<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
INET TECHNOLOGIES, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
INET TECHNOLOGIES, INC.
1255 WEST 15TH STREET, SUITE 600
PLANO, TEXAS 75075
April 17, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 annual meeting of stockholders
of Inet Technologies, Inc., which will be held at Plano Centre, 2000 East Spring
Creek Parkway, Plano, Texas on Tuesday, May 16, 2000 at 9:00 a.m. (Central
Time).
Details of the business to be conducted at this meeting are given in the
attached Notice of Annual Meeting of Stockholders and proxy statement.
After careful consideration, our Board of Directors has approved the
proposal set forth in the proxy statement and recommends that you vote for such
proposal.
In order for us to have an efficient meeting, please sign, date and return
the enclosed proxy promptly in the accompanying reply envelope. If you are able
to attend this meeting and wish to change your proxy vote, you may do so simply
by revoking your proxy and voting in person at the annual meeting.
We look forward to seeing you at the annual meeting.
Sincerely,
/s/ Elie S. Akilian
Elie S. Akilian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THIS MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
INET TECHNOLOGIES, INC.
1255 WEST 15TH STREET, SUITE 600
PLANO, TEXAS 75075
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2000
---------------------
To the Stockholders of Inet Technologies, Inc.:
The 2000 annual meeting of stockholders of Inet Technologies, Inc. will be
held at Plano Centre, 2000 East Spring Creek Parkway, Plano, Texas on Tuesday,
May 16, 2000 at 9:00 a.m. (Central Time) for the following purposes:
1. To elect two directors to serve until the annual meeting of stockholders
in 2001, two directors to serve until the annual meeting of stockholders
in 2002 and two directors to serve until the annual meeting of
stockholders in 2003, or in each case until their successors have been
elected and qualified.
2. To act upon such other business as may properly come before this meeting
or any adjournments thereof.
Only stockholders of record at the close of business on April 3, 2000 are
entitled to notice of and to vote at this meeting. A list of stockholders
entitled to vote at this meeting will be available for inspection at our
offices. Whether or not you plan to attend this meeting in person, please sign,
date and return the enclosed proxy card in the reply envelope provided. If you
attend this meeting and revoke your proxy by written notice to the Secretary of
the meeting, you may vote by ballot and only your vote at this meeting will be
counted. The prompt return of your proxy card will assist us in preparing for
this meeting.
By Order of the Board of Directors,
/s/ Mark A. Weinzierl
Mark A. Weinzierl
SECRETARY
April 17, 2000
<PAGE>
INET TECHNOLOGIES, INC.
1255 WEST 15TH STREET, SUITE 600
PLANO, TEXAS 75075
------------------------
PROXY STATEMENT
---------------------
These proxy materials and the enclosed proxy card are being mailed in
connection with the solicitation of proxies by the Board of Directors of Inet
Technologies, Inc., a Delaware corporation, for the 2000 Annual Meeting of
Stockholders to be held on Tuesday, May 16, 2000 at 9:00 a.m. (Central Time) and
at any adjournment or postponement thereof. These proxy materials were first
mailed to stockholders of record beginning on or about April 17, 2000.
PURPOSE OF MEETING
The specific proposal to be considered and acted upon at this meeting is
summarized in the accompanying Notice of Annual Meeting of Stockholders. The
proposal is described in more detail in this proxy statement.
VOTING RIGHTS AND SOLICITATION
Any stockholder executing a proxy pursuant to this solicitation may revoke
it at any time prior to its exercise by delivering written notice of such
revocation to our Secretary before this meeting or by properly executing and
delivering a proxy bearing a later date. Proxies also may be revoked by any
stockholder present at this meeting who elects to vote his, her or its shares in
person. The cost of soliciting proxies will be paid by us and may include
reimbursement paid to brokerage firms and others for their expense in forwarding
solicitation materials as well as the expense of preparing, assembling,
photocopying and mailing this proxy statement. Solicitation will be made
primarily through the use of the mail; however, our regular employees may,
without additional remuneration, solicit proxies personally by telephone or
Internet e-mail.
Our annual report to stockholders for the year ended December 31, 1999 has
been mailed concurrently with the mailing of the Notice of Annual Meeting of
Stockholders and this proxy statement to all stockholders entitled to notice of,
and to vote at, this meeting. The annual report is not incorporated into this
proxy statement and is not considered proxy solicitation material. We have fixed
April 3, 2000 as the record date for determining those stockholders who are
entitled to notice of, and to vote at, this meeting. At the close of business on
the record date, we had 46,080,659 outstanding shares of our common stock. If a
choice as to the matters coming before this meeting has been specified by a
stockholder on the proxy, the shares will be voted accordingly. If no choice is
specified on the returned proxy, the shares will be voted in favor of the
approval of the proposal described in the Notice of Annual Meeting and in this
proxy statement.
The presence, in person or by proxy, of the holders of a majority of the
shares of our outstanding common stock entitled to vote is necessary to
constitute a quorum at this meeting. Each of our stockholders is entitled to one
vote for each share of our common stock held by that stockholder as of the
record date. Cumulative voting is not permitted in the election of directors.
Abstentions and broker non-votes (I.E., the submission of a proxy by a broker or
nominee specifically indicating the lack of discretionary authority to vote on
the matter) are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. The vote of a plurality of the shares of
our common stock present
1
<PAGE>
in person or represented by proxy at this meeting and entitled to vote on the
election of directors is necessary for the election of a director. Abstentions
and broker non-votes have no effect on the determination of plurality, except to
the extent that they affect the total votes received by any particular
candidate.
As of February 29, 2000, our directors and executive officers beneficially
owned an aggregate of approximately 37.4 million shares of our common stock, not
including shares of common stock issuable upon exercise of outstanding stock
options, constituting approximately 81% of the shares of our common stock
outstanding. It is expected that such directors and executive officers will vote
or direct the vote of all shares of our common stock held or owned by such
persons, or over which such persons have voting control, in favor of the
proposal described in this proxy statement. Nonetheless, the approval of the
proposal is not assured. See "Principal Stockholders."
PROPOSAL 1
ELECTION OF DIRECTORS
We currently have the following six directors serving on our Board:
James R. Adams, Elie S. Akilian, Grant A. Dove, William H. Mina, Samuel S.
Simonian and Mark A. Weinzierl. At the Annual Meeting, the directors shall be
divided into three classes as nearly equal in size as is practicable, designated
Class I, Class II and Class III. The term of office of the initial Class I
directors shall expire at the 2001 annual meeting of stockholders, the term of
office of the initial Class II directors shall expire at the 2002 annual meeting
of stockholders, and the term of office of the initial Class III directors shall
expire at the 2003 annual meeting of stockholders, or in each case until their
successors have been elected and qualified. At each annual meeting of
stockholders held after this meeting, directors to replace those of a class
whose terms expire at such annual meeting shall be elected to hold office until
the third succeeding annual meeting or until their respective successors have
been elected and qualified.
VOTE REQUIRED
A board of six directors is to be elected at this meeting to hold office
until their respective term has expired or until their successors are elected
and qualified. The two nominees within each Class receiving the greatest number
of votes of the shares present in person or represented by proxy at this meeting
and entitled to vote on the election of directors shall be elected to the Board
of Directors, even if any nominee receives the vote of less than a majority of
the shares.
Unless otherwise instructed, the persons named in the accompanying proxy
card will vote the proxies received by them for each of the Board nominees named
below, each of whom is presently a director of the Company. If any nominee of
the Board is unable or declines to serve as a director at the time of the
meeting, the proxies will be voted for any nominee who is designated by the
present Board of Directors to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINEES LISTED HEREIN, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
CLASS I NOMINEES
<TABLE>
<CAPTION>
NAME DIRECTOR SINCE AGE POSITION
- ------------------------------------------------- -------------- -------- --------
<S> <C> <C> <C>
James R. Adams................................... 1999 60 Director
Grant A. Dove.................................... 1999 71 Director
</TABLE>
2
<PAGE>
MR. ADAMS has served as a director of Inet since June 1999. Mr. Adams has
served as a director of Texas Instruments Incorporated since 1989 and served as
its Chairman of the Board from 1996 to 1998. He previously served as President
of SBC Communications, Inc. from 1992 to 1995 and as President of Southwestern
Bell Telephone Company from 1988 to 1992. Mr. Adams holds an M.B.A. from the
University of Texas at Austin and a B.S. in Math and Physics from Texas A&M
University.
MR. DOVE has served as a director of Inet since June 1999. Mr. Dove has
served as Managing Partner of Technology Strategies & Alliances, or TS&A, since
1991 and currently serves as a director of the following publicly held
companies: MediaOne Group, Inc., a provider of telecommunications and cable
television, Cooper Cameron Corporation, an oilfield services company, and
InterVoice Brite, Inc., a telecommunications equipment and software sales
company. Prior to joining TS&A, Mr. Dove served as Chairman and Chief Executive
Officer of the Microelectronics and Computer Technology Corporation. Mr. Dove
holds a B.S. in Electrical Engineering from Virginia Polytechnic Institute and
State University.
CLASS II NOMINEES
<TABLE>
<CAPTION>
NAME DIRECTOR SINCE AGE POSITION
- --------------------------- -------------- -------- ---------------------------------------
<S> <C> <C> <C>
Mark A. Weinzierl.......... 1989 36 Director and Secretary
William H. Mina............ 1996 54 Senior Vice President of Administration
and Legal Affairs, and Director
</TABLE>
MR. WEINZIERL co-founded Inet in 1989, and has served as a director and as
Secretary since such time. Since February 2000, he has served as President and
Chief Executive Officer of Nextcell, Inc., a provider of wireless data modems.
He served as Executive Vice President of Inet from March 1990 to February 2000.
Mr. Weinzierl received his B.S. in Electrical Engineering from Iowa State
University and attended the University of Texas at Dallas M.B.A. program. Prior
to co-founding Inet, Mr. Weinzierl worked from 1986 to 1989 at Electrospace
Systems, Inc. in its switching department.
MR. MINA has served as Senior Vice President of Administration and Legal
Affairs since February 2000. He served as Senior Vice President of Finance &
Administration from April 1999 to February 2000. He previously served as our
Senior Vice President and Chief Financial Officer from February 1997 to April
1999. He has been a director of Inet since June 1996. From 1985 to February
1997, Mr. Mina was employed by Wafra Investment Advisory Group Inc., or Wafra, a
New York-based investment banking firm. While at Wafra, he served in various
positions, including Senior Vice President and Chief Financial Officer.
Mr. Mina holds an M.B.A. from Southern Methodist University and a B.A. in
Business Administration from Dallas Baptist University. Mr. Mina is married to
Mr. Simonian's aunt.
CLASS III NOMINEES
<TABLE>
<CAPTION>
NAME DIRECTOR SINCE AGE POSITION
- ---------------------------- -------------- -------- ----------------------------------
<S> <C> <C> <C>
Elie S. Akilian............. 1989 43 President, Chief Executive Officer
and Director
Samuel S. Simonian.......... 1989 44 Chairman of the Board
</TABLE>
MR. AKILIAN co-founded Inet in 1989, has served as a director since such
time and has served as President and Chief Executive Officer since April 1999.
He previously served as Executive Vice President responsible for sales and
marketing from March 1989 to April 1999. Prior to co-founding Inet, Mr. Akilian
worked from 1980 to 1989 at Electrospace Systems, Inc. in its switching
department. Mr. Akilian received his B.S. in Electrical Engineering from the
University of Texas at Arlington.
3
<PAGE>
MR. SIMONIAN co-founded Inet in 1989, has served as a director since such
time and has served as Chairman of the Board since April 1999. He previously
served as President from 1989 to April 1999, and as Chief Executive Officer from
March 1994 to April 1999. Prior to co-founding Inet, Mr. Simonian worked from
1979 to 1989 at Electrospace Systems, Inc. in its antenna control systems
division and its switching department. Mr. Simonian holds a B.S. in Electrical
Engineering from the University of Texas at Arlington. Mr. Simonian is the
nephew of Mr. Mina's spouse.
DIRECTOR COMPENSATION AND INDEMNIFICATION ARRANGEMENTS
Directors who are not our employees or employees of any of our subsidiaries,
other than Mr. Weinzierl, receive $5,000 per quarter for services as members of
our Board of Directors and committees thereof. In addition, all directors are
reimbursed for out-of-pocket expenses incurred in attending meetings of our
Board and committees on which they serve. Each individual who first joins the
Board will receive an option grant for 20,000 shares of common stock at the time
of his or her commencement of Board service, provided such individual has not
otherwise previously been employed by us. As a result of their appointment to
the Board, on June 15, 1999, Messrs. Adams and Dove received a grant of 20,000
non-qualified stock options at an exercise price of $18.06. In addition, at each
Annual Stockholders Meeting, beginning with the 2000 Annual Meeting, each
individual who is to continue to serve as a non-employee Board member, other
than Mr. Weinzierl, will receive an automatic grant of 10,000 non-qualified
stock options under the 1998 Stock Option/Stock Issuance Plan, or the 1998 Plan.
Each option will have an exercise price per share equal to 100% of the fair
market value per share of our common stock on the option grant date and a
maximum term of ten years measured from the option grant date. Each option will
be immediately exercisable for all the option shares, but any purchased shares
will be subject to repurchase by us, at the exercise price paid per share,
should the optionee's service as a non-employee Board member cease prior to
vesting in the shares. The 20,000 share grant will vest, and our repurchase
rights will lapse, in three equal annual installments over the director's period
of Board service, with the first installment to vest one year from the option
grant date. Each additional 10,000-share grant will vest upon the director's
completion of one year of Board service measured from the grant date.
We maintain directors' and officers' liability insurance and our Bylaws
provide for mandatory indemnification of directors and officers to the fullest
extent permitted by Delaware law. We have entered into indemnification
agreements with all of our directors and executive officers. In addition, our
Certificate of Incorporation limits the liability of our directors to us and our
stockholders for breaches of the directors' fiduciary duties to the fullest
extent permitted by Delaware law.
BOARD MEETINGS AND COMMITTEES
Our Board of Directors met three times during 1999, and acted a number of
times by written consent. Overall attendance at board and committee meetings was
100%.
We have a standing Compensation Committee currently composed of
Messrs. Adams and Dove. The Compensation Committee met one time in 1999. The
Compensation Committee has the responsibility for establishing the compensation
payable to our Chief Executive Officer and is responsible for establishing
compensations payable to our other executive officers based on recommendations
made by the Chief Executive Officer. The Compensation Committee also is
responsible for the overall administration of our employee benefit plans,
including our employee stock plans. We also have a standing Audit Committee
composed of Messrs. Adams and Dove. The Audit Committee met one time in 1999.
The Audit Committee assists in the selection of our independent auditors and is
responsible for designating those services to be performed by and maintaining
effective communication with the auditors. We do not have a standing Nominating
Committee or any other committee performing similar functions, and these matters
are considered at meetings of the full Board of Directors.
4
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock as of February 29, 2000 by (1) each person who is
known by us to own beneficially more than five percent of our common stock, (2)
each of our directors, (3) each of our executive officers named in the Summary
Compensation Table below, and (4) all executive officers and directors as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OWNERSHIP(1) CLASS
- ---------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Elie S. Akilian (2)....................................... 12,634,000 (4) 27.4%
Samuel S. Simonian (2).................................... 12,498,000 (5) 27.1%
Mark A. Weinzierl (3)..................................... 12,132,300 26.3%
William H. Mina........................................... 116,200 (6) *
James R. Adams............................................ 24,500 (7) *
Grant A. Dove............................................. 22,400 (8) *
All executive officers and directors as a group
(ten persons)........................................... 37,558,578 (9) 81.3%
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) Beneficial ownership is calculated in accordance with the rules of the
Securities and Exchange Commission under Rule 13d-3(d)(i). Percentage of
beneficial ownership is based on 46,048,910 shares of our common stock
outstanding as of February 29, 2000. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of our common stock subject to options held by that person that are
currently exercisable or will become exercisable within 60 days following
February 29, 2000 are deemed outstanding. However, these shares are not
deemed outstanding for the purpose of computing the percentage ownership of
any other person. Unless otherwise indicated in the footnotes to this table,
the persons and entities named in the table have sole voting and sole
investment power with respect to all shares beneficially owned, subject to
community property laws where applicable.
(2) The address for such stockholder is 1255 West 15th Street, Suite 600, Plano,
Texas 75075.
(3) The address for such stockholder is 661 East 18th Street, Plano, Texas
75074.
(4) Includes 178,600 shares held by such stockholder's minor children.
(5) Includes 267,900 shares held by such stockholder's minor children.
(6) Represents 50,000 shares subject to exercisable options and 66,200 shares
held jointly by such stockholder and his spouse.
(7) Includes 20,000 shares subject to exercisable options, 400 shares held by
the James R. Adams Family Limited Partnership (of which Mr. Adams is a
general partner) and 100 shares held by Mr. Adam's son.
(8) Includes 20,000 shares subject to exercisable options.
(9) Includes 132,500 shares subject to exercisable options.
5
<PAGE>
EXECUTIVE COMPENSATION
DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers and directors are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ -------- --------------------------------------------------
<S> <C> <C>
Elie S. Akilian......... 43 President, Chief Executive Officer and Director
Samuel S. Simonian...... 44 Chairman of the Board
William H. Mina......... 54 Senior Vice President of Administration and Legal
Affairs, and Director
Pierce E. Brockman...... 36 Senior Vice President and Chief Technology Officer
Jim W. Oliphant......... 57 Senior Vice President of Operations
Luis J. Pajares......... 39 Senior Vice President of Sales and Marketing
Jeffrey A. Kupp......... 37 Vice President and Chief Financial Officer
Mark A. Weinzierl....... 36 Director
James R. Adams.......... 60 Director
Grant A. Dove........... 71 Director
</TABLE>
Biographical information for Messrs. Akilian, Simonian, Mina, Weinzierl,
Adams and Dove is set forth under Proposal 1--"Election of Directors".
MR. BROCKMAN has served as Senior Vice President and Chief Technology
Officer since April 1999. He served as Vice President of Software Development
from January 1998 to April 1999. He previously served as Director of Software
Development from March 1995 to 1998, and has held other various positions since
joining Inet in September 1990. Mr. Brockman holds a B.S. in Computer Science
from Texas Tech University and a M.S. in Computer Science from The University of
Texas at Dallas.
MR. OLIPHANT has served as Senior Vice President of Operations since
May 1999. Prior to joining Inet, Mr. Oliphant was employed by Texas Instruments,
or TI, for more than 30 years. While at TI, he served in various positions,
including Manager of the Microelectronics Technology Center from 1993 through
July 1997, at which time the Microelectronics Technology Center was sold to
Raytheon. After the sale, Mr. Oliphant continued employment in this capacity
until he joined Inet in 1999. Mr. Oliphant holds a B.S. in Electrical
Engineering from the University of Texas at Arlington and a M.S. in Electrical
Engineering from Southern Methodist University.
MR. PAJARES has served as Senior Vice President of Sales and Marketing since
September 1999. From 1994 to September 1999, Mr. Pajares was employed by
DSC/Alcatel, a manufacturer of telecommunications equipment. While at
DSC/Alcatel, he served in various positions, including Vice President--
International Business and Vice President--Wireless Networks. Mr. Pajares holds
a B.A. from the University of Florida and an M.B.A. from The University of
Dallas.
MR. KUPP has served as Vice President and Chief Financial Officer since
February 2000. From November 1997 to February 2000, Mr. Kupp was employed by IEX
Corporation (a Tekelec Company), a provider of telecommunications software
products, as Vice President of Finance and Chief Financial Officer. From
January 1997 to November 1997, Mr. Kupp was employed by CS Wireless Systems,
Inc., a wireless video and internet access provider, as Senior Vice President
and Chief Financial Officer. From 1995 to 1997, Mr. Kupp worked as Director in
the Corporate Finance department of DSC Communications Corporation which is now
Alcatel. Mr. Kupp holds a B.A. in Accounting and Computer Science from Asbury
College and an M.B.A. from The Johnson Graduate School of Management at Cornell
University. Mr. Kupp is a Certified Public Accountant.
6
<PAGE>
EMPLOYMENT CONTRACTS; CHANGE-IN-CONTROL AND INDEMNIFICATION ARRANGEMENTS
The executive officers serve at the discretion of our Board of Directors. We
presently do not have an employment contract in effect with any of the executive
officers other than Messrs. Kupp and Pajares. We have entered into
indemnification agreements with all of our executive officers. We maintain
directors' and officers' liability insurance and our Bylaws provide for
mandatory indemnification of officers to the fullest extent permitted by
Delaware law.
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning the
compensation earned by our current Chief Executive Officer, our former Chief
Executive Officer and other executive officers whose salary and bonus exceeded
$100,000 for services rendered in all capacities to us and our subsidiaries
during 1998 and 1999. These individuals are referred to as the Named Officers.
No individual resigned during the last fiscal year who would otherwise have been
required to have been included in the table.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
------------------- ------------
OPTIONS ALL OTHER
NAME AND POSITION(S) YEAR SALARY BONUS (#OF SHARES) COMPENSATION
- ----------------------------------------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Elie S. Akilian (2) ..................... 1999 $204,000 $460,250 -- $ 674 (3)
President, Chief Executive 1998 204,000 425,250 -- 204 (3)
Officer and Director
Samuel S. Simonian (2) .................. 1999 $204,000 $335,250 -- $ 674 (3)
Chairman of the Board 1998 204,000 455,250 -- 204 (3)
Mark A. Weinzierl (6) ................... 1999 $204,000 $185,250 -- $ 674 (3)
Executive Vice President, Secretary and 1998 204,000 420,250 -- 204 (3)
Director
William H. Mina ......................... 1999 $192,075 $100,250 -- $17,532 (4)
Senior Vice President, Administration & 1998 180,000 160,250 65,000 29,828 (5)
Legal Affairs, and Director
</TABLE>
- ------------------------
(1) Excludes certain perquisites and other benefits which did not exceed 10% of
any officers' total salary and bonus.
(2) Mr. Simonian served as Chief Executive Officer until April 1999.
(3) Represents life and disability insurance premiums paid on behalf of such
officer.
(4) Consists of life and disability insurance premiums paid on behalf of such
officer as well as $16,858 of contributions by us to such officer's
participation in our 401(k) plan.
(5) Consists of life and disability insurance premiums paid on behalf of such
officer as well as $29,624 of contributions by us to such officer's
participation in our 401(k) plan.
(6) Effective February 2000, Mr. Weinzierl resigned as Executive Vice President
but continues to serve as Secretary and a member of our Board of Directors.
OPTION GRANTS IN 1999
No stock options or stock appreciation rights were granted to any of the
Named Officers during 1999.
7
<PAGE>
AGGREGATE OPTION EXERCISES IN 1999 AND DECEMBER 31, 1999 OPTION VALUES
No options were exercised by the Named Officers during 1999. The following
table sets forth certain information concerning option holdings at December 31,
1999 by each of the Named Officers. No SARs were exercised during 1999 and none
were outstanding at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
1999(1) DECEMBER 31, 1999(1)(2)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Elie S. Akilian............... -- -- -- --
Samuel S. Simonian............ -- -- -- --
Mark A. Weinzierl............. -- -- -- --
William H. Mina............... 110,000 65,000 $7,559,750 $4,268,875
</TABLE>
- ------------------------
(1) "Exercisable" refers to those options which were both exercisable and
vested, while "Unexercisable" refers to those options which were unvested.
(2) Value is determined by subtracting the exercise price from the fair market
value of our common stock at December 31, 1999 ($69.88 per share based upon
the closing sale price of our common stock on the Nasdaq National Market on
such date) and multiplying by the number of shares underlying the options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee was formed in July 1999. Messrs. Adams and Dove
have served on the Compensation Committee since that time. Neither of these
persons is an officer or employee, or former officer or employee, of us or any
of our subsidiaries. No interlocking relationship exists between the members of
our Board of Directors or Compensation Committee and the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
REPORT ON EXECUTIVE COMPENSATION
During 1999, compensation decisions concerning our executive officers were
made by the Compensation Committee of the Board of Directors, which is composed
of the non-employee directors listed below. The following report describes the
procedures employed by the Compensation Committee in formulating the
compensation policy for our executive officers during 1999.
It is the duty of the Compensation Committee to review and determine the
salaries and bonuses of our executive officers, including the Chief Executive
Officer, and to establish the general compensation policies for such
individuals. The Compensation Committee believes that the compensation policies
for our executive officers should reflect our performance and the value created
for our stockholders. In addition, the compensation policies should support our
short-term and long-term strategic goals and values and should reward individual
contribution to our success. We are engaged in a very competitive industry, and
our success depends upon our ability to attract and retain qualified executives
through the competitive compensation packages we offer to such individuals.
The following objectives are evaluated and considered when making
compensation decisions: (i) provide competitive annual cash compensation to
attract, retain and motivate high-caliber executives; (ii) in at-risk
compensation, align the interests of executives with those of our stockholders
through equity-based compensation and/or equity ownership; (iii) communicate
overall corporate objectives to executives so that all parties are working
towards a similar goal and (iv) deliver compensation through cost- and tax-
effective programs.
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GENERAL
Our overall philosophy is to reward executives for building long-term value
for our stockholders. We compensate our executive officers with a combination of
salary and incentives designed to focus their efforts on maximizing both our
near-term and long-term financial performance. In addition, our compensation
structure also rewards individual performance that furthers our goals. Elements
of our compensation structure include the following:
- Base Salary
- Annual Incentives
- Equity Incentives/Equity Ownership
Each executive officer's compensation package is designed to provide an
appropriately weighted mix of these elements which cumulatively provide a level
of compensation roughly equivalent to that paid by peer companies. The actual
value of total compensation is ultimately based on performance, and will be
strongly linked to stockholder value.
BASE SALARY
Base salary and increases in base salary are primarily determined by
individual performance. Each executive officer's base salary is adjusted each
year on the basis of (i) the Compensation Committee's evaluation of the
officer's personal performance for the year taking into account the
recommendation of the Chief Executive Officer and (ii) the competitive
marketplace for persons in comparable positions. Our performance and
profitability may also be a factor in determining the base salaries of executive
officers. In many instances, the qualitative factors involve a subjective
assessment by the Compensation Committee.
ANNUAL INCENTIVES
We maintain annual cash incentive bonus programs to reward executive
officers and other key employees for attaining pre-established corporate
performance goals. The annual incentives vary significantly based on our
profitability, revenue growth, and total shareholder return; the achievement of
our strategic objectives; and each individual's contribution towards that
performance. In setting corporate performance goals, we consider our historical
performance and underlying business model, as well as external and internal
expectations related to overall financial and operating performance.
EQUITY INCENTIVES/EQUITY OWNERSHIP
As mentioned, we believe it is important to align the interests of the
executive officers with those of our stockholders. In our opinion, equity
incentives and ownership are a way of achieving this objective. The two founders
who continue as our executive officers maintain a substantial ownership of our
common stock with each owning approximately 28% of total shares outstanding. For
the executive officers who do not have substantial outright ownership, we
believe equity-based incentives are an effective means of aligning the interests
of executives with those of stockholders. We utilize our 1998 Plan to grant the
equity-based incentives. Options granted under the 1998 Plan have an exercise
price equal to the market price of our stock on the date of grant, vest on a pro
rata basis over four years and carry a ten-year term. In general, the greater
responsibility an executive officer has, the greater the equity portion of his
or her total compensation package. To encourage employee ownership and to incent
employees to grow the value of the business through performance, we have
established an all-employee grant of stock options. Additionally, employees have
the ability to participate in our Employee Stock Purchase Plan.
COMPLIANCE WITH THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code imposes a limit on tax
deductions for annual compensation, other than performance-based compensation,
in excess of $1,000,000 paid by a corporation to its chief executive officer and
the other most highly compensated executive officers of a corporation. We have
not
9
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and do not currently anticipate paying cash compensation in excess of $1,000,000
per annum to any employee. None of the compensation paid by us in 1999 was
subject to the limitation on deductibility. The Board of Directors will continue
to assess the impact of Section 162(m) of the Code on its compensation practices
and determine what further action, if any, is appropriate.
CEO COMPENSATION
In setting compensation payable to our Chief Executive Officer,
Mr. Akilian, the Compensation Committee has taken into consideration his
significant ownership interest in Inet and has sought to be competitive with
companies of similar size within the industry. Given that consideration,
Mr. Akilian's compensation is tied to our performance and to his personal
performance. In 1999, Mr. Akilian earned a based salary of $204,000 and cash
bonus of $460,250. The bonus for 1999 was based on our performance and
Mr. Akilian's significant contribution to that performance in terms of both
leadership and strategic vision.
SUMMARY
It is the opinion of the Compensation Committee that the executive
compensation policies and plans provide the necessary total remuneration program
to properly align our performance and the interests of our stockholders through
the use of competitive and equitable executive compensation in a balanced and
reasonable manner, in both the short and long-term.
Submitted by the Compensation Committee of the Board of Directors:
James R. Adams
Grant A. Dove
STOCK PERFORMANCE GRAPH
The graph below depicts our stock price as an index assuming $100 invested
on May 27, 1999, the date of our initial public offering, along with the
composite prices of companies listed in the Nasdaq Stock Market (U.S. Companies)
Index and the S&P 500 Index. This information has been provided to us by the
Nasdaq Stock Market. The comparisons in the graph are required by regulations of
the Securities and Exchange Commission and are not intended to forecast or to be
indicative of the possible future performance of our common stock.
COMPARISON OF THE CUMULATIVE TOTAL RETURN* AMONG INET TECHNOLOGIES, INC.,
THE NASDAQ STOCK MARKET--U.S. INDEX AND THE S&P 500 INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INET TECHNOLOGIES, INC. NASDAQ STOCK MARKET (US) S & P 500
<S> <C> <C> <C>
5/27/99 100 100 100
12/31/99 388 164 116
</TABLE>
* $100 invested 5/27/99 in stock or index--including reinvestment of dividends.
Fiscal year ending December 31.
10
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT PERIOD INET NASDAQ
(FISCAL YEAR COVERED) TECHNOLOGIES, INC. STOCK MARKET (US) S&P 500
--------------------- ------------------- ----------------- --------
<S> <C> <C> <C>
5/27/99 100 100 100
12/31/99 388 164 116
</TABLE>
THE PRECEDING REPORT ON EXECUTIVE COMPENSATION AND THE STOCK PERFORMANCE
GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE INTO ANY OF OUR PREVIOUS
FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934
WHICH MIGHT INCORPORATE FILINGS MADE BY US UNDER THOSE ACTS, NOR WILL SUCH
REPORT OR GRAPH BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILINGS MADE BY US
UNDER THOSE ACTS, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY INCORPORATE THIS
INFORMATION BY REFERENCE.
CERTAIN TRANSACTIONS WITH MANAGEMENT
In September 1999, we sold our wireless data product line and related assets
to Nextcell, Inc., an entity controlled by Mr. Weinzierl, for a cash purchase
price of $7.0 million. The transaction was approved by a special committee of
disinterested members of the Board of Directors.
Effective January 1, 2000, we sold our membership interest in Inet Global
Research, L.L.C., to an entity controlled by Mr. Simonian, for a cash purchase
price of $82,000. This entity is currently performing services for us, and we
intend to enter into a formal agreement with this entity for certain contract
services.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who beneficially own more than 10% of our
common stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the Nasdaq Stock Market. Executive
officers, directors and greater than 10% beneficial owners are required by
Securities and Exchange Commission regulations to furnish us with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of the forms furnished to us or written
representations from certain reporting persons that no Forms 5 were required, we
believe that, during 1999, all of our executive officers, directors and greater
than 10% beneficial owners complied with all applicable Section 16(a) filing
requirements.
INDEPENDENT AUDITORS
Ernst & Young LLP served as our independent public auditors for fiscal year
1999, and was selected by our Board of Directors to serve in this capacity for
the 2000 fiscal year. Notwithstanding this selection, our Board of Directors, in
its discretion, may direct the appointment of a different independent accounting
firm at any time during the year if our Board of Directors believes that this
change would be in our stockholders' best interests. Representatives of Ernst &
Young LLP are expected to be present at this meeting to respond to appropriate
questions and will have the opportunity to make a statement if they desire to do
so. The engagement of Ernst & Young LLP as our auditors has been approved by our
Audit Committee.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
stockholder proposals to be presented at our 2001 annual meeting of stockholders
and in our proxy statement and form of proxy relating to that meeting, must be
received by us at our offices in Plano, Texas, addressed to our Secretary, not
later than 120 days prior to April 17, 2001. With respect to any stockholder
proposal submitted outside of Rule 14a-8, persons acting as proxies shall have
discretionary authority to vote against any proposal presented at our 2001
annual meeting of stockholders unless notice is received by us in the manner
specified in the previous sentence. These proposals must comply with applicable
Delaware law, certain rules and regulations promulgated by the Securities and
Exchange Commission and the procedures set forth in our Bylaws.
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<PAGE>
ANNUAL REPORT ON FORM 10-K
WE WILL MAIL TO ANY STOCKHOLDER WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY
OF OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999,
INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND LIST OF EXHIBITS. REQUESTS
SHOULD BE SENT TO THE ATTENTION OF INVESTOR RELATIONS, AT OUR EXECUTIVE OFFICES
LOCATED AT 1255 WEST 15TH STREET, SUITE 600, PLANO, TEXAS 75075.
OTHER MATTERS
Our Board of Directors is not aware of any matter to be presented for action
at this meeting other than the matters set forth in this proxy statement. Should
any other matter requiring a vote of the stockholders arise, the persons named
as proxies on the enclosed proxy card will vote the shares represented thereby
in accordance with their best judgment of our interest. Discretionary authority
with respect to such other matters is granted by the execution of the enclosed
proxy card.
By Order of the Board of Directors,
/s/ Mark A. Weinzierl
Mark A. Weinzierl
SECRETARY
April 17, 2000
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<PAGE>
PROXY
INET TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2000
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Elie S. Akilian and Mark A. Weinzierl,
and each of them, with full power of substitution, attorneys and proxies of
the undersigned to vote the shares of our common stock, par value $0.001 per
share, of Inet Technologies, Inc., which the undersigned could vote, and with
all power the undersigned would possess, if personally present at the annual
meeting of stockholders of Inet Technologies, Inc. to be held at Plano
Centre, 2000 East Spring Creek Parkway, Plano, Texas on Tuesday, May 16, 2000
at 9:00 a.m. (Central Time), and any adjournment thereof.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Please mark
your vote as /X/
indicated in
this example
1. The election of directors: FOR all nominees WITHHOLD 2. In their discretion, to act
(except as marked AUTHORITY upon any matters incidental to
Class I nominees: James R. Adams and Grant A. Dove left). to vote for the foregoing and such other
all nominees. business as may properly come
before the annual meeting or
Class II nominees: Mark A. Weinzierl and William H. Mina / / / / any adjournment thereof.
Class III nominees: Elie S. Akilian and Samuel S. Simonian
For, except vote withheld from the following nominee(s): THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1. ANY HOLDER WHO
WISHES TO WITHHOLD THE DISCRETIONARY AUTHORITY REFERRED TO IN
- ---------------------------------------------------------- ITEM 2 ABOVE SHOULD MARK A LINE THROUGH THE ENTIRE ITEM.
Receipt of the proxy statement dated April 17, 2000, is
hereby acknowledged.
Dated ,2000
-----------------------------------------
----------------------------------------------------
Signature
----------------------------------------------------
Signature
(Please sign exactly and as fully as your name appears
on your stock certificate. If shares are held jointly,
each stockholder should sign).
- ----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
