<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 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 17, 1999
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,
June 17, 1999 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 III 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 20, 1999, 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 26, 1999
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 JUNE 17, 1999
----------------
April 26, 1999
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, June 17, 1999 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 20, 1999,
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 20, 1999,
there were an aggregate of 13,778,619 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 William L.
Fiedler, 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, 1998 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 May 7, 1999.
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
III 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
<PAGE>
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 III Directors are Paul H. Saunders and Carmine Vona, both of whom are
currently serving as the Class III 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:
Paul H. Saunders (1995)............ Director 2002(1) III
Carmine Vona (1995)................ Director 2002(1) III
Continuing Directors:
Martin R. Hoffmann (1995).......... Director 2001 II
Edward J. McGrath (1993)........... Director, Vice 2001 II
President, Engineering,
Chief Technical Officer,
Secretary
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 III Directors at the Annual
Meeting.
Board of Directors' Meetings and Committees
The Board of Directors of the Company held five (5) meetings and acted by
unanimous written consent two (2) times during the fiscal year ended December
31, 1998. 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 1998.
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 four (4) meetings and acted by
unanimous written consent seven (7) times during fiscal 1998. 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 four (4) meetings during fiscal 1998.
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>
President, Chief Executive Officer, Chairman
William C. Styslinger, III.. 53 of the Board and Director
William L. Fiedler.......... 54 Chief Financial Officer, Treasurer and Vice
President, Finance and Administration
Edward J. McGrath........... 47 Vice President, Engineering, Chief Technical
Officer, Secretary and Director
Scott Blais................. 41 Vice President, Customer Services
Jeffrey M. Boone............ 35 Vice President, Software Engineering
Edward J. Delaney, Jr....... 39 Vice President, Marketing
Thomas Franeta.............. 44 Vice President, Business Development
Ira Goldfarb................ 41 Vice President, Worldwide Sales
Bruce E. Mann............... 51 Vice President, Network Storage Engineering
Robert W. Puffer............ 58 Vice President
Christopher E. Scanlan...... 40 Vice President
Martin R. Hoffmann (1)(2)... 67 Director
Paul H. Saunders (1)(2)..... 44 Director
Carmine Vona (1)(2)......... 61 Director
</TABLE>
- --------
(1) Member of Compensation and Option Committee.
(2) Member of Audit Committee.
Nominees for Election at the Annual 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.
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.
Directors Whose Terms Extend Beyond The 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.
3
<PAGE>
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. 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.
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
Scott Blais has served as Vice President, Customer Services since October
1998. Prior to joining the Company, Mr. Blais spent three years holding
various positions including Vice President and General Manager at Adra
Systems, Inc. Prior to that, Mr. Blais held the position of Director of
Customer Services and Quality Assurance for Keyfile Corporation.
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.
William L. Fiedler has served as Chief Financial Officer, Treasurer and Vice
President, Finance and Administration since September 1998. Prior to joining
the Company, Mr. Fiedler served from July 1984 to June 1998 as the Chief
Financial Officer, Treasurer and Senior Vice President, Finance and
Administration of Matrix One, Inc., a developer of product data management
systems. Prior to that, Mr. Fiedler served as the Chief Financial Officer of
Hendrix Electronics Inc., a developer of text processing and graphics
publishing systems, and had also held controllership positions at Bose
Corporation and GTE Sylvania.
Thomas Franeta has served as Vice President, Business Development of the
Company since June 1996. Mr. Franeta and 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, Worldwide 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
4
<PAGE>
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.
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 since January 1998.
Prior to that, Mr. Scanlon served as Vice President, Advertising Management
and Distribution from July 1997 through December 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 20, 1999 (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).......................... 1,599,018 11.6
Edward J. Delaney, Jr.(3).............................. 1,087,252 7.9
Edward J. McGrath(4)................................... 949,082 6.9
Mark Sanders(5)........................................ 732,791 5.3
Paul H. Saunders(6).................................... 3,375 *
Robert W. Puffer(7).................................... 6,489 *
Carmine Vona(8)........................................ 14,626 *
Bruce E. Mann(9)....................................... 257,699 1.9
Martin R. Hoffmann(10)................................. 161,643 1.2
All executive officers and directors as a group
(14 persons)(11)...................................... 4,904,390 35.3
</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 20, 1999 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. Excludes (i) 64,286 shares of
Common Stock owned by Thomas and Emily Franeta as Trustees of The
Styslinger Family Trust; (ii) 6,431 shares of Common Stock held by
Thomas Franeta as Custodian for Kimberly J. Styslinger; and (iii) 50,000
shares of Common Stock owned by his wife, Joyce Styslinger. 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. Includes 22,232 shares of
Common Stock issuable pursuant to outstanding stock options that may be
exercised within 60 days of April 20, 1999.
(3) Includes (i) 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 (ii) 13,832 shares of Common Stock issuable pursuant to
outstanding stock options that may be exercised within 60 days of April
20, 1999. Excludes 145,000 shares of Common Stock held by Merrill Lynch,
Trustee f/b/o Kathryn H. Delaney, IRA, as to which shares Mr. Delaney
disclaims beneficial ownership.
(4) Includes (i) 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 (ii) 15,032 shares of Common Stock issuable pursuant to
outstanding stock options that may be exercised within 60 days of April
20, 1999.
(5) Includes 1,090 shares of Common Stock issuable pursuant to outstanding
stock options that may be exercised within 60 days of April 20, 1999.
(6) Excludes (i) 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; (ii) 64,286 shares of Common
Stock owned by Richard R. Saunders, Jr. as Trustee for The Paul H.
Saunders Irrevocable
6
<PAGE>
Trust Agreement No. 1 For The Benefit Of Paul H. Saunders; (iii) 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; (iv) 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 (v) 620,769 shares of Common Stock owned
by Mr. Saunders' wife. Mr. Saunders disclaims beneficial ownership of the
shares held by these trusts and by his wife. Includes 3,375 shares of
Common Stock issuable pursuant to outstanding stock options that may be
exercised within 60 days of April 20, 1999.
(7) Includes 5,989 shares of Common Stock issuable pursuant to outstanding
stock options that may be exercised within 60 days of April 20, 1999.
(8) Includes 3,375 shares of Common Stock issuable pursuant to outstanding
stock options that may be exercised within 60 days of April 20, 1999.
(9) Includes (i) 3,332 shares of Common Stock issuable pursuant to
outstanding stock options that may be exercised within 60 days of April
20, 1999 and (ii) an aggregate of 15,883 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 3,375 shares of Common Stock issuable pursuant to outstanding
stock options that may be exercised within 60 days of April 20, 1999.
(11) Includes 108,261 shares of Common Stock issuable pursuant to outstanding
stock options that may be exercised within 60 days of April 20, 1999.
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, 1998
(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.................. 1998 $ 174,509 4,000
President and Chief Executive Officer 1997 169,200 5,333
1996 156,600 --
Edward J. Delaney, Jr. ..................... 1998 147,388 4,000
Vice President, Marketing 1997 141,258 5,333
1996 129,391 --
Bruce E. Mann............................... 1998 165,674 4,000
Vice President, Network Storage Engineering 1997 148,068 5,333
1996 132,141 --
Edward J. McGrath........................... 1998 149,975 4,000
Vice President, Engineering and Chief
Technical Officer 1997 145,800 5,333
1996 135,000 --
Robert W. Puffer(4)......................... 1998 157,381 500
Vice President 1997 143,269 13,333
1996 -- --
</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 1998, 1997 and 1996.
(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, 1998 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, 1998. Mr. Delaney--168,000 shares, $1,029,000;
and Mr. Mann--60,000 shares, $367,500.
(4) Mr. Puffer joined the Company in January 1997.
8
<PAGE>
Option Grants in Last Fiscal Year
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------
Percent of Potential Realizable Value At
No. of Total Assumed Annual Rates of Stock
Securities Options Exercise Price Appreciation for Option
Underlying Granted to or Base Term(3)
Options Employees Price Per Expiration -------------------------------
Name Granted(1) in Year(2) Share Date 0% 5% 10%
---- ---------- ---------- --------- ---------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William C. Styslinger,
III.................... 4,000 0.4491 $8.25 1/23/08 -- $20,753.52 $52,593.50
Edward J. Delaney, Jr... 4,000 0.4491 $8.25 1/23/08 -- $20,753.52 $52,593.50
Bruce E. Mann........... 4,000 0.4491 $8.25 1/23/08 -- $20,753.52 $52,593.50
Edward J. McGrath....... 4,000 0.4491 $8.25 1/23/08 -- $20,753.52 $52,593.50
Robert W. Puffer........ 500 0.0561 $8.25 1/23/08 -- $2,594.19 $6,574.19
</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 890,729 options were granted to employees in the year ended
December 31, 1998 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 granted under the Company's 1995 Stock
Option Plan 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, 1998; (ii) the net
value realized upon such exercise; (iii) the number of unexercised options
outstanding at December 31, 1998; and (iv) the value of such unexercised
options at December 31, 1998:
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, 1998 at December 31, 1998(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
William C. Styslinger,
III.................... -- -- 18,000/18,333 $77,193/$51,462
Edward J. Delaney, Jr... -- -- 11,700/14,734 $47,174/$28,590
Bruce E. Mann........... -- -- 1,800/7,533 $ -- /$ --
Edward J. McGrath....... -- -- 4,500/9,333 $51,462/$34,308
Robert W. Puffer........ -- -- 10,800/28,590 $ -- /$ --
</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, 1998,
the fiscal year-end ($6.125 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.
During the fiscal year ended December 31, 1998, options to purchase an
aggregate of 147,400 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
1998 Company performance and as an incentive for future performance.
10
<PAGE>
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, 1998, 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 1998, 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, Saunders and Vona were each paid $5,000 in fiscal 1998. 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, 1998, 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.
Comparison Of Cumulative Total Return
Among SeaChange International, Inc., Nasdaq
National Market Index and SIC Code Index(1)(2)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
-------------------FISCAL YEAR ENDING-------------------------
COMPANY/INDEX/MARKET 11/04/1996 12/31/1996 12/31/1997 12/31/1998
<S> <C> <C> <C> <C>
SeaChange Internat 100.00 136.00 38.03 32.69
Radio, TV Communication
Equip 100.00 118.13 115.32 124.70
NASDAQ Market Index 100.00 105.97 129.63 182.83
</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.
(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.
13
<PAGE>
ACCOUNTANTS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP,
independent accountants, to serve as auditors for the fiscal year ending
December 31, 1999. PricewaterhouseCoopers LLP has served as the Company's
independent accountants since 1993. It is expected that a member of
PricewaterhouseCoopers 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 III 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 2000 Annual
Meeting of Stockholders must be received no later than the close of business
on January 7, 2000 at the Company's principal executive offices in order to be
included in the Company's proxy statement for that meeting. The deadline for
providing timely notice to the Company of matters that stockholders otherwise
desire to introduce at the next annual meeting of stockholders of the Company
is May 22, 2000. 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 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.
14
<PAGE>
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, 1998 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, 1998.
15
<PAGE>
SEACHANGE INTERNATIONAL, INC.
Annual Meeting of Stockholders to be held on June 17, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints William C.
Styslinger, III and William L. Fiedler 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 June 17, 1999, 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 26,
1999, 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>
[X] Please mark votes as in this example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS.
1. To elect two (2) members to the Board of Directors, each to serve for a
three-year term as a Class III Director:
<TABLE>
<S> <C> <C>
FOR the nominees WITHHOLD AUTHORITY NOMINEES: Paul H. Saunders, Carmine Vona
listed to the right to vote for the nominees
(except as marked listed to the right (except
to the contrary) as marked to the contrary)
[_] [_] ------------------------------------------
</TABLE>
2. To transact such other business as may properly come before the meeting and
any adjournment thereof.
[_] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
- ----------------------------------------
- ----------------------------------------
Please sign exactly as name appears below. Joint owners must both sign.
Attorney, executor, administrator, trustee or guardian must give full title as
such. A corporation or partnership must sign its full name by authorized
person.
- -----------------------------------------
Signature of Stockholder
Date: , 1999
---------------------------------
- -----------------------------------------
Signature if held jointly
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
I/We will attend the meeting. [_] YES [_] NO
