<PAGE> 1
SCHEDULE 14A
(RULE 14n-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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
SKILLSOFT CORPORATION
- --------------------------------------------------------------------------------
(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:
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[ ] 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SKILLSOFT CORPORATION
20 INDUSTRIAL PARK DRIVE
NASHUA, NEW HAMPSHIRE 03062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 9, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SkillSoft
Corporation, a Delaware corporation, will be held as follows:
<TABLE>
<S> <C>
DATE: Friday, June 9, 2000
TIME: 10:00 a.m. local time
PLACE: Hale and Dorr LLP
60 State Street
Boston, MA 02109
</TABLE>
The meeting will be held to consider and vote upon the following matters:
1. To elect two Class I directors to serve until the 2003 Annual Meeting of
Stockholders;
2. To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for the current year; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, April 21,
2000 as the date for the determination of the stockholders of record entitled to
notice of, and to vote at, the meeting and at any adjournments thereof.
By order of the Board of Directors,
Thomas J. McDonald, Secretary
May 10, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED ENVELOPE IN ORDER
TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
<PAGE> 3
SKILLSOFT CORPORATION
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 2000
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SkillSoft Corporation (the "Company") for
use at the Annual Meeting of Stockholders to be held on Friday, June 9, 2000 at
10:00 a.m. local time at the offices of Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109 and at any adjournment of that meeting.
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified on a proxy, it will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery to the
Secretary of the Company of a written revocation or a subsequently dated proxy
or by voting in person at the meeting. Attendance at the meeting will not itself
have the effect of revoking a proxy unless the stockholder gives affirmative
notice at the meeting that the stockholder intends to revoke the proxy and vote
in person.
A copy of the Company's Annual Report to Stockholders for the year ended
January 31, 2000, which contains financial statements and other information of
interest to stockholders, accompanies the Notice of Meeting and this Proxy
Statement and is being mailed to stockholders on or about May 15, 2000.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 31, 2000 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCEPT FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON
WRITTEN REQUEST TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT 20 INDUSTRIAL
PARK DRIVE, NASHUA, NEW HAMPSHIRE 03062.
VOTES REQUIRED
On April 21, 2000, the date for the determination of stockholders of record
entitled to vote at the meeting, there were an aggregate of 13,073,797 shares of
common stock outstanding and entitled to vote, constituting all of the
outstanding voting stock of the Company. Each share of common stock entitles the
record holder to one vote on each of the matters to be voted upon at the
meeting.
The holders of a majority of the shares of common stock issued and
outstanding and entitled to vote at the meeting constitutes a quorum for the
transaction of business at the meeting. Holders of shares of common stock
present in person or represented by proxy (including holders of shares who
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 exists at the meeting.
The affirmative vote of the holders of shares representing a plurality of
the votes cast on the matter is required for the election of directors. The
affirmative vote of the holders of shares representing a majority of the votes
cast on the matter is required for the ratification of the selection of
independent public accountants.
Shares held by stockholders who abstain from voting as to a particular
matter, and shares held in "street name" by brokers or nominees who indicate on
their proxies that they do not have discretionary authority to vote such shares
as to a particular matter, will not be counted as votes in favor of such matter
and will also not be counted as votes cast on such matter. Accordingly,
abstentions and such "broker non-votes" will have no effect on the voting on the
election of the directors or on the ratification of the selection of independent
public accountants.
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PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. There are
currently two Class I directors, whose terms expire at this Annual Meeting of
Stockholders; two Class II directors, whose terms expire at the 2001 Annual
Meeting of Stockholders; and one Class III director whose term expires at the
2002 Annual Meeting of Stockholders (in all cases subject to the election and
qualification of their successors and to their earlier death, resignation or
removal).
The persons named in the enclosed proxy will vote to elect Charles E. Moran
and Stewart K.P. Gross as Class I directors, unless authority to vote for the
election of the nominees is withheld by marking the proxy to that effect.
Messrs. Moran and Gross are currently Class I directors of the Company. Messrs.
Moran and Gross have indicated their willingness to serve, if elected, but
should either of them be unable or unwilling to stand for election, proxies may
be voted for a substitute nominee designated by the Board of Directors. Proxies
may not be voted for a greater number of persons than the number of nominees
named herein.
Set forth below are the names and certain information with respect to each
director of the Company, including the nominees for Class I directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES.
CLASS I DIRECTORS (holding office for a term expiring at this Annual Meeting)
Charles E. Moran, age 45, is a founder of the Company and has served as its
Chairman of the Board, President and Chief Executive Officer since January 1998.
Before founding the Company, Mr. Moran served as President and Chief Executive
Officer of National Education Training Group, Inc., a computer-based information
technology training company, from May 1995 until November 1997. From July 1994
to May 1995, Mr. Moran was an independent consultant. From October 1993 until
July 1994, Mr. Moran served as Chief Financial Officer and Chief Operating
Officer of Softdesk, Inc., a developer of computer-assisted design and drafting
software. Mr. Moran is also a director of Workgroup Technology Corporation.
Stewart K.P. Gross, age 40, has served as director of the Company since
January 1998. Mr. Gross is a Managing Director of E.M. Warburg, Pincus & Co.,
LLC, where he has been employed since July 1987. Mr. Gross is a director of BEA
Systems, Inc., Alysis Technologies, Inc. and several privately held companies.
CLASS II DIRECTORS (holding office for a term expiring at the 2001 Annual
Meeting)
C. Samantha Chen, age 30, has served as director of the Company since June
1999. Ms. Chen has been a Vice President at E.M. Warburg, Pincus & Co., LLC
since January 2000, and was an associate from September 1997 to January 2000.
From April 1992 to June 1995, Ms. Chen served as an analyst at Bessemer Venture
Partners. From September 1995 to June 1997, Ms. Chen attended the Stanford
Graduate School of Business, where she obtained her MBA.
William T. Coleman III, age 52, has served as director of the Company since
August 1999. Since January 1995, Mr. Coleman has served as Chairman of the Board
and Chief Executive Officer of BEA Systems Inc., a provider of software
solutions for enterprise electronic commerce applications. From December 1985 to
January 1995, Mr. Coleman served as Vice President and General Manager and Vice
President of Software at Sun Microsystems. Mr. Coleman is also a director of
Portal Software, Inc.
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CLASS III DIRECTOR (holding office for a term expiring at the 2002 Annual
Meeting)
James Adkisson, age 52, has served as director of the Company since January
1998. Since 1992, Mr. Adkisson has been a Partner at Growth Resources
International, an investment advisory services company.
For information relating to shares of common stock owned by each of the
directors, see "Security Ownership of Certain Beneficial Owners and Management"
below.
BOARD AND COMMITTEE MEETINGS
The Board of Directors met thirteen times during the fiscal year ended
January 31, 2000. Each director attended at least 75% of the aggregate number of
Board and committee meetings held during the fiscal year ended January 31, 2000
that he or she was eligible to attend as a director and committee member.
The Board of Directors has a standing Audit Committee and Compensation
Committee. The Audit Committee of the Board of Directors is responsible for
reviewing the results and scope of audits and other services provided by the
Company's independent public accountants and reviewing the Company's system of
internal accounting and financial controls. The Audit Committee has adopted a
written charter. The Audit Committee did not meet during fiscal year ended
January 31, 2000 as its functions were discharged by the full Board of
Directors. The current members of the Audit Committee are Messrs. Adkisson and
Coleman.
The Compensation Committee of the Board of Directors is responsible for
reviewing and evaluating the salaries and incentive compensation of management
and key employees of the Company and making recommendations concerning these
matters to the Board of Directors. The Compensation Committee did not meet
during fiscal year ended January 31, 2000 as its functions were discharged by
the full Board of Directors. The current members of the Compensation Committee
are Ms. Chen and Mr. Gross.
The Company does not have a nominating committee or a committee performing
similar functions.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company, who currently consist of
Ms. Chen and Messrs. Adkisson, Coleman and Gross, are reimbursed for reasonable
out-of-pocket expenses incurred in attending Board and committee meetings. No
director receives cash compensation for services rendered as a director.
Non-employee directors (other than those currently serving on the Board of
Directors) will also be eligible for participation in the Company's 1999
Non-Employee Director Stock Option Plan. Under that Plan, each non-employee
director of the Company (other than current directors) will be granted a stock
option to purchase 40,000 shares of common stock on the date he or she is first
elected to the Board of Directors. The exercise price for all options granted
under the Plan will be equal to the fair market value of the common stock on the
date of grant. The options granted will become exercisable in four equal annual
installments on each anniversary of the date of grant, provided that the
optionee remains a director, and will become exercisable in full upon a change
in control of the Company. Each option will expire on the earlier of ten years
from the date of grant or on the first anniversary of the date on which the
optionee ceases to be a director of Skillsoft.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 29, 2000
with respect to the beneficial ownership of shares of common stock by each
person known to the Company to own beneficially more than
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5% of the outstanding shares of common stock; the directors and director
nominees; each of the executive officers; and the directors and executive
officers as a group.
The number of shares beneficially owned by each 5% stockholder, director or
executive officer is determined under rules of the Securities and Exchange
Commission (the "SEC"). Under such rules, beneficial ownership includes any
shares as to which the individual or entity has sole or shared voting power or
investment power and also includes any shares which the individual or entity has
the right to acquire on or before April 29, 2000 through the exercise of stock
options, and any reference in the footnotes to this table to shares subject to
stock options refers only to stock options that are so exercisable. For purposes
of computing the percentage of outstanding shares of common stock held by each
person or entity, any shares which that person or entity has the right to
acquire on or before April 29, 2000, are deemed to be outstanding but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person. Unless otherwise indicated, each person or entity has sole
investment and voting power (or shares such power with his or her spouse) with
respect to the shares set forth in the following table. The inclusion herein of
any shares deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
---------------------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF
OF BENEFICIAL OWNER OF COMMON STOCK COMMON STOCK
- ------------------- ---------------- -------------
<S> <C> <C>
Warburg, Pincus Ventures, L.P.(1)........................... 6,209,524 47.5%
Stewart K.P. Gross(2)....................................... 6,209,524 47.5%
Charles E. Moran(3)......................................... 1,366,666 10.5%
Jerald A. Nine.............................................. 500,000 3.8%
Mark A. Townsend............................................ 433,333 3.3%
Thomas J. McDonald.......................................... 266,666 2.0%
James Adkisson.............................................. 127,830 *
William T. Coleman, III(4).................................. 61,164 *
C. Samantha Chen(5)......................................... -- --
All directors and executive officers as a group (8
persons)(6)............................................... 8,965,183 68.6%
</TABLE>
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* Less than 1%
(1) The address for Warburg, Pincus Ventures, L.P. is 466 Lexington Avenue, 10th
Floor, New York, New York 10017-3147.
(2) Consists of shares beneficially owned by Warburg, Pincus Ventures, L.P.
Warburg, Pincus & Co. is the sole general partner of Warburg, Pincus
Ventures, L.P. Warburg, Pincus Ventures, L.P. is managed by E.M. Warburg,
Pincus & Co., LLC. Lionel I. Pincus is the managing partner of Warburg
Pincus & Co. and the managing member of E.M. Warburg, Pincus & Co., LLC, and
may be deemed to control both entities. Mr. Gross, a director of the
Company, is a managing director and member of E.M. Warburg, Pincus & Co.,
LLC and a general partner of Warburg Pincus & Co. Mr. Gross disclaims
beneficial ownership of these shares. Mr. Gross' address is c/o Warburg,
Pincus Ventures L.P., 466 Lexington Avenue, 10th Floor, New York, New York
10017-3147.
(3) Consists of 733,333 shares beneficially owned by Mr. Moran and a total of
633,333 shares of common stock beneficially owned by Mr. Moran's wife, as
trustee of various trusts for the benefit of Mr. Moran's children. Mr. Moran
disclaims beneficial ownership of the shares held in trust. Excluding these
shares, Mr. Moran beneficially owns a total of 733,333 shares of common
stock, or 5.6% of the outstanding common stock.
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(4) Consists of shares beneficially owned by the Coleman Family Trust, of which
Mr. Coleman is trustee.
(5) Excludes shares beneficially owned by Warburg, Pincus Ventures, L.P. Ms.
Chen is a vice president of E.M. Warburg, Pincus & Co., LLC, the manager of
Warburg, Pincus Ventures, L.P.
(6) See Notes 2-5.
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation for the fiscal years
ended January 31, 1999 and 2000 for each of the Company's executive officers.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(2)
FISCAL COMPENSATION(1) AWARDS
YEAR -------------------- ---------------
ENDED RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION JANUARY 31, SALARY BONUS STOCK AWARDS(3) COMPENSATION(4)
- --------------------------- ----------- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Charles E. Moran................... 2000 $250,000 $ -- $ -- $606,736(5)
Chairman of the Board, President 1999 $250,000 -- $1,373,700 --
and Chief Executive Officer
Thomas J. McDonald................. 2000 $135,000 -- $ 915,791 $ 2,599
Chief Financial Officer, Vice 1999 $135,000 100,000 $2,747,400 --
President, Operations and
Treasurer
Jerald A. Nine..................... 2000 $145,000 -- $ 457,895 $ 5,577
Vice President, Worldwide 1999(6) $117,115 -- $6,410,605 --
Sales and Marketing
Mark A. Townsend................... 2000 $145,000 -- $ 457,895 $ 5,577
Vice President, Product 1999 $145,000 -- $5,494,800 --
Development
</TABLE>
- ---------------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted, in accordance with the rules of the SEC, as the aggregate
amount of such perquisites and other personal benefits constituted less than
the lesser of $50,000 or 10% of the total annual salary and bonus for each
executive officer in each fiscal year covered.
(2) The Company did not make any stock option grants, grant any stock
appreciation rights or make any long-term incentive plan payouts during any
fiscal year covered.
(3) Long term compensation consisted of restricted stock granted under the
Company's 1998 Stock Incentive Plan which vests in 36 equal monthly
installments commencing the month following the date of grant. Amounts shown
above represent the value of the restricted stock award, based on the
initial public offering price ($14.00) less the purchase price paid. The
number of shares of restricted stock granted to Messrs. Moran, McDonald,
Townsend and Nine in the fiscal year ended January 31, 1999 was 0; 200,000;
400,000 and 466,667, respectively. The number of shares of restricted stock
granted to Messrs. Moran, McDonald, Townsend and Nine during the fiscal year
ended January 31, 2000 was: 100,000; 66,666; 33,333 and 33,333,
respectively. The number of shares of restricted stock held by each of the
executive officers as of January 31, 2000 and its value as of January 31,
2000, based on the initial public offering price ($14.00), was as follows:
Mr. Moran: 100,000 shares, $1,400,000; Mr. McDonald: 266,666 shares,
$3,733,324; Mr. Townsend: 433,333 shares, $6,066,662; and Mr. Nine: 500,000
shares, $7,000,000. The holders of those shares of restricted stock will be
entitled to receive any dividends paid by the Company on its common stock.
(4) Includes amounts paid as accrued vacation time.
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(5) Includes $600,000 as bonus paid under Mr. Moran's employment agreement. See
"Employment Agreements."
(6) Mr. Nine joined the Company in April 1998 and thus received compensation for
only part of the fiscal year.
OPTION GRANTS DURING FISCAL YEAR
The Company did not grant any options or stock appreciation rights during
the fiscal year ended January 31, 2000 to any of its executive officers.
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
None of the executive officers of the Company exercised any options to
purchase stock of the Company during the fiscal year ended January 31, 2000 or
held any such options as of January 31, 2000.
EMPLOYMENT AGREEMENTS
The Company is a party to an employment agreement with Mr. Moran entered
into in December 1997. Under the terms of this employment agreement, Mr. Moran
is entitled to receive an annual base salary of $250,000, which may be increased
in accordance with the Company's regular salary review practices. Mr. Moran is
also entitled to be paid a signing bonus of $600,000 upon the earliest of:
- the end of the second consecutive quarter that the Company achieves
quarterly revenue in excess of $1,000,000,
- the fourth anniversary of the date of the employment agreement or
- a sale of the Company following which the Company's stockholders own less
than 50% of the equity securities of the surviving company.
Mr. Moran was paid this bonus following the quarter ended January 31, 2000,
based on the Company achieving revenue in excess of $1,000,000 in two
consecutive quarters.
Mr. Moran is also entitled to participate in any bonus plan that the
Company may establish for its senior executives. Either the Company or Mr. Moran
may terminate the employment agreement at will for any reason, upon three
months' prior notice in the case of termination by the Company, or upon two
months' prior notice in the case of termination by Mr. Moran. If the Company
terminates Mr. Moran's employment without cause, or if Mr. Moran terminates his
employment for good reason (as defined in the employment agreement), then the
Company will be required to pay Mr. Moran his base salary and benefits for a
period of twelve months following termination. In addition, in the event of such
a termination, Mr. Moran's stock options will continue to vest and be
exercisable if he performs consulting services for the Company of up to ten
hours per month during the twelve months following termination.
The Company is a party to an employment agreement with Mr. McDonald, dated
February 2, 1998. Under the terms of the employment agreement, Mr. McDonald is
entitled to receive an annual base salary of $135,000, which may be increased in
accordance with the Company's regular salary review practices. In addition, the
Company agreed to sell Mr. McDonald 200,000 shares of its restricted common
stock, which vest in 36 equal monthly installments. Mr. McDonald is entitled to
participate in any bonus plan that the Company may establish for its senior
executives. Either the Company or Mr. McDonald may terminate the employment
agreement at will for any reason, upon three months' prior notice in the case of
termination by the Company, or upon two months' prior notice in the case of
termination by Mr. McDonald. If the Company terminates Mr. McDonald's employment
without cause, or if Mr. McDonald terminates his employment for good reason
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(as defined in the employment agreement), then the Company will be required to
pay Mr. McDonald his base salary and benefits for a period of six months
following termination. In addition, in the event of such a termination, Mr.
McDonald's stock options will continue to vest and be exercisable if he performs
consulting services for the Company of up to ten hours per week during the six
months following termination.
The Company is also a party to employment agreements with Messrs. Townsend
and Nine, dated January 12, 1998 and April 9, 1998, respectively. Under these
employment agreements, Messrs. Nine and Townsend are each entitled to receive a
base salary of $145,000, which may be increased in accordance with the Company's
regular salary review practices. In addition, the Company agreed to sell Messrs.
Townsend and Nine 400,000 and 466,667 shares, respectively, of its restricted
common stock, which vest in 36 equal monthly installments. Messrs. Townsend and
Nine are also entitled to participate in any bonus plans that the Company may
establish for its senior executives. These employment agreements provide for the
same termination provisions and severance benefits as Mr. McDonald.
CERTAIN TRANSACTIONS
On August 5, 1999, the Company issued and sold an aggregate of 1,195,238 of
its Series C preferred stock to five purchasers at a purchase price of $3.15 per
share. William Coleman III and James Adkisson, directors of the Company, each
purchased 31,746 of these shares. Warburg, Pincus Ventures, L.P. purchased
952,381 of these shares.
On August 31, 1999 and September 1, 1999, the Company sold 40,000 shares of
restricted common stock to each of Messrs. Coleman and Adkisson at a purchase
price of $1.50 per share pursuant to its 1998 Stock Incentive Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the establishment of the Compensation Committee in September 1999,
compensation decisions were made by the Board of Directors, including Mr. Moran,
an executive officer of the Company. Since its establishment, the Compensation
Committee has been responsible for executive compensation decisions. The
Compensation Committees' members during the fiscal year ended January 31, 2000
were Messrs. Coleman and Gross, and its current members are Ms. Chen and Mr.
Gross . No executive officer of the Company 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 the Company's Compensation Committee.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Board of Directors. During the fiscal year
ended January 31, 2000, the Board of Directors was responsible for reviewing the
Company's stock plans and reviewing and approving compensation matters
concerning the executive officers and key employees of the Company.
Overview and Philosophy. The Company uses its compensation program to
achieve the following objectives:
- To provide compensation that attracts, motivates and retains the
talented, high caliber officers and employees necessary to achieve the
Company's strategic objectives, as determined by the Board of Directors.
- To align the interest of officers with the success of the Company.
- To align the interest of officers with stockholders by including
long-term equity incentives.
- To increase the long-term profitability of the Company and, accordingly,
increase stockholder value.
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<PAGE> 10
Compensation under the executive compensation program is comprised of cash
compensation in the form of base salary and long-term incentive awards,
generally in the form of options to purchase common stock. In addition, the
compensation program includes various other benefits, including medical and
insurance plans, the Company's 401(k) Plan and the 1998 Stock Incentive Plan,
which plans are generally available to all employees of the Company.
The principal factors which the Board of Directors considered with respect
to each officer's compensation package for fiscal year ended January 31, 2000
are summarized below. The Compensation Committee may, however, in its
discretion, apply different or additional factors in making decisions with
respect to executive compensation in future years.
Base Salary. Compensation levels for each of the Company's officers,
including the Chief Executive Officer, are generally set within the range of
salaries that the Board of Directors believes are paid to officers with
comparable qualifications, experience and responsibilities at similar companies.
In setting compensation levels, the Board of Directors takes into account such
factors as (i) the Company's past performance and future expectations, (ii)
individual performance and experience and (iii) past salary levels. The Board of
Directors does not assign relative weights or ranking to these factors, but
instead makes a determination based upon the consideration of all of these
factors as well as the progress made with respect to the company's long-term
goals and strategies.
Base salary, while reviewed annually, is only adjusted as deemed necessary
by the Board of Directors in determining total compensation for each officer.
Base salary levels for each of the Company's officers, other than the Chief
Executive Officer, were also based in part upon evaluations and recommendations
made by the Chief Executive Officer.
Equity Incentives. The Board of Directors believes that stock
participation aligns officers' interests with those of the stockholders. In
addition, the Board of Directors believes that equity ownership by officers
helps to balance the short term focus of annual incentive compensation with a
longer term view and may help to retain key executive officers. Long term
incentive compensation, generally granted in the form of stock options, allows
the officers to share in any appreciation in the value of the Company's common
stock. In the fiscal year ended January 31, 2000, the Board of Directors granted
the executive officers restricted stock that becomes exercisable over a three
year period as a means of encouraging executives to remain with the Company and
promote its success.
In making stock option or restricted stock grants, the Board of Directors
considers general corporate performance, individual contributions to the
Company's financial, operational and strategic objectives, the Chief Executive
Officer's recommendations, level of seniority and experience, existing levels of
stock ownership, previous grants of restricted stock or options, vesting
schedules of outstanding restricted stock or options and the current stock
price.
Other Benefits. The Company also has various broad-based employee benefit
plans. Executive officers participate in these plans on the same terms as
eligible, non-executive employees, subject to any legal limits on the amounts
that may be contributed or paid to executive officers under these plans. the
Company offers a stock incentive plan and a 401(k) plan, which allows employees
to invest in a wide array of funds on a pre-tax basis. The Company also
maintains insurance and other benefit plans for its employees, including
executive officers of the Company.
Chief Executive Officer Compensation. In fiscal year ended January 31,
2000, the Company's President and Chief Executive Officer, Charles E. Moran,
received a base salary of $250,000, which represents 0% increase from start of
employment. The base salary is believed by the Board of Directors to be
consistent with
8
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the range of salary levels received by executive in a similar capacity in
companies of comparable size and stage of development.
Tax Deductibility of Executive Compensation. Section 162(m) of the Code
limits the tax deduction to the Company to $1 million for compensation paid to
any of the executive officers unless certain requirements are met. The Board of
Directors has considered these requirements and the regulations. It is the Board
of Director's present intention that, so long as it is consistent with its
overall compensation objectives, substantially all executive compensation be
deductible for United States federal income tax purposes. The Board of Directors
believes that any compensation deductions attributable to options granted under
the 1998 Stock Incentive Plan currently qualify for an exception to the
requirements of Section 162(m).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and holders of more than 10% of the common stock
to file with the SEC initial reports of ownership of the Company's common stock
and other equity securities on a Form 3 and reports of changes in such ownership
on a Form 4 or Form 5. Officers, directors and 10% stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of copies of such filings by the Company's
directors and executive officers and 10% stockholders or written representations
from certain of those persons, the Company believes that all filings required to
be made by those persons during the fiscal year ended January 31, 2000 were
timely made.
PROPOSAL 2 -- RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Arthur Andersen LLP as the
Company's independent public accountants for the current fiscal year. Arthur
Andersen LLP served as the Company's independent public accountants for the
fiscal year ended January 31, 2000. Although stockholder approval of the Board
of Directors' selection of Arthur Andersen LLP is not required by law, the Board
of Directors believes that it is advisable to give stockholders an opportunity
to ratify this selection. If this proposal is not approved, the Board of
Directors may reconsider its selection.
A representative of Arthur Andersen LLP is expected to be present at the
meeting and will have an opportunity to make a statement if he or she desires to
do so and will also be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THIS SELECTION.
OTHER MATTERS
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
for consideration at the meeting other than the proposals described above.
However, if any other business is properly brought before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares covered
by such proxy, to the extent permitted by the SEC's proxy rules, in accordance
with their best judgment on such matters.
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<PAGE> 12
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and employees may
solicit proxies by telephone, telegraph, facsimile and personal interviews, but
will receive no additional compensation for doing so. The Company 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. The Company will reimburse those brokerage
houses and other persons for their reasonable expenses in this connection.
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders submitted pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934 to be presented at the 2001 Annual Meeting of
Stockholders must be received by the Company at its principal executive offices
no later than January 15, 2001 in order to be considered for inclusion in the
Company's proxy materials for that meeting.
The Company's By-laws require that the Company be given advance written
notice of stockholder nominations for election to the Company's Board of
Directors and of other matters which stockholders wish to present for action at
an annual meeting of stockholders (other than matters included in the Company's
proxy materials in accordance with Rule 14a-8 under the Securities Exchange
Act).
Stockholder notices for nominations of directors or other matters must be
received by the Company's Secretary at the principal executive offices of the
Company not less than 60 days nor more 90 days prior to the anniversary of the
prior year's annual meeting of stockholders; provided, however, that if the date
of such annual meeting is more than 20 days before or more than 60 days after
the anniversary of the prior year's annual meeting, such notice must be received
not earlier than 90 days prior to the date of the meeting and not after the
later of (i) the date 60 days prior to the date of such meeting or (ii) the 10th
day following the date on which the notice of the meeting was mailed or public
disclosure was made, whichever occurs first. For the 2000 Annual Meeting, a
stockholder notice must be received not earlier than 90 days prior to the date
of the meeting (March 11, 2000) and not later than the 10th day following the
date on which the notice of the meeting was mailed or public disclosure was
made, whichever occurs first.
The Company's By-laws also specify requirements relating to the content of
such notices which stockholders must provide to the Secretary of the Company for
any matter, including a stockholder nomination for director, to be properly
presented at a stockholder meeting.
By order of the Board of Directors,
Thomas J. McDonald, Secretary
May 10, 2000
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. YOUR PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS APPRECIATED.
STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH
THEY HAVE SENT IN THEIR PROXIES.
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PROXY
SKILLSOFT CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
JUNE 9, 2000
The undersigned, having received a Notice of the Annual Meeting of
Stockholders of SkillSoft Corporation (the "Company") to be held on Friday, June
9, 2000 (the "Annual Meeting") and the Board of Directors' Proxy Statement
therefor, and revoking all prior proxies, hereby appoint(s) Charles E. Moran,
Thomas J. McDonald and Patrick J. Rondeau and each of them (with full power of
substitution), as proxies of the undersigned to attend the Annual Meeting and
any adjourned sessions thereof, and there to vote and act upon the following
matters in respect of all shares of common stock of the Company 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 or at any adjourned
session thereof will not be deemed to revoke this proxy unless the undersigned
shall affirmatively indicate thereat the intention of the undersigned to vote
said shares in person. If the undersigned hold(s) any of the shares of the
Company in a fiduciary, custodial or joint capacity or capacities, this proxy is
signed by the undersigned in every such capacity as well as individually.
SEE REVERSE SIDE SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 14
[X] Please mark your votes
as in this example.
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to office or
proposal specified below, this proxy will be voted FOR such election to office
or proposal. None of the matters to be voted on is conditioned on, or related
to, the approval of any other matter. All matters are proposed by the Company.
1. To elect two Class I directors:
NOMINEES: Charles E. Moran, Stewart K.P. Gross.
FOR ALL WITHHELD FROM
NOMINEES [ ] [ ] ALL NOMINEES
[ ] ---------------------------------------------------------------------
INSTRUCTION: To withhold authority for any individual nominee,
write the nominee's name in the space provided above.
2. To ratify the selection of Arthur Andersen LLP as the Company's independent
public accountants for the current fiscal year
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
NOTE: Please sign name(s) exactly as appearing hereon. 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, sign in full
corporate name, by authorized officer. If a partnership, please sign in
partnership name, by authorized person.
Signature: ___________________ Date: ___________
Signature: ___________________ Date: ___________
