<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Forrester Research, Inc.
(Name of Registrant as Specified In Its Charter)
Forrester Research, 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> 2
FORRESTER RESEARCH, INC.
1033 MASSACHUSETTS AVENUE
CAMBRIDGE, MASSACHUSETTS 02138
GEORGE F. COLONY
Chairman of the Board, President,
and Chief Executive Officer
April 13, 1999
To Our Stockholders:
You are cordially invited to attend the annual meeting of the stockholders
of Forrester Research, Inc., which will be held on Tuesday, May 11, 1999, at the
offices of Ropes & Gray, One International Place, Boston, Massachusetts at 10:00
a.m. (local time).
On the following pages, you will find the formal notice of the annual
meeting and our proxy statement. When you have finished reading the statement,
please promptly mark, sign, and return the enclosed proxy card to ensure that
your shares will be represented.
We hope that many of you will be able to attend in person. I look forward
to seeing you there.
Sincerely yours,
/s/ GEORGE COLONY
George F. Colony
Chairman of the Board, President,
and Chief Executive Officer
<PAGE> 3
FORRESTER RESEARCH, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1999
Notice is hereby given that the Annual Meeting of Stockholders of Forrester
Research, Inc. will be held at the offices of Ropes & Gray, One International
Place, Boston, Massachusetts at 10:00 a.m. (local time) on Tuesday, May 11, 1999
for the following purposes:
1. To elect one Class I director to serve until the 2002 Annual Meeting of
Stockholders;
2. To approve an increase in the number of shares of Common Stock available
for issuance under our 1996 Equity Incentive Plan; and
3. To transact such other business as may properly come before the meeting
and any adjournments thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice.
Stockholders of record at the close of business on March 31, 1999 are
entitled to notice of and to vote at the meeting. A list of stockholders
entitled to vote at the meeting will be open to examination by stockholders at
the meeting and during normal business hours from May 1, 1999 to the date of the
meeting at the offices of Ropes & Gray, One International Place, Boston,
Massachusetts.
If you are unable to be present personally, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope.
By Order of the Board of Directors
Susan M. Whirty, Esq.
Secretary
Cambridge, Massachusetts
April 13, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
<PAGE> 4
FORRESTER RESEARCH, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1999
PROXY STATEMENT
These proxy materials are delivered in connection with the solicitation by
the Board of Directors of Forrester Research, Inc. ("Forrester" or the
"Company") of proxies to be voted at our Annual Meeting of Stockholders (the
"Meeting") or at any adjournment thereof.
You are invited to attend the Meeting to be held at the offices of Ropes &
Gray, One International Place, Boston, Massachusetts at 10:00 a.m. (local time)
on Tuesday, May 11, 1999. This proxy statement was first mailed to stockholders
on or about April 13, 1999.
SHAREHOLDERS ENTITLED TO VOTE
Holders of record of Forrester common stock (the "Common Stock") at the
close of business on March 31, 1999 are entitled to receive notice of and to
vote at the Meeting. As of that date, the Company had issued and outstanding
8,802,242 shares of Common Stock. Each such share of Common Stock is entitled to
one vote on each matter to come before the Meeting.
PROXIES
Your vote is important. Shareholders of record may vote their proxies by
mail. If you choose to vote by mail, simply mark your proxy, date and sign it,
and return it in the postage-paid envelope provided.
A proxy may be revoked by a stockholder at any time before it is voted by
(i) returning to the Company another properly signed proxy bearing a later date,
(ii) otherwise delivering a written revocation to the Secretary of the Company,
or (iii) attending the Meeting and voting the shares covered by the proxy in
person. Shares represented by the enclosed form of proxy properly executed and
returned, and not revoked, will be voted at the Meeting by the persons named in
the proxy for the proposals set forth below. In the absence of contrary
instructions, the persons named as proxies will vote in accordance with the
intentions stated below.
REQUIRED VOTE
A majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to such
matter. Votes cast by proxy or in person at the Meeting will be counted by the
person appointed by the Company to act as the election inspector for the
Meeting. The nominee for election as Class I director at the Meeting who
receives the greatest number of votes properly cast for the election of
directors will be elected. The election inspector(s) will count shares
represented by proxies that withhold authority to vote for a nominee for
election as a director only as shares that are present and entitled to vote on
the matter for purposes of determining the presence of a quorum, but they will
not have any effect on the outcome of voting on the election of directors. The
approval of Proposal Two requires the affirmative vote of a majority of the
shares present or represented by proxy and entitled to vote. Abstentions will
have the effect of votes against the proposal.
The Annual Report to Stockholders for the Company's fiscal year ended
December 31, 1998 accompanies this proxy statement. This proxy statement and the
enclosed proxy are being mailed to stockholders on the same date as the date of
the Notice of Annual Meeting of Stockholders.
<PAGE> 5
COST OF PROXY SOLICITATION
The expense of soliciting proxies will be borne by the Company. Officers
and regular employees of the Company (who will receive no compensation therefor
in addition to their regular salaries) may solicit proxies. In addition to the
solicitation of proxies by use of the mails, the Company may use the services of
its officers and regular employees to solicit proxies personally and by mail,
telephone, and telegram from brokerage houses and other stockholders. The
Company will reimburse brokers and other persons for their reasonable charges
and expenses in forwarding soliciting materials to their principals.
PROPOSAL ONE:
ELECTION OF CLASS I DIRECTOR
The persons named in the enclosed proxy intend to vote each share as to
which a proxy has been properly executed and returned (and not revoked) in favor
of the election as a Class I director of the nominee named below, unless
authority to vote for the election of such nominee is withheld, by marking the
proxy to that effect.
Pursuant to the Company's Restated Certificate of Incorporation and Bylaws,
the Board of Directors is divided into three classes, as nearly equal in number
as possible, so that each director will serve for three years, with one class of
directors being elected each year.
The nominee, George F. Colony, is the director currently designated as a
Class I director whose term expires at the Meeting.
If Proposal One is approved, George F. Colony will be elected as a Class I
Director for a term of three years expiring at the 2002 Annual Meeting of
Stockholders, and until his respective successor is elected and shall qualify to
serve.
It is expected that Mr. Colony will be able to serve, but if he is unable
to serve, the proxies reserve discretion to vote, or refrain from voting, for a
substitute nominee or nominees.
NOMINEE
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
George F. Colony............................. 45 Class I Director
</TABLE>
George F. Colony, a Class I director, is the founder of the Company and has
served as President and Chief Executive Officer since the Company's inception in
July 1983.
OTHER DIRECTORS
Henk W. Broeders, age 47, a Class II Director, became a director of the
Company in May 1998 when he was elected at last year's Annual Meeting. Mr.
Broeders is currently an Executive Director of Cap Gemini N.V., a management
consulting firm located in the Netherlands. From 1992 to 1998, Mr. Broeders was
General Manager of IQUIP Informatica B.V., a software company in the
Netherlands.
Robert M. Galford, age 46, a Class III director, became a director of the
Company in November 1996 immediately following the Company's initial public
offering. Mr. Galford has been a member of the Faculty of the Executive Programs
at Columbia University's Graduate School of Business since 1994. Before joining
Columbia's Executive Programs, he taught at Boston University from 1993 to 1994.
Prior to his work in executive education, Mr. Galford was Vice President of the
MAC Group from 1986 to 1991 and its successor firm, Gemini Consulting, from 1991
to 1994.
George R. Hornig, age 44, a Class II Director, became a director of the
Company in November 1996 immediately following the Company's initial public
offering. Mr. Hornig is currently Executive Vice President of Deutsche Bank
Americas Holding Corporation, a banking firm, and from 1993 to 1998 Mr. Hornig
was Managing Director of Deutsche Bank North America Holdings, Inc., a Banking
Firm. From 1991 to 1993,
2
<PAGE> 6
Mr. Hornig was President and Chief Operating Officer of Dubin & Swieca Holdings,
Inc., an investment management firm. He is also Director of Unity Mutual Life
Insurance Company and SL Industries, Inc.
Michael H. Welles, age 44, a Class III director, became a director of the
Company in November 1996 immediately following the Company's initial public
offering. Mr. Welles has been Vice President of News Operations for NewsEdge
Corporation since February 1998. He previously served as Vice President of
Engineering at Individual, Inc. from May 1997 to February 1998, General Manager,
Next Generation Products for Lotus Development Corporation from 1994 to 1997,
and General Manager of Lotus' Improv development team from 1991 to 1994.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held five (5) meetings during the
fiscal year that ended December 31, 1998. In fiscal 1998, each director attended
at least 75% of the Board meetings held during such time each director was in
office. The Board of Directors currently has two standing committees, the Audit
Committee and the Compensation Committee. The Board of Directors does not have a
Nominating Committee or a committee performing similar functions.
The Audit Committee of the Company, which consists of George R. Hornig and
Henk Broeders, neither of whom is an executive officer or employee of the
Company, held four (4) meetings during the fiscal year ended December 31, 1998.
The Audit Committee reviews the results of operations of the Company with
officers of the Company who are responsible for accounting matters and, from
time to time, meets with the Company's independent auditors.
The Compensation Committee of the Company, which consists of two members,
Robert M. Galford and Michael H. Welles, neither of whom is an executive officer
or employee of the Company, held four (4) meetings during the fiscal year ended
December 31, 1998. The Compensation Committee administers the Company's stock
plans, recommends annual compensation arrangements for the Company's executive
officers, and reviews annual compensation arrangements for all other officers
and significant employees.
DIRECTOR COMPENSATION
Members of the Board of Directors of the Company are reimbursed for their
expenses incurred in connection with attending any meeting. In addition, under
the 1996 Stock Option Plan for Non-Employee Directors (the "Directors' Plan"),
the Company's three existing non-employee directors each received on the date of
last year's Annual Meeting an option to purchase 4,000 shares of Common Stock at
an exercise price of $38.38, the fair market value on that date. These options
vest in three equal installments on the first, second, and third anniversaries
of the date of grant. Upon his election as a director at last year's Annual
Meeting, Henk Broeders received an option to purchase 6,000 shares of Common
Stock at an exercise price of $38.38, the fair market value on the date of his
election, which will vest in three equal installments commencing on the date of
grant and on the first and second anniversaries of the date of grant. Each newly
elected, non-employee director will receive an option to purchase 6,000 shares
of Common Stock at an exercise price equal to the fair market value of the
Common Stock upon his or her first election as a director, which will vest in
three equal installments commencing on the date of grant and on the first and
second anniversaries of the date of grant. The Compensation Committee of the
Board of Directors also has the authority under the Directors' Plan to grant
options to non-employee directors in such amounts and on such terms as it shall
determine at the time of grant.
THE BOARD OF DIRECTORS RECOMMENDS ELECTION
OF THE NOMINEE DESCRIBED IN PROPOSAL ONE.
3
<PAGE> 7
PROPOSAL TWO:
AMENDMENT TO THE 1996 EQUITY INCENTIVE PLAN
The Amended and Restated Forrester Research, Inc. 1996 Equity Incentive
Plan (the "Plan") is designed to enhance the Company's ability to attract and
retain employees and others in a position to make significant contributions to
the Company's success by allowing them to become owners of the Company's Common
Stock. A total of 2,750,000 shares were initially reserved for issuance under
the Plan. As of the record date, there were outstanding options to purchase
1,974,622 shares of the Common Stock and 316, 583 shares remained available for
grant.
On April 7, 1999, the Company's Board of Directors voted to increase the
number of shares of Common Stock reserved for issuance under the Plan by
2,500,000 shares, subject to approval by the Company's stockholders. The Board
of Directors believes that this increase is necessary because equity awards
allow the Company to attract and retain talented professionals, and are an
important part of the Company's compensation philosophy of aligning employees'
incentives with the Company's objective of enhancing stockholder value.
SUMMARY OF THE PLAN
The following is a summary of the key features of the Plan.
ELIGIBLE PARTICIPANTS
The Compensation Committee of the Board of Directors administers the Plan.
Employees of the Company and its subsidiaries and other persons or entities who
are important to the success and growth of the Company are eligible
participants. The Compensation Committee has the authority to select employees
to whom awards are given. The number of the Company's employees (including
subsidiaries) as of March 31, 1999, was approximately 354.
MAXIMUM NUMBER OF SHARES
Currently, up to 2,750,000 shares of the Common Stock may be granted under
the Plan, subject to adjustments for stock splits, stock dividends, or
reclassification of the Company's Common Stock. The Board of Directors has
approved and is recommending that the stockholders approve an increase of
2,500,000 in the number of shares of the Company's Common Stock that may be
awarded under the Plan.
TYPES OF AWARDS
The Plan permits the Board of Directors to grant the following types of
awards:
- stock options, both incentive and non-statutory
- restricted and unrestricted stock.
STOCK OPTIONS
The Compensation Committee will determine the exercise or purchase price
per share of any option granted under the Plan. The exercise price of an
incentive stock option ("ISO") must be at least 100% (110% in the case of ten
percent shareholders) of the fair market value of the Common Stock at the time
of grant. The Compensation Committee will fix the term of each option, not to
exceed ten years from grant, and specify when each option will be exercisable.
Options may be exercised in the following ways:
- by paying the exercise price by check
- by tendering shares of common stock
- by using a promissory note
- by delivering to the Company an undertaking by a broker to deliver
promptly sufficient funds to pay the exercise price
- by a combination of these methods.
4
<PAGE> 8
RESTRICTED AND UNRESTRICTED STOCK AWARDS
The Compensation Committee may grant restricted and unrestricted stock
awards under the Plan. A restricted stock award entitles recipients to acquire
Common Stock at a purchase price determined by the Compensation Committee.
Restricted Stock Awards are subject to certain restrictions on resale as well as
forfeiture if the recipient ceases to be an employee of the Company. The
Compensation Committee may also grant unrestricted stock awards.
CHANGE OF CONTROL
In the case of certain mergers, consolidations or other transactions in
which the Company is acquired or liquidated, or its assets are sold, all
outstanding awards will terminate. Prior to such termination, however, all
outstanding awards will become exercisable unless the Compensation Committee
arranges for assumption of the awards by any surviving corporation.
TERMINATION AND AMENDMENT
The Compensation Committee may discontinue granting awards under the Plan
at any time. The Compensation Committee may also amend the Plan for any purpose
permitted by law, but no amendment may adversely affect the rights of any
participant under any outstanding award without the participant's consent.
STOCK PRICE INFORMATION
The closing price of the Common Stock, as reported on Nasdaq on March 31,
1999 was $30.375.
SUMMARY OF PLAN FEDERAL INCOME TAX CONSEQUENCES
Under the federal income tax laws now in effect, the material income tax
consequences associated with stock options awarded under the Plan are as
follows:
Incentive Options. An option holder realizes no ordinary taxable income
upon the grant or exercise of an ISO. If the option holder does not dispose of
the shares received upon the exercise of the ISO within two years from the date
of grant, or within one year after their receipt, then upon sale of such shares
the option holder will be taxed on any amount realized in excess of the option
price (the amount paid for the shares) as a long-term capital gain. Any loss
allowed for tax purposes will be long-term capital loss. The Company will not be
entitled to any deduction. The exercise of an ISO will, however, increase the
option holder's alternative minimum taxable income and may result in alternative
minimum tax liability for the option holder.
If the option holder disposes of the shares received upon exercise of an
ISO before the expiration of the holding periods described above (a
"disqualifying disposition"), the option holder generally will realize ordinary
income in the year of disposition in an amount equal to the excess (if any) of
the fair market value of the shares at exercise (or, if less, the amount
realized on a sale to an unrelated party of such shares) over the option price
thereof. The Company will be entitled to a tax deduction for that amount. Any
further gain recognized by the option holder will be taxed as short-term or
long-term capital gain and will not give the Company any deduction. Special
rules may apply where the option holder pays the exercise price of the ISO by
tendering shares of common stock. A disqualifying disposition will eliminate the
alternative minimum taxable income adjustment associated with the exercise of
the ISO if it occurs in the same calendar year as the year in which the
adjustment occurred.
If an option holder exercises an ISO at a time when it no longer qualifies
for the tax treatment described above, the option is treated as a nonstatutory
option. Generally, an ISO will not be eligible for the tax treatment described
above if it is exercised more than three months following termination of
employment (one year following termination of employment, in the case of
termination by reason of permanent and total disability), except in certain
cases where the ISO is exercised after the death of the option holder. Options
otherwise qualifying as ISOs will also be treated for federal income tax
purposes as nonstatutory options to the
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<PAGE> 9
extent they (together with other ISOs that the option holder owns) first become
exercisable in any calendar year in which shares having a fair market value,
determined at the time of the option grant, exceed $100,000.
Nonstatutory Options. An option holder realizes no income at the time a
nonstatutory option is granted under the Plan. Generally, an option holder
realizes ordinary income at exercise in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
exercise. This amount is subject to withholding in the case of options granted
to employees. The Company will be entitled to a corresponding tax deduction. Any
gain or loss that the option holder recognizes upon a later sale is treated as
capital gain or loss, either short-term or long-term, depending on the
applicable holding period for the sale.
Restricted Stock. Unless the recipient of restricted stock elects to be
taxed at the time of the issuance, there will be no federal income tax
consequences to the recipient or to the Company for as long as the shares are
subject to vesting restrictions. If and when such shares become vested, the
recipient will realize ordinary income in an amount equal to the excess of the
fair market value of the shares at such time over any amount paid for the
shares. Upon subsequent disposition of the shares, any additional gain or loss
realized by the holder generally will be capital gain or loss. If, on the other
hand, the recipient files the appropriate election with the IRS within 30 days
after the restricted stock is awarded, he or she will realize ordinary income at
the time of the award equal to the excess of the fair market value at that time
over any amount paid for the shares. In that case, any subsequent gain on
disposition representing appreciation after the time of the award will be
capital gain. However, if the shares are instead forfeited, the recipient will
not be entitled to recoup the ordinary income tax paid as a result of the
election. Whether or not the election is made, any amount of ordinary income
will be subject to withholding and generally will be deductible by the Company.
Certain Limitations. Section 162(m) of the Internal Revenue Code imposes a
$1 million limitation on the deduction that a public corporation may claim for
remuneration paid to any of its five top officers, subject to a number of
exceptions and special rules. Certain performance-based compensation is eligible
for an exemption from this limit. The Company intends that compensation
associated with the exercise of stock options awarded under the Plan will
qualify for this performance-based exemption.
The Internal Revenue Code also limits the amount of compensation that may
be paid without penalty in connection with a change in control. In general, if
the total of an individual's compensation related to a change in control equals
or exceeds three times his or her average annual taxable compensation
(determined, in general, over the five calendar years preceding the calendar
year in which the change in control occurs), the amount of such compensation
that exceeds the annual average is nondeductible to the Company and subject to
an additional 20% tax on the recipient. In making this determination, part or
all of the value of options, and other awards, granted or accelerated in
connection with a change in control may be required to be taken into account.
The foregoing discussion is provided for the information of stockholders
and does not purport to be a complete description of the federal tax
consequences of transactions under the Plan, nor does it describe state or local
tax consequences.
RECOMMENDATION AND VOTE
The Company's Board of Directors believes that the increase in the shares
reserved under the Plan will promote the interests of the Company and the
stockholders and enable the Company to attract, retain, and reward persons
important to the Company's success.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE TO INCREASE THE NUMBER OF COMMON SHARES RESERVED FOR ISSUANCE
UNDER THE AMENDED AND RESTATED FORRESTER RESEARCH, INC. 1996 EQUITY INCENTIVE
PLAN.
6
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information with
respect to the beneficial ownership of the Company's outstanding Common Stock as
of March 31, 1999 (except as set forth in the Notes to the table) by (i) each
person who is known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock of the Company, (ii) each of the executive
officers named in the Summary Compensation Table, (iii) each member of the
Company's Board of Directors, and (iv) the Company's directors and executive
officers as a group. Except as otherwise indicated, each of the stockholders
named below has sole voting and investment power with respect to the shares of
Common Stock shown as beneficially owned.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
-------------------------------
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER OWNED(1) SHARES
------------------------ ------------ -------------
<S> <C> <C>
George F. Colony, c/o Forrester Research, Inc. ............. 5,762,746 65.47%
1033 Massachusetts Avenue,
Cambridge, MA, 02138(2)
William M. Bluestein, Ph.D.(3).............................. 84,475 *
Mary A. Modahl(4)........................................... 44,927 *
Jon D. Schwartz(5).......................................... 98,205 1.12%
Stuart D. Woodring(6)....................................... 75,212 *
Henk W. Broeders(7)......................................... 2,000 --
Robert M. Galford(8)........................................ 4,533 *
George R. Hornig(9)......................................... 8,633 *
Michael H. Welles(10)....................................... 8,533 *
Directors and executive officers as a group (14 persons).... 6,128,134 69.62%
</TABLE>
- ---------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power
with respect to the shares. Shares subject to options currently exercisable
or exercisable within 60 days of March 31, 1999 are included as
beneficially owned.
(2) Includes 790 shares held by Mr. Colony's wife as to which Mr. Colony
disclaims beneficial ownership. Includes 766,936 shares that are subject to
options Mr. Colony granted to six key employees.
(3) Includes 44,924 shares of Common Stock issuable on the exercise of options
currently exercisable or exercisable within 60 days which number includes
6,466 options granted by Mr. Colony.
(4) Includes 31,821 shares of Common Stock issuable on the exercise of options
currently exercisable or exercisable within 60 days which number includes
17,738 options granted by Mr. Colony.
(5) Includes 96,670 shares of Common Stock issuable on the exercise of options
currently exercisable or exercisable within 60 days which number includes
31,666 options granted by Mr. Colony.
(6) Includes 57,734 shares of Common Stock issuable on the exercise of options
currently exercisable or exercisable within 60 days which number includes
12,730 options granted by Mr. Colony.
(7) Includes 2,000 shares of Common Stock issuable on the exercise of options
currently exercisable or exercisable within 60 days.
(8) Includes 1,200 shares held in trust for Mr. Galford's children as to which
Mr. Galford disclaims beneficial ownership and 3,333 shares of Common Stock
issuable on the exercise of options currently exercisable or exercisable
within 60 days.
(9) Includes 7,333 shares of Common Stock issuable on the exercise of options
currently exercisable or exercisable within 60 days.
(10) Includes 7,333 shares of Common Stock issuable on the exercise of options
currently exercisable or exercisable within 60 days.
* Less than 1%.
7
<PAGE> 11
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding all
compensation awarded to, earned by, or paid to the Company's President and Chief
Executive Officer and each of the other four most highly compensated executive
officers during 1998 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
-------------------- ------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION
--------------------------- ---- ------ ----- ------------------ ------------
<S> <C> <C> <C> <C> <C>
George F. Colony................ 1998 $175,000 $ 74,000 250 $5,000(3)
Chairman of the Board, 1997 $150,000 $133,702 500 --
President, and Chief 1996 $150,000 $ 77,501 -- $7,700(4)
Executive Officer
William M. Bluestein, Ph.D. .... 1998 $200,000 $ 92,850 240,250(2) $5,000(3)
Vice President, Corporate 1997 $176,667 $ 91,767 500
Strategy & Development 1996 $135,000 $ 72,497 70,926
Mary A. Modahl.................. 1998 $200,000 $ 93,765 240,250(2) $5,000(3)
Vice President, Research 1997 $176,667 $ 93,787 500
1996 $135,000 $ 65,127 70,926
Jon D. Schwartz................. 1998 $224,715 $ 63,720 240,250(2) $5,000(3)
Vice President, North 1997 $282,438 $ 7,250 500
American Sales 1996 $241,256 $ 23,136 70,019
Stuart D. Woodring.............. 1998 $200,000 $ 86,520 240,250(2) $4,500(3)
Vice President, Research 1997 $176,667 $ 99,892 500
1996 $135,000 $ 59,305 69,699
</TABLE>
- ---------------
(1) No Named Executive Officer received perquisites or other personal benefits
in excess of the lesser of $50,000 or 10% of his salary and bonus.
(2) Includes 200,000 shares of Common Stock granted by Mr. Colony and issuable
on the exercise of options.
(3) Represents Company's contribution under the Forrester Research, Inc. 401(k)
Plan.
(4) Represents benefits paid to Mr. Colony as the sole shareholder of an S
corporation and required to be reported as income.
8
<PAGE> 12
OPTIONS GRANTED AND OPTIONS EXERCISED IN THE LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to the Named Executive Officers during 1998. In addition to grants under
the Plan, during 1998 George F. Colony granted options to purchase one million
shares of Common Stock he owns to six employees of the Company including to the
Named Executive Officers listed below.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ANNUAL
NUMBER OF GRANTED RATES OF STOCK PRICE
SECURITIES TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(4)
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED(#) YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
George F. Colony.............. 250(1) * $21.04 1/29/03 $ 1,453 $ 3,211
William M. Bluestein,
Ph.D. ...................... 200,000(2) 8.12% $19.13 1/27/08 $2,406,151 $6,097,659
40,000(3) 1.62% $19.13 1/27/08 481,230 1,219,532
250(1) * $19.13 1/29/04 1,627 3,690
Mary A. Modahl................ 200,000(2) 8.12% $19.13 1/27/08 $2,406,151 $6,097,659
40,000(3) 1.62% $19.13 1/27/08 481,230 1,219,532
250(1) * $19.13 1/29/04 1,627 3,690
Jon D. Schwartz............... 200,000(2) 8.12% $19.13 1/27/08 $2,406,151 $6,097,659
40,000(3) 1.62% $19.13 1/27/08 481,230 1,219,532
250(1) * $19.13 1/29/04 1,627 3,690
Stuart D. Woodring............ 200,000(2) 8.12% $19.13 1/27/08 $2,406,151 $6,097,659
40,000(3) 1.62% $19.13 1/27/08 481,230 1,219,532
250(1) * $19.13 1/29/04 1,627 3,690
</TABLE>
- ---------------
(1) The exercise price of the options granted is equal to the fair market value
of the Company's Common Stock on the date of grant. Pursuant to the terms
set forth in the option certificate, the option was to become exercisable in
full on January 28, 2004 or earlier if the Company achieved a pre-determined
financial goal. The Company achieved that goal on December 21, 1998, and the
option vested and became exercisable in full on that date. All options
expire approximately 6 years from the date of grant.
(2) Each of these options was awarded by George F. Colony from shares
beneficially owned by Mr. Colony and pursuant to stock option agreements
(the "Option Agreements") entered into by Mr. Colony and certain employees
of the Company. The exercise price of the options granted is equal to the
fair market value of the Company's Common Stock on the date of the Option
Agreements and the options become exercisable as follows: one thirty-sixth
of the total number of options granted vest monthly through January 28,
1999; and one-third of the total number of options granted vest on each of
January 28, 2000 and January 28, 2001.
(3) The exercise price of the options granted is equal to the fair market value
of the Company's Common Stock on the date of grant. All options become
exercisable in three equal installments on the first, second, and third
anniversaries of the date of grant. All options expire approximately 10
years from the date of grant.
(4) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10%, compounded annually from the date the respective options were granted
to their expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of the Common Stock, the holders' continued
employment through the option period, and the date on which the options are
exercised.
\* Less than 1%
9
<PAGE> 13
The following table contains information for the Named Executive Officers
concerning the exercise of options during the fiscal year ended December 31,
1998 and unexercised options held as of the end of the 1998 fiscal year.
AGGREGATED OPTION EXERCISES IN 1998 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
---------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL AT FISCAL
SHARES YEAR-END(#): YEAR-END($)(1):
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George F. Colony.............. -- -- 750 -- $ 15,453 --
William M. Bluestein,
Ph.D. ...................... 62,500 $ 1,009,994 44,553 197,623 $1,541,055 $5,041,598
Mary A. Modahl................ 81,820 $ 1,689,491 32,233 197,623 $ 792,144 $5,041,598
Jon D. Schwartz............... 20,000 $ 257,250 86,267 199,502 $2,544,454 $5,101,055
Stuart D. Woodring............ 28,000 $ 359,866 78,735 197,214 $2,344,830 $5,023,704
</TABLE>
- ---------------
(1) Based upon the market price of $43.75 per share, which was the closing price
per share of Common Stock on the Nasdaq National Market on the last trading
day of the 1998 fiscal year less the option exercise price per share.
(2) Represents the difference between the fair market value of the stock at the
time of the exercise and the exercise price of the stock options.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Following the Company's initial public offering, the Board of Directors
appointed a Compensation Committee consisting of Robert M. Galford and Michael
H. Welles, neither of whom is an executive officer or employee of the Company.
The Compensation Committee is responsible for reviewing with management the
compensation of the Company's directors, officers, employees, and agents, making
recommendations to the Board of Directors, and administering the Company's stock
plans.
The Company's culture emphasizes certain key values -- quality,
cooperation, and creativity -- that it believes are critical to its continued
growth. To encourage achievement of the Company's key values, the Company places
great emphasis on individual excellence, and employees at all levels, as well as
executive officers, are encouraged to take initiative and lead individual
projects that enhance the Company's effectiveness. The Company's compensation
philosophy bases cash compensation on individual achievement, teamwork, and the
Company's short-term performance, and aligns employees' incentives with the
Company's objective of enhancing stockholder value over the long term through
long-term incentives, principally stock options. Compensation must also be
competitive with other companies in the industry so that the Company can
continue to attract, retain, and motivate key employees who are critical to the
long-term success of the Company.
Compensation for the Company's executive officers in 1998 consisted of
three principal components: base salary, cash bonuses, and stock options.
Base Salary. Base salaries of executive officers were determined by
evaluating the responsibilities of the position, the experience and performance
of the individual, and formal and informal industry comparisons.
Cash Bonuses. Cash bonuses were determined based upon performance against
individual and team goals and are funded by the Company's overall performance
against key business objectives.
Stock Options. The principal equity compensation component of executive
compensation are options granted under the Plan. Prior to 1996, the Company had
not issued stock options to executive officers or employees. In 1996, the
Company granted stock options, some of which vested upon consummation of the
10
<PAGE> 14
Company's initial public offering and others of which vest over three years, to
executive officers and other employees based on seniority and the position held
with the Company, and granted stock options, which vest over three years, to new
executive officers who joined the Company in 1996. The Compensation Committee
expects that future stock options generally will be granted when an executive
joins the Company, with additional options granted from time to time for
promotions and performance. The Compensation Committee believes that stock
option participation helps to motivate and retain executives and also aligns
management's incentives with long-term stock price appreciation. In determining
the size of awards for 1998, the Committee considered formal and informal
surveys of companies in similar businesses, recognizing that equity compensation
is a key retention incentive in a company, like Forrester, that relies heavily
on the quality of its analysts.
During 1998 George F. Colony granted options to purchase shares of common
stock beneficially owned by Mr. Colony to certain employees of the Company.
These grants had no effect on the employees' base salary, cash bonus, or stock
option compensation provided by the Company.
Mr. Colony's compensation package in 1998 as Chief Executive Officer
consisted of the same benefits program as other executive officers, including
base salary, cash bonus, and other executive and employee benefit programs. Mr.
Colony did not receive any stock options other than the award of an option of
250 shares that was made to every employee of the Company. In deciding to
increase the size of his base salary the Committee considered the performance of
the Company, including the increase in revenues, operating income, bookings, and
agreement value, although no single factor was more important than any other.
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation paid to certain executive officers in excess of $1.0 million unless
the compensation is performance based. To the extent consistent with its
performance goals, it is the Company's policy to structure compensation
arrangements with its executive officers to preserve the deductibility of that
compensation in light of Section 162(m).
Robert M. Galford
Michael H. Welles
11
<PAGE> 15
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the period cumulative return of
the Company's Common Stock against the return on the Nasdaq Stock Market Index
of U.S. Companies and the H&Q Technology index for the period indicated below.
COMPARISON OF CUMULATIVE TOTAL RETURNS*
<TABLE>
<CAPTION>
FORRESTER RESEARCH, INC. NASDAQ H&Q TECHNOLOGY
------------------------ ------ --------------
<S> <C> <C> <C>
11/26/96 100.00 100.00 100.00
'1996' 117.05 100.81 98.88
'1997' 103.41 123.77 115.93
'1998' 198.86 173.68 180.32
</TABLE>
- ---------------
* Assumes that the value of the investment in Forrester Research, Inc. Common
Stock, the Nasdaq Stock Market Index of U.S. Companies, and the H&Q Technology
index was $100 on November 26, 1996 and that all dividends were reinvested.
The stock performance graph above is not necessarily indicative of future
stock performance.
OTHER INFORMATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company, which consists of two members,
Messrs. Galford and Welles, neither of whom is or has been an executive officer
or employee of the Company, was responsible for compensation decisions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of filings under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") received by it,
and written representations from certain reporting persons, the Company believes
that during 1998 its directors, executive officers, and beneficial owners of
greater than ten percent of the Common Stock filed all required reports under
Section 16 of the Exchange Act, except that each of George F. Colony, Chairman
of the Board, President and Chief Executive Officer; Robert M. Galford, George
R. Hornig, and Michael H. Welles, Directors; and Susan M. Whirty, an executive
officer, inadvertently failed to report on a timely basis one transaction, and
William M. Bluestein, an executive officer, inadvertently failed to report on a
timely basis two transactions.
12
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Mr. Colony, who was the sole stockholder of the Company
prior to the Offering, have entered into an indemnification agreement relating
to their respective tax liabilities. Mr. Colony will continue to be liable for
personal income taxes on the Company's income for all periods prior to the time
the Company ceased to be an S corporation. The agreement generally provides that
the Company will indemnify Mr. Colony for any increase in his taxes (including
interest and penalties) resulting from adjustments initiated by taxing
authorities and from payments to him under the agreement, and Mr. Colony will
pay to the Company an amount equal to any decrease in his tax liability
resulting from adjustments initiated by taxing authorities. The agreement also
provides that, if the Company is determined to have been a C corporation for tax
purposes at any time it reported its income as a S corporation, Mr. Colony will
make a capital contribution to the Company in an amount necessary to hold the
Company harmless from any taxes and interest arising from such determination up
to the amount of distributions made by the Company to Mr. Colony prior to the
termination of the Company's S corporation election less any taxes and interest
attributable to such distributions.
The Company and Mr. Colony entered into a registration rights and
non-competition agreement (the "Registration Rights and Non-Competition
Agreement") which provides that if Mr. Colony's employment with the Company is
terminated he will not compete with the Company for the one-year period after
the date of such termination. The Registration Rights and Non-Competition
Agreement also provides that in the event the Company proposes to file a
registration statement under the Securities Act with respect to an offering by
the Company for its own account or the account of another person, or both, Mr.
Colony shall be entitled to include shares held by him (the "Registrable
Shares") in such a registration, subject to the right of the managing
underwriter of any such offering to exclude some or all of such Registrable
Shares from such registration if and to the extent the inclusion of the shares
would adversely affect the marketing of the shares to be sold by the Company.
The Registration Rights and Non-Competition Agreement also provides that Mr.
Colony may require the Company to register under the Securities Act shares
having a fair market value of at least $5.0 million, except that the Company is
not required to effect such registration more than twice or at certain times
described in the agreement. The Registration Rights and Non-Competition
Agreement also provides that the Company will pay all expenses incurred in
connection with such registration.
AUDIT MATTERS
Arthur Andersen LLP has been selected to audit the financial statements of
the Company for the year ending December 31, 1999 and to report the results of
their examination.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting and will be afforded the opportunity to make a statement if he or she
desires to do so and to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Proposals of stockholders submitted for consideration at the Annual Meeting
of Stockholders in 2000 must be received by the Company no later than December
16, 1999, in order to be considered for inclusion in the Company's proxy
materials for that meeting.
Under the Company's By-laws, stockholders who wish to make a proposal at
the 2000 Annual Meeting -- other than one that will be included in the Company's
proxy materials -- must notify the Company no earlier than February 8, 2000 and
no later than March 9, 2000. If a stockholder who wishes to present a proposal
fails to notify the Company by March 9, 2000, the proxies that management
solicits for the meeting will have discretionary authority to vote on the
stockholder's proposal if it is properly brought before the meeting.
13
<PAGE> 17
OTHER BUSINESS
The Board of Directors knows of no business that will come before the
Meeting for action except as described in the accompanying Notice of Annual
Meeting of Stockholders. However, as to any such business, the persons
designated as proxies will have discretionary authority to act in their best
judgment.
FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's annual report on Form 10-K filed with the
Securities and Exchange Commission is available to stockholders without charge
by writing to Forrester Research, Inc., Investor Relations, 1033 Massachusetts
Avenue, Cambridge, Massachusetts 02138.
14
<PAGE> 18
1592-PS99
<PAGE> 19
[1592 - FORRESTER RESEARCH, INC.][FILE NAME: FRI11B.ELX][VERSION - 2] [3/24/99]
FRI11B DETACH HERE
- --------------------------------------------------------------------------------
PROXY
FORRESTER RESEARCH, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING, MAY 11, 1999
The undersigned appoints George F. Colony and Susan M. Whirty, and each of
them, as proxies, each with the power of substitution, and authorizes them to
represent and vote all shares of common stock of Forrester Research, Inc. held
by the undersigned at the Annual Meeting of Stockholders to be held at the
offices of Ropes & Gray, One International Place, Boston, Massachusetts 02110 at
10:00 a.m. on Tuesday, May 11, 1999, or any adjournments thereof, for the
following purposes set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO CONTRARY DIRECTION IS MADE, THE PROXY WILL
BE VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR ON THE REVERSE SIDE.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 20
[1592 - FORRESTER RESEARCH, INC.][FILE NAME: FRI11A.ELX][VERSION - 4][04/06/99]
FRI111A DETACH HERE
- --------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. To elect one Class I director to serve until the 2002 Annual Meeting.
NOMINEE: George F. Colony
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. To approve an increase in the number [ ] [ ] [ ]
of shares of common stock available
for issuance under the Company's
Amended and Restated Forrester
Research, Inc. 1996 Equity Incentive
Plan.
3. To transact such other business as may properly come before
the meeting and any adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as name appears hereon and date. Where
shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give
full title as such.
Signature:_______________ Date: _______ Signature:_______________ Date: ________
