<PAGE>
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 than the Registrant [_]
Check the appropriate box:
[_] Confidential, For Use of the
[_] Preliminary Proxy Statement Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-2
Bottomline Technologies (de), 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>
BOTTOMLINE TECHNOLOGIES (de), INC.
155 Fleet Street
Portsmouth, New Hampshire 03801
Notice of Annual Meeting of Stockholders
to be held on Thursday, November 11, 1999
To the stockholders of Bottomline Technologies (de), Inc.:
The annual meeting of stockholders of Bottomline Technologies (de), Inc., a
Delaware corporation, will be held on Thursday, November 11, 1999 at 3:00
p.m., local time, at the Sheraton Harborside Portsmouth Hotel, 250 Market
Street, Porstmouth, New Hampshire 03801, for the purpose of considering and
voting upon the following matters:
1. To elect one Class I director for the ensuing three years;
2. To ratify the selection of Ernst & Young LLP as independent auditors of
the company for the current fiscal year; and
3. To transact such other business as may properly come before the annual
meeting, including any adjournment or postponement thereof.
We are enclosing a copy of our annual report to stockholders for the fiscal
year ended June 30, 1999 with the proxy statement which accompanies this
notice of meeting, which contains our financial statements and other
information of interest to you.
Holders of record of our common stock at the close of business on September
30, 1999 are entitled to receive this notice and to vote at the annual
meeting.
We urge you to attend the annual meeting in person. However, in order to
make sure that you are represented at the annual meeting, we also urge you to
complete, sign and return the enclosed proxy card as promptly as possible in
the enclosed postage pre-paid envelope.
By Order of the Board of Directors,
Daniel M. McGurl, President
October 12, 1999
Porstmouth, New Hampshire
<PAGE>
BOTTOMLINE TECHNOLOGIES (de), INC.
155 Fleet Street
Portsmouth, New Hampshire 03801
Proxy Statement
For the Annual Meeting of Stockholders
to be held on Thursday, November 11, 1999
This proxy statement is furnished to you in connection with the
solicitation of proxies by our board of directors for the annual meeting of
stockholders to be held on Thursday, November 11, 1999 at 3:00 p.m., local
time, at the Sheraton Harborside Portsmouth Hotel, 250 Market Street,
Porstmouth, New Hampshire 03801, including any adjournment or postponement
thereof.
The notice of the annual meeting, this proxy statement, our annual report
to stockholders for the fiscal year ended June 30, 1999, which we sometimes
refer to as "fiscal 1999," and the enclosed proxy are being mailed to
stockholders on or about October 12, 1999.
Voting of Proxies
All shares held by stockholders who are entitled to vote and who are
represented at the annual meeting by properly executed proxies received prior
to or at the annual meeting will be voted in accordance with the instructions
indicated on the proxy card, unless it is revoked prior to the vote. If a
proxy card does not specify how the proxy is to be voted with respect to a
particular matter, the shares will be voted "FOR" approval of the matter.
A proxy may be revoked before it is used to cast a vote. To revoke a proxy,
a stockholder must:
. file with our corporate secretary, at or before the taking of the vote,
a written notice of revocation bearing a later date than the proxy;
. duly execute a later dated proxy relating to the same shares and
deliver it to our corporate secretary before the taking of the vote; or
. attend the annual meeting and vote in person.
Attendance at the annual meeting, if a stockholder does not vote, will not
be sufficient to revoke a proxy.
Any written notice of revocation or subsequent proxy should be sent to us
at our principal executive offices at the following address: Bottomline
Technologies (de), Inc., 155 Fleet Street, Portsmouth, New Hampshire 03801,
Attention: Corporate Secretary.
Stockholders Entitled to Vote
Our board of directors has fixed September 30, 1999 as the record date for
the determination of stockholders entitled to vote at the annual meeting. Only
holders of record of our common stock at the close of business on the record
date are entitled to notice of and to vote at the annual meeting. On September
30, 1999, there were 10,636,809 shares of our common stock outstanding and
entitled to vote. Each share of common stock will have one vote for each
matter to be voted upon at the annual meeting.
Votes Required
The holders of a majority of the shares of common stock issued and
outstanding and entitled to vote at the annual meeting will constitute a
quorum for the transaction of business at the annual meeting. Shares of common
stock present in person or represented by proxy, including shares which
abstain or do not vote with respect to one or more of the matters presented
for stockholder approval, will be counted for purposes of determining whether
a quorum is present at the annual meeting.
<PAGE>
If a broker does not have discretionary voting authority to vote shares for
which it is the holder of record with respect to a particular matter at the
annual meeting, the shares cannot be voted by the broker, although they will be
counted in determining whether a quorum is present. Accordingly, these broker
non-votes and any abstentions will have no effect on the voting on a matter
that requires the affirmative vote of a certain percentage of the votes cast on
that matter (such as the election of the Class I director and the ratification
of the selection of independent auditors).
The affirmative vote of the holders of shares representing a plurality of
the votes cast by the holders of common stock entitled to vote at the annual
meeting is required for the election of the Class I director. The affirmative
vote of the holders of shares representing a majority of the votes cast by the
holders of common stock entitled to vote at the annual meeting is required for
the ratification of the selection of our independent auditors for the current
fiscal year ending June 30, 2000.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of September 30, 1999,
regarding the beneficial ownership of shares of our common stock by (a) each of
the "named executive officers," as described in the Summary Compensation Table
below, (b) each person or entity known by us to own beneficially more than 5%
of the outstanding shares of our common stock, (c) each director of ours,
including the director nominee, and (d) our executive officers and directors as
a group. The address of each of our employees, officers and directors is c/o
Bottomline Technologies (de), Inc., 155 Fleet Street, Portsmouth, New Hampshire
03801, and the address of the John H. Harland Company is 2939 Miller Road,
Decatur, Georgia 30035.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, which we sometimes refer to as the "SEC,"
and includes generally voting power and/or investment power with respect to
securities. Shares of common stock subject to options currently exercisable or
exercisable within 60 days of September 30, 1999 are deemed outstanding for
computing the percentage beneficially owned by the person holding the options
but are not deemed outstanding for purposes of computing the percentage
beneficially owned by any other person.
<TABLE>
<CAPTION>
Options
Attributed to
Shares
Shares Beneficially
Beneficially Owned Owned
------------------- -------------
Name of Beneficial Owner Number Percent Number
- ------------------------ --------- --------- -------------
<S> <C> <C> <C>
Daniel M. McGurl............................ 1,601,250 15.04% 7,500
Robert A. Eberle............................ 56,473 * 40,500
Joseph L. Mullen............................ 238,106 2.24 7,500
Leonard J. DiIuro, Jr....................... 54,750 * 3,750
John H. Harland Company..................... 581,394 5.47 --
Joseph L. Barry, Jr......................... 189,375 1.78 30,000
Bruce E. Elmblad............................ 60,000 * 15,000
James L. Loomis............................. 1,601,250 15.04 7,500
James W. Zilinski........................... 60,000 * 30,000
All executive officers and directors as a
group (8 persons).......................... 3,861,204 35.82 141,750
</TABLE>
- --------
* Represents less than 1% of the outstanding shares of our common stock.
2
<PAGE>
PROPOSAL 1--ELECTION OF CLASS I DIRECTOR
We have three classes of directors currently consisting of two Class I
directors, two Class II directors and two Class III directors. At each annual
meeting, directors are elected for a full term of three years to succeed those
whose terms are expiring. The terms of the three classes are staggered in a
manner so that only one class is elected by stockholders annually. Mr. Joseph
L. Barry, Jr. and Mr. Bruce E. Elmblad are currently serving as Class I
directors. Mr. Elmblad has notified us of his intention to retire from our
board of directors. Our board of directors intends to seek a qualified person
to replace Mr. Elmblad, however, a candidate has not yet been identified. The
Class I director elected this year will serve as a member of our board of
directors until the 2002 annual meeting of stockholders, or until his successor
is elected and qualified.
The persons named in the enclosed proxy will vote to re-elect Mr. Barry as
the Class I director unless the proxy is marked otherwise. Mr. Barry has
indicated his willingness to serve on our board of directors, if elected. If
Mr. Barry should be unable to serve, the person acting under the proxy may vote
the proxy for a substitute nominee designated by our board of directors.
However, the proxies cannot be voted for more than one person because we have
named only one nominee. Our board of directors has no reason to believe that
Mr. Barry will be unable to serve if elected.
Set forth below for each director, including the Class I director nominee,
is information as of September 30, 1999 with respect to (a) his name and age,
(b) position and offices at the company, (c) principal occupation and business
experience during the past five years, (d) directorships, if any, of other
publicly held companies and (e) the year he became a director of the company.
<TABLE>
<CAPTION>
Principal Occupation, Other
Business Experience
Director During the Past Five Years and
Name Age Since Other Directorships
---- --- -------- ---------------------------------
<C> <C> <C> <S>
Class I director, nominee to be
elected at the annual meeting
(term expiring in 2002)
Joseph L. Barry, Jr. 66 1990 Mr. Barry has served as President
of Hallmark Mechanical Corp., a
machinery service company, since
1990, and as President of
Hallamore Corp., a transportation
and rigging company, since 1956.
Since 1975, Mr. Barry has served
as Chairman of Northeast Concrete
Products and since 1978 as co-
chairman of New England Teamsters
Pension Fund.
Class II directors
(terms expiring in 2000)
Joseph L. Mullen 47 1996 Mr. Mullen has served as
Executive Vice President of
Operations of Bottomline since
July 1996, and served as Vice
President of Sales and Marketing
from July 1991 to July 1996. From
1977 to 1989, Mr. Mullen held a
variety of positions at IBM
Corporation, including Marketing
Manager and Northeast Area Market
Planning Manager.
James W. Zilinski 55 1994 Mr. Zilinski has served as
President, Chief Executive
Officer and a director of
Berkshire Life Insurance Company
since 1995. From February 1995 to
July 1995, Mr. Zilinski served as
an independent consultant. From
August 1994 to January 1995, Mr.
Zilinski served as President of
the Investment Services Group of
The BISYS Group, Inc., a provider
of outsourcing services to
financial institutions. Prior to
August 1994, Mr. Zilinski served
as Executive Vice President and
Chief Marketing Officer of New
England Mutual Life Insurance
Company.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation, Other Business
Experience
Director During the Past Five Years and Other
Name Age Since Directorships
---- --- -------- ----------------------------------------
<C> <C> <C> <S>
Class III directors
(terms expiring in 2001)
Daniel M. McGurl 63 1989 Mr. McGurl co-founded Bottomline in May
1989, and has served as Chairman of the
Board of Directors, President and Chief
Executive Officer of Bottomline since
May 1989. From 1987 to 1989, Mr. McGurl
served as Senior Vice President of State
Street Bank and Trust Company. Prior to
1987, Mr. McGurl held a variety of
positions at IBM Corporation, including
Director of Marketing Planning and
Director of Far East Operations.
James L. Loomis 49 1989 Mr. Loomis co-founded Bottomline in May
1989. Since August 1998, Mr. Loomis has
served as Senior Executive Advisor of
Bottomline. From July 1996 to August
1998, Mr. Loomis served as Executive
Vice President of Bottomline and from
May 1989 to July 1996, Mr. Loomis served
as Vice President and Treasurer. Prior
to 1989, Mr. Loomis held a variety of
positions with the Nashua Corporation, a
manufacturer of imaging supply products,
including Director of International
Finance and Treasurer of a foreign
subsidiary.
</TABLE>
Pursuant to the First Amendment and Restatement of Stock Rights and Voting
Agreement, dated as of March 31, 1992, as amended, among Bottomline and some of
our stockholders, those stockholders were granted the right, which terminated
upon the closing of our initial public offering in February 1999, to designate
representatives on our board of directors. Under this agreement, Messrs.
McGurl, Loomis and Barry were elected to our board of directors.
Board of Directors and Committee Meetings
Our board of directors met five times, including by telephone conference,
during fiscal 1999. The compensation committee of our board of directors held
one meeting during fiscal 1999. All directors attended 100% of the meetings of
our board of directors and the committees on which they served.
The compensation committee of our board of directors, currently composed of
Messrs. Barry and Elmblad, makes recommendations concerning salaries and
incentive compensation for our employees and administers and grants stock
options under our stock option plans to our executive officers. The audit
committee of our board of directors was formed in November 1998 to review the
results and scope of the audit and other services provided by our independent
public auditors. The report of our independent auditors with respect to fiscal
1998 was presented to our full board of directors prior to the formation of our
audit committee. Messrs. Elmblad and Zilinski are the current members of our
audit committee. We do not have a nominating committee or a committee serving a
similar function. Nominations are made by and through our full board of
directors.
Director Compensation
All of our directors are reimbursed for expenses incurred to attend meetings
of our board of directors and committees on which they serve. In addition, our
non-employee directors receive stock options under our 1998 Director Stock
Option Plan. The Director Stock Option Plan currently provides that each future
non-employee director will be granted an option to purchase 15,000 shares of
our common stock on the date of his or her initial election to our board of
directors, which will vest ratably over four years on each anniversary of the
date of grant. In addition, each non-employee director will receive an option
to purchase 7,500 shares of our common stock on the date of each annual meeting
of stockholders beginning with the 1999 annual meeting of
4
<PAGE>
stockholders, other than a director who was initially elected to our board of
directors at any time after the prior year's annual meeting. The options
granted annually vest upon the earlier of one year from the date of grant and
the date immediately preceding the next annual meeting of stockholders,
provided that the optionee remains a director of ours. The exercise price per
share of all options granted under the plan will be the fair market value of a
share of our common stock on the date of grant.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on our review of copies of reports filed by reporting persons
pursuant to Section 16(a) of the Securities Exchange Act of 1934, or written
representations from reporting persons that no Form 5 filing was required for
such person, we believe that, during fiscal 1999, all filings required to be
made by our reporting persons were timely made in accordance with the
requirements of the Securities Exchange Act of 1934 other than the filing of
one Form 4 reporting one transaction by Mr. Robert A. Eberle.
Executive Compensation
Summary Compensation Table
The following table sets forth for each of the last two fiscal years the
cash compensation paid and the shares underlying options granted to (a) our
chief executive officer and (b) each of the other executive officers who
received annual compensation in excess of $100,000 during fiscal 1999,
collectively, the "named executive officers."
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
----------------- ------------
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary Bonus Options(1) Compensation
- --------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Daniel M. McGurl........... 1999 $185,000 $190,000 -- $ 3,371(2)
Chairman of the Board of 1998 $172,333 $ 50,000 30,000 $ 1,680(2)
Directors, President and
Chief Executive Officer
Robert A. Eberle(3)........ 1999 $131,913 $150,000 162,000 $34,722(4)
Chief Financial Officer, 1998 -- -- -- --
Executive Vice President
and Treasurer
Joseph L. Mullen........... 1999 $175,000 $150,000 -- $ 4,088(2)
Executive Vice President, 1998 $144,375 $ 62,966 30,000 $ 2,158(2)
Operations
Leonard J. DiIuro, Jr.(5).. 1999 $120,000 $193,201 30,000 $ 4,199(2)
Executive Vice President, 1998 -- -- -- --
Sales
</TABLE>
- --------
(1) The number of shares covered by options to purchase shares of our common
stock granted during the fiscal years ended June 30, 1999 and June 30,
1998.
(2) Consists of contributions made by us to the named executive officer's
account in our 401(k) Plan.
(3) Mr. Eberle became Chief Financial Officer, Executive Vice President,
Treasurer and an executive officer of the company in September 1998.
(4) Consists of moving expenses.
(5) Mr. DiIuro became Executive Vice President, Sales and an executive officer
of the company in July 1998.
5
<PAGE>
Stock Options
The following table sets forth information for each of the named executive
officers with respect to the grant of stock options to purchase shares of our
common stock during fiscal 1999.
Option Grants During Fiscal 1999
<TABLE>
<CAPTION>
Potential Realizable
Percent Value at Assumed
Number of of Total Annual Rates of Stock
Securities Options Exercise Price Appreciation
Underlying Granted to or Base for Options Term(2)
Options Employees in Price Per Expiration ---------------------
Name Granted Fiscal Year Share(1) Date 5% 10%
---- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. McGurl........ -- -- -- -- -- --
Robert A. Eberle........ 162,000 21.4% $10.00 9/30/08 $1,018,809 $2,581,863
Joseph L. Mullen........ -- -- -- -- -- --
Leonard J. DiIuro, Jr... 30,000 4.0% $13.00 2/11/09 $ 245,269 $ 621,560
</TABLE>
- --------
(1) The exercise price of each option equaled the fair market value of our
common stock on the date of the option grant.
(2) Amounts that may be realized upon exercise of the options immediately
before the expiration of their term, assuming the specified compound rates
of appreciation (5% and 10%) on the market value of our common stock on
the date of option grant over the term of the options. These numbers are
calculated based on rules promulgated by the SEC and do not reflect our
estimate of future stock price growth. Actual gains, if any, on stock
option exercises and common stock holdings are dependent on the timing of
exercise and the future performance of our common stock.
Fiscal Year-End Option Values
The following table sets forth information for each of the named executive
officers with respect to the exercise of options to purchase shares of our
common stock during fiscal 1999 and the number and value of options outstanding
as of the fiscal year ended 1999. No stock options were exercised by any of the
named executive officers in fiscal 1999.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Options at In-the-Money Options
June 30, 1999 at June 30, 1999(1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Daniel M. McGurl........... 7,500 22,500 $331,500 $ 994,500
Robert A. Eberle........... -- 162,000 -- $6,966,000
Joseph L. Mullen........... 7,500 22,500 $337,500 $1,012,500
Leonard J. DiIuro, Jr...... 3,750 41,250 $168,750 $1,706,250
</TABLE>
- --------
(1) These values have been calculated on the basis of the closing price of our
common stock on the Nasdaq National Market on June 30, 1999, $53.00 per
share, less the aggregate exercise price.
6
<PAGE>
Report of the Compensation Committee on Executive Compensation
This report is submitted by the compensation committee of our board of
directors, which is responsible for making recommendations concerning salaries
and incentive compensation for our employees and administering and granting
stock options under our stock option plans. In addition, the compensation
committee consults with our management regarding pension and other benefit
plans and our compensation policies and practices.
General Compensation Policy
The compensation committee seeks to achieve the following three broad goals
in connection with Bottomline's executive compensation program:
. enable Bottomline to attract and retain qualified executives;
. create a performance-oriented environment by rewarding executives for
the achievement of Bottomline's business objectives and/or in the
individual executive's particular area of responsibility; and
. provide executives with equity incentives in Bottomline so as to link a
portion of the executive's compensation with the performance of
Bottomline's common stock.
Components of Compensation
To achieve these goals, the executive compensation program consists
principally of the following three elements:
. base salary;
. cash bonuses; and
. stock-based equity incentives in the form of participation in
Bottomline's stock option plans.
General Factors for Establishing Compensation
The compensation committee reviews the executive compensation of industry
peers with which Bottomline competes for employees to compare the
competitiveness of Bottomline's executive compensation packages. In this
regard, in fiscal 1999, the company engaged an outside consulting firm to
prepare a survey reviewing and comparing base salary, bonus programs and stock
options of Bottomline and its industry peers. The compensation committee
considered the results of the survey in determining the overall executive
officer compensation packages for fiscal 1999. In addition to its review of
industry compensation levels, the compensation committee also considered a
number of other factors in establishing the components of each executive
officer's compensation package, as summarized below.
Base Salary
Salaries for executive officers, including the chief executive officer, are
generally determined on an individual basis by evaluating the following:
. the executive's scope of responsibility, performance, prior employment
experience and salary history;
. Bottomline's financial performance, including increases in its revenues
and profits; and
. internal consistency within Bottomline's salary structure.
Annual Incentive Compensation
The compensation committee considers the payment of cash bonuses as part of
the compensation packages of Bottomline's executive officers. Annual bonuses
reflect a policy of requiring a certain level of company
7
<PAGE>
financial and operational performance for the prior fiscal year before any cash
bonuses are earned by executive officers. In general, the compensation
committee has tied potential bonus compensation to performance factors,
including the executive officer's efforts and contributions towards obtaining
Bottomline's objectives and overall growth. In determining the amounts of the
cash bonuses to be paid to the executive officers in fiscal 1999, including the
chief executive officer, the compensation committee specifically considered the
following achievements and the role played by the executive officer in
accomplishing these achievements:
. the successful initial public offering of Bottomline's common stock; and
. the selection of Bottomline by The Federal Reserve System to provide
software to its 12,000 member banks.
Long-term Incentive Compensation
Stock options are an element of the compensation packages of Bottomline's
executive officers, including the chief executive officer, because they provide
an incentive to executive officers to maximize stockholder value and because
they reward the executive officers only to the extent that stockholders also
benefit. The compensation committee believes that it is to Bottomline's
advantage to increase the executive officers' interest in Bottomline's welfare,
as these employees share the primary responsibility for Bottomline's management
and growth. The value of the stock options derives solely from appreciation of
Bottomline's common stock. In order to promote a longer term management focus
and to provide incentive for continued employment with Bottomline, stock option
grants generally become exercisable over a four year period, with the exercise
price being equal to 100% of the fair market value of Bottomline's common stock
on the date of grant or, in the case of Mr. McGurl, 110% of the fair market
value on the date of grant.
The size of the option grant made to each executive officer is based upon
the following factors:
. an evaluation of the executive officer's past performance;
. the total compensation being paid to the executive officer;
. the anticipated value of the executive officer's contribution to
Bottomline's future performance;
. the executive officer's scope of responsibility;
. the executive officer's current position with Bottomline;
. options awarded, if any, to the executive officer during previous fiscal
years; and
. internal comparability with option grants made to other executive
officers.
In fiscal 1999, stock options were granted under Bottomline's 1997 Stock
Incentive Plan to Mr. Robert A. Eberle, Chief Financial Officer, Executive Vice
President and Treasurer, and Mr. Leonard J. DiIuro, Jr., Executive Vice
President, Sales.
Chief Executive Officer's Compensation
On December 3, 1998, Bottomline entered into an employment agreement with
Mr. Daniel M. McGurl, Chief Executive Officer, President and Chairman of the
board of directors of Bottomline. Pursuant to his employment agreement, which
is more fully described below, Mr. McGurl received a base salary of $185,000
for fiscal 1999. The compensation of Mr. McGurl is based upon the same elements
and measures of performance as is the compensation of Bottomline's other
executive officers. In its determination to approve a cash bonus to Mr. McGurl
of $190,000 for fiscal 1999, the compensation committee specifically considered
the following:
. the successful initial public offering of Bottomline's common stock;
. the additional responsibilities Mr. McGurl has assumed in managing a
publicly traded company;
8
<PAGE>
. the selection of Bottomline by The Federal Reserve System to provide
software to its 12,000 member banks; and
. significant increases in Bottomline's revenues and profits over fiscal
1998.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to its chief executive officer and its four other most highly compensated
executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. Based
on the compensation awarded to Bottomline's chief executive officer and its
other named executive officers, it does not appear that the Section 162(m)
limitation will have a significant impact on Bottomline in the near term.
Compensation Committee
Joseph L. Barry, Jr.
Bruce E. Elmblad
Employment Agreements
We entered into an employment agreement with each of Messrs. McGurl and
Mullen in December 1998 and with Mr. Eberle in September 1998. The provisions
of each employment agreement are substantially the same. The term of each
employment agreement is the greater of (a) 36 months and (b), in the event we
experience a change in control, 24 months after such event.
A change in control of Bottomline occurs if:
. any person becomes the beneficial owner of 50% or more of the voting
power of our outstanding securities;
. we are acquired through a merger;
. we are liquidated; or
. all or substantially all of our assets are sold.
If the employee's employment is terminated either by the employee as a
result of an involuntary termination or by us without cause, then (a) all
outstanding options held by the employee would become immediately exercisable
in full, although this provision does not become effective until November 2000
with respect to Messrs. McGurl and Mullen, and (b) the employee would also be
entitled to receive a lump sum payment and continuation of benefits for a
period of 12 months, in the case of Messrs. Eberle and Mullen, and for a
period of 24 months in the case of Mr. McGurl. In the case of Messrs. Mullen
and Eberle, the lump sum payment would equal one year's salary plus the
maximum amount of bonus they were eligible to earn in the then current year.
In the case of Mr. McGurl, the lump sum payment would equal two times the sum
of his then annual salary plus the maximum amount of bonus he was eligible to
earn in the then current year.
An involuntary termination would occur if an employee's duties were
terminated without cause, his benefits were reduced or he was demoted or
relocated after a change in control.
Cause means, prior to a change in control of Bottomline, the discharge of
the employee resulting from:
. a felony conviction;
. failure to attend to material duties or obligations;
. the breach of confidentiality, non-competition or similar obligations by
the employee; or
. an act or omission which would constitute a crime involving our
property.
9
<PAGE>
The second and third items specified above would not constitute cause after
our change in control.
If the employee's employment is terminated upon or after a potential change
in our control, which is described below, by the employee as a result of an
involuntary termination or by us without cause, all then outstanding options
held by the employee would become immediately exercisable in full and the
employee would be entitled to receive a lump sum payment and continuation of
benefits for a period of 24 months, although this provision does not become
effective until November 2000 with respect to Messrs. McGurl and Mullen. In the
case of each of Messrs. Mullen and Eberle, the lump sum payment would equal two
times the sum of his then annual salary plus the maximum amount of bonus he was
eligible to earn in the then current year. In the case of Mr. McGurl, the lump
sum payment would equal three times the sum of his then annual salary plus the
maximum amount of bonus he was eligible to earn in the then current year.
A potential change in control of Bottomline would occur if:
. we enter into an agreement that would cause a change in our control;
. any person publicly announces an intention to take action which if
consummated would constitute a change in control; or
. the adoption of a resolution by our board of directors approving a
transaction which would result in a change in our control.
Each of the agreements provides that, in the event of a change in our
control, we would pay any excise tax which the employee would be liable for
under Section 4999 of the Internal Revenue Code as a result of having received
the severance benefits. Under Mr. McGurl's agreement, he received an annual
base salary of $185,000 in fiscal 1999. Under their agreements, each of Messrs.
Mullen and Eberle were each paid an annual base salary of $175,000 in fiscal
1999. Based upon the recommendations of the compensation committee, and as more
fully described above, in fiscal 1999 Mr. McGurl received a bonus of $190,000,
Mr. Mullen received a bonus of $150,000 and Mr. Eberle received a bonus of
$150,000.
Compensation Committee Interlocks and Insider Participation
The current members of the compensation committee of our board of directors
are Messrs. Barry and Elmblad. No executive officer of ours has served as a
director or member of the compensation committee of any other entity whose
executive officers served as a director or member of our compensation
committee. From August 1997 to November 1998, Mr. McGurl served as a member of
the compensation committee of our board of directors. Mr. McGurl did not
participate in any compensation deliberations with respect to any of his
compensation. Mr. McGurl is President, Chief Executive Officer and Chairman of
the board of directors of Bottomline.
10
<PAGE>
Stock Performance Graph
The stock performance graph below compares the percentage change in
cumulative stockholder return on our common stock for the period from February
12, 1999, the first day our common stock was publicly traded, through June 30,
1999, the end of fiscal 1999, with the cumulative total return on the Nasdaq
Stock Market and Nasdaq Computer & Data Processing.
This graph assumes the investment of $100.00 in our common stock (at the
initial public offering price), the Nasdaq Stock Market and Nasdaq Computer &
Data Processing on February 12, 1999, and assumes dividends are reinvested.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
February 12, 1999 June 30, 1999
----------------- -------------
<S> <C> <C>
Bottomline Technologies (de), Inc............... $100.00 $408.00
Nasdaq Stock Market............................. $100.00 $115.00
Nasdaq Computer & Data Processing............... $100.00 $114.00
</TABLE>
11
<PAGE>
PROPOSAL 2--RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
Our board of directors has selected Ernst & Young LLP as our auditors for
the current fiscal year, subject to ratification by stockholders at the annual
meeting. If the stockholders do not ratify the selection of Ernst & Young LLP,
our board of directors will reconsider the matter. A representative of Ernst &
Young LLP, which served as auditors for fiscal 1999, is expected to be present
at the annual meeting to respond to appropriate questions and to make a
statement if he or she so desires.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 2000 annual
meeting of stockholders must be submitted to the attention of our corporate
secretary at our offices, 155 Fleet Street, Portsmouth, New Hampshire 03801 no
later than June 14, 2000 in order to be considered for inclusion in the proxy
statement relating to that annual meeting.
The persons named in the enclosed proxy will have discretionary authority to
vote on any matter proposed by a stockholder for consideration at the annual
meeting that is not included in this proxy statement and persons named in the
proxies for our 2000 annual meeting will have authority to vote on any matter
proposed by a stockholder for consideration at the 2000 annual meeting that is
not included in the proxy statement for that meeting if we have not received
notice of the proposal by August 27, 2000.
OTHER MATTERS
Our board of directors knows of no other business which will be presented
for consideration at the annual meeting other than that described above.
However, if any other business should come before the annual meeting, it is the
intention of the persons named in the enclosed proxy to vote, or otherwise act,
in accordance with their best judgment on such matters.
We will bear the costs of soliciting proxies. In addition to solicitations
by mail, our directors, officers and regular employees may, without additional
remuneration, solicit proxies by telephone, telegraph, facsimile and personal
interviews. We will also request brokerage houses, custodians, nominees and
fiduciaries to forward copies of the proxy material to those persons for whom
they hold shares and request instructions for voting the proxies. We will
reimburse brokerage houses and other persons for their reasonable expenses in
connection with this distribution.
This proxy statement incorporates information with respect to our executive
officers from our annual report on Form 10-K, which is being delivered with
this document.
We urge you to attend the annual meeting in person. However, in order to
make sure that you are represented at the annual meeting, we also urge you to
complete, sign and return the enclosed proxy card as promptly as possible in
the enclosed postage-prepaid envelope. Stockholders who attend the meeting may
vote their stock personally even though they have sent in their proxies.
By Order of the Board of
Directors,
Daniel M. McGurl, President
October 12, 1999
Porstmouth, New Hampshire
12
<PAGE>
Appendix
--------
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
BOTTOMLINE TECHNOLOGIES (de), INC.
ANNUAL MEETING OF STOCKHOLDERS
November 11, 1999
This Proxy is solicited on behalf of the Board of Directors of
Bottomline Technologies (de), Inc. (the "Company").
The undersigned, having received notice of the annual meeting of stockholders
and the proxy statement therefor and revoking all prior proxies, hereby appoints
Daniel M. McGurl, Robert A. Eberle and John A. Burgess (with full power of
substitution), as proxies of the undersigned, to attend the annual meeting of
stockholders of the Company to be held on Thursday, November 11, 1999, and any
adjourned or postponed session thereof, and there to vote and act, as indicated,
upon the matters on the reverse side in respect of all shares of common stock
which the undersigned would be entitled to vote or act upon, with all powers the
undersigned would possess if personally present.
Attendance of the undersigned at the annual meeting of stockholders or at any
adjourned or postponed session thereof will not be deemed to revoke this proxy
unless the undersigned affirmatively indicates thereat the intention of the
undersigned to vote said shares of common stock in person. If the undersigned
hold(s) any of the shares of common stock in a fiduciary, custodial or joint
capacity or capacities, this proxy is signed by the undersigned in every such
capacity as well as individually.
Please vote, date and sign on reverse side and return promptly in the enclosed
postage pre-paid envelope.
Has your address changed? Do you have any comments?
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SEE REVERSE
SIDE SIDE
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
Please mark
[X] votes as in
this example.
The shares of common stock of Bottomline Technologies (de), Inc. represented by
this proxy will be voted as directed by the undersigned. If no direction is
given with respect to any proposal specified herein, this proxy will be voted
FOR the proposal.
1. To elect the following person as a Class I director for the ensuing three
years:
Joseph L. Barry, Jr.
FOR WITHHOLD
[_] [_]
2. To ratify the selection of Ernst & Young LLP as the Company's independent
auditors for the current fiscal year.
FOR AGAINST ABSTAIN
[_] [_] [_]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the annual meeting of stockholders or any
adjournment or postponement thereof.
Mark here for address change and note on reverse side: [_]
Please sign exactly as your name(s) appear(s) hereon. All holders must sign.
When signing as attorney, executor, administrator or other fiduciary, please
give your full title as such. Joint owners should each sign personally. If a
corporation, please sign in full corporate name, by authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please be sure to sign and date this proxy below.
Stockholder(s) sign here: Date:
----------------------- -------------------
