INTERGRAPH CORPORATION
Huntsville, Alabama 35894-0001
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 12, 1994
TO THE SHAREHOLDERS OF INTERGRAPH CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Intergraph Corporation (the "Company") will be held at the Intergraph
Auditorium, Building 15, Intergraph Way, Huntsville, Alabama, on May
12, 1994, at 5:00 p.m. local time for the following purposes:
1. To elect seven directors to the Board of Directors to serve for
the ensuing year and until their successors are duly elected and
qualified (designated as Proposal 1 in the accompanying Proxy
Statement).
2. To ratify the appointment by the Board of Directors of Ernst &
Young as the Company's independent auditors for the current year
(designated as Proposal 2 in the accompanying Proxy Statement).
3. To approve or disapprove a proposal by a shareholder that
requests the Bylaws of the Company be amended so as to require
that each of the Company's directors possess voting rights to at
least 1% of the outstanding shares of the Company's common stock
(designated as Proposal 3 in the accompanying Proxy Statement).
4. To approve or disapprove a proposal by a shareholder that
requests the Company's Shareholder Rights Plan be amended so as
to not interfere with any public tender offer which treats all
shareholders fairly (designated as Proposal 4 in the accompanying
Proxy Statement).
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on March 18, 1994, has been fixed as the
record date for determination of shareholders entitled to notice of
and to vote at the meeting.
A copy of the Annual Report to Shareholders for the fiscal year
ended December 31, 1993, is enclosed.
By Order of the Board of Directors
JOHN R. WYNN
Secretary
Huntsville, Alabama
March 31, 1994
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. NO POSTAGE
IS NEEDED IF MAILED IN THE UNITED STATES.
<PAGE>
INTERGRAPH CORPORATION
HUNTSVILLE, ALABAMA 35894-0001
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Intergraph
Corporation (the "Company"), to be voted at the Annual Meeting of
Shareholders to be held on May 12, 1994, and at any and all
adjournments thereof (the "Meeting"). The form of proxy permits
specification, approval, disapproval or abstention as to each of the
four proposals. Proposals 1 and 2 will be presented at the Meeting by
management, and Proposals 3 and 4 may be presented by shareholders.
If the enclosed form of proxy is properly executed, returned, and not
revoked, it will be voted in accordance with the specifications, if
any, made by the shareholder and, if specifications are not made, will
be voted in favor of Proposals 1 and 2 and against Proposals 3 and 4
set forth in the accompanying Notice of Annual Meeting of
Shareholders.
The cost of solicitation of proxies will be borne by the Company.
Proxies may be solicited by directors, officers, or regular employees
of the Company in person or by telephone or mail. The Company may
reimburse brokerage firms and others for their expenses in forwarding
solicitation material regarding the Meeting to beneficial owners. On
or about March 31, 1994, the Company will commence mailing this Proxy
Statement, the enclosed form of proxy, and the attached Notice to
holders of its common stock.
Shareholders who sign proxies have the right to revoke them at any
time before they are voted by filing with the Secretary of the Company
either an instrument revoking the proxy, or a duly executed proxy
bearing a later date, or by attending the Meeting and voting in
person.
The close of business on March 18, 1994, has been fixed as the
record date for the determination of shareholders entitled to notice
of and to vote at the Meeting.
GENERAL
A majority of the shareholders entitled to vote must be present in
person, or be represented by proxy, to constitute a quorum and act
upon the proposed business. Failure of a quorum to be represented at
the Meeting will necessitate an adjournment and will subject the
Company to additional expense.
Proposals 1, 2, 3, and 4 discussed in this Proxy Statement require
the affirmative vote of the holders of a majority of the outstanding
shares present and entitled to vote at the Meeting. The Board of
Directors recommends that you vote FOR Proposals 1 and 2 and AGAINST
Proposals 3 and 4 discussed in this Proxy Statement.
An automated system administered by the Company's transfer agent
counts the votes. The Company's Certificate of Incorporation and
Bylaws do not contain any provisions concerning the treatment of
abstentions and broker non-votes. Delaware law treats abstentions as
votes which are not cast in favor of a proposal or nominee. Delaware
law does not address the treatment of broker non-votes. Broker non-
votes will be included in the determination of the presence of a
quorum, but will not be counted for purposes of determining whether a
proposal or nominee has been approved.
1
<PAGE>
COMMON STOCK OUTSTANDING AND PRINCIPAL SHAREHOLDERS
As of January 31, 1994, there were outstanding 45,389,118 shares of
the Company's common stock, $.10 par value (the "Common Stock").
Holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by shareholders.
The following table sets forth information as of January 31, 1994,
as to (a) the only persons who were known by the Company to own
beneficially more than 5% of the outstanding Common Stock of the
Company, (b) the shares of such Common Stock beneficially owned by the
directors and nominees of the Company, (c) the shares of such Common
Stock beneficially owned by the "Named Executive Officers" of the
Company, specifically James W. Meadlock, Chairman of the Board and
Chief Executive Officer, who is also a nominee, the four most highly
compensated executive officers who were serving as such at December
31, 1993 (including Robert E. Thurber, Executive Vice President and
Director, who is also a nominee), and Howard G. Sachs, a former
executive officer of the Company whose compensation for the year would
have placed him in the group of the four highest paid executive
officers had he been employed at the end of the year, and (d) the
shares of such Common Stock beneficially owned by all directors,
nominees, and executive officers of the Company as a group:
Number of Shares Percent of Total
Name (1) Beneficially Owned (2) Outstanding (3)
---------------------- ---------------------- ----------------
Intergraph Corporation
Stock Bonus Plan Trust 6,624,000 (4) 14.6%
Sanford C. Bernstein
& Co., Inc. 3,084,036 (5) 6.8%
Directors and Nominees
----------------------
James W. Meadlock 1,165,012 (6)(7) 2.6%
Nancy B. Meadlock 2,045,903 (8) 4.5%
Robert E. Thurber 855,009 (9) 1.9%
Keith H. Schonrock, Jr. 80,840 (10) *
James F. Taylor, Jr. 74,946 (11) *
Larry J. Laster 19,914 (12) *
Roland E. Brown 8,856 (13) *
Named Executive Officers
------------------------
Stephen J. Phillips 11,383 (14) *
Manfred Wittler 10,000 (15) *
Howard G. Sachs 9,951 (16) *
Tommy D. Steele 2,695 *
All directors, nominees,
and executive officers as a
group (18 persons), including
the foregoing directors,
nominees, and named executive
officers (but excluding the
former executive officer) 4,527,600 (17) 10.0%
* Less than 1%
2
<PAGE>
(1) The address of the Stock Bonus Plan Trust is c/o Boston Safe
Deposit and Trust Company, One Boston Place, Boston, Massachusetts
02108. The address of Sanford C. Bernstein & Co., Inc., is One
State Street Plaza, New York, New York 10004. The address of
James W. and Nancy B. Meadlock is c/o Intergraph Corporation,
Huntsville, Alabama 35894.
(2) Unless otherwise noted, the indicated owner has sole voting power
and sole investment power.
(3) Shares issuable under immediately exercisable options are
considered outstanding for the purpose of calculating the
percentage of Common Stock owned by executive officers, the former
executive officer, directors, and 5% shareholders who have
immediately exercisable options, but such shares are not
considered outstanding for the purpose of calculating the
percentage of Common Stock owned by any other person.
(4) Voting rights of the Common Stock held by the Stock Bonus Plan
Trust are passed through to the Plan participants. Vested
participants in the Stock Bonus Plan have the right to diversify
one-half of the Common Stock allocated to their accounts and,
after attaining age 55, they have the right to diversify all of
the Common Stock allocated to their accounts.
(5) As set forth on a Schedule 13G dated February 14, 1994. This
schedule reflects that Sanford C. Bernstein & Co., Inc., has sole
voting power over 1,899,265 shares and sole investment power over
3,084,036 shares.
(6) This figure includes 197,765 shares allocated to Mr. Meadlock under
the Stock Bonus Plan and 180,000 shares owned jointly by Mr.
Meadlock and Nancy B. Meadlock as to which voting and investment
powers are shared.
(7) Mr. Meadlock may be deemed a "parent" of the Company as defined
under the Securities Act of 1933 by virtue of his share ownership
and position in the Company. Mr. Meadlock is also a Named
Executive Officer of the Company.
(8) This figure includes 1,200,000 shares held in trust for a child,
127,800 shares Mrs. Meadlock holds as custodian for a child,
122,502 shares allocated to Mrs. Meadlock under the Stock Bonus
Plan, and 180,000 shares owned jointly by Mrs. Meadlock and James
W. Meadlock as to which voting and investment powers are shared.
(9) This figure includes 166,261 shares allocated to Mr. Thurber under
the Stock Bonus Plan and 348,748 shares owned by Mr. Thurber's
wife as to which Mr. Thurber does not have sole voting and
investment power. Mr. Thurber is also a Named Executive Officer
of the Company.
(10) This figure consists of shares allocated to Mr. Schonrock
under the Stock Bonus Plan.
(11) This figure consists of shares allocated to Mr. Taylor under
the Stock Bonus Plan.
(12) This figure includes 9,900 shares owned jointly by Mr. Laster
and his wife as to which voting and investment powers are shared,
3,014 shares allocated to Mr. Laster under the Stock Bonus Plan,
and 7,000 shares over which Mr. Laster holds immediately
exercisable stock options.
(13) This figure consists of shares allocated to Mr. Brown under
the Stock Bonus Plan.
(14) This figure includes 1,883 shares allocated to Mr. Phillips
under the Stock Bonus Plan and 9,500 shares over which Mr.
Phillips holds immediately exercisable stock options.
(15) This figure consists of shares over which Mr. Wittler holds
immediately exercisable stock options.
(16) This figure includes 9,932 shares over which Mr. Sachs holds
immediately exercisable stock options. Mr. Sachs' employment with
the Company terminated on December 31, 1993. Options expire if
not exercised within three months of termination.
(17) This figure includes 818,870 shares allocated to such persons
under the Stock Bonus Plan and 63,500 shares over which such
persons hold immediately exercisable stock options.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of members of the Board
of Directors at nine by resolution pursuant to authority granted in
the Bylaws of the Company. The Board of Directors proposes that the
seven nominees listed below be elected as directors to serve until the
next Annual Meeting of Shareholders and until their successors are
duly elected and qualified. Although the Company has established the
number of directors at nine, proxies may not be voted for more than
seven persons. It is the desire of the Board of Directors that the
Board have the option of selecting two directors to serve on the Board
prior to the election of directors at the next Annual Meeting of
Shareholders. It is the intention of the persons named in the proxy
to vote the proxies for the election of the nominees listed below, all
of whom are presently directors of the Company. If any nominee should
become unavailable to serve as a director for any reason (which is not
anticipated), the persons named as proxies reserve full discretion to
vote for such other person or persons as may be nominated.
The nominees for director, together with certain information regarding
them, are as follows:
Director of
Company
Name and Age Positions/Offices with Company Since
----------------------- -------------------------------- -----------
James W. Meadlock (60) Chairman of the Board and
Chief Executive Officer 1969
Roland E. Brown (56) Director 1979
Larry J. Laster (42) Executive Vice President, Chief
Financial Officer, and Director 1987
Nancy B. Meadlock (55) Executive Vice President
and Director 1969 (1)
Keith H. Schonrock, Jr. (53) Director 1972
James F. Taylor, Jr. (49) Director 1973
Robert E. Thurber (53) Executive Vice President
and Director 1972
(1) Excluding the period from February 1970 to February 1972.
Mr. Meadlock, Mr. Laster, Mrs. Meadlock, and Mr. Thurber are
principally employed by the Company in the positions set forth above
and have been principally employed by the Company for the past five
years. James W. Meadlock and Nancy B. Meadlock are husband and wife.
Mr. Brown joined the Company in 1979 as Vice President, Treasurer,
and Chief Financial Officer and was an Executive Vice President of the
Company at the time of his retirement in 1986.
Mr. Schonrock is a founder of the Company and served in a variety of
engineering positions. At his retirement in 1987, he was an Executive
Vice President of the Company.
Mr. Taylor joined the Company in 1969, shortly after its formation,
and is considered to be a founder. Mr. Taylor was an Executive Vice
President of the Company at the time of his retirement in 1992.
4
<PAGE>
BOARD COMMITTEES AND ATTENDANCE
During the fiscal year ended December 31, 1993, the Board of
Directors held eleven meetings. The Company has an audit committee
consisting of Mr. Schonrock, Mr. Brown, and Mr. Taylor. The purpose
of the audit committee is to oversee the system of internal accounting
control and the internal audit function and to ensure the objectivity
of the independent audit. During the fiscal year ended December 31,
1993, the audit committee held six meetings. All of the directors
were present for 75% or more of the Board and applicable committee
meetings.
The Company does not have a nominating committee or compensation
committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In order to encourage retention of Company stock by executive
officers, the Company adopted a loan program effective January 7,
1993, under which executive officers may borrow, on an unsecured
basis, an amount not exceeding (1) the current market value of the
Common Stock of the Company owned by such executive officer, and/or
(2) the net value (current market price less exercise price) of
currently exercisable stock options owned by the executive officer.
Interest on any such loans is charged monthly at the prevailing prime
rate. Amounts must be repaid by the earlier to occur of termination
of employment, the date of sale of any Common Stock of the Company by
the executive officer, or May 20, 1994.
As of January 31, 1994, James W. Meadlock was indebted to the
Company in the amount of $2,514,000 under the program. This amount
represents the maximum amount outstanding since January 1, 1993.
EXECUTIVE COMPENSATION
Information relating to compensation of certain executive officers
of the Company, the policy and practices of the Company relative to
executive compensation, and the performance of the Company's stock are
presented in this section. This information consists of a summary
compensation table, information on stock option grants, exercises, and
year end values, information on employment contracts, a report on
executive compensation from the Board of Directors, and a graph
depicting the five-year performance of the Company's stock against the
performance of a peer group of companies and the Standard & Poor's 500
stock index.
COMPENSATION SUMMARY
The following table summarizes for the last three years the
compensation of the Chief Executive Officer, the four most highly
compensated executive officers who were serving as such at December
31, 1993, and Howard G. Sachs, a former executive officer of the
Company whose compensation for the year would have placed him among
the top four compensated executive officers for 1993 had he been
employed at December 31, 1993.
5
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------- -------------
Other Securities
Name and Annual Underlying All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($)
- --------------------------- ---- ---------- --------- ---------------- ------------- ----------------
(1)
<S> <C> <C> <C> <C> <C> <C>
James W. Meadlock,
Chairman and Chief
Executive Officer (2) 1993 $300,000 --- --- --- $ 6,390
1992 $300,000 --- --- --- $ 4,152
1991 $300,000 --- --- --- $ 11,092
Manfred Wittler,
Executive Vice President (3) 1993 $243,939 $72,671 $68,486 29,359 $ 11,920
1992 $216,049 $95,679 $61,481 --- $ 10,851
1991 $212,121 $69,287 $58,911 --- $ 8,485
Stephen J. Phillips,
Executive Vice President (4) 1993 $200,640 --- $20,749 --- $ 6,474
1992 $188,760 --- --- --- $ 6,369
Tommy D. Steele,
Executive Vice President (5) 1993 $182,000 --- --- --- $ 3,926
1992 $ 98,000 --- $64,654 110,000 $ 2,941
Robert E. Thurber,
Executive Vice President
and Director (6) 1993 $166,400 --- --- --- $ 3,779
1992 $166,400 --- --- --- $ 3,749
1991 $163,100 --- --- --- $ 9,499
Howard G. Sachs,
Former Executive Vice
President (7) 1993 $228,127 --- --- --- $400,201
1992 $186,120 --- --- --- $ 7,116
1991 $168,600 --- --- --- $ 12,619
</TABLE>
(1) "Other Annual Compensation" for each of the named executives does
not include the value of certain personal benefits, if any,
furnished by the Company or for which it reimburses the named
executives, including the use of corporate vehicles, unless the
value of such benefits in total exceeds the lesser of $50,000 or
10% of the total annual salary and bonus reported in the above
table for the named executive.
(2) "All Other Compensation" for Mr. Meadlock consists of the
following:
1993 1992 1991
------ ------ -------
Retirement plans contribution $ 72 $ 102 $ 6,142
Term life insurance * 6,318 4,050 4,950
------ ------ -------
Total $6,390 $4,152 $11,092
====== ====== =======
6
<PAGE>
(3) "Other Annual Compensation" for Mr. Wittler consists of the
following:
1993 1992 1991
------- ------- -------
Housing allowance $32,432 $32,967 $32,258
Lease of vehicle 28,765 24,558 21,438
Other 7,289 3,956 5,215
------- ------- -------
Total $68,486 $61,481 $58,911
======= ======= =======
"All Other Compensation" for Mr. Wittler consists of the following:
1993 1992 1991
------- ------- -------
Retirement plans contribution $ 9,758 $ 8,642 $ 8,485
Health insurance premiums 2,162 2,209 ---
------- ------- -------
Total $11,920 $10,851 $ 8,485
======= ======= =======
Mr. Wittler is paid in European currencies which fluctuate in value
against the U.S. dollar.
(4) Mr. Phillips first became an executive officer of the Company in
1992. "Other Annual Compensation" for Mr. Phillips for 1993
includes $16,744 for use of a corporate apartment. "All Other
Compensation" for Mr. Phillips consists of the following:
1993 1992
------ ------
Retirement plans contribution $4,585 $4,480
Term life insurance * 1,889 1,889
------ ------
Total $6,474 $6,369
====== ======
(5) Mr. Steele joined the Company as an executive officer in June 1992.
"Other Annual Compensation" for Mr. Steele for 1992 includes
$62,583 for reimbursement of relocation expenses and related income
tax payments. "All Other Compensation" for Mr. Steele consists of
the following:
1993 1992
------ ------
Retirement plans contribution $2,117 $2,037
Term life insurance * 1,809 904
------ ------
Total $3,926 $2,941
====== ======
(6) "All Other Compensation" for Mr. Thurber consists of the following:
1993 1992 1991
------ ------ ------
Retirement plans contribution $2,149 $2,119 $8,047
Term life insurance * 1,630 1,630 1,452
------ ------ ------
Total $3,779 $3,749 $9,499
====== ====== ======
7
<PAGE>
(7) Mr. Sachs' employment with the Company terminated on December 31,
1993. "All Other Compensation" for Mr. Sachs consists of the
following:
1993 1992 1991
-------- -------- --------
Retirement plans contribution $ 4,597 $ 4,479 $ 10,261
Term life insurance * 2,952 2,637 2,358
Severance pay (see page 10) 392,652 --- ---
-------- -------- --------
Total $400,201 $ 7,116 $ 12,619
======== ======== ========
* Premium payments for term life insurance were not made to split-dollar
insurance arrangements.
STOCK OPTION GRANTS, EXERCISES AND YEAR END VALUES
The Company from time to time awards stock options to executive
officers and other key employees pursuant to a stock option plan
approved by the shareholders of the Company. Members of the Plan's
administrative committee, which includes James W. Meadlock and Robert
E. Thurber, are not eligible to receive options under the plan.
The following table sets forth information concerning options
granted during the year ended December 31, 1993 to the Named Executive
Officers who are eligible to receive options under the plan.
<TABLE>
OPTION GRANTS
Individual Grants (1)
- ------------------------------------------------------------------------------
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to Exercise Grant Date
Options Employees Price Expiration Present
Name Granted(#) This Year ($/Share) Date Value ($)
- ------------------------ ---------- ------------- --------- ---------- ----------
(2)
<C> <C> <C> <C> <C> <C>
Manfred Wittler,
Executive Vice President 29,359 8.5% $11.75 2/5/2003 $154,300
</TABLE>
(1) Options were granted at fair market value on the date of grant
under the Company's incentive stock option plan. Fair market
value is determined as the closing sale price of the Company's
stock as reported on the National Association of Securities
Dealers, Inc. Automated Quotations National Market System.
Options are exercisable after two years from the date of grant at
a rate of 25% per year, with full vesting occurring after the
fifth anniversary of the grant date. Options were granted for a
term of ten years from the date of grant.
8
<PAGE>
(2) The present value of options at the date of grant was determined
using the Black-Scholes option pricing model. Estimated values
determined using this model are based on the market value of the
stock on the date of grant, the exercise price of the option, and
on assumptions as to risk free rate of return, volatility of the
Company's stock price, and expected term of the option. Dividend
yield is excluded from the calculation since it is the current
policy of the Company to retain all earnings to finance
operations. Risk free rate of return is based on quoted yields
for the month of the grant for U.S. Treasury Zero-Coupon bonds
with a term equal to the expected option term. Stock price
volatility is based on weekly changes in the Company's stock price
for the three year period preceding the month the option was
granted. The expected term of the option is based on the weighted
average of vested option amounts at each vesting date plus the
expected days to exercise. The expected days to exercise is the
number of days from vesting date to exercise date determined by
using actual exercise data for all of the Company's options for
the three year period preceding the month the option was granted.
The actual value, if any, an executive may realize from exercise
of stock options will be determined based on the excess of stock
price over exercise price on the date the option is exercised.
There is no assurance the value realized by an executive will be
at or near the value estimated by the Black-Scholes model, or that
any value will be realized.
There were no options exercised by any of the eligible Named
Executive Officers during the year ended December 31, 1993.
The following table sets forth values as of December 31, 1993, for
stock options held by the Named Executive Officers who are eligible to
receive options under the plan.
<TABLE>
YEAR END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Year End (#) at Year End ($)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------- ----------- ------------- ----------- -------------
<C> <C> <C> <C> <C>
Manfred Wittler,
Executive Vice President 10,000 39,359 --- ---
Stephen J. Phillips,
Executive Vice President 9,500 5,000 --- ---
Tommy D. Steele,
Executive Vice President --- 110,000 --- $302,500
Howard G. Sachs,
Former Executive Vice President 9,932 --- --- ---
</TABLE>
Mr. Sachs' employment with the Company terminated on December 31, 1993.
COMPENSATION OF DIRECTORS
No director of the Company is compensated for services as a director.
9
<PAGE>
EMPLOYMENT CONTRACTS
Mr. Wittler and two wholly-owned international subsidiaries and an
international branch of a wholly-owned U.S. subsidiary of the Company
are parties to contracts of employment dated November 1, 1989 and
April 18, 1991. The contracts, which operate in tandem, extend for a
term not to exceed five years from November, 1989 and provide Mr.
Wittler a fixed base salary, annual incentive bonus payments for
achievement and overachievement of certain sales orders, revenues, and
profitability levels in the Company's European operations, and certain
expense allowances for housing, a leased vehicle, and other personal
expense items. The contracts also provide for six months severance
pay in the event of involuntary termination of employment after the
first three years of the contracts, and for relocation of Mr. Wittler
at the Company's expense in the event of voluntary termination of
employment after the first three years of the contracts. In addition,
should the contracts be terminated by either of the parties, Mr.
Wittler is obligated to refrain from direct competition with the
Company or its affiliates for a period of six months following
termination, provided the Company has met its severance pay obligation
as described above.
Mr. Sachs and the Company were parties to an employment agreement
which, among other things, required payment under certain
circumstances of the full remaining term of the contract in the event
of early termination of his employment. As the result of a 1993
Cooperative Development Agreement between the Company and Sun
Microsystems Computer Corporation ("Sun"), most employees of the
Company's Advanced Processor Division ("APD"), which Mr. Sachs
managed, became employees of Sun on January 1, 1994 (other APD
employees will become Sun employees on January 1, 1995). Accordingly,
Mr. Sachs' employment with the Company terminated December 31, 1993.
Under the separation agreement, Mr. Sachs will be paid for the
remaining term of his employment contract, and he is obligated not to
disclose information that is proprietary and confidential to the
Company. As with all other recipients of incentive stock options of
the Company, Mr. Sachs' options will expire if not exercised three
months after the date of termination of employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a compensation committee or other
committee of the Board of Directors performing equivalent functions.
Mr. Meadlock's compensation is determined by the Board, excluding Mr.
Meadlock and Nancy B. Meadlock. During the year ended December 31,
1993, the Board held no deliberations regarding the compensation of
Mr. Meadlock. The Board has delegated responsibility for
determination of the compensation of all other executive officers to
Mr. Meadlock. The Administrative Committee of the Company's stock
option plans (the "Administrative Committee"), which is appointed by
the Board of Directors and currently consists of Messrs. Meadlock,
Schonrock, Taylor, and Thurber, may award both incentive stock options
and non-qualified options to executive officers and other key
employees. During the year ended December 31, 1993, the
Administrative Committee awarded a total of 345,004 stock options,
29,359 of which were awarded to Manfred Wittler, one of the four most
highly compensated executive officers employed by the Company as of
December 31, 1993. No other executive officer received an award in
1993.
During the year ended December 31, 1993, no executive officer of the
Company served as a director or as a member of the compensation
committee or committee performing equivalent functions of another
entity, and no executive officer of another entity served as a member
of the Board of Directors of the Company.
10
<PAGE>
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
The Chairman and Chief Executive Officer (CEO) subjectively
determines the compensation of all other executive officers of the
Company based on the authority and discretion granted him by the Board
of Directors. In arriving at his decisions, the CEO may consider such
factors as the executive's overall contribution to the Company, his or
her level of experience, and the Company's overall financial
performance. Relative weights are not formally assigned to these
factors, but some factors, particularly the Company's financial
performance as measured by revenue and earnings, may be subjectively
considered more important than others in arriving at compensation for
each individual executive officer. Specific quantifiable performance
objectives are generally not used in determining the individuals'
contribution to the Company, with the exception of sales personnel,
who are assigned sales dollar goals. Evaluation of executives whose
principal duties are technical in nature is based principally on the
CEO's judgment of the technical design of new products and meeting
product development schedules. Salaries for executives performing
administrative functions are based primarily on a subjective
determination of contribution to the Company. The Company does not
perform formal salary surveys. The CEO has a general awareness of
industry compensation practices by virtue of his experience and
position in the industry, but specific industry or competitor
compensation data (including that of the companies in the accompanying
performance graph) is not utilized.
There is no formal bonus plan for executive officers, but
exceptional individual performance has occasionally been rewarded by a
cash bonus at the discretion of the CEO. The determination of
exceptional performance for purposes of a bonus award is based upon a
subjective evaluation of individual job performance in the same manner
as discussed above for compensation in general. Overall corporate
performance neither guarantees nor precludes the award of bonuses, but
may influence the amount of such bonuses. Sales executives are paid a
base salary that approximates 70% of the executives' total potential
annual compensation. The base salary amount may be supplemented in
amounts up to an additional 30% of total potential compensation if
certain orders, revenues, and profitability objectives are met.
The granting of options by the Administrative Committee to purchase
shares of the Company's stock over a ten year period at a specified
price is the primary means of providing long-term incentive to
executive officers to perform in a manner that benefits themselves,
the Company, and the Company's shareholders. Decisions to award
stock options are based upon subjective evaluations of job performance
and expected contribution to the Company. Stock options may also be
used to attract new employees. No quantitative measures are used by
the Administrative Committee in deciding upon the award of stock
options. Previous option awards are considered when awarding new
options. With respect to incentive stock options, such options may
not exceed the amounts permitted under applicable Internal Revenue
Code provisions.
The compensation of the CEO is determined by the other members of
the Board of Directors, with the exception of Nancy B. Meadlock.
Since 1989 the Board has not deliberated the compensation of the CEO,
and the CEO has not been awarded a salary increase or bonus. The
Board believes that, because of Mr. Meadlock's large beneficial
holding of Company stock, the interests of Mr. Meadlock are aligned
with those of the Company's other shareholders. Mr. Meadlock is not
eligible to receive grants of stock options because of his
participation on the Administrative Committee of the option plans.
The Company at times enters into employment agreements with key
executives, generally of three years duration or less, that specify
the terms of employment including compensation arrangements. The
agreements generally provide for employment at will but may also
provide for severance payments under certain circumstances excluding
termination for cause. Any severance amounts would not exceed the
balance of compensation due for the remaining unfulfilled term of the
agreement. Executives without employment agreements terminated
through a workforce reduction or job elimination would receive
severance pay based on years of service up to a maximum of twenty-six
weeks pay under a Company policy applicable to all employees.
The above report on executive compensation is given by the Company's
Board of Directors.
James W. Meadlock Keith H. Schonrock, Jr.
Roland E. Brown James F. Taylor, Jr.
Larry J. Laster Robert E. Thurber
Nancy B. Meadlock
11
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder
return to the Company's shareholders compared with that of the
Standard & Poor's 500 Stock Index and a group of peer companies for
the five-year period ended December 31, 1993. The Company considers
its peer group to be the top five U.S. companies in terms of sales to
the computer-aided design (CAD) industry and/or the top five U.S.
computer workstation manufacturing companies for which financial
information is publicly available, as determined on the basis of 1992
revenues by Dataquest, Incorporated, a leading market research firm in
the computer industry. The Company's peer group consists of IBM,
Hewlett-Packard Corp., Digital Equipment Corp., Sun Microsystems,
Inc., Silicon Graphics, Inc., and Compaq Computer Corp. The
composition of the peer group changed from the presentation in the
1993 Proxy Statement. Mentor Graphics, Inc., which was included in
the top five U.S. CAD companies based on 1991 revenues and thus was
included in the Company's 1992 peer group, was replaced in the
Dataquest top five by Compaq Computer Corp. based on 1992 revenues.
Dataquest ranks the Company number two among the U.S. CAD companies
and number six among U.S. workstation manufacturers based on 1992
revenues.
Total shareholder return for the Company, the Standard & Poor's 500,
and the peer group was determined by adding a) the cumulative amount
of dividends for a given year, assuming dividend reinvestment, and b)
the difference between the share price at the beginning and at the end
of the year, the sum of which was then divided by the share price at
the beginning of such year. The graph assumes $100 was invested on
December 31, 1988 in the Company's Common Stock, in the Standard &
Poor's 500 companies, and in the peer group.
Comparative Five-Year Total Returns
Standard & Poor's 500 Stock Index, Peer Group,
and Intergraph Corporation
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
S&P 500 $100 $132 $128 $166 $179 $197
Peer Group $100 $ 84 $ 93 $ 86 $ 67 $ 78
INGR $100 $ 82 $ 65 $ 85 $ 63 $ 51
12
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Ernst & Young as
the Company's independent auditors to audit the financial statements
of the Company and to perform other appropriate accounting services
for the current fiscal year ending December 31, 1994. Such
appointment will be presented to the shareholders for ratification at
the Meeting. If the shareholders do not ratify the appointment, the
selection of another firm will be considered by the Board. A
representative of Ernst & Young is expected to be present at the
Meeting to respond to questions from shareholders and will be given
the opportunity to make a statement if so desired.
The Board of Directors recommends a vote FOR Proposal 2.
PROPOSAL 3
SHAREHOLDER PROPOSAL REGARDING VOTING
RIGHTS OF DIRECTORS
The Company has been informed that a shareholder intends to present
for action at the Company's Annual Meeting of Shareholders the
following resolution. The name and address of, and the number of
shares of Common Stock held by, the shareholder submitting such
proposal will be furnished to any person upon request to the Company.
Approval of this Proposal, WHICH IS OPPOSED BY THE COMPANY'S BOARD
OF DIRECTORS, requires the affirmative vote of the holders of a
majority of the outstanding shares present and entitled to vote at the
meeting.
"RESOLVED, that the Shareholders request that the Bylaws be
amended so as to require that each Director possess voting
rights to at least 1% of the outstanding shares."
The following statement was submitted by the shareholder in support
of such resolution:
"THE BOARD'S PERFORMANCE, as perceived by the marketplace,
is reflected in the Share price. Shares which sold for $40
in early 1986 are being 'dumped' for less than $10 today
(Nov-1993). In comparison, had that $40 been invested in
the S&P index, it would be worth about $80 today. The loss
to the Shareholder has been shocking - especially when one
considers that the Company has the best and most-varied CAD
software in the industry.
"THE BOARD of Directors must accept responsibility for
this poor performance - including the last four quarters of
negative earnings. Analysts have complained for years about
such things as:
a) not aggressively mass-marketing unbundled 'shrink-
wrapped' software,
b) not sticking with popular, open, market-proven state-of-
the-art hardware platforms, and
c) not controlling expenses.
"THE INDIVIDUAL DIRECTORS must, in turn, accept
responsibility for the failures of the overall Board.
Whereas 3 of the Directors are heavily-invested and highly-
committed to the success of the Company:
a) three other Directors, having divested of 90% of their
Shares and retired from active involvement with the
Company, have limited motivation to stay abreast of
industry trends, and
b) one lightly-invested Director/Manager, being directly
affected by potential salary-increases, bonuses, 'golden-
parachutes', etc., has limited independence and
objectivity.
13
<PAGE>
"Instead of accepting blame, and making appropriate
changes, however, these Directors have adopted a 'poison-
pill' to protect themselves from a 'hostile' Shareholder
takeover.
"THE SOLUTION: In order to assure a more positive long-
term future for the Company, this Proposal requests, in
essence, that the Board nominate only highly-invested
Directors who:
a) are highly-motivated to increase Share values,
b) are objective towards Company Management (not
compromised by superficial influences), and
c) are 'equal' team-players (as opposed to being either
'rubber-stamps' or 'power-seekers').
"Such Directors should re-energize the Board by providing
a healthy variance of views and would likely initiate more
thorough, timely, and independent reviews of all high-level
Company policies.
"EXCELLENT EXAMPLES of potential new Nominees are managers
of institutions, pension-funds, etc. who individually hold
(and vote) 1% or more of the Shares. Many such managers
professionally research the CAD industry and are highly-
motivated to see Share values improve. As a group, they
hold about 50% of the Company Shares.
"VOTE FOR THIS PROPOSAL, if you want to bring positive
evolutionary change to the Board. In 1991, a 'Shareholder's
Proposal Regarding Independent Directors' failed even though
the Board agreed with 'the premise that participation by
independent directors can be beneficial.' Share values
surged from $11 to $31 prior to the Meeting but plummeted
back to $19 within a month after the Proposal failed -
gradually sinking to $9. Let's not let this initiative fail
too!"
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF
THIS RESOLUTION, FOR THE FOLLOWING REASONS:
The Company believes that the Proposal that the Company's directors
possess voting rights to at least 1% of the outstanding shares is an
unreasonable and unnecessary requirement. Based on the number of
shares presently outstanding, a director would be required to own or
possess voting rights with respect to approximately 454,000 shares,
which undoubtedly would be beyond the means of most individuals.
Adoption of the Proposal will make it difficult, if not impossible, to
attract and retain qualified persons to serve as directors.
The arbitrarily selected 1% required level of stock ownership or
voting rights would not enhance the dedication, sound judgment, broad
experience and sincere willingness to serve which the Board seeks in
candidates for director. The statement in support of the Proposal
implies that directors with less than 1% of the voting rights with
respect to the outstanding Common Stock would not be objective and
would not have a substantial commitment to the best interests of the
Company and the best interests of its shareholders. Such a
requirement will not ensure a director's commitment to the Company and
the discharge of his or her fiduciary duty to represent the best
interests of all shareholders.
The Board of Directors recommends a vote AGAINST Proposal 3.
14
<PAGE>
PROPOSAL 4
SHAREHOLDER PROPOSAL REGARDING
THE COMPANY'S SHAREHOLDER RIGHTS PLAN
The Company has been informed that a shareholder intends to present
for action at the Company's Annual Meeting of Shareholders the
following resolution. The name and address of, and the number of
shares of Common Stock held by, the stockholder submitting such
proposal will be furnished to any person upon request to the Company.
Approval of this Proposal, WHICH IS OPPOSED BY THE COMPANY'S BOARD
OF DIRECTORS, requires the affirmative vote of the holders of a
majority of the outstanding shares present and entitled to vote at the
meeting.
"RESOLVED, that the Shareholders request that the
'Shareholder's Rights Plan' be amended so as to NOT
interfere with any public tender offer which treats all
Shareholders fairly."
The following statement was submitted by the shareholder in support
of such resolution:
"A company acquirer generally has the right to present a
'tender offer' directly to the company shareholders at a
specified price and time period to accept. Such offers are
generally made only if a potential acquirer cannot negotiate
a satisfactory buy-out agreement with the Board and are
generally made at prices that are significantly higher than
prior market prices.
"THE SHAREHOLDERS' RIGHTS PLAN was adopted by the Board
(without Shareholder approval) in response to the Board's
concerns about such a Company buy-out. The Plan, which is
often called a 'poison-pill', allows the Board to dilute and
to significantly diminish the value of a Shareholder's
investment if the Shareholder (Acquirer) should own 15% of
the Company's Shares.
"THE THREAT of such a confiscatory action should NOT be
permissible - except to counter an action which is clearly
predatory to the other Shareholders. Similar plans have
been used (or misused) by other boards to force an Acquirer
to pay selected individuals expensive 'golden parachutes' -
at the shareholders' ultimate expense.
"THE SOLUTION: This Proposal, in essence, requests that
the Board place fair and reasonable limits on the Plan such
that, if a potential Acquirer cannot negotiate an acceptable
buy-out agreement with the Board, the Acquirer will still
have the option of making a fair and unsolicited public
tender offer directly to the Shareholders. This 'Board
Bypass' capability allows the Shareholders to have the final
say on what is a reasonable offer for the Company.
"VOTE FOR this proposal in order to restore the
Shareholder's 'right' to be offered and to accept tender
offers."
15
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
RESOLUTION, FOR THE FOLLOWING REASONS:
On August 25, 1993, the Board of Directors adopted a Shareholder
Rights Plan (the "Rights Plan") to protect the Company's shareholders
against abusive takeover practices and to ensure that each shareholder
would be treated fairly and equally. Without the Rights Plan, third
parties would be free to engage in coercive or abusive takeover
tactics, such as two-tiered offers which may include stock and other
difficult to value consideration in addition to cash, and to otherwise
seek to acquire the Company on terms which may not be in the best
interests of the Company and its shareholders. The Rights Plan is
designed to assure that all of the Company's shareholders receive fair
and equal treatment in the event of any proposed takeover of the
Company and to guard against partial tender offers and other tactics
to gain control that are considered abusive. The Rights Plan is
intended to achieve these objectives by making such tactics more
costly for an acquirer and by creating an incentive for an acquirer to
negotiate with the Board of Directors.
While the shareholder proposal calls for an amendment to the Rights
Plan so as not to "interfere" with tender offers that treat all
shareholders "fairly", the proponent's statements imply that the
Company's Rights Plan deters legitimate acquisition proposals and
results in decreased stock values. To the contrary, the Rights Plan
will not deter a serious bidder who wants to acquire the Company in a
manner in which all shareholders receive what the Board believes to be
the full value for their stock. The Board of Directors is in the best
position to assess the adequacy and fairness of any offer, and it has
a fiduciary duty in such negotiations to maximize the value to all
shareholders that can be obtained for the Company's stock. The Board
also is required to meet these fiduciary obligations in determining
whether to redeem the rights in response to a specific acquisition
proposal. The overriding objective of the Board in adopting the
Rights Plan was, and continues to be, the preservation and
maximization of the Company's value for all shareholders.
The amendment to the Rights Plan, if adopted, would create
uncertainty as to the Board's role in evaluating tender offers. The
Rights Plan is intended to give the Board sufficient time to evaluate
any proposed tender offer and the possible alternatives and to provide
sufficient negotiating strength to take those steps that the Board
believes would be necessary to maximize the value that can be achieved
for all shareholders. The amendment would interfere with the ability
of the Board to negotiate favorable acquisition terms and would dilute
the protection afforded all the Company's shareholders under the
Rights Plan. In addition, nothing in the Rights Plan affects the
right of shareholders to receive tender offers directly, and the
Board, consistent with its fiduciary duties, may redeem the rights
within a certain period after any offer is commenced. The Company
believes the Board of Directors is in the best position to assess the
adequacy and fairness of any offer without the limitations and
uncertainties that would result from such an amendment to the Rights
Plan.
The Board of Directors recommends a vote AGAINST Proposal 4.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS
Shareholder proposals intended for presentation at the 1995 Annual
Meeting must be received by the Company for inclusion in its 1995
proxy material no later than December 1, 1994.
16
<PAGE>
OTHER
Management does not know of any other matters to be presented at the
Meeting for action by shareholders. However, if any other matters are
properly brought before the Meeting or any adjournment thereof, votes
will be cast pursuant to the proxies in accordance with the best
judgment of the proxy holders with respect to such matters.
UPON WRITTEN REQUEST OF ANY SHAREHOLDER TO JOHN R. WYNN, SECRETARY,
INTERGRAPH CORPORATION, HUNTSVILLE, ALABAMA 35894-0001, THE COMPANY
WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
By Order of the Board of Directors
JOHN R. WYNN
Secretary
DATED: March 31, 1994
17
<PAGE>
INTERGRAPH CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, MAY 12, 1994
The undersigned hereby appoints James W. Meadlock and John R. Wynn, or either
of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Intergraph Corporation which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
to be held on May 12, 1994, or any adjournment(s) thereof.
The Board of Directors recommends a vote FOR Proposals 1 and 2 and a vote
AGAINST Proposals 3 and 4.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below, [ ] WITHHOLD AUTHORITY to vote for
except as marked to the contrary all nominees listed below.
below.
James W. Meadlock; Roland E. Brown; Larry J. Laster; Nancy B. Meadlock;
Keith H. Schonrock, Jr.; James F. Taylor, Jr.; Robert E. Thurber.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
- -------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG AS THE COMPANY'S
AUDITORS FOR THE CURRENT FISCAL YEAR.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. SHAREHOLDER PROPOSAL THAT REQUESTS THE BYLAWS OF THE COMPANY BE AMENDED
SO AS TO REQUIRE THAT EACH OF THE COMPANY'S DIRECTORS POSSESS VOTING
RIGHTS TO AT LEAST 1% OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON
STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. SHAREHOLDER PROPOSAL THAT REQUESTS THE COMPANY'S SHAREHOLDER RIGHTS PLAN
BE AMENDED SO AS TO NOT INTERFERE WITH ANY PUBLIC TENDER OFFER WHICH
TREATS ALL SHAREHOLDERS FAIRLY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment(s)
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE INTERGRAPH CORPORATION
BOARD OF DIRECTORS
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3 AND 4.
COM*
ESP*
ESB*
Please sign exactly as your name appears
at left. If registered in the names of
two or more persons, each should sign.
Executors, administrators, trustees,
guardians, attorneys and corporate
officers should show their titles.
DATE , 1994
----------------- ---------------------------------------
PLEASE MARK, SIGN, DATE, AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. ---------------------------------------
* COM=Common Stock Shares; ESP=Employee Stock Purchase Plan Shares;
ESB=Employee Stock Bonus Plan Shares.
