<PAGE>
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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SEAGATE TECHNOLOGY, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
-------------------------------------------------------------------------
[X] 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:
-------------------------------------------------------------------------
Notes:
<PAGE>
SEAGATE TECHNOLOGY, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 1996
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SEAGATE
TECHNOLOGY, INC. (the "Company"), a Delaware corporation, will be held on
Thursday, October 24, 1996 at 10:00 a.m., local time, at Seascape Resort &
Conference Center, One Seascape Resort Drive, Aptos, California 95003 for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve an amendment to the Company's Certificate of Incorporation
for the purpose of increasing the authorized number of shares of Common
Stock reserved for issuance thereunder by Four Hundred Million
(400,000,000) shares to an aggregate of Six Hundred Million
(600,000,000) shares.
3. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending June 27, 1997.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on August 30, 1996 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
Donald L. Waite
Secretary
Scotts Valley, California
September 20, 1996
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED
TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
SEAGATE TECHNOLOGY, INC.
----------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of SEAGATE TECHNOLOGY, INC. (the
"Company") for use at the Annual Meeting of Stockholders to be held Thursday,
October 24, 1996 at 10:00 a.m., local time, or at any adjournment thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Stockholders. The Annual Meeting will be held at Seascape Resort &
Conference Center, One Seascape Resort Drive, Aptos, California 95003. The
Company's principal executive offices are located at 920 Disc Drive, Scotts
Valley, California 95066, and its telephone number at that location is (408)
438-6550.
These proxy solicitation materials and the Annual Report to Stockholders for
the fiscal year ended June 28, 1996, including financial statements, were
first mailed on or about September 20, 1996 to all stockholders entitled to
vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on August 30, 1996 are
entitled to notice of and to vote at the meeting. The Company has one series
of Common Stock outstanding, designated Common Stock, $.01 par value. At the
record date, 106,914,892 shares of the Company's Common Stock were issued and
outstanding. No shares of the Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
Every stockholder voting for the election of directors (Proposal One) may
cumulate such stockholder's votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
shares held by such stockholder, or distribute such stockholder's votes on the
same principle among as many candidates as the stockholder may select,
provided that votes cannot be cast for more than seven (7) candidates.
However, no stockholder shall be entitled to cumulate votes for any individual
unless such individual's name has been placed in nomination prior to the
voting and the stockholder, or any other stockholder, has given notice at the
meeting, prior to the voting, of the intention to cumulate the stockholder's
votes. On all other matters, each share of Common Stock has one vote. A quorum
comprising the holders of the majority of the outstanding shares of Common
Stock on the record date must be present or represented for the transaction of
business at the Annual Meeting. Abstentions and broker non-votes will be
counted in establishing the quorum.
The cost of soliciting votes will be borne by the Company. The Company has
retained Corporate Investor Communications, Inc. to provide proxy solicitation
services in connection with the meeting at an estimated cost of $6,000. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone, facsimile or other means.
1
<PAGE>
SECURITY OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of August 30, 1996 by (i) each
person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the executive officers named in the table under "Executive
Compensation and Other Matters--Executive Compensation-- Summary Compensation
Table" and (iv) all directors and executive officers as a group:
<TABLE>
<CAPTION>
COMMON APPROXIMATE
STOCK PERCENT
NAME OWNED OWNED(1)
---- ---------- -----------
<S> <C> <C>
Wellington Management Group (2)...................... 11,038,108 10.3%
75 State Street
Boston, MA 02109
Sanford C. Bernstein & Co. (3)....................... 8,297,266 7.8%
767 Fifth Avenue
New York, NY 10153
Alan F. Shugart (4).................................. 518,144 *
Robert A. Kleist (5)................................. 100,973 *
Laurel L. Wilkening (6).............................. 38,548 *
Kenneth E. Haughton (5).............................. 36,264 *
Thomas P. Stafford (7)............................... 20,623 *
Lawrence Perlman (8)................................. 6,041 *
Gary B. Filler (9)................................... 3,542 *
Bernardo A. Carballo (10)............................ 226,250 *
Donald L. Waite (11)................................. 156,844 *
Ronald D. Verdoorn (12).............................. 147,563 *
Brendan C. Hegarty (13).............................. 102,427 *
All directors and executive officers as a group (16
persons)(14)......................................... 1,836,272 1.7%
</TABLE>
- - --------
* Less than 1%
(1) Applicable percentage of ownership is based on 106,914,892 shares of
Common Stock outstanding as of August 30, 1996 together with applicable
options for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options currently exercisable or exercisable
within 60 days after August 30, 1996 are deemed outstanding for computing
the percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person.
(2) Reflects ownership as of August 8, 1996, as reported on Schedule 13G
filed with the Securities and Exchange Commission by Wellington
Management Co. ("WMC"), which, in its capacity as investment advisor, may
be deemed to beneficially own such shares. Such shares are owned by a
variety of investment advisory clients of WMC, which clients receive
dividends and the proceeds from the sale of such shares. No such client
is known by WMC to have such interest with respect to more than five
percent of the class except Vanguard/Windsor Funds, Inc. WMC has shared
dispositive power with respect to all shares beneficially owned and
shared voting power with respect to 270,200 of such shares. The Company
does not have any additional knowledge as to where dispositive or voting
power with respect to such shares resides.
(3) Reflects ownership as of June 30, 1996 based upon information provided by
a representative of Sanford C. Bernstein & Co. The Company does not have
knowledge as to where dispositive or voting power with respect to such
shares resides.
(4) Includes 45,000 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
2
<PAGE>
(5) Includes 24,164 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(6) Represents 38,348 shares of Common Stock which may be acquired within 60
days after August 30,1996 through the exercise of stock options.
(7) Represents 20,623 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(8) Represents 6,041 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(9) Represents 3,542 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(10) Includes 149,750 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(11) Includes 37,642 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(12) Includes 63,750 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(13) Includes 25,313 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
(14) Includes 642,656 shares of Common Stock which may be acquired within 60
days after August 30, 1996 through the exercise of stock options.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 1997 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than May 23, 1997 in order that they may be included in the proxy statement
and form of proxy relating to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
A board of seven (7) directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for management's seven (7) nominees named below, all of whom are presently
directors of the Company. In the event that any management nominee is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. In the event that additional persons
are nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner (in accordance with cumulative
voting) as will assure the election of as many of the nominees listed below as
possible, and, in such event, the specific nominees to be voted for will be
determined by the proxy holders. The Company is not aware of any nominee who
will be unable or will decline to serve as a director. The term of office for
each person elected as a director will continue until the next Annual Meeting
of Stockholders or until his or her successor has been elected and qualified.
VOTE REQUIRED
If a quorum is present and voting, the seven nominees receiving the highest
number of votes will be elected to the Board of Directors. Votes withheld from
any director, are counted for the purposes of determining the presence or
absence of a quorum for the transaction of business, but have no other effect
under Delaware law.
3
<PAGE>
NOMINEES
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<C> <C> <S> <C>
Alan F. Shugart 65 President, Chief Executive Officer and 1979
Chairman of the Board of Directors of the
Company
Gary B. Filler 55 Senior Vice President and Chief Financial 1985
Officer of Diamond Multimedia Systems,
Inc. (multimedia and graphics company)
Kenneth E. Haughton 68 Consultant, Engineering 1986
Robert A. Kleist 67 President, Chief Executive Officer and a 1981
Director of Printronix, Inc. (computer
printer manufacturer)
Lawrence Perlman 58 Chairman of the Board of Directors and 1989
Chief Executive Officer of Ceridian Corp.
(formerly Control Data Corporation)
(information services and defense
electronics company)
Thomas P.Stafford 65 Vice Chairman of Stafford, Burke and 1988
Hecker, Inc. (a consulting firm)
Laurel L. Wilkening 51 Chancellor, University of California, 1993
Irvine
</TABLE>
Except as set forth below, each of the nominees has been engaged in his or
her principal occupation described above during the past five years. There is
no family relationship between any director or executive officer of the
Company.
Mr. Shugart has been President of the Company since September 1991 and has
been Chief Executive Officer since the Company's inception in 1979. Mr.
Shugart also served as Chief Operating Officer of the Company from September
1991 until March 1995. In addition, Mr. Shugart served as Chairman of the
Board of Directors of the Company from inception until September 1991 and was
reappointed Chairman of the Board of Directors in October 1992. Mr. Shugart is
currently a Director of Valence Technology, Inc. and SanDisk Corporation.
Mr. Filler has been Senior Vice President and Chief Financial Officer of
Diamond Multimedia Systems, Inc. since January 1995. Mr. Filler has resigned
from his positions at Diamond Multimedia Systems, Inc. effective October 1,
1996. From June 1994 to January 1995, Mr. Filler was a business consultant and
private investor. From February 1994 until June 1994 he served as Executive
Vice President and Chief Financial Officer of ASK Group, Inc., a computer
systems company. Mr. Filler was Chairman of the Board of Directors of the
Company from September 1991 until October 1992. From October 1990 until
September 1991, Mr. Filler served as Vice Chairman of the Board of Directors
of the Company.
Dr. Haughton is also a director of Solectron Corporation.
Mr. Perlman was appointed Chairman of the Board of Directors of Ceridian
Corp. in November 1992. Mr. Perlman previously held several executive
positions at Control Data Corporation including Chairman of the Board of
Directors and Chief Executive Officer of Imprimis Technology Incorporated
("Imprimis"). Mr. Perlman is also a Director of Computer Network Technology
Corporation, Valspar Corporation, and Bio-Vascular, Inc.
General Stafford, a former astronaut, also serves as Director of Allied-
Signal Corporation, Pacific Scientific, Inc., Tremont, Inc., CMI, Inc., Fisher
Scientific International, Inc., Wackenhut, Inc., Wheelabrator Technologies,
Inc., and Tracor, Inc.
4
<PAGE>
Dr. Wilkening has served as Chancellor of the University of California,
Irvine since July 1993. From September 1988 to June 1993 she was Provost and
Vice President of Academic Affairs at the University of Washington. From May
1991 to January 1993, Dr. Wilkening also served as Chair of the Space Policy
Advisory Board of the National Space Council.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of sixteen meetings
during fiscal 1996. No director attended fewer than 75% of the meetings of the
Board of Directors and committees thereof, if any, upon which such director
served. The Board of Directors has an Audit Committee, an Executive Personnel
and Organization Committee, a Strategic Planning Committee and a Stock Option
Committee.
The Audit Committee, which consists of directors Filler, Wilkening and
Haughton, met twice during fiscal 1996. The Audit Committee reviews and
approves the scope of the audit performed by the Company's independent
auditors as well as the Company's accounting principles and internal
accounting controls. In fiscal 1996 the Board of Directors as a whole
recommended engagement of the Company's independent auditors.
The Executive Personnel and Organization Committee, which consists of
directors Kleist, Stafford and Perlman, met four times during fiscal 1996.
This Committee reviews the structure and performance of senior management, as
well as the Company's plans for management succession, recommends to the Board
of Directors candidates for nomination to the Board, administers the Company's
stock option and stock purchase plans and reviews and approves the Company's
compensation policies and distributions to officers under the Company's
Performance-Based Executive Compensation Plan. The Executive Personnel and
Organization Committee will consider nominees to the Board of Directors
recommended by stockholders. Stockholders making such recommendations should
follow the procedures outlined above under "Information Concerning
Solicitation and Voting--Stockholder Proposals to be Presented at Next Annual
Meeting."
The Strategic Planning Committee, which consists of directors Filler,
Perlman and Shugart, held a total of four meetings during fiscal 1996. This
committee reviews the Company's strategic plans and consults with the
Company's management with respect to its proposed acquisitions, strategic
investments and other such matters.
The Stock Option Committee, which consists of directors Perlman and Shugart,
was appointed in August 1995. This Committee reviews and approves stock option
grants to non-officer employees and consultants by written consent on a
periodic basis, generally weekly. Prior to August 1995 all stock option grants
were reviewed and approved by the Executive Personnel and Organization
Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Personnel and Organization Committee currently consists of
directors Kleist, Stafford and Perlman. During fiscal 1996, there were no
transactions requiring disclosure hereunder.
PROPOSAL TWO
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES
GENERAL
The Company's Restated Certificate of Incorporation, as amended, as
currently in effect (the "Certificate"), provides that the Company is
authorized to issue two classes of stock, consisting of 200,000,000 shares
designated as Common Stock, $0.01 par value per share, and 1,000,000 shares
designated Preferred Stock, $0.01 par value per share.
5
<PAGE>
On September 5, 1996, the Board of Directors of the Company authorized an
amendment to the Certificate (the "Certificate Amendment"), subject to
stockholder approval, to increase the authorized number of shares of Common
Stock by 400,000,000 shares to a total of 600,000,000 shares. Under the
proposed amendment, subparagraph (a) of Article 4 of the Certificate would be
amended to read as follows:
"The Corporation is authorized to issue two classes of shares to be
designated, respectively, 'Preferred Stock' and 'Common Stock.' The
total number of shares which the Corporation shall have the authority
to issue is Six Hundred One Million (601,000,000), of which One
Million (1,000,000) shall be Preferred Stock and Six Hundred Million
(600,000,000) shall be Common Stock. The Preferred Stock and the
Common Stock shall each have a par value of $0.01 per share, and the
aggregate par value of all shares of Preferred Stock is $10,000 and of
all shares of Common Stock is $6,000,000."
The stockholders are being asked to approve such Certificate Amendment. The
authorized but unissued shares of Common Stock would be available for issuance
from time to time for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further action by the
stockholders, except for those instances in which applicable law or stock
exchange rules require stockholder approval.
PURPOSE AND EFFECT OF THE AMENDMENT
The Board of Directors believes that it is in the Company's best interests
to increase the number of authorized shares of Common Stock in order to have
additional authorized but unissued shares available for issuance to meet
business needs as they arise without the expense and delay of a special
meeting of stockholders. The Board of Directors believes that the availability
of such shares will provide the Company with the flexibility to issue Common
Stock for proper corporate purposes which may be identified by the Board of
Directors in the future. For example, such shares may be issued in the event
the Board of Directors determines that it is necessary or appropriate to
permit a future stock dividend or stock split, to raise additional capital, to
acquire another corporation or its business or assets, to establish a
strategic relationship with a corporate partner or to issue shares under
management incentive or employee benefit plans.
While the Board of Directors has not authorized or taken any action with
respect to the issuance of any such shares and has no present agreement,
arrangement or understanding with respect to the issuance of any such shares,
the Board is currently contemplating a stock dividend or stock split of the
outstanding Common Stock. The Board's decision to approve a stock dividend or
stock split will be based upon market and other factors deemed relevant by the
Board from time to time. If the Board of Directors were to decide to approve a
stock dividend or stock split, the number of shares of Common Stock currently
authorized may not be adequate. Although there can be no assurance that a
stock dividend or stock split will be authorized, the contemplation of a stock
dividend or stock split was an important factor to the Board in determining
the size of the proposed increase in the authorized shares in that a stock
dividend or stock split would proportionately reduce the number of authorized
but unissued shares.
The Board does not intend to authorize the issuance of any such shares
except upon terms the Board deems to be in the best interests of the Company.
If the Certificate Amendment is approved by the stockholders, the Board of
Directors does not intend to solicit further stockholder approval prior to the
issuance of any additional shares of Common Stock, except as may be required
by applicable law or stock exchange rules. The increase in authorized Common
Stock will not have any immediate effect on the rights of the existing
stockholders. To the extent that the additional authorized shares are issued
in the future, they will decrease the existing stockholders' percentage equity
ownership and, depending on the price at which they are issued, could be
dilutive to the existing stockholders. Holders of the Company's securities
have no statutory preemptive rights with respect to issuances of Common Stock.
The Company last increased its authorized Common Stock from 81,000,000
shares to 200,000,000 shares in April 1990.
6
<PAGE>
Of the 200,000,000 currently authorized shares of Common Stock, 106,715,092
shares were issued and outstanding as of June 28, 1996 and an aggregate of
37,717,990 shares of Common Stock were reserved for issuance as follows:
11,850,012 shares were reserved for issuance upon exercise of outstanding
options; 4,025,819 shares were reserved for future grant under the 1991
Incentive Stock Option Plan (the "1991 Plan"); 490,000 shares were reserved
for future grant under the Directors' Option Plan (the "Directors' Plan");
239,750 shares were reserved for future grant under the Executive Stock Plan;
1,913,707 shares were reserved for future issuance under the Employee Stock
Purchase Plan; 10,314,286 shares were reserved for issuance upon conversion of
the Company's outstanding 5% Convertible Subordinated Debentures due 2003;
5,696,777 shares were reserved for issuance upon conversion of the Company's
outstanding 6 1/2% Convertible Subordinated Debentures due 2002; and 3,187,639
shares were reserved for issuance upon conversion of the Company's outstanding
6 3/4% Convertible Subordinated Debentures due 2001.
The Company intends to apply to the New York Stock Exchange for the listing
of any additional shares of Common Stock if and when such shares are to be
issued.
POTENTIAL ANTI-TAKEOVER EFFECT
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change-of-control of the Company without further action by the
stockholders. Shares of authorized and unissued Common Stock could (within the
limits imposed by applicable law) be issued in one or more transactions that
would make a change-of-control of the Company more difficult, and therefore
less likely. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of outstanding shares
of Common Stock, and such additional shares could be used to dilute the stock
ownership or voting rights of a person seeking to obtain control of the
Company. The Company has previously adopted certain measures that may have the
effect of helping to resist an unsolicited takeover attempt, including (i)
provisions in the 1991 Plan providing for the acceleration of exercisability
of outstanding options in the event of a sale of assets or merger, unless
otherwise determined by the Board of Directors; (ii) provisions of the
Certificate authorizing the Board to issue up to 1,000,000 shares of Preferred
Stock with terms, provisions and rights fixed by the Board and (iii)
provisions in the Company's bylaws regarding cumulative voting. Prior to
December 1994, the Company also had a Stockholder Rights Plan, the effect of
which was to make more difficult certain attempts to acquire control of the
Company. In December 1994, the Board of Directors terminated the Company's
Stockholder Rights Plan.
REQUIRED VOTE
The adoption of the Certificate Amendment requires the affirmative vote of
not less than a majority of the votes entitled to be cast by all shares of
Common Stock issued and outstanding on the Record Date. The effect of an
abstention is the same as that of a vote against the proposal. If the
Certificate Amendment is not so approved, the Company's authorized capital
stock will not change.
RECOMMENDATION
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION FOR THE PURPOSE OF
INCREASING THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
to audit the consolidated financial statements of the Company for the fiscal
year ending June 27, 1997 and recommends that stockholders vote for
ratification of such appointment. Notwithstanding the selection, the Board, in
its discretion, may direct the appointment of new independent auditors at any
time during the year, if the Board feels that such a change would be in the
best interests of the Company and its stockholders. In the event of a negative
vote on ratification, the Board of Directors will reconsider its selection.
7
<PAGE>
Ernst & Young LLP has audited the Company's financial statements annually
since 1980. Representatives of Ernst & Young LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company and
the four other most highly compensated executive officers of the Company (the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
--------------------------------- ------------------------------------------
SECURITIES UNDERLYING
OPTIONS GRANTED(#)(13)
NAME AND PRINCIPAL FISCAL SALARY OTHER ANNUAL RESTRICTED ------------------------
POSITION YEAR ($)(1) BONUS($) COMPENSATION($) STOCK AWARDS($) COMPANY SUBSIDIARY
- - ------------------ ------ -------- -------- --------------- --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan F. Shugart......... 1996 $680,781 $447,000 $312,558(2) $7,704,750(10) 120,000 30,000
Chairman, President,
and 1995 600,018 522,700 375,724(3) -- 120,000 --
Chief Executive Officer 1994 603,858 334,200 249,564(4) -- 120,000 --
Bernardo A. Carballo.... 1996 $440,778 $373,000 $294,660(5) $3,929,423(11) 60,000 20,000
Executive Vice
President, 1995 333,078 373,500 258,249(6) -- 45,000 --
Sales, Marketing, 1994 329,128 222,600 167,753(7) -- 40,000 --
Product Line Management
and Customer Service
Brendan C. Hegarty...... 1996 $468,278 $373,000 $289,234(5) $3,929,423(11) 60,000 20,000
Executive Vice
President 1995 394,238 373,500 272,185(6) -- 45,000 --
and Chief Operating 1994 365,544 212,000 150,175(8) -- 40,000 --
Officer, Components
Group
Ronald D. Verdoorn...... 1996 $457,701 $373,000 $261,805(5) $3,929,423(11) 60,000 20,000
Executive Vice
President 1995 342,309 373,500 260,932(6) -- 45,000 --
and Chief Operating 1994 328,932 222,600 241,702(9) -- 40,000 --
Officer, Storage
Products Group
Donald L. Waite......... 1996 $457,701 $373,000 $276,729(5) $3,852,375(12) 60,000 20,000
Executive Vice
President, 1995 400,005 373,500 257,049(6) -- 45,000 --
Chief Administrative 1994 383,447 222,600 163,286(7) -- 40,000 --
Officer and Chief
Financial Officer
</TABLE>
- - --------
(1) Fiscal Year 1994 included 27 bi-weekly pay periods while fiscal years
1995 and 1996 included 26 bi-weekly pay periods.
(2) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $298,000.
(3) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $348,500.
(4) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $222,700.
(5) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $249,000.
8
<PAGE>
(6) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $248,300.
(7) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $148,500.
(8) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $141,400.
(9) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $148,500 and equalization allowance of $62,592.
(10) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 150,000 shares of Common Stock at an exercise
price of $0.01 per share were granted to, and in March 1996 exercised by
Mr. Shugart. The amount shown in the table represents the dollar value
(net of the consideration paid) of the award of restricted stock,
calculated by multiplying the closing market price of the Company's
Common Stock on the date of grant by the number of shares awarded. As of
June 28, 1996, Mr. Shugart held 150,000 unvested shares of stock having a
value of $6,750,000 based upon the fair market value of the Common Stock
on June 28, 1996 of $45.00 per share. All of such unvested shares are
subject to repurchase by the Company at the original purchase price in
the event of a termination of Mr. Shugart's employment with the Company.
The shares are released from the Company's repurchase option after five
years from date of grant. See "Report of the Executive Personnel and
Organization Committee of the Board of Directors--Stock Options and
Restricted Stock Awards" for further information on vesting provisions.
Mr. Shugart will receive the same dividends on all shares of restricted
stock as all other stockholders; however, the Company does not anticipate
paying any cash dividends in the foreseeable future.
(11) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 76,500 shares of Common Stock at an exercise
price of $0.01 per share were granted to, and in March 1996 exercised by
Messrs. Carballo and Verdoorn, and Dr. Hegarty. The amount shown in the
table represents the dollar value (net of the consideration paid) of the
award of restricted stock, calculated by multiplying the closing market
price of the Company's Common Stock on the date of grant by the number of
shares awarded. As of June 28, 1996, each of these Executive Officers
held 76,500 unvested shares of stock having a value of $3,442,500 based
upon the fair market value of the Common Stock on June 28, 1996 of $45.00
per share. All of such unvested shares are subject to repurchase by the
Company at the original purchase price in the event of a termination of
employment with the Company. The shares are released from the Company's
repurchase option after ten years from date of grant. See "Report of the
Executive Personnel and Organization Committee of the Board of
Directors--Stock Options and Restricted Stock Awards" for further
information on vesting provisions. They will receive the same dividends
on all shares of restricted stock as all other stockholders; however, the
Company does not anticipate paying any cash dividends in the foreseeable
future.
(12) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 75,000 shares of Common Stock at an exercise
price of $0.01 per share were granted to, and in March 1996 exercised by
Mr. Waite. The amount shown in the table represents the dollar value (net
of the consideration paid) of the award of restricted stock, calculated
by multiplying the closing market price of the Company's Common Stock on
the date of grant by the number of shares awarded. As of June 28, 1996,
Mr. Waite held 75,000 unvested shares of stock having a value of
$3,375,000 based upon the fair market value of the Common Stock on June
28, 1996 of $45.00 per share. All of such unvested shares are subject to
repurchase by the Company at the original purchase price in the event of
a termination of Mr. Waite's employment with the Company. The shares are
released from the Company's repurchase option after five years from date
of grant. See "Report of the Executive Personnel and Organization
Committee of the Board of Directors--Stock Options and Restricted Stock
Awards" for further information on vesting provisions. Mr. Waite will
receive the same dividends on all shares of restricted stock as all other
stockholders; however, the Company does not anticipate paying any cash
dividends in the foreseeable future.
(13) The Stock Options listed in the table include options to purchase Common
Stock of the Company and options to purchase Common Stock of a
subsidiary, Seagate Software Inc. ("Seagate Software"). The Company's
subsidiary, Seagate Software, granted stock options to purchase Seagate
Software Common
9
<PAGE>
Stock to virtually all of the Seagate Software employees and certain
Seagate Technology, Inc. employees, including Named Officers, pursuant to
the Seagate Software Inc. 1996 Stock Option Plan (the "Software Stock
Plan"). See "Executive Officer Compensation--Stock Options" below for
additional information regarding options to purchase stock of Seagate
Software granted in fiscal 1996.
OPTION GRANTS IN FISCAL 1996
The following tables provide information concerning each grant of options to
purchase the Company's Common Stock and Seagate Software's Common Stock made
during fiscal year 1996 to the Named Officers in the Summary Compensation
Table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS FOR SEAGATE TECHNOLOGY,
INC.
--------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION
OPTIONS EMPLOYEES OR BASE FOR OPTION TERM(1)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#)(2) YEAR ($/SH)(3)(4) DATE 5% ($) 10% ($)
---- ---------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan F. Shugart......... 30,000 0.54% $43.75 07/27/05 $ 825,424 $2,091,787
30,000 0.54 47.00 10/25/05 886,741 2,247,177
30,000 0.54 56.50 01/24/06 1,065,976 2,701,393
30,000 0.54 58.00 05/01/06 1,094,277 2,773,112
Bernardo A. Carballo.... 15,000 0.27% $43.75 07/27/05 $ 412,712 $1,045,893
15,000 0.27 47.00 10/25/05 443,371 1,123,588
15,000 0.27 56.50 01/24/06 532,988 1,350,697
15,000 0.27 58.00 05/01/06 547,138 1,386,556
Brendan C. Hegarty...... 15,000 0.27% $43.75 07/27/05 $ 412,712 $1,045,893
15,000 0.27 47.00 10/25/05 443,371 1,123,588
15,000 0.27 56.50 01/24/06 532,988 1,350,697
15,000 0.27 58.00 05/01/06 547,138 1,386,556
Ronald D. Verdoorn...... 15,000 0.27% $43.75 07/27/05 $ 412,712 $1,045,893
15,000 0.27 47.00 10/25/05 443,371 1,123,588
15,000 0.27 56.50 01/24/06 532,988 1,350,697
15,000 0.27 58.00 05/01/06 547,138 1,386,556
Donald L. Waite......... 15,000 0.27% $43.75 07/27/05 $ 412,712 $1,045,893
15,000 0.27 47.00 10/25/05 443,371 1,123,588
15,000 0.27 56.50 01/24/06 532,988 1,350,697
15,000 0.27 58.00 05/01/06 547,138 1,386,556
</TABLE>
- - -------
(1) Potential realizable value is based on the assumption that the Comm on
Stock of the Company appreciates at the annual rate shown (compound ed
annually) from the date of grant until the expiration of the ten year
option term. These numbers are calculated based on the requirements
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth.
(2) All stock options granted in fiscal year 1996 begin to vest one year after
the date of grant, with 25% of the shares covered thereby vesting at that
time and with an additional 25% of the option shares vesting at the end of
each year thereafter, with full vesting occurring on the fourth
anniversary of the date of grant. Optionees are permitted, with certain
limitations, to exercise stock options as to unvested shares, but Common
Stock purchased thereby is subject to repurchase by the Company until such
vesting conditions are met. Under the 1991 Plan, the Board retains
discretion to modify the terms, including the price, of outstanding
options.
(3) Options were granted at an exercise price equal to the fair market value
of the Company's Common Stock, as determined by reference to the closing
price reported on the New York Stock Exchange on the last trading day
prior to the date of grant.
10
<PAGE>
(4) Exercise price and tax withholding obligations may be paid in cash, by
delivery of already-owned shares subject to certain conditions,
utilization of deferred compensation subject to certain limitations (see
Report of the Executive Personnel and Organization Committee of the Board
of Directors--Performance-Based Awards) or pursuant to a cashless exercise
procedure under which the optionee provides irrevocable instructions to a
brokerage firm to sell the purchased shares and to remit to the Company,
out of the sale proceeds, an amount equal to the exercise price plus all
applicable withholding taxes.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS FOR SEAGATE SOFTWARE
------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM (1)
GRANTED IN FISCAL PRICE EXPIRATION ----------------------------
NAME (#)(2) YEAR ($/SH)(3) DATE 5% ($) 10% ($)
---- ---------- ---------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Alan F. Shugart......... 30,000 .9153% $4.00 04/04/06 $ 75,467 $ 191,249
Bernardo A. Carballo.... 20,000 .6102 4.00 04/04/06 50,312 127,499
Brendan C. Hegarty...... 20,000 .6102 4.00 04/04/06 50,312 127,499
Ronald D. Verdoorn...... 20,000 .6102 4.00 04/04/06 50,312 127,499
Donald L. Waite......... 20,000 .6102 4.00 04/04/06 50,312 127,499
</TABLE>
- - --------
(1) Potential realizable value is based on the assumption that the Common
Stock of Seagate Software appreciates at the annual rate shown (compounded
annually) from the date of grant until the expiration of the ten year
option term. These numbers are calculated based on the requirements
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth.
(2) All stock options granted in fiscal year 1996 begin to vest one year after
the date of grant, with 20% of the shares covered thereby vesting at that
time, with an additional 20% of the option shares vesting at the end of
the second year thereafter, with 30% of the option shares vesting at the
end of the third year thereafter, with full vesting of the remaining 30%
occurring on the fourth anniversary of the date of grant. Under the
Seagate Software Plan, the Seagate Software Board retains discretion to
modify the terms, including the price, of outstanding options.
(3) Options were granted at an exercise price equal to the fair market value
of Seagate Software Common Stock on grant date, as determined by the Board
of Directors of Seagate Software Inc.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information regarding the exercise of
stock options in the last fiscal year by the persons named in the Summary
Compensation Table and the value of options held by such individuals at the
end of the fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS
END(#) AT FISCAL YEAR-END($)(2)
SHARES --------------------------- ---------------------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ EXERCISABLE/ EXERCISABLE/
ON EXCERCISE REALIZED UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) SEAGATE SOFTWARE SEAGATE SOFTWARE
---- ------------ ---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan F. Shugart......... 183,625 $7,289,949 0/ 0/ $ 0/ $0/
285,000 30,000 3,377,333 0
Bernardo A. Carballo.... 27,500 774,375 132,250/ 0/ 4,071,780/ 0/
118,750 20,000 1,176,090 0
Brendan C. Hegarty...... 27,812 855,639 7,813/ 0/ 191,969/ 0/
118,750 20,000 1,176,090 0
Ronald D. Verdoorn...... 27,994 1,331,710 46,250/ 0/ 1,055,780/ 0/
118,750 20,000 1,176,090 0
Donald L. Waite......... 0 0 78,350/ 0/ 2,172,255/ 0/
118,750 20,000 1,176,090 0
</TABLE>
11
<PAGE>
- - --------
(1) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
(2) Market value of the Company's Common Stock at fiscal year-end minus the
exercise price. No Seagate Software stock options held by Named Officers
were in-the-money at 1996 fiscal year end. The fair market value of
Seagate Software common stock at 1996 fiscal year end, as determined by
the Seagate Software Board of Directors, was $4.00 per share.
EMPLOYMENT CONTRACTS AND CHANGE-OF-CONTROL ARRANGEMENTS
The Company currently has no employment contracts with any of the executive
officers named in the "Summary Compensation Table" above and the Company has
no compensatory plan or arrangement with such executive officers where the
amount to be paid exceeds $100,000 and which are activated upon resignation,
termination or retirement of any such executive officer upon a change of
control of the Company.
The Company's 1991 Plan provides that in the event of a "change of control"
of the Company, the Board of Directors may, in its discretion, provide that
(i) all options granted under the 1991 Plan that are outstanding as of the
date of such change of control will become immediately vested and fully
exercisable and (ii) to the extent exercisable and vested, the value of all
outstanding options, unless otherwise determined by the Board prior to any
change of control, will be cashed out at the change of control price reduced
by the exercise price applicable to such options. The Company's Executive
Stock Plan provides that in the event of a "change of control" of the Company,
if constructive termination of an executive occurs within the two-year period
following such change of control, then there shall be released from the
Company's repurchase option that percentage of the executive's unreleased
shares determined by dividing (i) the number of months that have elapsed from
the date of grant to the date of such termination, by (ii) one hundred twenty
(120) or sixty (60), as applicable.
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors receive an annual retainer of
$30,000 and a fee of $3,000 per Board meeting attended (excluding telephonic
Board meetings), and $2,000 per Committee meeting attended, if such meeting is
on a day other than the day of a meeting of the Board of Directors. Each of
the persons serving as the Chairman of the Audit Committee and the Executive
Personnel and Organization Committee receives an additional annual retainer of
$8,000. Non-employee members of the Strategic Planning Committee receive an
annual retainer of $6,000. The Company also reimburses the directors for
certain expenses incurred by them in their capacities as directors or in
connection with attendance at Board meetings.
The Directors' Plan provides for the grant of non-statutory options to
purchase shares of the Company's Common Stock to non-employee directors. Under
the Directors' Plan the timing of option grants, amount of the grants,
exercise price and restrictions on exercise of the options are established in
the plan. The exercise price of options granted under the Directors' Plan may
not be less than 100% of the fair market value of the Common Stock on the date
of grant. The options become exercisable cumulatively for 1/48th of the shares
subject to the option at the end of each full month that the optionee remains
a director following the date of grant. Options granted under the Directors'
Plan expire five years from the date of grant and may be exercised only while
the optionee is serving as a member of the Company's Board of Directors,
within six months after termination as a director by death or disability or
within three months after termination as a director except by death or
disability. Effective on October 24, 1996, the term of options granted under
the Directors' Plan will be changed for all future options from five years to
ten years from the date of grant. Pursuant to the Directors' Plan, each new
non-employee director is granted an option to purchase 40,000 shares of Common
Stock upon the date on which such person first becomes a director. On November
1 of each year, each non-employee director is granted an additional option to
purchase 10,000 shares of Common Stock; provided, however, that no such
additional grant is made to a non-employee director who has received an
initial option grant in the preceding six months. On November 1, 1995, each of
the non-employee directors, Messrs. Kleist, Filler, Stafford and Perlman and
Drs. Haughton and Wilkening was granted an option to purchase 10,000 shares of
the Company's Common Stock at an exercise price of $44.625 per share.
12
<PAGE>
On April 4, 1996, each of the non-employee directors, Messrs. Kleist,
Filler, Stafford and Perlman and Drs. Haughton and Wilkening was granted an
option to purchase 20,000 shares of Seagate Software Inc. Common Stock at an
exercise price of $4.00 per share. The options become exercisable cumulatively
as follows: first and second anniversaries of grant date 20% each year; and on
the third and fourth anniversaries of the grant date 30% each year. Options
granted under the Seagate Software Stock Plan expire ten years from grant
date.
REPORT OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE OF THE BOARD OF
DIRECTORS
The Executive Personnel and Organization Committee (the "Committee") of the
Board of Directors reviews and approves the Company's executive compensation
policies. The following is the report of the Committee describing compensation
policies and rationale applicable to the Company's executive officers with
respect to the compensation paid to such executive officers for the fiscal
year ended June 28, 1996.
The Company's executive compensation policies are designed (i) to provide
competitive levels of overall compensation in order to attract and retain the
most qualified executives in the industry, (ii) to motivate executive officers
to achieve the Company's business objectives and (iii) to reward executive
officers for their achievements on behalf of the Company. To achieve these
goals, the Committee and the Board of Directors have established an executive
compensation program primarily consisting of three integrated components--Base
Salary, Performance-Based Awards, and Stock Options and Restricted Stock
Awards.
BASE SALARY. The base salary component of total compensation is designed to
be competitive at approximately the 50th percentile for similar companies in
terms of industry group, technology, complexity and company size. Company size
reflects both sales and market capitalization.
During fiscal 1993, the Committee on behalf of the Board worked with
management to develop an executive salary structure based on an extensive
competitive analysis including two published national pay surveys and proxy
statement pay comparisons for selected companies. Between the survey companies
and the proxy comparison companies, several companies from the "Peer Group"
used in the Performance Graph below were included. Working with Frederick W.
Cook & Co., independent consultants to the Committee, the Committee and
management updated the analysis in fiscal 1996. Frederick W. Cook & Co. also
acted as consultants to the Committee during the 1993 analysis.
From fiscal 1993 to fiscal 1996, Seagate's annual sales increased by more
than 250% and its market capitalization increased by approximately 800%. The
effect of this substantial growth, combined with general market movement in
pay levels, resulted in a significant adjustment in the executive salary
structure to maintain Seagate's stated competitive objective, i.e., 50th
percentile versus similar companies.
To implement the updated salary structure, individual salaries for the
Company's executive officers were increased during fiscal 1996 by an average
of 16.44% above fiscal 1995. The Committee exercised its discretion in
determining individual salaries taking into account individual performance,
future leadership potential, relative duties and responsibilities, and other
factors. No specific formula was applied to determine the weighting of these
factors.
The Chief Executive Officer's (the "CEO") base salary was increased during
fiscal 1996 by 25% from $600,000 to $750,000. His former salary had been in
place since fiscal 1994, reflecting Seagate's general policy of reviewing the
base salaries of executives over a period of 18-to-24 months. Thus, the amount
of the increase reflects general market movement over two fiscal years,
adjustment for Seagate's growth from the salary structure put in place in
fiscal 1992 to the updated structure put in place in fiscal 1996, and the
Committee's assessment of the CEO's individual performance contributions.
PERFORMANCE-BASED AWARDS. All executive officers, including the CEO,
participate in the Company's Performance-Based Executive Compensation Plan
(the "Plan"). The Plan compensates executive officers in the form of quarterly
awards. Awards under the Plan are intended to reflect the Committee's belief
that a significant
13
<PAGE>
portion of the annual compensation of each executive officer should be
contingent upon the performance of the Company and the individual contribution
of each executive officer. Awards under the Plan, including the CEO's, are
contingent upon attainment of specific Company profitability performance
objectives as measured by the Company's computation of a return on adjusted
assets, with the performance objectives established by the Committee at the
time of its approval of the budget for the fiscal year. The actual payout of
each quarterly award varies with Company performance such that above-average
performance results in above-average compensation and below-average
performance results in below-average compensation. In addition, consideration
is given to the relative contribution of each individual within the executive
group in attainment of that performance.
Under the Plan, 60% of the award is paid in cash. The remaining 40% is
deferred and may be used solely, except in the event of the death of the
executive, to satisfy a portion of the exercise price of certain stock options
granted under the 1991 Plan. As a result, 40% of each award earned is at risk
to the executive officer until stock options held by such executive officer
vest and are exercised. If a participant's employment with the Company is
terminated prior to the end of a fiscal quarter, other than by death or
disability of the executive, the Plan provides that he or she shall not be
eligible for an award for that fiscal quarter and any deferred accumulated
awards relating to unvested stock options are forfeited. In fiscal 1996, the
awards under the Plan represented approximately 52.25% of the CEO's total cash
compensation, including deferred awards, and ranged from 50.50% to 62.31% of
the total cash compensation, including deferred awards, of the other executive
officers. The Company's fiscal 1996 results were judged by the Committee to be
above average. Based upon the Company's performance during fiscal 1996, and
the executive officers' individual contributions, awards under the Plan were
made to executive officers, including the CEO, in three of the four fiscal
quarters. The CEO's individual contributions to the Company were his
leadership role in establishing and retaining a strong management team, his
strategic focus on the business to position it for growth and diversification,
and his work in communicating the Company's vision, strategy and performance.
STOCK OPTIONS AND RESTRICTED STOCK AWARDS. The grant of stock options and
restricted stock awards to executive officers creates a direct link between
compensation and long-term increases in stockholder value. The Committee
believes that stock option grants provide an incentive that focuses the
executive officers' attention on managing the Company from the perspective of
an owner with an equity stake in the business. Options and awards are subject
to vesting provisions to encourage executive officers to remain employed with
the Company. With respect to executive officers, stock option grants normally
occur on a quarterly basis. The size of each option grant is based upon the
executive officer's responsibilities, relative position with the Company and
the Committee's judgment with respect to the executive's impact on stockholder
value.
Options of Seagate Technology, Inc.: During fiscal 1996, the CEO received
four quarterly stock option grants of 30,000 shares, five executive vice
presidents received four quarterly grants of 15,000 shares, one executive vice
president received an initial grant of 64,000 shares and one quarterly grant
of 15,000 shares, two executive officers received four quarterly grants of
10,000 shares each and the remaining executive officer received an initial
grant of 34,459 shares and one quarterly grant of 7,000 shares.
Options of Seagate Software Inc.: Options to purchase common stock of
Seagate Software granted under the Software Stock Plan had exercise prices not
less than the estimated fair market value on the grant date, as determined by
the Board of Directors of Seagate Software Inc. Subject to certain conditions,
these options become exercisable cumulatively as follows: first and second
anniversaries of grant date 20% each year; and on third and fourth
anniversaries of grant date 30% each year. No option under the Software Stock
Plan may be exercised after 10 years from date of grant. During fiscal 1996,
the CEO received one grant of 30,000 shares, and each of the Named Officers
received 20,000 shares under the Software Stock Plan. The other executive
officers received grants ranging from 8,000 to 20,000 shares.
Restricted Stock Awards: Seagate has no pension or other retirement benefits
for executive officers. During fiscal 1996, the Committee considered whether
or not such benefits might be appropriate, primarily as a vehicle for long-
term employment retention of experienced individuals. Several alternative
arrangements were
14
<PAGE>
considered including the use of corporate-owned life insurance. After
thoroughly analyzing the alternatives, the Committee determined that it could
best combine the retention objectives for providing retirement benefits with
the advantages of stock-based incentives and executive stock ownership by
granting restricted stock with extended future vesting, in lieu of some form
of guaranteed pension.
As a result, special one-time restricted stock grants were made to executive
officers. The special restricted stock grants were made under the stockholder-
approved Executive Stock Plan, where the Committee has the authority to set
the vesting schedule. Special restricted stock awards made during fiscal 1996
vest 100%, i.e., "cliff vesting," at the end of ten years; except for the
restricted stock awards to the CEO and Chief Administrative Officer which vest
100% at the end of five years. There may be pro-rata vesting under certain
circumstances including death, disability, termination by the Company other
than for cause, and constructive termination following a change of control. In
addition, if an executive voluntarily resigns on or after attaining age 65 the
Board may grant pro-rata vesting. The size of the special restricted stock
awards was established by the Committee taking into account what would be
representative equivalent retirement benefit values under alternative
arrangements based on reasonable stock-price growth-rate assumptions.
Impact of Section 162(m) of the Internal Revenue Code. The Committee has
considered the potential impact of Section 162(m) of the Internal Revenue Code
on the compensation paid to the Company's executive officers. Section 162(m)
disallows a tax deduction for any publicly-held corporation for individual
compensation exceeding $1.0 million in any taxable year for any of the
executive officers named in the proxy statement, unless compensation is
performance-based. In general, it is the Company's policy to qualify, to the
maximum extent possible, its executives' compensation for deductibility under
applicable tax laws. As a result, the Committee submitted the Performance-
Based Executive Compensation Plan to the stockholders for ratification and
obtained approval at the 1994 Annual Meeting of Stockholders in order to
qualify for deductibility the compensation realized in connection with
payments under this plan. In addition, at the 1993 Annual Meeting of
Stockholders, the stockholders approved certain amendments to the 1991 Plan to
preserve the Company's ability to deduct the compensation expense relating to
stock options granted under such plan.
In approving the amount and form of compensation for the Company's executive
officers, the Committee will continue to consider all elements of the cost to
the Company of providing such compensation, including the potential impact of
Section 162(m).
MEMBERS OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE:
ROBERT A. KLEIST
LAWRENCE PERLMAN
THOMAS P. STAFFORD
15
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in the
cumulative return to the stockholders of the Company's Common Stock with the
cumulative return of the S&P 500 Index (the "S&P 500"), of a peer group
constructed by the Company (the "Peer Group") and of the Hambrecht & Quist
Computer Hardware Index for the period commencing July 1, 1991 and ending on
June 30, 1996. The Peer Group is composed of Komag, Inc., Quantum Corporation,
Read-Rite Corporation and Western Digital Corporation. Returns for the Peer
Group are weighted based on market capitalization at the beginning of each
fiscal year.
The Company is replacing the Peer Group index with the Hambrecht & Quist
Computer Hardware Index because three of the companies in the Peer Group last
year no longer exist as independent companies. The Company believes, therefore,
that it would be more appropriate to compare itself to a more broadly-based
index. Both indexes are displayed below because Securities and Exchange
Commission regulations require the old and new index to be presented in the
year of transition.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HAMBRECHT
& QUIST
Measurement Period SEAGATE COMPUTER
(Fiscal Year Covered) TECHNOLOGY, INC. PEER GROUP S & P 500 HARDWARE
- - --------------------- ---------------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Measurement Pt- 6/91 $100 $100 $100 $100
FYE 6/92 $198 $113 $114 $106
FYE 6/93 $212 $ 87 $129 $ 85
FYE 6/94 $263 $117 $131 $ 83
FYE 6/95 $527 $231 $165 $146
FYE 6/96 $600 $200 $208 $172
</TABLE>
- - --------
(1) The graph assumes that $100 was invested on July 1, 1991 in the Company's
Common Stock and in the S&P 500, the Peer Group, and the Hambrecht & Quist
Computer Hardware Index, and that all dividends were reinvested. No
dividends have been declared or paid on the Company's Common Stock.
Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
(2) The Company operates on a 52/53 week fiscal year which ends on the Friday
closest to June 30. Accordingly the last trading day of the Company's
fiscal year may vary. For consistent presentation and comparison to the S&P
500, the Peer Group, and the Hambrecht & Quist Computer Hardware Index
shown herein, the Company has calculated its stock performance graph
assuming a June 30 year end.
16
<PAGE>
The information contained above under the captions entitled "Report of the
Executive Personnel and Organization Committee of the Board of Directors" and
"Performance Graph" shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such
information be incorporated by reference into any filing under the Securities
Act of 1933 or Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates it by reference into such filing.
CERTAIN TRANSACTIONS WITH MANAGEMENT
During the fiscal year ended June 28, 1996, the Company paid Monterey
Airplane Company, a company 100% owned by Alan F. Shugart, Chairman of the
Board of Directors, President and Chief Executive Officer, and his wife, the
amount of $1,099,555 for chartered aviation services.
In connection with the Company's merger with Conner Peripherals, the Company
assumed the two loans, one in the amount of $250,000 and one in the amount of
$125,000, which had been made to William D. Watkins, Executive Vice President,
Chief Operating Officer, Recording Media, by Conner Peripherals. During the
fiscal year ended June 28, 1996, the largest aggregate amount outstanding
under each loan was $189,868 and $98,503, respectively. Neither loan bears
interest. The larger of the two loans will be forgiven provided that Mr.
Watkins remains employed with the Company until May 31, 1997. Payments on the
smaller of the two loans is made quarterly out of Mr. Watkin's incentive
compensation bonuses and as of August 30, 1996, the outstanding balance on
such loan was $35,244.
The Company believes that the terms of such transactions were no less
favorable than those which could be obtained from entities unrelated to the
Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Executive officers, directors and
greater than ten percent stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons, the Company believes that,
during the period from July 1, 1995 to June 28, 1996, its executive officers
and directors complied with all filing requirements.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent
as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: September 20, 1996
17
<PAGE>
PROXY PROXY
SEAGATE TECHNOLOGY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1996 ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 24, 1996
THE UNDERSIGNED STOCKHOLDER OF SEAGATE TECHNOLOGY, INC., A DELAWARE
CORPORATION, HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT, EACH DATED SEPTEMBER 20, 1996, AND HEREBY
APPOINTS ALAN F. SHUGART, GARY B. FILLER AND ROBERT A. KLEIST, AND EACH OF
THEM, PROXIES AND ATTORNEYS-IN-FACT, WITH FULL POWER TO EACH OF SUBSTITUTION,
ON BEHALF AND IN THE NAME OF THE UNDERSIGNED, TO REPRESENT THE UNDERSIGNED AT
THE 1996 ANNUAL MEETING OF STOCKHOLDERS OF SEAGATE TECHNOLOGY, INC. TO BE HELD
ON OCTOBER 24, 1996 AT 10:00 A.M., LOCAL TIME, AT SEASCAPE RESORT & CONFERENCE
CENTER, ONE SEASCAPE RESORT DRIVE, APTOS, CALIFORNIA 95003, AND AT ANY
ADJOURNMENT OR ADJOURNMENTS THEREOF, AND TO VOTE ALL SHARES OF COMMON STOCK
WHICH THE UNDERSIGNED WOULD BE ENTITLED TO VOTE IF THEN AND THERE PERSONALLY
PRESENT, ON THE MATTERS SET FORTH BELOW; AND, IN THEIR DISCRETION, UPON SUCH
OTHER MATTER OR MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR ADJOURNMENTS THEREOF.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK, FOR THE RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
SEAGATE TECHNOLOGY, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. Election of Directors:
If you wish to withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list below:
Alan F. Shugart; Robert A. Kleist; Gary B. Filler; Kenneth E. Haughton;
Thomas P. Stafford; Lawrence Perlman; Laurel L. Wilkening.
For [_] Withheld [_] For All Except [_]
2. Proposal to approve an amendment to the Company's Certificate of
Incorporation for the purpose of increasing the authorized number of shares
of Common Stock reserved for issuance thereunder by 400,000,000 shares to an
aggregate of 600,000,000 shares.
For [_] Against [_] Abstain [_]
3. Proposal to ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company for fiscal 1997:
For [_] Against [_] Abstain [_]
Dated: ____________________________ , 1996
__________________________________________
Signature
__________________________________________
Signature
(This Proxy should be marked, dated and signed by the stockholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign.)
