company's Common Stock at the $18.75 closing price on the date of
the Company's initial public offering and in each of the foregoing indices and
assumes reinvestment of dividends, if any.
[GRAPH APPEARS HERE](1)(2)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
11/05/96 12/31/96 12/31/97
- ------------------------------------------------------------------------
<S> <C> <C> <C>
SEACHANGE INTERNATIONAL, INC. 100.00 136.00 38.03
- ------------------------------------------------------------------------
SIC CODE INDEX 100.00 118.13 115.32
- ------------------------------------------------------------------------
NASDAQ MARKET INDEX 100.00 105.97 129.63
- ------------------------------------------------------------------------
</TABLE>
Notes:
A.The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B.If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
C.The Index level for all series was set to 100.0 on November 5, 1996.
- --------
(1) Prior to November 5, 1996, the Company's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date.
This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933 or
the Securities Exchange Act of 1934, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
13
<PAGE>
(2) The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on the graph was
obtained from Media General Financial Services, Richmond, Virginia, a
source believed to be reliable, but the Company is not responsible for any
errors or omissions in such information.
ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP,
independent accountants, to serve as auditors for the fiscal year ending
December 31, 1998. Price Waterhouse LLP has served as the Company's
independent accountants since 1993. It is expected that a member of Price
Waterhouse LLP will be present at the meeting with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions.
VOTING PROCEDURES
The presence, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to establish a quorum for the transaction of business. Shares
represented by proxies pursuant to which votes have been withheld from any
nominee for director, or which contain one or more abstentions or broker "non-
votes," are counted as present for purposes of determining the presence or
absence of a quorum for the Annual Meeting. A "non-vote" occurs when a broker
or other nominee holding shares for a beneficial owner votes on one proposal,
but does not vote on another proposal because the broker does not have
discretionary voting power and has not received instructions from the
beneficial owner.
Election of Directors. Directors are elected by a plurality of the votes
cast, in person or by proxy, at the Annual Meeting. The two (2) nominees
receiving the highest number of affirmative votes of the shares present or
represented and voting on the election of directors at the Annual Meeting will
each be elected as a Class II Director for a three-year term. Only shares that
are voted in favor of a particular nominee will be counted toward such
nominee's achievement of a plurality. Shares present at the Annual Meeting
that are not voted for a particular nominee or shares present by proxy where
the stockholder properly withholds authority to vote for such nominee will not
be counted toward such nominee's achievement of a plurality.
Other Matters. For all other matters being submitted to the stockholders at
the Annual Meeting, the affirmative vote of the majority of shares present, in
person or represented by proxy, and voting on that matter is required for
approval. Abstentions, as well as broker "non-votes" are not considered to
have been voted for this matter and have the practical effect of reducing the
number of affirmative votes required to achieve a majority for such matter by
reducing the total number of shares from which the majority is calculated.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received no later than the close of business
on December 30, 1998 at the Company's principal executive offices in order to
be included in the Company's proxy statement for that meeting. Any such
proposal must comply with the rules and regulations of the Securities and
Exchange Commission ("SEC").
EXPENSES AND SOLICITATION
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, certain of the Company's directors,
officers and regular employees, without additional remuneration, may solicit
proxies by telephone, telegraph and personal interviews. Brokers, custodians
and fiduciaries will be requested to forward
14
<PAGE>
proxy soliciting material to the owners of stock held in their names, and the
Company will reimburse them for their reasonable out-of-pocket costs.
Solicitation by officers and employees of the Company may also be made of some
stockholders in person or by mail, telephone or telegraph following the
original solicitation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of
the Company's Common Stock (collectively, "Reporting Persons") to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock of the Company. Such persons are required by regulations of the
SEC to furnish the Company with copies of all such filings. Based on its
review of the copies of such filings received by it with respect to the fiscal
year ended December 31, 1997 and written representations from certain
Reporting Persons, the Company believes that all Reporting Persons complied
with all Section 16(a) filing requirements in the fiscal year ended
December 31, 1997 with the following exceptions: Mr. Poulson failed to file a
monthly report covering two transactions. Mr. Poulson did report such
transactions on his year-end report on Form 5, which was timely filed.
Additionally, except for one transaction which was inaccurately reported on a
report on Form 4, Mr. McGrath reported all of his transactions on a timely
basis. Mr. McGrath has since amended such report on Form 4 and has corrected
the error.
15
<PAGE>
SEACHANGE INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints William C.
Styslinger, III and Edward J. McGrath and each of them, with full power of
substitution, as proxies to represent and vote all shares of common stock of
SeaChange International, Inc. (the "Company") which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company to be held on May 21, 1998, at 9:30 a.m. local time, at the offices
of Testa, Hurwitz & Thibeault, LLP, High Street Tower, 125 High Street, Boston,
Massachusetts 02110, and at all adjournments thereof, upon matters set forth in
the Notice of Annual Meeting of Stockholders and Proxy Statement dated April 21,
1998, a copy of which has been received by the undersigned. The proxies are
further authorized to vote, in their discretion, upon such other business as may
properly come before the meeting or any adjournments thereof.
The Board of Directors recommends a vote FOR the election of the directors.
SEE REVERSE SIDE
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED Please mark
STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS. your votes as [X]
indicated in
this example.
1. To elect two (2) members to the Board of Directors, each to serve for a 2. To transact such other business as may properly
three-year term as a Class II Director: come before the meeting and any adjournment
thereof.
FOR the nominees WITHHOLD AUTHORITY NOMINEES: Martin R. Hoffmann,
listed to the right to vote for the nominees Edward J. McGrath
(except as marked listed to the right (except)
to the contrary) as marked to the contrary) ----------------------------
[_] [_] [_] MARK HERE FOR ADDRESS CHANGE
AND NOTE BELOW
-----------------------------------------
Yes No -----------------------------------------
I/We will attend the meeting. [_] [_]
Please sign exactly as name appears below. Joint
owners must both sign. Attorney, executor, admin-
--------- istrator, trustee or guardian must give full title
| as such. A corporation or partnership must sign
| its full name by authorized person.
Date: , 1998
---------------------------------------
--------------------------------------------------
Signature of Stockholder
--------------------------------------------------
Signature if held jointly
PLEASE COMPLETE, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
