<PAGE> 1
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
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 Section 240.14a-12
SAGE, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee 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> 2
[SAGE LOGO]
2460 NORTH FIRST STREET, SUITE 100, SAN JOSE, CA 95131-1023
TEL (408) 383 5300; FAX (408) 383 5310; HTTP://WWW.SAGEINC.COM
July 10, 1999
TO THE STOCKHOLDERS OF SAGE, INC.:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Sage, Inc. (the "Company") on August 31, 2000, at 10:00
a.m., local time, which will be held at 2480 North First Street, San Jose,
California.
Details of business to be conducted at the Annual Meeting are given in the
attached Notice of Annual Meeting and Proxy Statement.
After careful consideration, the Company's Board of Directors has
unanimously approved the proposals and recommends that you vote FOR each such
proposal.
We hope that you will attend the Annual Meeting. In any event, after
reading the Proxy Statement, please mark, date, sign and return the enclosed
proxy card in the accompanying reply envelope. If you decide to attend the
Annual Meeting, please notify the Secretary of the Company if you wish to vote
in person and your proxy will not be voted.
A copy of the Company's 2000 Annual Report to Stockholders has been mailed
concurrently herewith to all stockholders entitled to notice of and to vote at
the Annual Meeting.
Sincerely yours,
LOGO
Chandrashekar M. Reddy
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
SAGE, INC.
2460 NORTH FIRST STREET, SUITE 100
SAN JOSE, CALIFORNIA 95131-1023
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Sage, Inc (the "Company") will be
held at 2480 North First Street, San Jose, California, on Thursday, August 31,
2000, at 10:00 a.m. local time, to:
1. Elect five directors to serve until the next Annual Meeting and
until their successors have been elected and qualified;
2. Ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants for the Company for the fiscal year ending March 31,
2001; and
3. Transact any other business which may properly come before the
meeting and any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement that accompanies this Notice. Stockholders of record at the close of
business on July 12, 2000, will be entitled to notice of and to vote at the
Annual Meeting and at any continuation or adjournment thereof.
All stockholders are cordially invited and encouraged to attend the Annual
Meeting. In any event, to ensure your representation at the Annual Meeting,
please carefully read the accompanying Proxy Statement which describes the
matters to be voted on at the Annual Meeting and sign, date and return the
enclosed proxy card in the reply envelope provided. Should you receive more than
one proxy because your shares are registered in different names and addresses,
each proxy should be returned to assure that all your shares will be voted. If
you currently receive more than one mailing as a shareholder and wish to avoid
the cost and duplication of paperwork, you should send a photocopy of the
address labels you currently receive to the registrar with a request to
consolidate your holdings under one mailing name. The address of the registrar
is shown on the back cover of your annual report. If you attend the Annual
Meeting and vote by ballot, your proxy will be revoked automatically and only
your vote at the Annual Meeting will be counted. The prompt return of your proxy
card will assist us in preparing for the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
LOGO
Chandrashekar M. Reddy
Chairman of the Board and
Chief Executive Officer
San Jose, California
July 28, 2000
<PAGE> 4
PROXY STATEMENT
------------------------
FOR THE ANNUAL MEETING OF
STOCKHOLDERS OF SAGE, INC.
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Sage, Inc., a Delaware corporation ("Sage" or the
"Company"), of proxies for the Annual Meeting of Stockholders of the Company
(the "Annual Meeting") to be held at 10:00 a.m., local time, on August 31, 2000,
and any adjournment or postponement thereof. This Proxy Statement was first
mailed to stockholders on or about July 28, 2000.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders. Each proposal is described in more detail in a subsequent section
of this Proxy Statement.
VOTING
Only holders of record of the Common Stock of the Company ("Common Stock")
at the close of business on July 12, 2000, will be entitled to vote at the
Annual Meeting and any continuations or adjournments thereof. Each share
entitles the holder to one vote on each matter to come before the Annual
Meeting. On June 20, 2000, there were 14,185,610 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting, held by 429 stockholders
of record. The presence at the Annual Meeting of a majority, or 7,092,806 of
these shares of Common Stock of the Company, either in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. An
automated system administered by the Company's transfer agent will tabulate
votes cast by proxy and an employee of the transfer agent will tabulate votes
cast in person at the Annual Meeting.
If any stockholder is unable to attend the Annual Meeting, such stockholder
may vote by proxy. The enclosed proxy is solicited by the Sage Board of
Directors (the "Board of Directors" or the "Board"), and, when returned properly
completed, will be voted as you direct on your proxy card. In the discretion of
the proxy holder, shares represented by such proxies will be voted upon any
other business as may properly come before the Annual Meeting. Each outstanding
share of Common Stock on the Record Date is entitled to one vote on all matters.
Directors shall be elected by a plurality of the votes cast.
The ratification of the independent auditors of the Company for the current
year will require the affirmative vote of a majority of the shares of the
Company's Common Stock present or represented and entitled to vote at the Annual
Meeting. Because abstentions are treated as shares present or represented and
entitled to vote for the purposes of determining whether a matter has been
approved by the stockholders, abstentions have the same effect as negative
votes. Broker non-votes and shares as to which proxy authority has been withheld
with respect to any matter are not deemed to be entitled to vote for purposes of
determining whether stockholder approval of that matter has been obtained. With
respect to Proposal Numbers 1 and 2, which require the affirmative vote of a
majority of the shares present and entitled to vote, broker non-votes shall have
no effect.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by (i) delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or (ii) attending the Annual Meeting and voting in person.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may also be solicited by directors, officers and
employees of the Company who will not receive additional
<PAGE> 5
compensation for such solicitation. Brokerage firms and other custodians,
nominees and fiduciaries will be reimbursed by the Company for their reasonable
expenses incurred in sending proxy material to beneficial owners of the Common
Stock.
The Annual Report of the Company for the fiscal year ended March 31, 2000
has been mailed concurrently with the mailing of the Notice of Annual Meeting
and Proxy Statement to all stockholders entitled to notice of and to vote at the
Annual Meeting.
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, five directors are to be elected to serve until the
next Annual Meeting and until their successors are elected and qualified, or
until the death, resignation, or removal of such director. It is intended that
the proxies will be voted for the election of the five nominees named below as
directors unless authority to vote for any such nominee is withheld. The
nominees receiving the highest number of votes will be elected. In the
unanticipated event that a nominee is unable or declines to serve as a director
at the time of the Annual Meeting, the proxies will be voted for any nominee
named by the current Board of Directors to fill the vacancy. As of the date of
this Proxy Statement, the Board of Directors is not aware of any nominee who is
unable or will decline to serve as a Director. In the event that additional
persons are nominated, other than by the Board of Directors, for election as
directors, the proxy holders intend to vote all proxies received by them for the
nominees listed below and any additional Board of Directors' nominee as
described above. The following are the nominees of the Board of Directors for
election as directors at the date hereof:
<TABLE>
<CAPTION>
NAME TITLE AGE
---- ----- ---
<S> <C> <C>
Chandrashekar M. Reddy....................... Chairman of the Board, Chief 39
Executive Officer and Director
Michael A. Gumport........................... Director 47
N. Damodar Reddy............................. Director 61
Kenneth Tai.................................. Director 49
Glenn W. Marschel, Jr........................ Director 53
</TABLE>
CHANDRASHEKAR M. REDDY has served as President and Chief Executive Officer
since our inception. From January 1986 to January 1995, Mr. Reddy held several
design and program management positions at Intel Corporation. Mr. Reddy received
a BS in Electrical Engineering from the Indian Institute of Technology and an MS
in Electrical Engineering from the University of Wisconsin, Madison.
MICHAEL A. GUMPORT has served as a Director of Sage since October 1996.
Since January 2000, Mr. Gumport has served as Strategic Advisor to the CEO and
the board of directors of Clear Logic, Inc., a semiconductor company From
October 1998 to November 1999, Mr. Gumport was the Chief Financial Officer of
eMagin Corporation, an optoelectronics company where he also served as a
director from 1994 to 1999. From February 1990 to September 1999, Mr. Gumport
served as a Senior Vice President for Semiconductor Equity Research at Lehman
Brothers. Since January 2000 Mr. Gumport has served as a Director of
iShopNoMarkUp.com, an internet company. Mr. Gumport received a BA degree from
Amherst College and an MBA from Columbia University.
N. DAMODAR REDDY has served as a Director of Sage since October 1996. Since
February 1985, Mr. Reddy has served as the President, Chairman of the Board and
Chief Executive Officer of Alliance Semiconductor. From September 1983 to
February 1985, Mr. Reddy served as President and Chief Executive Officer of
Modular Semiconductor, Inc. Mr. Reddy received an MS in Electrical Engineering
from North Dakota State University and an MBA from the University of Santa
Clara. Mr. Reddy is also a director of eMagin Corporation.
KENNETH TAI has served as a Director of Sage since August 1999. Since April
1998 Mr. Tai has served as the Chairman of Digitimes Publications, Inc., and
since March 1996 Mr. Tai has also served as the Chairman of Investar Capital,
Inc. From April 1993 to December 1995, Mr. Tai served as the Vice Chairman of
UMAX
2
<PAGE> 6
(USA), Inc. Prior to joining UMAX, Mr. Tai was one of the co-founders of Acer
Group where he served as Vice President of Worldwide Sales and Marketing as well
as President of the Acer Group USA. Mr. Tai received a BS degree in Electrical
Engineering from National Chiao Tung University and an MBA from Tamkang
University.
GLENN W. MARSCHEL, JR. joined the Board of Sage in June 2000, pursuant to
the merger of Sage and Faroudja. He served as President, Chief Executive Officer
and Co-Chairman of the board of directors of Faroudja since joining Faroudja in
October 1998. He has served as Chairman of the board of directors of Additech,
Inc., a petrochemicals company, since October 1997. From December 1995 to August
1997 Mr. Marschel was President and Chief Executive Officer of Paging Network,
Inc., a telecommunications company, and from April 1995 to November 1995 he
served as Vice Chairman of First Financial Management Company, a company in the
credit card transaction processing business. Mr. Marschel is also a director of
Sabre Group Holdings, Inc and Travelocity.com.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
ABOVE NOMINEES AS DIRECTORS.
PROPOSAL 2:
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors appointed PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year ending March 31,
2000.
Although the appointment of PricewaterhouseCoopers LLP is not required to
be submitted to a vote of the stockholders, the Board of Directors believes it
appropriate as a matter of policy to request that the stockholders ratify the
appointment of the independent public accountants for the fiscal year ending
March 31, 2000. In the event a majority of the votes cast at the meeting are not
voted in favor of ratification, the adverse vote will be considered as a
direction to the Board of Directors of the Company to select other auditors for
the fiscal year ending March 31, 2001.
The Company anticipates that a representative of PricewaterhouseCoopers LLP
will be present at the Annual Meeting. The representative will be given the
opportunity to make a statement if he desires to do so, and is expected to be
available to respond to questions submitted either orally or in writing at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FISCAL YEAR ENDING MARCH 31, 2001.
3
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of June 20, 2000, by (i) each
person known by the Company to own beneficially more than five percent (5%) of
the outstanding Common Stock of the Company; (ii) each of the Company's
directors; (iii) the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company, determined for the year
ended March 31, 2000 (collectively, the "Named Executive Officers"); and (iv)
all directors and executive officers as a group.
AMOUNT AND NATURE OF SHARES OF COMMON STOCK BENEFICIALLY OWNED AS OF JUNE 20,
2000
<TABLE>
<CAPTION>
SHARES
SUBJECT TO
A RIGHT OF SHARES ISSUABLE
OUTSTANDING REPURCHASE PURSUANT TO APPROXIMATE
SHARES OF AS OF OPTIONS EXERCISABLE PERCENTAGE
COMMON MARCH 31, WITHIN 60 DAYS BENEFICIALLY
STOCK 2000(1) OF MARCH 31, 2000 OWNED(2)
----------- ---------- ------------------- ------------
<S> <C> <C> <C> <C>
5% STOCKHOLDERS:
Entities affiliated with Investar Group....... 829,622 -- 15,170 5.95%
DIRECTORS AND EXECUTIVE OFFICERS:
Chandrashekar M. Reddy...................... 896,964 -- -- 6.32%
Simon P. Westbrook.......................... 156,430 44,682 -- *
Arun Johary................................. 204,031 71,564 -- *
Vijay P. Desai.............................. 328,333 6,943 27,805 *
Pratap G. Reddy............................. 329,999 6,943 41,666 *
N. Damodar Reddy............................ 413,915 -- -- *
Michael A. Gumport.......................... 241,633 -- 31,667 *
Kenneth Tai................................. -- -- *
Glenn Marschel.............................. 24,681 -- 114,000 *
All executive officers and directors as a
group (8 persons)........................ 2,595,986 -- -- 18.30%
</TABLE>
---------------
* Percentage less than 5%
(1) Shares of common stock issued under a stock repurchase agreement under which
we retained the right to repurchase those shares at a per share purchase
price equal to the original per share purchase price if the holder's
employment is terminated.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
t o options currently exercisable or exercisable within 60 days of March 31,
2000 are deemed outstandoing for computing the percentage of the person
holding such options but are not deemed outstanding for computing the
percentage of any other person. On June 20, 2000, there were 14,185,610
shares of the Company's Common Stock outstanding.
4
<PAGE> 8
COMPENSATION OF DIRECTORS
AND CERTAIN EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company for the
fiscal years ended March 31, 1999 and 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Chandrashekar M. Reddy....................... 1999 $140,000 $123,278 -- $107,211(1)
President and Chief Executive Officer 2000 $175,000 $ 41,708 -- $ 14,789
Simon P. Westbrook........................... 1999 $125,000 $ 96,325 -- --
Chief Financial Officer, 2000 $140,000 $ 20,678 -- --
Secretary and Treasurer
Arun Johary.................................. 1999 $135,000 $153,227 $48,333 --
Vice President of Engineering 2000 $160,000 $ 27,150 -- --
and Chief Technical Officer
Vijay P. Desai............................... 1999 $125,000 -- $47,667 $ 11,844(1)
Vice President and General Manager, 2000 $135,000 $ 49,450 -- --
Systems Business Unit
Pratap G. Reddy(2)........................... 1999 $125,000 $ 70,352 $72,333 --
Vice President and General Manager 2000 $138,000 $111,068 -- --
IC Business Unit
</TABLE>
---------------
(1) Includes amounts paid in fiscal year 1999 as salary deferred in fiscal years
1996 and 1997.
STOCK OPTIONS
The following table contains information concerning stock option grants
made to each of the Named Executive Officers during the fiscal year ended March
31, 2000. No stock appreciation rights were granted during such fiscal year to
the Named Executive Officers.
OPTION GRANTS IN FISCAL YEAR 2000
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED TO OPTION TERM(4)
OPTIONS EMPLOYEES IN FISCAL EXERCISE EXPIRATION -----------------------
NAME GRANTED(1) 2000(2) PRICE(3) DATE 5% 10%
---- ---------- ------------------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Chandrashekar M. Reddy.... 26,667 5.6% $7.98 Aug 12, 2009 $133,830 $339,153
Simon P. Westbrook........ 20,000 4.1 7.98 Aug 12, 2009 100,372 254,361
Arun Johary............... 16,667 3.5 7.98 Aug 12, 2009 83,645 211,972
Vijay P. Desai............ 11,667 2.4 7.98 Aug 12, 2009 58,552 148,382
Pratap G. Reddy........... 13,333 2.8 7.98 Aug 12, 2009 66,913 169,570
</TABLE>
---------------
(1) Each of the options vested as to 25% of the shares on August 12, 2000 and
2.08% shall vest monthly over the following three years thereafter.
(2) Based on a total of 476,422 option shares granted to our employees under our
1997 Stock Plan during fiscal year 1999.
5
<PAGE> 9
(3) The exercise price was equal to the fair market value of our common stock as
valued by our board of directors on the date of grant. The exercise price
may be paid in cash or through a cashless exercise procedure involving a
same-day sale of the purchased shares.
(4) The potential realizable value is calculated based on the ten-year term of
the option at the time of grant. Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the Securities and Exchange
Commission and does not represent our prediction of our stock price
performance. The potential realizable value at 5% and 10% appreciation is
calculated by assuming that the exercise price on the date of grant
appreciates at the indicated rate for the entire term of the option and that
the option is exercised at the exercise price and sold on the last day of
its term at the appreciated price.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named
Executive Officers concerning their exercise of stock options during the fiscal
year ended March 31, 2000, and the unexercised options held by them as of March
31, 2000.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-
HELD AT MARCH 31, THE-MONEY OPTIONS HELD
2000(1) AT MARCH 31, 2000(2)
SHARES ACQUIRED VALUE -------------------- ------------------------
NAME ON EXERCISED(1) REALIZED($) VESTED UNVESTED VESTED UNVESTED
---- --------------- ----------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Chandrashekar M. Reddy........ -- $-- -- 26,667 $ -- $373,871
Simon P. Westbrook............ -- -- -- 20,000 -- 280,400
Arun Johary................... -- -- -- 48,333 -- 805,284
Vijay P. Desai................ -- -- 25,819 33,515 553,456 631,905
Pratap G. Reddy............... -- -- 38,999 46,667 835,983 901,476
</TABLE>
---------------
(1) The heading Vested refers to shares that are no longer subject to
repurchase. The heading Unvested refers to shares subject to repurchase as
of March 31, 2000.
(2) Based on the closing price of our common stock of $22.00 per share as of
March 31, 2000 less the exercise price payable for such shares.
EMPLOYMENT AND TERMINATION AGREEMENTS
None of he Named Executive Officers each have written employment agreements
with the Company and are employed at will.
BOARD MEETINGS AND COMMITTEES
During the year ended March 31, 2000, the Board of Directors held 13
meetings. During the same period, each director attended at least 75% of the
aggregate of (i) the total number of meetings of the Board held during the
period for which he was a director and (ii) the total number of meetings by all
Committees of the Board on which such director served held during the period for
which he was a director. There is no familial relationship among any of the
executive officers or directors of the Company.
The Company currently has an Audit Committee and a Compensation Committee
of the Board of Directors. The Audit Committee is primarily responsible for
approving the services performed by the Company's independent public accountants
and reviewing the Company's accounting practices and system of internal
accounting controls. The Audit Committee, which currently consists of N. Damodah
Reddy, Kenneth Tai and Michael Gumport, held two meetings during the year ended
March 31, 2000. The Compensation Committee is responsible for recommending and
reviewing the compensation of the Company's executive officers and for
administering the Company's incentive plans. This committee, which currently
consists of Chandrashekar M. Reddy, Kenneth Tai and N. Damodar Reddy held one
meeting during the year ended March 31, 2000.
6
<PAGE> 10
COMPENSATION OF DIRECTORS
During the year ended March 31, 2000, none of the non-employee directors
received any cash compensation for their services. All directors have been
granted stock options in recognition of their services, and receive
reimbursement of reasonable travel expenses incurred in attending Board
meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Chandrashekar M.
Reddy, Kenneth Tai and N. Damodar Reddy. Chandrashekar M. Reddy also serves as
our President and Chief Executive Officer. Prior to the establishment of the
compensation committee on March 18, 1999, the board of directors as a whole made
all decisions relating to executive compensation. None of our executive officers
serves as a member of the board of directors or the compensation committee of
any entity that has one or more executive officers serving as a member of our
board of directors or compensation committee. There is no familial relationship
between Chandrashekar M. Reddy, N. Damodar Reddy or Pratap G. Reddy.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has the authority and responsibility to approve
the overall compensation strategy for the Company, administer the Company's
annual and long-term compensation plans, and review and make recommendations to
the Board of Directors with respect to the Company's executive compensation. The
Compensation Committee is comprised of independent, non-employee Board members.
General Compensation Policy. The Compensation Committee's overall policy is
to offer the Company's executive officers competitive compensation
opportunities. The Compensation Committee utilizes competitive data to develop
compensation recommendations competitive with other companies in the
semiconductor industry. The Compensation Committee's objectives are to (i)
create a performance oriented environment with variable compensation based upon
the achievement of annual and longer-term business results; (ii) focus
management on maximizing stockholder value through stock-based compensation
aligned to stockholders' return; and (iii) provide compensation opportunities
dependent upon the Company's performance relative to its competitors and changes
in its own performance over time. The Compensation Committee is authorized (i)
to establish and maintain compensation guidelines for salaries and merit pay
increases throughout the Company; and (ii) to make specific recommendations to
the Board of Directors concerning the compensation of executive officers of the
Company, including the Chief Executive Officer. The Compensation Committee also
administers the Company's stock option plans and the Company's retirement and
savings plan.
Factors. The primary factors considered in establishing the components of
each executive officer's compensation package for the fiscal year ended March
31, 2000 are summarized below. The Committee may in its discretion apply
entirely different factors, such as different measures of financial performance,
for future fiscal years.
- BASE SALARY. The base salary for each officer is set on the basis of
personal performance, the salary levels in effect for comparable
positions with other companies in the industry, and internal
comparability considerations. Generally, Company performance and
profitability are not taken into account in establishing base salary.
- ANNUAL INCENTIVE COMPENSATION. For the fiscal year ended March 31, 2000,
specific financial and organizational objectives, including earnings per
share, revenue and orders targets, were established as the basis for the
incentive bonuses to be paid to the executive officers of the Company.
- LONG-TERM STOCK-BASED INCENTIVE COMPENSATION. Generally, the Compensation
Committee awards stock options to each of the Company's executive
officers following the initial hiring and from time to time thereafter.
The option grants are designed to align the interests of the executive
officer with those of the stockholders and to provide each individual
with a significant incentive to manage the Company from the perspective
of an owner with an equity stake in the business. In furtherance of this
policy, the Company has implemented the 1997 Stock Plan to serve as a
comprehensive equity incentive program
7
<PAGE> 11
for the Company's executive officers and other employees. Generally, the
size of the option grant made to each executive officer is set at a level
which the Compensation Committee deems appropriate to create a meaningful
opportunity for stock ownership based upon the individual's current
position with the Company, but the Compensation Committee also takes into
account comparable awards to individuals in similar positions in the
industry, as reflected in external surveys, the individual's potential
for future responsibility and promotion, the individual's performance in
recent periods and the number of unvested options held by the individual
at the time of the grant. The relative weight given to each of these
factors will vary from individual to individual in the Committee's
discretion. Each of the Named Executive Officers, Chandrashekar M. Reddy,
Simon Westbrook, Arun Johary, Vijay Desai, and Pratap G. Reddy, received
stock option grants in fiscal year 2000.
Each grant allows the executive officer to acquire shares of the Company's
Common Stock at a fixed price per share (the market price on the grant date)
over a specified period of time (up to 10 years). The option will generally
become exercisable in installments over a four year period, contingent upon the
executive officer's continued employment with the Company. Accordingly, the
option will provide a return to the executive officer only if he or she remains
in the Company's employ, and then only if the market price of the Company's
Common Stock appreciates over the option term.
CEO Compensation. The Compensation Committee established Chandrashekar M.
Reddy's base salary with the objective of maintaining the competitiveness of
Chandrashekar M. Reddy's base salary with salaries paid to similarly situated
chief executive officers. With respect to Chandrashekar M. Reddy's base salary,
it was the Compensation Committee's intent to provide him with a level of
stability and certainty each year and not have this particular component of
compensation affected to any significant degree by Company performance factors.
Chandrashekar M. Reddy's base salary for the 2000 fiscal year was set by
reference to other chief executive officers in the industry. Chandrashekar M.
Reddy received additional compensation from the Company in the 2000 fiscal year
in the form of a performance bonus of $41,708 and deferred salary of $14,789. In
addition, Chandrashekar M. Reddy received a grant of 26,667 stock options in the
2000 fiscal year.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of the Company's executive officers. The limitation
applies only to compensation which is not considered to be performance-based.
The non-performance-based compensation paid to the Company's executive officers
in fiscal year 2000 did not exceed the $1 million limit per officer. As a result
of this limitation and certain other administrative provisions of the 1997 Stock
Plan, any compensation deemed paid to a covered executive officer in connection
with the exercise of stock options or stock appreciation rights granted under
the 1997 Stock Plan with an exercise price equal to the market price of the
shares covered by the option or stock appreciation right on the grant date will
qualify as performance-based compensation. The Compensation Committee does not
expect that the compensation to be paid to the Company's covered executive
officers for the 2001 fiscal year will exceed the $1 million limit per officer.
The Compensation Committee is aware of the limitations imposed by Section
162(m), and the exemptions available therefrom, and will address the issue of
deductibility when and if circumstances warrant and may use such exemptions.
Submitted by the Compensation Committee of the Company's Board of
Directors:
Chandrashekar M. Reddy
Kenneth Tai
N. Damodar Reddy
8
<PAGE> 12
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage changes in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return on the Dow Jones Equity Market Index and the Nasdaq
Electronic Components Index. The comparison assumes $100 was invested at the
time of the initial public offering of the Company's Common Stock and in each of
the foregoing indices and assumes reinvestment of any dividends.
COMPARISON OF 4 MONTH CUMULATIVE TOTAL RETURN(*)
AMONG SAGE, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
[GRAPH]
<TABLE>
<CAPTION>
NASDAQ COMPUTER & NASDAQ ELECTRONIC
SAGE, INC. DATA PROCESSING COMPONENTS
---------- ----------------- -----------------
<S> <C> <C> <C>
11/19/99 100.00 100.00 100.00
3/31/00 183.33 143.58 180.06
</TABLE>
(*) $100 invested on 11/11/99 in stock or index -- including reinvestment
of dividends. Fiscal year ending March 31.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings made by
the Company under those statutes, the preceding Compensation Committee Report on
Executive Compensation and the Company Stock Performance Graph will not be
incorporated by reference into any of those prior filings; nor will such report
or graph be incorporated into any future filings made by the Company under those
statutes.
9
<PAGE> 13
OTHER MATTERS
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
beneficial ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent (10%) stockholders are required
by Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. To the Company's knowledge, based
solely on review of the copies of such reports furnished to the Company and
written representations that no other reports were required, during the fiscal
year ended March 31, 2000, all of the Company's officers, directors and greater
than ten percent beneficial owners complied with applicable Section 16(a) filing
requirements during the 1999 fiscal year.
STOCKHOLDER PROPOSALS
The deadline for stockholder proposals intended to be considered for
inclusion in the Company's Proxy Statement for next year's Annual Meeting of
Stockholders is expected to be December 31, 2000. Such proposals may be included
in next year's Proxy Statement if they comply with certain rules and regulations
promulgated by the Securities and Exchange Commission.
OTHER BUSINESS
The Board of Directors is not aware of any other matter which may be
presented for action at the Annual Meeting. Should any other matter requiring a
vote of the stockholders arise, the enclosed proxy card gives authority to the
persons listed on the card to vote at their discretion in the best interest of
the Company.
BY ORDER OF THE BOARD OF DIRECTORS
LOGO
Chandrashekar M. Reddy
Chairman of the Board and
Chief Executive Officer
San Jose, California
July 28, 2000
10
<PAGE> 14
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF SAGE, INC.
FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 31, 2000
The undersigned stockholder of SAGE, INC., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement, each dated July 28, 2000, and the 2000 Annual Report to
Stockholders, and hereby appoints Simon P. Westbrook, Arun Johary and Vijay P.
Desai, or any one of them, proxies, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
2000 Annual Meeting of Stockholders of SAGE, INC. to be held on August 31, 2000
at 10:00 a.m., local time, at 2480 North First Street, San Jose, California,
and at any adjournment or adjournments thereof, and to vote all shares of
Common Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION
IS INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS OF SAGE, INC., AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 15
PLEASE MARK
YOUR VOTE AS
INDICATED IN
THE EXAMPLE. [X]
FOR ALL NOMINEES WITHHOLD
LISTED BELOW AUTHORITY
(EXCEPT AS TO VOTE FOR ALL
INDICATED) NOMINEES LISTED BELOW
1. ELECTION OF DIRECTORS [ ] [ ]
If you wish to withhold authority
to vote for any individual nominee,
strike a line through that nominee's
name in the list below.
Chandrashekar M. Reddy
Michael A. Gumport
N. Damodar Reddy
Kenneth Tai
Glenn Marschel
FOR AGAINST ABSTAIN
2. PROPOSAL TO RATIFY THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE [ ] [ ] [ ]
INDEPENDENT PUBLIC ACCOUNTANTS OF
SAGE, INC. FOR FISCAL 2001.
Signature(s)_______________________________ DATED: _______________, 2000
This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
FOLD AND DETACH HERE
