<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 [_] Confidential, For Use of the
than the Registrant [_] Commission Only (as Permitted by
Rule 14a-6(e)(2))
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WATCHGUARD TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Feee computed on table below per Exchange Act Rules 14a-6(i)(1) 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>
[LOGO OF WATCHGUARD TECHNOLOGIES, INC.]
May 8, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of WatchGuard Technologies, Inc., which will be held on Thursday, June 8,
2000, at 9:00 a.m., local time, at the W Hotel, Fourth and Seneca, Seattle,
Washington.
At the annual meeting, you will be asked to elect five directors to our
board of directors.
WATCHGUARD'S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION
OF THE NOMINEES FOR DIRECTOR.
You should read carefully the accompanying Notice of Annual Meeting of
Stockholders and the proxy statement for additional information.
Whether or not you plan to attend the annual meeting, please complete, sign
and date the enclosed proxy card and return it promptly in the enclosed
postage-prepaid envelope. Your shares will be voted in accordance with the
instructions you give in your proxy. If you attend the annual meeting, you may
vote in person if you wish, even if you previously returned your proxy card.
Your prompt cooperation is greatly appreciated.
Sincerely,
/s/ Christopher G. Slatt
Christopher G. Slatt
President, Chief Executive Officer
and Chairman of the Board
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
<PAGE>
WATCHGUARD TECHNOLOGIES, INC.
206 Occidental Avenue South, Suite 200
Seattle, Washington 98104
----------------
Notice of the 2000 Annual Meeting of Stockholders
to be held June 8, 2000
----------------
TO THE STOCKHOLDERS OF WATCHGUARD TECHNOLOGIES, INC.:
We will hold the 2000 Annual Meeting of Stockholders of WatchGuard
Technologies, Inc. on Thursday, June 8, 2000, at 9:00 a.m., local time, at the
W Hotel, Fourth and Seneca, Seattle, Washington, for the following purposes:
1. To elect to our board of directors one Class 1 director, to hold office
until the first annual meeting of stockholders following such election
or until his successor is elected and qualified, two Class 2 directors,
to hold office until the second annual meeting of stockholders following
such election or until their successors are elected and qualified, and
two Class 3 directors, to hold office until the third annual meeting of
stockholders following such election or until their successors are
elected and qualified.
2. To transact such other business as may properly come before the annual
meeting or any adjournments or postponements of the annual meeting.
These items of business are more fully described in the proxy statement
accompanying this notice. The board of directors has fixed the close of
business on April 24, 2000 as the record date for determining the stockholders
entitled to notice of and to vote at the annual meeting. Only stockholders of
record on the record date are entitled to notice of and to vote at the annual
meeting and any adjournments or postponements of the annual meeting.
The directors elected will be the candidates receiving the greatest number
of votes cast, in person or by proxy, at the annual meeting.
You are cordially invited to attend the annual meeting. To ensure your
representation at the annual meeting, however, you should complete, sign, date
and return the enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope. Your stock will be voted in accordance with the
instructions you give in your proxy. You may revoke your proxy at any time
before it is voted by signing and returning a proxy bearing a later date for
the same shares, by filing with the secretary of WatchGuard a written
revocation bearing a later date or by attending and voting in person at the
annual meeting.
By Order of the Board of Directors
/s/ Steven N. Moore
Steven N. Moore
Secretary
Seattle, Washington
May 8, 2000
<PAGE>
WATCHGUARD TECHNOLOGIES, INC.
----------------
PROXY STATEMENT
This proxy statement is being furnished to the holders of shares of common
stock of WatchGuard Technologies, Inc., a Delaware corporation, in connection
with the solicitation of proxies by our board of directors for use at the 2000
Annual Meeting of Stockholders and at any adjournments or postponements of the
annual meeting. We will hold the annual meeting on Thursday, June 8, 2000, at
the W Hotel, Fourth and Seneca, Seattle, Washington, at 9:00 a.m., local time.
The approximate date of mailing of this proxy statement and the accompanying
proxy is May 8, 2000.
Matters to Be Considered at the Annual Meeting
At the annual meeting, our stockholders of record as of the close of
business on April 24, 2000 will consider and vote on
(1) the election to our board of directors of one Class 1 director, to hold
office until the first annual meeting of stockholders following such
election or until his successor is elected and qualified, two Class 2
directors, to hold office until the second annual meeting of
stockholders following such election or until their successors are
elected and qualified, and two Class 3 directors, to hold office until
the third annual meeting of stockholders following such election or
until their successors are elected and qualified; and
(2) such other business as may properly come before the annual meeting or
any adjournments or postponements of the annual meeting.
Our board of directors recommends that our stockholders vote "FOR" the
election of the nominees for director.
Record Date; Shares Entitled to Vote; Vote Required
Only our stockholders of record at the close of business on the record date,
April 24, 2000, are entitled to notice of and to vote at the annual meeting.
We have one class of voting securities outstanding, which is designated as
common stock, and each share of common stock is entitled to one vote. As of
the record date, 22,857,661 shares of common stock were issued and
outstanding. The presence, in person or by proxy, of the holders of a majority
of the shares of common stock entitled to vote is necessary to constitute a
quorum for the transaction of business at the annual meeting.
The directors elected at the annual meeting will be the candidates receiving
the greatest number of votes cast by the holders of shares of common stock
present, in person or by proxy, at the annual meeting. Holders of shares of
common stock are not entitled to cumulate votes in electing directors. As of
the record date, our directors and executive officers and their affiliates may
be deemed to be the beneficial owners of approximately 51.48% of the
outstanding shares of our common stock. Each of our directors and executive
officers plans to vote or direct the vote of all shares of common stock over
which he has voting control in favor of electing the nominees for director.
Abstention and broker nonvotes will have no effect on electing directors
since they will not represent votes cast at the annual meeting for the purpose
of voting for the election of directors.
Proxies
Shares of common stock represented by properly executed proxies that we
receive at or before the annual meeting and that have not been revoked will be
voted at the annual meeting in accordance with the instructions contained in
the proxy. Shares of common stock represented by properly executed proxies for
which no instruction is given will be voted "FOR" the election of the nominees
for director. To ensure that your shares are voted, please complete, sign,
date and return promptly the enclosed proxy card in the postage-prepaid
envelope provided.
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<PAGE>
You may revoke your proxy by:
. submitting a later-dated proxy for the same shares at any time before
the vote on the election of the nominees for director;
. delivering written notice of revocation to the secretary of WatchGuard
at any time before the vote; or
. attending the annual meeting and voting in person. Merely attending the
annual meeting will not in and of itself revoke a proxy.
If the annual meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the annual meeting all proxies will be voted in the
same manner as the proxies would have been voted at the original convening of
the annual meeting (except for any proxies that have at that time effectively
been revoked or withdrawn), even if the proxies had been effectively voted on
the same or any other matter at a previous meeting.
Proxy Solicitation
We will bear the cost of soliciting proxies from our stockholders. Our
directors, officers and employees may solicit proxies by mail, telephone,
facsimile or otherwise. We will not additionally compensate our directors,
officers and employees for this solicitation but will reimburse them for out-
of-pocket expenses they incur. We will reimburse brokerage firms, fiduciaries
and other custodians who forward soliciting material to the beneficial owners
of shares of common stock held of record by them for the reasonable expenses
they incur in forwarding the material.
PROPOSAL ONE
ELECTION OF DIRECTORS
Our restated bylaws provide that our board of directors shall be composed of
not less than five nor more than nine directors, and that the board shall be
divided into three classes, as nearly equal in number as possible. At present
we have five directors. At this annual meeting, the first annual meeting since
the reclassification of our board in connection with our initial public
offering, our stockholders will elect the director in Class 1 to serve an
initial term of one year, the directors in Class 2 to serve an initial term of
two years and the directors in Class 3 to serve an initial term of three
years. At each subsequent annual meeting, our stockholders will elect one
class, with each director in that class elected to serve a term of three years
or until his or her successor is elected and qualified. If a director resigns
from the board before the expiration of his or her term, however, the director
elected or appointed to fill the resulting vacancy will be elected to a term
equal in time to the resigning director's remaining term or until his or her
successor is elected and qualified.
The board has nominated Stuart J. Ellman for election to the board as the
Class 1 director, Andrew W. Verhalen and Charles P. Waite, Jr. for election as
Class 2 directors and Steven N. Moore and Christopher G. Slatt for election as
Class 3 directors. We intend to cast votes in accordance with the accompanying
proxy for the election of these nominees unless we receive contrary
instructions. If any nominee should become unavailable for any reason, we
intend to cast votes for a substitute nominee designated by the board. The
board has no reason to believe that any of these nominees will be unable to
serve if elected.
Nominees for Directors
Class 1 -- Term Expires 2001
Stuart J. Ellman has served as a director of WatchGuard since April 1998.
Mr. Ellman cofounded RRE Ventures LLC, a venture capital firm, and since
August 1994 has served as general partner of RRE Ventures LLC and its
affiliates and predecessors. He also serves as managing director of RRE
Investors, LLC and as a member of RRE Investors II, LLC. He is also a director
of several private companies. Mr. Ellman holds a B.A. in economics from
Wesleyan University and an M.B.A. from Harvard University.
Class 2 -- Terms Expire 2002
Andrew W. Verhalen has served as a director of WatchGuard since May 1997.
Since April 1992, Mr. Verhalen has served as a partner of Matrix Partners, a
venture capital firm. Before 1992, Mr. Verhalen held
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<PAGE>
senior management positions at 3Com Corporation and Intel Corporation. He is
also a director of Alteon WebSystems Inc., Copper Mountain Networks, Turnstone
Systems, Unwired Planet and several private technology companies. Mr. Verhalen
holds a B.S.E.E., an M.E. and an M.B.A. from Cornell University.
Charles P. Waite, Jr. has served as a director of WatchGuard since May 1997.
Since December 1987, Mr. Waite has served as a general partner of Olympic
Venture Partners, a venture capital firm. He is also a director of Loudeye,
Inc., Verity, Inc. and several private companies. Mr. Waite holds an A.B. in
history from Kenyon College and an M.B.A. from Harvard University.
Class 3 -- Terms Expire 2003
Christopher G. Slatt cofounded WatchGuard in February 1996. Mr. Slatt has
served as president, chief executive officer and a director of WatchGuard
since inception, and as chairman of the board since April 1999. From September
1993 to October 1995, he served as a vice president and a general manager of
Legent Corporation, a computer software company, which was acquired by
Computer Associates International, Inc., a computer software company, in
August 1995. He is also a director of a private company. Mr. Slatt holds a
B.S.E.E. from the University of Notre Dame.
Steven N. Moore cofounded WatchGuard in February 1996. Mr. Moore has served
as executive vice president of finance of WatchGuard since March 1999, as
chief financial officer, secretary, treasurer and a director since inception,
and as vice president of finance and operations from inception to March 1999.
From September 1993 to September 1995, he served as director of finance of
Legent Corporation. Mr. Moore holds a B.S. in finance from Central Washington
University.
Director Compensation
We do not pay cash compensation to our directors for their services as
directors or members of committees of the board of directors, but we do
reimburse them for reasonable expenses they incur in attending meetings of the
board of directors. Directors of WatchGuard are eligible to participate in our
stock option plan.
Committees of the Board and Meetings
Compensation Committee. The compensation committee of our board of directors
consists of Messrs. Ellman, Verhalen and Waite. The compensation committee
. reviews and approves the compensation and benefits for our executive
officers and grants stock options to officers and nonemployees under our
stock option plan; and
. makes recommendations to the board of directors regarding these matters.
We established the compensation committee in February 1999. This committee did
not meet in 1999.
Audit Committee. The audit committee consists of Messrs. Ellman, Verhalen
and Waite. The audit committee
. makes recommendations to the board of directors regarding the selection
of independent auditors;
. reviews the results and scope of the audit and other services provided
by our independent auditors; and
. reviews and evaluates our audit and control functions.
We established the audit committee in February 1999. This committee met once
in 1999.
During 1999, there were eight meetings of the board, five of which were held
telephonically. Each of our directors attended 75% or more of the total number
of board meetings held during that director's service on the board. Each of
our directors attended each of the committee meetings held during the
director's service on that committee.
3
<PAGE>
EXECUTIVE COMPENSATION
Compensation Summary
The following table lists all compensation earned during 1999 by our chief
executive officer and our other executive officers whose compensation exceeded
$100,000 in 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual ------------
Compensation Securities
------------------ Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#)
--------------------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
Christopher G. Slatt..................... 1999 $190,000 $67,203 40,000
Chief Executive Officer and President 1998 155,000 -- 70,000
Steven N. Moore.......................... 1999 171,250 67,203 40,000
Executive Vice President of Finance, 1998 155,000 -- 70,000
Chief Financial Officer,
Secretary and Treasurer
R. Michael Peronto....................... 1999 142,019 49,538 440,564
Vice President and Chief Operating
Officer(1)
</TABLE>
- --------
(1) Mr. Peronto joined WatchGuard in March 1999. His annual salary is
$175,000.
Option Grants in 1999
The following table provides information regarding options granted during
1999 to our chief executive officer and our other executive officers whose
compensation exceeded $100,000 in 1999. The table includes the potential
realizable value over the 10-year term of the options, based on assumed rates
of stock appreciation of 5% and 10%, compounded annually. The assumed rates of
appreciation are prescribed by the Securities and Exchange Commission for
illustrative purposes only and are not intended to forecast or predict future
stock prices. Any actual gains on option exercises will depend on the future
performance of our stock.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
------------------------------------------------ Value at Assumed Annual
Number of Percent of Total Rates of Stock Price
Securities Options Granted Appreciation for Option
Underlying to Employees in Exercise Term
Options Last Fiscal Price Expiration ------------------------
Name Granted(#) Year ($/Share) Date 5%($) 10%($)
- ---- ---------- ---------------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Christopher G. Slatt.... 40,000 1.78% $14.30 6/17/04 $ 158,000 $ 349,000
Steven N. Moore......... 40,000 1.78 14.30 6/17/04 158,000 349,000
R. Michael Peronto...... 439,564 19.55 13.00 4/12/09 3,594,000 9,107,000
1,000 * 13.00 7/30/09 8,000 21,000
</TABLE>
Option Grants in Last Fiscal Year
- --------
* Less than 1%
Approximately 2% of Mr. Slatt's and Mr. Moore's options vest and become
exercisable each month, commencing on July 17, 1999. Of the options we granted
to Mr. Peronto on April 12, 1999, 25% vested and became exercisable on April
12, 2000 and approximately 2% of the remaining options vest and become
exercisable each month after that date. Of the options we granted to Mr.
Peronto on July 30, 1999, approximately 2% vest and become exercisable each
month, commencing on August 30, 1999. In 1999, we granted options to purchase
an aggregate of 2,248,314 shares to employees. We granted all options under
our stock option plan at exercise prices that equal or, in the case of 10% or
greater holders, exceed the fair market value of our common stock on the date
of grant.
4
<PAGE>
Unexercised Options Held as of December 31, 1999
The following table provides information regarding unexercised options held
as of December 31, 1999 by our chief executive officer and our other executive
officers whose compensation exceeded $100,000 in 1999. The value of
unexercised options is calculated on the basis of the closing sales price of
our common stock on the Nasdaq National Market on December 31, 1999, which was
$30.25 per share. The individuals listed below did not exercise any options
during 1999.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Fiscal Year-End(#) Fiscal Year-End($)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Christopher G. Slatt........ 38,541 71,459 $ 1,089,569 $ 1,655,921
Steven N. Moore............. 38,541 71,459 1,089,569 1,655,921
R. Michael Peronto.......... 104 440,460 1,794 7,597,935
</TABLE>
Change-of-Control Arrangements
Under Mr. Peronto's stock option letter agreement, if a change of control of
WatchGuard occurs, half of the unvested shares subject to the option for
439,564 shares granted on April 12, 1999 will vest and become exercisable.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors has furnished the
following report on compensation. The compensation committee, which is
comprised of three nonemployee directors, reviews and approves the
compensation and benefits for our executive officers, grants stock options to
officers and nonemployees under our stock option plan and makes
recommendations to the board of directors regarding these matters. The
compensation committee applies a similar compensation policy to executives and
employees and considers internal and external information in determining
compensation.
Compensation Philosophy
Our compensation policies are based on the belief that the interests of
employees should be closely aligned with those of our stockholders. The
compensation policies are designed to achieve the following objectives:
. Offer compensation opportunities that attract highly qualified employees,
reward outstanding initiative and achievement, and retain the leadership
and skills necessary to build long-term stockholder value.
. Maintain a market competitive compensation structure in line with corporate
business objectives. The focus is weighted on incentive programs and based
on results as measured by both the quarterly and long-term financial
performance of WatchGuard.
. Further our short- and long-term strategic goals and values by aligning
compensation with business objectives and individual performance.
Compensation Program
Our compensation program has three major integrated components: base salary,
quarterly bonus awards, and long-term incentives. We emphasize the award of
stock options as long-term incentives to executive officers.
Base Salary. Base salary levels are determined annually by reviewing the
skills, performance level, and contribution to the business of individual
employees.
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<PAGE>
Quarterly Bonus Awards. Quarterly bonus awards are based on individual
employee goals and the attainments of quarterly corporate objectives, which
are set on a quarterly basis.
Long-Term Incentives. The compensation committee views stock options as an
important part of its long-term, performance-based compensation program. The
committee believes that stock ownership is an excellent vehicle for
compensating its officers and employees. We provide long-term incentives
through our Amended and Restated 1996 Stock Incentive Compensation Plan and
our 1999 Employee Stock Purchase Plan, the purpose of which is to create a
direct link between executive compensation and increases in stockholder value.
Stock options are granted at fair market value and vest in installments
generally over four years. Thus, the value of the stockholders' investment
must appreciate before the optionee receives any financial benefit.
Additionally, the employee must remain in our employ for the period required
for the stock option to be exercisable, thus providing an incentive to remain
in our employ. When determining option awards for an executive officer, the
committee considers the executive's current contribution to WatchGuard's
performance, the anticipated contribution to meeting our long-term strategic
performance goals, and industry practices and norms. Long-term incentives
granted in prior years and existing levels of stock ownership are also taken
into consideration. Because the receipt of value by an executive officer under
a stock option depends on an increase in the price of our common stock, this
portion of the executive's compensation is directly aligned with an increase
in stockholder value. The committee believes that such stock plans align the
interests of the employees with the long-term interests of the stockholders.
Chief Executive Officer Compensation
Mr. Slatt's annual salary for 1999 was $200,000. During fiscal 1999, Mr.
Slatt was granted a stock option to purchase 40,000 shares of common stock at
an exercise price of $14.30 per share, 10% above the fair market value of our
common stock on the date of the grant. The stock option will vest in
accordance with our customary vesting schedule for performance-based grants as
set forth in footnote to the table titled "Options Grants in Last Fiscal
Year." Mr. Slatt's base salary, annual incentive award and long-term
compensation for 1999 was determined based upon the same factors employed by
the committee for executive officers generally.
Section 162(m) of the Internal Revenue Code limits the tax deductibility by
a corporation of compensation in excess of $1 million paid to its chief
executive officer and any other of its four most highly compensated executive
officers. Compensation that qualifies as "performance-based," however, is
excluded from the $1 million limit. The Committee does not presently expect
total cash compensation payable for salaries to exceed the $1 million limit
for any individual executive. In addition, our stock option plan is designed
to qualify as performance-based compensation that is fully deductible by us
for income tax purposes. The Committee will continue to monitor the
compensation levels potentially payable under our other compensation programs,
but intends to retain the flexibility necessary to provide total compensation
in line with competitive practice, our compensation philosophy and the best
interests of WatchGuard.
Compensation Committee
Stuart J. Ellman
Andrew W. Verhalen
Charles P. Waite, Jr.
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<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder return
for WatchGuard, the Nasdaq Stock Market Index and the Nasdaq Computer and Data
Processing Index. The graph shows the value as of December 31, 1999 of $100
invested on July 30, 1999, the date of our initial public offering, in
WatchGuard common stock, the Nasdaq Stock Market Index (U.S. companies) and the
Nasdaq Computer and Data Processing Index.
Comparison of Cumulative Total Return Among WatchGuard Technologies, Inc., the
Nasdaq Stock Market Index and the Nasdaq Computer and Data Processing Index
[PERFORMANCE CHART GRAPHIC]
<TABLE>
<CAPTION>
July 30, Dec. 31,
1999 1999
-------- --------
<S> <C> <C>
WatchGuard................................................ $ 100.00 $ 226.70
Nasdaq Stock Market Index (U.S. Companies)................ 100.00 149.80
Nasdaq Computer and Data Processing Index................. 100.00 178.50
</TABLE>
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table provides information regarding the actual beneficial
ownership of our outstanding common stock as of March 31, 2000 by
. each person or group that we know beneficially owns 5% or more of our
common stock;
. each of our directors;
. our chief executive officer and the other executive officers whose
compensation exceeded $100,000 in 1999; and
. all of our directors and executive officers as a group.
The percentage ownership data is based on 22,718,643 shares of WatchGuard
common stock outstanding as of March 31, 2000. Under the rules of the
Securities and Exchange Commission, beneficial ownership includes shares over
which the indicated beneficial owner exercises voting and/or investment power.
Shares of common stock subject to options that are currently exercisable or
will become exercisable within 60 days of March 31, 2000 are deemed
outstanding for computing the percentage ownership of the person holding the
option, but are not deemed outstanding for purposes of computing the
percentage ownership of any other person. Unless otherwise indicated in the
footnotes below, we believe that the persons and entities named in the table
have sole voting and investment power with respect to all shares beneficially
owned, subject to applicable community property laws. Unless otherwise
indicated, the following beneficial owners can be reached at our principal
offices.
<TABLE>
<CAPTION>
Percentage of
Shares of
Number of Shares Common Stock
Name and Address Beneficially Owned Outstanding
---------------- ------------------ -------------
<S> <C> <C>
Entities affiliated with Matrix IV Management
Co., L.P.(1)................................ 2,908,291 12.80%
2500 Sand Hill Road
Menlo Park, CA 94025
Entities affiliated with Olympic Venture
Partners(2)................................. 2,670,628 11.76
2420 Carillon Point
Kirkland, WA 98033
Entities affiliated with RRE Investors II,
LLC(3)...................................... 1,017,288 4.48
156 East 56th St., 22nd Floor
New York, NY 10022
Stuart J. Ellman(4).......................... 1,017,288 4.48
Andrew W. Verhalen(5)........................ 2,908,291 12.80
Charles P. Waite, Jr.(6)..................... 2,670,628 11.76
Christopher G. Slatt(7)...................... 2,532,429 11.12
Steven N. Moore(8)........................... 2,532,429 11.12
R. Michael Peronto(9)........................ 120,019 *
Directors and executive officers as a group
(6 persons)(10)............................. 11,781,084 51.36
</TABLE>
- --------
* Less than 1%
(1) Matrix IV Management Co., L.P. is the general partner of each of Matrix
Partners IV, L.P. and Matrix Entrepreneurs Fund, L.P., and thus is
deemed to beneficially own the shares held by these entities. Andrew W.
Verhalen, a director of WatchGuard, is a general partner of Matrix IV
Management Co., L.P.
(2) Includes 1,189,680 shares held by Olympic Venture Partners III, L.P. and
OVP III Entrepreneurs Fund, L.P. OVMC III, L.P. is the general partner
of Olympic Venture Partners III, L.P. and of OVP III
8
<PAGE>
Entrepreneurs Fund, L.P., and thus is deemed to beneficially own the
shares held by these entities. Also includes 1,480,948 shares held by
Olympic Venture Partners IV, L.P. and OVP IV Entrepreneurs Fund, L.P. OVMC
IV, LLC is the general partner of Olympic Venture Partners IV, L.P. and of
OVP IV Entrepreneurs Fund, L.P., and thus is deemed to beneficially own
the shares held by these entities. OVMC III, L.P. and OVMC IV, LLC
disclaim beneficial ownership of these shares except to the extent of
their pecuniary interest in these shares. Charles P. Waite, Jr., a
director of WatchGuard, is a general partner of OVMC III, L.P. and a
managing member of OVMC IV, LLC.
(3) RRE Investors II, LLC is the managing member of RRE Investors, L.P. and
the indirect managing member of RRE Investors Fund, L.P., and thus is
deemed to beneficially own the shares held by these entities. Stuart J.
Ellman, a director of WatchGuard, is a member of RRE Investors II, LLC.
(4) Mr. Ellman is a member of RRE Investors II, LLC, which is the direct or
indirect managing member of each of the entities affiliated with it. Mr.
Ellman disclaims beneficial ownership of the shares held by the entities
affiliated with RRE Investors II, LLC, except to the extent of his
pecuniary interest arising from his interest in RRE Investors II, LLC.
(5) Represents 2,908,291 shares held by entities affiliated with Matrix IV
Management Co., L.P. Mr. Verhalen is a general partner of Matrix IV
Management Co., L.P., which the general partner of each of the entities
affiliated with it. Mr. Verhalen disclaims beneficial ownership of the
shares held by the entities affiliated with Matrix IV Management Co.,
L.P., except to the extent of his pecuniary interest arising from his
interest in Matrix IV Management Co., L.P.
(6) Represents 2,670,628 shares held by entities affiliated with OVMC III,
L.P. and OVMC IV, LLC. Mr. Waite is a general partner of OVMC III, L.P.,
which is the general partner of Olympic Venture Partners III, L.P. and
of OVP III Entrepreneurs Fund, L.P. Mr. Waite is also a managing member
of OVMC IV, LLC, which is the general partner of Olympic Venture
Partners IV, L.P. and of OVP IV Entrepreneurs Fund, L.P. Mr. Waite
disclaims beneficial ownership of the shares held by Olympic Venture
Partners III, L.P., OVP III Entrepreneurs Fund, L.P., Olympic Venture
Partners IV, L.P. and OVP IV Entrepreneurs Fund, L.P., except to the
extent of his pecuniary interest arising from his interest in these
entities.
(7) Includes 300,000 shares held by Venus Capital LLC and 49,999 shares
subject to options exercisable within 60 days of March 31, 1999.
(8) Includes 300,000 shares held by Baja Investment Co. LLC and 49,999
shares subject to options exercisable within 60 days of March 31, 1999.
(9) Includes 119,234 shares subject to options exercisable within 60 days of
March 31, 1999.
(10) Includes 219,232 shares subject to options exercisable within 60 days
of March 31, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers, directors and holders of 10% or more of a registered
class of our equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Commission regulations
require executive officers, directors and 10%-or-greater stockholders to give
us copies of all Section 16(a) forms they file with the Commission.
Based solely on our review of the copies of these forms we received, or
written representations from reporting persons that no such forms were
required for those persons, we believe that during 1999 our executive
officers, directors and 10%-or-greater stockholders complied with all
applicable filing requirements.
9
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INDEPENDENT AUDITORS
Representatives of Ernst & Young LLP, our independent auditors, are expected
to attend the annual meeting and will have an opportunity to make a statement
and to respond to appropriate questions from stockholders.
PROPOSALS BY WATCHGUARD STOCKHOLDERS
Under the Securities and Exchange Commission's proxy rules, stockholder
proposals that meet specified conditions may be included in our proxy
statement and proxy for a particular annual meeting. Stockholders that intend
to present a proposal at our 2001 annual meeting must give us notice of the
proposal not later than January 8, 2001 to be considered for inclusion in the
proxy materials for that meeting. Stockholders that intend to present a
proposal that will not be included in the proxy materials must give us notice
of the proposal at least 60 but not more than 90 days before May 3, 2001.
However, our timely receipt of any such proposal by a qualified stockholder
will not guarantee the proposal's inclusion in our proxy materials or our
presentation at the 2001 annual meeting because there are other requirements
in the proxy rules.
OTHER BUSINESS
We do not intend to present any business at the annual meeting other than
the election of the directors described in the accompanying Notice of Annual
Meeting of Stockholders, and we have no present knowledge that any other
person intends to present business at the annual meeting. If, however, other
matters requiring the vote of the stockholders properly come before the annual
meeting or any adjournment or postponement of the annual meeting, the persons
named in the accompanying form of proxy will have discretionary authority to
vote the proxies held by them in accordance with their judgment as to those
matters.
ANNUAL REPORT AND FORM 10-K
Copies of our 2000 Annual Report to Stockholders and Annual Report on Form
10-K for the year ended December 31, 1999, as amended, are being mailed with
this proxy statement to each stockholder of record. If you did not receive a
copy of the Annual Report or the Form 10-K, you may obtain a copy (excluding
exhibits) without charge by writing or calling Investor Relations, WatchGuard
Technologies, Inc., 206 Occidental Avenue South, Suite 200, Seattle,
Washington 98101, (206) 623-7612. Copies of the exhibits to the Form 10-K are
available for a nominal fee.
10
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WATCHGUARD TECHNOLOGIES, INC.
This proxy is solicited by WatchGuard's board of directors for the
Annual Meeting of Stockholders to be held on June 8, 2000
The undersigned hereby appoint(s) Christopher G. Slatt and Steven N. Moore,
and each of them, as proxies, with full power of substitution, to represent and
vote as designated all shares of common stock of WatchGuard Technologies, Inc.
held of record by the undersigned on April 24, 2000 at WatchGuard's Annual
Meeting of Stockholders, to be held at the W Hotel, Fourth and Seneca, Seattle,
Washington, at 9:00 a.m. on Thursday, June 8, 2000, with authority to vote on
the matter listed below and with discretionary authority as to any other matters
that may properly come before the meeting or any adjournments or postponements
of the meeting.
IMPORTANT--PLEASE DATE AND SIGN ON THE OTHER SIDE
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. FOLD AND DETACH HERE .
<PAGE>
The board of directors recommends a Please mark
vote "FOR" the nominees in Item 1. your vote [X]
as indicated
WITHHOLD
FOR the AUTHORITY to vote
Nominee(s) for the Nominee(s)
(1) ELECTION OF DIRECTORS:
ONE CLASS 1 DIRECTOR [ ] [ ]
Nominee: Stuart J. Ellman
TWO CLASS 2 DIRECTORS [ ] [ ]
Nominees: Andrew W. Verhalen
Charles P. Waite, Jr.
TWO CLASS 3 DIRECTORS [ ] [ ]
Nominees: Steven N. Moore
Christopher G. Slatt
WITHHOLD for the following only: (write the name(s) of the nominee(s) in
the space below)
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Unless otherwise directed, all votes will be apportioned equally among those
persons for whom authority is given to vote.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER IN
THE SPACE PROVIDED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" THE
NOMINEES IN ITEM 1.
[ ] I plan to attend the annual meeting.
Please sign exactly as your name appears on your share certificate(s).
Attorneys, trustees, executors and other fiduciaries acting in a representative
capacity should sign their names and give their titles. An authorized person
should sign on behalf of corporations, partnerships, associations, etc. and give
his or her title. If your shares are held by two or more persons, each person
must sign. Receipt of the notice of meeting and proxy statement is hereby
acknowledged.
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Signature(s)________________________________________ Date_____________________
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. FOLD AND DETACH HERE .
