<PAGE> 1
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 sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
IOMEGA CORPORATION
(Name of Registrant as Specified In Its Charter)
IOMEGA CORPORATION
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
[IOMEGA LETTERHEAD]
March 23, 1999
To Our Stockholders:
It is my pleasure to invite you to the 1999 Annual Meeting of Stockholders
of Iomega Corporation. The meeting will be held on Tuesday, April 20, 1999 at
11:00 a.m. at the Marriott Hotel, 75 South West Temple, Salt Lake City, Utah.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the business to be transacted at the meeting.
I am also pleased to present Iomega's 1998 Annual Report, which will give
you an update with respect to our challenges and accomplishments during 1998 and
our plans for 1999 and beyond.
Our proxy statement and annual report mailing is only one of the ways that
we try to reach our stockholders. Please remember that there are other avenues
for communication open to you throughout the year. They are: our toll-free
fax-back service (1-888-88-IOMEGA), the IR section of our monthly Internet
magazine, Iomegazine(TM) (www.iomega.com), and our Investor Information Line
(1-801-332-3585).
This year, most stockholders will be able to vote by telephone or the
Internet. Instructions are on the stub portion of the enclosed proxy card. To
assure proper representation of your shares at the meeting, please take a moment
to vote by phone, via the Internet or by using the enclosed proxy card, at your
earliest convenience.
Sincerely yours,
/s/ Jodie K. Glore
JODIE K. GLORE
President and
Chief Executive Officer
<PAGE> 3
IOMEGA CORPORATION
1821 WEST IOMEGA WAY
ROY, UTAH 84067
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 20, 1999
The 1999 Annual Meeting of Stockholders of Iomega Corporation will be held
at the Marriott Hotel, 75 South West Temple, Salt Lake City, Utah on Tuesday,
April 20, 1999 at 11:00 a.m., local time. At the meeting, stockholders will act
on the following matters:
1. Election of three Class II directors, each for a term of three years;
2. Amendment of Iomega's 1997 Stock Incentive Plan to increase the number
of shares of common stock that may be issued under the plan from
12,000,000 to 20,500,000;
3. Ratification of the selection of Arthur Andersen LLP as our independent
auditors for the current year; and
4. Any other business that may properly come before the meeting or any
adjournment of the meeting.
Stockholders of record at the close of business on February 22, 1999 are
entitled to vote. Your vote is important regardless of the number of shares that
you own. Kindly sign, date and return the enclosed proxy card, or follow the
instructions provided for voting by phone or the Internet.
By Order of the Board of Directors,
LAURIE BARTLETT KEATING
Senior Vice President, General Counsel
and Secretary
Roy, Utah
March 23, 1999
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Voting Procedures...................................... 1
Item One -- Election of Directors...................... 3
Stock Ownership Information.......................... 12
Corporate Governance................................. 14
Director Compensation................................ 16
Executive Compensation............................... 18
Stock Performance Graph.............................. 23
Management Development and Compensation Committee
Report on Executive Compensation...................... 24
Item Two -- Amendment of 1997 Stock Incentive Plan..... 27
Item Three -- Ratification of Selection of Auditors.... 30
Additional Information................................. 30
</TABLE>
<PAGE> 5
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PROXY STATEMENT -- 1999 ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
This proxy statement contains information about the 1999 Annual Meeting of
Stockholders of Iomega Corporation. The meeting is scheduled to be held on
Tuesday, April 20, 1999, beginning at 11:00 a.m., at the Marriott Hotel, 75
South West Temple, Salt Lake City, Utah.
This proxy statement is furnished in connection with the solicitation of
proxies by Iomega's Board of Directors. Iomega's Annual Report for 1998 was
first mailed to stockholders, along with these proxy materials, on or about
March 23, 1999.
- -------------------------------------------------------
VOTING PROCEDURES
- -------------------------------------------------------
WHO CAN VOTE?
In order to vote, you must have been a stockholder of record at the close
of business on February 22, 1999 (the "record date"). If your shares are owned
of record in the name of a broker or other nominee, you should follow the voting
instructions provided by your nominee.
On the record date, there were 269,315,855 shares of Iomega's common stock
issued, outstanding and entitled to vote. Each share of common stock is entitled
to one vote on each matter to be voted upon.
HOW DO I VOTE?
You may vote by completing and returning the enclosed proxy or by voting in
person at the meeting. In addition, you may be able to vote by phone or via the
Internet, as described below.
VOTING BY PROXY. You may vote by completing and returning the enclosed
proxy. Your proxy will be voted in accordance with your instructions. If you do
not specify a choice on one of the matters described in this proxy statement,
your proxy will be voted in favor of that matter.
You may revoke your proxy at any time before its exercise by delivering a
written revocation or a subsequently dated proxy to the Secretary of the Company
or by voting in person at the meeting.
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the meeting, please
take the time to vote. This year, votes may be cast:
- by phone
- via the Internet
- by traditional paper proxy
Please take a moment to read the instructions, choose the way to vote that
you find most convenient and cast your vote as soon as possible.
- --------------------------------------------------------------------------------
VOTING BY PHONE OR INTERNET. If you are a stockholder of record (that is,
if your stock is registered with the Company in your own name), you may vote by
telephone, or electronically through the Internet, by following the instructions
included with your proxy card. If your shares are registered in the name of a
broker or other nominee, your nominee may be participating in a program provided
through ADP Investor Communication Services that allows you to vote by phone or
the Internet. If so, the voting form your nominee sends you will provide
telephone and Internet instructions.
The last vote you submit chronologically (by any means) will supersede your
prior vote(s). Also, if you vote by phone or the Internet, and later decide to
attend the annual meeting, you may cancel your previous vote and vote in person
at the meeting.
VOTING IN PERSON. If you attend the meeting, you may deliver your completed
proxy card in person or you may vote by completing a ballot which will be
available at the meeting.
WHAT CONSTITUTES A QUORUM?
In order for business to be conducted at the meeting, a quorum must be
present. A quorum consists of the holders of a majority of the shares of common
stock issued and outstanding on the record date and entitled to vote, or at
least 134,657,928 shares.
Shares of common stock represented in person or by proxy (including shares
that abstain or do not vote with respect to one or more of the matters to be
voted upon) will be counted for purposes of determining whether a quorum exists.
<PAGE> 6
If a quorum is not present, the meeting will be adjourned until a quorum is
obtained.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The three nominees receiving the highest number of
votes, whether or not a majority of the total number of votes cast, will be
elected.
OTHER MATTERS. The affirmative vote of the holders of a majority of the
shares of common stock voting on the matter is required to approve the two other
matters scheduled to be voted on at the meeting.
HOW ARE VOTES COUNTED?
Shares that (1) abstain from voting on a particular matter or (2) are held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote on a particular matter ("broker
non-votes") will not be voted in favor of that matter, and will also not be
counted as shares voting on the matter. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of voting on the matters to be
voted on at the meeting.
ARE THERE OTHER MATTERS TO BE VOTED ON AT THE MEETING?
The Board of Directors does not know of any other matters which may come
before the meeting, and, under Iomega's bylaws, the deadline for stockholders to
notify Iomega of any proposals or director nominations to be presented for
action at the annual meeting has passed. If any other matters are properly
presented at the meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment.
PLANNING TO ATTEND THE MEETING?
If you plan to attend the meeting and are a record holder, please check the
appropriate box on the enclosed proxy card. If you hold your shares in "street
name," please bring a statement from your broker showing your holdings. Seating
at the meeting will be on a first-come, first-served basis. If you have any
questions about the meeting, please call our Investor Information Line
(1-801-332-3585). Photographs will be taken at the meeting for use by Iomega,
and we may use these photographs in publications. If you attend the meeting,
permission to use your picture will be assumed. The Marriott Hotel is handicap
accessible. If you require special assistance, please call our Investor
Information Line.
2
<PAGE> 7
- --------------------------------------------------------------------------------
ITEM ONE -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
THE FIRST AGENDA ITEM TO BE VOTED ON IS THE ELECTION OF THREE
CLASS II DIRECTORS. THE BOARD HAS NOMINATED THREE PEOPLE, EACH
OF WHOM IS CURRENTLY SERVING AS A DIRECTOR OF IOMEGA, AND
RECOMMENDS THAT YOU VOTE FOR SUCH NOMINEES.
Our Board of Directors is divided into three classes, with one class being
elected each year and members of each class holding office for three-year terms.
The Board of Directors currently consists of ten directors, four of whom are
Class I Directors (with terms expiring at the 2001 Annual Meeting), three of
whom are Class II Directors (with terms expiring at the 1999 Annual Meeting) and
three of whom are Class III Directors (with terms expiring at the 2000 Annual
Meeting).
Two current directors, Messrs. Nolan and Sheehan, have informed the Board
that they will retire upon the expiration of their respective terms as Class II
directors. The Board extends its gratitude to Messrs. Nolan and Sheehan for
their many contributions to Iomega over the years, and wishes them good health
and good fortune in their well deserved retirement years.
At the 1999 Annual Meeting, stockholders will have the opportunity to vote
on the election of Messrs. Glore (who is currently serving as a Class III
Director), Puckett (who is currently serving as a Class I Director) and Seidl
(who is currently serving as a Class II Director). The persons named in the
enclosed proxy will vote to elect these three nominees as directors, unless you
withhold authority to vote for the election of any or all of the nominees by
marking the proxy to that effect. All of the nominees have indicated their
willingness to serve, if elected, but if any should be unable or unwilling to
serve, proxies may be voted for a substitute nominee designated by the Board of
Directors.
3
<PAGE> 8
- --------------------------------------------------------------------------------
NOMINEES FOR CLASS II DIRECTORS -- TERMS TO EXPIRE IN 2002
- --------------------------------------------------------------------------------
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
Jodie Glore was born in Burley,
Idaho and grew up in Ontario,
Oregon. After high school, he
enrolled in the United States
Military Academy at West Point
and graduated in 1969 with a
bachelor's degree in
engineering. He later spent 13
months in Germany and then
served in Vietnam for a year
with the 101st Airborne
Division. After being selected
to teach at West Point's
Department of Behavioral
Sciences and Leadership, he
earned a master's degree in
1975, with honors, in
Industrial and Labor Relations
from the University of Oregon
in Eugene, Oregon.
Mr. Glore's post-military
career began in 1979, when he
joined Allen-Bradley, now part
of Rockwell Automation, as
supervisor of special projects
for the company's Programmable
Control Division at Highland
Heights, Ohio. He supervised
and managed new product
development, marketing planning
services and product marketing
within the Programmable Control
Division until 1984, when he
was appointed director of
product management for
Allen-Bradley's Sensing
Division in Milwaukee,
Wisconsin. In 1985, Mr. Glore
joined Square D where he held
several management positions.
He was corporate vice president
of sales and marketing, with
sales exceeding $1.3 billion
annually, when he left in 1992
to rejoin Allen-Bradley as
senior vice president for the
Industrial Computer and
Communications Group, which
later became known as the
Automation Group. He was
appointed president of
Allen-Bradley in 1994.
In 1995, Mr. Glore was
appointed as president and
chief operating officer of
Rockwell Automation, a leading
supplier of industrial
automation products, systems
and software in North America,
and a division of Rockwell
International. Mr. Glore led
Rockwell Automation's growth
from $2.1 billion to $4.5
billion in just four years.
During his tenure at Rockwell,
Mr. Glore held several senior
management positions, including
corporate senior vice president
of Rockwell International and a
member of Rockwell's Corporate
Strategy Committee. Mr. Glore
was named chief executive
officer and president of Iomega
in October 1998.
Mr. Glore served as chairman of
the board of Reliance Electric
from 1995 until 1998 and was
elected as a member of BF
Goodrich's board of directors
in September 1998.
[PHOTO]
JODIE K. GLORE
AGE 51
DIRECTOR SINCE OCTOBER 1998
CURRENTLY SERVING AS A
CLASS III DIRECTOR
COMMITTEE
MEMBERSHIP:
- - EXECUTIVE
4
<PAGE> 9
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
Bernard Puckett was raised in
Magee, Mississippi. He is a
graduate of the University of
Mississippi with a bachelor of
science degree in mathematics.
Upon graduating from college,
Mr. Puckett joined IBM in
sales, ultimately becoming vice
president of sales for IBM's
Western U.S. division. He then
held multiple positions in
products, marketing and finance
at IBM from 1967 to 1993,
including vice president,
marketing-U.S.; director
business plans-worldwide; chief
financial officer, U.S.
marketing and service; vice
president,
communications-worldwide;
president of IBM's mainframe
division responsible for
worldwide development,
manufacturing and product
management; and senior vice
president and group executive
for applications solutions,
responsible for
industry-specific hardware and
software, and for IBM's entry
into the services sector
through IBM Consulting Group
and ISSC, IBM's outsourcing
group. Mr. Puckett capped his
career at IBM as its senior
vice president-corporate
strategy and development, where
he was responsible for driving
IBM's overall business strategy
and associated merger and
acquisition activity.
From 1994 to 1996, Mr. Puckett
was president, and beginning in
1995 was president and chief
executive officer, of Mobile
Telecommunications Technologies
("MTEL"), which is now SKYTEL,
a worldwide paging company.
Mr. Puckett has been a private
investor since 1996. He
currently serves as a director
of R. R. Donnelley & Sons
Company, IMS Health, P-Com,
Inc., Neilson Media Research
and Software.com.
[PHOTO]
M. BERNARD PUCKETT
AGE 54
DIRECTOR SINCE FEBRUARY 1999
CURRENTLY SERVING AS A
CLASS I DIRECTOR
COMMITTEE
MEMBERSHIP:
- - MANAGEMENT DEVELOPMENT AND COMPENSATION
5
<PAGE> 10
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
John Michael ("Mick") Seidl was
raised in Wisconsin and Ohio.
He is a graduate of the United
States Military Academy at West
Point and has both a masters of
public administration degree
and a doctorate in political
economy and government from
Harvard University.
From 1961 to 1971, Mr. Seidl
served in the United States Air
Force where he advanced from
second lieutenant to captain.
As a captain, he was an
assistant professor in the
department of social services
at West Point from 1968 to
1971. From 1971 to 1973, Mr.
Seidl was a deputy assistant
secretary, program development
and budget, in the U.S.
Department of the Interior. Mr.
Seidl was a member of the
economic and public management
faculty at Stanford
University's graduate school of
business from 1974 to 1978.
Mr. Seidl held various
executive management positions
with subsidiaries of The
Natomas Company, a diversified
energy company with
international operations in
Indonesia, the U.K., the U.S.,
Canada, and several other
countries from 1977 through
1983. From 1984 to 1989, Mr.
Seidl held various executive
positions, including president,
chief operating officer and
director of Enron Corp., an
international energy company
formed in 1985 from the merger
of Houston Natural Gas
Corporation and InterNorth,
Inc. Mr. Seidl is the former
president and ex-director of
MAXXAM, Inc., which is a
sixty-five percent owner of
Kaiser Aluminum, and the parent
company of Pacific Lumber
Company and MAXXAM Property.
From 1989 to 1992, he served as
chairman and chief executive
officer of Kaiser Aluminum, and
from 1990 to 1992, he was
chairman and chief executive
officer of Pacific Lumber and
chairman of MAXXAM Property
Company.
After a brief retirement in
1993, Mr. Seidl joined CellNet
Data Systems, Inc., a provider
of low-cost wireless data
network services to the utility
industry. Mr. Seidl has served
as chairman, president and
chief executive officer of
CellNet since 1994.
Mr. Seidl is a director of the
Denver, Colorado-based St.
Mary's Land and Exploration
Company, a member of the
endowment board, and former
board member of the Oregon
Shakespeare Festival, a board
member of the San Francisco
Opera, and a member of the
Corporate Council, The
Conservation Fund. He is a
former chairman and president
of the Houston Grand Opera, and
a former member of the board of
governors of the Nature
Conservancy of Arlington,
Virginia.
[PHOTO]
JOHN M. SEIDL
AGE 59
DIRECTOR SINCE FEBRUARY 1999
CURRENTLY SERVING AS A CLASS II DIRECTOR
COMMITTEE
MEMBERSHIP:
- - MANAGEMENT DEVELOPMENT AND COMPENSATION
6
<PAGE> 11
- --------------------------------------------------------------------------------
CLASS I DIRECTORS -- TERMS TO EXPIRE IN 2001
- --------------------------------------------------------------------------------
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
John Barter was raised in
Mobile, Alabama. Mr. Barter
earned a bachelor of science
degree in physics from Spring
Hill College in 1968 and a
master of business
administration degree in
finance from Tulane University
in 1973.
Upon his graduation, he joined
Allied Chemical Corporation, a
predecessor to AlliedSignal,
Inc., from which he retired in
1997. During his 24-year tenure
at AlliedSignal, Mr. Barter
held various financial
management and executive level
positions including controller,
senior vice president of
planning, development and
administration, chief financial
officer and most recently
president of AlliedSignal
Automotive and executive vice
president of AlliedSignal, Inc.
from 1981 to 1984.
Mr. Barter held the positions
of treasurer and vice president
of finance and accounting for
Union Texas Petroleum Corp., a
subsidiary of AlliedSignal,
where he led the subsidiary
through several multi-million
dollar merger/acquisition
transactions. Throughout his
career at AlliedSignal, Mr.
Barter contributed to the
company's cash management,
international finance,
acquisition, development,
accounting and restructuring
efforts.
During Mr. Barter's 11 years as
a member of the board of
directors of BMC Software,
BMC's revenue grew from less
than $100 million to $960
million. In 1989, BMC Software
completed a successful public
offering.
Mr. Barter also serves as a
director of Louisiana-Pacific
Corporation and is the Chairman
of the Board of Trustees of
Spring Hill College.
[PHOTO]
JOHN W. BARTER
AGE 52
DIRECTOR SINCE MAY 1998
CURRENTLY SERVING AS A
CLASS I DIRECTOR
COMMITTEE
MEMBERSHIPS:
- - AUDIT
- - EXECUTIVE
7
<PAGE> 12
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
David Dunn was raised in
Brooklyn, New York. After
graduating from high school, he
worked briefly and then went on
active duty in the Marine Corps
in the summer of 1950. Through
the Marine Corps, he won a
competitive appointment to the
United States Naval Academy,
which he entered in 1951 and
from which he graduated in
1955. After four years of
additional service in the
Marine Corps, Mr. Dunn resigned
in 1959 to commence work on his
master of business
administration at Harvard
Business School, from which he
graduated in 1961. A "High
Distinction" graduate, Mr. Dunn
was also selected as a Baker
Scholar.
Following graduation, Mr. Dunn
worked for one year with G. H.
Walker & Co. as an investment
banker. In the summer of 1962,
he joined J. H. Whitney & Co.,
a venture capital firm, where
he became a partner in 1966. He
resigned from Whitney in 1970
to organize Idanta Partners
Ltd., a venture capital firm,
of which he has been managing
partner from its inception to
the present time. As a venture
capitalist, Mr. Dunn has
participated in the financing
of many companies and served on
numerous boards. He provided
start-up capital for Storage
Technology Corporation and was
a director of that company for
more than 15 years, from its
start-up phase through the
point where it was generating
substantially more than $1
billion a year in annual
revenue.
Idanta Partners also provided
all of the outside start-up
capital for Prime Computer and
Mr. Dunn served as Chairman of
Prime from its inception for
more than 15 years, at which
time its annual sales were more
than $1 billion. Mr. Dunn's
firm invested all of the
outside capital for the
start-up of Iomega and he has
been Chairman of the Board of
Iomega since Iomega's
incorporation in 1980.
[PHOTO]
DAVID J. DUNN
AGE 68
DIRECTOR SINCE 1980
CURRENTLY SERVING AS A
CLASS I DIRECTOR
COMMITTEE
MEMBERSHIPS:
- - EXECUTIVE (CHAIRMAN)
- - NOMINATING AND GOVERNANCE (CHAIRMAN)
8
<PAGE> 13
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
James Sierk was raised in
western New York. After
graduation from the Warsaw High
School he attended Rutgers
University on an athletic
scholarship. He graduated with
a bachelor of science degree in
chemistry in 1960 and
immediately entered the Marine
Corps as an infantry officer.
He served in the U.S. and
Southeast Asia and attained the
rank of captain. After his
active Marine Corps service,
Mr. Sierk attended Rensselaer
Polytechnic Institute and
received a master's degree from
the School of Management
Engineering.
Following graduation, Mr. Sierk
joined Xerox Corporation, then
a $300 million company. He held
operations positions in
manufacturing and product
development and was named to be
the first vice president of
materials management in 1972.
Subsequent positions included
responsibility for U.S.
manufacturing operations and
operations in the Far East and
the Americas. In 1989, he was
named to lead Xerox's
successful effort to win the
Malcolm Baldrige National
Quality Award. In 1991, Mr.
Sierk joined AlliedSignal as
the senior vice president of
quality and productivity and a
member of the Leadership
Committee. During the
subsequent seven years he led
the change processes, including
Six Sigma, which allowed the
senior management team to
transform the company. By his
retirement in late 1997, he had
been responsible for the
functional leadership of
materials management,
marketing, manufacturing,
information technology,
centralized business services,
research and technology, and
quality.
Mr. Sierk served as interim
president and chief executive
officer of Iomega from March
through October, 1998 while a
search for a president and
chief executive officer was
underway. He serves as a
director for Ames Rubber
Corporation. Mr. Sierk is an
active member of various civic
and professional organizations
including the Malcolm Baldrige
Award. The Secretary of
Commerce has appointed him to
successive positions as a
judge, chairman of the judges'
panel, an overseer, and as
chairman of the board of
overseers of this national
business excellence award.
[PHOTO]
JAMES E. SIERK
AGE 60
DIRECTOR SINCE 1997
CURRENTLY SERVING AS A
CLASS I DIRECTOR
COMMITTEE
MEMBERSHIPS:
- - EXECUTIVE
- - OPERATIONS AND TECHNOLOGY (CHAIRMAN)
9
<PAGE> 14
- --------------------------------------------------------------------------------
CLASS III DIRECTORS -- TERMS EXPIRE IN 2000
- --------------------------------------------------------------------------------
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
Robert Berkowtiz was born in
Brooklyn, New York and raised in
Boston, Massachusetts. After
graduating from Boston English High
School, he attended Northeastern
University where, as a cooperative
student, Mr. Berkowitz worked for the
U.S. Navy in Patuxent River, Maryland
and Raytheon Labs in Bedford,
Massachusetts.
After graduating from Northeastern in
1959 with a bachelor of science
degree in mechanical engineering, he
worked until 1968 for the Laboratory
of Electronics that designed,
developed and produced the Doppler
navigation system for the F-105
fighter-bomber aircraft. In 1961, he
joined Computer Control Company. For
the next ten years, Mr. Berkowitz
held a series of assignments with
Computer Control Company, including
the mechanical design and manufacture
of the on-board computer for the NASA
Mariner 4 Mars space mission, and the
manufacture of satellite subsystems.
In 1964, Computer Control Company was
acquired by Honeywell Corporation.
Mr. Berkowitz's last assignment with
Honeywell was as plant manager,
responsible for the production of its
minicomputer systems.
Mr. Berkowitz resigned from Honeywell
in 1972 to participate in forming
Prime Computer, a manufacturer and
developer of minicomputer systems.
From 1972 to 1984, Mr. Berkowitz was
vice president of manufacturing for
Prime Computer. Specializing in asset
management techniques, he installed
just-in-time inventory systems,
automated production techniques and
established offshore production
facilities. During this period, Prime
Computer led the industry in
inventory turns and assets as a
percent of revenue. From
approximately 1985 to 1988, Mr.
Berkowitz served as president and
chief executive officer of Ontologic,
a closely held company developing an
object-oriented database management
software system with a proprietary
object language. Also, he served on
the board of directors of New England
Digital Corporation, a closely held
firm developing direct disc audio
recording and post-production systems
for the recording industry. During
1991, he was appointed to the board
of directors of CimTelligence
Systems, developers of process
planning software, and subsequently
was appointed its president and chief
executive officer holding that
position until March of 1992.
Since 1992, Mr. Berkowitz has been a
private investor. From 1983 to 1990,
Mr. Berkowitz wrote a weekly
newspaper column devoted to
technology and its impact on society.
He has also served as a board member
for the Men of the 400, a Catholic
charitable organization, for the
Framingham Union Hospital, and for
the Middlesex Area Chamber of
Commerce. Mr. Berkowitz is a past
president of the Framingham Union
Development Fund for the 80's Inc.
[PHOTO]
ROBERT P. BERKOWITZ
AGE 63
DIRECTOR SINCE 1983
CURRENTLY SERVING AS A
CLASS III DIRECTOR
COMMITTEE
MEMBERSHIP:
- - AUDIT (CHAIRMAN)
10
<PAGE> 15
NAME BUSINESS EXPERIENCE / DIRECTORSHIPS
- -------------------------
- --------------------------------------------------------------------------------
John Myers was raised in
Emmaus, Pennsylvania. Mr. Myers
graduated from Pennsylvania
State University in 1960 with a
bachelor of science degree in
mechanical engineering and
received the distinguished
outstanding engineer of the
year award in 1994.
Mr. Myers began his career with
the General Electric Company in
1960, holding various
manufacturing, quality control,
and engineering positions
primarily in the Aircraft
Engine Group. Upon leaving
General Electric in 1978, he
was named vice president and
general manager of the nuclear
medicine division of the
Technicare Company, a position
he held for two years. From
1980 to 1992, Mr. Myers served
as president of the Lycoming
Division of Textron Inc., a
manufacturer of small turbine
and piston engines for general
aviation, corporate aviation,
commercial and military
helicopters, landing craft and
tanks. During his presidency,
Lycoming's annual sales grew
from $140 million to $1
billion. Mr. Myers was named
winner of the Silver Knight
Award in 1986 for outstanding
management at Lycoming.
Mr. Myers joined Thiokol
Corporation, now Cordant
Technologies, Inc., in June
1992 as president and chief
operating officer and was
appointed president and chief
executive officer in May 1993.
From late 1993 through its sale
in 1996, Mr. Myers was chairman
of Garrett Aviation Service, a
company that performed
maintenance and upgrades on
corporate jets and
piston-powered airplanes.
Since 1996, Mr. Myers has been
an independent business
consultant. Mr. Myers also
serves as a director for the
Curtiss-Wright Corporation, and
is past national chairman of
the American Defense
Preparedness Organization and a
former director of Bridgeport
Hospital in Bridgeport,
Connecticut.
[PHOTO]
JOHN R. MYERS
AGE 62
DIRECTOR SINCE 1994
CURRENTLY SERVING AS A
CLASS III DIRECTOR
COMMITTEE
MEMBERSHIPS:
- - MANAGEMENT DEVELOPMENT AND COMPENSATION (CHAIRMAN)
- - OPERATIONS AND TECHNOLOGY
11
<PAGE> 16
- --------------------------------------------------------------------------------
STOCK OWNERSHIP INFORMATION
- --------------------------------------------------------------------------------
OWNERSHIP BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table contains information regarding ownership of Iomega's
common stock on January 31, 1999 by each director, certain executive officers
and the holders of more than five percent of Iomega's outstanding common stock.
<TABLE>
<CAPTION>
SHARES
ACQUIRABLE TOTAL PERCENT
SHARES WITHIN 60 BENEFICIAL OWNER-
BENEFICIAL OWNER OWNED (1) DAYS (2) OWNERSHIP SHIP
---------------- --------- + ---------- = ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Idanta Partners Ltd. (3).................... 21,780,280 0 21,780,280 8.1%
John W. Barter.............................. 8,463 0 8,463 *
Robert P. Berkowitz......................... 17,350 2,000 19,350 *
David J. Dunn............................... 24,793,298(4) 2,000 24,795,298 9.2%
John R. Myers............................... 30,284 212,000 242,284 *
John E. Nolan............................... 129,373(5) 375,000 504,373 *
M. Bernard Puckett (6)...................... 0 0 0 *
John M. Seidl (6)........................... 0 0 0 *
James E. Sierk.............................. 66,006 160,000 226,006 0
John E. Sheehan............................. 170,247 2,000 172,247 0
Edward D. Briscoe (7)....................... 790,024 49,988 840,012 *
L. Scott Flaig.............................. 30,000 97,143 127,143 *
G. Fred Forsyth (7)......................... 10,000 53,000 63,000 *
Jodie K. Glore.............................. 15,000 300,000 315,000 *
James A. Taylor............................. 20,000 0 20,000 *
Kim B. Edwards (8).......................... 3,906,922 0 3,906,922 1.5%
All current directors and executive officers
as a group (19 persons)(9)................ 26,371,907 1,841,703 28,213,610 9.7%
</TABLE>
- ---------------
* Less than 1%
(1) For each person, the "Shares Owned" column may include shares attributable
to the person because of that person's voting or investment power or other
relationship.
(2) Under the rules of the Securities and Exchange Commission, a person is
deemed to have "beneficial ownership" of any shares over which that person
has or shares voting or investment power, plus any shares that person may
acquire within 60 days, including through the exercise of a stock option.
For each person the number in the "Shares Acquirable Within 60 Days" column
constitutes shares covered by options exercisable within 60 days after
January 31, 1999.
(3) The address of Idanta Partners Ltd. ("Idanta") is 4660 La Jolla Village
Drive, Suite 850, San Diego, CA 92122.
(4) Consists of 2,989,514 shares held by a family trust of which Mr. Dunn is
trustee, and 21,780,280 shares held by Idanta, with respect to which the
family trust is a managing general partner. Mr. Dunn shares voting and
investment power with respect to such shares. Excludes 2,400 shares held by
Mr. Dunn's spouse. Mr. Dunn disclaims beneficial ownership of all of the
foregoing shares.
(5) Includes 18,000 shares held by the Nolan Family Foundation, as to which Mr.
Nolan disclaims beneficial ownership.
(6) Messrs. Puckett and Seidl were appointed to the Board of Directors in
February 1999.
(7) Mr. Briscoe and Mr. Forsyth are no longer executive officers of Iomega
effective January 1999.
12
<PAGE> 17
(8) Mr. Edwards resigned as President and Chief Executive Officer in March 1998.
(9) Includes 21,780,280 shares of common stock held by Idanta. Excludes shares
held by Messrs. Briscoe, Edwards and Forsyth. See notes (7) and (8).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of reports and representations submitted to Iomega,
except as follows, all reports regarding beneficial ownership of securities of
the Company required to be filed under Section 16(a) of the Exchange Act for the
1998 fiscal year were timely filed.
A stock purchase in January 1998 by Scott Flaig and a stock purchase in
February 1998 by Kevin O'Connor were reported late.
13
<PAGE> 18
- --------------------------------------------------------------------------------
CORPORATE GOVERNANCE
- --------------------------------------------------------------------------------
CORPORATE GOVERNANCE POLICY
In January 1999, the Board of Directors reaffirmed the corporate governance
policy it adopted in January 1998. The policy is set forth below. The Board
intends to review the corporate governance policy at least once a year.
The purpose of Iomega's corporate governance policy is to ensure that
Iomega is managed for the long-term benefit of its stockholders. This policy
recognizes that stockholder interests are rarely, if ever, well served by
failing to consider the interests of employees and the other communities in
which the Company operates. It is the directors' obligation to ensure that this
policy becomes part of the fabric of decision-making and operations throughout
Iomega.
We agree with the 1990 Business Roundtable statement of the function of
boards of directors, as follows:
"The board of directors has five primary functions:
1. Select, regularly evaluate, and, if necessary, replace the Chief
Executive Officer. Determine management compensation. Review succession
planning.
2. Review and, where appropriate, approve the financial objectives, major
strategies and plans of the corporation.
3. Provide advice and counsel to top management.
4. Select and recommend to stockholders for election an appropriate slate
of candidates for the board of directors. Evaluate board processes and
performance.
5. Review the adequacy of systems to comply with all applicable
laws/regulations and sound business practices."
In performing these functions, the Board of Directors of Iomega carries out
a number of activities during the year, including:
- Evaluating the performance of the Chief Executive Officer at least
annually at a meeting of non-management directors.
- Evaluating its own performance and the performance of individual
directors on a periodic basis.
- Succession planning and management development are reported on annually
by the Chief Executive Officer to the Board. A detailed performance
evaluation for each of his subordinates is provided at that time.
- Annually, the Board reviews and approves a multi-year strategic plan and
a one-year operating plan for the Company.
- The Board, through its Management Development and Compensation Committee,
conducts an annual review of management compensation and incentives. In
dealing with incentives, the Board will not approve re-pricing options
(i.e., lowering of option prices) without an affirmative vote of the
holders of a majority of the shares voting on the issue.
14
<PAGE> 19
BOARD COMMITTEES
The Board of Directors has six standing committees: Audit; Ethics and
Compliance; Executive; Management Development and Compensation; Nominating and
Governance; and Operations and Technology. All members of all committees are
non-employee directors, except that the Chief Executive Officer is a member of
the Executive Committee.
AUDIT COMMITTEE. The Audit Committee met ten times during 1998. The
primary functions of the committee are to:
- recommend the selection of Iomega's independent auditors;
- review the scope and results of the audit with the independent
accountants;
- review non-audit work of the outside auditors and consider its effect, if
any, on the independence of the Company's outside auditors;
- review with management and the independent accountants the Company's
interim and year-end operating results;
- consider the accuracy of the Company's internal accounting and audit
procedures; and
- oversee the Company's internal audit work.
The current members of the Audit Committee are Messrs. Barter, Berkowitz,
Nolan and Sheehan.
ETHICS AND COMPLIANCE COMMITTEE. The Ethics and Compliance Committee met
three times during 1998. The primary functions of the committee are to review
the policies and programs that are designed to assure Iomega's compliance with
legal and ethical standards that affect its role as a responsible corporate
citizen, including those related to:
- human resource issues, such as equal employment opportunities;
- health, safety and environmental matters; and
- proper business practices.
The Ethics and Compliance Committee currently consists of Messrs. Nolan and
Sheehan.
EXECUTIVE COMMITTEE. The Executive Committee met two times during 1998.
The primary function of the committee is to review certain issues relating to
Iomega's business between meetings of the full Board of Directors.
The Executive Committee currently consists of Messrs. Dunn, Barter, Glore
and Sierk.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE. The Management
Development and Compensation Committee met ten times during 1998. The primary
functions of the committee are to:
- recommend the compensation package of each executive officer to the
President;
- approve compensation arrangements for other senior level employees;
- consider matters related to management/leadership development and
succession planning;
- recommend individuals for election as officers;
- administer Iomega's employee stock option, stock purchase, cash bonus and
other employee benefit plans; and
- authorize stock option grants under the Company's 1997 Stock Incentive
Plan.
The current members of the Management Development and Compensation
Committee are Messrs. Myers, Puckett and Seidl.
NOMINATING AND GOVERNANCE COMMITTEE. The Nominating and Governance
Committee met five times during 1998. The primary functions of the committee are
to review policies and make recommendations to the Board concerning:
- the size and composition of the Board;
- the criteria and qualifications for election to the Board;
- retirement from the Board;
- the structure, composition and members of Board committees;
- the overall effectiveness of the Board and areas for improvement;
- nominees for director; and
- director compensation and benefits.
The current members of the Nominating and Governance Committee are Messrs.
Dunn and Nolan.
OPERATIONS AND TECHNOLOGY COMMITTEE. The Operations and Technology
Committee met on four occasions during 1998. The primary functions of the
committee are to:
- review and report to the Board on operational and technology issues,
including manufacturing, engineering, product development, quality
control and customer service; and
- review and decide on management recommendations on sites for new
facilities and relocation of existing facilities.
The current members of the Operations and Technology Committee are Messrs.
Myers and Sierk.
15
<PAGE> 20
BOARD MEETINGS AND ATTENDANCE
During 1998, the Board of Directors met thirteen times and acted by written
consent on five occasions. Each director attended at least 75% of the aggregate
of the number of Board meetings and the number of meetings held by all
committees on which he then served.
- --------------------------------------------------------------------------------
DIRECTOR COMPENSATION
- --------------------------------------------------------------------------------
Iomega's non-employee directors receive the fees described below for their
services on the Board of Directors and its committees. Until June 1998, all fees
paid to non-employee directors were paid in cash. In June 1998, the Board
revised the terms of its compensation to non-employee directors to provide the
compensation described below in the form of restricted stock in lieu of cash.
After the second, third and fourth quarters of 1998, each director received a
grant of restricted stock for services during that quarter. The number of shares
of restricted stock was determined by dividing the total amount payable for
attendance at Board and committee meetings during the quarter, plus one-fourth
of the director's annual retainer, by the closing price of the common stock on
the New York Stock Exchange on the trading day prior to the date of issuance.
The grants of restricted stock were issued under Iomega's 1997 Stock Incentive
Plan. In addition, all non-employee directors are reimbursed for certain
Company-related out-of-pocket expenses.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL
RETAINER:
* Chairman of the Board............................................... $150,000
(the Chairman does not receive any other committee or meeting fees)
* Other Non-Employee Directors........................................ $ 20,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMITTEE
FEES:
* Chairman of the Audit Committee..................................... $ 22,500
* Chairman of the Management Development and
Compensation Committee.............................................. $ 12,500
* Chairman of the Operations and Technology Committee................. $ 8,000
* Chairman of the Ethics and Compliance Committee..................... $ 8,000
* Other Members of a Standing Committee............................... $ 5,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MEETING
FEES:
* Per Board Meeting................................................... $ 2,000
* Per Committee Meeting............................................... $ 2,000
(not paid if exceeds $4,000 in combination with other meeting fees for same
two-day period)
* Per Board or Committee Meeting by Teleconference.................... $ 750
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Non-employee directors are also eligible to receive options under Iomega's
1995 Director Stock Option Plan. Options granted under the plan vest over five
years and have an exercise price equal to the fair market value of the common
stock on the date of grant. On initial election to the Board, each director
receives an option for 50,000 shares. After the initial option fully vests, the
director is eligible to receive an option for 10,000 shares on each anniversary
of the director's initial election. Instead of the initial or any annual option,
directors can elect to receive a series of monthly options covering, in total,
the same number of shares as the single option grant would have covered. Each
monthly option in a series will vest such that the total number of shares vested
at any time is equal to the number that would have been vested if a single
option had been granted.
16
<PAGE> 21
The following table describes the options granted under the plan during
1998, other than options granted to Mr. Sierk, whose options are described under
"Executive Compensation -- Option Grants."
<TABLE>
<CAPTION>
EXERCISE
DATE OF PRICE PER NUMBER OF SHARES
NAME TYPE OF GRANT GRANT(S) SHARE UNDER OPTION
- ---- --------------------- -------- --------- ----------------
<S> <C> <C> <C> <C>
John W. Barter.................... Initial grant on 05/13/98 $7.5000 50,000
appointment to Board
Robert P. Berkowitz............... Annual grant, in the 04/22/98 $8.8125 3,334
form of three 05/22/98 $6.8125 3,333
monthly options 06/22/98 $5.5000 3,333
David J. Dunn..................... Annual grant, in the 04/22/98 $8.8125 1,000
form of ten monthly 05/22/98 $6.8125 1,000
options (nine of 06/22/98 $5.5000 1,000
which were granted 07/22/98 $5.8125 1,000
in 1998) 08/24/98 $4.8125 1,000
09/22/98 $4.1250 1,000
10/22/98 $4.1250 1,000
11/23/98 $7.8125 1,000
12/22/98 $7.8125 1,000
John E. Nolan..................... Annual grant, in the 04/22/98 $8.8125 1,667
form of six monthly 05/22/98 $6.8125 1,667
options 06/22/98 $5.5000 1,667
07/22/98 $5.8125 1,667
08/24/98 $4.8125 1,666
09/22/98 $4.1250 1,666
John E. Sheehan................... Annual grant 04/22/98 $8.8125 10,000
</TABLE>
17
<PAGE> 22
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION
The following table contains information concerning each of the three
persons who served as chief executive officers of Iomega during 1998 and the
other four most highly compensated executive officers of Iomega (the "Named
Executive Officers"), as required under applicable rules of the SEC.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) -----------------------
-------------------------------- AWARDS
OTHER -----------------------
ANNUAL RESTRICTED SHARES ALL OTHER
NAME AND COMPENSA- STOCK UNDERLYING COMPENSA-
PRINCIPAL POSITION YEAR SALARY BONUS TION(2) AWARDS OPTIONS(3) TION(4)
------------------ ---- ------ ----- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Jodie K. Glore(5) 1998 $110,769 $210,769(6) -- $ 0 2,100,000 --
President and
Chief Executive Officer
L. Scott Flaig(7) 1998 $395,192 $400,000(8) $149,198 $ 0 300,000 $ 5,300
Executive Vice President and 1997 $ 14,423 $ 10,817 -- $ 0 200,000 $ 0
Chief Operating Officer
James A. Taylor(9) 1998 $284,615 $213,462(6) $473,986 $ 0 200,000 $ 0
Executive Vice President and
Chief Marketing Officer
Edward D. Briscoe 1998 $306,154 $ 88,385 -- $ 0 250,000 $ 5,300
President, Personal Storage 1997 $198,269 $128,371 -- $ 0 0 $ 4,500
Division 1996 $164,440 $ 90,334 -- $ 0 280,000 $ 4,500
G. Fred Forsyth(10) 1998 $414,423 $124,327 -- $ 0 230,000 $ 0
President and General
Manager, 1997 $115,385 $102,892 -- $ 0 250,000 $ 0
Professional Products
Division $ 0
Kim B. Edwards(11) 1998 $150,000 $ 0 -- $ 0 0 $795,000(12)
Former President and 1997 $450,000 $641,800 -- $ 0 0 $ 4,500
Chief Executive Officer 1996 $402,288 $636,640 -- $ 0 900,000 $ 4,500
James E. Sierk(13) 1998 $438,250 $ 0 -- $22,250(14) 202,500 $ 0
Interim President and
Chief Executive Officer
</TABLE>
- ---------------
(1) In accordance with SEC rules, other compensation in the form of perquisites
and other personal benefits has been omitted in those instances where such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or ten percent of the total of annual salary and bonus for the
Named Executive Officer for such year. Does not include awards under a cash
performance unit plan adopted in 1998. See "Long-Term Incentive
Plan -- Awards in Last Fiscal Year."
(2) All amounts disclosed constitute payment or reimbursement of relocation
expenses.
(3) Reflects the number of shares covered by options to purchase common stock
granted during the year indicated. Iomega has never granted stock
appreciation rights.
(4) Except as otherwise noted, represents the Company's matching contribution
under the Iomega Retirement and Investment Savings Plan.
(5) Mr. Glore commenced serving as an executive officer of Iomega in October
1998.
(6) Includes amounts paid pursuant to the offer of employment letter between
the Company and the Named Executive Officer.
(7) Mr. Flaig commenced serving as an executive officer of Iomega in November
1997.
(8) This one-time discretionary bonus payment was made in recognition of
outstanding leadership in accomplishing operational improvements and to
resolve a dispute regarding equity compensation.
18
<PAGE> 23
(9) Mr. Taylor commenced serving as an executive officer of Iomega in April
1998.
(10) Mr. Forsyth commenced serving as an executive officer of Iomega in
September 1997.
(11) Mr. Edwards resigned as Iomega's President and Chief Executive Officer in
March 1998.
(12) Consists of $500,000 cash and $295,000, the aggregate value of 40,000
shares of common stock issued to Mr. Edwards. The cash and stock were paid
as severance in connection with Mr. Edwards' resignation. See "Employment
and Severance Agreements."
(13) Mr. Sierk served as interim President and Chief Executive Officer of Iomega
from March 1998 to October 1998. Mr. Sierk received compensation for such
services in the form of common stock, and $420,000 of the amount reported
for Mr. Sierk's salary constitutes the aggregate value of such stock on the
dates issued. The remaining $18,250 constitutes fees received in cash for
services during the first quarter of 1998 as a director. See "Director
Compensation."
(14) Reflects the value of 2,871 shares of restricted stock received in January
1999 in lieu of director fees for services during the fourth quarter of
1998. See "Director Compensation." The amount shown is the fair market
value of such shares on the date of grant. Mr. Sierk owned no shares of
restricted stock at the end of fiscal 1998. Mr. Sierk is eligible to
receive dividends declared on such restricted stock.
OPTION GRANTS
The following table contains information about options granted to the Named
Executive Officers during 1998 and the potential realizable value of those
options as determined in accordance with SEC rules.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SHARES PERCENT OF TOTAL EXERCISE OF STOCK APPRECIATION FOR
UNDERLYING OPTIONS GRANTED PRICE PER EXPIRA- OPTION TERM(3)
OPTIONS TO EMPLOYEES IN SHARE TION --------------------------
GRANTED FISCAL YEAR (1) DATE(2) 5% 10%
---------- ---------------- --------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Jodie K. Glore.............. 2,100,000(4) 54.9% $4.09 10/22/08 $5,406,529 $13,701,205
L. Scott Flaig.............. 75,000(5) 2.0% $5.25 08/04/08 $ 247,627 $ 627,536
L. Scott Flaig.............. 200,000(6) 5.2% $5.25 08/04/08 $ 660,339 $1,673,430
L. Scott Flaig.............. 25,000(7) 0.7% $5.44 10/30/08 $ 85,490 $ 216,649
James A. Taylor............. 150,000(5) 3.9% $6.84 04/13/08 $ 645,600 $1,636,076
James A. Taylor............. 25,000(7) 0.7% $5.25 08/04/08 $ 82,542 $ 209,179
James A. Taylor............. 25,000(7) 0.7% $5.44 10/30/08 $ 85,490 $ 216,649
Edward D. Briscoe........... 50,000(8) 1.3% $9.25 02/13/08 $ 290,864 $ 737,106
Edward D. Briscoe........... 75,000(5) 2.0% $5.25 08/04/08 $ 247,627 $ 627,536
Edward D. Briscoe........... 100,000(7) 2.6% $5.25 08/04/08 $ 330,170 $ 836,715
Edward D. Briscoe........... 25,000(7) 0.7% $5.44 10/30/08 $ 85,490 $ 216,649
G. Fred Forsyth............. 30,000(8) 0.8% $9.25 02/13/08 $ 174,518 $ 442,264
G. Fred Forsyth............. 75,000(5) 2.0% $5.25 08/04/08 $ 247,627 $ 627,536
G. Fred Forsyth............. 100,000(7) 2.6% $5.25 08/04/08 $ 330,170 $ 836,715
G. Fred Forsyth............. 25,000(7) 0.7% $5.44 10/30/08 $ 85,490 $ 216,649
Kim B. Edwards.............. -- -- -- -- -- --
James E. Sierk.............. 50,000(9) 1.3% $7.00 03/25/08 $ 220,113 $ 557,810
James E. Sierk.............. 7,500(9) 0.2% $8.25 04/27/08 $ 38,913 $ 98,613
James E. Sierk.............. 10,000(10) 0.3% $8.44 10/16/07 $ 49,790 $ 122,243
James E. Sierk.............. 7,500(9) 0.2% $6.75 05/26/08 $ 31,838 $ 80,683
James E. Sierk.............. 7,500(9) 0.2% $5.50 06/25/08 $ 25,942 $ 65,742
James E. Sierk.............. 7,500(9) 0.2% $5.50 07/27/08 $ 25,942 $ 65,742
James E. Sierk.............. 7,500(9) 0.2% $4.44 08/27/08 $ 20,715 $ 52,386
James E. Sierk.............. 7,500(9) 0.2% $4.25 09/25/08 $ 20,046 $ 50,801
</TABLE>
19
<PAGE> 24
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SHARES PERCENT OF TOTAL EXERCISE OF STOCK APPRECIATION FOR
UNDERLYING OPTIONS GRANTED PRICE PER EXPIRA- OPTION TERM(3)
OPTIONS TO EMPLOYEES IN SHARE TION --------------------------
GRANTED FISCAL YEAR (1) DATE(2) 5% 10%
---------- ---------------- --------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
James E. Sierk.............. 100,000(11) 2.6% $3.81 10/16/08 $ 239,766 $ 607,614
James E. Sierk.............. 7,500(9) 0.2% $5.13 10/23/08 $ 24,173 $ 61,259
</TABLE>
- ---------------
(1) Exercise price is equal to the fair market value of the Common Stock on the
date of grant.
(2) Options are subject to acceleration upon the occurrence of certain events
constituting a change of control of Iomega.
(3) Amounts represent hypothetical gains that could be achieved for the option
if exercised at the end of the option term. These gains are disclosed as
required under SEC rules, and are based on assumed rates of stock
appreciation of 5% and 10% compounded annually from the option's date of
grant to its date of expiration. Actual gain upon exercise, if any, will
depend on the future performance of the Common Stock, the optionholder's
continued employment with the Company and the date on which the option is
exercised.
(4) Consists of the following options: (i) options for 300,000 shares fully
vested on grant, (ii) options for 1,000,000 shares vesting in three equal
annual installments beginning October 22, 1999, (iii) options for 725,000
shares vesting in five equal annual installments beginning October 22,
1999, and (iv) options for 75,000 shares vesting in five equal annual
installments beginning on October 22, 2001. The 75,000-share option is
subject to acceleration on the achievement of certain performance targets
as determined by the Board of Directors.
(5) Option vests in five equal annual installments beginning on the first
anniversary of the date of grant.
(6) Option vests in seven equal annual installments beginning on December 1,
1998, subject to acceleration on the achievement of certain performance
targets as determined by the Board of Directors. The performance targets
for 1998 were met resulting in the accelerated vesting of 28,571 shares.
(7) Option vests in five equal annual installments beginning on the third
anniversary of the date of grant, subject to acceleration upon the
achievement of certain performance targets as determined by the Board of
Directors.
(8) Option vests in five annual installments of 10%, 15%, 20%, 25% and 30%
each, beginning on the first anniversary of the date of grant.
(9) Option vests in full on the first anniversary of the date of grant.
(10) Option vests in five annual installments beginning on October 16, 1998.
(11) Option fully vested on the date of grant.
OPTION EXERCISES AND YEAR-END VALUES
The following table contains information regarding options exercised by the
Named Executive Officers during 1998 and options held by the Named Executive
Officers on December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED YEAR-END FISCAL YEAR-END (2)
ON VALUE ------------------------- -----------------------
NAME EXERCISE REALIZED (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Jodie K. Glore....... 0 -- 300,000/1,800,000 $ 918,750/$5,512,500
L. Scott Flaig....... 0 -- 68,572/ 431,428 $ 58,930/$ 555,133
James A. Taylor...... 0 -- 0/ 200,000 -- /$ 168,750
Edward D. Briscoe.... 0 -- 415,024/ 564,976 $2,484,338/$1,837,331
G. Fred Forsyth...... 0 -- 50,000/ 430,000 -- /$ 407,813
Kim B. Edwards....... 2,913,500 $19,270,441 0/ 0 -- / --
James E. Sierk....... 0 -- 108,000/ 144,500 $ 350,000/$ 107,969
</TABLE>
- ---------------
(1) Based on the fair market value of the common stock on the date of exercise,
less the option exercise price.
(2) Based on the fair market value of Iomega's common stock on December 31, 1998
($7.3125 per share), less the total option exercise price.
20
<PAGE> 25
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
In 1998, Iomega adopted a performance unit plan, which provides executive
officers with the opportunity to earn cash incentive awards depending on their
collective achievement of performance targets as determined by the Board of
Directors. Under this plan, executive officers received performance units, the
value of which will be up to a specified maximum, ranging from $5.25 to $10.00
per unit. The per-unit value of each award will be based on performance as
measured against the individual or group goals set when the performance units
were granted. The following table describes awards of performance units during
1998.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER PLAN
NUMBER OF PERIOD UNTIL ----------------------------------------------
NAME PERFORMANCE UNITS PAYOUT (1) THRESHOLD (2) TARGET (2) MAXIMUM (2)
- ---- ----------------- ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Jodie K. Glore....... 75,000 01/25/01 -- -- $ 750,000
L. Scott Flaig....... 200,000 01/25/01 -- -- $1,050,000
25,000 01/25/01 -- -- $ 250,000
James A. Taylor...... 25,000 01/25/01 -- -- $ 131,250
25,000 01/25/01 -- -- $ 250,000
Edward D. Briscoe.... 100,000 01/25/01 -- -- $ 525,000
25,000 01/25/01 -- -- $ 250,000
G. Fred Forsyth...... 100,000 01/25/01 -- -- $ 525,000
25,000 01/25/01 -- -- $ 250,000
Kim B. Edwards....... 0 -- -- -- --
James E. Sierk....... 0 -- -- -- --
</TABLE>
- ---------------
(1) Reflects the earliest date payable. No payments will be made on performance
units after the seventh anniversary of the date of the award.
(2) For each award of performance units, payment will be made only if specified
performance targets are met. If and when the performance targets are met,
the Board of Directors will determine the amount payable, up to the
indicated maximum.
EMPLOYMENT AND SEVERANCE AGREEMENTS
EMPLOYMENT AGREEMENT WITH MR. GLORE. In October 1998, Iomega entered into
an employment agreement with Mr. Glore. Iomega agreed to pay Mr. Glore an annual
base salary of $600,000. Mr. Glore's annual cash bonus is targeted at 100
percent of base salary, although actual bonus payments may be higher or lower,
and he is guaranteed a cash bonus for 1999 of $600,000. The agreement provides
for payment of up to 24 months of Mr. Glore's base salary and target bonus if he
is discharged by the Company other than for cause before October 2001, and
payment of up to 36 months of Mr. Glore's base salary and target bonus if he is
discharged by the Company following a change in control.
LETTER AGREEMENT WITH MR. SIERK. In March 1998, Mr. Sierk agreed to serve
as Iomega's interim President and Chief Executive Officer until a successor was
appointed. Upon assuming office in March 1998, Mr. Sierk received 51,428 shares
of common stock (then worth $360,000) and an option to purchase 50,000 shares of
common stock at $7.00 per share. Mr. Sierk was also granted monthly options to
purchase 7,500 shares of Iomega common stock on April 27, May 26, June 25, July
28, August 25, September 25, and October 23, 1998 for exercise prices of $8.25,
$6.75, $5.50, $5.50, $4.44, $4.25 and $5.13, respectively. Upon leaving office
in October 1998, he received 11,707 shares of common stock (then worth $60,000).
SEVERANCE AGREEMENT WITH MR. EDWARDS. In March 1998, Mr. Edwards resigned
as President and Chief Executive Officer of Iomega, and in April 1998, he
entered into a severance agreement with Iomega. The agreement provided for a
one-time payment of $500,000 as a severance allowance. The agreement also
provided for certain health benefits, outplacement and administration services
and reimbursement of certain transition-related expenses not covered by
prospective employers.
Under the agreement, Mr. Edwards agreed to accept 40,000 shares of
restricted stock in lieu of the
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<PAGE> 26
80,000 shares that would have vested on January 1, 1999 under a 1995 bonus
arrangement with the Company. Iomega also extended Mr. Edwards a $5 million loan
secured by shares of Iomega's common stock pledged by Mr. Edwards. The loan is
payable in five annual installments of $1 million each, plus interest at 5.7
percent per annum, beginning on April 15, 1999. As of February 28, 1999, $5
million in principal and $249,083 in interest remained outstanding on the loan.
SEVERANCE AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS. In November 1998,
Iomega entered into severance agreements with each of the Named Executive
Officers (other than Messrs. Edwards and Sierk). Each agreement provides for the
payment of one year's base salary, benefits and estimated bonus (but less
amounts received from any subsequent employment) if the officer is terminated
without cause before November 1, 1999.
TRANSACTION WITH MANAGEMENT
In July 1998, Iomega borrowed $40 million from Idanta Partners Ltd. and a
trust affiliated with Mr. Dunn, Iomega's Chairman of the Board. Idanta Partners
holds approximately eight percent of Iomega's common stock and Mr. Dunn acts as
Idanta's managing general partner through the affiliated trust. Iomega issued a
series of three senior subordinated notes, principal and interest on which are
payable on March 31, 1999. The interest rate on the loan is graduated from 8.7
percent to 12.7 percent per annum, and is currently 12.7 percent per annum.
Iomega used the proceeds of this loan to acquire Nomai, S.A., a French
manufacturer of removable storage systems. As of February 28, 1999, $40 million
in principal and $2.7 million in interest remained outstanding on this loan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Upon Mr. Edwards' resignation as President and Chief Executive Officer in
March 1998, Mr. Sierk, a member of the Management Development and Compensation
Committee, was appointed interim President and Chief Executive Officer. Mr.
Sierk served in such capacity until October 1998, when Mr. Glore was appointed
President and Chief Executive Officer.
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<PAGE> 27
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
Iomega's common stock has been listed for trading on the New York Stock
Exchange under the symbol IOM since November 1996. Before that, the Company's
common stock was traded on the Nasdaq National Market under the symbol IOMG.
The following graph compares the cumulative total stockholder return on
Iomega's common stock for the last five fiscal years with the cumulative total
return of (i) the CRSP (Center for Research in Security Prices) Total Returns
Index for the New York Stock Exchange Stock Market (U.S. Companies); and (ii)
the CRSP Total Returns Index for New York Stock Exchange Computer and Office
Equipment Stocks (U.S. and Foreign).
This graph assumes the investment of $100 on December 31, 1993 in Iomega's
common stock and each of the indices listed above, and assumes dividends are
reinvested. Measurement points are at the last trading day of the fiscal years
ended December 31, 1994, 1995, 1996, 1997 and 1998.
[Stock Performance Graph]
<TABLE>
<CAPTION>
NYSE STOCK MARKET (US NYSE STOCKS COMPUTER
IOMEGA CORPORATION COMPANIES) AND OFFICE EQUIPMENT
------------------ --------------------- --------------------
<S> <C> <C> <C>
12/31/93 100 100 100
12/31/94 158.5 100 115.8
12/30/95 2371.9 135.5 151.4
12/29/96 5085.4 164.3 202.2
12/31/97 7280.5 218.3 246.2
12/31/98 4280.5 262 407.9
</TABLE>
23
<PAGE> 28
MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Iomega's executive compensation program is administered by the Management
Development and Compensation Committee of the Board of Directors. Messrs. Myers
and Sierk served on the Committee throughout 1998. David A. Duke resigned from
the Board of Directors and the Committee in June 1998. In February 1999, Mr.
Puckett and Mr. Seidl joined the Committee and Mr. Sierk ceased serving on the
Management Development and Compensation Committee.
During 1998, the Committee was responsible for recommending the cash
compensation package of each existing officer and all newly recruited executive
officers. In making decisions regarding executive compensation, the Committee
considered the input of the Company's other directors and Pearl Meyer &
Partners, Inc., an independent compensation consulting firm engaged by the
Committee. Additionally, the Committee reviewed benchmarking data from other
compensation consultants to assess the Company's compensation and benefits
programs.
In order to attract and retain the talent that it needs to meet corporate
objectives, Iomega designed its executive compensation programs to deliver
overall cash compensation competitive with comparable companies if corporate
objectives are achieved and, if objectives are exceeded, to deliver compensation
that is in some cases above that paid by comparable companies. Bonuses are tied
closely to corporate performance, with actual awards varying considerably
according to overall Company performance.
The executive compensation program consists of a combination of base
salary, cash bonuses and stock option awards. All three components are intended
to attract and retain outstanding executives and focus management on achieving
or exceeding Company objectives, with an emphasis on achieving net income
objectives. In determining the total amount and mix of the compensation package
for each executive officer, the directors subjectively consider the overall
value to the Company of each executive in light of numerous factors, such as
impact level within the organization, competitive position, individual
performance, and the past and expected contribution by each executive officer.
BASE SALARY
The Company's base salaries are structured to be within the median range of
salaries paid by similar companies for comparable positions. For 1998, the
Company undertook a specialized survey which examined compensation within three
distinct categories of companies, including a cross-section of similar companies
in Silicon Valley, a cross-section of similar growth technology companies and a
cross-section of various Fortune ranking companies. Companies selected for
salary comparison purposes differ from the companies included in the NYSE Stock
Computer and Office Equipment index which is used in the Stock Performance Graph
that precedes this report. The Company also considered data from broad-based
compensation surveys of high technology companies. Based on the special and
broad-based survey data reviewed by the Committee, and the Committee's
assessment of the subjective factors listed above, base salary increases were
approved effective January 1, 1998 for some but not all executive officers.
Additional base salary increases were approved effective November 2, 1998, for
one of the Named Executive Officers and three other executive officers, whose
salaries were determined to be below the median range for their respective
positions. The Company's strategy is to migrate towards an executive
compensation mix that places less emphasis on base salary and more emphasis on
short-term and long-term incentives that are directly linked to Company and
individual performance. In support of this strategy, the Company plans to
institute bi-annual merit based salary reviews for most executive positions.
CASH BONUSES
The Company embraces a pay for performance philosophy. For 1998, the
Company adopted a cash bonus plan with two components. The target bonus for
executives, which included each of the Named Executive Officers other than Mr.
Glore, ranged from 40% to 75% of each executive's 1998 gross salary. The first
component was based on the Company's year-end financial performance in relation
to a specific net income goal. The second component was based on the successful
achievement of key operational excellence metrics. The Company did not achieve
the net income goal set for 1998 and no payments were made with respect to the
24
<PAGE> 29
financial performance component. In view of the significant losses incurred in
1998, no amounts were paid under the operational excellence component of the
plan either. However, a discretionary bonus pool was authorized which enabled
the Company to make limited discretionary bonus payments to executive officers
and certain key contributors for 1998. The amounts that were paid were awarded
in recognition of the significant progress made in improving product quality,
customer service, asset management and product life cycle compliance and in
building an effective organization. Mr. Flaig, the Company's Chief Operating
Officer, was paid a special one-time discretionary bonus, both in recognition of
his outstanding leadership in achieving significant operational and customer
satisfaction improvements, and in order to resolve a dispute between Mr. Flaig
and the Company with respect to equity related compensation.
STOCK OPTIONS
The Committee believes it is in the best interest of the Company's
stockholders to grant stock options at the time of hiring key personnel and
periodically thereafter, as the long-term component of executive and key
employee compensation. Stock option grants to executive officers and other key
employees are intended to align employee financial interests with long-term
shareholder value. In each case, the precise number of options granted is
subjectively determined.
In February 1998, stock options were granted to certain Named Executive
Officers and other key employees. These options were granted at an exercise
price equal to the fair market value of the Company's common stock on the date
of grant and provided for vesting over a five-year period. Further grants of
non-qualified stock options, at an exercise price equal to the fair market value
of the Company's common stock on the date of grant and with vesting over a
five-year period, were made in August 1998 as a part of a long-term incentive
compensation review described below.
After a thorough review with Pearl Meyer, the independent compensation
consulting firm retained by the Committee, the proportion of long-term
incentives, as a part of overall compensation, was increased for executive
officers. During the second half of 1998, stock options were granted to each
executive officer and to a small number of other vice presidents, at an exercise
price equal to the fair market value of the Company's common stock on the date
of grant, with annual vesting on the third through seventh anniversary of the
grant date, subject to accelerated vesting if performance metrics established by
the Board of Directors are achieved. Each grant of "performance accelerating"
stock options was accompanied by a grant of "performance units", consisting of
cash awards payable after three or more years if and only if the stock option
acceleration metrics are achieved.
COMPENSATION OF CHIEF EXECUTIVE OFFICERS
In January 1998, the Committee increased Mr. Edwards' base salary from
$450,000 to $500,000. Mr. Edwards' target bonus for 1998 was $500,000. In March
1998, Mr. Edwards resigned from the Company and James E. Sierk, a member of the
Board of Directors, was appointed interim Chief Executive Officer. Under an
agreement between the Company and Mr. Sierk, which is described above in this
proxy statement, Mr. Sierk's compensation was paid in shares of common stock of
the Company. The terms of Mr. Edwards' severance agreement with the Company are
also described above.
In October 1998, Mr. Glore was named President and Chief Executive Officer.
His annual base pay was established at $600,000 with a guaranteed bonus equal to
100% of his actual salary earnings for 1998. Mr. Glore's long-term compensation
includes options to purchase 2,100,000 shares of the Company's common stock, at
an exercise price equal to the fair market value of the stock on the date of
grant, as reflected in the table of option grants set forth above in this proxy
statement. The options granted to Mr. Glore were based in part on Mr. Glore's
long-term compensation at his prior employer and based in part on the input of
an independent compensation consulting firm engaged by the Committee. Mr.
Glore's benefits include a split dollar life insurance policy, which was
intended to replace death benefits that Mr. Glore forfeited as a result of his
departure from his prior employer. Mr. Glore has elected to waive $150,000 of
his annual bonus for 1999 and 2000 to fund supplemental benefits under this life
insurance policy.
25
<PAGE> 30
IMPACT OF SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code disallows a tax deduction to
public companies for certain compensation in excess of one million dollars paid
to the Company's chief executive officer and four other most highly paid
executive officers. There can be no assurance that compensation attributable to
stock options granted under the 1997 Stock Incentive Plan will be treated as
qualified performance-based compensation under Section 162(m). Moreover, because
the Company's cash bonus program and its performance unit plan are not operated
in a manner designed to qualify as performance-based compensation under Section
162(m), some or all of the payments under these programs may not be deductible
for federal income tax purposes. The Committee reviews the potential effect of
Section 162(m) periodically and in the future may decide to structure the
performance-based portion of its executive officer compensation to comply with
Section 162(m).
John R. Myers
James E. Sierk
26
<PAGE> 31
- --------------------------------------------------------------------------------
ITEM TWO -- AMENDMENT OF 1997 STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
THE SECOND AGENDA ITEM TO BE VOTED ON IS THE AMENDMENT OF
IOMEGA'S 1997 STOCK INCENTIVE PLAN. THE BOARD RECOMMENDS THAT
YOU VOTE FOR SUCH AMENDMENT.
The purpose of Iomega's 1997 Stock Incentive Plan is to encourage ownership
of the Company's stock by officers, directors, employees, consultants and
advisors whose continued services are essential to our future progress, and to
provide them with an incentive to continue in their relationship with Iomega. As
of December 31, 1998, 3,416,825 shares of common stock remained available for
awards under the plan.
PROPOSED INCREASE IN SHARES UNDER THE PLAN
In February 1999, the Board of Directors adopted, subject to stockholder
approval, an increase in the number of shares of common stock that may be issued
under the plan from 12,000,000 to 20,500,000 shares. The Board believes this
increase will help Iomega attract and retain qualified officers, directors,
employees, consultants and advisors and provide further incentives to such
persons as a result of their equity interest in Iomega.
SUMMARY OF 1997 STOCK INCENTIVE PLAN
The principal provisions of the 1997 Stock Incentive Plan are summarized
below. This summary is qualified in its entirety by reference to the plan, a
copy of which is attached to the electronic copy of this proxy statement filed
with the SEC and may be accessed from the SEC's home page (www.sec.gov). Copies
of the 1997 Stock Incentive Plan may also be obtained from Iomega's Secretary.
The 1997 Stock Incentive Plan provides for the grant of "incentive stock
options" intended to qualify under Section 422 of the Internal Revenue Code,
nonstatutory stock options and restricted stock awards.
ELIGIBILITY. Officers, key employees, directors, consultants and advisors
of Iomega may receive awards under the plan. On January 31, 1999, approximately
1,000 persons were eligible for awards under the plan, including the Named
Executive Officers. The granting of awards under the plan is discretionary, and
Iomega cannot now determine the number or type of awards to be granted in the
future to any particular person or group.
ADMINISTRATION. The plan is administered by the Board of Directors. The
Board selects the recipients of awards. The Board also determines (1) how many
shares of common stock are covered by options, (2) when options become
exercisable, (3) the exercise price of options, and (4) the terms and conditions
of restricted stock awards. The Board has delegated authority under the plan to
the Management Development and Compensation Committee.
STOCK OPTIONS. The exercise price of options under the plan may not be
less than fair market value (in the case of incentive stock options and options
intended to qualify as performance-based compensation under Section 162(m) of
the Code) or, subject to certain limitations described below, 25% of fair market
value in the case of nonstatutory stock options. On March 15, 1999, the average
of the high and low trading prices of Iomega's common stock on the New York
Stock Exchange was $5.25. The plan permits the Board to determine the manner of
payment of the exercise price of options, including through payment by cash,
check or in connection with a "cashless exercise" through a broker, by surrender
to the Company of shares of common stock, by delivery to the Company of a
promissory note, or by any other lawful means.
RESTRICTED STOCK. Restricted stock awards entitle recipients to acquire
shares of Iomega's common stock subject to Iomega's right to repurchase all or
part of such awarded shares upon the occurrence of specified conditions.
LIMITATIONS. No option may be granted to a U.S. employee for a term in
excess of ten years, and no option may be granted to a non-U.S. employee for a
term in excess of eleven years. The number of shares of restricted stock awarded
in any calendar year at below fair market value may not exceed 10 percent of the
total number shares of restricted stock
27
<PAGE> 32
awarded in the prior year. Similarly, the number of shares under nonstatutory
stock options granted in any calendar year with exercise prices below fair
market value may not exceed 10 percent of the total number of shares under all
options granted in the prior calendar year. No more than 1,000,000 shares may be
awarded to any single participant in one calendar year, provided that up to
2,000,000 shares may be awarded to an employee in the initial year of
employment. Unless the Board provides otherwise in a particular award, awards
may not be transferred except by will or the laws of descent and distribution.
Award recipients must satisfy all tax withholding obligations arising from an
award. The Board may allow the recipient to meet the withholding obligation by
delivering shares of common stock, including shares otherwise issuable under the
award.
ADJUSTMENTS. The plan requires the Board of Directors to make appropriate
adjustments to the terms of the plan and any outstanding awards to reflect stock
dividends, stock splits and other similar events. In the event of a merger or
other Acquisition Event (as defined in the plan), the plan provides for
outstanding options to be assumed or substitute awards granted. If the acquirer
refuses to assume or substitute for such awards, the Board of Directors will
accelerate the vesting of awards or provide for a cash out of the value of the
awards. Options granted under the plan typically provide that in the event of a
merger or other Acquisition Event, one-half of the shares subject to the
respective agreement which are not, by their terms, then exercisable, become
immediately exercisable, with the remaining shares becoming exercisable in
accordance with the original vesting schedule, except that all shares will vest
two years after the Acquisition Event or, earlier if the optionholder's
employment is terminated without cause (as defined in the plan) or if the
optionholder terminates employment for good reason (as defined in the plan).
BOARD AUTHORITY TO CHANGE PLAN. The plan will expire by its terms in
January 2007. The Board of Directors may at any time amend, suspend or terminate
the plan, except that no outstanding award designated as subject to Section
162(m) of the Internal Revenue Code by the Board of Directors after the date of
such amendment shall become exercisable, realizable or vested (as applicable to
such award) unless the amendment has been approved by the Company's
stockholders.
AWARDS GRANTED UNDER THE PLAN. Since the original adoption in April 1997,
the following awards have been granted under the plan to the following persons
and groups: Jodie K. Glore (options: 2,000,000/restricted shares: 0); L. Scott
Flaig (500,000/0); James A. Taylor (200,000/0); Edward D. Briscoe (250,000/0);
G. Fred Forsyth (480,000/ 0); Kim B. Edwards (0/0); James E. Sierk (202,500/0);
all current executive officers as a group (4,116,250/0); all current
non-employee directors as a group (0/64,705); John M. Seidl (0/0); M. Bernard
Puckett (0/0); and all Iomega's employees as a group, other than executive
officers (3,212,415/0).
FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the United
States federal income tax consequences that generally will arise with respect to
awards granted under Iomega's 1997 Stock Incentive Plan and with respect to the
sale of common stock acquired under the plan.
Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of common stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
28
<PAGE> 33
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
Nonstatutory Stock Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the common stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
NSO Stock for more than one year prior to the date of the sale.
Restricted Stock. A participant will not recognize taxable income upon the
grant of a restricted stock award unless the participant makes an election under
Section 83(b) of the Code (a "Section 83(b) Election"). If the participant makes
a Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary compensation income, for the year in which
the award is granted, in an amount equal to the difference between the fair
market value of the common stock at the time the award is granted and the
purchase price paid for the common stock. If a Section 83(b) Election is not
made, then the participant will recognize ordinary compensation income, at the
time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the common stock
at the time of such lapse and the original purchase price paid for the common
stock. The participant will have a tax basis in the common stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the common stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss in an amount
equal to the difference between the sale price of the common stock and the
participant's tax basis in the common stock. This capital gain or loss will be a
long-term capital gain or loss if the shares are held for more than one year.
For this purpose, the holding period shall begin just after the date on which
the forfeiture provisions or restrictions lapse if a Section 83(b) Election is
not made, or just after the award is granted if a Section 83(b) Election is
made.
Tax Consequences to Iomega. The grant of an award under the plan will have
no tax consequences to the Company. Moreover, in general, neither the exercise
of an incentive stock option nor the sale of any common stock acquired under the
plan will have any tax consequences to the Company. Iomega generally will be
entitled to a business-expense deduction, however, with respect to any ordinary
compensation income recognized by a participant under the plan, including in
connection with a restricted stock award or as a result of the exercise of a
nonstatutory stock option or a Disqualifying Disposition. Any such deduction
will be subject to the limitations of Section 162(m) of the Code.
29
<PAGE> 34
- --------------------------------------------------------------------------------
ITEM THREE -- RATIFICATION OF SELECTION OF AUDITORS
- --------------------------------------------------------------------------------
THE THIRD AND FINAL AGENDA ITEM TO BE VOTED ON IS RATIFICATION
OF THE SELECTION OF ARTHUR ANDERSEN LLP AS IOMEGA'S
INDEPENDENT AUDITORS FOR THE CURRENT YEAR. THE BOARD
RECOMMENDS THAT YOU VOTE FOR SUCH RATIFICATION.
The Board of Directors, at the recommendation of the Audit Committee, has
selected Arthur Andersen LLP, a firm of independent public accountants, as
auditors, to examine and report to stockholders on the Consolidated Financial
Statements of Iomega and its subsidiaries for the fiscal year 1999.
Arthur Andersen LLP has served as Iomega's independent auditors since the
Company's inception in 1980. If ratification of this selection of auditors is
not approved by a majority of shares voting on the matter, the Board of
Directors will reconsider its selection of Arthur Andersen LLP.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting and will have the opportunity to make a statement if they desire to do
so and will also be available to respond to appropriate questions from
stockholders.
Audit services performed by Arthur Andersen LLP during 1998 included
examination of the Consolidated Financial Statements of Iomega, services related
to filings made with the SEC, and certain services related to the Company's
consolidated quarterly and annual reports as well as other periodic reports at
international locations. Arthur Andersen LLP also performs tax-related and
consulting services for Iomega. Total fees for all audit and non-audit services
provided by Arthur Andersen LLP during 1998 were approximately $5,790,000.
The Audit Committee meets at least twice a year with Arthur Andersen LLP
and reviews both audit and non-audit services performed by Arthur Andersen LLP
as well as fees charged by Arthur Andersen LLP for such services. The Audit
Committee also reviews the annual audit plan and the results of the annual
audit. Non-audit services are reviewed by the Audit Committee, which considers,
among other things, the anticipated effect, if any, the performance of such
services would have on the auditors' independence.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
SOLICITATION EXPENSES
Iomega will bear all costs of the solicitation of proxies by the Board of
Directors. In addition to solicitations by mail, Iomega's directors, officers
and employees, without additional pay, may solicit proxies by telephone or
personal meetings. Iomega has retained Kissel-Blake, a division of Shareholder
Communications Corporation, to assist in the solicitation of proxies, at a cost
of approximately $5,000 plus reimbursement of reasonable expenses. The Company
reserves the right to retain other outside agencies for the purpose of
soliciting proxies. Iomega will request brokers, custodians and fiduciaries to
forward proxy soliciting material to the owners of stock held in their names,
and, as required by law, Iomega will reimburse them for their out-of-pocket
expenses in this regard.
DIRECTOR NOMINATIONS
The Nominating and Governance Committee will consider nominees recommended
by stockholders. Stockholders who wish to recommend nominees for director should
submit such recommendations to the Secretary of the Company, at Iomega's
principal offices.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal that a stockholder wishes to be considered for inclusion in
the Company's proxy
30
<PAGE> 35
statement and proxy card for the 2000 Annual Meeting of Stockholders must be
received by Iomega's Secretary at our principal offices not later than
November 24, 1999.
In addition, Iomega's bylaws require stockholders to give advance notice of
any stockholder nominations of directors and of any other matter stockholders
wish to present for action at an annual meeting of stockholders (other than
matters to be included in our proxy statement, which are discussed in the
previous paragraph). The required notice must be given within a prescribed time
frame, which is generally calculated by reference to the date of the most recent
annual meeting. Assuming that Iomega's 2000 Annual Meeting of Stockholders is
held after April 1, 2000 and before June 30, 2000 (as we currently anticipate),
the bylaws would require notice to be provided to Iomega's Secretary at Iomega's
principal offices no earlier than January 21, 2000 and no later than February
10, 2000. If a stockholder fails to provide timely notice of a proposal to be
presented at the 2000 Annual Meeting, the proxies designated by the Board of
Directors of the Company will have discretionary authority to vote on any such
proposal which may come before the meeting.
By Order of the Board of Directors,
LAURIE BARTLETT KEATING
Senior Vice President, General Counsel
and Secretary
31
<PAGE> 36
PROXY PROXY
IOMEGA CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) Jodie K.
Glore and Laurie Bartlett Keating, and each of them, with full power of
substitution, as proxies to represent and vote, as designated herein, all shares
of Common Stock of Iomega Corporation that the undersigned would be entitled to
vote if personally present at Iomega's 1999 Annual Meeting of Stockholders be
held at the Marriott Hotel, 75 South West Temple, Salt Lake City, Utah 84101 on
Tuesday, April 20, 1999 at 11:00 a.m., local time, and at any adjournment
thereof.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE> 37
A [ X ] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
WITHHOLD
AUTHORITY
FOR to vote for all
all nominees nominees FOR AGAINST ABSTAIN
<S> <C>
1. To elect the [ ] [ ] Nominees: 2. To approve an Amendment of [ ] [ ] [ ]
persons listed Jodie K. Glore Iomega's 1997 Stock Incentive
at right as M. Bernard Puckett Plan to increase the number of
Class II Directors: (except as marked below): John M. Seldl shares of common stock that may
be issued under the plan from
12,000,000 to 20,500,000.
[ ] FOR ALL NOMINEES EXCEPT THE FOLLOWING: (TO
WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE 3. To ratify the selection of [ ] [ ] [ ]
NOMINEES, WRITE THE NOMINEE'S NAME BELOW): Arthur Andersen LLP as Iomega's
independent accountants for the
__________________________________________________ current year.
__________________________________________________
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OF THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
THREE DIRECTOR NOMINEES AND FOR PROPOSALS 2 AND 3.
ATTENDANCE OF THE UNDERSIGNED AT THE MEETING OR ANY
ADJOURNMENT THEREOF WILL NOT BE DEEMED TO REVOKE THIS
PROXY UNLESS THE UNDERSIGNED SHALL REVOKE THIS PROXY IN
WRITING OR AFFIRMATIVELY INDICATED THE INTENT TO VOTE IN
PERSON.
SIGNATURE _________________________________ DATE __________,1999 SIGNATURE_________________________________ DATE __________,1999
IF HELD JOINTLY
</TABLE>
NOTE: Please sign exactly as name appears on this card. When shares are held by
joint owners, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give title as such. If a
corporation or a partnership; please sign by authorized person.
<PAGE> 38
IOMEGA CORPORATION
1997 STOCK INCENTIVE PLAN
-------------------------------------
(as amended through February 3, 1999)
1. PURPOSE
The purpose of this 1997 Stock Incentive Plan (the "Plan") of Iomega
Corporation, a Delaware corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and thereby better aligning the interests of such persons with
those of the Company's stockholders. Except where the context otherwise
requires, the term "Company" shall include any present or future subsidiary
corporations of Iomega Corporation as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder
(the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options or restricted stock (each, an
"Award") under the Plan to purchase shares of the Company's common stock, $0.03
1/3 par value per share (the "Common Stock"). Any person who has been granted an
Award under the Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be
administered by the Board of Directors of the Company (the "Board"). The Board
shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. All decisions by the Board shall be
made in the Board's sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Award. No director
or person acting pursuant to the authority delegated by the Board shall be
liable for any action or determination relating to or under the Plan made in
good faith.
(b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares subject to Awards
for any one Participant to be made by such executive officers in any calendar
year.
- 1 -
<PAGE> 39
(c) APPOINTMENT OF COMMITTEES. To the extent permitted by
applicable law, the Board may delegate any or all of its powers under the Plan
to one or more committees or subcommittees of the Board (a "Committee"). The
Board shall appoint one such Committee consisting of not less than two members,
each of whom shall be an "outside director" within the meaning of Section 162(m)
of the Code and a "non-employee director" as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
references in the Plan to the "Board" shall mean a Committee or the Board or the
executive officer referred to in Section 3(b) to the extent of such delegation.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c),
Awards may be made under the Plan for up to 20,500,000 shares of Common Stock
(which reflects the two-for-one split of the Common Stock effected on December
22, 1997 in the form of 100% stock dividend to holders of record as of December
1, 1997, and amendments of the Plan adopted by the Board of Directors on
October 30, 1998 and February 3, 1999). If any Award expires or is terminated,
surrendered or canceled without having been fully exercised or is forfeited in
whole or in part or results in any Common Stock not being issued, the unused
Common Stock covered by such Award shall again be available for the grant of
Awards under the Plan, subject, however, in the case of Incentive Stock Options
(as hereinafter defined), to any limitation required under the Code. Shares
issued under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section
4(c), the maximum number of shares with respect to which an Award may be granted
to any Participant under the Plan shall be 500,000 shares per calendar year or,
in the case of an initial Award made in connection with the employment of a new
employee, 1,000,000 shares in the initial calendar year of such employee's
employment. The per-participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code.
(c) ADJUSTMENT TO COMMON STOCK. In the event of any stock split,
stock dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other similar change
in capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, and (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award, shall be
appropriately adjusted by the Company (or substituted Awards may be made, if
applicable). Such adjustment shall be made by the Board, whose determination in
that respect shall be final, binding an conclusive. If this Section 4(c) applies
and Section 7(e) also applies to any event, Section 7(e) shall be applicable to
such event, and this Section 4(c) shall not be applicable.
5. STOCK OPTIONS
- 2 -
<PAGE> 40
(a) GENERAL. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to
be an "incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall only be granted to employees of the Company and
shall be subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability to a Participant,
or any other party, if an Option (or any part thereof) which is intended to be
an Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price
at the time each Option is granted and specify it in the applicable option
agreement. The exercise price of each Incentive Stock Option granted under the
Plan shall be no less than 100% of the Fair Market Value (as defined in
paragraph (f)(2) of this Section 5) of the Common Stock at the time such Option
is granted. The exercise price of each Nonstatutory Stock Option shall be no
less than 25% of the Fair Market Value of the Common Stock at the time such
Option is granted; provided however, that the maximum number of shares of Common
Stock subject to Nonstatutory Stock Options granted in any calendar year at
below 100% of Fair Market Value shall not exceed 10% of the total number of
shares of Common Stock subject to Options granted in the prior calendar year
(or, with respect to the first year of the Plan, in 1997).
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement. No Option will be granted for a term in excess of
10 years, except those options granted in foreign jurisdictions which can be
granted for a term of up to 11 years.
(e) EXERCISE OF OPTION. Options may be exercised only by delivery
to the Company of a written notice of exercise signed by the proper person
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the
Company;
(2) except as the Board may otherwise provide in an
Option, (i) delivery of an irrevocable and unconditional undertaking by a credit
worthy broker to deliver promptly to the Company sufficient funds to pay the
exercise price, (ii) delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a credit worthy broker to
- 3 -
<PAGE> 41
deliver promptly to the Company cash or a check sufficient to pay the exercise
price; or (iii) delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by the Board in good faith
("Fair Market Value"), which Common Stock was owned by the Participant at least
six months prior to such delivery;
(3) to the extent permitted by the Board and explicitly
provided in the Option (i) by delivery of a promissory note of the Participant
to the Company on terms agreed to and determined by the Board, (ii) by reduction
in the amount of any liability owed by the Company to the Participant, including
any liability attributable to the Participant's participation in any
Company-sponsored deferred compensation program or arrangement, or (iii) by
payment of such other lawful consideration as the Board may determine; or
(4) any combination of the above permitted forms of
payment.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price from the recipient in the event that conditions specified by the
Board in the applicable Award are not satisfied prior to the end of the
applicable restriction period or periods established by the Board for such Award
(each, "Restricted Stock Award"); provided, however, that the maximum number of
shares of Common Stock subject to Restricted Stock Awards granted in any
calendar year at below 100% of Fair Market Value shall not exceed 10% of the
total number of shares of Common Stock subject to Awards made in the prior
calendar year (or, with respect to the first year of the Plan, in 1997).
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price (which shall not be less than the
par value of the Common Stock), if any. Any stock certificates issued in respect
of a Restricted Stock Award shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee). At the expiration of the applicable restriction periods, the Company
(or such designee) shall deliver the certificates no longer subject to such
restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law,
- 4 -
<PAGE> 42
except by will or the laws of descent and distribution, and, during the life of
the Participant, shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.
(b) DOCUMENTATION. Each Award under the Plan shall be evidenced by
a written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan,
each type of Award may be made alone in addition to any other type of Award. The
terms of each type of Award made under the Plan need not be identical, and the
Board need not treat Participants uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on
an Award of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) ACQUISITION EVENTS; DISSOLUTION OR LIQUIDATION
(1) CONSEQUENCES OF ACQUISITION EVENTS. Upon the
occurrence of an Acquisition Event (as defined below), or the execution by the
Company of any agreement with respect to an Acquisition Event, the Board shall
provide that outstanding Awards shall be assumed, or equivalent Awards shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such Options substituted for Incentive Stock Options
shall satisfy, in the determination of the Board, the requirements of Section
424(a) of the Code; PROVIDED, HOWEVER, that if any successor corporation refuses
to assume or substitute such Awards, then the Board shall: (i) upon written
notice to the Participants, provide that all then unexercised Options will
become exercisable in full as of a specified date (the "Acceleration Date")
prior to the Acquisition Event and will terminate immediately prior to the
consummation of such Acquisition Event, except to the extent exercised by the
Participants between the Acceleration Date and the consummation of such
Acquisition Event (provided that, in the event of an Acquisition Event under the
terms of which holders of Common Stock will receive upon consummation thereof a
cash payment for each share of Common Stock surrendered pursuant to such
Acquisition Event (the "Acquisition Price"), the Board may provide that all
outstanding Options shall terminate upon consummation of such Acquisition Event
and each Participant shall receive, in exchange therefor, a cash payment equal
to the amount (if any) by which (A) the Acquisition Price multiplied by the
number of shares of Common Stock subject to such outstanding Options (whether or
not then exercisable), exceeds (B) the aggregate exercise price of such
Options); and (ii) provide that all Restricted Stock Awards then outstanding
shall become free of all restrictions prior to the consummation of the
Acquisition Event.
An "Acquisition Event" shall mean: (a) any merger or consolidation
which results in the voting securities of the Company outstanding immediately
prior thereto continuing to represent
- 5 -
<PAGE> 43
(either by remaining outstanding or by being converted into voting securities of
the surviving or acquiring entity) less than 50% of the combined voting power of
the voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation; (b) any sale of all
or substantially all of the assets of the Company; or (c) the acquisition of
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act) of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities (other than through a merger or
consolidation or an acquisition of securities directly from the Company) by any
"person", as such term is used in Sections 13(d) and 14(d) of the Exchange Act
other than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportion as their ownership of stock of the Company.
(2) DISSOLUTION OR LIQUIDATION. In the event of the
proposed dissolution or liquidation of the Company, the Board shall notify each
Participant as soon as practicable prior to the effective date of such proposed
event. The Board, in its discretion, may upon written notice to the
Participants, (i) provide that all then unexercised Options will become
exercisable in full as of a specified date and for a specified period of time
prior to such proposed event and (ii) provide that all Restricted Stock Awards
then outstanding shall become free of all restrictions immediately prior to the
effectiveness of such proposed event.
(3) ASSUMPTION OF OPTIONS UPON CERTAIN EVENTS. The Board
may grant Awards under the Plan in substitution for stock and stock-based awards
held by employees of another corporation who become employees of the Company as
a result of a merger or consolidation of the employing corporation with the
Company or the acquisition by the Company of property or stock of the employing
corporation. The substitute Awards shall be granted on such terms and conditions
as the Board considers appropriate in the circumstances.
(f) WITHHOLDING. Each Participant shall pay to the Company, or
make provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in connection with Awards made to such Participant no later
than the date of the event creating the tax liability. The Board may allow
Participants to satisfy such tax obligations in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value. The Company may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to a Participant.
(g) AMENDMENT OF AWARD. The Board may amend, modify or terminate
any outstanding Award, including but not limited to, substituting therefor
another Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
- 6 -
<PAGE> 44
(h) CONDITIONS ON DELIVERY OF STOCK. The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the Plan until (i)
all conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(i) ACCELERATION. The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, or that any
Restricted Stock Awards shall be free of all restrictions, as the case may be.
8. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have
any claim or right to be granted an Award, and the grant of an Award shall not
be construed as giving a Participant the right to continued employment or any
other relationship with the Company. The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided in
the applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become
effective on the date on which it is adopted by the Board, but no Award granted
to a Participant designated as subject to Section 162(m) by the Board shall
become exercisable, vested or realizable, as applicable to such Award, unless
and until the Plan has been approved by the Company's stockholders. No Awards
shall be granted under the Plan after the completion of ten years from the date
on which the Plan was adopted, by the Board but Awards previously granted may
extend beyond that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate
the Plan or any portion thereof at any time, provided that no Award granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award (to the extent that such amendment to the Plan was required to
grant such Award to a particular Participant), unless and until such amendment
shall have been approved by the Company's stockholders.
- 7 -
<PAGE> 45
(e) STOCKHOLDER APPROVAL. For purposes of this Plan, stockholder
approval shall mean approval by a vote of the stockholders in accordance with
the requirements of Section 162(m) of the Code.
(f) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
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