<PAGE> 1
EXHIBIT 99.1
PIVOTAL CORPORATION
NOTICE OF MEETING
AND
MANAGEMENT INFORMATION
AND PROXY CIRCULAR
for the
Annual General Meeting
to be held on
Wednesday, October 25, 2000
<PAGE> 2
September 1, 2000
Dear Shareholder:
It is my pleasure to invite you to attend the Company's 2000 annual
general meeting of shareholders. The meeting will be held on Wednesday, October
25, 2000 at 2:30 p.m., Vancouver time, at The Waterfront Centre Hotel, 900
Canada Place Way, Vancouver, British Columbia.
If you are unable to attend the meeting in person, please complete,
date, sign and return the enclosed form of proxy to ensure that your vote is
counted.
The Notice of Meeting, Management Information and Proxy Circular, and
form of proxy for the annual general meeting, and a reply card for use by
shareholders who wish to receive the Company's interim financial statements, are
all enclosed. These documents contain important information and I encourage you
to read them carefully.
Yours truly,
(signed) NORMAN B. FRANCIS
President and Chief Executive Officer
<PAGE> 3
PIVOTAL CORPORATION
Suite 300 - 224 West Esplanade
North Vancouver, British Columbia V7M 3M6
NOTICE OF MEETING
Pivotal Corporation (the "Company") will hold its annual general meeting (the
"Meeting") of shareholders at The Waterfront Centre Hotel, 900 Canada Place Way,
Vancouver, British Columbia, on Wednesday, October 25, 2000 at 2:30 p.m.
(Vancouver time) for the following purposes:
(a) to receive the annual report to shareholders of the directors
of the Company;
(b) to receive and consider the financial statements of the
Company for the financial period ended June 30, 2000 and the
report of the auditors thereon;
(c) to elect directors of the Company for the ensuing year;
(d) to approve and confirm, by ordinary resolution, an amendment
to the Company's Incentive Stock Option Plan as set out in the
accompanying Information Circular. The text of this resolution
is set out in Schedule "A" to the Information Circular.
(e) to appoint Deloitte & Touche LLP, Chartered Accountants, as
auditor of the Company for the ensuing year and to authorize
the directors to fix the auditor's remuneration; and
(f) to transact such other business as may properly come before
the Meeting or any adjournments or postponements thereof.
Accompanying this Notice of Meeting are: (1) a Management Information and Proxy
Circular; (2) the Annual Report for the Company for the year ended June 30,
2000; (3) the audited consolidated financial statements of the Company prepared
in accordance with Canadian generally accepted accounting principles for the
year ended June 30, 2000; (4) a form of proxy and notes thereto; and (5) a reply
card for use by shareholders who wish to receive the Company's interim financial
statements.
If you are a registered shareholder of the Company and are unable to attend the
Meeting in person, please date and execute the accompanying form of proxy, and
deposit it with CIBC Mellon Trust Company at Suite 1600, 1066 West Hastings
Street, Vancouver, British Columbia, V6E 3X1, Attention: Mr. Doug Allen before
2:30 p.m. (Vancouver time) on Monday, October 23, 2000, or not less than 48
hours (excluding Saturdays and holidays) before any adjournment of the Meeting.
If you are a non-registered shareholder of the Company and receive these
materials through your broker or through another intermediary, please complete
and return the materials in accordance with the instructions provided to you by
your broker or such other intermediary. IF YOU FAIL TO FOLLOW THESE
INSTRUCTIONS, YOUR SHARES MAY NOT BE ELIGIBLE TO BE VOTED AT THE MEETING.
This Notice of Meeting, the Management Information and Proxy Circular, the
Annual Report, the financial statements, the form of proxy and notes thereto for
the Meeting, and the reply card are first being sent to shareholders of the
Company on or about September 25, 2000.
DATED at Vancouver, British Columbia this 1st day of September, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
(signed) DIANE MALAHER
Secretary
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
LETTER TO SHAREHOLDERS
<S> <C>
NOTICE OF MEETING ........................................................................ i
MANAGEMENT INFORMATION AND PROXY CIRCULAR ................................................ 1
Solicitation of Proxies ............................................................... 1
Appointment and Revocation of Proxies ................................................. 1
Exercise of Discretion ................................................................ 1
Abstention from Voting ................................................................ 2
Securities Entitled to Vote ........................................................... 2
Principal Shareholders ................................................................ 2
Currency .............................................................................. 2
PARTICULARS OF MATTERS TO BE ACTED UPON .................................................. 2
Election of Directors ................................................................. 2
Amendment to Incentive Stock Option Plan .............................................. 5
Appointment of Auditor ................................................................ 6
CORPORATE GOVERNANCE ..................................................................... 6
Mandate of the Board of Directors ..................................................... 6
Composition of the Board of Directors ................................................. 7
Description of Decisions Requiring Prior Approval of the Board of Directors ........... 7
Expectations of Management ............................................................ 7
Shareholder Communication ............................................................. 7
Recruitment of New Directors and Assessment of the Board of Directors' Performance .... 7
Committees of the Board of Directors .................................................. 8
Audit Committee ..................................................................... 8
Compensation Committee .............................................................. 8
Options Committee ................................................................... 8
EXECUTIVE COMPENSATION ................................................................... 9
Summary Compensation Table ............................................................ 9
Stock Options ......................................................................... 9
Employment and Consulting Contracts ................................................... 12
Remuneration of Directors ............................................................. 12
Report on Executive Compensation ...................................................... 12
Performance Graph ..................................................................... 13
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS ........................ 13
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS ............................................ 13
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON .................................. 14
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ................................................ 14
OTHER BUSINESS ........................................................................... 14
</TABLE>
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<PAGE> 5
PIVOTAL CORPORATION
MANAGEMENT INFORMATION AND PROXY CIRCULAR
This Management Information and Proxy Circular ("Information Circular") is
furnished in connection with the solicitation of proxies by the management of
Pivotal Corporation ("Pivotal" or the "Company") to be voted at the annual
general meeting of the shareholders of the Company to be held on Wednesday,
October 25, 2000 (the "Meeting") at the time and place and for the purposes set
forth in the accompanying Notice of Meeting.
It is anticipated that this Information Circular and the accompanying Notice of
Meeting and form of proxy will be first mailed to the shareholders of the
Company on or about September 25, 2000. Unless otherwise stated, the information
contained in this Information Circular is given as at September 1, 2000.
Pursuant to section 111 of the Company Act (British Columbia), advance notice of
the Meeting was published in The Vancouver Sun and The Province on August 30,
2000.
SOLICITATION OF PROXIES
While it is expected that the solicitation for proxies will be conducted
primarily by mail, proxies may be solicited personally or by telephone by
directors, officers and regular employees of the Company. All costs of
solicitation will be borne by the Company.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the accompanying form of proxy are the President and
Chief Executive Officer and the Chief Financial Officer of the Company. A
shareholder has the right to appoint a person, who need not be a shareholder, to
attend and act for the shareholder and on the shareholder's behalf at the
Meeting other than either of the persons designated in the accompanying form of
proxy, and may do so either by inserting the name of that other person in the
blank space provided in the accompanying form of proxy or by completing and
delivering another suitable form of proxy.
A proxy will not be valid unless the completed, signed and dated form of proxy
is delivered to CIBC Mellon Trust Company, Suite 1600, 1066 West Hastings
Street, Vancouver, British Columbia, V6E 3X1, not less than 48 hours (excluding
Saturdays, Sundays and holidays) before the time for holding the Meeting or any
adjournment thereof at which the proxy is to be used.
A shareholder who has given a proxy may revoke it by an instrument in writing
duly executed and delivered either to CIBC Mellon Trust Company or to the
registered office of the Company at any time up to and including the last
business day that precedes the day of the Meeting, or any adjournment thereof,
at which the proxy is to be used, or to the Chairman of the Meeting on the day
of the Meeting or any adjournment thereof. A revocation of a proxy will not
affect a matter on which a vote is taken before the revocation.
EXERCISE OF DISCRETION
On a poll, the nominees named in the accompanying form of proxy will vote or
withhold from voting the shares represented thereby in accordance with the
instructions of the shareholder on any ballot that may be called for. The proxy
will confer discretionary authority on the nominees named therein with respect
to:
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(a) each matter or group of matters identified therein for which a
choice is not specified other than the appointment of an
auditor and the election of directors;
(b) any amendment to or variation of any matter identified
therein; and
(c) any other matter that properly comes before the Meeting.
In respect of a matter described in this Information Circular for which a choice
is not specified in the proxy, the nominees named in the accompanying form will
vote shares represented by the proxy for the approval of such matter.
As of the date of this Information Circular, management of the Company knows of
no amendment, variation or other matter that may come before the Meeting, but if
any amendment, variation or other matter properly comes before the Meeting each
nominee intends to vote thereon in accordance with the nominee's best judgement.
ABSTENTION FROM VOTING
Shareholders may abstain from voting in respect of a matter described in this
Information Circular by completing the box marked "Withhold" on the accompanying
form of proxy, or by attending the Meeting in person, and abstaining from voting
for or against a particular matter.
SECURITIES ENTITLED TO VOTE
As of September 1, 2000, the Company had outstanding 22,466,823 fully paid and
non-assessable Common Shares without par value, each carrying the right to one
vote.
Only shareholders of record at the close of business on September 20, 2000 who
either attend the Meeting personally or complete, sign and deliver a form of
proxy in the manner and subject to the provisions described above will be
entitled to vote or to have their shares voted at the Meeting.
PRINCIPAL SHAREHOLDERS
To the knowledge of the directors and senior officers of the Company, as at
September 1, 2000, only Norman B. Francis, Douglas J. Mackenzie and Kleiner,
Perkins, Caufield & Byers beneficially owned directly or indirectly, or
exercised control or direction over, voting securities carrying 10% or more of
the voting rights of the Company.
CURRENCY
All references to monetary amounts are in Canadian dollars unless otherwise
indicated.
PARTICULARS OF MATTERS TO BE ACTED UPON
ELECTION OF DIRECTORS
The directors of the Company are elected at each annual general meeting and hold
office until the close of the next annual general meeting or until their
successors are duly elected or appointed. Management proposes to nominate each
of the following six persons for election as a director of the Company. All the
proposed nominees are presently directors of the Company.
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The six nominees who receive the most votes in favour of their respective
appointments will be elected to the Board of Directors.
Proxies cannot be voted for a greater number of persons than the number of
nominees named. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE ENCLOSED
FORM OF PROXY WILL BE VOTED FOR THE NOMINEES SET OUT BELOW.
Information concerning the six nominees, as furnished by them individually, is
set forth below.
<TABLE>
<CAPTION>
NOMINEE'S NAME AND RESIDENCE RESUME
---------------------------- ------
<S> <C>
NORMAN B. FRANCIS(1) Norman B. Francis co-founded Pivotal
West Vancouver, British Columbia, Canada in 1990 and has served as President,
Chief Executive Officer and a
director since December 1990. Mr.
Francis' experience prior to
co-founding Pivotal includes
co-founding Basic Software Group
Inc., an accounting software
company, in 1979. Mr. Francis served
as Basic Software Group's Vice
President, Operations until the
company was acquired by Computer
Associates International, Inc., a
software company, in 1985. Mr.
Francis served as Vice President,
Micro Products Division of Computer
Associates International Inc. from
1985 to 1990. Mr. Francis holds a
bachelor of science degree in
Computer Science from the University
of British Columbia, Canada and is a
Chartered Accountant.
KEITH R. WALES Keith R. Wales co-founded Pivotal
West Vancouver, British Columbia, Canada in 1990 and has served as a director
since December 1990 and as Chief
Technical Officer since May 1999.
Mr. Wales also served as Vice
President, Research and Development
from December 1990 through July
1999. Mr. Wales' experience prior to
co-founding Pivotal includes
co-founding Basic Software Group
Inc., an accounting software
company, in 1979. Mr. Wales served
as Basic Software Group's Vice
President, Research and Development
until the company was acquired by
Computer Associates International,
Inc. in 1985. Mr. Wales served as
Divisional Vice President, Research
and Development of Computer
Associates International, Inc. from
1985 to 1986. Mr. Wales holds a
bachelor of science degree in
Mathematics and a master's of
science degree in Computer Science
from the University of British
Columbia, Canada.
</TABLE>
----------
(1) Member of the Option Committee.
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<TABLE>
<CAPTION>
NOMINEE'S NAME AND RESIDENCE RESUME
---------------------------- ------
<S> <C>
JEREMY A. JAECH Jeremy A. Jaech has served as a
Seattle, Washington, U.S.A. director since July 1996. Mr. Jaech
currently serves as Vice President,
Microsoft Corporation, Visio
Division, a supplier of
enterprise-wide business diagramming
and technical drawing software for
Microsoft Windows. Prior to
Microsoft, Jeremy co-founded Visio
Corporation, which was later sold to
Microsoft, in September 1990. Prior
to co-founding Visio Corporation,
Mr. Jaech co-founded Aldus
Corporation in 1984 and served as
Vice President, Engineering. Aldus
Corporation was purchased by adobe
Systems Incorporation in 1989. Mr.
Jaech holds a bachelor's degree in
Mathematics and a master's degree in
Computer Science from the University
of Washington.
ROBERT J. LOUIS(2)(3) Robert J. Louis has served as a
West Vancouver, British Columbia, Canada director since June 1995. Since
March 1999, Mr. Louis has served as
President of Ventures West
Management Ltd., a venture capital
firm which he joined as an Executive
Vice President in January 1991. Mr.
Louis earned a bachelor of science
degree and a master's degree in
Science from the University of
Victoria, British Columbia, Canada
and a Ph.D. in Physics from the
University of British Columbia,
Canada.
DOUGLAS J. MACKENZIE(2)(3) Douglas J. Mackenzie has served as a
Palo Alto, California, U.S.A. director since July 1992. Mr.
Mackenzie has served as Limited
Partner of Kleiner, Perkins,
Caufield & Byers, a venture capital
firm specializing in high-tech
companies, since April 1994. Mr.
Mackenzie also serves as a director
of Marimba, Inc. and e. Piphany,
Inc. Mr. Mackenzie holds a
bachelor's degree in Economics and a
master's degree in Industrial
Engineering from Stanford
University, and a master's degree in
Business Administration from Harvard
University.
</TABLE>
--------
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
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NOMINEE'S NAME AND RESIDENCE RESUME
---------------------------- ------
DONALD A. MATTRICK Donald A. Mattrick has served as a
Vancouver, British Columbia, Canada director since May 1999. Mr.
Mattrick has served as the President
of Electronic Arts Worldwide
Studios, a manufacturer of gaming
software, since September 1997. Mr.
Mattrick served as Executive Vice
President, North American Studios of
Electronic Arts Worldwide Studios
from October 1995 to September 1997
and as Executive Vice President and
General Manager of Electronic Arts
Worldwide Studios from 1991 to
October 1995.
The following table sets out the number of Common Shares and stock options
beneficially owned by each nominee for election to the Board of Directors and
the senior officers of the Company, directly or indirectly, or over which each
nominee or officer exercised control or direction, as at September 1, 2000.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(1) NUMBER OF OPTIONS
------------------------ ------------------- -----------------
<S> <C> <C>
Norman B. Francis(2) 2,266,000 97,850
President, Chief Executive Officer and Director
Keith R. Wales(3) 1,075,800 50,000
Chief Technical Officer and Director
Jeremy A. Jaech(4) 55,556 60,000
Director
Robert J. Louis(5) 2,173,260 Nil
Director
Douglas J. Mackenzie(6) 2,418,051 Nil
Director
Donald A. Mattrick Nil 15,000
Director
TOTAL: 7,988,667 222,850
--------- -------
% of total outstanding: 35.6% 1%
========= =======
</TABLE>
--------------------
Notes:
(1) Information as to the number of Common Shares beneficially owned, directly
or indirectly, is based on information furnished by the Registrar and
Transfer Agent of the Company and by the nominees or officers.
(2) The Common Shares owned by Mr. Francis represent 10.1% of the outstanding
voting securities of the Company.
(3) The Common Shares owned by Mr. Wales represent 4.8% of the outstanding
voting securities of the Company.
(4) The Common Shares owned by Mr. Jaech represent .25% of the outstanding
voting securities of the Company.
(5) The Common Shares owned by Mr. Louis represent 9.7% of the outstanding
voting securities of the Company.
(6) The Common Shares owned by Mr. Mackenzie represent 10.8% of the outstanding
voting securities of the Company.
AMENDMENT TO INCENTIVE STOCK OPTION PLAN
At the Meeting, approval of the shareholders will be sought to pass an ordinary
resolution, being a resolution passed by a majority of shareholders at the
Meeting, confirming an amendment to the Incentive Stock Option Plan (the "Plan")
of the Company as approved by the directors of the Company. The
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amendment will increase the maximum number of Common Shares reserved for
issuance under the Plan by 1,500,000 Common Shares, from 5,076,186 to 6,576,186,
in order to ensure sufficient options are available to permit the Company to
maintain its policy of granting options to employees to align their interests
with those of the Company's shareholders. Copies of the amended Plan may be
obtained by any shareholder from the Secretary of the Company and are available
for inspection by shareholders of the Company at its corporate head office at
Suite 300 - 224 West Esplanade, North Vancouver, British Columbia V7M 3M6, and
will be available for review at the Meeting. Implementation of the amendment to
the Plan is subject to the approval of regulatory authorities. The remainder of
the Plan remains unchanged from the form previously approved by shareholders.
The text of the proposed resolution to approve this amendment to the Plan is set
out in Schedule A hereto.
APPOINTMENT OF AUDITOR
Unless otherwise instructed, the proxies received pursuant to this solicitation
will be voted for the re-appointment of Deloitte & Touche LLP, Chartered
Accountants, of Vancouver, British Columbia, as the auditors of the Company to
hold office until the close of the next annual general meeting of the Company or
until a successor is appointed. The appointment of Deloitte & Touche LLP as
auditor of the Company must be approved by a majority of more than fifty per
cent of the votes cast by the holders of Common Shares who vote in person or by
proxy at the Meeting.
It is proposed that the remuneration to be paid to the auditor be fixed by the
Board of Directors.
Deloitte & Touche LLP has been the auditor of the Company since July, 1998.
Deloitte & Touche LLP has been invited to, and will attend, the Meeting.
CORPORATE GOVERNANCE
MANDATE OF THE BOARD OF DIRECTORS
Pursuant to the British Columbia Company Act, the Board of Directors is required
to manage or supervise the management of the business and affairs of the
Company. The Board of Directors' principal responsibilities are to supervise and
evaluate management, to oversee the conduct of the business, to set policies
appropriate for the business and to approve corporate strategies and goals. The
mandate and responsibilities of the Board of Directors are to be carried out in
a manner consistent with the fundamental objective of protecting and enhancing
the value of the Company and providing ongoing benefit to the shareholders.
The responsibilities of the Board of Directors include the review and critique
of management's strategy and plans on a formal basis at least once each year,
and on an ongoing basis as part of the continuing dialogue between management
and directors. A fundamental part of the planning and review process includes
the identification by management and the directors of areas of risk to the
Company and the development of plans to address those risks. The Board of
Directors also makes inquiries to satisfy itself that the Company has in place
proper management information systems and internal controls.
The directors are kept informed of the Company's operations at meetings of the
Board of Directors and its committees and through reports and analyses by
management. There were ten meetings (in person or by teleconference) of the
Board of Directors during the financial year ended June 30, 2000. Each of
Messrs. Mattrick, Mackenzie and Roger S. Siboni, a former director of the
Company, missed more than one meeting of the Board due to business obligations.
The frequency of meetings, as well as the nature of the matters dealt with, will
vary from year to year depending on the state of the Company's business and the
opportunities or risks which the Company faces from time to time. Within this
framework, it is
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anticipated that the Board of Directors will meet four times during the
financial year ending June 30, 2001. In addition, informal communications
between management and directors occur outside of regularly scheduled board and
committee meetings.
COMPOSITION OF THE BOARD OF DIRECTORS
The current composition of the Board of Directors is in compliance with the
guidelines for corporate governance adopted by The Toronto Stock Exchange, which
recommend that the Board of Directors be constituted with a majority of
individuals who qualify as unrelated directors. An unrelated director is a
director who is independent of management and is free from any interest and any
other business or other relationship which could, or could reasonably be
perceived to, materially interfere with the director's ability to act with a
view to the best interests of the corporation, other than interests and
relationships arising from shareholding. A related director is a director who is
not an unrelated director.
The Board of Directors has determined that of its six present directors, four
are unrelated and two, Norman B. Francis and Keith R. Wales are related
directors as they currently serve as President and Chief Executive Officer and
Chief Technical Officer of the Company respectively.
The Company does not have a significant shareholder with the ability to exercise
a majority of the votes for the election of the Board of Directors.
DESCRIPTION OF DECISIONS REQUIRING PRIOR APPROVAL OF THE BOARD OF DIRECTORS
In addition to matters which by law or by the Articles of the Company must be
approved by the Board of Directors, management is required to seek Board of
Director approval for major transactions such as strategic alliances,
acquisitions and financings.
EXPECTATIONS OF MANAGEMENT
Management is responsible for developing and implementing the strategies and
tactics of the Company within the context of authorized budgets and corporate
policies and procedures. Management provides information to the Board of
Directors in a regular and comprehensive fashion. The Board of Directors uses
this information along with other information requested from time to time to
assist management by providing advice and guidance to identify issues and
opportunities for the Company.
SHAREHOLDER COMMUNICATION
The Company employs a combination of active and passive methods to communicate
with its shareholders. Regular communications are conducted with shareholders
through press releases, newsletters and annual and quarterly reports. At the
Meeting, a full opportunity is afforded shareholders to ask questions concerning
the Company's business and, in addition, the Company organizes or makes
presentations at many investor conferences each year. The Company's investor
relations department also answers numerous queries and makes information about
the Company available on the Company's Website at www.pivotal.com. The Board of
Directors believes that the Company's communications with shareholders and
investors is responsive and effective.
RECRUITMENT OF NEW DIRECTORS AND ASSESSMENT OF THE BOARD OF DIRECTORS'
PERFORMANCE
The Board of Directors and senior officers of the Company are responsible for
identifying, evaluating and recommending nominees for the Board of Directors and
reviewing incumbent directors for re-election to the Board of Directors.
Incumbent and potential new directors are evaluated by the Board of Directors
and the senior officers of the Company with the objective of obtaining a
balanced mix of board members with the experience and expertise to ensure that
the Board of Directors is composed of
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individuals who will best serve the interests of the Company and assist
management in reaching the Company's strategic goals.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established three standing committees: the Audit
Committee, the Compensation Committee and the Options Committee. The Board of
Directors has delegated certain responsibilities to each of these Committees and
has also instructed each of them to perform certain advisory functions and make
recommendations and report to the Board of Directors. Where considered prudent,
certain matters falling under the responsibility of these Committees are at
times dealt with at a meeting of the entire Board of Directors.
AUDIT COMMITTEE
The Audit Committee meets with the financial officers of the Company and the
independent auditors to review and inquire into matters affecting financial
reporting, the system of internal accounting and financial controls and
procedures and audit procedures and plans. The Committee also makes
recommendations to the Board of Directors regarding the appointment of
independent auditors. In addition, the Committee reviews and recommends to the
Board of Directors for approval the annual financial statements of the Company
and certain other documents required by the regulatory authorities. The
Committee is also responsible for approving the policies under which the
financial officers of the Company may invest funds in excess of those required
for current operations. In the financial year ended June 30, 2000, this
Committee met four times. This Committee is composed of Robert J. Louis and
Douglas J. Mackenzie, neither of whom is a current or former officer of the
Company. Both members of the Committee are unrelated directors.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for establishing and monitoring the
Company's long range plans and programs for attracting, training, developing and
motivating employees. The Committee reviews recommendations for the appointment
of persons to senior executive positions, considers terms of employment,
including succession planning and matters of compensation and recommends awards
under the Company's incentive stock option plan and the employee share purchase
plan. In the financial year ended June 30, 2000, this Committee met once. The
Committee is composed of Jeremy A. Jaech, Robert J. Louis and Douglas J.
Mackenzie, none of whom are current or former officers of the Company. All
members of the Committee are unrelated directors.
OPTIONS COMMITTEE
The Option Committee has been given the authority to grant options to employees
of Pivotal pursuant to Pivotal's Incentive Stock Option Plan. The Committee is
currently composed of Norman B. Francis who is a current officer of the Company
and therefore, a related director. The corporate governance policies of The
Toronto Stock Exchange recommend that the committees of the Board of Directors
be composed of outside directors, the majority of whom are unrelated directors,
although some board committees may include one or more inside directors. The
Board has considered this issue and supports the continued membership of Mr.
Francis on this Committee, however, the Board intends to appoint an additional
director to this Committee.
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<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
During the Company's financial year ended June 30, 2000, the aggregate cash
compensation paid or payable by the Company to its directors and senior officers
was $1,786,468.
The table below contains a summary of the compensation paid to the Company's
President and Chief Executive Officer and the Company's four most highly
compensated executive officers (other than the President and Chief Executive
Officer) who were serving as executive officers at the end of the Company's most
recently completed financial year (collectively, the "Named Executive
Officers"), for each of the Company's three most recently completed financial
years ended June 30, 2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------- ------------
Securities Other
Name and Principal Position Year Salary Bonus Under Options Compensation
--------------------------- ---- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Norman B. Francis 2000 $175,000 $78,983 25,000 Nil
President and Chief Executive 1999 $120,000 Nil Nil Nil
Officer 1998 $120,000 Nil 25,850 Nil
Keith R. Wales 2000 $150,000 $35,931 25,000 Nil
Chief Technical Officer 1999 $120,000 $37,064 Nil Nil
1998 $120,000 $68,392 Nil Nil
Vincent D. Mifsud(1) 2000 $175,000 $103,755 20,000 Nil
Chief Financial Officer and 1999 $85,192 $32,799 160,000 $14,269
Executive Vice President 1998 Nil Nil Nil Nil
Glenn S. Hasen 2000 US$150,000 $106,513 30,000 Nil
Executive President, Field 1999 US$125,000 $87,425 90,000 Nil
Operations 1998 US$100,000 Nil 136,000 Nil
Robert A. Runge 2000 US$160,000 $53,665 20,000 Nil
Chief Marketing Officer 1999 US$145,000 $39,651 60,000 Nil
1998 US$125,000 Nil 250,000 Nil
</TABLE>
-------------------------
Notes:
(1) Mr. Mifsud was hired in December of 1998.
STOCK OPTIONS
Pivotal's Board of Directors and shareholders approved the Company's Incentive
Stock Option Plan (the "Plan") in July, 1992. Initially, 1,096,800 Common Shares
were reserved for issuance under the Plan. This reserve has been increased
several times. Initially, the eligible persons under the Plan were Pivotal's
directors, officers and employees and the directors, officers and employees of
Pivotal's subsidiaries. The Plan was subsequently amended to extend eligibility
to include Pivotal's independent contractors and consultants, independent
contractors and consultants of Pivotal's subsidiaries and any partnership, joint
venture, or other entity in which Pivotal holds a 50% or greater voting
interest, and directors of any such partnership, joint venture, or other entity.
The exercise price for options granted
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under the Plan is determined by the Board of Directors, and must not be less
than the fair market value of the Common Shares on the date of grant as
determined by the Board of Directors, less any discount permitted by law and by
regulatory bodies having jurisdiction over Pivotal. In the case of U.S.
residents and citizens, the Plan provides for the grant of both incentive stock
options that may qualify under section 422 of the U.S. Internal Revenue Code and
non-qualified stock options on terms determined by the Board of Directors,
subject to statutory and other limitations in the Plan, including limitations on
the exercise price, which for incentive options to comply with section 422 of
the Code, may not be less than 100% of the fair market value of the Common
Shares on the date of grant. Incentive options may be granted to Pivotal's
employees and those of Pivotal's subsidiaries, while non-qualified options may
be issued to non-employee directors, and independent contractors, as well as to
employees.
The Plan is administered by the Board of Directors, which determines the
individuals who receive options, the time period during which the options may be
partially or fully exercised, the number of Common Shares issuable upon the
exercise of each option and the option exercise price.
No option may be transferred by an optionee other than by the laws of
succession, descent and distribution, and, during the lifetime of an optionee,
the option is exercisable only by the optionee.
If an optionee's employment or engagement is terminated other than by death or
disability, no further instalments of options that have not vested as of the
date of termination will become exercisable, and the optionee will be entitled
to exercise vested options for a period of 30 days following termination. If an
optionee is terminated for cause, any option or unexpired portion granted to the
optionee terminates immediately. Upon termination of employment or engagement of
an optionee by reason of death or permanent and total disability, the optionee's
options remain exercisable for 12 months to the extent that the options had
vested and were exercisable on the date of termination.
Each option vests and becomes exercisable at such times determined by the Board
of Directors at the time of grant. Holders of options granted before June 1999
under the Plan cannot exercise these options more than five years from the date
of grant, or an earlier date as may be fixed by the Board of Directors. In June
1999, Pivotal's shareholders approved amendments to the Plan which became
effective on August 5, 1999. These amendments, among other things: (a) permitted
the grant of options with a duration of up to ten years; (b) extended the expiry
date for the Plan from July 31, 2002 to July 31, 2006; (c) deleted the
requirements for shareholders approval for future amendments to the Plan, other
than as required by law; (d) allowed administration of the Plan by a committee
of the Board of Directors; and (e) permitted the Plan administrator to authorize
two of Pivotal's officers acting together to make option grants to eligible
individuals other than executive officers or directors within limits set by the
Plan administrator.
The amendments also increased the number of Common Shares reserved for issuance
pursuant to the Plan by: (a) 1,076,186 Common Shares (which, when combined with
earlier increases, resulted in a maximum of 5,076,186 Common Shares being
issuable under the Plan); plus (b) an automatic increase on the first day of
each fiscal year beginning in 2001, equal to the lesser of 800,000 Common Shares
or 4% of the average Common Shares outstanding as used to calculate fully
diluted earnings per share as reported in Pivotal's annual report to
shareholders for the preceding year.
On September 21, 2000, the Board of Directors of the Company approved a further
increase in the maximum number of Common Shares reserved for issuance under the
Plan by 1,500,000 Common Shares, from 5,076,186 to 6,576,186, in order to ensure
sufficient options are available to permit the Company to maintain its policy of
granting options to employees to align their interests with those of the
Company's shareholders prior to the automatic increase which, as discussed
above, will not occur until July 1, 2001. This amendment to the Plan is subject
to the approval of regulatory authorities.
The usual period over which options become vested under the Plan is four years,
with vesting as to 25% on the first anniversary of the date of grant and 12.5%
at the end of each six month period thereafter, but
- 10 -
<PAGE> 15
the Plan administrator may provide for different vesting schedules in particular
cases. The exercise price payable for Common Shares purchased under the Plan
must be paid in cash or by certified cheque, or other consideration with
equivalent value at the time of purchase as the Plan administrator may
determine.
Any unexercised options that expire or that terminate upon an employee ceasing
to be employed by Pivotal become available again for issuance under the Plan.
The Plan as amended will terminate on July 31, 2006.
A summary of stock options granted to the Named Executive Officers under the
Plan during the financial year ended June 30, 2000 is set out in the table
below. No stock appreciation rights ("SARs") are outstanding, and it is
currently intended that none be issued.
As at September 1, 2000, options to purchase 2,271,008 Common Shares were
outstanding.
<TABLE>
<CAPTION>
OPTIONS GRANTED DURING 2000 FINANCIAL YEAR(1)
Market Value of
Securities
Underlying
% of Total Exercise Price Options on the
Securities Options Granted (per Common Date of Grant Expiration Date
Name Under Options in the Year Share) (per Common Share) Date of Grant
----------------- ------------- --------------- -------------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Norman B. Francis 25,000 1.75% US$51.25 US$51.25 Jan.19, 2010 Jan.20, 2000
Keith R. Wales 25,000 1.75% US$51.25 US$51.25 Jan.19, 2010 Jan.20, 2000
Vincent D. Mifsud 20,000 1.4% US$51.25 US$51.25 Jan.19, 2010 Jan.20, 2000
Glenn S. Hasen 30,000 2.1% US$21.25 US$21.25 Oct.13, 2009 Oct.14, 1999
Robert A. Runge 20,000 1.4% US$21.25 US$21.25 Oct.13, 2009 Oct.14, 1999
</TABLE>
----------
(1) All stock options are for Common Shares of the Company.
The following table summarizes all stock options exercised by Named Executive
Officers during the financial year ended June 30, 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTIONS EXERCISED DURING 2000 FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION VALUES(1)
Value of Unexercised
Securities Unexercised Options at in-the-Money Options at
Acquired on Aggregate Value June 30, 2000 June 30, 2000
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
----------------- ----------- --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Norman B. Francis Nil Nil 72,850 $1,105,160
Keith R. Wales Nil Nil 25,000 Nil
Vincent D. Mifsud 40,000 $2,326,950 140,000 $1,808,000
Glenn S. Hasen 57,750 $1,455,100 86,250 $1,103,300
Robert A. Runge 25,000 $372,132 57,500 $735,533
</TABLE>
----------
(1) Based on the closing price of the Common Shares on the NASDAQ National
Market on the last trading day of the financial year, being US$23.50.
- 11 -
<PAGE> 16
EMPLOYMENT AND CONSULTING CONTRACTS
The Company has entered into employment agreements with each of Glenn S. Hasen
(effective from October 21, 1996), Robert Runge (effective from September 8,
1997) and Vincent D. Mifsud (effective from November 16, 1998). Each agreement
requires the execution of confidentiality agreements containing customary terms,
including non-solicitation provisions. The agreements with Messrs. Runge and
Mifsud also provide that in the event of dismissal without just cause or where
all or substantially all of the shares or assets of Pivotal are acquired, the
standard vesting schedule under the Company's Incentive Stock Option Plan will
be accelerated.
REMUNERATION OF DIRECTORS
The Company does not pay cash compensation to directors for serving on the Board
of Directors, but it does reimburse directors for out-of-pocket expenses for
attending board and committee meetings. The Company does not provide additional
compensation for committee participation or special assignments of the Board of
Directors. Of the Directors, only Messrs. Francis and Wales received stock
options for their participation on the Board of Directors for the year ended
June 30, 2000. Both Messrs. Francis and Wales received options to purchase
25,000 Common Shares at a price of US$51.25 per share.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews and recommends to
the Board of Directors the compensation and benefits of all Pivotal's executive
officers and establishes and reviews general policies relating to compensation
and benefits of Pivotal's employees.
The Company's compensation policies and programs are designed to be competitive
with similar customer relationship management companies in the e-commerce
environment and to recognize and reward executive performance consistent with
the success of the Company's business. These policies and programs are intended
to attract and retain capable and experienced people.
In addition to industry comparables, the Committee considers a variety of
factors when determining both compensation policies and programs and individual
compensation levels. These factors include the long range interests of the
Company and its shareholders, overall financial and operating performance of the
Company and the Committee's assessment of each executive's individual
performance and contribution towards meeting goals and objectives.
The total compensation plan for executive officers is comprised of four
components: base salary, cash bonuses, stock options and an employee stock
purchase plan. In establishing base salaries, the Committee reviews competitive
market data for each of the executive positions and determines placement at an
appropriate level in a range. Compensation levels are typically negotiated with
the candidate for the position prior to his or her final selection as an
executive officer. The compensation range for executives normally moves annually
to reflect external factors such as inflation. Cash bonuses are used to reward
officers for meeting specific performance targets as mutually agreed upon on an
annual basis. The third component of the compensation plan is the Incentive
Stock Option Plan, which is intended to emphasize management's commitment to
growth of the Company and the enhancement of shareholder value. The fourth
component of the compensation plan is the employee stock purchase plan, which is
used to encourage participants to remain in the employ of the Company and to
have a strong commitment to, and a personal interest in, the success of the
Company.
- 12 -
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the monthly percentage change in the Company's
cumulative total shareholder return on its Common Shares with the cumulative
total return of the NASDAQ National Market(1), for the period from August 5,
1999 to June 30, 2000.
[PERFORMANCE GRAPH]
Note:
The Company completed an initial public offering and its securities were listed
on the NASDAQ National Market on August 5, 1999. The Company's securities were
listed on the Toronto Stock Exchange on August 17, 2000.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
None of the directors, executive officers or senior officers of the Company or
any proposed nominees for directors of the Company, or any associates of any of
them, is or has been indebted to the Company or any subsidiary thereof.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
To the knowledge of management of the Company, no insider or nominee for
election as a director of the Company had any interest in any material
transaction involving the Company during the year ended June 30, 2000 or has any
interest in any actual or proposed material transaction involving the Company in
the current year.
- 13 -
<PAGE> 18
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the directors or senior officers of the Company, nor any person who has
held such a position since the beginning of the last completed financial year
end of the Company, nor any proposed nominee for election as a director of the
Company, nor any associate or affiliate of the foregoing persons, has any
substantial or material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted on at the
Meeting.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is a "foreign private issuer" under the Securities Exchange Act of
1934 (the "Act") and as such its insiders are not required to file reports under
section 16(a) of the Act.
OTHER BUSINESS
At this time management knows of no other business proposed for the Meeting.
DATED at Vancouver, British Columbia this 1st day of September, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
(signed) Diane Malaher
Secretary
- 14 -
<PAGE> 19
SCHEDULE "A"
PROPOSED TEXT OF RESOLUTION REGARDING AMENDMENT TO INCENTIVE STOCK OPTION PLAN
BE IT RESOLVED that an amendment to the Company's Incentive Stock Option Plan
(the "Plan") pursuant to which the maximum number of Common Shares reserved for
issuance under the Plan is increased by 1,500,000 Common Shares, from 5,076,186
Common Shares to 6,576,186 Common Shares, all as more particularly described in
the Information Circular dated as of September 1, 2000, is hereby approved.
<PAGE> 20
PIVOTAL CORPORATION
Suite 300 - 224 West Esplanade
North Vancouver, BC V7M 3M6
PROXY
FOR THE 2000 ANNUAL GENERAL MEETING
OCTOBER 25, 2000
THIS PROXY IS SOLICITED BY MANAGEMENT OF THE COMPANY
The undersigned shareholder of Pivotal Corporation (the "Company") hereby
appoints Norman B. Francis, or failing him, Vincent D. Mifsud, or failing either
of them ___________________________ as the proxyholder for and on behalf of the
undersigned to attend, act and vote for and on behalf of the undersigned at the
annual general meeting (the "Meeting") of the shareholders of the Company to be
held at The Waterfront Centre Hotel, 900 Canada Place Way, Vancouver, British
Columbia, on Wednesday, October 25, 2000 at 2:30 p.m. and at any adjournment
thereof, to the same extent and with the same powers as if the undersigned were
present at the Meeting or any adjournment thereof, and, without limiting the
foregoing, the persons named are specifically directed to vote as indicated
below. For further information regarding the Meeting and the matters that will
be acted upon at the Meeting, reference is specifically made to the accompanying
Notice of Annual Meeting, and Management Information and Proxy Circular, both
dated September 1, 2000. The instructions to this proxy form part of this proxy.
The undersigned directs the proxyholder appointed by this proxy to vote as
follows:
1. To elect the following persons as directors of the Company until the next
annual general meeting:
Norman B. Francis..........FOR [ ] WITHHOLD [ ]
Keith R. Wales.............FOR [ ] WITHHOLD [ ]
Jeremy A. Jaech............FOR [ ] WITHHOLD [ ]
Robert J. Louis............FOR [ ] WITHHOLD [ ]
Douglas J. MacKenzie.......FOR [ ] WITHHOLD [ ]
Donald A. Mattrick.........FOR [ ] WITHHOLD [ ]
2. To approve and confirm an amendment to the Company's Incentive Stock Option
Plan, increasing the number of Common Shares reserved for issuance under the
Plan as described in the accompanying Information Circular.
FOR [ ] AGAINST [ ]
3. To appoint Deloitte & Touche LLP, Chartered Accountants, as auditor of the
Company until the next annual general meeting at a remuneration to be fixed
by the directors of the Company.
FOR [ ] WITHHOLD [ ]
EXECUTED on the _____ day of __________________, 2000.
---------------------------------------------- -----------------------------
Signature of Shareholder (or Authorized Number of Common Shares Held
Attorney or Signatory on behalf of Shareholder)
--------------------------------------------------------------------------------
Name of Shareholder (Please Print Clearly)
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City/Province
INSTRUCTIONS:
1. The common shares represented by this proxy will, on any ballot, be voted as
you may have specified by marking an "X" in the spaces provided for that
purpose. IF NO CHOICE IS SPECIFIED AND EITHER OF NORMAN B. FRANCIS OR VINCENT D.
MIFSUD IS APPOINTED AS PROXYHOLDER, THE COMMON SHARES WILL BE VOTED AS IF YOU
HAD SPECIFIED AN AFFIRMATIVE VOTE.
2. YOU MAY APPOINT AS PROXYHOLDER SOMEONE OTHER THAN THE PERSONS NAMED IN THIS
PROXY BY STRIKING OUT THEIR NAMES AND INSERTING IN THE BLANK SPACE PROVIDED THE
NAME OF THE PERSON YOU WISH TO ATTEND AND ACT AS PROXYHOLDER, AND THAT PERSON
NEED NOT BE A SHAREHOLDER OF THE COMPANY. IF THE INSTRUCTIONS ON THIS PROXY ARE
CERTAIN, THE COMMON SHARES REPRESENTED BY THE PROXY WILL BE VOTED ON ANY POLL IN
ACCORDANCE WITH SUCH INSTRUCTIONS, AND WHERE YOU SPECIFY A CHOICE WITH RESPECT
TO ANY MATTER TO BE ACTED ON, THE COMMON SHARES WILL BE VOTED ON ANY POLL IN
ACCORDANCE WITH THE SPECIFICATIONS SO MADE.
3. THIS PROXY ALSO CONFERS A DISCRETIONARY AUTHORITY TO VOTE THE COMMON SHARES
WITH RESPECT TO:
(a) AMENDMENTS TO, OR VARIATIONS OF, MATTERS IDENTIFIED IN THE NOTICE OF ANNUAL
MEETING; AND
(b) OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING,
BUT ONLY IF MANAGEMENT HAS NOT BEEN MADE AWARE, A REASONABLE TIME PRIOR TO THIS
SOLICITATION, THAT THE AMENDMENTS, VARIATIONS OR OTHER MATTERS ARE TO BE
PRESENTED FOR ACTION AT THE MEETING. No matters other than those stated in the
attached Notice of Annual Meeting are, at present, known to be considered at the
Meeting but, if such matters should arise, proxies will be voted in accordance
with the best judgment of the proxyholder.
4. In order to be valid this proxy must be signed by the shareholder or by his
or her attorney duly authorized in writing or, in the case of a corporation,
executed under its corporate seal or by an officer or officers or attorney for
the corporation duly authorized. If this proxy is executed by an attorney for an
individual shareholder or joint shareholder or by an officer or officers or
attorney of a corporate shareholder not under its corporate seal, the instrument
so empowering the officer or officers or the attorney, as the case may be, or a
notarial copy thereof, should accompany the proxy. The signature and name must
conform to the name of the shareholder as registered. Executors, administrators
and trustees signing on behalf of the registered shareholder should so indicate.
If common shares are jointly held, either of the registered owners may sign the
proxy. If this proxy is not dated in the blank space provided, it will be deemed
to bear the date on which it was mailed by management of the Company.
5. This proxy may not be used at the Meeting unless it is deposited at the
office of CIBC Mellon Trust Company at Suite 1600, 1066 West Hastings Street,
Vancouver, British Columbia, V6E 3X1, Attention: Mr. Doug Allen before 2:30 p.m.
(Vancouver time) on Monday, October 23, 2000, or not less than 48 hours
(excluding Saturdays and holidays) before any adjournment of the Meeting. The
Chairman of the Meeting has the discretion to accept proxies received
subsequently.
